Ragusa & Ragusa
[2021] FedCFamC2F 470
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Ragusa & Ragusa [2021] FedCFamC2F 470
File number(s): ADC 3962 of 2015 Judgment of: JUDGE BROWN Date of judgment: 10 December 2021 Catchwords: FAMILY LAW – Property – property settlement – long marriage – assessment of contributions – where the applicant has failed to engage in proceedings – criminal activity on behalf of the applicant – negative contributions to the property pool on behalf of the applicant – where parties have not accrued superannuation – considerations of justice and equity – just and equitable to make a property order – test in Stanford & Stanford. Legislation: Criminal Assets Confiscation Act 2005 (SA)
Family Law Act 1975 (Cth) Pt VIII, ss.75, 79
Federal Circuit and Family Court of Australia (Division 2) (Family Law) Rules2021 (Cth), Pt.10.6, rr.10.26, 10.27Cases cited: Bevan & Bevan [2013] FamCAFC 116
In the Marriage of Browne & Green (1999) 25 Fam LR 482
In the Marriage of DJM and JLM (1998) 23 Fam LR 396
In the Marriage of Kowaliw [1981] FamCA 70
In the Marriage of Omachini (2005) 33 Fam LR 134
In the Marriage of Townsend (1994) 18 Fam LR 505
Marriage of Hickey (2003) 30 Fam LR 355
Stanford v Stanford (2012) 247 CLR 108
Taylor v Taylor (1979) 143 CLR 1
Trevi & Trevi [2018] FamCAFC 173
Watson & Ling [2013] FamCA 57Division: Division 2 Family Law Number of paragraphs: 124 Date of hearing: 14 October 2021 Place: Adelaide Counsel for the Applicant: The Applicant appearing In Person Counsel for the Respondent: Mr Boehm Solicitor for the Respondent: Johnston Withers ORDERS
ADC 3962 of 2015 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR RAGUSA
Applicant
AND: MS RAGUSA
Respondent
ORDER MADE BY:
JUDGE BROWN
DATE OF ORDER:
10 DECEMBER 2021
UPON NOTING THAT:
A.There have been three distinct awards of costs made against the applicant as follows NOTING THAT such costs orders remain outstanding:
i.An order of Chief Judge Alstergren dated 15 September 2020 where the applicant was ordered to pay the respondent the costs of the hearing before Chief Judge Alstergren on 20 July 2020;
ii.An order of Judge Kelly dated 27 October 2020 where the applicant was ordered to pay the respondent’s costs in an amount of $450.00 by 30 November 2020; and
iii.An order of Senior Registrar Heuer dated 25 November 2020 where the applicant was ordered to pay the respondent’s costs thrown away in an amount of $1,600.00 by 21 December 2020.
THE COURT ORDERS THAT:
In full and final settlement of all applications for the settlement of matrimonial property:
1.The real property of the applicant, Mr Ragusa (hereinafter referred to as ‘the applicant’) and the respondent, Ms Ragusa (hereinafter referred to as ‘the respondent’) be divided as follows:
(a)The property situated at B Street, Suburb C being the whole of the property comprised in Certificate of Title Register Book Volume … Folio … (hereinafter referred to as ‘the B Street, Suburb C property’) be retained by the respondent.
(b)That the respondent’s interest in Allotments 1, 2 and 3 D Street, Suburb E being the whole of the land comprised in Certificates of Title Register Book Volume … Folios … and … (hereinafter referred to as ‘the D Street, Suburb E property’), being one half of the said property, be retained by the respondent NOTING THAT the other half of the D Street, Suburb E property was subject to proceeds of crime confiscation applications as a result of the applicant’s criminal activity, and have subsequently been forfeited to the Crown.
(c)The applicant is ordered to indemnify the respondent with respect to any liability of the respondent either personally or jointly with the applicant in respect of any debts or loans claimed or secured against the D Street, Suburb E property.
2.Within seven (7) days of the date of this order, the applicant discharge at his own expense the caveat (dealing number: … ) registered over the B Street, Suburb C property.
3.That pursuant to section 106A of the Family Law Act 1975 (Cth) that in the event that either party refuses or neglects to comply with the provisions of these orders, a Judicial Registrar of the Federal Circuit and Family Court of Australia is hereby appointed to execute all deeds and documents in the name of the defaulting party.
4.Including but without limiting the effect hereof, the applicant shall retain for his sole use and benefit absolutely free from any further claim or demand of the respondent:
(a)the furniture and furnishings in his possession, power and control;
(b)any motor vehicle in his possession;
(c)all bank accounts, savings, shares and investments in his name;
(d)his personal effects; and
(e)any other real and/or personal property and/or financial resources of the applicant or in the applicant’s name and/or possession not otherwise specified herein.
5.Including but without limiting the effect hereof, the respondent shall retain for her sole use and benefit absolutely free from any further claim or demand of the applicant:
(a)the furniture and furnishings in her possession, power and control;
(b)any motor vehicle in her possession;
(c)all bank accounts, savings, shares and investments in her name;
(d)her personal effects; and
(e)any other real and/or personal property and/or financial resources of the respondent or in the respondent’s name and/or possession not otherwise specified herein.
6.There be no order as to costs.
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.
IT IS NOTED that publication of this judgment by this Court under a Ragusa & Ragusa has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE BROWN:
INTRODUCTION
This should have been a simple and quickly resolved matrimonial property case. That it has not been so, in my view, is largely attributable to the dereliction of the husband and his legal advisor.
The parties to the proceedings are Mr Ragusa (hereinafter referred to as ‘the husband’ or ‘Mr Ragusa’) and Ms Ragusa (hereinafter referred to as ‘the wife’ or ‘Ms Ragusa’). They are both now aged pensioners and neither can be regarded as being in a strong financial positon, particularly the husband.
Regrettably, at the end of their long marriage, there is only one significant asset potentially subject to any order of the court. This is the wife’s home, situated at B Street, Suburb C (‘the B Street, Suburb C property’).
If the property is sold, the wife will have to find somewhere else to live. Given her age, it is doubtful that she would be able to purchase an alternative place to live. In these circumstances, real issues arise regarding the fairness of compelling the sale of this property.
Mr Ragusa has remarried. He lives in a South Australian Housing Trust property, which consumes a significant portion of his aged pension, but provides him with some security of tenure.
For reasons which will become obvious, as these reasons for judgment unfold, it is untenable for the parties to live in the one premises and it is necessary for their financial relationship to be brought to a close. Necessarily, issues relating to the proprietorship of the B Street, Suburb C property must be legally resolved.
There is one significant complication, in the case, which has led to its delay. The parties previously owned, as joint tenants, an industrial property, in a semi-rural area on the northern outskirts of Adelaide (‘the Suburb E properties’).
In 2018, Mr Ragusa was sentenced to 3 years and 2 months imprisonment, with a non-parole period of 15 months, in respect of trafficking a large commercial quantity of a controlled drug and cultivating a large commercial quantity of controlled plant for sale. The drug in question was cannabis and the cultivation took place at the Suburb E properties.
Subsequently, on 1 September 2020, the husband’s interest in the Suburb E properties were forfeited to the Crown pursuant to the provisions of the Criminal Assets Confiscation Act 2005 (SA). Accordingly, to some extent, Mr Ragusa is the author of his own financial misfortune.
Although the wife was also originally charged with the husband, the South Australian authorities accept that she was not criminally involved in the drug cultivation. In these circumstances, her interest in the Suburb E property remains extant and, when these proceedings are concluded, the South Australian authorities are prepared to allow her to retain her interest in the property.
In these circumstances, the only significant assets, which are potentially amenable to these proceedings, are the Suburb E properties and the home registered in the wife’s name, at B Street, Suburb C.
On the basis of the various affidavits filed on the court file to date, controversies arise between the parties as to the precise date of their separation and, more significantly, the extent of their respective contributions towards the B Street, Suburb C property.
The resolution of these controversies has been much delayed by the fact of the husband’s criminal proceedings and the related forfeiture application and, more recently, by his failure to actively engage in the property settlement proceedings.
For the reasons which will follow in due course, I am satisfied that it is appropriate that the proceedings now be finalised, notwithstanding the husband’s objections to such a course, which he made in conjunction with an application for an adjournment.
In my view, nothing useful would be served by such an adjournment, which would represent a significant prejudice to the wife, who is entitled to have her application for property orders determined by the court, given the manner in which Mr Ragusa has approached the litigation to date.
However, this course is not without its difficulties. I accept that Mr Ragusa is not legally qualified and does not speak English as his first language. It may well be the case that he has been let down by his former solicitor, Mr Oks.
However, at the end of the day, the prejudice to each of the parties, must be balanced. Given his circumstances, Mr Ragusa has no capacity to pay any order for costs, which may be made against him. Accordingly, the prejudice to be accorded to the wife by an adjournment cannot be ameliorated by an award of costs to be made in her favour.
In addition, the main thrust of the wife’s position is that it would be unconscionable for her to not to retain her home of many years, in its entirety, given her advanced age and what she has established is her compromised state of health, particularly in circumstances in which it is incontrovertible that it is Mr Ragusa’s actions alone which have significantly diminished the pool of matrimonial assets.
The Crown has agreed that the Suburb E properties should be sold and the wife’s portion of the proceeds should be held in trust pending the outcome of these proceedings. Precisely what the sum realised will be is not known but it is likely to be at least $167,000.00. An obvious question arises as to the justice and equity of Mr Ragusa being able to benefit, even indirectly, from such a sale, given his serious criminal activity resulted in its forfeiture.
In addition, it is not known to me what would be the attitude of the South Australian Crown to such a sleight of hand, which would see the husband being penalised in respect of one aspect of the property and potentially rewarded in respect of another of it.
BACKGROUND
Mr Ragusa was born in Country D in 1943. Ms Ragusa was born in Country D in 1944. They married in Country D at some time in 1964. The parties migrated to Australia in 1968 and settled in Adelaide. They have four adult children, aged between 47 and 55 years.
The husband applied for divorce, in this court, on 22 October 2015 citing a date of separation of 23 October 2013 but indicating that separation had occurred under the one roof between 23 October 2013 and 18 February 2015. It seems clear that the roof in question was provided by the B Street, Suburb C property.
On 5 May 2016, the wife responded to the Application for Divorce and opposed the granting of a divorce order. It was her position that the marriage had not irretrievably broken down and the parties continued to live together as husband and wife.
Ultimately, the contested Application for Divorce was fixed for hearing, before me, on 1 November 2016 and each party was directed to file Affidavit material. In her Affidavit, Ms Ragusa deposed that the due to the cultural and religious upbringing, which she shared with Mr Ragusa, the marriage between them was indissoluble until one of them died. She did however concede that the husband had become involved with another person, whom I understand he has subsequently married.
The relevant divorce order was made by me, on 1 November 2016. At that time, I was satisfied that the marriage between the parties had irretrievably broken down and the wife’s essentially religious objections were not sufficient to justify the dismissal of the divorce application.
In her more recently filed Affidavit, in support of her application for final property orders, the wife now asserts that the marriage between the parties actually broke down in or about 1995, when she discovered the husband had been unfaithful to her. In these circumstances, she deposes as follows:
I considered the marriage to the husband ended. I wanted nothing to do with husband but I had no option at that time other to stay living in the same house as I could not afford to go elsewhere with the children. I kept on with the normal household cleaning and cooking for the family. We slept in separate rooms.[1]
[1] See Affidavit of Ms Ragusa filed 17 September 2021 at [5.3].
The husband commenced the current proceedings on 3 February 2017. He sought an equal division of the parties’ marital property but did not indicate how such an outcome was to be achieved in practical terms. In his affidavit filed in support, he deposed that the B Street, Suburb C property had been purchased in the wife’s name alone, in 2008, because he had debts and was not eligible for mortgage finance, whilst the wife was.
The purchase price was $415,000.00. He did not indicate the extent of the mortgage at the time but asserted that he had made financial contributions towards the mortgage and other outgoings on the property until what he asserts was the date of separation in 2013.
At this stage, the husband conceded that he has been charged with criminal offences involving the cultivation of cannabis but indicated his intention to plead not guilty. He also indicated that he had lodged a caveat on the title of the B Street, Suburb C property, which the wife had sought to remove in the Supreme Court of South Australia.
In his financial statement, he disclosed an aged pension as his only source of income. The husband provided an account of his employment since arriving in Australia. This included operating a business and a restaurant.
The wife responded to the application on 19 July 2017. She sought to retain the B Street, Suburb C property and for the value of the Suburb E properties to be divided equally between the parties. In her affidavit in support, she characterised the husband as a financially profligate person. Her position, regarding her employment history in Australia, was as follows:
·She had worked since arriving in Australia;
·She had had many jobs including fruit picking, factory work, working in a commercial kitchen and collecting cans;
·She had worked night and day shifts to support her children and had done all the household tasks, including cooking and cleaning;
·The husband had rarely provided her with money;
·She had worked on building sites and in his business on many occasions, for which she had not been paid;
·From 1971, the parties had operated a take away shop and lived behind the shop;[2]
·More recently, the wife has deposed that, at times, she worked three jobs;
·She had worked at a food processing factory and as a kitchen hand;
·She had tried to save every cent available to her but the husband would take her savings and would forge her signature on withdrawal slips;
·The husband was bankrupted in 1995 in respect of a debt he owed to a member of the Country D community. This embarrassed her so she paid the debt;
·She had paid other of the husband’s debts;
·The husband was physically abusive if she challenged him.[3]
[2] See Affidavit of Ms Ragusa filed 19 July 2017 at [23]-[24].
[3] Ibid [19].
The most significant issue in dispute between the parties, at this stage, centred on the purchase of the B Street, Suburb C property in 2008. The wife deposed that the purchase price was $415,000.00 with additional charges, primarily arising from stamp duty, of $19,500.00. She borrowed $290,000.00 from the Adelaide Bank, secured by way of mortgage to complete the purchase and contributed $165,000.00 from her own savings.
There is no dispute that the wife has lived at the B Street, Suburb C property since 2008, initially with some of the parties’ children. It is her positon that she did not want the husband to move in with the family but he forced himself into the home, threatening to burn the property down if he could not live there, when it suited him. The thrust of the wife’s evidence is that she has been subject to threats, assaults and intimidation by the husband throughout the entirety of their marriage.
She characterises herself as a frugal and hardworking person, who assiduously saves her money. In contrast, she characterises the husband as a person who borrows money, which he does not repay and a person who has coerced and extorted her into providing money to him. She alleges he broke into the B Street, Suburb C property in 2015 and stole some of her financial records. She further alleges that he has sent money overseas to Country D to fund his current wife.
In her trial affidavit, the wife deposes as follows as to the circumstances which motivated her purchase of the B Street, Suburb C property:
I was very afraid for my children’s future and worried that there would not be any financial security for them or for me. I decided I had to get my own mortgage to buy my own home. I obtained further employment at two separate employers in order to financially support myself and provide for four children. I worked at the Employer E in the kitchen and at a food processing factory. I had three jobs at the same time. I saved every single cent that I could. I went without many things.[4]
[4] Ibid [20].
CONDUCT OF THE PROCEEDINGS
On the first return date of the application, the parties were referred to a Conciliation Conference appointed for 24 July 2017. It was adjourned until 13 November 2017 due to the unavailability of valuation evidence. The parties were unable to resolve issues. At the time, the presiding Registrar noted that the husband’s criminal trial was set for November of 2018 and relevant real properties were subject to proceeds of crime confiscation applications.
Throughout 2018 and 2019 the proceedings were adjourned administratively on the joint application of the parties’ respective solicitors, whilst the criminal proceeding and related confiscation application progressed through the District Court. The case came back before me on 4 February 2020 on which occasion I indicated it would be subject to call over by the Chief Judge.
Ultimately, the case came before Alstergren CJ on 20 July 2020, when His Honour made the following orders and notation:
1. The matter be adjourned to the Federal Circuit Court of Australia before Chief Judge Alstergren on 15 September 2020 at 9.00am for a compliance mention hearing.
2. The Applicant file and serve an Affidavit setting out matters pursuant to the Criminal Assets Confiscation Act 2005 (SA).
3. The costs of the Respondent of today be reserved.
AND THE COURT NOTES THAT:
(A)There was no appearance by or on behalf of the Applicant today although the Microsoft Teams hearing details were provided by email to the solicitors for the Applicant, and there was also no Callover Questionnaire submitted by or on behalf of the Applicant.[5]
[5] Orders of Chief Judge Alstergren dated 20 July 2021.
The affidavit directed to be filed was not filed. On 15 September 2020, the case returned before the Chief Justice, when the following orders were made:
1. The matter be listed to a Judicial Assessment Conference on a date to be fixed.
2. The parties have liberty to approach the Chief Judge’s Chambers to have the matter relisted to the Chief Judge if the matter does not settle at the Judicial Assessment Conference referred to in Order 1 above.
3. The Applicant is to pay the costs of the hearing before Chief Judge Alstergren on 20 July 2020.
AND THE COURT NOTES THAT:
(A)The Respondent has informed the Court today that the Applicant’s interest in two properties subject to District Court proceedings have ceased. Accordingly, the Applicant is no longer required to file and serve the Affidavit referred to in order 2 of court orders dated 20 July 2020.
(B)The District Court proceedings are no longer an impediment to the matter proceeding in this Court.
(C)This matter has been in the Court system since 2015 and needs to progress.
(D)If in any proceedings there are allegations of family violence and the provisions of s.102NA of the Family Law Act 1975 apply (see attached Family Violence Information Sheet), any unrepresented party will not be permitted to personally cross-examine the other party/parties.
(E)Affected unrepresented parties may apply to the Commonwealth Family Violence and Cross-Examination of Parties Scheme (“the Scheme”) for representation but any such application must be made at least 12 weeks prior to the final hearing.
(F)Further information about the legislation and the Scheme can be found at Part 4 of the attached Family Violence Information Sheet.
(G)If s.102NA applies and a party becomes unrepresented after trial directions have been made, that party is required to promptly advise the Court.[6]
[6] Orders of Chief Judge Alstergren dated 15 September 2021.
The case as directed was listed before Judge Kelly for a judicial assessment on 27 October 2020. The matter did not resolve and was referred to a further judicial assessment on 25 November 2020. The husband was ordered to pay the wife’s costs in an amount of $450.00 by 30 November 2020. The amount remains outstanding.
On 25 November 2020 neither the husband nor his solicitor appeared before Senior Registrar Heuer, who ordered that the husband pay the wife’s costs thrown away in an amount of $1,600.00 by 21 December 2020. I also understand that this sum too remains outstanding. Senior Registrar Heuer adjourned the case before me for directions to prepare the matter for trial on 31 May 2021.
Neither the husband nor his solicitor appeared at court on 31 May 2021. On this occasion, the following orders were made:
1. The matter is listed for an undefended hearing at 10.00am on 14 October 2021.
2. The respondent wife do file any affidavit in support of her application on or before 16 September 2021.
3. The wife’s costs of today’s appearance are reserved.
4. A copy of today’s orders are to be served upon the applicant husband’s last known address.
Independently of any involvement by me, the case was listed in what was known as the winter call over, an initiative of the Chief Judge to avoid delay in the court’s processes. The case was listed on 3 August 2021 before Judge Carter who confirmed the undefended hearing in the presence of the husband’s long standing solicitor, Mr Oks. Accordingly, there can be no doubt that Mr Ragusa knew of the undefended hearing date approximately ten weeks beforehand.
Neither Mr Ragusa nor Mr Oks have made any application to vacate the undefended hearing. In a formal sense, despite there having been six distinct case management events intervening and multiple administrative adjournments, the husband has not filed any material since his application in February of 2017. Three distinct awards of costs have been made against him. He has failed to appear on three occasions.
The husband appeared in person on 14 October 2021 and sought to adjourn the undefended hearing. He informed me that Mr Oks was no longer acting for him. Mr Oks has not filed a Notice of Ceasing to Act. The wife opposed the adjournment. She had complied with the court’s direction to file an updated affidavit, which she did on 17 September 2021.
The wife’s solicitor has provided evidence that she wrote to the husband, at what he confirmed was his address, to advise Mr Ragusa of both the order fixing the undefended hearing and to provide him with a copy of Ms Ragusa’s trial affidavit on 4 June and 29 September 2021 respectively.[7]
[7] See Exhibits B and C.
Up to this stage, Ms Ragusa has incurred costs of $28,295.00.[8] She is 76 years of age. I accept her evidence that she is in poor health, suffering from diabetes and high blood pressure. She has complied with all the directions of the court and has always appeared. The delay in the finalisation of the case, as a consequence of the proceeds of crime forfeiture proceedings, is solely attributable to the criminal conduct of the husband, which he has formally admitted. It seems unlikely that Mr Ragusa will either pay any award of costs made against him or has the means to satisfy such an order.
[8] See Exhibit A.
Against this background, I was satisfied that it would cause Ms Ragusa significant prejudice if the case was further adjourned and this prejudice would not be ameliorated by any further award of costs, given that similar orders had been made in the past and had not been satisfied.
More significantly, for reasons upon which I will expand upon shortly, I did not think such an outcome would be just and equitable in the sense that such adjournment would serve no useful purpose, as any order requiring the sale of the B Street, Suburb C property would be inherently unfair to Ms Ragusa and given her age and level of income, her borrowing capacity must be regarded as extremely limited.
THE NATURE OF AN UNDEFENDED HEARING
It is a significant thing for proceedings to be determined in the absence of evidence from one of the parties concerned. The court has an obligation to ensure that the parties to proceedings before it have an opportunity to participate in those proceedings. However, there must be limits on such an obligation, which cannot be indefinitely prolonged.
Before a person can be adversely affected by a judicial order, they must be afforded an adequate opportunity to be heard.[9] I am satisfied that Mr Ragusa has been given an adequate opportunity to appear in these proceedings and put his position before the court.
[9] See Taylor v Taylor (1979) 143 CLR 1, 20 (Murphy J).
In addition, and of significant weight in the current matter, Ms Ragusa is entitled to have her application, for settlement of property matters, determined within a reasonable period of time, pursuant to the applicable principles of law. This is important given the significant delays which have arisen in the conduct of the case, none of which are attributable to any act or omission attributable to Ms Ragusa.
As such, she needs neither Mr Ragusa’s formal imprimatur nor his cooperation to have her application determined. Rather, there is an obligation, on Mr Ragusa’s part, if he wishes to be involved in the proceedings, for him to attend at court as required and pursue any application put by him or on his behalf with due diligence.
The Federal Circuit Court and Family Court is a court of private law. It determines disputes, between parties, according to law. In this case, according to the provisions of Part VIII of the Family Law Act 1975 (Cth) (‘the Act’), which relate to the division of property following the breakdown of a marriage relationship.
The court cannot compel a party to engage with litigation. It is however obliged to give each party the opportunity to put evidence before the court and, if he or she wishes to do so, contest any evidence relied upon by the opposing party.
However, a party, whether by intransigence, disinterest or manipulation cannot succeed in denying an applicant a just resolution, according to law, to his or her application, by choosing not to take part in proceedings because they do not proceed in the manner of his or her preference. That would be fundamentally unfair to the opposing party and an affront to the proper administration of justice, which requires that a properly instituted application be finalised within a reasonable period of time relative to the complexity and issues raised in such an application.
Part 10.6 of the Federal Circuit and Family Court of Australia (Division 2) (Family Law) Rules2021 (Cth) deals with the court’s authority to enter judgment against a respondent if that respondent defaults in complying with a court order, or fails to prosecute any proceedings with due diligence.
Pursuant to rule 10.26 a party is in default if, among other things, he or she has failed to:
·Comply with an order of the court in the proceedings;
·Produce a document as required; or
·Do any act required to be done by these Rules;
·Prosecute the proceedings with due diligence.
I am satisfied that Mr Ragusa has not prosecuted the proceedings with due diligence and has failed to comply with numerous orders of the court. In these circumstances, pursuant to the provisions of rule 10.27(2) Ms Ragusa is entitled to seek the dismissal of Mr Ragusa’s application.
In addition and significantly, pursuant to the provisions of rule 10.27(3), the court may, if it considers it just, enter judgment and make orders in favour of Ms Ragusa against Mr Ragusa on an undefended basis. In my assessment, Mr Ragusa has been given adequate notice of these proceedings; has failed to prosecute his application diligently and given the idiosyncratic circumstances of the case, it is just that the case be finalised at this juncture.
However, Ms Ragusa is not entitled, as of right, to the orders which she seeks only on account of the omissions in the prosecution of his case by Mr Ragusa. Rather, the onus remains on her to establish to the court that the orders which she seeks, are just and equitable, according to law.
Essentially, Ms Ragusa must lead sufficient evidence to establish her case to the court and persuade it that the result she proposes is a just and equitable one. Otherwise, the court should impose the result, in the case, it considers fair according to the law and the evidence available to it.
The court’s pre-eminent responsibility is to ensure a just result between the parties, notwithstanding the failure of Mr Ragusa to participate properly in the proceedings. However, in the absence of satisfactory rebutting evidence, Ms Ragusa’s affidavit material is to be accepted by the court, unless it appears inherently unreliable or otherwise unsatisfactory.
THE LEGAL PRINCIPLES APPLICABLE
The major provisions relating to marital property division are contained in sections 79(1); 79(2); 79(4); and 75(2) of Part VIII of the Act. Pursuant to section 79(1), the court is authorised to make such order as it considers appropriate in order to alter the interests of the parties to a marriage in relevant property.
Pursuant to section 79(2) the court is actively prevented from making such an order unless it is satisfied that it is just and equitable to do so in all the circumstances prevailing. This follows from the use of the prohibitive words “shall not” in the relevant section. As indicated above, one of the central issues arising in the case is whether it would be just and equitable to make an order altering the existing property rights of the wife in respect of the B Street, Suburb C property, given the overall circumstances of the case.
Section 79(4) provides the mechanics of how a court is to make an order altering marital property interests. It provides seven matters [in paragraphs (a) – (g)] to be considered, as relevant. In this case, the criteria provided by section 79(4)(c) are particularly germane. These go to parenting and homemaking contributions.
Paragraphs (a); (b); and (c) categorise contributions made by marital partners, which are relevant. Paragraph (d) directs the court to take into account the effect of any order upon the earning capacity of either party to the marriage concerned.
Paragraph (e) directs the court to consider a list of matters contained in section 75(2), which are germane to spousal maintenance or the prospective positions of the parties concerned by reference to their respective financial resources, means and needs.
Finally, paragraphs (f) and (g) apply to child support and previously made parenting orders, as relevant. There is some overlap between these various provisions and not all will be applicable in every case.
Until recently, the position in respect of the process to be applied to the resolution of matrimonial property cases was said to be well settled, as it required the application of a preferred approach. This approach entailed a four step process, described by the Full Court as follows:
·identification and valuation of the property of the parties;
·identification and evaluation of contributions to the property (including property no longer owned by the parties) – the contribution phase – section 79(4)(a) to (c);
·identification and assessment of the various matters in section 79(4)(d) to (g) including to the extent they are relevant, the matters in section 75(2) – the prospective needs phase;
·considerations of justice and equity.[10]
[10] See In the Marriage of Hickey (2003) 30 Fam LR 355, 370 [39] (Nicholson CJ, Ellis and O’Ryan JJ); Bevan & Bevan [2013] FamCAFC 116 at [60] (Bryant CJ & Thackray J).
The general applicability of this four step process has been recast, to some extent, in the light of what has been said recently by the High Court in the matter of Stanford v Stanford (‘Stanford’).[11] In the case, the majority stated that:
It will be recalled that s 79(2) provides that ‘[t]he court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order’. Section 79(4) prescribes matters that must be taken into account in considering what order (if any) should be made under the section. The requirements of the two sub-sections are not to be conflated. In every case in which a property settlement order under s 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order.
The expression ‘just and equitable’ is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its metes and bounds.[12]
[11] Stanford v Stanford (2012) 247 CLR 108.
[12] Ibid 120 [35]-[36] (French CJ, Hayne, Kiefel and Bell JJ).
Accordingly, considerations of what is just and equitable flavour all applications pertaining to property settlement. What is fair is impossible to define with certitude and must depend on the prevailing circumstances. It is impossible to define what is or is not a just and equitable outcome in isolation. However, care must be taken to avoid conflating the stipulation contained in section 79(2) with the discretionary exercise contained in section 79(4).
The first consideration for the court is whether it is just and equitable to make any order adjusting proprietorial interests in the current matter, given its idiosyncratic circumstances. In Stanton the High Court indicated that, in the vast majority of matrimonial property cases, the requirements of section 79(2) will be readily satisfied, largely as a result of a consideration of the circumstances of the parties concerned, particularly the nature of their separation. The majority said as follows:
In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of the choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying section 79(4).[13]
[13] Ibid 122 [42].
In my view, this is not the situation in the current matter. It is not readily apparent that it is just and equitable to make any adjustment in the existing proprietary interests of the parties in the two major assets subject to the proceedings – the B Street, Suburb C property and the Suburb E properties.
In respect of the B Street, Suburb C property, it is registered in the wife’s sole name and she asserts that she purchased it in 2008 without any financial contributions from the husband after the marriage between the parties had broken down. It is her case that since this date any contributions made by the husband towards the property have, at best, been minimal and, at worst, been negative in nature. There is no controversy that the wife has lived in the property, separately from the husband, since early 2015, more than six years ago, during which period there can be no doubt she has solely maintained the property.
More significantly, if the property is sold to realise some sum to pay the husband, the wife will lose her accommodation and given her age and state of health, will be sorely pressed to find somewhere else to live. In all the circumstances of the case, I struggle to see how this will reach a conclusion that could be considered fair, notwithstanding the needs of the husband. However, to a large extent, in my view, his actions have brought him to his current parlous financial state.
This brings me to the Suburb E properties. These have significant worth when compared to the B Street, Suburb C property and could have provided a significant counterbalance to the wife retaining her home, given the length of the marriage and each parties’ high level of prospective needs. However, the husband’s actions have diminished the asset pool to a significant degree. It would be unfair to the wife if this was not a factor to be taken into account.
In addition, in my view, it hardly accords with principles of justice and equity that the husband should receive all or some portion of the wife’s interest in the properties given that it was his conduct which resulted in the confiscation of half their value, even if the South Australian authorities would countenance such an outcome, which appears dubious.
In any event, notwithstanding these considerations, I propose briefly to consider the orthodox four step process. I do so on the basis of what was said by the majority of the Full Court (Bryant CJ and Thackray J) in Bevan & Bevan (‘Bevan’):[14]
Although the High Court did not disapprove the four step process, we accept it did not approve it either... However, the High Court’s decision serves to refocus attention on the obligation not to make an order adjusting property interests unless it is just and equitable to do so.
…
Stanford will also serve as a reminder that the four step process ‘merely illuminates the path to the ultimate result’.[15]
[14] Bevan & Bevan [2013] FamCAFC 116.
[15] Ibid at [65], [71] (Bryant CJ and Thackray J).
In my assessment, an analysis of these various steps and the evidence available in respect of them, will shed light on what is the appropriate just and equitable order to make ending the parties’ financial relationship with one another.
In Bevan, the Full Court summarised three fundamental propositions relating to the interaction between section 79(2) and section 79(4), which can be summarised as follows:
·Determination of what is just and equitable begins with an identification of existing property interests;
·The discretion provided by section 79 must not proceed on any assumption that any settlement of property should be different from those existing property interests, as determined by principles of common law and equity;
·However a determination that a person has an entitlement to a division of property by reference only to section 79(4) would be wrong as it would ignore the express statutory requirement of section 79(2) or conflate the two considerations.[16]
[16] Ibid at [73].
As discussed by the Full Court in Bevan, whether it is just and equitable to make any particular property order is invariably inextricably interwoven with questions of contribution arising under section 79(4) and the parties’ financial and relationship history with one another.
As a consequence of Stanford it has been said that the four step process has a holistic flavour to it. In in Watson & Ling, Murphy J said as follows:
As a result of those matters, the Court’s approach to s 79/s 90SM may be less compartmentalised than what a strict or unthinking adherence to four (or three) “steps” might otherwise reveal. The task is essentially holistic; is it just and equitable in the particular circumstances of the particular relationship or marriage under consideration to make an order and, if so, its terms must similarly meet that criteria. Of course, holistic though the approach is, it must be referenced to what the Act requires and care must be taken to ensure that the Court’s reasons make that clear.[17]
[17] Watson & Ling [2013] FamCA 57 at [13] (Murphy J).
What is clear, is that the Court’s overwhelming and preeminent obligation is to deliver a just and equitable outcome in the case before it through an analysis of all relevant aspects of the evidence available to it.
STEP ONE – THE POOL OF ASSETS
In her affidavit evidence, the wife has provided expert valuations in respect of both the B Street, Suburb C property and the Suburb E properties.[18] The valuation of the B Street, Suburb C property is relatively contemporary. The valuation of the Suburb E properties is some four years old. This is, however the only evidence available to me and the wife has deposed as to her and the Crown’s intention to sell the properties, which will obviously crystallise the properties worth at the date of sale. In all these circumstances, I propose to accept the wife’s evidence in respect of the relevant pool of assets and liabilities relevant to these proceedings, which are as follows:
[18] See the Affidavit Ms Ragusa filed 17 September 2021 at Exhibits ML-1 and ML-2.
Property
Dollars
B Street, Suburb C SA
$500,000.00[19]
Wife’s half-interest in the Suburb E properties
$167,500.00[20]
Husband’s motor vehicles
$13,000.00
Husband’s furniture and effects
$500.00
Wife’s furniture and effects
$500.00
Machinery at Suburb E properties
E$40,000.000
Total
E$721,500.00
Liabilities
Mortgage secured against B Street, Suburb C property
$35,600.00
[19] This value is based on a valuation dated 23 November 2020.
[20] This value is based on a valuation dated 18 July 2017.
The wife deposes that she has no superannuation and, as far as she is aware, neither does the husband. Accordingly, on any view, the pool of assets is a modest one. In legal terms, she is the registered proprietor of all the significant aspects of property. In addition, it is an underlying assumption of the wife’s case that the court needs to take into account the husband’s wastage of the Suburb E properties resulting from its partial confiscation.
The Full Court of the Family Court has identified three areas where it is appropriate to notionally “add back”,[21] into a pool of matrimonial property, assets which do not exist or cannot be proved to be still existing. The circumstances are as follows:
·Where matrimonial assets have been utilised to pay the parties’ legal fees, thus diminishing the pool of assets available to be distributed between them and so creating a situation where the normal rule whereby each party should bear his or her own costs is defeated.[22]
·Where there has been a premature distribution of matrimonial assets.[23]
·Where one of the parties has embarked on a course of conduct, either recklessly or with the direct intent to reduce or minimise the effective value of some item of matrimonial property.[24]
[21] See In the Marriage of Omachini (2005) 33 Fam LR 134 at 144 [30] (Holden, Warnick and Le Poer Trench JJ).
[22] See In the Marriage of DJM and JLM (1998) 23 Fam LR 396.
[23] See In the Marriage of Townsend (1994) 18 Fam LR 505.
[24] See In the Marriage of Kowaliw [1981] FamCA 70 [12] (Baker J).
In regard to the third of these categories, it has been pointed out by the Full Court that this principle represents a guideline for the court rather than a fixed code, bearing in mind the discretionary nature of the jurisdiction created by section 79 of the Act.[25]
[25] See In the Marriage of Browne & Green (1999) 25 Fam LR 482.
In Watson & Ling, Murphy J indicated that the court generally eschews the notion of negative contributions. As such, the direct dollar for dollar adjustment for alleged dissipation of funds, should be the exception rather than the rule.[26]
[26] Watson & Ling [2013] FamCA 57 at [33]-[34] (Murphy J).
However that is not to say that, in cases involving dissipation of funds, considerations relating to the assessed superior contributions of the non-dissipating party cannot be engaged at the second stage of the process or more generally as an applicable section 75(2)(o) factor.
Recently, in Trevi & Trevi, the Full Court has reiterated that the court’s authority to add back is both discretionary and exceptional in nature. The court said as follows:
Two fundamental premises emerge from Omacini and the authorities preceding it. First, ‘adding back’ is a discretionary exercise. When the discretion is exercised in favour of adding back, it reflects a decision that, exceptionally, in the particular circumstances of a case, justice and equity requires it. The second premise is its corollary: in cases that are not ‘exceptional’ justice and equity can be achieved, not by adding back, but by the exercise of a different discretion – usually by taking up the same as a relevant s 75(2) factor. Indeed, it has been said that the latter is ‘a course which is, perhaps, technically more correct’ than adding back to the list of existing interests in property.[27]
[27] Trevi & Trevi [2018] FamCAFC 173 at [30] (Murphy J).
In my view, given the nature of Mr Ragusa’s conduct, which resulted in the forfeiture of one half of the Suburb E property to the Crown, it is difficult to characterise this as anything other than a negative contribution, which in no way can be attributable to any act or omission emanating from Ms Ragusa.
It is also seems to me that it renders the case one of an exceptional nature, which requires the direct dollar for dollar adding back of the value of the forfeited Suburb E property into the relevant pool and its notional attribution to the husband.
If this is done, in net terms, the pool of property becomes $853,400.00 of which the wife retains items to the value of $632,400.00, whilst items worth $221,000.00, albeit largely notionally, are attributed to the husband resulting in a current division, in percentage terms of approximately 74%/26% split in favour of the wife.
STEP TWO – CONTRIBUTIONS
In the second step, I must ascertain the contributions, which each party has made towards the pool of assets, as are found, following the first step. Contributions fall into two broad categories.
The first kind is contributions to the property: financial contributions and non-financial contributions, made directly or indirectly, by or on behalf of a party to the marriage to the acquisition, conservation or improvement of any of the property of that relationship.
The second kind is contributions to the welfare of the family: in the words of section 79(4)(c), “the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent.”[28]
[28] See Family Law Act1975 (Cth) s 79(4)(c).
It is clear from the authorities that this second kind of contribution must be given appropriate weight and is not to be treated as a token matter or as a contribution which is inherently less valuable or important than a financial contribution to property.
In its totality, section 79(4) requires the court to examine the entirety of contributions, both financial and non-financial, to the welfare of the family, as well as to the acquisition, conservation and improvement of any asset which may be individually identified.
The task conferred is to weigh and assess contributions, which are necessarily disparate in nature. Contributions, within the framework of a marriage, which are different in quality and nature – that of a homemaker and parent, which is not readily quantifiable in dollar terms, and that of a wage earner; – must be compared. As indicated above it has been described as a holistic exercise.[29]
[29] See Watson & Ling [2013] FamCA 57 at [13] (Murphy J).
As a consequence, contributions are not automatically required to be tied to the acquisition of any particular item and may be taken into account in a total sense. The exercise is not a purely arithmetical or accounting one.
The marriage between the parties was an extremely long one. They married in 1964 and migrated to this country in 1968. The marriage produced four children, now all adult. Depending on whose evidence is preferred, the marriage was one either in excess of thirty years or closer to fifty years in its duration.
On the wife’s case, the parties have had a complex financial relationship with one another, encompassing various small businesses, none of which can be accounted a financial success, which she would categorise as being marked by the husband making imprudent decisions and behaving in a fiscally reckless fashion to his creditors.
In these circumstances, it is her case that she has, in effect, gone it alone financially since 1995. Thereafter saving all her surplus funds, whilst working three jobs, which ultimately enabled her to purchase the B Street, Suburb C property in her own name, through the application of her own hard earned savings and a mortgage in her sole name. This contention is supported by the registration of the property in question. I accept the wife’s evidence in this regard.
In addition, I accept the wife’s evidence that she undertook the vast majority of homemaking and parenting activities required, often in arduous circumstances, whilst working extremely hard, in a variety of difficult occupations. In my view, any assessment of contributions, notwithstanding the length of the marriage concerned, overwhelmingly favours the wife and would not result in me departing from the approximately 75/25% division of assets (including the add back of the husband’s forfeited interest in the Suburb E properties), which currently stands.
STEP THREE – THE PROSPECTIVE NEEDS OF THE PARTIES
The third step involves the assessment of the parties’ prospective needs, by reference to the factors set out in section 75(2) of the Family Law Act. Pursuant to section 75(2)(o), the court is entitled to take into account “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account”.
The husband’s conduct which led to the forfeiture of his half of the Suburb E properties can be taken into account at this stage of the proceedings but in technical terms I have elected to deal with the issue on a direct dollar for dollar basis at the second stage.
However, no matter what approach is taken, I must not lose sight of the obvious – in monetary terms, the husband can derive no benefit from his portion of the property due to its forfeiture. As such, there can be no doubt that he faces a bleak financial future in which his sole source of financial support will be the aged pension and in which it is almost certainly the case that he will live in public housing, of one form or other, for the remainder of his life.
The wife, who is a similar age to the husband – 76 years of age – has one significant advantage over him, namely she owns the house in which she lives subject to a modest mortgage. In my view, it would be fundamentally inequitable that she should lose this safeguard, which she sorely needs, in order to pay any nominal sum to the husband. Her overwhelming prospective need is somewhere secure in which to live.
There is no evidence regarding her borrowing capacity. She continues to have a modest mortgage, the service of which must consume a significant portion of her pension which she has deposed is $915.00 per fortnight. She is liable to significant legal costs, which I am satisfied have been inflated as a consequence of the husband’s approach to this litigation.
The wife has no superannuation. If she pays out her mortgage and legal fees from her share of the sale of the proceeds of sale of the Suburb E properties, she will be most probably left with a sum comfortably in excess of $100,000.00, given the relevant valuation is approximately four years old. In general terms, she requires some sum to cover any unforeseen exigencies of life.
In addition, on any view, the B Street, Suburb C property has been her home for approximately thirteen years. It would be an emotional wrench for her to have to leave it. It is not only her home but the home of three of her adult children and some of her grandchildren.[30]
[30] See the Affidavit of Ms Ragusa filed 17 September 2021 at [7].
For obvious, it would be a great challenge for her, given her compromised health, to have to find some form of alternative accommodation. Like the husband, it would almost certainly mean that she would have to rely on some form of public or benevolent housing if the property is sold. This would be fundamentally unfair to her.
I concede that it remains open, in theoretical terms, for the wife to transfer to the husband some or all of her portion of the proceeds of sale of the Suburb E property, in respect of which the Crown has indicated it is willing to allow her to retain, when the properties are sold following the conclusion of these proceedings.
In this context, the wife has deposed as follows:
I am unable to buy out the husband’s interest in the Suburb E properties now held by the Crown. I have advised the Crown that I agree to the sale of the Suburb E properties with proceeds to be divided between me and the Crown with my share to be held in trust pending the outcome of the herein proceedings.[31]
[31] Ibid at [12.13].
As previously indicated, there can be no doubt that it was the husband’s criminal activity which resulted in the forfeiture of the part of the property legally attributable to him. The central question arising is whether it would be equitable for some portion of the proceeds of sale of this property, directly attributable to his criminality, should come back to him, through the application of the third step.
As with the wife, I accept that Mr Ragusa’s prospective needs are likely to be significant. He has no accrued superannuation to provide him with a buffer in his old age. He is also solely reliant on the aged pension and is currently living in publicly provided housing. He too would benefit from some form of nest egg to protect him from unforeseen exigencies, given his lack of superannuation.
In my assessment, it would be an affront to any consideration of justice that any part of the proceeds of sale of the Suburb E properties should come back to the husband indirectly given it was his actions which led to the dramatic diminution of the parties’ asset pool.
CONCLUSIONS – WHAT IS JUST AND EQUITABLE?
I conclude the reasons for judgment with the question which, given the applicable exposition of the law by the High Court in Stanford, regarding the primacy of section 79(2), namely is it just and equitable for the court to make any order altering the parties’ existing property interests given the parties’ existing proprietorial interests in the relevant property.
In my view, given the wife’s present circumstances and her need to retain the B Street, Suburb C property, it would not be just and equitable to make any order in respect of this property, which remains the wife’s legal property.
Nor, in my view, given the connection between the husband’s criminal activity and the Suburb E properties, would it be just to utilise the wife’s existing interest in these properties, which the South Australian Crown recognise are untainted by any nefarious activity emanating from her, for allocation to the husband, notwithstanding his significant prospective needs.
There is no other source of property available to be distributed between the parties. In these circumstances, in my view, the only just and proper orders to be made are those which confirm the parties existing proprietorial rights. I appreciate this outcome leaves the husband in straitened financial circumstances. However, so far as the Suburb E properties are concerned, this difficult state of affairs is attributable solely to his own actions.
The wife seeks a further order for costs. She is already the recipient of a number of unsatisfied orders for costs. The husband has no obvious means of satisfying those order or indeed any further such order. The wife has been entirely successful in her application, which has resulted in her retaining all the property which conceivably could be attributed to the parties’ marriage. In these circumstances, I do not consider it either just or proper to make any further award of costs, which is unlikely ever to be satisfied.
Accordingly, I have reached the view that I should make the orders as proposed by counsel for the wife, other than in respect of costs. For these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding one hundred and twenty-four (124) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Brown. Associate:
Dated: 10 December 2021
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