Yardsley and Yardsley (No. 2)

[2018] FamCA 464

FAMILY COURT OF AUSTRALIA

YARDSLEY & YARDSLEY (NO. 2) [2018] FamCA 464

FAMILY LAW – PROPERTY – INTERIM – Where the wife is permitted to use the proceeds of the sale of the former matrimonial home to acquire a new property

Family Law Act 1975 (Cth)

Fields & Smith (2015) FLC 93-638
Hoffman & Hoffman (2014) FLC 93-591
Kane & Kane (2013) FLC 93-569
Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466

APPLICANT: Mr Yardsley

RESPONDENT: Ms Yardsley

FILE NUMBER: SYC 5348 of 2015

DATE DELIVERED: 20 June 2018

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Watts J

HEARING DATE: 30 April 2018

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Gardiner

SOLICITOR FOR THE APPLICANT: Clinch Long Woodbridge Lawyers

COUNSEL FOR THE RESPONDENT: Ms Christie

SOLICITOR FOR THE RESPONDENT: Barkus Doolan

Orders

Pending further order

1. The husband is to pay all amounts necessary to effect the sale of the Suburb B property such payments to be taken into account by the trial judge.

2. In the event that the husband fails to comply with order 1, in default the wife may access funds that are currently in the approximate sum of $25,000 in a frozen account for the purposes of making those payments.

3. The net proceeds of the sale of Suburb B after the payment of the mortgage and sale costs be distributed as follows:

   3.1.The parties shall do all acts and things to instruct the solicitor acting on the sale of the Suburb B property to include in the Contract for Sale a special condition which, subject only to the purchaser's consent, enables an early release to the wife, by way of interim property settlement of up to and including $200,000 of the deposit monies paid by the purchaser to be used by the wife to pay the deposit on a real property in Sydney that the wife may wish to purchase and in the event the wife does not find a property to purchase, a special condition that enables the wife to an early release of up to $60,000 of the deposit monies for the wife to meet her relocation and rental accommodation (including bond) expenses;

   3.2.In payment to the wife by interim property settlement up to a total of $1,300,000 with such funds to be used by the wife in the acquisition of real property (the new property) to be purchased in her sole name and for the payment of stamp duty on such purchase;

   3.3.In payment to the wife of $92,000 by way of part payment of all outstanding periodic spouse maintenance arrears owed by the husband to the wife pursuant to the Orders of 20 July 2016;

   3.4.In payment to the wife or the Child Support Registrar on the wife's behalf of all other unpaid spouse maintenance arrears owed by the husband as at the date of completion of the sale of the Suburb B property pursuant to the Orders of 20 July 2016; and

   3.5.The balance of the proceeds of sale be placed in an account in the joint names of the solicitors on the record for each party in a controlled monies account or any other account to which the parties agree.

4. The wife is at liberty to borrow further funds secured by way of first mortgage over the new property for the purposes of acquiring the new property but thereafter is restrained from further selling, encumbering or dealing with the new property.

5. Forthwith, upon the exchange of contracts of any sale of the Suburb B Property, the husband shall do all acts and things and sign all documents as to cause the caveat registered on the title to the Suburb B Property by his Solicitors, Clinch Long Woodbridge Pty Ltd, to be withdrawn at his costs.

6. Any other outstanding interim applications are dismissed.

7. The final hearing of this matter is expedited. It is to be listed for a first day event at 2.15pm on 23 August 2018.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Yardsley & Yardsley (No. 2) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 5348 of 2015

Mr Yardsley

Applicant

And

Ms Yardsley

Respondent

REASONS FOR JUDGMENT

1. On 30 April 2018, the parties both agreed that the former matrimonial home at Suburb B would have to be sold. By consent, I made orders for the sale of the Suburb B property and some conditions relating to that sale in the context explained in my ex tempore reasons for judgment of 30 April 2018.

2. The wife had agreed to the sale of the Suburb B property in the following circumstances:

   2.1.The wife had been served with a notice from Westpac creating a circumstance where a forced sale of the Suburb B property was possible. She entered into negotiations with the bank. They agreed to reduce the mortgage payments for a period of six months upon the condition that she would move to have the property sold privately rather than by way of mortgagee sale.

   2.2.The reason the notice was issued was that mortgage payments had fallen into arrears. Notwithstanding the orders made by Justice Loughnan on 20 July 2016, the husband had taken the decision during the middle of 2017 to cease mortgage payments. Exhibit 12, is an email chain between the husband and his Westpac Private Banker. When Westpac informed the husband in November 2017 that they had honoured a number of outstanding mortgage payments with the expectation that the husband would place the account back into credit, the husband wrote, “I did not wish to honour the mortgage payments. Please reverse these” and “I need to force the sale of my house as my ex Wife refuses to settle our financial affairs”. On its face, this correspondence illustrates that the husband had deliberately engineered the non-payment of mortgage instalments.

   2.3.The husband had also ceased to make spousal maintenance payments from 16 May 2017 (that is, he had paid them for a period of nine and a half months after the order was made but has not paid them for about a year). That has had a dramatic effect on the wife’s ability to live.

   2.4.During the hearing there was also agreement in relation to the wife appointing a solicitor and an agent for the sale and for the price of the sale to be agreed upon between the parties, but in default, to be determined by the single expert who had previously valued the Suburb B property in these proceedings.

   2.5.There was a disagreement in relation to how the costs of any sale should be funded. The husband wished that money be taken from the $25,000 that is still in a frozen account. The wife wished for there to be an order that the husband make those payments but, in default of the husband complying with that order, then those funds could be used for that purpose.

   2.6.The parties have agreed on the disposition of some of the proceeds of sale and that agreement has been crystallised in the consent orders made 30 April 2018.

3. There, however, was fundamental disagreement as to how the net proceeds of any sale should be applied.

4. The husband’s position is that each party should receive $100,000 and that the balance of the net proceeds of sale should be placed in a controlled monies account.

5. The wife seeks orders which the wife herself conceded were unusual. The wife’s application for the distribution of proceeds of sale is as follows:

   5.1.The parties shall do all acts and things to instruct the solicitor acting on the sale of the Suburb B property to include in the Contract for Sale a special condition which, subject only to the purchaser's consent, enables an early release to the Wife, by way of partial and/or interim property settlement of up to and including $200,000 of the deposit monies paid by the purchaser to be used by the Wife to pay the deposit on a real property in Sydney that the Wife may wish to purchase and in the event the Wife does not find a property to purchase, a special condition that enables the Wife to an early release of up to $60,000 of the deposit monies for the Wife to meet her relocation and rental accommodation (including bond) expenses;

   5.2.In payment to the Wife of $92,000 by way of part payment of all outstanding periodic spouse maintenance arrears owed by the Husband to the Wife pursuant to the Orders of 20 July 2016;

   5.3.In payment to the Wife or the Child Support Registrar on the Wife's behalf of all other unpaid spouse maintenance arrears owed by the Husband as at the date of completion of the sale of the Suburb B property pursuant to the Orders of 20 July 2016;

   5.4.In payment to Barkus Doolan Family Lawyers in the amount of $49,118.51 by way of interim costs to satisfy the Wife's current indebtedness to Barkus Doolan Family Lawyers;

   5.5.In payment of a further $149,000 to the Wife by way of interim costs on account of the Wife's estimated future estimated legal fees and disbursements;

   5.6.In payment to the Wife in the sum of $150,000 by way of interim and/or partial property settlement; and

   5.7.In payment of the balance then remaining to the Wife by way of interim and/or partial property settlement, up to a total amount of $1,500,000, with such funds to be used by the Wife in the acquisition of a real property to be purchased in her sole name and for the payment of stamp duty on such purchase.

6. In Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466, the Full Court at 85,645 set out that when considering whether or not to make interim property orders, the “over arching consideration” is the interests of justice. It was not necessary to establish compelling circumstances. All that was required was that the exercise of power be appropriate. The Full Court went on to adopt what had been previously said in Harris and Harris (1993) FLC 92-378, namely that the power needed to be exercised within the framework of s 79 and the discretion had to be exercised conservatively.

7. Some attention needs to be paid to the overall parameters of the property dispute. The wife in her affidavit at [155] estimates that the net assets of the parties are in the approximate sum of $3,214,722. The wife asserts that a just and equitable division of those assets would be as to 65 per cent to her and 35 per cent to the husband. That distribution of assets is set out at [174] of the wife’s affidavit of 6 April 2018 with the wife receiving $2,086,637 and is predicated upon the wife receiving as part of that sum the whole of the proceeds of sale of the Suburb B property.

8. The anticipated net proceeds of the sale of the Suburb B property after valuation, costs of sale and discharge of the mortgage is likely to be in the approximate sum of $1,947,795. The wife’s application seeks she receive from the net proceeds of the sale of the Suburb B property the following amounts:

   Deposit on new home  $ 200,000

   Spousal maintenance arrears  92,000

   Legal fees owed  49,118

   Future legal fees  149,000

   Interim property  150,000

   Balance for new home (up to)               1,500,000

   $2,140,000

9. It can be seen that the effect of the wife’s application is that she seeks to receive the whole of the net proceeds of the sale of Suburb B, although the majority of those monies would be reinvested in a house in which she would reside.

10. The overall estimate by the wife of the net pool of assets at $3,214,722 does not include an amount of $704,000 which the wife says the husband has had since the separation from drawings from H Ltd entitlements. The details of the wife’s calculation in that regard is set out in [110] of her affidavit.

11. In relation to s 79(4)(d) – (g) considerations, the husband’s earning capacity is a matter of some contention. The wife has annexed to her tender bundle the 2016 Country D tax statement in relation to the husband’s income. It was agreed for the purpose of the trial that the Country D dollar and the Australian dollar are about at parity. Those documents could be read therefore as being the equivalent to Australian dollars. Tendered from the Westpac subpoenaed material (but not discovered by the husband) is the husband’s income tax assessment in relation to the 2017 tax year dated 7 August 2017 (part of Exhibit 12). That document indicates the husband’s gross income is $932,246 and the tax payable on that income was $172,276. The information in that document is close to the wife’s evidence as to what the husband’s income was in the previous year. It equates to a weekly gross income of $17,927.

12. This is to be contrasted with the husband’s assertion in his financial statement filed after hours on 20 April 2018 that his gross weekly income was in the sum of $11,362.

13. It is not appropriate in the context of this interim hearing to do any detailed analysis of the expenditure claimed in the husband’s most recent financial statement. There are some obvious areas, however, that require scrutiny including the $140 a week the husband says he pays to the wife for gardening/lawn mowing, $450 a week on Club Membership and $750 on the parties’ adult daughter’s activities/pocket money. The husband is no longer making any payments in relation to university for Ms E. At para [115] of the wife’s affidavit, she states that the husband is now expending less money in relation to F’s schooling as F is now attending as a day student in Country D and not as a boarder when he was at G School. Also at a final hearing, there will be some investigation in relation to the amount the husband asserts he owes by way of loan on his overdraft with UAB.  The husband also asserts that he is paying $1,600 per week off credit cards debts that seem to be in the order of about $36,000.

14. In addition, the husband has not been paying the liability in relation to the mortgage on the Suburb B property which he lists on his financial statement as being a regular payment by him in the sum of $1,520 per week.

15. On the face of it, it appears that there is a substantial and significant disparity in the earning capacities and available surplus periodic funds of each of the parties and that, prima facie, will be a significant s 75(2) factor in the wife’s favour at hearing.

16. The wife has a degree, however, has not engaged in any form of work since 1998. Over the course of the parties’ marriage, the husband obtained paid employment in different countries and the family relocated to accommodate him. The parties relocated a total of five times and lived in Sydney, New Zealand, and Asia. This, and the wife’s role as primary caregiver, inhibited her ability to find work or qualify in her profession.  

17. Taking a conservative approach, it is not out of the question that the wife might be able to achieve the division of property that she is seeking, although having said that, it is not certain she will achieve that outcome.

18. The husband’s application for final property orders is that the assets be divided 60/40 in his favour. The apparent basis of that claim is that whilst conceding there would be an adjustment in the wife’s favour on s 79(4)(d) to (g) considerations, he asserts that his financial contributions have been so significant during the marriage that he would receive an adjustment of the overall assets 60/40 in his favour, even after the wife received an adjustment in her favour for s 79(4)(d) to (g) considerations. To the extent that the husband’s claim relates to personal exertion earnings during the cohabitation, the husband would face the obvious hurdles created by cases such as  Kane & Kane (2013) FLC 93-569; Hoffman & Hoffman (2014) FLC 93-591; Fields & Smith (2015) FLC 93-638.

The wife’s application to use proceeds of sale to acquire new accommodation

1. The wife’s first application is for her to receive $200,000 to put towards a deposit on a new home. This is coupled with an application to receive up to $1,500,000 to complete the acquisition of a new home.

2. The arguments put against making such an order are:

   20.1.It is not an order that is usually made because whilst orders for the sale of assets are sometimes made for some purposes (such as in this case to avoid a fire sale by a bank), the acquisition of new property is not something that normally is ordered at an interim stage; and

   20.2.The downside for a new acquisition is that the wife would incur stamp duty on the acquisition of a new property and, if the property has to be sold, real estate agent’s selling commission will have to be paid.

3. The arguments for allowing the wife funds to buy a new property are:

   21.1.In the context of this interim hearing, it seems that the husband has deliberately set out to create a situation whereby he has forced the wife to sell the matrimonial home prior to the final hearing;

   21.2.If the wife is forced into the rental market, that rent will be lost whereas if she is able to acquire an unencumbered property, she will not need to pay rent;

   21.3.There are advantages in selling and buying in the same market as a guarantee against a movement in the market in an adverse direction when the wife comes to repurchase into that market;

   21.4.The husband’s financial strength and his ability to regenerate his wealth in the future on an ongoing basis when judged in the context of this interim hearing, seem substantially superior to the wife’s; and

   21.5.On the husband’s case, the wife would probably be compelled to move house twice whereas if the wife’s application for final orders is successful, she will only have to move once.

4. Balancing the arguments for and against allowing the wife to acquire a new property, I find it is appropriate and just and equitable to allow her to have the opportunity to do so. However, taking a conservative approach, I shall limit the monies available to the wife for a new purchase to $1,500,000 inclusive of the $200,000 deposit. The wife will be at liberty to raise a first mortgage on the acquisition of any new property but shall otherwise be restrained from further selling, encumbering or dealing with the new property.

Who should pay, in the first instance, the cost of the sale of the Suburb B property?

1. The husband is in the superior financial position. I will make an order that the husband pay the costs of the sale but if he doesn’t the wife can use part of the $25,000 that is currently frozen for that purpose.

Arrears of spousal maintenance

1. The wife seeks that she receive from the proceeds of the sale of Suburb B the amount owing for spousal maintenance in the sum of $92,000 together with any further accumulated arrears. It is proper I make that order.

The wife’s further application for legal costs and a lump sum interim property settlement order

1. The wife seeks $200,000 out of the proceeds of sale to pay $50,000 to the lawyers for debts they have incurred to date and have $150,000 remaining available for that purpose for future legal fees.

2. The wife already has the benefit of a dollar for dollar order in circumstances where the husband continues to be represented. The wife will receive a lump sum by way of payment of arrears of spousal maintenance. Taking a conservative approach and having already made $1,500,000 available to the wife to enable her to acquire a new property in the interim, it is appropriate to conserve the balance of the proceeds of the sale of Suburb B.

Removal of Caveat

1. The husband’s lawyers have lodged a caveat on the Suburb B property, asserting an equitable interest arising from a contract to provide legal services to the husband. Both parties agree that the husband should do everything necessary to ensure that his lawyers withdraw that caveat prior to the settlement of the sale of the Suburb B property.

Expedition

1. The wife filed an Application for Final Orders on 14 August 2015. Given the age of these proceedings, the time interim hearings have occupied and the outstanding issues, it is appropriate I expedite the matter. It is to be listed for a first day event on 23 August 2018 before myself.

I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts delivered on 20 June 2018

Associate: 

Date:  20.6.18