Bacall & Zagar
[2020] FamCA 350
•14 May 2020
FAMILY COURT OF AUSTRALIA
| BACALL & ZAGAR | [2020] FamCA 350 |
| FAMILY LAW – ALTERATION OF PROPERTY INTERESTS – no parenting issues. COHABITATION – disputed evidence of duration of relationship, the husband contending the relationship lasted a few years only whereas the wife contending the relationship lasted for over 15 years – finding in wife’s favour. DISCLOSURE BY HUSBAND – very poor – serious difficulty obtaining a reliable understanding of the totality of the parties’ asset position – wife, conversely, in straitened financial circumstances – financial position of husband substantial – extensive review of authority of appropriate orders where discovery has been defective. CONTRIBUTIONS – husband providing the lion’s share of financial contributions – the wife providing significant home-maker contributions – husband contending wife’s entitlement limited to 5% - wife initially seeking a 50% division of property but at the trial contending for 40% - wife’s contentions upheld as to 40% – division ordered in the percentages 40% to the wife and 60% to the husband. |
| Family Law Act 1975 (Cth), ss 49, 75(2), 79, 112AP, pt VIII Matrimonial Causes Act 1959 (Cth) |
| Abalos v Australian Postal Commission (1990) 171 CLR 167 Guild & Stasiuk [2020] FamCA 348 Holloway v McFeeters (1956) 94 CLR 470 Ward v Williams (1955) 92 CLR 496 Warren v Coombes (1979) 142 CLR 531 |
| Thomas Bingham, ‘The Judge as Juror: the Judicial Determination of Factual Issues’ (1985) 38(1) Current Legal Problems J. H. Wigmore, Wigmore on Evidence, vol. IA (Tillers ed, 1983) |
| APPLICANT: | Ms Bacall |
| RESPONDENT: | Mr Zagar |
| FILE NUMBER: | SYC | 8282 | of | 2017 |
| DATE DELIVERED: | 14 May 2020 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | The Honourable Justice Wilson |
| HEARING DATE: | 21 and 22 October 2019 |
| DATE OF FINAL WRITTEN SUBMISSIONS: | 9 April 2020 |
SUBMISSIONS RECEIVED FROM:
| COUNSEL FOR THE APPLICANT: | Ms D Coulton |
| SOLICITOR FOR THE APPLICANT: | O’Sullivan Legal |
| COUNSEL FOR THE RESPONDENT: | Mr P Sansom of Senior Counsel |
| SOLICITOR FOR THE RESPONDENT: | Neil Jamieson & Associates |
REPRESENTATION AT TRIAL
| COUNSEL FOR THE APPLICANT: | Ms D Coulton |
| SOLICITOR FOR THE APPLICANT: | O’Sullivan Legal |
| COUNSEL FOR THE RESPONDENT: | Mr P Sansom of Senior Counsel |
| SOLICITOR FOR THE RESPONDENT: | Neil Jamieson & Associates |
Direction
I DIRECT the parties to bring in minutes, with seven days, that give effect to these reasons.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Bacall & Zagar has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: SYC 8282 of 2017
| Ms Bacall |
Applicant
And
| Mr Zagar |
Respondent
REASONS FOR JUDGMENT
Introduction
On 13 November 2017 the applicant filed this proceeding for orders under s 79 of the Family Law Act in relation to real estate at B Street, Suburb C, New South Wales. In her initiating application to commence this proceeding the applicant sought orders for the sale of that property and for the division of the property on a 50/50 basis. The respondent in his amended response dated 25 July 2018 sought orders dismissing the applicant’s application.
In these reasons the applicant is referred to as Ms Bacall, the applicant or the wife, all being interchangeable references to Ms Bacall.
In these reasons the respondent is referred to interchangeably as Mr Zagar, the respondent, the husband or Mr Zagar.
One of the main issues in dispute in this proceeding was the duration of the relationship between the applicant and the respondent. Another significant issue in this litigation was the contribution of the parties.
Some, although not many matters of fact were agreed. They may be shortly stated to include the following –
a)the applicant was born in 1965 and the respondent in 1966;
b)they married in 2000;
c)prior to their marriage the applicant worked variously as a secretary, as a finance professional in the United States and the United Kingdom, as a waitress, as a receptionist, as a real estate agent and as an advisor; and
d)the respondent has for approximately 15 years worked as a commercial manager.
The dates over which they cohabitated, even after marriage, was a contested matter in this litigation.
According to the applicant’s counsel in opening, whether described as a de facto relationship or as a marital relationship, the applicant and respondent cohabitated for an extended period, upwards of 12 years. Conversely, the respondent argued that the parties lived together for three years and six months “in differing contexts as to the true nature of their relationship” (those were the words of Mr Sansom SC).
Despite the applicant seeking in her initiating application an order for property division in the propositions of 50% each, in her case outline and in the opening by her counsel the applicant sought a 40% property adjustment in her favour. Conversely, on behalf of the respondent it was put that at best, any adjustment in favour of the applicant (if one was required at all) was limited to 5%.
Both parties urged me to apply the reasoning in Zaruba & Zaruba.[1] However, in applying the reasoning in that case the applicant argued that a global approach ought to be taken to the division of the property whereas the respondent argued that upon a proper construction of the reasoning in that case an asset-by-asset approach ought to be taken.
[1] [2017] FamCAFC 91
Synopsis
For the reasons that follow –
a)I find that the period of cohabitation between these parties was as the wife said, 15 years in total;
b)the relevant property should be assessed on an asset-by-asset basis and not on a global basis;
c)contributions ought to be assessed at 40% in favour of the applicant and 60% in favour of the respondent;
d)matters bearing upon s 75(2) considerations that included the applicant’s assumption of liability as co-mortgagor elevated her entitlements to the percentage I found, namely 40%; and
e)I direct the parties formulate orders within seven days to give effect to the reasons I have set out below.
Relevant factual setting
The applicant made one affidavit that was adopted by her and marked as an exhibit in the trial of this proceeding. It was made on 19 June 2019. She deposed to the respondent and her being 53 years of age when this proceeding was tried.
The applicant’s version of events
According to the applicant, prior to her meeting the respondent her accommodation history involved her living for a time in the United Kingdom and living in Sydney. They were as follows –
a)from 1990 until October 1997 the applicant lived in the United Kingdom;
b)on her return from the United Kingdom the applicant moved in with her mother in D Street, Suburb E between October 1997 and March 1998;
c)in March 1998 the applicant left her mother’s home and moved into a studio in F Street Suburb E until June 1998 or thereabouts; and
d)in late June 1998 the applicant moved into accommodation owned by the respondent at G Street, Suburb C, terminating her lease of the studio at F Street, Suburb E.
The applicant stated that she and the respondent began a sexual relationship from late 1998. She said he paid for her course of studies to become a registered real estate sales person. She said he also paid the deposit on a car she purchased and guaranteed some other amount on 2 November 1998.
In developing her version of the important factual events in this litigation, the applicant put forward as exhibits to her own affidavit certain information that she said was derived from a spreadsheet on the respondent’s computer. The first spreadsheet, marked as exhibit “[A1]” to her 19 June 2019 affidavit recorded the totality of the respondent’s personal expenses from 1 October 1998 to 26 January 2010. The second spreadsheet on which the applicant relied in this case was marked as exhibit “[A2]” to her 19 June 2019 affidavit. In the second spreadsheet (A2), the applicant summarised the entries on the first spreadsheet (A1) except that A2 was a list of payments by the respondent of personal expenses referrable solely to the applicant. The applicant stated that the total expenditure recorded in the second spreadsheet (A2) was $105 485.12 and that such expenditure was incurred by the respondent for the applicant’s benefit. It is not presently relevant or necessary to go to the detail of the expenditures on the second spreadsheet (A2). Suffice it to say that the expenditures there recorded were mostly personal. The applicant did not adduce evidence of the relevant invoice to which the payments on the second spreadsheet corresponded.
Between June and October 2000 the applicant stated that she ceased living with the respondent at the G Street property and instead rented a studio at H Street, Suburb E. She said she left the G Street premises because the respondent did not commit to a wedding date on which they could marry. In paragraph 14 of her affidavit (the subject of objection for relevance by the husband, but in my view squarely part of the narrative in this case) the applicant purported to narrate a word-perfect exchange she said she had with the respondent. It is utile to record that paragraph in terms –
That is shortly after we met he said words to the effect: “You are the one I want to marry. I said words to the effect: “I’m in love with you too. I want to marry you too. I want to be married to have a child. He said: Yes”
In two recent judgments I have handed down (Walcott & Walcott[2] and Sandel & Reimann[3]) I have written in most disapproving terms of the practice of deponents putting statements of the effect of their words in quotation marks. Either words in quotation marks are direct transcripts from contemporaneous records made when the words were fresh in the deponent’s recall or the words were to the effect of what was said. It cannot be both. Solicitors should take greater care when preparing affidavits that the course followed, as here, does not involve the attribution of a verbatim account when the witness’s version is not that. To do otherwise involves an attempt to elevate the reliability of the witness’s version of events, thoroughly impermissibly, in my view.
[2] [2020] FamCA 218
[3] [2020] FamCA 210
The applicant stated that despite her decamping from the G Street premises she and the respondent remained in a committed relationship. She said he assisted her to move her belongings from the G Street premises to the H Street studio and that the respondent paid the rental bond for the applicant’s accommodation at H Street. She said that in the period of her residing at H Street the applicant and the respondent maintained a relationship, she resided at the G Street property up to three days a week, they stepped out together as a couple and they enjoyed sexual relations.
The applicant said that on 21 August 2000 she and the respondent holidayed at the Whitsunday Islands to celebrate his proposal of marriage to her. She said he paid for the holiday. A debit entry to the respondent’s MasterCard appeared on exhibit A2 recording payment of the sum of $3,338.01 with the words “Whitsunday Islands Holiday.” The applicant stated in paragraph 19 of her affidavit that 10 days later the applicant applied for, paid for and obtained all relevant marriage certificate documentation. The respondent’s payment of $66.22 was shown on a line entry for 31 August 2000 on exhibit A2. She said she and the respondent “commenced residing together” (her words) at the G Street premises in October 2000. She said they married on … December 2000. She did not address the termination of her lease in the H Street studio nor her recovering her chattels.
It seems that the applicant wanted a child soon after their marriage. She said the respondent “would not discuss when we would have a child so in or about June 2001 I decided to live elsewhere” (her words).
The applicant did not live in the same house as the respondent for a little short of five years between June 2001 and April 2006. In June 2001 the applicant left the G Street premises to move in with her mother in premises at another address in Suburb C then she took a lease of a fully rented studio in Suburb N.
The respondent asserted that during the period she and the respondent lived in different houses from June 2001 to April 2006 they were nevertheless in a marital relationship. At all events, that was her construction of events. In 14 separate subparagraphs subjoined to paragraph 24 of her affidavit (all the subject of the husband’s objections for irrelevance, but I found them relevant) the applicant gave reasons for her assertion that she and the respondent were in a marital relationship over that near-five year period. Paraphrasing those 14 separate subparagraphs, the reasons advanced by the applicant for her comment that she and the respondent were in a marital relationship over that near-five year period were as follows –
a)she stayed overnight over that period at the G Street premises, maintaining a sexual relationship and falling pregnant with the respondent’s baby in May 2005;
b)she enjoyed unrestricted access over that period to the G Street premises;
c)she and the respondent attended social events as a couple including dinner parties, housewarming parties, birthday parties, a funeral and a wake;
d)the applicant entertained her friends at the G Street premises every Friday or Saturday night;
e)without there being any need to obtain the respondent’s prior consent, the applicant’s family members frequently stayed at the G Street premises;
f)the applicant and respondent invariably (her word) hosted New Year’s Eve parties at the G Street premises;
g)in 2005 the respondent and applicant hosted the applicant’s 40th birthday for 15 guests at the G Street premises and by way of a gift, the respondent enhanced the engagement ring he gave her in 2005, a photographic depiction of which the applicant exhibited as exhibit A4 to her affidavit;
h)on a daily basis of the period from June 2001 to April 2006 the applicant and the respondent contacted one another, especially when they did not see one another in person to convey messages of love;
i)they spent significant birthdays and Valentine’s Days together as a couple;
j)in the period June 2001 to February 2006 the respondent paid the applicant’s personal expenses totalling $88,606.77 which she itemised in exhibit A6 in another spreadsheet;
k)the respondent accompanied the applicant and the applicant’s mother on a Christmas visit to City A over 2003 and 2004 (he having paid for the applicant’s airfare) and the three stayed at the applicant’s sister’s residence in US State J;
l)on 3 June 2004 the respondent sent the applicant an email the salient portion of which read “I know the last 7 years have not been wonderful, but I also know that we do have something very very special between us, which is not based upon infatuation or lust but a true deep love and bond which u [sic] have never felt with anyone before and I feel it in you also”;
m)between 2001 and April 2006 the respondent gave the applicant an allowance derived from the funds in the applicant’s own Westpac account; and
n)on 12 October 2004 the respondent paid a 5% deposit for the acquisition of real estate known and described as B Street, Suburb C in the joint names of the applicant and the respondent, the purchase price of which was $1,200,000, settlement of which was effected on 31 January 2005.
In April 2006 the applicant said she commenced living with the respondent at B Street, Suburb C.
Returning to the chronological factual narrative, the applicant stated that in June 2005 the respondent pressured her into the termination of her pregnancy, then at five weeks. She did not say so expressly at paragraph 25 of her affidavit (the subject of objection by the husband, but I was assisted by that paragraph) but it seemed that the respondent’s exertion of pressure was successful as the applicant terminated her pregnancy in June 2005. The applicant did not reveal how she paid for that termination nor did she give details of the procedure she underwent. No reference was made to any such payment in exhibit A28 or exhibit A6. At all events, between 14 February the following year (2006) and June 2006 the applicant said that by reason of her anger towards the respondent in his pressuring the applicant into terminating her pregnancy she began an extra-marital relationship with a third person. She said she told the respondent about her extra-marital relationship.
According to the applicant, that relationship ran from 14 February 2006 “until about June 2006” (her words). Curiously, despite the continuance of her relationship with the third person in the period February to June 2006, the applicant nevertheless moved into the four bedroom dwelling at B Street. She said in paragraph 28 of her affidavit that prior to April 2006 when she moved into the premises at B Street the respondent constantly asked her to put an end to the relationship with the third person “and recommence our marital relationship” inferring it had come to an end.
The applicant narrated events out of chronological sequence, at times making it difficult to follow the evolution of her version of events. An illustration emerged about her relationship with the respondent in the period between her moving into the property at B Street in April 2006 and the date on which an assurance she said the respondent gave her in February or March 2006. On the latter date, according to the applicant, the respondent undertook to the applicant that the property at B Street would be sold and the profits split between them. The applicant said in paragraph 28 of her affidavit (objected to for irrelevance but I regarded it as relevant) that she and the respondent acknowledged that they needed to live in that premises for over 12 months in order to avoid paying capital gains tax.
The applicant stated that she terminated her extra-marital relationship with the third person in May or June 2006 and, to use her word, “recommenced” her marital relationship with the respondent.
She said she resided in the premises at B Street Suburb C between April 2006 and March 2011, almost five years in total.
The applicant said in paragraph 30 of her affidavit that in the period between May or June 2006 to March 2011 during which she (objected to but in my view useful) and the respondent were in a marital relationship and that she and the respondent demonstrated the existence of their marital relationship in several ways that she catalogued in that paragraph. Those features included being monogamous, socialising as a couple, spending Christmas 2007 with the respondent’s parents and family, holidaying together, her presenting the B Street premises as a warm and colourful environment, decorating the premises and exchanging cards on special occasions. She also stated that the respondent paid for various expenses incurred by the applicant in the period between 2006 to 2010 totalling $18,697.88.
The applicant said in paragraph 31 of her affidavit (objected to but in my view relevant) that her marriage became strained in December 2007. However, she said it recovered.
The applicant said that in February 2011 she moved out of the B Street premises. She said she did that in order to support her mother who was then suffering a terminal illness and also because (so she said) she realised she was never likely to have a family. She said the latter point heightened her anxiety and depression causing her to be adversely affected by poor mental health.
The applicant said in paragraph 34 of her affidavit that while she and the respondent were not living under the same roof between 2011 and 2013, they had not ended their relationship.
In October 2014 the applicant said she publically announced that her marriage with the respondent was at an end, that she and he would divorce and that she retained a solicitor to commence the divorce process.
The respondent’s version of events
Before addressing my reasons for preferring one witness’s version of the evidence over another’s it is necessary to record the respondent’s version of events. At the outset it must be said that the respondent identified two periods of cohabitation. He said the first was between 14 October 2000 to June 2001. They then separated. He said they cohabited again in mid-2006 then separated finally in December 2007. The respondent said the first period of cohabitation lasted 8 months. He said the second period of cohabitation lasted for 18 months. Arithmetically, the respondent in his affidavit affirmed 3 June 2019 invited me to conclude that the total duration during which the applicant and the respondent cohabited was 2 years and two months. However, in his case outline dated 17 October 2019 senior counsel for the respondent wrote that the respondent contended that the parties lived together for about 3.6 years (which I assume was intended to convey the notion that the applicant and respondent lived together for a little more than three and a half years). In the same case outline, senior counsel for the respondent calculated something in the order of eight years as being the applicant’s estimation of the applicant’s and respondent’s time living together as man and wife.
Calculating the duration of the period during which the applicant and the respondent lived together was an issue in this case that fell for determination.
The respondent did not address the circumstances of his meeting the applicant. He gave the date of the commencement of their cohabitation as October 2000 and the end of their first epoch of cohabitation as June 2001. He said that prior to their cohabitation the applicant was living in rented accommodation at H Street, Suburb E and that she was working in real estate.
The respondent stated in paragraph 14 of his affidavit made 3 June 2019 that the applicant vacated her rented premises at H Street, Suburb E on 14 October 2000 on which date she moved into G Street, Suburb C.
From the foregoing, it will be readily apparent that the date on which the applicant moved into G Street was hotly disputed. The applicant said she moved in during October 1998 following her tenancy at F Street Suburb E coming to an end. Conversely, the respondent was silent in his affidavit about any events involving him and the applicant during 1998 and 1999. His narrative commenced in the year 2000. He said that immediately prior to her moving in with the respondent at G Street in October the applicant was living at H Street, Suburb E. The respondent contended that the date of cohabitation did not commence in 1998 as the applicant asserted but rather it commenced in 2000. In support, he exhibited as exhibit [R]2 to his 3 June 2019 affidavit a document the respondent described as a trust receipt from a real estate agency. The copy trust account document ([R]1) disclosed that a payment had been made in relation to property at H Street and that the relevant period corresponding with the payment was 29 July 2000 to 4 September 2000. The respondent also exhibited to his affidavit as exhibit [R]2 a letter from the applicant to K Group Suburb E (a real estate agency) dated 22 November 2000. The relevant portion of that letter read as follows –
Prior to vacating the premises on 14 October 2000, I discussed the option of breaking the lease with your leasing manager Ms L. I was advised that if a new tenant could be found who would move in immediately after my departure, I would not incur rental charges beyond my occupancy date. I was agreeable to this arrangement and was advised on 20 October 2000 that a tenant had been found who would move in on 23 October 2000.
That letter seemed to show that under her own hand the applicant stated she vacated H Street Suburb E on 14 October 2000. At first blush that information seemed inconsistent with the information in the applicant’s affidavit in paragraph 7 in which she stated that she was living at an address in F Street, Suburb E immediately prior to her moving in with the respondent. Yet on closer examination the discrepancy may not be significant.
At all events, it was common cause between the applicant and the respondent that the applicant moved into the unit at G Street, Suburb C on 14 October 2000.
From the respondent’s perspective the next event in the chronological evolution of the facts of this case was the separation of the applicant and the respondent in June 2001. The respondent gave very little by way of context for that event. Beyond stating that the applicant had no assets when they commenced cohabitation in October 2000, he did not descend to the detail of their relationship between October 2000 and June 2001. However, the respondent said that upon their separation, their relationship was not acrimonious, that the applicant moved into nearby accommodation and that the applicant and respondent saw one another in a local context with some frequency. He said there was “an absence of hostility” (his words). He said he occasionally visited the applicant at her home where they had sexual relations. As verification of the applicant’s occupation of premises away from him, the respondent exhibited as exhibit [R]5 to his affidavit a telephone account in relation to premises at 10 M Street, Suburb C. That account tended to render more probable the fact that by December 2001, the applicant had established herself in her own accommodation at 5 M Street, Suburb C, that is to say, away from the respondent.
In and of itself, the fact that the applicant had taken a lease of premises independent from the respondent who concurrently maintained his own accommodation elsewhere, did not axiomatically lead to the conclusion that at law the two were separated in the manner the respondent said or, conversely, that they were together, as the applicant said.
The respondent also exhibited as exhibit [R]6 to his affidavit a document, said to have been an unsigned letter from the applicant to her then employer, dated 24 May 2002. The respondent sought to rely on one sentence purportedly expressing a statement by the applicant that she had been separated for 12 months preceding the date of the letter, making that date 24 May 2001. The respondent acknowledged that the document dated 24 May 2002 was unsigned. It was not the subject of cross examination.
According to the respondent, on several tax returns between 2001-2004 the applicant gave as her address 5 M Street, Suburb N.
The respondent stated in his affidavit made 3 June 2019 that he and the applicant resumed cohabitation on an unspecified day in mid 2006 which cohabitation came to an end on 2 December 2007.
The respondent gave evidence in paragraph 26 and following of his affidavit that during his discussions with the applicant about getting back together, he was considering purchasing the property at B Street, Suburb C. He said in his affidavit that at about the time he and the applicant got back together, he and the applicant agreed to purchase B Street, Suburb C in joint names. He said settlement of that purchase was effected on 31 January 2005. His evidence of the source of funds for the purchase price was imprecise. While he said the price was $1,200,000 he did not say who provided the deposit and how much that was. He did say (in the passive tense) that $945,000 was borrowed from an entity by the name of O Company. He did not identify whether that was an unincorporated entity, a commercial lender, a related company or for that matter a company at all and he did not exhibit any mortgage documentation. Be that as it may, the respondent said O Company provided $945,000 to complete the purchase. Using that arithmetic, the sum provided by way of deposit and the balance of the purchase price was $255,000. No contract of purchase was exhibited by the respondent, nor sale note. No financial documentation was exhibited, whether as to a trust receipt from the relevant real estate agent or a bank statement showing the movement of funds from the vendor to the purchaser. No settlement statement from the purchaser’s solicitors was exhibited accounting for the money used to purchase the property. The point was left wholly unexplored in the evidence.
It will be recalled that the applicant stated that she commenced to live at the property at B Street in April 2006. Conversely the respondent said at paragraph 33 of his 3 June 2019 affidavit that he continued to live at G Street, Suburb C after settling the purchase of B Street, Suburb C. That was the subject of an objection. That evidence seemed to me to be relevant and was not a conclusion as the asserted basis of the objection. The respondent said he took two years’ leave from his employer between September 2004 and August 2006 and after settlement of the purchase of B Street, Suburb C he physically personally undertook extensive renovation activities to the B Street property. He listed the work he did at paragraph 34 of his affidavit. It was extensive. Despite objection, paragraph 34 was utile in my view.
The respondent said he moved into the B Street property on 4 April 2006. He said he and the applicant did not commence cohabitation when each moved in. He said that when the applicant moved into the B Street property she was in a relationship with another man, a point with which the applicant agreed in her affidavit and in her evidence given under cross examination. It was put to the applicant that prior to her moving into the B Street property, the applicant sent a friend whose name was unimportant a collection of emails in which the applicant told her friend she (the applicant) was moving into the B Street property as a flatmate. That was on 27 March 2006. The respondent said in his affidavit that after the applicant moved into the B Street property, the two did their own washing and cooking, each purchased food separately, the respondent met all mortgage repayments and each maintained his and her separate social lives.
It will be recalled that the applicant stated that from about May or June 2006 she and the applicant were in a marital relationship. In paragraph 42 of his 3 June 2019 affidavit the respondent stated that in the middle of 2006 he and the applicant began to cohabitate again. The respondent set out his asset position at the commencement of what he termed the second period of cohabitation. In the passages below I have examined matters relevant to property division especially an identification of the relevant property as at mid 2006.
Without describing the circumstances that led to it, the respondent stated in paragraph 45 of his affidavit that after 18 months of their second period of cohabitation, he and the applicant separated for a second time on 2 December 2007. He exhibited an email from the applicant sent on 5 December. It is utile to set out in full that email (errors in the original) –
Darling [Mr Zagar],
I know you are a beautiful man…but after 10 years it’s obvious that no amount of love can make this work.
Please know that I love you and that you hold a special place in my life, however, I have to move on without you.
I don’t know what the future holds but im praying it will be better for both of us.
I love you and always will, I just cant be yours anymore.
[Ms Bacall] xxx
The respondent stated that at about the time of the separation in December 2007 the applicant told the respondent that as she worked in real estate she took the view that the B Street property was worth $3 million. He said she told him she would sell that property for $3 million and she wanted half the profit. The respondent said the applicant insisted on selling the property at that price despite the B Street property having been purchased in 2005 for $1.2 million and despite the fact that the property achieved a valuation of $3.8 million after the lapse of 11 years in 2018.
He said the applicant “kept shouting at me that I had to agree”. He said “I wanted Ms Bacall to stop so I agreed.” He said the applicant requested him to record in her diary his agreement as just recorded. He said he began to do so, then stopped and the point was not mentioned again and the property was not listed for sale.
The respondent devoted considerable attention in his affidavit to his financial circumstances at separation in December 2007. That was useful information. I return to an examination of it in the passages below.
According to the respondent, the separation in December 2007 was not acrimonious. He said the applicant remained in occupation at the B Street property. He said they resumed living as flatmates. He described the arrangements between them in the period between separation in 2007 and the date on which the applicant moved out of the B Street property in 2011. It must be said that his description was perfunctory, to say the least, spanning paragraphs 67 and 68 of his affidavit, 12 lines in total. It was less than illuminating. In those passages he described how the applicant operated a stall at the Suburb N market and how the two rarely saw each other or spoke to each other. He said he accompanied the applicant to the wedding of a mutual friend. He said they stood in the park with a group during the wedding ceremony but did not attend the reception.
The respondent stated in paragraph 69 of his affidavit that the applicant sent him an email dated 16 March 2011 after having moved out of the B Street property. He exhibited that email as exhibit [R]19 to his 3 June 2019 affidavit. It read as follows –
Dear [Mr Zagar],
As per our conversation tonight, I would like you to send me an invoice for painting, new carpet and whatever else you need to replace in the room I occupied for the last 4/5 years.
I apologise for the damage, but like most tenanted properties, there is normal wear and tear. Especially since I have lived in that room for the last 24 months solid.
I will be leaving on Monday 28th March whilst you’re at work. I am minding a friend’s place for 4 weeks and will be securing a permanent address during that time.
I will return the keys as soon as I have managed to move out 5 years worth of vintage collectables. I apologise in advance for the time delay but will remove everything as soon as is physically possible.
Ms Bacall
The respondent said the applicant left the B Street property and rented an apartment at P Street, Suburb Q. He stated that the applicant lived at that Suburb Q address for the financial years ended 30 June 2012 and 30 June 2013 because the applicant filed tax returns over those years giving that address. He exhibited those tax returns as exhibit [R]20. It must be said that those returns were drafts as they were unsigned. The respondent invited me to receive those tax returns, no doubt as an admission against interest in relation to the applicant’s address, although his senior counsel did not put a submission to me in those precise terms.
The respondent stated that the applicant telephoned him in 2013 stating she needed somewhere to live for a short time, requesting his approval to her moving back. The respondent said the applicant was upset, although she did not say why. He said he wanted to help her so he agreed to her moving back. He did not give a date of the applicant’s return. However, he said that when she returned the applicant and the respondent resumed their living arrangements as flatmates but not in circumstances of cohabitation.
The respondent said the applicant began some form of glassware and candles business and that she used the kitchen and lounge room of the B Street property as her workspace and storage area. He exhibited a variety of photographs purporting to be displays in the lounge room of candles and glassware. None of the photographs were accompanied by dates.
The respondent stated in paragraph 75 of his affidavit that in March 2014 or thereabouts he received an unsigned letter from the applicant’s solicitors. An objection was taken on behalf of the applicant to my receiving that paragraph on the basis that the paragraph represented a conclusion. I confess to not reading the paragraph in such a way that the objection is made good. The respondent did not exhibit that letter. However, he said that the letter contained a request on behalf of the applicant for a property settlement. He said that at around the same time, his parents were asking him to arrange for the release of their property from the collateral security of which it formed part.
The respondent said that since 2013 he and the respondent have lived at the B Street property as flatmates without marital cohabitation.
Before addressing the financial evidence in the case it is necessary to draw together some of the areas of agreement and those of dispute in relation to dates during which the applicant and the respondent lived together.
The arena of dispute on cohabitation
The passages that follow are my distillation of the evidence set out above. Where a conflict in the evidence is revealed, I have identified that conflict yet the determination of conflicting evidence is addressed further below in these reasons.
The date of the first meeting between the applicant and the respondent
The applicant identified the date of her first meeting of the respondent with precision as 28 June 1998. She said she met the respondent at a public house and formed a relationship.
The respondent was silent on any date in 1998. He gave no evidence of the circumstances of his first meeting with the applicant. Instead, he commenced the factual narrative in this case by going directly to the period of their first cohabitation, which he said was October 2000. It would be peculiar, at a factual level, for a couple to romantically cohabitate in the absence of some lead-up to that cohabitation. The respondent’s version of events amounted to an invitation for me to conclude that the applicant lived together in a domestic union, there being no factual setting against which the decision to live together was set. In the applicant’s cross examination, senior counsel for the respondent challenged the applicant about the date of the first meeting between the applicant and the respondent. Mr Sansom SC brought to my attention that a notice to admit had been prepared, dated 26 September 2019, on behalf of the respondent for the applicant to answer. Three diary entries in the applicant’s diary were among the items in respect of which admissions were sought from the applicant. The diary dates were 4 July 1998, 19 November 1998 and 30 April 2000. The applicant admitted the authenticity of those diary entries. The applicant’s diary entry for 4 July 1998 read as follows –
[R Hotel] met [Mr Zagar] #2
The applicant was cross examined about the accuracy of the date recording that event. She was taken to an entry in her diary on 30 June 1998 that recorded, so she said, that the respondent attended a public house at which she then worked. She said she had met the respondent a week or so earlier at a different venue. She said her diary entry for 30 June 1998 may have been out by a week or so.
The respondent did not positively deny the date of his first meeting the applicant as being 30 June 1998 nor was the applicant challenged in cross examination on the basis that 28 June, 30 June or any other date in mid-1998 was wrong. Mr Sansom SC did not put to the applicant that I should reject her evidence about meeting the respondent in June 1998 or thereabouts. The precise exchange unfolded in cross examination in the following manner –
MR SANSOM: … You enter in your diaries matters on a daily basis as it effects your daily life; I take it that’s correct, is it?
MS BACALL: Affect my daily life?
MR SANSOM: Things that happen as they occur - - - ?
MS BACALL: Yes.
MR SANSOM: - - - that day?
MS BACALL: Yes.
MR SANSOM: Right?
MS BACALL: I mean, primarily it’s my business diary.
MR SANSOM: All right?
MS BACALL: What – what – what date – what year is this diary?
MR SANSOM: Well, we will come to that momentarily. If you look at that first one that has been opened for you, if you see the entry – the 5 July, bottom right-hand corner?
MS BACALL: Yes.
MR SANSOM: Under that and circled there’s:
I met [Mr Zagar].
And a number 2. Do you see that?
MS BACALL: Yes.
MR SANSOM: Does that indicate that that’s the day you met [Mr Zagar] or something else?
MS BACALL: Well, that diary may be incorrect inasmuch as the night I met [Mr Zagar] I remembered it was a week after my birthday and a week before my sister’s birthday, and that would have been an approximation.
MR SANSOM: Well, just in relation to that, do you think you’ve gone back into your diary a week or so after the date ‑ ‑ ‑?
MS BACALL: Possibly.
MR SANSOM: ‑ ‑ ‑ and re-entered, as it were?
MS BACALL: Possibly.
MR SANSOM: Why would you have done that?
MS BACALL: Because I put things in my diary as I remember it. If it became a significant date.
MR SANSOM: All right. I take you back a few days on that same page, 30 June, just so that I understand the methodology that you’ve been employing. Halfway down 30 June it has got an asterisk:
[Mr Zagar] came into Nelson.
Is that the [S Hotel] you’re referring to?
MS BACALL: Yes. I was waitressing at.
MR SANSOM: Right. So had you met him formally at that stage, Mr Zagar?
MS BACALL: I met him at [the R Hotel].
MR SANSOM: Just prior to that, or when?
MS BACALL: If he came into the – if it says he came into the Nelson, then I – I would have met him the previous Sunday.
MR SANSOM: I see. Yes?
MS BACALL: So my date would be out by a week or so.
The date the applicant first cohabitated with the respondent
So far as the date on which the applicant said she moved in to live with the respondent at G Street, Suburb C, the respondent said the date was 14 October 2000. Conversely, the applicant said the date was October 1998 and the duration of that occupation was from October 1998 until June 2000. The respondent was silent in relation to that period. The applicant was cross examined about her statement in paragraph 7 of her affidavit that she moved into G Street, Suburb C in 1998. Mr Sansom SC took the applicant to her diary entry for 19 November 1998. It will be recalled that in paragraph 4 of her affidavit she said that after forming a relationship with the respondent in June 1998 she stayed at his premises three nights a week. She was challenged about that. The applicant’s evidence in answer to questions put to her in cross examination was in the following terms –
MR SANSOM: You don’t agree with my suggestion; is that the case?
MS BACALL: That from the night I met Mr Zagar in 1998 in – in the end of June or the first week of July in 1998, I actually probably spent more time with him because he would pick me up from work; he would drive me to work in the morning. He was just there all the time.
MR SANSOM: Well, ma’am, we might get through this entire process if you listen carefully to the question and answer the question that has been asked. My question went to – the proposition went to this. You weren’t spending three nights a week at Mr Zagar’s place. I wasn’t asking whether he picked you up in the morning or whether he did something else?
MS BACALL: Yes, I was spending three nights a week at Mr Zagar’s place.
No contrary proposition was put to the applicant. In other words, applying principles in Browne v Dunn[4] and other more recent cases such as Precision Plastics Pty Ltd v Demir,[5] Ellis v Wallsend District Hospital,[6] Levinge v Director of Custodial Services[7] and Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation,[8] the applicant’s questioning was not embedded with a proposition to the effect that the applicant was wrong in relation to the date of that event or that she could not possibly be correct about the date she gave by reason of some specific contradictory factor. In those circumstances there being direct contradictory evidence from the applicant that she moved in with the respondent in October 1998 and there being no contrary evidence from the respondent about the period October 1998 to October 2000, I accept that on the balance of probabilities the applicant’s version of events was correct in that she and the respondent commenced to cohabitate in October 1998.
[4] [1893] 6 ER 67
[5] (1975) 132 CLR 362
[6] (1989) 17 NSWLR 553
[7] (1987) 9 NSWLR 546
[8] (1983) 1 NSWLR 1
The period June 2000 to October 2000
The applicant said in her affidavit that she departed G Street, Suburb C in June 2000 and lived until 14 October 2000 in rented accommodation. She said she moved out because the respondent would not commit to a wedding date. The applicant was questioned about her reason for moving out. She was not questioned to the effect that she was in error in the first place for suggesting that she lived with the respondent. Mr Sansom SC took the applicant to paragraphs 12 and 13 of her affidavit made 19 June 2019. The exchange unfolded in the following manner –
MR SANSOM: … You say at 12 and 13 from June 2000 to about October 2000 you stopped residing with Mr Zagar at Suburb C and rented a fully furnished studio at H Street, Suburb E, and you go on to explain that in the following paragraph. You stopped residing with Mr Zagar because:
...even though we were living together in a committed relationship, he would not commit to a day of wedding between us.
MS BACALL: True.
MR SANSOM: All right. Now, taking that paragraph, firstly, you go on to say – and this is ..... conclusion but there’s no conversation about it – you say there was a promise when you first met and formed your relationship. What was his promise then?
MS BACALL: That I was “the one”. That I was the one he was going to marry.
MR SANSOM: All right. Okay. When you say a “committed relationship”, what do you mean by that phrase?
MS BACALL: I was – the time we were living together, in ’98 to 2000?
MR SANSOM: Yes.
MS BACALL: Yes, committed, exclusive.
MR SANSOM: All right. And where elsewhere you’ve used that phrase, “committed”, that’s what you mean. You kept yourself and he kept himself exclusively to the two of you. There wasn’t other partners; is that what you mean?
MS BACALL: I didn’t have other partners at that time.
The applicant was questioned about a holiday trip she took with the respondent to the Whitsunday Islands on 21 August 2000. The applicant’s questioning was set against a backdrop of events during which the applicant said the respondent had, from the inception of their relationship, told her he would marry her but that by June 2000, that event not having materialised, she moved out. She said they went on the August 2000 holiday because the respondent agreed to marry her by a particular date. She put the significance of the discussion about a date for their marriage in the following context –
MR SANSOM: Ma’am, I haven’t asked you about all these details, have I?
MS BACALL: I’m trying to explain, though, that I don’t remember the exact conversation, but the whole way from the day Mr Zagar met me he told me I was the one. He was going to marry me and he told me that throughout the two years of cohabitation then.
MR SANSOM: All right.
MS BACALL: It was only when I asked for a date.
MR SANSOM: So do I get this right from that piece of evidence: that it being only when you asked for a date and he either, what, said “No” or didn’t answer you, that that period of cohabitation came quickly to an end; is that what you’re saying?
MS BACALL: The relationship didn’t come to an end; however, I did move out because I was not going to have my life wasted by a man that was not going to fulfil his words.
And then there was the following exchange –
MR SANSOM: Paragraph 18, you say:
At about 21 August 2000, the respondent and I went on a holiday to the Whitsunday Islands.
MS BACALL: Yes, because he agreed – well, yes, because he said he was going to marry me and I could pick a date.
And this one –
MR SANSOM: Right. Well, are you able to put any timeframe on when you say that he asked you to marry him?
MS BACALL: It – it would have been before the Whitsunday Islands.
MR SANSOM: Well, clearly, on your evidence, it must have been because you say that was the cause for the trip?
MS BACALL: Yes.
Questions put by Mr Sansom SC about events prior to 14 October 2000 were perfectly proper and helpful. Mr Sansom discharged his duties as senior counsel in a thoroughly courteous, proper and polite manner. I was very much assisted by his questions. Yet it could not be said that any of those questions about the evidence given by the applicant concerning events between 1998 and October 2000 went beyond clarification. They probed the applicant’s memory and tested her recollection, linking her version of her viva voce evidence to the version of events as given by her in contemporaneous written records, namely, her diary. At no stage was the applicant challenged to the effect that she was flatly wrong about a particular date or event, that she made up her evidence (or worse, lied about it) or that her evidence was in stark contrast to a contradictory version of events as given by the respondent. No version, still less a seriously different contradictory version of events was given by the respondent of events between mid-1998 and October 2000. There being no contradictory version of events in respect of the first meeting and early cohabitation between the applicant and the respondent, I accept the version given by the applicant. In those circumstances I find on the balance of probabilities that –
a)the applicant and the respondent met in the week prior to 5 July 1998;
b)they commenced to cohabitate in October 1998;
c)that continued between late June 1998 and June 2000;
d)in June 2000 the applicant moved out because the respondent had not committed to a wedding date;
e)prior to the August 2000 holiday in the Whitsunday Islands the applicant proposed marriage which they celebrated by the 21 August 2000 trip to the Whitsunday Islands;
f)the applicant returned to the respondent’s G Street premises in October 2000; and
g)the couple married in December 2000.
This was a hard-swearing case. On many important issues the applicant’s version of events was diametrically opposed to the respondent’s. I had to decide whose version I accepted. Then it became necessary to assess the evidence about the nature of the relationship between the respondent and the applicant in the period June 1998 to October 2000. The applicant contended the two enjoyed a fully formed domestic relationship over that period. Conversely, the respondent contended in effect that without describing the factual context, the two discussed marriage in August 2000, holidayed on 21 August 2000, commenced cohabitation in mid-October 2000 and married in December 2000. At this juncture let me say I find the respondent’s version of events as just narrated immediately above highly improbable. It defies all likelihood that apropos next-to-nothing of an historical factual backdrop a man and a woman discuss marriage, then celebrate the fact of fixing a marriage date by holidaying interstate then they marry, all within such a truncated duration. The more likely turn of events is as the applicant gave them. In any event, no contrary version was given by or on behalf of the respondent.
Assessing witness veracity
During the course of the trial I had the opportunity of carefully observing the applicant and respondent, their demeanour in the witness box especially. Consequently, I was able to observe not only what they said but how they said what each said.
In terms of witness veracity, at this point it is useful to record certain observations about the way a court is required to proceed with the assessment of a witness’s evidence.
As the trial judge I enjoyed all the benefits to which Kirby ACJ averted in Galea v Galea.[9] There, his Honour held that the advantages enjoyed by the trial judge were as follows –
a)hearing the evidence in its entirety;
b)hearing and seeing all evidence in context, chronologically and logically advanced;
c)having time during adjournments and during the running of the case to reflect upon the evidence and to weigh it against all other evidence while fresh;
d)hearing and seeing interruptions, hesitations and delays in the giving of testimony; and
e)observing body language, sometimes important for interpreting communication.
[9] (1990) 19 NSWLR 263
It is squarely within the function of the trial judge to form an assessment of the veracity of a witness. Lest authority for that proposition be required, it is found in the decision of High Court in Lovell v Lovell,[10] embraced by the Full Court of this court in In the Marriage of Scott.[11]
[10] (1950) 81 CLR 513
[11] (1994) 17 Fam LR 420
The Court of Appeal of the Supreme Court of Victoria in Pell v R[12] referred to issues of witness credibility and to the leading text book on point. Those observations were not upset on appeal.[13] The court said that in his book Evidence, Proof and Probability,[14] Sir Richard Eggleston identified a number of considerations which a judge will typically take into account in the assessment of a witness’s credibility. The relevant passage puts the position as follows –
What are the factors that a judge takes into account when deciding whether a witness is telling the truth? They may be listed as follows –
1)The inherent consistency of the story: if the evidence of the witness contains internal contradictions, it cannot be accepted as a whole. The question may be which part to reject.
2)Consistency with other witnesses: this, of course, involves making an assessment also of the other witnesses, which in turn requires consideration of the factors here set out in relation to those witnesses also.
3)Consistency with undisputed facts: these include documentary evidence (if not subject to attack), facts admitted by the parties, or matters of common knowledge or experience.
4)The ‘credit’ of the witness: in addition to the observation of his performance in the witness-box, this will include ... evidence of bias against a party; or evidence of a general reputation for mendacity.
5)Observation of the witness: this includes physical manifestations of truthfulness or mendacity, or of uncertainty, and also characteristics observable in the witness-box or capable of being tested there (hearing and eyesight, capacity to judge distance or height) ...
6)The inherent probability or improbability of the story.
[12] [2019] VSCA 186
[13]Pell v R [2020] HCA 12
[14] Sir Richard Eggleston, Evidence, Proof and Probability (Weidenfeld and Nicolson, 2nd edition, 1983) 192-193
The first consideration as identified above by Sir Richard Eggleston where a witness’s evidence contains internal contradictions, the question of which part of the witness’s evidence should be accepted and which part rejected has been surveyed in Dublin Wicklow and Wexford Rly Co v Slattery[15] and Christmas v Nicol Bros Pty Ltd.[16]
[15] (1878) 3 App Cas 1155
[16] (1941) 41 SR (NSW) 317
A test for assessing the truth of a witness’s evidence has also been stated by Gosnell J in GH v The Catholic Child Welfare Society (Diocese of Middlesbrough).[17]There, his Lordship said –
[17] [2016] EWHC 3337 (QB)
In his instructive article entitled The Judge as Juror: The Judicial Determination of Factual Issues,[18] published in Current Legal Problems 38, Mr Justice Bingham (as he then was) made this observation –
“The main tests needed to determine whether a witness is lying or not are, I think, the following, although their relative importance will vary widely from case to case –
[18] Thomas Bingham, ‘The Judge as Juror: the Judicial Determination of Factual Issues’ (1985) 38(1) Current Legal Problems
(1) the consistency of the witness’s evidence with what is agreed, or clearly shown by other evidence, to have occurred;
(2) the internal consistency of the witness’s evidence;
(3) consistency with what the witness has said or deposed on other occasions;
(4) the credit of the witness in relation to matters not germane to the litigation;
(5) the demeanour of the witness.”
As to that last point, demeanour, I was also able to observe demeanour of the key witnesses, a fact that provided a considerable advantage as was reflected in an array of cases. Those cases include Coghlan v Cumberland,[19] Dearman v Dearman,[20] Owners of SS Hontestroom v Owners of SS Sagaporack; SS Hontestroom v SS Durham Castle,[21] Paterson v Paterson,[22] Warren v Coombes,[23] Brunskill v Sovereign Marine & General Insurance Co Ltd,[24] Jones v Hyde,[25] Abalos v Australian Postal Commission,[26] Devries v Australian National Railways Commission,[27] State Rail Authority of New South Wales v Earthline Constructions Pty Ltd,[28] Fox v Percy[29] and Husain v O & S Holdings (Vic) Pty Ltd.[30]
[19] [1898] 1 Ch 704
[20] (1908) 7 CLR 549
[21] [1927] AC 37
[22] (1953) 89 CLR 212
[23] (1979) 142 CLR 531
[24] (1985) 59 ALJR 842
[25] (1989) 63 ALJR 349
[26] (1990) 171 CLR 167
[27] (1993) 177 CLR 472
[28] (1999) 73 ALJR 306
[29] (2003) 214 CLR 118
[30] [2005] VSCA 269
It is important not to give too much credence to demeanour when considering the evidence of a witness. In Fox v Percy, the High Court observed that it can be dangerous to place too much reliance upon the appearance of a witness rather than focusing on more objectively reliable matters.
Demeanour is relevant in assessing witness credibility but I have not relied solely on witness credibility in this case. Even unchallenged evidence may be accepted but if it does not go to a fact in issues then the utility of that unchallenged evidence diminishes. To the extent that unchallenged evidence addresses a fact in issue, it is long established that unchallenged evidence need not be accepted if it is inherently incredible or inherently improbable. Cases standing for that proposition include Precision Plastics Pty Ltd v Demir, Ellis v Wallsend District Hospital, Levinge v Director of Custodial Services and Allied Pastoral Holdings Pty Ltd v Federal Commissioner of Taxation.
In Kuhl v Zurich Financial Services Australia Ltd[31] the High Court acknowledged that it was a serious matter to reach the conclusion that a party’s witness had failed to comply with the duty to tell the whole truth to the court. The plurality of the High Court said the following –
…Witnesses are supposed to answer questions put by counsel responsively: they are supposed to give a full answer, but no more. It is one thing to say that a witness was not asked the right questions. It is another thing to say that a witness did not answer the questions that were asked. And it is an even more serious thing to say that a witness was "reluctant" to answer. The duty of a witness is to tell the truth, the whole truth, and nothing but the truth so far as the questions asked seek it. The duty of a witness to answer questions responsively involves not only a negative duty (not to volunteer material for which the question does not call), but also a positive duty (to proffer all material within the witness's knowledge for which the question does call).
[31] (2011) 243 CLR 361 at [62]
So far as the benefit enjoyed by a trial judge on matters of witness assessment and credibility are concerned, it is useful to identify the observations on point by the High Court in Louth v Diprose.[32] There, the court was concerned with an appeal on factual findings made by the learned trial judge, King CJ of the Supreme Court of South Australia. An appeal to the Full Court of the Supreme Court against factual findings made in support of conclusions about unconscionable conduct was dismissed. On further appeal to the High Court those factual findings were not disturbed. Various members of the High Court made observations about the fact-finding process in which a trial judge engages. Deane J held as follows –
As Rich J. observed in Wilton v. Farnworth,[33] in a judgment with which Dixon and McTiernan JJ. agreed, a trial judge in an undue influence case in which the parties directly involved give evidence ordinarily enjoys an immeasurable advantage in estimating the characters and capacities of those involved in the impugned transaction.
[32] (1992) 175 CLR 621
[33] (1948) 76 CLR 646, 654
That is not limited to undue influence cases. Over the course of the last century the High Court has made observations about and applied the principles in relation to a trial judge’s findings of fact. Those High Court decisions include McLaughlin v Daily Telegraph Newspaper Co Ltd (No 2),[34] Dearman v Dearman,[35] Scott v Pauly,[36] Paterson v Paterson,[37] Voulis v Kozary,[38] Warren v Coombes,[39] Brunskill v Sovereign Marine & General Insurance Co Ltd,[40] Abalos v Australian Postal Commission,[41] Devries v Australian National Railways Commission,[42] State Rail Authority of New South Wales v Earthline Constructions Pty Ltd,[43] Walsh v Law Society of New South Wales,[44] Rosenberg v Percival,[45] Fox v Percy,[46] CSR Ltd v Della Maddalena,[47] Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd,[48] Minister for Immigration and Border Protection v SZVFW[49] and Lee v Lee.[50]
[34] (1904) 1 CLR 243, 247
[35] (1908) 7 CLR 549, 561
[36] (1917) 24 CLR 274, 278-281
[37] (1953) 89 CLR 212, 218-225
[38] (1975) 180 CLR 177, 181-183
[39] (1979) 142 CLR 531, 537-533
[40] (1985) 59 ALJR 84
[41] (1990) 171 CLR 167,178-179
[42] (1993) 177 CLR 472, 479-481
[43] (1999) 73 ALJR 306 (at [73]-[93])
[44] (1999) 198 CLR 73 (at [54])
[45] (2001) 205 CLR 434 (at [27], [37]-[41], [92], [103], [163]-[164])
[46] (2003) 214 CLR 118 (at [22]-[31])
[47] (2006) 80 ALJR 458 (at [17]-[24])
[48] (2010) 241 CLR 357 (at [76])
[49] (2018) 264 CLR 541 (at [29]-[34], [153])
[50] (2019) 93 ALJR 993 (at [1], [55])
Deane J also explained in Louth v Diprose that where an intermediate appellate court has agreed with the findings of fact made by the trial judge, even the High Court should not disturb those concurrent findings in the absence of special reasons such as plain injustice or clear error. So much was held in The Commonwealth v Introvigne,[51] South Australia v Johnson,[52] Waltons Stores (Interstate) Ltd v Maher[53] and Walker v Wilson.[54] Of special relevance are the comments of Deane J in Waltons Stores about the rationale and justification for such an approach. It was as follows –
In a context where the cost of litigation has gone a long way towards effectively denying access to the courts to the ordinary citizen who lacks access to government or corporate funding, it is in the overall interests of the administration of justice and of the preservation of at least some vestige of practical equality before the law that, in the absence of special circumstances, there should be an end to the litigation of an issue of fact at least when the stage is reached that one party has succeeded upon it both on the hearing before the court of first instance and on a rehearing before the court of first appeal.
[51] (1982) 150 CLR 258, 274
[52] (1982) 42 ALR 161
[53] (1988) 164 CLR 387
[54] (1991) 172 CLR 195, 200
The plurality (Dawson, Gaudron & McHugh JJ) expressed matters slightly differently but to like effect. Their Honours held as follows –
The assessment of character is part of the process involved in determining questions of credit, although, as here, there may be cases in which character assumes a significance of its own. The process of accepting or rejecting evidence has been described as one that involves an inference based, at least in part, on “a principle of faith in human veracity sanctioned by experience”.[55] Likewise, the assessment of character, which is often an earlier step in the process of determining issues of credit, may be described as involving an inference based, at least in part, on a principle of faith in human conduct sanctioned by experience. In both cases, the process is one in which the decision maker brings to bear his or her experience of life and, perhaps, his or her personal predilections. Because of this, different people may come to different conclusions about character and credit and, hence, as to disputed matters of fact.
It is precisely because different people may come to different conclusions as to character, credit and disputed matters of fact that, in a forensic contest, findings as to those matters are entrusted to the trial judge (or, in cases of trial by jury, to the jury) in accordance with rules and procedures that guarantee a considerable measure of finality. And in a forensic contest, findings as to those matters will usually be bound up with each other and involve some consideration of demeanour in the witness box - as they did in this case.
[55] J. H. Wigmore, Wigmore on Evidence, vol. IA (Tillers ed, 1983) p. 954, referring to an unverified citation from T. Starkie, Law of Evidence, (1824). See also Doney v The Queen (1990) 171 CLR 207, 214
The plurality also mentioned the relevance of demeanour. It was as follows –
They are findings which were substantially dependent on the trial judge's assessment of character and credit and which were reached having regard to the demeanour of the parties in the witness box. As such and as the authorities repeatedly acknowledge, they are findings which, unless some error is to be discerned, an appeal court must respect.[56]
[56] Paterson v Paterson (1953) 89 CLR 212, 218-224; Taylor v Johnson (1983) 151 CLR 422, 441-443; Brunskill v Sovereign Marine & General Insurance Co Ltd (1985) 59 ALJR 842, 844; Baumgartner v Baumgartner (1987) 164 CLR 137, 144-146; Abalos v Australian Postal Commission (1990) 171 CLR 167, 178-179; Dawson v. Westpac Banking Corporation (1991) 66 ALJR 94, 99, 105, Wilton v Farnworth (1948) 76 CLR 646, 654-655; Blomley v Ryan (1956) 99 CLR 362, 409
Making findings of fact in a case such as this imposes an enormous responsibility on the trial judge. I have approached the task diligently focused on the requirements set out above.
Before addressing specific issues raised by disputed evidence and expressing my evaluation of whose evidence on a given point I found to be more reliable, it is useful to record a few observations about the presentation of the applicant and the respondent.
It was possible for me to state certain observations about each of the applicant and the respondent. So far as the respondent was concerned, I formed the view that he was guarded and less than fully frank in his evidence. The version of events given in his affidavit was selective. He did not put key issues into their full chronological context. In the witness box his answers to questions put during cross examination were clipt. In most instances he said no more than was absolutely necessary to provide a responsive answer to the questions put. In saying that I recognise that the respondent was, most likely, a hard-headed business man whose ordinary demeanour was cool and calculating. Even so, in my judgment the respondent did not tell me all material information within the witness’s knowledge for which the answers to questions put to him called.
Conversely, the applicant often told me more than she was asked. I do not mean by that observation that she was wholly unfocused or unrestrained in the information she gave. However, at times she was unresponsive to questions put to her, preferring instead to volunteer more than she was asked. Yet that did not detract from the value of the responsive answers that she gave. At times she was pressed (although I must say with perfect propriety by Mr Sansom SC) in her evidence and, for the most part, she was firm in her response. Her evidence of her abortion was undoubtedly difficult for her to give as no doubt was her evidence about her lengthy devotion to a man who was cool and unresponsive to her at an emotional level. While the applicant tended to be scattered at times, I took the view she was thoroughly honest. I took the view the respondent kept a significant amount of evidence from me.
Some findings about cohabitation
As has been observed above, in this case the evidence about the precise living arrangements between the applicant and the respondent at different times of their relationship differed in the version given by the applicant as opposed to the version given by the respondent. Having read the affidavits of each in relation to those periods and having seen and heard the cross examination of each, it is possible to state certain factual findings about the evidence concerning cohabitation over different periods. I have broken up those periods into discrete epochs, rather than adopt a broad (and potentially imprecise) assessment of those periods.
The first relevant date was June 1998. The applicant said she met the respondent on a date in late June 1998. Her diary fastened the date as being early July 1998. In answer to questions put in cross examination the applicant told Mr Sansom SC that she met the respondent at a venue known as the R Hotel on the Sunday prior to 5 July 1998 because on the latter date (5 July 1998) the respondent came into the R Hotel where the applicant was then working and the two had met by that date. The respondent was silent in his affidavit about the date of his first meeting of the applicant. He gave no evidence of the date 5 July 1998 or about the Sunday preceding it. Every relationship has a commencement date. The applicant gave a date for the start of her relationship with the respondent. Her version was supported in approximate terms by the entries in her diary. She was consistent in her evidence given in answers to questions put in cross examination on point. Conversely, the respondent said nothing about the days on or near 30 June 1998. For that matter he gave no evidence to pinpoint the date on which he first met the applicant. Further, he did not positively deny the dates on or about 30 June 1998 as the date on which he first met the applicant, nor did he put forward an alternative date as representing his version of events. In those circumstances, on the balance of probabilities I find as a fact in this case that the applicant and the respondent first met in late June 1998 and their meeting was at the R Hotel followed by a meeting at the S Hotel.
At the time of their first meeting the applicant was living at an address in F Street, Suburb E, although for the purposes of these reasons it is not necessary to make a factual finding of the exact address at which she was then living.
In the period June 1998 to October 1998 the applicant stated that she lived in rented premises. The respondent did not contend otherwise. However, the applicant gave as her address at that time an address in F Street, Suburb E. She did not exhibit a lease of that premises. The respondent did not address that period (June to October 1998) in his affidavit. The respondent’s factual recital commenced no earlier than October 2000. Mr Sansom SC cross examined the applicant about events in the period November 1998 to April 2000[57] yet not in relation to the events between June 1998 to October 1998. In the absence of any contrary factual scenario put by the respondent I accept the version of events given by the applicant that in the period from June 1998 to October 1998 the applicant lived in rented accommodation in F Street, Suburb E. I make a finding to that effect on the balance of probabilities.
[57] T 35 L 41
That case is mentioned in this narration, even though it is very fact specific and bears little in the way of general application, because Mushin J cited it in Nyles v Nyles,[156] considered next.
[156](2011) 46 Fam LR 29
A rash of s 79A cases then followed. Chronologically next was the decision of Nyles, judgment in which was handed down on 19 July 2011. In that case the husband and wife entered into a binding financial arrangement. The husband alleged that prior to his agreement to the consent orders the wife failed to disclose material relevant to the value of certain shareholdings. The husband sought orders for the setting aside of the consent orders together with the binding financial arrangement. The case is better viewed in the context of a s 79A application rather than as a conventional property alteration case under s 79. That said, Mushin J made useful observations about disclosure obligations.
The facts were a little out of the ordinary and are important in the context of property alteration orders where a windfall gain arises, most recently considered in Jabour v Jabour.[157] In Nyles the husband and wife had a 12 year marriage with two daughters aged 17. He was 58 and she was 52. The wife was a director of a company that, during the currency of the family law litigation, was in the process of converting from a private company to a public company. Slightly less than two months after the making of the consent order, the company floated on the stock market. The float was successful deriving for the wife a large windfall which she realised consequent upon the share capital’s increased value. The question arose whether the wife had made full and frank disclosure of all relevant documentation prior to the making of the consent orders. An important issue related to third-party discovery and whether the commercial sensitivity of the processes that culminated in the company float needed to be disclosed, despite its characterisation as being commercial-in-confidence. Interestingly, yet this was not brought to the attention of the learned trial judge, the question of commercial-in-confidence objections to discovery had already been decided in 1990 by Pincus J in Conrock Ltd v CSR Ltd[158] citing the House of Lords decision in O’Sullivan v Herdmans,[159] dismissing the objection to discovery. Neither of those decisions came to the attention of Mushin J.
[157](2019) 59 Fam LR 475
[158][1990] FCA 312
[159][1987] 1 W.L.R. 1047
His Honour held that that wife had failed in her obligations to make full and frank disclosure. Placing reliance upon Oriolo, Livesey, Morrison, Briese, Barker and Jeeves, his Honour held as follows –
The duty of full and frank disclosure is a fundamental element of the administration of justice and has long been recognised as vital in the determination of competing applications for alteration of property interests under the Act. This duty attaches to all material facts. In Oriolo v Oriolo (1985) 10 Fam LR 665; (1985) FLC 91-653, the Full Court held:
We consider that there is a clear obligation on a party to proceedings in this Court to make a full and frank disclosure of all relevant financial circumstances. As was said by Lord Brandon for the House of Lords in Livesey v Jenkins [1985] AC 424 at 438; (1985) 1 All ER 106 at 114 :
“I stated earlier that, unless a court is provided with correct, complete and up to date information on the matters to which, under sec 25(1), it is required to have regard, it cannot lawfully or properly exercise its discretion in the manner ordained by that subsection. It follows necessarily from this that each party concerned in claims for financial provision and property adjustment (or other forms of ancillary relief not material in the present case) owes a duty to the court to make full and frank disclosure of all material facts to the other party and the court. This principle of full and frank disclosure in proceedings of this kind has long been recognised and enforced as a matter of practice. The legal basis of that principle, and the justification for it, are to be found in the statutory provisions to which I have referred.”
So far as disclosure of information in the public domain was concerned, Mushin J held that the wife was nevertheless obliged to disclose that information as well. His Honour held –
By way of summary, I find that the wife did not make a full and frank disclosure as required by the law. While she made the husband aware in general terms that there were matters which she could not disclose to him without a confidentiality agreement first being entered into, she did not specify that material in any detail. In my view, the husband was aware of the fact that he could probably obtain further material relevant to the substantive applications, either by agreement as to confidentiality or court order. Further, the wife did nothing to cause the C valuation to be updated, which might have resulted in the emergence of a very different picture of the value of the wife’s shares.
More importantly, the wife breached her legal obligation to provide the husband with details of the material which was in the public domain. I reject the proposition that informing the husband of the availability of that information was even close to her obligation of full and frank disclosure, not only to the husband but also to the court.
Not only was full and frank disclosure a “basic” obligation, but according to Mushin J, the “duty of full and frank disclosure is a fundamental element of the administration of justice and has long been recognised as vital” in s 79 cases. His Honour said the “duty attaches to all material facts.” Some key words were “fundamental element to the administration of justice” and “long… recognised as vital.” There could be no doubt that his Honour was extremely focused on the need for diligence in disclosure. So with those statements expressed with such emphasis and imperative, one wonders why their full impact was neutralised by the court in Pearce v Pearce[160] stating –
“Equally, however, [it] is not every failure of full and frank disclosure which would justify a court in setting aside an order.”
[160][2016] FamCAFC 14
Most peculiarly, in Pearce v Pearce the court cited Morrison as well as Livesey v Jenkins for that quoted portion. If anything, Livesey pointed in the opposite direction. Pearce was a case concerning s 79A yet very few of the key cases on non-disclosure were considered, and instead Oriolo, Suiker and Briese were considered but in the context of the holdings of the trial judge. No separate consideration was given to them by the court hearing the appeal.
Hannam J was concerned with the husband’s non-disclosure in Judd v Cornell-Judd.[161] Her Honour there held that the husband had omitted to disclose a $31,000 bank balance along with $10,000 in understated superannuation entitlements and information relating to share trading. Her Honour held that those non-disclosures were a “significant matter in circumstances where the property pool available is a little over $200,000 and subject to a debt of $80,000.” So far as the decided cases that have addressed the consequences of non-disclosure were concerned, her Honour rested her conclusions based only on the decisions in Weir and Kannis. Hannam J ordered a further 25% division to the wife based on the non-disclosure and based on the husband’s reckless conduct thereby conferring 85% of the pool in favour of the wife and 15% in favour of the husband.
[161][2016] FamCAFC 390
In an undefended de facto property alteration case, Cronin J addressed the consequences of the father’s failure to make disclosure as well as his failure to participate in the proceeding in Merritt & Richards (No. 2)[162] by giving the entire pool to the mother. So far as non-disclosure was concerned, his Honour held as follows –
But for his superannuation, the evidence does not support a conclusion that the father has any assets. To a large degree, however, he is the master of his own demise, having regard to his positive obligations to provide evidence as to not only his assets but also his earning capacity and financial position (see Black and Kellner (1992) FLC 92-287 and Briese and Briese (1986) FLC 91-713).
[162][2016] FamCA 66
A large number of Full Court decisions bore upon the issue of non-disclosure that his Honour did not address.
Another s 79A decision emerged in Waterman & Waterman.[163] That as an ex tempore decision involving an appeal from the Federal Circuit Court. On appeal, the court recited how the trial judge considered Barker & Barker and Livesey v Jenkins. Under the heading “lack of disclosure,” the court said the following –
Importantly, the duty to disclose is a duty owed both to the other party and to the court. The duty is to make “full and frank disclosure of all information relevant to the case in a timely manner” (emphasis added).[14] The statements made by Smithers J in Briese & Briese[15] remain, with respect, as true today as they were then:
... a person in the position of the husband in this case has a positive obligation to set out at an early stage his financial position in a clear and comprehensive manner ... The need for each party to understand the financial position of the other party is at the very heart of cases concerning property and maintenance.
[163][2017] FamCAFC 23
The court referred to Morrison especially the statement therein that “the duty of disclosure is a basic duty.” In Waterman the court said that comment was “of considerable significance.” The court in Waterman recited the comments of Lord Brandon in Livesey v Jenkins. The court also quoted from Suiker in the following terms –
Under the Family Law Act 1975, the need for a resolution of disputes by negotiation and the consequent making of consent orders ... is an essential part of the legislation and the rules ... In our opinion, the necessity for full and frank disclosure of financial matters to the Court and to the other party are basic to the process of the Court and the fundamental aims of the financial legislation contained in section 79 of the Family Law Act 1975...
Thus, that Full Court placed special emphasis on the decisions in Barker, Livesey, Morrison and Suiker.
More recently again, in the ex tempore decision of Trang & Kingsley,[164] a single judge sitting as the appeal division dealt with a case in which the wife had failed in her disclosure obligations. After mentioning Chang v Su and Weir & Weir the court held as follows –
The starting point to consideration of these complaints is to emphasise two fundamental aspects of this case. First, by reason of the wife’s failure to explain her use of substantial funds in a total amount not quantifiable, allied with the wife’s abject failure to fully and frankly disclose her financial circumstances (including as to her property interests in Country A) only property interests held by the husband were capable of identification and valuation. Moreover, as the trial judge correctly observed at [68] in considering the first question of whether it is just and equitable to make any alteration of property interests, by reference to Stanford v Stanford [2012] HCA 52; (2012) 247 CLR 108, “[i]n reality any alteration could only be one way because the husband did not seek any alteration of the interests of property held by the wife”. Second, as his Honour correctly identified at [64] and [65] the guidelines to the approach to be taken set out in Weir & Weir (1993) FLC 92-338 and Chang v Su [2002] FamCA 156; (2002) FLC 93-117 were engaged.
[164][2017] FamCAFC 120.
The other cases mentioned above were wholly ignored. Embedded in the passage quoted immediately above is some form of recognition that the only repositories of the jurisprudence on the duty of disclosure and the consequences of a failure to meet those disclosures is to be found in the reasons for judgment in Chang v Su and in Weir & Weir. I do not agree. The learning goes well beyond that as I have surveyed above.
In Brewer & Brewer[165] I made some far reaching observations about disclosure. While lengthy they were as follows –
[165][2019] FamCA 247
In the specific context of family law litigation ch 13 of the Family Law Rules governs a party’s obligations concerning disclosure. The centuries of learning concerning civil litigation in courts of common law and chancery as recorded, for example, in Daniell’s Chancery Practice[166] have been largely supplanted by ch 13. In what can only be described as “clear and unambiguous terms”, as Cronin J called the phrase when referring to the rule in his Honour’s extrajudicial speech entitled ‘The obligation to disclose; but what if they don’t?’,[167] ch 13 sets out not only what to disclose but how to do so. By way of emphasis, the provisions of ch 13 are to be read in conjunction with the provisions of r 1.08 that imposes upon each party a responsibility to promote and achieve the main purpose recorded in the seven sub‑paragraphs of r 1.07. Among those are timeliness, proportionality and cost efficiency in the conduct of family law litigation. In many respects, the legislative aspirations evident in the Civil Procedure Act of the State of Victoria and its counterpart in New South Wales have been largely replicated, consonant with a legislative imprimatur across many jurisdictions of the Commonwealth of Australia that compels parties to get to the heart of disputed issues quickly, time and cost efficiently while concurrently keeping uppermost in mind the proportionality of the disputed issues relative to the overall contest.
[166] Sidney Edward Williams and Frank Guthrie‑Smith, Daniell’s Chancery Practice: being a treatise on the practice of the Chancery Division and on appeal therefrom (Sweet & Maxwell, 8th ed, 1985)
[167] The Honourable Justice Paul Cronin, ‘The obligation to disclose; but what if they don’t’ (conference paper, National Family Law Conference, April 2008)
The disclosure obligation is a continuing obligation. That point is traceable to older English decisions such as Mitchell v Darley Main Colliery Co[168] and Myers v Elman.[169] Yet the proposition was not as clear as it was once thought to be having regard to other earlier observations to the contrary, such as those emanating from the Divisional Court in James v Plummer.[170] For that matter, in the Full Court of the Federal Court of Australia in TNT Management Pty Ltd v Trade Practices Commission; Brambles Holdings v Trade Practices Commission[171] Sheppard J pointed out that the authorities said to impose the obligation of continuing discovery were not even referred to in Bray’s Digest on the Law of Discovery.[172]
[168] (1884) 1 Cab & El 215
[169] [1940] AC 282
[170] (1888) 23 LJNC 107
[171] (1983) 47 ALR 693
[172] Edward Bray, Digest on the Law of Discovery with practice notes (Sweet & Maxwell, 1904)
Rule 13.07 of the Family Law Rules describes the obligation of disclosure as a “duty”. Mirroring equitable principles, that rule provides that the duty of disclosure applies to each document that “is or has been in the possession, or under the control, of the party disclosing the document”. Noticeably, the word “power” was omitted from r 13.07, the word “power” having attracted a rash of judicial intrigue in common law courts such as in Lonrho Ltd v Shell Petroleum Co Ltd[173] and in Palmdale Insurance Ltd (in liquidation) v L Grollo & Co Pty Ltd.[174] At all events, severe consequences befall a party who deliberately withholds a document. In his Honour’s paper cited above, Cronin J observed that when it comes time to list a proceeding for trial each party is required to undertake that they have disclosed everything and if that undertaking is false on the basis that all documents have not been disclosed, the party in default thereby exposes himself or herself to the offence created by r 13.15(2). That offence is additional to the contempt power reposed in s 112AP of the Family Law Act.
[173] [1980] 1 WLR 627
[174] [1987] VR 113
It will be immediately apparent that the legislature has taken the view that parties’ disclosure duties are very serious and disobedience towards them or dereliction in a party’s approach in relation to them will not be trifled with.
In this case the issue of the sale of the husband’s interest in relation to all aspects of the B Pty Ltd enterprise remains a very important issue. I was not persuaded, at least not at this stage of the interlocutory process of the case, that the full, complete and exhaustive duty concerning disclosure has been diligently discharge by the husband. That failure has obvious consequences to an overall understanding of the husband’s financial circumstances. In turn, that bore upon whether I was satisfied of the matters that the husband needed to prove on this application, one of which was the reality of his needs. It was one thing for the husband to assert that he was unable to support himself from income and that he said he was a commission agent entitled to “commission” as opposed to regular income. It was an altogether different thing for him to fully and completely discharge his duties of disclosure concerning his interest (direct and indirect) in relation to all corporate and trust entities associated with all facets of the B Pty Ltd operations. To the extent that he asserted that he had sold some or all of his interest that he once owned, he was required (and currently remains required) to reveal all aspects of that sale. That encompassed all documents evidencing the offer, the acceptance of that offer, the written agreement that thereby came into existence by acceptance of that offer, the performance of that agreement according to its terms and other things. Of the latter point, the fact of payment and amounts paid are obvious matters calling for documentation. Performance will also be evidenced by the transfer of shares scrip, the registration of the transferees in the share registry of the company and ASIC documentation. So far as other evidence of payments is concerned, self‑evidently contemporaneous bank documentation will be especially relevant, not only as to the amount of the payment but as to the source of funds giving rise to the payment.
Those observations are scarcely new law. The modern genesis of the need for proper disclosure emanated from the House of Lords decision in Livesey v Jenkins.[175] There, Lord Brandon of Oakbrook held as follows –
[175] [1985] 1 AC 424, 437‑438
I stated earlier that, unless a court is provided with correct, complete and up‑to‑date information on the matters to which, under section 25(1), it is required to have regard, it cannot lawfully or properly exercise its discretion in the manner ordained by that subsection. It follows necessarily from this that each party concerned in claims for financial provision and property adjustment (or other forms of ancillary relief not to reel in the present case) owes a duty to the court to make full and frank disclosure of all material facts to the other party and the court. This principle of full and frank disclosure in proceedings of this kind has long been recognised and enforced as a matter of practice. …
All other members of the House of Lords agreed in the observations of Lord Brandon of Oakbrook.
Those observations were adopted by Smithers J in In the Marriage of Briese.[176] There, Smithers J placed significant store in the observation of the House of Lords in Livesey v Jenkins. His Honour held as follows –
[176] (1985) 10 Fam LR 642, 662
Although the case relates to quite different circumstances, I believe that the conclusion in the House of Lords in the case of Livesey v Jenkins [1985] 1 All ER 106 is apposite, namely that in financial proceedings between spouses each party must make a full and frank disclosure of all material facts. In that case it was made clear that full and frank disclosure was required as a matter of principle the in light of the fact that it was the duty of the court, taking into account a number of designated criteria, to make a decision which basically involved the exercise of a discretion. This is quite different from common law litigation between strangers, in which such a general duty does not exist, and obligations would only exist insofar as statute or court rules required.
In my view it is fundamental to the whole operation of the Family Law Act 1975 (Cth) in financial cases that there is an obligation of the nature to which I have referred. Livesey v Jenkins makes it clear that mere compliance with rules of court or practice directions does not alter the basic principle of the need for full and frank disclosure by the parties. The fact that in the present case it is not a question of ultimate nondisclosure of a matter relevant to the orders made, but is of a different nature being relevant to delay and expense, does not in my view prevent the principal being applicable here as to the matter of costs. There is an obligation on each party to act so as to provide a basis upon which the two of them are in a position to resolve the case by agreement, or proceed to a hearing, as expeditiously as may reasonably be done.
The decision of Smithers J in Briese was handed down on 27 June 1985. Almost six months later the Full Court adopted the observations of the House of Lords and of Smithers J as mentioned above in Oriolo & Oriolo.[177]
Very shortly thereafter a differently constituted Full Court in In the Marriage of Giunti[178] applied Briese as well as Oriolo. In Giunti, the Full Court held as follows[179] –
It is obviously desirable as a general principle that the court should first of all identify the pool of assets available and evaluate it. If each party complies with his or her obligation to make full and substantive disclosure of their financial affairs – see In Marriage of Briese (1985) 82 FLR 369, affirmed by the Full Court in In Marriage of Oriolo [1985] FLC 80,254 – there is no problem, although there may be disputes as to valuation.
However, if as is here, one party fails to fulfil that obligation, is it open to that party then to rely on the absence of satisfactory evidence to prevent the making of an order against him or her which otherwise justice and equity would require? It would be simple, if that were the case, to evade the jurisdiction of this court, not by outright refusal which would attract sanctions but by obfuscation and evasion. …
Subsequent decisions of the Full Court, consistent in approach, emerged in In the Marriage of Stein,[180] In the Marriage of Mezzacappa[181] and In the Marriage of Black & Kellner[182] as well as In the Marriage of Tate[183] and In the Marriage of Chang and Sue.[184]
In Tate’s case, the Full Court (Nicholson CJ, Kay and Waddy JJ) referred to the continuing process of discovery, citing TNT Management Pty Ltd v Trade Practices Commission; Brambles Holdings v Trade Practices Commission.[185] In Tate’s case, the Full Court compared the rules of courts relating to discovery in the High Court, the Federal Court of Australia and in the High Court of Judicature in the United Kingdom.
For decades this court has encountered situations where the court has been unable to fully ascertain the extent of a party’s financial position by reason of a lack of full and frank disclosure. Illustrations have emerged in cases such as In the Marriage of Stein[186] and In the Marriage of Weir,[187] the latter authority standing for the proposition that where there has been nondisclosure by one party, the court should not be unduly cautious about making findings in favour of the other party. For that matter, as was held in In the marriage of Abdullah,[188] undisclosed funds or hidden funds did not render those funds unascertained or unascertainable. Slightly later the Full Court in In the Marriage of Efthimiadis[189] followed Black’s case and Weir’s case.
Many of the issues addressed above were canvassed by Stephen O’Ryan QC in his article ‘Attempts to Deal with Undisclosed Wealth in Property Settlement Proceedings’.[190] Likewise, Graham Richardson SC made a very useful contribution to the learning in his article ‘A Beginner’s Guide to Property Settlement and Related Proceedings in the Family Court’.[191]
[177] (1985) 10 Fam LR 665
[178] (1986) 11 Fam LR 160
[179] Ibid 165
[180] (1986) 11 Fam LR 353
[181] (1987) 11 Fam LR 957
[182] (1992) 15 Fam LR 343
[183] (2000) 26 Fam LR 731
[184] (2002) 29 Fam LR 406
[185] (1983) 47 ALR 693
[186] (1986) 11 Fam LR 353
[187] (1992) 16 Fam LR 154
[188] (1981) 6 Fam LR 654
[189] (1993) 16 Fam LR 384
[190] (1994) 8 Australian Journal of Family Law 96
[191] (1998) 17 Australian Bar Review 48
Drawing the threads together about deficient disclosure
The authorities surveyed above seem to me to be the more authoritative statements of principle on the duty of disclosure and the consequences of a failure in complying with that duty. From the statements of principle that apply, the following may be extracted in the manner set out hereunder.
First, the duty of disclosure is a concept derived from equity (Flight v Robinson).[192]
[192] [1844] 50 ER 9
Next, r 13.04 of the Family Law Rules is the present repository of the duty.
From here, I have dissected the learning in three categories –
a)the duty itself including to whom the duty is owed;
b)the context of the duty; and
c)the consequences of non-compliance with the duty.
Let me start with the first.
The duty itself
The duty is owed to the court as well as to the parties to the proceeding (Livesey v Jenkins, Waterman).
Full and frank disclosure of all material facts is a fundamental requirement in financial matters (Black & Kellner).
A party in a property proceeding has a duty to make full disclosure of his or her financial affairs (Weir).
The duty to disclose is absolute (Kannis).
The duty is crucial to the functioning of this jurisdiction (Morrison).
Full and frank disclosure of financial matters between the parties is basic to the process of the court and is one of the elements of the Family Law Act and the process of the court (Suiker).
The duty is fundamental to the question whether to grant relief under s 79A (Nyles).
The content of the duty
There is an obligation on each party to act so as to provide a basis on which the parties are in a position to resolve the case by agreement or to proceed to a hearing as expeditiously as may reasonably be done (Briese).
Each party owes a duty to the court to make full and frank disclosure of all material facts to the other party and to the court (Livesey v Jenkins).
There is an obligation on the parties to make full and frank disclosure of all their financial assets and it is also expected of the parties that they shall cooperate in the conduct of the proceeding in order to bring it to an early and prompt conclusion with a minimum of expense (Marinko).
The duty is to make full and frank disclosure of all information relevant to the case in a timely manner (Briese, Waterman, Morrison, Suiker).
The comments made in Howard to the effect that the husband was not under a duty to make full disclosure are wrong (Oriolo).
The consequences of a breach of the duty
By reason of a breach of the duty of disclosure, the uppermost limit of what can be ordered to be transferred to one party in an application under s 79 is the whole of the ascertained property of the parties (Monte).
It is not open to one party who has failed to fulfil the obligation of full and frank disclosure to rely on that failure so as to prevent the making of an order against that party in default (Giunti, Black v Kellner, Oriolo).
The failure to disclose relevant financial information may lead a court to draw inferences against the person who failed to disclose the information. However, it is not appropriate to transfer the task of establishing relevant financial factors from the parties to the trial judge (Steiner).
Where there is clear evidence of non-disclosure the court should not be unduly cautious of making findings in favour of the innocent party (Weir, Monte)
Once there is sufficient evidence to support a finding that a party has not made full disclosure, the court has jurisdiction to make an order in relation to unidentified and undisclosed property (Weir, Monte).
It is beside the point whether non-disclosure was wilful or accidental or whether it was the result of misfeasance or nonfeasance. The duty to disclose is absolute. Where the court is satisfied that the whole truth has not come out the court might more readily conclude that the asset pool was greater than demonstrated. In those circumstances it might be appropriate to err on the side of generosity to the party who might otherwise be seen to be disadvantaged by the lack of complete candour (Chang v Su, Weir, Kannis).
The obligation to make full and frank disclosure is regarded as being so crucial to the functioning of this jurisdiction that the deliberate failure by one party to meet that obligation may result in the court drawing adverse inferences against the non-disclosing party, where there is material on which such an inference can be based (Stein, Mezzacappa, Giunti, Morrison and Barker).
Conclusion
Mr Sansom SC contended that property orders should be made to the effect of which is to alter property interests as between the applicant and respondent of no more than 5% in favour of the applicant.
I reject that submission.
In my view orders should be made to divide property on the basis that it is just and equitable to do so. That is for the simple reason that the financial unity underpinning the marriage between the applicant and the respondent has come to an end and it is just and equitable therefore to divide property as the High Court held in Stanford v Stanford. In this case it was extremely difficult to gain a real and meaningful insight into the respondent’s true financial position as his documentary proofs in this case were so very poor.
The factors prescribed by s 75(2) of the Family Law Act weigh in favour of the applicant.
I agree with Ms Coulton that a division of more than 5% in favour of the applicant is warranted. Equal division of the property would have been attractive. However, while the s 75(2) factors are considerable, the respondent’s direct and indirect financial contributions especially in relation to B Street, Suburb C were more significant than were the applicant’s. On the other hand, the applicant’s assumption of liability as co-mortgagor elevated her entitlements.
In my view, a division of property should be ordered. Once done, in my view the applicant is entitled to a sum equating to 40% of the value of property and the respondent is entitled to a sum equating to 60% of the value of property. On current figures, in my view, such an order for the division of property is warranted as it is just and equitable to make such an order. So far as the precise amount to be divided is concerned, it is almost impossible to say having regard to the appalling disclosure that the respondent has provided. Using the figures mentioned above in the passage immediately above “contributions”, on one view the net asset position of the parties was a little over $4.3 million. Applying 40% to that figure, the sum thereby derived is $1,720,000. I have real reservations that the figure of $4.3 million is accurate in view of the disclosure discrepancies and the lack of accurate valuation evidence. In view of the fact that this s 79 settlement is a “once and for all” figure, it would be wholly erroneous to make an order based on suspect figures. It must not be forgotten that in Merritt & Richards (No. 2), by reason of the disclosure deficiencies the court awarded the entirety of the property to the person to whom defective disclosure was given. In the circumstances of this case such a result would be extreme. Yet the position remains, that I feel no confidence whatsoever that the figures given by the respondent bear any relationship to reality. But as other authority canvassed above instructs, the trial judge must do the best he or she can do in the circumstances of the case. The figures given by the respondent were estimates, on his own admission. True, those estimates were agreed by the applicant. But they remained estimates in respect of which proper valuation evidence should have been given but was not given. This led me to question the validity of the respondent’s assertion that the net property pool was $4.3 million. I hold grave suspicions that the respondent was playing down the actual value of assets so that the applicant’s entitlements to them would be correspondingly diminished. In my view the net pool of assets was nearer $5.3 million than it was to $4.3 million. Forty percent of that figure was $2,120,000. In my judgment, that is more likely the real net figure on which this property division should proceed.
It is likely that the land at B Street Suburb C will need to be sold in order for the respondent to meet the sum I have ordered him to pay the applicant. Conversely, he may wish to attempt to refinance his land holdings somehow. It is only fair that he has an opportunity to explore the best way to do that.
I direct the parties formulate orders within seven days to give effect to these reasons. If required, I will entertain a directions hearing on a date to be fixed.
I certify that the preceding three hundred and sixty-one (361) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Wilson delivered on 14 May 2020.
Associate:
Date: 14 May 2020
[154][1982] 1 WLR 786
22
52
7