FINI & NEALS

[2018] FCCA 3510

FEDERAL CIRCUIT COURT OF AUSTRALIA

FINI & NEALS [2018] FCCA 3510

Catchwords:
FAMILY LAW – Property– where husband failed to participate in proceedings – parties’ separated under one roof – where wife is the primary carer of two children – where husband has a gambling addiction – s.75(2) matters require an adjustment in favour of the wife – transfer of the former matrimonial home to the wife – orders made.

Legislation:

Family Law Act 1975 (Cth), ss.75(2), 79(2), 79(4), 106A

Applicant: MS FINI

Respondent: MR NEALS

File Number: MLC 7096 of 2018

Judgment of: Judge Hartnett

Hearing date: 15 November 2018

Delivered at: Melbourne

Delivered on: 15 November 2018

REPRESENTATION

Counsel for the Applicant: Ms Hannan

Solicitors for the Applicant: Mackinnon Jacobs Lawyers

The Respondent: No appearance

ORDERS

1. On or before 28 February 2019:-

   (a)the Husband sign all documentation as may be necessary and required to transfer to the Wife all his right, title and interest in Property A being the property more particularly described in Certificate of Title Volume (“the former matrimonial home”).

   (b)the Wife do all acts and things and sign all documents as may be necessary and required to discharge the mortgage number [omitted] to Bank 2 (“the mortgage”) secured against the title of the former matrimonial home and pay out or refinance the liability secured by the mortgage into her sole name, and in any event indemnify the Respondent Husband and keep him indemnified with respect to the said liability.

2. The Wife do all things necessary and/or sign all documentation necessary to transfer to the Husband the below listed assets valued at $320,000.00 as per the following timeline:-

   (a)within 21 days from the date of these Orders the sum owing in full, by the Husband to [company] (estimated as at 24 September 2018 to be $63,000.00) with any fees and/or other costs associated with [company] removing the Warrant of Seizure and Sale Notice lodged over the former matrimonial home to be met by the Husband (in practical terms the Wife to meet these from the cash portion of the assets to be transferred to the Husband as per Clause 2 herein);

   (b)on or before 28 January 2019 a cash payment of $50,000.00 to the Husband;

   (c)on or before 28 February 2019:-

   (i)the Wife to sign all documentation necessary to transfer to the Husband, at the Husband’s expense, all of her below listed shares estimated to be valued at $40,000.00:-

   A.all her Shares 1 shares,

   B.all her Shares 2 shares,

   C.all her Shares 3 shares,

   D.all her Shares 4 shares

   (ii)a further cash payment of approximately $167,000.00 (being the remainder due to the Husband in cash to equate to a transfer of $320,000.00 in full following the transfers and payments referred to in Order 2(a), Order 2(b) and Order 2(c)(i) hereof.

3. Should the Husband fail to have vacated the former matrimonial home by 8.00am on the morning of 28 February 2019 then the payments and transfers referred to in clause 2(c)(i) and (ii) hereof be suspended until the Husband vacate the former matrimonial home with the Husband to remove himself from the former matrimonial home as a matter of priority.

4. Pending the parties compliance with Orders 1 and 2 herein:-

   (a)the parties be restrained from further encumbering the mortgage, and

   (b)from further encumbering the former matrimonial home without the written consent of the other party.

5. Should the Wife fail to comply with Order 1(b) hereof on or before 28 February 2019 then former matrimonial home be forthwith sold by an Agent as elected by the Wife on such terms and conditions and reserve price as recommended by the Selling Agent.

6. The conveyancing associated with the sale of the former matrimonial home be undertaken by the Wife’s Solicitor.

7. Liberty be reserved to either party to apply with respect to the terms and conditions of the execution of sale.

8. Upon the sale referred to in Order 6 hereof being completed the proceeds of sale of the former matrimonial home be distributed as follows:-

   (a)firstly to pay all costs, commission and expenses of the sale;

   (b)secondly to discharge the mortgage and any other encumbrance secured over the property;

   (c)thirdly any balance remaining to the Husband pursuant to Order 2(c)(ii) herein (if any);

   (d)the balance to the Wife.

9. Each party must do all acts and things and sign all documents as may be necessary and required to give full force and effect to the Orders.

10. If either party refuses or neglects to sign any document required to give effect to these Orders within 14 days of being required to do so, then pursuant to s.106A of the Family Law Act 1975, a Registrar of this Court is authorised to sign on behalf of the defaulting party upon the request of the non-defaulting party in writing.  The defaulting party must indemnify the non-defaulting party in relation to any costs incurred as a result of that party’s default.

11. That unless otherwise specified in these Orders and save for the purpose of enforcing any monies due under the terms of these Orders:-

    (a)each party be solely entitled to the exclusion of the other to all other property (including choses in action) in their possession as at the date of these Orders (the furniture and chattels located at the former matrimonial home deemed to be in possession of the Wife);

    (b)each party forego any claims they may have to any superannuation entitlements belonging to or earned by the other now or in the future;

    (c)each party retain to the exclusion of the other all bank accounts in their respective names;

    (d)the parties forthwith sign all things necessary to close any and all joint bank accounts with the balance to be divided equally between the parties;

    (e)insurance policies remain the sole property of the owner named thereon;

    (f)each party be solely liable for and indemnify the other against any liability in their respective names;

    (g)any joint tenancy of the parties in any real or personal estate is thereby expressly severed.

12. All extant applications be otherwise dismissed and the proceedings removed from the list of pending cases.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLC 7096 of 2018

MS FINI

Applicant

And

MR NEALS

Respondent

REASONS FOR JUDGMENT

(Edited Ex Tempore Reasons)

1. These proceedings came before the Court upon the Applicant wife (‘the wife’) filing an initiating application on 25 June 2018. The Applicant proceeds on an amended initiating application filed by her on 12 November 2018.

2. The wife relies upon the following evidence:-

   a)affidavits sworn by her on 25 June 2018 and 12 November 2018;

   b)a financial statement sworn by her on 25 June 2018; and

   c)an affidavit of Mr R sworn 8 November 2018.  Mr R is a certified practicing valuer who provided a valuation of the property known as and situated at Property A in the State of Victoria. This real property is the parties’ former matrimonial home (‘the property’).

3. The Court is satisfied as to service upon the Respondent husband (‘the husband’) of the above described documents. An affidavit of service was filed on 13 November 2018 as to service the amended initiating application; the affidavit of the wife affirmed 12 November 2018; and the affidavit of Mr R sworn 8 November 2018. These documents were personally served upon the husband on 12 November 2018. 

4. The orders that are sought in the amended initiating application are final property orders.

5. The Court is satisfied on the evidence before it that the orders as sought by the wife should be made by the Court.

Background

1. The wife was born on [date] 1974 and she is now aged 44 years.  The husband was born on [date] 1973 and he is also 44 years of age.

2. The parties commenced their cohabitation in or around 1999, and they married on [date] 2003. In or around July 2017, the wife determined that the marriage was at an end, and took steps to formalise the parties’ separation.  She made it very clear to the husband, at that time, that the marriage was over, and commenced to live separately and apart from him, save that the parties and their two children continued to live under the same roof.

3. There are two children of the parties’ marriage, [X] born on [date] 2007 who is now aged 11 years and [Y] born on [date] 2010 who is now aged eight years. Both children attend School K, and they are in grades 5 and 3 respectively.

4. It is anticipated by the wife that the children, having been in her primary care, will continue to reside with her in the property post the physical separation of the parties. No parenting orders are sought to be made.

5. In addition to attending to home duties throughout the course of the marriage, and attending to the primary care of the children, the wife commenced working part time, approximately two to three days a week, as a [occupation omitted] at some time during the course of the marriage, although a precise time is unknown to the Court.  The income of the wife from this form of employment is ongoing and in the sum of approximately $350 each week.

6. The husband, throughout the cohabitation and marriage, was a self-employed [occupation omitted].  He works with his father, and his income is unknown to the wife and unknown to the Court, the husband having failed to participate in these proceedings. The wife asserts the husband has a capacity to earn income beyond her income, but unfortunately, the husband has elected to work on an ad-hoc basis over the years.  The wife has no knowledge of what the husband has earnt on average, in the last three financial years.

Consideration

1. The husband was ordered, by orders made 20 August 2018, to file and serve a response, affidavit and financial statement within 28 days of service of the orders of 20 August 2018 upon him. Service was duly effected. He failed to comply with that order.

2. The matter was then further listed for hearing on 1 October 2018. A conciliation conference was to occur on 9 October 2018. That date was vacated, in circumstances where the husband has failed to participate in the proceedings. On 1 October 2018, the matter was adjourned to 15 November 2018 for final hearing, and other orders of a procedural nature were made, which included, in order 5, that the husband comply with order 3 of the orders made on 20 August 2018.  Further, order 6 required the husband to attend in person on the final hearing date and pursuant to order 7 of the orders made on 1 October 2018, in the event the husband failed to attend Court this day, at the Court’s discretion, the wife had leave to proceed on an undefended basis. Again, the husband was necessarily served with a copy of the order.

3. The husband did not attend Court on 15 November 2018. He filed no response nor an affidavit of evidence. He left unchallenged the wife’s evidence. The wife was granted leave to proceed with her application on an undefended basis.

Acquisition of assets

1. Prior to the parties’ cohabitation commencing, the parties agreed, in [date] 1998, to purchase the property.  They each resided with their respective parents at this time. The property was purchased by the parties as tenants in common as to one of a total of two equal undivided shares. To the best of the wife’s recollection, the parties purchased the property for $160,000.  They put together a small deposit, and borrowed the remaining funds.  At that time, they each had nominal savings.

2. At around the same time that the parties purchased the property, the wife’s mother passed away unexpectedly from [medical condition].  She died on [date] 1998.  The wife’s father was completely distraught following the death of his wife, and approximately two months later he committed suicide.  He died on [date] 1998.

3. The wife was living at her parents’ residence in Suburb M when her father committed suicide.  Shortly thereafter, her sister Ms J moved into the Suburb M property with the wife, and remained living with the wife for a period of time prior to the parties taking up cohabitation in the home on the property, in [date] 2003.

4. The wife and her sister were the only beneficiaries of their parents’ estate.  The wife set out, in paragraph 15 of her affidavit sworn 25 June 2016, the property inherited by she and her sister from their parents’ estate.  To the best of the wife’s recollection, her half-share of her parents’ estate, including her equity in her parents’ Suburb M property, totalled in the vicinity of $400,000, together with an allocation of [Shares].

5. The cash component of the wife’s inheritance enabled the parties to pay out in full the Bank 1 mortgage they had obtained in respect of the purchase of the property. In or around [date] 2003, the wife paid out the balance owing, in the sum of approximately $95,000. The remainder of the wife’s inheritance sum was placed in a Bank 1 bank account, which was accessed by the parties as required during the course of their marriage. Those funds inherited by the wife assisted in purchasing for the parties a new motor vehicle, paying for some holidays, and paying for their wedding.

6. In or around [date] 2003, the parties decided to use some of the inheritance funds to purchase outright a block of land in Property B, located at Property B (‘the Property B block’).  The block was registered in the sole name of the wife.

7. In or around [date] 2004 the parties borrowed the sum of approximately $180,000 securing those borrowings over the property with the application of the funds intended for the construction of a holiday house on the Property B block.  That was, however, not proceeded with.

8. On [date] 2007 the parties’ son [X] was born, and in the months following [X]’s birth the husband’s gambling addiction commenced.  The parties’ daughter [Y] was born on [date] 2010.  Between 2007 and 2012 the husband’s gambling addiction caused him to obtain approximately $160,000 from the redraw funds available and secured over the property; obtain $16,100 from the wife’s Bank 1 account into which she had deposited the funds received from her inheritance; and obtain cash advance funds from the parties’ Bank 1 credit card in the sum of approximately $28,000 as at February 2013.

9. The affidavit evidence of Mr R, certified practising valuer, is that as at 25 September 2018, the property had a value of $1,100,000. The mortgagor in respect of the property is Bank 2.  As at 16 May 2018 the payout figure of the mortgage was $141,863.58.  The mortgagors issued a notice of default and notice of demand by notice of 16 May 2018 claiming arrears owing on the mortgage, as at 15 May 2018, in the sum of $2,420.97 and that further enforcement expenses had been accrued of $516.12. The mortgagor threatened repossession of the property and proceedings to commence against the parties if the total sum of $2,937.09 was not paid in accordance with the notice of default and notice of demand.

10. The husband’s gambling has resulted in [Company] obtaining the issue of a warrant of seizure and sale notices. [Company] has placed a caveat over the property in relation to which the total sum of approximately $63,000 is required to be paid to secure the withdrawal of the caveat.  The husband has ignored any correspondence from the wife’s lawyer; from [Company]; or any other debt collectors who are seeking that he repay funds owing.

Section 75(2) matters

1. On or about [date] 2018, the wife sold the Property B property for $350,000. After the expenses of sale, net proceeds of approximately $339,000 were received by the wife.  The wife has accessed some of these funds to assist in meeting living expenses of herself and the children given her income is insufficient and she is not assisted in her support of the children by the husband.

2. The husband’s gambling problems are known to his parents. They recently sold their home and indicated to the wife that they wished to put money aside for [X] and [Y] for when they are older.  The husband’s mother asked the wife to accompany her to the Bank 3 in Suburb N to make arrangements for $50,000 to be placed into an account in the wife’s name as trustee for [X] and [Y].

3. The parties have continued throughout these proceedings to reside separately under the one roof. The wife’s evidence is that during this period of time the husband has said to the wife on numerous occasions that he has “no intention of going to Court” to respond to the wife’s application.

4. On 19 September 2018 the wife arranged for a subpoena to be filed in the Court and served on [Company] in order for the wife to ascertain the sum due and payable to [Company] by the Respondent husband due to credit card debt accrued by him servicing his gambling habit. The response from [Company], which is before the Court and annexed to the wife’s affidavit sworn 12 November 2018 and marked as exhibit “F3”, sets out that the husband owes approximately $63,000 to [Company].  That debt consists of two separate accounts, being:-

   a)a debt relating to a Bank 1 credit card which as at 24 September 2018 totalled $53,538.23; and

   b)debt relating to an Bank 3 credit card which as at 24 September 2018 had an amount outstanding in the sum of $9,126.85.

5. The wife places evidence before the Court that she has a capacity to refinance into her sole name the current mortgage owing over the property which totals approximately $142,000.  That debt was largely accrued by the Respondent husband withdrawing funds available on the redraw facility of the mortgage to finance his gambling habit.

6. The wife has accessed some part of the net proceeds of sale of the parties’ investment property in Property B to meet legal expenses and other daily living expenses, in particular, as the husband has failed to provide her with any funds on a regular basis to assist in meeting the mortgage and household expenses and other living expenses of herself and the parties’ children.  Given the husband’s failure to engage in these proceedings, the wife anticipates, as deposed to by her in paragraph 14 of her affidavit sworn on 12 November 2018, that the husband will not sign any necessary documentation required to effect a transfer of his interest in the property and nor will the husband vacate the property on or before 28 February 2019.  To that end the wife sought and will obtain an order that the final payment or transfer to be made to the husband is postponed should the husband remain in the former matrimonial home by 8.00am on 28 February 2019.

The Asset pool  

1. The asset pool comprises the following:-

   a)the former matrimonial property with a net equity of $958,000;

   b)the wife’s Bank 1 account ending in (being the majority of the net sale proceeds from the vacant block of land owned by the parties in Property B) estimate $270,000; 

   c)the wife’s inherited share portfolio consisting of:-

   i)approximately Shares 1;

   ii)approximately Shares 2;

   iii)approximately Shares 3;

   iv)approximately Shares 4;

   d)the wife’s motor vehicle, nominal value; 

   e)the funds remaining in the wife’s solicitor’s trust account from the net proceeds of sale of the Property B block, $10,000; 

   f)the Respondent husband’s work vehicle, nominal value;

   g)the Respondent husband’s savings, not known. 

2. Debts:-

   a)the wife’s Bank 1 Mastercard, $2600 approximately; 

   b)the wife’s Bank 3 credit card, $8000 approximately; 

   c)the wife’s potential Capital Gains Tax debt following the sale of the Property B property, not known; 

   d)the husband’s debt to [Company] as at 24 September 2015 and in relation to which a caveat was lodged on the property or has been lodged on the property by [Company], $63,000 approximately.

   e)other debts of the husband not known. 

1. Superannuation:-

   a)the wife’s superannuation with Super Fund D as at 30 June 2018, $33,195;

   b)the wife’s Super Fund E rollover, estimated at $84; 

   c)the Respondent husband’s superannuation, unknown.

Consideration

1. The Court is satisfied that in all the circumstances it is just and equitable to make the orders as sought by the wife and in this regard the Court is mindful of s.79(2) of the Family Law Act 1975 (Cth), (‘the Act’).

2. The Court takes into account those mandatory considerations as set out in s.79(4) of the Act and, in particular, refers to the following evidence:-

   a)in respect of the financial contribution made directly by the wife to the acquisition of assets of the parties, the Court notes that the wife contributed at the commencement of cohabitation in excess of $400,000 by way of her inheritance together with her shareholding;

   b)the wife has made a significant contribution to the marriage and the welfare of the family and to the support and care of the family, including in her capacity as homemaker and parent.  The husband has put no evidence before the Court as to his contributions in this regard, although the Court accepts that throughout the marriage he made a contribution to the welfare of his family in the application of his income and in his caregiving role as a parent of the parties’ children. Those matters are not taken issue with by the wife save the wife’s evidence as to the application of the husband’s income in those circumstances where it was applied toward his gambling activities;

   c)the wife’s inheritance has in part been expended and wasted by the husband.  The husband has redrawn on the mortgage facility of the parties over the property in which they reside and in doing so has wasted some part of the asset pool of the husband and wife.  Additionally, the husband has incurred credit card debt which has resulted in a caveat over the property.  The husband has gambled in excess of $200,000 of funds available to the husband and wife additional to the approximately $63,000 of credit card debt that he has amassed.

3. The matters referred to in s.75(2) of the Act so far as they are relevant favour the wife. The wife has a limited earning capacity. She has the primary care of the two children of the marriage and will continue to have that primary care into the future. She will not be assisted in her financial support of the children to any great extent by the husband. This is a significant matter given the ages of the children.

4. The wife has a borrowing capacity of some $150,000 which will enable her to remain in the property and continue to provide accommodation for herself and the children. The wife’s proposals see the wife continuing to provide accommodation for the children and the husband being given by the wife whatever cash is available to the parties to re-establish himself, absent the application of those funds by the husband towards his gambling habit.

5. The Court determines that in all the circumstances an apportionment on the basis of contribution should be in the vicinity a loading of 18% in the wife’s favour, and in respect of the s.75(2) of the Act matters a loading of 7% in the wife’s favour making an apportionment of the asset pool as to 75% to the wife and 25% to the husband being a just and equitable outcome.

6. The orders proposed by the wife put that outcome into effect.

7. Otherwise, the proceedings shall be dismissed and the matter removed from the list. 

I certify that the preceding forty (40) paragraphs are a true copy of the reasons for judgment of Judge Hartnett

Date: 30 November 2018