WENTWORTH & HAMILTON

[2014] FamCA 813

FAMILY COURT OF AUSTRALIA

WENTWORTH & HAMILTON [2014] FamCA 813

FAMILY LAW – PROPERTY – De facto relationship – Injunctions – where injunction to preserve assets in the jurisdiction sought – where no contest that such injunction appropriate – where issue is as to the monetary scope of the injunction – consideration as to the financial history of the relationship in assessing appropriate order to be made

Family Law Act 1975 (Cth) s 114

APPLICANT: Mr Wentworth

RESPONDENT: Mr Hamilton

FILE NUMBER: PAC 4531 of 2012

DATE DELIVERED: 24 September 2014

PLACE DELIVERED: Parramatta

PLACE HEARD: Parramatta

JUDGMENT OF: Foster J

HEARING DATE: 8 September 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Gillies

SOLICITOR FOR THE APPLICANT: Matthews Folbigg Pty Ltd

COUNSEL FOR THE RESPONDENT: Ms Eldershaw

SOLICITOR FOR THE RESPONDENT: WMD Law

Orders

That pending further order:

1. That the respondent be restrained from using the proceeds of sale of Property D at Suburb B except on the following terms and conditions and as follows:

   (a)       in payment of the costs of sale,

   (b)       in discharge of any secured loan,

   (c)       in discharge of the mortgage registered over the Locality C property,

   (d)in payment of $60,000 to be held in a controlled monies interest bearing account in the names of the solicitors for the parties in trust for the parties pending further order,

   (e)       the balance to the respondent. 

2. That subsequent to completion of Property D sale and pending further order the respondent shall not encumber, sell or charge the Locality C property except on the following conditions:

   (a)that the Locality C property may be encumbered to a maximum of $385,000,

   (b)that funds borrowed against the Locality C property, if any, be applied to the acquisition of residential property within the Sydney metropolitan area,

   (c)that forthwith upon the proposed encumbrance of the Locality C property and not less than one month before any mortgage advance the respondent must notify the applicant and provide all reasonable particulars of the intended mortgage and purchase.

   (d)that the respondent be permitted to sell the Locality C property on the following conditions:

   (i)that the respondent provide to the applicant not less than 1 months written notice of his intention to sell together with the name of the selling agent, proposed method of sale and list price or reserve price as the case may be,

   (ii)the respondent do all acts and things to achieve the best price reasonably obtainable,

   (iii)the respondent promptly notify the applicant in writing of any contract of sale that has been executed including provision of a copy of the contract of sale and any special conditions,

   (iv)that the sale proceeds after payment of the costs of sale and discharge of any mortgage at the respondent’s election be either, paid into his solicitors controlled monies account in the name of the respondent and the respondent have no recourse to such account other than the purchase of or investment in residential real property within the Sydney metropolitan area,

   (v)that the respondent promptly notify the applicant of payment of any proceeds of sale into the controlled monies account and promptly notify the applicant as to the application of any proceeds of sale to residential real property providing all reasonable particulars of the intended purchase,

   (e)that the respondent be permitted to lease or licence the Locality C property or any part of it on the best terms reasonably available,

   (f)that upon the applicant receiving notice pursuant to these orders the applicant shall do all things necessary to remove the caveat registered by him against the Locality C property.

3. That the applicant forthwith do all acts and things and execute all documents to remove the caveat registered by him against the title to Property D.

4. That the costs of both parties of the present application be reserved.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Wentworth & Hamilton 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 PARRAMATTA

FILE NUMBER: PAC 4531  of 2012

Mr Wentworth

Applicant

And

Mr Hamilton

Respondent

REASONS FOR JUDGMENT

1. The present application is an application in a case filed by the applicant in the primary proceedings in which orders are sought as to de facto property settlement. The applicant describes the nature of the application as “an Interim application to secure in Australia proceeds of sale of the [Suburb B] property so as to ensure there are adequate fund (sic) in Australia to meet the claims of the Applicant”.

2. The respondent to the primary application, being the respondent to this interim application, contends that whilst certain of his assets will remain in Australia after he relocates for employment to Country N in the Middle East that injunctive relief should be limited to those assets and not extended to any other or additional sum as asserted by the applicant.

3. It is common ground that it is appropriate for injunctive orders to be made to preserve some of the respondent’s assets in the jurisdiction with the only issue for determination the nature and extent of the assets so preserved.

4. There is significant issue as between the parties in relation to the financial history of the relationship in particular insofar as the acquisition and disposition of certain assets are concerned.

5. There is an issue between the parties as to the commencement of their cohabitation, the applicant asserting cohabitation commenced in 1999 and the respondent asserting cohabitation commenced in March 2002. It is common ground that the parties separated in October 2011.

In the beginning

1. At the beginning of the parties’ relationship the applicant owned a property on the Central Coast. That property was sold in September 2001 and there is an issue as to the net proceeds of sale then available to the applicant. Otherwise the applicant had at that time accumulated superannuation entitlements of about $73,000, savings from an inheritance of about $28,000 and monies from a compensation verdict received in February 2002 of about $65,000.

2. The respondent at the beginning of the parties’ relationship owned a home unit property at E Street, Suburb H with a mortgage outstanding of $54,000. That property had been acquired by him some years earlier. Over the period of the relationship the respondent borrowed additional funds taking the mortgage to about $540,000 against the security of the property to fund various transactions referred to later in these reasons. The respondent also had personalty, shares, superannuation and a car; he says having a total value of about $270,000 at this time.

3. It is common ground that during the period of cohabitation the applicant held various salaried positions earning a modest PAYE income.

4. The respondent was at all times employed as a healthcare professional and it is not in issue that his income far exceeded that of the applicant.

M Street, Suburb J (Building K)

1. In June 2002 the parties purchased together a home unit property in Building K. The purchase price was $785,258 plus purchase costs. The property was purchased as tenants in common as to one third to the applicant and 2/3 to the respondent.

2. The purchase price comprised a mortgage advance of $523,000 obtained by the respondent for his two thirds share of the overall purchase price. The applicant contends that he contributed his share from cash funds available to him at that time as referred to above. The respondent contends that the applicant’s one third share totalling about $261,000 was funded as to $157,000 in cash and the balance by way of a mortgage advance of about $104,000.

3. Exhibits C, E and F clearly evidence the mortgage advances for the purchase of this property as asserted by the respondent.

4. The applicant asserts that subsequent to purchase of Building K property he made some capital repayments in relation to “the mortgage” secured over the property. He adduces no evidence to support this contention, notwithstanding that historical mortgage documents would, it is to be inferred, have been available to him.

5. The respondent asserts that subsequent to purchase of the Building K property he expended significant funds in the renovation of the property.

6. The parties sold Building K property in May 2005 for $950,000. The net proceeds of sale were about $930,000. The applicant provides a confusing explanation as to the disposition of the sale proceeds, asserting that $273,000 was applied to the purchase of a home unit at Property D, Suburb B and the sum of $83,866 being paid to each of the parties.

7. The respondent asserts that the proceeds of sale were available as to one third (about $310,000) less any balance outstanding on his mortgage to the applicant and as to two thirds (about $620,000) less any balance outstanding on his mortgage to the respondent.

Property D, Suburb B

1. At the time of sale of the Building K property the parties purchased another home unit property at Property D, Suburb B. The property was purchased for $810,000 plus purchase costs. The property was purchased as tenants in common as to one third to the applicant and two thirds to the respondent.

2. The applicant asserts that the purchase price comprised $272,000 from the proceeds of sale of the Building K property and a mortgage advance of about $497,000, totalling $769,000. He is silent as to the balance of the purchase funds.

3. The respondent asserts that the applicant’s contribution to the purchase of Property D of about $272,000 comprised a mortgage advance of $167,000 with the balance in cash available to the applicant from his share of the proceeds of sale of the Suburb B property. The respondent asserts that his contribution of about $573,000 was funded by way of a mortgage advance of $333,000 and the balance in cash available to him from the sale of the Building K property.

4. The applicant contends that mortgage payments in relation to the Suburb B property were paid as to one third by him and two thirds by the respondent.

5. The applicant makes no reference to the circumstances where there were two separate mortgage advances. The circumstances relating to the purchase as contended by the respondent are evidenced by the mortgage statements in evidence as Exhibit D that reveal the mortgage advances of $167,000 to the applicant and $333,000 to the respondent.

6. The respondent contends that after purchase he expended considerable funds on the renovation and improvement of the property without contribution from the applicant.

7. In April 2010 the respondent sold his Suburb H property for $727,000 and after selling costs and discharge of mortgage the net proceeds were about $222,000. The respondent paid out his then $150,000 mortgage on Property D. Otherwise the balance available to him was about $70,000.

The Locality C rural property

1. In 2003 the parties purchased a rural property at Locality C. The property was purchased as tenants in common as to 99 per cent to the respondent and 1 per cent to the applicant. The purchase price all up was approximately $300,000. The purchase price was wholly funded by way of a collateral mortgage advance secured by the respondent against his Suburb H property. He has met all mortgage payments in relation to the property since purchase.

2. Subsequent to purchase the respondent asserts that he spent about $400,000 on improvements to the property together with a significant sum in relation to legal expenses relating to neighbourhood property disputes.

3. The applicant contends that he has made a most modest non-financial contribution to the property.

4. On 9 June 2011 the respondent paid $40,000 to the applicant and in consideration of that payment the applicant transferred his interest in this property to the respondent.

5. This property has a presently agreed value of $500,000 and is subject to an outstanding mortgage of $385,573.

The Locality A property

1. In August 2011, shortly before separation, the parties purchased a small rural property at Locality A for $410,000. The property was purchased as tenants in common as to two thirds to the applicant and one third to the respondent.

2. The respondent asserts that he paid the whole of the purchase price together with stamp duty and legal fees on purchase totalling another $16,000.

3. The applicant provides no evidence as to how the purchase was funded.

4. Subsequent to purchase the respondent asserts that he at his expense furnished the home on the property.

5. It was agreed by the applicant and respondent that notwithstanding the respondent having paid for the property without contribution by the applicant that the applicant would retain the whole of the property in consideration of a payment of one third of the value being $137,000 to the respondent.

6. A further consideration for this arrangement was the applicant transferring to the respondent his interest in Property D as referred to below.

7. To fund the payment to the respondent the applicant borrowed funds by way of mortgage security over the property and indeed borrowed further funds for his own purposes including improvements to the property.

8. This property was then transferred to the applicant and the applicant transferred his interest Property D to the respondent.

9. It is agreed that Locality A has a present value of $480,000 and is subject to an outstanding mortgage of $200,000 borrowed by the applicant to pay the respondent with additional funds borrowed by the applicant for his own purposes.

Discussions at separation

1. At the time of separation the parties entered into various negotiations in an endeavour to resolve property issues between them.

2. The respondent asserts an agreement that he would pay the applicant funds totalling $24,108 and transfer to the applicant his interest in the Locality A property referred to above in consideration of the applicant paying to the respondent a sum equivalent to one third of the purchase price.

3. This notwithstanding that the respondent had paid the whole of the purchase price together with stamp duty on purchase and legal fees totalling in all an additional $16,000.

4. In addition the respondent would pay to the applicant $64,558 and refinance the applicant’s loan in relation to his one third share of Property D that had an outstanding balance at that time of $84,993.

5. In consideration of the arrangement referred to in the previous paragraph the respondent asserts that the applicant transferred to the respondent the applicant’s interest in Property D.

6. These transactions were all implemented by the parties following a valuation of $1.2 million being obtained at the time of Property D, thus valuing the applicant’s interest in Property D at $400,000 less his mortgage of $84,993 being $315,007.

7. The applicant it appears received two thirds of Locality A ($273,000) plus $64,558 plus $24,108, totalling $361,666.

Subsequent to separation

1. Subsequent to the parties separating the respondent has continued to pay all mortgage payments and outgoings in relation to Property D and the Locality C property with the applicant meeting similar obligations in relation to the Locality A property.

2. The respondent has been offered an employment opportunity to work as a healthcare professional in Country N and proposes to relocate his residence to Country N.

3. To facilitate the respondent living and working in Country N he is required either to own property or hold a certain amount of funds in local bank accounts. The respondent proposes to purchase a property in Country N and also a property in Country G in the Middle East where he will work from time to time. Provided that the respondent has a “property investor residency Visa” then, even if his employment in Country N is terminated, he will be able to remain in the country so as to pursue his career.

4. The respondent requires he says at least about $730,000 to meet his relocation and setup expenses in Country N.

5. The respondent has now exchanged contracts for the sale of Property D at a sale price of $1,680,000. The respondent after discharge of mortgage and sale costs totalling about $420,000 expects to receive net proceeds of sale of $1,260,000. The respondent contends that he will require the whole of the net proceeds of sale of Property D to meet this commitment.

6. Contracts for sale of Property D were exchanged on 12 August 2014 and the 10 per cent deposit of $168,800 was released to the respondent with settlement to be effected by 12 November 2014. On 13 August 2014 the respondent having obtained an equity mortgage facility from the National Australia Bank drew $700,000 of those funds and deposited those funds in a Citibank high interest account. With the balance of deposit and other funds held by him the respondent has total funds of about $820,000 available to him.

7. On settlement of the sale of Property D the respondent estimates that in addition to the $700,000 drawn down by him, he will receive the balance of net proceeds of sale of about $543,000.

8. He says that he requires the whole of these funds to facilitate his relocation to Country N.

9. The respondent says that he will in the foreseeable future seek to sell his Locality C rural property, although the property may take 12 months to sell.

10. The respondent proffers to the court his undertaking that he would return funds to the jurisdiction if proceedings between himself and the applicant are resolved and a payment to the applicant is required. It is difficult to see how that could be done promptly in the event that the respondent disposes of the bulk of those funds in the purchase of property overseas.

11. In summary the applicant seeks the following orders:

    a)that the respondent be restrained from dealing with the proceeds of sale of Property D except in accordance with these orders,

    b)that net proceeds of sale of Property D be applied in discharge of the mortgage on the Locality C property,

    c)that the sum of $200,000 be held in a controlled monies account in the name of the applicant and respondent pending further order of the court,

    d)that the respondent be restrained from otherwise encumbering, selling assigning charging or any other manner or way dealing with the Locality C property pending further order of the court,

    e)that the respondent be restrained from making any application in respect of transferring his current superannuation entitlements with HESTA out of the jurisdiction of Australia or applying in any manner to access those funds on the basis that he is no longer in the jurisdiction.

12. The respondent in his response to the applicant’s application in a case seeks the following orders:

    a)that the sale proceeds of [Property D] be applied as follows:

    i)in payment of the costs of sale,

    ii)in discharge of any secured loan,

    iii)in discharge of the mortgage registered over the [Locality C] property,

    iv)$60,000 to be held in his solicitor’s controlled monies account in the names of the applicant and respondent pending further order of the court and,

    v)the balance to the respondent.

    b)That pending further order the respondent shall not encumber or charge the [Locality C] property except on the following conditions:

    i)that the [Locality C] property may be encumbered to a maximum of $385,000,

    i)that funds borrowed against the [Locality C] property be applied to the acquisition of residential property within the Sydney metropolitan area,

    ii)that forthwith upon the proposed encumbrance of the [Locality C] property the respondent must notify the applicant and provide all reasonable particulars of the intended purchase a property.

    c)that the respondent be permitted to sell the [Locality C] property on the following conditions:

    i)that the respondent provide to the applicant written notice of his intention to sell together with the name of the selling agent, proposed method of sale and list price or reserve price as the case may be,

    ii)the respondent do all acts and things to achieve the best price reasonably obtainable,

    iii)the respondent promptly notify the applicant in writing of any contract of sale that has been executed including provision of a copy of the contract of sale and any special conditions,

    iv)that the sale proceeds after discharge of the costs of sale and any mortgage and at the respondent’s election be either paid into his solicitor’s controlled monies account in the name of the respondent and the respondent have no recourse to such account other than to the purchase of or investment in residential real property within the Sydney metropolitan area,

    v)that the respondent promptly notify the applicant of payment of any proceeds of sale into the controlled monies account and promptly notify the applicant as to the application of any proceeds of sale to residential real property providing all reasonable particulars of the intended purchase,

    vi)that the respondent be permitted to lease or licence the [Locality C] property or any part of it,

    vii)that upon the applicant receiving notice pursuant to these orders the applicant shall do all things necessary to remove the caveat registered by him against the [Locality C] property,

    d)that the applicant forthwith do all acts and things and execute all documents to remove the caveat registered by him against the title to [Property D].

The Injunction

1. Section 114 of the Act facilitates the ordering of injunctive relief in the circumstances set out therein including an injunction in relation to property.

2. Both parties seek injunctions with the only issue the extent of the property to be preserved in the jurisdiction to meet the prospective claim of the applicant.

3. The applicant is possessed of two thirds of the equity of the Locality A property to which he made no contribution. He has acquired the other third on good terms from the respondent.

4. The applicant has received a payment in consideration of his 1 per cent interest in the Locality C property and on his own evidence his contributions to that property are very modest when compared to that asserted by the respondent.

5. The applicant has also received other payments from the respondent referred to above.

6. The major issues are firstly the transactions resulting in Property D firstly being acquired by the parties and then transferred to the respondent by the applicant and secondly the weight to be afforded to the applicant’s non-financial contributions to the relationship.

7. It was conceded by counsel for the applicant that the non-financial contribution issue was a modest one at best.

8. Having regard to the nature of the arrangement between the parties as to the acquisition of the various properties and the nature of the de facto relationship it will probably be appropriate to determine the matter on an asset by asset basis. The approach adopted however will be determined at trial.

9. The respondent concedes that he will discharge the mortgage on the Locality C property, thus leaving about $500,000 in equity in the jurisdiction plus a further $60,000. The applicant has already received a $40,000 payment in regard to this property where he has made only modest non-financial contributions.

10. The applicant already has a two third interest in the Locality A property to which he made no contribution. That interest is about $320,000 on present estimates of valuation.

11. Thus there will remain in the jurisdiction about $880,000 in property to meet any claim by the applicant. In addition the respondent has significant superannuation that can be the subject of a splitting order if sought. It is common ground that the respondent, now aged 45, is unable to access his superannuation until he reaches his preservation age.

12. Otherwise the other assets of the parties include the applicant’s car, chattels and superannuation and the respondent’s small share portfolio, a judgment debt owed to him and personalty.

13. In the circumstances as set out above it is proper to require the respondent to leave the Locality C property in the jurisdiction unencumbered, that there be a further $60,000 preserved and that he be restrained from dealing with the Locality C property save on terms as sought by him.

14. Orders will be made accordingly.

15. Costs of both parties of the present application are reserved.

I certify that the preceding seventy-one (71) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 24 September 2014.

Associate: 

Date:  24 September 2014