Shearer and Defazio
[2013] FCCA 1596
•11 October 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| SHEARER & DEFAZIO | [2013] FCCA 1596 |
| Catchwords: FAMILY LAW – Property – Husband admitted to nursing home – wife remained living in matrimonial home registered in her sole name – Husband through his granddaughter acting as his Litigation Guardian initiated proceedings purporting to seek alteration of property interests – Husband dies before final orders made – Application by granddaughter to be substituted for Husband pursuant to s.79(8)(b) of Family Law Act – Application by Wife for summary dismissal of whole proceedings. |
| Legislation: Federal Circuit Court Act 1999, s.17A |
| Stanford and Stanford [2012] HCA 52; (2012) 247 CLR 108; 47 Fam LR 481; [2012] FLC 93-518 Fisher v Fisher (No.2) (1986) 161 CLR 438 Whitehouse [2009] FamCAFC 207; (2009) 42 Fam LR 319 Latorre v Maddock (2012) 47 Fam LR 206 George (a bankrupt) v Fletcher (trustee) [2010] FCAFC 53 Spencer v Commonwealth of Australia (2010) 241 CLR 118 In the Marriage of Pavey (1976) 1 Fam LR 11,358 Hepworth v Hepworth (1963) 110 CLR 309 |
| Applicant: | MS SHEARER (ON BEHALF OF MR DEFAZIO (DECEASED)) |
| Respondent: | MS DEFAZIO |
| File Number: | BRC 9410 of 2012 |
| Judgment of: | Judge Lapthorn |
| Hearing date: | 29 May 2013 |
| Date of Last Submission: | 29 May 2013 |
| Delivered at: | Brisbane |
| Delivered on: | 11 October 2013 |
REPRESENTATION
| Counsel for the Applicant: | Mr Hamwood |
| Solicitors for the Applicant: | Crowley Greenhalgh Solicitors |
| Counsel for the Respondent: | Mr Green |
| Solicitors for the Respondent: | Littles Lawyers |
ORDERS
That pursuant to S.17A(2) of the Federal Circuit Court Act 1999 the Initiating Application filed 17 October 2012 be summarily dismissed;
That pursuant to S.17A(2) of the Federal Circuit Court Act 1999 the Application in a Case filed 21 February 2013 be summarily dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Shearer & Defazio is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRC 9410 of 2012
| MS SHEARER (ON BEHALF OF MR DEFAZIO (DECEASED)) |
Applicant
And
| MS DEFAZIO |
Respondent
REASONS FOR JUDGMENT
Introduction
Ms Shearer, the granddaughter of Mr Defazio who died on 13 November 2012 filed an application on his behalf on 17 October 2012. This application was drafted in very broad terms. During the course of the hearing I was called upon to decide if those terms were sufficient to establish a valid application under the Family Law Act 1975 (Cth). Mr Defazio’s wife who is the Respondent in these proceedings argued that the application should be summarily dismissed. Ms Shearer sought an order that she be substituted as the applicant in light of Mr Defazio’s death.
Applications
In the Initiating Application (Family Law) filed 17 October 2012 final orders were sought in the following terms:
1. That the parties interests in the joint asset pool be quantified after the disclosure process is completed.
2. Such other orders as the Court deems necessary.
At the time of filing this application Ms Shearer was purporting to act under an Enduring Power of Attorney on behalf of Mr Defazio. At the same time she filed an Application in a Case seeking orders that she be made the Litigation Guardian for him. The matter was brought on urgently at the request of Ms Shearer and given a return date before me the following day. Ms Defazio appeared by telephone assisted by her son-in-law Mr M. I made an interim order appointing Ms Shearer as the Litigation Guardian for Mr Defazio and adjourned the matter to 5 November 2012 with directions for the serving of documents. This date was administratively adjourned by consent of the parties in anticipation of the High Court delivering judgment in Stanford.[1]
[1] Stanford and Stanford [2012] HCA 52 delivered 15 November 2012; (2012) 247 CLR 108; 47 Fam LR 481; [2012] FLC 93-518.
On 21 February 2013 Ms Shearer filed a further Application in a Case seeking orders that she be appointed as the substitute Applicant in these proceedings. This application was purported to be pursuant to Rule 6.15(2) of the Family Court Rules (sic) however it was argued that the power to hear the application in the Federal Circuit Court was to be found in s.79(8).
The Respondent wife in her Response filed 23 May 2013 sought to have both the Application in a Case and the Initiating Application summarily dismissed.
Material Relied On
The applications for summary dismissal and substitution were heard on the papers.
The Applicant relied on:
a)Initiating Application filed 17 October 2012;
b)Application in a Case filed 21 February 2013;
c)Affidavits of Ms Shearer filed:
i)17 October 2012 (18 paragraphs);
ii)17 October 2012 (12 paragraphs);
iii)21 February 2013;
d)Affidavit of Ms Greenhalgh filed 17 October 2012;
e)Affidavit of Mr K filed 21 February 2013;
f)Financial Statement of Mr Defazio, filed 17 October 2012; and
g)Orders made 18 October 2012.
The Respondent relied upon the following documents:
a)Response filed 23 May 2013;
b)Affidavit of Ms Defazio filed 23 May 2013;
c)Notice of Intention to rely on hearsay evidence filed 28 May 2013;
d)Financial Statement of Ms Defazio filed 23 May 2013; and
e)Transcript of proceedings 18 October 2012.
Tendered into evidence was a letter dated 12 February from the solicitors for the Respondent, Littles Lawyers, to the solicitors for the Applicant, Crowley Greenhalgh Solicitors.[2]
[2] Exhibit R1
I have had regard to the material filed and tendered as well as the written and oral submissions made by counsel for each party.
Evidence
Although the matter proceeded on the papers I am able to make a number of findings from the material filed.
Mr Defazio and Ms Defazio were married on (omitted) 1972. They, along with two of Ms Defazio’s children, initially lived in a home (“The Property A Property”) owned by Ms Defazio that she had inherited from her first husband. In 1998 or 1999 the parties moved to a new home (“The Property G Property”) which was purchased from the sale proceeds of the Property A property and another property that Ms Defazio had also inherited. The Property G property was purchased in Ms Defazio’s name only notwithstanding they had by that stage been married over 26 years. On 30 September 1999, the husband lodged a caveat over the Property G property claiming “an equitable estate or interest as co-owner in equity of one-half of the estate in fee-simple.” There was no evidence of any other action taken by him in relation to the caveat. It ultimately lapsed and Ms Defazio’s evidence was that both she and Mr Defazio travelled together to the Titles Office to have it removed.
Ms Shearer gave evidence that Mr Defazio had told her Ms Defazio did not work outside the home after the marriage whereas Ms Defazio’s evidence was that she worked for a (omitted) firm as a (omitted). Mr Defazio was in the (omitted) when they married but later worked for a (omitted). In retirement he received (omitted) pensions and superannuation.
Mr Defazio financially contributed to the marriage by providing financial support for Ms Defazio and her children. Ms Defazio also received income from two flats that formed part of the Property A property until that property was sold.
Ms Shearer alleged that Mr and Ms Defazio had an “adversarial relationship” which had deteriorated to the point that they had had separate bedrooms and living areas for many years. Ms Defazio did not accept this description of their relationship but conceded that there were times when they were “a little snippety to each other – that is pretty normal.”
In early to mid 2011, Mr Defazio began showing signs of dementia. He completed an Enduring Power of Attorney in favour of Ms Shearer and in the alternate Mr K on 9 March 2011. He also executed a Will appointing Ms Shearer the executor and trustee with Mr K as the alternate. Ms Defazio was not a beneficiary under his will..
In May 2011, Mr Defazio travelled as part of a (omitted) programme to (country omitted) to commemorate the (omitted). It was during this time that he experienced episodes of illogical or delusional behaviour and was repatriated to Australia. It was upon his return that he was diagnosed with dementia. A dispute developed between Ms Shearer on the one hand, and Ms Defazio’s son Mr T on the other, over whether the husband could safely return to the home in terms of his own wellbeing and that of Ms Defazio. He did return to the home and professional care was arranged for him.
In July 2011 Ms Shearer and Mr Defazio met with a solicitor and discussed his relationship with Ms Defazio. I will address this aspect of the evidence in more detail later. In November 2011 Mr K, a neighbour of Mr and Ms Defazio prepared a document entitled ‘General Understanding between Mr Defazio and Ms Defazio when managing financial payments for daily and periodic living expenses’. In August 2012 after a fall Mr Defazio was admitted to hospital and did not return home. He was moved to an interim care facility before being admitted to a nursing home in September. When the Initiating Application was filed on 17 October 2012, Mr Defazio had been admitted to hospital and was lapsing in and out of consciousness. He died on 13 November 2012.
Application for Substitution
The power to make an order for substitution as the applicant is to be found in s.79(8):
(8) Where, before property settlement proceedings are completed, a party to the marriage dies:
(a) the proceedings may be continued by or against, as the case may be, the legal personal representative of the deceased party and the applicable Rules of Court may make provision in relation to the substitution of the legal personal representative as a party to the proceedings;
(b) if the court is of the opinion:
(i) that it would have made an order with respect to property if the deceased party had not died; and
(ii) that it is still appropriate to make an order with respect to property;
the court may make such order as it considers appropriate with respect to:
(iii) any of the property of the parties to the marriage or either of them; or
(iv) any of the vested bankruptcy property in relation to a bankrupt party to the marriage; and
(c) an order made by the court pursuant to paragraph (b) may be enforced on behalf of, or against, as the case may be, the estate of the deceased party.
Brennan J in Fisher v Fisher (No.2)[3] when considering the validity of s.79(8) held:
Section 79(8) does not confer jurisdiction on the Family Court to entertain proceedings commenced after the death of one of the parties to the marriage. The proceedings to which it relates are proceedings commenced between the parties to a marriage with respect to the property of those parties or either of them arising out of the marital relationship or otherwise falling within par. (ca) of the definition of "matrimonial cause" in s. 4(1) of the Act. The proceedings must have been a matrimonial cause commenced pursuant to s. 79(1). The death of a spouse will not always extinguish or satisfy the moral claims of the surviving spouse and children to which effect would have been given if the proceedings had been completed. Section 79(8) empowers the Family Court to give effect to the moral claims made in respect of the property of the spouses which was made available to answer those claims by the commencement of the proceedings, provided "it is still appropriate to make an order with respect to property": s. 79(8)(b)(ii). That qualification on the power, coupled with par. (ca)(i) of the definition of "matrimonial cause", ensure that the jurisdiction is exercised only in cases where the moral obligations arising out of the marriage remain unsatisfied.
Section 79(8) provides machinery for the discharge of those moral obligations in priority to any rights in the property of a party to a marriage which arise by testamentary disposition of that party's property or by any other devolution of that property on that party's death. That is a law which governs an incident of marriage in that it provides the machinery for enforcing the moral obligations with respect to property arising from a spouse's marital relationship. It is a law with respect to marriage.
[3] (1986) 161 CLR 438 at pp457-8; 11 Fam LR 11 at p23; See also the consideration of s79(8) by the Full Court of the Family Court of Australia in Whitehouse [2009] FamCAFC 207; (2009) 42 Fam LR 319
It was argued and conceded that in the event the Court accepted the submissions in relation to the Summary Dismissal Application then the application for substitution would also be dismissed. For the reasons that appear below I have concluded that the application should be summarily dismissed and therefore it is not necessary for me to further consider this application. It also will be dismissed.
Summary Dismissal
The Court has power to summarily dismiss an application in certain circumstances. S.17A of the Federal Circuit Court Act 1999 provides:
17A(1) The Federal Circuit Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:
(a) the first party is prosecuting the proceeding or that part of the proceeding; and
(b) the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding or that part of the proceeding.
17A(2) The Federal Circuit Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:
(a) the first party is defending the proceeding or that part of the proceeding; and
(b) the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.
17A(3) For the purposes of this section, a defence or a proceeding or part of a proceeding need not be:
(a) hopeless; or
(b) bound to fail;
for it to have no reasonable prospect of success.
17A(4)This section does not limit any powers that the Federal Circuit Court has apart from this section.
Rule 13.10 of the Federal Circuit Court Rules2001 reflects s.17A and reads as follows:
13.10 The Court may order that a proceeding be stayed, or dismissed generally or in relation to any claim for relief in the proceeding, if the Court is satisfied that:
(a) the party prosecuting the proceeding or claim for relief has no reasonable prospect of successfully prosecuting the proceeding or claim; or
(b) the proceeding or claim for relief is frivolous or vexatious; or
(c) the proceeding or claim for relief is an abuse of the process of the Court.
The approach to be taken when considering an application pursuant to s.17A is to be similar to that undertaken by the Federal Court pursuant to s.31A of the Federal Court of Australia Act 1976 which is in virtually identical terms.[4] This provision was considered by the High Court in Spencer v Commonwealth of Australia.[5] In that case Hayne, Crennan, Kiefel and Bell JJ held the power to dismiss an action summarily is not to be exercised lightly but full weight must be given to the expression “no reasonable prospect” as a whole. Their honours said:
[58] How then should the expression “no reasonable prospect” be understood? No paraphrase of the expression can be adopted as a sufficient explanation of its operation, let alone definition of its content. Nor can the expression usefully be understood by the creation of some antinomy intended to capture most or all of the cases in which it cannot be said that there is “no reasonable prospect”. The judicial creation of a lexicon of words or phrases intended to capture the operation of a particular statutory phrase like “no reasonable prospect” is to be avoided. ……
[59] In many cases where a plaintiff has no reasonable prospect of prosecuting a proceeding, the proceeding could be described (with or without the addition of intensifying epithets like “clearly”, “manifestly” or “obviously”) as “frivolous”, “untenable”, “groundless” or “faulty”. But none of those expressions (alone or in combination) should be understood as providing a sufficient chart of the metes and bounds of the power given by s 31A. Nor can the content of the word “reasonable”, in the phrase “no reasonable prospect”, be sufficiently, let alone completely, illuminated by drawing some contrast with what would be a “frivolous”, “untenable”, “groundless” or “faulty” claim.
[60] Rather, full weight must be given to the expression as a whole. The Federal Court may exercise power under s 31A if, and only if, satisfied that there is "no reasonable prospect" of success. Of course, it may readily be accepted that the power to dismiss an action summarily is not to be exercised lightly. But the elucidation of what amounts to "no reasonable prospect" can best proceed in the same way as content has been given, through a succession of decided cases, to other generally expressed statutory phrases, such as the phrase "just and equitable" when it is used to identify a ground for winding up a company. At this point in the development of the understanding of the expression and its application, it is sufficient, but important, to emphasise that the evident legislative purpose revealed by the text of the provision will be defeated if its application is read as confined to cases of a kind which fell within earlier, different, procedural regimes.
[4] Latorre v Maddock (2012) 47 Fam LR 206 [8]-[10]; George (a bankrupt) v Fletcher (trustee) [2010] FCAFC 53 at [75] and [105]
[5] (2010) 241 CLR 118
The Respondent’s argument for summary dismissed can be summarised as follows:
a)The final orders sought in the Initiating Application did not disclose a cause of action and consequently the Court does not have power to hear the application;
b)In the alternative to a): if the application for final relief is treated as engaging the Court’s power under s.79 the Court would not be satisfied that it would have been just and equitable to make an order under that section if Mr Defazio hadn’t died, and consequently no order can be made under s.79(8) substituting Ms Shearer;
c)In the alternative to a): if the application for final relief is treated as engaging the Court’s power under s.78, the action abated with Mr Defazio’s death, and
d)In the alternative to c): if the action survives Mr Defazio’s death the grounds for relief under section 78 haven’t been made out.
It was argued, on behalf of the Respondent, that the relief sought in the Initiating Application did not seek to alter property interests pursuant to s.79 nor did it seek a declaration as to property rights pursuant to s.78.
The relief sought read as follows:
1.That the parties interests in the joint asset pool be quantified after the disclosure process is complete;
2.Such other orders as the Court deems necessary.
It was submitted that without an application under s.79 or s.78 there was no power to make the orders sought and accordingly the application should be dismissed. Anticipating the argument that the deficiency could be cured by amendment it was argued that the orders sought were so far removed from the essential nature of an application under either s.78 or s.79 that to permit an amendment to bring the application within either of those sections would in effect amount to retrospectively permitting the commencement of an entirely new action. Although it is not uncommon for applicants to draft their Initiating Applications in broad terms and to ultimately amend the application after the nature of the asset pool has been ascertained it is unusual to see orders drafted without any reference to a property adjustment or declaration.
Counsel for Ms Shearer argued that although the wording of the application lacked specificity it was clear especially when read with the affidavit evidence filed in support of the application that there was an application for property settlement before the court.
Although I accept the Respondent’s argument that the wording of orders sought in the Initiating Application does not disclose any application under s.79 or s.78 I am not persuaded such failure is fatal to the application. At any stage in proceedings the Court may allow or direct any party to amend a document other than an affidavit[6] even if the effect of doing so would be to include a cause of action arising after the proceedings had started.[7] The affidavit evidence filed in support of the application made it clear from the outset that property adjustment orders were being sought in that the stated reason for the application was: “... … the Applicant’s interest in the former matrimonial home should be released to him to allow him to relocate to a private nursing home … …”. In my view it would be open to the Court to allow an amendment to the Initiating Application and therefore I am not persuaded that the application should be summarily dismissed on this ground.
[6] Rule 7.01 Federal Circuit Court Rules 2001
[7] Rule 7.02. This Rule is subject to Rule 7.03 but that Rule has no application to proceedings under the Family Law Act.
The Respondent’s alternate argument in the event that Court was to find, as I have, that the Initiating Application had engaged the Court’s power under s.79 was that Ms Shearer had ‘no reasonable prospect of successfully prosecuting’ an application under s.79(8) as the Court could not conclude that it would be just and equitable to alter the property interests as required by s.79(2) had Mr Defazio not died.
The High Court in Stanford[8] considered the operation of s.79 in similar although not identical factual circumstances to this matter. In that case the wife in a 30 year marriage needed nursing home care after a stroke and the onset of dementia. Her daughter from a previous relationship brought proceedings for property settlement in the Family Court of Western Australia as the wife’s case guardian. There was no evidence of any expressed desire on the part of the wife to separate from the husband. He continued to provide support for her while she was in care. The husband had brought the former matrimonial home into the relationship. The Family Law Magistrate who heard the application at first instance made a property settlement order in favour of the wife but this was overturned in part on appeal to the Full Court of the Family Court of Australia. The wife died before the Full Court delivered its judgment but the proceedings were continued by the wife’s daughters having been substituted pursuant to s.79(8). The Full Court made orders for property settlement that provided for the sale and division of the former matrimonial home upon the husband’s death. He appealed to the High Court.
[8] Op Cit
In their judgment the plurality[9] had this to say:
[9] French CJ, Hayne, Kiefel and Bell JJ.
[35] 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 subsections 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.
[36] 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. And while the power given by s 79 is not “to be exercised in accordance with fixed rules”, nevertheless, three fundamental propositions must not be obscured.
[37] First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property. So much follows from the text of s 79(1)(a) itself, which refers to "altering the interests of the parties to the marriage in the property" (emphasis added). The question posed by s 79(2) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order.
[38] Secondly, although s 79 confers a broad power on a court exercising jurisdiction under the Act to make a property settlement order, it is not a power that is to be exercised according to an unguided judicial discretion. In Wirth v Wirth, Dixon CJ observed that a power to make such order with respect to property and costs "as [the judge] thinks fit", in any question between husband and wife as to the title to or possession of property, is a power which "rests upon the law and not upon judicial discretion". And as four members of this Court observed about proceedings for maintenance and property settlement orders in R v Watson; Ex parte Armstrong:
"The judge called upon to decide proceedings of that kind is not entitled to do what has been described as "palm tree justice". No doubt he is given a wide discretion, but he must exercise it in accordance with legal principles, including the principles which the Act itself lays down."
[39] Because the power to make a property settlement order is not to be exercised in an unprincipled fashion, whether it is "just and equitable" to make the order is not to be answered by assuming that the parties' rights to or interests in marital property are or should be different from those that then exist. All the more is that so when it is recognised that s 79 of the Act must be applied keeping in mind that "[c]ommunity of ownership arising from marriage has no place in the common law". Questions between husband and wife about the ownership of property that may be then, or may have been in the past, enjoyed in common are to be "decided according to the same scheme of legal titles and equitable principles as govern the rights of any two persons who are not spouses". The question presented by s 79 is whether those rights and interests should be altered.
[40] Thirdly, whether making a property settlement order is "just and equitable" is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s 79(4). The power to make a property settlement order must be exercised "in accordance with legal principles, including the principles which the Act itself lays down". To conclude that making an order is "just and equitable" only because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act.[10]
[10] References removed
Therefore it is important in determining whether it is just and equitable to alter the property interests of Mr Defazio’s estate and/or Ms Defazio that care be taken not to conflate that task with the evaluation of contributions under s.79(4). Again the decision of the plurality is of assistance in understanding the just and equitable requirement:
[41] Adherence to these fundamental propositions in exercising the power in s 79 gives due recognition to “the need to preserve and protect the institution of marriage” identified in s 43(1)(a) as a principle to be applied by courts in exercising jurisdiction under the Act. If the parties have made a financial agreement about the property of one or both of the parties that is binding under Pt VIIIA of the Act, then, subject to that Part, a court cannon make a property settlement order under s 79. But if the parties to a marriage have expressly considered, but not put in writing in a way that complies with Pt VIIIA, how their property interests should be arranged between them during the continuance of their marriage, the application of these principles accommodates that fact. And if the parties to a marriage have not expressly considered whether or to what extent there is or should be some different arrangement of their property interests in their individual or commonly held assets while the marriage continues, the application of these principles again accommodates that fact. These principles do so by recognising the force of the stated and unstated assumptions between the parties to a marriage that the arrangement of property interests, whatever they are, is sufficient for the purposes of that husband and wife during the continuance of their marriage. The fundamental propositions that have been identified require that a court have a principled reason for interfering with the existing legal and equitable interests of the parties to the marriage and whatever may have been their stated or unstated assumptions and agreements about property interests during the continuance of the marriage.
[42] 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 a 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 s 79(4).
[43] By contrast, the bare fact of separation, when involuntary, does not show that it is just and equitable to make a property settlement order. It does not permit a court to disregard the rights and interests of the parties in their respective property and to make whatever order may seem to it to be fair and just.
[44] When, as in this case, the separation of the parties is not voluntary, the bare fact of separation does not demonstrate that the husband and wife have any reason to alter the property interests that lie behind whatever common use they may have made of assets when they were able to and did live together. Common use of some assets may very well continue, as it did here when the husband made provision for the wife's care and accommodation. Past arrangements that the parties have made about their property interests on the assumption, expressed or implicit, that those arrangements were sufficient and appropriate during the continuance of their marriage are not necessarily falsified. If both parties are competent, it can still be assumed that any necessary or desirable adjustment can be made to their property interests consensually. And if one of the parties has become incompetent it is not to be assumed that the other party lacks the will and ability to make those necessary or desirable adjustments.
[45] Contrary to the submissions of the husband in this Court, there may be circumstances other than a voluntary separation of the parties marking the breakdown of their marital relationship in which a court may be satisfied that it is just and equitable to make a property settlement order. For example, demonstration of one party's unmet needs that cannot be answered by a maintenance order may well warrant the conclusion that it is just and equitable to make a property settlement order. It may be that there are circumstances other than need.
[46] As has already been emphasised, nothing in these reasons should be understood as attempting to chart the metes and bounds of what is "just and equitable". Nor is anything that is said in these reasons intended to deny the importance of considering any countervailing factors which may bear upon what, in all the circumstances of the particular case, is just and equitable. In particular, as the Full Court pointed out in its first judgment in this matter, the magistrate erred in not taking account of the consequences that would follow for the husband if a property settlement order were to be made in the terms which were sought on behalf of the wife. The husband would be required to sell the matrimonial home, in which he was still living, despite the needs of his wife then being met by the provision of full time care, a further provision of money against future contingencies and the possibility, if needed, of making a maintenance order.[11]
[11] Emphasis added and references removed
The evidence suggests that at times Mr Defazio was concerned about his name not being on the title of the Property G property. He lodged a caveat in 1999 which lapsed after no legal action was taken in relation to it. He signed a further caveat on 7 July 2011 after seeing Ms Greenhalgh, solicitor with Ms Shearer. This caveat was not dated and no instructions were given by him for it to be lodged. Ms Shearer’s evidence was that Mr Defazio discussed with Ms Greenhalgh his desire to obtain a property settlement and Ms Shearer formed the belief that he wanted to secure his interest in the Property G property. Ms Greenhalgh wrote to Ms Shearer on 11 July advising her about aspects of her authority under Mr Defazio's Enduring Power of Attorney. Ms Greenhalgh expressed the view that Mr Defazio had not at the time she saw him 4 days previously lost the capacity to act for himself. Ms Greenhalgh requested Ms Shearer obtain a statement from Mr Defazio as to his financial history. Ms Shearer did so on 26 July 2011. She had Mr Defazio sign it. Nothing further was done by Mr Defazio with Ms Greenhalgh or any other solicitor in relation to bringing property proceedings.
Although he did not bring proceedings the evidence of Mr K would suggest that Mr Defazio remained concerned about the fairness of him not being included on the title to the property and the provisions of Ms Defazio’s will which provided for him to receive one third of her estate if she predeceased him. In November 2011 Mr K prepared a document for both Mr Defazio and Ms Defazio and sent copies to each other’s family. Both Mr and Ms Defazio as well as the family members who saw the document agreed to its contents. Mr K was of the view that Mr Defazio remained fully mentally aware of his financial position. The document reads as follows:
GENERAL UNDERSTANDING BETWEEN
MR & MS DEFAZIO
WHEN MANAGING FINANCIAL PAYMENTS FOR DAILY AND PERIODIC LIVING EXPENSES
General background
It is recognised that Ms Defazio is the titled owner of the house at (omitted) and has made the contribution of capital to the purchase of the house
It is recognised that Mr Defazio has been and remains the sole ‘bread winner’ in the household. Mr Defazio’s income is sourced from:
a) (omitted) superannuation
b) (omitted) pension (plus special disability provision)
Net funds paid to Mr Defazio are $1928 per fortnight
Ms Defazio obtains a spouse (or partners) allocation of monies from Mr Defazio's (omitted) Pension
Net funds allocated to Ms Defazio direct are $408 per fortnight
General principles
Mr Defazio will allocate $500 per fortnight to the daily living expenses specifically for food for both Ms Defazio and Mr Defazio. This money is given to Ms Defazio as the person who manages these funds in purchasing the food.
The balance of income into the household after the allocation for food is approximately 1:3 (ie Ms Defazio 25% and Mr Defazio 75%). Therefore it is agreed that living expenses for rates and utilities are shared on the same basis of contribution.
This shared contribution covers the monthly and periodic household expenses including:
a.Rates
b.Electricity and power
c.Telephone and communications
d.Water
e.Health insurance (for Ms Defazio)
f.Household insurances
g.Other relevant cost overheads agreed by Mr Defazio and Ms Defazio
This sharing of household costs and overheads does not apply to:
a.Ms Defazio’s motor vehicle expenses
b.The costs of supporting and maintaining the three dogs as pets
The exclusion of these specific items reflects the special arrangements within the house and Ms Defazio accepts these costs directly.
These arrangements are to be applied with a willingness to resolve any issues with good sense and a sharing of the amenities provided in the common home
This document was not signed. There is no dispute in relation to Mr K’s evidence in relation to the preparation of the document nor his evidence that Mr and Ms Defazio acted upon it.
Mr K gave evidence of the parties living somewhat separate lives. He observed Mr Defazio to have his own ‘den’ but that the husband and wife had meals together. There is no evidence that at any time Mr Defazio expressed a desire to separate from Ms Defazio. Likewise there was no evidence that Ms Defazio ever expressed a desire to separate from her husband. I accept the submission that there is no evidence that Mr and Ms Defazio had separated in the sense that their marriage had broken down. [12] Physical separation occurred when Mr Defazio was admitted to hospital in August 2012. The following month he was moved to a nursing home. Ms Defazio continued to visit Mr Defazio every second day.
[12] See In the Marriage of Pavey (1976) 1 Fam LR 11,358
Separation is not necessary to attract the jurisdiction of the court to make an order for property settlement. The circumstances surrounding separation however may be relevant when the court is considering the question of whether it is just and equitable to make such an order.
“the bare fact of separation, when involuntary, does not show that it is just and equitable to make a property settlement order”[13]
[13] Stanford [43]
It was submitted that there was no evidence that Mr Defazio’s financial arrangements were anything other than sufficient to meet his needs or that he was not receiving the financial support he needed. Ms Shearer initially believed a bond would be required for his placement in the nursing home. This was not necessary. He was able to meet his financial arrangements with the nursing home from his pension and other income.
The ‘General Understanding’ prepared by Mr K for Mr and Ms Defazio shows that the husband and wife acknowledged the wife was the ‘titled’ owner of the Property G property and that the husband was the ‘bread winner’ and they made arrangements for the allocation of funds for ongoing expenses. This agreed arrangement was described in that document as:
……to be applied with a willingness to resolve any issues with good sense and a sharing of the amenities provided in the common home
Although this document was prepared in November 2011, it by and large reflected the reality for Mr and Ms Defazio since the beginning of their marriage. The husband lived in a home provided by the wife and the husband brought in either all or the majority of the income throughout the marriage. Even accepting the evidence of Mr K and Ms Shearer that the husband did not like the fact that he was not on the legal title of the Property G property, his agreement to that document and his failure to bring proceedings for property settlement suggests an assumption between Mr and Ms Defazio that the arrangement was sufficient for their purposes during their marriage.[14] It is not unusual for parties in a marriage or relationship to make compromises including financial ones in that relationship.
[14] Stanford [41]
In light of the agreement and Mr Defazio’s financial commitments being met while he was in the hospital and nursing home, I accept the Respondent’s submission that there was no basis for concluding that with Mr Defazio’s admission to the nursing home, “the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end…”[15]
[15] Stanford [42]
Mr Green submitted:
In short, there is no “principled reason for interfering with the legal and equitable interests of the parties to the marriage”[16] up to the point where Mr Defazio died.
It follows that the court would not have made an order under s 79 had Mr Defazio not died, and accordingly, without the court coming to such a conclusion, the court could never be in a position to make an alteration of orders between Mr Defazio’s estate and Ms Defazio under s 79(8).
[16] Stanford [41].
I accept those submissions.
I do not accept the submission made on behalf of Ms Shearer that the Court would have made an order substantially altering in the husband’s favour the interests of the Property G property on the basis of 40 years of marriage. Whilst I did not understand that submission to be based on an argument of “community of ownership” arising from the lengthy marriage in case it was so intended, I accept the Respondent’s argument that, at least in Australia, such argument has no place in the common law.[17]
[17] Stanford [39] quoting Hepworth v Hepworth (1963) 110 CLR 309, 317.
For those reasons I would summarily dismiss the applications as I am satisfied that Ms Shearer would have no reasonable prospect of prosecuting the applications. Although unnecessary to decide in light of my decision above, I also accept the submission of the Respondent that there are no circumstances demonstrating that it “is still appropriate to make an order in respect to property”[18] given the need to provide financial security to Mr Defazio ceased with his death and there was no evidence of any dependants other than Ms Defazio.
[18] Section 79(8)(b)(ii).
Mr Green made further submissions in the alternative in the event that I was to find that the application was grounded on the power to make a declaration pursuant to s.78. It is not necessary for me to consider those submissions in light of Mr Hamwood’s concession that that was not the basis of the application and in light of my conclusions that the application was one intended to be brought under s.79.
For the above reasons I will make the orders set out in the beginning of this judgment.
I certify that the preceding forty-nine (49) paragraphs are a true copy of the reasons for judgment of Judge Lapthorn
Date: 11 October 2013
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