Zuccatelli and Baggio

[2011] FamCA 795

FAMILY COURT OF AUSTRALIA

ZUCCATELLI & BAGGIO [2011] FamCA 795

FAMILY LAW – PROPERTY SETTLEMENT – Application for summary dismissal – insufficient evidence case ‘doomed to fail’
FAMILY LAW – PROPERTY SETTLEMENT – Oral application for injunction – no evidence of risk of disposal of property prior to conclusion of hearing – application refused
FAMILY LAW – PROPERTY SETTLEMENT – Removal of caveat by Applicant – Respondent authorised to remove in event of refusal or failure of Applicant to do so
FAMILY LAW – PROPERTY SETTLEMENT – Application for security for costs refused
FAMILY LAW – PROCEDURE – Rules 10.13 and 10.14 of Family Law Rules 2004 (Cth) – hearing of dispute regarding signature on Deed of Agreement as separate issue

Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)

Bigg v Suzi (1998) FLC 92-799
Ferrall and McTaggart as trustees for the Sapphire Trust and Ors & Blyton & Blyton & Attorney-General of the Commonwealth (2000) FLC 93-054
Pelerman & Pelerman (2000) FLC 93-037
Luadaka & Luadaka (1998) FLC 92-830
M v DB (2006) FLC 93-293
Manta Ray & Brookfield Breeding Co Pty Ltd (1998) ACLC 304
Prior & Prior (2002) FLC 93-105
Waugh & Waugh (2000) FLC 93-052

APPLICANT: Mr Zuccatelli

RESPONDENT: Ms Baggio

FILE NUMBER: MLC 4471 of 2011

DATE DELIVERED: 14 October 2011

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Kent J

HEARING DATE: 14 October 2011

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Livaditis & Co

SOLICITOR FOR THE RESPONDENT: Lewenberg & Lewenberg Solicitors

Orders

1. Pursuant to Rules 10.13 and 10.14 of the Family Law Rules 2004 (Cth) the issues raised by the parties concerning the Deed of Agreement dated 18 February 2008 (including the authenticity, validity, enforceability and effect (if any) of the Deed) be heard and determined as a separate decision (“the discrete hearing”).

2. Within twenty-one (21) days the Respondent file and serve an affidavit annexing a pleading in the form of Points of Claim in which is set out each and every fact and particular upon which she relies; and the relief she seeks; with respect to the discrete issue and in which affidavit she swears or affirms the truth of the facts and particulars contained in the Points of Claim.

3. Within twenty-one (21) days of service upon him of the Respondent’s affidavit annexing the Points of Claim, the Applicant file and serve an affidavit annexing a pleading in the form of Points of Defence in which is set out his response to each fact contained in the Points of Claim (and in respect of any such fact not admitted, the factual basis for the non-admission), together with each and every other fact and particular upon which he relies in defence of the claim; and the relief which he seeks, with respect to the discrete issue; and in which affidavit he swears or affirms the truth of the facts and particulars contained in the Points of Defence.

4. Pursuant to Division 15.5.2 of the Family Law Rules 2004 (Cth), an expert document examiner/handwriting expert be appointed as the single expert to examine the original Deed of Agreement dated 18 February 2008 and to provide an expert report as to the authenticity of that document and the signatures upon that document and to facilitate such appointment, inspection and report:

   (a)Within seven (7) days, the Respondent, by her solicitors, provide to the Applicant, by his solicitors, a list of three (3) names of expert document examiners/handwriting experts; and

   (b)Within seven (7) days thereafter, the Applicant, by his solicitors, provide to the Respondent, by her solicitors, the name the Applicant selects from that list who shall thereupon be the single expert; and

   (c)Within seven (7) days thereafter the parties, by their respective solicitors, shall confer by telephone or in person if necessary to settle an agreed letter of instruction for the single expert; and

   (d)For the purpose of instructing the single expert, the Respondent has the leave of the Court to uplift from the subpoenaed documents on the Court file the original of the Deed of Agreement dated 18 February 2008 and to provide that document to the single expert; and

   (e)Each party shall comply forthwith with any reasonable request by the single expert to be provided with any sample writing or other documents and, if the single expert so requests, the parties shall do all acts and things necessary to arrange for the single expert to inspect the signature of either party upon any application or affidavit filed in this Court; and

   (f)The parties shall, in the first instance, meet in equal shares the single expert’s reasonable fees and expenses.

5. Liability for the costs of the single expert ultimately be an issue reserved to the trial judge of the discrete issue.

6. The proceedings be adjourned to the registry for the fixing of a date for a directions hearing before a Registrar for the making of directions for the hearing of the discrete issue.

7. That the Applicant deliver to the solicitors for the Respondent by 10.00am on Monday 17 October 2011 a duly executed Withdrawal of Caveat in registrable form of caveat …, or any other caveat in respect of which the Applicant is caveator, in relation to the property situate F Street, Suburb G in the State of Victoria, being more particularly described as Lot … on Plan of Subdivision … contained in Certificate of Title Volume … Folio ….

8. Should the Applicant refuse or neglect to comply with paragraph 7 of these Orders, then, pursuant to s 106A of the Family Law Act 1975 (Cth), the Respondent is appointed to executed such Withdrawal of Caveat in the name of the Applicant and to do all acts and things necessary to give effect, reality and operation to the Withdrawal of Caveat.

9. The oral application of the Applicant for an injunction requesting the Respondent to deposit the sum of $150,000.00 upon trust be dismissed.

10. The Respondent’s application for security for costs be dismissed.

11. The application by the Respondent for summary dismissal of the substantive application be dismissed.

12. Otherwise, any other outstanding interim applications in this matter be dismissed.

13. The costs of and incidental to the applications dealt with today be reserved to the trial judge.

IT IS NOTED that publication of this judgment under the pseudonym Zuccatelli & Baggio is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 4471 of 2011

Mr Zuccatelli

Applicant

And

Ms Baggio

Respondent

EX TEMPORE REASONS FOR JUDGMENT

1. Pursuant to an Amended Application in a Case filed on 12 October 2011 by Ms Baggio, a number of applications are before the Court. There is some confusion so far as relief claimed in the case thus far disclosed. The substantive proceedings initiated by the Applicant in the substantive proceedings, Mr Zuccatelli, are framed for property orders pursuant to s 79 of the Family Law Act 1975 (Cth). It is not in issue that there was no marriage between the parties and that, in reality, any relief that can be sought should be sought pursuant to the relevant provisions of Part VIIIAB of the Family Law Act 1975 (Cth), and specifically s 90SM rather than s 79.

2. The other source of confusion relevant so far as the proceedings as pleaded and discussed in the affidavits is concerned is what is said to be the status of a certain Deed of Agreement relied upon by the Respondent said to be entered into on 18 February 2008. In the result, it would seem that the case of the Respondent is, in truth, that the Deed of Agreement is binding upon the parties whether by operation of Victorian State law at the time it was entered into and/or in combination with transitional provisions for financial agreements for de facto relationships now pursuant to the Family Law Act 1975 (Cth). All of those are matters that require addressing in any formal proceedings or amended proceedings the parties frame, and I propose to make orders for that to occur.

3. In the Amended Application in a Case filed on 12 October 2011, the first Order sought was that there be summary dismissal of the substantive proceedings. Whilst this Court clearly has power to make such an Order, it is recognised that such a power for summary dismissal is a jurisdiction which should be used sparingly, and the test for application for exercising discretion to dismiss a matter summarily is whether the application is ‘doomed to fail’. Authority for that proposition is to be found in Bigg v Suzi (1998) FLC 92-799; Pelerman & Pelerman (2000) FLC 93-037; Ferrall and McTaggart as trustees for the Sapphire Trust and Ors & Blyton & Blyton & Attorney-General of the Commonwealth (2000) FLC 93-054; Prior & Prior (2002) FLC 93-105, amongst many other authorities. Rule 10.12 of the Family Law Rules 2004 (Cth) and s 28 are relevant to the power to exercise such jurisdiction.

4. In the present case, most if not all of the facts alleged be one party are disputed by the other. In particular, there is a dispute surrounding what, if any, work was done by the Applicant on a home owned by the Respondent at the commencement of the relationship. In broad terms, it is the Respondent’s case that she and her sister inherited the subject property, she subsequently paid the sister for her share of the property, that substantial works were undertaken to the property, but that all of those works were planned prior to the relationship under discussion with the Applicant, and were all funded by her, the Respondent. For his part, the Applicant suggests that he undertook substantial work to improve the property that has significantly added to its value (so he says) and that he paid for parts of the renovations that were undertaken.

5. The Respondent’s case is that she came to the relationship with substantial assets, in particular the house property just referred to, whilst the Applicant came to the relationship with debts and indeed, that the Respondent funded his debts to a significant extent. That is yet again another factual issue, because to the extent that the Applicant acknowledges in affidavit material the payments made for his benefit by the Respondent, he asserts that he repaid such advances as a result of the earnings out of a company the parties jointly owned known as “H Pty Ltd” sourced solely from his efforts. He suggests that the earnings of “H Pty Ltd” also funded renovations and again, that is a matter of dispute between the parties.

6. As an indication of the extent of factual dispute between these parties, the Respondent puts before the Court a Deed of Agreement dated 18 February 2008. Documents have been subpoenaed from the solicitors who I understand were instrumental in the preparation and finalisation of that Deed. I gave leave at the outset of the hearing for the parties to inspect those subpoenaed documents. In his affidavit evidence, the Applicant denies ever having seen such a document prior to it being annexed to one of the Respondent’s affidavits. Notwithstanding what has occurred this morning, including inspection of the files, I am informed by his legal representative Mr Mellis that the Applicant maintains his denial of ever signing such an agreement and denies knowledge of such an agreement other than in the circumstances described.

7. The parties agreed by their respective legal representatives in the course of the hearing that the agreement is a central issue and that it would be convenient to both parties if an Order was made pursuant to Rule 10.13 of the Family Law Rules 2004 (Cth) for issues concerning the Deed of Agreement to be heard and determined as a separate issue, and I propose to make such an Order.

8. Given the factual disputes between the parties, and in circumstances where on the authorities I am to approach an application for summary dismissal having regard to, in effect, the evidence sought to be adduced or asserted by the Applicant here, because of the high hurdle in terms of exercising that discretion, I am not satisfied that I can conclude that the application is doomed to fail in the relevant sense. I point out that it is not enough for it to be concluded that the case is a weak one or to assess the merits or prospects as poor. I need to be satisfied that it would be ‘doomed to fail’ to exercise the discretion to summarily dismiss the proceedings, and I am not so satisfied on the evidence before me that I can reach that conclusion, and I therefore do not accede to that application.

9. The Respondent (who is the present applicant so far as the Application in a Case is concerned), also sought an Order that the Applicant deliver a withdrawal of caveat with respect to Certificate of Title Volume … Folio …, being title with respect to the subject house property under discussion. That property has been sold and the settlement of that sale is due to occur, as I understand it, on or about the 28^th of this month. After preliminary discussion of the matter in Court this morning, I was informed that the Applicant is willing to withdraw the caveat on the property, and I propose to make an Order that he do so, and failing his doing so, that a person be authorised to sign a withdrawal of caveat on his behalf given the imminent settlement of the sale of the property.

10. The Applicant then made an oral application before me that there ought be, in effect, an injunction securing $150,000.00 out of the proceeds of sale in respect of the forthcoming settlement. I am informed that the sale price is $850,000.00, that there will be a mortgage loan to repay of about $200,000.00, leaving a balance of about $650,000.00. What is sought by the Applicant is that $150,000.00 of those settlement proceeds be held effectively on trust by solicitors for the Respondent pending the final resolution or determination of this matter.

11. In circumstances where the application was permitted to be made as an oral application, but is unsupported by any evidence to the effect that there is a risk so far as loss of the proceeds or that the Respondent would act in a way to dissipate completely those proceeds, there is obvious difficulty for the Applicant in satisfying me as to matters of balance of convenience and the usual requirements for such an injunction. Generally speaking in this jurisdiction, pursuant to authorities such as Waugh & Waugh (2000) FLC 93-052 and the subsequent discussion of Waugh (supra) by the Full Court of this Court in M v DB (2006) FLC 93-293, what needs to be shown by an Applicant for such an injunction is a risk of dissipation that will defeat or prejudice a claim under s 79 (or s 90SM). In this case, the Respondent was the owner of a property which she sold to purchase her sister’s interest in the subject property under discussion. That property is now being sold and the Respondent will need to rehouse herself and, I assume, that would involve the rehousing of her children who have lived with her on the material before me. She proposes, I am informed, to purchase a substitute property for that purpose.

12. In those circumstances, I am not prepared to grant an injunction with respect to the proceeds of sale. In my view, the balance of convenience plainly favours the Respondent being able to pursue her aim to purchase a substitute property, and as the evidence reflects, the Respondent has a long history of property ownership vis-à-vis the duration and timing of this relationship.

13. The remaining application before me is that the Respondent seeks an Order for security for costs, essentially on the basis that because the Applicant does not own assets and because his application is said to be completely unmeritorious, that success in the litigation by the Respondent will be rendered somewhat Pyrrhic by reason of the fact that it is said that costs orders which would likely follow that event would not ultimately be enforceable or paid by the Applicant.

14. Rule 19.05 of the Family Law Rules 2004 (Cth) is the relevant rule in respect of security for costs. The circumstances delineating whether such Orders should be made were outlined in the decision of the Full Court in the case of Luadaka (1998) FLC 92-830. After an extensive review of the relevant authorities in this and other jurisdictions, the Full Court suggested that the following, non-exhaustive factors, are relevant to the exercise of the discretion to order a security.

15. First, the history and conduct of all litigation between the parties (by reference to the authorities cited by the Full Court); second, the merits of the claims by the party whose costs are sought to be secured (however the Full Court noted that the Court will not engage in a detailed examination of the parties’ likelihood of success unless it can be demonstrated that there is a high probability of success or failure, and the bona fides of the claim are also relevant); next, the financial circumstances of each of the parties. In Luadaka (supra), the Full Court held that Orders for security will not be limited to those cases in which the Applicant for security does not have the means to meet their own costs. Such orders may be made even where the Applicant for security does have the necessary means. Next, any delay in bringing the application by the party against whom the order for security is sought; further, the likelihood of higher than usual costs because of the way in which the relevant party has or is likely to present their case; next, whether an Order for costs will stifle the litigation. This is said to be a relevant, but not decisive matter (and the Full Court referred to Manta Ray & Brookfield Breeding Co Pty Ltd (1998) ACLC 304), and finally the likely amount of costs to be incurred and any likely difficulty in enforcing an Order for costs after the event.

16. Having taken those considerations into account, it seems to me that at this preliminary stage and on the material before me, I have difficulty in assessing the merits of the claim of the Respondent, particularly so far as the Deed of Agreement which she asserts is concerned. It may well be that the Respondent can establish that the Deed of Agreement was indeed executed by the Applicant and there may be a number of consequences if that occurs. One possible consequence is that the effect of the Deed, if it is upheld, will be to bring an end to these proceedings. Another consequence, even if it is not a binding financial agreement within the meaning of Part VIIIAB of the Family Law Act 1975 (Cth) is that it may nevertheless have a significant effect in the proceedings in terms of meeting any substantive claim by the Applicant. I note, for example, that that agreement purports to record that the Applicant acknowledged that he had undertaken “minor” renovations to the property which of course would be inconsistent with the evidence which he has adduced before the Court in his present affidavit material.

17. Even if the agreement is not operative, this is a case where it is clear on the evidence on both sides that substantial assets were brought into the relationship by the Respondent and the Applicant acknowledges that he had only debts at the commencement of this short relationship, and he also acknowledges matters such as his alcohol difficulties and other events.

18. Given all of those things, I am not in a position at this stage and on an interim hearing, to make even a preliminary assessment of the competing merits of the claims. So far as the financial circumstances of the parties are concerned, it is clear enough that the Respondent will be able to meet her costs of these proceedings from her resources in a comparative sense to the Applicant’s position, given her position so far as assets are concerned. The Applicant is said to continue operating “H Pty Ltd” and he has sworn a financial statement which discloses earnings of $2,000.00 per week from that source. On the face of that material, the Applicant will be able to meet an Order for costs at the conclusion of proceedings.

1. In circumstances where the amount of security sought is $25,000.00, and in the face of the financial statement of the Applicant, it is clear enough that if I made an Order for security for that amount or a similar amount it would have the effect of stifling the litigation in the sense that the Applicant would not be able to pursue any claims simply because the proceedings would be stayed until he provided that security, and if he was unable to provide a sum such as $25,000.00, which seems unlikely on his material, that would bring an end to the matter.

2. In those circumstances, it seems to me that at this stage at least, I ought not make any Order for security for costs. That said, it should not prevent the Respondent from pursuing further application for security if she so chooses, depending upon the outcome of the discrete hearing. It may be that one outcome of that hearing means that the substantive proceedings nevertheless proceed, but will proceed in circumstances where there have been some findings adverse to the Applicant as a result of that hearing. That is speculative, but I simply point out that an interim Order refusing an application for security does not prevent further interlocutory applications for the same purpose.

3. I therefore make the Orders set out at the commencement of these Reasons for Judgment.

I certify that the preceding twenty-one (21) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Kent delivered on 14 October 2011.

Associate: 

Date: