Morcos & Lindon (No 3)
[2025] FedCFamC1F 183
•21 March 2025
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Morcos & Lindon (No 3) [2025] FedCFamC1F 183
File number(s): MLC 209 of 2020 Judgment of: BENNETT J Date of judgment: 21 March 2025 Catchwords: FAMILY LAW – PROPERTY –substitution of parties – joinder of parties – where second respondent is the Executor of the husband’s mother’s Estate – where the Executor was the husband – where following final judgment the husband resigned as Trustee and appointed two beneficiaries in his place – where the Trustees seek to be joined in the name of Trustee or substituted as second respondent – where clarified in outline of case that trustees no longer seek substitution and seek to be joined – where application not pressed at hearing as relief sought is duplicitous of husband’s relief sought – where application should be an Application in an Appeal – application dismissed, wife’s costs reserved.
FAMILY LAW – PROPERTY – application for stay pending appeal – where trustee has filed a Notice of Appeal – application for stay of final orders sought by husband and trustees – where trustees does not press stay application – where husband presses stay application -where stay granted.
FAMILY LAW – PROPERTY – slip rule application – where wife and husband seek different relief pursuant to the slip rule – where some orders sought are not slip rule matters – where trial judge is functus officio with respect to non-slip rule matters including making adjustments for CGT where there was no evidence of CGT before the Court – where order provided for non-existent caveat to be removed and amended to refer to correct caveat pursuant to slip rule – where mechanism for distribution of property sought by wife amended pursuant to slip rule.
Legislation: Family Law Act1975 (Cth)
Federal Circuit and Family Court of Australia Rules 2021 (Cth)
Cases cited: Gould v Vaggelas [1985] 157 CLR 215
Harrell & Nesland [2020] FamCAFC 21
Jackson & Balen [2009] FamCAFC 131
Morcos & Lindon (No 2) [2025] FedCFamC1F 7
R v Cripps; ex parte, Muldoon [1984] 1 QB 686
Division: Division 1 First Instance Number of paragraphs: 85 Date of hearing: 14 February 2025 Place: Melbourne Counsel for the Applicant: Litigant in Person Counsel for the First Respondent: Mr Wells SC with Ms James Solicitor for the First Respondent: Zeno Lawyers Counsel for the Second Respondent: The Applicant appearing on behalf of the Executor of the Estate Counsel for the Proposed Third Respondent: Mr North SC Solicitor for the Proposed Third Respondent: KHQ Lawyers ORDERS
MLC 209 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR MORCOS
Applicant
AND: MS LINDON
First Respondent
EXECUTOR OF THE ESTATE OF THE LATE MS B
Second Respondent
TRUSTEES OF THE ESTATE OF THE LATE MS B
Proposed Third Respondent
ORDER MADE BY:
BENNETT J
DATE OF ORDER:
21 MARCH 2025
THE COURT ORDERS THAT:
1.The application of the Trustees of the Estate of the Late Ms B dated 12 February 2025 seeking substitution or joinder is dismissed.
2.Paragraphs 1, 3, 4, 5, 6, 7, 8, 9, 10, 11 and 12 of my orders of 20 January 2025 in this matter are stayed pending final appeal.
3.The Orders made on 20 January 2025 be amended pursuant to 10.13 of the Federal Circuit and Family Court Rules 2021, in accordance with my reasons set out in paragraphs [47] to [51] and [61] to [67] and be reissued to the parties and practitioners.
4.The wife’s costs of answering the applications of the Trustees, fixed in the sum of $8,700, are reserved until after the determination of the appeal.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BENNETT J
INTRODUCTION
Before me are applications for a stay of final property orders, joinder or substitution of parties and other remedial orders pending an appeal which is likely to be heard in April 2015. On 20 January 2025, I pronounced property orders and published my reasons for decision, following a 10-day trial which commenced on 22 April 2024 and concluded on 1 August 2024. At that trial, the respondent wife was represented by Ms James of Counsel and the husband appeared in person with the assistance of a GG Language interpreter. The husband also appeared as the Executor of the Estate of the late Ms B.
I found that the property at D Street, Suburb E, was purchased in the name of the husband’s mother, Ms B (now deceased), using money that was not hers but was the husband’s and placed by him into a bank account in her name operated solely by him.[1] At hearing, the property had an agreed value of $2,850,000. I found that the husband had deliberately sought that the property not be included in the property pool and that this extended to a will that appointed him as Executor and Trustee while his daughters from a previous marriage were the primary beneficiaries. The terms of the will were that the Trustee of the testamentary trust could do anything to benefit himself as a general beneficiary.
[1] Morcos & Lindon (No 2) [2025] FedCFamC1F 7 [165] – [174].
The husband’s mother died in 2010. The parties separated in 2013. The husband did not obtain probate until mid-2019. For some of that time the husband was an undischarged bankrupt, and the receipt by the husband of valuable property during his bankruptcies would have been financially inconvenient.
I found that the husband forged documents as his mother including after she had died. This resulted in the mortgagee bank advancing a further $750,000 on the security of the property at D Street with no knowledge that Ms B was dead and that the husband had forged her signature.[2]
[2] See Morcos & Lindon (No 2) [2025] FedCFamC1F 7 [40] – [48].
The husband commenced property settlement proceedings in 2020.
The primary beneficiaries had knowledge of the proceedings and had written to the Court on several occasions but had not sought to be joined.[3] On 7 May 2024, Ms P, one of the primary beneficiaries, attended Court, ostensibly to support the husband, in circumstances where she may have been called as a witness in the case. She was informally asked some brief questions, not under oath, and clarified that she did not intend to be called as a witness. She was asked to discuss the matter with the husband and after the adjournment the husband’s position was that he would not call Ms P to give evidence.[4] On that day, both the wife’s application for interim sale and the will of Ms B were raised as topics of cross-examination of Mr Morcos..[5]
[3] Ibid [20] – [21].
[4] Transcript of proceedings, 7 May 2024, page 96-98.
[5] Transcript of proceedings, 7 May 2024, p.92 line 15.
Correspondence was sent by the primary beneficiaries on three occasions (the first two addressed to the wife’s solicitors, the final to my Chambers) as outlined in my primary judgment at [20], [21] and [31]. There was further an affidavit filed by the Executor of the Estate (Mr Morcos) on 21 August 2024, after the close of evidence, in which there was no application to re-open the evidence and, as there was no consent from the wife for it to be treated as an Exhibit, it was ignored.
I delivered my decision on 20 January 2025, which, in effect, declared the property to belong legally to the husband. The property was included in the pool of property interests available for distribution and the orders included a mechanism by which the property be sold and divided between the husband and wife.
In the final paragraph of my reasons, I said:
[304] I predict that implementation of these orders will not be straight forward. I reserve liberty to the parties to apply in relation to implementation of these orders. Listings of applications in this regard can be discussed with my Associates via email to […@...]. Liberty to apply to any alleged mathematical errors which fall within the operation of the slip rule.
The corresponding order was:
16. I reserve liberty to the parties to apply urgently in relation to:
(a)Implementation of this Order including any application pursuant to s 106A of the Act;
(b) For matters allegedly requiring correction under the slip rule, and
(c)For permission to provide a copy of these reasons for decision to Westpac Bank, the husband’s Trustee in bankruptcy or any other person.
On 22 January 2025, the practitioners for the wife sent an email to my Associate and to the husband, raising the following matters.
(1)I had provided for the wife to withdraw a caveat over a property occupied by the husband, when, in fact, there was no such caveat. The wife, correctly, asserted that the only caveat in the matter was a caveat lodged by the husband over the property in which the wife resides. The wife sought to rely on the slip rule to amend the orders to withdraw the husband's caveat over the wife's property.
(2)The wife asserted that there may have been a mathematical error in calculating an add-back component of the wife's legal fees, and sought that the amount added back for legal fees not include $40,000 or $45,000 from the wife's superannuation fund, because I had otherwise found that the superannuation pool was principally constituted by an inheritance which the wife received upon the death of her father, well after separation.
(3)The wife asserted that the paragraph pursuant to which proceeds of sale of the property D Street, Suburb E which is occupied by the husband is to be distributed "is unclear" and would be likely to result in the wife receiving less than was intended by the Court. The wife sought that, pursuant to the slip rule, the order be amended to better reflect the clear intention of paragraphs 295 to 300 of my reasons for decision, and provide a formula which can be used.
I mark the correspondence from the wife’s practitioners Exhibit SR1.
On 5 February 2025 the husband wrote to my Associate expressing the following, which I mark Exhibit SR2:
Good afternoon Associate,
I refer to the Orders made by Her Honour on 20 January 2025 and the Reasons for Judgement published.
I am writing to the Court to raise the below issues in relation to the Orders. I would like these raised in tomorrow's Mention hearing.
1. There are some significant tax implications such as Capital Gain Tax and stamp duty implications if the property is transferred and sold in my personal name.
2. Based on initial tax advice the sale of the property in my name will trigger a Capital Gain Tax liability of approximately $400,000 (if not more depending on final sale value). Stamp duty may also apply. I need time to consider this further with my accountant.
I seek the indulgence of the Court in proposing that Clause 294 and all other relevant respective orders to be varied to account for any tax liabilities pursuant to the Slip Rule.
Based on the above significant implications, I request the court
1. Stop orders until the tax issue is resolved.
2. I also notify the court that I intend to appeal and will formally do so before the required date.
Kind regards
[Mr Morcos]
Applications are not initiated by email correspondence. Each party should have filed an application in the appropriate form. It may be that the parties misunderstood the contents of paragraph 304 of my reasons for judgment and thought that an email to my Chambers could initiate an application. In fact, I only referred to emailing my associates in the context of securing a hearing date. However, in the interests of wishing to proceed with the matter on 6 February 2025, I gave each party liberty to make an oral application, as contemplated by their respective emails.
As indicated, in the substantive financial proceedings, the husband appeared on his own behalf. He also appeared as Executor of the Estate of his late mother, Ms B. On Monday, 3 February 2025, the husband resigned as Executor and his daughters, Ms O and Ms Q, were appointed as Trustees (“the new Trustees”).
On 5 February 2025, the Trustees retained the firm KHQ Lawyers to represent them in these family law proceedings.
On 6 February 2025, Ms James of Counsel appeared on behalf of the wife, the husband appeared in person, Ms Davey, solicitor, of KHQ Lawyers, appeared on behalf of the Executors of the Estate of the husband's late mother. There were several reasons why the matter could not be dealt with on 6 February. First, the husband could not work the MS Teams platform. Second, shortly prior to Court on 6 February 2025, the Counsel for the wife served written submissions. The husband had not had an opportunity to read these submissions prior to the commencement of the hearing. Clearly, he would be afforded an opportunity to read the submissions. Third, Counsel for the wife indicated that she had not been aware of the communication by the husband to the Court, referred to at paragraph 13 above, and agreed that she requested some further time in which she could prepare any submissions which were necessary to respond to matters raised by the husband.
On 6 February, the husband attempted to make an oral application for a stay of the orders of 20 January 2025.
On 6 February 2025 the matter was adjourned to 14 February 2025 with orders that any further submissions be filed and served by the wife by 10 am on 10 February, and then by the husband and the Estate by not later than 10 am on Wednesday, 12 February 2025. No further submissions were to be filed otherwise.
The new Trustees then filed a Notice of Appeal on 12 February 2025, along with an Application in a Proceeding seeking substitution (or alternatively to be joined as third respondents) and a stay of the operative provisions of the orders of 20 January 2025.
At the interim defended hearing on 14 February 2025, Mr Wells SC appeared with Ms James for the wife, Mr North SC appeared for the Trustees and Mr Morcos appeared on his own behalf.
There is some confusion as to the position of the Trustees. The Application coversheet refers to themselves as the second respondent, the “Executor of the Estate of the Late [Ms B]” in both this Application in a Proceeding and in the Appeal documentation. Senior Counsel for the wife made the argument that the application cover sheet looked on the face of it as if it was an application made by an existing party to the proceeding, not a non-party as it, strictly speaking, was. Senior Counsel for the trustees said that it was a limitation of the Commonwealth Courts Portal and is incorrect in law to suggest that an application in a proceeding cannot be made by an interested non-party. However, this position is inconsistent with the trustees attempting to, initially, substitute themselves as the second respondent and take over the place of the Executor. The trustees could have drawn their documents so that they took the place of an intervener or a fourth party. I am not aware that they sought to explain to the wife's practitioners that they were wrongly described in the head note, by affidavit or by correspondence. Anyone reading the document would see that they are "the Executor".
APPLICATION FOR JOINDER
By way of an application filed on 12 February 2025, the husband’s daughters, Ms O and Ms Q, acting as Trustees of the Testamentary Trust of the Late Ms B, seek to be substituted for the Executor of the Late Ms B as Second Respondent or, alternatively be joined to the proceedings as Third Respondents pursuant to s 92 of the Family Law Act. They further seek that the final orders in relation to the sale and distribution of the property at D Street be stayed (paragraphs 1, 3, 4, 5, 6, 7, 8, 9, 10, 11 and 12). As stated, the Trustees have now filed an appeal of my orders of 20 January 2025.
I note that, in submissions, Mr North SC clarified that the Trustees no longer wish to be substituted for the second respondent (a departure from their application) and instead sought to be joined as third respondents. As above, the documents filed by the Trustees until this point have on the face of them, described them as the Executor of the Estate as the Second Respondent.
At the time of final hearing, the Executor and Trustee were one and the same. Mr North SC submitted that the husband has now appointed Ms O and Ms Q as Trustees, but he remains the Executor. At this point in the hearing, Mr Morcos sought to consult with Ms O and Ms Q, but their Counsel motioned for them not to do so, and they declined to talk to their father. The husband did not otherwise make submissions with respect to the joinder application.
I informed Mr North SC that it was my view that the Trustee’s application to be joined was best dealt with as an application in the appeal, and the relief sought by the new Trustees could be achieved through the application for stay sought by Mr Morcos (on 6 February 2025) pending the outcome of the appeal either filed by himself or as filed by the new Trustees. Subsequently, the application for joinder was not pressed by the trustees.
Ms James made submissions on behalf of the wife that the intervention application should be determined as an application in the appeal and is not for determination by the trial judge.
I agree that substituting parties after I have delivered my decision is beyond my remit. My power is exhausted save for the slip rule applications and a stay and I will now deal with those.
In my view, a substitution is not necessary. The parties before me were the husband, the wife and the Executor who at that stage was the husband. It was the person who by operation of law who was the Executor who was a party to the proceedings before me. The identity of the Executor may change but the parties in these financial proceedings stay the same. The new Trustees say that by operation of law they are now the Trustee. I appreciate that is their position, but I am not giving my imprimatur to the change of Executor or Trustee. That can be adumbrated and, if needs be, challenged in another place.
For the avoidance of doubt, the application for joinder or substitution of the trustees is dismissed.
APPLICATION FOR STAY PENDING APPEAL
The husband, by way of oral application, seeks a stay of the operative provisions of the final orders that require the sale of the property at D Street and distribution of proceeds. The wife opposes the stay on the grounds of the continuing diminution of equity in the property and the ongoing mortgage liability but offered that the proceeds be held or frozen and not distributed pending the outcome of the appeal. Nevertheless, the husband pressed the application for stay.
The husband has referred to his appeal but had not yet filed an appeal. In the meantime, the daughters have filed an appeal as Executors or Trustees.
Mr Morcos’s submissions in respect to the need for a stay were, in essence, that the beneficiaries under the will (being on his case this three older daughters including Ms O and Ms Q) will “take over everything”. I take this to mean that the beneficiaries intend to take over the loans which were due to reach capacity at the end of 2024 in order to avoid the bank forcing sale of the property in accordance with their rights under the mortgage.
The husband did not particularise the orders he seeks to be stayed. The application filed by the Trustees refers to a stay of specifically orders 1, 3, 4, 5, 6, 7, 8, 9, 10, 11 and 12, and the husband seems to agree in part with that position in that he appears to seek a stay of the entirety of the orders.
I record below the submissions of Mr North SC on behalf of the Trustees are also supportive of the husband.
Mr North SC referred to the case of Jackson & Balen [2009] FamCAFC 131 at [28]:
[28] The principles to be applied in hearing a stay application pending an appeal are well settled (see Federal Commissioner of Taxation v Myer Emporium Ltd [No. 1] (1986) 160 CLR 220 at 222; Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685; Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd (1986) 161 CLR 681). Those authorities stress the discretionary nature of the application which should be determined on its merits. Principles relevant to this matter include the following:
•the onus to establish a proper basis for the stay is on the applicant for the stay. However it is not necessary for the applicant to demonstrate any “special” or “exceptional” circumstances;
•a person who has obtained a judgment is entitled to the benefit of that judgment;
•a person who has obtained a judgment is entitled to presume the judgment is correct;
•the mere filing of an appeal is insufficient to grant a stay;
•the application must be bona fides;
•a stay may be granted on terms that are fair to all parties - this may involve a court weighing the balance of convenience and the competing rights of the parties;
•a weighing of the risk that an appeal may be rendered nugatory if a stay is not granted – this will be a substantial factor in determining whether it will be appropriate to grant a stay;
•some preliminary assessment of the strength of the proposed appeal – whether the appellant has an arguable case.
Mr North SC submitted that there is an arguable case to be made on appeal as summarised in the Trustees’ Case Outline at pages 5 through 7. The essence of the appeal is that it challenges my determination under s78 that the husband is the legal and equitable owner of the property at D Street.
It is argued that there is a significant prospect that if the stay is not granted, there is a chance that the land will be sold and proceeds distributed before appeal, denying the beneficiaries, on his case (being the husband’s eldest three daughters) from the opportunity on behalf of the Estate to use the property to earn income.
With respect to the stay application itself, Ms James conceded that the preservation of the property pool is an appropriate concern pending appeal. She submits that the husband and new Trustees do not have an arguable case on appeal and questioned whether it was bona fides. First, she submits that the appointment of the daughters as Trustees does not deem them to be beneficiaries. It was Ms James’s submission that the findings of fact made in my final judgment were findings based on the evidence before me and there was adequate evidence to reach those conclusions.
Ms James submitted that in any event, and regardless of any stay, once the mortgagor discovered the order it would trigger foreclosure and that would disadvantage all parties by taking the sale of the property out of the parties’ hands where it is in the interests of all parties to maximise the sale price of the property. It is the preference of the wife to be in control of the sale rather than allowing Westpac to facilitate the sale, regardless of whether any decrease in equity over the time period covered by the stay is recoverable as a result of the appeal being dismissed.
I am satisfied that the appeal has legs. It may not succeed but it is not without merit.
I will allow the application for stay of the sale of the property at D Street, Suburb E. Any prejudice suffered by the wife due to the operation of the stay can be a matter for further application pending the outcome of the appeal.
SLIP RULE APPLICATION
Rule 10.13 of the Federal Circuit and Family Court of Australia Rules 2021 (Cth), ("the Rules"), provides:
(1)The court may at any time vary or set aside an order if:
(a)it was made in the absence of a party; or
(b)it was obtained by fraud; or
(c)it is interlocutory; or
(d)it is an injunction or for the appointment of a receiver; or
(e)it does not reflect the intention of the court; or
(f)the party in whose favour it was made consents; or
(g)there is a clerical mistake in the order; or
(h)there is an error arising in the order from an accidental slip or omission.
(2)Subrule (1) does not affect the power of the court to vary or terminate the operation of an order by a further order.
In Harrell & Nesland [2020] FamCAFC 21, Kent J, sitting as the Full Court, quoted Sir John Donaldson MR in R v Cripps; ex parte, Muldoon [1984] 1 QB 686 at 696 as follows:
If a court has reached a decision which is ambiguously expressed either in the reason judgment or in the formal orders giving effect to the decision, the ambiguity of expression can be removed in the exercise of the slip rule powers.
In simple terms, the slip rule means an order can be varied to ensure that the order clearly and accurately reflects the intentions of the Court. The slip rule does not permit reconsideration of the substance of the court's ruling. It can be applied either by consent of the parties or at the Court's own initiative. Generally, the principles governing the application of the slip rule include:
·Its purpose is to avoid injustice to litigants;
·It cannot be invoked as a matter of course;
·It is to be "exercised sparingly, lest it encourage carelessness on the parties' legal representatives and expose the risks to public interest in finality of litigation" (Gould v Vaggelas [1985] 157 CLR 215);
·A correction under the slip rule takes effect from the date of the original judgment or order, that is, it takes effect retrospectively.
Relief Sought by the Wife
All of the relief sought by the wife is sought pursuant to the slip rule. I will deal with each item sought by the wife in turn.
Caveat
The wife submits that order 7 was pronounced in error. It provides:
7. Immediately prior to settlement, the wife do all acts and things and sign all such documents as may be required at her own expense to withdraw all caveats lodged by her or on her behalf over [D Street, Suburb E].
The wife, in her second Further Amended Response to Initiating Application, filed on 1 May 2024 at page four, paragraph four, seeks an order requiring the husband to do all acts and things to withdraw the caveat lodged by him over G Street, Suburb H. Uncontroversially, this was and remains the only caveat lodged by any party against any of the properties in the proceeding before me. The wife seeks that I vary order 7 of the final orders.
It is appropriate that this order be amended pursuant to the slip rule. The wife proposes that the order become:
‘Within 28 days of the Orders the Husband do all acts and things and sign all documents required, at his own expense, to withdraw all caveats lodged by him or on his behalf over [G Street, Suburb H] including but not limited to caveat […]
The husband requests that I “keep everything as it is” but agreed that there was no such caveat over the D Street property. In his written submissions, he says he does not object.[6]
[6] Written Submissions of the Husband filed 12 February 2025 [18].
It is appropriate that the amendment be made as sought by the wife, pursuant to the slip rule.
Superannuation
The wife says that there was a mathematical error in calculating an add-back component of the wife's legal fees, and sought that the amount added back for legal fees not include $40,000 or $45,000 paid that was sourced from the wife's superannuation fund, because I had otherwise found that the superannuation pool was principally constituted by an inheritance which the wife received upon the death of her father, well after separation.
At paragraph 294 of my reasons for decision, there appears the following table of assets:
Description Ownership Value ($) Non-superannuation assets (Pool 1) G Street, Suburb H
Valued at $1,650,000 (August 2022)less liability to AG Bank mortgage registered over G Street, Suburb H ($166,000)
Wife $1,484,000
D Street, Suburb E VIC
Valued at $2,850,000 (August 2022)less liabilities of
Business loan ending …50: ($635,000); and Business Loan Facility account ending …69 – ($450,000)
Total: ($1,085,000)Husband $1,765,000 Motor Vehicle 1 Wife $12,000 Add back: Wife’s legal fees Wife $148,000 TOTAL NON-SUPERANNUATION INTERESTS $3,409,000 Superannuation interests (Pool 2) Superannuation Fund 3 Wife $454,000 [7] Nil Superannuation Husband NIL TOTAL PROPERTY $3,863,000 [7] Transcript of proceedings, 30 July 2024, page 415, line 30.
At paragraph 266 of my reasons, I commented:
[266]The wife gave the following evidence about having drawn down her superannuation to pay legal fees. She says that she has withdrawn $40,000 or $45,000 from her superannuation fund which at the time of final hearing had an approximate balance of approximated $454,000.
At paragraph 264, I recorded that:
[264]The wife’s superannuation interest is described above. It has been heavily augmented by an inheritance from her father’s Estate and partially depleted by legal costs. The wife’s father died in […] 2018 by which time the husband and wife had been separated for five years. The wife received a partial inheritance from her father’s Estate of $100,000 [mid-]2019 (six years after separation) and a further $250,000 in [early] 2021 (eight years after separation). [In mid-] 2021 the wife transferred $240,000 to her [Superannuation Fund 3]. At separation, the wife’s superannuation interest had largely been cashed out. The balance of the wife’s superannuation on 30 June 2013 was $24,437.70.
In paragraph 265 of the reasons, I concluded that the inheritance "was solely referable to the wife".
In the course of the reasons for judgment, I explained that I was going to treat the financial interests of the parties in two pools. One pool was constituted by the wife's superannuation, which was derived from her father's inheritance, and the other pool of assets was everything else. Based on the fact that the inheritance and consequent superannuation interests was a pool from which there was no division made, the wife contends that the $40,000 or $45,000 paid in legal costs from her superannuation fund should similarly be ignored. The consequence of that would be that the add-back against her, at paragraph 284, would be $108,000 rather than $148,000.
Counsel for the wife submitted that I had made a finding that there should be no alteration to superannuation. This is correct. However, the funds had already ceased to be superannuation once they were applied to legal fees.
The husband opposes the wife’s application for amendment.[8]
[8] Written Submissions of the Husband filed 12 February 2025 [19].
I do not find that there is any incongruity between the add-back that I have allowed of $148,000 (necessarily including $40,000 which originated from the wife's superannuation) and my finding that the superannuation interest of the wife is not to be the subject of division between the husband and the wife. It was not an error on my part. Any changes contemplated by the wife would, in my view, constitute reconsideration of the substance of my ruling and cannot be made pursuant to the slip rule. I will not make the amendment sought.
Mechanism of sale
My decision was that the property occupied by the husband at D Street, Suburb E, would be sold and the proceeds of sale would form part of the assets divisible between the parties. I ordered:
8.On completion of the sale of the [D Street] property, the proceeds be paid in the following manner and priority:
(a)First, in payment of all costs, commissions, adjustments due to the purchaser and expenses of sale;
(b)Second, in payment and discharge of any amount due under the mortgage(s) encumbering the property; inclusive of penalties, interest and default charges (c) Third, to the wife for reimbursement of any conveyancing expenses in relation to the sale paid by her;
(d)Fourth, 50% be allocated to the wife (“the wife’s allocated amount”); and
(e) 50% be allocated to the husband (“the husband’s allocated amount”).
9.From the wife’s allocated amount, the sum of $1,644,000 be allocated to the husband’s allocated amount (representing the sum of $1,484,000 being the agreed net value of [G Street] plus $12,000 for the wife’s car and $148,000 for the wife’s paid legal fees);
10.From the husband’s allocated amount, the sum representing 50% of the husband’s wanton borrowings and penalties, interest and charges for all borrowings be allocated to the wife’s allocated amount. The amount of wanton borrowings and penalties, default charges and arrears be calculated by subtracting from all monies required by the bank at settlement the sum of $540,000 (being the original borrowings described in [119] to [120] of the reasons).
The wife submits that order 9, above, is ambiguous and does not reflect my intention as set out in the reasons for judgment. The relevant paragraphs from the reasons of decision are paragraphs 293 to 301 inclusive:
[293] The parties agreed on valuation of both real properties. I will adopt the agreed value of the [G Street] property but will have regard to the actual sale price for [D Street] which must be sold. I have not allowed for the costs of sale of [D Street] because there is no evidence in that regard. I will use the agreed value of [D Street] to calculate indicative entitlements and to assess the fairness and equity of the result but use a formula to divide the proceeds of [D Street] to take into account the actual sale price and costs.
Are the Orders Just, Equitable and Appropriate?
[294] Non-superannuation assets are notionally valued at $3,409,000 as set out in the table.
**TABLE NOT REPRODUCED**
[295] Notionally, each party receives 50% of $3,409,000.
[296] The husband notionally receives $1,704,500 from the sale of [D Street]. I say ‘notional’ because the sale price of [D Street] may vary from the agreed value.
[297] The wife receives $1,704,500 made up of $60,500 cash, the [G Street] property (including liabilities $1,484,000), her car ($12,000) and her paid legal fees ($148,000).
[298] In addition, from the husband’s share, the husband must pay the wife 50% of the whatever the mortgagee bank receives attributable to the $510,000 of wanton borrowings and all arrears and penalties.
[299] The wife retains her superannuation interest intact at $454,000.
[300] Having regard to the agreed values and s75(2) adjustments, the indicative total entitlement of each party will be something like:
•The wife: $60,500 + $1,644,000 (value of [G Street], car and paid legal fees) + $255,000 from husband (for wanton borrowing) + $454,000 (superannuation) = $2,413,500.
•The husband: $1,704,500 less $255,000 to the wife = $1,449,500.
[301] The above equates to division of all interests, including the wife’s superannuation (largely from her late inheritance) of about 62.5% to the wife and 37.5% to the husband. If the wife’s superannuation is excluded, save to the extent that I have already made an adjustment for the wife’s superannuation in favour of the husband pursuant to s75(2)(f), the above division equates to about 57.5% to the wife and 42.5% to the husband.
The wife proposes an adoption of a formula-based order to remove ambiguity. The wife proposes to vary the orders as follows:
The Wife proposes an adoption of a formula-based order to remove the ambiguity. The wife proposes a variation of the Orders as follows:
a. Order 8(d) to read: Fourth, the balance to be distributed in the following order:
b. New Order 8(d)(i) First, the Wife shall receive a lump sum payment equating to the value of F, in accordance with the formula at paragraph 9 below, less ($1,644,000 (the total of items A, B and C) (“the Wife's allocated amount”).
c. New 8(d)(ii) Second, the Husband shall receive the balance (“the Husband’s allocated amount”), subject to Order 10.
d. Order 9 to be replace with: The following formula shall be adopted for the purposes of Order 8(d) and 8(e) above: A ($1,484,000 [G Street]) + B (12,000 Wife's motor vehicle) + C (148,000 Legal Fees [this amount is subject to the Courts views with respect to the above submissions])+ D (net sale proceeds from the sale of [D Street Suburb E]) = E. Thereafter E divided by 2 = F (one half of the net asset pool).
On the wife’s formula, the wife is to retain a lump sum payment, if any, which is equal to one half of the value “E” less the monetary equivalent of the wife’s keep ($1,644,000). “E” is comprised of the wife’s keep “A+B+C” (being her property, car and add-backs, or $1,644,000) plus the net proceeds of sale of the property at D Street (“D”). The husband receives the remainder.
The husband opposes the amendment sought by the wife.[9] He submits that, on the wife’s formula, the calculation does not factor in the potential for the value of “F” being less than the value of the Wife’s keep (A+B+C or $1,644,000), and therefore the Court should explicitly provide for the amount in F to be offset against Order 10 (which is the allowance for wanton and reckless expenditure).
[9] Written Submissions of the Husband filed 12 February 2025 [20].
The basis of the husband’s concern is that, based on the husband’s financial advice as to Capital Gains Tax, which was not before the Court at the time of trial, there is a possibility that the net proceeds of sale of D Street are less than $1,644,000, resulting in a final “F” figure of less than $1,644,000 (the wife’s keep). On the evidence before me, the agreed value of D Street was $2,850,000 with mortgage liabilities of approximately $1,000,000. The valuation of D Street was performed in August 2022 and there was no updating valuation evidence, although judicial notice could be taken of the fact that the property has likely risen in value in the two years since the valuation, albeit by amounts unknown. The husband had steadfastly refused to have the real properties valued for the trial and, whereas he always opposed a sale of the property, the wife always sought the property be sold and also sought an urgent sale during the trial. There was no evidence, submission or even mere suggestion as to any tax liabilities arising from sale or any reason why the net proceeds of sale would be less than the equivalent of the wife’s keep. The husband’s evidence was that he could not afford the fares on public transport to and from Court, so someone else paid his fares. He has never filed a personal tax return, and he did not once refer to having an accountant in spite of exhaustive cross-examination of his financial circumstances and irregularities therein. I did not take CGT into account and my reasoning was based on the fact that would be very unlikely that the net sale proceeds of D Street would be less than the wife’s keep.
I am satisfied that the amendment sought by the wife does make it clearer than the orders I pronounced. I am prepared to make the alteration pursuant to the slip rule. The husband’s opposition to the wife’s proposed order, essentially based on liability for CGT, goes to substance of the orders rather than clarification. Whilst the parties may now be able to reach an accommodation about taking into account CGT actually paid, I cannot change the orders under the slip rule.
FURTHER ORDERS SOUGHT
Provision of reasons to the Registrar of Titles and the mortgagee bank
In relation to a transfer of the property at D Street, Suburb E, the wife submits further machinery orders are required to give effect to the orders and the declaration made pursuant to section 78 of the Family Law Act declaring that the husband is the legal and beneficial owner of the property situated D Street, Suburb E. Paragraph 1 of my order reads as follows:
1.Pursuant to section 78 of the Family Law Act 1975 (Cth) (“the Act”), the Court declares [MR MORCOS] as the proprietor and legal and beneficial owner of the property situated at [D Street, Suburb E] in the State of Victoria (the “[D Street] property”).
I ordered the sale of the D Street property, invested the wife with power to appoint a conveyancer and real Estate agent for that purpose. The wife submits that:[10]
Section 103(1) of the Transfer of Land Act states:
In any proceeding in a court relating to any land or any instrument or dealing in respect thereof if the court directs the Registrar to make any amendments to the Register or otherwise to do any act or make any recordings necessary to give effect to any judgment decree or order of the court the Registrar shall obey such direction.
The Wife contends an order in the following terms will assist the parties in carrying out the Orders of the Court:
New Order 1A: Pursuant to section 103(1) of the Transfer of Lands Act in giving effect to these Orders, the Registrar of Titles be hereby authorised to rectify the Register to record [MR MORCOS] as the registered proprietor of the property situated at [D Street Suburb E] more particularly described in Certificate of Title Volume [...] Folio [...].
The proposed Order will empower the Registrar of Titles to amend the register to reflect the Applicant Husband as the registered proprietor of the [D Street] property, in accordance with the Orders. It is submitted that without such Order, it would create difficulty and hardship to the Wife in enforcing the Orders.
The Court has the power and jurisdiction to make the Order under section 80(d) or in the alternative 80(k) of the Family Law Act.
[10] Written Submissions of the wife filed 10 February 2025, page 4-5.
At paragraph 16(c) of the orders, I reserved liberty to the parties to apply urgently in relation to permission to provide a copy of my reasons for decision to Westpac Bank and the husband's Trustee in bankruptcy or any other person. The wife submits that the orders of the Court will need to be provided to third parties other than Westpac Banking Corporation and the bankruptcy Trustee. The wife seeks leave of the Court to provide a copy of the orders to any person, organisation or government or non-government department required to give effect to the orders. The Registrar of Titles in the State Revenue Office will, the wife submits, require a copy of the orders for the purpose of the transfer.
The wife also seeks leave of the Court to provide my reasons for judgment to the bankruptcy Trustee, Westpac Banking Corporation and their legal representatives. It is submitted that without the reasons for judgment, Westpac Banking Corporation are unlikely to cooperate with the transfer. It is in the interests of justice and transparency that Westpac be provided with a copy of the judgment. The difficulty, from the husband's point of view, is that the reasons for the decision set out, chapter and verse, how he has deceived the bank for a number of years, causing or permitting the various officers of the bank to believe that his mother was alive and well and living in Melbourne, and executing documents in her capacity as an account holder and borrower. The husband has now been provided with a certificate pursuant to section 128 of the Evidence Act, in relation to his admission of having forged documents in his mother's name.
The husband opposes the wife’s application.[11]
[11] Written Submissions of the Husband filed 12 February 2025 [22]-[25].
While it causes me some concern that Westpac is not aware of these proceedings and my findings, the appeal is likely to be heard within a few months.
The application to provide a copy of the reasons to the mortgagee bank and Registrar of Titles can wait until after the appeal has been determined.
Requirement for the husband to cooperate with the agent
Counsel for the wife submits that my Order implies, but do not explicitly state, that the husband is required to keep the premises clean and neat for inspection and for vacant possession. It is a clarification that the wife says is necessary as the husband has indicated he physically will not be able to do any cleaning or removal himself, and that additional assistance may be required either by the wife or a third party.
The husband opposes the proposal.[12] He says that he is going to run a business from the premises.
[12] Written Submissions of the Husband filed 12 February 2025 [24].
I see the utility in such an order, but it is not a matter for the slip rule. The wife has conduct of the sale and, necessarily authority to present the property in a reasonable state for inspection by potential purchasers. I do not presume to say that all junk and rubbish must be removed, there may be an argument that how the property is presented will not affect the price attainable. This is a matter of implementation and enforcement.
I will not accede to the wife’s application. For the avoidance of doubt, the husband has no permission from the court or the wife to operate a coffee shop.
Relief Sought by the Husband
The matters now raised by the husband are of fairly short compass.
The husband seeks that I make an amendment under the slip rule to account for CGT implications of the sale of the property at D Street. .[13] I note that there was no evidence before me as to the husband’s tax liabilities at the time of final hearing. It is my recollection that the husband has never filed a personal taxation return and only filed a corporate return to\t qualify for a loan. There was no mention of him having an accountant in a personal capacity or as Executor.
[13] Written Submissions of the Husband filed 12 February 2025 [26]-[28], [3]-[7].
Counsel for the wife seemed to recognise the sense in allowing for CGT actually paid but that is not a matter for me. This is not a matter that can be dealt with by way of slip rule.
The husband seeks that I appoint an independent person to conduct the sale of the property at D Street. Order 3(a) of my final order grants the wife the conduct of the sale. This was an intentional decision based on my findings as to the husband’s less-than-honest conduct with respect to the property. The alteration sought by the husband is not a remedy available under the slip rule.
The husband seeks that the time limits under orders 3(d) and 3(f) be extended as they are “unfairly oppressive and unreasonable in the circumstances”. He says he will struggle to clean and tidy the property as he is a frail and elderly man with medical conditions. He says he will struggle to find rental accommodation within the proscribed timeframe. The wife opposes the extension on the basis that he has not begun to commence the process and has had since January 25 to do so. I have granted the stay sought by the husband. He now has until after the appeal is determined to organise cleaners and removalists or bring an application for an extension of time. The relief sought is not pursuant to the slip rule in any event.
COSTS
The wife seeks that the trustees pay her costs, fixed in the amount of $8,700. Counsel for the trustees disputes that costs should even be reserved in the circumstances where the application was not pressed. Nevertheless, the wife had to prepare and respond to the application, particularly as a result of the ambiguity as to whether the application was filed by the second respondent or a proposed third respondent.
In my view any determination of costs in relation to joinder or substitution at this point in time are best determined after the appeal and I will reserve them accordingly.
I certify that the preceding eighty-five (85) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Bennett. Associate:
Dated: 21 March 2025
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