Appleford and Meriden
[2018] FCCA 3333
•20 November 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| APPLEFORD & MERIDEN | [2018] FCCA 3333 |
| Catchwords: FAMILY LAW – De facto property – contributions – inadequate disclosure by one party – adjustment pursuant to s.90SF(3)(r). |
| Legislation: Family Law Act 1975, ss.4AA, 44(5), 44(6), 90SF, 90SM |
| Cases cited: Whitford & Whitford (1979) FLC 90-612 McDonald & McDonald (1977) FLC 90-317 |
| Applicant: | MR APPLEFORD |
| Respondent: | MS MERIDEN |
| File Number: | ADC 25 of 2016 |
| Judgment of: | Judge Kelly |
| Hearing dates: | 12, 13, 14, 20 December 2017 and 29 January 2018 |
| Date of Last Submission: | 29 January 2018 |
| Delivered at: | Adelaide |
| Delivered on: | 20 November 2018 |
REPRESENTATION
| Counsel for the Applicant: | Mr S Lindsay |
| Solicitors for the Applicant: | Jordan & Fowler |
| Counsel for the Respondent: | Mr K Tredrea |
| Solicitors for the Respondent: | Angela Ferdinandy |
ORDERS
Leave is granted to the Applicant to file his Initiating Application for property settlement out of time, pursuant to s.44(6) of the Family Law Act 1975.
The time for the Applicant to file his Initiating Application is extended to 13 January 2016.
In full and final settlement of any claim for property settlement that each party may make against the other:
The Respondent pay to the Applicant the sum of $113,000 within 28 days.
Thereafter the Applicant retain the following items free from any further claim by the Respondent:
(a)the settlement sum referred to above;
(b)his motor vehicle;
(c)his household items and personal effects;
(d)any savings or investments in his possession, power or control; and
(e)his superannuation entitlements.
The Respondent retain the following items free from any further claim by the Applicant:
(a)her interest in the property situated at Property A;
(b)her motor vehicle;
(c)her household items and personal effects;
(d)any savings or investments in her possession, power or control.
Each party shall indemnify the other in respect to any debt in their sole name.
All proceedings are otherwise dismissed.
Liberty to either party to apply in relation to costs, upon written request to chambers made within 21 days.
IT IS NOTED that publication of this judgment under the pseudonym Appleford & Meriden is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT ADELAIDE |
ADC 25 of 2016
| MR APPLEFORD |
Applicant
And
| MS MERIDEN |
Respondent
REASONS FOR JUDGMENT
Introduction
The Applicant Mr Appleford and the Respondent Ms Meriden were in a de facto relationship for approximately 20 years, finally separating in October 2013.
Despite initial negotiations shortly after separation, neither party filed proceedings until Mr Appleford’s Application was filed on 13 January 2016. The Respondent argues that the Initiating Application is out of time and should be dismissed. For the reasons that follow the Court will extend the time for Mr Appleford to file his Application to 13 January 2016 and will determine property settlement issues arising from the breakdown of the parties’ de facto relationship.
Background
The Applicant was born on … 1945 and the Respondent was born on … 1957. The parties de facto relationship commenced in 1995. The Respondent owned a property at Property B (“the Property B property”) prior to the relationship and the parties lived there throughout the entirety of their relationship.
Both parties worked during their relationship. The Applicant earned a modest income fluctuating between $16,000 – $37,000 per year and the Respondent was in steady full time employment as a health care worker, earning approximately $80,000 per year.
Ultimately, the Respondent conceded that she and the Applicant were in a de facto relationship but it is fair to say that their relationship was unusual. I accept the Respondent’s evidence to the effect that:
(a)the parties’ sexual relationship ended relatively early;
(b)they kept their personal finances separate and never operated joint bank accounts;
(c)the Applicant made no direct contribution towards the mortgage secured over the Property B property;
(d)at various times during the relationship both parties were engaged in sexual/romantic liaisons with other people. The Applicant was in a relationship with a woman, Ms C, for a number of years while still living with the Respondent.
These may be unusual aspects of their domestic life together but I am satisfied that the parties were living in a de facto relationship[1] and this was a proper concession for the Respondent to make.
[1] Family Law Act (1975) s. 4AA
Following the parties’ separation Ms Meriden remained living in the Property B property and Mr Appleford moved out. He subsequently married in … 2014, but that relationship has since ended. At the time of trial he was living in rental accommodation in Suburb D.
The Respondent commenced a relationship with her current partner Mr E in … 2015. A few months later she sold the Property B property and settlement proceeded on 19 November 2015. The Respondent received net proceeds of sale in the sum of $525,000 which she then used for the purchase of a new property with Mr E at Property A (“the Property A property”).
Extension of time
Section 44(5) of the Family Law Act says that a party to a de facto relationship may apply for a property settlement order only if the application is brought within two years of the end of the de facto relationship. Section 44(6) gives the Court power to extend the time for an application to be filed, but only if the Court is satisfied that hardship would be caused to the party if leave were not granted.
The principle authority in relation to the extension of time is the 1979 Full Court decision of Whitford & Whitford[2]. In that case the Full Court held that the power to extend the time for filing of a property settlement application should be exercised liberally in order to ensure that an applicant does not suffer hardship.
[2] Whitford & Whitford (1979) FLC 90-612
The authorities are clear that the mere loss of the right to commence proceedings does not, of itself, constitute hardship.[3] In McDonald & McDonald[4] Chief Justice Evatt said (quoting from the reasons of Justice Emery in Swallow & Swallow delivered 16 September 1977):
[3] Whitford (ibid) at 78,144-145; McDonald & McDonald (1977) FLC 90-317 at 76,688
[4] McDonald & McDonald (supra) at 76,688
“… The mere loss of the right is not in itself hardship. The right lost … must be a right which in all circumstances is substantial. ...
... An applicant must establish:
(a) a prima facie case which is in the circumstances substantial;
(b) that to deny the right to litigate that claim would cause hardship in the sense referred to above to a party …;
(c) that there is an adequate explanation as to why the claim was allowed to lapse.”
Equally, a finding of hardship does not automatically mean that the Court will grant leave to proceed out of time. Rather, establishing hardship is the essential pre-requisite before the Court can consider exercising its discretion.[5] Once a finding of hardship has been made, the Court must then consider the consequences of exercising the discretion, or not.
[5] Whitford (supra) at 78,145; Walker & Walker (1984) FLC 91-564; Sharp & Sharp [2011] Fam CAFC 150 at para. 27
I am satisfied that Mr Appleford has established that he will suffer hardship if he is not permitted to proceed. The Applicant’s present financial circumstances are fraught. His financial situation would potentially improve significantly if he is granted leave to pursue his application for property settlement. The parties were in a lengthy relationship and acquired or paid off assets during the relationship, albeit those assets were in the Respondent’s sole name. I am satisfied the Applicant has a prima facie claim to a property settlement.
The Court must then consider the consequences for the Respondent if leave is granted. Ms Meriden notes that since the parties separated in 2013 and the relevant time limit passed in 2015, she has proceeded to arrange her financial affairs in the expectation that the Applicant was not intending to pursue a claim for property settlement. She sold the Property B property and purchased the Property A property with Mr E. Their finances are now substantially intermingled within that property.
The Respondent argues that the Applicant was well aware of his obligations under the Family Law Act, as he had sought legal advice in 2014. She further argues that the Applicant has not given an adequate explanation for the delay in issuing the proceedings. Finally, the Respondent argues that the relevant asset pool is very modest and therefore the Applicant’s chance of pursuing a successful claim for property settlement is limited.
In all of those circumstances the Respondent argues that the discretion should not be exercised in Mr Appleford’s favour. With respect, I disagree.
The Applicant’s delay was only five months or so. He has explained the delay, saying that he anticipated negotiations would continue and would proceed satisfactorily towards a resolution. Further, when he became aware that the Property B property was on the market for sale, he was content to await the outcome of that process and expected to receive further correspondence from the Respondent’s solicitors. I conclude that there is a sufficient explanation for the delay in filing these proceedings.
There is a considerable negative impact upon the Applicant if leave is not granted, given his financial circumstances. There will be some inconvenience for the Respondent if the application proceeds, given that she has re-structured her finances with Mr E, but her position is no different to many other litigants who have entered new relationships and purchased new properties after separation. This inconvenience does not outweigh the Applicant’s entitlement to pursue his potential entitlement.
I am satisfied the husband has established a prima facie claim for property settlement and that he will suffer hardship if he is not permitted to argue his case before the Court. I grant leave for the Application to proceed out of time, pursuant to s.44(6) of the Act.
The property settlement proceedings
The proceedings commenced with Mr Appleford’s Initiating Application filed 13 January 2016 and Ms Meriden’s Response filed on 25 May 2016. In her Response Ms Meriden sought a declaration that the parties were not in a de facto relationship. In the alternative, she argued that the Application was filed out of time and should be dismissed.
The threshold issues were initially listed for hearing on 11 July 2016. In the course of that hearing it became clear that both parties needed to consider their position and accordingly, directions were made as follows:
1.Within 14 days, the Applicant file and serve an Amended Initiating Application seeking a Declaration pursuant to s.90RD of the Family Law Act 1975, as to the specific dates as to cohabitation and separation.
2.Within 21 days, the Applicant file and serve an Application in a Case and supporting Affidavit as to:
a)evidentiary issues raised by him regarding production of documents potentially protected pursuant to s.131 of the Commonwealth Evidence Act; and
b) leave to proceed out of time.
3.The Respondent file any Response and answering Affidavit upon which she intends to rely on or before 14 October 2016.
4.The matter is listed for trial on 5, 6 and 7 April 2017 at 10.00am (allowing three days).
The proceedings were adjourned to 9 November 2016, but that hearing was administratively adjourned, at the joint request of the parties.
The trial did not proceed on 5 April 2017 as the Respondent sought an adjournment, to take advice in relation to her legal representation. While the adjournment was granted, the Respondent’s solicitors were ordered to pay the Applicant’s costs thrown away in relation to the Court attendance that day, given that the difficulties regarding the Respondent’s legal representation could have been identified much earlier and the hearing adjourned well ahead of time.
The proceedings were adjourned to commence on 12 December 2017. The hearing proceeded over three days and was adjourned for closing submissions to 20 December 2017.
On that date the Respondent made an unexpected application to re‑open her case. Following submissions the Court granted Ms Meriden leave to re-open her case and made the following directions:
“…
2. The Respondent file and serve an Affidavit in relation to various international bank transfer records recently located by her, such Affidavit to be filed and served by 12.00noon Friday 22 December 2017.
3. Liberty to either party to issue such subpoena as they may require, to be marked returnable to 22 January 2018.
4. The trial is adjourned to 29 January 2018 to conclude cross examination of the Respondent and Closing Submissions.”
The trial
The Applicant relied upon the following documents:
a)his trial Affidavit filed 27 March 2017;
b)his amended Financial Statement filed 27 March 2017.
A number of other witnesses were no longer required once the Respondent conceded that the parties had lived in a de facto relationship.
The Respondent relied upon the following documents:
a)her trial Affidavit filed 4 April 2017;
b)her Financial Statement filed 4 April 2017;
c)trial Affidavit of her partner Mr E filed 4 April 2017.
Both parties gave evidence and were cross examined during the trial, as was Mr E.
The Applicant presented as a straightforward witness with a fairly unsophisticated approach to financial matters. As with many litigants before this Court, Mr Appleford tended to present his evidence in a way that he hoped would best promote his case, rather than responding to the question at hand. His recollection of past events was somewhat vague and his evidence regarding the extent of his contributions to the Property B property was overstated at times. With those caveats in mind, I am satisfied that he endeavoured to give his evidence honestly and to the best of his recollection.
Ms Meriden was cross-examined at length, particularly surrounding the alleged loss of funds through an Internet scam. Counsel for Mr Appleford urged the Court to find that the Respondent was an unreliable witness who deliberately misled the Court in relation to a number of matters – from her refusal to accept the nature of the parties’ relationship, to the Internet scam and the “disappearance” of her superannuation entitlements.
I decline to find that the Respondent lied on oath, but I am satisfied that she failed to fully disclose her financial dealings, until forced to do so. This does not mean that all of her evidence was unreliable. On the contrary, the Respondent presented with a more sophisticated understanding of the parties’ financial arrangements during the relationship and I am satisfied her evidence in this regard was generally accurate. However, her failure to disclose relevant evidence early in the proceedings, and to provide proper and timely disclosure of financial records led to considerable delays. This is a factor I will return to in these Reasons.
The Respondent had failed to provide proper discovery of relevant bank statements until trial, to the point where Counsel for the Applicant, Mr Lindsay, sought an adjournment arguing that he and his client were unable to properly consider discovered documents that were provided only the day before trial.
That application for an adjournment was unsuccessful but the Applicant argues that the Respondent’s failure to properly present her case must be a factor in the Court’s determinations and I agree.
Legal principles
The legislation in relation to de facto property settlements is contained in Part VIIIAB of the Family Law Act 1975. This Part largely mirrors the legislation that deals with property settlements following the breakdown of a marriage and therefore the same authorities apply to Part VIIIAB as apply to Part VIII.
Section 90SM(3) says that the Court must not make such an order for property settlement unless it is just and equitable to do so. This condition is generally met in most situations where a de facto relationship has broken down because there will no longer be “the common use of property” by the parties.[6]
[6] Stanford & Stanford [2012] HCA 52 at para.42
Assuming the Court determines that it is just and equitable to make an order adjusting the property interests of the parties, s.90SM(4) sets out the factors that must be taken into account. These factors include the parties’ contribution to the maintenance and acquisition of the asset pool during the relationship, including either party’s direct or indirect financial contributions and their direct or indirect non-financial contributions. The Court must also consider any contribution made to the welfare of the family including in the capacity of homemaker or parent.
Section 90SM(4)(d) directs the Court to consider the impact of any proposed order upon the earning capacity of either party. Section 90SM(4)(e) directs the Court to consider the matters set out in s.90SF(3) so far as they are relevant, factors that focus the Court’s attention upon each party’s future needs, amongst other issues.
The High Court in Stanford has set out three “fundamental propositions” to guide trial Judges dealing with property settlement proceedings, summarised by the Full Court in Bevan as follows:
“1.Determination of a just and equitable outcome in an application for property settlement begins with the identification of the existing legal and equitable interests (as determined by common law and equity);
2.The discretion conferred by the statute must be exercised in accordance with legal principles and must not proceed on an assumption that the parties’ interests in the property are or should be different from those determined by common law and equity;
3.The determination that a party has a right to a division of property fixed by reference only to the matters in s.79(4), and without separate consideration of s.79(2), would erroneously conflate what are distinct statutory requirements.”[7]
[7] Bevan & Bevan [2013] FamCAFC 116, para.73
In some circumstances the Court may find that previously owned assets may be notionally ‘added back’ into the asset pool. This approach may be taken if the assets have been “prematurely distributed” to one party, or where a party has “acted recklessly, negligently or wantonly with the matrimonial assets effectively reducing their value”.[8]
[8] AJO & GRO (2005) FLC 93-218,p 79,617; see also Kowaliw (1981) FLC 91-092:
In a recent decision of Thurston & Loomis & Ors [2018] FamCA 26 Forrest J followed the line of earlier Full Court authorities and said:-
“… Adding back to the “pool” of property is the exception, not the rule, but the exception can arise where one of the parties has acted with these assets (including cash) in a way which has reduced or minimised their value or the amount of money available to be included in any adjustment of their property interests. Whether the exception arises is often considered in respect of cash that was part of the capital of the parties at separation that has been spent by one of the parties since their separation.”[9]
[9] Thurston & Loomis & Ors [2018] FamCA 26 @ para 278
Earlier Full Court authorities have noted that determining a property settlement application involves a four step process.[10] Assuming the Court is satisfied that it is just and equitable to make an order for property settlement, the Court must identify the parties’ legal and equitable interests in the assets arising from their relationship, together with their liabilities. The Court should then assess each party’s contributions during the relationship in accordance with s.90SM(4)(a)-(c).
[10] Lee Steere & Lee Steere (1998) FLC 91-626; Hickey v Hickey & Attorney General of the Commonwealth of Australia (Intervenor) 2003 FLC 93-143; AJO & GRO (ibid)
The third step requires the Court to consider the matters set out in s.90SM(4)(d)-(g), including the future needs factors identified in s.90SF(3). The Court should then consider its findings and make appropriate orders adjusting the parties’ property interests on such basis as is appropriate and ultimately just and equitable as between them.
The Full Court in Bevan commented that Judges should be careful not to follow the “four step process” too strictly. It is not legislatively mandated, but rather provides a structured process towards the ultimate requirement, which is to ensure that a property settlement order is only made when the Court is satisfied that it is just and equitable to do so and that the terms of the order itself are also just and equitable.[11]
[11] Bevan & Bevan, supra, para.86
In determining any application for property settlement, the Court is not embarking upon an arithmetical exercise but rather a consideration of all the relevant factors set out in s.90SM(4).
In the proceedings before me I am satisfied it is just and equitable to make an order for property settlement between the parties and will accordingly determine the asset pool before going on to consider the parties’ contributions and the relevant factors pursuant to s.90SF(3).
The asset pool
The asset pool relevant to these proceedings is clearly defined. Both parties own personal effects and motor vehicles which they have acquired after separation and they do not seek to take those items into account, given the length of time since their separation. I accept that is a proper approach to adopt.
The Respondent argues that the asset pool relevant at trial should be limited to her half interest in the Property A property, valued at $275,000. With due respect to the Respondent, that cannot be correct.
Ms Meriden received $525,000 from the sale of the Property B property and contributed the full purchase price for the Property A property is the sum of $452,000. She also paid the associated outgoings such as stamp duty and conveyancing fees, to a total of approximately $490,000. The Respondent gave evidence that she spent the remaining $35,000 on her general living expenses. Her evidence was not challenged on this point.
The Respondent decided to purchase that property as a joint tenant with Mr E and in doing so she argues that she has effectively “gifted” half of the purchase price paid by her to Mr E. That was her choice, but a party cannot unilaterally decide to alienate a significant portion of the asset pool. To allow the Respondent to do so would be unjust and inequitable.
The Respondent’s legal interest in the Property A property may only be 50%, but she paid the full purchase price. If she and Mr E were ever to separate, I am confident she would seek a substantially greater percentage of the property in any property settlement and she would be entitled to do so.
The Respondent was entitled to use a portion of the net proceeds of sale for her own living expenses and given the delay in filing these proceedings, the Applicant cannot now argue that those funds should be deemed an add back and included in the asset pool. I conclude that only those net proceeds directly traceable to the purchase of the Property A property should be added back into the asset pool, in the sum of $452,000.
Should the parties’ superannuation entitlements be included?
The Respondent argues that her superannuation payout should not be included in the asset pool. As mentioned, she was unable to resume paid employment following a back injury in 2013. As she was not eligible for any WorkCover payments, the Respondent accessed her superannuation. Ms Meriden then drew upon those funds for her ongoing living expenses.[12]
[12] Respondent’s trial Affidavit, para.58
Clearly the Respondent was entitled to rely upon her superannuation funds for her own personal support, however the situation is more complicated. Ms Meriden says that she lost most of her superannuation payout as she was the victim of an Internet fraud scheme. She gave evidence that during late 2013 and early 2014, she began an Internet relationship with a person she believed was a Caucasian male named Mr F. At his request she transferred approximately $127,500 to him during that time, to assist him financially. In mid-2014 she was contacted by the Australian Federal Police who informed her that “Mr F” did not exist and that she had been caught up in a complex organised crime Internet scam.
The Respondent was cross-examined at length regarding this Internet scam. I will discuss that evidence in more detail elsewhere in these Reasons, but for the purpose of defining the asset pool, I decline to add back the Respondent’s superannuation entitlements, for the following reasons.
As noted above, a party is entitled to draw upon assets or financial resources for their own support. I accept Ms Meriden was supporting herself from these funds once she stopped working. The real question is whether the funds allegedly lost to the “Internet scam” can be categorised as ‘reasonable expenditure’. If not, that portion of the Respondent’s superannuation that was not expended reasonably should be added back into the asset pool.
The Applicant argues that the Respondent’s evidence in relation to the “Internet scam” was entirely unreliable. Ms Meriden did not provide any evidence about this Internet scam until her trial Affidavit filed 4 April 2017. She failed to properly disclose relevant banking records throughout the proceedings, even after the trial had commenced. She failed to present any documentary evidence in relation to the international money transfers until late in the trial. I agree that Ms Meriden’s evidence on this topic was unclear and unreliable on a number of significant issues.
Nonetheless, in assessing whether a party’s expenditure has been reasonable, it is difficult to draw a line between the ‘proper’ use of these funds, as opposed to expenditure that is so imprudent or ‘improper’ that the Court should add those expended funds back into the asset pool. The Respondent’s decision to send funds overseas was foolish and imprudent. However, had she not lost $127,500 of her superannuation funds in this way, Ms Meriden would have been perfectly entitled to continue to draw upon those funds for her ongoing support over the subsequent years.
It is impossible to calculate what her legitimate expenditure may have been over the intervening years, or to quantify that portion of her superannuation she might reasonably have retained, as at the date of trial. In those circumstances I decline to add back the Respondent’s superannuation and conclude that these matters are best addressed when considering the s.90SF factors.
Turning to the Applicant’s superannuation, he accessed the bulk of his superannuation during the relationship and there is no basis to add back those funds now. As to his current superannuation, it is a very modest sum. In circumstances where I have excluded all of the Respondent’s superannuation from the asset pool, I conclude it is just and equitable to also exclude the Applicant’s remaining superannuation entitlements.
Therefore the relevant asset pool consists of that portion of the net proceeds from the sale of the Property B property now represented in the Property A property, in the sum of $452,000.
Contributions
The Respondent brought her equity in the Property B property into the relationship. This was the only tangible asset of significant value that existed during the relationship and provides the basis for the asset pool now under consideration.
The parties agree that the Respondent met most of the outgoings associated with this property during their relationship, including mortgage repayments. By and large, the parties were content to leave their finances separate, such that the Applicant used his income for his own needs and the Respondent used her income for her needs, which included meeting all household expenses in relation to the home, such as rates, taxes, insurance and the like.
The fact that one party earns a greater income does not automatically mean that their direct financial contributions should be given greater weight. The Court must also weigh up the parties’ contributions overall, including their non-financial contributions and their efforts as ‘homemaker’ in maintaining a functional, supportive domestic environment.
I accept that Mr Appleford made some direct contribution to the household finances across the years. He occasionally contributed to household bills and expenses. He used a portion of an inheritance that he received to pay for some painting work to be undertaken. I am satisfied he made other direct financial contributions during the relationship, such as meeting the cost of maintaining the pool, but the extent of his direct financial contributions to the assets of the relationship is far less that the contributions made by Ms Meriden over the years.[13]
[13] See wife’s trial affidavit paras 30,31, 75-81
I am satisfied that both parties made non-financial contributions towards the maintenance and acquisition of the asset pool. The Applicant assisted in maintaining the pool and garden. He also provided occasional assistance to the Respondent’s mother across the years. Nonetheless the evidence clearly indicates that the Respondent’s indirect and non-financial contributions were substantially greater than the Applicant’s contributions.
The Applicant’s contributions as set out in his trial Affidavit is the high point of his case. Even if his evidence in accepted in full, it is clear that his financial and non-financial contribution across the years were modest. By contrast, the Respondent maintained all of the expenses associated with the Property B property. She drew down on the mortgage to buy the motor vehicle 1, which the Applicant retained after separation. The Applicant continued to live rent free in a granny flat on the Property B property until May 2014, when he finally moved out.
On balance, the evidence leads overwhelmingly to the conclusion that the Respondent made a substantially greater financial and non-financial contribution during the relationship. In reality, Mr Appleford benefitted from Ms Meriden’s direct financial contribution by enjoying a comfortable life, in her comfortable home, at little cost to himself.
The parties chose to maintain separate financial arrangements throughout their relationship. The fact that the Respondent was a signatory on one of the Applicant’s bank accounts does not change that. Accordingly the Applicant did not make the ‘incidental’ financial contributions that might otherwise have occurred, if their finances were intermingled.
In 2010 the Applicant drew down approximately $35,000 from his superannuation entitlements. He did not identify any substantial portion of those funds as being directed towards the family finances and I conclude that by and large, he used these funds for his own benefit.
The Respondent also accessed her superannuation, as discussed earlier in these Reasons. I have not included this figure or any of the parties’ superannuation within the asset pool and therefore I do not consider either party’s contributions to their superannuation entitlements are relevant to my assessment of their contributions.
Taking into account all of the above discussion, I conclude that the Respondent has made the overwhelmingly greater contribution to the relevant asset pool. I assess the Applicant’s contributions at 20% and the Respondent’s contributions at 80%.
Section 90SF factors
(a) age and state of health of the parties
The Applicant was born … 1945 and is 73 years old. He was working full time until just prior to trial when he was diagnosed with a heart condition. Given his age, he is now required to obtain a medical clearance before returning to his employment as a labourer.
The Respondent was born … 1957 and is almost 61 years old. She suffered a back injury in 2013 which has affected her capacity to work as a health care worker. She describes suffering ongoing pain and difficulty with day‑to-day activities such as walking and housework.
(b) the income, property and financial resources of each party and their capacity for future employment
The Applicant was hopeful that his heart condition has stabilised and he anticipated obtaining the necessary medical clearance to resume working. Nonetheless, Mr Appleford’s capacity for future employment will be limited, given his age. He has no assets or financial resources beyond any settlement due to him in these proceedings.
The Respondent is unable to work, due to her back injury. Similar to the Applicant, she holds only those assets and financial resources that she will retain through these Court proceedings, noting that her equity from the sale of the Property B property is now held in the Property A property.
(c) whether either party has the care or control of a child of the de facto relationship
Not relevant.
(d) commitments of each party necessary to support themselves or another person; and
(e) the responsibility to support any other person
Neither party has any legal responsibility to support a child or any other person. Both parties lead a modest lifestyle and endeavour to live within their means.
(f) the eligibility of either party for a pension, allowance or benefit
The Applicant is eligible for an aged pension. The Respondent is eligible for a Newstart Allowance.
(j) the extent to which either party has contributed to the income, earning capacity, property or financial resources of the other party
The parties were in a lengthy de facto relationship but their financial history is such that neither party has made a substantial contribution towards the income, earning capacity, property or financial resources of the other party.
(m) financial circumstances of either party cohabiting after separation
Both parties have entered into other relationships after separation. The Applicant was married briefly, but that relationship ended and he is not presently living with a partner.
The Respondent has been living in a de facto relationship with Mr E since 2015. At the time of trial Mr E was studying to obtain qualifications as a … but is otherwise reliant upon a disability pension. Mr E is not in a position to financially support the Respondent but Ms Meriden clearly enjoys the emotional and financial benefits of living in a committed de facto relationship.
(r) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account
Until this point, my discussion of the relevant s.90SF (3) factors would not lead to any additional adjustment in either party’s favour.
I turn now to the Respondent’s evidence in relation to her superannuation funds and her failure to provide disclosure of relevant financial records during the proceedings.
In the course of cross examination on this topic, Ms Meriden was noticeably defensive and uncertain. I accept that the Respondent may have felt embarrassed about the Internet scam. This may provide some explanation for her presentation in the witness box, but the fact remains that her evidence on this topic was far less reliable than her earlier evidence about other topics, such as financial arrangements during the parties’ relationship.
The Respondent argues that most of her superannuation payout was lost through the Internet scam. In the course of cross examination on 14 December 2017, Ms Meriden gave evidence that she felt embarrassed and ashamed at having been fooled by “Mr F” and that she dealt with that shame by closing off that chapter of her life and simply forgetting about it. She said that she “tore up” any Western Union international transfer receipts at the time she moved out of the Property B property.
She was asked to explain a number of significant deposits and withdrawals from her ANZ Access Advantage account no … . The bank statements for the period December 2013 – January 2014 include three deposits totalling $127,500 marked as “Transfer from Super Fund”. The parties agree these payments were received from Superannuation Fund together with further deposits of $25,000 on 12 September 2014, $12,200 on 5 March 2015 and an earlier deposit of $12,750 on 26 August 2013. [14]
[14] Exhibit A5, Bank Accounts for Access Advantage Account …, Statement 35, 33, 36
Another deposit of $14,600 was received into the account on 23 January 2014.[15] Ms Meriden initially gave evidence that she assumed it was another Superannuation payment but it became clear that this deposit was a termination payment received at the time of her retirement from the Employer. Ms Meriden conceded that she had not disclosed this termination payment previously.
[15] Ibid, statement 34
On 29 January 2014 there was a further deposit in the sum of $45,012.06 identified as “Closing Balance from …”.[16] Ms Meriden again gave evidence that she believed this was another payment received from her Super Fund. That cannot be correct, given that this deposit has an entirely different descriptor. Ms Meriden was unable to clarify the source of these funds.
[16] Ibid, statement 34
The Respondent’s pattern of withdrawals from the Access Advantage Accounts was equally unusual. She withdrew several large amounts of money between 27 December 2013 and 25 January 2015 (over $140,000). The withdrawals are described on the statements as “Card Entry at Suburb G Branch”. This period of time matches the Western Union transfers, but the dates do not match precisely.
On 20 December 2017 Ms Meriden sought leave to re-open her case. Notwithstanding her evidence to the contrary, she informed the Court that she had been able to locate the relevant financial records relating to the international money transfers.[17] Given that this was a central issue in dispute, leave was granted and the trial then further adjourned, to allow the Applicant time to consider the new evidence.
[17] Exhibit R5 Bundle of receipts regarding international money transfers via Western Union and MoneyGram
The trial resumed on 29 January 2018 and Ms Meriden re-commenced in cross-examination. The Western Union records show that Ms Meriden sent over $100,000 overseas during a five week period during December 2014 – January 2015.
The Western Union receipts show a number of international money transfers not only to Mr F but to a range of other recipients, including Mr H, Mr J, Mr K, Mr L and Mr M. Many of the recipients have listed as their address as Country N. On some days Ms Meriden appears to have forwarded multiple payments to different recipients.[18]
[18] For example 3 payments totalling $7,384 on 28/12/13; 3 payments totalling $15,000 on 13/1/14; 4 payments totalling $22,000 on 22/1/14
Ms Meriden was unable to give any coherent answer explaining why she was convinced to send such large sums of money, to a number of different people, over such a short period of time. Nor was she able to explain the pattern of repeated transfers on the same date.
The Court takes judicial notice that even the most sensible citizens can find themselves caught up in Internet scams. The Court received into evidence a print out from an article published in The Age newspaper on 24 January 2018, entitled “Scam victims urged to claim payouts”.[19] This article provides some support for the Respondent’s claim that she had earlier been contacted by police regarding this Internet scam.
[19] Exhibit A7, article from The Age newspaper dated 24 January 2018
Counsel for the Applicant argues that all of the Respondent’s evidence on this topic is totally unreliable and should be rejected by the Court. I agree that the Respondent’s conduct in relation to the documentation surrounding the use of her superannuation payout was highly unsatisfactory. Her demeanour in the witness box during cross examination on this topic was equally unsatisfactory. However, I am not prepared to find that Ms Meriden has concocted this whole story, or that she has lied under oath.
Her failure to mention this Internet scam in her original Affidavit filed on 25 May 2016 is a significant omission, nonetheless. I conclude that she deliberately withheld this information early in the Court proceedings. Whether she did so out of shame, or embarrassment, or because she felt it was none of the Applicant’s business, is irrelevant. Every litigant is required to disclose all relevant financial information. That is a fundamental requirement of family law litigation.
The Respondent’s failure to make full disclosure
The Respondent also failed to disclose a vast array of relevant financial documentation until just prior to, or during the trial. This made it impossible for the Applicant to consider his final position or to undertake any sensible negotiations.
I appreciate the Respondent initially argued that the Court did not have jurisdiction, as the parties were not in a de facto relationship. That may account for some delay in providing disclosure, but once the issue of jurisdiction was listed for trial jointly with the substantive property settlement proceedings, her obligation to provide full and complete disclosure crystallised.
In Gould & Gould (2007) FamCA 609, the Full Court confirmed that where a party has failed to make proper disclosure, a trial Judge is entitled to consider making an adjustment in favour of the other party pursuant to s.75(2)(o) [the equivalent section to s.90SF(3)(r)]. The Full Court relied upon an earlier decision of Kannis & Kannis (2003) FLC 93‑135, where the Full Court upheld the decision of the trial judge (Holden CJ) to make a s.75(2)(o) adjustment in the wife’s favour on account of the husband’s failure to provide proper disclosure. These decisions typify a long line of authorities regarding the absolute obligation to provide full disclosure of all relevant financial documents.
The Respondent’s late disclosure regarding her bank statements is unacceptable, and her ‘last gasp’ disclosure surrounding the Western Union receipts even more so. Her failure to account for various transactions into and out of her Access Advantage Account, or to explain the pattern of payments made to “Mr F” and others is inexplicable. These factors combine to raise considerable uncertainty about the Respondent’s bona fides surrounding this topic. In the unusual circumstances of this case, I conclude that the Respondent’s conduct is such that a further adjustment of 5% in the Applicant’s favour is warranted.
Conclusion
The Respondent argues that the Applicant came into the relationship with no assets and that he left the relationship with a motor vehicle valued at approximately $16,000. She argues that this outcome equates to a just and equitable settlement. With due respect, that would see the Applicant retaining less than 5% of the asset pool. That is neither just nor equitable, given the Court’s findings today.
I have assessed the parties’ contributions as 20% to the Applicant and 80% to the Respondent. On the basis of the further 5% adjustment pursuant to s.90SF(3)(r), I conclude that the Applicant should receive a settlement sum equivalent to 25% of the tangible asset pool. For the purposes of this hearing, the asset pool consists solely of the Respondent’s equity from the sale of the Property B property, in the sum of $452,000. Accordingly the Applicant should receive the sum of $113,000.
Both parties will otherwise retain all other assets in their possession or control, including the Applicant’s remaining superannuation entitlements. Both parties have already utilised the superannuation entitlements that they previously accessed. Even if Ms Meriden had not been the victim of a fraud, she may well have expended her superannuation payout over the intervening years and she would have been entitled to do so. The Applicant cannot feel too aggrieved on that score, as he could have initiated Court proceedings at any time following the parties’ separation.
I am satisfied that that the Applicant should retain the small superannuation entitlement still in existence. This will result in both parties retaining the whole of their superannuation entitlements without any further adjustment and I am satisfied that is just and equitable.
The Applicant will retain the settlement sum now due to him. The Respondent will retain the bulk of the tangible assets arising from the parties’ relationship, which reflects her overwhelming contribution.
I appreciate Ms Meriden will need to raise the funds necessary to pay out the Applicant’s entitlement. That may leave her in a more difficult financial position, but she will still retain a strong foothold in the property market, which is a substantial benefit for any party’s future financial security.
I am satisfied these orders are just and equitable as between the parties.
I certify that the preceding one hundred and seven (107) paragraphs are a true copy of the reasons for judgment of Judge Kelly
Date: 20 November 2018
3
2