Mezzacappa & Mezzacappa

[1987] FamCA 20

In the marriage of MEZZACAPPA, G. and MEZZACAPPA, G.

(1987) FLC ¶91-853

Other publishers' citations: (1987) 11 FamLR 957 (1987) 90 FLR 350

Full Court of the Family Court of Australia at Melbourne.

Judgment delivered 2 December 1987.

Before: Joske, Strauss and Mullane JJ.

Joske, Strauss and Mullane JJ.: This is an appeal against orders of Kay J. made on 30 April 1987 in proceedings for alteration of interests in property under sec. 79 of the Family Law Act 1975.

The effect of these orders was that there should be transferred and paid to the wife real property and money to the total value of $187,750, being one half of the property and moneys which his Honour found the parties possessed, namely, $375,500. The real property consisted of: (1) the former matrimonial home at Bunker Avenue, Kingsbury, valued at $82,500 and (2) the parties' equity in a property at Niblick Street, Kingsbury, valued at $53,000. His Honour also found that the husband held other property consisting of moneys or investments amounting to $240,000, which together with the real estate composed the total of $375,500. His Honour accepted the husband's evidence that out of the sum of $240,000 he had spent $10,000 on a car and $9,000 on furniture for his own use. The wife had in her possession property or chattels worth about $5,000, some of which his Honour found might have belonged to the daughter. The husband was also a member or beneficiary under a superannuation scheme to which he had contributed about $8,000. At the time of the hearing he was almost 50 years of age. His entitlement under the scheme on retirement at age 55 was $47,000 together with a fortnightly pension of $135. This entitlement was calculated on his current salary. As his salary would rise, so would his lump sum entitlement and pension. On his present earnings, at retirement at age 65 he would receive $60,000 by way of lump sum plus $194 fortnightly pension. These superannuation entitlements would be subject to some income tax.

The parties were married on 21 February 1961. Both the husband and wife were born in Italy. They migrated to Australia in 1967 or 1968. There are two children of the marriage. M born on 29 May 1965 and T born on 21 October 1971. At the time of the hearing before his Honour, T was living with the husband. The husband was born on 26 June 1937, and the wife was born on 6 January 1942. It was common ground that from 1968 until 1984 both parties had worked hard and accumulated the assets referred to above. Both parties were employed in the main by the Department of Health as ward or Kitchen assistants and both earned similar income. Counsel for both parties conceded that until the time of the separation, the parties should be seen to have contributed equally towards the acquisition, conservation and improvement of their assets and to the welfare of the family. As his Honour found, they were frugal with their money and they invested wisely. There were a number of dealings in real estate and by February 1984, they had six pieces of real estate, registered in either the husband's name or in the joint names of the parties.

At the time of the hearing the wife was living with another man, with whom she had become involved from about 1981 or 1982. As a result of some arrangement entered into between the husband and the wife's family, she was lured to Italy, early in 1984 on the pretext that her father was ill. Shortly afterwards the husband procured the execution in his favour by the wife of a power of attorney to act on her behalf. He used this power of attorney to sell four of the six properties which the parties then had. The net proceeds of these sales amounted in all to $220,582.45. The husband received certain other moneys on behalf of both parties and according to his Honour's findings the total of all moneys received by him was $262,418.01. As his Honour remarked:

``... what became of the $262,418.01, which is the common ground of the parties was a fruit of their joint labours has been where most of the discussion has been in this case.''

His Honour found that the husband had accounted satisfactorily for $60,000 of this amount of $262,418.01. The husband gave various explanations as to how he had expended the balance of $262,418.01, none of which were accepted by his Honour, and his Honour found that:

``In the present case, as at May 1985 the husband had in his possession over $200,000 and since February 1984, has had $260,000 in his possession. He would have me believe that the monies no longer exist. This evidence, on his part, I do not accept. I am firmly convinced that the husband has available for his use the sum of $202,000 that I calculated previously and in addition, there has been an appropriate accrual to it. He has always been a wise investor.

For the past two years, banks have readily offered 15 per cent interest. There is no reason for me to assume the husband has not invested in the least productive method, namely bank interest. There have been movements in and out of foreign currency in this case; there has been a dramatic decline in the Australian dollar as against the Italian Iira, and he may well have made a lot of profit.

I do not know in what form it exists, but I have no doubt that it exists, either in cash in interest bearing deposits or in some other form of profitable investments belonging to the parties that would be worth $240,000 at least.''

At an earlier part of the judgment, when dealing with the husband's versions of what he had done with the money, his Honour found:

``It is a fanciful explanation without, in my view, the slightest amount of credit and subject to monies which I think were reasonably explained away, I can only conclude that the husband has the vast bulk of that money and has invested it wisely over the last two years since he removed it from the parties' bank accounts.

If he spent it as he says he did, over the six or eight weeks that he removed it from the three accounts, he spent it at the rate of $25,000 per week. There must be somewhere some record or some observer of that course of events, yet none was called.''

The only ground on which the appeal before us proceeded was as follows:

``That the learned trial Judge was wrong at law, alternatively erred in the exercise of his discretion in making by way of settlement of property, an order adjusting property which could only be met at least in part out of unidentified and unquantified resources.''

Counsel who appeared for the husband on this appeal conceded that his Honour was entitled to find that the husband had had $260,000 in his possession in February 1984 and that as at May 1985 he had $200,000 in his possession, and that his Honour was entitled to reject the husband's evidence that the moneys no longer existed. However, she submitted that his Honour was in error when he concluded that, ``... there has been an appropriate accrual to those funds''. She submitted that there was no evidence that the money had been invested at 15 per cent or at any other rate or that the investments were worth $240,000. Counsel for the husband also submitted that as the husband had accounted for $19,000 of the $202,000 (being the price of the car and furniture) the appropriate capital sum in respect of which an apportionment should have been made was $183,000. It will be noted that the total figure of $240,000 assumes an increment of $38,000 on $202,000 over two years which is in fact a little less than 10 per cent. In our view his Honour was not in error when he did not deduct the sum of $19,000 from the moneys to be distributed or from the moneys in respect of which interest should be calculated. The wife's share of the $202,000 was one half namely $101,000 and this had been withheld from her use since May 1985. The husband has had the use of this amount of $101,000 which in reality belonged to the wife. We think his Honour was entitled to infer from all the evidence and circumstances of the case that the money had been invested by the husband at least at a rate equivalent to bank interest. Whilst there was no express evidence of a bank interest rate and whilst 15 per cent may be on the high side, the wife did in fact only receive 10 per cent on her share of the money. Another way of looking at the matter is that the husband has had the wife's share at his use and disposal and that an allowance to the wife of 10 per cent per annum for the use of her share is a modest one. Accordingly, this submission fails.

Counsel for the husband's second submission was that his Honour had been unable to trace the money to any fund or property and that the only definite and ascertained property consisted of the former matrimonial home at Bunker Avenue, valued at $82,000 and the Niblick Street house worth $53,000. She relied upon Monte and Monte (1986) FLC ¶91-757 in support of an argument that the upper limit of what the Court should have ordered to be transferred under sec. 79 was the whole of the ascertained property of the parties. Implicit in this argument is that the sum of $240,000 is not ascertained property. In Monte's case the trial Judge found that in addition to the net proceeds of the sale of the former matrimonial home, the husband had ``undisclosed financial resources'' which were not disclosed to the Court for the purpose of the proceedings, but which were somehow available to meet an order. However, the trial Judge was not able to identify or quantify these assets or resources. In Monte's case the trial Judge ordered the transfer to the wife of the proceeds of the sale of the home (the fund) and ordered the husband to pay a further $40,000. The Full Court said:

``In our view the finding that the husband had `assets... which are somehow available to meet an order' cannot stand in the light of the trial Judge's earlier findings and comments in regard to the financial position of the husband and the state of the evidence before the trial Judge in that regard. To found jurisdiction under sec. 79 in relation to the property, other than the fund, her Honour was obliged to make findings as to the existence and value of that other property even though the unsatisfactory nature of the evidence made it necessary to express that finding in the most general terms both as to identity and value.''

The present case is quite different. There was a finding that the husband had received the proceeds of the sale of various properties and other moneys and that the amounts received in 1984 amounted to $262,418.01. This finding now remains unchallenged. There was a further finding that the husband had accounted for an expenditure of $60,000 and that he had retained the balance. There was therefore a finding that in May 1985 the husband had in his possession $202,418 of the property of the parties. His Honour concluded in the absence of an acceptable explanation as to the disposition of this large sum that the husband had retained it and that the money had been invested by or on behalf of the husband. Consequently, there was a finding identifying the assets, viz., the balance of the moneys received by the husband in 1984 from the sale of properties and other defined sources, and he identified real property and there was an express finding as to their value. The fact that the husband had hidden the money and refused to disclose its whereabouts did not make the funds unascertained or unascertainable. See Abdullah and Abdullah (1981) FLC ¶91-003 and Giunti and Giunti (1986) FLC ¶91-759.

The last submission was that as the money could not be traced to particular assets it was not identifiable as property of the parties. However, this submission ignores the finding that the husband was in control of the funds. The funds had been traced and found to be in his possession. He was the only person who knew their precise whereabouts and he refused to disclose them. In this situation the fact that the funds had been traced no further than to being in his possession or under his control is of no significance.

It was also submitted by counsel for the husband that having regard to sec. 81 of the Family Law Act the Court should not have made an order for an amount which exceeded the value of the real property, because the pursuit of the excess might involve the parties in enforcement proceedings and possibly bankruptcy proceedings. Section 81 is not intended or designed to encourage frauds or to protect a person in the husband's position from enforcement proceedings. In Abdullah's case the husband claimed to have dissipated $32,728 by gambling, Baker J. rejected this evidence and found that the husband still had the money, either in cash or in investments. He made an order which the husband could not have satisfied from his own resources without recourse to part of the sum of $32,728.

In our view the funds which his Honour found to be in the husband's control are property within the meaning of sec. 79 of the Act and the order made was unexceptional. The appeal should be dismissed.

The time fixed by the order for payment or transfer of property has expired. The time for carrying out the original orders should now be extended so that the orders not already carried out will have to be carried out within a month from the delivery of this appeal judgment. As the time for payment fixed by the original order has expired, the husband will be required to pay interest at the rate fixed by the Rules at 15 per cent per annum from 30 May 1987, which was the date due for payment under these orders. We were informed by counsel that the Niblick Street property has already been transferred to the wife and therefore no further order extending the time for the transfer of that property is required.

In all of the circumstances the husband should be required to pay the costs of this appeal. The following orders are made:

1. That the appeal be dismissed.

2. That the orders of Kay J. of 30 April 1987 be varied as follows:

(a) By substituting in para. 2 for the words ``on or before 30 May 1987'' the words, ``within one month from the date of this order of the Full Court''.
(b) By substituting for para. 3 the following: ``That within one month from the date of this order of the Full Court the husband pay to the wife the sum of $52,250 together with interest thereon at the rate of 15 per cent per annum from 30 May 1987 to the date of payment''.
(c) By substituting in para. 4 for the words: ``In the event that the husband on or before 30 May 1987 pays the wife the sum of $134,750'' the following words: ``That in the event that the husband within one month from the date of this order of the Full Court pays to the wife the sum of $134,750 together with interest thereon at the rate of 15 per cent from 30 May 1987 to the date of payment''.

3. That the husband pay to the wife, the wife's taxed costs of this appeal.