Baldoni & Baldoni (No 2)

Case [2023] FedCFamC1F 337

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Baldoni & Baldoni (No 2) [2023] FedCFamC1F 337

File number(s): SYC 1234 of 2019
Judgment of: KARI J
Date of judgment: 5 May 2023
Catchwords: FAMILY LAW – PROPERTY SETTLEMENT – Short relationship of no more than 3 and a half years – Significant acrimony and mistrust between the parties – Where the legal costs of the matter were disproportionate – Where a significant issue in the litigation centred around the ownership and liquidation of a company, initially contributed by the wife – Where the liquidator intervened in these proceedings – Where the claim of the intervener was resolved by consent – Where there is a dispute as to how the liability to the liquidated company is to be paid – Where the Court considered the wife to be a truthful and accurate historian – Where the wife asks the Court to consider a range of amounts received and dissipated by the husband – Where the Court finds that the husband’s conduct both during the relationship and in the post separation period was reckless, negligent and/or wanton with a direct result of reducing the property available for division between the parties – Where the wife made significantly greater contributions to that of the husband – Where the Court considers there should be a further adjustment in favour of the wife pursuant to 75(2) – Where the husband is restrained from dealing with any of the assets that he is to retain pending the determination of any cost applications
Legislation:

Corporations Act 2001 (Cth), ss 180, 181, 1317H

Evidence Act 1995 (Cth), s 50

Family Law Act 1975 (Cth), ss 75, 69.

Federal Circuit and Family Court of Australia (Family Law Rules) 2021, r 1.04
Cases cited:

Baldoni & Baldoni [2019] FamCA 446

Bertrand & Bertrand [2021] FedCFamC1F 70

Bevan & Bevan [2013] FamCAFC 116 (‘Bevan’)

Biltoft and Biltoft (1995) FLC 92-614

Clauson & Caluson (1995) FLC 92-595

Commissioner of Taxation & Worsnop and Anor [2009] FamCAFC 4

Dickons & Dickons (2012) 50 Fam LR 244

Hayne and Hayne (1977) FLC 90-265

Hickey & Attorney-General (Intervener) (2003) FLC 93-143

Jabour & Jabour (2019) FLC 93-898

Kennon v Kennon (1997) FLC 92-757

Kowaliw and Kowaliw (1981) FLC 91-092

Stanford & Stanford (2011) FamCAFC 208 (‘Stanford’)

Steinbrenner & Steinbrenner [2008] FamCAFC

Trevi & Trevi (2018) FamCAFC 173

Trustee of the Property of G Lemnos, A Bankrupt & Lemnos and Anor [2009] FamCAFC 20

Vass & Vass (2015) 53 FamCAFC 51  

Division: Division 1 First Instance
Number of paragraphs: 252
Date of hearing: 4 - 8 April, 11 April, 2 May, 20 June, 21 October, 7 November 2022, 17 February 2023
Place: Sydney (in person) and Adelaide (via Microsoft Teams)
Counsel for the Applicant: Mr O
Solicitor for the Applicant: Edwards Family Lawyers
Counsel for the Respondent: Mr Z
Solicitor for the Respondent: Rockliffs Lawyers
Counsel for the Intervener: Mr Noakhtar
Solicitor for the Intervener: Somerset Ryckmans

ORDERS

SYC 1234 of…

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Baldoni & Baldoni (No 2) [2023] FedCFamC1F 337
Case
[2023] FedCFamC1F 337
Decision Date

CaseChat Overview and Summary

In the case of Baldoni & Baldoni (No 2), the court was tasked with dividing matrimonial assets and liabilities between the parties. The wife, the applicant, sought a fair and equitable distribution of the assets, while the husband and the liquidator of a company associated with the husband opposed her claims. The court considered various documents, including financial statements, affidavits, and expert valuations, to determine the net value of the assets and liabilities. The wife proposed retaining 90% of the net assets, while the husband sought a different distribution. The court ultimately decided that the parties should retain their assets as they currently stand, with the exception of the payment of a liability to R Company.

The legal issues before the court included the valuation and distribution of assets, the consideration of dissipated funds, and the treatment of post-separation liabilities. The court had to determine the appropriate weight to give to the wife's requests to add back dissipated funds into the matrimonial pool and consider future needs factors. The court also had to decide whether to include the parties' post-separation liabilities in the calculation of their separate personal liabilities.

In its reasoning, the court noted that the parties had not met the overarching purpose of the evidence process, which is to ensure a just and equitable outcome. The court found that the husband and his legal representatives bore significant responsibility for this failure. The court determined that the net value of the property to be divided was $3,390,712, and that the wife should retain approximately 90% of the net assets, while the husband should retain approximately 10%. However, the court also found that the wife would need to meet the liability to R Company from the assets she retained, which would result in her retaining slightly more than her entitled share. The court considered this outcome to be just and equitable in all the circumstances.

The final orders of the court included provisions for the distribution of assets, the payment of the R Company liability, and the allocation of costs between the parties. The court noted that the outcome and entitlements it had determined were more closely aligned with the outcome promoted by the wife, but that the approach to the liability to R Company aligned with the orders promoted by both the husband and the liquidator. The court also made comments on the valuation of a motor vehicle and the consideration of dissipated funds and post-separation liabilities.

Orders

Orders of the court

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Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

On any view, the overarching purpose has not been met in these proceedings. For that, as these reasons bear out, the husband and to the extent that they facilitated it, his legal representatives bear a significant responsibility.THE EVIDENCE The applicant wife relied on the following documents which were provided to the Court in an electronic Court Book:(a)The wife's Further Amended Initiating Application filed 15 January 2020;(b)The wife's Trial Affidavit filed 25 October 2021, and further affidavit filed 23 March 2022;(c)The wife's Financial Statement filed 15 November 2021;(d)The affidavit of the wife's mother Ms AC filed 26 October 2021;(e)The affidavit of the wife's father Mr AC filed 26 October 2021;(f)The affidavit of the single expert valuer, Mr AD filed 3 November 2021. Mr AD was instructed by the husband and the wife to undertake valuations of the real property.(g)The affidavit of the single expert valuer Mr AE filed 31 March 2022. Mr AE was instructed by the husband and the wife to undertake a valuation of livestock.(h)The affidavit of livestock agent Mr AG filed 28 March 2022. Mr AG was instructed by the wife to answer specific questions regarding the retrospective valuation of livestock.(i)Case Outline filed 15 November 2021 together with a draft Minute of Order. The husband relied on the following documents which were also provided to the Court in an electronic Court Book:(a)The husband's Further Amended Response to Initiating Application filed 3 July 2020.(b)The husband's Trial Affidavit filed 20 October 2021, together with a further affidavits filed 4 November 2021 and 30 March 2022.(c)The husband's Financial Statement filed 16 November 2021.(d)The affidavit of Ms AH, the former bookkeeper for R Company, filed 3 July 2020.(e)The affidavit of Mr AJ, a delivery driver, filed 27 October 2021.(f)The affidavit of Mr AK, a delivery driver, filed 8 November 2021.(g)Case Outline filed 15 November 2021, together with a Chronology and Short Minute of Orders sought. The liquidator relied on the following documents which were provided to the Court in an electronic Court Book:(a)The Response to Initiating Application filed 28 April 2021.(b)The Trial Affidavit of the liquidator, Mr Vertue filed 21 October 2021.(c)Case Outline filed 15 November 2021 together with a draft Minute of Orders sought by the liquidator. Each the husband and wife and the intervener also relied upon written submissions provided to the Court prior to the hearing on 20 June 2022. In addition, the wife (through her legal representatives) engaged in a detailed exercise of preparing a Notice to Admit certain facts, together with Notices prepared pursuant to Section 50 of the Evidence Act 1995 (Cth). The focus of those notices was an effort to minimise those facts in dispute during the trial hearing, and to save Court time; which undoubtedly was the beneficial result of that exercise. Those notices were contained in the wife's electronic Court Books as follows:(a)Notice to Admit dated 21 March 2022;(b)Section 50 Notices dated 21 October 2021, 29 October 2021, 5 November 2021, 11 November 2021 and 23 March 2022.

Decision

Reasons for decision

When consideration is given to the effect of the adjustment in the discussion that follows, I am satisfied that an appropriate outcome in this matter results is an outcome that leaves the parties essentially retaining those assets and resources presently in their sole name, possession and control without any further adjustment, save and except as to the payment of the R Company liability.CONCLUSION I have already identified in these reasons the property that is to be bought to account comprises the following:(a)The gross value of property to be divided is $4,663,447 comprised as follows:(i)Real property $5,095,000;(ii)Proceeds from the sale of properties $120,165;(iii)The U Trust ($819,115);(iv)Bank Accounts $2,908;(v)Motor Vehicles $16,000;(vi)Superannuation $133,489; and(vii)Add back $115,000.(b)The gross liabilities (including the liability to R Company of $547,458) total ($1,272,735).(c)The net value of property is therefore $3,390,712. An adjustment that sees the wife retaining 90 per cent of the net assets and the husband 10 per cent of the net assets would see the wife retaining net assets to the value of $3,051,641, and the husband retaining net assets to the value of $339,071. If the wife were to retain the jointly owned real property as she proposes, the wife shall retain and/or hold net property valued at $3,471,526 comprised as follows: The husband holds net property of $346,479, comprised as follows: As can be seen from the property to be retained by each of the parties, the husband is retaining net assets with a value of $346,479, which is slightly in excess of 10 percent (which I have calculated at $339,071). I am satisfied that it is appropriate that there be no further adjustment. The wife on the other hand is retaining net assets of $$3,471,526 which is far in excess of the entitlements that I have determined ($3,051,641). Therefore, the practical effect is that the wife will be required to meet the liability to R Company from the assets that she is to retain. In the first instance the liability to R Company is to be met from those funds held by the wife's solicitors in their trust account from the proceeds of sale of the two properties totalling $120,165. Thereafter, the wife is to make a payment in the amount of approximately $427,293 to satisfy in full the liability to R Company. While I accept that the differential between the parties is significant, I am cognisant that the parties are in effect being restored to the same position that they were in at the commencement of the relationship, noting the findings that I have made and summarised at [180-183] herein. In all of the circumstances of this case I consider such an outcome to be just and equitable.COSTS APPLICATION The Court understands that the each of the parties have made general applications for costs as part of the final orders that they have each sought. It is apparent from the orders that I propose to make as a result of these reasons, that the outcome and entitlements that I have determined are more closely aligned with the outcome promoted by the wife; albeit that the approach to the liability to R Company aligns with the orders promoted by each the husband and the liquidator.

Ratio Decidendi

Legal Principle Established

The final item about which comment is required is the Motor Vehicle 5 at item 24. In that regard:(a)Each of the parties had proffered an estimate for the value of the Motor Vehicle 5; the wife $3,000 and the husband $2,000.(b)There had been no formal valuation of the Motor Vehicle 5.(c)Counsel for each of the parties ultimately conceded that in those circumstances it would be appropriate to include the Motor Vehicle 5 at a value of $2,500.(d)Again, the husband's counsel did not have instructions to agree this approach, however he again acknowledged that this approach was appropriate.LIABILITIES INCURRED POST SEPARATION WHICH THE PARTIES ASK THE COURT TO HAVE REGARD In addition to the liabilities that have been identified in the above schedule, the parties have also mutually drawn the Court's attention to their respective post-separation liabilities. They do so, not because they ask the Court to bring those liabilities to account as liabilities in the calculation of the composition of the matrimonial assets and liabilities to be divided, but rather so that the Court has some understanding of these liabilities in the overall assessment of the matter. Those liabilities are as follows: With regards to that schedule, the personal liabilities of the wife at the time of trial totalled approximately $10,483, and the personal liabilities of the husband totalled approximately $82,837. To those liabilities I also understand, as earlier identified, that the parties have significant outstanding liabilities for their legal fees in these proceedings. With reference to the June 2022 Costs Notices those outstanding legal fees are approximately $100,938 for the wife and $649,160 for the husband. If I include those legal fees in the calculation of the parties separate personal liabilities, I understand that:(a)The wife's personal liabilities total approximately $111,421; and(b)The husband's personal liabilities total approximately $731,997.DISSIPATED FUNDS In addition to the assets and liabilities that have been identified, the wife asks the Court to consider a range of amounts received and dissipated by the husband. In some instances the wife asks the Court to add back into the matrimonial pool certain amounts as notional property; being monies received by the husband, which has been expended and therefore no longer exists. In other instances the wife asks the Court to treat the funds received and expended by the husband when consideration is given to the relevant future needs factors enunciated in s 75(2) of the Act, and in particular pursuant to s 75(2)(o). Before considering this issue, it is important to highlight that there are no firm rules as to how the Court is to bring to account funds that have been dissipated. In Vass & Vass (2015) 53 FamCAFC 51, the Full Court identified:138.There is no error committed per se in adjusting the parties' actual property interests by a calculation involving notionally adding back into the pool sums which have been dissipated by the parties.