Vranic and Vranic and Ors

[2009] FamCA 1282

FAMILY COURT OF AUSTRALIA

VRANIC & VRANIC AND ORS [2009] FamCA 1282

FAMILY LAW – PROPERTY – Interim

APPLICANT: Ms Vranic

RESPONDENT: Mr Vranic

2^nd RESPONDENT: Ms Muncic

3^rd RESPONDENT: M Pty Ltd

FILE NUMBER: SYF 6740 of 2002

DATE DELIVERED: 7 December 2009

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Cohen J

HEARING DATE: 7 December 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Rayment QC with
Mr Locke

SOLICITOR FOR THE APPLICANT: Oliveri Attorneys

COUNSEL FOR THE RESPONDENT: Ms Black

SOLICITOR FOR 2^ND & 3^RD RESPONDENT: Mr Anderson
ERA Legal

Orders

1. That, by consent, such of the net proceeds of sale of the N property that are obtained by the Second and Third Respondent are to be paid into Court forthwith on their receipt to be held by it pending final orders in the property proceedings.

2. That liberty to apply is granted to the Wife in the event that she sees fit to do so on receipt of documents subject of the notice to produce served on the Second and Third Respondents and the Wife.

3. That the Husband is hereby restrained from lodging any caveat in respect of the land upon which the former matrimonial home is situated.

4. That the Wife is hereby authorised to enter into arrangements for the leasing of the said home being in substance those referred to in paragraph 44 of the Wife’s affidavit sworn on 3 December 2009.

5. That Order 7 made on 3 July 2009 is hereby discharged.

6. That he Wife be entitled by way of interim costs to pay her solicitors from the net proceeds of sale of the S property the sum of $350,000.

7. That the Husband’s Response to an Application in a Case filed 5 November 2009 is hereby dismissed.

8. That in the event the Wife is required to serve any documents on the Husband, service may be effected by leaving the documents in the letterbox of … C Street, R.

9. That all costs are reserved.

Notation:

A.That the Wife will remove the caveat from the N property to allow the sale of the said property.

IT IS NOTED that publication of this judgment under the pseudonym Vranic & Vranic and Ors is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYF 6740 of 2002

MS VRANIC

Applicant

And

MR VRANIC

First Respondent

MS MUNCIC

Second Respondent

M PTY LTD

Third Respondent

REASONS FOR JUDGMENT

1. There are two lots of proceedings before me.  I shall only deal in this judgment with one lot of those proceedings.  The lot I shall not deal with is in relation to any applications which have been made, including oral applications, in the final proceedings which are part heard.

2. The applications that I will deal with are the wife’s application which was filed on 16 October 2009 together with the husband’s Response to that application which was filed on 5 November 2009.

3. The wife now seeks, by way of amendment to her application, a series of orders which are contained in a document which I shall initial and date 7 December, and place with the file.  There are actually 13 orders sought in that document, but because of matters that have already been dealt with today, this judgment does not deal with orders 1, 2, 11 and 12 of those orders.  The wife seeks orders in accordance with each of paragraphs 3 to 9 inclusive.

4. The first order that is sought by the wife relates to the lodging by the husband of a caveat.  The caveat was lodged on the property in S which was the parties’ former matrimonial home. It is in the sole name of the wife.  What happened was that the wife made arrangements to sell that property and settlement was due to take place before today, but the husband lodged a caveat which prevented the sale.  As a result of the application that is now before me he has now withdrawn that caveat, as he should have.  It should never have been lodged.  Nevertheless, the wife is concerned that he might lodge another caveat before settlement is due to take place. 

5. The order that the wife seeks is that the husband be restrained from lodging another caveat to prevent the sale of that property which is due to take place this week.  In my view, a restraining order can do no harm.  Either the husband has no intention and will not lodge a caveat and the sale will be able to go ahead or, if he does have an intention, the application of a restraining order to him preventing him from lodging any further caveats to prevent sale of that property can do no harm because no such caveat should be lodged, it being quite clear, in all of the circumstances, that the wife should be entitled to sell the property.  I shall make an order in accordance with order 3 against the husband.

6. The next order the wife seeks is that she be entitled, by way of authorisation by the Court, to enter into an arrangement for leasing the home for about 6 months.  After all, she will need to have somewhere to live and, in any event, will have to pay rent until such time as the principal proceedings are concluded. In those circumstances, there seems to be little reason why she should not lease the home she previously lived in rather than be put to the expense, which is likely to be equally as great or greater, of leasing another suitable home. 

7. The reason why I think that this matter should be the subject of an order, rather than merely recognition that she is entitled to live and, therefore, entitled to spend money on rent, is that the terms of her lease involve a lump sum being paid;  a sum of $25,350, for the rent from the proceeds of sale;  a lump sum that, were it not for the arrangement that it be paid out of the proceeds of sale,  would be available to meet the property orders that I shall make in the part heard property proceedings.  In my view, there is absolutely no reason why she should not be entitled to pay the $25,000 from the proceeds of sale of the S property.  The husband’s counsel has not suggested otherwise. I shall make the order which the wife seeks in order 4. of the document that I have initialled and placed with the papers.

8. The next order is really a procedural order. The wife seeks to allow the sale of the former matrimonial home.  This home has to be sold.  It has always been clear that the home would ultimately have to be sold. I can say is that it is in both parties’ interests that it be sold as soon as possible. In those circumstances, I should make order 5. as sought by the wife.

9. The next three orders that the wife seeks relate to what should be done with the balance that will be payable to the wife on sale.  What the wife seeks is declarations that the husband owes particular amounts to her for one reason or another and that, accordingly, she should be entitled to discharge those debts from the proceeds of sale.  There are only two sources of indebtedness by the husband to the wife.  One is a series of orders made by a judicial registrar as long ago as 19 August 2003.  He made three orders that are of consequence here. 

10. The first is that the husband pay $255 a week in spousal maintenance to the wife.  The second order he made is, also by way of a spousal maintenance order, that the husband pay certain living costs of the wife.  The third order he made is that the husband pay some interim costs to the wife in the sum of $50,000.  Those interim costs were for use by the wife to pay her former solicitors; costs she owed those solicitors in the amount of $50,000 plus interest which are secured by mortgage over the former matrimonial home.  Now, according to the wife, and there seems to be no reason to dispute her calculations, the weekly payment part of the spousal maintenance debt is $83,000 and the balance of the spousal maintenance debt is $425,831.  It is also the case that the wife calculates that the interest component together with the principal that is secured by caveat lodged by her former solicitors over the former matrimonial home is now $74,944 approximately.

11. The other debt the wife seeks declarations about relates to child support that the wife is owed. She says these declarations support her claim to use the proceeds of sale of the former matrimonial home to discharge the indebtedness which is $89,000, another figure which has not been disputed.

12. The former matrimonial home is due to be sold for $1.565 million.  She expects to receive a balance of $354,000 or close to that sum by way of net proceeds of sale. It is my understanding that the $354,000 that she is likely to receive by way of net payment is clear of the amount payable to her former solicitors for the discharge of the caveat.  What she seeks the declarations about the debts for, however, is not for an impractical purpose.  She wants to be able to pay her current solicitors part of the debt she owes them.  She currently owes them $597,831.  Because she expects to get about $350,000 clear from the sale of the house, she wishes to use that $350,000 to pay her solicitors part of the debt owing to them. 

13. In my view there is no need for me to make any declarations as to the amounts that the husband owes her because that really would be an act which is undertaken by the Court in vain. As between the parties, what is going to be divided between them is their net property and in which pocket the money might be held as a result of orders for spousal maintenance and child support has become largely irrelevant by this stage in the proceedings.  However, it is not entirely irrelevant.  It is, in my view, a complete justification for the use of her net proceeds to discharge her solicitor’s debt, remembering that that will be regarded as an advance to her; a discharge that, had the husband met his obligations under the orders of the Judicial Registrar, she would have been able to achieve by paying her solicitors already. The amounts involved in what the husband owes her come to, not including the $74,000 owing to her former solicitors, something like $597,800 altogether on my calculations for spousal maintenance and child support,  nearly twice what she would have been able to pay her solicitor had that debt been paid. 

14. In relation to the husband’s application, the situation with him is that he seeks to be able to use moneys he will receive or he expects to receive to discharge his debts or some of them.  In particular, he refers to about $205,000 in credit card debts and a creditor’s petition which has been taken out against him by R Group, which he says is justified to the extent of the claim in it, in that he owes the R Group Proprietary Limited $178,984.60.  That petition is due to be heard by a federal magistrate in December this year.  The moneys that the husband expects to come to him could come from a number of sources. 

15. He expects a payment to him by the liquidator of A Pty Limited because A Pty Ltd is due to sell certain land. As a result of that sale, there could be a substantial amount coming to him, possibly as much as $220,000.  He also says that a company, C Company, which is being wound up is due to sell property which will result in the same liquidators paying him about $150,000.  What he wants is to use those two amounts to pay off the creditor’s petition and his credit card debts, or to a large extent pay them off.

16. The wife opposes that and, among other things, is prepared to take the risk that the husband will become bankrupt.  What she says is that the evidence in the final proceeding is that the debt to R Group Pty Ltd has been secured by a caveat over a property at N. 

17. The property at N is at the centre of the property proceedings.  The husband alleges that he has no interest in it, but rather that an ex-employee of his and colleague of his, the second respondent, through her company the third respondent, simply owns that property because it bought it at its proper value.  The evidence before me is that the third respondent, who is the registered owner of the N property, is about to sell it and that there will be moneys left over from the sale which will be sufficient to discharge the caveat after the mortgagee has been paid.  In those circumstances, the husband won’t need the $178,984.

18. The issue of the caveat was dealt with in the part heard property proceedings and my recollection of the evidence is that the husband’s indebtedness to R Group Pty Ltd is secured by a caveat over the N property.  In that event, if that is true, there is no real prospect of the husband becoming bankrupt pursuant to the petition against him brought by R Group Pty Ltd.

19. In relation to the credit card debts that he wishes to pay, I should mention that he has maintained throughout the proceedings before me, over a number of years, that his assets are exceeded very substantially by his liabilities and that he has never had any money to live from day to day and that he has been relying upon the generosity of friends to live, having no income and not receiving social security benefits.  At one stage he said he was living in motels.  Another time he said he was living at an address where he could not be found and which had no living quarters, but he then said he was living in a shed in the backyard of that property. 

20. It strikes me as very strange that his creditors, namely banks, that have issued these credit cards have allowed him to run up $205,000 worth of debts.  If it is the case that he has no property, and one must not lose sight of the fact that the wife says that the husband has attempted to hide millions of dollars worth of property, then the banks should take the risk that they have subjected themselves to.  I can see no reason why they should be put in a special position to the disadvantage of the wife.  I do not think, in all of the circumstances, particularly the fact that the matter is part heard and there is a claim against the husband about his failure to disclose a very large sum, that it is appropriate for me to make an order allowing him to pay this amount of money from moneys he receives before I determine the real situation as to property as between the parties. In those circumstances, it is my view that I should refuse his application. 

21. I will revoke what I said about rejecting the husband’s application and add this.  I have now discovered that my recollection was wrong and that it is not the case that R Group Pty Ltd has a current caveat over the property at N.  Therefore, the indebtedness that the husband admits to having to R Group is not going to be discharged on the sale of the N property.  The husband, it appears, owes funds to R Group - at least he does according to his evidence. 

22. I am of the view that his indebtedness to R Group should be dealt with in the same way as his indebtedness to the credit card providers. Because the wife is prepared to take the risk that he will be bankrupted by R Group as a result of the indebtedness to it and because I have not determined whether or not he has money hidden, like the credit card debts, his indebtedness to R Group should be dealt with only after I have made findings based upon the issue of whether or not he has hidden assets and upon what I regard the parties’ net assets to be.

23. Because he claims to have no other assets and because any assets that might be payable to him by the liquidator will not be payable to him, as I have already restrained the liquidator from paying those assets to him, until such time as this court determines what might happen to any assets the liquidator holds, the creditors on the bankruptcy and the Official Receiver will not have any entitlement to them.

24. My decision, then, is no different from my decision prior to lunch. It is that the husband’s claim to use any moneys which might become payable to him should be dismissed and such moneys will become part of the pool available for distribution and as such their fate will be dependent on the outcome of the property orders that are eventually made.

I certify that the preceding twenty-four (24) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cohen

Associate:     

Date:              13 January 2010