Stamp & Leone

[2021] FamCA 543

FAMILY COURT OF AUSTRALIA

Stamp & Leone [2021] FamCA 543

File number(s):	SYC 8476 of 2015
Judgment of:	HENDERSON J
Date of judgment:	28 July 2021
Catchwords:	FAMILY LAW – PROPERTY – Where the husband was declared bankrupt in 2019 and has not participated in Court proceedings since that time – Where the husband solely occupied the former matrimonial home from 2015 to 2019 and reduced the available mortgage advancements to nil – Where the home was left by the husband in a damaged state and rectified solely by the wife prior to its sale with the assistance of loans from family members – Where the proceeds of sale of the home are held in trust – Where the wife has been the sole carer of the parties’ child post-separation and will continue to be so into the future – Assessment of contributions and future needs – Orders made for the wife to receive 85 per cent of the net assets and husband 15 per cent.
Legislation:	Family Law Act 1975 (Cth) s 79, s 75(2)
Number of paragraphs:	76
Date of hearing:	17 June 2021
Place:	Sydney
Counsel for the Applicant:	Mr Brown
Solicitor for the Applicant	Etienne Lawyers
Solicitor for the Respondent:	McAuley Hawach Lawyers

ORDERS

SYC 8476 of 2015

BETWEEN:

MR B TRUSTEE IN BANKRUPTCY FOR THE BANKRUPT ESTATE OF MR STAMP

Applicant

AND:

MS LEONE

Respondent

ORDER MADE BY:	HENDERSON J
DATE OF ORDER:	28 JULY 2021

THE COURT ORDERS ON A FINAL BASIS THAT:

1.The parties do all acts and things to authorise T Lawyers to pay the net proceeds of sale of the Suburb E Property currently held in the trust account of T Lawyers as follows:

(a)$40,000 to the Trustee in Bankruptcy for the Bankrupt Estate of Mr Stamp;

(b)The balance to the wife with the wife to pay:

(i)$14,400 to Mr C;

(ii)$22,923 to the wife’s sister;

(iii)$12,860 to the wife’s parents.

2.Thereafter the balance of the funds in trust, the husband’s two (2) motorbikes in the wife’s possession and the wife’s interest in the Leone Family Super Fund property portfolio are declared the wife’s property absolutely.

3.The wife is authorised to sell the husband’s two (2) motorbikes and retain the proceeds of sale thereof and to sign in the absence of the husband any document necessary to effect a sale of the motorbikes.

4.The parties are otherwise each declared the sole owners in equity and at law to all items of property and financial resources including superannuation, shares, motor vehicles, chattels and money in bank accounts held in their respective names.

5.Notwithstanding these orders, each of the parties are to remain solely liable for any debt or liability held in their sole names and, if required, release and indemnify the other party in respect of any debts, liabilities, demands or claims arising from any debt or liability in their name.

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 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).

IT IS NOTED that publication of this judgment by this Court under the pseudonym Stamp & Leone has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

REASONS FOR JUDGMENT

1. This was a hearing between the applicant, Mr B, the Trustee in Bankruptcy for the bankrupt estate of Mr Stamp (“the husband”) and the respondent, Ms Leone (“the wife”).

2. The estate of Mr Stamp was sequestered in the Federal Court of Australia on 19 December 2019.  From around that time Mr Stamp had not taken part in the Family Law Proceedings, nor has he had any contact with the Trustee in Bankruptcy.  Thus, the matter has been dealt with in that respect on an undefended basis against him although, at law, he has no status in the property proceedings as he is still an undischarged bankrupt. 

3. Mr Hawach, solicitor, acted for the wife.  Mr Brown, barrister, acted for the Trustee in Bankruptcy (“the Trustee”). 

4. I read for the Trustee:

   (1)Summary of Argument;

   (2)Application in a Case filed 20 August 2020;

   (3)Affidavits of Mr B, the Trustee in Bankruptcy, filed 11 August 2020 and 18 May 2021; and

   (4)Affidavit of Mr F filed 2 March 2021. 

5. For the wife I read:

   (1)Case Outline prepared by Mr Hawach;

   (2)Affidavit of the wife filed 6 May 2021; and

   (3)Financial Statement of the wife filed 6 May 2021.

6. The only Financial Statement filed by the husband was that contained in Court Exhibit 1, being a bundle of tender documents agreed to by both parties' representatives, which Financial Statement was filed on 1 August 2016 showing that the husband at that time had an income of $587 as a consultant, was paying $350 a week in mortgage payments and had an interest with  the wife in the property at D Street Suburb E (“the Suburb E property”), Motor Vehicle 1, a motorbike and had combined some $15,500 in superannuation. 

7. The wife’s financial material filed for these proceedings was sworn on 6 May 2021.  The wife is an assistant, earning some $1,277 per week.  Her expenses are $1,700 and her evidence is her parents assist her to make up the shortfall of expenses over income.

8. The parties have a child, X, born in 2014. The husband has been assessed to pay child support in the sum of $83 per week for X which is not being paid and he has arrears of child support of $11,000 currently.

9. There is some $346,000 in a trust account, being the net proceeds of sale of the former matrimonial home at Suburb E.  The wife has some small amount of personal possessions such as jewellery, an interest in the Leone Family Super Fund of $264,000, credit card debt of $5,000, owes legal fees to her former lawyers G Lawyers of $18,600 and Mr Hawach is owed some $38,000 in legal fees.

10. There is no doubt that the conduct of the husband in:

    (1)Failing to engage in these proceedings;

    (2)Remaining in the former matrimonial home to the exclusion of the wife and child since separation in 2015 and until the wife took possession of it in August 2020;

    (3)His failure to pay the mortgage on that property and expending monies in advance on the mortgage which, at separation, was $50,000, to nil; and

    (4)Leaving the home in a damaged and filthy state;

    has made this matter extremely difficult for the wife to conclude and has resulted in unnecessary expenditure of funds by her.

11. The husband’s conduct resulting in the wife incurring excessive legal fees is consistent with the difficulties the Trustee has had in dealing with his estate.

12. The short facts are as follows.

13. The wife is 35, the husband is 44 years of age.

14. In 2011 they purchased their property at Suburb E for $580,000 using the wife's savings of $30,000, a mortgage from J Bank and a loan of $80,000 from the husband’s mother.  That loan was repaid by the parties within two years of it being taken out.

15. The parties commenced cohabitation after purchasing the home in June 2011 and their son, X, was born in 2014, and is currently aged seven.

16. By September 2015 the parties had separated under the one roof.

17. By 9 November 2015 the wife had left the home with the child and was residing at her parents’ home.  The husband's behaviour began to deteriorate and he began harassing the wife and her family. 

18. As at separation on 9 November 2015 the mortgage was in advance of $52,550.  By July 2017, and in less than two years, the advance payments had reduced to $26,314.

19. The husband alleges the wife threatened to kill him in January 2016 and that she had abused the child in March 2016. No action was taken by the Department of Communities and Justice or police in relation to the husband's spurious claims.

20. The wife attended the Suburb E property on 19 April 2016 to retrieve her personal belongings with the assistance of the police and observed the poor state of the home. The husband had defecated on dining room chairs.

21. Interim parenting orders were made by consent in September 2016 for the husband to spend time with the child twice a week and for that time to increase.  The husband did not avail himself of this time.

22. The husband alleged the Suburb E property was infested with termites but did not permit the wife an inspection. 

23. On 6 February 2017 consent orders were made for the husband to pay the Suburb E property mortgage and he did so up until January 2018. 

24. By 14 June 2018 the advanced payments on the Suburb E property loan, which had been drawn down to $26,314 as at July 2017, had further reduced to $9,919 and the husband had not complied with the consent orders and had used monies the parties had in advance of their mortgage as at separation to pay the mortgage.

25. Mr C was appointed court Single Expert on 5 September 2017 with the husband ordered to pay those costs initially.  He did not pay those costs.  The report has not been released. The husband made a complaint about Mr C to his relevant Board.

26. The husband refused to allow a valuation of the Suburb E property in March 2018.

27. The husband ceased spending any time with the child in May 2018 as the maternal grandmother who had been facilitating and supervising time could no longer continue to do this.

28. The wife has re-partnered and has twins, Y and Z, born in 2019.

29. On 15 February 2019 the husband was declared bankrupt.

30. The husband last attended Court in September 2019.

31. As at 13 September 2019 the Suburb E mortgage was in arrears of $2,225.  By 6 November 2019 the arrears on the Suburb E mortgage were $7,415.

32. On 25 May 2020 the matter was set down for an undefended hearing and both the wife and Trustee applied to sell the property.

33. On 24 July 2020 orders were made for the wife to have sole parental responsibility for the child, the child to live with his wife and the husband was not to contact the child.  On that same date orders were made for the husband to give vacant possession of the Suburb E property and for that property to be sold by the wife.  The wife took possession of the property on 15 August 2020 and it is not until December 2020 that she was able to place the property on the market for sale such was the poor state and condition of the property at possession.

34. The husband’s former solicitors had lodged a caveat on the title to protect their legal fees and that is an issue that has had to be dealt with by the wife as well in order to effect a sale.

35. Mr B was appointed the Trustee of the husband's estate on 13 February 2020.

36. The Suburb E property sold on 5 December 2020 for $850,000 and the net proceeds of sale of $346,314.19 are held in trust.

    WIFE’S EVIDENCE

37. The wife’s evidence in her affidavit is clear.  The wife has been the primary parent for the child and has, effectively, solely parented him post-separation and will continue to do so into the future as the husband has had no contact with or communication with the child for many years.  The wife will continue to solely financially support the child as the husband pays no child support and has been assessed to pay a modest amount, in any event, of $83 a week.

38. The wife says that she and the husband, with the assistance of her father, renovated the Suburb E property and improved it prior to separation.  They updated the kitchen, repaired and resealed timber floors, installed new blinds and put in the fireplace.[1] The wife says she was responsible for the majority of the mortgage payments during the marriage as she had consistent employment.  The husband was often unemployed.  On occasions, her father employed him.[2] 

    [1] Affidavit of the wife filed 6 May 2021 at [21].

    [2] Ibid at [22].

39. After the wife returned to work following her maternity leave, her parents paid her a wage of $1,000 through their company to assist in living expenses although the wife asserts she really did not do sufficient work to earn that income.[3]  They provided a car and a phone for the wife because she could not afford it, and this was the money that she used to pay the mortgage on the property.[4]  They gave their daughter $10,000 when their grandchild was born.  Her grandmother provided $5,000 to her, some of which was to assist in renovating the home. The wife’s parents allowed the parties to use their Bunnings account to pay for materials to complete the renovations including $1,000 towards blinds, gave them gifts of furniture and the like, particularly for their grandson.[5]  The grandfather did the plumbing on the property, dug trenches, painted and gyprocked the Suburb E property.[6] 

    [3] Ibid at [23].

    [4] Ibid at [24].

    [5] Ibid at [25].

    [6] Ibid at [27].

40. The husband was self-employed in a business and he did travel to Country Q, the wife asserts, prior to COVID-19.  The husband had two motorbikes stored at the property, which are now at her husband's business. He did not collect these motorbikes after separation, and they are currently in the wife's possession. 

41. The husband remained living at the Suburb E property for five years post-separation and did not pay the mortgage, using the mortgage payment in advance that the parties had achieved during the relationship to fund his lifestyle, and the wife and child were excluded from the property.  The husband did not pay for the home and building contents insurance during this time either and the wife paid this cost although not living in the property.

42. On 13 September 2019, the J Bank sent the wife an arrears of mortgage letter setting out that the mortgage was in arrears in the sum of $2,255.  On 24 September, the wife was served with a default notice in respect of the arrears. 

43. On 6 November, the wife received a letter from H Lawyers, solicitors for the J Bank, claiming the total arrears on the mortgage were $7,415 and that the parties owed the bank $481,858.

44. On 4 February 2020, a notice was served on the wife under section 57(2) of the Real Property Act 1900 (NSW) seeking the property be sold and orders were made in this Court appointing the wife as trustee for sale. As at that date, the arrears of mortgage were $4,545.81. At the sale, there was some $2,000 in arrears of council rates as well, a total of $6,545.

45. The wife says when she took vacant possession of the property on 15 August 2020 it was filthy and in disarray.  There was rubbish and construction material left lying around both inside and outside the property.  There was dog urine in the home.  The home had not been cleaned and there were still incomplete renovations.  The wife and her partner, Mr K, carried out significant works to get the property into a state suitable to put on the market, including:

    (1)Changing all the locks on the windows;

    (2)Repairing leaking sinks;

    (3)Installation of bulkhead and kickboards in the kitchen;

    (4)Lining the wall behind the fridge;

    (5)Installing architraves, skirting boards, blinds;

    (6)Repairing broken doors;

    (7)Installation of cornices, kickboards and gyprock in the laundry;

    (8)Repairing the laundry toilet door and installation of a toilet;

    (9)Repairing a hole in the gyprock in the study;

    (10)Completing ceilings in the main bedroom, including repairing the vanity hole;

    (11)Completing the ceilings in the ensuite bathroom and cornices in the main bedroom;

    (12)Cleaning and completing the installation for the back balcony deck;

    (13)Removing carpets on the internal steps;

    (14)Removing loose planks;

    (15)Cleaning up the garden; and

    (16)Removal of rubbish.[7]

    [7] Affidavit of the wife filed 6 May 2021 at [73].

46. The wife assessed it took her three months to carry out these renovations. The renovations cost between $50,000 and $60,000. The costs she expended were a drawdown of $10,000 for a loan from L Bank and she borrowed the balance of funds from her family members, which monies are reflected in the balance sheet as loans from her family.

47. The husband has paid made one payment of child support of $1,000, and he is currently about $11,000 in arrears.

48. Not only did the wife have to contend with the intransience and poor behaviour of the husband, he failed to comply with any order for discovery and the lawyers who had previously acted for him, M Lawyers, had placed a caveat on the title of the property to protect their legal fees. The Trustee had also lodged a caveat on the title.  

49. The wife requested the caveats be removed. The Trustee complied however the husband’s former lawyers did not and they refused to do so unless their fees of $25,888, being the judgment debt of some $17,000 and interest, were paid to the firm.  The wife incurred significant legal costs in disabusing M Lawyers of their right to obtain that money from her and this, too, increased her legal costs.

50. The wife tells the Court that her partner, Mr K, earns some $82,000 per annum and that he and she support X as well as their twins, Y and Z, and Mr K’s two daughters from a previous relationship, R and S. 

51. The wife asserts that as a result of the husband's neglect of the property, she incurred the following costs:

    (1)$7,000 in unpaid council fees since 2018;

    (2)$50,000 advance of the mortgage each of them had contributed to post-separation;

    (3)$10,000 in cleaning up the Suburb E property;

    (4)$900 for a locksmith;

    (5)$7,074 in mortgage default fees; and

    (6)The monies expended on the renovations of the property prior to sale. 

52. The wife seeks orders that she retain the net proceeds of sale of the Suburb E property, her superannuation, proceeds of sale of the husband’s motorbikes, but agrees to pay Mr C's fees and $10,000 to the Trustee. The Trustee does not agree to these orders.

53. The Trustee properly submits that my task is to have regard to the judgment debts against the husband, which are set out at page 120 of their tender bundle, being:

    (1)$2,100 to the Australian Tax Office;

    (2)$25,888 to M Lawyers, being a principle sum of legal fees of $17,276 and the additional amount being interest and costs for their judgment debt in the Local Court;

    (3)Monies owing to the local Council, which the trustee accepts were paid from the proceeds of sale;

    (4)Bankrupt Estate debts of $31,769.53; and

    (5)The Trustee in Bankruptcy’s costs of $66,219.91.

54. From Court exhibit 1, the balance sheet is as follows:

    (1)Assets:

    (a)Net proceeds of sale of the former matrimonial home, $346,314.19;

    (b)The wife's savings in her account are her money.  It has been six years since separation and they are not a matrimonial asset;

    (c)Both the Trustee and Mr Hawach failed to add to the balance sheet the $4,106.64 that the Trustee had obtained from the sale of P Company shares in the husband's name, and they must be included as a matrimonial asset; and

    (d)The husband's motorbikes of $10,000 in the wife's possession, which she seeks to retain.

    (e)Total assets: $360,421.

    (2)Debts

    (a)The wife has $6,691 left on a personal loan and I will allow the wife that loan, given this was part of the monies used to have the property brought up to a standard for sale;

    (b)The original $10,000 drawn down on her credit card now standing at $5,000 will be allowed in full given this money was used to clean up the former matrimonial home in preparation for the necessary renovations in having it brought up to a standard for sale;

    (c)Loans to her sister of $22,923 and to her parents of $12,860 are allowed as those funds were used to get the property to a standard for sale; and

    (d)The debt to Mr C, of $14,400

    (e)Total debts: $66,874.

    (3)Net assets: $293,547.

    (4)The wife has an interest in a family trust Self-Managed Superannuation Fund property portfolio managed by her parents and to which she and the husband have made a minimal contribution.

    (5)I note legal fees of $18,000 to her former lawyers and her current legal fees of some $38,000 for these proceedings, although relevant to my determination, are not matrimonial debts.

    (6)I note the claim for the Bankrupt Estate’s Debts for $31,769, and the Trustee in Bankruptcy’s costs are $66,219.91.

1. Both lawyers agree that the process I must now engage in is the four-step process, set out in section 79 of the Family Law Act 1975 (Cth) (“the Act”).

2. That process is to identify the matrimonial property, its nature and value, assess how that property was acquired by way of direct financial contributions, indirect contributions and as parent and homemaker, assess both parties' entitlement to that asset base and then determine whether that assessment for past contributions ought be changed due to the post-separation contributions and/or the future needs of the parties.

3. There is no doubt that the wife has made a superior contribution to the relationship’s asset being the former matrimonial home.  The wife had $30,000 in pre-relationship savings and put that money into the purchase of the property. Further, the loan from the husband’s mother of $80,000 was repaid by the parties within two years of it being advanced, an impressive feat by each of them. 

4. The wife paid for the mortgage during the relationship from monies effectively advanced to her by her parents. There was $52,000 in advance of the mortgage as at separation and that was a contribution by each of them, again a remarkable feat.

5. Her father rendered significant financial and physical assistance to the parties during the relationship by way of physically helping them and providing money, goods, services and the like when the home was being renovated.

6. I accept the husband contributed to the moneys in advance in the drawdown facility and in repaying his mother the initial $80,000 lent to the parties which enabled them to purchase the home.

7. On these facts I assess the wife’s contribution-based entitlement for her past contributions to be 60 per cent and the husband’s to be 40 per cent.

8. Going to post-separation contributions.

9. The husband, during his sole occupation of the property, used the mortgage advance to fund the mortgage payments and when the property was sold there was some $7,000 in unpaid council fees, $7,000 in mortgage default fees and a debt of $2,507 in the parties’ joint credit union account which was discharged at settlement and overdrawn by the husband. The diminution of the advance mortgage payments and arrears of council rates together with the additional costs the wife incurred to have the property made fit for sale all arose due to the husband's conduct and behaviour in not abiding by orders of the Court that he pay the mortgage.

10. Not only did the wife expend monies, she borrowed to have the property brought up to a standard to be able to sell it and she, and her partner and family members, worked tirelessly for three months to achieve this result. Additionally, the wife paid $900 to a locksmith to obtain vacant possession.

11. Further, the wife and child were excluded from the property and the husband changed the locks.  He failed to maintain the property at any level, pay any child support and the wife was the primary parent and homemaker of their child. On these facts I assess her post-separation contribution to the parties’ assets and as a parent and homemaker at 10 per cent.

12. Going to the future needs under section 75(2) of the Act.

13. The wife will continue to solely parent the child and provide for him psychologically, emotionally and financially. The husband is in arrears of child support of $11,000 and will not pay into the future. I note the wife has re-partnered.

14. In particular, the wife has incurred significant legal fees, which she is required to pay, due the husband's conduct and his failure to comply with orders of the Court for full and frank disclosure and/or maintaining the mortgage on the home in which he was living, a home he damaged. These are all relevant factors under section 75(2)(o) of the Act.

15. I will not make a superannuation splitting order as I am unclear what superannuation the husband is seized of. Secondly, the wife’s superannuation is her interest in a property portfolio in a family trust to which she and the husband made minimal contribution.

16. In those circumstances I assess her future needs to be 15 per cent, giving her a contribution-based entitlement of 85 per cent and the husband 15 percent. 

17. The net assets are $293,547 after the debts to the wife’s sister, parents, her credit card, L Bank loan and Mr C’s fees are deducted and paid.

18. 85 per cent of $293,547 is $249,515 to the wife and $44,032 to the husband.

19. The husband via the Trustee has realised $4,106.64 from the sale of the husband's P Company shares and this must be deducted from the husband’s entitlement, being a figure of $40,000 rounded up to the Trustee.

20. The orders are that the Trustee is to receive $40,000 from the monies held in trust and the wife the balance with the wife to pay the following:

    (1)$14,400 to Mr C;

    (2)$22,923 to her sister;

    (3)$12,860 to her parents.

21. The balance is the wife’s property absolutely as is her interest in the Leone Family Super Fund property portfolio and the two motorbikes registered in the husband’s name.

22. I find these orders are just and equitable in all the circumstances. 

I certify that the preceding seventy-six (76) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Henderson.

Associate:

Dated:       28 July 2021