AYAD & VALMONT
[2020] FCCA 3189
•28 July 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| AYAD & VALMONT | [2020] FCCA 3189 |
| Catchwords: FAMILY LAW – Remote hearing – self represented litigant and s.102NA – dispute with respect to superannuation splitting – all other property previously dealt with by foreign Court – consideration of jurisdiction in those circumstances – section 131 Evidence Act 1995 and admission of evidence of settlement negotiations – consideration of the impact of earlier “informal” settlement upon the exercise of discretion – consideration of Stanford – division of superannuation. |
| Legislation: Evidence Act 1995 (Cth), s.131 |
| Cases cited: Capic v Ford Motor Company of Australia Ltd (Adjournment) [2020] FCA 486 Hickey v Hickey and the Attorney General for the Commonwealth of Australia (Intervenor) (2003) FLC 93-143 AJO & GRO (2005) FLC 93-218 Stanford v Stanford (2012) 247 CLR 108 Kennon & Kennon (1997) FLC 92-757 Other sources: |
| Applicant: | MS AYAD |
| Respondent: | MR VALMONT |
| File Number: | PAC 3957 of 2019 |
| Judgment of: | Judge Harman |
| Hearing date: | 28 July 2020 |
| Date of Last Submission: | 28 July 2020 |
| Delivered at: | Parramatta |
| Delivered on: | 28 July 2020 |
REPRESENTATION
| The Applicant Wife appeared in person |
| Solicitors for the Respondent: | Ms S. Woolford of Armstrong Legal |
ORDERS
Orders are made in accordance with the Minute of Orders Sought by the Applicant marked Exhibit A and annexed hereto.
Remove all outstanding issues from the list of cases awaiting hearing.
Upon the expiration of the Appeal period and in the event that no appeal is lodged that all exhibits then be returned to the party who tendered same and that all material produced on subpoena or pursuant to section 69ZW of the Family Law Act 1975 be returned to the person or organisation who produced same or securely destroyed.
Note: Whilst a plea for costs is included in the Husband’s Response, such a plea cannot be prosecuted in circumstances where he has been wholly unsuccessful.
Each party shall pay their own costs of and incidental to these proceedings.
Exhibit A
FINAL ORDERS SOUGHT
That a base amount of $47,814.54 is allocated, as required by section 90XT(4) of the Family Law Act 1975, to the Applicant out of the Respondent’s interest in Super Fund B (member number ...64).
That in accordance with section 90XT(1)(a) of the Family Law Act 1975:
(a)The Applicant is entitled to be paid the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001, and
(b)The Respondent’s entitlements to payments out of his interest in Super Fund B and the entitlement of such other person to whom a splittable payment may be payable, is correspondingly reduced by force of these Orders.
That the Trustee of Super Fund B (“the Trustee”) shall do all such acts and things and sign all such documents as may be necessary to:
(a)Calculate, in accordance with the requirements of the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001, the entitlement created for the Applicant by Order 1; and
(b)Pay the entitlement whenever the Trustee makes a splittable payment out of The Respondent’s interest in Super Fund B.
That these Orders have effect from the operative time and the operative time for this Order is four days after service upon the trustee of a certified copy of these Orders.
That these Orders bind the Trustee of Super Fund B.
IT IS NOTED that publication of this judgment under the pseudonym Ayad & Valmont is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PARRAMATTA |
PAC 3957 of 2019
| MS AYAD |
Applicant
And
| MR VALMONT |
Respondent
REASONS FOR JUDGMENT
These proceedings are between parties to a marriage - Ms Ayad, the Wife and Applicant, and Mr Valmont, the Husband and Respondent.
The marriage between the parties no longer subsists, having been dissolved by an Order made by a Court in City C, USA in or about October 2018.
The issues in dispute between the parties are fairly limited on their face. All this Court is asked to determine is a controversy with respect to superannuation splitting. That is not to suggest that the only property of or ever in existence with respect to these parties is superannuation. However, for reasons that will become apparent, the majority of assets of these parties have been addressed by another jurisdiction, to wit, the City C Court.
In the proceedings, Mr Valmont, as the respondent, is legally represented. Ms Ayad is not legally represented and has not been, it would seem, at any time.
There are allegations of family violence raised by Ms Ayad, to which I will return shortly. Notwithstanding that evidence, no Order pursuant to section 102NA of the Family Law Act 1975 (Cth) has been made at any time. That is on the basis that:
a)It was not raised by the parties;
b)It was not apparent that there was any difficulty between the parties in direct cross-examination proceeding.
Direct cross-examination of Mr Valmont by Ms Ayad has occurred today without complaint or problem. It would be fair to observe that Ms Ayad has done quite well. There is no Apprehended Domestic Violence Order, however such an Order may be styled, between the parties, although it would seem, from the evidence now available, that one had been applied for at some time. Whether one was ever in existence or not, there is not one now and has not been one during the currency of the proceedings.
Finally, and most importantly, it has not been apparent at any point in time during the proceedings that there is any sufficient imbalance or discomfort that would warrant or require such an expenditure of public funds.
There is also a logistical difficulty in that both of the parties are presently resident on a full-time basis in the United States of America. That has led to the necessary address of these proceedings by remote hearing, utilising Microsoft Teams. Whilst there are difficulties in the use of such technology for all proceedings, those difficulties need not be discussed at this time or in this forum. In this case, proceeding remotely has lent the great and considerable advantage that neither party has been required, particularly as neither would be permitted by present public health regulations to do so, to travel to Australia for the purpose of this hearing, as the parties had originally anticipated.[1]
[1] At the time that the matter was originally fixed for hearing, such rudimentary technology was not available to the Court. There had been no consideration of or investment in such simple, cost effective technology and, hence, whilst the Federal Circuit Court Act permitted and encouraged the use of AV facilities, this was, in reality, confined to static appearances between Registries and, at times, a Registry and a Correctional facility, usually attended by difficulty. Even the AV facilities provided for appearance of litigants subject to safety plans required those persons to attend at a Court Registry and with far from ideal participation due to the use of aged and unreliable equipment.
History of proceedings
The matter has a fairly limited history before this Court. It is one of very few cases that are heard and determined within 12 months of their commencement. Whilst, certainly, matters may conclude within that period with great regularity, they are matters which resolve consensually, by and large.
The matter was commenced by an Application filed by Ms Ayad on 16 August 2019. The application was filed in the Family Court and the first Court event was a Financial Case Assessment Conference with a Registrar, a specie of court event not known in the Federal Circuit Court.
The matter came before a Registrar on 26 September 2019. On that date, a number of notations and Orders were made, including an Order transferring the proceedings to this Court.
The matter then came before a Registrar in the Registrar Discrete Property list - the second Court event, the first before this Court. On that date, the matter was further adjourned as the Respondent had not filed material. I do not raise that as a criticism, merely to observe what the bench sheet reflects. The matter was also, on that date, referred to myself. The matter was fixed for a hearing for 6 May 2020 and with directions made for preparation for that hearing. A further direction was made for the filing of a Response, which direction was complied with.
As a consequence of the COVID-19 pandemic, the matter was then listed for call-over prior to its anticipated hearing date. The hearing date of the proceedings was vacated for a number of reasons, not the least of which was that at the time of call-over, 14 April 2020, it was not possible for this particular courtroom to entertain or conduct a remote hearing - the rollout of necessary technology and equipment not having yet reached this far-flung corner of the Commonwealth. Again, that is no criticism of the hardworking and extremely resourceful staff of the IT section. It is simply that the Court was ill-prepared for the pandemic, as Courts in most English-speaking countries were.
The matter was further called over on 8 May 2020, by which time the possibility of remote hearing by Microsoft Teams had become a reality, noting that which was contained within the Court’s initial notice to the community and the profession[2] that such hearings would commence when they were possible. The matter was then fixed to today’s date for hearing. The matter has proceeded by Microsoft Teams.
[2] See ‘Notice to the Profession – Covid-19 Measures and Listing Arrangements’ published 19 March 2020: The principle basis upon which work will be conducted in the Courts in the near future will be by telephone, and when it becomes possible by videoconferencing” [emphasis added].
I am conscious that there is a 16-hour time difference between the Court’s location and the parties’ homes. Thus, these reasons are given, albeit commencing well within Court sitting hours, in the small hours of the morning in Suburb D, City C, where the parties and their children are resident.
These are, as Perram J in Capic & Ford Motor Company of Australia Ltd (Adjournment) [2020] FCA 486 opined, extraordinary times. This is a matter that ordinarily would proceed by face-to-face hearing, but perhaps we might rethink such circumstances in the future and permit parties resident outside of the jurisdiction to participate in this fashion now that the technology is available.
It is also germane to observe that the matter, in very many ways, embodies the difficulty with seeking to consider matters as complex or simple based purely upon the value of the assets in dispute. In this case, the total value of assets is approximately $126,000, comprising two superannuation funds, the Wife’s and the Husband’s, with values of approximately $25,000 and $101,000, respectively. Yet the issues are myriad and complex, not only factually but potentially legally. Thankfully, those matters have, as the evidence has progressed, become clearer and more certain.
Material considered
In dealing with the matter, I have read and considered the following material in Ms Ayad’s case:
a)The Application Initiating Proceedings, filed by Ms Ayad on 16 August 2018;
b)Ms Ayad’s statement of financial circumstances, filed the same day;
c)Ms Ayad’s affidavit of evidence-in-chief, filed 19 June 2020;
d)A document headed Chronology of Events, which also attaches a number of documents to be tendered, having been filed 17 July 2020.
There are exhibits in Ms Ayad’s case as attached to that chronology or otherwise, and they comprise:
a)Exhibit A, a Minute of Orders sought;
b)Exhibit X, correspondence from Super Fund B, the fund that would be effected by the Orders sought in exhibit A (if made);
c)Exhibit M1, correspondence with respect to the Wife’s interactions with US Custom and Border Protection upon her entering the United States of America;
d)Exhibit M2, a lease entered into by the parties jointly in September 2015 with respect to premises in the United States;
e)Exhibit M3, certain bank statements of the Wife;
f)Exhibit M4, a copy of an Order issued by the Federal Circuit Court - Sydney, 20 May 2016, relating to the receipt of Fair Work Act compensation by the Husband - a modest sum, but addressed in the evidence;
g)Exhibit M5, an invoice or receipt from a jeweller with respect to the purchase or repair or refitting of both a women’s and a men’s wedding ring and other documents relating thereto;
h)Exhibit M6, a report prepared, on the Wife’s evidence, at the instigation of the US Immigration authority with respect to the Wife. That report would appear to be undated but relates to interviews with the Wife in June 2016;
i)Exhibit M7, material from legal representatives apparently instructed or retained by the Wife in February 2018. Its relevance is not readily apparent;
j)Exhibit M8, a chain of email correspondence between the Wife and legal representatives for the Husband with respect to, principally, proceedings before the US court;
k)Exhibit M9, a relatively up-to-date statement - or at least current at the time the proceedings were commenced - with respect to the Husband’s Super Fund B;
l)Exhibit M10, a suggestive record of payments with respect to alimony, child support or otherwise.
In Mr Valmont’s case I have read and considered:
a)His Response, filed 8 May 2020;
b)His financial statement and affidavit, both filed, it would seem, on 8 May 2020, together with a number of exhibits, comprising:
i)Exhibit F1, an email between the Husband and his legal representatives in the US proceedings. It relates to a chain of email communications, exhibit 2 to the Wife’s trial affidavit;
ii)Exhibit F2, statements with respect to the Husband’s superannuation, showing both its past and present values or at least proximate thereto;
iii)Exhibit F3, a determination of unemployment compensation form with respect to the Husband;
iv)Exhibit F4, the Wife’s current resume.
Each of the parties have given brief evidence and have been cross-examined. Both parties have had the opportunity, whether directly or through their legal representatives, to make submissions.
At the conclusion of the evidence, there were a number of matters that are relatively agreed and as can be set out in a chronology of events. I will come to the evidence shortly, after considering jurisdiction.
Jurisdiction
As the Judiciary Act 1903 (Cth) makes clear, the Court must, before proceeding to hear any cause of action, be satisfied that it has jurisdiction. It is not a significant issue in this case as there is no challenge or contest as to the Court’s jurisdiction. Both parties, as it were, submit to the Court’s authority. The Wife, at least, is an Australian citizen, and I am satisfied that this would found jurisdiction as regards residential status.
It is clear that the assets that the Court is asked to deal with, (ie, the parties’ respective superannuation interests), are both accumulated in and presently held within Australia.
The parties have been involved in lengthy proceedings before a court in City C covering some five years, it would seem. Concerningly, and notwithstanding the intention of both that Court and this to achieve finality for these parties, it would seem that they will return before that Court as soon as next week to address a number of issues, which I need not be engaged with.
The property that is before the Court can be addressed under Part VIII of the Family Law Act (supra), as the parties have been married. It is, thus, a matrimonial cause. The Application is brought within time.[3]
[3] Section 44 prescribes a 12 month period following divorce. As addressed, the parties’ divorce became final in October 2018, and the application was filed in September 2019 and thus commenced within 12 months
Part VIIIB of the Family Law Act provides an object in section 90XA to allow and permit the Court to make orders effecting a split of superannuation. Section 90XC of the Family Law Act makes clear that the Court can proceed, for the purpose of Part VIII or Part VIIIB proceedings to treat superannuation as though it were property, with an expanded definition of matrimonial cause provided.
For all of those reasons, I am satisfied that the Court does have appropriate jurisdiction.
Proposals of the parties
The Wife seeks a superannuation splitting Order in her favour in a sum of $47,814.54. Thus, that sum would be removed or rolled over from the Husband’s interest with Super Fund B and rolled to an account of the Wife’s nomination.
The Husband seeks that the Wife’s Application be dismissed with an Order for indemnity costs.
As it is the early morning in the locality in which the parties are present, I make clear - from the outset and for their benefit and nothing else - that I propose to make the Orders sought by the Wife and for the reasons that will follow.
Evidence
There is a surprising level of commonality in the evidence and a significant degree of agreement between these parties as to the chronology of events. They can be summarised from the documents provided by each of the parties as follows.
1974, the Wife is born. I do not include the totality of the statement as it is contained in the Husband’s Case Outline document as it goes on to state “in Australia”. It became apparent, during cross-examination, that the Wife may have been born outside of Australia, although nothing at all turns upon that issue. This is raised in the context of one of the exhibits referred to above - the psychological report prepared at the behest of US Immigration officials, which commences with the statement that the Wife was born in Australia. That statement is suggested to be inaccurate. It does not trouble me as regards the Wife’s credit even if that statement might have been inferred by the psychologist. It is not her document. It is on that basis that I simply refer to the Wife’s birth, however, noting that the Husband makes the same error.
1975, the Husband is born in the United States.
2000, the parties commence cohabitation with each other, it would seem, after meeting whilst both present in, if not working in, City E in the United States, presently beset by a rapid escalation of the pandemic. Thankfully for the parties, they are no longer living in that state. Shortly thereafter, the parties would appear to have come to Australia, because in 2000, they were married in Sydney.
In 2002, the eldest of the children, Mr F, was born. What would be apparent is that Mr F is now 18.
In 2003, the second child of the relationship, X, was born.
In 2007, the parties purchased a property at Suburb G, which was, until 2014 or thereabouts, their matrimonial home and principal place of residence. The Wife suggests that the parties vacated that property and moved together to rental accommodation in 2014 as a consequence of unfortunate events that had occurred at the property in the nature of a home invasion and attempted robbery, which had caused severe distress, as one might well imagine such events would, to all involved, including the children of these parties. The property, on the Wife’s case, was then tenanted. This is not inconsistent with the Husband’s evidence. But in any event, during 2014, whether in the early part thereof, as the Husband alleges, or some latter date, the parties separated. The Wife then began to rent a property in one location, the Husband another. Shortly thereafter, the parties began to practice a relatively shared care arrangement for their children, then minors.
In 2011, the third child of the marriage, Y, was born.
In 2011, the Wife withdrew a sum of $10,000 from her then superannuation entitlements. The parties are very much at odds as to why that occurred. There may, in fact, be some controversy as to whether it occurred or, if so, how the net funds resulting from the withdrawal were applied. However, I accept that the withdrawal occurred. I need not enter the fray as to what was done with the funds.
On 4 March 2015, and following some short negotiation - as to which there is little evidence, but as to the evidence that exists, I accept and prefer that of the Wife - the former matrimonial home at Suburb G was sold. The proceeds of sale were divided other than equally. The Wife received $220,377.88. The Husband received $185,730.38. Both parties point to the reality that the difference in that which each received was $35-36,000. Each advances an alternate hypothesis as to what that difference represented and why it occurred.
The Husband’s case is that the difference represented an equal division of the proceeds of sale of the home and an adjustment for approximately one-half of the Husband’s then superannuation entitlements. The Wife suggests that it represented a differentiation to accommodate various debts and other matters, which are set out in correspondence in one of the annexures to the Wife’s affidavit. I will return to that issue shortly.
In July 2015, or possibly a latter date but certainly in the latter half of 2015, both parties, separately initially, relocated to the United States - the Husband travelling with Mr F and X, the Wife travelling with Y. What is clear is that in 2015, possibly at or about the time that they relocated, a property was purchased by these parties jointly in City C. The parties agree on that much.
In 2016, the Husband commenced proceedings in the Family Court of City C. At or about that time, the Husband also received, whether in one payment or several payments, funds totalling AUD $600,000, representing the settlement of his business affairs in Australia relating to a business he had previously conducted with others. I accept, to the extent that it is something that the parties are in dispute about, that a property in the United States was purchased, whether the purchase had completely settled prior to the receipt of those funds or otherwise, preferring in that regard the Wife’s evidence as supported by various documents tendered by her.
The Husband sets out in his chronology a number of details with respect to the conduct of the City C proceedings. I am not satisfied that I need recite those matters or trouble myself with them. The Court has concluded those proceedings and, as the Husband has made clear, the Court has made final Orders with respect to parenting on 1 May 2018 and final Orders with respect to property, alimony and other matters on 17 May 2018. I need not go behind the Orders made by that Court. The issue of comity would arise.
During the course of those proceedings and in April 2018, the property which had been purchased in City C was sold. From the proceeds of sale and consistent with the Orders that were made by the Family Court City C, the parties again received disparate amounts of money therefrom. The Order issued by the Court, together with the settlement statement relating to the sale, are attached to the Husband’s material. I need not address it specifically at this point other than to observe that the parties are agreed that the material that is attached reflects the distribution that they each received.
Each party suggests that the other failed, during the course of those proceedings, to make disclosure - or full and proper disclosure - whether at all or at different points in the proceedings. What is conceded in cross-examination eruditely conducted by Ms Ayad, is that the $600,000 from the resolution of business affairs was not, at least initially, disclosed in those proceedings, although I do not suggest that it was never disclosed. Whether it was taken into account or how it was taken into account by the City C Court I could not ascertain as there are no reasons given, merely a short-form checklist tick-box arrangement, which is not criticism but which does not enable me to understand the full and total reasoning as to the settlement that was reached or even to fully and properly understand who received what. The parties, no doubt, would have that information available to them. It is not necessarily, in its completeness, available to the Court.
It would seem that the pandemic has had some significant impact upon the Husband, who has invested funds of undisclosed amount in establishing a business in City C. The business has suffered, as I readily accept it would have, as a consequence of the pandemic, social-distancing requirements and the like. I am conscious that the provision of support and assistance by government agencies in the United States does not necessarily reflect or mirror that extended under Australian packages.
Accordingly, I would accept that both parties – and very much both – are doing it tough at this point in their lives. Ms Ayad indicates that as a recent arrival in the United States, whether her immigration has been finalised to the point of what is commonly referred to as a “Green Card” or not, she is unable to earn any significant income, notwithstanding her somewhat impressive resume, as her qualifications from overseas may not be recognised, may require some updating or other accreditation and, in any event, she is earning approximately US$18 per hour, comparable with the Australian basic wage.
The evidence of the parties is, however, at odds with respect to a number of factual issues which the parties ask this Court to determine before addressing the issue of the property adjustment. I will deal with a number of them and make clear the findings that are made. I will do so by posing and responding to questions which are, in essence, posed by the parties.
Did the informal division of the proceeds of sale of the Suburb G property reflect an adjustment with respect to superannuation?
Ultimately, I am satisfied it did not.
The Husband says that the disparity in the distribution - $36-37,000 - is remarkably similar to what represented half of the then value of the super. It is equally clear that it represented, approximately, the amount that the Wife suggested she had sought from the Husband as an adjustment in her favour to take into account various other things.
The Wife annexes, as I have already referred to, (Exhibit 2), a partial email chain between herself and the Husband. The commencing email from the Wife is forwarded by herself to herself, (ie, from one email to the same email). It is, however, the Wife’s sworn evidence that the email was sent by her to the Husband. The Husband, late in the piece and during cross-examination, suggested that he has never seen the email that the Wife suggests was sent to him by her and that she may well have manufactured it or altered it in some fashion.
What is undisputed is the response provided by the Husband, whether to that email or any other email:
I agree with all of it.
It is unclear what is agreed to if it is not the email the Wife leads. There is reference to retention of bikes and cars by the parties, respectively, and the statement made at the conclusion thereof:
All this is only agreed upon if you agree to not stake any claim over my business [that being the business which ultimately and within some 18 months or so of that email communication realised $600,000].
Ultimately, whether the above finding is correct or not, it would not impact upon the Orders that I propose to make or the discretion which I intend to positively exercise. Whether the amount is remarkably similar or not, it is difficult to understand which could be accepted, although on the basis of the email chain - the only evidence provided - I accept that the Wife is more probably correct than not.
However, lest I am wrong in that regard, it must be clear to the parties – indeed, it must be clear through the five years of litigation they have embarked upon before the City C court – that prior informal agreement does not, in any way, preclude a Court exercising jurisdiction. It may speak, as the Husband’s case is run, to the issue of whether it is just and equitable to now make a further Order over and beyond that made by the City C Court. It would not appear to be suggested or, if it was, accepted, that it was other than just and equitable to deal with and divide the property of the parties notwithstanding their previous suggested informal agreement.
What is clear is that the division of property which occurred at that time was not, on its face, by reference to the evidence as it has now unfolded, just and equitable. It did not take into account significant assets of the parties, to wit, the business. In any event, it is not submitted that there is any issue of estoppel which would preclude the Wife bringing her Application, merely that it is not just and equitable in all of the circumstances for jurisdiction to be exercised. I will deal with that in considering the legislative provisions.
I am also conscious that the Wife’s evidence, comprising index 2 to her affidavit, was initially the subject of objection and was excluded. However, upon arriving at the Husband’s evidence on the same issue, that decision was revisited and the material admitted.
Section 131 of the Evidence Act 1995 (Cth), the basis upon which objection was taken, provides that:
Evidence is not to be adduced of a communication that is made between persons in dispute or between one or more persons in dispute in third party in connection with an attempt to negotiate a settlement of the dispute or a document, whether delivered or not, that has been prepared in connection an attempt to negotiate the dispute.
Thus, on its face, the objection had real substance. However, on the basis that the Husband seeks to introduce unchallenged, from the Wife’s perspective, evidence as to a different formulation of negotiation between them, I am satisfied that the exceptions in at least subparagraphs (2)(c) and (e) would apply, that being that the substance of the evidence has been partially disclosed with the express or implied consent of the persons in dispute and the full disclosure of the evidence is necessary to enable a proper understanding of the other evidence - that is, the Husband asserts one version of the negotiation, which is admitted and before the Court, with the Wife’s express or implied consent, (ie, she has not objected to it), and to allow that to stand without the Wife introducing the available evidence she holds with respect to a contrary content of negotiation would be unjust and inequitable and would not permit a proper understanding of the evidence. Further, the evidence that the Wife seeks to lead contradicts or qualifies evidence that is already admitted, (ie, the Husband’s). On that basis, I am satisfied that material is properly before the Court.
Ultimately, however, irrespective of who is correct or incorrect with respect to the negotiations which may have occurred between the parties, there are only two issues that need to be observed to make clear that the Court is entitled to proceed to consider the interests of these parties in addition to the above grounds, they being:
a)The division of the proceeds of sale would appear to have affected nothing more than a division of the proceeds of sale. It is not to suggest that the calculation of the distribution could not have taken into account, as the Wife asserts, various debts and other expenses and assets or, as the Husband asserts, the value of his superannuation. But what is made clear is;
b)The parties, thereafter, intermingled their affairs again in a fashion that would - by reference to Full Court authority dealing with Applications to set aside orders that are made, let alone informal and undocumented agreements between the parties - lead to an implied consent to a revisiting of the issue.
Did the parties reconcile when they moved to the United States?
I am satisfied that, ultimately, I need not determine the issue. That is not to suggest that I prefer one version over the other, although if push came to shove, as it were, I would accept the evidence of the Wife. She presents a number of corroborative documents, including, although it is far from dispositive on its own, the correspondence referred and an exhibit with respect to wedding rings suggested to have been purchased or modified by the parties, irrespective of who ultimately attended to that work or paid for it.
There are, in addition, the concessions made by the Husband during his cross-examination, as would be apparent from the transcript, as to his holding out of the Wife as his Wife and the reality that the parties had, whether as the best of friends and intending to co-parent their children, notwithstanding that they were separated or otherwise, intermingled their funds - not in a minor fashion, but substantially.
It was put to the Wife that the parties had operated a joint bank account for the pure purpose of enabling them to meet joint expenses. The Wife made the appropriate concession, aiding her credit, that it was one of the purposes but far from the sole. If the bank account were the only intermingling of financial affairs of the parties, that would be a different thing to the circumstances of these parties. They purchased real estate together. They both lived it in together. Whether they ultimately did or did not sleep in the same bed every night, engaged in other relationships or not, I am satisfied that that evidence might permit a finding to be made on the balance of probabilities that a reconciliation occurred.
The reason I have indicated that it is not an issue that I need determine to the point of a finding, even though I would have a preference as to the acceptance of one version of events over the other, is because the intermingling of funds by and of itself is sufficient to imply consent to overturn any prior arrangement, even if it had been a Court-ordered arrangement. The parties had not entered into Orders. Thus, they left themselves at large to the Court’s discretion, whether this Court or the City C Court.
There is, of course, the important concession by the Husband that there was no adjustment made in the initial distribution of funds to reflect any value for the business, whether as an asset or an income-earning vehicle, that was ultimately retained by him as a consequence, if one is to accept his view that the parties had reached a concluded bargain - albeit not formalised in any documentary fashion, including by asking the Court to exercise jurisdiction by consent, of all assets between them. That would simply seem unrealistic.
Further, there is the concession of the Husband during cross-examination that he received $600,000. Whilst he was clear that he has disclosed it in a tax return, whether in the US or Australia, when asked:
Was that part of our negotiation in relation to our divorce –
his response was clear:
?---No.
When he was asked:
In 2016, did you include that amount in documents that you filed in the US proceedings –
the answer again clear:
?---No.
In those circumstances, the intermingling combined with that circumstance of itself would be sufficient to vitiate against that which is submitted with some force, and appropriately, by counsel for the Husband, referring in the written document that is provided by way of submissions to a number of authorities as to the parties’ consent to the distribution of their funds urging caution in overturning or interfering with those arrangements.
The evidence that is available need not lead to a finding that the parties did, in fact, reconcile. That is also, on a number of bases, connected with the specific evidence in this case. What is common ground between the parties is that the Husband’s superannuation interest with Super Fund B came into being during the relationship and has not - since shortly after the parties separated or moved to the United States, whichever might be the relevant or applicable description - been the subject of contribution by either party of any substance, if at all.
It is not conceded that the Wife held a superannuation interest at the commencement of the relationship. However, I accept her evidence on oath that she did. It is unclear what that account was worth. It would seem not a vast amount. That is no criticism of Ms Ayad or her hard work and effort in establishing the fund and the contributions that she made to it. But it is common ground between the parties that shortly after the relationship commenced, the first child of the marriage was born and that Ms Ayad was, thereafter, predominantly devoted to her role as homemaker.
In those circumstances, it is improbable that any contributions or significant contributions were made in the relationship. I accept that there was a small withdrawal. I accept Ms Ayad’s evidence, on oath in her financial statement, that she continues to hold approximately $25,000. Certainly, it is true that no document is produced to corroborate that, but the proceedings have been on foot for some little time - nearly 12 months. No call would appear to have been made, no subpoena issued. Again, that is no criticism of those conducting the Husband’s affairs. It is not a matter of such great moment, and, indeed, on the basis upon which the Husband’s case is fashioned - that it is not just and equitable for any Order to be made - it might have been seen as unnecessary.
However, ultimately, the intermingling of affairs post the distribution of the proceeds of sale of Suburb G - an agreed fact - is sufficient, I am satisfied to obviate against the need for a finding as to whether there was reconciliation but to allow those facts and circumstances to be taken into account. In doing so, I do not intend to engage with the Orders made the City C Court. I respect my brother and sister judicial officers no matter where they sit. The issue of comity requires that I simply take the determination that is made by them on its face.
However, I similarly could not be satisfied that the boxes ticked in the documents that are produced as a consequence of the conclusion of those proceedings relating, for example, to disclosure by the parties, could satisfy me or permit an inference to be drawn as to any specific disclosure or non-disclosure by either party.
Did the Husband perpetrated family violence against the Wife such as to generate what is often referred to as a Kennon argument?
Again, I am satisfied that I need not determine that issue to finality or to the point of any finding. I make clear for Ms Ayad’s benefit that this is not to disregard her evidence. I make clear for Mr Valmont’s benefit that it is not to accept that evidence without challenge. It is most assuredly challenged. It is merely that it is not necessary for that finding to be made.
I am conscious that this may appear, to some, controversial that the Court should pursue any such allegation to a point of finding as a matter of validation for a victim and to ensure that a perpetrator is exposed. However, this is not a Court of morals or general public principle. It is a determination of the affairs of these parties. Issues of family violence have, perhaps in past times, been too private and behind closed doors. But for the purpose of this case, it is a finding that is simply unnecessary to enable justice to be done. If it were necessary, I would have no hesitation in pursuing the evidence that is led. However, as it is not a necessary finding to permit the determination, I will not address it further.
Is the lack of evidence with respect to the Wife’s superannuation fund fatal to her cause?
No.
I have already referred to the evidence that is given. The Wife is clear and unchallenged as to her evidence that she brought superannuation into the relationship. She has no document to corroborate the fund or its value at the time, but she gives clear evidence on oath that it is so, and I cannot simply disregard her evidence on oath for lack of corroboration.
It is uncontroverted that the Wife was in employment at the commencement of the relationship and for some little time after its commencement, and, as a consequence of Australian superannuation guarantee legislation, the Wife must have made contribution to some fund or had contributions made on her behalf by an employer.
The Wife has, as I have already indicated, disclosed the interest in her financial statement. She has attributed a value to it. I might infer, though I do not – I simply accept the Wife’s evidence on oath and sufficiently informed on her part to offer it on oath, noting that it is a document attested by her as true – that she holds the approximately $25,000 in the fund. She was not challenged on that aspect of her evidence.
There is no controversy as to the Husband’s superannuation entitlements. There is no controversy, as I have already observed, that the Husband’s superannuation entitlements were wholly or substantially accrued during the relationship and that the contributions have ceased substantially, if not altogether, with the parties’ removal from the Commonwealth.
The Wife’s fund was largely, if not substantially or even possibly completely or close to it, accumulated at the commencement of the relationship. Nothing turns upon that. It is not an issue that parties should or could retain that which is held by them at the commencement of a relationship as a matter of course. Such a proposition is entirely contrary to everything which has fallen from the Full Court in authorities such as Hickey,[4] AJO & GRO,[5] Pierce[6] and the like.
[4]Hickey v Hickey and the Attorney General for the Commonwealth of Australia (Intervenor) (2003) FLC 93-143.
[5]AJO v GRO (2005) FLC 93-218.
[6]Pierce v Pierce (1999) FLC 92-844.
What are the assets that the Court should deal with?
I am satisfied the Court should confine itself to the superannuation interests of the parties.
I do not propose to go behind the Orders made by the City C Court, which profess to address all other non-superannuation assets of these parties. If either suggests that it is otherwise, they can have their remedy in that jurisdiction. In this Court, I have only a plea for relief with respect to superannuation splitting and nothing else, but that does not mean that I can or should ignore the totality of the distribution of assets of these parties, although that is made very much simpler in many respects by the portions of evidence to which I have already referred.
I do not propose to canvass the evidence in any greater detail. I propose to address the matter by reference to the legislative provisions to which I now turn.
Determination
I must commence, as Stanford[7] makes clear, by considering whether it is appropriate to exercise jurisdiction. The High Court answers that question as a general proposition at paragraph 42:
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).
[7]Stanford v Stanford (2012) 247 CLR 108.
Jurisdiction is readily established in circumstances where the parties have previously enjoyed a relationship together, intermingled their financial affairs and otherwise, and have now separated such that assets or resources that one or both parties had previously contributed to or might expect to have received some benefit from will no longer be the case.
I am satisfied that this would apply in this case, and, thus, the Court can and should proceed to address and determine this dispute on its merits. However, as the High Court made clear, the Court does not proceed on the basis that an Order, just because it is sought, should be granted or that jurisdiction, just because it is sought to be appropriately invoked, must be acted upon through a positive exercise of discretion. That is the thrust of the Husband’s case. Section 79(2) of the Family Law Act (supra), as the High Court focused upon, makes clear that justice and equity must infuse all that the Court does, including determining whether any order should be made, let alone its quantum.
I do not interpret that which falls from their Honours as meaning that there is some threshold determination before a consideration of section 79 or section 75(2) of the Family Law Act (supra). That would be somewhat nonsensical. Nor is it submitted, with the greatest of respect, by either party. To determine that no order should be made without having regard to the merits of the case and the evidence that is led would be very much to put the cart before the horse. I am satisfied that the determination as to justice and equity can only be made in the context of the evidence of the parties and its proper consideration by reference to section 79(4) and section 75(2).
In turning to section 79(4), I must have regard to the contributions of the parties, directly or indirectly, towards the acquisition, conservation or improvement of property, treating again, as section 90XC of the Family Law Act (supra) permits, the superannuation interests of the parties as property for present purposes.
I must have regard to the contributions made, directly or directly, by the parties towards acquisition, conservation or improvement of property, again largely mirroring the former.
I must have regard to the contributions of the parties to the welfare of the family constituted by the parties and their children.
I must have regard to the effect of Orders upon the earning capacity of either party as well as the section 75(2)[8] factors. I must also, under sections (f) and (g), have regard to any other Order made under this Act, although I am satisfied, at least as another relevant consideration, that might include the Orders made by the City C Court, as well as any child support that a party is assessed to provide. There is significant complaint between the parties with respect to that very issue. However, I am satisfied that it does not aid or assist either party to any real extent in this case.
[8] Family Law Act 1975 (Cth).
Importantly, there are Orders made by the City C Court and possibly under State or Federal US laws with respect to the provision of child support as well as alimony, as it is described. There is some controversy as to arrears and what those arrears might be. They do not appear substantial, although that is not to dismiss Ms Ayad’s complaints as to the accrual of arrears.
What is clear and apparent, as is quoted from the City C judgment in the material filed by the Husband, is that there is significant acrimony between the parties. Hence, it is explicable that they would be at odds as to such simple and readily demonstrably provable allegations, such as to accrual of arrears. It would seem the controversies relating to those matters will see the parties back before that Court next week.
However, both parties do provide support for these children in some form. They practice an equal care arrangement, it would seem. And whilst I, again, do not dismiss the complaints, criticisms or assertions of either party, it simply does not assist, nor is it necessary to pursue it to achieve justice.
What I must focus upon are the positive contributions. The Husband, as is common, asserts that he has made the primary financial contribution through hard work and exertion. That would appear, at least inferentially, conceded by the Wife. That is not to suggest she has sat on her hands and done nothing. It is conceded, on the Husband’s own case, that the Wife was the primary homemaker and parent.
As observed in Kennon & Kennon (1997) FLC 92-757, quoting a significant history of Full Court authority prior thereto, the Court, to give proper meaning and weight to homemaker and parent contributions, must balance them and should balance them equally with financial contributions. The Full Court has been clear that there is no category of special financial contribution. One wonders how, if an entrepreneur generating millions of dollars of income and accumulating property as a consequence thereof is not validly found to have made a greater-than-equal contribution (and I make clear that I do not seek to assert that they should be so found to have done so), parties who have subsisted in their marriage and accumulated modest wealth, at least in first world terms, would expect that their contributions would be found other than equal.
I am satisfied that the contributions of these parties should be assessed as equal with respect to all of their property, including within that definition by reference to section 90XC of the Family Law Act (supra), namely, their superannuation interests
The Wife has, in addition to her contribution as a homemaker and parent, on her evidence, which is not challenged but nor need it be, contributed in support and assistance with respect to the development of the Husband’s business, which has ultimately realised $600,000 gross. It may well be that there have been payments and deductions therefrom. The Husband is clear that there have, although they are not specifically quantified.
At paragraph 20 of his affidavit, the Husband sets out, for example, that the amount he initially received, although a further payment would appear to have come into his hands, was substantially eroded by paying his accountant, purchasing a new motor vehicle and boat and paying off credit cards.[9]
[9] Curiously, in cross-examination with respect to the wedding ring issue, the Husband was clear that he does not have and has never had a credit card. Nothing turns upon the issue
I am satisfied by reference to all of the contributions of these parties, over a relatively lengthy relationship, that their contributions should be assessed as equal. That would include equality with respect to the superannuation entitlements, as will become apparent from the wording of section 75(2) of the Family Law Act (supra) or portions thereof. Again, in the circumstance we are in, the Husband’s fund is that which is primarily sought to be attached, and there is no controversy that it has accumulated entirely during the relationship. Thus, I am satisfied that the Wife has made, at the very least, indirect and equal contribution towards the accumulation of that fund.
The Husband may well have made contribution to the Wife’s fund even if no contributions have occurred during the relationship, and I do not propose to disregard the Wife’s superannuation. Both are taken into account in this determination. However, ultimately, equality of contribution, I am satisfied, is appropriate.
I must then turn to section 75(2) of the Family Law Act 1975 (supra) and consider the factors therein which are relevant. I will address them individually:
a)Age and state of health of the parties. The parties are of relatively similar age. Neither suggest that they suffer ill health or ill health that will impact their earning capacity. One would hope that circumstance will continue well into the future.
b)Income, property and financial resources of the parties and their physical and mental capacity for gainful employment. Again, that is relatively equal.
c)Whether a party has the care of a child under the age of 18 years. Both parties share in the care of their two minor children.
d)Commitments of the parties necessary to enable them to support themselves and others. There is no evidence that suggests that that is a relevant factor.
e)The responsibility of the parties to support any other person. Not relevant.
f)The eligibility of either party to receive a pension, benefit or pension or other payment from a superannuation fund. Neither is so entitled at this point in time. It may be possible for the Husband to withdraw from his super under Australian pandemic regulation at least to a limited extent, but they are matters for him. There is no suggestion it is occurring at present. Neither is of an age or has triggered a vesting event that would permit them to access their funds other than for financial hardship reasons, which the Wife, I accept, has already done on one occasion.
g)When the parties have separated a standard of living that, in all the circumstances, is reasonable. I am satisfied that the Wife’s standard of living is perhaps less than that of the Husband. That is not to suggest, particularly in these pandemic times, that the Husband’s business is other than impacted by COVID-19 restrictions. However, they are both struggling to survive in these difficult and unique times. This factor does not assist a great deal one way or the other.
h)The extent to which payment of maintenacen would assist the other in improving their earning capacity through education or otherwise. Not relevant.
i)The effect of orders on creditors. Not relevant.
j)The extent to which maintenance is in consideration the extent to which a party has contributed to the income-earning capacity, property or financial resources of the other. Maintenance is not under consideration. However, I am entitled to consider as a relevant fact and as I have already observed, that the Wife has, indirectly at the very least, contributed to the Husband’s superannuation fund accumulated during the relationship and, curiously, since separation, the parties having been absent from Australia and contributions having ceased, growth of the fund is not through personal exertion but merely accumulated interest and the like of the fund that already existed. Thus, the contribution to the ongoing increase, modest as it is, is also that of both parties equally, as reflected by their previous equal contribution.
k)Duration of the marriage and the extent to which it has affected the earning capacity of the parties. I am conscious that this is potentially a factor in favour of either party. What I am also conscious of is that the Wife is, perhaps, at this point in time as regards capital received as a consequence of the proceedings before the City C Court, (although I do not seek for one moment to go behind those Orders or to criticise them in any fashion), worse off than she would have been had she not travelled to the United States and had simply retained the funds that she had received from Suburb G and pursued and prosecuted an Application under the Family Law Act1975 (Cth) in Australia with respect to the remaining assets. That is, however, somewhat hypothetical and does not greatly assist.
l)The need to protect the role of a party as a homemaker or parent. This is not particularly relevant. Each party has parenting responsibilities for the children of this relationship.
m)Whether either party is cohabiting and, if so, the financial circumstances of the cohabitation. Neither leads evidence that this is relevant.
n)The terms of the order and whether it will impact upon vested property and bankruptcy. Not relevant.
o)Subsection (naa) is similarly not relevant.
p)Child support. I have already addressed this above with respect to contribution and I am not satisfied need be addressed further.
The factor that is relevant is subsection (o), any other fact or circumstance which, in the opinion of the Court, the justice of the case requires to be taken into account. The case is very much balanced upon, from both parties’ perspectives, issues of justice and equity. I am satisfied that in respect to this ground, I am entitled to have regard, whether disclosed in 2016 or at any other point in the City C proceedings, to the realities that:
a)he Husband has received and largely retained (although I accept there may have been intermingling of some portion of the funds in the purchase of the United States property now sold and the proceeds divided) the funds from the sale of the business. There may also have been other expenses, taxation and the like, however, evidence is not led to identify them. I accept that they may well have been incurred, and it would have eroded the gross amount somewhat.
b)The Wife has not made contributions to her superannuation during the relationship as she has subjugated her role within the marriage to the welfare of the family, particularly comprising a predominant role as homemaker and parent.
Those two factors combined would, in my mind, justify and entitle the Wife to an adjustment of five to 10 per cent in relation to the property which the Court considers, (ie, the combined superannuation of these parties).
At this point, it is germane to observe that the Wife’s proposal is that she receive a sum certain by way of superannuation split from the Husband’s entitlements. That sum represents just under 58 per cent of the combined superannuation interests of these parties. The Wife seeks a split of $47,814.54. The Wife holds $25,000 in super or thereabouts. The Husband holds, in a rounded amount, $101,000.
Accordingly, if the Wife were to receive $47,814.54, together with her retaining the superannuation she presently holds, she would receive about 57.8 or 9 per cent of the total superannuation of the parties. That falls well within the range that would be achieved from equality of contribution towards those assets of the relationship and section 75(2) adjustment.
The Court is not focused, in assessing contribution, upon identifying the asset to which the contribution is made. Contributions can be made to specific assets. They can be made positively and negatively. They can made at different points in time. But contributions can also be made in the more amorphous and less-definable fashion as a contribution as a homemaker and parent, raising and parenting children, meeting their needs, subjugating participation in paid employment and with it the accrual of employment benefits such as leave entitlements and superannuation as addressed in the evidence.
For those reasons, I am satisfied that the adjustment, pursuant to section 75(2), should appropriately be fixed at an approximate midpoint of the range that I am satisfied would apply - eight per cent - thus achieving the outcome that the Wife desires and thus, for that reason if nothing else, obviating against the need, as I have already indicated, to pursue various factual controversies to a point of finding, (which may be prejudicial to one party or the other or simply invite or generate further appellate controversy). However, on that basis, an adjustment of the superannuation interests of the parties 58 to 42 per cent would achieve that which the Wife seeks.
Finally, I note that whilst a plea for costs is included within the Husband’s Response, such a plea could not be prosecuted in circumstances where he has been, to adopt the language of section 117 of the Family Law At (supra), wholly unsuccessful. He has not resisted the relief sought by the Wife.
Similarly, the Wife, self-represented as she is, is in no position to prosecute an Application for Costs. As the High Court has been clear, costs relate to professional legal costs and possibly some other out of pocket expenses. Had the Wife been put to the expense of air fares to Australia and at the time of her arrival compulsory two-week quarantine in a hotel at her own expense, those costs might be recoupable. But, thankfully, the matter has been dealt with remotely without such costs incurred, and I am satisfied, accordingly, a further order can and should be made at this point that each party pay their own costs of and incidental to these proceedings.
I certify that the preceding one hundred and thirteen (113) paragraphs are a true copy of the reasons for judgment of Judge Harman
Associate:
Date: 23 November 2020
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