BECKERT & BECKERT (No.2)
[2019] FCCA 1488
•31 May 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| BECKERT & BECKERT (No.2) | [2019] FCCA 1488 |
| Catchwords: FAMILY LAW – Parenting and property applications – respondent father seeks adjournment – comprehensive failure to observe directions for trial – best interests of children – failure to observe and perform orders made by consent – financial non-disclosure – directions necessary to promote progress in proceeding – failure to particularise orders that are to be sought in relation to parenting or property – unilateral withdrawal of funds from applicant’s account and from account of self-managed superannuation fund – father contends trial will be of 10 days duration – parties agree in transfer of proceeding to Family Court – costs. |
| Legislation: Family Law Act 1975 (Cth), ss.60CC, 61DA, 65AA, 67Z, 69ZW, 75(2), 106A, 117, 117(2A) |
| Cases cited: Beckert & Beckert [2018] FCCA 3847 CDV v Minister for Immigration and Border Protection [2019] FCA 726 DKX17 v Federal Circuit Court of Australia [2019] FCAFC 10 Eldred & Eldred (No 2) [2015] FamCA 188 Gallo v Dawson (1990) 93 ALR 479 Jackamarra v Krakouer (1998) 195 CLR 516 LAC & TRF & LKL [2005] FamCA 158 Mallett v Mallett (1984) 156 CLR 605 Masters v Cameron (1954) 91 CLR 353 Penfold v Penfold (1980) 144 CLR 311 |
| Applicant: | MS BECKERT |
| Respondent: | MR BECKERT |
| File Number: | MLC 13463 of 2017 |
| Judgment of: | Judge A Kelly |
| Hearing dates: | 27, 28 May 2019 |
| Date of Last Submission: | 30 May 2019 |
| Delivered at: | Melbourne |
| Delivered on: | 31 May 2019 |
REPRESENTATION
| Counsel for the Applicant: | Mr Nehmy |
| Solicitors for the Applicant: | Sayer Jones |
| The Respondent: | In person |
| Counsel for the Independent Children's Lawyer: | Ms Burt |
| Solicitors for the Independent Children's Lawyer: | Creative Family Law Solutions |
ORDERS
The trial of the proceeding, fixed for hearing pursuant to paragraph 3 of the Order made on 26 February 2018, be adjourned to a date to be fixed.
Pursuant to r 8.02 of the Federal Circuit Court Rules 2001, the proceeding be transferred to the Family Court of Australia at Melbourne.
The Applicant have leave nunc pro tunc to file and serve her Amended Initiating Application dated 14 May 2019.
On or before 4:00pm on Wednesday, 31 July 2019, the Respondent file and serve:
a)a Response to the Amended Initiating Application filed on 14 May 2019, indicating where he agrees or disagrees with the final orders sought by the Applicant and containing any further orders or directions which he seeks by way of final relief;
b)an affidavit by which the Respondent shall address, insofar as he proposes to respond, each matter in the Applicant’s affidavit sworn on 14 May 2019, and the Family Report of Mr A dated 9 January 2019;
c)each further affidavit on which he proposes to rely;
d)an updated Financial Statement; and
e)an Outline of Case, not exceeding 20 pages, providing his response to the Outlines of Case filed by the Applicant and the Independent Children’s Lawyer respectively, each filed on 22 May 2019, and any further matter on which he may rely in seeking final relief.
Direct that by 4:00pm on Monday, 3 June 2019, the Applicant notify the Respondent of the names of two accountants that she proposes should prepare the taxation returns and financial statements for the Beckert Family Trust (the Trust), for the financial years ended 30 June 2017 and 30 June 2018 (taxation returns and financial statements).
By 4:00pm on Friday, 7 June 2019, the Respondent shall select one of the two accountants nominated by the Applicant pursuant to paragraph 5 of this Order and notify the Applicant of such selection for the purposes of preparation of the Trust’s taxation returns and financial statements (the Accountant).
In default of compliance with paragraph 6 of this Order, the Applicant be at liberty to nominate the Accountant.
Direct that forthwith upon the nomination of the Accountant pursuant to paragraph 6 or 7 of this Order, the Applicant:
(a)request the Accountant to provide a list of all documents and information that the Accountant may require so as to prepare the Trust’s taxation returns and financial statements;
(b)engage the Accountant to prepare and furnish to the parties the Trust’s taxation returns and financial statements.
Within 21 days of the receipt of the Accountant’s response to the request made pursuant to paragraph 8(a) of this Order, the parties shall as soon as is reasonably practicable do all acts and things, produce all documents and records which are in their possession, custody and control and sign all documents, whether in their personal capacity or as directors of the trustee of the Trust, Beckert Pty Ltd (ACN …) (Trustee), as may be necessary to enable the Accountant to prepare and lodge the Trust’s taxation returns and financial statements.
The parties forthwith do all acts and things required to engage the Accountant to furnish advice to the parties as to:
a)whether the Beckert Self-Managed Superannuation Fund (SMSF) is a compliant self-managed superannuation fund; and
b)if it is not, the steps that are required to make the SMSF a compliant self-managed superannuation fund and the consequences of failing to do so,
and in default of such engagement by 4:00pm on Friday, 7 June 2019, the Applicant be at liberty to engage the Accountant for that purpose.
The fees payable to the Accountant for the work undertaken pursuant to paragraphs 8 and 10 of this Order be paid from the monies held by the Applicant’s solicitors, Sayer Jones Pty Ltd, in Westpac Bank BSB … Account Number … on trust for the parties in their capacity as directors of the Trustee (Account …).
By 4.00pm on Wednesday 31 July 2019, the Respondent shall do all acts and things as may be necessary to:
a)lodge his personal taxation return for the financial year ended 30 June 2018;
b)lodge the taxation return for [K] Pty Ltd for the financial year ended 30 June 2018; and
c)serve a copy of each such taxation return on the Applicant.
The parties forthwith do all acts and things as may be necessary to authorise that the monies payable to the Applicant pursuant to paragraph 8(a) of the consent Engrossed Minute annexed to the Order made on 26 February 2018 be paid to the Applicant from the monies held in Account ….
The parties forthwith do all acts and things to authorise:
a)an interim distribution of monies to the Applicant in the sum of $35,000 with such sum to be characterised at trial;
b)payment of the outstanding annual review fee charged by ASIC in the sum of $592 respecting Beckert Investments Pty Ltd,
with such payments to be paid from the monies held by LMG Lawyers on trust for the Applicant in Trust Account No ….
In default of compliance with paragraphs 11, 13 or 14 of this Order the principal of Sayer Jones Pty Ltd, William Henry Jones, be authorised pursuant to section 106A of the Family Law Act 1975 (Cth) to do all acts and things and execute all instruments as may be necessary to enable the respective payments to be made and to give validity and operation to these Orders and each such instrument.
Forthwith upon the payments to be made pursuant to in paragraphs 11, 13 or 14 of this Order, the balance of monies currently held by LMG Lawyers and Toner & May Legal respectively on behalf of the parties personally or in their capacity as directors of the Trustee or the Trustee be paid to Sayer Jones Pty Ltd, with such monies to be held until further order in interest bearing Controlled Monies Accounts (CMA), as follows:
a)as to the monies currently held on behalf of the parties themselves, to be invested in a CMA in the names of the parties;
b)the monies currently held on behalf of Beckert Investments Pty Ltd to be paid into the Account ….
Direct that service of a sealed copy of this Order upon LMG Lawyers and Toner & May Legal respectively shall be sufficient evidence of the parties’ authority for each firm of lawyers to do all acts and things and make such payments as are to be made pursuant to this Order.
By 4:00pm on Monday, 3 June 2019, each party provide to the other a list of the documents, disclosure and production of which they seek and within 21 days of such request being made, the other party shall respond to that request attaching each of the documents sought or, if unable to be produced, details as to why production is unable to occur.
In default of compliance with this Order, either party have leave to apply for the proceeding to be heard on an undefended basis.
The respondent pay the applicant’s costs of the trial vacated on 27 May 2019, fixed in the sum of $15,000.
AND THE COURT NOTES THAT:
A.The Independent Children’s Lawyer has this day invited the Respondent to undertake a supervised hair follicle alcohol test through the Australian Workplace Drug Testing Service (AWDTS) or its nominee, with such testing to be conducted at an approved laboratory, accredited to conduct hair drug testing to the recognised International Standard ISO/IEC 17025:2005 by the relevant national accreditation body for that laboratory.
IT IS NOTED that publication of this judgment under the pseudonym Beckert & Beckert (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 13463 of 2017
| MS BECKERT |
Applicant
And
| MR BECKERT |
Respondent
REASONS FOR JUDGMENT
Introduction
These reasons for judgment explain why orders have been made: adjourning a trial; regulating the future conduct of the matter; determining an application for costs, and; transferring the proceeding to the Family Court of Australia. These reasons may be read in conjunction with the reasons for judgment dismissing the respondent father’s objection to a subpoena that was served by the applicant wife on Victoria Police: Beckert & Beckert [2018] FCCA 3847. Part of the history of the proceeding is replicated from those earlier reasons.
The applicant wife commenced the proceeding by an initiating application filed on 20 December 2017. In the ensuing 17 months, orders have now been made by the court on thirteen occasions. It is unnecessary to recount the orders that were made on each occasion.
The parties were married on … 2007 and finally separated on 6 April 2017. There are three children who are the subject of the proceeding. According to the applicant’s affidavit filed on 15 May 2019, the two eldest children were born on … 2013 (twins) and the third child was born a week later on … 2013 in Country C via surrogacy, utilising donor eggs and the respondent’s sperm.
Background
The wife is aged 44 years and is a qualified health care worker. She has migrated to Australia from Country D and is an Australian citizen.
The respondent, who is aged 46 years, conducts work in his own business on his own account. He has been in his own business for some 20 years.
A significant issue in the case since its inception, has been and remains whether the respondent is a chronic alcoholic.
By her initiating application, the wife has applied for an adjustment of property interests, spousal maintenance and child support. On the applicant’s case outline and evidence, the respondent has progressively withdrawn financial support to the applicant since the parties’ separation.
By his Response, the husband sought orders for equal shared parenting responsibility and an array of orders for spend-time arrangements in relation to the children. Amongst the procedural orders sought by the respondent, were orders for the provision of documents relating to “the husband’s DNA testing regarding his parentage of the children.” Orders were also sought for the sale of a number of properties. The respondent’s suggestion of DNA testing to determine parentage has not been pursued. This may be explained having regard to the matters set out at [3] above.
At the first directions hearing of the matter, on 26 February 2018, the proceeding was set down for hearing on 27 May 2019, relating to all the issues in the case. Extensive directions were made regulating the steps necessary for the matter to be made ready for trial. In particular, the applicant was required to file and serve her trial affidavits and an outline of case 21 days prior to trial and the respondent was required to file his trial affidavits and an outline of case within 14 days before trial.
It follows that the parties have had no less than fourteen months in which to prepare their affidavits and case outlines. As appears below, the respondent adopted the stance that he was relieved of an obligation to file his trial affidavits and an outline of case, by reason that the applicant’s material was filed late. He has done so notwithstanding that, even allowing for the applicant’s delay, his material could have been filed before trial. Instead, he has not complied with those orders at all.
The case is highly conflictual. On 20 April 2018, an order was made for the appointment of an Independent Children’s Lawyer.
On 3 September 2018, an order was made that the children live with the applicant. Orders were also made, by consent, for the respondent to submit to alcohol testing at the commencement and conclusion of the children’s spend-time with him. An order for the obtaining of a family report to be prepared by Mr A was also made.
Further orders were made on 5 September, 13 September and again on 18 October 2018. In the intervening period, on 3 October 2018, the respondent filed an application in a case, concerning the making of medical appointments for the children and their enrolment in a school.
On 5 September 2018, the parties agreed in a series of consent orders regulating the sale (or completion of the settlement of the sale), of properties in Suburb E, Street F, Suburb G and Town H. Without rehearsing the detail of those consent orders, it is sufficient for present purposes to note that the parties were agreed they should each receive an initial distribution of $50,000 from the net proceeds of sale of the Property E property. They also agreed that a sum of $148,000 be paid to the Australian Taxation Office in satisfaction of a debt owing by the respondent's business [K] Pty Ltd, and for the balance of those net proceeds to be held in a controlled monies account to be opened in the name of Beckert Investments Pty Ltd as trustee of the Beckert Family Trust and that such account be ‘managed by the wife’s solicitors’.
Similar orders were made respecting the sale of the Town H property and Suburb G property, including, that the net proceeds of sale of the Town H property, also be held in a controlled monies account to be opened in the name of Beckert Investments Pty Ltd and again ‘to be managed by the wife's solicitors’. An ancillary order was made requiring the respondent to withdraw, at his expense, caveats lodged by him in relation to the Property E property, the Suburb G property and the Town H property.
On 3 September 2018, counsel for the Independent Children's Lawyer informed the court that arrangements have been made for the parties and children to confer with Mr A on 29 October 2018.
On 5 September 2018, the court noted that the parties were to use their best endeavours to prepare a joint table of all assets and liabilities, identifying the legal and beneficial ownership of each such item and where there was disagreement or agreement respecting those assets liabilities. This did not occur.
On 18 October 2018, orders were made by consent for the children’s school enrolment and the dismissal of an application in a case that had been filed by the respondents. It appears from other evidence that the respondent has made attempts to cancel the children’s enrolments.
On 29 November 2018, the applicant filed a subpoena addressed to the proper officer of Victoria Police, seeking production of documents held relating to the respondent for the period since 1 April 2017. Victoria Police has obeyed the subpoena and the documents are held in the Registry of the court. Later, on 29 November 2018, the respondent filed a Notice of Objection to the subpoena. The Notice of Objection was returnable in a Duty List on 18 December 2018. The applicant was represented by Mr Nehmy of counsel while the respondent appeared in person. There was no appearance by or on behalf of Victoria Police or the Independent Children’s Lawyer. On 21 December 2018, orders were made dismissing the respondent’s Notice of Objection.
In preparation for trial, the Independent Children's Lawyer has issued a large number of subpoenas. Before me, the respondent submitted that he could have, but did not apply to set aside any of those subpoenas (other than that which had been addressed to Victoria Police).
On 18 October 2018, further orders were made, by consent, that each party do all acts and things required to instruct LMG Lawyers to divide the sum of $72,040.25 equally between them, such sum, to be characterised by way of partial property settlement. I infer that this sum represented the net proceeds of sale of the Suburb G property.
On 18 February 2019, orders were made that, until further order, the children spend time and communicate with their father each alternate weekend from 7.00pm on Friday until 7:30am on Monday and otherwise as may be agreed in writing. By dent of the respondent having lost his driver’s licence for driving while having a reading well in excess of 0.05% blood alcohol level, it was necessary for orders to be made that the mother collect the children from the father's residence upon the conclusion of their spend time with him.
On 14 May 2019, the applicant filed a proposed amended Initiating Application together with her trial affidavit and a Financial Statement. Counsel for the applicant accepted that those documents had been filed some nine days late. The respondent objected that the proposed amended Initiating Application had been filed without leave. When the matters in that application were addressed with the respondent in some detail, it emerged that there were many matters with which he did not disagree. He has not filed a Response to that document.
Further, the following day, 15 May 2019, the respondent filed an Application in a Case together with affidavits sworn by his paralegal and himself, seeking an adjournment of the trial. The respondent deposed that the applicant’s affidavit was some 200 pages in length, comprised of 324 paragraphs ‘which have taken me entirely by surprise’ and that there were 29 exhibits. He deposed that the applicant's affidavit contained at least 100 lies and that he had extensive documentation that would demonstrate his contention. He deposed further that as at the date of making his affidavit (15 May 2019), ‘I am only halfway through reviewing the applicant's affidavit’. Before me, the respondent equivocated as to whether he had completed his review of the affidavit in the period 15 May 2019 to the date of the hearing. Contrastingly, the respondent's affidavit did not say anything respecting his own compliance with the orders which were made on 26 February 2018, as to the preparation of his own trial affidavit and Outline of Case.
On 23 May 2019, in response to a compliance check, the respondent advised the court of the following:
a)he considered the proceeding had resolved on multiple occasions:
. . . both on financial terms and parenting. However my soon to be former wife is incapable of sticking to her agreements. This is not to say I agree she was not bound by them.
b)7 witnesses were to be called – before me, the respondent declined my invitation to identify any of those witnesses more precisely or to describe the progress in finalising his own affidavit;
c)he estimated the hearing would be of 10 days duration;
d)there were further documents to be filed, including a number of affidavits by third parties on parenting and in relation to ‘financial and property arrangements’, including his own;
e)he had not briefed counsel for the reason that this was:
Impossible due to the late voluminous material from the wife.
f)all issues remained in dispute.
Further attempts by my chambers to obtain an Outline of Case from the respondent, in advance of the trial, yielded no response.
Allowing for the nine-day delay in service of the applicant’s material, the respondent still had time before the scheduled trial date to finalise his own trial affidavit and Case Outline. He did not do so and has provided no evidence of what he has in fact done by way of trial preparation, in the period since orders were made in February 2018 setting the matter down for trial.
Having regard to the stance which he has adopted in the proceeding to this point, the respondent has abstained from particularising the precise parenting orders which he submits should be made in the best interests of the children and the property orders which he submits would reflect a just and equitable adjustment (if any) of their property interests. I consider that the failure to particularise the parenting or property orders which he proposed would be appropriate for the determination of the matter, was a conscious and deliberate decision on his part.
On 17 May 2019, the applicant's paralegal deposed that the parenting proceeding had resolved as a result of the convening of a Family Dispute Resolution Service (FDRS). The paralegal’s affidavit exhibited a report from FDRS which stated in part ‘the parties appeared to have reached a Final Agreement in principle with the Independent Children's Lawyer to draft the terms of the Agreement that are acceptable to all parties’. The report exhibited to the affidavit indicates that the FDRS Conference had been held on 23 April 2019.
Orders have been made pursuant to s 69ZW of the Act requesting the provision by the Department of Health and Human Services Victoria (DHHS), to provide documents and information relating to the children. Further orders were made permitting the inspection of those documents by the parties’ legal representatives.
Reports from DHHS were provided. The first, dated 12 September 2018, was provided in response to a notice given under s 67Z of the Act and in which the departmental officer reported in part as follows:
On 7 September 2018, [DHHS] received a report in relation to concerns for the children in the care of Mr Beckert given his substance and alcohol abuse. Further to these allegations were made that Mr Beckert was the perpetrator of family violence, and despite having intervention orders in place, Mr Beckert had breached the Order a number of times.
Child Protection were aware of the concerns in relation to alcohol abuse and family violence. Further contact was made with Ms Beckert to ascertain the outcome of the court proceeding hearings. It was made evident that Mr Beckert has significant alcohol abuse issues and that this leads him to his aggressive behaviours.
It is imperative that the children are not exposed to any incidents of family violence and are not exposed to Mr Beckert’s alcohol abuse. It would be highly recommended that Mr Beckert undergo intensive counselling and therapy to address his alcohol abuse issues, in order to ensure that the children are not at risk of his aggressive behaviour when he has been drinking. Ms Beckert appears to understand the serious nature of the risk of the children exposed and is acting as a protective parent.
The children have a right to a relationship to have a relationship with both parents, providing that this is safe for the children.
Secondly, a response from DHHS given pursuant to an order made under s 69ZW, on 14 May 2019, DHHS provided details of the notifications which had been made in July 2016, August 2016, April 2017, September 2018, January 2019 and May 2019. The DHHS officer concluded:
Whilst the reports made to Child Protection have not been suggestive of immediate or significant risk to warrant further intervention, it is acknowledged that the children have been exposed to family violence and Mr Beckert's alcohol abuse.
Cumulative harm can impact on the safety, development, stability and well-being of children. There have been six reports made to child protection which may be indicative of cumulative harm.
By his Response filed on 24 April 2018, the respondent sought to be excused from particularising the parenting orders that he would submit were in the children’s best interests, pending receipt of a family report.
The family report prepared by Mr A dated 9 January 2019, furnished detailed opinions and observations following his consultation with the parties and their children. Without derogating from the detail of the report, I note the following recommendations and conclusions were expressed by the author: (a) the children formed their primary attachments to their mother; (b) the children had robust, age-appropriate in developmentally important father/son bonds with their father; (c) ordinarily, the author would have recommended parenting arrangements that reflected those relationships; (d) the difficulty in doing so in this case was the objective evidence that the father suffered ‘from a moderate to severe alcohol dependence disorder’ having brought into question his capacity to provide constant, safe parenting for the children at both practical and emotional levels; (e) Mr A was unable to determine whether an opinion (expressed by another medical practitioner in July 2018), to the effect that father's alcohol dependence disorder was in ‘early remission’ remained the case in 2019; (f) the father showed little insight into either the breadth or depth of the likely impact of the disorder on his own health, behaviour or relationships including those with the children; (g) Mr A endorsed the current consent parenting orders operative as at 3 September 2018; (h) the only sustainable solution was for the father to address his alcohol dependence effectively (which required that he engage consistently with a single treating professional over a minimum period of 12 months); (i) Mr A could not recommend a regime for the children to spend further spend time with their father without testing or supervision until after that minimum period of treatment; (j) Mr A addressed the applicant mother’s reasons as to why it was appropriate to make an order for sole parental responsibility and offered further factors which might militate in favour of a conclusion that sole parental responsibility was appropriate.
Mr A concluded:
If the Court were to decide that Ms Beckert’s concerns were valid, this would lead me to conclude that her having sole parental responsibility may help to lessen conflict at least until [the father] had recovered from his alcohol dependence.
The respondent submitted that Mr A had made a number of findings which had not been put to him and which were in contest.
In a careful Outline of Case, Ms Burt of counsel for the ICL addressed the factors under ss 60CC, 61DA and 65AA of the Act and proposed detailed orders reflecting those submissions. In particular, counsel for the ICL proposed that the applicant mother should have sole parental responsibility for the children.
It is unnecessary, for the purposes of these reasons for judgment to record the matters addressed in the applicant's detailed trial affidavit. However, the affidavit appears well organised and to address comprehensively the issues raised in the proceeding. For present purposes I observe the following text messages are in evidence as being transmitted from the respondent to the applicant (omitting dates):
My generosity is related to keeping the home I built and renovated, for the boys . . . You’re on very dangerous ground now. My financial and property patience is running out.
Nothing will settle if the boys don’t get their last swim.
You want to settle, and your lying lawyers prepare documents that involve you seeking sole parental custody. Gloves are off.
I need $50k. It’s not a joke. You’ll spend $5k opposing, I’ll get the orders. You’ll waste $5k. what’s the point.
I told you that you’d pay $k and not get it back that lying sack of shit of a barrister cost you money you will never see again. Good job.
Many of the texts in evidence are repetitious of texts sent multiple times within a short space of time.
It is also of some use to recognise a number of features which were identified in her affidavit and Outline of Case. Despite the apparently limited financial disclosure which has been made, the applicant contends that, in the period 1 July 2016 – 14 April 2019, the respondent has withdrawn a total sum of $275,185 from the parties’ bank account from their self-managed superannuation fund (SMSF).
Other contentions made by the applicant include that:
a)a number of intervention orders (IVO) have been made and breached;
b)on 10 December 2018, the respondent was found guilty of the persistent breach of an IVO;
c)the respondent has attended rehabilitation for treatment of, but continues to suffer, chronic alcohol dependence;
d)the respondent has been detected for drink-driving on at least two occasions and has lost his license accordingly;
e)despite the consent orders, the respondent has failed to conduct breath analysis on himself for the purposes of spend time with the children on no less than 21 occasions;
f)the respondent's child-support arrears exceeded $13,000;
g)on 28 August 2017, the respondent logged into the applicant's internet bank accounts, transferring $156,536.98 from her account into an unknown account for which he has not made any disclosure;
h)on 31 August 2017, the respondent told the applicant that he would not discuss financial arrangements with her until parenting arrangements were agreed;
i)the respondent has refused to furnish to the applicant, the documents necessary for completion of various tax returns;
j)in early 2019, the respondent has leased a new Motor Vehicle for his new partner, Ms J.
Self-evidently, these matters remain to be tested at trial.
Should the matters for which the applicant contends be established, it would follow that the respondent has withdrawn $275,185 from the SMSF bank account and the sum of $156,536.98 from the applicant’s bank account; in all, for sums exceeding $430,000.
Despite repeated requests, the applicant further contends that she has not obtained adequate or proper financial disclosure from the respondent. The parties have sold all real property and the net proceeds of sale await consideration. Counsel for the applicant contended that, apart from the sum of $275,185 withdrawn by the respondent from the SMSF account, the net assets remaining in comprising the substantive part of the asset pool amounts to approximately $1M. Add backs are apparently in issue.
The applicant also contends that despite the orders made earlier in this proceeding, the respondent has refused to permit that the net proceeds of sale of certain of the properties, be deposited into controlled monies accounts. The respondent maintains that he has no difficulty in the deposit of those monies to such accounts. He appears to consider that, he is under no obligation to consent to the transfer of the monies, until he has been satisfied that the controlled monies accounts have been opened, so that they can be managed by the applicant’s solicitors as contemplated by the consent orders which have been made. His construction of the consent orders differs from that which I would place on them. At all events, copies of the accounts exhibited to an affidavit disclose that:
a)LMG Lawyers currently hold $470,499.92 on trust for the Applicant in Account No …;
b)Toner and May Legal as a customer of Bendigo and Adelaide Bank currently hold $435,584.30 on trust for Beckert Investments Pty Ltd in Account No …;
c)Sayer Jones Pty Ltd as a customer of Westpac Banking Corporation has opened a Controlled Moneys Account No … and holds the sum of $91,979.76 in an account designated CMA ITF BECKERT INVESTMENTS PTY LTD ATF BECKERT FAMILY TRUST.
It is common ground that Beckert Investments Pty Ltd is the trustee of the Beckert Family Trust and that the applicant and respondent are the directors of that company.
Further, as noted above, the respondent's Response filed on 26 April 2018, sought orders for shared parental responsibility but he otherwise be excused from particularising the final parenting orders that he would seek pending receipt of a family report. Notwithstanding the release of Mr A's report on 11 January 2019, the respondent continues to fail to file an Amended Response which does particularise the final parenting orders that he seeks. Similarly, the respondent's Response does not particularise the property orders that he seeks.
Concerning property orders from adjustment of property interests, the applicant's outline submitted that her total contributions ought be assessed at 70% to which should be added a further adjustment of 10% pursuant to s 75(2) factors similar. The Applicant’s evidence, if accepted, may support the conclusion that it may be appropriate to take into account the sums which have been appropriate by the respondent. In addition, the court does not yet know precisely what property orders the respondent actually proposes. The failure to file an Outline of Case trial affidavit and current Financial Statement in accordance with the directions made in February 2018, only compounds the systemic failure to address the issues in this case. The text messages set out above may indicate that the settlement of the matters in dispute is to be on the respondent’s terms and not otherwise. A different view of the matter may emerge if or when the respondent ever states the position for which he contends and files evidence.
Consideration
An application for an adjournment is not automatic but calls for the exercise of judicial discretion: cfGallo v Dawson (1990) 93 ALR 479, 480 (McHugh J). Indeed, inherent in the grant of a discretionary power, is an assumption that such applications will sometimes be refused: Jackamarra v Krakouer (1998) 195 CLR 516, 540 (Kirby J), see also at 519-521 (Brennan CJ and McHugh J). More recently, in DKX17 v Federal Circuit Court of Australia [2019] FCAFC 10, [83], Rangiah J, with whom Reeves and Bromich JJ agreed, stated:
An adjournment is not granted merely for the asking. Wider issues are in play, even if they were not expressly referred to by the trial judge. As Toohey and Gaudron JJ observed in Sali v SPC Ltd [1993] HCA 47; (1993) 67 ALJR 841 at 636:
The contemporary approach to court administration has introduced another element into the equation or, more accurately, has put another consideration onto the scales.The view that the conduct of litigation is not merely a matter for the parties but is also one for the court and the need to avoid disruptions in the court's lists with consequent inconvenience to the court and prejudice to the interests of other litigants waiting to be heard are pressing concerns to which a court may have regard.
See also, CDV v Minister for Immigration and Border Protection [2019] FCA 726, [32] (Snaden J).
I was far from convinced as to the adequacy of the respondent’s explanation for the proposed adjournment. While the affidavit evidence such as it was pointed to the lateness of service of the applicant’s trial affidavit and its apparent volume, it was not surprising given the nature of the issues that have bedevilled this litigation since its inception. The respondent’s belated reply to the compliance check received shortly before the appointed trial date stated that he was ‘taken by surprise’ and noted that it contained 100 lies which he would refute with extensive documentation of his own. Unlike the respondent, I am not at all surprised that the applicant proceeded on the basis that she would be put to proof on all issues. While the Response fails to furnish particulars of the orders that the respondent submits to be appropriate on all issues, the failure to address those matters is compounded by the fact that the proceeding was set down for trial in February 2018, the Family Report was released in January 2019 and there is no Outline of Case.
There has been continuous failure in complying with orders and the explanations for not having done so are unconvincing. Since September 2018, the parties were agreed that the net proceeds of the sale of the various properties would be held in controlled monies accounts to be managed by the applicant’s solicitors. The failure to take the steps that were reasonably required to secure that those monies were so deposited has had the result that the parties are deprived the opportunity to earn interest on those monies for so long as they remain in a trust account. The more likely reason why those monies have not been deposited into such accounts is explained by the respondent’s resistance to the idea that the accounts will be managed by the applicant’s solicitors. As discussed in the course of submissions, there may well be a question whether the loss of the interest on those monies represents a form of waste that may properly fall for consideration in identifying the total asset pool.
Likewise, there has been the failure to prepare a joint statement of assets and liabilities. The failure to do so resulted in the making of further orders that had as their object that a joint statement of assets and liabilities would be filed (even if this served to identify those items about which there was agreement or dispute).
I have noted above the respondent’s failure to file any affidavits, a current Financial Statement, an Outline of Case and the complaints respecting the making of full financial disclosure. The belated disclosure that the respondent intends to call 7 witnesses and that the trial will be of 10 days duration underscores my concern that the respondent has failed to make disclosure of those matters earlier. Neither of those matters had been revealed by the applicant on any of the previous occasions on which the matter had been listed for mention. The significant waste of the court’s resources is self evident.
When asked about the supposed agreement reached at FDRS, the respondent stated that it had not been signed. He further submitted that upon the principles stated in Masters v Cameron (1954) 91 CLR 353, it was not necessary for such an agreement to be signed. Accepting that some agreements need not be signed or reduced to writing, the improbability that matters relating to the paramount interests of children would not be reduced to writing and signed by the parties and approved by the court was undermined by the FDRS report that confirmed a formal agreement was to be prepared by the ICL. The respondent’s evidence as to this ‘agreement’ is also to be considered in the broader context of the applicant’s evidence that the respondent has said that he will not discuss financial arrangements until parenting issues have been resolved and further, that he has declined to particularise the orders sought.
Just as it is settled that the conduct of litigation is not merely a matter for the parties but is also one for the court, I have taken account of the need to avoid disruptions in the business of this court and prejudice to the interests of other litigants. A more immediate question of prejudice in this case arises from the need to consider the best interests of the children.
For the reasons above, I would not have granted the adjournment save that I concluded it to be in the children’s best interests that the respondent be afforded a final opportunity to put on his evidence so that the position of the children might be fully considered.
In the course of the hearing before me, detailed consideration was given to the orders that were submitted to be appropriate to be made in an attempt to progress the determination of the matter. The applicant provided a minute of proposed orders that was the subject of further discussion with all parties. The respondent indicated where he agreed and disagreed and why. While the hearing was stood down in order that the parties could confer in relation to a final minute of proposed orders, the respondent elected to return to his business and seemingly blamed the applicant for a failure to send the minutes to him by email.
Then followed further submissions in which I sought to ascertain where refinement to the orders was required and again, where the respondent agreed or disagreed with those orders. I concluded that the best way of confirming the respondent’s position in relation to the orders was to require that the applicant produce a final proposed minute, that this be sent in Word format to the respondent and ICL so that they could track the changes which were submitted as being appropriate to be made. The respondent has transmitted a revised minute containing the tracked changes that he contends to be appropriate. I have considered both his submissions in relation to those matters together with the final tracked changes that he suggests. The respondent’s minute of orders sent to the court containing those tracked changes shall remain on the court file.
It is convenient to address those orders in turn,
The trial of the proceeding, that was fixed for hearing pursuant to paragraph 3 of the Order made on 26 February 2018, must be adjourned.
The proceeding should be transferred to the Family Court of Australia at Melbourne pursuant to r 8.02 of the Federal Circuit Court Rules 2001. While the parties were agreed in transfer, I have considered the matters to which r 8.02(4) directs attention.
Orders are required to grant leave to the applicant, now for then, to file and serve her Amended Initiating Application dated 14 May 2019. The respondent agreed in the grant of leave. I do not agree that it is necessary for the applicant to have leave to file and serve her trial affidavit or financial statement.
The Respondent proposed that he be allowed a period of 21 days in which to file his Response, affidavits, Financial Statement and Outline of Case. As I have determined that the matter should proceed undefended if orders are not complied with, the Respondent should be allowed until by 4:00pm on Wednesday, 31 July 2019 to file and serve:
a)a Response to the Amended Initiating Application indicating where he agrees or disagrees with the final orders sought by the Applicant and containing any further orders or directions which he seeks;
b)an affidavit by which the Respondent shall address, insofar as he may seek to respond, each matter in the Applicant’s Trial Affidavit and the Family Report of Mr A;
c)each further affidavit on which he proposes to rely;
d)an updated Financial Statement; and
e)an Outline of Case, providing his response to the Outlines of Case filed by the Applicant and the Independent Children’s Lawyer and any further matter on which he relies in seeking final relief.
The respondent was substantially agreed in those orders.
In light of the procedural history to date, I will order that in default of compliance with the filing and service of that material, the applicant be at liberty to apply for the proceeding to be heard undefended. That order will be expressed more broadly so as to enable such application to be made if there be any default in compliance with the Order as made.
I have referred above to the ongoing difficulty that has obtained in securing completion of the taxation returns and financial statements for the Beckert Family Trust for the financial years ended 30 June 2017 and 30 June 2018. The respondent agreed in a series of orders that provided for the preparation of those returns. The only objection which he stated was that his former accountants should not be responsible for the preparation of those documents. The respondent submitted that those accountants were ‘corrupt’ and that they should have no part in the preparation of the returns and statements. Whether or not that be so, I accept the applicant’s submission that the process of appointment of other alternative accountants can be achieved by a regime under which the applicant will nominate two firms of accountants and the respondent may choose one of those firms. In default of him so doing, the applicant shall be at liberty to nominate and engage the accountant to prepare those returns. The parties were essentially agreed upon the terms pursuant to which the accountants would obtain the information and data necessary to complete those returns and statements.
The parties were likewise largely agreed upon a series of orders that provided for:
a)the completion of the tax returns of the respondent and the company through which he conducts his business;
b)ascertaining whether the parties’ SMSF was a compliant self-managed superannuation fund and if not, for identification of the steps that were required to make it compliant and the consequences of failing to do so.
I have assumed that the essential object in ascertaining whether the parties’ SMSF was a compliant fund is directed to quantifying the sum that has been withdrawn from that fund in order that it may be recouped.
The parties were agreed on the costs of securing the completion of the trust returns and obtaining advice as to the SMSF. Implicit in the orders that have been agreed is that the applicant should not, directly or indirectly, bear the respondent’s costs of the preparation of his personal tax return or that of the company by which he conducts his business.
The parties were also agreed that the monies payable to the applicant under earlier orders should be released to her without delay and that a further sum of $35,000 should be paid to her as an interim distribution with such sum to be characterised at trial. Having regard to the content of her trial affidavit and the history of the matter addressed above, I am prepared to grant that application.
The respondent sought a reciprocal payment to him of $35,000. For the reasons above, including in particular those set out at [38]-[42], I decline that application. On the facts as they presently appear, I am not prepared to countenance a payment to the respondent until there has been a significant measure of compliance with all orders, including those which provide for the filing of an updated financial statement.
The respondent objected to a payment of some $1,241.06 to Lumo which appears to be a utility provider of some sort. I note that the parties agreed in consent orders for a payment to Lumo on an earlier occasion. It is not necessary to resolve that issue at present. They were agreed that an outstanding fee to ASIC be paid from the monies held by LMG Lawyers.
The applicant is entitled, despite the respondent’s objection to an order pursuant to s 106A of the Act. I am satisfied on the whole of the case that the potential for further disputation is real and immediate and that no useful purpose is served by facilitating that this might occur. In default of the payment to the accountant of the costs associated with securing the preparation and lodgement of the tax returns and financial statements of the Trust, the advice as to whether the SMSF is a compliant fund and the interim payment to the applicant, an order pursuant to s 106A will secure that those payments are made without undue delay.
As to the continuing failure to secure that the net proceeds of sale of the properties be held in interests bearing accounts, the parties are agreed in orders that the balance of such monies be paid to the applicant’s solicitors forthwith. As concerns the monies held on behalf of the Trustee, the parties, in their capacity as directors of that trustee are agreed that those monies be held in in a Westpac Term Deposit Account. Ancillary orders are required to facilitate the immediate payment of those monies by the firms of solicitors who presently hold them; LMG Lawyers and Toner any May Legal respectively.
An affidavit filed by the applicant’s solicitor identifies the accounts in which those monies are held and exhibits copies of current bank statements. Those statements confirm that there has been no good reason why the net proceeds of sale of the properties could not have been transferred to those accounts. The respondent’s submissions to the contrary are rejected. The evidence confirms that the applicant’s solicitor has already opened a Controlled Monies Account on behalf of the Trustee. No credible explanation was offered why the net proceeds of sale of the properties owned by the Trustee had not been deposited to that account. To assist in the orderly transfer of monies from LMG Lawyers and Toner and May Legal, the applicant’s solicitors are forthwith authorised to serve a copy of the Order on those lawyers.
The parties are also agreed in orders that will regulate the making of full financial disclosure.
The applicant applied for costs and sought that a sum of $20,850 be paid.
The respondent opposed that application and sought and was granted an opportunity to file submissions respecting the question of costs. That submission has been filed and I have considered it.
In general, parties to a proceeding under the Act should bear their own costs: s 117(1). However, power is conferred on the court to make such order as to costs as it considers just where it is of the opinion that circumstances justify it in doing so: s 117(2). The power is subject to a number of provisions, including the Rules of Court.
The Federal Circuit Court Rules 2001 (Cth) confer power when making an order for costs, to either: set the amount of costs; set the method by which such costs are to be calculated or to refer the matter for taxation in the manner there provided. In addition, the court may set the time for payment of costs: r 22.02(2).
Once the court has formed the opinion that the circumstances justify it in doing so, the general rule as expressed in s 117(1) will yield to the power conferred by s 117(2): Penfold v Penfold (1980) 144 CLR 311, 315. It is therefore not the case that the power to award costs may be exercised only in a clear case or that exceptional circumstances be shown: Mallett v Mallett (1984) 156 CLR 605, 631-632.
The power to make an order for costs is relevantly constrained by sub-s 117(2A) which provides that the court shall have regard to the matters enumerated in that provision in considering what order (if any) should be made in relation to costs. Properly construed, there is nothing in s 117 which prescribes either that more than one factor must be present before an order for costs may be made or that a comparative evaluation of the weight of each such factor must be undertaken in the exercise of the discretion to award costs: LAC & TRF & LKL [2005] FamCA 158, [41]; Eldred & Eldred (No 2) [2015] FamCA 188, [22]. The authorities recognise that there may be one factor which so dominates the particular facts and circumstances of the case that it may sufficiently provide a sole basis for the conclusion that the discretion ought be exercised in favour of, or against, an order for costs.
I am satisfied that an order for costs should be made. However, it is necessary to conclude, and in this case I am of the opinion, that there are circumstances justifying the making of an order for costs.
While they were not the subject of submission, I have considered the matters addressed by s 117(2A). I am satisfied that there is a present disparity in the parties respective financial positions and that this could have been addressed had the trial proceeded. The factor which is of particular significance in the present case is the respondent’s conduct and non-compliance with orders, which I have described fully above. As concerns the parties’ financial positions and matters of particular significance, I refer in particular to the matters in [38]-[42] above.
In relation to any other relevant matters, there are at least two factors which warrant consideration. First, while the statutory discretion conferred by s 117 to award costs is constrained by the prescription of the considerations listed in s 117(2A), proceedings under the Act are different from civil litigation. In particular, in an application for the adjustment of property interests, each of the party’s is concerned with a just and equitable adjustment of the assets which comprise their asset pool. By extension, each of them is reasonably entitled to expect that their rateable share in that pool will not be eroded unnecessarily by unwarranted disputes. Conversely, they are reasonably entitled to expect that the hearing of their parenting and property applications will not be delayed as a consequence of repeated non-compliance with orders. Secondly, I am most concerned that it is necessary to recognise the scarcity of the court’s available resources and that the diversion of those resources from the demands of other cases as relevant considerations.
The applicant was directed to prepare an affidavit which provided a breakdown of the basis on which the costs were calculated. I have considered that affidavit. Both counsel’s fees and the solicitors’ charges do not appear unreasonable or excessive.
I am prepared to allow that not all of the costs incurred by the applicant will be thrown away by reason of the adjournment. Indeed the claim for costs demonstrates that this is also recognised by the applicant’s lawyers. However, the matter had been set down for hearing in February 2018 and the circumstances in which the trial was vacated rested substantially with the respondent. Yet the inevitable delay in securing a new trial date necessarily means that significant costs will again need to be incurred.
I will set and allow the applicant a sum of $15,000 by way of costs.
The ICL also sought that a notation be made to the order recording that the respondent had that day been invited to undertake hair follicle testing. While the respondent opposed the making of that notation I see no reason why it should not be made. Further, in light of the opinions expressed by Mr A it would quite useful, from the perspective of the future assessment of the children’s best interests, to record that that invitation had been made, so allowing the respondent an opportunity consider it and to lead evidence at trial as to how he responded to that invitation.
I certify that the preceding eighty-four (84) paragraphs are a true copy of the reasons for judgment of Judge A Kelly
Date: 31 May 2019
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