Morse & Duarte (No 5)

Case [2024] FedCFamC1F 7

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Morse & Duarte (No 5) [2024] FedCFamC1F 7

File number(s): SYC 737 of 2014
Judgment of: HARPER J
Date of judgment: 18 January 2024
Catchwords: FAMILY LAW – PROPERTY – Where property proceedings remitted after appeal – Where orders made for wife’s Response to be dismissed following non-compliance with Court orders and her failure to attend the compliance hearing – Where no appearance by wife or Second Respondent at the final hearing – Where wife filed no material – Wife emailed chambers the evening before the final hearing annexing medical certificates objecting to the hearing proceeding – Where no application for adjournment was made and no affidavit filed – Where hearing proceeded in absence of wife and Second Respondent – Where the substantial asset in the property pool is a property held in the name of wife and Second Respondent – Where Court had previously made declaration that Second Respondent had no beneficial or equitable interest in the property – Where Court ordered Second Respondent transfer his interest in the property to wife and subsequently be removed as a party to the proceedings – Orders not complied with and property remained registered in the names of wife and Second Respondent at date of final hearing – Where wife resides in the property – Husband has sole care of the children of the marriage – Husband found to have made greater contributions – Adjustment of 6 per cent made in favour of husband on account of s 75(2) factors – Where orders made for wife to provide vacant possession of the property to husband – Husband to facilitate the sale of the property – Net proceeds of the sale to be distributed 70 per cent to husband and balance to wife.
Legislation:  Family Law Act 1975 (Cth) Pt VIII, ss 79, 75(2), 80, 81
Cases cited:

Aitken & Aitken (2023) FLC 94-142; [2023] FedCFamC1A 69

Anson & Meek (2017) FLC 93-816; [2017] FamCAFC 257

Barnell & Barnell (2020) FLC 93-961; [2020] FamCAFC 102

Benson & Drury (2020) FLC 93-998; [2020] FamCAFC 303

Bosanac v Commissioner of Taxation (2022) 275 CLR 37; [2022] HCA 34

Burke and Burke (1981) FLC 91-055

Candle & Falkner (2021) FLC 94-069; [2021] FedCFamC1A 102)

Dickons v Dickons (2012) 50 Fam LR 244; [2012] FamCAFC 154

Duarte & Morse (2019) FLC 93-902; [2019] FamCAFC 93

Duarte & Morse (No 3) [2023] FedCFamC1A 148

G and G (2000) FLC 93-043; [2000] FamCA 1075

Grunseth & Wighton (2022) FLC 94-099; [2022] FedCFamC1A 132

Hickey and Hickey and Attorney General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143; [2003] FamCA 395

Horrigan & Horrigan [2020] FamCAFC 25

Jabour & Jabour (2019) FLC 93-898; [2019] FamCAFC 78

JEL and DDF (2001) FLC 93-075; [2000] FamCA 1353

Kowalski and Kowalski (1993) FLC 92-342

Mallet v Mallet (1984) 156 CLR 605; [1984] HCA 21

Morse & Duarte (2017) 58 Fam LR 131; [2017] FamCA 1039

Morse & Duarte (No…

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Morse & Duarte (No 5) [2024] FedCFamC1F 7
Case
[2024] FedCFamC1F 7
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CaseChat Overview and Summary

The matter of Morse & Duarte (No 5) involved complex property proceedings following the divorce of Mr Morse and Ms Duarte. After a series of appeals and remitted hearings, the case returned to the Court with unresolved issues regarding the distribution of the matrimonial property, particularly a property located at B Street, Suburb C. Ms Duarte had failed to comply with prior court orders, including providing vacant possession and transferring her interest in the property to Mr Morse, leading to the current hearing. The central legal issues the court had to address were whether the orders for property distribution should be enforced, and if so, how the property should be divided between the parties. The court had to consider the history of non-compliance, the significance of Suburb C as the primary asset, and the implications of prior court orders that were not executed. The court also had to determine the appropriate adjustment for s 75(2) factors and how to distribute the net proceeds from the sale of Suburb C.

In its reasoning, the Court noted the substantial non-compliance by Ms Duarte with prior orders and her failure to engage in the process to determine the value of the property and her superannuation. Despite the absence of precise valuations, the court exercised its discretion to adopt a broad brush approach to determine the asset distribution. It was decided that Mr Morse should receive 70 per cent of the net proceeds from the sale of Suburb C, along with his existing assets, to achieve a fair distribution. The court also highlighted the importance of enforcing the prior orders for the transfer of the property and the need for Mr Morse to have control over the sale process to ensure compliance with the court’s directions. The court further addressed the issue of costs, noting that any application would need to consider the reasons for judgment and would be dealt with separately.

The court made comprehensive orders to ensure the sale of Suburb C, including directives for Ms Duarte to vacate the property, provide vacant possession to Mr Morse, and refrain from interfering with the sale. It also outlined the process for listing the property for sale, the distribution of the net proceeds, and the implications for both parties' liabilities and entitlements. The orders were designed to finally determine the financial relations between the parties and prevent further proceedings, subject to any outstanding costs applications. The court noted that Mr Tolman, who was previously involved in the property, had no beneficial interest and should be removed as a party to the proceedings.

Orders

Orders of the court

SYC 737 of 2014

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MR MORSE

Applicant

AND:

MS DUARTE

First Respondent

MR TOLMAN

Second Respondent

ORDER MADE BY:

HARPER J

DATE OF ORDER:

18 JANUARY 2024

THE COURT ORDERS THAT:

Vacant possession

1. Within 14 days of the date of these orders, the First Respondent Wife (“the wife”):

(a) vacate the property situated at B Street, Suburb C in the State of NSW being the whole of the land in folio identifier … (“the Suburb C property”);

(b) provide vacant possession of the Suburb C property to the Applicant Husband (“the husband”);

(c) leave the Suburb C property in good order and repair and in a presentable condition; and

(d) not approach to within 600 meters of the Suburb C property or instruct any third party to approach within 600 meters of the Suburb C property.

2. In the event the wife fails, or refuses to comply with Order 1(a) and/or Order 1(b), then upon the filing of an affidavit of the husband or his legal representative confirming that the wife has failed to comply with Order 1(a) and/or Order 1(b) together with a Warrant for Possession of the Suburb C property in the form approved under the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (“the Rules”) and a copy for service, a Warrant for Possession shall be issued pursuant to r 11.56 of the Rules authorising an Enforcement Officer to forthwith attend at the Suburb C property and:

(a) enter the Suburb C property;

(b) give possession of the Suburb C property to the husband.

3. Upon obtaining vacant possession of the Suburb C property the husband:

(a) is authorised to change the locks to the premises at the Suburb C property;

(b) is to have sole use and occupation of the Suburb C pending its sale; and

(c) is to pay, as and when they fall due, all outgoings and costs associated with the Suburb C property which are incurred as and from the date he takes exclusive occupation of the Suburb C property.

4. The wife is solely responsible for and must pay, as and when they fall due, any and all outgoings and costs associated with the Suburb C property prior to the date on which the husband takes vacant possession of the Suburb C property, and must indemnify the husband in relation to those costs.

Transfer

5. Within 30 days of the husband obtaining vacant possession of the Suburb C property in accordance with these orders, the husband, the wife and the Second Respondent, Mr Tolman, do all acts and things and sign all such documents as may be necessary to transfer the Suburb C property to the husband’s sole name, at the husband’s cost, including executing a Transfer, nominating the husband as transferee, in registrable form in accordance with the provisions of the Real Property Act 1900 (NSW).

Sale

6. Within 90 days of the date on which the Suburb C property is transferred to the husband’s sole name in accordance with Order 5, the husband is to do all acts and things and sign all such documents as may be necessary to list the Suburb C property for sale by private treaty:

(a) with an agent selected by the husband (“the Agent”);

(b) at a price nominated by the husband in consultation with the Agent;

(c) for an advertising campaign of the husband’s choice, in consultation with the Agent; and

(d) if an offer is made from a prospective purchaser where the purchase price is at or above 95 per cent of the list price, the offer must be accepted.

7. In the event a contract for sale is not entered pursuant to Order 6 within 30 days of the date the Suburb C property is listed for sale by private treaty in accordance with Order 6, then the Suburb C property is to be listed for auction, with the first auction to take place within 60 days of the date on which the Suburb C property is listed for auction:

(a) with an auctioneer selected by the husband (“the Auctioneer”);

(b) with a reserve price nominated by the husband in consultation with the Agent and/or Auctioneer; and

(c) in the event that the bidding does not reach the reserve price, the husband must sell the property to any proposed purchaser who makes a bid or offer at or above 95 per cent of the reserve price.

8. Should the Suburb C property not be disposed of at auction in accordance with Order 7, the Suburb C property be re-listed for sale by private treaty for a further period of 30 days with a further auction to be held forthwith at the expiration of the 30 day period. This auction is to be conducted in the same manner as specified in Order 7. The process specified in this order (Order 8) shall be repeated until such time as the Suburb C property is sold.

9. The husband engage a conveyancing solicitor, of his choice, to act as conveyancer for the sale of the Suburb C property.

10. Upon the Suburb C property being sold, the gross proceeds of sale be applied in the following order and manner:

(a) any commission and selling costs including but not limited to real estate commission, auctioneer’s fees and advertising fees incurred in relation to the Suburb C property;

(b) legal (conveyancing) costs incurred in relation to the sale of the Suburb C property;

(c) any adjustments under a Contract for Sale for rates, land tax and other outgoings;

(d) to the husband:

(i) first in reimbursement of all funds paid pursuant to Order 3(c);

(ii) second, an amount equal to 70 per cent of the balance of the proceeds then remaining less the amount of $120,568; and

(e) the balance of the proceeds of sale to the wife, subject to Order 11.

11. If the Agent recommends any repairs and/or maintenance be undertaken to the Suburb C property prior to it being listed for sale in accordance with these orders, the wife shall be solely liable for those costs, and:

(a) the husband is to meet the costs of such repairs and/or maintenance at first instance;

(b) the husband is to provide to the wife invoices evidencing the costs of said repairs and/or maintenance; and

(c) the costs of said repairs and/or maintenance shall be deducted from the wife’s entitlement pursuant to Order 10(e), prior to her receiving the same, and paid to the husband.

12. The wife is restrained from:

(a) lodging any caveat on the Suburb C property; and

(b) doing any act or thing or causing any other person to do any act or thing which would have the effect of interfering with or negatively impacting upon the sale of the Suburb C property.

Retention of Property

13. Pursuant to s 78 of the Family Law Act 1975 (Cth) (“the Act”) the husband is declared to be solely entitled to all his right, title, interest and entitlement in:

(a) the money paid to him pursuant to these orders; and

(b) all other items of property including money, motor vehicles, insurances, equities, superannuation entitlements, and personal effects currently in his possession or control.

14. Pursuant to s 78 of the Act the wife is declared to be solely entitled to all her right, title, interest and entitlement in:

(a) the money paid to her pursuant to these orders; and

(b) all other items of property including money, motor vehicles, insurances, equities, superannuation entitlements, and personal effects currently in her possession or control.

Indemnities

15. Pursuant to s 78 of the Act, the husband is declared to be solely liable for all liabilities in his name and shall indemnify and keep indemnified the wife in respect of the same.

16. Pursuant to s 78 of the Act the wife is declared solely liable for all liabilities in her name and shall indemnify and keep indemnified the husband in respect of the same.

17. Each party hereby releases the other from all actions, proceedings, claims, demands, costs and expenses whatsoever and howsoever arising which either of them had or may have against the other for or by reason of or in respect of any act, cause, matter or thing.

Other

18. Pursuant to s 81 of the Act the Court intends these orders to finally determine all financial relations and issues between the parties and avoid further proceedings between them.

19. Each party do all things necessary, including providing all consents and signing all necessary documents, to give effect to these orders in the time periods prescribed.

20. All outstanding applications, filed by any party to the proceedings be dismissed, save for the husband’s Application in a Proceeding filed 22 December 2017 and amended on 24 December 2019, which is yet to be determined.

Section 106A

21. In the event any party refuses or neglects to execute any deed, document or instrument necessary to give effect to all or any of these orders within 48 hours of a request for them to do so, then a Registrar of the Court shall be appointed pursuant to s 106A of the Act to execute such deed, document or instrument in the name of the said party and do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of affidavit.

Costs

22. Any application for costs is to be filed with an affidavit in support no later than 28 days from the date of these orders.

THE COURT NOTES THAT:

A. On 31 January 2023 the Court declared that the Second Respondent, Mr Tolman, has no beneficial interest in the Suburb C property.

B. Order 3 of the 31 January 2023 orders provided that:

As between the Applicant and the First Respondent and without prejudice to their respective rights at trial and without admissions as between them, within 7 days of the making of this order, the Second Respondent do all acts and things and sign all documents necessary to transfer his right, title and interest in the [Suburb C] property to the First Respondent.

C. Order 4 of the 31 January 2023 orders provided that:

Upon the transfer contemplated by Order 3, the Second Respondent be removed as a party to the proceedings.

D. At the time of the making of these order, Order 3 of the 31 January 2023 orders had not been carried out and the Second Respondent remains a party to these proceedings.

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).

Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

Background

Background to the litigation

This matter has a lengthy and convoluted history in this Court, involving both property and parenting proceedings. BACKGROUND Some relevant background of this matter is set out in Morse & Duarte (No 2) [2022] FedCFamC1F 152 at [4]–[31] (“Morse & Duarte (No 2)") wherein I dealt with a summary dismissal application by the wife. I incorporate those details here, and I will not repeat what I have said unless necessary for this judgment. In summary, the husband and wife commenced cohabitation in 2003, and were thereafter married in 2004. During the relationship, the parties had three children together: H, born 2006, J, born 2010, and K, born 2012 ("the children"). The parties separated on a final basis in late 2013, divorcing in 2015. After separation, the wife formed a relationship with Mr Tolman in late 2013. They initially lived in S Street, Suburb Q (“Suburb Q”) but exchanged contracts to purchase B Street, Suburb C (“Suburb C”) in late 2013. I will return to this purchase later in these reasons. The wife and Mr Tolman had two children. There was no evidence about these children or their care arrangements. As will be explained, Suburb C is important because it is the single most substantial asset in the property pool considered in this judgment.PROCEDURAL HISTORY It is necessary to refer to some aspects of the lengthy and convoluted procedural history of these proceedings. Final judgment was delivered by Le Poer Trench J (as he then was) on December 2017 (Morse & Duarte (2017) 58 Fam LR 131 (“Morse & Duarte”)). As a result of this judgment the children were placed in the sole care of the husband. Orders were also made for division of matrimonial property. Specifically, Le Poer Trench J (as he then was) concluded Suburb C was held by the wife and Mr Tolman on constructive trust for the husband and the wife in equal shares as tenants in common. This conclusion was overturned on appeal and the proceedings remitted for further hearing on property issues only (Duarte & Morse (2019) FLC 93-902 (“Duarte & Morse"). Numerous applications have been brought by the wife since Morse & Duarte (No 2) and can be summarised as follows:(1)Notice of Appeal filed by the wife on 7 April 2022 seeking leave to appeal the order of 17 March 2022 which dismissed her application for summary dismissal (Morse & Duarte (No 2)). Appeal dismissed on 4 August 2022; (2)Application in a Proceeding filed by the wife on 8 April 2022 seeking a stay of the proceedings pending the outcome of the appeal from Morse & Duarte (No 2); (3)Application in a Proceeding filed by the wife on 22 February 2023 seeking the appointment of a Registrar pursuant to s 106A of the Act to give effect to orders of 31 January 2023;(4)Application in a Proceeding filed by the wife on 22 March 2023 seeking summary dismissal or permanent stay of the husband’s Fifth Amended Initiating Application filed on 4 December 2019. Application dismissed on 12 April 2023;(5)Application in a Proceeding filed by the wife on 22 March 2023 seeking a number of procedural orders including that the 22 January 2024 trial dates be vacated and that the husband be restrained from funding further legal fees by way of unsecured loans. Application dismissed on 12 April 2023; and(6)Notice of Appeal filed by the wife on 9 May 2023 seeking leave to appeal the orders of 12 April 2023 which dismissed the wife’s application for summary dismissal. The appeal was dismissed on 29 August 2023 and the wife was ordered to pay the husband’s costs in the sum of $15,000 (Duarte & Morse (No 3) [2023] FedCFamC1A 148).

Evidence

Evidence Before The Court

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Decision

Reasons for decision

Taking account of these matters, I am satisfied there should be an adjustment in favour of the husband for s 75(2) factors of up to 6 per cent.CONCLUSION I am satisfied that it is just and equitable for the husband to receive assets of approximately 70 per cent of the asset pool. The husband seeks, in summary, a sale of Suburb C and 70 per cent of the net proceeds. It is difficult to be precise in achieving this outcome for several reasons. The first is that Suburb C has not been valued, and the value given in the balance sheet is approximate. This is at least in part a result of the wife’s failure to give any evidence of Suburb C’s value, and engage with the process to allow either an expert valuation or to reach an agreed value. The second is that the wife also failed to disclose the value of her superannuation. However, in the circumstances, the appropriate approach is to take as settled the present total value of the net assets excluding Suburb C but including superannuation, which is $708,048. The husband holds 87 per cent of these assets, with a value of $616,201, whereas 70 per cent of $708,048 is $495,633, $120,568 less than $616,201. If the husband retains his existing assets and receives 70 per cent of the net proceeds of sale of Suburb C less $120,568 he will receive his entitlement. To the extent this approach cannot include some precise known values for the reasons given, it also accords with authority. The process required of the Court by s 79 is the exercise of a wide discretion, not the performance of a mathematical or accounting exercise, justifying a “broad brush” approach (Dickons at [25]; Candle & Falkner (2021) FLC 94-069 at [101]). I am satisfied that in light of the history of these proceedings, including the non-compliance with the orders of 31 January 2023, that the orders sought by the husband which would place him in control of the sale process of Suburb C are appropriate. COSTS The husband seeks an order that the wife pay his costs incidental to these proceedings on an indemnity basis. Any application for costs will have to include a consideration of these reasons. There are also outstanding applications from earlier in the proceedings. The husband accepted that the question of costs would have to be considered separately after the delivery of these reasons. I will make provision in the orders for any application for costs to be made within 28 days of the delivery of judgment.

Ratio Decidendi

Legal Principle Established

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