Rahman v Rahman (No. 2)

Decision date: 22 May 2025

Jurisdiction: Equity

Before: Slattery J

Decision: Orders made for removal of caveats with funds to be set aside for the caveators on settlement.

Catchwords: LAND LAW — Caveats — Removal of caveat — Removal by order of court – consequent upon a family law dispute a wife is appointed as the trustee for sale of two matrimonial properties – due to continuing conflict between husband and wife the wife fails to sell the properties – wife replaced as trustee for sale – independent professional trustees for sale appointed – trustees for sale seek the removal of caveats securing obligations to a former professional adviser of the husband and a lender to the wife, to enable the properties to be sold – trustees for sale offer to set aside funds to cover the security of the caveators.

Legislation Cited: Family Law Act 1975
Real Property Act 1900

Cases Cited: Rahman v Rahman [2024] NSWSC 1616

Category: Consequential orders

Parties: Fahmid Rahman (Plaintiff)
Mita Rahman (First Defendant/Cross-Respondent)
Wafa Rahman (Second Defendant/Cross-Claimant)

Representation: Counsel:
N/A
Solicitors:
N/A

File Number(s): 2024/00374705

Publication restriction: No

JUDGMENT

1. This is the Court’s second judgment in these proceedings. The Court first judgment on 28 November 2024 sets out the background to the proceedings: Rahman v Rahman [2024] NSWSC 1616. The proceedings concern the appointment and supervision of trustees for sale following certain orders of the Federal Circuit and Family Court of Australia (“FCFCA”) made on 24 March 2023 between Ms Mita Rahman, the plaintiff wife and Mr Fahmid Rahman, the defendant husband. These reasons are to be read with the Court’s first judgment. Events, matters and persons are referred to in both judgments in the same way.

2. Once again, the husband in the wife appeared for themselves although the wife was again assisted by Mr Gilmore, who was given leave to speak on her behalf as a McKenzie's friend.

3. The Court’s first judgment removed the wife from her position as trustee for sale under the 24 March 2023 Orders of the FCFCA ("the March 2023 orders") because the implementation of those orders had become paralysed by endemic conflict between the husband and the wife. The Court consulted with the Registrar in Equity thereafter and on 16 December 2024 appointed Mr Stefano Calabretta of Emerson Lewis Lawyers and Mr Andrew Fleming of Walker and White as joint trustees for the sale of the land, referred to for convenience in the first judgment as property 1 and property 1A. Since December 2024 the trustees for sale have been progressing the sales of the two properties far more expeditiously than at any time since the making of the March 2023 orders.

4. Since December 2024, some issues have arisen which have impeded the work of the trustees for sale. This has led to the matter coming before the Court for further argument on 14 May 2025. The Court pronounced orders on 14 May 2025 which were perfected on 21 May 2025. These reasons for decision explain the reasons for the making of those orders. But first some short further background to events since 16 December 2024 is required.

5. The trustees for sale sought possession of property 1A against the wife by motion in January 2025. The Court gave judgment for possession in the trustees’ favour against the wife on 18 February 2025 and ordered that execution of the writ of possession be stayed, so that it was not executed before 28 March 2025. This was to allow the wife an opportunity to vacate the property 1A according to a reasonable schedule of her choosing. The same day the Court ordered the husband to withdraw a caveat registered on the title of property 1 and property 1A to facilitate their sale. In the event the husband did not withdraw the caveat the Registrar was authorised to do so. The caveat was withdrawn.

6. The wife vacated property 1A by 28 March 2025. The husband sought to attend the premises and to inspect, collect and remove chattels there, which he identified as his own. He was authorised to enter the property and remove those items by orders of the Court on 8 April 2025. And thereafter the trustees for sale were given liberty to dispose of all remaining assets and personal property at property 1A.

7. The trustees now have vacant possession of property 1A and are preparing it for sale. Property 1 is tenanted and is subject to a contract for sale to Ms Wafa Rahman, the couple’s daughter. The sale of property 1 is subject to the tenancy. Completion of the sale property 1 was due to take place on Friday, 16 May 2025. But when the matter came before the Court on 14 May it was unclear that the transaction was likely to settle on Friday 16 May. Ms Rahman did not give a clear indication to the Court that she was going to settle the transaction two days later. Unfortunately, Mr Chaudhry, the solicitor had been acting for her on the transaction was not present by AVL. It is desirable that he appears on future occasions when the matter comes before the Court.

8. The immediate issue that brought the matter before the Court was the motion of the trustees for sale dated 7 May 2025, which sought the removal of caveats from the titles to property 1 and property 1A. Rodney John Kent and Peter Orlizki, practising as Kent Attorneys, who formerly acted for the husband had lodged a caveat over both properties (“the Kent Attorneys caveat”). Perpetual Corporate Trust Ltd, the trustee of a personal finance are, the Plenti Lending Platform, had loaned funds to the wife (“the Plenti caveat”) had lodged a caveat over the title to property 1.

9. The Court has ample powers to order the removal of caveats under Real Property Act 1900, s 74K. This power is commonly deployed in circumstances such as the present, where trustees for sale are seeking to remove caveats prior to settlement of the sale of properties entrusted to them.

10. The Kent Attorneys caveat represents a claim by Kent Attorneys for a sum of $30,000 from the sale proceeds. An affidavit filed on behalf of Kent attorneys shows how the sum of $30,000 was accumulated. That affidavit recounts a disturbing history of how the provision of ordinary legal services by Kent Attorneys to the husband invoiced in 2015 for a total of $12,812.80 has now ballooned to a figure of $30,000. According to Kent Attorneys evidence the reason for the near tripling of the claim is the husband’s constant and unyielding opposition to paying the claim through many events. These included opposition to Kent Attorneys at every step of the following procedural events, a cost assessors determination, a review of the cost assessment, the entry of the local court judgement for costs, the enforcement of the local court judgement, examination orders, motions by the husband for stays of the costs orders, further motions by the husband for a stay of the costs orders, a third set of motions by the husband to set aside costs orders, adjournments to allow the husband to file an appeal in the Supreme Court in relation to the costs orders, an application by the husband to pay costs orders by instalments, unsatisfied garnishee orders against the husband. The objective evidence advanced by Kent Attorneys supports this history of conflict generated by the husband.

11. Faced with this frustrating history, to ensure enforcement of Kent Attorneys’ costs, the firm applied to the FCFCA. On 25 January 2023 Judge Dunkley of the FCFCA charged property 1 and property 1A by order with an obligation to pay an amount of $23,589.74 as at 25 January 2023 to Kent Attorneys increasing with a daily interest rate of $5.11. This is now somewhat more than $30,000 but has been rounded down. Kent attorneys are prepared to accept the sum of $30,000 as they do not wish to be involved any longer in conflict with the husband arguing about the quantum of this debt.

12. The husband did not appeal against these orders. As a result, Kent Attorneys placed a caveat on the titles to the two properties, the caveats that the trustees now wish to remove.

13. The husband advanced a wide range of opposition to the Court dealing with the matter. He said that out in detail and written and oral submissions which the court has considered. The husband objected to this Court’s exercise of jurisdiction. He challenged the order in which the trustees were selling the properties. He sought to stop the process of sale until he had the opportunity of bringing further applications in the Family Court on the basis that its jurisdiction should prevail. He was critical of Kent Attorneys and did not appear to accept the validity of their debt. He submitted that all the costs of the trustees for sale should be paid by the wife. He submitted that this that was preferring the interests of the wife.

14. In summary the husband wanted the following outcomes. He wanted to stay the sale, remove the trustees, compel the sale of property 1 to Ms Rahman, stay these proceedings pending his further applications in the FCFCA, and allow him and the couple’s daughter Ms Rahman to purchase both properties, citing the need for welfare of Ms Rahman a child of the marriage.

15. The Court is not prepared to stay these proceedings, which are well within its jurisdiction and are not an exercise of jurisdiction under the Family Law Act 1975. These proceedings relate to this Court’s inherent jurisdiction to supervise trustees and its jurisdiction under the Real Property Act, 1900. This Court cannot and does not intend to vary any orders of the FCFCA in relation to this couple. This Court only intends within its jurisdiction to assist in the implementation of the existing orders of the FCFCA Family Court, the March 2023 orders, which do not require sale of the properties to any family member. The clear intent of the orders is to sell the two properties on market to obtain the best price reasonably available for the couple.

16. There is every reason to order the removal of the Kent Attorneys caveats so the settlement of these two properties can proceed smoothly and the Court will make the orders requested. The Court is told that after the payment out of any first mortgages that there is ample equity in these properties to meet the Kent Attorneys caveat. Kent Attorneys want to leave the caveats in place and be paid out on settlement. Kent Attorneys do not want to have to expend further legal costs to come back to Court to apply for funds to be paid out to them later.

17. But the trustees want the caveats removed now, as they may have to issue a notice to complete in respect of property 1 and removal of the caveat will simplify the marketing and sale of property 1A. The Court will order them to be removed now but Kent Attorneys desire to minimise further costs in enforcing this obligation can still be accommodated. This is understandable in the circumstances it declares the $30,000 represents a compromise.

18. Kent Attorneys will not have to make a further application to Court for access to the money. The trustees should pay the funds into their trust account on settlement. On the next occasion the matter is before this Court, the Court proposes to make additional orders providing for the paying of $30,000, when received by the trustees on settlement of one of these properties, to Kent Attorneys. The orders of Judge Dunkley are still in place and there is no basis for withholding these funds from Kent Attorneys any longer. Whatever the disputes between husband and wife established third-party creditors such as Kent Attorneys should be paid. The wife was not in any way responsible for incurring this debt and it should be deducted from the husband’s share.

19. The Plenti caveat over property presents a much simpler picture. The wife does not dispute the Plenti caveat debt, and she has conducted herself reasonably in relation to it and not sought to contest it in unnecessary or protracted litigation. It should be deducted from her ultimate share of the proceeds of sale of the two properties. Similar arrangements will be made for the trustees for sale to pay that debt to the Plenti caveat caveator after settlement to minimise legal costs for that caveator.

20. The husband threatens further action against the wife in the FCFCA, which action is said to be listed for hearing on 22 May 2025. It is unclear what maintainable relief under the Family Law Act 1975 that the husband could possibly have at this late stage of the FCFCA proceedings, especially given that the husband has brought multiple appeals in the FCFCA, which have all been dismissed.

21. It is otherwise this Court’s intention to proceed to pay out the proceeds of sale of the two properties in accordance with the existing March 2023 orders made by the FCFCA which allocate the proceeds 64% to the wife and 36% to the husband. This Court does not have jurisdiction under the Family Law Act 1975 but will exercise this Court’s jurisdiction over the trustees by implementing the FCFCA’s March 2023 orders by paying the monies out to the husband and the wife as soon as the properties are sold.

22. Should the FCFCA wish to take a different course then the proceeds of sale can be paid into the FCFCA (subject to this Court making orders about the costs of these proceedings and costs related to the appointment of the trustees for sale and their conduct of the sales) for the later disposition of the FCFCA, upon its exercise of jurisdiction under Family Law Act 1975.

23. For these reasons, the Court makes the following orders:

24. ORDERS pursuant to section 74K of the Real Property Act 1900 that Rodney John Kent and Timothy Peter Orlizki withdraw caveat [not included in these reasons] (Kent Attorneys Caveat) from the title of property 1 and property 1A.

25. ORDERS pursuant to section 74K of the Real Property Act 1900 that Perpetual Corporate Trust Limited (ACN 000 341 533) withdraw caveat [not included in these reasons] (Plenti Caveat) from the title of property 1.

26. ORDERS, with respect to the Kent Attorneys Caveat, that the Trustees are to withhold the sum of $30,000 from the sale proceeds of property 1 (and if necessary property 1A) at settlement and maintain those funds in their trust account until further order of the Court.

27. ORDERS, with respect to the Plenti Caveat, that the Trustees are to withhold the sum of $80,000 from the sale proceeds of property 1 at settlement and maintain those funds in their trust account pending further order of the Court.

28. DIRECTS that if the sale of property 1, settles on Friday 16 May 2025:

(a) Ms Rahman shall file and serve written submissions by 21 May 2025 as to how the funds should be disbursed; and (b) the defendant, Mr Rahman shall file and serve written submissions in reply by 28 May 2025.

6. NOTES that if the contract for sale of property 1 does not settle on 16 May 2025 the Trustees for Sale are at liberty to issue a Notice to Complete to the purchaser, Wafa Rahman.
7. NOTES that it is not necessary for Kent Attorneys or Plenti to file any further motions for the payment of funds out of the trust account of the trustees for sale.
8. ADJOURNS the proceedings for further directions before Slattery J at 9:30am on 11 June 2025, when the Court will review the progress of the sale of each of property 1 and property 1A with a view to finalising these proceedings and the sale of the two properties in the near future.

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