Moreno & Moreno

Case [2025] FedCFamC1F 304

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Moreno & Moreno [2025] FedCFamC1F 304

File number: MLC 12344 of 2024
Judgment of: MCNAB J
Date of judgment: 9 May 2025
Catchwords: FAMILY LAW – PROPERTY – Where the wife seeks a division of assets 80 per cent in her favour – Where the husband is bankrupt – Where the paternal grandmother claims interest in a property of the marriage under s 42(2)(e) of the Transfer of Land Act 1958 (Vic) and seeks a declaration that she has a life tenancy or life interest in the property – Paternal grandmother’s application dismissed – Orders made adjusting the assets of the wife and husband 80 per cent in the wife’s favour.
Legislation:

Family Law Act 1975 (Cth) ss 75, 79

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 8.15

Transfer of Land Act 1958 (Vic) s 42

Cases cited:

Barba v Gas & Fuel Corporation of Victoria (1976) 136 CLR 120

Burke v Dawes (1938) 59 CLR 1; [1938] ALR 135

Haslam v Money for Living (Aust) Pty Ltd (2008) 172 FCR 301; [2008] FCA 1536

Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8

Kaplan & Hankel [2025] FedCFamC1F 41

Watson v Foxman (1995) 49 NSWLR 315

Division: Division 1 First Instance
Number of paragraphs: 50
Date of hearing: 1-2 May 2025
Place: Melbourne
Solicitor for the Applicant: Ms Mastroianni of Sage Family Lawyers
Counsel for the First Respondent: Did not participate
Counsel for the Second Respondent: Mr Holzer in his capacity as the Trustee of the Bankrupt Estate of the First Respondent
Counsel for the Third Respondent: Mr Williams KC with Ms Walker
Solicitor for the Third Respondent: K&L Gates
Counsel for the Fourth Respondent: Mr Little
Solicitor for the Fourth Respondent: RNG Lawyers

ORDERS

MLC 12344 of 2024

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN:

MS MORENO

Applicant
AND:

MR MORENO

First Respondent

MR HOLZER (TRUSTEE) BANKRUPT ESTATE OF MR MORENO

Second Respondent

MS C MORENO

Third Respondent

D PTY LTD

Fourth Respondent

ORDER MADE BY:

MCNAB J

DATE OF ORDER:

9 MAY 2025

THE COURT ORDERS THAT:

1.The Amended Application in a Proceeding filed by the third respondent on 16 April 2025 be dismissed.

2.Order 2 of the orders made on 4 April 2025 be discharged.

3.Within 7 days from the date of these orders the third respondent withdraw caveat no. … registered on 27 August 2021 over the Title of the property situated at E Street, Suburb F, Victoria  and more particularly described in Certificate of Title Volume … Folio … (“the Suburb F property”).

4.Within 60 days from the date of final orders, the third respondent vacate the Suburb F property and deliver vacant possession of the Suburb F property to the fourth respondent.

5.The fourth respondent do all acts and things to cause the proceeds of the sale of the property situated at G Street, Suburb H and more particularly described in…

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AGLC
Moreno & Moreno [2025] FedCFamC1F 304
Case
[2025] FedCFamC1F 304
Decision Date

CaseChat Overview and Summary

In the Federal Circuit and Family Court of Australia, the case of Moreno & Moreno involved a dispute over the division of assets between the applicant wife, Ms Moreno, and the first respondent husband, Mr Moreno. The third respondent, Ms C Moreno, the paternal grandmother, claimed an interest in a property of the marriage under section 42(2)(e) of the Transfer of Land Act 1958 (Vic) and sought a declaration that she has a life tenancy or life interest in the Suburb F property. The fourth respondent, D Pty Ltd, sought orders restraining the mortgagee from exercising any rights to take possession of the Suburb F property. The key legal issue was whether the grandmother had a life interest in the Suburb F property, thereby entitling her to remain there under the protection of section 42(2)(e) of the TLA. The court had to determine whether the grandmother's claim was substantiated by the evidence and whether she indeed had a life interest in the property.

The court analysed the evidence presented by both the grandmother and the wife, focusing on their testimonies regarding the circumstances surrounding the transfer of title to the husband. The court preferred the wife's evidence over the grandmother's, finding it more reliable and measured. The grandmother's evidence was deemed less credible due to her health conditions and difficulties in recalling specifics of the events in question. The court found that the grandmother's claim of a life interest in the Suburb F property was not substantiated by the evidence. Consequently, the grandmother's application was dismissed, and orders were made to adjust the assets of the wife and husband, with 80 per cent of the assets distributed in favour of the wife.

In summary, the court dismissed the grandmother's claim for a life interest in the Suburb F property, finding it unsupported by the evidence. The court ordered the grandmother to vacate the Suburb F property within 60 days and mandated the distribution of the proceeds from the sale of the Suburb H and Suburb F properties, with 80 per cent going to the wife and 20 per cent to the husband. Additionally, the court required the grandmother to withdraw the caveat over the Suburb F property and directed the release of $10,000 held by K&L Gates to the fourth respondent. The wife was also granted sole entitlement to personal property and bank accounts as per the court's orders.

Orders

Orders of the court

MLC 12344 of 2024

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MS MORENO

Applicant

AND:

MR MORENO

First Respondent

MR HOLZER (TRUSTEE) BANKRUPT ESTATE OF MR MORENO

Second Respondent

MS C MORENO

Third Respondent

D PTY LTD

Fourth Respondent

ORDER MADE BY:

MCNAB J

DATE OF ORDER:

9 MAY 2025

THE COURT ORDERS THAT:

1. The Amended Application in a Proceeding filed by the third respondent on 16 April 2025 be dismissed.

2. Order 2 of the orders made on 4 April 2025 be discharged.

3. Within 7 days from the date of these orders the third respondent withdraw caveat no. … registered on 27 August 2021 over the Title of the property situated at E Street, Suburb F, Victoria and more particularly described in Certificate of Title Volume … Folio … (“the Suburb F property”).

4. Within 60 days from the date of final orders, the third respondent vacate the Suburb F property and deliver vacant possession of the Suburb F property to the fourth respondent.

5. The fourth respondent do all acts and things to cause the proceeds of the sale of the property situated at G Street, Suburb H and more particularly described in Certificate of Title Volume … Folio … to be paid as follows:

(a) first, to discharge the loan owed to D Pty Ltd, secured by registered mortgage number …;

(b) second, to pay the selling agent’s costs and commissions and the conveyancing lawyer/conveyancer’s costs and disbursements;

(c) third, to pay any outstanding council rates or charges or other adjustments; and

(d) fourth, any remaining funds to be distributed as follows:

(i) 80 per cent to the applicant; and

(ii) 20 per cent to the second respondent.

6. The fourth respondent do all acts and things to cause the proceeds of the sale of the Suburb F property to be paid as follows:

(a) first, to discharge the loan owed to D Pty Ltd, secured by registered mortgage number ….

(b) second, to pay the selling agent’s costs and commissions and the conveyancing lawyer/conveyancer’s costs and disbursements.

(c) third, to pay any outstanding council rates or charges or other adjustments.

(d) fourth, any remaining funds to be distributed as follows:

(i) 80 per cent to the applicant; and

(ii) 20 per cent to the second respondent

7. The third respondent do all acts and things and sign all documents necessary to instruct K&L Gates to release the sum of $10,000 held in accordance with the orders made on 4 April 2025 to the fourth Respondent.

8. The applicant retain all personal property in her possession and bank accounts held in her name as at the date of these orders.

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

(a) The applicant be solely entitled to the exclusion of the other to all property (including choses-in-action) in their own name or in their possession as at the date of these orders;

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

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

(d) The applicant and second respondent hereby forgo any claim they may have to any superannuation benefit or interest in any trust or deceased estate that is payable or is belonging to or owned by the other, save as provided for in these orders.

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.

Background

Background to the litigation

This matter involves the applicant wife, Ms Moreno aged 45 years (“the wife”), the first respondent husband, Mr Moreno aged 50 years (“the husband”), the second respondent is Mr Holzer, in his capacity as the trustee of the bankrupt estate of the husband, the paternal grandmother, Ms C Moreno (“the grandmother”) is the third respondent and D Pty Ltd (“D Pty Ltd”) is the fourth respondent. BACKGROUND The grandmother currently resides at E Street, Suburb F, Victoria (“Suburb F property”). The grandmother seeks orders that the mortgagee (the fourth respondent) be restrained from exercising any rights it may have to take possession of the property. The grandmother puts her claim on the basis that she is a tenant in possession of the property and/or has a life interest and is therefore protected by operation of s 42(e) of the Transfer of Land Act 1958 (Vic) (“TLA”). The husband and wife commenced cohabiting between their respective parents’ homes between 1997-1999. They were married in mid-1998. The husband and wife have four children:(a)Mr J born 2000;(b)Mr K born 2001;(c)X born 2012; and(d)Y born 2015. The grandmother and her late husband, Mr B, conducted a business, L Pty Ltd (“L Pty Ltd”), and each of them were appointed directors of the company in mid-1998. The husband worked in that business from a young age and was appointed a director in 1993. In mid-2006, the husband and wife purchased a property at G Street, Suburb H, Victoria (“Suburb H property”) for the sum of about $275,000. The husband and wife each worked in the business with the grandmother and Mr B with Mr B being in effective control until his health failed. There are periods where Mr B resigned as a director, but I note that he was reappointed as a director in mid-2014 and subsequently resigned in mid-2015. The grandmother gave evidence that in the period of 2010 to 2011 Mr B was terminally ill and unable to participate in the operations of L Pty Ltd and that the husband and wife took over operation of the business at that point. I note that Mr B passed away in 2015. I accept the evidence of the wife that he continued to “hold the reins” in the business until shortly before he passed away. The evidence of both the grandmother and the wife was that the business was not particularly profitable and relied heavily on borrowings, including using personal credit cards for business debts. By June 2006, the Suburb F property was subject to mortgages, and it appears there was also a banking facility with the Commonwealth Bank of Australia who registered a charge on the assets of L Pty Ltd in 1993. In 2014, the business was seeking finance and had engaged a solicitor, M Lawyers (“M Lawyers”), to source funds for that purpose. In early 2014 debt collectors were seeking payment of about $30,000.[1] [1] Affidavit of Mr Holzer filed 28 April 2025, Annexure MH-7. The wife gave evidence at [32] of her trial affidavit that in mid-2015 the husband told her that the loans on the Suburb F property had to be refinanced to avoid the banks taking the property from his parents and that the property would be transferred to him. In order to raise funds to refinance the Suburb F property and payout debt in the name of the grandmother and Mr B , the Suburb H property had to be offered as security to the lender. In contrast, the grandmother gives evidence at [20] of her trial affidavit that in about April 2015 (and reiterated several times subsequently until 12 October 2015) the husband told her:30 …“I don’t have enough money to run [L Pty Ltd]. I have no equity in the [Suburb H] property so I cannot borrow any money using [Suburb H] as security. Can you please transfer the title to the [Suburb F] property to me so I can then borrow money against the property, and if you do that I promise that you can both live in the property for the rest of your lives”.

Evidence

Evidence Before The Court

On 28 March 2025, Deputy Registrar Bracewell made orders transferring the matter to the Federal Circuit and Family Court of Australia (Division 1) and listed the matter before me for an interim defended hearing. That hearing occurred on 4 April 2025, where orders were made for D Pty Ltd to be joined the proceeding as the fourth respondent, for D Pty Ltd to instruct the sheriff to not execute a Warrant of Possession in relation to the Suburb F property until the grandmother’s claim of life interest in the property has been determined and for the filing of evidence and outlines of case. The matter was listed urgently for final hearing on 1 May 2025 for an estimated duration of 2 days. EVIDENCE The wife relies upon:(a)Affidavit of Mr Holzer filed 28 April 2025;(b)Further Amended Initiating Application filed 25 April 2025;(c)Affidavit of Ms Moreno filed 25 April 2025;(d)Affidavit of Mr Q filed 17 April 2025; and(e)Affidavit of Mr Q filed 17 April 2025. The second respondent relies upon:(a)Affidavit of Mr Holzer filed 28 April 2025. The grandmother relies upon:(a)Further Amended Application in a Proceeding filed 29 April 2025;(b)Affidavit of Mr R filed 29 April 2025;(c)Amended Application in a Proceeding filed 16 April 2025;(d)Affidavit of Ms C Moreno filed 15 April 2025;(e)Affidavit of Mr S filed 3 April 2025;(f)Affidavit of Mr S filed 1 April 2025;(g)Application in a Proceeding filed 1 April 2025; and(h)Affidavit of Mr S filed 26 February 2025. D Pty Ltd relies upon:(a)Affidavit of Mr Q filed 17 April 2025;(b)Affidavit of Mr Q filed 3 April 2025; and(c)Affidavit of Mr Q filed 2 April 2025. The husband did not file any documents in the proceedings and although he attended Court on the first day of the hearing. Notwithstanding r 8.15(3)(e) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) which provides that annexures are not in evidence unless they have been tendered, I informed the parties, which they accepted, that due to the nature of the hearing and its urgency in being listed for final hearing, I will treat the annexures to all affidavits as being in evidence. THE GRANDMOTHER’S APPLICATIONRELEVANT LAW Section 42 of the TLA provides:(1)Notwithstanding the existence in any other person of any estate or interest (whether derived by grant from His Majesty or otherwise) which but for this Act might be held to be paramount or to have priority, the registered proprietor of land shall, except in case of fraud, hold such land subject to such encumbrances as are recorded on the relevant folio of the Register but absolutely free from all other encumbrances whatsoever, except—(a)the estate or interest of a proprietor claiming the same land under a prior folio of the Register;(b)as regards any portion of the land that by wrong description of parcels or boundaries is included in the folio of the Register or instrument evidencing the title of such proprietor not being a purchaser for valuable consideration or deriving from or through such a purchaser.(2)Notwithstanding anything in the foregoing the land which is included in any folio of the Register or registered instrument shall be subject to—…(e)the interest (but excluding any option to purchase) of a tenant in possession of the land;

Decision

Reasons for decision

The net assets that may be available after the sale of the properties and payment to secured creditor is likely to be meagre. CONCLUSION Counsel and the solicitors for the grandmother represented her on a pro bono basis. The solicitors for the wife also appeared on a pro bono basis. The Court acknowledges that very significant contribution.

Ratio Decidendi

Legal Principle Established

See also: Haslam v Money for Living (Aust) Pty Ltd (2008) 172 FCR 301 particularly at [23]-[28] (per Middleton J).CONSIDERATION In assessing the evidence of each of the witnesses directly relevant to the question of what was agreed in 2015 regarding the grandmothers continued occupation of the Suburb F property, I have regard to the approach taken by McLelland CJ in CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 318-319 as follows:Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances. In many cases (but not all) the question whether spoken words were misleading may depend upon what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience. Whilst that case concerned proof of a cause of action under the Trade Practices Act 1974 (Cth), is equally apt when considering claims where an agreement of the kind alleged in this kind is alleged: see Kaplan & Hankel [2025] FedCFamC1F 41 at [61] –[62] and [112] –[113]. Each of the grandmother and wife gave oral evidence in relation to the circumstances surrounding the transfer of title to the husband. The grandmother gives evidence that she is 81 years old and in very poor health. She has health conditions including osteoarthritis over her body and particularly around her spine following surgery, severe asthma and a medical condition. She presented as a person who was struggling with health and had difficulty recalling specifics of many of the matters put to her in relation to expenditure by her or on her behalf and the details of debts which were affecting the properties at the time of the transfer. Although she was adamant that she had a clear recollection of what occurred in 2015 as deposed by her in her affidavit and what was said, I prefer the evidence of the wife. I do so as the wife gave evidence in a measured way and was prepared to make concessions where appropriate in particular in relation to the terms of the loan application which was made to the fourth respondent which included what purported to be a lease affecting the premises at the time of the application when in fact there was no valid lease operating. When cross-examined, and after some apprehension, the wife conceded:[Counsel for the grandmother] And that tenancy agreement was a complete fabrication, wasn’t it?WifeWell, it must have been, because, like I said, it was a bit of a blur back then.[Counsel for the grandmother] And you knew that it was a complete fabrication?WifeWell, yes.[Counsel for the grandmother] You knew that […] had never at any point been living in the house or intending to live in the house?WifeYes, that’s true.[Counsel for the grandmother] So in putting forward this fabricated document, I suggest to you, you were lying to [D Pty Ltd]?WifeWell, yes, that’s what we’ve seen. Yes.[Counsel for the grandmother] And you’ve said, well, yes I lied to them, but if it kept a house over [the grandmother’s] head, that’s all right? WifeWell, I’m just stating now that – yes.