HARTNER & PAGLIOTTI
[2016] FamCA 1026
•1 December 2016
FAMILY COURT OF AUSTRALIA
| HARTNER & PAGLIOTTI | [2016] FamCA 1026 |
| FAMILY LAW – PROPERTY – Application by wife for spousal maintenance – Application by husband for adjustment of property interests – Where the wife owns property and cash in Australia and the husband owns property in Italy – Where the wife has not made full disclosure of all the funds that have been in her possession from time to time – Where a “two pools” approach was adopted in respect of the Australian and Italian property pools – Where both parties have made significant equal contributions during the 30 year marriage – Where a s 75(2) adjustment of 12 per cent is made to the wife so that she receives 62 per cent of the parties’ total assets – Where the wife’s spousal maintenance claim is dismissed. FAMILY LAW – INJUNCTIONS – Application by husband to restrain wife from continuing spousal maintenance proceedings in Italy – Where wife’s spousal maintenance claim in these proceedings has been dismissed – Where complete relief was available in these proceedings – Where the wife should be estopped from further seeking spousal maintenance in another jurisdiction in accordance with the principle of res judicata – Where the anti-suit injunction is made against the wife as sought by the husband. |
| Family Law Act 1975 (Cth) ss 72, 72(2), 79(2) |
| CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 Caddy and Miller (1986) FLC 91-720 |
| APPLICANT: | Ms Hartner |
| RESPONDENT: | Mr Pagliotti |
| FILE NUMBER: | SYC | 1883 | of | 2007 |
| DATE DELIVERED: | 1 December 2016 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Rees J |
| HEARING DATE: | 21, 22, 23 December 2016 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Knox SC |
| SOLICITOR FOR THE APPLICANT: | Watts McCray Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Bell |
| SOLICITOR FOR THE RESPONDENT: | Clinch Long Woodbridge Lawyers |
Orders
IT IS ORDERED
That the wife’s Further Amended Initiating Application filed 20 September 2016 be dismissed.
That within 28 days of the date of these Orders:
(a)The wife withdraw her appeal against the decisions of the Court of Appeal, Rome, Family Section;
(b)The parties do all acts and things necessary to discontinue all proceedings in the Italian Courts relating to property and financial matters between the parties; and
The parties are restrained by way of injunction from filing any further application or commencing any further proceedings in the Italian Courts against the other party in relation to property and financial matters resulting from the breakdown of their marriage (including but not limited to the case file registered n…. of 2013 in the Court of Appeal, Rome, Family Section.
That the husband’s Response filed 28 July 2016 be otherwise dismissed.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Hartner & Pagliotti has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 1883 of 2007
| Ms Hartner |
Applicant
And
| Mr Pagliotti |
Respondent
REASONS FOR JUDGMENT
Ms Hartner (“the wife”) and Mr Pagliotti (“the husband”) married in 1972 and separated in May 2002. The husband is an Italian citizen and, until he retired, was a public servant.
They met in Australia where the husband had been transferred in the course of his duties.
There were no children of their marriage although the wife had two children of a previous relationship.
At the commencement of their relationship, the wife owned a half share in a property at Suburb A, South Australia (“Suburb A”), jointly with her sister; a property at Suburb B, South Australia (“Suburb B”) where the parties lived together after their marriage; and a property at Suburb C, South Australia (“Suburb C”). She operated and owned a business. She had cash of about $20,000, jewellery and a car. She had no debts.
The husband owned a car but had no other significant assets.
After the marriage, the wife continued to operate her business until 2005 and the husband continued his employment.
The wife moved with the husband through various transfers. They were living in Rome when they separated in 2002.
PROPERTY ACQUIRED DURING THE MARRIAGE
In 1974, the wife sold Suburb B and used the proceeds to purchase a property in Suburb D. The Suburb D property was sold in about 1978 and the proceeds used to purchase a property at E Street, Suburb E, (“Suburb E”) where the parties lived when the husband was posted to Sydney.
In 1983, the wife sold the Suburb C property and used the proceeds to purchase a property at F Street, Suburb G (“Suburb G”) where the parties lived when the husband was posted to Melbourne.
In 1984, the husband inherited an apartment in City H from his late parents together with other properties. In 1985, he sold the apartment to his brother and used the proceeds to purchase an apartment in Rome in I Street for 360 million Lire. The husband provided the whole of the purchase money. The title was registered in the names of both parties. The apartment in I Street was renovated. The wife claims that she paid the cost of renovations which she alleges amounted to 100 million Lire. The wife does not give evidence about the source of the funds which she alleges were used for the renovations. The husband disputed both the amount of the cost and the source of the funds.
The apartment in I Street was sold in 1990. The wife deposed that the sale money was equally divided between them. The husband asserted that the wife received two-thirds of the funds.
The proceeds were used to purchase two properties. The wife bought, in her sole name, a property in Sydney at J Street, Suburb K for $730,000 (“J Street”).
The parties bought, in joint names, another apartment in Rome at L Street (“L Street”) for 400 million Lire. The wife deposed that the husband paid the purchase price from his share of the sale money of the I Street apartment and that she paid a further 170 million Lire “towards the balance of the purchase price and renovations”. The husband disputed both the costs of the renovations and the wife’s assertion that she provided the funds.
In 1996, the wife sold the Suburb G property and purchased a unit in Sydney at M Street, Suburb N (“Suburb N”) for $501,000.
In 1997 the wife purchased a property in Suburb O for $440,000 subject to a mortgage of $352,000 with the balance from her savings.
The wife renovated the Suburb O property and sold it in 2000 for a net gain of $143,515. She deposed that those funds were used in part to fund the renovations at L Street and partly for living expenses.
The parties separated in May 2002 when they were living in Rome at L Street. The husband left the apartment. The wife remained in the residence.
At the time of the separation, the wife owned:
· Suburb E;
· Suburb N;
· Half share in Suburb A;
· Half share in L Street; and
· J Street.
The husband owned:
· Half share in L Street;
· Agricultural land in Italy (inherited);
· Half share of land in Italy (inherited);
· One-fifth share of family estate (inherited); and
· One-fifth share of income from an advertising board in City H.
In 2005, the wife sold Suburb N and Suburb E and received a total of $1,104,000. She used part of that money to purchase a property in Suburb P, South Australia for $650,000 (“Suburb P”). She paid $231,000 in Capital Gains Tax and used $223,000 to renovate J Street.
In 2007 the wife sold J Street for $3,005,000 and purchased Q Street, Suburb K for $1,800,000 (“Q Street”). That transaction, and the disposition of the balance of the proceeds of sale, is set out later in these Reasons.
Also in 2007, the wife sold Suburb A and received $87,500, being her half share of the proceeds.
In 2009 the husband retired and received a lump sum payment of €380,490. He has thereafter been in receipt of a pension.
THE 2002 AGREEMENT
In February 2002, before they separated, the parties entered into an agreement which was prepared by the wife’s lawyer. The agreement recited that the parties wanted the marriage to continue and that they agreed to continue to live together. It contained provisions for money to be paid to the wife from savings and from the husband’s salary, as well as provision of a motor vehicle, and business class tickets to Australia for the wife each year.
The wife relies on a provision to the effect that the husband would pay her 40 per cent of his employment termination payment and that he would renounce any claim on her Australian property.
It was not argued that this agreement was entered into under any relevant provision of Italian law or had any binding effect in Italy.
The agreement is not a Binding Financial Agreement for the purpose of Australian law. It has no legal force or effect in Australia.
PROCEEDINGS IN ITALY
In 2003 the husband commenced proceedings in Italy for judicial separation and consequential financial orders. The wife then sought an order for spousal maintenance.
In October 2003, the husband was ordered to pay maintenance in the sum of €6,000 per month. The husband appealed against the maintenance order.
That order was varied in June 2004 and reduced to €4,800 per month with a CPI increase.
On 21 September 2011 the amount was reduced to €2,500 per month.
On 2 July 2013 the amount was increased to €3,000 per month.
In 2014, the husband, pursuant to orders, paid the wife €174,624.81 for her half share in L Street.
The last appeal was determined on 19 October 2015 and the spousal maintenance order was vacated. The wife has appealed against that order. There is no evidence before the Court about when the wife’s appeal might be heard and determined. She seeks, on a final basis, an order that the husband pay her spousal maintenance and that he pay her an amount equivalent to 40 per cent of the lump sum of €380,490 that he received on retirement.
The husband seeks an order restraining the wife from proceeding further in Italy. The wife opposes that application and wishes to preserve her rights to proceed in Italy.
PROCEEDINGS IN AUSTRALIA
In April 2006, the husband lodged a caveat over the title of J Street. He then commenced proceedings in the Supreme Court of NSW claiming an interest in the property. Those proceedings were transferred to the Family Court of Australia.
At trial, the wife sought an order that each party retain the property in his or her possession. She also sought an order for lump sum spousal maintenance, or in the alternative, property settlement, in the sum of $500,000.
The husband sought orders which would have the effect that he keep his property in Italy and that the wife pay him a sum of money such that he receives half of the net value of the assets of the parties.
He also seeks an order that the wife withdraw her appeal against the orders in Italy dismissing her spousal maintenance application, and that she be restrained from filing any further application in Italy in relation to spousal maintenance or property settlement.
VALUATION OF THE HUSBAND’S ITALIAN PENSION
At the commencement of the hearing, senior counsel for the wife sought to rely on an affidavit of Mr R, purporting to value the husband’s Italian pension.
I refused to allow the affidavit to be relied upon and I indicated that I would give my reasons in the substantive judgment. These are the reasons.
The husband, in his Financial Statement sworn 7 October 2016, deposed:
The Husband receives €1,422 net per week by way of a pension that he receives from his government pension fund through the Government Institute I.N.P.S. of Rome. The husband throughout his 50 years of service as a public servant contributed a monthly amount to this pension fund from which he now receives a monthly pension.
The scheme incorporated into the Family Law Act 1975 (Cth) (“Family Law Act”) at Part VIIIB is confined in its operation to eligible superannuation plans which are defined in s 90MD to be any of the following:
(a) a superannuation fund within the meaning of the SIS Act;
(b) an approved deposit fund;
(c) an RSA;
(d) an account within the meaning of the Small Superannuation Accounts Act 1995;
(e) a superannuation annuity (within the meaning of the Income Tax Assessment Act 1997).
The reference to the SIS Act is a reference to the Superannuation Industry (Supervision) Act 1993 (Cth).
A superannuation interest means an interest that a person has as a member of an eligible superannuation plan, but does not include a reversionary interest.
Nothing in the Family Law Act purports to affect, or confer jurisdiction, in relation to a superannuation interest outside Australia.
It follows that nothing in the regulations which make provision for the valuation of superannuation interests under the Family Law Act could have any application to superannuation that does not come within the definition of an eligible superannuation plan.
Mr R, in his report, stated that he was engaged to value a pension interest in “Italy’s National Institute of Social Security”. He commences Part A of his report by stating:
A pension entitlement under an overseas pension scheme is not an entitlement over which a Court exercising jurisdiction under the Family Law Act 1975 would or could make orders binding a third party trustee/administrator in another jurisdiction. However, to assist the Court we are instructed to apply the method and factors under Australian law to provide an indication of the amount that would be taken to be the value if an equivalent pension entitlement under an Australian superannuation scheme were before the Court. (emphasis added)
There is no evidence to establish that the pension that the husband receives is “an equivalent pension entitlement” to any Australian superannuation scheme. There is no evidence at all of the terms of the payment, or any legislation applicable to such a pension under Italian law, which might affect its value. It cannot simply be assumed that a pension received in Italy is, in any or in all respects, the equivalent of a pension received in Australia under an Australian superannuation scheme.
Where the assumption which founds the opinion of the expert has not been proven, the opinion of the expert has no evidentiary value.
NON-DISCLOSURE BY THE WIFE
The wife swore a Financial Statement on 15 March 2007. She disclosed that she had $421,880 in bank accounts and she owed J Street, Suburb P, and a half interest in L Street.
On 1 May 2007, orders were made in the Family Court of Australia in the following terms:
BY CONSENT AND WITHOUT ADMISSIONS
1.The husband to do all thing necessary and sign all documents to enable the wife to sell the property [J Street, Suburb K] (“the [Suburb K] property”) to an arms length purchaser and for fair market value including withdrawing Caveat No. … on or (at the husband’s option) before settlement.
2.The wife will spend all or part of the proceeds of sale of the [Suburb K] property for the purchase of another property to be registered in her sole name for her residence together with the costs of the purchase, her removalist and relocation costs and any costs of work to make the property suitable for her residence, such costs of work not to exceed 15% of the purchase price of the new residence.
3.The that wife advise the husband as to the way that the proceeds of sale of the [Suburb K] property have been expended.
4.In the event that any funds remain after the wife has complied with Orders 1 and 2 above then the wife will deposit the same in an interest bearing account with the National Australia Bank in her name.
5.The wife is restrained from using any part of the capital or interest of the proceeds of sale of the [Suburb K] property other than in accordance with Order 2 above unless she has given to the husband 21 days prior written notice of her intention to do so advising the husband of the amount to be used and the purpose of such expenditure.
6.The wife will provide to the husband a photocopy of the sale and purchase contracts within 7 days of exchange of such contracts. The wife will not enter into any contracts with a settlement date less than 28 days from the date of exchange.
7.The wife is restrained from selling, apportioning or charging as security the new residence purchased by her without first providing to the husband 28 days prior written notice of her intention to do so.
8.While any part of the proceeds of sale of the [Suburb K] property remain invested the wife will provide to the husband copies of monthly bank statements in respect of such invested funds as and when she receives the said statements.
9.The wife will allow and will do all things necessary to permit the husband to obtain at his expense any independent valuation that he may desire of either the [Suburb K] property or any other property purchased or to be purchased by the wife with the proceeds of sale of the [Suburb K] property.
10.Liberty to either party to apply or 7 days notice to the other party.
In August 2007, the wife sold J Street for $3,005,000 and purchased a property at Q Street, Suburb K for $1,800,000.
On 3 September 2007, the wife’s solicitors wrote to the husband’s solicitors advising that “the net balance of sale moneys” of $1,137,835.68 had been deposited into an account in the name of the wife with the National Australia Bank account number ending 343.
In an affidavit sworn by her on 20 November 2007, the wife deposed to spending $2,024,725 on Q Street. She provided copies of invoices totalling $180,024. She alleged that $385,000 was “due” to be paid as Capital Gains Tax (CGT). She provided no documentary evidence of this assessment and there is no evidence to establish whether that sum, or any other amount, was paid.
The husband alleges that the sum of $980,275 from the sale of J Street has not been accounted for.
There is no evidence that the wife complied with Order 5 made 1 May 2007. The husband has consistently, throughout the proceedings, sought from the wife information about how the balance of the proceeds of J Street has been used.
Mr S has been the solicitor for the wife in relation to her property and commercial affairs for many years. On 16 March 2015, the wife deposited $500,000 with Mr S to be held by him at interest. This money was intended to be used to fund entry into an aged care facility if necessary or for other, necessary expenses. The wife refers to that money as “controlled money”.
The wife swore a Financial Statement on 28 May 2015. She disclosed bank accounts totalling $455,622. In cross-examination she agreed that she had not included in her disclosure the sum of $500,000 held on her behalf by her solicitor, Mr S. Therefore on 28 May 2015, the wife had cash of $955,622.
She was unable to explain, in cross-examination, where she had obtained $500,000 to give to Mr S. She was, however, clear that the money had been given to Mr S before she swore the Financial Statement and she had inadvertently failed to disclose it.
Annexed to the husband’s affidavit sworn 6 November 2015 is a letter from the wife’s then solicitor dated 13 October 2015 which stated, inter alia:
The amount held in the controlled monies account is additional to the monies disclosed in my client’s Financial Statement at Item 37. This was not included in the Financial Statement as she erroneously understood that because it is controlled monies, it is not under her control.
By 28 May 2015, the wife had sold J Street and bought Q Street. She had also sold Suburb N, Suburb E and Suburb A and bought Suburb P. She deposed that she owned only Q Street and Suburb P.
In re-examination the wife said that the $500,000 which was given to Mr S came from the sale of Suburb E, the sale of J Street and the maintenance paid by the husband.
That evidence is contradictory to her trial affidavit where she deposed that the whole of the proceeds of the sale of Suburb N and of Suburb E were used to purchase Suburb P, pay CGT and renovate J Street.
On 9 March 2015, Aldridge J made Orders in relation to disclosure by the wife of the documents relevant to the sale of J Street and the disposition of the sale money in the following terms:
IT IS ORDERED:
1. That I make order 1 changing 48 hours to 14 days, order 3, 7 and 8 changing 7 days to 14 days in the Application in a Case filed 11 February 2015, set out herein:
1.That within 14 days the Wife provide the following documents/information:
a.A copy of the Will dated 17 February 2012 referred to in Caveat No. … lodged on behalf of the Wife over the property known as and situate at [Q Street, Suburb] K NSW, folio identifier … (“the [Q Street] property”);
b.A copy of the Trust Deed and any amending instruments for the Family Trust referred to in Caveat No. …;
c.All transaction documents and bank statements showing what monies have been lent/contributed or otherwise injected into the [Q Street] property by the Family Trust referred to in Caveat No. AH874015;
d.Copies of all bank statements for the period 3 September 2007 to date for any account in which the Wife has an interest into which she deposited any or all of the proceeds of sale from sale of the property located at [J Street, Suburb K] NSW, folio identifier … (“the [Suburb K] property”) (whether or not such account remains open and whether or not the funds were directly deposited from the sale or at some later time and whether or not the funds remain in the account);
e.The particulars of all property in Australia in which the Wife has an interest, including supporting documents evidencing:
i.the purchase price;
ii.date of purchase by the Wife;
iii.any document held by the Wife when after purchase gives an estimate of the value for each property;
iv.current balance of any mortgage secured against each property; and
v.source of funding for each purchase.
f.Details and supporting documents (including invoices and receipt) which evidence how the proceeds of sale of the [Suburb K] property have been expended since its sale in 2007 by the Wife; and
g.A copy of the purchase contract for any property purchased by the Wife since August 2007 not already disclosed.
3. That the Wife shall not otherwise encumber, pledge, transfer or otherwise alienate her interest in any property in which she has an interest without first providing the Husband with 60 days’ notice, including but not limited to both the [Q Street] property and the property situate at [T Street, Suburb P] South Australia (“the Suburb P property”).
7. That the Husband be permitted to lodge a Caveat over the [Suburb P] property.
8. That within 14 days the Wife file an Affidavit identifying where the monies in each of the following cases were dispatched to:
a. The withdrawal of $600,000 on 26 February 2013 from the Wife’s NAB bank account ending 434;
b. The withdrawal of $255,000 on 11 December 2014 from the Wife’s NAB bank account ending 759;
c. The closing balance of NAB term deposit (account number …517) in the amount of $700,000 closed on 19 April 2011;
d. The withdrawal of $200,000 on 25 September 2007 from the Wife’s NAB bank account ending 4343;
e. The withdrawal of $500,000 on 8 February 2008 from the Wife’s NAB bank account ending 4343;
f. The withdrawal of $200,000 on 12 March 2008 from the Wife’s NAB bank account ending 4343;
g. The withdrawal of $300,000 on 30 July 2008 from the Wife’s NAB bank account ending 4343; and
h. The withdrawal of $158,000 on 14 August 2008 from the Wife’s NAB bank account ending 4343.
2. That the balance of the Application in a Case filed 11 February 2015 be stood over before a Registrar at 9.30 am on 15 June 2015 in the duty list and later before a Judge for a possible interim hearing.
3. That the parties’ costs of today are reserved.
In response to those Orders the wife filed an affidavit sworn 20 March 2015. In relation to the withdrawal of $600,000 on 26 February 2013, the wife deposed:
I do not recall and have no documentation currently which will assist me to determine where the money was placed. However, I would have deposited it into an account term deposit that gave the best interest.
In relation to closing of the term deposit of $700,000 on 19 April 2011, the wife deposed:
I do not currently have enough documentation in my possession which allows me to determine what I did with that money other than I know that after perhaps deducting monies for living expenses, I would have placed it into a term deposit/account to earn the best interest.
I do not accept that the wife was truthful in giving that evidence. In cross-examination she agreed that she was careful to check bank records as she did not trust the bank’s record keeping. She said that all of her banking records had been made available to her solicitor when the affidavit was prepared. She was able to recall account numbers for her most commonly used accounts. She gave extensive evidence of moving money from bank to bank to get a more advantageous rate. She is a person who carefully managed her money. I do not accept that the wife would not have remembered what she did with $1.3 million dollars.
There is no evidence that the wife complied with Orders 1(c) to (g) made on 9 March 2015.
The wife filed a third Financial Statement sworn on 20 September 2016. In that document she deposed that she had cash of $691,926, including the money held by Mr S. By the trial, that sum had been reduced further to $584,740.
Thus between 28 May 2015 and the trial which commenced on 21 November 2016, the wife had disposed of $370,882. No doubt some of that money was used to pay costs but there was no proper explanation of the disposal of those funds.
The wife has not complied with her obligation to make full disclosure. She has not responded to the husband’s numerous requests for disclosure and she has not complied with either the Orders made 1 May 2007 as to the disbursement of the proceeds of sale of J Street, or the Orders made 9 March 2015 requiring her to make a proper disclosure.
I am not satisfied that the wife has accounted for all of the funds that have been in her possession from time to time.
NON-DISCLOSURE BY THE HUSBAND
The wife asserted that the husband owned property in Italy which he had not disclosed and that he had sold property in Italy in 2012 without disclosing the sales.
She did not establish either proposition.
The single expert valuer’s evidence did not support the wife’s allegations.
Ultimately, the dispute about the husband’s property revolved around a discrepancy of about $16,000 referred to at Item 16 of the parties’ agreed Balance Sheet.
THE BALANCE SHEET
The parties tendered an agreed Balance Sheet setting out their respective contentions as to the nature and value of their assets.
That document is reproduced below. I will deal with the items in contention using the Item Number in the Balance Sheet.
| Ownership | Description | Wife / de facto partner’s value | Husband / de facto partner’s value | |
| ASSETS | ||||
| Italian Assets | ||||
| 1. | H | Chest antiquity (W = €N/K) (H = €3,000) | $ NK | $ E 4,269* |
| 2. | H | 7 piece 24 carat gold framed sitting room furniture (W = €N/K) (H = €250) | $ NK | $ E 355* |
| 3. | H | Artwork in Rome Apartment (H = €400) | $ NK | $ E 568* |
| 4. | H | Italian property 1 (W = ) (H =€130,200 – 20 per cent interest in this property) | $ 199,911 | $ 199,911 |
| 5. | H | Rome Apartment (W =) (H = €312,000) | $ 446,949 | $ 446,949 |
| 6. | H | Italian property 2 (W =) (H = €259,000) | $ 370,888 | $ 370,888* |
| 7. | H | Italian property 3 (W =) (H = €704,600 – 50 per cent interest in this property) | $ 1,008,987 | $ 1,008,987 |
| 8. | H | Ministry of Foreign Affairs Cheque Account #4426 (H = €3,844) | $ 207,648 | $ E $5,468* |
| 9. | H | Templeton Monetary Fund (H = €18,678) | $ 26,746 | $ 26,746 |
| 10. | H | Italian Bank 1 Account | $ NK | $ does not exist |
| 11. | H | Undisclosed Italian Bank Accounts | $ NK | $ does not exist |
| 12. | H | BNL Life Insurance Investment Account (€134,622) | $ 192,735 | $ 192,735 |
| 13. | H | Lump sum payment from Italian pension in 2009 (W = €380,490) | $ 549,482 | Today’s balance is Item 12 |
| 14. | H | British Motor Vehicle– | $ 37,250 | $ 37,250 |
| 15. | H | Contents | $ 50,000 | $ 30,000 |
| 16. | H | Other Italian Real Estate (W = €42,247 + NK) (H = Part of parcel … Lot …, all of Sub … @ €29,000) (H = Part of parcel … Lot …, all of Sub … @ €1,762.50) | $ 60,495 + NK | $ 44,049* |
| 17. | H | Italian Real Estate disposed of in 2012 without notice to the Wife or Court | $ NK | $ NIL |
| 18. | H | Monies in trust for legal fees and counsel’s fees | $ 26,759 | $ 26,759 |
| SUBTOTAL – Italian Assets | $ 3,177,850 + NK | $ 2,394,934 | ||
| Australian Assets | ||||
| 19. | W | Westpac Controlled Monies Account #41-7885 | $ 350,000 | $ 350,000 |
| 20. | W | Westpac Account #262 | $ 100,480 | $ 100,480 |
| 21. | W | Westpac Account #107 (Funeral expense account) | $ 62,394 | $ 62,394 |
| 22. | W | Westpac Account #807 | $ 31,616 | $ 31,616 |
| 23. | W | ANZ Account #314 | $ 3,665 | $ 3,665 |
| 24. | W | ANZ Account #219 | $ 18,266 | $ 18,266 |
| 25. | W | Commonwealth Bank Account #730 | $ 12,641 | $ 12,641 |
| 26. | W | NAB Account #343 | $ 1,644 | $ 1,644 |
| 27. | W | NAB Account #482 | $ 4,034 | $ 4,034 |
| 28. | W | Q Street, Suburb K | $ 2,375,000 | $ 2,375,000 |
| 29. | W | T Street, Suburb P | $ 820,000 | $ 820,000 |
| 30. | W | Household Contents | $ 30,000 | $ 50,000 |
| 31. | W | 670 Santos Shares | $ 3,289 | $ 3,289 |
| 32. | W | German Motor Vehicle | $ 11,400 | $ 11,400 |
| 33. | W | 184 Shares in Insurance Australia Group | $ 1,080 | $ 1,080 |
| 34. | W | 54 Korvest Pty Ltd shares | $ 122 | $ 122 |
| 35. | W | Jewellery | $ 15,000 | $ 30,000 |
| 36. | Monies in trust for legal and Counsel’s fees | $ 50,586 | $ 50,586 | |
| SUBTOTAL – Australian Assets | $ 3,891,217 + NK | $ 3,926,217 | ||
| Total | $ 7,069,067 + NK | $ 6,321,151 |
| ADDBACKS | ||||
| 37. | Funds required to be available from injuncted monies from sale of Australian property – (Refer: Order dated 1 May 2007) and interest thereon | $ NIL | $ NK | |
| Total | $ 0 | $ 0 |
| LIABILITIES | ||||
| 38. | W | Westpac Credit Card #875 | $ 11,520 | $ 11,520 |
| Total | $ 11,520 | $ 11,520 |
| SUPERANNUATION | |||||
| Member | Name of Fund | Type of Interest | Wife / de facto partner’s value | Husband / de facto partner’s value | |
| 39. | $ NIL | $ NIL | |||
| Total | $ 0 | $ 0 |
| FINANCIAL RESOURCES | ||||
| Ownership | Description | Wife / de facto partner’s value | Husband / de facto partner’s value | |
| 40. | H | Italian Pension (W=Pension) (H=Income – €5,600 per month) | $ TBA | $ NIL |
| Total | $ TBA | $ NIL |
*Note: Conversion rate used is 1 EUR = 1.4316 AUD
Items 1, 2 and 3 – Husband’s personalty
There is no evidence of the value of these items other than the husband’s admission. His value will be adopted.
Item 8 – Husband’s cheque account
No evidence was led to establish the amount asserted by the wife. The husband’s figure will be accepted.
Items 10 and 11
There is no evidence that these accounts exist. They will be removed from the balance sheet.
Item 13 – Lump sum received by the husband on retirement
The amount of €380,490 was received by the husband in 2009 when he retired. Part of the money was invested in the Templeton Fund. Part of the money was used to pay €174,624.81 to the wife in 2014 as payment of her half interest in L Street. Some of the funds were used for other expenses. The balance appears in Item 12.
No submissions were directed to the assertion that this amount should be included as the amount paid in 2009.
There is no basis upon which the sum received in 2009 should be included as an asset of the husband in 2016. This item will be removed from the balance sheet.
Items 15 and 30 – Husband’s contents and wife’s contents
Each party asserts that the other has household contents valued at $50,000 and that he or she has contents valued at $30,000.
These parties have been separated for 14 years. With the exception of the items of antique furniture that are referred to at Items 1 to 3, there is no suggestion that the household contents are of great value and no evidence about when the items were acquired.
I will remove both items from the Balance Sheet.
Item 16 – other Italian Real estate
This dispute arises from the valuation of the single expert who has included, as property owned by the husband, a number of parcels of land in Property 1, being seven parcels which form Lot …. The husband disputes the accuracy of the record. He asserts that he does not own all of the parcels and that the records are inaccurate. The single expert conceded in cross-examination that the records can be inaccurate.
The difference between the husband’s assertion of the value of the parcels he owns and the valuation is about $16,000.
No evidence was adduced by the husband to establish that the record is incorrect.
I propose to accept the value ascribed by the single expert.
Item 17 – Real property disposed of by the husband in 2012
No evidence was adduced to establish that any real property had been disposed of.
The single expert explained that the description of the relevant lots in Italian Property 1 had been changed and the lots which had previously been described as lots 1, 2, 3 and 4 were now described as lot 5 and had been valued.
Item 35 – Wife’s jewellery
There is no evidence of the value of the jewellery other than the wife’s admission. I propose to accept her figure.
Item 38 – Wife’s credit card debt
The wife gave evidence that her credit card is paid automatically from her bank account. There is no evidence of the debt at the date of the trial. It is a debt that is only referable to the wife’s spending and has no relation to the husband or the marriage. It will be removed from the balance sheet.
I therefore find that, for the purposes of these proceedings, the assets and liabilities of the parties are:
Italian assets owned by husband Chest antiquity $ E 4,269 7 piece 24 carat gold framed sitting room furniture $ E 355 Artwork in Rome Apartment $ E 568 Italian property
(1 per cent interest in this property)$ 199,911 Rome Apartment $ 446,949 Italian property 2 $ 370,888 Italian property 2
(50 per cent interest in this property)$ 1,008,987 Ministry of Foreign Affairs Cheque Account #426 $ E $5,468 Templeton Monetary Fund $ 26,746 BNL Life Insurance Investment Account
(€134,622)$ 192,735 British Motor Vehicle– $ 37,250 Other Italian Real Estate $ 60,495 Monies in trust for legal fees and counsel’s fees $ 26,759
Total of Italian assets $2,381,380 Australian Assets owned by wife Westpac Controlled Monies Account #41-7885 $ 350,000 Westpac Account #262 $ 100,480 Westpac Account #107 (Funeral expense account) $ 62,394 Westpac Account #807 $ 31,616 ANZ Account #314 $ 3,665 ANZ Account #219 $ 18,266 Commonwealth Bank Account #730 $ 12,641 NAB Account #343 $ 1,644 NAB Account #482 $ 4,034 Q Street, Suburb K $ 2,375,000 T Street, Suburb P $ 820,000 670 Santos Shares $ 3,289 German Motor Vehicle $ 11,400 184 Shares in Insurance Australia Group $ 1,080 54 Korvest Pty Ltd shares $ 122 Jewellery $ 30,000 Monies in trust for legal and Counsel’s fees $ 50,586 Total of Australian Assets $3,876,217 Total $6,257,597
SECTION 79(2)
Senior counsel for the wife opened with the submission that there should be no adjustment of the legal interests of the parties in the property they each own, relying on the provisions of s 79(2) of the Family Law Act which states:
The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
The husband’s position was that it would be appropriate to make an adjustment because of the substantial financial contribution made by him from his inheritance to the acquisition of the wife’s property in Australia, specifically J Street and her cash.
The husband has made a prima facie case that it would be just and equitable to make an order adjusting the legal interests of the parties in their property.
TWO POOLS APPROACH
The property of the parties consists of property in Australia solely owned by the wife and property in Italy solely owned by the husband.
The wife asserts that the husband made no contribution to the acquisition, conservation and improvement of her Australian property, except in so far as the purchase money for J Street came from the sale of I Street.
The husband asserts that the wife made no financial contribution to the acquisition, conservation and improvement of his Italian property.
The wife’s case is that she should retain her Australian property.
The husband’s case is that he should retain his Italian property and that the wife should pay him a sum of money.
It is most convenient to consider the contributions each made to the property of the other by dealing with the matter on a “two pools” basis.
THE WIFE’S CONTRIBUTIONS TO THE ITALIAN PROPERTY
The property in Italy has its genesis in the husband’s inheritance from his late parents. The husband’s parents died intestate. They had significant property and five adult children, the husband, his two brothers and his two sisters. After the death of the husband’s mother in 1985, the siblings held a family meeting and agreed to divide the real estate assets between them.
As a consequence of that agreement, the husband received his parents’ apartment in City H. He also received an undivided one-fifth interest in the family estate known as Property 1; one-half share of a property at Property 2 which has six marble caves which are leased as quarries; agricultural land at Property 3 which is farmed by the husband’s brother; a share in a company which owns an advertising hoarding in City H; a garage/warehouse at T Town; and a half share in land at U Town.
With the exception of the City H apartment and the land at U Town, all of the property which the husband inherited has been retained by him. The wife does not assert that she made any contribution to the inherited properties.
The apartment in City H was sold by the husband for 400 million Lire and the land at U Town was sold for 70 million Lire (the husband received 35 million Lire).
The husband used 360 million Lire from the sale to purchase an apartment in I Street in Rome. The title of the apartment was placed in joint names with the wife.
The I Street apartment was renovated. There is substantial disagreement about the extent of the renovations, the cost of the renovations and the source of the funds for the renovations.
The husband asserts that the renovations were paid for from the 40 million Lire left over from the sale of the City H apartment and the 35 million Lire from the sale of U Town.
The wife asserts that she paid for the whole of the costs of the renovations in the sum of 100 million Lire using funds from her Australian investment income.
Neither party has produced any documentary evidence to substantiate their claims.
The wife does not assert that the 75 million Lire available to the husband was used for any purpose other than the renovation of I Street.
The wife bears the onus of proof in relation to her assertion that she paid 100 million Lire to renovate I Street. She has not discharged that onus.
I accept that the wife supervised the renovations when the husband was at work and that they were both involved in the renovations at other times.
After four years, in 1990, I Street was sold for 1,340,000,000 Lire.
The parties disagree about how the proceeds were disbursed. The wife asserts that they each received 670 million Lire. The husband asserts that the wife received, and banked into her own bank account, two bank cheques from the purchaser, one for 670 million Lire and a second cheque for 150 million Lire.
The husband produced bank receipts showing the receipt into the wife’s bank account of the two cheques. Those receipts accord with the wife’s bank statement which is annexed to her trial affidavit.
In cross-examination, senior counsel for the wife put to the husband that the deposit of 150 million Lire was of money that the wife had repatriated to Italy to use in the renovation of I Street. It was also put to the husband that the 150 million Lire was money transferred by the wife to Italy from Australia for the prospective use in the renovation of the apartment they had not yet purchased at L Street. Both propositions cannot be correct.
The wife gave no evidence regarding the payment into her bank account of 150 million Lire.
I accept the evidence of the husband that the wife received 820 million Lire from the sale of I Street.
The balance of the sale proceeds of I Street were used to purchase, again in joint names, the apartment at L Street.
The wife asserted that she paid 170 million Lire towards the renovation of L Street. The husband disputed that assertion. The wife provided no document to support her claim.
The L Street apartment was purchased when the husband had been posted to the Caribbean. The husband gave evidence that the renovations were not extensive and were quickly completed before they left for the Caribbean. He said that he paid for any renovations.
The purchase price of L Street was 400 million Lire. If the wife received 820 million Lire from the sale of I Street, then the husband received the balance of 520 million Lire. He had funds with which to renovate L Street.
The wife bears the onus of proof in relation to her assertion that she paid for the renovations. She has not proven her assertion.
After the parties separated, the wife remained in occupation of L Street until she returned to Australia in 2004.
L Street is now the husband’s home.
In 2014 the husband was ordered, in the Italian proceedings, to pay the wife €174,624.81 (about $255,000) for her share of L Street. She acknowledged receipt of those funds.
The wife made a contribution to the Italian assets in her role as home maker. She made a contribution to the management and oversight of the renovations to I Street and L Street.
The husband denies that the wife made any significant contribution to the parties’ living expenses during their marriage. The wife alleges that she used her income from rent and the net proceeds of the sale of property to contribute to the parties’ lifestyle. Whilst it is not possible to quantify that contribution, I accept that the wife did make such a contribution.
THE HUSBAND’S CONTRIBUTIONS TO THE AUSTRALIAN PROPERTY
The husband does not claim to have made any contribution to the properties which were acquired by the wife before the purchase of J Street, or to the properties at Suburb N and Suburb O.
The husband claims to have contributed to the acquisition of J Street by virtue of the provision of 820 million Lire from the sale of I Street which had been purchased using the husband’s inherited money. As a consequence, the husband claims to have contributed to the purchase of Q Street, and to the cash now in the wife’s possession, as those assets had their origin in the proceeds of sale of J Street.
J Street was purchased for $730,000 using funds from the sale of I Street.
J Street was renovated in 2005. There is no evidence of the costs of the renovations. The wife deposed that she used $223,000 from the sale of Suburb E and Suburb N “towards significant renovations and improvements undertaken to the J Street property to make it liveable as well as some living expenses.”
J Street was sold and Q Street purchased from the proceeds of sale. The wife’s use of the balance of the proceeds of the sale of J Street has been explored earlier in these Reasons.
I accept that the husband made a significant contribution to the property at Q Street and to the cash held now by the wife.
OVERALL CONTRIBUTIONS
The property in the possession of the husband and the wife at trial had its genesis in two quite different ways. The wife had real estate interests at the commencement of the marriage and she continued throughout the marriage to buy and sell real estate.
The husband had no significant assets at the time of the marriage but he received an inheritance in 1985. The inherited land is still held by the husband. The inherited apartment was the basis of the purchases of real property at I Street, L Street and J Street.
Although the husband’s pension has been treated as a resource in these proceedings, it was generated through 40 years of public service by the husband. For thirty of those years, the wife also contributed to the husband’s professional career, as his wife, homemaker and hostess in his entertaining. She followed him through various transfers. She gave up her job in Sydney when they decided to return to Rome in 1980.
The parties were married for 30 years. Both parties have made significant, though different, contributions throughout this very long marriage. The wife’s greater initial contributions are to some extent eroded by the offsetting contributions of the husband’s income and inheritance of properties during the marriage.
They used their combined assets to acquire other property as they agreed from time to time.
The contributions made by each of them, including contributions to the husband’s pension entitlement, should be regarded as equal.
SECTION 75(2)
The wife is 81 years old. She is in frail health.
She has income from her investments, which earn only a small rate of interest, and from the rent of Suburb P. Suburb P is occupied by the wife’s daughter and her husband. The wife’s daughter is employed. Her husband has retired. They pay rent of $215 per week. In cross-examination, the wife conceded that market rent would far exceed that amount. The wife also gave evidence in cross-examination that she has given $50,000 to her grandson to pay legal fees in proceedings in which he was a party and $20,000 to her daughter. She also referred to other, smaller sums given for other purposes.
The wife has about $584,000 in cash and real property valued at $3,195,000, including the property in which she lives which is valued at $2,375,000. In addition she has personalty valued at $96,477. She has net assets of almost four million dollars.
The husband is 72 years old. He has retired. There is no evidence that he has any capacity to earn income from employment.
He has assets valued at about $2.4 million which includes real estate. With the exception of his apartment at L Street valued at $446,949, the husband’s real estate assets are income producing and his income from those properties is about €1,000 per week although the figure may be less if an allowance is made for tax. Some care needs to be taken in including the husband’s income from his inherited properties for the purpose of a s 75(2) assessment. In relation to the most valuable property, Property 3, the value of that property, which is included as an asset of the husband in the Balance Sheet, was calculated by the single expert on the basis of its income as well as its land value. There is a danger of double counting if the income received from Property 3 is again taken into account here.
However, the husband also has a pension of €1,422 per week. Using the agreed exchange rate, the husband’s pension is $2,036 per week.
Senior counsel for the wife characterised the husband’s pension, in his submissions, as a resource. Although no specific value can be attributed to it, it is a resource of significant value, providing to the husband an income for life of about $106,000 per annum at its present value.
The pension is of such value to the husband that it is appropriate to offset the pension against the wife’s greater assets.
This would result in the wife receiving 62 per cent of the parties’ combined assets which I consider to be an appropriate adjustment to take into account the husband’s continuing pension entitlement.
SPOUSAL MAINTENANCE
The wife seeks, in her Further Amended Initiating Application filed 20 September 2016, at Order 6.1, the following order:
That the husband pay to the wife the sum of $500,000 by way of lump sum spousal maintenance or, in the alternative, by way of property settlement.
The application is governed by the provisions of s 72(1) of the Family Law Act:
(1) A party to a marriage is liable to maintain the other party, to the extent that the first-mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:
(a) by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
(b) by reason of age or physical or mental incapacity for appropriate gainful employment; or
(c) for any other adequate reason;
having regard to any relevant matter referred to in subsection 75(2).
Thus, two matters arise. Is the wife unable to support herself adequately, and is the husband reasonably able to provide the maintenance she seeks?
Senior counsel for the wife conceded in submissions that there is no fund immediately available from which the husband could pay $500,000. He does not have $500,000 in cash. The property he owns in Italy is, with one exception, owned jointly with others. There is no evidence which suggests how the husband might be able to raise the necessary funds.
However, the wife has not established that she is unable to support herself from her own resources.
I am conscious of the fact that the wife has disposed of some $370,882 since May 2015 and the use to which those funds were put was not explained.
She has cash of about $584,000 and a property at Suburb P valued at $820,000. While the wife wants to make the Suburb P property available to her daughter and is entitled to do so, she cannot ask the Court to ignore that asset which she could rent for market value or sell to provide for her own needs. As has been referred to earlier in these Reasons, the wife contemplates the possibility of residential aged care. If she chooses that option, then the proceeds of rent or sale of Q Street will also be available for her needs.
The wife’s application for spousal maintenance will be dismissed.
THE ANTI-SUIT INJUNCTION
The husband seeks an order to restrain the wife from continuing litigation in Italy in relation to her claim for spousal maintenance, or alimony as it is referred to in the Italian proceedings. The wife opposes that application.
The principles for the granting of an anti-suit injunction are enunciated in the case of CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345 (“CSR”). That case has been applied extensively in this jurisdiction, most notably by the decision of the Full Court of the Family Court in Lederer v Hunt (2007) 36 Fam LR 587.
In CSR, the High Court outlined two bases of the court’s power to grant an anti-suit injunction. Firstly, the court’s inherent power to prevent its processes being abused; and secondly, the power arising from equity to prevent proceedings that are vexatious or oppressive.
In CSR, Dawson, Toohey, Gaudron, McHugh, Gummow and Kirby JJ said “The inherent power to grant anti-suit injunctions is … to be exercised when the administration of justice so demands or, in the context of anti-suit injunctions, when necessary for the protection of the court's own proceedings or processes.” (emphasis added)
Their Honours went on to say:
One well established category of case in which an injunction may be granted in the exercise of equitable jurisdiction is that involving proceedings in another court, including in a foreign court, which are, according to the principles of equity, vexatious or oppressive. Thus, it was said in Carron Iron Company v Maclaren that "[w]here [there is] ... pending a litigation here, in which complete relief may be had, [and] a party to the suit institutes proceedings abroad, the Court of Chancery in general considers that act as a vexatious harassing of the opposite party, and restrains the foreign proceedings."
In Société Aerospatiale, the Privy Council emphasised that the various cases decided in the nineteenth century with respect to vexation and oppression, including Peruvian Guano Company v Bockwold, have continuing significance for the grant of anti-suit injunctions. Those cases establish that the mere co-existence of proceedings in different countries does not constitute vexation or oppression. In particular, Peruvian Guano establishes that "double litigation [which] has no other element of oppression than this, that an action is going on simultaneously abroad, which will give other or additional remedies beyond those attainable in [the domestic forum]" does not amount to vexation or oppression.
More recently, in Bank of Tokyo Ltd v Karoon, Robert Goff LJ pointed out, correctly, in our view, although without specific reference to underlying equitable principle, that foreign proceedings are to be viewed as vexatious or oppressive only if there is nothing which can be gained by them over and above what may be gained in local proceedings. On the other hand, they are vexatious or oppressive if there is a complete correspondence between the proceedings or, in terms used in Carron Iron Company, if "complete relief" is available in the local proceedings. (Footnotes omitted; emphasis added)
Earlier in these Reasons I set out the background of the Italian proceedings. In October 2015, the husband’s appeal against the wife’s claim for alimony was successful. The wife has since commenced a further appeal.
The evidence before the Court was that in the Italian proceedings, the wife seeks 40 per cent of the husband’s lump sum retirement payout of €380,490 and ongoing alimony. In these proceedings, she seeks $500,000 by way of a lump sum payment of spousal maintenance.
The wife’s spousal maintenance application brought before me has been considered and dismissed for the reasons given above. I considered the Italian properties and interests of the parties along with the properties and interests of either party in Australia. Complete relief was available to the parties in these proceedings.
Should the wife continue to litigate her claim for alimony in Italy, that would allow her to re-litigate the same issues that have come before me in these proceedings. The principle of res judicata estoppel exists to prevent this abuse of the court’s processes.
In Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at 597, Gibbs CJ, Mason and Aickin JJ defined res judicata estoppel in the following terms:
The rule as to res judicata comes into operation whenever a party attempts in a second proceeding to litigate a cause of action which has merged into judgment in a prior proceeding.
In Caddy and Miller (1986) FLC 91-720 the Full Court said at 75,233 that the doctrine of res judicata estoppel:
...reflects the general interest of the community in the termination of disputes and in the finality and conclusiveness of judicial decisions, together with the right of the individual litigant to be protected from multiple suits for the same cause. It is part of the common law, and parties who go to a court to effect a resolution of a dispute are bound by its operation and consequences.
According to the principle of res judicata estoppel, the wife cannot seek relief in two different countries in relation to the same cause of action. She must be estopped from doing so.
Not only should the wife be estopped from litigating the same cause of action in another jurisdiction, not doing so would be oppressive and vexatious to the husband who has defended the same cause of action in the Australian proceedings. Counsel for the husband submitted that the extensive litigation overseas will continue indefinitely if the wife is not restrained from pursuing her claim in Italy. Given the length of these proceedings and the age of the parties, further litigation is undesirable.
An anti-suit injunction will be made against the wife to restrain her from continuing the litigation in Italy.
I certify that the preceding one hundred and seventy-seven (177) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 1 December 2016.
Associate:
Date: 1/12/2016
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
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Civil Procedure
Legal Concepts
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Injunction
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Res Judicata
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Estoppel
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Remedies
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Jurisdiction
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Appeal
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