Norris (a pseudonym) v Brooks (a pseudonym) (No 2)

I delivered the principal judgment in these proceedings on 17 June 2022: see Norris v Brooks [2022] NSWSC 804 (“J”).

In accordance with what the parties informed the Court are the procedures for ensuring the anonymity of the parties, the witnesses, and the people and places involved in family law proceedings in the Federal Circuit and Family Court of Australia (Family Court), the reasons for judgment will be processed before they are published, so that the name of the proceedings will be changed and arbitrary names are given instead of the real names of the relevant persons and places. When these reasons for judgment are published, the same procedure will be followed to ensure a proper level of anonymity.

The issue dealt with in the principal judgment was an application by the husband for orders under s 79 of the Family Law Act 1975 (Cth) altering the interests of the husband and wife to their matrimonial property. The proceedings had been transferred to this Court by an order made by Foster J of the then Family Court of Australia on 21 January 2020.

The hearing took place in the period between [hearing dates redacted]. The issues raised in this lengthy hearing were complex and unfamiliar to the day-to-day jurisdiction exercised by this Court. As I recorded at J[540], the reasons for judgment were substantially completed by 23 March 2022, but on 31 March 2022, the husband foreshadowed making an application to reopen his case. On 3 June 2022, my Associate was advised on behalf of the husband that the application to reopen would not proceed. The reasons for judgment were then delivered on 17 June 2022.

The reasons for judgment were therefore delivered some 15 months after the completion of the hearing.

For the purposes of the proceedings, the husband and wife agreed that the property to which they were entitled should be divided into two pools. Only Pool 1 was to be divided between the parties.

The order I made at J[532] was that the existing matrimonial property of the parties – in effect, the property in Pool 1 – was to be divided between them in the proportion 52.5% in favour of the wife and 47.5% in favour of the husband. This order would not provide for any fixed sum to be divided in the stated proportions between the wife and the husband. It contemplated that they would receive shares of what the property in Pool 1 was actually worth.

The largest asset in Pool 1 is a residential property at [Suburb D] that was the final matrimonial home of the parties. For the purposes of the hearing, the parties treated the [Suburb D] property as having a value of $3.8 million. That value was derived from a formal valuation undertaken by the joint expert valuer appointed by the parties and was stated as giving the value as at 24 February 2021.

The valuation undertaken by the expert valuer is accordingly now in the order of 18 months old. It is notorious that the value of residential properties in the Sydney market may have changed substantially over that period.

The issue to be determined in these reasons is whether the husband's share in the Pool 1 assets should be determined on the basis that the [Suburb D] property now has a value of $3.8 million, or whether the value should be determined by putting the property to public auction.

The husband's submission is that the only fair course is for the Court to make orders that will enable the actual present value of the [Suburb D] property to be determined by a public auction.

The wife has responded to this claim by submitting that the proceedings were conducted on the basis that the parties accepted that the [Suburb D] property had a value of $3.8 million, and that the Court's final orders should be made on the basis that the husband is entitled to a 47.5% share in that value.

In order to explain the detail of the wife's position fully, it is necessary to refer to that part of the principal judgment in which I explained that the wife, the husband and each of their four children were entitled to percentage shares in the sale price of a property at [Suburb B]. It is not necessary to refer to the relevant aspects of the principal judgment in detail. It is sufficient to note that, during the hearing, a purchaser was found for the [Suburb B] property at a very favourable price that was substantially greater than the value of the property that was supported by the valuation evidence that was then available. The Court made appropriate orders to facilitate the appointment of trustees for sale, and in due course the [Suburb B] property was sold for the price that was offered and the contract for sale was ultimately completed.

Thereafter, the eldest child of the parties was appointed by order of this Court as the financial manager of the affairs of the three youngest children under the supervision of NSW Trustee and Guardian.

For the purpose of considering the final orders that should be made following the delivery of the principal judgment, the wife provided evidence that the NSW Trustee and Guardian had approved amounts of $1,283,333.33 from the estates of each of the three youngest children being applied by their financial manager for the purpose of the common purchase by the three youngest children of a suitable residential property that will be appropriate to accommodate them into the indefinite future. The proposal conveyed by the wife to the Court is that these three amounts would be applied on behalf of the three youngest children to purchase the [Suburb D] property for a price of $3.8 million.

The parties' eldest daughter received the largest share in the proceeds of sale of the [Suburb B] property, and the wife advised the Court that the daughter was prepared to apply part of that share in supporting the purchase of the [Suburb D] property, whether that be in the name of the wife or of the three youngest children.

The principal reason why the husband objected to this course is that he believes that the [Suburb D] property now has a market value substantially greater than $3.8 million. In an affidavit provided to the Court, the husband noted that the [Suburb B] property had in fact sold for a price some 40% over the valuation given to it in the evidence before the Court.

The husband had also obtained appraisals by local real estate agents regarding the current value of the [Suburb D] property. Those appraisals were given in June 2022 and were within the following ranges: $4.8 million to $5.2 million, $4.5 million to $5.0 million, and $7.0 million to $7.5 million.

The husband submitted that the significant range in the values indicated by these appraisals made it more appropriate for the market value of the [Suburb D] property to be determined by public auction, rather than by a current valuation report.

The aspect of s 79 of the Family Law Act that is of particular significance to the determination of the present issue is s 79(2), which provides:

As was stated in Stanford v Stanford (2012) 247 CLR 108 at 121; [2012] HCA 52 at [39]-[40] by French CJ, Hayne, Kiefel and Bell JJ (footnotes omitted, emphasis in original):

In substance, this means that a court exercising jurisdiction under s 79 of the Family Law Act must, as a separate exercise, satisfy itself that in all the circumstances, it is just and equitable for the Court to make an order altering the interests of the parties to the marriage in the matrimonial property. The making of the order must be just and equitable at the time it is made, not only when the proceedings are heard.

I accept the husband's submission that a change in the value of the [Suburb D] property is a matter which will influence the practical effect of the orders and, accordingly, may impact the justice and equity of the decision.

This submission was supported by the following extract from the judgment in Halstron & Halstron [2022] FedCFamC1A 65 at [52]-[53] (McClelland DCJ and Austin J):

While it may be appropriate in some circumstances for the Court to order that the current value of the relevant property be determined by a new and up-to-date valuation, I am satisfied that, in the present case, the preferable course is for the Court to order that the [Suburb D] property be put to public auction. As will be immediately apparent from a survey of the reasons in my principal judgment, there is an extreme level of antipathy between the parties and of the children towards the husband. The Court cannot be confident that the parties will cooperate in the sale of the [Suburb D] property. If the value were to be determined by a further valuation, that may give rise to further disputes between the parties. The only practical way to avoid the possibility of further disputation is to let the market determine the value of the [Suburb D] property.

The husband has provided affidavits containing consents to being appointed as trustees for sale of the [Suburb D] property by the two solicitors who were appointed by the Court to conduct the successful sale of the [Suburb B] property. I am satisfied that the hourly rate of each proposed trustee appears reasonable (although I am not required at this stage to determine that matter), and the estimated cost of acting as trustee of $10,000 plus GST, and the costs of acting on the conveyance of $4,000 plus disbursements and GST, appear reasonable. The Court has an affidavit of fitness in respect of both trustees by one of their partners.

The orders to be made will permit the wife and the children to bid at the auction. Provided NSW Trustee and Guardian gives final approval, the parties' three youngest children will be able to bid at the auction through their financial manager. As indicated, the parties' eldest daughter should have the resources to assist her family members to place the highest bid, if that is something that they all think is an appropriate course to follow at the auction.

I will add an order that will permit the trustees for sale to authorise the auctioneer to accept a bid from any or all of the wife, the eldest daughter, and the eldest daughter as financial manager for the three youngest children, to apply the wife's share in the sale price of the [Suburb D] property towards its purchase. That order should have the effect that the wife will be able to bid a price that takes advantage of her entitlement to receive half of the net sale price after allowance is made for all costs and other impositions such as capital gains tax.

The parties and the trustees will be able to relist the matter before me if it becomes necessary to make any adjustment to the order that will permit the wife to apply her share in the proceeds of sale of the [Suburb D] property towards its purchase.

Subject to certain changes made by me and which I explain below, the husband's solicitor has advised me that the following orders conform to the approach that is commonly adopted by the Family Court in these circumstances:

I have varied the draft orders submitted on behalf of the husband in the following principal ways:

These orders are complicated in terms of structure and language, but I have decided that it is appropriate to make orders in these terms, given the advice I have received that the orders will conform with the approach commonly adopted by the Family Court. I will not cause the orders to be entered until 7 days after these reasons are delivered, to give the parties an opportunity to consider them and to advise my Associate whether there are any drafting difficulties that will justify some revision. I am conscious that the wife may find this process difficult as she has not been legally represented for the purpose of the formulation of the orders that will be appropriate to give effect to my principal judgment.