Passey and Passey and Anor

[2008] FamCA 418

FAMILY COURT OF AUSTRALIA

PASSEY & PASSEY AND ANOR [2008] FamCA 418

FAMILY LAW – PROPERTY – s79

Family Law Act 1975 (Cth)

APPLICANT: Mrs Passey

FIRST RESPONDENT: Mr Passey

SECOND RESPONDENT: Mr Fyve

FILE NUMBER: NCC 3672 of 2007

DATE DELIVERED: 6 May 2008

PLACE DELIVERED: Newcastle

PLACE HEARD: Newcastle

JUDGMENT OF: Loughnan JR

HEARING DATE: 6 May 2008

REPRESENTATION

COUNSEL FOR THE APPLICANT: MR Austin

SOLICITOR FOR THE APPLICANT: Halletts, Solicitors

FIRST RESPONDENT: Mentioned by consent

SECOND RESPONDENT: No appearance

Orders

IT IS NOTED

1. There is no appearance by or on behalf of the Second Respondent at midday today.

IT IS ORDERED

1. The Court gave verdict and judgment in favour of the Wife against the Second Respondent in the sum of $130,800.

1. Orders are made in terms of paragraphs 1, 2 and 3 of the document titled “Terms of Settlement” marked Exhibit A.

1. That the Second Respondent pay the costs of the Wife of and incidental to these proceedings as and from 14 December 2007, such costs to be as agreed between the Wife and the Second Respondent or as assessed by a taxing officer.

IT IS NOTED that publication of this judgment under the pseudonym Passey & Passey and Anor is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT NEWCASTLE

FILE NUMBER: NCC 3672 of 2007

MRS PASSEY

Applicant

And

MR PASSEY

First Respondent

And

MR FYVE

Second Respondent

REASONS FOR JUDGMENT

1. These are proceedings under s.79.  The proceedings were commenced by an application filed 10 December 2007.  The wife is 37 years of age.  I don't know how old the husband is.  They were married in December 1989 and separated in August of 2001, although they had six to eight months apart from early 1999.  They were divorced on 9 May 2003.  They have three children, B, C and J, who are 17, 15 and 11 years of age.

2. There were four parties to the proceedings at one point:  the wife, the husband, the wife's father, Mr Fyve, and the Permanent Custodian Limited.  The proceedings seek orders against the wife's father based on an alleged breach of trust. 

3. The background evidence is that the husband and wife, were living in a caravan.  In March 1992, the wife's father bought a property at S, for $73,500, with the intention of putting the husband and wife into an owned property. The wife gives some evidence about discussions that were had at the time, and there is some confirmation of all that in a statutory declaration that was prepared a couple of years later whereby there is an acknowledgement that the husband and wife had paid all the expenses in relation to the purchase; all loan repayments - and the evidence seems to be that the property was fully encumbered by borrowings from the National Australia Bank; rates, insurance, power, water, sewerage, recent renovation and additions.  The document also purports to evidence that:

The reason it was bought was that my daughter and her husband were living in a rented caravan at my residence and the repayments on the [S] property were about the same as the cost of rentals of a similar property.  [The wife] and [the husband] didn't have the finances for the purchase of a property and on the advice of my solicitor we purchased the [S] property using my property at [M] as security with the intention of transferring the deed over to [the husband] and [the wife] at a later date.

The document was made by the second respondent – the wife’s father.

1. The evidence of the wife is that the property was subject to a lease at the time of purchase, just for a short period.  The wife says that she and her husband met the shortfall of the mortgage over the rent and then moved into the property in June of 1992. There was a period of three months when they had to cover the shortfall.  The statutory declaration was made some years afterwards, but it says what it says.

2. The wife says that in 1999 her father borrowed 83 and a bit thousand dollars from the Newcastle Permanent Building Society, applied $65,878 to pay off the NAB loan, giving the balance to the husband and wife to pay off a car loan and to meet some day to day expenses. The wife refers to the fact that she and the husband were having some problems because the husband was drinking.  She says that subsequently the car was later repossessed because payments were not made.  She says that she made all the payments on the mortgage from 1999 on.

3. She says in 2004 she was able to put together a finance proposal to discharge the mortgage and to deliver on the agreement that everybody had made, that the property was being held for her and her husband. However, she says by that time she and the husband were separated and divorced. Her evidence doesn't make much sense about these things - but she says there was a conversation with her father wherein he said, "I'd transfer it to you but I don't want […]," – that is the husband - "to get his hands on it."  She says then they attempted negotiations by way of mediation in 2006 and an agreement was reached between herself and her husband in principle in 2006 but ultimately he refused to sign a consent order.

4. Then, she says, her father's attitude changed.  He began to say that he was reluctant to transfer the property into her sole name.  Various reasons were given such as taxation liabilities that would stem from the transfer; that he wished to be reimbursed for funds he'd allegedly spent on maintenance on the property. The wife speculates that his reluctance stemmed from the fact that she was in a new relationship at that time.

5. She says that in May of 2006 she attended at the Newcastle Permanent Building Society to make a repayment and was told that the loan had been paid out. She discovered that there had been a transfer from her father to her ex-husband, registered on 3 July 2006.  She said that as soon as she found out about the loan being paid out she had a caveat put on the property. A lapsing notice was later served and the caveat lapsed. A title search revealed that there was a mortgage given in favour of Permanent Custodians Limited. The wife remained in the property until she was evicted by the mortgage. Ultimately the mortgagee acted on a power of sale and the net effect is that $14,943 remains in a solicitor's trust account, being the equity from the property.

6. There was an interlocutory application seeking certain injunctions and other things, and on 14 December 2007 an order was made giving leave to the wife under s.44(3) to bring an application under 79 out of time. The application that she had filed was deemed to be regularly filed and an order was made that the net proceeds of sale of the S property were to be paid to the applicant's solicitors to be held pending the outcome of these proceedings. That is how the fund of $14,943 was created.

7. The Permanent Custodian is not involved anymore.  No orders are now sought against them.  Orders are sought against the wife's father and against the husband. The husband has signed a document indicating his consent to the terms of orders under s.79. He has not taken part in the proceedings by filing any documents.  He has made no financial disclosure. All we have is a solicitor's letter saying that they have given advice to the husband in relation to terms of settlement and that:

   The terms were read and explained to Mr [the husband], who confirmed he understood the nature and effect of the document.

8. So we come to the s.79 proceedings. 

9. The first thing is to identify the pool. In this case there is a claim in equity against the wife's father in relation to a breach of trust. 

10. As to the question of service - the evidence is that the property that the wife’s father lived at in 1997 was P Street, M. The wife would give evidence that the property is also known as …, or … and that her father has lived there for all relevant times. It would be the wife’s evidence that he lives there now with his partner, Ms D. On 10 December last service was performed by a solicitor and there was a conversation with somebody who identified himself as Mr D. The wife's evidence would be that he is the son of her father's partner.

11. There is no appearance by or on behalf of the wife’s father at midday today.  I am satisfied that it is appropriate to deal with the proceedings undefended against him.  I think you need to be more than comfortably sure about service in a case like this where there are unquantified damages sought, but he has been on notice in relation to the proceedings.  I am told that the evidence would be that there has been no feedback from him at all in relation to these proceedings. 

12. The jurisdiction relied on is the accrued jurisdiction of the Court.  That is jurisdiction that accrues to a superior Court where there is a claim that arises out of the same substratum of facts as are before the Court in proceedings regularly invoked within its jurisdiction. Here there is no objection to the exercise of power.  Some orders were made in December last without the involvement of the wife's father and some orders have been made today. Documents were served on the wife's father and he has taken no part in the proceedings. The case is argued in the alternative that there is an implied or resulting trust from the fact of financial contributions made from the acquisition of the property. It is submitted that in this case it is a bit easier than most to divine the intention of the parties when there is a statutory declaration by the wife's father, outlining not only his intention was in 1997, but also indicating the purpose of the purchase of the property in the first place, taking us back to 1992.  Indeed, I think there is an argument that there is an express trust with the requirement that documents purporting to deal with land need to be evidenced in writing being addressed by the Statutory Declaration.

13. It is submitted that the presumption of advancement doesn't act inimically to the wife's claim in these proceedings because the benefit was, in the first instance, to the wife's father, not to the child.  In the alternative, it is argued that a constructive trust applies because at the end of the day there has been a fraud against the wife by conduct by the person who held the title on trust for her. He was to deal with it only for the benefit of one of the beneficiaries and has in fact dealt with the property against her interests. The argument is that it would be unconscionable to allow that to continue.

14. The property ultimately passed to the mortgagee and the residue remains to be dealt with but the wife seeks damages against her father.  There is a calculation as to how those damages are made up in the written submission on behalf of the wife. For the reasons set out in that submission it seems to me that there is, including interest to 6 May 2008, an amount of $130,800 owing.  I make the findings that follow from those submissions.

15. Coming back to the task under s.79.  There is $14,943 sitting in the wife's solicitor's trust account, being the residue of the S property; $130,800 is the judgment debt the wife has in relation to her father. 

16. Then there's $600 in savings; $26,000 sourced in a bequest, the evidence would be, since separation; motor vehicle worth $12,000; contents at $5000; all based on admissions against interest.  There is a modest superannuation entitlement of $606.  The wife owes $6000, I assume in relation to the car.  She owes $875 on an ANZ Bank credit card and $1100 on another card.  That is the pool of assets.  The agreement between the husband and the wife is that they will do everything they can to cause the moneys held on trust on behalf of them to be paid to the wife then otherwise the parties retain what they have and retain responsibility for what they owe, and a 106A order.

17. As to whether that is a just and equitable outcome it is a bit hard to say.  We are a bit short on evidence here.  The law would have it that not much more than the fact that the parties are represented and agree is needed for the Court to be satisfied that a just and equitable distribution has been made. There is little evidence about contribution. I have referred to the wife making the payments from 1999 onwards. That was for the later part of the marriage.  There are three children and they currently live with the wife.  That would suggest that she has been their primary caregiver. There is some evidence that might suggest problems in the husband's capacity to make a contribution. 

18. Going forward, the husband seems to be in paid employment and I infer that from the fact that he has a child support obligation above the minimum rate.  The wife is in part-time employment.  She receives some interest.  She has single parent pension and the child support, as I said. She lives with the children and if she lives with anyone else, that person done not have an income.  The children have no income.  Her outgoings are less than her income but they are very modest.  For example, her living expenses are $50 a week, which I don't think would pay for food let alone anything else. Thus she is in modest circumstances; the husband has chosen not to tell us anything about his own circumstances.  Doing the best I can, the orders the wife seeks are just and equitable.

19. I give verdict and judgment in favour of the wife against the second respondent in the sum of $130,800.

20. There is an application for costs of the wife from 14 December to date against her father.  Her father had notice of the claim.  He has not assisted the Court at all. He did not even appear to object to jurisdiction or take any part in the proceedings.  In undefended proceedings the wife is put to making all of the elements of a case, there can be no part of the case that is resolved by concession. Thus she has had to take steps that wouldn't normally have to be undertaken in a contested dispute. That has happened, I infer in circumstances whereby the second respondent did not oppose the orders sought.  As to the financial circumstances of the parties I have made findings about the wife.  The evidence suggests that her father owns a property at M.  I don't know anything else about his financial circumstances.  In terms of the conduct of the proceedings, he has taken no part.  The proceedings have not arisen from a failure to comply with orders and neither party has been wholly unsuccessful in the proceedings.  The critical thing is that the wife has been put to making a case which was not opposed. The matter could have been very straightforward and the costs incurred by her largely related to that issue.

I certify that the preceding twenty three (23) paragraphs are a true copy of the reasons for judgment of the Honourable Judicial Registrar Loughnan

Associate: 

Date:  17 June 2008