Barbieri & Barbieri (No 2)
[2024] FedCFamC1F 686
•1 November 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Barbieri & Barbieri (No 2) [2024] FedCFamC1F 686
File number: SYC 6804 of 2020 Judgment of: SCHONELL J Date of judgment: 1 November 2024 Catchwords: FAMILY LAW – PROPERTY – Final orders – s 79A– Where issues of non-disclosure – Where miscarriage of justice by reason of the failure to disclose relevant information and documents amounting to a suppression of evidence – Orders set aside and new orders made.
FAMILY LAW – PRACTICE AND PROCEDURE – Application to adduce expert evidence – Retrospective market valuation of real property – Allegation of fraud – Delay – Application dismissed.
Legislation: Family Law Act 1975 (Cth) ss 75(2), 79A, 87, 90SF(3), 90SM
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 6.01, 6.06, 7.02, 7.11
Cases cited: Barker & Barker (2007) 36 Fam LR 650; [2007] FamCA 13
C & C [1998] FamCA 143
Crowe-Maxwell v Frost (2016) 91 NSWLR 414
Gadhavi & Gadhavi (2023) 67 Fam LR 174; [2023] FedCFamC1A 117
Gilbert, C.A. v Estate of Gilbert, R.G. (1990) FLC 92-125
Gollingsv Scott (2007) 37 Fam LR 428; [2007] FamCA 397
Green and Kwiatek (1982) FLC 91-259
Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143; [2003] FamCA 395
Holland and Holland (1982) FLC 91-243
Horrigan & Horrigan [2020] FamCAFC 25
Jabour & Jabour (2019) FLC 93-898; [2019] FamCAFC 78
Kokl and Kokl (1981) 7 Fam LR 591
Lane v Lane (2016) FLC 93-699; [2016] FamCAFC 53
Morrison & Morrison (1995) FLC 92-573
Nagel & Clay (2020) 60 Fam LR 550; [2020] FamCA 326
Official Trustee in Bankruptcy v Bryan & Gatenby (deceased) (2006) FLC 93-258; [2006] FamCA 6
Omacini & Omacini (2005) FLC 93-218; [2005] FamCA 195
Patching and Patching (1995) FLC 92-585
Prowse and Prowse (1995) FLC 92-557
Randwick City Council v Fuller (1996) 90 LGERA 380
Singerson & Joans [2014] FamCAFC 238
Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52
Suiker and Suiker (1993) FLC 92-436
Taylor v Taylor (1979) 143 CLR 1; [1979] HCA 38
T & T [2003] FamCA 1066
Townsend and Townsend (1995) FLC 92-569
Trevi & Trevi (2018) FLC 93-858; [2018] FamCAFC 173
Number of paragraphs: 201 Date of hearing: 7–9 August 2024, 23 August 2024 and 25 October 2024 Place: Sydney Counsel for the Applicant: Mr Sirtes SC with Mr Hand Solicitor for the Applicant: Edwards Moloney Family Law Counsel for the Respondent: Mr Cox SC with Mr O’Brien Solicitor for the Respondent: Russell Kennedy Lawyers NSW ORDERS
SYC 6804 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS BARBIERI
Applicant
AND: MR BARBIERI
Respondent
ORDER MADE BY:
SCHONELL J
DATE OF ORDER:
1 NOVEMBER 2024
THE COURT ORDERS THAT:
1.The orders made 16 September 2022 are set aside.
2.The husband shall within 30 days pursuant to s 79 of the Family Law Act 1975 (Cth) pay to the wife $3,131,398.
3.In the event that any party seeks an order for costs they are to submit to my Associate within 28 days a Minute of Order setting out the order sought and an Affidavit setting out the basis for such an order. That matter will thereafter be listed to hear argument as to costs.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Barbieri & Barbieri has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
SCHONELL J:
These are proceedings pursuant to s 79A(1)(a) of the Family Law Act 1975 (Cth) (“the Act”) brought by the applicant wife (“the wife”) seeking to set aside consent orders made 16 September 2022. In the event that the orders are set aside, she seeks that the Court make adjustive orders pursuant to s 79 such that the parties’ assets as asserted by her are divided equally.
The respondent husband (“the husband”) opposes all orders sought by the wife. He asserts that the wife has failed to establish that a ground exists for the making of an order under s 79A, that there has been no miscarriage of justice and there is no basis to set aside the consent orders. Assuming the wife were successful, he contends that there is no warrant for a further adjustment of property under s 79.
The hearing was initially listed for three days to commence on 6 March 2024. The matter was adjourned for reasons set out in Barbieri & Barbieri [2024] FedCFamC1F 173 and listed for four days to commence on 6 August 2024. The matter did not proceed on the first day due to the ill health of one of the counsel.
At the commencement of the hearing, the husband sought to move on an application to adduce evidence from other than a single expert. Having heard submissions, I dismissed the application and indicated that I would provide reasons in due course. Those reasons are referred to below.
The matter was adjourned part heard on the last day to permit the husband to adduce evidence explaining the disposition of the proceeds of sale of Units 1 and 2 C Street, Suburb D, NSW ("the Units”). The matter concluded with submissions on 23 August 2024 whereupon judgment was reserved.
On 16 October 2024, the Court advised the parties that it would deliver judgment the next day. At 8.01 pm that evening, the wife filed an application seeking leave to re-open to adduce further evidence as to an error in the calculation of the wife’s paid legal fees. On 17 October 2024, directions were made for the husband to file any evidence on which he sought to rely with the application listed for hearing on 25 October 2024.
At the hearing on 25 October 2024, the wife was granted leave to re-open to tender an Amended Costs Notice and the re-opening was not opposed by the husband. The Amended Costs Notice became Exhibit 100. It was agreed as between the parties that the figure that should appear in the Balance Sheet (Exhibit 97) for the wife’s paid costs was $1,303,856. The husband sought his costs in the sum of $1,500 for the re-opening which, remarkably, was opposed by the wife. A costs order in that amount was made and the wife sought reasons which I indicated would be incorporated in my final reasons for judgment. Later that day, the wife’s solicitor indicated that she no longer sought reasons.
DOCUMENTS RELIED ON
The wife relied upon the following documents:
(1)Second Further Amended Initiating Application filed 24 April 2024;
(2)Further Amended Points of Claim filed 24 April 2024;
(3)Affidavit of wife filed 16 January 2024;
(4)Affidavit of wife filed 11 July 2024;
(5)Affidavit of Ms B filed 11 July 2024;
(6)Affidavit of Mr E filed 19 July 2024;
(7)Affidavit of Mr F filed 11 July 2024;
(8)Financial Statement filed 11 July 2024;
(9)Application to reopen filed 16 October 2024;
(10)Affidavit of wife filed 16 October 2024;
(11)Case Outline; and
(12)Outline of Closing Submissions.
The husband relied upon the following documents:
(1)Response to Initiating Application filed 8 December 2022;
(2)Amended Defence to Further Amended Points of Claim filed 6 June 2024;
(3)Affidavit of husband filed 11 July 2024;
(4)Affidavit of husband filed 16 August 2024;
(5)Affidavit of Ms G filed 11 July 2024;
(6)Financial Statement filed 11 July 2024;
(7)Application in a Proceeding filed 29 July 2024;
(8)Affidavit of Ms H filed 29 July 2024; and
(9)Case Outline.
Each party also tendered documents which became exhibits in the proceedings.
BACKGROUND
The wife contends that the parties commenced cohabitation in 1997, while the husband contends that the date of cohabitation was in 1998, the date of the parties’ marriage.
The parties have two children, one born in 1999 and another born in 2001. At the time of hearing, both children were over the age of 18.
Both parties agree that a separation occurred in January 2018. The husband has since remarried, and his current spouse has a daughter from a prior relationship. The wife has not re-partnered.
The parties’ assets comprised their former matrimonial home at Suburb J, the Units, public company shares and other assets.
Following separation and particularly after the commencement of proceedings, a continuing issue raised by the wife was the extent of the husband’s disclosure. The husband in his affidavit sworn 10 July 2024 says the following:
13Throughout the matter, [Ms Barbieri] continually asserted that I did not provide her with financial disclosure in order for her to understand our asset pool. The allegations of this kind started after my first letter providing disclosure and continued until the conclusion of the matter, and beyond.
14Each time I provided financial disclosure, [Ms Barbieri] made a further request for disclosure. Each request for disclosure contained various requests that I say were repeated, rephrased, uncertain, vague or seemingly irrelevant. [Ms Barbieri] made various allegations that I had not complied with her requests and alleged that I failed in my duty to disclose. I depose to this below.
Another issue raised during negotiations was the value of the Units. In that respect, the husband records in his affidavit the following:
34After separation, and having the understanding that [Ms Barbieri] was across the value of our assets, I instructed my solicitors to write to [Ms Barbieri] on 14 August 2019 with an offer and a balance sheet that reflected the total value of the Units as "$12,000,000". The letter also noted that the Units "may be valued by a commercial property valuer'' and if [Ms Barbieri] sought for a valuation, then I nominated "[Mr K] of [L Valuers]". …
35On 10 September 2019, [Ms Barbieri] requested disclosure to inform the value of the Units and on 13 September 2019 my solicitors met this request by providing an appraisal that valued the Units together in the range of $11,900,000 - $12,500,000 …
The parties were unable to reach agreement about the value of the Units and in early 2020 M Valuers were instructed to undertake a valuation. That valuation valued Unit 1 at $4,850,000 and Unit 2 at $4,350,000.
The Units were subject to leases. In relation to the leasing of the Units, the husband in his affidavit says the following:
81.7 In relation to the leasing of Unit 1:
(a)On 2 June 2020, I emailed [Ms Barbieri] with disclosure of a Heads of Agreement for Unit 1 and information of a potential new tenant. I informed [Ms Barbieri], "we have received the rent for last month [of the current tenant] ... From yesterday the [property] is vacant'. I informed [Ms Barbieri] that although the rent offered for the new tenant was only about 65% of the normal market rent, that this was owing to both COVID and the recession and it was a deal we just could not afford to lose.
Proceedings for financial adjustment were commenced by the husband on 25 September 2020 in the then Family Court of Australia.
On 27 April 2021, Rees J made interim consent orders. Order 16.3 required specific disclosure from the husband in relation to his dealings with the Units as follows:
That pending further order, the husband both in his personal capacity and in his capacity as a director and/or shareholder of [Mr Barbieri Superannuation Fund] shall… not less than 7 days prior to signing a new lease (or renewing a lease) or agreeing to any capital expenditure to either Unit 1 [C Street] and Unit 2 [C Street] the husband will provide to the wife copies of all emails, proposed leases and other documents.
On that same day, orders were made providing a joint letter of instructions to O Valuers to undertake a further valuation of the Units.
On 12 August 2021, single expert valuations by O Valuers valued Unit 1 at $5,500,000 and Unit 2 at $4,600,000.
On 6 September 2021, the husband received an email from N Real Estate containing a market appraisal estimating the sale price for Unit 1 at an average of $8,421,467 and for Unit 2 at an average of $6,361,667. Neither of these market appraisals were disclosed to the wife.
On 25 October 2021, in anticipation of the mediation the next day, the husband’s solicitors provide a balance sheet to the wife disclosing the value of Unit 1 at $5,500,000 and Unit 2 at $4,600,000.
The husband in his affidavit says that he did not provide the market appraisal to the wife for the following reasons:
69On 26 October 2021, the Court Ordered mediation took place after provision of the valuations of [Suburb J] and the Units. Just prior to this mediation I received an email from [Mr P] about his rough appraisal of the Units. I did not provide this appraisal to [Ms Barbieri]. I did not do this because:
69.1[Mr P], an agent of [N Real Estate] had been chasing the sale of the Units for sometime. [N Real Estate] sold one of the other Units during the relationship and I was aware that he wanted the sale if there were others that had to be sold. I took his appraisal with a grain of salt and treated it like a sales pitch, given that it was received so close to the valuations of the Units I thought it was inflated to the point of being ridiculous.
…
69.3I did not wish to derail the mediation. I was concerned that [Ms Barbieri] may not have seen how [Mr P’s] commercial interest may have influenced his appraisal provided. I was also concerned that this new information may compromise the impending mediation as [Ms Barbieri] would use it as another excuse, that alleged inadequate disclosure had been provided by me.
The matter did not resolve at the mediation.
On 12 November 2021, the husband’s solicitor sends an offer proposing as part of the offer the husband retaining the Units, and for the pool to be divided 51 percent to the wife and 49 percent to the husband.
Between that date and March 2022, the wife seeks on a number of occasions for the husband to provide a Schedule of the Effect of the orders he proposes. None is ever provided.
On 8 March 2022, following further negotiations, the parties reached an agreement in principle that saw the husband paying a cash sum to the wife and the husband retaining the Units. At the same time, the husband contacted N Real Estate. In that respect, the husband says in his affidavit:
114I also reignited the enquiry with [N Real Estate] to sell Unit 1 and Unit 2 in the event I did not have capacity to obtain finance. On 30 March 2022 I contacted [Mr P] to check whether he was still interested in the potential listing as we discussed in 2021. This was confirmed and on 31 March 2022, I advised him that I would be "in touch hopefully writhin [sic] the next 70 Days or so". When I sent this email, I hoped that [Ms Barbieri] and I would have come to an agreement within this period. …
…
116On 31 March 2022 [Ms Barbieri] responded to my offer for cash adjustment provided on 24 March 2022. [Ms Barbieri] agreed in principle; however she sought a higher cash payment. One of the reasons she used to support this request was she contended that the valuations we were relying on to support our offers from [O Valuers] for Unit 1 and Unit 2 were "significantly under their true value".
…
120On 31 March and 12 April 2022, [Mr P] sent me emails with quotes for the marketing schedule for the lease of the Units. These quotes contained a number of errors and inconsistencies. For one, they identified Unit 4 rather than Units 1 and 2. The general practice of [N Real Estate] is that when they were asked to quote on something they sent though quotes as invoices, so if you decided to go ahead you just paid the invoice.
On 24 March 2022, the husband’s solicitors sent the wife’s solicitors an offer of settlement which proposed that the wife transfer her interest in the Suburb J Property and the joint Q Finance portfolio to the husband, roll over her interest in the SMSF to the husband and for the husband to pay her $9 million in three tranches prior to 1 December 2022.
The wife accepted the husband’s offer but proposed the cash amount be increased to $9.3 million.
The husband responds on 4 April 2022, increasing the cash offer to $9.1 million.
On 8 April 2022, the wife’s solicitor responds proposing the cash adjustment be $9.3 million. The wife in her affidavit says, “Had I known that [Mr Barbieri] was intending to sell the [Suburb D] Units, I would not have made this proposal. I would have suspended negotiations until after the sale of the [Suburb D] Units” (affidavit of the wife filed 16 January 2024, paragraph 66).
On 22 April 2022, N Real Estate email the husband an updated marketing schedule for Unit 1 and Unit 2.
On 22 April 2022, the husband seeks a quote from his solicitor for conveyancing costs of the Units.
On 28 April 2022, the wife’s solicitor provides draft orders to the husband’s solicitor.
In April 2022, the tenants of Unit 1 give notice to the husband of their intention to vacate in mid-2022. The next day, the husband advises N Real Estate of this. No notice is given to wife until 11 July 2022.
On 12 May 2022, the husband’s solicitor responds to wife’s draft orders including a statement that the husband ought to be permitted to sell one or both units to pay the wife. The wife’s solicitor responds on 24 May 2022 that the husband be permitted to sell Unit 1 with the wife’s prior written permission to satisfy the Orders. The husband’s solicitor responds to this proposal contending “Your client’s attempts to financially control our client by her involvement in the sale of the commercial properties are again unusual and not needed.”
The wife’s solicitor responds on 26 May 2022 consenting to the removal of any restraint on the husband from selling Unit 1, “provided there is full transparency from your client; and the agent and lawyer acting on the sale are instructed to keep our client informed.”
On 1 June 2022, the parties and their lawyers take part in a conference to settle the Orders.
On 2 June 2022, the husband corresponds with his conveyancing solicitor regarding contracts for the Units.
On 8 June 2022, the husband’s conveyancing solicitor provides the husband with draft contracts which are sent to N Real Estate.
On 16 June 2022, N Real Estate made enquiries with the strata managers for the Units for the purposes of preparing the information memorandum for the sale.
On 11 July 2022, the husband’s solicitor sends an offer of settlement that the husband asserted saw the wife retain 56 percent of the matrimonial pool. The husband disclosed that the tenant of Unit 1, had “recently given notice and the vacation of this tenant will likely impact the ability of the parties to meet the interim distribution of funds.”
On 21 July 2022, N Real Estate send the husband a signed Heads of Agreement and deposit for the new lease of Unit 1. Notice of the lease is not disclosed to the wife notwithstanding the Orders made by Rees J.
On 9 September 2022, the husband contacts N Real Estate advising them that they needed to get the Units ready for market, and on 13 September 2022 the husband receives from N Real Estate an agency agreement to sign.
On 13 September 2022, the parties sign Consent Orders and documents are sent to the Court for approval.
Orders are made by consent on 16 September 2022.
On 3 October 2022, the husband advises the wife by email that Unit 2 has been placed on the market.
In late 2022, the husband exchanges contracts for both Units at $10.3 million and $6.7 million.
On 7 December 2022, the wife files an Initiating Application pursuant to s 79A of the Act.
APPLICATION TO ADDUCE EXPERT EVIDENCE OTHER THAN FROM A SINGLE EXPERT
On 29 July 2024 at 5.44 pm the husband’s solicitor served an application in a proceeding seeking to adduce evidence pursuant to r 7.11 of the Federal Circuit and Family Court of Australia (Family Law) Rules (“the Rules”) being evidence of a retrospective market valuation of the Units. The application was supported by an affidavit of the husband’s solicitor. The application and affidavit were served four business days before the commencement of the adjourned hearing.
The affidavit of the husband’s solicitor records the following:
12.After reviewing the Wife’s trial material prior to the final hearing listed in March 2024 it became clear the Wife held an inconsistent view as to the treatment and reliance on the [O Valuers] valuations.
…
14.Given the perceived inconsistent position in regard to the Wife’s treatment and reliance on the previous [O Valuers] valuations my client provided instructions to obtain further evidence as to the retrospective value of the [Suburb D] Units at the time the final orders were made.
15.As such, after the initial rukle9A trial was adjourned to August 2024, my client instructed my office to write to the Wife proposing an historical valuation of the [Suburb D] Units as at the date of the Final Orders.
…
17.On 1 July 2024, correspondence was sent to EFL proposing the historical valuation of the [Suburb D] Units.
18.On 4 July 2024, EFL opposed my client’s proposal for the appointment of a single expert to conduct an historical valuation of the [Suburb D] Units. Annexed and marked “A” is a copy of a letter from my office dated 1 July 2024 along with the proposed draft joint letter to the nominated single expert and letter in response from EFL dated 4 July 2024.
19.As the Wife did not agree to jointly appoint a single expert to conduct a retrospective valuation of the [Suburb D] Units as at the date of the Final Orders, my client now seeks to appoint and rely on an expert witness pursuant to R 7.11(1) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (“the Rules”).
In relation to the reasons for adducing expert evidence, the solicitor for the husband identified that the expert sought to be engaged had previously been jointly engaged as a single expert. The evidence, it was said, would go to establish the retrospective market value of the Units. The affidavit goes on to record:
25.The retrospective valuations provide an assessment of the value of the [Suburb D] Units at the time the Orders were made. The contention of the husband is that the sale price that the [Suburb D] Units ultimately sold for was far more than he expected and far more than the genuine market value.
26.The retrospective valuation reports Annexed at D, if permitted to be adduced as evidence will further assist the Court in substantiating the value of the [Suburb D] Units at the time of the Orders and assess the contentions made by the Husband. As far as I have reviewed the Wife does not lead evidence to address this issue whether that be valuation evidence or evidence of any other kind.
27.One of the main issues that appears to be in contention for the s79A Application is whether (1) the sale of the [Suburb D] Units was above market, or (2) whether the husband had information that he did not disclose that was sufficient to establish that the [Suburb D] Units were a certain value and that their sale would correspond to that value. Resolution of this issue can now be assisted through the annexed expert evidence by way of the retrospective valuation report. That is, [Mr R] of [O Valuers] (in his reports at Annexure D) has used the sale and leasing data of comparable properties in or around the Final Orders to assess the sale of the [Suburb D] Units as against the market to arrive at a determination as to whether the sale was within range or an anomaly that the market could not have anticipated.
28.Another issues that the retrospective valuation speaks to are the conditions and market climate as at the time the Final Orders were made. This issue is apparent especially in the evidence given by both the Wife and my client in their respective trial affidavits. The engagement of [O Valuers] as an expert will provide the court with much needed assistance in determining which of the parties’ evidence is supported by the single expert through their analysis of comparable sales and leasing evidence at or around the time of the Final Orders.
The husband’s solicitor, by way of explanation for the delay in bringing the application, contended that in the period leading up to the filing of the affidavits, neither party had sought to rely upon the O Valuers valuations and therefore the husband did not see the need for a historical valuation. The solicitor contended that upon receiving the wife’s affidavit it was assessed that the wife had changed her position but there was no time between receipt of the wife’s evidence and the commencement of the hearing to apply for an expert.
The affidavit went on to assert that the husband thereafter was monitoring the market and received an email from N Real Estate on 14 May 2024 as to a recent sale which prompted him to instruct his solicitors to propose a single expert valuation. The delay between 14 May 2024 and 1 July 2024 is said to be explained by various matters going to the availability of experts, the taking of time to obtain quotations and various other matters that, so it is said, diverted attention from the issue of the appointment of a single expert.
The affidavit asserted the wife had been on notice of the proposal to obtain single expert evidence since 1 July 2024 and that the reports, when received on 26 July 2024, were immediately disclosed to the wife.
Notwithstanding the contentions advanced in the solicitor’s affidavit, senior counsel for the husband submitted the necessity for the evidence related to the wife’s allegation of fraud, which was raised for the first time on 24 April 2024, albeit contending that it had some peripheral relevance to other issues.
Senior counsel for the wife responded that the basis of the fraud allegation was not that the husband knew the true value of the land, but rather he knew that real estate agents had expressed to him what they considered to be its value. The true value was not a relevant consideration and thus the single expert evidence was not relevant to an issue in the proceedings. He further contended that there were various defects in the reasoning of the expert which went to its admissibility.
DISCUSSION
Part 7.1 of the Rules deals with experts. The purpose of the Part is recorded in r 7.02 which is cast in the following terms:
The purpose of this Part is as follows:
(a)to ensure that parties obtain expert evidence only in relation to a significant issue in dispute;
(b)to restrict expert evidence to that which is necessary to resolve or determine a proceeding;
(c)to ensure that, if practicable and without compromising the interests of justice, expert evidence is given on an issue by a single expert witness;
(d)to avoid unnecessary costs arising from the appointment of more than one expert witness;
(e)to enable a party to apply for permission to tender a report or adduce evidence from an expert witness appointed by that party, if that is necessary in the interests of justice.
An examination of r 7.02 reveals that expert evidence is only to be obtained in relation to a significant issue in dispute, where it is necessary to resolve or determine the proceedings and that where practicable, so long as the interests of justice permit, it is to be given by a single expert.
The affidavit of the husband’s solicitor makes plain that the husband had determined well prior to the commencement of the first hearing, as a consequence of matters contained in the wife’s affidavit, that there was an issue (as far as he was concerned) that required expert evidence. The wife’s affidavit was filed on 16 January 2024 with the matter initially listed for a final hearing on 6 March 2024. I do not accept that there was not sufficient time between those dates to make an application for a single expert. Beyond the assertion that there was not sufficient time, no other explanation was advanced as to why the husband did nothing. I am satisfied that the husband must have made a tactical decision to do nothing.
On 6 March 2024, the proceedings were adjourned over the objection of the parties in circumstances where the Court determined that it was not appropriate that there be a bifurcated hearing dealing with just the s 79A allegations. At no time during the course of submissions in relation to a consideration of adjourning the hearing was it advanced by the husband that the matter required the appointment of a single expert. Once it was clear that the Court was going to adjourn the matter of its own motion, the husband did not raise as an issue the necessity for appointment of a single expert. In that respect, he remained mute.
It is clear that he again did nothing between 6 March 2024 and 1 July 2024, a period of nearly four months, in raising the issue of the appointment of a single expert. Nor did he act diligently once he knew the wife opposed the application on 4 July 2024.
Senior counsel for the husband submitted that the evidence was relevant to the fraud contentions raised for the first time in the Further Amended Points of Claim filed 24 April 2024. If it be the case that the broadening of the issues to now include fraud heightened the importance of the evidence, the history referred to above demonstrates the dilatory approach of the husband on this issue in doing nothing about it for a further ten weeks until a letter was sent on 1 July 2024.
The husband has not acted promptly in relation to the bringing of this application. More substantially, I am not satisfied it is relevant to an issue that I have to determine or necessary to resolve or determine the proceeding. In that respect, r 7.02 draws the Court’s attention to the necessity for expert evidence in relation to a significant issue in dispute and/or where it is necessary to resolve or determine the proceedings.
The issue in dispute, as articulated by the wife’s senior counsel in so far as the fraud allegation was concerned, is not whether the husband knew the true value of the property but rather that agents had expressed to him what they considered to be its value which he at no time disclosed to the wife. In that respect, as senior counsel for the wife made plain, the true value was not an issue in the fraud case. It was not submitted by the husband’s senior counsel in light of that submission how the evidence was necessary to resolve or determine the proceeding.
Expert evidence is to be adduced principally by way of single experts. The husband has been dilatory having sat on his hands and done nothing for months. I am not satisfied that it is relevant to a “significant issue in dispute” or has the “necessary” quality as required by r 7.02 requires. That it may have some peripheral relevance to other issues does not elevate it to a “significant issue” or being “necessary to resolve or determine the proceedings.”
These are my reasons for refusing the husband’s application.
THE WIFE’S SUBMISSIONS
The wife in her Case Outline encapsulates her case in the following terms:
2.On 7 December 2022, the Applicant filed an Initiating Application (amended by her second further Amended Initiating Application filed on 24 April 2024) by which she seeks to set aside the Final Orders made by the consent of the parties on 16 September 2022.
3.The Application relies upon section 79A(1)(a) of the Act, on the basis that there has been a miscarriage of justice by reason of the Respondent’s:
a.conduct that amounts to fraud within the meaning of section 79A;
b.suppression of evidence, including failure to disclose information highly relevant to the value of the asset pool, and the giving of false evidence;
c.conduct that amounts to duress within the meaning of section 79A;
d.conduct that fits within the category of “other circumstances” for the purposes of section 79A.
4.The Respondent engaged in conscious wrongdoing by his conduct. It was brazen and deceptive conduct, and resulted in him achieving 64% of the matrimonial pool as opposed to the agreed approximate equal division.
While the Case Outline contended reliance upon “other circumstances”, this seemed to be abandoned by the time of submissions as it did not feature in the Outline of Submissions. During submissions, senior counsel for the wife abandoned reliance on duress.
The wife’s case pivots off a number of factual contentions relating to the Units. Those factual contentions in so far as they relate to fraud, suppression of evidence or the giving of false evidence broadly included the following:
(1)On 12 August 2021, the parties received a valuation of the Units undertaken by O Valuers that valued Unit 1 at $5,500,000 and Unit 2 at $4,600,000 (Exhibit 8).
(2)On 6 September 2021, the husband received from N Real Estate a market appraisal of the Units which provided a range of estimated sale prices for Unit 1 at an average of $8,421,467 and for Unit 2 at an average of $6,361,667 (Exhibit 6).
(3)The husband never disclosed the market appraisal.
(4)The husband, from at least late March or April 2022 was engaged in a process of arranging the listing of the Units for sale upon the making of final orders including have solicitors prepare contracts, liaising with real estate agents, agreeing as to sales commissions, received sales agency agreements and signing sales agency agreements.
(5)The husband never disclosed to the wife that he was engaged in a process of putting in place arrangements to sell the Units with the agents who had provided a market appraisal at well in excess of what they had been valued.
(6)The husband advised the wife that one of the tenants had vacated one of the Units and that the loss of rent would affect any distribution (Exhibit 30).
(7)The husband did not ever advise the wife that the Unit had been subsequently leased despite an order requiring him to advise of the entering into of a new lease (Exhibit 99).
(8)That in at least a six-month period prior to the making of orders, the husband by text and email made various threats to withdraw from a settlement or go to court with the intent of pressuring the wife to sign terms of settlement.
(9)That the husband made various disparaging comments about the wife’s lawyers with the intent of undermining her confidence in her lawyers.
(10)A representation made by the husband in the joint letter to the Court seeking the approval of the Consent Orders (Exhibit 41) was false and amounted to the giving of false evidence. The false evidence was:
16.The Husband contends that the overall division is more in favour of the Wife and that there is no agreed schedule although he agrees that all assets and superannuation interests of the parties have been identified in the Schedule of Effect relied upon by the Wife however, he contends that there will be additional liabilities that have not been included in the Schedule.
Her senior counsel submitted in the wife’s Outline of Submissions as follows:
38.The fact that the Husband was armed with the knowledge he had as to the value at which he had authorised [N Real Estate] to sell these two […] units, in excess of $17 million, and the inference to be drawn from the Sales Inspection Reports that the Husband believed it was appropriate to ‘go to the market’ with such value and seek offers for those amounts, informs the falsity of the Husband’s contention that the “overall division is more in favour of the Wife”.
39.The Husband could not have believed that to the be true. He withheld this not just from the Wife but also from the Court. His understanding of the realistic value of the marital pool, such that the deal that the Wife was entering into was, on no view of it, more favourable to the Wife. It was less favourable. That letter was as much an attempt to hoodwink the Wife as it was an attempt by the Husband to hoodwink this Court.
THE HUSBAND’S SUBMISSIONS
The husband’s senior counsel submitted that the market appraisal (Exhibit 6) was not a discoverable document and relied upon a decision of Chisholm J in Andersonv Anderson (2000) FLC 93-016 (“Anderson”) cited with approval by the Full Court in Lane v Lane (2016) FLC 93-699.
He further submitted in the Outline of Submissions that the parties had been involved in:
5.… “protracted and difficult negotiation between September 2021 and September 2022…At various times in the negotiation’s different permutations of assets and cash were debated in offers. The disputed [Suburb D] Units, … were in some proposals to be divided one each to the applicant and respondent. Ultimately the settlement has the applicant receiving cash of 9.3 million and the respondent took assets; and having adopted that resolution the respondent needed to borrow or sell an asset to pay the applicant. On such a settlement the respondent assumed all the risk as the property values and was obliged to pay the capital gains tax. As matters transpired the Units were sold after the consent orders and sold for more than was expected.
He submitted that the evidence revealed that the wife knew the Units were worth more than the valuers has valued them at and understood the risks, which was one of the reasons why she wanted cash rather than one of the Units.
In relation to any threats, the husband submitted in his Outline of Submissions, that:
6.Both parties were represented during the settlement negotiations, and all communications directly between the litigants were in text or email…The communications between the applicant and respondent should be understood as no more than a litigant encouraging a compromise to avoid further legal costs being incurred and seeking to avoid delay which may have had the effect of risking assets reducing the value. Such communications from the respondent were understandable in circumstances where the applicant was to receive a cash payment, and the respondent assumed the risk on the real property values reducing and capital gains tax.
During 2021 and 2022, the husband engaged financers in relation to his capacity to raise funds to settle the property proceedings. Senior counsel submitted that what the husband did was merely prepare for the possibility of selling one or both Units in the event it was necessary to fund the property settlement.
In relation to the lease of one of the Units, senior counsel submitted that the husband had previously emailed the wife about resigning a lease with a 30 percent uplift (Exhibit 24), the wife had not responded, and he submitted had shown no interest in the releasing of the property. Further, the husband submitted that the lease was only for nine months and denied that not registering the lease was an attempt to breach his duty of disclosure.
As to the assertion of “the giving of false evidence” by reference to Exhibit 41, the husband’s senior counsel submitted that the Schedule of the Effect of the Orders which formed part of Exhibit 41 did not represent an agreed position as to value and did not include liabilities that were to be borne solely by the husband.
His senior counsel submitted that the offers of the husband to give the wife one of the Units during the negotiations subsequent to September 2021 demonstrate the frailty of the allegation as to fraud.
DISCUSSION
Parties to financial proceedings are bound by a duty to disclose matters that are relevant to the proceedings. Such disclosure obligation is set out in the Rules.
In that respect, r 6.01 provides as follows:
6.01 General duty of disclosure
(1) Subject to subrule (4), each party to a proceeding has a duty to the court and to each other party to give full and frank disclosure of all information relevant to the proceeding, in a timely manner.
Note: The proceedings to which the duty of disclosure applies include both parenting proceedings and financial proceedings. Failure to comply with the duty may result in the court excluding evidence that is not disclosed or imposing a consequence, including punishment for contempt of court.
(2) The duty of disclosure applies from the start of the proceeding and continues until the proceeding is finalised.
Note: Parties are also expected to comply with the duty of disclosure when complying with the pre-action procedures.
(3) The duty of disclosure also applies to a litigation guardian appointed under Part 3.5.
(4) This rule does not apply to a respondent to an application alleging contravention or contempt.
In Nagel & Clay (2020) 60 Fam LR 550, Harper J observed in the following terms:
76.The duty of disclosure is fundamental in all proceedings under the Act. It is not some hollow guideline to which perfunctory lip service can be paid. Numerous financial cases have made this point. In Waterman & Waterman (2017) FLC 93-762 at [32] – [33] the Full Court emphasised that the duty to disclose is a duty owed “both to the other party and to the court” and endorsed the comment of the Full Court in Morrison & Morrison (1995) FLC 92-573, at 81,670 that “Ordinarily, a failure to comply with that duty will amount to a miscarriage of justice” …
(Original emphasis)
The duty of disclosure is absolute and a continuing obligation throughout the litigation to the point of judgment. It does not relate simply to documents but includes information pertinent to the proceedings.
A failure to disclose goes to the very heart of the Court’s obligation to make a determination that is just and equitable. In Morrison & Morrison (1995) FLC 92-573 (“Morrsion”), the Full Court at 81,672 observed:
We take this opportunity once again to reinforce the view that duty of disclosure is a basic duty. Ordinarily, a failure to comply with that duty will amount to a miscarriage of justice. In saying that, however, we adopt (with slight modification) the words of Lord Brandon in Livesey v Jenkins at 119 where His Lordship said:
“I would end with an emphatic word of warning. It is not every failure of frank and full disclosure which would justify a court in setting aside an order of the kind concerned in this appeal. On the contrary, it will only be in cases when the absence of full and frank disclosure has led to the court making, either in contested proceedings or by consent, an order which is substantially different from the order which it would have made if such disclosure had taken place that a case for setting aside can possibly be made good. Parties who apply to set aside orders on the ground of failure to disclose some relatively minor matter or matters, the disclosure of which would not have made any substantial difference to the order which the court would have made or approved, are likely to find their applications being summarily dismissed, with costs against them ...”
Rather than use His Lordship's test of “the order which it would have made”, we would suggest the test is more properly expressed as “the order which it might have made”.
(Original emphasis)
The husband contends that Exhibit 6 was not a document that the husband was required to disclose, contending that it did not fall within r 6.06(3)(b). He submits that r 6.06(3)(b) required “disclosure of ‘any vested or contingent interest in property’” (Case Outline of husband filed 5 August 2024, paragraph 21). He submitted that a market appraisal and preliminary communications about future steps to sell did not disclose any interest in the property. Nor were such communications within r 6.06(3)(g), as “no ‘disposal of property … made by the party’ had occurred” (Case Outline of the husband filed 5 August 2024, paragraph 21). The husband submits that “the focus of ordinary financial disclosure under the rules, absent specific order or request, is on the disclosure and identification of assets” and that a market appraisal “is no more than an inadmissible opinion which identifies a range of comparable recent sales. It would not ordinarily be a relevant and disclosable document” (Case Outline of the husband filed 5 August 2024, paragraph 22–23).
The respondent also submitted that consistent with the observations of Chisholm J in Anderson, the market appraisal was not a disclosable document and not disclosing it did not amount to a suppression of evidence. I am not satisfied that Anderson has any application to this case. His Honour’s determination in that case rested upon notions of legal professional privilege attaching to a valuation. Here, no such privilege attached to Exhibit 6.
I do not accept the contentions advanced on behalf of the husband. The Rules could not be clearer. Rule 6.01 provides that “each party to a proceeding has a duty to the court and to each other to give full and frank disclosure of all information relevant to the proceedings in a timely manner”. It is not limited in the terms circumscribed by the husband’s senior counsel. The obligation applies not just to documents but also information relevant to the proceedings.
A relevant issue in these proceedings was the value of the Units. Each of the parties operated on the basis during their negotiations that the valuations they had obtained in May 2020 and again in August 2021 undervalued the Units. Each believed the Units to be worth more. How much more was a relevant issue. Any document or information that could inform a decision about value was a relevant matter in the proceedings and was required to be disclosed.
The husband well knew that the information contained in Exhibit 6 was information that the wife would have wanted to know. As much is clear from the content of his affidavit referred to below. The husband made a deliberate decision to deprive her of that information. The information known solely by the husband came to his attention on 6 September 2021 with the parties to attend a mediation approximately six weeks later.
In relation to that mediation and the appraisals, the husband said the following:
69.On 26 October 2021, the Court Ordered mediation took place after provisions of the valuations of [Suburb J] and the Units. Just prior to this mediation I received an email from [Mr P] about his rough appraisal of the Units. I did not provide this appraisal to [Ms Barbieri]. I did not do this because:
69.1[Mr P], an agent of [N Real Estate] had been chasing the sale of the Unites for sometime. [N Real Estate] sold one of the other Units during the relationship and I was aware that he wanted the sale if there were others that had to be sold. I took his appraisal with a grain of sale and treated it like a sales pitch, given that it was received so close to the valuations of the Units I thought it was inflated to the point of being ridiculous.
…
69.3I did not wish to derail the mediation. I was concerned that [Ms Barbieri] may not have seen how [Mr P’s] commercial interest may have influenced his appraisal provided. I was also concerned that this new information may compromise the impending mediation as [Ms Barbieri] would use it as another excuse that alleged inadequate disclosure had been provided by me.
It was not for the husband to decide what the wife could or could not do with information or what the wife could or could not know. The above paragraph makes it clear that the husband not only knew that the market appraisal was information that would inform the wife as to the value of the Units, but that he feared what she might do with the information. This demonstrates that he well knew both the relevance of the information to the proceedings and the significance the wife might place upon it.
The market appraisal provided information to the husband. He could choose to act on it or reject it. His subsequent conduct demonstrated that he acted upon it. He could not however deprive the wife of that same right. By deciding not to disclose that document and the information that it contained to the wife, he deprived the wife of information relevant to making her own determination as to what she wanted to do with the property and as to the value of the property. Disclosure of the appraisal to the wife might in circumstances where she considered the valuations to be “undervalue” put her on a chain of enquiry as to the value or to even suspend negotiations until a sale of the Units. The husband had a duty of disclosure even where he thought the appraisal was “ridiculous” (affidavit of husband filed 11 July 2024, paragraph 69.1).
I also reject the submission that because it was an appraisal it was not relevant to value. On two earlier occasions during the proceedings, he had provided appraisals to the wife (affidavit of husband filed 11 July 2024, paragraphs 35 and 47). Clearly, he regarded market appraisals as both relevant and disclosable.
An examination of Exhibit 6 reveals that it was the husband who sought out N Real Estate to provide him the information. The clear inference arising from the first paragraph of the email of 6 September 2021 is that N Real Estate are responding to a request emanating from the husband as “to the anticipated sale value” of the Units. The husband agreed in cross examination that he included his current spouse in his responses to N Real Estate. He clearly regarded it as relevant to include his current spouse but not his former wife.
Exhibit 9, being the husband’s response to N Real Estate to which his spouse is included, clearly refers to the upcoming mediation when it records “as discussed due to extenuating circumstances currently we are hoping to be in a position for clarity by late October hence why we cannot make a plan”.
I am satisfied that the husband failed to disclose to the wife relevant information to the proceedings as contained in Exhibit 6.
During the course of the husband’s cross examination, he agreed that it was a failure of disclosure in not informing the wife that he had intended on putting the Units on the market and was taking active steps to do so. The highest his disclosure ever got was that he might have to sell to meet the payment to the wife.
I am satisfied that the husband only ever intended to sell once he had a settlement with the wife and he was ensured of keeping the benefit of the proceeds of sale. I am also satisfied that the husband, informed by the information set out in Exhibit 6 and once it was clear that an agreement had been reached in principle that he was to retain all of the Units, set in train a process of events to sell at least one if not both of the Units but only after orders had been entered into. That he might have investigated obtaining finance is irrelevant to the obligation to disclose the fact of engaging agents and solicitors to list the Units at a certain price informed by the market appraisals known only by him.
I do not accept the evidence of the husband that he did not engage N Real Estate until 18 September 2022 (affidavit of husband filed 11 July 2024, paragraph 172) or the submission of his senior counsel that the husband “did not engage [N Real Estate] to list the Units for sale until 19 September 2022” (Case Outline of husband filed 5 August 2024, paragraph 12). To the extent that the husband represented that fact in his material, it did not represent the whole truth.
My conclusion is informed by the following findings:
(a)On 24 March 2022, the husband’s solicitor sends an offer of settlement which includes him retaining both Units with a cash payment to the wife (affidavit of wife filed 16 January 2024, paragraph 57).
(b)On 31 March 2022, N Real Estate contacted the husband with a marketing proposal and say the following:
[Mr Barbieri] – Good to talk again yesterday. Please see attached our proposed marketing schedule, and we have also attached the items that we will cover. We have also attached two current sale campaign IMS for your review… As discused we are very interested in working with you on this campaign and will not lose this opportunity over a fee. Let’s talk again when you are ready.” Husband responded the same day thanking [N Real Estate] for their assistance and advising he would be in touch hopefully within the next 70 days.
(Exhibit 12)
(c)On 31 March 2022, the wife accepts the husband’s offer of 24 March 2022 but seeks to increase the cash component (affidavit of wife filed 16 January 2024, paragraph 60)
(d)On 1 April 2022, the husband agrees to N Real Estate’s commission for the sale of both units. The email records the following:
Further to our chat Subject to the market should we proceed shortly in the sale of both properties yes 1.1% including GST. I would expect this could be within 14 days.
(Exhibit 13)
(e)The husband’s solicitor responds increasing the cash offer to $9,100,000 and agreeing to an order for default sale of one of the Suburb D Properties in the event the cash was not paid on time (affidavit of wife filed 16 January 2024, paragraph 64).
(f)N Real Estate sends an updated marketing schedule for the Units (Exhibit 14).
(g)On 22 April 2022, the husband asks his solicitor for a quote for legal fees for the Units (Exhibit 15).
(h)On 25 May 2022, the husband’s solicitor responds to draft orders proposed by the wife asserting the husband should be allowed to sell one or both units to pay out the wife but that he should not need her consent to do so, describing it as an attempt to financially control the husband (Exhibit 16). The husband does not disclose that he had agreed terms with N Real Estate or engaged solicitors to prepare contracts.
(i)On 26 May 2022, the wife’s solicitor agrees to remove any restraint on the husband selling Unit 1 “provided there is full transparency from your client; and the agent and lawyer acting on the sale are instructed to keep our client informed” (Exhibit 17). Such a request for transparency is ignored.
(j)On 31 May 2022, the husband’s conveyancing solicitor provides contracts for the sale of Unit 1 and Unit 2 (Exhibit 19). Despite the wife’s request for full transparency, the contracts are not sent to her. The contracts are however sent to N Real Estate (Exhibit 20)
(k)On 28 July 2022, the husband emails S Accountants “we need to talk again about tax implications when selling the [Units]” (Exhibit 34).
(l)On 31 July 2022, the husband represented to the wife by email “valuations [Units] together $10m” (Exhibit 35). At paragraph 75A of the Amended Defence to Further Amended Points of Claim, the husband admits to sending this email. The husband elects not to inform the wife what N Real Estate estimate the sale price to be.
(m)On 9 September 2022, the husband received draft information memorandums from N Real Estate for the sale of the Units (Exhibit 36).
(n)On 13 September 2022, the husband received a sales agency agreement from N Real Estate identifying that the Units are to be offered at $17,500,000 and that the agent’s opinion is that “current estimated selling price is $17,500,000” (Exhibit 37).
(o)On 13 September 2022 at 12.03pm, the husband instructed N Real Estate to prepare two separate agency agreements for each of the Units “for legal reasons” (Exhibit 38).
(p)On 13 September 2022, the husband received sales agency agreements with N Real Estate for Unit 1 and Unit 2, with a listing price of over $10,000,000 and $7,000,000 respectively. At paragraph 82 of the Amended Defence to Further Amended Points of Claim, the husband admits receipt of an Agency Agreement.
(q)On 13 September 2022, the husband writes to his solicitor saying he is “awaiting court stamp this week and progressing to sell hopefully immediately” (Exhibit 39).
(r)On 13 September 2022, consent orders are sent to the Court. The orders provide in the event of the husband defaulting in a payment to the wife then pursuant to Order 38, Unit 2 was to be sold with a listing price of not less than $4,600,000, “unless otherwise recommended in writing by the agent” (Exhibit 41). The husband had already been advised of the agent’s recommendation for listing at a price substantially in excess of that amount.
I am satisfied that the husband had, by late March or early April 2022, set upon a path to sell the Units and failed to disclose that fact to the wife. I find that he was proposing to sell the Units in line with the market appraisals he had obtained in September 2021. It was an egregious and deliberate failure on his part to not disclose that he was selling the Units through N Real Estate. Had it been disclosed, it would also have disclosed the fact of the market appraisal.
I place no weight on the submission of the husband that the wife agreed to a settlement where she took cash, and the husband took all the risk. The risk taken by the husband such as it was, was informed in part by information that he had failed to disclose. I accept the submission that the wife knew the units were undervalued. However, what the wife did not know, and the husband did know, was that N Real Estate had advised him that in their opinion the selling price was significantly over the valuation. I place no weight on the husband’s contention that he regarded the appraisal as ridiculous. He did not regard it as so ridiculous such that he retained a different agent to sell the Units or have them listed at a price below the “ridiculous” recommendation in circumstances where the proceeds were to be used to fund the payment to the wife.
Nor do I accept the submission of the husband’s senior counsel that the husband was merely preparing for the possibility of a sale. The findings I have made demonstrate that it was no mere possibility but an actuality that they were to be sold, but only after orders had been made and he was secured of retaining the benefit to the exclusion of the wife.
On 27 April 2021, Rees J made a series of orders, one of which was to the following effect;
16.3.Not less than 7 days prior to signing a new lease (or renewing a lease) or agreeing to any capital expenditure to either Unit 1 [C Street] and Unit 2 [C Street] the husband will provide to the wife copies of all emails, proposed leases and other documents;
In early 2022, the tenants of Unit 1 give notice of intention to vacate in mid-2022. The husband advised N Real Estate of this the next day.
On 11 July 2022, the husband’s solicitor advises the wife’s solicitor for the first time saying, “it is noted that one tenant, Unit 1, has recently give[n] notice and the vacation of this tenant will likely impact the ability of the parties to meet the interim distribution of funds” (Exhibit 30). Notice had not been given recently; the husband had known for nearly three months.
In mid-2022, the tenant signs a new lease (Exhibit 33). In breach of Order 16.3, the husband never advises the wife that a tenant signs a new lease. I do not accept senior counsel for the husband’s submission that the wife had shown no interest in the releasing of the property or that in some way the term of the lease or the fact that it was not registerable was not a relevant consideration. The wife had the benefit of an order and an expectation that the husband would comply with it. The husband was bound both by a duty of disclosure and a Court order to disclose and failed to do so. I am satisfied that his failure to comply with the Order was part of a continuing failure to make a full and frank disclosure.
I am satisfied that the husband had a duty to disclose all of the documents and information referred to above and failed in his discharge of that duty.
SECTION 79A(1)(a)
Section 79A is remedial and is intended to be construed liberally to give effect to its intended purpose, namely, to remedy a miscarriage of justice (Gilbert, C.A. v Estate of Gilbert, R.G. (1990) FLC 92-125).
It is well settled (see Patching and Patching (1995) FLC 92-585) that an application pursuant to s 79A(1)(a) requires an applicant to establish to the satisfaction of the Court the following:
(a)That a ground whether it be fraud, duress, suppression of evidence, the giving of false evidence or some other circumstance exists.
(b)That if a ground is established has there been a miscarriage of justice.
(c)Whether the Court in its discretion should set the order aside.
(d)Whether the Court in its discretion should make another s 79 order.
Fraud
To establish fraud, the wife must demonstrate on the part of the husband some “conscious wrongdoing or some form of deceit” (Kokl and Kokl (1981) 7 Fam LR 591 at [598]).
In Green and Kwiatek (1982) FLC 91-259, the Full Court considered the meaning of fraud in the context of an agreement under s 87(6) of the Act. Their Honours observed at 77,456 as follows:
The definition of “fraud”, both equitable and in common law has been well settled since the celebrated definition of Lord Herschell LC in Derry v Peak (1889) 14 A.C. 337 at p.374. The learned trial judge restated that definition in the following terms:
“Fraud in this context consists of a false statement of fact which is made by one party to a transaction to the other knowingly, or without belief in its truth, or recklessly, without caring whether it be true or false, with the intent that it should be acted upon by the other party and which was in fact so acted upon.”
There is no difference in the meaning of fraud under s 87 of the Act to that used under s 79A.
I have no doubt that the husband was motivated to conclude the settlement negotiations which he felt had been going on interminably. The husband was cross examined at length about some of his emails and text messages sent to the wife. He agreed that some of them could be interpreted as trying to put pressure on his wife while others could be construed as a threat. He agreed he made disparaging comments about the wife’s solicitor which I am confident were made with the aim of undermining the wife’s confidence in her solicitor.
The husband also informed the wife that a tenant had vacated with the consequence of a potential impact on the capacity to make an interim distribution, but never told her that two weeks later a lease had been signed at a much higher rental. While I am satisfied that the wife has established that the husband was prepared to say things to achieve a settlement and failed to make a full and frank disclosure, I am not satisfied that the wife has established that the husband’s conduct could be described as deceitful.
I am not satisfied that the wife has established a ground based on fraud.
Suppression of Evidence (including failure to disclose relevant information)
In Official Trustee in Bankruptcy v Bryan & Gatenby (deceased) (2006) FLC 93-258 Young J observed:
106.Suppression of evidence is the wilful concealment of matters where it is the duty of one or both parties to disclose that information to the court. This duty of accurate and proper disclosure applies both in contested proceedings and in consent orders. A party must not knowingly create a false impression or allow the court even on the making of consent property orders, to draw a false inference. In the marriage of Kokl (1981) FLC 91-078. A party must not deliberately conceal evidence which should be before the Court although there is no obligation to put evidence which would advance the interest of the other party.
In Suiker and Suiker (1993) FLC 92-436 the Full Court said at 80,471:
…the consent to an order must be informed consent. The consent to the order is itself part of the judicial process on which the Court places reliance. If that consent is based on misleading or inadequate information, and there may be, in our opinion a miscarriage of justice either by reason of the “suppression of evidence’ or by reason of “any other circumstance’.
I am comfortably satisfied for the reasons given above that the husband failed in his obligation of disclosure and consequently the wife has established this aspect of a ground under s 79A(1)(a) that the husband suppressed evidence that he was required to disclose.
Giving of False Evidence
The wife’s case in this respect relied upon representations made by the husband in the joint letter prepared by the parties’ solicitors that was presented to the Court in support of the making of the orders.
In Taylor v Taylor (1979) 143 CLR 1 Mason J observed that “the words ‘false evidence’ in s 79A (1) do not mean evidence which is wilfully false. The subsection should be read according to its terms” (at 13).
The Full Court in T & T [2003] FamCA 1066 in the context of an application to set aside consent orders observed:
149.Although we need make no definitive ruling about it, there does appear to be significant substance in the submissions on behalf of the appellant that this section is aimed at enabling the Court to set aside a decision it has made where that decision has been based on evidence that proves to be untrue.
150.It cannot be said that in this case the orders that were made in 1996 followed the giving of any evidence whatsoever. It would seem in those circumstances that a finding that the making of the orders relied upon the giving of false evidence was unlikely to be open to the trial Judge
The NSW Court of Appeal in Crowe-Maxwell v Frost (2016) 91 NSWLR 414, affirming the approach in Randwick City Council v Fuller (1996) 90 LGERA 380 at [382], opined that:
52.Subject to some statutory provision dispensing with the rules of evidence, a court, in determining a dispute between parties, is required to act only on evidence given on oath by witnesses; any documentary evidence tendered in the case; such facts as are agreed by the parties for the purpose of the proceedings; and any concessions made by a party in the course of the proceedings. Subject to any acquiescence by the opposing party, a submission does not have the status of evidence: Randwick City Council v Fuller (1996) 90 LGERA 380 at 382; [1996] NSWCA 444.
The subsection refers to the giving of false evidence. In this instance, no evidence was given.
I am not satisfied that the wife has established that the husband gave false evidence.
Conclusion
I am, for the reasons given above, not satisfied that the wife has established either fraud on the part of the husband or that he gave false evidence. I am however satisfied that the wife has established that the husband failed to disclose relevant documents and information and consequently there was a suppression of evidence.
Miscarriage of Justice
Establishing a ground under s 79A(1)(a) is of itself insufficient. The wife must establish that it gave rise to a miscarriage of justice.
The expression ‘miscarriage of justice’ has been interpreted to mean that an order has been unjustly obtained (see Holland and Holland (1982) FLC 91-243). The phrase concerns the integrity of the judicial process.
In Barker & Barker (2007) 36 Fam LR 650 the Full Court observed as follows:
120.A miscarriage of justice under s 79A(1)(a) will occur if circumstances exist which “for some significant reason, make the order contrary to law and justice according to law as it relates to the integrity of the judicial process [original emphasis]” (Bigg v Suzi (supra) at 84,982). See also Suiker (supra); Public Trustee (as executor of the estate of Gilbert) v Gilbert (supra)). Whilst cases such as Suiker (supra), Holland v Holland (1982) FLC ¶91-243 and Gebert v Gebert (1990) FLC ¶92-137 indicate that the words “miscarriage of justice” should not be construed narrowly and the phrase “integrity of the judicial process” should not be taken only to refer to the hearing in the court, the circumstances creating the miscarriage must nevertheless have been such as to have had an influence on the outcome of the litigation…
Having earlier observed as follows:
113.We note further what was said by Thorpe LJ in Burns v Burns [2004] EWCA Civ 1258; (2004) 3 FCR 263 at 267 that the effect of the decisions in Robinson v Robinson [1982] 2 All ER 699; [1982] 1 WLR 786 and Livesey v Jenkins [1985] 1 All ER 106; [1985] AC 424 is “to establish clearly that if a party is in breach of the duty of candour, whether by actively presenting a false case or passively failing to reveal relevant facts and circumstances, then the court has the power to set aside the order and do justice, whether or not the order was made by consent.
I am satisfied that there has been miscarriage of justice by reason of the failure to disclose relevant information and documents. What the wife consented to was not informed consent by virtue of the husband’s deliberate non-disclosure and consequently the order was “unjustly obtained”.
Should the Orders be set aside
The Court retains a discretion as to whether it should vary or set aside the orders. The section provides no guidance as to the matters the Court should consider in the exercise of its discretion.
In Prowse and Prowse (1995) FLC 92-557 the Full Court described it in terms of whether “it was nevertheless just, in all of the circumstances, as an exercise of judicial discretion, to allow those orders to stand” (at 81,565).
I am satisfied that it would not be just to allow the orders to stand and that the orders should be set aside. It is clear that the husband failed to disclose relevant documents and information that should have been made available to the wife such as to occasion a miscarriage of justice. While the wife considered that the valuations undervalued the Units, she had no other information available to her to form a view as to value when compared with the husband who did.
The wife gave evidence that she would not have signed the orders had she known what the husband knew.
The husband’s counsel submitted that the effect of the orders was that the assets were ultimately held as to 55.4–57.5 percent to the husband and that in all the circumstances, including the length of the relationship and the respective contributions, it was a just and equitable result. I am not satisfied that is so having regard to the result achieved. I note that was not the percentage division the wife understood that she had agreed to.
I am satisfied that the non-disclosure which led to the miscarriage of justice led the court to make orders which are substantially different to those that it might have made but for the disclosure on the Court’s assessments of the respective contributions and the matters under s 75(2).
For those reasons the orders should be set aside.
APPROACH TO PROPERTY PROCEEDINGS
The approach to be adopted in a financial adjustment case under s 79 of the Act is to follow the well-recognised four-step process (see Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143). Following such an approach, the Court identifies and values the assets and liabilities at the date of hearing for the purposes of division. Secondly, the Court assesses the contributions of the parties within the meaning of s 79 of the Act and determines a contribution-based entitlement. Thirdly, the Court identifies the relevant matters under s 75(2) and determines such adjustment as is necessary to the contribution-based entitlement. Finally, the Court considers the effect of the findings and must then determine whether the order as proposed is in all the circumstances just and equitable.
I am satisfied having regard to what the High Court said in Stanford v Stanford (2012) 247 CLR 108 that it is just and equitable that another order be made adjusting the property interests of the parties. The parties had invited the Court previously to adjust their property interests on the basis of certain assumptions, that order will be set aside. I remain of the view consistent with the view previously held in 2022 that it is just and equitable to consider making an adjustive order given how the property of the parties is currently held, given how that came about and having regard to the matters under s 79 referred to by them in their affidavits and expanded on in more detail later in these reasons.
BALANCE SHEET
The parties’ assets and liabilities were captured in Exhibit 97. The parties are at issue as to the inclusion and value of a number of items.
Exhibit 97, as amended by the re-opening, records as follows:
BALANCE SHEET 22 August 2024 Estimated Value ASSETS Current Ownership Wife Husband 1 T Street, Suburb U W $3,800,000 $3,800,000 2 V Street, Suburb W (joint tenants with Ms G) H $3,860,000 $1,930,000 3 1 X Street, Town Y Qld H $78,432 $39,216 4 NAB Account #...85 W $6,637 $6,637 5 Z Bank Account #...81 W $7 $7 6 Z Bank Account #...10 W $0 $0 7 AA Bank Account #...51 W $39 $39 8 AA Bank Account #...60 W $0 $0 9 BB Bank Account #...24 W $32 $32 10 CC Bank Account #...94 W $77 $77 11 Edwards Moloney Family Law Trust Account W $280,474 $280,474 12 Russell Kennedy Trust Account balance H $54,648 $54,648 13 Z Bank Investment Cash #...81 H $52,976 $52,976 14 Z Bank Account #...52 H $3,798 $3,789 15 Z Bank Account #...11 H and Ms G $2,645 $1,323 16 Westpac Choice (x…07) H and Ms G $3,000,136 $3,000,136 17 Shares H $76,622 $76,622 18 DD Investments account no. x…88 H NIL NIL 19 Z Bank Account x…06 W NIL NIL 20 Z Bank x…81 Cash Account W $0 $0 21 Z Bank Shares (x…56) H $290,945 $290,945 22 Ms Barbieri Family Trust W 23 EE Bank Account #...71 $10,573 $10,574 24 EE Bank Cash Account #...98 $2,807 $2,807 25 EE Bank Portfolio (excl. cash account x…98) $885,189 $885,189 26 FF Pty Ltd H 27 Z Bank Business Account x…00 $3,422 $3,469 28 Q Finance share portfolio $1,115,829 $1,115,829 29 Loan to Mr Barbieri $196,526 $196,526 30 Sundry Creditors ($2,750) ($2,750) 31 Motor Vehicles and Other 32 Motor Vehicle 1 H $0 $0 33 Motor Vehicle 2 H $0 $0 34 Motor Vehicle 3 Ms G $63,475 $0 35 Motor Vehicle 4 W $70,075 $70,075 36 Motor Vehicle 5 W $0 $0 37 Jewellery W $70,000 $70,000 38 Household contents H $10,420 $10,420 39 Household contents W $21,580 $39,500 40 Suburb J Furniture W $0 $0 41 3 bottles wine W $1,860 $1,860 42 Wife’s personal items W $0 $0 43 Wine collection H $1,860 $1,680 44 45 46 Total Assets $13,958,334 $11,942,100 47 48 ADDBACKS Current Ownership Wife Husband 49 Post separation travel expenditure for the period February 2018 to July 2024 H $450,000 $0 50 Post separation expenditure on step child for the period 5 April 2019 to 30 July 2024 H $102,934 $0 51 Post Separation payments to Ms G’s parents for the period 2 September 2022 to 1 July 2024 H $33,599 $0 52 Gambling Losses from June 2016 to September 2021 H $570,690 $0 53 Gambling Losses from September 2021 to March 2024 H $137,650 $0 54 Cash withdrawn post-separation between 7 March 2018 to 1 July 2024 H $1,336,139 $0 55 Cash withdrawn from joint account post-separation between 18 January 2018 to 17 July 2021 H $217,756 $0 56 Ms G's Legal Costs with RK paid by Husband H $22,073 57 W Fees, interest and charges on GG Finance Loan paid by Wife $41,561 $0 58 Fees paid by Husband on accountant between March 2021 and January 2023 H $0 $0 59 Husband's legal costs H $776,410 $776,410 60 W's Post Separation Expenditure on travel for the period 13 August 2019 to 13 September 2023 W $0 $0 61 W Legal Fees paid to Edwards Family Lawyers W $1,303,856 $1,303,856 62 W Accountancy and professional fees by Wife W $38,214 $38,214 63 W Fees, interest and charges on GG Finance Loan paid by Wife W $0 $41,561 64 W cosmetics and beauty W $0 $123,241 65 W share for Valuations for Suburb D Units and Suburb J (x6) during Substantive Proceedings W $0 $9,955 66 67 68 Total Addbacks $5,030,882 $2,293,237 69 70 LIABILITIES Current Ownership Wife Husband 71 Z Bank Visa card W $0 $0 72 AMEX card ending #...07 H $0 $26,606 73 Loan from FF Pty Ltd H $196,526 $196,526 74 Westpac Investment Property Loan (x…54) H $2,997,711 $2,997,711 75 76 77 78 Total liabilities $3,194,237 $3,220,843 79 80 TOTAL PROPERTY EXCLUDING SUPER 81 Total Assets: $13,964,858 $11,942,100 82 Total Addbacks: $5,330,204 $2,493,176 83 Total Liabilities: $3,194,237 $3,220,843 84 Net (Excluding Super): $16,100,825 $11,214,434 85 86 SUPERANNUATION Current Ownership Wife Husband 87 Mr Barbieri Superannuation Fund H 88 Mr Barbieri Superannuation Pty Ltd 89 HH Street, Suburb JJ Queensland (formerly referred to as the Suburb KK Property) $5,175,000 $5,175,000 90 Suburb KK Bond for LL Pty Ltd ($75,050) ($75,050) 91 Selling Agent Commission & Fees for Suburb KK Property ($94,875) ($94,875) 92 CGT on sale of Suburb KK Property ($134,138) 93 Professional legal fees of MM Law Firm for sale of Suburb KK ($8,705) ($8,705) 94 Deposit for 2 X Street, Town Y $64,000 $64,000 95 Deposit for NN Street, Suburb KK $700,000 $700,000 96 Shares in OO Pty Ltd, PP Pty Ltd and QQ Pty Ltd $217,050 $217,050 97 Units in RR Unit Trust and SS Unit Trust $23,484 $23,484 98 ANZ Cash Investment Account #...45 $9 $0 99 Z Bank Business Cheque Account #...54 $55,709 $55,709 100 Sundry Debtors $0 $0 101 Distributions receivable NK $0 102 Q Finance share portfolio $686,630 $686,630 103 TT Finance share portfolio $2,582 $2,582 104 UU Finance Investment Portfolio $1,397,831 $1,397,831 105 PAYG payable $0 $0 106 Sundry Creditors ($10,250) ($10,250) 107 Income tax payable $0 $0 108 Ms Barbieri Superannuation Fund W 109 Ms Barbieri Pty Ltd 110 Z Bank Saver Account #...56 $1 $1 111 EE Bank Account #...06 $18,549 $18,549 112 EE Bank Cash Management #...44 $208,500 $208,500 113 EE Bank Portfolio (excl. cash #...06) $3,037,671 $3,037,671 114 Total Superannuation $11,398,136 $11,263,989 115 116 FINANCIAL RESOURCES Wife Husband 117 118 119 120 TOTAL INCLUDING SUPER Wife Husband Total Assets: $13,958,334 $11,942,100 Total Addbacks: $5,030,882 $2,293,237 Total Liabilities: $3,194,237 $3,220,843 Total Superannuation: $11,398,136 $11,263,988 NET $27,193,115 $22,278,482
The issues in relation to the asset column relate to Items 2, 3, 14, 15, 23, 27, 34, 39 and 43.
Items 2 and 3 are two pieces of real estate held by the husband and his current spouse. The wife includes the value of the property with no regard to the legal title while the husband asserts he only owns half of each of the properties. The evidence reveals that the funds to acquire the properties were provided by the husband through drawings from his superannuation. His current spouse gives no evidence of any direct financial contribution to the acquisition of either property.
Senior counsel for the wife contends that the full value of the asset should be brought to account as otherwise the husband has effectively given away half of the value. It was not seriously pressed that the husband had an equitable interest in his current spouse’s share of the property.
Senior counsel for the husband says that only the husband’s legal interest should be included, that the husband’s current spouse has made financial and non-financial contributions to the property and that no notice of any claim has been given by the wife affecting her legal interest.
I have considered how these irreconcilable positions can be accommodated. The Court is required to have regard to the property of the parties at the time of trial identifying the legal and equitable interests of the parties. An addback is the exception rather than the rule (Omacini & Omacini (2005) FLC 93-218). There might be room to argue consistent with cases such as Townsend and Townsend (1995) FLC 92-569 that the husband’s use of his superannuation to acquire property in the name of his current spouse was a “premature distribution of a matrimonial asset”. While this occurred after s 79 orders had been made, the husband was on notice of the wife’s claim to set the orders aside.
In Trevi & Trevi (2018) FLC 93-858 (“Trevi”), the Full Court observed:
27.The Full Court held in Omacini and Omacini that addbacks fall into “three clear categories”: where the parties have expended money on legal fees; where there has been a premature distribution of matrimonial assets; and “waste” or wanton, negligent, or reckless dissipation of assets.
28.However, the Full Court also made it clear that an addback does not necessarily occur whenever “a party has expended money realised from the disposition of assets that existed as at the date of separation”, the Full Court describing such a proposition as “unduly simplistic”. An earlier Full Court made the same point, saying that adding back is “the exception rather than the rule”.
29.The fundamental precept that addbacks are exceptional, reflected in the decisions just referred to, also mirrors what has been said in earlier decisions of the Full Court that, for example, “the Family Court must take the property of a party to the marriage as it finds it” at trial. An important parallel proposition is that the parties do not “go into a state of suspended economic animation” after separation. Thus, reasonably incurred expenditure does not usually come within accepted categories of addback.
30.Two fundamental premises emerge from Omacini and the authorities preceding it. First, “adding back” is a discretionary exercise. When the discretion is exercised in favour of adding back, it reflects a decision that, exceptionally, in the particular circumstances of a case, justice and equity requires it. The second premise is its corollary: in cases that are not “exceptional” justice and equity can be achieved, not by adding back, but by the exercise of a different discretion – usually by taking up the same as a relevant s 75(2) factor. Indeed, it has been said that the latter is “a course which is, perhaps, technically more correct” than adding back to the list of existing interests in property.
(Footnotes omitted)
I am satisfied that the better approach is to have regard to the fact that the husband’s superannuation has diminished by $1,969,216 by the acquisitions in his current spouse’s name and have regard to that in the consideration of the matters under s 75(2). The balance sheet will reflect the husband’s legal interest.
Item 15 is a reference to the husband’s joint account with his current spouse. There was no examination of the source of funds that went into that account. There is no principled reason why the half share of his current spouse should be added back or considered under s 75(2). I will only include the husband’s half of the bank account.
The parties are apart in relation to items 14, 23, 27 and 43. There were no submissions made about the discrepancy. When one looks at the numbers it may well be that it is entirely a transposition error. I propose to adopt the figure proposed by each party in respect of their property as an admission against interest.
Item 34 relates to a motor vehicle in the husband’s current spouse’s name. The evidence reveals that the husband traded in a car in his name for $70,000 to purchase a car in his spouse’s name. this was the amount the wife ultimately proposed in lieu of the amount it Exhibit 97. Consistent with the approach in relation to the Suburb W property, I will take this into account under s 75(2).
Item 39 represents the difference between the valuation of the wife’s contents and what was said to be various items of furniture purchased subsequent to the date of the valuation. The wife was cross-examined on her home contents and indicated that the valuer valued everything that was in her home. As best as I understand the argument advanced by the husband, both during cross-examination and in submission, it was that there are items purchased and paid for by the wife from a furniture store which were delivered subsequent to the date of the valuation. There was no attempt with precision to identify which items were purchased at the furniture store and were not included in the valuation. The husband bore the onus of proof on this issue. I am not satisfied that there is evidence that would enable me to conclude that not all of the wife’s furniture, including any items purchased at the furniture store, had not been valued. Accordingly, I propose to accept the figure of $21,580.
I am not satisfied that it is appropriate to include an amount paid by the husband for various valuations at Item 65 as an add back. This is a matter that is more properly dealt with by way of an application for costs.
The wife was cross-examined on her expenditure on cosmetic procedures and the reasons why she incurred the costs (item 64). I have no reason to doubt the wife’s evidence as to why this was spent. I am satisfied that it was reasonable of the wife to have expended this amount for the reasons advanced by her during cross examination. I do not propose to add it back or have regard to it under s 75(2).
The wife seeks to add back various amounts expended by the husband, some pre-separation and others post-separation exceeding $2,800,000 (items 49-56). It covers cash withdrawals, amounts expended by the husband on travel for himself and his current spouse, monies spent by the husband on the child of his current spouse, monies remitted to his current spouse’s parents in another country, gambling losses (some of which pre-date the marriage and some post-date separation) as well as monies paid by the husband towards his current spouse’s legal fees. I have previously referred to the established jurisprudence and the need to establish “exceptionality” as the precursor to an addback.
Cognizant as the wife’s lawyers must have been of the established authorities, no principled reason was advanced as to why these amounts should be added back. Parties are entitled to get on with their lives post separation with the expectation that the Court will not be conducting an audit of how they spent their money post separation provided such expenditure can be described as reasonable, reasonable being relative to the circumstances of the parties. As the Full Court observed in Trevi “reasonably incurred expenditure does not usually come within accepted categories of addback”.
In Gollingsv Scott (2007) 37 Fam LR 428 the Full Court dealt specifically with post-separation expenditure by a husband, and confirmed the principles established in earlier cases that parties are entitled to get on with their own lives post-separation, and generally post-separation expenditure for reasonable living expenses should not be brought to account. In the course of their discussion, the Full Court referred to the unreported decision of C & C [1998] FamCA 143 (coram Nicholson CJ, Ellis and Kay JJ) who said:
45.Although it is not one of the Grounds of Appeal, we would also like to make the observation that we were troubled by her Honour adding back into the pool of assets the sum of $15,000 provided by the wife to Andrea to enable her to place a deposit on a unit. The provision of modest amounts of capital by parents to their adult children to enable the children to get a start in life is a normal experience in our society. In a case involving the magnitude of the assets of this case, in our view it is unreasonable to conduct a microscopic examination of each of the parties’ items of post-separation expenditure with a view to determining whether or not it is appropriate that they be brought into account in dividing up the asset pool between them. The cases which deal with notional add-backs are generally examples of circumstances in which it would be clearly unjust and inequitable not to take those matters into account. (See Kowaliw (1981) 7 Fam LR 13; [1981] FLC 91-092, esp at FLC 76,645; Townsend (1994) 18 Fam LR 505; [1995] FLC 92-569; Farnell, (1995) 20 Fam LR 513 (expenditure on legal costs notionally added back because of s117).
46.Whilst not seeking to place a fetter upon the exercise of discretion of a trial judge in individual cases, it seems to us that the concept of adding monies reasonably disposed of back into the pool ought to be the exception rather than the rule. The parties are entitled to reasonably conduct their affairs post-separation in a manner that is consistent with properly getting on with their lives. Providing modest support for their adult children or taking not inappropriate holidays for themselves seems to fit comfortably within that description.
The question becomes whether the expenditure incurred by the husband was in all the circumstances reasonable. In relation to gambling losses, some of the amounts relate to pre‑separation expenditure dating back to 2016. The husband conceded that he lost monies gambling. Had the money not been gambled, it would have formed part of the parties’ assets. The husband conceded in his affidavit that in one year his loss percentage was 60 percent. An examination of the husband’s expenditure on holidays for himself and his current spouse reveals expenditure vastly in excess of that spent by the wife post separation on travel. In addition, the husband expended a large sum in support of his stepchild, paid his current spouse’s legal fees and contributed monies to his current spouse’s family overseas totalling in excess of $150,000 as well as substantial cash drawings by the husband. I am not satisfied even within the confines of these parties’ wealth that the expenditure of the husband as identified by the wife could be categorised as reasonable as against the evidence such as it was of significantly more modest expenditure by the wife.
The husband’s senior counsel submits the following:
48.An alternative approach to discrete add backs on post consent order spending would be to recognise both parties received significant assets pursuant to the consent orders, and all post order spending should be allowed on the balance sheet. In effect, and by analogy, to treat the effect of the consent orders as if they were interim property to be accounted for on the balance sheet
No submission was advanced as to what these amounts would be on the part of each of the parties and consequently, even if fleetingly attractive, there is insufficient evidence to do so.
Consistent with the above, I am not satisfied that the appropriate way to deal with this expenditure is to add back these amounts. The approach consistent with authority is to have regard to it under s 75(2).
The only other sum in dispute on the addbacks is the interest on the wife’s loan for legal fees (items 57 and 63). This is a debt incurred by the wife and there is no basis for it to be added back against the husband. Nor can I see a basis for it to be added back against the wife. It was a debt incurred by her post-separation, but that does not mean that it should be included as an add back.
In relation to liabilities, the parties were at issue in relation to Item 72, being the husband’s credit card balance of $26,606. There was no cross-examination of the husband on this amount. In circumstances where the parties’ bank account balances are brought to account, it seems to me that there is no principled reason why such a liability should not also be brought to account. I accept the husband’s senior counsel’s submission that if he had paid his credit card then his bank account balances would have been correspondingly reduced. I am satisfied that it is appropriate that his credit card liability should be included.
The parties were otherwise at issue in relation to the capital gains tax on the sale of the Suburb KK property in the sum of $134,138 (item 92). The wife opposed this sum being added back. The source is identified in Exhibit 98. Counsel for the wife identifies that Exhibit 98 is expressed in very general terms. In that respect, it asserts as follows:
Further to our conversation, please find below an indication of the tax payable in FY2025 on the sale of the [Suburb KK] property by the superfund. We note that we have not yet completed the 2024 financial accounts to confirm the costs base post depreciation and have not included any estimate of sales commissions or conveyancing fees, that being said, our back of the envelope calculation of tax on the basis that the property was notionally sold [in] July is as follows…
(Exhibit 98)
I accept there is a significant degree of imprecision in relation to the capital gains tax calculation. For example, it does not take account of agent’s commission, selling costs, or legal fees and is a “back of the envelope” calculation. I am satisfied that there is a liability, but it would be inappropriate to take it into account as a precise figure where it is imprecise. I will take this amount into account under s 75(2).
As a result of the above findings, I find the property of the parties for division (excluding any item that has a nil or zero balance) to be as follows:
Item Owner Description Value ASSETS 1 W T Street, Suburb U $3,800,000 2 H V Street, Suburb W $1,930,000 3 H X Street, Town Y Qld $39,216 4 W NAB Account #...85 $6,637 5 W Z Bank Account #...81 $7 7 W AA Bank Account #...51 $39 9 W BB Bank Account #...24 $32 10 W CC Bank Account #...94 $77 11 W Edwards Moloney Family Law Trust Account $280,474 12 H Russell Kennedy Trust Account balance $54,648 13 H Z Bank Investment Cash #...81 $52,976 14 H Z Bank Account #...52 $3,789 15 H Z Bank Account #...11 $1,323 16 H Westpac Choice (x…07) $3,000,136 17 H Shares $76,622 21 H Z Bank Shares (x…56) $290,945 22 W Ms Barbieri Family Trust 23 W EE Bank Account #...71 $10,573 24 W EE Bank Cash Account #...98 $2,807 25 W EE Bank Portfolio (excl. cash account x…98) $885,189 26 H FF Pty Ltd 27 H Z Bank Business Account x…00 $3,422 28 H Q Finance share portfolio $1,115,829 29 H Loan to Mr Barbieri $196,526 30 H Sundry Creditors ($2,750) 31 Motor Vehicles and Other 35 W Motor Vehicle 4 $70,075 37 W Jewellery $70,000 38 H Household contents $10,420 39 W Household contents $21,580 41 W 3 bottles wine $1,860 43 H Wine collection $1,680 ASSETS $11,924,132 ADDBACKS 59 H Husband’s legal costs $776,410 61 W W Legal fees paid to Edwards Family Lawyers $1,303,856 62 W W Accountancy and professional fees by Wife $38,214 NET ADDBACKS $2,118,480 ASSETS AND ADDBACKS $14,042,612 LIABILITIES 72 H AMEX card ending #...07 $26,606 73 H Loan from FF Pty Ltd $196,526 74 H Westpac Investment Property Loan (x…54) $2,997,711 NET LIABILITIES $3,220,843 NET ASSETS (EXCL. SUPERANNUATION) $10,821,769 SUPERANNUATION H Mr Barbieri Superannuation Fund 89 HH Street, Suburb JJ Queensland (formerly referred to as the Suburb KK Property) $5,175,000 90 Suburb KK Bond for LL Pty Ltd ($75,050) 91 Selling Agent Commission & Fees for Suburb KK Property ($94,875) 93 Professional legal fees of MM Law Firm for sale of Suburb KK ($8,705) 94 Deposit for 2 X Street, Town Y $64,000 95 Deposit for NN Street, Suburb KK $700,000 96 Shares in OO Pty Ltd, PP Pty Ltd and QQ Pty Ltd $217,050 97 Units in RR Unit Trust and SS Unit Trust $23,484 99 Z Bank Business Cheque Account #...54 $55,709 102 Q Finance share portfolio $686,630 103 TT Finance share portfolio $2,582 104 UU Finance Investment portfolio $1,397,831 106 Sundry creditors ($10,250) W Ms Barbieri Superannuation Fund 110 Z Bank Account #...56 $1 111 EE Bank Account #...06 $18,549 112 EE Bank Cash Management #...44 $208,500 113 EE Bank Portfolio (excl. cash #...06) $3,037,671 NET SUPERANNUATION $11,398,127 NET ASSETS (INCL. SUPERANNUATION) $22,219,896 ASSESSMENT OF CONTRIBUTION
The assessment in a property case calls for the exercise of a discretion and a holistic value judgment of the respective contributions of the parties. The Court is required to consider all of the contributions of the parties as the Full Court in Dickons v Dickons (2012) 50 Fam LR 244 makes plain:
24.… the task of assessing contributions is holistic and but part of a yet further holistic determination of what orders, if any, represent justice and equity in the particular circumstances of this particular relationship. So much is clear from the terms of s 79 itself and, in particular, s 79(2). The essential task is to assess the nature, form and extent of the contributions of all types made by each of the parties within the context of an analysis of their particular relationship.
25.Doing so is also consistent with the demands of authority that the ultimate assessment of contributions should be made without “giving overzealous attention to the ascertainment of the parties’ contributions” (Norbis v Norbis (1986) 161 CLR 513 at 524 ; 65 ALR 12 at 18 ; 10 Fam LR 819 at 825 ; [1986] HCA 17) and the well-established recognition in the authorities (acknowledged specifically by her Honour in this case) that the process required of the court by s 79 is the exercise of a wide discretion, not the performance of a mathematical or accounting exercise.
26.The necessarily imprecise “wide discretion” inherent in what is required by the section is made no more precise or coherent by attributing percentage figures to arbitrary time frames or categorisations of contributions within the relationship. Indeed, we consider that doing so is contrary to the holistic analysis required by the section and, in the usual course of events, should be avoided.
The Full Court in Horrigan & Horrigan [2020] FamCAFC 25 emphasised and reinforced that the proper approach to the assessment of contributions is:
35.… well established that an assessment of contributions is not a mathematical exercise, but rather involves the identification and assessment of all of the parties’ respective contributions, in a holistic way across the course of the relationship and in the post separation period to the point of assessment. …
I am also mindful of what the Full Court said in Singerson & Joans [2014] FamCAFC 238 at [66] that for the purposes of s 79 of the Act, there is nothing to suggest that any category of contribution needs to be quarantined and applied solely to particular assets. In my view, the authorities require evaluation of all contributions to the property of the parties, notwithstanding that the categories of property may be different. This view has been confirmed by subsequent Full Courts such as in Jabour & Jabour (2019) FLC 93-898, where their Honours observed that a primary judge should be cautious in emphasising the importance of an increase in value of a particular item of property at the expense of “the myriad of other contributions that each of the parties has made during the course of the relationship” (at [35]).
The consistent theme from the authorities is that the multifarious contributions over the relationship and subsequently of all types are to be assessed in a holistic way.
Guided by such Full Court determination, I propose to assess the parties’ contributions.
FINDINGS AS TO CONTRIBUTION
The wife submitted that I should find that the contributions of the parties were equal up to the time of hearing. The husband’s senior counsel submitted that whilst the contributions of the parties during the relationship were equal, the Court should find that the contribution analysis favours the husband in the range 55–60 percent. The differential was said to arise from the husband’s greater initial contributions but also his post separation contributions.
The parties are at issue as to when they commenced cohabitation. The wife contends that cohabitation commenced in 1997 whereas the husband contended that it commenced in 1998. There was no cross examination of the wife and limited cross examination of the husband as to this issue. The wife’s witness Ms B gives evidence that she met the husband in 1996, and that the wife moved into his home in 1997 and thereafter visited the home while the wife lived there. She was not required for cross examination. I am satisfied, accepting Ms B’s evidence, that the parties commenced cohabitation in 1997.
The husband submits that the initial contributions favour him. In that respect, he contends at paragraph 239 of his affidavit that he held the following assets:
·A property at Suburb VV subject to a debt of about $280,000 which was sold in 1999 for $1,000,000;
·A motor vehicle;
·FF Pty Ltd, in which he was the sole director and shareholder, holding net assets of $198,597;
·WW Company, in which he was the sole director and shareholder, the trustee of the WW Unit Trust that he asserts had a value of approximately $405,000;
·What he describes as “significant savings”, “a nice collection of furniture”, a wine collection and personal effects; and
·Superannuation of $457,544.
The wife says that the husband said to her on their wedding night words to the following effect that, “Now that we are married I can tell you how much money we have. I am worth $1,000,000 and that is now ours” (affidavit of wife filed 16 January 2024, paragraph 209).
The husband says the wife had a car and a credit card debt. The wife says she did not have any assets or liabilities of any significance.
There was no challenge to the evidence of the husband referred to above. I am satisfied that the husband brought into the relationship the assets referred to and that his initial contribution exceeded that of the wife and provided a foundation for the wealth of the parties. Her senior counsel submits that the husband’s initial contributions should be given little weight when considering the length of the relationship and his general unreliability.
The husband submitted that the contributions during the course of the relationship were equal, while the wife submitted that the contributions of the parties over the relationship and post separation were equal. I am satisfied that during the relationship both parties made a substantial contribution in their respective spheres.
Post-separation, the wife remained in occupation of the former matrimonial home. The wife says that after separation she continued to care for their daughter during her Year 12 studies in 2018 as well as coordinating of the international relocation of their son. She says that she provided financial support for both children after separation.
The husband’s affidavit at paragraph 317 and onwards identifies his post-separation contributions. The husband says that post-separation, he paid the mortgage and outgoings on the home which cost about $13,000 per month, as well as meeting expenses of the wife on a credit card until 25 May 2021.
Post-separation, he purchased a property at Suburb W for over $2,600,000, funded in part with funds from his superannuation and otherwise by way of mortgage. He lived in that property from June 2021, selling it in late 2021 for nearly $3,000,000. On one view, the property made a gross profit of $365,000. There is no evidence, however, of what the entry and/or exit costs were by way of stamp duty, legal fees and agent’s commission, nor whether after spending $46,000 on renovations he made any profit on the acquisition.
The husband also points to a profit made by him post-separation in relation to the Suburb KK late 2022 he purchased the Suburb KK property for over $4,700,000 through his superannuation fund. Exhibit 98 identifies that the prospective sale price is over $5,700,000. On paper there is a gain of approximately $1,000,000. Exhibit 98 identifies that there is stamp duty, legal and adjustments on sale of $105,746 and in the balance sheet there is an accounting for the Suburb KK bond of $75,050, selling and agent’s commission of $94,875 and legal fees for the accountants of $8,705, making total expenses of $284,376. The net profit, therefore, on the Suburb KK property is likely to be something in the order of $715,000 subject to capital gains tax. The husband also identifies that he undertook a significant amount of work subsequent to separation in managing the parties’ properties, made various payments identified at paragraphs 73 and 74 of his counsel’s Case Outline, as well as share trading which led to a growth in the value of shares between separation and trial.
I also recognise that the purchase of the Suburb KK property, the purchase of the home at V Street and the payment to the wife was funded from the proceeds of sale of the Units which he retained. On one view, it was the significant uplift over the valuation of the Units realised from their sale that allowed the husband to make these purchases, funded as they were from the proceeds of sale.
The Full Court in Gadhavi & Gadhavi (2023) 67 Fam LR 174, in the context of initial contributions, recently observed:
30. It was not in dispute that the primary judge applied proper principle in determining that the assessment of the impact of the husband’s initial contributions could only properly occur after she assessed “the totality of the parties’ contribution-based entitlement over the entirety of the marriage and post-separation” (at [210]).
31.In that respect, in Pierce v Pierce (1999) FLC 92-844 (“Pierce”), the Full Court stated at [28]:
…It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution.
32. To similar effect, in Cabbell & Cabbell [2009] FamCAFC 205, the Full Court stated at [54] that in considering the parties’ contributions, it is necessary to trace the use of those assets and consider the foundation that they laid for the subsequent accumulation of wealth by the parties.
33.That is, in evaluating the parties’ contributions, it was necessary for the primary judge to have regard to the context of the husband’s initial contribution and specifically, to the opportunity that initial contribution created and the impact of that initial contribution on the subsequent wealth of the parties as at the date of the hearing.
(Emphasis added)
The wife submits that the contributions overall should be assessed as equal, while the husband says they should be assessed in the range 55–60 percent. I am not persuaded that the wife’s submission properly recognises the import of the husband’s initial contributions and his post‑separation contributions when considering the assessment of contribution over the entirety of the relationship and then to hearing. I am satisfied, consistent with the authority referred to above, that regard must be had to the effect of the husband’s initial contributions and the contributions in the period post-separation. That said, the percentage proposed by the husband’s senior counsel overstates in my assessment the contribution analysis in the husband’s favour and does not sufficiently recognise the wife’s contributions.
Doing the best I can and having regard to the contributions of both parties overall, I am satisfied that the contribution-based finding favours the husband and calls for an assessment in favour of the husband as to 52 percent.
SECTION 75(2)
The wife did not contend for any adjustment under s 75(2). That said, the argument was made as against a significantly different balance sheet which brought to account as against the husband the total value for the Suburb W property, the total of the deposit paid for the Town Y property, the trade in of the husband’s motor vehicle and significant expenditure by the husband that were asserted to be dealt with by way of addbacks.
The husband also said that there should be no adjustment under s 75(2).
The husband is aged 67 and the wife is aged 58 and each have some health issues. Whilst the wife had advanced a case for non-disclosure by the husband in her Case Outline in so far as it related to the current assets of the parties, that was not advanced in submissions.
I am not satisfied that there is any adjustment warranted by way of the disparity as to health, income, earning capacity, age or by reason of an obligation to support a new spouse. Each will have sufficient assets to support themselves independent of any need to earn income by way of employment.
The contribution finding favours the husband and is a factor to consider in the s 75(2) analysis. The other matters that call for consideration is the expenditure by the husband of over $2,000,000 to acquire real estate and a car in his current spouse’s name. It is proper and consistent with authority to recognise this diminution in the available property of the parties under s 75(2). I am also satisfied that relative to the wife, the husband’s expenditure referred to earlier vastly exceeded that of the wife and that it was not reasonable and calls for an adjustment in favour of the wife. This expenditure included monies spent on his current spouse, on holidays and travel, gambling and cash withdrawals. I also recognise that there will be capital gains tax payable on the sale of the Suburb KK property to be borne by the husband. Taking all of these matters into account, I am satisfied that it is appropriate that there be an adjustment in favour of the wife. I assess that in percentage terms at 10 percent.
IS THE EFFECT JUST AND EQUITABLE
Accordingly, I am satisfied that the assets of the parties should be divided in the proportions as to 58 percent to the wife and 42 percent to the husband.
The total pool of assets is $22,219,896. To give effect to a 58 percent division would see the wife receiving property having a value of $12,887,539.
The wife has property having a total value of $9,756,141. Having regard to the Balance Sheet of the parties, a 58 percent distribution of the parties’ assets to the wife, considering the property that the wife has, would require the husband to make a payment to her of $3,131,398.
Having regard to the above matters, I am satisfied that such a division and payment constitutes a just and equitable determination.
The husband’s senior counsel made no submissions as to how any amount should be paid to the wife in the event the Court made orders pursuant to s 79. The wife sought a payment in part by way of cash and in part by way of superannuation splitting order but in a larger amount.
I propose to make an order that the husband pay the funds to the wife by way of cash payment. There is no reason why, given the funds he holds in the bank and his other resources, such payment should not be made within 30 days.
I will make orders accordingly.
I certify that the preceding two hundred and one (201) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Schonell. Associate:
Dated: 1 November 2024
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