Vasil & Vasil

[2021] FamCA 545

FAMILY COURT OF AUSTRALIA

Vasil & Vasil [2021] FamCA 545

File number(s):

ADC 1397 of 2017

Judgment of:

BERMAN J

Date of judgment:

28 July 2021

Catchwords:

FAMLY LAW – PROPERTY – Sole use and occupation – Where the husband seeks sole use and occupation of one of the properties – Where the wife opposes the application – Where the property has been tenanted by the same tenant for the past thirteen years – Where the fixed term lease expired and continued as a periodic lease – Where a new lease was backdated and entered into on the same day the husband filed his application – Consideration of whether any equitable interest arises where proper procedure for a fixed lease has not been followed – Where a finding cannot be made that the tenancy agreement is not a valid agreement – Application dismissed.    

Legislation:

Residential Tenancies Act 1995 (SA) s 79A

Cases cited:

Amey v Minister for Environment and Natural Resources [1996)] SARTT 14

Chan v Cresdon Pty Ltd (1989) 168 CLR 242

Number of paragraphs:

53

Date of hearing:

18 June 2021  

Place:

Adelaide

Solicitor for the Applicant:

Self Represented

Counsel for the Respondent:

Mr Jordan

Solicitor for the Respondent:

Jordan & Fowler Family Lawyers

ORDERS

ADC 1397 of 2017

BETWEEN:

MR VASIL

Applicant

AND:

MS VASIL

Respondent

ORDER MADE BY:	BERMAN J
DATE OF ORDER:	28 JULY 2021

THE COURT ORDERS THAT:

1.The Application in a Case filed 25 February 2021 is dismissed.

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 Vasil & Vasil has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

REASONS FOR JUDGMENT

BERMAN J

INTRODUCTION

1. By Amended Initiating Application filed 27 July 2020, Ms Vasil (“the wife”) seeks the following orders by way of settlement of property:

   (1)That Mr Vasil (“the husband”) transfer to the wife his interest in the property situate at DD Street, Suburb B (“the Suburb B property”);

   (2)That contemporaneously with the transfer of the husband’s interest in the Suburb B property to the wife, the wife discharge the current mortgage and liability to the Commonwealth Bank of Australia;

   (3)That the wife have as her sole property and free from any claim, right or entitlement of the husband the following:

   (a)The property situate at EE Street, Suburb A (“the Suburb A property”);

   (b)Any interest of the husband in R Unit Trust, Ms Vasil Family Trust, J Trust and L Pty Ltd;

   (c)Her FF Company shares;

   (d)Her savings;

   (e)All items of furniture, household effects and personal effects in her sole name and/or possession; and

   (f)Her superannuation interests with M Super Fund and N Super Fund.

   (4)That the husband have as his sole property free from any claim, right or entitlement of the wife the following:

   (a)The property at GG Street, Suburb HH (“the Suburb HH property”);

   (b)Any interest of the wife in T Pty Ltd;

   (c)His JJ Company shares;

   (d)His savings;

   (e)His motor vehicles;

   (f)All items of furniture, household effects and personal effects presently in the sole name of and/or possession of the husband; and

   (g)His superannuation interests.

2. By his Amended Response to Initiating Application filed 16 March 2020, the husband seeks that the property of the parties, inclusive of superannuation, be distributed between the parties in such a manner as the Court considers appropriate and equitable.

3. The proceedings are not yet listed for trial.  The Court is awaiting the publication of a report by the single expert forensic accountant as to the wife’s interest in the following:

   (a)Ms Vasil Family Trust (1 unit in R Unit Trust)

   (b)Two 3343 shares in S Pty Ltd

   (c)The wife’s interest in J Trust;

   (d)The wife’s interest in L Pty Ltd.

4. The parties are not agreed as to the net pool of property available for distribution by way of property settlement and division.

5. At paragraph 57 of the wife’s affidavit filed 27 July 2020, she sets out her assessment of the property of the parties as principally comprising the following:

   (1)The Suburb B property $470,000

   (2)The Suburb A property $770,000

   (3)The Suburb HH property $420,000

   (4)Ms Vasil Family Trust $16,660

   (5)The wife’s interest in N Super Fund $300,000

   (6)The husband’s interest in KK Super Fund (as at 10/7/2018) $185,000

   (7)The wife’s interest in M Super $38,135

6. The liability to the Commonwealth Bank in respect of the Suburb B property is now negligible, although the wife discloses significant loans from her parents for renovations to the Suburb A property and to support herself and the children.

7. The husband does not agree with the wife’s assessment as to the assets and liabilities.

8. By Application in a Case filed 25 February 2021, the husband seeks an order that he have the sole occupancy and use of the Suburb A property.

9. It is not controversial that the Suburb A property is held by the wife as the sole registered proprietor.  The property was owned by her prior to the commencement of the relationship with the husband.

10. For about the last thirteen years the property has been the subject of a continuing tenancy to Mr LL.

11. By her Response to an Application in a Case filed 1 April 2021, the wife resists the husband’s application for sole use and occupation.

12. The husband’s application seeks that if Mr LL currently occupies the Suburb A property under a periodic tenancy then pursuant to the provisions of the Residential Tenancies Act1995 (SA) (the “RTA”), the wife do issue a notice of termination on the basis that the property is required for the husband’s exclusive occupancy.

    THE HUSBAND’S APPLICATION

13. The husband relies upon his affidavit filed 2 March 2021 in support of the orders he seeks.

14. On 21 September 2017, the husband had filed an application seeking that he live in the Suburb B property.  The application was opposed and the wife also sought to take up occupation in the Suburb B property.

15. The Suburb A property has predominantly been an investment property since 2005.

16. The husband accepts that Mr LL has been in occupation for over thirteen years.  The husband considers that at the rate of $410 per week, Mr LL has been paying less than market rental.  The issue for the husband is that as at 2 March 2021 he considered that Mr LL’s most recent lease agreement of some thirty six months expired on 2 June 2020 and to the best of his knowledge and belief, there had not been put in place a formal rental agreement.

17. The husband stated that he would be unemployed as of 30 June 2021 as a result of the expiration of his employment contract.  His current lease agreement also expires given that his current tenancy is aligned to his contract of employment.

18. Whilst the evidence is scant, the husband contends that he has made numerous applications to seek employment but to date has been unsuccessful.

19. The husband’s position is that the wife has been favoured with a Court order that enabled her to live in the Suburb B property and now that the husband’s circumstances are dire, he considers that he should be given the same opportunity.  Simply put, he considers his claim for sole use and occupation of the property should take precedence over Mr LL’s continued tenancy.

20. The wife opposes the husband’s application.

21. She considers that it is a relevant consideration that she is the sole registered proprietor of the Suburb A property and has been since 1990, namely four years prior to the marriage to the husband.  As and from the commencement of the marriage, the wife states that the Suburb A property has been freehold and unencumbered.

22. The short history is that following the marriage, the parties lived in the Suburb A property until 2007 when they moved to the wife’s father’s home at Z Street, Suburb A.  At that time the Suburb A property was rented out to Mr LL who has remained in continuing occupation.

23. Mr LL has historically occupied the property on a written lease.

24. The wife concedes that Mr LL’s previous lease expired on 2 June 2020 but that on 24 February 2021 she was advised by Mr LL that the lease had expired and that he wanted to enter into a new lease.

25. The wife states that she and Mr LL met on 25 February 2021 and a new lease was prepared and signed.

26. The chronology relied upon by the wife is that she met with Mr LL at 10.00 am on 25 February 2021 and entered into the lease with him prior to her solicitor receiving notification of the husband’s application at 8.02 pm on the same day.

27. Mr LL was served with the proceedings and attended the hearing in person. 

28. He relied upon his affidavit filed 15 June 2021 prepared by the wife’s solicitor.  He confirms that he made two telephone calls to the wife on 24 February 2021 at 5.40 pm and on 26 February 2021 at 8.59 am.

29. The first telephone conversation occurred to enable Mr LL to advise the wife that the bathroom taps where leaking and needed a plumber to attend.  It was during that telephone call that he contends he reminded the wife that a new lease for the property was required.

30. The lease was signed between the wife and Mr LL on 25 February 2021.  He received advice from the wife on 26 February 2021 that the husband had filed an application seeking sole use and occupation of the Suburb A property.

31. Mr LL has not had any direct communication with the husband prior to being served with the application on 2 March 2021.

32. Mr LL complied with a subpoena filed by the husband seeking that he provide his phone records for the period 24 – 28 February 2021.

33. The phone records have been produced and they confirm Mr LL’s evidence that there were two phone calls to the wife.

34. Exhibit “1” is the lease entered into between the wife and Mr LL on 25 February 2021.

35. The lease document is unremarkable and appears to be a standard form Residential Tenancy Agreement downloaded by the wife from the South Australian Government website. 

36. The tenancy agreement, although signed on 25 February 2021 is backdated to 6 June 2020.  There is no explanation as to why this was done in circumstances where at the expiration of the earlier lease on 2 June 2020 the tenancy was month to month.

37. The backdating of the agreement has heightened the husband’s suspicion that the tenancy agreement was entered into by Mr LL after the wife received notification of the application.

    LEGAL PRINCIPLES

38. It is not contested that Mr LL is a long term tenant of the Suburb A property. Section 79A of the RTA provides that if a fixed term lease has not been terminated prior to the end of the term, the lease will continue as a periodic lease, the term of which follows the rent programme schedule. After the fixed term lease expired on 2 June 2020, Mr LL had a periodic lease that was renewed every two weeks upon payment of the rent.

39. Whilst the relationship between the wife as landlord and Mr LL as tenant is provided for under the RTA. I have considered whether the tenancy arising from Mr LL’s long occupation of the Suburb A property may give rise to an equitable interest where the proper procedure for a fixed lease has not been followed.

40. In the decision of Amey v Minister for Environment and Natural Resources [1996)] SARTT 14 the South Australian Residential Tenancies Tribunal (“the tribunal”) determined that there was an enforceable agreement between the parties in circumstances where the tenancy agreement was entered into before the landlord was the owner of a property.

41. The tribunal relied upon the decision of Chan v Cresdon Pty Ltd (1989) 168 CLR 242 where the High Court found at 252:

    For present purposes these authorities establish two propositions. First, the court’s willingness to treat the agreement as a lease in equity, on the footing that equity regards as done what ought to be done and equity looks to the intent rather than the form, rests upon the specific enforceability of the agreement. Secondly, an agreement for release will be treated by a court administering equity as an equitable lease for the term agreed upon and, as between the parties, as the equivalent of a lease at law, though the lessee does not have a lease at law in the sense of having a legal interest in the term.

42. In the circumstances as between the wife and Mr LL, it is unlikely that he has an equitable lease.  There is no evidence of any discussion between the wife and Mr LL as to a renewal to the fixed term that expired in June 2020.  It is likely that neither party turned their mind to the issue until it was raised by Mr LL on 24 February 2021.

43. If any of the following scenarios had occurred then a different outcome may well have arisen:

    ·The wife and Mr LL having had a verbal agreement to renew the lease for a fixed term;

    ·The presence of a tenancy agreement that wasn’t properly executed; and

    ·The wife having promised Mr LL or encouraged the belief in him that the lease would be renewed for a fixed term.

44. It is unfortunate that Mr LL’s affidavit was prepared by the wife’s solicitor.

45. In circumstances where Mr LL has been in occupation for thirteen years it would not be surprising if there was broad agreement with the wife that his tenancy would continue irrespective of whether they entered into a fixed term tenancy agreement.

46. Mr LL considered that he would continue to occupy the premises into the foreseeable future.  His financial circumstances are precarious and the wife understood that the retention of the right to occupy the Suburb A property was of considerable benefit to him.

    CONCLUSION

47. It is well settled law that the Court does not have the ability to make orders that affect the substantive rights of a third party.  Whether Mr LL has a substantive right depends upon whether at common law a court would find that he had an equitable lease or in the alternative that there was a valid lease agreement entered into by him.

48. On the evidence as presented, I am not able to determine the matter.  It is an issue that will only be further advanced by oral evidence.

49. The wife points to a valid tenancy agreement entered into prior to her solicitor having notice of the husband’s application.  For his part, and with perhaps some justification, the husband considers that the errors and omissions in the tenancy agreement support his contention that the agreement was entered into in order to defeat his application.

50. I am not able to make a finding on the balance of probabilities that the tenancy agreement was entered into after the event and therefore is not a valid agreement.

51. In those circumstances I am not able to determine the matter in favour of the husband’s application.

52. Therefore whilst the husband may not have an entitlement for an order of sole use and occupation of the Suburb A property, if his financial circumstances are as stated, the more effective relief may be to seek orders by way of interim or partial settlement of property or lump sum spousal maintenance.

53. I make the order as appears at the commencement of these reasons.

I certify that the preceding fifty-three (53) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Berman.

Associate:

Dated:       28 July 2021