ZABATINO AND ANOR & TAMBURRO AND ANOR

[2012] FamCA 458

FAMILY COURT OF AUSTRALIA

ZABATINO AND ANOR & TAMBURRO AND ANOR [2012] FamCA 458

FAMILY LAW – ORDERS – Consent Orders – Where Consent Orders do not give effect to the parties’ intention. 

Suiker and Suiker (1993) FLC 92-436

1st APPLICANT: Ms Zabatino

2nd APPLICANT: Mr Zabatino

1st RESPONDENT: Mr Tamburro

2nd RESPONDENT: Ms Tamburro

FILE NUMBER: SYC 7693 of 2011

DATE DELIVERED: 18 June 2012

PLACE DELIVERED: Brisbane

PLACE HEARD: Sydney

JUDGMENT OF: Bell J

HEARING DATE: 30 March 2012

REPRESENTATION

COUNSEL FOR THE FIRST AND SECOND APPLICANT: Mr Seriser of Counsel appearing for the first and second applicants

SOLICITOR FOR THE FIRST AND SECOND APPLICANT: J Francis Lawyers

THE FIRST RESPONDENT APPEARING IN PERSON

THE SECOND RESPONDENT APPEARING IN PERSON

Orders

1. That paragraphs 3(b) and 3(d) of the consent Orders dated 16 October 2006 as between Ms Zabatino, Mr Zabatino, Mr Tamburro and Ms Tamburro be set aside and in lieu thereof the following shall appear:

   (b)      The amounts required to discharge any mortgage registered over the   Suburb H property (if applicable), with any monies required to   discharge such mortgage to be deducted from monies payable to “the             first third party Respondent and the second third party Respondent” as   provided for in Order 3(d) hereof.

   (d)      The then balance in the following proportions:

   (i)       55/180 share to the Wife;

   (ii)      55/180 share to the Husband;

   (iii)     70/180 share as between the first third party respondent and the   second third party respondent, subject to any deduction provided   for by Order 3(b) above.

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

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: SYC 7693 of 2011

Ms Zabatino and Mr Zabatino

Applicant

And

Mr Tamburro and Ms Tamburro

Respondent

REASONS FOR JUDGMENT

1. This is a somewhat convoluted matter in that it involves not one, but two couples, both of whom separated and both of whom executed final Orders for property settlement by consent. 

2. Unfortunately, despite the very nature of those aforementioned Consent Orders, intended to finalise the economic relationship between the parties as far as practicable, the effect of that previous drafting has been such that the financial affairs of all four parties remain far from settled. 

3. The issue preventing the finalisation of the parties’ affairs, and the sole issue for my determination, is the distribution of sale proceeds from the Respondents’ former matrimonial home at B Street, Suburb H, New South Wales (“the Suburb H property”). 

4. The Application before me seeks to set aside the relevant clauses of the earlier consent orders and substitute same with clauses that give effect, or so the Applicants contend, to the intention of the parties.  That is, that the Respondents were to be solely liable for the mortgage over the Suburb H property in the event that the property was ever sold. 

5. I note that by the time this matter came before me the Orders sought by the Applicants were in fact supported by the Second Respondent, the Applicants’ daughter, and the Applicants only found opposition in their former son-in-law, the First Respondent.  I refer to the draft consent orders which became Exhibit 4 to these proceedings and incorporate same in these Reasons. 

6. The Applicants in these proceedings are an elderly couple, Ms and Mr Zabatino, who reside at Town M in New South Wales.  The Second Respondent is the adult daughter of the Applicants, a Ms Tamburro, and the First Respondent is the former son-in-law of the Applicants, and former husband of the Second Respondent, a Mr Tamburro.

7. The Applicants separated on a “final” basis on 31 March 2004.  The duration of the Applicants’ separation is unclear on the material before me but suffice it to say that by the time the matter came before me in March 2012 the Applicants both deposed to having “since” reconciled and in fact provided the same residential address at Town M. 

8. Following their separation the Applicants executed a document on 12 September 2006 entitled “Terms of Settlement”.  This document was signed by all four parties to these proceedings, as the Respondents had an interest in certain property owned by the Applicants.  On 16 October 2006 these “Terms of Settlement” were executed as Consent Orders in the Sydney Registry of the Family Court (see Annexure “B” to the affidavit of Mr Joseph Francis filed 20 December 2011). 

9. These 2006 Orders make provision, inter alia, for the sale of the Suburb H property. 

10. By way of background, the Applicants depose that the Suburb H property was originally owned by the Applicants as sole proprietors.  I refer to the affidavit of the Applicant Wife, Ms Zabatino, filed 6 March 2012.  In or around 2001 the Applicants sought to sell the Suburb H property but, having received little interest in the property, the Applicants instead offered the Respondents an opportunity to acquire a minority interest in the property.  The Applicant Wife deposes that, conditional upon the Respondents acquiring an interest in the property, the Respondents would occupy the Suburb H property with their three children and the Applicants would relocate to reside at their retirement home on the Central Coast (presumably, the Town M address now provided as the Applicants’ residential address).  I note that at this time, in around 2001, the Suburb H property appears to have been unencumbered. 

11. The Respondent Wife, Ms Tamburro, deposes that the agreement with the Applicants was that the Respondents would jointly purchase a 35/90^th share in the Suburb H property, the consideration for such interest agreed between the parties at $350,000.00. 

12. In order to facilitate their partial acquisition of the Suburb H property, the Respondents subsequently entered into a mortgage with the St. George Bank for this sum of $350,000.00, with such loan agreement signed by Mr and Ms Tamburro on 1 August 2002 (See Annexure “A” to the affidavit of Mr Zabatino filed 6 March 2012).  I note in passing that this document lists the “Name of mortgagor(s) (Owner)” as to include all four parties to these proceedings.  However I reiterate that the loan agreement has only been signed by the Respondents.  I note also that the Applicants are listed as guarantors to the loan and that the Applicants both individually depose to having sighted the agreement in their capacity as guarantors. 

13. The Applicant Wife deposes that sometime after the Respondents entered into the loan agreement with the St George Bank the Applicants received a cheque from the Respondents in the sum of $350,000.00.  The Applicant Wife further deposes that thereafter the Respondents occupied the Suburb H property and made all mortgage repayments, although she notes that “between 2009 and 2011 they were behind on several mortgage payments” (paragraph 7 of the affidavit of Ms Zabatino, filed 6 March 2012).  I accept the Applicant Wife’s evidence in respect of these occasional failures to make mortgage repayments (see Annexures “C3” and “C4” to the affidavit of Ms Zabatino, filed 6 March 2012) given, as will become evident in the course of these Reasons, the bank’s refusal to transfer the mortgage to the Respondent Wife appears to be based on the Respondents’ previous borrowing history. 

14. As mentioned above, the Applicants entered into Consent Orders in October 2006 and upon the advice of the Applicant Wife’s then solicitors (see Annexure “C” to the affidavit of Mr Joseph Francis filed 20 December 2011) Mr and Ms Tamburro were joined to those proceedings as the “first third party respondent” and “second third party respondent” respectively.  The Applicant Husband deposes that prior to entering into the Consent Orders, the Applicants had a conversation with their daughter and her then husband (that is, the Respondents) advising that the financial agreement would “include a variation to the title of [the Suburb H property].” 

15. The relevant portion of the Consent Orders was formulated to retain the Respondents’ existing title to the Suburb H property whilst dividing the majority interest held by the Applicants between the Applicant Husband and Applicant Wife.  That is, the Respondents’ interest was unaffected.  See paragraph (1) of the 2006 Consent Orders:

    1.That within 42 days of the date of these Orders, the husband and wife do all acts and things and sign all documents necessary to convert their interest, in the proportions of 55/90 shares as joint tenants (being held as tenants in common with the first third party respondent and the second third party respondent together as joint tenants as to 35/90) in and to the property situated at and known as [… B Street, Suburb H] in the State of New South Wales, being the whole of the land comprised in Certificate of Title Folio Identifier […] (“the [Suburb H] property”), to the wife as to 55/180 shares and to the husband as to 55/180 shares as tenants in common. 

16. I also note the Title Search for the Suburb H property, dated 29 March 2011 and produced by the solicitors for the Applicant after the conclusion of the trial, reflects the parties’ interests in those same terms:

    [MR ZABATINO]

    IN 55/180 SHARE

    [MS ZABATINO]

    IN 55/180 SHARE

    [MR TAMBURRO]

    [MS TAMBURRO]

    AS JOINT TENANTS IN 70/180 SHARE

    AS TENANTS IN COMMON

17. Relevantly, the 2006 Orders also provided for the distribution of sale proceeds in the event the Respondents elected to sell the Suburb H property.  Paragraph 3 of the Orders reads as follows:

    3.On settlement of the sale of the [Suburb H] property the proceeds of sale be paid in the following manner and priority:

    (a)All costs and expenses of sale including legal costs and disbursements, agent’s commission, valuer’s fees and auction expenses (including repayment of any such expenses as have been paid by any of the parties);

    (b)The amounts required to discharge any mortgage registered over the [Suburb H] property (if applicable);

    (c)The amounts required to pay municipal and water rates outstanding with respecting to the [Suburb H] property;

    (d)The then balance in the proportions of 55/180 shares to the wife, 55/180 shares to the husband, and 35/90 shares as between the first third party respondent and the second third party respondent. 

    (My underlining)

18. More on this later. 

19. The Respondents then separated on a final basis (under the same roof) on 5 January 2010 (see Exhibit 2 to these proceedings – Application for Consent Orders as between Ms Tamburro and Mr Tamburro).  On 6 August 2010 the Respondents entered into Consent Orders to effect property settlement.  These Orders provided, inter alia, for the Respondent Husband to do all acts and things necessary to transfer his right, title and interest in the Suburb H property to the Respondent Wife.  Furthermore, the Orders also required the parties to do all acts and things necessary to discharge the existing mortgage with the St George Bank over the Suburb H property.  See Exhibit 3 to these proceedings. 

20. The intent of the 2010 Orders was, as stated above, to transfer the Respondent Husband’s share in the Suburb H property to the Respondent Wife.  This of course also necessitated the Respondent Wife incurring the sole liability for the aforementioned St. George Bank mortgage. 

21. I refer to and incorporate the Annexures “C1”, “C2”, “C3” and “C4” to the affidavit of Ms Zabatino, filed 6 March 2012, which provide the pretext to the Respondents’ inability to implement and give effect to the 2010 Orders.  As appears in that correspondence between the Respondent Wife and the mortgagor, the St. George Bank refused to refinance the mortgage over the Suburb H property to Ms Tamburro’s name alone, “based on the conduct of the loan over the past 12 months” and her “income position”. 

22. I am therefore satisfied that the 2010 Consent Orders were never given force and effect and that in fact the Respondents continued to live in the former matrimonial home until the sale of the property. 

23. Given that the Suburb H property represented the substantial asset of the Respondents’ marriage, the Respondent Wife deposes that the parties were left with two options to effect property settlement between them, that is, for:

    ·     one of us to acquire the minority interest of the other party in [the Suburb H property] with the consent of my parents or

    ·     for [the Suburb H property] to be sold and for the proceeds of sale to be divided between us either in accordance with our interest in the property or by agreement to adjust our interest in the property.

24. It appears there is some contention as to the events that led to the sale of the Suburb H property.  The Applicants both depose that, “by agreement of all parties [the Suburb H property] was sold and the contract for sale of [the Suburb H property] was signed by all parties” (see paragraph 17 of the affidavit of Mr Zabatino filed 6 March 2012; see paragraph 19 of the affidavit of Ms Zabatino filed 6 March 2012). 

25. The Respondent Husband denies the assertion of any “agreement” and deposes that the Applicants approached him and his then wife and “requested that the property be sold.” 

    22.[Ms Tamburro] and I told the [Zabatinos] that we did not want to sell the property, as the real estate market had been down since the Global Financial Crisis and we did not believe the property would sell for a good price…

    23.[Mr and Ms Zabatino] pressured [Ms Tamburro] and myself into listing the property for sale, despite our refusal to do so.  I believe the [Zabatinos] were experiencing financial difficulties at the time.  I suspect the [Zabatinos] needed to sell the property to free up capital…

26. As mentioned above, the Respondent Wife now supports her parents’ Initiating Application and has deposed in support of their statement that the Suburb H property was sold at the Respondents’ election. 

27. It is here relevant to note that indeed both Applicants deposed to having been concerned at the time for the potential of a mortgagee sale of the Suburb H property, given the Respondents’ inability to make mortgage repayments and the Applicants’ precarious position as guarantors. 

28. In any case, all four parties to these proceedings signed the relevant contract for sale and so far as I can see the Respondent Husband has not made any submissions or assertions that he was under any real undue influence to do so.  I do not consider that much falls on the determination of whom to prefer in respect of this dispute, but nonetheless I found the Applicants’ and Respondent Wife’s evidence the more credible of these two versions. 

29. The Applicants were not a party to the 2010 Consent Orders between the Respondents, nor do they depose to have had knowledge of same (the Applicant Wife deposes that she first discovered the existence of the 2010 Orders on 4 March 2011 when she located an unsigned copy of the document (see paragraph 22 of the affidavit of Ms Zabatino, filed 6 March 2012)). 

30. Accordingly, the Applicants proceeded with the sale of the Suburb H property without reference to or in consideration of the 2010 Orders. 

31. As aforementioned, all four parties executed the contract for sale of the Suburb H property to a third party and settlement occurred on 9 September 2011.  In anticipation of the settlement date, the Applicants’ conveyancing firm wrote to the Applicants enclosing a Settlement Sheet which provided the amount to be distributed to all interested parties.  The document provided the following:

    Settlement Cheques Required

Cheque	$1,640.78	in favour of	[Local] Council
Cheque	$353.10	in favour of	Sydney Water
Cheque	$308,324.64	in favour of	St George Bank
Cheque	$130,476.10	in favour of	[Mr Tamburro]
Cheque	$133,476.10	in favour of	[Ms Tamburro]
Cheque	$209,748.16	in favour of	[Ms Zabatino]
Cheque	$930.00	in favour of	T Conveyancing Firm
Cheque	$212,748.15	in favour of	[Mr Zabatino]
TOTAL	$997.697.03

1. Such figures were presumably calculated to give effect to the 2006 Consent Orders in respect to distribution of the proceeds of sale (I note that, based on the conveyancer’s figure of the balance due on settlement ($997,697.03), a 55/180 share of the nett proceeds of sale would be $209,748.16 and a half share of the 35/90 share would be $133,476.10).  However, upon the conveyancer’s attempt to distribute these funds, the parties discovered a discrepancy between the figures calculated by the conveyancer (in accordance with the 2006 Orders) and their own assumed individual entitlements. 

2. The Applicants assert that they ought receive the proportion of sale proceeds as provided in paragraph (3)(d), but with such amount unaffected by the operation of paragraph (3)(b).  That is, that the Applicants should not bear any responsibility for the mortgage of the Respondents. 

3. As aforementioned, paragraph (3) as it currently appears in the 2006 Consent Orders does not give effect to the Applicants’ belief.  On the face of it, the Consent Orders provide for all parties to remain liable for any mortgage before the distribution of sale proceeds in the proportions otherwise agreed upon. 

4. In response, the Respondent Husband submits that the 2006 Orders are clear in their terms; namely, that the Respondents were to be solely liable for the repayment of the mortgage whilst they resided in the Suburb H property.  Furthermore, the Respondent Husband deposes:

   Reluctantly, [Ms Tamburro] and I agreed to sell the property, on the basis that paragraph 3 of the Orders would now come into effect (in that the balance of the mortgage owing on the property would be paid out of the net proceeds of sale before the remainder of the funds were disbursed in accordance with our respective shares).

5. I have previously noted the Respondent Wife’s support of her parents’ application and I also emphasise her denial of the Respondent Husband’s affidavit insofar as his assertion that the Respondents were only to be solely liable for repayment of the mortgage for the duration of their residence at the Suburb H property. 

6. As at the time of trial, the nett proceeds of sale remained in trust at the Applicants’ conveyancing firm.  The conveyancing firm has advised the parties (through the Applicants’ solicitor; see Annexure “K” to the affidavit of Mr Joseph Francis filed 20 December 2011) that without written authorisation from all parties they are unable to release the funds from trust. 

7. I also note that all four parties have received two interim distributions of the sale proceeds held in trust: an initial sum of $30,000 each and then an additional $10,000 each (see paragraph 36 of the affidavit of Mr Tamburro filed 13 February 2012). 

8. Where then does this leave us?

9. The Applicants ask that I vary or set aside the existing paragraphs (3)(b) and (3)(d) of those 2006 Orders and substitute same for an Order which provides that the Respondents are solely liable for payment of the St. George Bank mortgage.  The Applicants make this application under section 79A or, in the alterative, under the inherent jurisdiction of this Court. 

10. By way of his Response to an Initiating Application filed 13 February 2012, the Respondent Husband seeks the Applicant’s Initiating Application be dismissed and the 2006 Orders be upheld and executed. 

11. Upon consideration of the evidence before me I have found nothing in the Applicants’ words or actions to indicate an intention other than that which they submit to – namely, that it was always agreed between all four parties that the Respondents bought into the Suburb H property subject to a mortgage to which they alone would remain liable. 

12. This intention is quite clearly at odds with the sentiment reflected in the 2006 Consent Orders entered into by all four parties and subsequently I believe it necessarily follows that a miscarriage of justice would arise, should the parties be made to adhere to the 2006 Orders in their current form. 

1. Section 79A(1)(a) of the Family Law Act 1975 (Cth) provides that the court may vary or set aside an order where there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence, the giving of false evidence or any other circumstance. There is nothing open to me on the material to find evidence of any of those headings articulated in s 79A(1)(a) and accordingly the Orders would have to be varied under the mantle of “any other circumstance”.

2. The Full Court has held that the expression “any other circumstance” as it appears in s 79A is intended to encompass “procedural irregularities occurring in the course of proceedings” (see Suiker and Suiker (1993) FLC 92-436).

3. I note that the Full Court has held repeatedly that the terms of this expression should not be interpreted narrowly;  as the Full Court provided in Suiker (supra), “the words ‘miscarriage of justice’ should not be given a restrictive meaning, particularly when coupled with the words ‘any other circumstances’ and that justice means justice according to law.” 

4. The emphasis of the term “miscarriage of justice” is upon the integrity of the judicial process, and the Full Court has prescribed that the meaning of this term should not be extended further than that (Clifton & Stuart (1991) FLC 92-194. However, I again note the Full Court in Suiker, whereby Nicholson CJ, Baker and Strauss JJ provided:

   3.        The words “miscarriage of justice” should not be construed   narrowly, but may include matters connected to the proceedings   which           have an influence on the outcome. 

5. As the agreement between the parties was inherently connected to the proceedings, to give effect to the 2006 Orders in their present form would quite clearly be contrary to the integrity of the judicial process. 

6. For those reasons, I find that the Respondent Husband and the Respondent Wife are to bear the liability of the St George Mortgage, with such liability to be reflected in the funds allocated from the proceeds of sale by the conveyancer. 

7. Insofar as costs are concerned, in circumstances where the solicitor that may have been responsible for the drafting of such an Order is not a party to the current proceedings, I regret that I am unable to make any order as to costs. 

I certify that the preceding fifty (50) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Bell delivered on 18 June 2012.

Associate: 

Date:  18 June 2012.