Durante and Seggio and Ors - [2011] FMCAfam 77

FEDERAL MAGISTRATES COURT OF AUSTRALIA

DURANTE & SEGGIO & ORS

[2011] FMCAfam 77

FAMILY LAW – Property and children – contravention penalty – husband disclaims interest in mother’s estate – accrued jurisdiction – s.106B of the Family Law Act 1975 – wife’s application to withdraw disclaimer successful.

Family Law Act 1975, ss.106B, 80(1)(k)

JW Broomhead (Vic) Pty Ltd (in liq) v JW Broomhead Pty Ltd [1985] VR 891
Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457
Probert v Commissioner of State Taxation (1998) SASC 6896
Re Paradise Motor Company Limited (1968) 1 WLR 1125

Applicant:

MS DURANTE

First Respondent:

MR W SEGGIO

Second Respondent:

MR S SEGGIO

Third Respondent:

MS BISSI

Fourth Respondent:

STATE TRUSTEES LIMITED

File Number:

MLC 1121 of 2010

Judgment of:

Hartnett FM

Hearing date:

26 October 2010

Delivered at:

Melbourne

Delivered on:

3 February 2011

REPRESENTATION

Counsel for the Applicant:

Ms Devine

Solicitors for the Applicant:

Perry Watson

First Respondent:

In person

Counsel for the second Respondent:

Mr Woods

Solicitors for the second Respondent:

Evans Ellis

Counsel for the third Respondent:

Mr Woods

Solicitors for the third Respondent:

Evans Ellis

Counsel for the fourth Respondent:

Dr Kovacs

Solicitors for the fourth Respondent:

State Trustees Limited Legal Branch

THE COURT ORDERS THAT:

Pursuant to s.62G(2) of the Family Law Act 1975 the Applicant and First Respondent and the child of the relationship ([X] born [in] 1997) attend upon a family consultant nominated by the Dispute Resolution Coordinator of the Federal Magistrates Court of Australia on a date and at time/s to be advised for the purposes of the preparation of a family report.
The family report deal with the following matters:
(a)Any views expressed by the said child and any factors (such as the said child’s maturity or level of understanding) that would affect the weight that the court should place on those wishes;
(b)the matters set out in ss.60CC, 61DA and 65DAA of the Family Law Act 1975; and
(c)any other matters that the Family Consultant considers important to the welfare or best interests of the said child, including a consideration of sole parental responsibility for the mother.
The family consultant have leave to inspect any documents produced under subpoena in this matter provided that they have been released for inspection by at least one party.
The adult child [Y] born [in] 1992 is at liberty to attend also.
The wife’s costs of the contravention proceeding are to be paid by the husband. They are to be fixed in a sum determined by the court on the adjourned date and the question of a stay of payment is to be determined also on that day. Both parties are at liberty to make submissions as to quantum and a stay.
The husband within 14 days of this date withdraw his disclaimer of interest in the Estate of Ms J Seggio.
All extant applications are adjourned to 11 March 2011 at 10am for mention and for the husband to enter into a bond to be of good behaviour with attached conditions.

IT IS NOTED that publication of this judgment under the pseudonym Durante & Seggio & Ors is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT MELBOURNE

MLC1121 of 2010

MS DURANTE

Applicant

And

MR W SEGGIO

First Respondent

MR S SEGGIO

Second Respondent

MS BISSI

Third Respondent

STATE TRUSTEES LIMITED

Fourth Respondent

REASONS FOR JUDGMENT

The husband was born [in] 1952 and is now aged 58 years. The wife was born [in] 1965 and is now aged 45 years. Both are Australian citizens. The wife has required the assistance of a Spanish interpreter throughout the proceedings. She is represented. The husband is now a litigant in person. The husband and wife married [in] 1990 and separated on 4 January 2010 after a marriage of approximately 19 years and 4 months. There is one child of the marriage [X] born [in] 1997. He is now 14 years old and living with his mother. His father seeks some communication and time spent with him and I propose that a s.62G of the Family Law Act 1975 (the Act) report be prepared to assist in the determination of the child’s wishes and his relationship with each of his parents. Further, to determine whether equal shared parental responsibility promotes the child’s best interests. The parties’ other child is now an adult. He is [Y] born [in] 1992. [Y] is aged 18 years. He too resides in the household of his mother and if he desires, should attend upon the family consultant as and when reasonably requested to do so by the said consultant. He is however not compelled to attend.
The parties spent many years following their marriage residing in [P], South America. The family arrived in Australia from [P] on

12 December 2002. Initially they resided in Melbourne (about 10 months as alleged by the husband) before moving to Queensland where they remained living until December 2009 whereupon they returned to Victoria. The husband claims that he owned 2 real properties in [D] which he had purchased prior to his move to [P] and that upon the family’s return to Australia he sold same and received approximately $480,000 which he applied to the purchase of a family home in Brisbane and otherwise general living expenses. I make no finding as to that alleged contribution at this interim stage. The parties had owned a business and property in [P] which was sold by them before their return to Australia. The wife claims the husband kept the totality of the funds, in a sum unknown to her, and applied them as he wished without any consultation with her. The husband claims the net proceeds were approximately US$60,000 and that he purchased land for the wife in [P] at a cost of US$10,000. This assertion and the application of the balance of the funds, indeed their quantum, are yet to be determined.
The parties did reside in Brisbane and purchased a property at

Property S which became their family home. It was sold in July 2009 with the family thereafter remaining in occupation as tenants until December 2009. The husband claims the sale proceeds were $410,000 less a further $15,000 in agent’s commission resulting in a net of $395,000. The wife was not privy to the quantum of the net sale proceeds and nor has she ever had access to the funds. On arriving in Melbourne in December 2009 the parties took up rental accommodation at Property M. The parties had marital difficulties over a period of time before their final separation. The wife alleged the husband was violent to herself and the children on 3 January 2010 and obtained an interim intervention order on 6 January 2010 which was subsequently extended to 3 March 2010 whereupon the husband indicated he did not propose to oppose the making of a final intervention order against him. The husband, on 5 January 2010 obtained an interim intervention order against his son [Y]. In this climate of hostility and mistrust the wife filed an application on

8 February 2010 seeking sole use of the former matrimonial home in Property M and various property and maintenance orders. In particular, the wife was very concerned as to the whereabouts of the sale proceeds of the parties’ Brisbane home. The wife and children were living in a refuge at the time of the filing of her financial statement of 8 February 2010 and thereafter she moved into rental accommodation supporting herself and the boys on a Commonwealth pension. [Y] earns some small weekly income. The husband obtained and kept for his own use the return of bond monies of approximately $1,500 and took up rent-free residence.
On 1 March 2010 and with both parties present in court, orders were made with respect to the wife’s property and spousal maintenance application. In particular, order number 2 provided as follows:
“2.The husband forthwith provide to the wife’s solicitors full details including copies of all documents pertaining to:
a) the sale of the parties property at Property S in the State of Queensland (“the property”) including the name of the estate agent acting and the conveyancing firm’s details;
b) the proceeds of the sale of the parties property;
c) the disposal of the proceeds of the sale of the property;
d) any donations made by the husband to any charity in the past 12 months, including the dates of any donations the amount of such donation and copies of receipts in relation thereto.”
The husband had sworn in affidavit material by that time that he had disposed of the parties’ sale proceeds.
On 23 April 2010 the wife filed a contravention application alleging the husband had not complied with order number 2 of the orders made

1 March 2010. On 6 May 2010 various other orders were made including orders that the husband produce various documents and specifically, in order 6(d)
“all documents required to be produced pursuant to order number 2 of the Orders made 1 March 2010.”
The further hearing of the contravention application was adjourned to

2 August 2010. On 2 August 2010 the allegations contained in the contravention application as to the breach of order number 2 were found proven and the question of penalty was adjourned. These reasons deal in part, with that penalty.
The husband admits that he has disposed of the Brisbane property sale proceeds. In responding to order number 2 of the orders made 1 March 2010 the husband provided a hand written note dated 5 March 2010 which is annexure ‘B’ to the affidavit of the wife sworn 23 April 2010 and relied upon in support of her contravention application. The husband in that document provided the names of the estate agent and conveyancer and their addresses and phone numbers. He claimed to have no documents; described the proceeds as being $410,000 less a $15,000 agents fee and said as to the disposal of the proceeds:
“As I have said I donated it all. I kept no records. I did it in an emotional way as I saw the greed of money destroying our marriage. I donated it over several weeks some by direct donation some by mail. Some with random names some without names. I do not remember the dater (sic) or how much to each charity”
Prior to signing this note and on 25 February 2010 the husband swore an affidavit and financial statement. In his financial statement he swore that he was in receipt of no income, was unemployed yet paid rent on the former matrimonial home of $350 a week. He gave his address as Property A. He claimed as assets a 1998 car with a value of $1,000; money in the bank of $2,000; and the sole registered proprietorship of land in [M] which he valued at $10,000. He completed the section on disposal of assets as a disposal of cash – donated to charity $200,000+. In his affidavit the husband swore that $200,000 of the sale proceeds were paid back into his account on

5 February 2010 by Ms Bissi (who is the husband’s sister). Some months subsequent to the contravention being proven Ms Bissi swore an affidavit in the proceedings being on 5 December 2010. By that time she had become a party to the proceedings. The husband did not provide the evidence as required pursuant to order number 2 of the orders made on 1 March 2010 but Ms Bissi provided some of that necessary information including a letter dated 28 July 2009 of the husband’s to her. Contrary to what her brother swore in February 2010 and contrary to the evidence he gave in court on 6 May 2010 that he lent $400,000 to his sister because she needed the money, her evidence was that her brother forwarded her a cheque for $400,000 in late July 2009 to hold on his behalf. She did so, placing the funds in an interest bearing term deposit account in the joint names of herself and her husband. She returned the funds on 5 February 2010 to the husband as requested by him in two transfers of $200,000 each. The interest earned on the term deposit of $7,347 remain in her control with a tax assessment due for which she and her husband shall be liable.
In his affidavit sworn 25 February 2010 the husband said that his sister had paid back into his account the sum of $200,000 on 5 February 2010 and that he had then given away $400,000 to charity. He annexed copies of two bank statements indicating that he withdrew $190,000 on the day the wife’s application was issued and $130,000 on the day following. He was aware the proceedings were about to issue and he gave as his address for service Property A where he was not residing. He swore in paragraphs 15 and 16 of that affidavit:
“15. I have formed a view that the wife’s main concern was the division of family assets. She has refused or rejected my offers to assist with accommodation and expenses and due to her stance, I felt that as a good Christian I ought to remove temptation and greed from both of us. I have donated all of the funds previously held by me from the sale proceeds of the Brisbane property to various charities including:
(a)Unicef
(b)Oxfam Community Aid Abroad
(c)Green Peace
(d)Brotherhood of St Laurence
(e)Help Haiti
(f)Red Cross Australia
(g)RSPCA
(h)The Salvation Army
(i)Royal Children’s Hospital
(j)The Big Issues Australia
(k)St Augustine’s Church, Bourke Street, Melbourne
(l)St Monica’s Church in Essendon
(m)Vision Australia
(n)Sacred Heart Mission”
16. As a result thereof, I have no further funds and hold no further funds from the sale proceeds of the property. Now attached and marked with the letters “WS3” is a copy of the most recent bank statement showing the withdrawal of all funds.”
When the matter next returned to court following the making of 1 March 2010 orders and on 14 April 2010 for mention only, the wife had not yet filed her contravention application. She sought an adjournment whilst making a submission that the husband had failed to comply with the orders. The husband responded on that day that he did not have the information sought and that he had, in order to “eliminate the cause of the divorce” – that being money – given $400,000 away anonymously and in a random way. He said –
“I bought about 300-400 envelopes, stamped envelopes. I put a random amount in each. I put charity names and addresses and I sent them out. Some I delivered; some I put in charity boxes.

I distributed it in a random fashion.”
On 6 May 2010 the contravention application commenced. The allegation as to the passport issue was not proceeded with. The husband had been served as required under the Rules and the evidence of the wife was as contained in her affidavit sworn 23 April 2010. The husband was cross-examined. He denied the remaining alleged breach. He did not challenge the contents of the wife’s affidavit. He gave at the time his residential address as Property A which is the address of the real property held in the estate of his deceased mother. He gave evidence that he was living in his brother Mr R’s house although Mr R was not living there and the registered proprietors were a Ms & Mr A. He then changed his evidence to claim the registered proprietors of the property as his mother and father – his father having died in 1982 and his mother in 2001. Specifically the husband gave the following evidence as to his mother’s estate:
a)the inheritance had not been decided;
b)there was a will but he did not know if probate had been granted;
c)his mother hid all the documents and “unfortunately we haven’t been able to find them, and the process is taking a long time, because the present problem is the marriage certificate between my mother and my father which they are looking for in Poland”;
d)his mother’s will provided for her estate to be divided equally between he and his brother and sister;
e)he did not have an interest in his mother’s estate
“…because my brother indicated that he would challenge my mother’s will in respect that I was away for 20 years, I made no contribution, either to the house or to my mother’s wellbeing, and as I’m in this situation, I have no financial assets and cannot challenge him. So I decided not to contest his challenge, and in that case I will have no interest.”
The alleged breach as set out in the contravention application was found proven on 2 August 2010 in that the husband failed to provide documents within his control and failed to provide full and proper details as to his alleged charity donations. The husband could also not recall – in evidence on 6 May 2010 – where he transferred the sums of $389,383.15 and $8230 to. Such sums had been deposited into his Commonwealth Bank of Australia account at Property S on 2^nd and 14^th days of July 2009 as discovered by the wife’s solicitors and not proffered by the husband. Subsequently the filing of his sister’s affidavit provided the evidence which the husband on that occasion withheld.
The husband’s breach of orders of the court was a first breach. I propose that given his financial circumstances as described by him (they being that he has no money) to require the husband to enter into a bond to be of good behaviour for a 12-month period and as a condition of that bond that he comply with all court orders hereafter. The matter shall be listed for the husband to indicate his willingness or otherwise to enter into such a bond and in the event he declines a different penalty will be imposed. I am mindful the proceedings have not been finalised and the totality of findings on the evidence made.
On 6 May 2010 the court also ordered the husband to transfer to the wife his interest as sole registered proprietor of a property in [M] Victoria contained in Certificate of Title Volume [omitted]. The wife swore in her affidavit filed on 29 July 2010 that the husband had not returned the transfer document forwarded to him by the wife’s solicitors on 13 May 2010. The wife however wished to incur no further expense in pursuing that alleged contravention as she had appointed a valuer, Mr L, who provided a valuation contained in affidavit sworn 28 July 2010. He placed a value on the said property of $2,500. The following statement was contained in that valuation (with inspection occurring on 26 July 2010)
“…due to the size of the subject land Council would not issue the property with a planning permit to build any kind of dwelling.”
For 6 years prior to the sale of the former matrimonial home in Brisbane the husband did not work. The wife was primarily engaged in home duties and the husband claimed the parties lived off investments controlled by him and which were funded by the sale proceeds left over from his [D] properties after purchase of the Brisbane property and being approximately $215,000. He claimed to have no investments remaining at the commencement of these proceedings. The husband claimed in evidence on 6 May 2010 that he traded in shares using the Commonwealth Bank for his transactions but when asked –
“And you can produce bank statements for that time?”
he responded:
“Unfortunately, when we were moving, I put everything in a bucket of water, I made paper mache, and I chucked them.”
The husband also gave evidence on that day as to the net sale proceeds as follows:
“Your Honour, I accept I am in a very difficult situation. The money if it existed, or if it still exists, will result in the death of my sons.”
On 2 August 2010 the husband was cross-examined as to the operation in part of his bank accounts in 2008 and 2009 but his responses to questions asked was to say he had during that time a period of depression and an attack of anxiety in December 2008, that he was on medication and cannot now remember what financial transactions he engaged in at the time or why. What he did recall was that he lent his sister Ms Bissi $400,000 with no interest charge in 2009 and that he did not inform his wife. The purpose of that loan (in evidence given that day) was for his sister to keep the money safe and out of the reach of his eldest son whom he alleged wished to steal the funds. On the return of the funds $200,000 was placed in his savings account and $200,000 in his cash management account. It was these funds he donated to charity by (he claimed on that day) driving around Melbourne “anywhere from St Kilda to Hawthorn to Essendon”, withdrawing large sums of money from differing branches of the banks where he had funds, putting the cash in envelopes and getting rid of it. He gave evidence that three priests advised him to adopt this course.

Mr R Seggio has also become a party to the proceedings. The joining of the second, third and fourth named respondents to the proceedings arose in circumstances where it was discovered by the wife’s solicitors that the husband had transferred some of the parties’ funds and being $400,000 to his sister to deny the wife any of such funds and where he had an interest in his deceased mother’s estate along with his brother and sister. This estate was subsequently discovered to be still unadministered, and the husband to have recently disclaimed his interest in it.
The fourth respondent State Trustees Limited filed a response on

25 October 2010. This was in relation to the amended application of the wife filed 28 September 2010. An affidavit sworn by Ms F on

21 October 2010 was relied upon. Various orders were made in relation to this application on the hearing date of 26 October 2010.
State Trustees Limited is the executor of the estate of Ms J Seggio.

Ms J Seggio died in 2001. Probate of her will was granted on

23 September 2009. The estate consists only of real property at Property A valued in about August 2009 in the sum of $250,000. The estate is to be distributed to the deceased’s three children one of whom includes the husband in these proceedings. The debts of the estate have not been paid so the executorial function has not been completed. These debts may be only those due to State Trustees Limited.
On 11 February 2010 the husband attended the offices of State Trustees Limited and stated that he wishes to disclaim his interest in his mother’s estate. On 22 February 2010 the husband provided a written request to State Trustees Limited confirming that he wished to disclaim his interest in the estate. The wife had issued the proceedings on

8 February 2010.
State Trustees Limited submit there is no power under the Act to order the husband to withdraw his disclaimer because such would be an order in relation to the property of the estate and not in relation to the property of a party to the marriage. The wife seeks an order that “the husband within 14 days withdraw his disclaimer of interest in the Estate of Ms J Seggio.” This is the issue which remains outstanding for determination in the response of the fourth respondent.
Looking first to the matter in my discretionary exercise of this court’s accrued federal jurisdiction, this being clearly necessary for a resolution of the whole matter between the parties (Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457) and there being no objection to same, I consider the following: The husband’s disclaimer had taken effect by 22 February 2010. A beneficiary may at any time after the death of the testator disclaim the benefit of a gift and the effect of that is that no property has ever vested in the beneficiary, as the disclaimer operates by way of avoidance and not by disposition (Re Paradise Motor Company Limited (1968) 1 WLR 1125).
In Probert v Commissioner of State Taxation (1998) SASC 6896 Olsson J said at paragraph 30:
“In the absence of any specific legislative provision to the contrary, the authorities quite clearly establish the proposition that a formal disclaimer of a benefit conferred by a will does not act positively as an assignment or disposition of property. The whole concept of such an act in relation to residue, at least if it occurs before personal representatives become functus officio is that it acts negatively by preventing the relevant property vesting at all… Until the executorial function is complete the nominated beneficiary is free to choose whether to avail himself or herself of the request or to disclaim it. If there is a disclaimer then the gift is avoided and with it the concomitant right.”
The question is whether the court can require the husband to withdraw the disclaimer. Administration of the estate remains incomplete. The husband did not, in the conveyance of his disclaimer, set out any reasons for his desire to disclaim his beneficial interest in the estate of his mother. The evidence before the court of 6 May 2010 indicates an acceptance of the beneficial interest between the date of the death of his mother and the disclaimer notification of 22 February 2010 with a subsequent rejection on the basis of lack of financial ability to contest the challenge to the will that he claimed was proposed by his brother. Certainly the husband did not disclaim his interest between September 2009 and February 2010 and the administration of the estate proceeded with respect to the three children under the will. It would appear that the husband for a time impliedly or actually accepted his interest in the estate to subsequently retract that acceptance and disclaim his interest at the time of the wife instituting property proceedings in this court and without any reasons being proffered by him to the executor of the estate.
Have the husband’s brother and sister been prejudiced by the husband’s subsequent action of disclaimer? Certainly they have if the estate is left with debts to pay. They have also by State Trustees Limited involvement in these proceedings. The wife has been prejudiced by the husband’s disclaimer if he is to receive some funds or real property interest as a result of his inclusion in his mother’s will.
Further, the husband tacitly accepted his beneficial interest in his mother’s estate between September 2009 and February 2010 because he did nothing to disclaim his interest knowing of that interest from a much earlier time and possibly from the time of his mother’s death in 2001. His inaction until the commencement of these property proceedings leads the court to draw an inference that he accepted his interest in his mother’s estate. As said by McGarvie J in JW Broomhead (Vic) Pty Ltd (in liq) v JW Broomhead Pty Ltd [1985] VR 891 at 931:
“In the absence of positive conduct by which the donee indicates acceptance, the right to disclaim is lost because the court makes a presumption of fact or draws an inference. The presumption or inference is that by remaining silent beyond the time when he would be expected to decline the gift if not accepting it, the donee has tacitly accepted. The inference in the case of a donee is easy to draw because it is human nature to accept gifts. With a gift such as one under a trust deed or a will it is not normally considered necessary to indicate acceptance, but a beneficiary who desires not to receive what is given would commonly indicate that desire. Inaction by the beneficiary is consistent with acceptance. …
The test for whether a beneficiary is entitled to disclaim is whether in the circumstances he has accepted by words or conduct or has remained silent for so long that the proper inference is that he has determined to accept the interest.”
In the circumstances of this case and with the husband having full knowledge of his likely inheritance and in his inaction and silence for a period being unequivocal acceptance, then having so tacitly accepted, the right to disclaim is lost to the husband, whether or not prejudice is occasioned to others even though I have found there is such prejudice.
In addition to, or in the alternative, the order the wife seeks can be made pursuant to s.106B of the Act and/or s.80(1)(k) of the Act. The husband has effectively signed a document notifying of his avoidance of a gift. He has done so voluntarily and alienated his prospective entitlement. He has done so in circumstances where he has sought to deprive the wife of any funds such that he claims to have also disposed of approximately $400,000 of the parties’ assets. His intention is to defeat any order of this court that might provide the wife with monies from whatever source and his disclaimer renders him not entitled to any part of the ultimately administered estate of his mother. This precludes the making of any order in the wife’s favour which can reasonably be anticipated in these proceedings wherein the husband claims to have disposed of $400,000. If indeed he has, there is no other financial resource or asset available to the wife on the evidence as described in these reasons other than the husband’s beneficial entitlement. The court determines it proper to exercise its discretion in this matter and make the order sought by the wife. In order to do justice as between the parties such an order as sought by the wife should be made.

I certify that the preceding twenty-six (26) paragraphs are a true copy of the reasons for judgment of Hartnett FM

Associate:

Date: 3 February 2011