ALI & ALI
[2019] FamCA 1012
•24 December 2019
FAMILY COURT OF AUSTRALIA
| ALI & ALI | [2019] FamCA 1012 |
| FAMILY LAW – PRACTICE AND PROCEDURE – Application for joinder – Whether the husband’s mother should be joined to property proceedings between the parties – Whether the joinder of the husband’s mother is a person whose interests would be affected by the making of an order under section 79 of the Family Law Act 1975 – Whether the joinder of the husband’s mother is necessary for the Court to completely and finally determine all matters in dispute – Application dismissed. FAMILY LAW – PROPERTY – Settlement in relation to a marriage – Where the parties seeks orders for an adjustment of the matrimonial property – Where the husband contends he made a notable contribution to the property pool by way of winning the Lottery – Where the wife asserts the Lottery winnings were a joint contribution – Where the husband withdrew a large sum of money in cash and could not account for his expenditure – Where unaccounted funds withdrawn in cash by the husband are added back into the matrimonial property pool – Where the husband did not work for a significant period of the relationship – Where the wife has one adult child of a previous relationship and the husband has two children of a subsequent relationship – Where the parties own multiple properties in Australia and overseas – Where the parties agree the overseas property should be retained by the husband – Where Orders are made requiring the husband to pay to the wife $200,000 in accordance with findings made under section 79 of the Family Law Act 1975. |
| Evidence Act 1995 (Cth) ss. 76(1) Family Law Act 1975 (Cth) pt. VIII, ss. 79, 75(2), 117. Family Law Rules 2004 cl. 6 of sch, 1, r 6.02, 13.01, 13.04. |
| Allen v Snyder [1977] 2 NSWLR 685 Kowaliw and Kowaliw (1981) FLC 91-092 Lovine & Connor and Anor [2012] FamCAFC 168 |
| APPLICANT: | Ms Ali |
| RESPONDENT: | Mr Ali |
| FILE NUMBER: | SYC | 5846 | of | 2014 |
| DATE DELIVERED: | 24 December 2019 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | McClelland DCJ |
| HEARING DATE: | 28, 29 and 30 October 2019 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Campton SC |
| SOLICITOR FOR THE APPLICANT: | Swan Lawyers |
| COUNSEL FOR THE RESPONDENT: | Ms Petrie |
| SOLICITOR FOR THE RESPONDENT: | Matthews Folbigg Pty Ltd |
| SOLICITOR FOR THE INTERVENOR: | Ms Swan |
Orders
That all previous Orders are discharged.
That within 28 days of the date of these Orders:
(a)The Respondent husband shall:
(i)Do all acts and things and sign all documents necessary to transfer to the Applicant wife all of his right, title and interest in the properties:
a.B Street, Suburb C, New South Wales ("the Suburb C property")
b.D Street, Suburb E, New South Wales ("the Suburb E property")
c.Any interest that he has in F time share, described as a 7,000 annual credit membership ("F time share").
(ii)Pay the Wife the sum of $200,000, to an account as nominated by the Wife.
(b)The wife shall do all acts and things and sign all documents necessary to transfer to the husband all her right, title and interest in the properties situated at 1 & 2 G Street, City H State J, USA ("the State J property"). To give effect to this Order:
(i)The husband shall forthwith do all things to prepare the documents to be signed by the wife to give effect to this Order, and provide same to the solicitor for the wife; and
(ii)The wife shall sign the documents prepared by the husband to give effect to this Order on receipt of those documents by her solicitor, and then provide such documents to her solicitor to hold in Escrow pending compliance by the husband with Order (2)(a) ((2)(a)(i) and (2)(a)(ii) inclusive), and will attend to the exchange of these documents with the husband on his compliance.
That pending implementation of Order (2), the husband shall be and is hereby restrained from:
(a)selling, transferring, encumbering, alienating or in any other way dealing with the Suburb C property or the Suburb E property, except in compliance with these Orders;
(b)selling, transferring, encumbering, alienating or in any other way dealing with the interest of the husband and the wife in the State J property;
(c)leaving the Commonwealth of Australia.
That the husband vacate the Suburb C property within 28 days of the date of these Orders, and thereafter:
(a)the Husband shall remain away;
(b)the wife shall have sole use and occupation of the Suburb C property.
Pending the husband's vacation of the Suburb C property, pursuant to these Orders, the husband shall do all acts and things to maintain the Suburb C property to a reasonable standard and in good condition.
That in default of the husband's compliance with Order (4) above, a Warrant for Possession pursuant to r 20.54 of the Family Law Rules 2004 be issued in respect to the Suburb C property so as to provide vacant possession of the property to the wife.
Liberty is granted for the parties to apply to the Court in chambers for the Warrant for Possession to issue.
That the husband and wife shall forthwith do all acts and things to direct and pay the balance of the controlled monies retained by the solicitor for the Applicant on behalf of the parties to an account as nominated by the wife.
That as between the wife and the husband, and subject to the above Orders, the wife and the husband shall each respectively retain all interest in and entitlement to:
(a)all personal property now in her/her respective possession or control;
(b)all shares, debentures, units in unit trusts, bank, building society or credit union accounts standing in his/her sole name respectively;
(c)all interests in life insurance policies and superannuation funds standing in his/her sole name respectively.
Both the husband and wife release the other from all actions, proceedings, claims, demands costs and expenses whatsoever and howsoever arising which either of them had or may have against the other.
That the parties shall do all acts and things necessary to give effect to these Orders.
That in the event that either party does not sign any document that is necessary to give effect to these Orders, the Registrar of the Family Court of Australia Sydney shall be appointed pursuant to s 106A of the Family Law Act 1975 to execute such document in the name of the said party upon the Registrar being provide with evidence of said party not signing by way of Affidavit.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Ali & Ali has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
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 r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 5846 of 2014
| Ms Ali |
Applicant
And
| Mr Ali |
Respondent
REASONS FOR JUDGMENT
Introduction
This matter concerns an Application for final property orders in relation to the marriage of Ms Ali (“the wife”) and Mr Ali (“the husband”).
Regrettably, the parties have incurred substantial legal fees. One reason for that has been complications associated with characterising lottery winnings received in early 2004. There has also been a significant issue as to how those winnings have been applied. Resolution of that issue has not been assisted by the husband’s failure to provide proper disclosure.
As a result of that failure, several issues have been determined contrary to the interests of the husband. This has included an outcome where a substantial portion of the lottery winnings have been notionally added back into the matrimonial property pool and identified as a premature distribution of funds to the husband.
On 22 October 2019, an Application in a Case filed 18 October 2019 by Ms K (“the husband’s mother” or “Ms K”) was listed for hearing. In that Application Ms K sought orders joining her to the proceedings. After hearing submissions, I dismissed that Application and indicated that I would include my reasons in this decision. I include my reasons for doing so in my judgment concerning the parties respective Applications for orders concerning their property pursuant to Pt VIII of the Family Law Act1975 (Cth).
Background
In 1961, the wife was born. She is currently 58 years old.
In 1967, the husband was born in Country A. He is currently 52 years old.
In 1984, Ms L, the child of the wife from a previous relationship, was born. She is currently 35 years old.
In 1989, the husband immigrated to Australia and has lived in Australia since that time.
In 1989, the husband’s current partner, Ms M, was born. She is currently 30 years old.
On 14 June 1995, the husband was granted Australian citizenship.
In August 1995, the husband entered into a contract to purchase a property located at D Street, Suburb E, NSW (“the Suburb E property”) for a purchase price of $124,000 and subject to a mortgage with T Bank in the sum of $111,500.
In mid-1998, the parties commenced cohabitation.
From 1998 to May 2019, the Suburb E property was tenanted.
In June 1998, the parties entered into a contract as joint tenants to purchase a property located at B Street, Suburb C, NSW (“the Suburb C property”) for the purchase price of $254,000 and subject to a mortgage from V Bank in the sum of $228,000.
On 4 July 1998, the parties commenced living in the Suburb C property.
In 1999, the husband established N Business (“the husband’s business”). The husband was the sole director and shareholder of that business and held a contract with a government department.
In 1999, the parties married.
On 6 June 2000, the mortgage secured on the Suburb E property was refinanced in the sum of $111,500.
In 2002, the parties purchased acreage (100 acres) at O Street, P Town (“the P Town property”) for the purchase price of $212,000. There was a mortgage registered over the P Town property in the sum of $300,000, dated 30 November 2002. The parties also borrowed $223,000, to finance the purchase, from a mortgage with Australia and New Zealand Banking Group (“ANZ Bank”) secured against the Suburb C and P Town properties.
In 2002, the parties purchased Company Q shares, being 7,000 shares in a holiday timeshare, for the sum of $10,000. The parties funded this purchase from a personal loan from ANZ Bank.
In January 2004, the father purchased a winning lottery ticket. The prize was the sum of $1,169,383.61. The amount was paid into the husband’s T Bank account ending …64 on 23 January 2004.
On 29 June 2004, the ANZ Bank mortgage in the sum of $62,112.03 secured on the Suburb C property was discharged from the parties’ lottery winnings and income.
In 2005, the ANZ Bank mortgages were discharged.
In 2005, the parties entered into a contract to purchase a property located at R Street, Suburb S, QLD (“the Queensland property”) for the purchase price of $207,000. The parties obtained two mortgages, in the sum of $100,000 and $445,000, from U Bank secured against the Suburb C property and the Queensland property. The mortgages were used to refinance the mortgage on the Suburb E property. At the time the mortgage secured on the Suburb E property was discharged. An amount of $208,961.93 from the $445,000 mortgage was applied towards the purchase of the Queensland property.
On 27 June 2005, the mortgage secured on the Suburb E property was discharged in the sum of approximately $104,465 by drawing down on the U Bank mortgage secured against the Suburb C property and the Queensland property.
In 2006, the husband ceased working and the mortgage secured on the Suburb E property was discharged.
On 23 October 2008, the parties entered into a contract to purchase property at 1 and 2 G Street, City H, State J (“the State J property”) for the purchase price of $290,000 USD.
From 2008 to date, the rental income for the State J property has increased from approximately $2,000 USD per month to $4,915 USD per month.
On 31 October 2008, a Grant Deed recording the husband’s mother, Ms K, and the parties as grantees was entered into. Ms K is a resident of the United States and is an American citizen.
From late 2009 or early 2010 until she was approximately 25 years old, the wife’s daughter, Ms L, lived with the parties.
On 1 April 2010, a Grant Deed was entered into between the husband’s mother and the parties transferring the Title of the State J property to the parties.
In September 2010, the parties refinanced the U Bank mortgages with ANZ Bank. The Suburb C property was released as security and the new ANZ Bank loans were secured against the Queensland property and P Town property. The Queensland property ANZ Bank loan named both parties as mortgagees. The U Bank loan for $100,000 that had been used to discharge the loan over the Suburb E property in 2005 was refinanced with the ANZ Bank, in the husband's name, and the wife was a personal guarantor. At the time the husband was not working.
On 15 February 2011, the parties separated.
In February 2011 to 22 August 2018, the parties lived separated under the same roof at the Suburb C property.
In February 2011 to May 2019, the Suburb E property was rented to tenants.
Between 1 July 2011 and 30 June 2018, the husband received net rental in the sum of $63,888 from the Suburb E property.
On 14 May 2011, the wife withdrew $10,000 from the parties' redraw account.
From 1 July 2011 to 30 June 2018, the husband received interest on his savings in the sum of $86,985.
Between 1 and 7 February 2012, the husband withdrew $705,000 in cash, leaving a balance of $269,281.80 on 7 February 2012 from his T Bank account, which includes interest deposited subsequent to the withdrawal
On 23 April 2012, the parties sold the Queensland property for $304,000. The mortgage on the P Town property was discharged with the net proceeds of sale from the Queensland property in the sum of $69,782.96. The wife withdrew the net proceeds of sale from the Queensland property in the sum of $13,083.74 without the husband’s authority or consent.
In May 2012, the husband met his current partner, Ms M, online. At the time she was living in Country I.
On 19 September 2014, the wife initiated proceedings in the Federal Circuit Court of Australia.
On 10 December 2014, the husband filed a Financial Statement in the proceedings disclosing savings in the sum of $240,850 and $90,000 "cash in safe".
In mid-2015, the husband sold the wife's motor vehicle for $1,000 and applied the money towards living costs.
In 2016, the parties divorced.
In 2016, the husband's child, X, of his current relationship with Ms M was born.
In 2017, the P Town property was sold and the balance of the net proceeds of sale was paid into a controlled monies account held by the wife's legal representatives. The parties sold the P Town property for a sale price of $530,000 and received net proceeds of sale of $477,413.26.
In January 2018, the husband and Ms M moved to Australia from Country I with their daughter X.
From 26 January 2018 to 22 August 2018, Ms M and X lived with the parties at the Suburb C property.
From 22 August 2018 to date, the husband and his family with Ms M have lived in the Suburb C property to the exclusion of the Wife.
On 17 September 2018, Orders were made for the wife to receive a partial property settlement in her favour in the sum of $50,000.
From 11 October 2018 to 31 May 2019, the wife rented a unit at Suburb Z. The wife claims that she paid rent in the sum of $21,700 and spent $14,873.18 for storage, removalists and costs to purchase furniture and furnishings.
In 2018, the husband's child, Y, of his current relationship with Ms M was born.
On 7 May 2019, each party received an interim property settlement in the sum of $50,000.
In May 2019, the wife moved into the Suburb E property.
On 28 June 2019, Orders were made, by consent, for each party to receive an additional partial property settlement in the sum of $50,000.
On 30 October 2019, I made Orders, by consent, for partial property distribution to the wife of the controlled monies held by the wife’s legal representatives, in the sum of $323,283.
Application for joinder
By Amended Application in a Case, filed on 18 October 2019, the husband’s mother, Ms K, sought orders for her to be joined to the proceedings. That Application was heard and dismissed on 22 October 2019. The parties agree that it was appropriate for me to give reasons for dismissing that Application in these Reasons for Judgment.
The Application was brought in circumstances where the orders sought by the wife as well as the orders sought by the husband both propose that the wife transfer her interests in the State J property to the husband.
Relevant background to joinder application
On 17 October 2008, the husband’s mother purchased the State J property in her sole name for the purchase price of $290,000 USD. The wife contends that although the intention was for the husband’s mother to reside in the State J property, the property was an investment for the parties. The husband and Ms K contend that the property was purchased for her to live in.
On 19 September 2008, the husband entered into a Deed of Gift in the sum of $60,000 to the husband’s mother to fund the deposit for the State J property. The parties agreed to draw down $69,673 from the ANZ Bank mortgage secured against the P Town property and the Suburb C property to fund this gift. The wife asserts that the money was gifted to the husband’s mother to avoid her having to pay tax. It has not been necessary to determine whether that was the case.
The balance of the purchase price was funded with a mortgage taken out in the husband’s mother’s name in the sum of approximately $230,000 USD. The husband contends that he spoke to a bank manager in the USA to obtain a loan to purchase the property and was advised that the parties were unable to as they were not American citizens.
After the purchase of the property, the husband paid for renovations and maintenance from the lottery winnings, in the sum of $130,000 AUD.
In late 2008, the parties were added to the title of the State J property as joint tenants with the husband’s mother. The husband’s mother asserts that this was due to her concerns that if the title of the property was in her name it potentially impacted upon her entitlement to receive a government pension.
On 1 April 2010, by Grant Deed, the husband’s mother transferred the State J property to the parties and was removed from the title. The husband’s mother contends that this was due to her concern that her estranged daughter, Ms Selma Olds, may lay claim to the property after her passing.
The husband and Ms K acknowledge that the current rent on the State J property is $4,305.74 USD per month. The rent is paid into an account in the United States, in the husband’s sole name. A direct debit of $1,500 is paid into a joint account with the husband's mother to pay for the mortgage secured over the property each month.
Orders sought
The husband’s mother relied upon her Affidavit dated 23 September 2019 and an Amended Application in a Case filed 18 October 2019 that sought the following:
1. An order that the second respondent can join the substantive proceedings in this matter.
2. A declaration that the Applicant in the case, the second respondent in the proceedings, is the beneficial owner of the property situated at 1 including 2 G Street, City H, State J, United States of America.
3. That the Applicant in the proceedings and First Respondent in the Application in the case do all acts and things necessary to transfer her title and interest in the properties situated at 1 including 2 G Street, City H, State J, United States of America.
4. In the alternative to Order 1 and 2 above, That the Applicant do all acts and things necessary to transfer all her right, title and interest in the property situated at 1 and including 2 G Street, City H, State J, United States of America to the First Respondent and that the First Respondent enters into a deed to establish the Applicant in the Case's life interest in the property.
5. In the alternative to Order 1, 2 and 3 above, a declaration that the Applicant and the First Respondent are holding the properties situated at 1 G Street, City H, State J, United States of America on constructive trust for the Second Respondent.
6. In the alternative to Order 1, 2, 3 and 4 above, a declaration that the Applicant be granted a Life Estate in the properties situated at 1 G Street, City H, State J, United States and that she has exclusive use of the properties including the full benefit of the income earned from the properties.
7. Such further or alternate order as this Honourable Court deems fit.
8. Costs of the Application should it be opposed.
In seeking that the Application by Ms K be dismissed, the wife relied upon her Affidavit dated 17 October 2019 and Response to an Application in a Case filed 17 October 2019.
The husband, as the Second Respondent to the Application in a Case, supported proposed order 1. of his mother’s Application that she be joined to the proceedings. He relied upon his Affidavit dated 22 October 2019 and Response to an Application in a Case filed on 22 October 2019.
Consideration of Application for joinder
Section 79(10)(b) of the Act provides that any person whose interest would be affected by the making of an order that is sought by parties to the marriage is entitled to be joined to the proceedings.
That provision reflects a fundamental principle of natural justice described by McHugh J in State of Victoria v Sutton [1998] 195 CLR 291 at [77], in the following terms:
The rules of natural justice require that, before a court makes an order that may affect the rights or interests of a person, that person should be given an opportunity to contest the making of that order. Because that is so, it is the invariable practice of the courts to require such a person to be joined as a party if there is an arguable possibility that he or she may be affected by the making of the order.
The principal is also reflected in r 6.02 (1) of the Family Law Rules, which provides that:
A person whose rights may be directly affected by an issue in a case, and whose participation as a party is necessary for the court to determine all issues in dispute in the case, must be included as a party to the case.
In Wayne & Dillon & Dillon [2008] FamCAFC 204 at [18] and [19], Warnick J said of the word “necessary” as used in r 11.01(1) of the Federal Magistrates Court Rules (as they then were called) – a rule very similar to r 6.02 of the Rules:
The word “necessary” ... must mean something more than “useful” or “expeditious”. In my view, if there are available alternative means to joinder to the substantive proceedings, of obtaining from a third person or someone already a party what is needed to allow an applicant for joinder to establish an identified “case”, joinder is unlikely to be “necessary”.
However, if a cause of action, recognisable at law, against a “third person” is particularised, then it is at least highly likely that joinder will be “necessary for the court to completely and finally determine all matters in dispute.”
In this matter neither party has particularised a cause of action against Ms K. As noted the orders proposed by both the husband and the wife in these proceedings seek orders for the State J property to be transferred to the husband.
Ms K contended that she has an equitable interest in the property as result of the operation of one or more of the following legal principles.
The solicitor for Ms K argued that Ms K is in a position to establish a constructive trust has arisen in respect to the State J property. She, correctly contends, at least under Australian law that, a constructive trust may arise by operation of law, irrespective of the parties’ intentions, to prevent the legal owner of property from acting unconscionably toward a person promised, or otherwise entitled, to an interest in the property. That is, a constructive trust “arises by operation of law whenever the circumstances are such that it would be unconscionable for the owner of property… to assert his own beneficial interest in the property and deny the beneficial interest of another.”[1]
[1] Paragon Finance PLC v DB Thakerar & Co [1999] 1 All ER 400 at 409 see also Linke & Ors v Linke & Ors [2018] VSC 505 (Keogh J) at [87]
The solicitor for Ms K further argues that her client is in a position to establish an entitlement to the State J property as result of the application of the principal of proprietary estoppel. In that respect, in Giumelli v Giumelli [1999] 196 CLR 101, the High Court held that, in order to find that equity should intervene due to proprietary estoppel, the Court must find that there was:
1. an assumption,
2. inducement of the assumption, and
3. action in reliance of the assumption
The solicitor for Ms K further argued that Ms K is in a position to establish the existence of a common intention constructive trust in respect to the State J property. A common intention constructive trust arises after the purchase of property where parties have a common intention that one will receive a beneficial interest in the property (Allen v Snyder [1977] 2 NSWLR 685, 690–1; Vedejs v Public Trustee [1985] VR 569; and Ogilvie v Ryan [1976] 2 NSWLR 504). There are three elements as set out below.
1. There must be an actual common intention that the claimant was to have a beneficial interest in the property. Such an intention may be inferred from words or conduct but cannot be imputed. In this case, that intention was that in exchange from transferring the land to the parties to the marriage, the Applicant would be permitted to reside in the property for the remainder of her life.
2. The claimant must have acted to his or her detriment in reliance on the common intention.
3. It would be unconscionable in the circumstances for the legal owner to deny the oral agreement and defeat the beneficial interest that was promised.
Finally, the solicitor for Ms K argues that Ms K is in a position to establish the existence of a windfall constructive trust. A windfall constructive trust may be imposed where one party has made contributions to a property, and it would be unconscionable for the registered proprietor to retain the benefit of those contributions. Baumgartner v Baumgartner [1987] 164 CLR 137.
For such a trust to be found the following is necessary;
a)The parties must be involved in a joint relationship or endeavour (Swettenham v Wild [2005] QCA 264).
b)There was a pooling of resources for the purposes of the joint relationship or endeavour. This might include consideration of the non-financial contributions made by the parties (Miller v Sutherland (1990) 14 Fam LR 416, 424; Muschinski v Dodds [1985] 160 CLR 583. .)
c)The joint relationship has come to an end. (Brendan Edgeworth et al, Sackville & Neave: Australian Property Law (LexisNexis Butterworths, 10th ed, 2016) [4.124])
d)It is unconscionable in the circumstances for the landowner to retain the benefit of the other’s contributions
The difficulty for Ms K is that the well-researched submissions of her solicitor, focus upon the operation of Australian law whereas the property is in the United States. No evidence was provided to the court regarding the likely position under the law of the United States or, more specifically, the law of State J where the property is located. This is particularly relevant where, as noted, on 1 April 2010, a Grant Deed was entered into between the husband’s mother and the parties transferring the title of the State J property to the parties. No evidence has been presented as to the significance of that Deed, which was voluntarily entered into by Ms K with the benefit of legal advice. In particular, no evidence has been presented as to the operation of State J law including the extent to which the operation of such a Deed can be displaced by principles with similar effect to those set out in the submissions of the solicitor for Ms K.
Further there is a well-established principle of private international law that it is not competent for this court to make enforceable orders in relation to real property under the jurisdiction of a foreign sovereign. British South Africa Co v Companhia de Mocambique [1893] AC 602.
The operation of that principle, has however, been adapted in the context of family law proceedings. The Full Court in Teo & Guan [2015] FamCAFC 94 cited, with approval, passage from a limited paper by Dr Anthony Dickey QC, ‘Orders in respect of foreign property under section 79’ (1993) 67 Australian Law Journal 538:
It may be objected that an order under s 79 cannot be made in respect of foreign property as this offends the common law jurisdictional bar on domestic courts adjudicating upon rights to foreign land as laid down in British South Africa Co v Companhia de Mocambique ([1893] AC 602). It now seems clear, however, that this jurisdictional limitation does not apply to proceedings under s 79, as the rule in the Mocambique case concerns proceedings only to determine existing title to, or existing right to possession of, foreign land. Proceedings under s 79 are of a different character. They concern rights arising from a matrimonial relationship, even though these rights may ultimately involve the disposition of foreign land. This point was made in respect of equivalent English proceedings by the Court of Appeal in Hamlin v Hamlin ([1986] Fam 11 at 21). The Family Court may nonetheless always decline in the exercise of its discretion to make an order under s 79 in respect of foreign land. It may do so, for example, if the order cannot be enforced in the foreign jurisdiction. … [Emphasis in original text]
The final two sentences of that extract are significant. They go to the question of the Court exercising discretion to make an order against a party in circumstances where that order might not be enforceable in the foreign jurisdiction. This point was also made by Kent J in Chen & Tan [2012] FamCA 225, where his Honour said at [18] that the ability of the Family Court to make an order against a party “in personam”:
…may be qualified to the extent that, having regard to the principle that a party ought not be ordered to do something illegal in the place it is to be done, when exercising jurisdiction in personam, Courts ought be alive to avoiding the making of an Order in relation to any assets located in a foreign country that might operate in direct conflict with the laws of that country.
(Citations omitted)
In this matter Ms K has, with respect, not provided evidence, including expert evidence as to the operation of law in State J and, accordingly, has not established that it would be appropriate for the court to make those orders sought by her. This is in circumstances where such orders have the potential to operate in direct conflict with the laws of State J.
In that respect, as Kent J also noted in Chen & Tan (supra);
Moreover, it has been held that a Court should not exercise extra-territorial jurisdiction where any Order the Court might make would be clearly futile.
(Citations omitted)
As result of not providing evidence in respect to the operation of State J law, Ms K has failed to satisfy me that it is appropriate to make the orders she seeks and, in particular, I am unable to determine whether the making of those orders would be in direct conflict with the laws of State J and/or would be a futility.
Moreover, even if I am wrong on that analysis, I nonetheless declined to grant Ms K leave to intervene in the proceedings because she failed to satisfy me that her “rights may be directly affected by an issue in a case” between the husband and wife in these proceedings. This is because, as noted, neither party is seeking any orders against the mother. Specifically, they are both seeking orders that the State J property be transferred to the husband. They are not seeking an order for the property to be sold or otherwise encumbered. Accordingly, insofar as Ms K contends that she has an equitable interest in that property she remains entitled to pursue such an application pursuant to the laws of State J and in an appropriate court located in that jurisdiction.
The solicitor for Ms K argued, however, that in circumstances where the son’s asset pool may be diminished by orders made in these proceedings, he may be reluctant to honour a commitment he gave his mother that she could live in the State J property for life. That submission, is, however, with respect, merely speculative insofar as it attempts to predict a possible change in the state of mind of the husband, her son. This is in circumstances where the husband has provided no evidence in respect to any such potential change of mind. Moreover, even if the potential for such a change of mind had been established that would be the indirect consequence of an order under s 79 of the Act and not a direct consequence as required by rule 6.02.
Lastly, it is argued by the solicitor for Ms K that she is directly impacted by these proceedings because the mortgage in respect to the State J property is in her name. In that respect it is acknowledged that the husband has continued to pay that mortgage from rental income received from the property and that rental income exceeds the amount of the mortgage that is payable. It is conceded that there is a theoretical possibility that the husband as the owner of the property may, in the future, decline to apply the proceeds he received by way of rental from the property towards payment of the mortgage on that property. However, that possibility exists today and it would continue to exist in the future under the orders sought by each of the parties in the proceedings. Those respective orders are for the property to be transferred to the husband. Accordingly, the same potential theoretical liability that Ms K faces today in respect to the mortgage on the State J property would continue to exist despite any orders that may be made in these proceedings. Accordingly, her rights, in respect to that mortgage are not directly affected by these proceedings in the context of the orders that each party is respectively seeking for the property to be transferred to the husband.
There is no question that, in considering each of the parties applications in this matter, the Court is obliged to take into account all of the property, wherever located: Pastrikos and Pastrikos (1980) FLC 90-897 at 75,654. This includes the property in the United States. However, that can be done without Ms K participating in these proceedings. The husband is in a position to present such evidence as he deems fit in respect to any encumbrances that may impact upon the State J property. This includes presenting evidence from his mother who was in the body of the Court during the course of the hearing of the Application. In circumstances where the husband was in a position to call evidence from Ms K in the proceedings if he had so chosen I determined that Ms K was not a “necessary” party to the proceedings in order for me to take into account the circumstances relating to the State J property.
Accordingly, for the reasons I have outlined above, I made Orders on 22 October 2019 dismissing the Application in a Case filed by Ms K.
Applications for final property distribution
The wife’s Application
The wife sought that orders be made in accordance with her Amended Initiating Application filed 9 October 2019 and otherwise in accordance with Exhibit 21, as follows:
1. That all previous Orders are discharged
2. That within 14 days of the date of these Orders, and simultaneously:
2.1 The Respondent Husband "the Husband" shall:
2.1.1 do all acts and things and sign all documents necessary to transfer to the Applicant Wife ("the Wife") all of his right, title and interest in the properties:
(a) B Street, Suburb C, in the State of New South Wales ("the Suburb C property")
(b) D Street, Suburb E, in the State of New South Wales ("the Suburb E property")
(c) Any interest that he has in an F time share, described as a 7,000 annual credit F time share membership ("F time share").
2.1.2 Pay the Wife the sum of $200,000, to an account as nominated by the Wife.
2.2 The Wife shall do all acts and things and sign all documents necessary to transfer to the Applicant Husband all her right, title and interest in the properties situated at 1 & 2 G Street, City H State J, USA ("the USA property"). To give effect to this Order:
2.2.l The Husband shall forthwith do all things to prepare the documents to be signed by the Wife to give effect to this Order, and provide same to the solicitor for the Wife;
2.2.2 The Wife shall sign the documents prepared by the Husband to give effect to this Order on receipt of those documents by her solicitor, and then provide such documents to her solicitor to hold in Escrow pending compliance by the Husband with Order 2.1 (2.1.1 and 2.1.2 inclusive), and will attend to the exchange of these documents with the Husband on his compliance.
3. That pending implementation of Order 2, the Husband shall be and is hereby restrained from:
3.1 selling, transferring, encumbering, alienating or in any other way dealing with the Suburb C property or the Suburb E property, except in compliance with these Orders;
3.2 selling, transferring, encumbering, alienating or in any other way dealing with the interest of the Husband and the Wife in the USA property;
3.3 leaving the Commonwealth of Australia.
4. That the Husband vacate the Suburb C property within 14 days of the date of these orders, and thereafter:
4.1 The Husband shall remain away;
4.2 the wife shall have sole use and occupation of the Suburb C property.
5. Pending the Husband's vacation of the Suburb C property pursuant to these Orders, the Husband shall do all acts and things to maintain the Suburb C property to a reasonable standard and in good condition.
6. That in default of the husband's compliance with order four (4) above, a Warrant for Possession pursuant to Rule 20.54 of the Family Law Rules 2004 be issued in respect to the Suburb C property so as to provide vacant possession of the property to the Wife.
7. Liberty to apply to the Court in chambers for the Warrant for Possession to issue.
8. That the Husband and Wife shall forthwith do all acts and things to direct and pay the balance of the controlled monies retained by the solicitor for the Applicant on behalf of the parties to an account as nominated by the Wife.
9. That as between the Wife and the Husband, and subject to the above Orders, the Wife and the Husband shall each respectively retain all interest in and entitlement to:
9.1 All personal property now in her/her respective possession or control;
9.2 All shares, debentures, units in unit trusts, bank, building society or credit union accounts standing in his/her sole name respectively;
9.3 All interests in life insurance policies and superannuation funds standing in his/her sole name respectively.
10. Both the Husband and Wife release the other from all actions, proceedings, claims, demands costs and expenses whatsoever and howsoever arising which either of them had or may have against the other.
11. That the parties shall do all acts and things necessary to give effect to these Orders.
12. That in the event that either party does not sign any document that is necessary to give effect to these Orders, the Registrar of the Family Court of Australia, Sydney Registry, shall be appointed pursuant to section 106A of the Family Law Act to execute such document in the name of the said party upon the Registrar being provide with evidence of said party not signing by way of affidavit.
The husband’s Application
The husband sought that orders be made in accordance with the Further Amended Response to Initiating Application (marked ‘Exhibit 16’ in the proceedings), as follows:
1. Within 14 days of the date of these Orders, the Wife shall forthwith and do all acts and things and sign all documents necessary to arrange the transfer of her right, title and interest in the former matrimonial home situated at B Street, Suburb C and known as being the whole of the land contained in Certificate of Title … ("the Suburb C property") to the Husband.
2. That the Husband indemnify and keep indemnified the Wife in relation to any and all Council rates, water rates and utilities and other outgoings in respect of the Suburb C property, including any arrears of same.
4. Within 56 days of the date of these Orders the Wife shall do all acts and things and sign all documents necessary to arrange the transfer of her right, title and interest in the properties situated at 1 and 2 G Street, City H, State J, United States (“U.S. properties”) to the Husband.
(a) The Husband shall, simultaneously with the transfer of the U.S. properties do all acts and things so as to discharge the Wife's liability for any mortgage secured over the U.S. properties and provide to the Wife a copy of the Discharge of Mortgage as evidence of same.
(b) That the Husband indemnify and keep indemnified the Wife in relation to any and all Council rates, water rates, taxes and other outgoings in respect of the U.S Properties, including any arrears of same.
4. That the Husband indemnify and keep indemnified the Wife in relation to any and all Council rates, water rates, taxes and other outgoings in respect of the U.S Properties, including any arrears of same.
5. Within 14 days of the date of these Orders:
(a) the Husband shall forthwith and do all acts and things and sign all documents necessary to arrange the transfer of his right, title and interest in the property situated at and known as D Street, Suburb E in the State of New South Wales being the whole of the land contained in Certificate of Title Folio Identifier … ("the Suburb E Property");
(b) Upon the transfer of the Suburb E Property to the Wife, the Wife shall be responsible for and shall pay any and all Council rates, water rates and utilities and other outgoings in respect of the Suburb E Property, including any arrears of same incurred from 1 May 2019, and indemnify and keep indemnified the Husband of same.
(c) Upon the transfer of the Suburb E Property to the Wife, the Wife will be responsible for and shall pay any and all capital gains tax liability associated with the Suburb E Property and indemnify and keep indemnified the Husband of same.
6. On a date that is note more than 6 months from the making of these Orders the Husband shall pay to the Wife such sum that is required to effect an overall adjustment of property interest of 60% to the Husband and 40% to the Wife.
7. In the event the Husband fails to make the payment referred to in Order 6 hereof the Husband shall thereafter forthwith do all acts and things and sign all documents so as to sell the Suburb C property and upon the settlement of the sale of the property the proceeds of sale shall be divided as follows:
(a) In payment of all usual rate adjustments.
(b) In payment of legal costs associated with the sale of the property.
(c) In payment to the Wife of such sum as required to discharge the Husband’s obligations pursuant to Order 6 hereof.
8. Pending the payment to the Wife referred to in Order 6 the Husband shall be restrained from encumbering the Suburb C Property unless in compliance with these orders or otherwise with the express written consent of the wife.
9. Within 14 days of the date of these Orders the parties shall do all acts and things and sign all documents as is necessary to pay to the Wife all principal and interest held in the Controlled Monies Account in the name of Matthews Folbigg Pty Ltd held on behalf of Ms Ali and Mr Ali.
10. The Wife shall retain the $150,000 partial property division that she has previously received from the Controlled Monies Account;
11. The Husband shall retain the $100,000 partial property division that he has previously received from the Controlled Monies Account.
12. Within 14 days of the date of these Orders the parties shall do all acts and things and sign all documents as is necessary to transfer the Company Q F time share to the wife at the wife’s expense.
10. (sic) That the Husband retain at the exclusion of the Wife the following assets:
(a) The Fiberglass speed boat and trailer, registration number …;
(b) Custom made box trailer, registration number …;
(c) Quad bike, … brand.
13. That the Husband be solely responsible for the loan repayable to Ms W and indemnify the Wife of the same.
14. That unless otherwise specified in these Orders:
(a) Each party be solely entitled to all chattels, goods, motor vehicles, furniture, furnishings and any other property in the possession or control of such party as at this date;
(b) Each party be solely entitled to any moneys, shares and debentures which stand in such party's name as at this date;
(c) Each party be solely entitled to any superannuation benefits held in such party's name and each party hereby foregoes any claim they may have to any superannuation benefits belonging to or earned by the other;
(d) Each party be solely liable for and indemnify the other against any debt, loan or liability whatsoever held in such party's name as at this date.
15. That the Wife pay the Husband's costs of and incidental to this application.
Evidence
The wife relied upon the following documents:
a)Affidavit of Ms Ali filed 30 August 2019; and
b)Financial Statement filed 30 August 2019.
The husband relied upon the following documents:
a)Affidavit of Mr Ali filed 4 September 2019; and
b)Financial Statement filed 4 September 2019.
The following exhibits were relied upon:
a)Tender bundle of annexures to the Affidavit of the wife (‘Exhibit 1’);
b)Tender bundle of annexures to the Affidavit of the husband (‘Exhibit 2’);
c)ANZ joint account ending in …87 statement of account from 2 January 2002 to 1 August 2002 (‘Exhibit 3’);
d)Husband’s T Bank account ending in …51 statement of account from 7 August 2014 to 6 February 2015 (‘Exhibit 4’);
e)Husband’s T Bank account ending in …51 statement of account from 7 August to 6 February 2015 and 2 October 2015 to 1 April 2015 (‘Exhibit 5’);
f)Husband’s T Bank account ending in …51 statement of account from 7 February 2015 to 6 August 2015 (‘Exhibit 6’);
g)Letter from Aitken Lawyers (representing the wife at the time) to Matthews Folbigg Lawyers (representing the husband) dated 16 October 2018 (‘Exhibit 7’);
h)Husband’s Financial Statement filed 10 December 2014 (‘Exhibit 8’);
i)Amended summons of relief filed 11 April 2007 in the Industrial Court of New South Wales (‘Exhibit 9’);
j)Husband’s Financial Statement filed 17 September 2018 (‘Exhibit 10’);
k)Final joint balance sheet of the parties (‘Exhibit 11’);
l)Costs notice for the wife (‘Exhibit 12’);
m)Costs notice for the husband (‘Exhibit 13’);
n)Material produced on subpoena by the Department of Immigration and Border Protection (‘Exhibit 14’);
o)Letter from Aitken Lawyers to Matthews Folbigg Lawyers dated 7 February 2017 (‘Exhibit 15’);
p)Further Amended Response to Initiating Application (‘Exhibit 16’);
q)Jointly agreed chronology (‘Exhibit 17’);
r)Super Fund 2 documents (‘Exhibit 18’);
s)Letter from Aitken Lawyers to Matthews Folbigg Lawyers dated 14 September 2018 (‘Exhibit 19’);
t)Minute of consent orders (‘Exhibit 20’); and
u)Proposed minute of orders sought by the wife (‘Exhibit 21’).
Inadequate disclosure
The obligation of disclosure is fundamental to the effective functioning of this jurisdiction. It is an obligation that exists both at common law and pursuant to statute.
On 17 June 2018, I made orders which included an order that the husband provide an undertaking as to disclosure in compliance with rule 13.15 of the Rules. No such undertaking was provided. Those orders also directed the husband, pursuant to rule 13.04(1)(g) to provide “details about disposal of property.”
In Briese & Briese (1986) FLC 91-713 at 75,181, Smithers J applied the House of Lords decision in Livesey v. Jenkins (1985) 1 All ER 106 in determining that:
… in financial proceedings between spouses each party must make a full and frank disclosure of all material facts. In that case it was made clear that full and frank disclosure was required as a matter of principle in the light of the fact that it was the duty of the Court, taking into account a number of designated criteria, to make a decision which basically involved the exercise of a discretion.
[Emphasis added].
His Honour further stated at 75,181:
In my view it is fundamental to the whole operation of the Family Law Act in financial cases that there is an obligation of the nature to which I have referred. Livesey v. Jenkins makes it clear that mere compliance with rules of court or practice directions does not alter the basic principle of the need for full and frank disclosure by the parties.
[Emphasis added].
In that regard, r 13.01(1) of the Rules relevantly provides that:
… each party to a case has a duty to the court and to each other party to give full and frank disclosure of all information relevant to the case, in a timely manner.
Further, r 13.04(1) of the Rules relevantly provides that:
A party to a financial case must make full and frank disclosure of the party's financial circumstances, including:
(a) the party's earnings, including income that is paid or assigned to another party, person or legal entity;
…
(g) any disposal of property (whether by sale, transfer, assignment or gift) made by the party, a legal entity mentioned in paragraph (c), a corporation or a trust mentioned in paragraph (f) that may affect, defeat or deplete a claim:
(i) in the 12 months immediately before the separation of the parties; or
(ii) since the final separation of the parties; and …
Clause 6 of Part 1 of Schedule 1 of the Rules relevantly provides:
(6) At all stages during the pre-action negotiations and, if a case is started, during the conduct of the case itself, the parties must have regard to: …
(i) the duty to make full and frank disclosure of all material facts, documents and other information relevant to the dispute.
Note: The duty of disclosure extends to the requirement to disclose any significant changes (see clause 4 of this Part).
[Emphasis added]
The fact that the obligation of disclosure exists as a duty to the Court, as well as the other party, is significant. It is also significant that the obligation is in respect to the disclosure of “information relevant to the dispute”, not simply one that attaches to the production of documents.
In Graf-Salzmann and Graf [2015] FCWA 68 Walters J noted:
… a judge is entitled to take a "robust view" in relation to findings regarding a party's financial position (including a party's capacity to meet any proposed order) where that party has failed to make full and frank disclosure of his/her financial position: see Chang v Su (2002) FLC 93-117 at [71] and [72].
In Efthidmiadis & Efthidmiadis (1993) FLC 92-361 at 79,804, the Full Court said:
So far as the wife is concerned, there is no doubt that she should be treated as substantially understating her income… The circumstance that the wife had a significantly greater income that she deposed to was very damaging to her on issues of credit overall and virtually ensured that she was put out of Court so far as s75(2) factors were concerned.
As noted by Bell J in Goddard Elliott v Fritsch [2012] VSC 87 at [894] – [895];
When it comes to making findings on the evidence, the non-disclosure of a party, and the appropriation by a party of matrimonial property for themselves, may be taken into account when making findings on the evidence. The applicable principle was enunciated in In the Marriage of Weir:
This court has pointed out in a line of cases leading up to the recent decision of the Full Court, … that it is the duty of a party involved in property proceedings in this jurisdiction to make a full disclosure of their financial affairs.… It is clear enough from his Honour's findings in the present case that the husband had not done so and had in fact pocketed the proceeds of a substantial number of cash sales. It is obvious that in most cases of this nature it is difficult enough for the other party to establish that fact let alone establish the quantum of what has been taken.
It seems to us that once it has been established that there has been a deliberate non disclosure, which follows from his Honour's findings in this case, then the court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature.
It can be seen that the non-disclosure, like an adverse finding as to credit, is a reason ‘not to be unduly cautious’ about making findings in favour of the innocent party. But it is not a basis, upon its own, for deciding an application against the non-disclosing party. There must be ‘an underlying body of evidence from which such conclusions can be drawn’.
In cases of non-disclosure, the court must still do the best it can, even if the findings have to be imprecise; further, the court may ‘err on the side of generosity to the party who might be otherwise be [sic] seen to be disadvantaged by the lack of complete candour’. [References omitted]
In this matter the husband has failed to disclose how an amount of $705,000 in cash which he withdrew from a T Bank term deposit account in February 2012 has been applied.
Further, the husband has failed to disclose rental income he has received and expenditure he has incurred in respect to the State J property. In that respect, despite having been requested to produce them, other than in respect to the financial years 2011 through to 2013, the husband has not produced his tax returns in respect to the State J property in the period subsequent to 2008.
It is therefore not possible to make an assessment as to the amount of net income the husband has received from the United States property save to the extent that his evidence is that he receives rental income of $4,915 USD per month in US dollars and the monthly mortgage is approximately $1,660 USD per month. However, those assertions have not been confirmed by the production of any current mortgage documents.
Senior counsel for the wife highlighted the significance of the husband’s nondisclosure in respect to the State J property noting that even if a calculation is made that for the past eight years the husband has received half of the amount that he currently states he is receiving by way of rental income then he would have received an amount approximating $250,000.
Not only does nondisclosure prevent the court from accurately assessing the benefit that the husband has received from the American property which, as noted, is jointly owned by both himself and the wife, it also makes it difficult to make an assessment of the husband’s income in the future for the purpose of considering whether it is appropriate to make an adjustment pursuant to s 75(2) of the Act.
Failure by the husband call evidence from Ms K
Despite, in the previous week, supporting an application by his mother to intervene in the proceedings, the husband elected not to call evidence from his mother Ms K. In the circumstances in which that occurred the rule in Jones v Dunkel [1959] 101 CLR 298 will apply where “it might reasonably have been expected”[2] or “it would be natural”[3], for one party to call or produce the witness. It has been held the rule applies in a case where there has been an “unexplained failure by a party to call a witness who is in the camp of that party”.
[2] Ronchi v Portland Smelter Services Ltd [2005] VSCA 83 (15 April 2005) [32] (Eames JA, Buchanan JA agreeing). (‘Ronchi’).
[3]Payne v Parker [1976] 1 NSWLR 191, 201 (Glass JA). (‘Payne’).
In Goddard Elliott v Fritsch (supra) Bell J succinctly outlined the potential consequence of a party failing to call evidence from a witness in circumstances where that witness has the potential to provide evidence that fills an evidentiary lacuna or supplement incomplete evidence regarding a material issue in the case. His Honour said at [45] – [46];
The general principle which is stated in Blatch v Archer is that ‘all evidence is to be weighed according to the proof which it was in the power of one side to have produced and in the power of the other to have contradicted’. It was held by Newton and Norris JJ in O’Donnell v Reichard (which was followed by Buchanan, Eames and Nettle JJA in Ronchi) that, in so weighing the evidence, the unexplained failure of the party to call the evidence may be taken into account against that party for two purposes:
(a) in deciding whether to accept any particular evidence, which has in fact been given, either for or against that party, and which relates to a matter with respect to which the person not called as a witness could have spoken; and (b) in deciding whether to draw inferences of fact, which are open to them upon evidence which has been given, again in relation to matters with respect to which the person not called as a witness could have spoken.
The unexplained failure of the party to call the witness cannot be used to reason that the evidence of the witness would not have been favourable to the party. The trier of fact cannot allow the inference which may (not must) be drawn to be elevated that high. It is limited to the inference that, if called, the evidence would not have assisted the case of the party failing to call the witness. As was held in Weissensteiner v The Queen, that inference is available when evaluating all of the evidence which is before the court, including the evidence given by witnesses whose credibility and reliability has been attacked. As applied in the case of evidence of that kind, Mason CJ, Deane and Dawson JJ held this to be the principle:
Doubts about the reliability of witnesses or about the inferences to be drawn from the evidence may be more readily discounted in the absence of contradictory evidence from a party who might have been expected to give or call it.
(Citations omitted]
The failure to call evidence from Ms K in this case is relevant because of the evidentiary lacuna in respect to income and expenses associated with the State J property. It is also relevant in the context where the credibility of evidence provided by the husband is a live issue in these proceedings.
Credit
Senior counsel for the wife contended that “the husband is an unreliable witness such that the Court would not accept his evidence on any factual issue in dispute with my client unless the contention he makes is supported by objective third party evidence.”
Counsel for the husband acknowledged that the husband was an unreliable historian and there were a number of instances where he is Affidavit was inconsistent with documentary records establishing dates of transactions.
It is, with respect, implausible, as contended by the husband that he did not have regard to relevant documents in preparing his Affidavit. For that reason I do not accept the husband’s explanation for his poor recollection of dates and details of transactions. This is particularly relevant in the context where a central issue in the proceedings has been the failure of the husband to account for an amount of approximately $705,000 which he obtained as a cash withdrawal from a T Bank account into which the lottery winnings, to which I have earlier referred, were paid.
The husband prevaricated in answering questions relating to the dates of transactions and the details of transactions that clearly predated receipt of the lottery winnings. On a number of occasions, when presented with relevant documentary evidence he had no choice other than to accept the error of the assertions he had made in his Affidavit in respect to those transactions.
The implausibility of the husband preparing his Affidavit without regard to that documentary evidence combined with the manner in which the husband gave evidence regarding those matters satisfies me that the husband’s assertions regarding a number of items of expenditure that clearly occurred before he received the lottery winnings was more than a mere oversight. For reasons which I set out below, I find that the husband deliberately asserted that those expenditures post-dated receipt of the lottery winnings in order to provide an explanation as to what he did with the $705,000 cash withdrawal.
In that context, the evidence establishes that on 23 January 2004 the husband deposited the lottery winnings of $1,169,383.61 into a Bank account. On 29 January 2004, $800,000 was withdrawn from the initial bank account and deposited into a term deposit with the T Bank.
During cross-examination the husband was asked what happened to the amount of $369,383 that had not been deposited into the term deposit. He was unable to provide an explanation as to how those funds were expended. I accept, however, the submission of Counsel for the husband that records produced during the course of these proceedings provide an explanation as to how at least some of that portion of the amount of $369,383 was expended.
As I will explain below, in detailing relevant transactions, the husband has, however, provided no adequate explanation as to how he has expended or applied the amount of $705,000.
As against the husband’s lack of credit in respect of these matters the evidence provided by the wife in her Affidavit is supported by appropriate documentary evidence and the version of events that she has provided is consistent with those documents. In my view, she did her best to respond appropriately and directly to questions asked of her in cross examination and she was a straightforward and credible witness.
In those circumstances, I accept the evidence of the wife in circumstances where it contradicts that of the husband.
The law – concepts and principles
Insofar as is relevant in these proceedings, s 79 of the Act sets out the following:
(1) In property settlement proceedings, the court may make such order as it considers appropriate:
(a) in the case of proceedings with respect to the property of the parties to the marriage or either of them--altering the interests of the parties to the marriage in the property; or
…
(c) an order for a settlement of property in substitution for any interest in the property; and
(d) an order requiring:
(i) either or both of the parties to the marriage; or
…
to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines.
…
(2) The 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.
In exercising that discretion, the Court is required to take into account the matters set out in s 79(4) of the Act, as follows:
(4) In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
(a) the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c) the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d) the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e) the matters referred to in subsection 75(2) so far as they are relevant; and
(f) any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
Since the decision of the High Court in Stanford & Stanford (2012) 247 CLR [108], there has been some debate as to the approach that should be taken by the Court in the exercise of its discretion pursuant to s 79 of the Act.
Prior to Stanford (supra) the Family Court had established principles for determining what kind of order is just and equitable under s 79(2). In the leading case of In theMarriage of Hickey (2003) 30 Fam LR 355, 370 [39], it was held that the preferred approach was to adhere to the following four steps:
a)identify and determine the asset pool of the parties as at the date of the hearing (this necessarily involves identifying both the assets and liabilities).
b)identify and determine each of the parties’ financial and other contributions to the date of the hearing (this can include the financial contributions made before, during and after the marriage).
c)assess how future and other events may have a financial impact on either of the parties, such as their age and state of health and their income and property or financial resources (known as the s 75(2) factors).
d)step back and examine this formula-based reasoning against the history of the marriage, intangible considerations and other contingencies so as to consider whether the outcome represents a just and equitable result.
That approach had been endorsed many times,[4] however, as the High Court noted in Stanford (supra), s 79(2) provides that the Court shall not make an order altering the interests of the parties to the matrimonial property, unless it is satisfied that “in all the circumstances, it is just and equitable to make the order”. Accordingly, since Stanford (supra) it has generally been the practice of the Family Court to determine as an initial issue, whether it is just and equitable to make an adjustment of marital property.
[4] See for example Manolis v Manolis [No 2] (2011) FamCAFC 105 (13 May 2011) [63] (Coleman, May and Ainslie-Wallace JJ); Kildea v Kildea (2007) 38 Fam LR 347, 365 [104] (Finn, May and Boland JJ); In the Marriage of Coghlan (2005) 33 Fam LR 414, 420 [22] (Bryant CJ, Finn and Coleman JJ), 440 [142] (O’Ryan J).
More generally in Petruski & Balewa [2013] FamCAFC 15 at [49], the Full Court said:
The task of assessing contributions under s 79 of the Act is an holistic one; what is required is to evaluate the extent of the contributions of all types made by each of the parties in the context of their particular relationship (Dickons & Dickons [2012] FamCAFC 154). As was also said by the Full Court in Lovine & Connor and Anor [2012] FamCAFC 168, at paragraphs 40 and 41 such an evaluation “inevitably involves value judgments and matters of impression”, and accordingly it cannot be treated as “a mathematical exercise.”
Consideration
Is it just and equitable to make a property adjustment?
Both parties sought an adjustment of their property interests pursuant to s 79 of the Act. In that regard, in Stanford (supra) at [42], the High Court said:
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).
In this matter, the title of the Suburb C property is in both the parties’ names. This needs to be separated so that the parties can get on with their lives. It is also necessary to make orders concerning the proceeds of the sale of the P Town property and the timeshare interests that the parties have. In both of their Applications, the parties are in agreement that the title to the State J property should be transferred to the husband.
It was not disputed that the parties cannot continue to access those properties or sharing the benefits of those properties as was the case when they were married couple. It is therefore appropriate, just and equitable to make a property adjustment.
The matrimonial asset pool
Having determined that it is just and equitable to make orders pursuant to s 79, the High Court in Stanford (supra) and the Full Court in Bevan & Bevan [2013] FamCAFC 116 confirmed that the starting point for the Court in property proceedings is the identification of the legal and equitable interests of the parties’ assets, liabilities, superannuation and financial resources, as at the date of hearing.
The parties’ respective contentions in respect to the matrimonial property pool are set out in the following balance sheet.
| ASSETS | ||||
| Ownership | Description | Wife’s value | Husband’s value | |
| 1 | Joint | B Street, Suburb C | 800,000 | 800,000 |
| 2 | Husband | D Street, Suburb E | 590,000 | 590,000 |
| 3 | Joint | 1 G Street, City H, State J (U.S.A.) | 1,102,600 | 1,102,600 |
| 4 | Joint | Controlled monies account maintained by the solicitor for the Wife on behalf of the parties | 323,283 | 323,283 |
| 5 | Joint | 7,000 annual credit F time share membership | 3,000 | 3,000 |
| 6 | Wife | Bank Accounts | 14,325 | 20,242 |
| 7 | Wife | Shares | 57,820 | 57,820 |
| 8 | Husband | Bank accounts | 198,389 | 198,389 |
| 9 | Husband | Company AA and Company BB Shares | 17,704 | 17,704 |
| 10 | Husband | Motor vehicle 1. | 4,100 | 4,100 |
| 11 | Husband | Fibreglass speed boat (1994) | 9,200 | 4,000 |
| 12 | Husband | Quad Bike (2006) | 3,500 | 3,500 |
| 13 | Husband | Custom made box trailer (Rego …) | 1,000 | 1,000 |
| 14 | Husband | Tractor | 8,000 | NIL |
| 15 | Wife | Motor Vehicle | NIL | Not known |
| 16 | ||||
| Total | $ 3,132,921 | $ 3,125,838 | ||
| ADDBACKS | ||||
| Ownership | Description | Wife/de facto partner's value | Husband/de facto partner's value | |
| 17 | Husband | Assets sold by the husband after the date of separation | 114,938 | NIL |
| 18 | Husband | lottery funds $950,265.97 in account …12 (p21 - 25 of W's affidavit) | 959,091 | NIL |
| 19 | Husband | Paid Legals | TBC | Stated at 23 |
| 20 | Wife | Paid legal fees | 15,000 | 100,000 |
| 21 | Wife | Funds received by the Wife from part of the proceeds of sale of the Queensland Property | NIL | 13,083 |
| 22 | Wife | Partial property distribution received by Wife | 107,600 | 150,000 |
| 23 | Husband | Partial property distribution received by the husband | 100,000 | 100,000 |
| Total | $ 1,296,629 | $ 165,000 | ||
| LIABILITIES | ||||
| Ownership | Description | Wife’s value | Husband’s value | |
| 24 | Husband | CC Bank - Mortgage - U.S. Property $212,131 US converted to AUD | 311,131 | 311,131 |
| 25 | Wife | ANZ Visa Credit Card (account …62) | 24,478 | NIL |
| 26 | Wife | ANZ Visa Credit Card (account …30) | 4,674 | NIL |
| 27 | Wife | DD Bank | 10,697 | NIL |
| 28 | Wife | EE Bank Loan | 11,970 | NIL |
| 29 | Wife | ANZ Personal Loan #...83 | 13,124 | NIL |
| 30 | Wife | Income tax | 22,997 | NIL |
| 31 | Husband | ANZ Visa #...92 | 7,327 | 7,327 |
| 32 | Husband | Tax fine (State J) | NIL | 5,718 ( |
| 33 | Joint | Loan from Ms W | NIL | 10,000 |
| 34 | Joint | Anticipated taxes if US property sold | NK | 109,428 |
| 35 | Husband | Outstanding CGT for P Town sale | NIL | 72,311 |
| 36 | Husband | Anticipated CGT if Suburb E property is sold | NIL | 804,417 |
| Total | $ 406,398 | $ 1,211,332 | ||
| SUPERANNUATION | |||||
| Member | Name of fund | Type of interest | Wife’s value | Husband’s value | |
| 37 | Wife | Super Fund 1 | Accumulation | 257,936 | Not known |
| 38 | Husband | Super Fund 2 | Accumulation | 153,816 | 153,816 |
| 39 | Wife | Super Fund 3 | Accumulation | 19,150 | 19,150 |
| Total | $ 430,902 | $ 172,966 | |||
Assets consideration
The parties were able to reach agreement in respect to items 1, 2, 3, 4, 5, 7, 8, 9, 10, 12 and 13.,
As these are proceedings under Part VIII of the Act, the rules of evidence apply. This includes the opinion rule as set out in s 76(1) of the Evidence Act 1995 (Cth) which, provides that in the absence of the application of a relevant exemption, “evidence of an opinion is not admissible to prove the existence of a fact about the existence of which the opinion was expressed.” It was not asserted that a relevant exemption applies in this case. There is therefore no admissible evidence before the court in respect to the value of the following items:
·item 11 – fibreglass speed boat
·item 14 - tractor
·item 15 – wife motor vehicle.
Accordingly, those items will be removed from the balance sheet.
In respect to item 6 – being the wife’s bank accounts, it was, appropriately, in my view, conceded by senior counsel for the wife that the wife has not produced evidence to support her contention that her bank account is as asserted in the first column of the balance sheet and in those circumstances, I accept that the figure is $20,242.
Principles relevant to add backs
The rationale for “add backs” was described by the Full Court in Mayne & Mayne (2011) FLC 93-479 at 85,896-97 in the following terms:
Parties to proceedings about the division of property before the Family Court … frequently urge the Court to add-back assets or funds that have been applied by one party or another for allegedly his or her own purposes after separation. The rationale is that one party should not benefit from a premature distribution of the assets. An obvious example is withdrawing and using money from a bank account either joint or owned by one of the parties. …
The application of the funds removed … may have been for a personal purpose (for example, to pay legal fees) or it may have been applied in the sustenance of a party or the children of the parties.
If the former is the case this has generally been found to be a pre-emptive unilateral division of property. If the latter is the case then the principles enunciated in Marker v Marker [[1998] FamCA 42] and Chorn NH & Hopkins RC [(2004) FLC 93-204] apply. If the money was, or part of the money, was used to meet reasonable living expenses then that money, or that part of the money, is not “added-back” or regarded as a pre-emptive distribution. [Emphasis added]
In AJO & GRO [2005] FLC 93-218 at 79,617, the Full Court identified three categories where it may be appropriate to notionally add back an item of expenditure, as follows:
e)Where the parties have expended money on legal fees: DJM & JLM (1998) FLC 92-816 at 85,262;
f)Where there has been a premature distribution of matrimonial assets: Townsend & Townsend (1995) FLC 92-569 at 81,654; and
g)In the circumstances outlined by Baker J in Kowaliw and Kowaliw (1981) FLC 91-092 at 76,644, including:
i.“where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets”; or
ii.“where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value”.
Those principles have been applied in a number of cases where one party has prematurely obtained the benefit of the property of the relationship prior to the question of an appropriate adjustment being considered at final hearing.
The decision of the High Court in Stanford (supra) has created some uncertainty as to whether the approach of the Court in respect to add backs is correct. In Stanford (supra), the High Court said at [37] that the first step in respect to s 79 proceedings is:
… 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.
[Emphasis in original]
In Mayne (supra), Faulks J said at 85,897 that, in considering the existing legal and equitable interests of the parties to that appeal, “[B]y definition it would seem that property which has been spent when the matter is before the Court is no longer there and is not property”. [Emphasis in original]
However, more recently, in Trevi & Trevi [2018] FamCAFC 173 at [30], the Full Court stated:
Two fundamental premises emerge from Omacini and the authorities preceding it. First, “adding back” is a discretionary exercise. When the discretion is exercised in favour of adding back, it reflects a decision that, exceptionally, in the particular circumstances of a case, justice and equity requires it. The second premise is its corollary: in cases that are not “exceptional” justice and equity can be achieved, not by adding back, but by the exercise of a different discretion – usually by taking up the same as a relevant s 75(2) factor. Indeed, it has been said that the latter is “a course which is, perhaps, technically more correct” than adding back to the list of existing interests in property.
(References omitted)
In that decision, their Honours then went on to helpfully clarify the appropriate approach to the treatment of add backs in the context of Stanford (supra) at [46] to [47], as follows:
In Stanford v Stanford, the High Court emphasised as fundamental that a consideration of whether it is just and equitable to make a property settlement order begins by “identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property”.
The essence of a claim for addbacks is that the asserted sum/s should be added to the value of the existing property interests of the parties and, subsequent to the assessment of contributions, credited to the spending party as part of the value of their assessed entitlements. Doing so does not offend what was emphasised by the High Court. Adding back does not seek to create property interests that do not exist. Rather, doing so emphasises that satisfying the respective requirements of ss 79(2) and (4) of the Act to do justice and equity can require an “accounting” or “balance sheet” exercise for the purposes of s 79(2) and (4), so as to include the value of the dissipated property or expended sums within the total value of the parties’ existing interests in property, and to credit the value of same against the assessed entitlement of the dissipating or spending party.
The wife, on the other hand, contends that the husband has overstated the contributions he made in terms of supporting Ms L. She does acknowledge, however, that he did provide some assistance and also shared some costs in respect to Ms L including education expenses and expenses associated with extracurricular activities. The wife further acknowledges that the husband provided some assistance in caring for Ms L including transporting her to school and various activities. The husband acknowledges that, as Ms L increased in maturity, she made her own way to school.
The husband contends that after he ceased work in 2006, he played a greater role in caring for Ms L. However, at that stage Ms L was herself an adult. In circumstances where I prefer the evidence of the wife I am satisfied that the husband did not substantially increase the time or intensity of work he undertook in and around the house after he ceased full-time employment in 2006.
In this matter while there is a difference in emphasis in the parties’ evidence as to the contributions the husband made effectively as a homemaker and carer for Ms L, his contribution nonetheless needs to be acknowledged. In the period up until he ceased employment in 2006, that contribution together with the parties’ respective contributions in earning income in their paid employment should be assessed as one of equality.
Accordingly, in the period between the parties cohabitation and the husband ceasing his business activities in 2006, I am satisfied that the parties contributions in terms of s 79(4) of the Act, both direct and indirect, should be assessed as equal.
As previously noted, in 2006 the husband ceased his business activity. He contends this was as result of a back injury which he sustained in that year. I have found that a back injury, which the husband sustained in 2002 was such that it limited some aspects of his employment including heavy lifting and working in confined spaces. However, it was not such that it caused him to cease his business activities. This is confirmed in documentation produced concerning the husband’s dispute with the New South Wales Government (Exhibit 9). In respect to that dispute, the husband contended that the State Government had wrongly terminated its contract with the husband’s business not that he was incapable of providing services to the State Government.
The husband contends that the Court should nonetheless consider the interest which he contributed primarily as result of the investment of lottery winnings but also as result of interest earned on the remaining proceeds of the business which he retained. As I have indicated, I consider the lotto winning to be a joint contribution and, therefore, I do not consider the interest earned on those funds to be a contribution solely on the part of the husband. The husband carries the burden of proving the extent of his contributions and the evidence does not enable me to separately determine the interest earned by the husband on the funds he retained following cessation of his business activities. However, in the context of the parties’ asset pool, the amount of interest earned from those funds would not have been substantial.
Comparatively, the wife continued to be actively engaged in employment throughout the parties’ relationship and subsequent to the parties’ relationship. To her credit this included retraining after she was retrenched from her employment in the banking industry.
As I have previously noted, in Grier & Malphas (supra) the Full court found that the parties contributions as a homemaker and parent needed to be equally valued to those contributions provided by a person skilled in business and commerce. However, that finding was made in the context of the parties in that case agreeing that “both parties gave their best in business, parenting and all aspects of their relationship”. That was not the case in respect to the relationship between the parties in the present case. I am satisfied that the husband failed to adequately exploit his own earning capacity in the period after he ceased employment in 2006. The evidence establishes that, since that time, he had the physical capacity to play social sport and he conceded that he had the capacity to engage in employment in a managerial capacity including in the running of a café.
In those circumstances I find that the wife made a greater indirect contribution in the period subsequent to the husband ceasing employment in 2006 and their separation in 2011.
Post separation contributions
I am satisfied that, in the period subsequent to the parties’ separation in 2011, the husband has continued to utilise the parties’ property for his own benefit. I have arrived at that conclusion because of the fact that the husband, who denies earning an income has been able to maintain a comfortable lifestyle including regularly undertaking overseas trips and providing financial support to his current partner when she lived in Country I.
In determining that to be the case, I am not in a position to determine the extent to which the husband has decreased the parties’ property by expending the sum of $705,000 which has not been properly accounted for after it was withdrawn from the T Bank term deposit in early 2012. In the absence of the husband providing proper disclosure as to how those funds have been expended an inference will be made contrary to his interests. That is, I infer that the husband has had the benefit of the expenditure of those funds.
Unlike the husband, who has accessed and, I infer, depleted the property of the parties in the period subsequent to the parties’ separation the wife has continued in full-time employment in circumstances where she has had limited access to the matrimonial property. This included having to rent accommodation while the husband was able to continue living in a property of the parties’ and receive the benefit of rental income from the Suburb E property and the State J property.
Summary of findings as result of s 79(4) contributions
As result of the matters to which I have referred I am satisfied that it is appropriate to make an adjustment in the wife’s favour in respect to s 79(4) contributions of 5%. I will separately consider whether any additional adjustment should be made pursuant to s 75(2) considerations.
Relevant section 75(2) factors
Certain of the considerations set out in s 75(2) of the Act are not relevant to the facts of this matter. Accordingly, while I have considered all of the factors listed in s 75(2) of the Act, I will focus only on those that are considered to be of relevance to these proceedings.
(a) the age and state of health of each of the parties
As earlier noted, the husband contends that, in 2006, he sustained a serious back injury that resulted in him retiring from employment giving up his business interest. The details of his injuries are set out at paragraphs 27 and 28 of his Affidavit. Evidence given by the husband during the course of these proceedings included the fact that he regularly plays social sport as well as the fact that he acknowledges that he could work in the capacity as a manager of a café. That evidence establishes that the husband has, in the paragraphs to which I have referred, exaggerated the extent of his injury and its impact on his earning capacity.
In that respect, I note that the husband travelled to the United States each year from 2008 to 2016. He travelled to Country I eight times. He also travelled to China, Country GG and holidayed in Country HH. As noted, he has played and continues to play social sport.
Contrary to his assertions that he ceased work in 2006 as result of his back injury. In statements he has made in respect to proceedings in the Industrial Commission of New South Wales, it is clear that the husband, through his business ceased providing services to the government as a result of a contractual dispute and not an incapacity as result of a back injury (Exhibit 9).
The mother is in good health and has demonstrated a capacity for the hard work that she has undertaken both during the course of the parties’ relationship and subsequent to their separation.
(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment
As result of the inadequate disclosure provided by the husband is not possible to make a determination as to the husband’s income, property and financial resources. It is of note, however, that the husband contends he has not worked since 2006 but, since that time he has had the capacity to maintain a comfortable standard of living including undertaking regular overseas trips to which I have referred. Despite contending that he has not worked he also had the capacity to take lump sum amounts to Country I to assist in the support of his current wife when she was living there.
I respectfully agree with and accept the submission of senior counsel for the wife, that the evidence concerning the husband’s lifestyle in the period subsequent to 2006 confirms that he has had substantial financial resources available to him. In circumstances where the husband has failed to provide adequate disclosure that inference is determined contrary to his interests.
In terms of earning capacity, it appears to be the case that the husband sustained an injury to his back in 2002. However, the husband managed to continue working until 2006. The husband contends, however, that the condition of his back in 2006 necessitated him retiring from work and disbanding his business.
Senior counsel for the wife referred to documents produced by the Department of Immigration (Exhibit 14) which contain a phone message sent by the husband to his current partner in 2013 referring to the fact that he was, at the time of sending that message, working. The husband has not provided a satisfactory explanation as to why he made such a reference in that text exchange. Nevertheless, in circumstances where it is denied by the husband, the evidence is not such that I can determine that he was, as a matter of probability, working in 2013 or subsequently.
Nevertheless, as noted, despite claiming to be incapacitated for employment the husband has, in the period subsequent to the party separation, contemplated engaging in work managing a café. The husband also acknowledges that he regularly plays social sport.
I accept that the husband’s back injury is such that it is likely to prevent him engaging in employment requiring heavy lifting and working in confined spaces. He nonetheless has a substantial residual earning capacity.
The wife has demonstrated an admirable capacity to retrain the cessation of her role as bank officer in 2012 or 2013 and she currently works three jobs in order to earn adequate income.
In those circumstances the evidence satisfies me that the parties have a comparable earning capacity.
(c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years
The husband and his current partner have 2 children, X who was born in 2016 and Y who was born in 2018.
(f) the eligibility of either party for a pension, allowance or benefit under: (i) any law of the Commonwealth, of a State or Territory or of another country; or (ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia; and the rate of any such pension, allowance or benefit being paid to either party.
Neither party is in receipt of a government pension or benefit. I have earlier referred to the relatively modest superannuation entitlements of each of the parties. In that respect I have noted that the wife’s entitlement is marginally greater than that of the husband. This is a consequence of the wife continuing in paid employment.
(g) where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable.
As previously noted, despite not being in paid employment since 2006, the husband has been able to maintain a comfortable standard of living including engaging the overseas travel to which I have earlier referred.
Comparatively, the wife has had quite a financial struggle as result of having to find and pay for her own rental accommodation and pay for these legal proceedings.
Her position has not been assisted by relatively intransigent position adopted by the husband in respect to the wife accessing marital resources that have been available that otherwise would have assisted her to sustain her standard of living and meet her legal expenses. Specifically, it has been necessary for the wife to seek relevant orders from this Court in order to access the funds that I have referred to as partial property distribution is as set out in the balance sheet.
(ha) the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant.
This is not a relevant consideration.
(j) the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party.
I have not placed weight on this consideration. This is because, after the parties commenced cohabitation in 1998, they essentially continued with their pre-cohabitation practices of working an undertaking their respective household duties and responsibilities.
In that sense neither party has made a contribution, in terms of this provision, that is over and above the other.
(k) the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration
The parties commenced cohabitation in 1998 and married in 1999. They separated in February 2011.
At the time the parties commenced cohabitation the wife’s daughter was approximately 13 years old. While being the primary carer of her daughter the wife was nonetheless able to continue in her career working in the banking industry despite having those caring responsibilities.
I have previously acknowledged that the husband provided some assistance in respect to supporting in caring for Ms L, however, that did not impact upon his earning capacity.
(l) the need to protect a party who wishes to continue that party's role as a parent.
The husband asserts that he is not working as a result of incapacity due to a back injury which he contends he sustained in 2006. The husband is not contended that he is refraining from working because he wishes to play the predominant role in caring for the children of himself and his new partner.
(m) if either party is cohabiting with another person—the financial circumstances relating to the cohabitation
At paragraph 34 of his financial statement the husband contends that he is paying approximately $500 per week in respect to the living expenses of his children to his new relationship X and Y. He further contends that he is paying approximately 300 per week in respect to the expenses of his current partner Ms M.
At paragraph 17 of his financial statement the husband contends that his current partner earns an average weekly income of approximately $265 per week.
(n) the terms of any order made or proposed to be made under section 79 in relation to: (i) the property of the parties; or (ii) vested bankruptcy property in relation to a bankrupt party
In this matter this is a significant consideration. This is because, in determining the adjustment to the parties’ property, having regard to the matters set out in s 79 (4) of the Act, I have inferred, contrary to the husband’s interest, that he has had the benefit of the sum of $705,000 which, in February 2012, he withdrew from a term deposit holding lottery winnings.
In those circumstances care must be taken not to impose upon the husband an additional detriment relating to those same considerations to which I have had regard in determining the adjustment pursuant to section 79 (4) of the Act.
(na) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
This is not a relevant consideration.
(o) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account
The husband acknowledge that he retained an insurance payment in respect to a second insurance claim for storm damage and fencing to the property at P Town. The amount that he retained was a sum of $7,930. This was in addition to a further amount of $4,313 which the husband received by way of a payment in respect another insurance claim concerning that property.
Further, the husband acknowledge that in the period between 2012 and 2015, he sold cattle that had been on the P Town property for which he received a payment of approximately $6,000.
In addition, the husband retained the proceeds of the sale of an excavator that had been on the P Town property. The wife contends that the value of the excavator was approximately $22,864. The husband also retained a bond refund which was received from tenants who vacated the Suburb E property subsequent to orders being made for that to occur on 17 September 2018.
Comparatively, it is acknowledged that the wife retained the benefit of the amount of $13,083.74 which the wife retained from the proceeds of the sale of the parties’ Queensland property.
Senior counsel for the wife contended that additional factors that the Court should consider pursuant to section 75(2)(o) is that, it was contended, the Court should infer that the husband induced his mother to attempt to intervene in these proceedings in respect to an unmeritorious claim regarding her asserted interest in the State J property. It should be inferred, it was contended, that the husband’s actions in so doing were a “device to attempt to reduce the pool of property” available for distribution between the parties.
It is the case that I have dismissed the Application by the husband’s mother, Ms K, to intervene in the proceedings. The information presented to the Court is insufficient to enable the Court to safely conclude that Ms K’s attempted intervention was as a result of inducement by the husband and/or a device on his part. Issues regarding the circumstances in which the Application was made and the manner in which it was conducted are more appropriately considered in the event of an Application for costs relating to those proceedings.
Senior counsel for the wife further contended that the court should have regard to the fact that, while the evidence indicates that the husband enjoyed a comfortable lifestyle in the period subsequent to the party’s separation, the wife has had quite a struggle to financially sustain herself. Specifically, it is contended that the husband has unreasonably rejected justified applications on the part of the wife to access the funds of the parties, including those held in a controlled monies account, which the husband could reasonably anticipate would be allocated to the wife as part of an adjustment of the parties’ property at final hearing.
However, these contentions as to the manner in which the husband has conducted these proceedings is a matter more appropriately considered in the context of the potential application of s 117 of the Act. In arriving at that conclusion I note, that prior to the commencement of submissions, the husband appropriately, in my view, agreed to the wife accessing funds to assist her to meet her living expenses in the period subsequent to the hearing of the case and the delivery of judgement.
Finally, it is argued that the Court should also have regard to the fact that, at a time when the husband and the wife were living under the same roof at the Suburb C property, in January 2018 the husband introduced into that property his current partner and their child X. Senior counsel for the wife stated that this resulted in the wife being required to live in a “terrible environment” until such time as an application for an Apprehended Violence Order (AVO) was made against her in August 2018. It was contended the Court should have regard to that matter, together with the fact that the wife was required to incur legal fees in successfully defending the application for the AVO in determining what is a fair and reasonable adjustment of the parties’ property.
The husband, on the other hand, contends that he introduced his current partner and their eldest child into that property in circumstances where that was not the permanent residence of the wife or, more specifically, that she did not spend the totality of her time living there.
I accept that it was, the very least, a gross discourtesy to the wife for the husband to introduce his current partner and their eldest child into the home in which both he and the wife were living at the time. However, the information before the Court regarding the circumstances in which the husband introduced his current partner and X into the Suburb C property and the circumstances in which the parties lived there in the period between January until August 2018 is not such that I can safely have regard to those circumstances as a factor to be considered in making an adjustment pursuant to either s 79(4) or s 75(2) of the Act.
Finally, it was contended, by senior counsel for the wife, that the court should also have regard to the fact that, despite Orders being made in September 2018 requiring the husband to give notice to tenants occupying the Suburb E property, that they were required to vacate that property to facilitate the wife staying in that property, he failed to give that notice until the lease on the property had expired.
I have had regard to that matter in not acceding to the Application by the husband for the totality of monies received by the wife by way of interim property distribution being added back to the property pool. Specifically, I have failed to include as an add back, amounts paid by the wife in respect to rental and storage fees in respect to that period as set out in paragraph 32 of her Affidavit. Accordingly, it would be double counting to have regard to that matter has an additional item pursuant to s 75 (2) of the Act.
No additional adjustment to s 75(2) considerations
In light of the matters to which I have earlier referred, including the fact that I have considered both parties to have a comparable earning capacity, I am not satisfied that it is appropriate to make any additional adjustment in respect to s 75(2) considerations.
In arriving at that conclusion, I have referred to the wife submissions regarding inappropriate conduct on the part of the husband in respect to the application of the parties’ property and in respect to the manner in which he has conducted these proceedings.
The manner in which the parties have conducted these proceedings is a matter to be determined in the event of an application being made for costs pursuant to s 117 of the Act.
As stated above, in arriving at a conclusion that it is appropriate for there to be a 5% adjustment in favour of the wife pursuant to s 79(4) considerations I have inferred, contrary to the interests of the husband, that he has had the benefit of the application of the sum of $705,000 in circumstances where he has failed to properly disclose how those funds have been applied. In those circumstances I have not made a further adjustment pursuant to s 75(2) relating to the wife’s contentions in respect to misapplication of funds by the husband. This is because, to do so, would result in him suffering a second detriment associated with those matters that I have already had regard to in considering the adjustment pursuant to s 79(4) in favour of the wife.
holistic overview
Prior to commencing final submissions, counsel for the husband advised the Court that the husband acknowledged that it was not possible to seek an order that would have the legal effect of splitting the parties’ interests in the F timeshares. The husband, through his counsel, advised the Court that he had no objection to those shares being allocated to the wife as part of the adjustment of the parties’ property. Accordingly I will make an order to that effect and take that adjustment into account in the adjustment of the parties’ property.
Further, as previously noted on the final day of the hearing, the parties agreed to a consent order that “controlled moneys currently held in trust by Matthews Folbigg Lawyers on behalf of the parties in the sum of $323,283.00, together with any interest accrued shall forthwith be paid to the wife.” It was agreed that transfer should be recognised as a distribution that the wife has received from the property of the parties.
As set out above I have assessed the total property pool, including notional property and superannuation, available for distribution to be the sum of $4,613,421.
An adjustment of 5% in favour of the wife means that the portion of the parties’ property that she should receive is $2,537,381.55. Correspondingly, the portion of the parties property that the husband should receive including notional add backs is $2,076,039.45.
The items set out in the balance sheet that are in the hands of the wife or, notionally in the hands of the wife are as follows:
·Item 4 – Joint – Controlled monies account maintained by the solicitor for the wife: $323,283
·Item 5 – Joint – 7000 annual credit F time share membership: $3,000
·Item 6 – Wife – Bank accounts: $20,242
·Item 7 – Wife – Shares: $57,820
·Item 20 – Wife – Paid legal fees: $15,000
·Item 22 – Wife – Paid legal fees: $107,600
·Item 37 – Wife – Super Fund 1: $257,936
·Item 39 – Wife – Super Fund 3: $19,150
Those items total the amount of $804,031. It is therefore necessary to make orders that result in property to the value of $1,733,350.55 being transferred to her.
The items set out in the balance sheet that are in the hands of the husband or notionally in the hands of the husband are as follows:
·Item 8 – Husband – Bank accounts: $198,389
·Item 9 – Husband – Company AA and Company BB shares: $17,704
·Item 10 – Husband – Motor vehicle 1: $4,000
·Item 12 – Husband – Quad bike: $3,500
·Item 13 – Husband – Box trailer: $1,000
·Item 18 – Husband – lottery winnings: $705,000
·Item 19 – Husband – Paid legal fees: $233,381
·Item 38 – Husband –Super Fund 2: $153,816
Those items total the amount of $1,316,790. To effect an adjustment of 45% to the husband I note he is therefore entitled to retain, from those assets that are in the parties’ joint names, property to the value of $759,249.45.
The parties are in agreement that the husband should retain the property at 1 G Street, City H, State J. That property is valued at $1,102,600. As result of such an order the husband would therefore retain property, including notional property that he has had the advantage of, which is $343,350.55 in excess of the amount that I have determined to be an appropriate, just and equitable adjustment to him. It will therefore be necessary for the husband to make a cash payment to the wife to address that imbalance.
I note, the orders sought by the wife include in proposed order 2.1.2 that husband pay to the wife “the sum of $200,000, to an account as nominated by the Wife.”
This is $143,350.55 less than the amount which I have determined to be an appropriate just and equitable distribution to the wife. However, it is nonetheless an outcome that is in accordance with her Application and I will therefore make orders consistent with her Application.
This will result in an outcome whereby the wife will receives property, including notional property that I have identified as being property which she has already received the benefit totalling $2,394,030. This will result in an outcome where the wife will receive approximately 52% of the parties’ property, including notional property and superannuation. This is 3% less than the outcome that I would have apportioned in favour of the wife had there been an additional property available for distribution. The fact that situation exists is in large part as result of the substantial amount of money that I have included as notional property including the amount of $705,000, which I have determined to be property in respect to which the husband has already benefited. As previously explained I have made that determination in circumstances where the husband has failed to adequately explain how those funds have been applied. In other words, as explained, because of his inadequate disclosure, I have made an inference that he has benefitted from those funds.
Conclusion
Having regard to all those matters I am satisfied that it is just and equitable to make the orders sought by the wife in this matter despite the fact that it will result in an outcome that is marginally less than the outcome which I would have awarded had there been additional property available for distribution. I have increased relevant time periods for compliance with the orders having regard to the Christmas period.
I certify that the preceding two hundred and ninety nine (299) paragraphs are a true copy of the reasons for judgment of the Honourable Deputy Chief Justice McClelland delivered on 24 December 2019.
Associate:
Date: 24 December 2019
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