Moreno and Moreno
[2009] FMCAfam 1109
•26 October 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| MORENO & MORENO | [2009] FMCAfam 1109 |
| FAMILY LAW – Property proceedings – application to set aside a binding financial agreement. |
| Family Law Act 1975 ss.90KA, 90K(1)(e), 90C, 90G, 90G(1)(e) |
| Fevia & Carmel-Fevia [2009] FamCA 816 B and B (2008) 38 FamLR 503; FLC 93-357 Williams v Bayley [1861-78] All ER Rep 227 |
| Applicant: | MS MORENO |
| Respondent: | MR MORENO |
| File Number: | CRC 178 of 2008 |
| Judgment of: | Demack FM |
| Hearing date: | 9 October 2009 |
| Date of Last Submission: | 9 October 2009 |
| Delivered at: | Brisbane |
| Delivered on: | 26 October 2009 |
REPRESENTATION
| Solicitors for the Applicant: | Susan Green Legal Practice |
| Counsel for the Respondent: | Ms Howe |
| Solicitors for the Respondent: | Harbour Law |
ORDERS
That pursuant to section 90K of the Family Law Act 1975 the financial agreement dated 28 August 2005 be set aside.
That the husband file and serve his response, form 13 financial statement and affidavit in support no later than 4.00pm on
23 November 2009.
That the husband and wife disclose documents as prescribed in Annexure A no later than 4.00pm on 23 November 2009.
That in the event the valuation of any former matrimonial property remains outstanding by 19 November 2009 the parties shall obtain a joint valuation, with the wife by 21 November 2009 to provide a panel of three proposed valuers to the husband and the husband to chose a valuer from said panel within forty eight hours of receipt of said panel. In the event the husband fails to elect a valuer the wife be at liberty to make such election.
That the husband be responsible for the costs of any valuation in the first instance but with the ultimate incidence being reserved to trial.
That the husband pay the wife’s costs of and incidental to this application fixed in the sum of EIGHT THOUSAND FIVE HUNDRED DOLLARS ($8,500.00) such sum to be paid within thirty five (35) days.
That this matter be adjourned for further mention to 9.30am on
2 December 2009 in the Federal Magistrates Court sitting at Coffs Harbour.
IT IS NOTED that publication of this judgment under the pseudonym Moreno & Moreno is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
CRC 178 of 2008
| MS MORENO |
Applicant
And
| MR MORENO |
Respondent
REASONS FOR JUDGMENT
Is it unconscionable for a husband who has sought and obtained a wife from Russia to come to Australia, where the relationship is unstable and marked by separations and where the husband is the sole sponsor and indeed, sole basis for the wife’s residence status, to require her to sign a Binding Financial Agreement which is most unfavourable to her on the understanding that if she does not sign the document, the marriage is at an end?
And if the document signed by the wife is later altered by the husband with the alterations initialled by the wife without legal advice does the document constitute a Binding Financial Agreement?
And if the wife did not keep a final copy for safe-keeping, but rather was shown a copy by the husband, who then stored it amongst his paperwork in the house lived in by the married couple, has a ‘copy been given’ to the wife?
The question whether a financial agreement is valid, enforceable or effective is to be determined according to the principles of law and equity that are applicable in determining the validity, enforceability and effect of contracts and purported contracts (per s.90KA of the Family Law Act 1975 (“the Act”)). It is the wife’s position that the husband engaged in conduct that was, in all the circumstances, unconscionable in respect of the making of the financial agreement (s.90K(1)(e)). The husband resists this, and says that the financial agreement is binding.
The evidence before me came from the parties’ affidavits and viva voce, and from the solicitor who acted for the wife when the document was signed and provided her with certain advices, as well as records from a women’s refuge and a counselling psychologist both produced pursuant to subpoena. The solicitor was cross-examined by telephone. The parties (and their legal representation) were in person. The wife’s evidence was translated from Russian to English by a sworn interpreter.
Mr Moreno (born 1962), self-employed in the construction industry, lives and works in Coffs Harbour. He is the owner of three encumbered properties, with a net value (in 2006) of $1.15 million.
In mid-2003, Mr Moreno sought to commence a relationship with a Russian woman through a dating agency. He chose Ms Moreno (born 1973), who spoke no English. They commenced a relationship through email, via the agency, which translated their increasingly intimate emails. They married in Russia in April 2005 and on 16 August 2005; Ms Moreno came to Coffs Harbour, Australia. She had had a couple of English lessons before she came.
In December 2005, Ms Moreno took herself to a local women’s refuge and stayed for about a month. She continued to receive support from the staff at the refuge, after she had left it.
She told the staff at the refuge that for the past four months,
Mr Moreno had been physically abusive, verbally abusive and controlling to her. She was given assistance with applying for a Protection Order.
On 16 January 2006, Mr Moreno wrote to the government department responsible for Ms Moreno’s visa in the following terms:
I now wish to advise that my marriage to Ms Moreno has broken down and I do not consider that there are any prospects of reconciliation. Consequently, I now give formal notice of withdrawal of my sponsorship of her residence application.
On 7 February 2006, Ms Moreno spoke with the refuge staff about withdrawing her protection order application after Mr Moreno told her that if she did, he would not withdraw his sponsorship of her visa.
On 18 February 2006 the refuge staff were advised by Ms Moreno that Mr Moreno wanted her to leave the relationship and Australia. She had been charged with shoplifting a cardigan from a large chain clothes store and did not understand why she had done that.
On 20 February 2006, the refuge staff were advised by Ms Moreno that she and Mr Moreno had reconciled.
Legal Aid represented Ms Moreno for her criminal matter. A referral was made to a psychologist by Victims Services at the Victims Compensation Tribunal. The psychologist, Ms Moreno, saw
Ms Moreno twice during March 2006. Ms Moreno told Ms Moreno that during the last six months she had left Mr Moreno five times. She said that:
… Mr Moreno had withdrawn her access to his bankcards and telephone cars and taken her keys (house and car). She reported that he has called her a “Russian prostitute” and has pushed her and held her wrist, so that she can’t leave. Ms Moreno reported that she feels trapped because she has to stay with Mr Moreno for two years otherwise she has to go back to Russia.
And further about the marriage, she reported:
…Mr Moreno made her “sleep with him she (she didn’t want to.” She reported that he says to her that she is his wife and that she must “cook, clean and suck (his) dick.” Ms Moreno reported that he tells her that she needs to lose weight and that he controls her and says she should get a job.
During the course of the short period of time that Ms Moreno was having contact with Ms Moreno, she reconciled with Mr Moreno yet again. She reported to the psychologist that he had “promised to change”, but that, indeed, he hadn’t.
The psychologist formed the view that Ms Moreno was suffering from an Adjustment Disorder with Mixed Anxiety and Depressed Mood – Chronic – Moderate severity. She considered that some of her difficulties were referable to traumas experienced in Russia by
Ms Moreno, which had included an operation which had left her unable to have children.
Ms Moreno continued to see Ms Moreno in a counselling arrangement having been approved for around ten hours of counselling through Victims Services. She pleaded guilty to the shoplifting and was placed on a bond. No conviction was recorded.
Mr Moreno found the offence, court appearance and outcome upsetting and horrifying. As a long-time resident of a regional community he was embarrassed that the wife who he had brought to Australia was “stealing from Australians”.
On 25 August 2006, Ms Moreno consulted solicitor and accredited family law specialist, Vivien Carty about a financial agreement that
Mr Moreno wanted her to sign. Mr Moreno had told Vivien that he would pay for one hour’s legal advice. Ms Moreno had gone to Legal Aid and they had referred her to Ms Carty. Ms Carty took contemporaneous notes of the consultation. After Ms Moreno had left, Ms Carty prepared a statutory declaration for Ms Moreno to sign when she returned a couple of days later. She had also prepared a letter containing Ms Moreno’s instructions and her consequent advices. In all material facts the two documents reflect the same information. Ms Carty was told by Ms Moreno:
He brought agreement two weeks ago to me and said “document is on the table for you”. I asked him: “what kind of document?” He said “It is agreement between us for our marriage”. When I opened s90C Agreement I don’t understand. He says “just sign it. Go to legal aid and sign it”. I say: “I must read it”. He say: “For what…you don’t understand it. Your English isn’t good enough.
He said: “If you not put your signature I will separate from you. I am still your sponsor. If you not put your signature for agreement I not put signature for your documents and you will go straight back to Russia”
This was not the first time that Ms Moreno had heard about signing a document to do with marital property. In an email early in their relationship (not before the court), Mr Moreno had mentioned it. She had no problem with the notion; her interpreted reply from Russia stated: “Of course I will sign all and anything you want me to sign, because I want you to know if I will be you I will be with you because of you and no other reason”. Further, when she was in the women’s refuge, Ms Moreno received some document from a solicitor acting for Mr Moreno although she cannot remember any details about it.
The financial agreement that Mr Moreno was asking Ms Moreno to sign provided that up until the parties had been married for 15 years, the wife would only be entitled to receive her share of any property acquired during the marriage. Ms Moreno had come to Australia with no assets. The marriage had continued for 16 months at this stage. She was, at times, not working and as a consequence, contributing less than the husband by way of direct financial contributions.
Ms Carty’s advice was that the agreement was not to Ms Moreno’s financial advantage. She considered that the “only advantage of signing the agreement” was “that the husband hopefully won’t carry out his threat to kick you out of the matrimonial home and will also hopefully sign the papers to enable you to obtain permanent residence in Australia.” At that time and to this day, this sensible solicitor considered that Ms Moreno felt that she had no choice but to sign the agreement. Ms Carty considered that Ms Moreno had been placed under enormous duress by Mr Moreno.
On 28 August 2006, having been given the letter of advice and having signed the statutory declaration, Ms Moreno signed the document headed Financial Agreement under section 90C of the Family Law Act 1975. Ms Carty duly completed the declaration as to independent legal advice.
The document was then passed to the husband for signing. He did not know the content of the advice received by Ms Moreno. He signed the document on 29 August 2006 and received his certification as to legal advice. On his copy, changes have been made to the arithmetic for his part of the pool of assets less liabilities, to demonstrate that his assets were $1,215,000 not $720,000.
Sometime later, back at the house, Ms Moreno was shown a copy of the final signed document by Mr Moreno. He then put it away where he stored his paperwork, and Ms Moreno did not see it again.
They separated again in September 2006 and Mr Moreno sent another letter on 24 September 2006 to the Department of Immigration, in the following terms[1]:
I would like to report that our relationship has brocken down again for the fourth time and as a sponsor it is my responsibility to inform the appropriate authorities in the married spouse department that I wish to withdraw my sponsorship immediately I also like to add that Ms Moreno has been nothing but trouble since she has come to Australia as in taking myself to Court for a false AVO, in which was never persued and caused trouble with the police in a waste of time in paper work ,then going down the old road of domestic violence and was given Centerlink money ,then returned back to me because of jeopardizing the visa of all this process ,and also was caught stealing from the Coffs Harbour plaza and found guilty but was not convicted with a 1yr good behaviour bond. This is just a few of the grief I have had to contend to and pay all moneys. I would like to reassure you that there will be NO reconsilliation of the matter in question this time I’m truly at my end tathers and sorry for the whole process I have done my best to make this lady happy.
[1] Reproduced with spelling as contained
That was not the final separation. They reconciled. They separated on a final basis on 11 January 2008, around 15 months after the signing of the agreement.
The wife now submits that it is unconscionable for the document to be declared binding due to the duress she was under to sign it.
The husband says[2] that he:
“did not put the Applicant under “enormous pressure” to sign the Agreement but [he] did want her to sign it as she promised to do and uphold her commitment to do so.”
[2] Paras 23 and 24 of affidavit filed 27 July 2009.
And further, the husband says that the applicant “did not tell [him] that she had not understood it or disputed it”. He says: “I believe that she deliberately tricked me and deceived me so that she could gain later which she is attempting to do now [through this application]”.
For those reasons, the husband says that the agreement is binding.
In determining whether the husband’s conduct was unconscionable, equity requires a consideration of the circumstances of the case, including whether there was an improper use of a position of advantage. As far back as 1866, an agreement was held to be unenforceable when a father agreed to be responsible for debts incurred by his son when the bank told him that his son would face criminal prosecution if he didn’t enter into the agreement[3]. It is clear that an agreement obtained by duress or undue influence is unenforceable.
[3] Williams v Bayley [1861-78] All ER Rep 227
But equity allows for a level of rigour in transactions. There needs to be something more than a disadvantageous contract. Section 90G of the Act contemplates that a lawful agreement might contain advantage to one party and disadvantage to the other, by requiring parties to firstly receive independent advice.
Here, it seems to me, the contract is clearly unfavourable to the wife. After a marriage of not quite three years, it seems that she will have no entitlement to any property or spousal maintenance.
But was there duress, or undue influence?
The husband denies being violent to the wife. I had the opportunity to see both of the parties in the witness box and to observe their demeanour. As the wife’s evidence was translated, it seemed to me necessary to keep an especial eye on her demeanour and her tone of voice. I accept that the wife’s presentation to the court was in all material aspects on a par with her presentation to Ms Carty. I accept that her statements have been internally consistent to the women’s refuge, the psychologist, Ms Carty and the Court (in affidavit and cross-examination). During cross-examination she was not shaken from her position that she had been subjected to physical and verbal aggression by the husband.
I accept that the wife feared for her visa status if her marriage did not continue and that issue was a motivator for her in signing the agreement. She did not want to return to Russia as a failure, with a failed marriage. She had left behind family and friends who believed her to be making a new life in Australia and she could not bear to return under such circumstances. Further, she wanted her marriage to work. She wanted to remain married to Mr Moreno; she just wanted him to stop being aggressive to her.
I accept that the husband was and continues to be dismissive of the wife. He has shown no understanding or insight into his wife’s situation. He considers that her behaviour is misleading and deceptive. He thinks that she manipulates people by pretending that her English is poorer than it is, without demonstrating any understanding of the difficulty that she has experienced communicating with Australians in a second language, lately learned. There is no evidence that the husband learned any Russian in an attempt to share the burden of the communication gap. He travelled to Russia once only, and married
Ms Moreno during that trip.The husband’s attitude to the wife shines through his manner of describing the wife’s one offence. He has not attempted to understand what a minor shoplifting offence might be a symptom of. He has not reflected on what it might mean for his wife, but rather, dwells on what it meant for him and his reputation.
His letters written to the Department of Immigration reflect his position of considering himself as some kind of benefactor who was in a position to take everything away from his wife when she failed to sufficiently demonstrate her gratitude by behaving as he sought.
There was nothing said by the husband in cross-examination which caused me to resile from this view. He did not impress me as a man who had been wrongfully accused of bullying and aggressive behaviour.
I am satisfied that the wife left the marriage on those many occasions because her husband’s behaviour to her was intolerable arising from his aggression, violence and a general lack of respect. I am satisfied that she understood that the agreement was unfavourable to her but that she considered she had no present option but to sign as the threat of leaving Australia loomed heavily. Her past experience was that the husband would continue to behave aggressively and that if she left him he would likely advise the authorities and her visa would be cancelled, forcing her to return to Russia.
I find that this situation, caused by the husband’s actions, constitutes duress. I find that this duress is of such a level as to be unconscionable conduct. On that basis I would set aside the Agreement signed by the parties and dated 28 August 2006.
Was the document an agreement in terms of the Act, given that it was altered after signing by the wife, and the wife did not keep a copy in her control or immediate possession?
The difference between the documents signed by the parties is the arithmetic only, as best I can tell. The gross and net assets in the husband’s pool are increased by around 30%. This is a marked increase, but the base information was not changed. The manner of distributing the property at any future time was not altered. I do not consider that change to have been material and distinguish these factual circumstances to those in Fevia & Carmel-Fevia [2009] FamCA 816. Had there been no other behaviour which offends Equity, this irregularity would not have been sufficient to render the contract unenforceable.
I accept that the wife was not given a copy which she was free to control and keep. There was no evidence to say that the husband had kept a separate copy to the one that he showed the wife and which he then stored within his possessions. I consider that the marital relationship was such that a document stored by the husband within his paperwork, was not a document which could be considered within the wife’s control. I consider that, by extension, the wife being shown a copy of the document by the husband does not constitute her being given a copy of it. There is no evidence that the husband understood that the wife was to be given her copy of the document from some other source. Section 90G(1)(e) of the Act has not bee strictly complied with. A financial agreement is binding on the parties if and only if all of the s.90G factors are complied with strictly[4].
[4] B and B (2008) 38 FamLR 503; FLC 93-357
On that basis, I would find that the financial agreement is not binding.
I set aside the financial agreement entered into by the parties on or about 28 August 2005.
The husband must now file and serve his amended response to the wife’s application for final property orders, his financial statement and supporting affidavit(s). I will give him four weeks to attend to that task. Disclosure and valuations, if any, need to be undertaken. The matter will be listed for further mention in December 2009 and will take the usual course, including the attendance at a conciliation conference with the requirement for a bona fide endeavour to resolve all issues.
The wife seeks her costs. The husband had assets in 2006 in the order of $1.2 million. There is no evidence before me as to his present position. The wife is impecunious and reliant upon government benefits. The wife has been wholly successful. Her case has not changed from the point of filing and was supported by the evidence of the solicitor who had advised her in 2006. The husband’s conduct at the time of the signing of the document was laid bare for his contemplation, and he has chosen not to consider that his behaviour was unconscionable. He required the wife to prove her case. And she did.
Given the marked disparity between their financial positions, I consider that it is proper that the husband should pay the wife’s costs of this portion of her application. Her application necessarily included final property adjustment orders – this application is an adjunct to that application. She should receive costs for Stage 1 and Stage 5, plus daily hearing fees for the first short appearance and for the one day hearing before me, along with travelling costs (two journeys; to reflect the return Coffs Harbour - Brisbane journey) under the Federal Magistrates Court Rules 2001 – Schedule 1.
I order that the husband pay the wife’s costs fixed at $8,500 within 35 days.
I certify that the preceding fifty three (53) paragraphs are a true copy of the reasons for judgment of Demack FM
Associate: E Crutchfield
Date: 26 October 2009
ANNEXURE A
Documents to be produced prior:
List of all bank accounts, details of account numbers, passbooks and bank statements for the previous twelve (12) months.
Details of credit union/building society or other like deposit passbooks and statements for the previous twelve (12) months.
Details and records of any investments including stocks and shares.
Income Tax Returns and assessments for the previous three (3) financial years.
Social security pension or payment details.
Details/records of long service leave accrued.
Details/records of overtime worked in the previous twelve (12) months.
Superannuation documentation including a completed “Superannuation: Information required for family law matters” form or a form which substantially complies with that form.
Valuation of real estate.
Valuation of chattels including car(s).
Records/details of any life assurance or disability insurance.
Details/records of any of the above children.
School reports.
Medical or psychiatric reports.
Medical certificates.
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