James and James

[2016] FamCA 1105

FAMILY COURT OF AUSTRALIA

JAMES & JAMES [2016] FamCA 1105

FAMILY LAW – PROPERTY – Application for interim sale of property – dispute as to which property should be sold to discharge a debt owing to the bank – interim orders made for the sale of an investment property of the parties

Family Law Act 1975 (Cth)

APPLICANT: Ms James

RESPONDENT: Mr James

FILE NUMBER: MLC 10243 of 2012

DATE DELIVERED: 12 December 2016

PLACE DELIVERED: Melbourne

PLACE HEARD: Johns J

JUDGMENT OF: Johns J

HEARING DATE: 12 December 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Wheeler

SOLICITOR FOR THE APPLICANT: Farrar Gesini Dunn

COUNSEL FOR THE RESPONDENT: Ms Vohra

SOLICITOR FOR THE RESPONDENT: Schetzer Constantinou

Orders

1. That the Husband and the Wife do all acts and things and sign all documents as may be required in their capacity as Directors of Q Pty Ltd (as trustee of the Q trust) in order to immediately sell by auction the real property situate at and known as R Street, Suburb S in the state of Victoria being the whole of the land more particularly described in the certificate of title Volume … Folio … (“R Street”) and for the purposes of effecting the sale:-

   (a)       the sale be conducted by T Real Estate Suburb S;

   (b)       the method of sale be by way of public auction;

   (c)       R Street be sold with vacant possession;

   (d)       the reserve price be $550,000 “five hundred and fifty thousand dollars”;

   (e)       the conveyancers for the sale be U Lawyers.

2. That upon settlement of the sale the proceeds be applied as follows:-

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

   (b)       second, to be applied to the discharge of the following liabilities secured by way of mortgages registered number … and registered number … to the National Australia Bank being loan numbers ending in:

   (i)4218;

   (ii)1658;

   secured against the property situate at and known as 2 R Street being the whole of land described in certificate of title Vol 09557 Folio 405 (“2 R Street”) and secured against R Street;

   (c)       third, the balance if any then remaining to be placed into an interest bearing account in the joint names of the parties to be held upon trust for them by the wife’s solicitor until further order.

3. That each party have liberty to apply with respect to the terms and conditions of the sale.

4. That the wife’s application in a case filed 28 October 2016 and the husband’s response to application in a case filed 25 November 2016 be otherwise dismissed.

5. That each party’s costs of this day be reserved.

6. That pursuant to Rule 19.50 of the Family Law Rules 2004 (Cth) this matter reasonably required the attendance of counsel.

7. That the matter be listed for mention before Justice Johns at 9.30 am on 20 March 2017.

IT IS NOTED that publication of this judgment by this Court under the pseudonym James & James has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 10243 of 2012

Ms James

Applicant

And

Mr James

Respondent

REASONS FOR JUDGMENT

1. I am going to order a sale of the unit. The proceeds of sale from that unit will be applied to the discharge of the National Australia Bank liabilities secured thereon. If there is a surplus it will be held on trust for the parties.

2. The basis for that order, just so that it is quite clear to the parties, is that the bank needs to be paid.  I have the competing applications of both parties seeking to retain significant property.  I simply am not in a position to determine the feasibility or otherwise of either of their positions with respect to the former matrimonial home or the L Town property.  I recognise that the wife seeks to retain the investment property as part of her property settlement, but it is the asset that in the scheme of her application is the less important of the two properties she seeks to retain. 

3. The debt to the mortgagee has to be paid from somewhere.  The consequence of doing nothing is for the bank to foreclose, for the bank to force a sale of that property and possibly, then, the other R Street property afterwards.  That would be a most unsatisfactory result from the wife’s perspective and also likely from the husband’s perspective.  The parties need to be protected from that consequence. 

4. A sale of the unit, as well as significantly reducing the debt, may well have the impact of allowing the bank to enter in some negotiations so that there is no further pressure from them until the trial.  There is an order that the husband service the debt secured over the property at R Street, Suburb S. That order will continue.  It is likely that if the husband elects to continue not to service that debt, there will be significant scrutiny of those decisions at the trial and the inevitable consequence may well be – if that is a course of conduct that continues – that such is the debt position of these parties that L Town will have to be sold at that time and either the proceeds applied to reduction of debt or reduction of debt and payment to the wife of her entitlements.  I do not know. 

5. It is too early to predict what the outcome of the trial is, particularly when there is so much uncertainty as to the value of the parties’ assets, but these orders should be seen as orders to protect what is left.  In light of the evidence before me, being the correspondence from the bank, it is the most appropriate course to ensure preservation of assets at this point in time. 

I certify that the preceding five (5) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Johns delivered on 12 December 2016.

Associate: 

Date:  12 December 2016