WARRICK & MIA
[2020] FamCA 365
•14 May 2020
FAMILY COURT OF AUSTRALIA
| WARRICK & MIA | [2020] FamCA 365 |
| FAMILY LAW – INJUNCTION – Application for removal of caveat – Where application dismissed on terms as to sale or refinance. FAMILY LAW – SECURITY FOR COSTS – Application by the wife that the deceased husband’s estate provide security for costs – Where consideration of applicable principles – Where application dismissed. FAMILY LAW – INTERIM PROPERTY – Application by the husband’s estate for sale of property – Orders made that should the property sell a sum representing 40 per cent of the net proceeds of sale be held in an interest bearing controlled money account in trust for both parties pending further orders. |
| Family Law Act 1975 (Cth) ss 79, 114 Family Law Rules 2004 (Cth) r 19.05 |
| Searle Holdings Pty Ltd & Pencious and Anor (Security for Costs) [2014] FamCAFC 58 Warrick & Mia [2018] FamCA 426 |
| APPLICANT: | Mr Y Warrick as Executor of the Estate of the Late Mr Warrick |
| RESPONDENT: | Ms Mia |
| FILE NUMBER: | PAC | 845 | of | 2017 |
| DATE DELIVERED: | 14 May 2020 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Foster J |
| HEARING DATE: | 16 April 2020 |
REPRESENTATION
| SOLICITOR FOR THE APPLICANT: | Mr Fong of Just In Case Legal |
| COUNSEL FOR THE RESPONDENT: | Mr Todd |
| SOLICITOR FOR THE RESPONDENT: | Du And Associates |
Orders
That the respondent wife’s application for removal of caveat be dismissed.
That the respondent wife’s application for security for costs be dismissed.
That the wife shall be and is hereby permitted to sell the property at D Street, Suburb M for the best price reasonably obtainable provided that the sale price shall be not less than $1,500,000 without the consent in writing of the applicant and that upon sale the gross proceeds of sale be paid as follows:
(a) In payment of agent’s commission on sale and selling legal costs;
(b) In payment of any contract adjustments;
(c)In payment of 40 per cent of the balance then remaining to an interest bearing controlled money account in the joint names of the parties’ solicitors in trust for the parties with the sum of $100,000 to be paid out therefrom to the applicant or as he may direct in writing and the balance to remain pending further order; and
(d) As to the balance then remaining to the wife or as she may direct,
provided always that the applicant shall upon settlement of the sale provide on settlement a duly executed withdrawal of caveat so as to facilitate the sale completing.
That the wife, should she otherwise elect to do so, is hereby permitted to mortgage the said property for a total sum not exceeding $500,000 provided that from any sum borrowed she pay to the applicant, or as he may direct in writing, the sum of $100,000 by way of partial property adjustment with the remaining funds borrowed to be disbursed as the wife may direct provided always that the applicant as caveator shall consent to the registration of such mortgage in priority to his caveat.
That costs be 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 Warrick & Mia 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 845 of 2017
| Mr Y Warrick as Executor of the Estate of the Late Mr Warrick |
Applicant
And
| Ms Mia |
Respondent
REASONS FOR JUDGMENT
In February 2017 the applicant husband then aged 69 commenced proceedings seeking a declaration that purported “financial agreements” signed by the parties in 2007, the time of marriage, and 2014, the time of alleged separation, were not binding. He, otherwise, sought consequential orders for property adjustment under s 79 of the Family Law Act 1975 (Cth) (“the Act”).
Under the terms of the 2014 “agreement” the wife was to pay to the husband $150,000 on terms and the husband was to transfer his interest in the home to the wife. The wife paid to the husband $60,000 and a later payment in November 2016 of $24,000. It is common ground that the 2014 “agreement” is not binding on the parties.
The husband in April 2016 lodged a caveat over the title to the property at D Street, Suburb M. The wife commenced proceedings in the Supreme Court of NSW seeking to have the caveat withdrawn. On 18 May 2017 the Court ordered the caveat be extended until further order and transferred the proceedings to this Court.
In her Response filed in this Court in May 2017, the wife sought orders dismissing the husband’s application and seeking a declaration that the financial agreements be binding on the parties.
On 12 June 2018 orders were made by Loughnan J that the financial agreement entered into by the parties in 2007 be set aside.
Subsequently, procedural directions were made by a Registrar on 13 August 2018.
Unfortunately, the husband passed away in late 2018.
On 28 June 2019 the Court made the following orders and directions:
(1)The proceedings are adjourned for further judicial case management to 9.30am on Friday, 4 October 2019.
(2)The parties are granted leave to issue such subpoena as they consider relevant to the issues before the Court with such subpoena to be returnable by no later than 4 October 2019.
THE COURT NOTES THAT
(3)The initial Executor to whom probate was granted in respect to the late Applicant’s Will renounced and that a subsequent grant of probate to the substitute Executor is anticipated in the next two months.
(4)Upon there being a formal grant of probate in relation to the deceased estate, it is the Court’s expectation that the parties will provide the Court with a consent order substituting the Executor for the deceased husband in these proceedings.
(5)The relationship of the parties in this matter was short and that ultimately it appears that an assessment of contributions will depend upon discrete financial contributions by the parties at the commencement of and during the relationship.
(6)Ultimately the Court’s determination will depend upon the evidence before the Court supported by documents that are readily available to both parties.
(7)It is the Court’s expectation that before any trial directions are made in this matter, the parties will engage in meaningful mediation in an effort to resolve the matter and that trial directions will not be made until the Court is informed of the mediation undertaken and the identity of the mediator.
(8)At present there is an outstanding application by the Respondent for security of costs that remains to be determined if pressed.
After some issues the husband’s son was later appointed as legal personal representative of the deceased husband and substituted for the deceased in the outstanding property matter.
The present matters for determination arise from the wife’s Response to the husband’s Initiating Application. Relevantly, the wife seeks orders for:
a)Security for costs;
b)That the husband’s caveat be withdrawn; and
c)That she be at liberty to borrow funds of up to $1,000,000 on the security of the subject property.
Section 79(8) of the Act relevantly provides:
(8)Where, before property settlement proceedings are completed, a party to the marriage dies:
(a)the proceedings may be continued by or against, as the case may be, the legal personal representative of the deceased party and the applicable Rules of Court may make provision in relation to the substitution of the legal personal representative as a party to the proceedings;
(b)if the court is of the opinion:
(i)that it would have made an order with respect to property if the deceased party had not died; and
(ii)that it is still appropriate to make an order with respect to property;
the court may make such order as it considers appropriate with respect to:
(iii)any of the property of the parties to the marriage or either of them; or
(iv)any of the vested bankruptcy property in relation to a bankrupt party to the marriage; and
(c)an order made by the court pursuant to paragraph (b) may be enforced on behalf of, or against, as the case may be, the estate of the deceased party.
The wife’s evidence
The wife relied on the following:
a)Her Amended Response filed 12 December 2019;
b)Her Financial Statement filed 15 November 2019;
c)Her Affidavit filed 3 May 2019 (before the substitution order);
d)Her Affidavit filed 15 April 2020; and
e)Affidavit of Dianna Du, Solicitor, filed 3 October 2019.
The home at Suburb M has an asserted value of $1.55 million and is unencumbered. The wife, otherwise, asserts that she owns a property in City B with a value of about $1.0 million.
The wife makes complaint that the estate of the deceased husband may well be insolvent. It is common ground that the estate owes significant legal fees to the solicitor arising from its proper administration and the current proceedings. Of course, the estate has protective assets in the form of any future s 79 orders that may be made in its favour.
Pursuant to the “agreement” of 2014 the wife acknowledges that she has paid the husband a total of only $90,000 with a balance outstanding to the husband under the “agreement” of $60,000.
The wife asserts that the value of the home at Suburb M was in 2014 $650,000 with an outstanding mortgage of $412,000 leaving an equity of about $238,000. She asserts that she contributed $130,000 at the time of the purchase with the husband thereafter paying some $139,000 in mortgage payments.
The wife asserts that she after the 2014 agreement repaid the mortgage. Reasons for Judgment of Loughnan J (Warrick & Mia [2018] FamCA 426) reveal that the funds were provided by her mother in the sum of about $417,000.
The wife asserts that the husband represented to her in 2007 that he had some $650,000 in superannuation. She further complains that the husband retained some $100,000 in a lottery win to which she lays claim.
The parties’ relationship was from 2007 to perhaps 2014. There were no children of the relationship.
The wife seeks to be able to borrow $500,000 against the security of the property or sell the property leaving some $400,000 in a controlled money account pending determination of the present proceedings.
The Estate’s Evidence
The Estate relied on:
a)the Affidavit of Jeng Lek Fong, Solicitor, filed 9 May 2019 (before the substitution order); and
b)The Affidavit of Jeng Lek Fong, Solicitor, filed 14 April 2020.
The Estate now seeks orders (Third Further Amended Initiating Application filed 31 October 2019) for sale of the home and that the net proceeds be paid:
a)as to repayment of $90,000 to the wife;
b)as to 60 per cent of the balance then remaining to the wife; and
c)as to the balance of 40 percent to the Estate.
Otherwise, the Estate seeks costs on an indemnity basis against the wife of the Supreme Court proceedings and costs of the s 79 proceedings.
The Estate sought the wife’s consent to lodging a caveat to protect its interest. That consent was not forthcoming. The wife sought to lapse the caveat. The Estate was required to seek relief by way of Notice of Motion seeking that the caveat be extended and that the proceedings be transferred to this Court. The caveat was extended by the Supreme Court as referred to above after the wife consented to the order after hearing.
There is no doubt some contention as to the husband’s financial contributions to the property notwithstanding the wife’s concession referred to above.
Discussion
There are clearly significant issues as to the parties’ respective contributions to be tried. The property now has a value of over $1.5 million and is unencumbered.
There are assets, it appears, overseas to which the husband does not contend any contribution. The existence or otherwise of his superannuation needs to be established. The parties are at odds in relation to their respective interest in an asserted lottery win.
Security for costs
In Searle Holdings Pty Ltd & Pencious and Anor (Security for Costs) [2014] FamCAFC 58 the Full Court said:
26.The power to make an order for security for costs is found in s 117 of the Family Law Act 1975 (Cth) (“the Act”). As was explained in Gerber & Bradley (formerly Gerber) and Ors (Security for Costs) [2011] FamCAFC 206 in addition to the matters referred to in the section, it is well settled that pursuant to s 117(2A)(g) the following matters should be considered:
• the prospect of success of the litigation…;
• whether the claim for security is made bona fide;
• whether or not an order for security would stifle the litigation;
•whether or not the litigation may involve a matter of public importance;
•whether or not there has been a delay in bringing the application for security; and
•whether there would be difficulty in enforcing an order for costs.
(see also Palma & Caleffi and Anor (Security for Costs) [2011] FamCAFC 174)
27.These factors largely reflect the considerations referred to in r 19.05(2) Family Law Rules 2004 (Cth).
Rule 19.05(2) of the Family Law Rules 2004 (Cth) (“the Rules”) provides:
(2)In deciding whether to make an order, the court may consider any of the following matters:
(a)the applicant's financial means;
(b)the prospects of success or merits of the application;
(c)the genuineness of the application;
(d)whether the applicant's lack of financial means was caused by the respondent's conduct;
(e)whether an order for security for costs would be oppressive or would stifle the case;
(f)whether the case involves a matter of public importance;
(g)whether a party has an order, in the same or another case (including a case in another court), against the other party for costs that remains unpaid;
(h)whether the applicant ordinarily resides outside Australia;
(i)the likely costs of the case;
(j)whether the applicant is a corporation;
(k)whether a party is receiving legal aid.
The financial means of the Estate appear to be minimal and subject to any order made in the current primary application under s 79 of the Act.
The applicant has significant prospects of an order for property adjustment. His payment agreed to by the wife in 2015 represented more than half the then available equity in the home. Of the overall value, it represented about 23 per cent of the equity. That percentage of the present equity equates to a sum of about $356,000. There are arguably some adjustments to that sum to be canvassed including, of course, revisiting the issues of contributions to the property (and other property entitlements of the parties), the lottery win and the payments to the husband in 2014.
The Estate’s claim is genuine in that it asserts that the husband did not receive his proper entitlement during his lifetime and such should be for the benefit of his estate.
The respondent failed to pay her late husband what she asserts he was entitled to thus leading to the present history of costly litigation.
By reason of the Estate’s circumstances, any order for security for costs of the quantum sought by the wife would stifle the litigation. The wife’s application was made promptly but delayed without fault on her part by reason of the original executor named in the will renouncing probate.
The primary rule as to costs is that each party pays their own. Of course, there are matters that may displace that general rule. The wife seeks an order (Amended Response Filed 12 December 2019) that she pay to the husband’s estate the sum of $365,000 (the calculation of which is not known) with various deductions totalling between $219,000 and $169,000 be made. On that basis the net sum she asserts that should be paid will not be below $146,000, more than sufficient to meet any cost order against the Estate.
In all of the circumstances there will be no order for security for costs.
The caveat and sale or mortgage
The wife has evidenced an intention to encumber or sell the subject property. She sought to lapse the Estate’s caveat notwithstanding being invited to consent to its continuation pending the outcome of these proceedings.
It is appropriate that the caveat remain on title to secure the prospective interest of the Estate.
Section 114 of the Act permits the Court to provide injunctive relief as it considers proper with respect to the matter to which the proceedings relate.
The wife should be permitted to sell the property should she wish but the existence of the caveat will ensure that part of the proceeds as referred to below will remain to prospectively meet the Estate’s claim.
The caveat can be discharged on settlement of the sale of the property on proper arrangements thus ensuring that the Estate’s interest is protected. It is appropriate that having regard to the orders sought by both parties that should the property sell then a sum representing 40 per cent of the net proceeds of sale be held in an interest bearing controlled money account in trust for both parties pending further orders. From such sum $100,000 should be paid to the applicant.
Otherwise, the financial circumstances of the wife do not indicate any ability on her part to secure a mortgage borrowing of $500,000. Yet if she is able to do so, and considering the final orders as to property sought by her referred to above, it is appropriate that from any sum borrowed the sum of $100,000 be paid to the Estate by way of interim property adjustment.
Orders will be made accordingly.
I certify that the preceding forty three (43) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 14 May 2020.
Associate:
Date: 14 May 2020
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