XAVIER & LOVETT

[2014] FamCA 322

FAMILY COURT OF AUSTRALIA

XAVIER & LOVETT [2014] FamCA 322

FAMILY LAW – ORDERS – whether the husband’s Application in a Case seeking a stay of orders for part property settlement should be granted – whether the orders should be varied – extension of time for payment ordered.

FAMILY LAW – COSTS – whether a costs order should be made – whether party-party costs are appropriate.

Family Law Act 1975 (Cth) s 177.

APPLICANT: Mr I Xavier

RESPONDENT: Ms Lovett

FILE NUMBER: MLC 968 of 2013

DATE DELIVERED: 6 May 2014

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Thornton J

HEARING DATE: 6 May 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr P Davis

SOLICITOR FOR THE APPLICANT: Sebastian Rubera & Assoc

COUNSEL FOR THE RESPONDENT: Ms M Vohra

SOLICITOR FOR THE RESPONDENT: Mills Oakley Lawyers

Orders

1. The Application in a Case filed by the husband on 14 March 2014 be dismissed.

2. BY CONSENT, paragraph 1 of the orders made by Justice Thornton on 10 February 2014 be varied as to the timing of the payment to provide that the amount of $100,000 be paid by the husband to the wife by 20 June 2014 by way of interim property settlement (“the payment”).

3. In the event that the payment is not made, in furtherance of compliance with and satisfaction of paragraph 2 herein, the husband do all acts and things and execute all such documents to cause the real property situate at G Street, Suburb H (“G Street”) to be forthwith sold by auction (“the sale of G Street”), on such terms and conditions (including as to the reserve price) as are agreed between the parties and with a selling agent to be agreed between the parties and failing agreement as to such terms and conditions and to the choice of selling agent, the selling agent be appointed by the President of the Real Estate Institute of Victoria, the costs of which shall be a sale cost pursuant to paragraph 4(a) hereof, and the said selling agent then recommend the terms and conditions of the sale which shall be binding upon the parties.

4. Upon the sale of the G Street property, the proceeds of the sale of G Street be applied as follows:

   (a)       Firstly, to pay the cost, commission and expense of the sale;

   (b)       Secondly, to discharge the mortgage secured on the title of G Street;

   (c)

   Thirdly, to pay the wife the sum of $100,000 pursuant to paragraph 1 of the orders made by Justice Thornton on 10 February 2014 and

   
   

   6 May 2014 together with interest payable to the wife from 17 March 2014 as calculated under the Family Law Rules 2004 from that date to the date of receipt of payment by the wife;

   (d)The balance then remaining be paid in to the trust account of Mills Oakley Lawyers in an interest bearing deposit account held in the names of the parties and not be released except by further court order or the prior written consent of both the husband and the wife via their respective lawyers, save that Mills Oakley Lawyers be authorised to release from the said investment funds to the Deputy Commissioner of Taxation upon receipt of a notice of assessment verifying such liability, such amount as is necessary to pay any capital gains tax assessed to be payable by reason of the sale of G Street.

5. The husband pay the party-party costs of and incidental to the wife’s Response to the Application in a Case to be agreed by the parties and failing agreement to be taxed.

6. Otherwise, any extant financial issues be referred to the docketed Registrar for case management.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Xavier & Lovett 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 968  of 2013

Mr I Xavier

Applicant

And

Ms Lovett

Respondent

EX TEMPORE REASONS FOR JUDGMENT

1. The parties are engaged in substantive property settlement proceedings initiated by the wife under Part VIII of the Family Law Act 1975 (“the Act”).

2. The husband was ordered to pay the wife the sum of $100,000 by way of part property settlement on 10 February 2014 by no later than 17 March 2014.  The husband has not complied with that order. 

3. On 14 March 2014, the husband filed an Application in a Case seeking, amongst other things, that the orders made on 10 February 2014 be stayed, and that the property in which the wife resides at J Street, Suburb K, be offered for sale and the proceeds be applied:

   (a)Firstly, to pay all costs, commissions and expenses of the sale;

   (b)Secondly, to discharge the mortgage and any other encumbrance affecting the J Street property;

   (c)Thirdly, the sum of $100,000 to be paid to the wife in satisfaction of order 1 of the orders made 10 February 2014; and

   (d)The balance be paid to the wife by way of partial property settlement.

4. The wife filed a Response to the Application in a Case on 22 April 2014 seeking that, inter alia, the husband’s application be dismissed and that in compliance with and satisfaction of the order for payment of $100,000 by the husband to the wife, the husband do all such acts and things to sell by auction the property at G Street, Suburb H (“the G Street property”) and that the proceeds be applied:

   (a)Firstly to pay the cost, commission and expenses of the sale;

   (b)Secondly to discharge the mortgage;

   (c)Thirdly to pay the wife the sum of $100,000, together with interest payable to the wife from 17 March 2014; and

   (d)The balance then remaining be put in an interest bearing trust account of Mills Oakley Lawyers.

5. This application was discussed by the parties this morning and an agreement was reached for a variation on the time for payment under the orders of

   
   

   10 February 2014.  Counsel for the husband proposed that the variation to the order for payment be made by consent, and that if the payment is not made, the question of non-compliance be dealt with in another application which might be considered in the judicial duty list.  In the alternative, counsel for the husband sought that the J Street property be sold and that the wife and child of the marriage move to the investment property, being the G Street property.  I note that the child of the marriage attends school in Suburb F, some 45 minutes by car from the G Street property. 

6. Counsel for the wife submitted that there is no basis for postponing the issue of compliance and incurring additional costs in a further hearing in circumstances where the husband has sought an indulgence from the Court, which has been agreed by the wife, for further time to comply with the order made on 10 February 2014.  The wife has not agreed to the indulgence of the variation without the security by way of sale of the G Street property, which she sought in her response to the husband’s Application in a Case.  The husband has had notice of this. 

7. After hearing submissions from both counsel about making an order for security in the event that the husband fails to comply with the varied order to be made by agreement, I have concluded that it is appropriate to make an order in the terms sought by the wife for the following reasons. 

8. The husband is in breach of the order made on 10 February 2014 and owes the wife $100,000 pursuant to those orders.  The husband has been put on notice by the wife that she seeks the sale of the G Street property in her Response to the Application in a Case filed 22 April 2014. 

9. It is the husband’s case that the parties own three pieces of real property:

   1)     the former matrimonial home at E Street, Suburb F, which is in the joint names of the parties and estimated to be worth $800,000.  It is unencumbered by way of any mortgage and the husband lives in that property.

   2)     J Street, Suburb K, where the wife resides with the child of the marriage, when the child is in the care of the wife.  The husband estimates that this property is worth $700,000 with a $530,825 mortgage secured against it with Suncorp. 

   3)     G Street, Suburb H, which is registered in the husband’s sole name. He estimates it is worth $550,000.  It is subject to a mortgage with Suncorp of $270,000 on the husband’s deposition.  The husband deposed this is made up of two loans; one for $165,000 and the other for $105,000.  The husband deposed that the $105,000 loan is used to pay $2,200 per month for the J Street mortgage and that these loans are interest only loans.

10. It is the husband’s case that the parties have between them $2.05 million in real property with liabilities of $800,000, leaving a net of $1.25 million.  From this, the wife is owed $100,000.  To pay this amount to the wife, the husband proposes that the J Street property, where she lives, be sold.  The husband deposed that the parties agree that this property was purchased pursuant to an agreement between them that the husband would purchase it for the wife.

11. It is the wife’s case that the husband has entitlements and beneficial interests in significantly more assets than these three properties and she successfully obtained the litigation funding order for investigation of the parties’ property interests by way of an interim part property settlement.

12. The husband deposed that the G Street property will attract capital gains tax if sold and, therefore, J Street ought to be sold instead.  The wife is prepared to seek advice as to how to minimise the capital gains tax to be paid on the sale of G Street but this is a matter for the parties and the Court does not make orders based on taxation minimisation. 

13. The husband agrees that if the wife and the child were to live in Suburb H, that the trip to the child’s school in Suburb F is some 45 minutes by car.  This would entail three hours travel per day by the wife and one and a half hours per day by the child of the marriage. 

14. It is not in issue that the husband has greater income and financial resources than the wife. 

15. As submitted by counsel for the wife, beyond attempting to oppress the wife and to have her, in effect, pay herself for her part property order, there can be no reason to require the wife to move to Suburb H from J Street.  This arrangement would allow the husband to retain his investment property and the former matrimonial home in which he resides and leave for the wife no real property that she has chosen, wants to live in and may seek to retain.  Counsel for the wife submitted that there is ample equity to pay the wife the $100,000 she is owed without requiring her to leave a property she and her husband agree was purchased for her residence.  The capital gains tax can be managed between the parties and, in any event, is paid from the proceeds of sale and is not payable until at least May 2015 if the property is sold in this financial year. 

16. Counsel for the husband submitted that there is an untested issue between the parties as to the arrangement for the purchase of the J Street property where the wife and child of the marriage reside.  That may be so, but the husband has deposed that there was an agreement for the purchase of the J Street property for the benefit of the wife and he is residing in the former matrimonial home which is in joint names, unencumbered and valued at $800,000 on his case.  If the husband proposes to comply with the order for payment of the $100,000 to the wife, as he has indicated, there will be no requirement to sell the G Street property.  There is no justification for delaying the wife the fruits of her order and incurring further costs in a second hearing.

17. In all the circumstances, I am satisfied that it is appropriate to make the orders that the Application in a Case filed by the husband dated 14 March 2014 be dismissed and that, by consent, paragraph 1 of the order made by me on 10 February 2014 be varied as to the timing of payment to provide that the amount of $100,000 be paid by the husband to the wife by 20 June 2014, submitted by counsel for the wife by way of interim property settlement.  I have nominated that date because the husband put to me between 30 to 60 days and the wife’s counsel suggested 45 days.

18. I will also order that in the event that the payment is not made, the husband cause the G Street property to be sold by auction and the proceeds be applied, after payment of the costs, commission and expense of the sale and after discharging any mortgage, the wife be paid the sum of $100,000 pursuant to paragraph 1 of the orders made by me on 10 February 2014. 

Costs

1. Section 117(1) of the Act states that the general rule is that each party should bear his or her own costs of proceedings under the Act. However, the Court is empowered to make an order for costs if it is of the opinion that there are circumstances which would justify such an order.

2. Section 117(2A) of the Act mandates the factors to which the Court should have regard in considering whether to make an order for costs, which are:

   (a)the financial circumstances of each of the parties to the proceedings;

   (b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;

   (c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;

   (d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;

   (e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;

   (f)whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and

   (g)such other matters as the court considers relevant.

3. The application before me is an application that the husband pay the party-party costs of the wife of and incidental to the costs of the Response to the Application in a Case.  In my view, this is a case where an order for costs should be made, having regard to the conduct of the husband in the proceedings.  There was an application before the Court for a stay.  However, it was then conceded that the husband, in fact, is able to obtain the money that was ordered to be paid originally.  There has also been a failure by him to comply with the orders that had been made.

4. I consider that in all of those circumstances, and it is a matter of discretion, and additionally having regard to the amount of material filed by the husband in relation to the application, that it is appropriate to make an order for costs against him. 

5. I propose to make an order for costs, on a party-party basis, of and incidental to the costs of the wife’s response to the application to be agreed and, failing agreement, to be taxed.

I certify that the preceding twenty-three (23) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Thornton delivered on 6 May 2014.

Associate: 

Date:  16 May 2014