Vernick & Bayley
[2024] FedCFamC1F 888
•16 December 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Vernick & Bayley [2024] FedCFamC1F 888
File number(s): SYC 6110 of 2021 Judgment of: ALTOBELLI J Date of judgment: 16 December 2024 Catchwords: FAMILY LAW – ENFORCEMENT – Where the Court is asked to determine whether the respondent breached final orders of this Court – Where the respondent prevented the sale of the former matrimonial home – Where the Court determines that the respondent is in breach of final orders mandating the former matrimonial home to be sold by auction – Where the final orders are a contingent obligation to pay money – Where the respondents’ contravention of orders is enforceable – Where the Court orders that the former matrimonial home be sold by auction on an urgent basis. Legislation: Family Law Act 1975 (Cth) ss 79A, 106A
Federal Circuit and Family Court (Family Law) Rules 2021 (Cth) rr 1.04, 11.01, 11.07
Division: Division 1 First Instance Number of paragraphs: 16 Date of hearing: 16 December 2024 Place: Sydney via videoconference Counsel for the Applicant: Mr Stapelton Solicitor for the Applicant: Gordon & Barry Lawyers Pty Ltd Counsel for the Respondent: Mr Longworth Solicitor for the Respondent: Maksisi Lawyers ORDERS
SYC 6110 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS BAYLEY
Applicant
AND: MR VERNICK
Respondent
ORDER MADE BY:
ALTOBELLI J
DATE OF ORDER:
16 DECEMBER 2024
THE COURT ORDERS THAT:
1.The Respondent is to forthwith give instructions in writing to B Real Estate (“the agents”) to conduct an auction of C Street , Suburb D NSW, being the whole of the land contained in folio identifier … in accordance with Orders of this Court made on 10 October 2024, on such a date as recommended by the agents and occurring before 25 December 2024.
2.If the Respondent has not given such instructions to the agents in writing by 17 December 2024 at 10:00 am, then the Applicant thereafter has immediate leave to approach a Registrar of this Court, pursuant to s 106A of the Family Law Act 1975 (Cth) to sign an instrument or document required on behalf of the Respondent to conduct such auction in accordance with Order 1 herein.
3.Leave is granted to the Applicant to relist the proceedings on 24 hours’ notice in the event that further orders or directions are required, provided that in the event that such liberty is exercised the person seeking to relist the proceedings shall:
(a)forthwith notify all other parties of the intention to make the request and the reason for same;
(b)make the request for relisting in accordance with the Federal Circuit and Family Court of Australia protocol as to communication with chambers; and
(c)contemporaneous with any notice of relisting serve upon all other parties a minute of orders to be sought together, in the case of the parties, with such evidence as is relied upon by the party in seeking such orders.
4.The Applicant’s costs of and incidental to the Application in a Proceeding filed 13 December 2024 are hereby reserved.
5.The remainder of the Application in a Proceeding filed 13 December 2024 is hereby dismissed.
6.Leave is hereby granted for the Applicant and/or her lawyers to supply a copy of this order to the agents.
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 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Vernick & Bayley has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
EX TEMPORE REASONS FOR JUDGMENT
ALTOBELLI J:
I provide the following extempore reasons for judgment. By way of an Enforcement Application filed on behalf of the Applicant Wife (“the wife”) on 11 December 2024 (“the enforcement application”), supported by an affidavit of Mr E; the wife’s solicitor, filed 11 December 2024, the wife seeks enforcement of orders that I made by consent on 10 October 2024 (“the final orders”). Such orders being final orders altering the property interests of the husband and the wife. The enforcement application was opposed by the Respondent husband (“the husband”). Such opposition was contained in Order 1 of his Application in a Proceeding filed 13 December 2024 (“the husband’s Application in a Proceeding”). The relief sought in Order 2 of the Husband’s Application in a Proceeding was withdrawn and dismissed by consent. Evidence in support of the husband’s case was contained in his Affidavit filed 13 December 2024.
The relevant order to be enforced is Order 1 of the final orders, which provides for the sale of the husband’s and the wife’s jointly owned property at located at C Street, Suburb D NSW, being the whole of the land contained in folio identifier … (“the Suburb D property”). The final orders provide that both the husband and the wife are to do all things necessary to sell the Suburb D property in the manner prescribed, in this case by way of public auction. Order 1.2 provides that the husband appoints a solicitor conveyancer. The wife is required under Order 1.3, being the person in occupation of the Suburb D property, to facilitate access to the Suburb D property for the purposes of preparing for sale. Order 1.4 states that the Suburb D property must be sold by auction in late 2024, or as determined by the husband in conjunction with the agent.
Order 1.5 prescribes that the reserve price for the auction is to be $5.35 million or as determined by the husband in conjunction with the agent. Order 1.6 states that the sale price shall be as the husband determines, provided that such sale price is no less than $5,082,500. Order 4 requires both the wife and the husband to cooperate in every way with the agent, including not doing or saying anything to hinder or prevent a sale being affected; that is Order 4.3. Order 9 deals with the distribution of the sale proceeds and states that the wife receive $1,775,000 by 11 January 2025, failing which she will receive interest on that amount calculated in accordance with the rate payable on the home loan at the time until she receives the money.
Relevantly, the Court observes payment to the wife of this amount is dependent on the sale of the Suburb D property. There is no independent obligation for the father to pay this amount outside of sale. If the amount is not received by that date, the only recompense to the wife is the interest that accrues. That, of course, does not enable her to receive the money any earlier.
Order 11 requires the husband to keep paying the mortgage payments on the Suburb D property until it has been sold. The material before the Court creates the impression that this may not have taken place and that payments are in arrears. The wife's case, shortly stated, is that contrary to the terms of the final orders, the husband has either cancelled and/or postponed the auction sale of the Suburb D property, whilst expressing a desire to buy out the wife for a cash amount equivalent to her entitlement under Order 9. Such is the deep distrust and enmity between the husband and the wife, that the wife does not accept this proposal and views it as simply another attempt at delay.
It is common ground that the auction has not taken place as yet. The wife seeks orders which, in practical terms, would result in the auction occurring quickly. The evidence indicates that the husband does have the sum of $1.775 million available to him to pay the wife her entitlement under Order 9. Based on the documentary evidence before the Court, there is reason to understand and indeed accept the wife's concerns and submissions that the husband is unlikely to be able to refinance the existing mortgage. Even if the wife receives her payment, if the husband cannot refinance the loan, she remains in a vulnerable position as regards to that liability. Nonetheless, there is nothing on the evidence before me that would reassure the Court that the husband does in fact have the capacity to refinance.
For present purposes, the focus must be on what obligation of the husband he has failed to comply with and to which obligation can be enforced by an order of the Court. The wife's case is that the husband has failed to comply with Order 1.4, that is, to list the Suburb D property for sale by auction. The auction was to take place in late 2024. The wife concedes that the postponement of that auction was, and I quote, “as determined by the husband in conjunction with the agent”. She contends, however, that the evidence before the Court would lead the Court to conclude that the agent wants the auction to occur quickly. The Court agrees.
The totality of the material before the Court, including the various annexures to the affidavits, collectively lead the Court to that impression. Indeed, the strong impression that is formed from the totality of the material, including the husband's own material, is that he would now prefer to retain the Suburb D property, rather than cause it to be sold by auction as is required by the final orders. The Court is satisfied, therefore, that the husband is in contravention of Order 1.4, to list the property for auction. The Court observes, of course, that under Order 1.6, he still retains rights in relation to the sale price provided it is no less than $5.082 million.
The legal issue that is raised is whether this is an enforceable obligation for the purposes of r 11.01 of the Federal Circuit and Family Court (Family Law) Rules 2021 (Cth) (“the Rules”). Rule 11.01 is entitled “Enforceable Obligations”. I read r 11.01 through the lens of the overarching purpose which, of course, is prescribed at r 1.04. Rule 1.04(1) says that:
The overarching purpose of these Rules, as provided by section 67 of the Federal Circuit and Family Court Act, is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible.
I also read pt 11 of the Rules as having a particular purpose, and that is to enforce obligations, and that therefore the interpretation of these rules must have that purpose in mind. Even if it were not the case that rules stated to cover enforcement of the Court's orders were inadequate to meet the particular issues that come before the Court, I would be of the view that the Court has an inherent power to enforce its own orders whether the Rules, made pursuant to the Act, are adequate or not.
Counsel for the husband contends that the obligation is not an enforceable obligation for the purposes of r 11.01. Counsel for the wife contends to the contrary. The Court is satisfied that the husband's obligation to list the Suburb D property for sale by auction is an enforceable obligation under r 11.01(1)(a). That is to say, an obligation to pay money. The husband’s obligation to pay money to the wife under Order 9.4.1 is inextricably linked to his preceding obligations pertaining to the sale of the Suburb D property in Order 1. If he does not comply with Order 1, he cannot comply with Order 9, which, it should be noted, requires not only a payment of the cash sum to the wife but also to discharge the bank mortgage over the Suburb D property.
To interpret the husband’s obligation anything other than holistically would lead to an absurd result and would be inconsistent with r 1.04. The obligation under Order 1.4 is simply part of his broader obligation under Order 9. As an obligation to pay money, r 11.05 contains specific methods by which the obligation, “may be enforced”. Hence, it is not the only manner of enforcement.
Rule 11.07 describes general enforcement powers, but again, does not purport to be exclusive or prescriptive. Even if I am wrong in classifying the obligation under Order 1.1 to be an obligation to pay, I am satisfied that it is an enforceable obligation under r 11.01(1)(c), that is, failing to sign a document under s 106A of the Family Law Act 1975 (Cth) (“the Act”). The application of s 106A of the Act is clearly contemplated by Order 15. The document in question is the instruction in writing to the real estate agent to conduct the auction.
Regrettably in this case, the strong impression created by the totality of the material before the Court is that the husband, for his own reasons, now prefers to retain the Suburb D property and to pay his wife out. He can only do so if he refinances the existing mortgage, which appears to be in arrears in circumstances where he has the obligation to pay the mortgage. The Court cannot ignore the reality that part of the relief sought in the Husband’s Application in a Proceeding was an application under s 79A of the Act to vary the final orders so that he could achieve this aim. He withdrew this part of his Application in a Proceeding, presumably based on good legal advice, and very wisely so. His own affidavit expresses the desire to retain the Suburb D property. Respectfully, the husband's agenda is clear.
The reality is that no one really knows what will happen at an auction until one is held and the market is tested. For her own reasons, the wife wants to pursue this, and for his own reasons, the husband does not. The final orders contemplated an auction, and that is what should take place, noting the control given to the husband by the final orders about what price can be accepted. Both parties led evidence about what agents have represented to them about what buyers have offered, or may be willing to offer, but the auction is the only non-speculative manner of ascertaining the value of the Suburb D property and complying with the final orders.
The form of order proposed by the wife in the enforcement application is problematic in the sense that it does not specifically address an auction sale on a particular date. There is, however, some assistance from the submissions made in her document titled “Wife’s Position” dated 16 December 2024, which contemplates a sale by auction on a date recommended by the agent. Noting the time of year and the urgency of the situation, the Court must do the best it can and makes the following order based on those sought by the wife in the enforcement application.
I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the ex tempore Reasons for Judgment of the Honourable Justice Altobelli. Associate:
Dated: 19 December 2024
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