Wallace and Wallace
[2012] FamCA 654
FAMILY COURT OF AUSTRALIA
| WALLACE & WALLACE | [2012] FamCA 654 |
| FAMILY LAW – PROPERTY – Injunctions - Sole occupancy to husband to enable sale of home to avoid mortgagee’s sale - Wife to vacate. |
| Family Law Act 1975 (Cth) |
| Blomley & Ryan (1956) 99 CLR 362 Hoult & Hoult [2011] FamCA 1023 |
| APPLICANT: | Mr Wallace |
| RESPONDENT: | Ms Wallace |
| INTERVENOR: | H Pty Ltd |
| INTERVENOR: | W Pty Ltd |
| FILE NUMBER: | MLC | 9861 | of | 2009 |
| DATE DELIVERED: | 30 July 2012 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Cronin J |
| HEARING DATE: | 30 July 2012 |
REPRESENTATION
| THE APPLICANT: | In person |
| THE RESPONDENT: | In person |
| COUNSEL FOR THE INTERVENORS: | Ms Rozner |
| SOLICITOR FOR THE INTERVENORS: | Galilee Solicitors |
Orders
That the wife vacate the property at Property M by 4.00 pm on 28 September 2012.
That from the date of the wife vacating the said property, the husband have sole occupancy thereof.
That the wife be restrained from injunction from further attending at the property after vacating it without written permission of the solicitors for the husband or if he is not represented, by written permission from the husband himself.
That the husband be responsible for the appointment of an agent for the sale of the real property.
That upon the settlement of the sale, the proceeds be applied as follows:
(a) first, to pay all costs, expenses and commission of the sale;
(b) secondly, to discharge the mortgage encumbering the property to the Bank of Queensland;
(c) thirdly, to discharge the mortgage to H Pty Ltd and W Pty Ltd; and
(d) fourthly, to deposit the balance in an interest bearing account in the joint names of the parties until further order.
That pursuant to s 106A of the Family Law Act 1975 (Cth), in the event that any party does not comply with the terms of these orders to give effect to a sale of the said property, the Registrar may sign any such documents as may be required in the name of the husband and the wife and for the purposes of this order, the Registrar may be satisfied upon receipt of an affidavit by the solicitor for either of the parties that such compliance has not been provided.
That all outstanding interim applications are otherwise dismissed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Wallace & Wallace has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLC 9861 of 2009
| Mr Wallace |
Applicant
And
| Ms Wallace |
Respondent
And
H PTY LTD
(Intervenor)
And
W PTY LTD
(Intervenor)
REASONS FOR JUDGMENT
These are proceedings concerning a house owned by the husband and wife at N. The husband wants the court to sell it to prevent a mortgagee’s repossession. The wife opposes the orders for sale. She is currently residing in the property and on a rent-free basis.
This morning and by leave, the interveners were joined to the proceedings. Rule 6.05 of the Family Law Rules 2004 permits that intervention if an application and an affidavit are filed. I have both of those documents. No basis is set out in the rules as to why or how a party should be allowed to intervene, but rule 6.02 provides that a party whose rights may be directly affected by an issue, and whose participation in the proceedings is necessary to determine all issues, must be included as a party. Logically it follows, therefore, that the interveners H Pty Ltd and W Pty Ltd would have been joined on the basis of the husband’s application.
In April 2012, the interveners took an interest by mortgage over the Property M. The circumstances of that interest are, from the wife’s perspective, controversial.
The background of the proceedings only needs to be mentioned very briefly. This is a marriage of some 10 years and there is one child who is currently living, pursuant to orders of this court, with the husband. Those orders were made in March 2011 and the time between the wife and that child is supervised. Mushin J had concerns about the capacity of the wife to make the decisions that were necessary for parenting.
In October 2011, the matter was back in the judicial duty list and it came before me. The parties were both represented at that stage and the issues were compromised. The orders I then made, with their consent, were that the husband pay all of the principal and interest in relation to the mortgage then encumbering the home, as well as $350 per week to the wife, commencing in October. That was sum was to be amended upon the wife receiving a Centrelink benefit. The orders also provided that the wife have the sole use and occupation of the property until further order.
The parties’ respective positions concerning the final division of their property remains unclear. The husband initially sought that the property be transferred to him and that he pay the wife money, but it will be clear from his current position that that is no longer viable. The wife filed a response in which she sought undefined orders, but today she said that she would like to keep the property as part of her settlement. That position seems unrealistic. With lawyers acting for her, the wife executed a guarantee of the mortgage obligations for D Pty Ltd in its capacity as the trustee of the D family trust, that is, the mortgage earlier mentioned.
A term of the guarantee was that the home in N be sold “in accordance with a matrimonial agreement”. Unfortunately, no agreement has been reached and the case is awaiting a final hearings. From my calculations, it is not that far away.
The guarantee was not only executed by the husband and the wife, but there is evidence of a certificate signed by a solicitor on behalf of each party. The solicitor for the wife who signed the certificate was on the court’s record until at least Friday in these proceedings. The significance of that certificate is that the wife now asserts that she is entitled to set aside the guarantee because she entered into it under duress. She points to an email she sent to her solicitors after the certificate was executed, which I interpret to mean she was accepting the borrowing was necessary because the husband was otherwise going to go bankrupt.
However, the husband’s evidence, which is set out in his affidavit, is that both parties agreed to the loan of $171,000 to satisfy a debt to the Australian Taxation Office. The evidence points to the fact that the government was about to enforce its debt due by the husband. The wife also points to an advice from her solicitors, which refers to the loan as “reprehensible” but that related to the interest under the mortgage. The rate, which is 42 per cent, with interest payments of $5985 per month, also indicated clearly in the document that the debt had to be completely satisfied by October 2012.
I am very conscious that the requirement to discharge the mortgage is only months away. The wife has also acknowledged that she handed the documents to the solicitor for the husband, having executed them. I also note that her signature is witnessed by her then-solicitor.
Throughout her affidavit, the wife referred to the authority of the High Court of Australia in Blomley & Ryan (1956) 99 CLR 362, which is a case about a drunken man selling his farm. Fullagar J, amongst other justices who delivered a judgment, said that the contract itself could be set aside where the facts supported a finding that there was an unconscionable transaction. His Honour said, and I quote:
The circumstances adversely affecting a party, which may induce a court of equity either to refuse its aid or to set a transaction aside, are of great variety and can hardly be satisfactorily classified. Among them are poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance or explanation is necessary. The common characteristic seems to be that they have the effect of placing one party at a serious disadvantage vis-a-vis the other. It does not appear to be essential in all cases that the party at a disadvantage should suffer loss or detriment by the bargain.
That decision was referred to by Murphy J of this court in Hoult & Hoult [2011] FamCA 1023 where his Honour looked at the Amadio judgment, and particularly that of Deane J, (1983) (Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447). Deane J said that the applicability of the doctrine is comprised of a number of elements. The weaker party must, at the time of entering into the transaction, suffer from a special disadvantage vis-à-vis the stronger party; the special disadvantage must seriously affect the weaker party’s capacity to judge or protect his or her own interests; the stronger party must know of this special disadvantage; that party must take advantage of the opportunity presented by the disadvantage; and taking of advantage must have been unconscientious.
Having regard to the wife being legally represented, and particularly being represented by her family lawyers, her handing of the documents, once executed to the solicitors for the husband and the potential outcome of the substantive proceedings indicating the chances of the wife being able to retain this home are very limited, I find that there is no unconscionability here and as a consequence, the order for sale must be made. Without it, the mortgagee will take its own action under the mortgage.
In respect of the substantive property proceedings, the equity in the family home at N is very modest. For the wife to take over that property would, on the figures I have seen, be improbable, despite the arguments about her contributions, which are set out in her affidavit.
The evidence is in the affidavit, and also the document that she produced as an annexure, number 2, to her affidavit, which is a copy of the husband’s own figures.
The husband’s position is that he can no longer satisfy the orders having regard to the current financial position. The wife disputes that. However, there are two important observations that must be made. First, the indications are that the husband’s income in 2011 was about $25,000. His prognostication is that it will probably be much the same in 2012. On any view, he cannot meet the obligations under the mortgage due to the third parties. Secondly, there is a default notice that has been served on both the husband and the wife in relation to the mortgage by the third parties. The husband’s evidence is that he cannot make the payments and therefore there is a change in his financial position. He explained that by reference to the global financial crisis.
I am satisfied that there has been a significant change in his circumstances since the orders were made in 2011.
In this particular case, the parties have had a sworn valuation undertaken. That arose out of orders of the court earlier in the year, when they were negotiating some form of compromise. It seems that the valuation has come in at $700,000. The wife seems to dispute that, but no doubt the market will tell us the truth.
The wife’s evidence, which is set out in her affidavit, is that she put a lot of money into this business. To the extent that that is so, an adjustment can be made out of whatever funds are left. If I do not take the steps that are now being contemplated, there is a real prospect that there will be nothing left for these parties to argue about.
The wife’s evidence was that in her view, the loan was “illegal”. I cannot find anything in the evidence that would suggest that there was anything illegal about it. It might be an argument about unconscionability, but that is not for me to decide on the evidence before me today.
I take into account her evidence that she is a social security recipient. It does not take much imagination to understand that her resources are extremely limited.
One of the arguments raised was who should take responsibility for the necessary sale preparation. The wife’s evidence was she was the one who had been responsible for those things in the past and she was better able to do it. However, the husband is the one in whom I have more confidence, having regard the approach each party has met to date.
The wife also sought injunctions to preclude the third parties from enforcing their rights under the mortgage. There is no evidence that would enable me to exercise the provisions of Part VIIIAA of the Family Law Act 1975 (Cth) (“the Act”). Accordingly, there is no basis for me to make an injunction against the third parties.
The wife’s application, which has been made orally, was also for orders against the husband being able to sell the home in N. All of the evidence points to the fact that it is necessary and proper to make the order in this particular case.
I have also read the affidavit of the wife very carefully, despite the fact that it is confusing and, at times, irrelevant. The wife covers herself, to some extent, by saying that she had to do it in a rush and she had been left high and dry by her lawyers.
I am not satisfied, however, that she has not covered all of the things that I need to hear to enable me to make a determination. I have looked at the annexures that she has produced, and taken them into account. Despite the fact in oral argument and in her affidavit material, the wife expresses concerns about some sort of determination being made against her because of her religious views or because of religious bias. I am not determining this on religious grounds, but on what the law requires me to do.
Section 114 of the Act is what governs the powers of the Court. Subparagraphs (e) and (f) of subsection 1 set out that the Court has the power to make such orders as it considers proper for the protection of property, including, if necessary, making orders for sole occupancy of a particular property.
Section 114(3) provides that the Court can use very extensive powers to ensure that necessary injunctions are carried out. The fundamental question is whether or not it is proper to make an order for sale. I think it is, having regard to the fact that it is necessary to protect the asset of the parties, because if I do not make the orders, then the third parties will be entitled to exercise their rights under the mortgage.
Accordingly, I propose to make an order for a sale. The only question then remaining is the period of time before that starts. The third party has indicated that they would be prepared to wait for two months. That is not the husband’s preferred position, but having regard to the impecuniosity of the wife, I think it is sensible in this case to give her two months to vacate the property, by which date the husband can have sole occupancy and sole responsibility for the necessary organisation of the sale.
ORDERS DELIVERED
I certify that the preceding twenty eight (28) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 30 July 2012.
Associate:
Date: 9 August 2012
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