Xinya & Ping (No 2)
[2024] FedCFamC2F 606
•16 May 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Xinya & Ping (No 2) [2024] FedCFamC2F 606
File number(s): MLC 3428 of 2020 Judgment of: JUDGE O'SHANNESSY Date of judgment: 16 May 2024 Catchwords: FAMILY LAW – PROPERTY – section 79A application – alleged miscarriage of justice arises under any other circumstance – impugned order made in terms pressed by the impugning party – parties bound by the manner they conduct their cases – payment not made provision – not necessarily a “default” within section 79A(1)(c) – necessary implied provision in delivery up of jewellery order can only apply to jewellery in parties power or possession – without section 79A is there jurisdiction to vary a delivery up order to provide a compensatory payment? – no miscarriage of justice found – no “default” pursuant to section 79A(1)(c) found – enforcement application partially successful – section 79A application dismissed Legislation: Evidence Act 1995 (Cth) s 140
Family Law Act 1975 (Cth) s 79A(1)(a)(b)(c)
Cases cited: Attaway & Balloch (No. 2) [2019] FamCAFC 243
Barker v Barker (2007) 36 Fam LR 650
Kowaliw and Kowaliw (1981) FLC 91-092
Lane & Lane (2016) FLC 93-699
Langford and Coleman (1993) FLC 92-346
Division: Division 2 Family Law Number of paragraphs: 94 Date of last submission/s: 10 May 2024 Date of hearing: 9 & 10 May 2024 Place: Melbourne Counsel for the Applicant: Ms Swart Solicitor for the Applicant: Domantay Legal Pty Ltd Counsel for the Respondent: Mr Gates Solicitor for the Respondent: M and K Lawyers Group Pty Ltd ORDERS
MLC 3428 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS XINYA
Applicant
AND: MR PING
Respondent
ORDER MADE BY:
JUDGE O'SHANNESSY
DATE OF ORDER:
16 MAY 2024
THE COURT ORDERS THAT:
Amended pursuant to rule 10.13(1) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) on 17 May 2024.
1.The application of Ms Xinya, to set aside the orders of 25 July 2022, be and is dismissed.
2.On the application of Mr Ping, to enforce the orders of 25 July 2022;
(a)Ms Xinya do all acts and things necessary and sign all such documents as may be required to remove the caveat registered over the property known as D Street, Suburb E in the State of Victoria, at her expense; and
(b)The parties do all acts and things to cause and ensure the proceeds of sale of the property known as B Street, Suburb C, held in trust for the parties, be distributed as follows:
(i)The sum of $19,379.36, together with any interest accrued or earned on that sum or part, pro rata to the whole of the proceeds of sale so held, to Ms Xinya or as she directs; and
(ii)The balance to Mr Ping, or as he directs.
3.All extant applications are otherwise dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE O’SHANNESSY
INTRODUCTION
The road to unsuccessful litigation is paved with unchecked assumptions. In this case a property valued at $975,000 for final hearing purposes was sold, after orders were made and at arm’s length, for $700,000. Matrimonial property division in a falling real estate market is often more problematic than in a rising or stable real estate market. That conundrum is at the heart of this case.
In this matter the main question I must determine is whether final property alteration orders, made after a contested 2 day final hearing on 25 July 2022 (‘the original orders’) should be set aside, and different orders made, pursuant to section 79A of the Family Law Act 1975 (Cth)(‘the Act’) as the wife in this proceeding seeks.
If the original orders are not set aside, I must determine the application of the Husband, said to be an enforcement application, who wants an order for delivery of jewellery “enforced” by converting a delivery up order to an order for payment of a compensatory sum of money.
The matter proceeded before me as a final hearing over the 9th and 10th of May 2024. Both parties, the husband and wife, were represented by solicitors and counsel.
BACKGROUND
The applicant wife, Ms Xinya (‘the Wife’), is aged 39 and the respondent husband, Mr Ping (‘the Husband’), is aged 41. The Husband and Wife commenced cohabitation in 2013, married in 2015 and separated at the end of 2018. They cohabited as man and wife for almost six years and did not have children together. The parties were divorced in 2020 and property alteration proceedings were commenced by the Wife in April of 2020. Both parties re-partnered. By the end of the marriage and at final hearing, the parties owned three real properties with the Wife owning one (‘the Suburb G property’) and the Husband owning two properties (‘the Suburb E property’ and ‘the Suburb C property’).
The final hearing leading to the first instance orders was over the 12th and 13th of May 2022. At that hearing both parties were represented by solicitors and counsel. The relevant parts of the original orders were as follows:
1.Within 90 days of the date of these Orders, the Respondent husband pay to the Applicant wife the sum of $200,432 by way of property settlement (Settlement Sum).
2.Forthwith upon the making of such payment, the wife do all acts and things necessary and sign all such documents as may be required to remove the caveat registered over the properties situate at and known as [B Street, Suburb C] ([Suburb C Property) and [D Street, Suburb E] (Suburb E Property).
3.In the event that the husband has not paid the Settlement Sum to the wife as referred to in paragraph 1 within 90 days of these orders, the husband shall immediately do all things and sign all documents necessary to sell the [Suburb C] Property and the proceeds of sale shall be applied in the following order and priority:
(a) First, to pay all costs, commissions and expenses of the sale;
(b)Second, to discharge the mortgage and any other encumbrance registered against the property;
(c)Fourth, to make a payment to the wife to reveal an overall adjustment of the net asset and superannuation pool of 60 percent to the wife and 40 percent to the husband;
4.Within 60 days of these orders, the wife deliver to the husband all jewelleries she received from the husband and his family members.
The learned Trial Judge’s findings included the following passages:
3The wife’s case is that she made significant initial contributions in the sum of $380,000 which she used to purchase a unit off the plan prior to the commencement of the parties’ relationship. She argues otherwise the parties’ contributions should be considered equal and that there should be no adjustment for s75(2) factors. She argues that there should be a 15% adjustment in her favour in recognition of her initial contributions.
4The husband argues that this is a classic Stanford & Stanford [2010] FamCA 784 case. He disputes the extent of the wife’s initial contributions and submits that those contributions have been eroded. He places some significance on the increase in value of his real estate interests post separation. He also refers to the fact that he has remarried and has a young child with his wife to support. He argues that in all of the circumstances it would not be just and equitable to make any adjustment of the parties’ property interests.
…
47.Considering all of these factors I am satisfied that there should be no adjustment under s.75(2).
Asset Liability Wife Husband F Street, Suburb G Property $975,000 $278,390 $696,610 D Street, Suburb E Property $700,000 $352,880 $347,120 B Street, Suburb C Property $975,000 $355,484 $619,516 Loan owing to Parents $89,000 - $89,000 Commonwealth Bank Account $42,230 $42,230 H Bank Account $531 $531 Super Fund J $207,998 $207,998 Super Fund K $87,117 $87,117 Combined Net Pool $946,838 $965,284 Payment adjustment +$200,432 -$200,432 Effect of the Orders $1,147,273 $764,853 48The husband’s argument is that of a classic Stanford style case where it would not be just and equitable to make any adjustment of the parties property interests. This however is not sustainable for two reasons. Firstly, it ignores the fact that the wife owned the [Suburb G] property before the commencement of the relationship where an initial contribution cannot be ignored, particularly given the parties’ relatively short relationship. The use of the [Suburb G] property must also be taken into account. This property was the matrimonial home throughout the relationship even if the wife rented additional rooms out from time to time. I am satisfied that the husband did not contribute to the [Suburb G] property expenses during the first year and that this assisted him in saving funds to purchase the [Suburb C] property. I reject the argument that the wife made no contribution to the husband’s investment property as it ignores the indirect contribution by reason of the fact that he is able to rent out both properties in their entirety because they were living in her property. I accept the wife’s evidence that there was some discussion about moving into the [Suburb C] property and making this their matrimonial home but chose to remain in [Suburb G] as a matter of convenience. The wife was not challenged about her evidence that she and the husband cleaned the [Suburb C] property and bought basic furniture and electronic goods so that they could rent out that property.
49I also reject the husband’s argument that the fact that his properties increased by a greater amount than the wife’s property post separation somehow should be attributed to him. Neither party suggests that the increase in values of properties was anything other than as a result of market forces. As a result, in considering the full Court’s comments in Jabour and Jabour [2019] FamCAFC 78, I do not accept that the increase in the properties should be treated as a contribution in favour of either party.
50I am satisfied that the wife had equity in the [Suburb G] property at the beginning of the relationship of approximately $360,000 which was made up of the deposit she had and the money she received from her parents. Both parties have made indirect financial and non-financial contributions to the other’s respective property. Neither party seeks a superannuation split. Whilst the wife made additional voluntary contributions to her superannuation during the relationship and post separation, which presumably otherwise could be applied to reducing the debt on the [Suburb G] property, it would be unfair to ignore the significant increase in her superannuation and the fact that she has significantly more superannuation than the husband. If the superannuation was simply put to one side, it would not be fair to the husband and I take this into account when considering the myriad of contributions made by both parties.
51.Having considered the totality of the evidence including the unsatisfactory evidence about the value of the wife’s defined benefit entitlements, I find that the wife should receive a cash payment from the husband in $200,432, and otherwise the parties each keep the assets, liabilities and superannuation in their possession. This will result in an overall adjustment of the net asset pool of 60% to the wife and 40% to the husband. I am satisfied that the orders I make are just and equitable.
There was no appeal following the original orders.
AGREED FACTUAL AND LEGAL MATTERS
If the orders were set aside, save as to the value of the Suburb C property at the time of sale and the now known calculation of capital gains tax relating to the Suburb C property, for the purposes of determining what further order should be made, it was agreed that the essential factual findings of the learned Trial Judge should apply to the assessment of the asset pool of the parties, their respective contributions within the meaning of section 79(4)(a), (b) & (c) of the Act and the balancing of applicable prospective factors pursuant to section 75(2) of the Act. The parties agreed and both pressed that if, or when, the original orders were set aside, the 60/40 division of property in the Wife’s favour should again apply as the learned Trial Judge had decided.
It was now known and agreed that the Husband would pay about $19,000 in capital gains tax arising from the sale of the Suburb C property. If the orders were set aside the Husband sought that liability to be taken into account and borne in the same proportions. Ultimately, by final address the Wife conceded that if she was successful in setting aside the orders the now known capital gains tax liability would have to be taken into account as a joint liability.
No submissions as to form of original orders sought
It was not disputed before me that order 3 of the original orders, the ‘sell the [Suburb C] property if the payment has not been made’ provision, was not the subject of any agitation or attention in the original trial. The Husband did not make submissions (in the alternative or otherwise) or as to the form of the sell the [Suburb C] property if the payment has not been made provision. But the Wife did in her Outline of Case document for the original final hearing.
Unusual order sought in original trial
The form of the orders sought by the Wife in three different iterations were as follows.The Wife’s Initiating Application, back in 2020, only sought orders for “a just and equitable division of the property of the parties”. Then, in August of 2020, the Wife filed an amended application and sought orders that included the following:
1.That the husband pay to the wife the sum of $234,227 by way of property settlement within 60 days.
2.That forthwith upon the making of such payment, the wife do all acts and things necessary and sign all such documents as may be required to remove the caveat registered over [Suburb C] property and [Suburb E] property.
3.That within 60 days of these orders the wife deliver to the husband all jewelleries she received from the husband and his family members.
4.In the event that the husband has not paid to the wife the amount referred in paragraph one within 60 days of these orders, then the husband shall immediately do all things and sign all documents necessary to sell the [Suburb C] property and the proceeds of sale shall be applied in the following order and priority:
i. Firstly, to pay all costs associated with the sale;
ii.Secondly, to discharge the mortgage with [H Bank] against [Suburb C] property;
iii. Thirdly, pay to the wife the greater of:
(a) $234,227; or
(b)a payment to reveal an overall adjustment of non-superannuation interest of 57
per cent to the wife and 43 per cent to the husband.
iv. The balance to be paid to the husband.
The effect of the “in the event the Husband has not paid” order sought by the Wife at the original hearing was that in the event the payment was not made and consequently of a sale occurred, the Wife would share any increase in the sale price of the Suburb C property but the Husband would entirely bear any decrease. While every case must be looked at in regard to its own particular facts, as a general rule, the authorities[1] demonstrate that if a property is ordered to be sold then the parties should bear the lessor or greater sale proceeds in the same proportions as the assets are divided. Or put another way, unless there is good reason to the contrary, the parties should share the upside or the downside consequences of a sale.
[1] Precedent or binding decisions of the appeal court, the Full Court of the Family Court of Australia and or the Full Court of the Federal Circuit and Family Court of Australia that should be followed.
The Wife sought different orders at the original final hearing. The primary figure sought was greater and the, ‘in the event the Husband has not paid’ provision was different and largely, but not entirely, fell into line with the settled principle of the risk or benefit of a higher or lower sale price being shared between the parties.
The different default order pressed by the Wife in her Outline of Case document was in the following terms:
4.The husband seeks return from the wife f further items of jewellery which have not been in her possession or control since the parties divorced and the wide says she is therefore unable to provide those items. The Husband is claiming from the wife a payment of $13,020. The jewellery was not listed in the asset pool of the parties.
It was not contested before me that there was no submission or evidence, at the original hearing, of there being any good reason why one party should bear all the risk or all the upside of a sale of a property ordered by the court. Hence it is unsurprising the original orders followed the general principle referred to above
The Wife’s outline of case at the original trial pressed that the Husband bear all or any capital gains tax arising from any court ordered sale. The general principle is that, unless there is a good reason to the contrary, the expenses and consequences of sale that are certain – usually real estate agent commission, advertising expenses, conveyancing costs and like expenses – are borne by the parties in the same proportions as the assets are divided. As is self evident, the provision dealing with capital gains tax that the Wife sought did not follow the general principle described above.
It is readily apparent why the Wife would of varied the orders she sought from those of her amended application filed 3 August 2021 to those pressed in the outline of case. Because the orders in the amended application ran firmly against the general principle of the parties sharing the rise and fall of sale proceeds, unless there is good reason to the contrary, on one view pressing such a position may have reduced the persuasiveness of the Wife’s overall case that it was just and equitable to make property alteration orders. That change of position may well have assisted the Wife’s case in the cut and thrust of persuading the learned Trial Judge to make a property division along the lines sought by the Wife.
Capital gains tax not pressed and not taken into account in original orders
It had been common ground that the Suburb C property had risen in value since purchased and that it had been rented out the whole of the relationship, but it was not disputed before me that in the original trial there was no evidence or submission as to capital gains tax. Hence it is unsurprising that the reasons and orders of the first instance decision did not refer to capital gains tax. It is now undisputed that as a result of the sale the Husband will be assessed for and pay about $19,000 in additional income tax known as capital gains tax. The Husband did not seek to set the orders aside notwithstanding that the entire burden of the capital gains tax would rest on him.
Wife did not press to be involved in sale at original sale
As can be readily observed the form of the ‘in the event the Husband has not paid’ provision of the orders was in the same form as pressed by the Wife. There was no provision pressed by the Wife for her to be involved in, or consulted in, the sale process that would arise in the event the primary figure was not paid. Further, as discussed at the hearing before me, the once ubiquitous pro forma final property orders[2] did not include as a standard or usual a provision for both parties to be involved in or consulted where one parties’ property was to be sold if a payment was not made by the specified date. Such a provision is not uncommon and often enough included where at least one party sees it as necessary.
[2] For many years available to parties in the Family Law Act courts in paper form at the end of the bar table and also known as the “omnibus orders”.
APPLICABLE LAW
A party making an allegation bears the onus of proving, on the balance of probabilities, that allegation. I am bound by and apply section 140 of the Evidence Act 1995 (Cth) that provides:
(1)In a civil proceeding, the court must find the case of a party proved if it is satisfied that the case has been proved on the balance of probabilities.
(2)Without limiting the matters that the court may take into account in deciding whether it is so satisfied, it is to take into account:
(a) the nature of the cause of action or defence; and
(b) the nature of the subject-matter of the proceeding; and
(c) the gravity of the matters alleged.
Orders do not mean what a party subjectively thinks they mean or should mean. In Langford and Coleman (1993) FLC 92-346 the Full Court observed at 79,671 that:
It follows that if an order made by consent must be treated like any other non-consensual court order it must be read and interpreted quite independently of what the parties subjectively might have intended thereby. It must be rea as standing on its own feet, as it were.
In the section 79 case of Kowaliw and Kowaliw (1981) FLC 91-092, Baker J, (‘Kowaliw’) observed at 76,645 that:
If a party has acted in the manner to which I have referred earlier either by:
(a)embarking upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b)acting recklessly, negligently or wantonly with matrimonial assets the overall effect of which has reduced or minimised their value
then such conduct in my view and the economic consequences which flow here from are clearly matters to which the Court may have regard pursuant to the provisions of sec. 75(2)(o).
If, on the other hand, loses of a financial kind have been suffered by the parties to a marriage in the course of the pursuit of matrimonial objectives, such as the gaining of income or the acquisition of assets whether the liability for such losses joint or several, then in my view, such losses should be shared by the parties (although not necessarily equally) and taking into account when altering property interests.
The applicable part of the Act is as follows:
Section 79A Setting aside of orders altering property interests
(1)Where, on application by a person affected by an order made by a court under section 79 in property settlement proceedings, the court is satisfied that:
(a)there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information), the giving of false evidence or any other circumstance; or
(b)in the circumstances that have arisen since the order was made it is impracticable for the order to be carried out or impracticable for a part of the order to be carried out; or
(c)a person has defaulted in carrying out an obligation imposed on the person by the order and, in the circumstances that have arisen as a result of that default, it is just and equitable to vary the order or to set the order aside and make another order in substitution for the order; or[3]
…
the court may, in its discretion, vary the order or set the order aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside.
…
[3] Sections 79A (1) (d) and (e) were not relied upon and are not relevant to this case.
In addition to the general principles of frequent application referred to above I refer to, and am bound by, the following authorities dealing with section 79A of the Act. In Lane & Lane (2016) FLC 93-699 (‘Lane’) the Full Court’s observations in a section 79A case included[4]:
36.It was uncontroversial that his Honour’s determination of the issue before him required the resolution of a three part enquiry: first, whether the wife had established one of the matters to which s 79A speaks. In this case, the wife principally contended that the husband had suppressed relevant evidence. If that fact is established, his Honour was then[5] required to determine whether the suppression of the evidence amounted to a miscarriage of justice and, finally[6], if that is established, whether to set aside or vary the orders or make another order (see Suiker and Suiker (1993) FLC 92-436).
(emphasis and footnotes added)
[4] Headings in the original omitted.
[5] Self evidently this could also be expressed as “second” of the three part enquiry.
[6] Self evidently this could also be expressed as ‘third” of the three part enquiry.
In Barker v Barker (2007) 36 Fam LR 650 (‘Barker’) the Full Court observed:
118.We are mindful of the fact that for the purpose of s 79A(1)(a) “a miscarriage of justice can only occur by reason of a fact or event which occurs before or at the time of the making of the order which is sought to be set aside” (Public Trustee (as executor of the estate of the late Gilbert) v Gilbert (supra). See also Bigg v Suzi (1998) FLC ¶92-799 at paragraph 6.39). Counsel for the wife relied upon what he asserted to be the disparity between “real value” and the value the Court had acted upon at the time of the consent orders, such a value being established in part by the events which had occurred before the orders were made and in part by the subsequent sale. Counsel for the wife’s point was that although the sale occurred after the orders were made, the circumstances which enabled the sale at $2,650,000 had already occurred by the date of hearing approximately a month earlier...
…
120.A miscarriage of justice under s 79A(1)(a) will occur if circumstances exist which “for some significant reason, make the order contrary to law and justice according to law as it relates to the integrity of the judicial process [original emphasis]” (Bigg v Suzi (supra) at 84,982). See also Suiker (supra); Public Trustee (as executor of the estate of Gilbert) v Gilbert (supra)). Whilst cases such as Suiker (supra), Holland v Holland (1982) FLC ¶91-243 and Gebert v Gebert (1990) FLC ¶92-137 indicate that the words “miscarriage of justice” should not be construed narrowly and the phrase “integrity of the judicial process” should not be taken only to refer to the hearing in the court, the circumstances creating the miscarriage must nevertheless have been such as to have had an influence on the outcome of the litigation...
(emphasis added)
Parties bound by the conduct of their case
The Full Court observed in Attaway & Balloch (No. 2) [2019] FamCAFC 243 that:
12.It is elementary that a party is bound by the conduct of his or her case. This means that the mother cannot invite the primary judge to evaluate evidence in a particular fashion and then complain on appeal that her Honour did precisely what she was asked to do (Metwally v University of Wollongong (1985) 60 ALR 68).
THE WIFE’S CASE
Before me, the Wife sought:
1.The wife seeks the orders be varied to preserve her entitlement following the husband’s default to the $200,432 payment to be paid to her from the $329,129.30 held in trust following the husband’s sale of the [Suburb C] property.
2.The wife seeks to vary the order with respect to the return of jewellery to limit it to the jewellery which was in her possession or control as at the date of the orders.
In opening, counsel for the Wife explained her section 79A case as relying on sections 79A(1)(a) and (b) and (c). As to section 79A(1)(a) it was asserted the miscarriage of justice arose from ‘any other circumstance’ and that circumstance was the original orders made provision for a sale in the event the payment was not made, and the Wife had no role in the sale. The failure of any provision as to the Wife being involved in or consulted about the sale had led to the Suburb C property being sold by the Husband undervalue and that he did so recklessly and negligently. The Wife asserted that the true value of the property at the time of the sale by the Husband was actually $825,000, as asserted by the jointly retained single expert witness, Mr S. But until final address, the Wife pressed that after the original orders had been set aside, the new orders should provide for a fixed payment to her of $200,432 to be paid from the proceeds of sale and penalty interest. This fixed payment amount was, and had been calculated by the learned Trial Judge, based on the previously agreed at trial figure for the Suburb C property of $975,000.
In final address the Wife moved her position to assert the new order should have a payment calculated on the single expert witness retrospective value of the Suburb C property of $825,000. That would mean a payment of $94,379 from the proceeds of sale to the Wife if capital gains tax was not taken into account, and $82,880 if it was. The $19,000 capital gains tax liability was not disputed.
The Wife’s affidavit of evidence in chief included the following:
23.I only found out that the property was sold for $700,000 [in mid] 2023 from my conveyancer, which was one (1) day before the settlement. Again, I was shocked and very concerned, because the sale price was much lower than the sworn valuation figure being $975,000 at the time of the defended hearing in May 2022 and the range of selling price ($800,000 - $880,000) advertised on the Real Estate website back in [late] 2022. [Mr Ping] had never informed me of the actual sale price and I had no reason to suspect that it would be so much less than the valuation figure.
…
25.[In mid] 2023, [Mr Ping] replied my email saying that he would not pay me $200,432 because the settlement sum had changed. He said that he would recalculate the overall adjustment of net asset. Annexed hereto and marked “[Xinya]-7”is a copy of the email dated [mid] 2023.
26.I was confused because my understanding of the final orders was that [Mr Ping] must pay me the settlement sum of $200,432 after selling the property because he could not make the payment within 90 days of the date of the order.
…
45.My application before the Court at Final Hearing (as amended)[7] was that in default was worded as follows:
[7] The amended application filed 18 months before the original trial had so claimed, but this application had been superseded or replaced by different provisions being sought in a document filed and served and known as “Outline of Case” shortly before the original hearing.
“In the event that the husband has not paid to the wife the amount referred in paragraph one within 60 days of these orders, then the husband shall immediately do all things and sign all documents necessary to sell the [Suburb C] property and the proceeds of sale shall be applied in the following order and priority:
i. Firstly, to pay all costs associated with the sale;
ii.Secondly, to discharge the mortgage with [H Bank] against [Suburb C] property;
iii. Thirdly, pay to the wife the greater of: (emphasis added)
(a) $234,227; or
(b) a payment to reveal an overall adjustment of non-superannuation interest of 57
per cent to the wife and 43 per cent to the husband.
iv. The balance to be paid to the husband.”
46.Based on the wording of the orders which I sought in my application at Trial[8], I believe that the Court would have been aware that I was seeking that the Settlement Sum be a fixed payment, with that sum only to be varied in the event that the pool had increased by reason of the [Suburb C] Property selling for more than it was valued at Trial. This would be reasonable in my view, because the price might increase by reason of the delays involved with a default sale. That seems to be a commonsense and fair interpretation of the way things should work in a default situation, otherwise my court ordered entitlements would be at risk of being adversely affected in an unpredictable manner if the property were to be sold unilaterally by [Mr Ping] for significantly less than its agreed value.
47.If it was not the intention of the court to protect my entitlements in this way (notwithstanding any slip or error in the orders which might on the face of it suggest otherwise) then I would have expected to act as co-vendor on the sale of [Suburb C] to protect my entitlements and get the best sale price for that matrimonial asset. However, under the final orders, [Mr Ping] had the sole and unilateral conduct of the sale. This meant that under the current wording of the Final Orders, I was vulnerable to [Mr Ping] selling for less than market value (in a way which defeated my proper entitlement to the Settlement Sum). This was because in default of [Mr Ping] making payment of a fixed dollar value amount due on 23 October 2022 under the Final Orders, it converted to a percentage of a variable pool if [Mr Ping] defaulted in payment (with [Mr Ping] controlling the relevant variable in the pool, namely the sale price of [Suburb C]). Further, I was vulnerable in the sense that I was unable to control that variable (sale price of [Suburb C]), because [Mr Ping] was not obliged under the Final Orders to consult me in any way in respect of the default sale and did not keep me properly informed.
[8] This assertion of opinion overlooks the terms of the orders sought in the Wife’s “Outline of Case” document recited above.
After learning of the actual sale price of the Suburb C property, the Wife insisted the proceeds of sale be held on trust for the parties and the Husband agreed. The proceeds of sale remain held on trust.
That the Wife’s opinions about the original orders were genuinely held was not questioned. In cross examination, the Wife explained that she had understood, and still expected, that if the Suburb C property had been sold for more than the $975,000 figure used at trial, she should have received 60% of the increase, but none of the capital gains tax liability and that when it sold for less, she should still receive the sum calculated on a value of $975,000.
The Wife also said that in October, before the sale, she had kept an eye on the marketing of the Suburb C property and was aware of the property being marketed or advertised in the range of $800,000 to $880,000, but the actual sale price was not a concern of hers because she understood she would receive the first $200,432 from the sale proceeds regardless of the actual sale price.
Section 79A means some orders should not be final
When addressing the issue of any policy reason of the need for finality of orders, counsel for the Wife submitted that section 79A of the Act meant that some orders, that is those within the provisions of section 79A, should not be final. I accept that submission.
In oral opening, counsel for the Wife put her case, in effect, as follows:
·Section 79A(1)(a), …a miscarriage of justice … by reason of any other circumstance, was relied upon and that circumstance was that the order as made meant the Wife had no role in the sale (when the payment was not made) and the sale of the Suburb C property was at “undervalue” and was conducted recklessly and negligently.
·Section 79A(1)(b), in the circumstances have arisen since the order was made it is impractical… for a part of the order to be carried out …,was relied upon as to the jewellery provision only. It was impractical because the jewellery can’t be located.
·Section 79A(1)(c), a person has defaulted in carrying out an obligation imposed …by the order, was relied upon and the default was the failure to pay the order 1 sum of $200,432 by the required date.
As to the sale of the Suburb C property it was put that the combined circumstances that fell within ‘any other circumstance’, and hence demonstrated a miscarriage of justice for the purpose of section 79A of the Act, were:
·The Wife was not consulted and had no role, and no opportunity to be involved, in the sale, and that being a default sale when the Husband was a trustee for sale; and
·The Husband’s failure to seek the Wife’s consent to a variation of the orders and a deferred sale meant that;
The Husband did not act reasonably, and that he was reckless, and the well-known principles of Kowaliw apply.
It was also put that the miscarriage of justice of section 79A(1)(a) could arise from events or circumstances that occurred after the orders were made, and the seminal authority of Barker (referred and cited to earlier in these reasons) was said to support this proposition. I will address this later.
THE HUSBAND’S CASE
Before me, the Husband sought the following:
1.The proceeds of sale of the property situate at and known as [B Street, Suburb C] VIC (Suburb C Property) held in the Macpherson Kelley Lawyer’s trust account in the sum of $329,129.30 (“the [Suburb C] Property Sale Proceeds”) be distributed in the following proportions:
a) the sum of $5,065.86 to the wife; and
b) the sum of $324,063.44 to the husband
in accordance with paragraph 3(c) of the Orders made on 25 July 2022.
2.Contemporaneously with the distribution of the [Suburb C] Property Sale Proceeds in accordance with paragraph 1 above, the wife do all acts and sign all documents to withdraw the caveat registered against the property known as and situate at [D Street, Suburb E], at the wife’s sole expense, in accordance with paragraph 2 of the Orders made on 25 July 2022.
3.The wife forthwith and within 7 days return to the husband all jewellery received by her from the husband or his family members or in the alternative, the wife pay to the husband the sum of $13,020 in lieu of returning the jewellery, in accordance with paragraph 4 of the Orders made on 25 July 2022.
4.The wife pays the husbands costs of and incidental to this application
The Husband opposed the original orders being set aside or varied pursuant to section 79A. He said there was not a miscarriage of justice and clause 3 of the original orders – the impugned order 3 recited above – was substantially in the form pressed by the Wife and that, in compliance with the orders, the Husband had made a genuine attempt to sell the property within the time pressed by the Wife and had achieved an arm’s length sale price in a declining market. Further, the orders did not compel him to consult the Wife about the sale and, in a declining market, had he delayed, a lower price may have been achieved.
The $13,020 payment figure sought by way of enforcement was varied down in oral opening to $2,120.
In oral opening, counsel for the Husband pressed the dismissal of the section 79A application and for the distribution of the proceeds of sale of the Suburb C property without taking account of the capital gains tax to be paid, acknowledging capital gains tax had not been agitated at the original hearing and was not included in the order. But if the order was set aside – which was opposed – then it was said capital gains tax should be taken into account along with other selling expenses but with the actual price achieved.
By his counsel, the Husband complained that the Wife sought to prove the proper value for the Suburb C property was $825,000 at the time of sale but still pressed for a division of the sale proceeds as if the property was worth the earlier valuation figure of $975,000. The Husband, by his counsel, complained that the order provided for certain jewellery to be delivered, as the Wife had sought at the original trial, was she simply asserted it no longer was available to her. Hence, he said, compensation should be paid.
His case was that he attempted to get the most money he could from the sale of the Suburb C property because he was to receive 40% of that amount and that he was not required to consult the Wife. It was common ground that the Husband had emailed the Wife and told her of his intention to sell rather than make the payment some three weeks before the payment was due.
CONCLUSIONS
It is convenient to deal with the jewellery compensation payment controversy first.
The jewelleries
I repeat order 4 of the first instance orders.
4.Within 60 days of these orders, the wife deliver to the husband all jewelleries she received from the husband and his family members.
At the original trial, the Husband had not pressed for any order relating to the “jewelleries”. He had pressed a case of no section 79 orders should be made at all. It was not disputed that there was no evidence or submission as to the jewelleries at the original trial.
State of affairs assumed
The following was ultimately not contested in final address. I accept that the Wife had left the jewelleries she had received from the Husband’s family members with her parents in Country T. I accept that after divorce she had told her parents they could deal with those items of jewellery as they saw fit. The Wife made no inquiries of her parents at the time of original trial as to whether they had the jewellery or not, but assumed they still had possession of the jewellery. At the original trial the Husband made no inquiries of the Wife’s side as to whether she still had the jewellery that had come from his parents, but assumed the Wife still had possession of the jewellery. I accept that the Wife proposing to deliver the not delivered jewellery contributed to the assumption that the Husband made. But both made assumptions and did not check their assumption at any relevant time before the orders were made.
After orders were made, the Wife ascertained that her parents had disposed of the jewellery. Hence, of the jewellery described in the impugned orders, only the jewellery received from the Husband was delivered to the Husband. The Wife did not demonstrate any embarrassment or contrition, rather insouciance, for her contribution to the mistaken assumption that the jewellery from the Husband’s parents still existed.
It was also common ground before me that it was only the Wife who pressed for the inclusion of the jewellery provision in orders and outline of case and that there was no evidence or submissions about the jewellery in the original trial.
The Husband first pressed for a compensation payment of about $13,000 in regard to the jewellery from his parents that had not been re delivered to him but had reconsidered the value of the jewellery, and at final hearing before me pressed for a compensation payment of $2,120. This was so notwithstanding he accepted the Wife’s explanation about what had happened to the jewellery. I accept that jewellery from his parents had an importance to the Husband apart from the value in money.
Necessary implied terms
As discussed in the hearing before me, I am satisfied that the order as to the jewellery had two necessary implied terms. They were that the order could only operate on the specified jewellery that actually was in the power or possession of the Wife and that she would undertake diligent search or efforts to obtain the same. In that circumstance, the Wife does not need recourse to section 79A to avoid being pressed by the Husband for the jewellery or compensation based on his opinion of its value.
Jurisdiction to vary a delivery up order to a financial payment without section 79A?
The Husband opposed recourse to the provisions of section 79A at all, that is, opposed the setting aside and/or variation of the original order. This was notwithstanding that he would be left to bear all of the capital gains tax liability. But the Husband sought the payment of a sum in lieu of the jewellery not delivered. When filing an enforcement application soon after the controversy about the sale of the Suburb C property had blown up, he had sought a payment of $13,020. At the hearing before me that was varied to $2,120. The sum of $2,120 was the result of the Husband’s research to attempt to value the not delivered jewellery. Neither the $13,020 or the $2,120 was an agreed figure and neither was the opinion of a single expert witness.
I raised with counsel for the Husband that absent, or without recourse, setting aside the original orders pursuant to section 79A, I did not immediately see jurisdiction to vary the original orders to make an order for payment of a sum in lieu of the jewellery provision. In discussion, I observed that such jurisdiction, if it existed, might be handy from time to time, but that apparent handiness would not provide jurisdiction and I left him on notice he would need to persuade me with that I had the jurisdiction he sought I exercise. In the end counsel did not make further submissions as to jurisdiction to make the jewellery compensation order sought. If I had jurisdiction, the issue of the value of the not delivered jewellery would have been a live issue. Unless agreed, the value of property is usually a matter of expert opinion and a party’s genuine but not expert opinion is, where objection is taken, not admissible.
Unnecessary to determine jurisdiction
Because I am satisfied that the jewellery order, by necessary implication to give effect to the order, only commanded the Wife to deliver jewellery in her power or possession and it was not disputed that at all material times the not delivered jewellery was not in the Wife’s possession, I am satisfied of two matters. The first is that that it is neither appropriate nor necessary to have recourse to the provisions of section 79A of the Act. The issue does not arise. The second is that notwithstanding by doubts, it is unnecessary to determine whether, without recourse to section 79A of the Act, I would have jurisdiction to vary the jewellery deliver order to a payment of money in compensation. The issue does not arise.
Was the Suburb C property sold recklessly undervalue?
In opening it was asserted that the Husband had, without consulting the Wife who would bear 60% of any loss, recklessly sold the Suburb C property for less than market value. I accept the Wife’s counsel submission that although not expressly stated in the orders, the Husband was, from the point where the payment was not made, in substance, a trustee for sale for both parties.
The different valuations
It was common ground, or at least, not disputed that:
·The single expert valuation as at mid-2020 provided a value of $775,000; and
·The single expert valuation as at late 2021 provided a value of $975,000. This was the single expert valuation the parties relied upon at the original trial, in May of 2022[9]; and
·The independent valuation undertaken by the mortgagee bank for the purchaser the Suburb C property as at mid-2023 provided a value of $750,000; and
·Whatever the true or proper value of the Suburb C property was, the real estate market for that part of Suburb C was declining at the time the Husband marketed the property in late 2022.
[9] With a mortgage debt of $355,484 giving the equity figure in the original reasons at [47] recited above, of $619,516.
The Husband’s evidence as to the sale
The Husband’s evidence about the sale included the following[10].
[10] Within the Husband’s Affidavit in Chief filed 26 April 2024
10.The Orders required me to forthwith do all things necessary to sell the [Suburb C] Property. I interpreted that Order as requiring me to list the property for sale immediately and to sell it as soon as possible.
11.In addition to wanting to comply with the Orders by selling the property promptly, [the Wife] threatened to issue enforcement proceedings against me. [In late] 2022, I received an email from [the Wife] which contained her threat to reinstitute court proceedings. The message read in part as follows:
“According to the Court Order, you must give me the money within 90 days, otherwise you need to sell the [Suburb C] house immediately. It will be exactly 90 days. If you haven’t started selling the house after that, I will ask the court to enforce it. I have consulted and the cycle for selling a house is about one month. Please sell the house before the end of [the year] and hand it over within 60 days. I hope you don’t delay deliberately. I can ask the court to give you a time limit.”
…
12.I have a wife and two infant children, and my elderly parents reside with us. My wife, children and parents are wholly dependent on me for financial support. I was fearful that if I did not sell the [Suburb C] property quickly and before [late] 2022, [the Wife] would make a court application against me. I experienced significant anxiety and stress in the lead up to and during the Final Hearing of our initial proceedings. I was fearful of [the Wife] issuing court proceedings against me, and I was worried that I would experience great financial and emotional strain if I did not comply with the Orders and [the Wife]’s demands.
13.I do not know any selling agents so I asked my friend, [Mr W], if he knew any agents to recommend to me. On or around [late] 2022, my friend recommended [Mr U] of [V Company] and sent me [Mr U]’s phone number. Page 18 of the bundle exhibit contains a true and correct copy of the messages exchanged between me and [Mr W] [in late] 2022 where [Mr W] provides me [Mr U]’s phone number.
14.On or around [late] 2022, I met [Mr W] for the first time. [Mr U] inspected the [Suburb C] property. [Mr U] made some comments to me regarding the condition of the [Suburb C] property and he recommended that I undertake some maintenance works to prepare the property for sale, such as [some] repairs. I told [Mr U] that I was required to sell the property pursuant to a Court Order and I showed [Mr U] a copy of the Court Orders with respect to the [Suburb C] property. I asked that [Mr U] achieve the best possible selling price. I was later provided with an Exclusive Sale Authority by [Mr U]. I signed the Exclusive Sale Authority [in late] 2022.
15.In response to paragraphs 38 to 41 inclusive of [the Wife]’s Affidavit, I say that the [Suburb C] property was maintained throughout the sale process and settlement period. I attended to all repairs suggested by [Mr U] prior to the sale, including mowing the front lawn. I also paid for and completed other repairs recommended by [Mr U]. The tenant had been living in the [Suburb C] property for around ten years and never complained that I had not maintained the house. The [Suburb C] property was around fifty years old at the time of sale and its condition had expectedly declined over time. The renovations required to be carried out to the [Suburb C] property would have likely been extensive. I found the tenant’s cleanliness to be reasonable during the period of tenancy. The condition of the [Suburb C] property has remained consistent in the last three to four years.
16.The [Suburb C] Property was listed on the market in [late] 2022 with an asking price range of $800,000 to $880,000. I did not determine the selling price but rather, I listened to the advice of the selling agent as the professional who suggested the price range.
17.The property was listed for private sale and I understand that there were regular open inspections conducted by the selling agent. The marketing campaign included online advertisements of the property, and the [V Company] website, a sale signage board at the property, brochures, and drop cards which were distributed. The marketing costs amounted to $[4,200]
18.To the best of my knowledge, no offers within the asking price range of $800,000 to $880,000 were received by the selling agent. [Mr U] informed me that there were low levels of interest in the property and very few attendees at the open inspections.
19.[Mr U] told me that [in late] 2022, a conditional offer for $685,000 was received for the [Suburb C] property, despite the asking price range of $800,000 to $880,000. The offer was subject to a building and pest inspection, finance approval, vacant possession, and the removal of unwanted articles in the driveway. The offer was not accepted due to the conditions sought by this prospective buyer.
20.[In late] 2022, [Mr U] told me that he thought it was unlikely he could achieve a sale price in the asking range of $800,000 to $880,000. [Mr U] told me that I should consider offers in the price range of $700,000 to $770,000 based on recent sales and the urgency to sell the [Suburb C] property. I was disappointed that the [Suburb C] property would likely not sell for more however, given the constraints the Orders placed on me and [Mr U], I accepted his advice.
In cross examination, in accordance with her ethical obligations and her client’s case, the Husband was asked directly by counsel, “Did you deliberately sell the [Suburb C] property so [the Wife] got less”. The Husband answered “No”. The Husband responsively answered questions. In oral evidence, the Husband said he had felt “not good” about the original decision and orders. He said he had felt “not good” about advice of the selling agent to market the property at $800,000 to $880,000 and about the selling agent’s advice to the effect that the negotiated $700,000 price was the best that would be obtained but that he had to comply with the orders.
The Husband said he considered borrowing but, taking into account all his financial circumstances including available cash and what he understood – from an online bank borrowing capacity calculator – was his capacity to borrow, he made the decision to sell the Suburb C property and when he did so, told the Wife of his decision.
He said he never contemplated asking the Wife if she would want to buy the property, or seeking her consent to an extended marketing campaign, or selling the property at another time. He said he feared being taken back to court if he did not immediately comply with the order. He said that when the original judgment and orders were handed down, he didn’t think he could make the payment because he didn’t have enough cash.
It was not suggested before me that there was ever any evidence, cross examination, or submissions in the original trial as to the Husband’s capacity to borrow or raise the funds for a payment whatever that was to be. The Husband gave oral evidence that it took him a while as he started to realise his financial circumstances and make a decision to sell the property.
The tenant in the Suburb C property had been a tenant for about 10 years and the Husband said he didn’t want to try and evict the tenant over Christmas because of how hard he thought the tenant would find it to get alternative rental accommodation. A delayed settlement also suited the purchaser, so the 6-month settlement date was agreed to. When the tenant moved out earlier, that is in early 2023, the purchaser insisted on keeping the settlement date as in the contract. The Wife criticised this process.
The evidence of the selling agent
The Husband called the selling agent in his case. His evidence included:[11]
[11] Within Mr U’s affidavit of 26 April 2024.
11.I prepared and presented [the Husband] with an Exclusive Sale Authority to sell the [Suburb C] property. The Exclusive Sale Authority was signed by [the Husband] [in late] 2022 and the [Suburb C] property was listed for sale thereafter. Exclusive Sale Authority…
12.In my Exclusive Sale Authority and in my discussions with [the Husband], I recommended a selling price range of $800,000 to $880,000 for the [Suburb C] property. I recommended this selling price range based the highest recent sales of comparable properties and to try to attract the highest selling price for the [Suburb C] property…
13.When the [Suburb C] property was listed for sale online, the real estate market was still recovering from the Covid-19 lockdown periods. Sales around that time were unpredictable. The clearance rate for sales during the time period was around 50-60%.
14.The [Suburb C] property was marketed using our standard marketing campaign package. This included brochures and signage boards, as well as online listings. I used pre-existing photographs of the [Suburb C] property from when it was last listed on the market in 2013. The total cost of the marketing for the sale of the [Suburb C] property was $[4,200].
15.The [Suburb C] property was advertised [online] [in late] 2023. It was also listed on the [V Company] website. The [Suburb C] property was listed [online] for 32 days [in late] 2022. In that time, the listing had 7,160 views and of those, 360 people saved the listing. We had 35 phone and SMS enquiries and 25 email enquiries…
16.I conducted regular open inspections for the [Suburb C] property with each inspection garnering little interest.
17.After almost two weeks on the market, there was little interest in the [Suburb C] property. Only two groups attended the open inspections and I was not receiving any new enquiries for the [Suburb C] property. There were no written offers from any prospective purchasers.
18.[In] or around [late] 2022, I amended the online [Suburb C] property listing name [online] to read something like “Must be sold, offer invited, must be inspected!”.
19.[In late] 2022, I received an offer of $685,000 from a prospective buyer. I advised [the Husband] of the offer…
20.I presented the offer to [the Husband] and he advised that he would not accept the offer because of the price and the conditions attached to it.
21.Around the time the first offer was received, I spoke with [the Husband] and advised him that to sell the property, I recommended that he should consider accepting a lower sale price. This was because the market at that time was unpredictable and since my initial advice as to the selling price, I discovered several comparable properties in a better condition than the [Suburb C] property which had sold for between $670,000 and $750,000. I recommended to [the Husband] that a more realistic sale price would be between $700,000 to $770,000. [The Husband] signed a revised sale authority reflecting my advice in relation to the selling price range [in late] 2022. Annexed to my affidavit and marked ‘[Xinya]-2’ is the CMA Report containing various comparable properties.
22.The reduced asking price was not advertised online because [the Husband] and I wanted to achieve the highest possible price for the property. I did not have [the Husband] sign an updated sales authority so the advertised price online remained $800,000-$880,000.
23.[In late] 2022, an unconditional offer was received from for the [Suburb C] property of $680,000. I negotiated with the purchaser and received an offer of $700,000 which was accepted by [the Husband]. The contract was signed by all parties [in late] 2022…
24.No other offers were received by me for the purchase the [Suburb C] property, save for the offers detailed in this my Affidavit.
25.I had not met the purchaser prior to the sale campaign for the [Suburb C] property. To the best of my knowledge, [the Husband] did not know the purchaser either.
The single expert valuer’s evidence
Mr S was retained after the sale event controversy arose. He prepared a report, arising from inspection in late 2023 (10 months after the contract of sale) as to value of the Suburb C property as at the day of sale late 2022. He also addressed questions put to him in writing after the report was prepared. The single expert witness was critical of the sale conducted by the Husband and also of the selling agent and the selling agent’s post-sale explanations for the selling price. His report (and answers to questions put in writing) and opinions included:
“Market Value” in this report is defined as: - “Market Value is the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm's length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion”. The definition assumes:
•A willing but not anxious vendor and purchaser, with no duress or compulsion;
•A reasonable period in which to negotiate the sale, taking into account the value of the property and the state of the market;
•The value will remain static throughout the period;
•The property will be fully exposed to the market.
The basis of valuation assumes:
Freehold title subject to vacant possession. Included in the amount of this valuation are normal fixtures and fittings. Excluded from the amount of this valuation are items of furniture and furnishings, and occupant's fixtures and fittings. This valuation is determined on the basis that the property, the title thereto and its use are not affected by any matter other than those mentioned in this report.
The valuation has been prepared in conformity with the Code of Professional Ethics and Conduct adopted by the Australian Property Institute.
This valuation is for the use only of the parties to whom it is addressed and for no other purpose. No responsibility is accepted to any third party who may use or rely on the whole or any part of the content of this valuation.
The date of valuation is [late] 2022.
…
The dwelling is [a large] home with a total living area of […] sqm. The building has plasterboard internal linings and is in average condition with a functional layout.
We have relied on our external observations from the kerbside and information provided by Domantay Legal from a previous redacted valuation report which contained several photographs of the improvements circa 2021.
We note the report states several maintenance items were required and presentation was at best fair with the property tenanted. The external photographs show an overgrown front yard with general garden maintenance required.
…
12.1 Housing Demand and Supply
The Covid-19 pandemic, low interest rates and low supply resulted in a strong real estate market in the [Suburb C] in line with other parts of Melbourne and regional markets. An extra layer of demand had come from buyers seeking a regional lifestyle supported by a new work from home paradigm. These fundamentals have been playing out through 2020 and 2021 with agents reporting the market normalizing this year.
Not all properties were selling above the advertised range, which was the norm in the rising market conditions in the prior two years and price adjustments from agents after several weeks of marketing became evident. Values were still historically high with signs of an easing market; interest rate rises, and higher fuel prices placed further pressure on values with the market shifting in favour of buyers where the property is run of the mill. Unique or ‘Blue Chip’ properties continued to perform well. The subject property having a dated façade and interior would have fallen into the ’run of the mill’ category and have been price sensitive however the sale price recorded on RP Data Core Logic appears to be severely discounted.
…
The Valuation report has assessed the property against relevant comparable sales evidence to arrive at its conclusion on value. The background to the marketing campaign raises concerns with the valuer as to the motivation/process employed to sell the property. Reducing an asking price by 22.5% within three weeks of launching is a significant reduction in price and can impair the outcome of achieving fair market value. The selling process has no bearing on the derived value in the valuation report however is certainly a factor in the eventual sale price.
…
The agent indicates he regards the above sales as similar to the subject property with a value range of $670,000 to $750,000.
If the agent believes the comparable sales evidence indicated a value range of $670,000 to $750,000 why was it listed at $800,000 to $880,000?
The valuation report relies on comparable market evidence to derive its conclusion. The comments and opinions of the agent appear contradictory when the advertising copy states an immaculate home yet when struggling to achieve the anticipated sale price in the initial range advertised, the presented condition of the dwelling is used as the reason to discount the price by 22.5% within 3 weeks of launching – we note RP Data still lists the only advertised range at $800,000 to $880,000.
The valuation assumes that the dwelling is in a dated/poor condition with the comparable sales evidence used in the report the most relevant to the subject property. The new evidence provided has been analysed against the subject property with the sale at [X Street, Suburb C] the only sale providing compelling evidence to review the initial valuation figure.
(emphasis added)
Conclusion about the sale
By the end of the trial, the reliability or bona fides of the evidence of the Husband and the Wife was not questioned. As discussed with counsel, I found the evidence of both parties to be genuine and honest as he or she understood things. It was not submitted to the contrary. But the allegation of the Suburb C property sale being “undervalue” and “reckless” was maintained.
I acknowledge the circumspection of the single expert valuer, Mr S, as to the sale process. But Mr S acknowledged the terms of the sale order (and it is common ground they were communicated to the selling agent) “contradicted the definition of value in (his) valuation”. That concession was sensible. They did. The orders provided for the property to be immediately placed on the market for sale. Although the selling authority price range was reduced to the $700,000 to $770,000 range from the $800,000 to $880,000 range, the advertised or marketed price was not reduced or altered. Mr S mistakenly understood it was.
I am not satisfied that the single expert witness has taken sufficient account of the property being tenanted, with the necessary restrictions on sale that involved. The vendor could not immediately prepare the property for each and every inspection. The opinion of the selling agent that having a tenant ruled out sale by auction was not challenged and I accept that. In any event, the Husband had, at his own expense, undertaken the minor repairs the selling agent advised. I am not satisfied the comparable sales the single expert relied on were sales under compulsion, like here, with a tenant in occupation, like here, and when, like here, the property was to be “immediately” put on the market for sale.
In any event the evidence of the selling agent at [15-17], that warrants repetition, was not challenged:
15.The [Suburb C] property was advertised [online] [in late] 2023. It was also listed on the [V Company] website. The [Suburb C] property was listed [online] for 32 days [in late] 2022. In that time, the listing had 7,160 views and of those, 360 people saved the listing. We had 35 phone and SMS enquiries and 25 email enquiries…
16.I conducted regular open inspections for the [Suburb C] property with each inspection garnering little interest.
17.After almost two weeks on the market, there was little interest in the [Suburb C] property. Only two groups attended the open inspections and I was not receiving any new enquiries for the [Suburb C] property. There were no written offers from any prospective purchasers.
Further, it is common ground that although the property was advertised on the market for private sale with regular open for inspections from late 2022 until and including late 2022, and over that five-week period only two offers were received, both for less than the ultimate selling price. Both were rejected by the Husband and, I infer, taking into account the selling agent’s advice. The second offer received was negotiated up to the ultimate selling price of $700,000.
In this case, the interests of the Wife and the Husband, to achieve the best price in a reasonable time, were aligned. Absent suspicion between a divorced couple who have undergone the stress of the original trial process with barristers at 5 paces and cross examination where credibility was questioned, in this case there was no evidence, reason, or apparent logic of events to distinguish or discard the colloquialism, “Always back self-interest, at least you know it’s trying.”
I do not find that Mr S was wrong, in the sense that if the sale had of occurred with actual vacant possession, as opposed to that being a future possibility, with all the advantages of presentation and marketing that would open, and most importantly with “a willing but not anxious vendor and purchaser, with no duress or compulsion” as opposed to the circumstances here. The Husband was anxious to sell to comply with the court order and he was under compulsion to sell, and sell sooner rather than later.
In all the circumstances including his demeanour when cross examined, I accept the evidence of the selling agent. In all the circumstances including his demeanour when cross examined, I accept the evidence of the Husband, appropriately motivated by the original orders and reminded of the Wife’s intention to take him back to court if he did not comply with the orders.
Further, I am not satisfied that the selling agent has acted unprofessionally in all the circumstances. I am not satisfied that the Husband has acted improperly or other than as compelled by the orders. The fact that had things been different, a different price might have been achieved does not demonstrate either of those things.
In all of these circumstances, I am not satisfied that the Suburb C property was sold “undervalue” or “recklessly” or “negligently” at all or in the Kowaliw sense of those terms.
Was there a miscarriage of justice?
It was not suggested there was any agitation before the original learned Trial Judge of the ‘if the payment is not made’ provision, or evidence that would have thrown up, even faintly, possible consideration of the order other than as the Wife proposed it in her Outline of Case document. Yet, it is said that impugned part of the order caused a miscarriage of justice. The impugned order did not refer to capital gains tax at all. On the submissions and evidence of the parties at the original hearing, there was no apparent reason to consider capital gains tax.
During the hearing I raised with counsel for the Wife how it could be said that a provision in an order was a miscarriage of justice, when that provision was for practical purposes, the identical provision that was pressed by the Wife in the original trial? Counsel, having had the opportunity to address this point, has not been able to persuade me that there has been a miscarriage of justice because of the provisions of order 3 that did not provide for the Wife to be consulted in the event of the sale if the payment was not made. The Wife never pressed, or even suggested, that there should be such provision. That such a provision is, when pressed, and there is good reason to do so, is frequently made, does not of itself demonstrate a miscarriage of justice hen such a provision is not included and a sale is conducted by one party without reference to the other.
I take into account the general principles that parties are bound by the way they conduct their cases and refer to the authority recited earlier. If I am wrong about that conclusion, I am not satisfied that the Husband and the selling agent’s conduct of the sale was undervalue or improper or reckless for the reasons I set out above. Further, I am not satisfied that the Wife being consulted about the conduct of the sale would have resulted in a higher or better selling price.
I do not accept counsel for the Wife’s submission that Barker is authority for the proposition that the events occurring after the orders were made can constitute a miscarriage of justice for the purpose of section 79A(1)(a). I refer to the recited passages in Lane and Barker recited above. In Barker, it is true that the Husband received the much greater price for the parcel of farming land sold after the orders, but that case turned on the fact that the Husband had received an offer for the farm that was much greater than the expert valuation and did not disclose the offer to the Wife before the orders were made. The Wife’s case assumed that a provision that she be consulted or involved in the sale would have been practical and been able to actually happen without recourse to further litigation and further expense and grief thereof. I have no such evidence before me and the limited communication between the parties and their capacity to make assumptions of the conduct of the other would indicate that such a provision would not have been practical. But I make no finding.
In coming to that conclusion, I put to one side the erroneous assumption of the Wife that the order meant that she would only share in the upside of the sale price from a figure of $975,000 net of selling expenses, but not any downside. The principal reasons for which I am not satisfied there was a miscarriage of justice pursuant to section 79A(1)(b) are:
·The Wife, represented by solicitor and counsel, obtained the very provision that was pressed and pressed for good reason in accordance with settled principals of law; and
·I am not satisfied that any higher or better selling price would have been achieved if the Wife had been consulted.
Section 79A(1)(b) – circumstances that have arisen since the Order was made.
Because of the finding as to necessary and implied terms in the jewellery order, it is unnecessary to consider if this provision applies in this case.
Section 79A(1)(c) – a person has defaulted…
The essential argument was that not making the payment, the Husband had defaulted his obligations under the orders, and that this was a default as contemplated by section 79A(1)(c). I do not accept this proposition by way of shorthand or convenience, the provision of order 3 that provided for events if the payment was not made, could be recited or called a “default” provision. I am not satisfied or persuaded that such a circumstance, or shorthand, is a “default” contemplated by section 79A(1)(c). The whole of the orders must be had regard to, taking the orders as a whole, consistent with settled law and general principle.
The scheme of the orders was that if the payment was not made, regardless of reason, then the property was sold with the upside or downside from the previously accepted single expert valuation being borne by the parties as the learned Trial Judge found appropriate and just and equitable. This was entirely orthodox and consistent with settled law that the learned Trial Judge was bound to follow.
It follows that I am not satisfied that any of the provisions of section 79A apply to this controversy and the Wife’s application should be dismissed.
CALCULATIONS NOW COMMON GROUND
The only orders that need to be made is to reinforce the provision of the withdrawal of the caveat lodged by the Wife on the Husband’s Suburb E property and clarifying the application of the orders to the actual sale.
Late in the proceeding before me, the Husband tendered an aide memoire (H2) and the contents of that were uncontroversial. The aide memoire set out the various calculations of the payment from the proceeds of sale held on trust that would be made for the Wife if the orders were set aside, or not set aside, and the various values attributed to the property with and without capital gains tax taken into account. The amount of selling cost was ultimately not controversial and was the amount of $26,759.73. Significantly, the Husband did not attempt to include at this point of the case the expenses that he paid for minor repairs to have the property improved for market as advised by the selling agent.
If the orders are set aside and new orders made based on the single expert retrospective valuation of $825,000 with selling costs but without capital gains tax, the Wife would receive $94,379.36.
If the single expert valuation was applied with selling costs and with capital gains tax, then the Wife will receive $82,880.60.
If the actual sale price is applied with the uncontroversial selling costs and without capital gains tax being taken into account, then the Wife would receive $19,379.36. If the actual sale price was applied with uncontroversial cost of sale and capital gains tax, the Wife would receive $7,880.60. However, for capital gains tax to be taken into account, it would require a variation of the orders pursuant to section 79A and the Husband, disadvantaged by the capital gains tax liability, does not assert any miscarriage of justice or other application of section 79A.
Because I am not satisfied the orders should be set aside and varied pursuant to section 79A, I am not satisfied that capital gains tax can and should be taken into account, in particular in the circumstances where the issue of capital gains tax was not pressed or agitated before the learned trial Judge in the original hearing. The sum that the Wife should receive should be calculated in accordance with the original orders and take into account the now known and uncontroversial selling costs in H2, and based upon the actual sale price of $700,000, and without taking into account capital gains tax.
Interest earned, if any?
Although it was not agitated before me, if the funds held in trust have earned any interest, the parties should receive the interest earned on the portion of the funds held in trust to which they will be entitled pro rata.
Hence, the Wife should receive the sum of $19,379.36 and interest if any earned on that sum pro rata.
Hence, all extant applications will be otherwise dismissed and any application for costs, if one is to be made, should be made in accordance with Federal Circuit and Family Court of Australia (Family Law) Rules 2021.
I certify that the preceding ninety-four (94) numbered paragraphs are a true copy of the Reasons for Judgment of Judge O'Shannessy. Associate:
Dated: 16 May 2024
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