Hightower and Morandi

[2019] FamCA 134

FAMILY COURT OF AUSTRALIA

HIGHTOWER & MORANDI [2019] FamCA 134

FAMILY LAW – PROPERTY – Settlement in relation to marriage – Where the wife seeks orders for settlement of property – Where the husband has not engaged with the proceedings – Where the value of the property has been reduced due to damage that occurred while the husband was resident prior to the execution of a warrant for possession – Just and equitable to make an order.

Family Law Act 1975 (Cth) ss 75(2), 79, 81

Stanford & Stanford (2012) 247 CLR 108

APPLICANT: Ms Hightower

RESPONDENT: Mr Morandi

FILE NUMBER: ADC 3093 of 2018

DATE DELIVERED: 1 March 2019

PLACE DELIVERED: Adelaide

PLACE HEARD: Adelaide

JUDGMENT OF: Berman J

HEARING DATE: 1 March 2019

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Tinning

SOLICITOR FOR THE APPLICANT: Belchamber Legal

COUNSEL FOR THE RESPONDENT: No appearance

Orders

1. In full and final settlement of either parties’ claims for settlement of property or alteration of property interests and otherwise in accordance with Part VIII of the Family Law Act 1975 (as amended):

   1.1within 14 days of the date hereof the parties shall do all things necessary including sign the Department of Motor Vehicles registration transfer document to effect the transfer of Motor vehicle 2 registration … from the joint names of the parties to the husband’s sole name and in the event the husband fails to sign the transfer document upon presentation of same, a Registrar of this Honourable Court be appointed to sign such document on behalf of the husband upon proof by affidavit of the wife of such default and that the husband shall pay the reasonable costs of the wife in relation to same;

   1.2Subject to subparagraphs 1.1 hereof the wife do otherwise retain for her sole use and benefit absolutely, free from any further claim, right or entitlement of the husband at law or in equity:

   1.2.1the former matrimonial home situated at B Street, Suburb F in the State of South Australia (Certificate of Title Register Book Volume … Folio …);

   1.2.2any motor vehicle presently in her possession;

   1.2.3furniture, articles of domestic use or ornament, and jewellery as in her possession;

   1.2.4any monies standing to her credit in any financial institutions;

   1.2.5all her estate and interest both at law and in equity which she has now or may hereafter have in any superannuation scheme, retirement benefit, early retirement redundancy benefit or rollover fund;

   1.2.6all her estate and interest both at law and in equity which she has now or may hereafter have in any life assurance, insurance or endowment insurance policy;

   1.2.7all other items of property presently in her possession of whatsoever nature and from whatsoever source;

   1.3subject to subparagraphs 1.1 hereof the husband do otherwise retain for his sole use and benefit absolutely, free from any further claim, right or entitlement of the wife at law or in equity:

   1.3.1any motor vehicle presently in his possession;

   1.3.2furniture, articles of domestic use or ornament, and jewellery as in his possession;

   1.3.3any monies standing to his credit in any financial institutions;

   1.3.4all his estate and interest both at law and in equity which he has now or may hereafter have in any superannuation scheme, retirement benefit, early retirement redundancy benefit or rollover fund;

   1.3.5all his estate and interest both at law and in equity which he has now or may hereafter have in any life assurance, insurance or endowment insurance policy;

   1.3.6all other items of property presently in his possession of whatsoever nature and from whatsoever source;

   1.4the wife do otherwise pay and fully indemnify the husband in respect to;

   1.4.1all mortgage payments owing pursuant to Commonwealth Bank Memorandum of Mortgage No.s …05 and …07

   1.4.2All rates, taxes, levies and other outgoings with respect to the Suburb F property;

   1.4.3all debts and liabilities of the wife including personal loan, credit card and store account debts in the sole name of the wife;

   1.5the husband do otherwise pay and fully indemnify the wife in respect to;

   1.5.1any monies owed by the husband and the wife to the husband’s family members;

   1.5.2all debts and liabilities of the husband including personal loan, credit card and store account debts in the sole name of the husband or severally with others;

   1.6The parties be hereby restrained by injunction from pledging the credit of the other.

2. All applications of the parties do otherwise stand dismissed and are hereby removed from the active cases list.

   Liberty to apply for consequential orders.

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 Hightower & Morandi 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 ADELAIDE

FILE NUMBER: ADC 3093 of 2018

Ms Hightower

Applicant

And

Mr Morandi

Respondent

EX TEMPORE REASONS FOR JUDGMENT

1. By Amended Initiating Application filed 29 January 2019, Ms Hightower (“the wife”) seeks orders for settlement of property against Mr Morandi (“the husband”). The proceedings commenced by Initiating Application on 1 August 2018 and have been the subject of amendment on two subsequent occasions. A feature of the proceedings is that there has not been any engagement by the husband. The interim proceedings were heard and determined in the Federal Circuit Court by order made on 31 January 2019. Registrar Paxton noted that there was no appearance by the husband and the matter was listed for an undefended hearing on a date to be advised.

2. It was intended that the matter would be heard by Judge Kelly. As a result of her Honour’s absence from the registry, the proceedings were transferred to the Family Court of Australia. On the matter coming to my attention I determined that the matter should proceed as ordered by the Registrar. The hearing today is for a determination of the final orders sought by the wife.

3. Something must be said as to the status of the husband. He does not appear today and I am satisfied that his name has been called in the precincts of the Court.

4. It is not the case that the absence of the husband today is unusual or unexpected. The evidence and orders made in the Federal Circuit Court suggest that for reasons best known to the husband he has determined not to engage in the proceedings and has been recalcitrant in respect of the orders made as part of the interim arrangements.

5. The history of orders made is relevant to the manner in which I propose to proceed today. On 10 September 2018, Judge Kelly noted that there had been attempted service upon the husband of the affidavit material and applications filed by the wife.

6. Her Honour was satisfied, as is self-evident from the orders made that day, that personal service of the proceedings upon the husband be dispensed with and that substituted service could be effected by the delivery of sealed copies of documents to the premises at B Street, Suburb F. Service by the delivery of the documents was to be deemed as effective service. It was apparent from the order and in particular her Honour’s notation, consequent upon the report of the process server, that the husband appeared to be avoiding formal personal service.

7. The tenor of her Honour’s order continued through the proceedings. The order of 24 September 2018 urges the husband to attend the proceedings in circumstances where there may well be an order sought by the wife for sole use and occupation of the premises and the immediate sale of the property. A sealed copy of the order was forwarded by pre-paid post to the husband, care of an organisation known as D Service. Significant costs were incurred by the wife in respect of the husband’s refusal to attend the proceedings.

8. The issue was again raised before her Honour on 8 November 2018, this time in circumstances where the husband remaining in the premises, to the exclusion of the wife, had not paid any instalments other than one payment towards the Commonwealth Bank mortgages as he was required to do by order of 24 September 2018. The consequence was that the wife then made those mortgage repayments in order to preserve her credit rating. Importantly, the husband was again put on notice that there may be an amended initiating application seeking the sole use and occupation of the property.

9. Her Honour made orders in terms of paragraphs 3 and 4, which foreshadowed what would happen if the husband did not make regular payments to the mortgage, namely he would be required to vacate the premises and that the wife would have sole use and occupation. Again, orders were made in respect of the filing of answering documents and a warning to the husband that if he did not attend the adjourned hearing date on 31 January 2019, then the application may proceed on an undefended basis.

10. Further orders were made on 6 December 2018, arising out of the continued refusal of the husband to pay the mortgage. Her Honour made orders that the husband vacate the premises, that the wife have sole use and occupation, and that the husband be thereafter restrained from residing in or attending the premises. Again, the issue of service was considered and her Honour’s order deemed that personal service be effected by leaving a copy of the orders at the Suburb F premises.

11. On 18 December 2018, again noting that there had not been compliance by the husband, a warrant of possession for the property was issued. The warrant was formalised on 18 December 2018 and the warrant had to be executed to evict the husband from the property. Thereafter, the wife has resumed occupation or control over the property.

12. The documents relied upon by the wife are as follows:

    (1)An Amended Initiating Application filed 29 January 2019.

    (2)Her Affidavit filed 1 August 2018.

    (3)Her Affidavit of 30 January 2019.

    (4)Her Financial Statement filed 1 August 2018.

    (5)Valuation documents relevant to the valuation of the property at B Street, Suburb F, being Exhibits “1” and “2”.

    (6)A case outline document prepared by the wife’s counsel.

13. I have also been assisted by a draft minute of order which sets out the orders now sought by the wife. The document is relevant, not only because it assists the Court in determining the orders that should be made, but there have been some changes that are apparent on the orders that now represent the wife’s position when compared to the amended initiating application which sets out then, the most recent version of the orders sought. The principal difference is that it is no longer required that there be detailed orders in terms of the personalty that is to be retained by the wife and that which she concedes is to be retained by the husband. Apparently that division has occurred.

14. The second difference is that the wife no longer seeks the relief in 1(g) namely, an order by way of personal protection. That issue has been dealt with to the wife’s satisfaction by the implementation of an intervention order.

15. In summary, if I make orders in terms of the minute of order prepared by the wife’s counsel, that will represent a conclusion to the proceedings and will give finality to the parties as is required, pursuant to s 81 of the Family Law Act 1975 (Cth) (“the Act”).

16. In the circumstances of this case not much is required by way of background, but it is useful in terms of the orders that I propose to make to set out under the broad history.

17. The parties met in or about 2009, commenced co-habitation in 2012 and were married on 28 March 2015. They separated on 8 December 2017, and counsel considers that the Court should view the relationship of something slightly more than five years. The wife was employed as a receptionist and at the same time, was studying for the degree of clinical psychology. By reference to her affidavit, she asserts that the parties had minimal assets at the date of commencement of their co-habitation, each of them having a motor vehicle, some modest superannuation entitlement, and in terms of the wife, a HECS debt. The wife commenced employment as a Health Professional in 2015, and continues in that employment.

18. I am uncertain as to the state of employment in respect of the husband. I accept the wife’s evidence that during the period of this short relationship the husband had some employment, but to a very significant degree and during long periods of unemployment, he was supported financially by the wife. There was some small financial relief arising from a termination payment that was received in the sum of $10,000.

19. The parties purchased the B Street property in mid 2013. The purchase price was modest at $292,000, there was stamp duty and other attendant costs of sale and the total price was $305,948.

20. There were a range of difficulties with the ability of the parties to effect the purchase of the property in the sense that their financial position was poor, and they needed the assistance of the wife’s mother as guarantor for some part of the outstanding mortgage, namely about 20 per cent, in order that they avoid the necessity for mortgage insurance. The wife asserts that her parents were of assistance and that they gifted furniture and effects to the parties. Whilst the mortgage was funded by the income of each of the parties going into a joint account and then being transferred into an account from which the mortgage payments were debited, it remained in the sole name of the wife and she is also the sole registered proprietor of the property.

21. I raise that, not because there is any doubt about the current legal interest of the parties in respect of the property, but simply because there appears to be an error in the financial statement that had been prepared and filed on behalf of the wife on 1 August 2018, which referred to the names of the registered proprietors of the B Street property as being the husband and the wife.

22. The assets of the parties are relatively modest and by reference to the schedule, both are set out in [18] of the wife’s affidavit filed in support of her initial application and the schedule of assets and liabilities as prepared by the wife’s counsel. The significant property of the parties is identified in the following assets:

    (1)The property at B Street, Suburb F.

    (2)Motor vehicle 1 in the wife’s name.

    (3)Motor vehicle 2 in the husband’s name.

    (4)A joint NAB account of little or no value.

    (5)The wife’s NAB account opened at separation of little or no value.

    (6)The wife’s CBA account of little or no value.

    (7)The husband’s bank accounts are not known.

23. In terms of the liabilities, they predominantly relate to the following:

    (1)The CBA home loans of $275,000.

    (2)The wife’s Visa credit card of $9,000.

    (3)The wife’s Mastercard of $3,000.

24. The wife has a superannuation entitlement with Super Scheme 1 of $38,000. Nothing is known of the husband’s superannuation entitlement. Accordingly, the pool is modest, and even taking into account the assessment by the wife as seen in [18] of her affidavit, the assets and liabilities of the parties at separation reflect total assets of about $332,000 and total liabilities of about $287,000. It is of note that in [18] there is some assistance as to the husband’s superannuation entitlement, considered by the wife to be a Super Scheme 2 account, in the sum of $42,000.

25. For the purposes of these proceedings, I am prepared to accept the assertion of the wife in respect of her understanding of the husband’s superannuation entitlement.

26. There are some matters raised in terms of the personal items retained, but I do not propose to be concerned about the retention of her pets.

27. I raise the issue of the valuation of the B Street property now, by reference to the tender by counsel of two valuation reports which provide, firstly, some assistance, but also, again, bring the parlous financial position that the wife finds herself in, into stark focus.

28. Exhibit “1” is a valuation report of the C Group, which I am satisfied was prepared as part of the discussion and investigation of the wife’s ability to purchase the property, at first instance. The valuation report was as a result of an inspection on 26 August 2016, and provided an assessment by the valuer that the market value of this property was $310,000. The wife accepts that valuation as being an accurate reflection of the value of the property at the time that it was prepared, and clearly supports the valuation estimate that she placed on the property in her financial statement.

29. There is more to the valuation of the property as is demonstrated by Exhibit “2” which is a valuation assessment by a real estate agent in the employ of the G Group, who, by letter dated 25 January 2019, considered that in her professional opinion and after viewing the property, the value was between 195,000 and $205,000. What is immediately apparent is the difference in terms of the value as considered by the agent upon inspection in January 2019 and the valuation a following inspection in August 2016.

30. By reference to the following paragraphs, the answer is depressingly clear. This property has been extensively damaged to the extent that I find no one could live in it as it is. It would also run the risk of being a safety hazard due to all of the wiring that is exposed and cut. The oven is missing. The kitchen has been turned into a workshop. Mould consumes the bathroom and there are holes in numerous parts of the walls. The backyard is not even visible, due to all the rubbish and weeds.

31. I refer to the matters raised in the wife’s Affidavit of 30 January 2019. As discussed, her Honour’s order dated 18 December 2018 accorded the issue of a warrant of possession and the removal of the husband from the B Street property. There was difficulty in gaining the final repossession, because the husband had altered the locks in respect of the property. Once repossession had been obtained successfully the wife was distressed, consequent upon her observations of the state of the house and its extensive disrepair.

32. Paragraph 8 of her affidavit sets out the areas of concern, and they are extensive. It is estimated that even to make the property fit for sale or liveable or even safe, the sum of at least $15,000 would need to be expended. I expect that that is conservative. It appears that an explanation for the husband’s reluctance to allow entry to the property and to explain the extent of the damage is to be found in [11], where information was received that suggested the husband had been stealing power by bypassing the meter, which explains all the drilled holes in the walls and the cables running through.

33. The difficulty created by the husband was not simply one of emotional distress to the wife, but occasioned serious financial expenditure. There were legal fees and disbursements in the process, not just derived from the normal ebb and flow of litigation, but expense incurred because of the refusal by the husband to engage in the process, and the need to engage process servers and the sheriff’s office to give effect to orders of the court. The repairs to the property are assessed by the wife at about $15,000.

34. Mortgage repayments and council rates have been paid by the wife in circumstances where there was either an understanding, an agreement or an order that the husband would at least meet his share of those expenses during the period of his sole occupation. There were various Visa card repayments arising from expenses incurred during the period of the relationship, as were there credit expenses for the provision of furniture and effects, and, in particular, in terms of utilities that had not been paid by the husband during his period of occupation.

Legal principles to be applied

1. The wife seeks an alteration of the respective interests of the parties in property. The relationship is of short duration, but for the interest that the wife concedes they have in Motor vehicle 2 the legal interests are relatively well-defined, and the issue that needs to be answered by reference to s 79(2) of the Act is whether I should be satisfied that, in all the circumstances, it is just and equitable to make the orders that the wife seeks. Property is defined in s 4(1) of the Act and means property to which those parties are or that party is, as the case may be entitled, whether in possession or reversion. In Stanford & Stanford (2012) 247 CLR 108, the majority held at [35]:

   It will be recalled that s 79(2) provides that “[t]he 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”.

2. Importantly, the Court found at [39]:

   …whether it is “just and equitable” to make the order is not to be answered by assuming that the parties’ rights to or interests in marital property are or should be different from those that then exist.

3. This is a matter that was raised with counsel given the circumstances where the property is modest, the relationship is short, the contribution by one party is overwhelming and the legal interests are all clear. The Court should give proper consideration as to whether it is appropriate to apply the provisions of s 79.

4. I am satisfied that in the circumstances of this case, particularly where the wife seeks that there should be an alteration of property, that it is just and equitable for the Court to embark upon the adjustment, as sought. There is a requirement that the Court should consider finality, however unhappy this relationship may have been.

5. Nonetheless, the parties were in a marital partnership and that at least initially, they worked collectively and together to amass property that would bring some financial support to their relationship. The fact that there was a substantial breakdown and, ultimately, irreconcilable differences, does not alter the mindset of the parties and their common intention at the commencement of their cohabitation.

6. The assets of the parties are therefore uncontroversial, and I consider that they are appropriately reflected by the schedule of assets and liabilities as is to be found at Part F of counsel’s case outline document.

7. They are, in any event, ad idem with the wife’s assessment in [18] of her Affidavit of 1 August 2018 and her Financial Statement of the same date, save and except for the obvious amendment which is that there is now a significantly lower value to be attributed to the B Street property. I have accepted that evidence of lower value and, accordingly, I incorporate the lower value as has been done by the wife’s counsel in the balance sheet. I also bring to account not only the wife’s Super Scheme 1 at $38,000, but her evidence that she considers the husband to be entitled to a Super Scheme 2 entitlement of about $42,000 or thereabouts, as at the date of settlement.

8. Any difference or uncertainty as to the precision of the assets and liabilities of the parties is not as a result of any lack of diligence by the wife, but the unacceptable conduct of the husband in terms of his refusal to engage in the process. I am obliged to consider the contributions of the parties and I bring to account those matters raised in the wife’s trial affidavit, as discussed. The conduct of the husband following separation where, notwithstanding his residence in the B Street property, he made little or no financial contribution towards the house expenses, credit card repayments or mortgage repayments, other than an amount of $3,354.93 is significant.

9. Following separation, the wife had to find her own accommodation and did not have the advantage that the husband had of being able to remain in the B Street property. She incurred rental and other accommodation commitments. She continued to pay the home loan in the sum of $22,692, she paid council rates of $1,500, various credit card and other expenses totalling $12,200, and utility accounts for water, electricity and gas, to which the husband should have been responsible, for $3,900.

10. Overwhelmingly, there is also the estimated cost of repairing the property to $15,000 and that does not bring to account that the property is currently uninhabitable, that it represents a safety hazard, and that there may be significantly more expense likely to be incurred, given the exposed wiring.

11. The s 75(2) factors are relatively straightforward. The parties are still young. The wife is in employment. The husband is likely to be in employment, albeit no information is known, and he clearly has not made any discovery or disclosure which would assist in either the wife better formulating the order she seeks or the court better determining the issues that are required to be the subject of consideration.

12. In those circumstances, I do not consider that there are any factors, pursuant to s 75(2), that are overwhelming in favour of either of the parties.

13. I am also obliged to consider the superannuation entitlements of the parties. I do not propose to treat the assets of the parties and their superannuation entitlements by way of a single pool approach, I propose to deal with that matter by a two pool approach, and in doing so self-evidently nothing arises of contention, given my finding that the superannuation entitlements of the parties are approximately equal and that there are many years to run before each of these parties would be able to satisfy a condition of release.

14. There is no evidence as to any peculiarity or difficulty or interest or different aspect of the respective funds, and I form the view that there is nothing about the superannuation entitlements of the parties or the benefits that might inure from the separate superannuation interests that would cause me to do anything other than to simply leave the entitlements in the hands of each of them.

15. All of that brings the matter to the point where the contribution of the wife is overwhelming, arising from the adverse conduct of the husband and the significant financial contribution that has been required to be made by the wife following the separation.

16. The difficulty for the wife, however, is that there is no net property for which these issues can attribute in circumstances where there is a deficiency in respect of the property of the parties, and a clear finding that the deficiency is predominantly as a result of the adverse conduct of the husband.

17. I then turn to consider the orders that the wife now seeks. I am satisfied that the orders proposed reflects a just and equitable outcome.

18. The construct of the orders is that in full and final settlement, the parties will do all that is necessary to cause the transfer of Motor vehicle 2 from the joint names of the parties to the husband’s sole name. Thereafter, each of the parties will retain their realty and personalty in their separate position, power and control and in particular, that the wife will retain her interest in the property at  B Street, Suburb F, free from any further claim, right or entitlement of the husband.

19. Thereafter, the orders provide for each of the parties to indemnify the other in respect of their separate liabilities, and I have been asked to note specifically the proposed order in [1.5] that the husband is to indemnify the wife in respect of any moneys owed by him, and possibly the wife to the husband’s family. I propose to fall in with those orders. For those reasons, then, subject to the amendment in [1.1] of the order, namely, the inclusion of the words “[Motor vehicle 2]” to better identify the vehicle, the subject of the transfer.

20. I make orders as appear at the commencement of these reasons.

I certify that the preceding fifty-four (54) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 1 March 2019.

Associate:

Date: 13 March 2019