Seggio and Durante & Ors
[2012] FamCAFC 27
•24 February 2011
FAMILY COURT OF AUSTRALIA
| SEGGIO & DURANTE AND ORS | [2012] FamCAFC 27 |
| FAMILY LAW – APPEAL – APPLICATION FOR LEAVE TO APPEAL – where the order sought to be appealed against required the husband to withdraw his disclaimer of interest in his mother’s estate – where if leave is granted the husband seeks on appeal orders that the proceedings be stayed, that Order 5 be dismissed, and the matter be re-heard by a different Federal Magistrate – where the order complained of was made in the context of an interlocutory hearing relating to parenting and property settlement issues as well as determination of penalty for a proven contravention by the husband – where it would appear that Order 5 was a final order and thus leave to appeal is not required – where leave to appeal is granted in any event because of the relative uniqueness of the issue before the Federal Magistrate – where the husband says that the Federal Magistrate erred in not taking into account that he had disclaimed his interest in his mother’s estate in 2006 – where there is a question mark over whether what was said in 2006 did constitute a disclaimer or whether it was effective – where it was open to the Federal Magistrate to conclude that the husband had “lost” his right to disclaim his interest in his mother’s estate – where the husband’s counsel suggested that a disclaimer once made is irrevocable and cannot be withdrawn and “the Court has no power to so order” – where whether the disclaimer is revocable or not does not determine the power of the Court to order its withdrawal – where there is no merit in any of the grounds of appeal – appeal dismissed. FAMILY LAW – APPEAL – COSTS – where the wife seeks costs in the sum of $2,000 – where the husband opposes the application for costs on the basis that it was reasonable for him to file his application given the validity of the points raised therein – where the appeal has been wholly unsuccessful – costs order made as sought by the wife. |
| Family Law Act 1975 (Cth) – s 80(1)(k), s 106B |
| JW Broomhead (Vic) Pty Ltd (In liquidation) v JW Broomhead Pty Ltd [1985] VR 891 |
| APPLICANT: | Mr Seggio |
| 1ST RESPONDENT: | Ms Durante |
| 2ND RESPONDENT: | Mr Seggio |
| 3RD RESPONDENT: | Ms Bissi |
| 4TH RESPONDENT: | State Trustees Limited |
| FILE NUMBER: | MLC | 1121 | of | 2010 |
| APPEAL NUMBER: | SA | 15 | of | 2011 |
| DATE DELIVERED: | 24 February 2011 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Strickland J |
| HEARING DATE: | 8 June 2011 |
| LOWER COURT JURISDICTION: | Federal Magistrates Court |
| LOWER COURT JUDGMENT DATE: | 3 February 2011 |
| LOWER COURT MNC: | [2011] FMCAfam77 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Howe |
| SOLICITOR FOR THE APPLLICANT: | Hughes Watson Marks Kennedy Barristers & Solicitors |
| COUNSEL FOR THE 1ST, 2ND AND 3RD RESPONDENTS: | Ms McCreadie |
| SOLICITOR FOR THE 1ST RESPONDENT: | Perry Weston Lawyers |
| SOLICITOR FOR THE 2ND AND 3RD RESPONDENTS: | Evans Ellis Lawyers |
| COUNSEL FOR THE 4TH RESPONDENT: | Ms Carroll-Bell |
| SOLICITOR FOR THE 4TH RESPONDENT: | State Trustees Limited |
Orders
To the extent that it is necessary, leave is granted to the applicant husband to appeal against Order 5 made by Federal Magistrate Hartnett on 3 February 2011.
The appeal be dismissed.
The husband pay to the wife the costs of and incidental to the appeal fixed in the sum of $2,000.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Seggio & Durante and Ors has been approved by the Chief Justice pursuant to
s 121(9)(g) of the Family Law Act 1975 (Cth).
| IN THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT MELBOURNE |
Appeal Number: SA 15 of 2011
File Number: MLC 1121 of 2010
| Mr Seggio |
Applicant
And
| Ms Durante |
1st Respondent
| Mr Seggio |
2nd Respondent
| Ms Bissi |
3rd Respondent
| State Trustees Limited |
4th Respondent
REASONS FOR JUDGMENT
Introduction
By way of Notice of Appeal filed on 16 February 2011, Mr Seggio (“the husband”) sought leave to appeal against Order 5 made by Hartnett FM on 3 February 2011. The respondents to the application are Ms Durante (“the wife”), the husband’s brother, Mr R Seggio, the husband’s sister, Ms Bissi, and the executor of the estate of the husband’s mother, State Trustees Limited.
In summary, the order sought to be appealed against required the husband to withdraw his disclaimer of interest in his mother’s estate (Order 5). In the event that leave is granted the husband seeks on appeal orders that the proceedings be stayed, that Order 5 be dismissed, and that the matter be re-heard by a different Federal Magistrate.
Background
The husband was born in 1952 and was aged 58 years at the time of trial. The wife was born in 1965 and was aged 45 years at the time of trial.
The parties married on in 1990 and separated in 2010.
The child the subject of the proceedings in the Federal Magistrates Court was X, born in 1997. At the time of trial he was 14 years of age and living with the wife. The parties’ other child, Y, was born in 1992. At the time of trial he was 18 years of age and resided in the wife’s household.
The parties spent many years following their marriage residing overseas. The family returned to Australia from overseas in December 2002, initially residing in Melbourne before moving to Queensland and then returning again to Victoria.
The parties had owned a business and property overseas which was sold before their return to Australia. The wife claimed that the husband kept the proceeds (amount unknown to her), whilst the husband claimed that the net proceeds were approximately US$60,000, US$10,000 of which was used to purchase land for the wife in the overseas country.
The husband claimed that he owned two properties in Melbourne which he purchased prior to moving overseas and then sold upon the family’s return to Australia, receiving approximately $480,000 which he then applied to the purchase of the family home in Brisbane, as well as to other general living expenses. That property was sold in July 2009, and according to the husband the net proceeds of sale were $395,000. Upon arriving in Melbourne in December 2009 the parties took up rental accommodation in Melbourne (“the former matrimonial home”).
In July 2009 the husband transferred the proceeds of sale of the Brisbane property to his sister without informing the wife.
On 5 February 2010 the husband’s sister transferred this money back to the husband, depositing amounts of $200,000 each in two separate accounts.
On 8 February 2010 the wife filed an application seeking sole use of the former matrimonial home and various other property and maintenance orders. At that time the wife and children were living in a refuge, and thereafter moved into rental accommodation, funded by a Commonwealth pension. The parties’ eldest child was also earning a small weekly income. The husband kept the return of bond monies in the amount of approximately $1,500 and took up rent-free accommodation.
Between 5 February 2010 and 16 February 2010 the husband disposed of the proceeds of sale of the Brisbane property by giving away the total amount of $400,000 to various charities.
On 11 February 2010 the husband informed State Trustees Limited that he wished to disclaim his interest in his mother’s estate and on 22 February 2010 he provided a written request to that effect to State Trustees Limited.
On 1 March 2010 orders were made, inter alia, for the husband to provide the wife’s solicitors with full details of the sale of the Brisbane property and the disposal of the proceeds of sale, including any donations made by the husband to charity in the preceding 12 months.
On 23 April 2010 the wife filed a contravention application alleging the husband had not complied with the above mentioned Order 2. On 6 May 2010 various orders were made, including that the husband provide all documents pursuant to Order 2 made 1 March 2010. The further hearing of the contravention application was adjourned to 2 August 2010 when the allegations in relation to the breach of Order 2 were found proven and the question of penalty was adjourned.
The second respondent was joined to the proceedings when it was discovered by the wife’s solicitors that the husband had transferred the proceeds of sale of the Brisbane property to his sister. Then, when it was discovered that the husband had disclaimed his interest in his mother’s estate, his brother, who was a beneficiary as well, and State Trustees Limited were joined as the third and fourth respondents respectively.
The matter came before Hartnett FM for hearing on 26 October 2010, and
her Honour made orders and handed down her reasons for judgment on
3 February 2011.
Relevant aspects of the reasons for judgment of the Federal Magistrate
The Federal Magistrate commenced her reasons for judgment by providing the background of the parties (as above) and outlining the issues before the Court.
The Federal Magistrate noted firstly that, in part, her reasons would deal with the penalty to be imposed upon the husband for contravening Order 2 of
1 March 2010.
Her Honour set out the material in the husband’s financial statement and his affidavit both sworn on 25 February 2010. In his affidavit, the husband deposed that he had lent his sister, Ms Bissi, $400,000, and that she had paid back $200,000 on 5 February 2010. However, to the contrary, Ms Bissi gave evidence that the husband had sent her a cheque for $400,000 in late July 2009 to hold on his behalf, which she did by placing the funds in an interest bearing term deposit account held jointly with her husband. Ms Bissi then returned the funds to her brother on 5 February 2010 in two transfers of $200,000 each, with the interest of $7,347 to remain in her control. The husband also gave evidence that he took action to “eliminate the cause of the divorce”, namely money, by donating $400,000 “anonymously and in a random way” to various charities, and as a result he no longer held any proceeds from the sale of the Brisbane property.
The Federal Magistrate noted that during the cross-examination of the husband as to the operation of his bank accounts in 2008 and 2009, he said he was taking medication for depression and anxiety and that he could not remember what financial transactions he engaged in during that time. However, the husband did recall that, without informing the wife, he lent his sister $400,000 in 2009 for the purpose of keeping the money safe from the parties’ eldest child whom he alleged wanted to steal the funds. The husband alleged that upon the return of the funds, $200,000 was placed in his savings account and $200,000 in his cash management account, and it was these funds that he donated to charity.
Given the husband’s evidence of his poor financial position and the fact it was the first time the husband had breached court orders in relation to the contravention, the Federal Magistrate proposed to require the husband to enter into a bond of good behaviour for a period of 12 months, on the condition that the husband comply with all court orders thereafter.
In relation to the estate of the husband’s mother, the Federal Magistrate recorded that probate had been granted in September 2009 and that the estate consisted only of real property which was valued at $250,000 in August 2009.
The husband gave evidence at the hearing of the contravention application on
6 May 2010 that the inheritance had not been decided, there was a Will which provided for the estate to be divided equally between the husband and his brother and sister, and that he did not have an interest in the estate because he would not contest any challenge his brother made in relation to the Will.
Her Honour recorded that on 11 February 2010 the husband had attended the offices of the fourth respondent and stated his wish to disclaim his interest in the estate, and on 22 February 2010 he confirmed the same in writing.
Her Honour then noted the submission of State Trustees Limited that there was “no power under the [Family Law Act 1975 (Cth)] to order the husband to withdraw his disclaimer because such would be an order in relation to the property of the estate and not in relation to the property of a party to the marriage”.
The Federal Magistrate looked first to her “discretionary exercise of this Court’s accrued federal jurisdiction, this being clearly necessary for a resolution of the whole matter between the parties”, and determined on the authorities that the effect of the husband’s disclaimer was that “no property [had] ever vested in the beneficiary, as the disclaimer operates by way of avoidance and not disposition”.
Her Honour then turned to the question of whether the Court could require the husband to withdraw his disclaimer. Her Honour found that the evidence before the Court on 6 May 2010 indicated that the husband had accepted the beneficial interest between the date of his mother’s death and the disclaimer notification of 22 February 2010, and then subsequently rejected it around the time the wife instituted property proceedings in the Federal Magistrates Court, on the basis of lack of financial ability to contest the challenge to the Will that he claimed was proposed by his brother. Citing McGarvie J in JW Broomhead (Vic) Pty Ltd (in liq) v JW Broomhead Pty Ltd [1985] VR 891 at 931, the Federal Magistrate determined that the husband’s “inaction until the commencement of these property proceedings leads the court to draw an inference that he accepted his interest in his mother’s estate”. Her Honour further determined that “[i]n the circumstances of this case and with the husband having full knowledge of his likely inheritance and in his inaction and silence for a period being unequivocal acceptance, then having so tacitly accepted, the right to disclaim is lost to the husband whether or not prejudice was occasioned to others …”
In addition to or in the alternative, the Federal Magistrate found that the order the wife seeks can be made pursuant to s 106B and/or s 80(1)(k) of the
Family Law Act 1975(Cth) (“the Act”). As the husband claimed to have disposed of $400,000 of the parties’ assets and thereby had no financial resources other than his beneficial entitlement, which he effectively avoided in circumstances where he sought to defeat any court order providing the wife with funds, the Federal Magistrate determined to make the order sought by the wife.
Relevant order made 3 February 2011
Hartnett FM made the following order on 3 February 2011:
…
(5)The husband within 14 days of this date withdraw his disclaimer of interest in the Estate of Mrs [Seggio].
…
Leave to appeal
The order complained of was made in the context of an interlocutory hearing relating to parenting and property settlement issues as well as a hearing to determine penalty for a proven contravention by the husband, and thus the husband seeks leave to appeal.
I would have thought that Order 5 was a final order and thus leave to appeal is not required. However, if it is required, then given the relative uniqueness of the issue before the Federal Magistrate, how her Honour determined that issue, and the challenge that is now made to the order, it would be appropriate to grant leave to appeal and I will do so.
I now turn to the grounds of appeal.
Grounds of appeal
The husband’s grounds of appeal were set out in an annexure to his Notice of Appeal filed on 16 February 2011. They are difficult to follow, and, as a result, at the commencement of the hearing before me counsel for the husband indicated that those grounds of appeal would not be proceeded with and the new grounds of appeal relied upon were to be found in his written submissions filed on behalf of the husband on 20 May 2011. However, for my part that did not necessarily render the complaints being made by the husband any clearer.
There are three grounds of appeal to be found in the written submissions, namely:
1.The Honourable Federal Magistrate’s discretion miscarried in that she incorrectly determined the reasonable time during which the appellant could have disclaimed his interest in the estate of his late mother.
2.Her Honour fell into legal error in impliedly determining that a disclaimer of interest was revocable.
3.Procedural fairness was not accorded to the appellant.
However, during the hearing before me it soon became apparent by reference to the transcript of the hearing before her Honour that Ground 3 could not succeed, and it was not pursued.
Discussion
Ground 1
Although at first it was difficult to discern the specific complaint that was being raised here, during the hearing of the application it was clarified that the error allegedly made by her Honour was to not take into account that the husband had disclaimed his interest in his mother’s estate in 2006.
Her Honour found that because of his inaction the husband at least impliedly accepted the beneficial interest in the estate between the date of the death of his mother in 2001 and his written notification on 22 February 2002, but in so doing her Honour appears to have overlooked the wife deposing in paragraph 9 of her affidavit sworn on 22 September 2010 as follows:
In 2006, shortly after the breakdown of our marriage and five years after his mother’s death, the husband disclaimed his interest in his mother’s estate.
Thus, prima facie, her Honour was incorrect in approaching this matter on the basis that there was complete inaction by the husband following his mother’s death. However there must be a question mark over whether what was said in 2006 did in fact constitute a disclaimer, or more to the point whether it was effective. First, at the hearing on 6 May 2010 the husband only gave evidence of disclaiming his interest in February 2010, and made no mention of any previous disclaimers either verbal or otherwise. However, inconsistently, at the hearing on 26 October 2010 he did refer to the alleged disclaimer in 2006. Secondly, if what he had said in 2006 was a true disclaimer then he would not have needed to do anything further in February 2010. The fact is that in 2006 the husband did not convey his alleged disclaimer to the executor. Thirdly, there can be no denying that the husband did absolutely nothing about this following the grant of probate on 23 September 2009 until he attended at the offices of the executor on 11 February 2010.
It is also suggested that the formal notice in February 2010 was “the written manifestation of the earlier disclaimer of interest (in 2006)”. However, that submission does not bear scrutiny. The time for action was when probate was granted on 23 September 2009, and there is no explanation in the evidence as to why there was a delay until 22 February 2010.
I also observe that an argument was mounted in the written submission that there was “no executor to whom a formal disclaimer could have been made by the husband”, and what he did in 2006 “must be taken to be the most he could have done in those circumstances to indicate his intention”. However, this argument was based on a clear error in that in fact State Trustees Limited had been the executor of the estate at all relevant times. This error was ultimately recognised during the hearing before me, and this argument was not pursued.
Accordingly, I consider that it was still open to her Honour to conclude as she did, namely that the husband had “lost” his right to disclaim his interest.
However, even if her Honour was wrong about whether the husband had “lost” his right to disclaim the interest this was not the sole basis for her Honour making the order that she did. It was also founded, correctly in my view, in
s 106B of the Act. In other words, the making of the written disclaimer was clearly made to “defeat” an anticipated order. One only needs to take into account the timing of the husband’s actions and the surrounding circumstances including the disposal of $400,000 to accept that this finding was also open to her Honour.
In all the circumstances there is no merit in this ground of appeal.
Ground 2
Here the husband’s counsel was suggesting that a disclaimer once made is irrevocable and cannot be withdrawn, and as a result “the court has no power to so order”.
There is no doubt that a beneficiary has the choice to either accept or disclaim an interest, and that if there is acceptance, either directly or by implication, disclaimer is no longer possible (JW Broomhead (Vic) Pty Ltd (In liquidation) v JW Broomhead Pty Ltd [1985] VR 891 at 931). The husband’s counsel submits that logically it must also be the case that after a disclaimer acceptance is no longer possible. However, no authority is cited for this proposition.
In any event, this entirely misses the point. Her Honour in effect found that the disclaimer in February 2010 was not effective because the right to disclaim had been lost prior to that time. Thus, her Honour was able to order that the disclaimer be withdrawn.
In the alternative her Honour found that the instrument by which the husband disclaimed his interest should be set aside pursuant to s 106B.
Accordingly, the plain fact of the matter is whether the disclaimer was revocable or not does not determine the power of the Court to order its withdrawal.
Thus, there is also no merit in this ground of appeal.
Conclusion
Having found no merit in any of the grounds of appeal, the appeal must be dismissed.
Costs
At the conclusion of the hearing I received submissions from counsel in relation to the costs of the application.
If the appeal was unsuccessful the wife sought an order for costs in the sum of $2,000.
This application was opposed by the husband on the basis that it was reasonable for the application to be filed given the validity of the points raised.
Although I have granted leave to appeal, the appeal has been wholly unsuccessful and accordingly it is appropriate that there be an order for costs. On that basis I will make the order sought by the wife given that there was no challenge to the amount of costs sought.
I certify that the preceding fifty-five (55) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Strickland delivered on
24 February 2012.
Associate:
Date: 24 February 2012
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