JERVIS & JERVIS

[2018] FCCA 228

FEDERAL CIRCUIT COURT OF AUSTRALIA

JERVIS & JERVIS [2018] FCCA 228

Catchwords:
FAMILY LAW – Property orders sought – modest pool – where husband failed to attend the final hearing and the matter was heard on an undefended basis – husband acted unilaterally in disposal of assets and in his incurring of costs – orders made as sought by the wife – wife to retain proceeds of sale.

Legislation:

Family Law Act 1975, s.75(2)

Applicant: MS JERVIS

Respondent: MR JERVIS

File Number: AYC 29 of 2017

Judgment of: Judge Hartnett

Hearing date: 7 December 2017

Orders made: 7 December 2017

Orders made at: Albury

Reasons delivered on: 2 February 2018

Reasons delivered at: Melbourne

REPRESENTATION

Counsel for the Applicant: Ms Southey

Solicitors for the Applicant: Toner & May Legal

The Respondent: In Person

ORDERS MADE 7 DECEMBER 2017

1. The net proceeds of sale of the property known as and situate at Property A standing at approximately $58,647.57 be within seven days disbursed to the wife by the agency of her solicitor.

2. Upon the sale of the property known as and situate at Property B (‘the Property B property’), the net proceeds of sale (estimated to be approximately $25,000) be disbursed to the wife by the agency of her solicitor within seven days of the settlement of the sale.

3. Order 8 of the orders made on 19 October 2017 be varied such that the wife do all things necessary to ensure the sale of the Property B property proceeds with vacant possession, including doing all things necessary to terminate the informal tenancy agreement, noting that for the purpose of this order, the wife be recognised as a landlord of the Property B property.

4. In default of Property B property having vacant possession within 14 days of the date of these orders, the parties do all acts and sign all documents necessary within seven days of the default to transfer the Property B property to the wife to effect the sale pursuant to the orders made on 19 October 2017, with the transfer costs being deemed a cost of the sale.

5. Pursuant to s.106A of the Family Law Act 1975 (Cth), if either party refuses or neglects to sign or execute and return a document within 14 days of a written request to do so, then the Registrar of the Federal Circuit Court of Australia at Melbourne is hereby appointed to sign or execute such document on behalf of that party upon lodgement of such document/s and the filing of an affidavit of a solicitor on behalf of the requesting party as to the said neglect or refusal, and the defaulting party shall pay the other party’s taxed costs of and incidental to such request and production of documents to the Registrar.

6. Unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these or any subsequent orders:-

   (a)each party be solely entitled to the exclusion of the other to all property (including choses-in-action) in the possession of such party as at the date of these orders;

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

   (c)insurance policies remain the sole property of the owner named therein;

   (d)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders;

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

7. Otherwise all extant applications are dismissed.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT ALBURY

AYC 29 of 2017

MS JERVIS

Applicant

And

MR JERVIS

Respondent

REASONS FOR JUDGMENT

Adjournment

1. On the final hearing of this matter, the husband sought an adjournment of the proceedings. He had earlier telephoned the Court (on the morning of the hearing) to indicate that he would be an hour late for the proceedings.  The Court stood the matter down for the husband to be able to attend.  He then attended. The husband indicated that his “material” was stolen from his vehicle on the preceding evening.  The Court discussed with the husband paragraph 10 of the orders made 19 October 2017 which was as follows:-

   “(10) The husband within 28 days file and serve:

   (a) A response to initiating application seeking appropriate property orders

   (b) An affidavit with respect to property matters

   (c) A financial statement

   (d) written evidence to demonstrate his assertion that he paid the sum of approximately $100,000 in a Self-Managed Superannuation Fund to a third party.”

2. The husband did not file nor serve, and nor were these part of his “materials” which were “stolen”, a response to the initiating application of the wife in which the wife seeks final property orders.  The husband indicated to the Court that he did not know what orders he sought. He did not have before the Court any affidavit with respect to the wife’s property orders application. He did not have before the Court a financial statement. The husband asserted that he loaned the sum of approximately $100,000 from a self-managed superannuation fund to a third party.  He provided no evidence, rather he made submissions from the bar table, as to this purported loan of $100,000. The husband claimed he hoped to recover his sum advanced of $100,000 together with interest.

3. The husband previously had lawyers acting for him who withdrew in a notice of withdrawal which was filed with the Court on 8 March 2017. That notice provided an address for service of the husband to the Court and to the other party, being (address omitted).  The solicitors for the wife forwarded to that address for service the document dated 28 November 2017, which has been tendered and marked “Exhibit 1” in these proceedings. By the orders made on 19 October 2017, the husband was required to file and serve a notice of address for service within 7 days thereof. The husband did not file a notice of address for service. At trial he claimed that he no longer resided at the address for service provided by his former solicitors as set out herein. 

4. At the commencement of the proceedings, and during the continuation of the proceedings in the morning, the husband did not provide any medical evidence as to:-

   a)the state of his mental or physical health; and/or

   b)any inability, caused by the state of his mental and/or physical health, in him participating in the proceedings.

   The Court raised those matters with husband when he, referring to his mental health, sought an adjournment of the trial.

5. The proceedings had commenced prior to the luncheon adjournment. They were part heard requiring a return of the parties in the afternoon. The husband attended at Court around 2.15pm but did not proceed into the courtroom. Instead, he handed to the Registry a medical certificate which the Registry conveyed to the Court. The husband left the Court building.

6. The medical certificate, dated the date of the hearing was from Dr E of (omitted) Medical Centres the contents of which relevantly, were as follows:-

   “This is to certify that Mr Jervis (sic) presented here this morning in a lot of distress due to some family issues he is going through, he also reported he has a court hearing today for which he is very agitated.  In my assessment using DASS 21 he has severe stress and depression with moderate anxiety.  He will be mentally unfit for a court case from 7/12/2017 to 7/12/2017 inclusive.  He is advised to seek treatment for mental health.  Dr E.”

7. The Court telephoned the (omitted) Medical Centres to ascertain the validity of the medical certificate and to obtain some evidence from Dr E. The Court was advised that Dr E would not make himself available to speak with the Court. In these circumstances, there was no cross-examination as to the contents of the medical certificate afforded to the other side. In these circumstances, where the Court could not rely on the medical certificate produced by the husband, the matter proceeded.

8. The adjournment application of the husband prior to the luncheon adjournment had been refused, and the husband was well aware that the matter was proceeding and on an undefended basis as a result of the husband’s failure to file any material as ordered by Judge Williams in orders made 1 May 2017, and as further ordered by the Court in orders made 19 October 2017. The husband, the Court concluded, had ample opportunity to participate in these proceedings and failed to do so.

The application

1. Before the Court for its determination was an amended initiating application seeking property orders filed by the wife on 27 April 2017.  In that application, relevantly, the wife sought orders as follows:-

   “18. The net assets of the marriage be divided as to 70% to the Wife and as to 30% to the husband.

   19. The Wife be excused from further particularising the Orders sought pending full financial disclosure from the Husband.”

2. Following the filing and service of the amended initiating application, the solicitors then acting for the husband filed a notice of withdrawal as lawyer.  The notice of intention to withdraw as lawyer also notified the husband that the case was listed before the Court at the address of the Court in Albury, New South Wales, and on 19 October 2017 at 10.30am for final hearing. 

3. On 19 October 2017 the matter proceeded before the Court wherein orders were made adjourning the matter further to 7 December 2017 at 10.00am for final hearing.  Order 2 of the orders made on 19 October 2017 was as follows:-

   “…There is liberty to the mother to proceed undefended in the event the father fails to comply with order number 10 herein or in the event he fails to appear in person and remain throughout the proceedings on the final hearing date.”

   The Court notes the husband had departed the Court during the course of the proceedings on 19 October 2017.

4. Other orders made on 19 October 2017 provided for:-

   a)leave to the parties to withdraw their respective applications for parenting orders on the basis that care and protection proceedings were ongoing in the (omitted); and

   b)the sale of the parties real property situate at Property B in the State of Victoria (‘the Property B property’) with the application of the proceeds of sale as set out in order 4 of the orders made that day.  Whilst the wife had the sole conduct of the sale pursuant to order 5 of the orders made, the wife was unable to sell the real property because of the husband’s failure to comply with order 8 of the orders made 19 October 2017, being:-

   “The husband do all things necessary to ensure the sale proceeds with vacant possession, including doing all things necessary to terminate the informal tenancy agreement.” 

5. In correspondence after the making of the orders on 19 October 2017, the solicitors for the wife wrote to the husband advising him, relevantly, that:-

   “As advised to you at Court on 19 October 2017, our client intends seeking orders which provide for her to retain the entire net proceeds of sale from the Property A property as well as the Property B property.

   In relation to the sale of the Property B property, we note orders made by the Court on 19 October 2017 provide for the sale of that property forthwith. 

   Because of the tenant currently residing in the Property B property, we are instructed our client has been unable to advance the sale.

   We are instructed to seek further Orders to be made by the Court on 7 December 2017 which will provide for the sheriff, to attend, if required, and remove the tenant from the Property B property to enable the sale to proceed without further delay. 

   It is imperative that the sale of the Property B property occurs without further delay.  We note the (bank omitted) have issued a Default Notice with respect to the secured mortgages attached to the Property B home.  The (bank omitted) have further advised that they are considering issuing proceedings against both parties to recoup the outstanding monies owed. 

   We strongly recommend you obtain independent legal advice in relation to this matter.  If you have engaged a solicitor to further assist you in the family law matters, could you please provide them with a copy of this correspondence and ask them to contact the writer to further discuss.”

6. The wife’s solicitors had earlier corresponded directly with the occupant of the Property B property and on 23 August 2017, being prior to the orders made on 19 October 2017. That correspondence was relevantly as follows:-

   “We understand that you occupy the property with the permission of our client’s former husband, Mr Jervis.  Your occupancy is at will.  There is no lease agreement and you do not pay rent.  

   We advise that the subject property is an asset in the pool of marital assets which are the subject of current family law proceedings.  Those proceedings are listed for final hearing on 19 October 2017, on which occasion our client is seeking, among other things, an order from the court that the property which you presently occupy be sold. 

   This is notice to you to vacate the property by no later than 21 days from the date of this letter, being Wednesday, 13 September 2017. You should immediately make arrangements to secure alternative accommodation. 

   Please ensure that the property is left in a clean and tidy state when you vacate. 

   If you do not vacate the property by 13 September 2017, our client reserves all of her proprietary rights, including but not limited to, obtaining a court order to have you lawfully removed from the property and to change the locks in the premises…”

7. On the final hearing of these proceedings, the tenant remained in occupation of the Property B property and did not pay rent. 

8. The wife sought differing orders on the hearing of the proceedings to those as set out in her amended application filed 27 April 2017. A minute of final orders sought by the wife was handed to the husband on the morning of the final hearing. Those orders sought had earlier been conveyed to the husband in correspondence of 28 November 2017.

9. The husband was thus on notice as to the wife’s orders sought and had been afforded procedural fairness. The wife relied otherwise upon an affidavit of evidence sworn by her on 9 October 2017 and the evidence as contained in a financial statement sworn by her on 9 October 2017. Her evidence is unchallenged by the husband. 

History

1. The wife was born on (omitted) 1984 and is aged 33 years.  The husband was born on (omitted) 1976 and is aged 41 years. 

2. The parties commenced their relationship in or about 2004 and married on (omitted) 2007.  They separated in or about mid-November 2015.

3. There are three children of the marriage, [X] born (omitted) 2006 (‘[X]’), now aged 11 years,  [Y] born (omitted) 2009, (‘[Y]’), now aged 8 years, and [Z] born (omitted) 2010 (‘[Z]’), now aged 7 years.  Since the parties’ separation some two years ago, the three children of the marriage have resided in the primary care of the wife.  She has re-partnered. Her partner is Mr S.  He was born on (omitted) 1985 and is aged 32 years.  He is an (occupation omitted) and he is employed full time.  He has no children.

4. In or about June 2017 the Department of Health and Human Services (‘DHHS’) became formally involved with the family of the parties and protection application proceedings were issued in the (omitted). As a result of those proceedings, the children were placed in the care of the wife.  The husband was remanded in custody in (omitted) 2017 for various offences including family violence and drug offences.  He was released on bail in (omitted) 2017.  The DHHS proceedings are listed for a contested hearing (omitted). 

5. The wife receives no child support payments from the husband in respect of the three children.  She works part time as a (occupation omitted) with her employer (omitted).  She has only been engaged in that employment for approximately four months.  Her receipt of income from that employment is $236 each week and additionally she receives government Centrelink benefits of $311 each week.  Mr S is in receipt of an average weekly income of $500 each week. With these funds, the wife and Mr S support the three children. 

6. Whilst the wife’s financial statement indicated that she had some limited savings in the (bank omitted) at the time of the swearing of her document, that financial statement also indicated that she had an (omitted) MasterCard debt of $6,129, and an overdrawn (bank omitted) account liability of $704. Various other debts totalled approximately $3250. 

7. No financial statement was filed by the husband.  For the purposes of the final hearing proceedings, the husband indicated in submissions from the bar table that he did have the sum of $100,000 in a self-managed superannuation fund but that he had loaned such monies to a third party, with interest on the loan accruing.

8. The wife, in her financial statement, sworn 9 October 2017, provided evidence of superannuation entitlements held by her with (omitted superannuation) of $26,000 approximately. 

Contribution

1. At the commencement of cohabitation, the parties had minimal assets.  The wife’s sworn evidence was that the husband had substantial debt in the sum of about $120,000.  The husband, in an affidavit sworn 14 February 2017, denied that he was in debt and further denied, as had been asserted by the wife, that he had a gambling addiction. The wife’s evidence is accepted, the husband not participating in the proceedings and thus not being available for cross-examination as to his earlier affidavit evidence.

2. The husband worked and earnt income throughout the period of cohabitation. The wife also was gainfully employed although she took time off on maternity leave following each child’s birth.

3. The husband’s debt, and any debts of the parties that then existed, were extinguished upon receipt by each party of individual TAC payouts due to a (omitted) motor vehicle accident that the wife was involved in. This was a serious motor vehicle accident.  In particular, the wife was struck by an (omitted) who crashed into the motor vehicle the wife was driving at the time. (details of accident omitted)  The wife received a TAC payout following this accident of $400,000.  The husband also received a payout of $100,000 for pain and suffering.

4. Prior to the receipt of the TAC monies and in early 2007, the parties purchased, as joint proprietors, the Property B property for the sum of $324,000.  They borrowed funds from the husband’s mother in the amount of $50,000, which was applied toward the deposit. Otherwise the parties had some savings from the wife’s employment, and obtained a mortgage in the sole name of the wife to facilitate the purchase.  The mortgage over the Property B property remained in the sole name of the wife until 2014, when the previously very poor credit rating of the husband was rectified and the mortgage was able to be transferred into joint names. 

5. Following the receipt of the TAC funds, the wife applied some part of her monies toward repaying the husband’s mother, the sum of $50,000, which had been previously lent to the parties as described above. There was also other debt in the name of the husband, which included a loan to (omitted) of approximately $45,000, that the wife paid out of her receipt of TAC funds. Additionally, the wife applied the sum of $200,000 approximately toward the Property B property, which included renovations undertaken.  The parties purchased three motor vehicles: a (vehicle omitted), written off by the husband; a (vehicle omitted) written off by the husband; and a (omitted) motor vehicle, again written off by the husband. Over the course of the marriage, the wife’s evidence is that the husband rendered valueless approximately 10 motor vehicles.

6. During those times when the wife was not working, she cared for the children. The husband was gainfully employed throughout the cohabitation period as a (occupation omitted) for (employer omitted). He was terminated from that employment post separation and in 2017. When he was not working, he assisted the wife with the care of the children and he assisted the wife from time to time in the cleaning of the home.

1. In June 2014, the parties purchased a block of land at Property A in the State of Victoria (‘the Property A property’) for $125,000. To facilitate that purchase, they acquired a mortgage from the (bank omitted) for the entire purchase price using as security for the loan, some of the equity the parties then had in the Property B property. The parties were intending to eventually build a home on the Property A property.

2. In or about August 2014, the parties purchased a further property at Property C in the State of Victoria for approximately $500,000. Again, the parties borrowed the total sum of the purchase price and, again, the Property B property was used as security for the loan.  The wife’s father also gifted the parties the sum of $35,000 toward the purchase.

3. Following the parties’ separation in mid-November 2015, the property at Property C, was sold for $665,000.  After the costs of sale were paid out, together with the mortgage encumbrance, an amount of $77,842 remained for distribution between the parties. Such net proceeds of sale were agreed between the parties to be divided equally. This occurred. No allowance was made for the gift given to the parties by the wife’s father.

Asset Pool

1. The asset pool at the time of trial was difficult to assess because of the husband’s failure to file a financial statement and his complete lack of disclosure.  On the evidence, the assets and liabilities of the parties, as put before the Court by the wife to the best of her ability, are as follows:-

   a)an initial interim distribution to each of the husband and wife of $20,000 in respect of the Property C property;

   b)a further interim distribution to each of the husband and wife in respect of the Property C property in the sum of $18,921;

Assets

c)the Property B property with a value of approximately $500,000;

d)the net proceeds of sale of the property at Property A, in the sum of $58,647.57;

e)the (omitted) motor vehicle of the husband - value unknown;

f)the (omitted) motor vehicle of the husband - value unknown;

g)the (omitted) motorbike of the husband - value unknown;

h)the (omitted) motorbike of the husband - value unknown;

i)the (omitted motor vehicle) of the husband - value unknown;

j)the (omitted motor vehicle) of the husband - value unknown;

k)the camper trailer - value unknown;

l)the rooftop tent - value unknown;

m)four children’s quad bikes - value unknown;

n)ride-on mower - value unknown;

o)slate pool table - estimated value $6000;

p)the husband’s superannuation, whilst unknown to the wife, was submitted by the husband to be in the sum of $100,000, together with any interest that may be earnt on that sum;

q)the wife’s superannuation of $26,000;

Liabilities

a)the (omitted) mortgage, secured over the Property B property of approximately $358,803.82 together with a further additional encumbrance loan of the parties in respect of their real property dealings of approximately $105,397.43 (total $464, 201.25);

b)overdrawn cheque account with the (omitted) - estimated $1480.35;

c)(omitted) credit card of the wife – $6129;

d)various debts (including for electricity, water and gas) of the wife – estimated $2500; and

e)electricity bill incurred in respect of the Property B property but in the wife’s name – estimate $4000.

1. In or about mid-2017, the parties sold the Property A property for $155,000.  Once again, the costs of sales, together with the mortgage, were paid out. The amount of $58,647.57 remains in a trust account held by the wife’s solicitors on behalf of the parties.

2. At the time of separation in mid-November 2015, the wife retained a (omitted) motor vehicle, subject to finance secured over the vehicle by (omitted). Following separation, the wife had sent numerous emails and text messages to the husband, asking him to sign transfer documents to enable the registration of the (omitted motor vehicle) to be changed from his name into her name. Such transfer of ownership would have enabled her to renegotiate the loan terms with the finance company.  The husband refused.  In one of his emails to the wife, he demanded that the wife transfer to him the sum of $5500, being the amount owing on the loan at that time, before he would consider signing a transfer document. On 23 April 2017, whilst the wife was attending a football practice match of the parties’ son [X], a tow truck proceeded to tow the wife’s car away.  Contained in the car were the children’s school bags, clothes bags, clean washing, the wife’s (omitted) items, her laptop and a spare wallet which contained all of her identification documents, amongst other things.  The wife’s evidence is that the husband arranged for the vehicle to be towed away from the football ground, and that the vehicle was repossessed by the finance company. The husband had not attended to the finance repayments in respect of the vehicle.

3. At the time of separation, the husband retained a (omitted) motor vehicle.  He informed the wife that a tree had fallen on it, and claimed he was paid out insurance monies.  He also informed the wife that his (omitted) motorbike had been stolen.  The husband sold a (omitted) motor vehicle registered in his name and retained by him following separation, and the wife has no knowledge as to the husband’s application of any net proceeds of sale, the vehicle being subject to finance.

4. At the time of separation, the husband remained in occupation of the former matrimonial home being the Property B property. The wife was able to take only very limited items from the home.  Her personal items were denied her by the husband, and he burnt all of her textbooks, journals, (omitted) books, normal reading literature books as left by the wife on the bookshelf following the parties’ separation. Up until 2014, the husband had a bad credit rating and, accordingly, all accounts were placed in the name of the wife including utility accounts and Foxtel. The husband continued to enjoy his use of Foxtel.  The wife attempted to cancel the account but was informed that whilst monies due on the account remained outstanding, she could not cancel the account. The wife paid out the account and closed it.  However, the Foxtel account was reinstated by the husband without the wife’s knowledge or consent.  She again cancelled the account, but because the set top boxes were not returned, but rather remained with the husband, a debt of $1000 was incurred by the wife who has entered into a payment arrangement toward payment of that sum.

5. The husband has made no repayments toward the mortgage over the Property B property.  No rental receipts have been applied by him toward any reduction of the mortgage.  An electricity bill in the wife’s name of approximately $4000 has been incurred in respect of the property.

Section 75(2) matters

1. The wife continues to have the children in her care without any financial support from the husband.  She is solely responsible for the payment of the children’s school fees, uniforms, clothing and sporting and extracurricular activities. She resides in rental accommodation with her de facto partner. It is his income which supports the household, together with the wife’s part-time income.

Conclusion

1. The asset pool is relatively small. The wife’s obligation to support the three children is a very onerous one, and will no doubt be undertaken without any future provision of support from the husband. The s.75(2) of the Family Law Act 1975 (Cth) considerations overwhelmingly favour the wife. The husband has acted unilaterally in his disposal of assets; in his incurring of costs to the parties; and in his renting out, albeit with no rental receipts accounted for to the wife, of the Property B property of the parties. Despite the receipt of significant funds by the parties during their cohabitation, there is little left. The single largest amount is those monies the husband says he has in a superannuation fund. On the wife’s evidence, there is little prospect of such funds continuing to exist.

2. The Court determines it is just and equitable in all the circumstances of the case to accede to the application of the wife and shall make those orders as sought by her. No doubt the wife will incur further considerable costs in her execution of the Court’s orders, including, in dealing with a tenant who has to date refused to vacate a property to which he is not entitled, either as a registered proprietor, being a person who holds some equitable interest, or as a tenant.  The continuation of that situation, supported by the husband, is a wastage of the parties’ assets and is taken into account by the Court in these proceedings. In essence, the husband has acted to eradicate the parties’ assets, and his conduct toward the wife and children has made their financial existence precarious. The prompt resolution of these proceedings was a necessary element for the wife and the Court accordingly made orders at the conclusion of the final hearing.

I certify that the preceding forty-three (43) paragraphs are a true copy of the reasons for judgment of Judge Hartnett

Date: 2 February 2018