BERRIDGE & LEIGH
[2017] FCCA 2876
•24 November 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| BERRIDGE & LEIGH | [2017] FCCA 2876 |
| Catchwords: PRACTICE AND PROCEDURE – Undefended hearing – orders made by consent granting leave to proceed undefended in default of compliance with orders for financial disclosure – failure to provide financial disclosure – applicant pursued claim for final relief where respondent’s claim for compensation not disclosed – applicable principles. |
| Legislation: Evidence Act 1995 (Cth), s.140 |
| Cases cited: A and Z [2006] FamCA 179 Texts cited: Cross on Evidence, 10th Ed (2015) |
| Applicant: | MS BERRIDGE |
| Respondent: | MR LEIGH |
| File Number: | MLC 12155 of 2015 |
| Judgment of: | Judge A Kelly |
| Hearing date: | 20 June 2017 |
| Date of Last Submission: | 20 June 2017 |
| Delivered at: | Melbourne |
| Delivered on: | 24 November 2017 |
REPRESENTATION
| Solicitor for the Applicant: | Mr Thexton |
| Solicitors for the Applicant: | Thexton Lawyers |
| The Respondent: | No appearance by the Respondent |
ORDERS
The property situate at and known as Property A (Property), forthwith be placed on the open market for sale.
In relation to the said sale of the Property:
(a)a Real Estate Agent, to be appointed for the purposes of effecting the sale, shall be selected by the President of the Real Estate Institute of Victoria (or his/her nominee), the costs of which selection shall be a selling expense of the sale;
(b)within 7 days of the selection of that Real Estate Agent, the sale price and terms of the sale shall be as recommended by the President of the Real Estate Institute of Victoria (or his/her nominee). The costs of such recommendations shall be included as a selling expense of the sale;
(c)a conveyancer to be appointed for the purposes of effecting the sale (Conveyancer) shall be selected by the President of the Real Estate Institute of Victoria (or his/her nominee), the costs of which conveyance shall be a selling expense of the sale;
(d)the parties shall follow the reasonable recommendations of the nominated Real Estate Agent and Conveyancer, including in relation to the marketing and sale of the Property;
(e)the Property may be sold by public auction or private treaty as may appear expedient in the discretion of the Real Estate Agent.
The proceeds of sale of the Property shall be applied as follows:
(a)first, to pay all costs, commission and expenses of the sale including the costs of the conveyance;
(b)secondly, to pay any sum due and payable on any mortgage registered on title to the Property;
(c)thirdly, to pay any sum due and payable in respect of land tax, rates or other outgoings as may be required to complete the sale;
(d)fourthly, as to the balance (Balance), such sum to be paid into the trust account of the Conveyancer and be applied and paid, as required, in accordance with paragraph 8 of this order.
The applicant shall retain:
(a)any monies standing to the credit of her bank accounts;
(b)her motor vehicle;
(c)her superannuation;
(d)her personal effects.
IT IS DECLARED THAT the value of the personal property referred to in paragraph 4 of this order is $43,316.
The respondent shall retain:
(a)any amount standing to the credit of his bank account;
(b)his motor vehicle;
(c)his superannuation;
(d)any chattels in the Property;
(e)his person effects.
IT IS DECLARED THAT the value of the personal property referred to in paragraph 6 of this order is $76,500.
The Balance, together with the sum of $43,316 and the sum of $76,500 be divided in accordance with paragraphs 3(d), 4, 5, 6 and 7 above so as to effect an overall division of the parties’ property as to:
(a)85 per centum, to the applicant, and;
(b)15 per centum, to the respondent.
Save for the purposes of enforcing any orders made above:
(a)each party is solely entitled, to the exclusion of the other, to all and any other property in the possession of such party as at the date of this order;
(b)each party foregoes any claims that they may have as to any superannuation, compensation, insurance, employment or any other benefits belonging to, earned or receivable by the other;
(c)all insurance policies remain the sole property of the named owner;
(d)each party is solely liable for and indemnifies the other against any liability encumbering any item of property to which that party may be entitled pursuant to this order, and in respect of any other liability that may be incurred in their name;
(e)any joint tenancy of the parties in any real or personal property is severed.
The parties do and abstain from doing all such acts and things (as the case requires), and sign all necessary documents as may be reasonably necessary so as to affect a sale of the Property, including as by execution of documents, complying with reasonable requests of the Real Estate Agent and Conveyancer and in giving vacant possession of the Property prior to completion of the sale.
Notwithstanding paragraph 10 above, and the court considering it necessary to exercise the powers of the court under s 106A(1) of the Family Law Act 1975 (Cth), a Registrar of the Federal Circuit Court of Australia is appointed, in default of the performance or observance of the obligations in paragraph (10) above, to execute any documents in the name of the parties or either of them and do all acts and things necessary so as to give validity and operation to the sale and transfer of the Property pursuant to paragraphs 1-3 inclusive of this order.
Liberty to apply be reserved to apply for further directions as may be required so as to effect and complete the sale of the Property.
IT IS NOTED that publication of this judgment under the pseudonym Berridge & Leigh is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 12155 of 2015
| MS BERRIDGE |
Applicant
And
| MR LEIGH |
Respondent
REASONS FOR JUDGMENT
Introduction
These reasons for judgment explain why orders have been made in an undefended application for adjustment of property interests as between parties to a de facto relationship.
By her outline of case, the applicant sought a sale of the parties’ property situate at Property A (Property) and that 100% of the net proceeds be payable to her. Although he did not participate in the trial of the proceeding, by his response, the respondent had sought only that there be a property settlement pursuant to s 90SM of the Family Law Act 1975 (Cth) (Act).
In substance, I have concluded that the Property should be sold and that it is appropriate for the parties’ interests to be adjusted as to 85% in favour of the applicant and 15% in favour of the respondent.
Background
The following background is based upon an analysis of the parties’ affidavits, the evidence in which was otherwise contradicted. Although the hearing proceeded undefended, it is consistent with the exercise of power to adjust property interests that regard may be had to the material filed by the absent party: A and Z [2006] FamCA 179, [72] citing Chang and Su (2002) FLC 93-117. Accordingly, the matters set out below include both matters that were common ground and my findings of fact upon particular issues. Where issues of dispute arose, I have addressed them separately in a later section of these reasons. Where it has been necessary to decide disputed issues of fact I have applied the civil standard of proof to the resolution of that issue.
The applicant who is aged 38 years variously deposed that she worked as a (occupation omitted), been retrenched, and is now a student of (course omitted).
The respondent, aged 41 years, had worked as a (occupation omitted) but by reason of a workplace injury has not worked since 2013. The respondent deposed that he worked for an (employer omitted). He had been engaged in physical work all his life and had no formal qualifications.
The respondent deposed that he often worked seven days per week so as to provide for the applicant and for his family. The applicant agreed that sometimes the respondent did work seven days per week but said that he also maintained a serious drug habit.
The parties’ relationship began in 2004 and ended in October 2014. They did not marry. Until 2009, the applicant had lived at home with her parents while the respondent lived in an apartment.
The parties’ affection for one another grew quickly and some two months after they had met, the respondent proposed to the applicant. As the respondent had no steady employment at that time, the applicant would occasionally pay his rent and other bills.
There is one child of the relationship, X, now aged four years.
In 2009, the parties began cohabitation in the respondent’s apartment. The applicant had an aspiration that the parties would buy a home together and to that end set about paying off the respondent’s outstanding credit cards. Their relationship encountered difficulty. The respondent developed an obsession with a (omitted) game that he played online with his friends. He began to ignore the applicant, who moved back to her parents home following an argument in which the respondent destroyed various items of the applicant’s property.
In late 2009, the parties moved to accommodation in (omitted), which they rented.
The relationship continued to be marred by domestic violence. On the applicant’s own case, it is clear that the verbal abuse was reciprocated and that she spoke of the respondent in deliberate and belittling terms. In addition, the respondent also had a propensity for physical abuse for which he would, on occasions, later apologise. In February 2010, police attended the parties’ premises following allegations that the respondent had repeatedly pushed the applicant against a wall.
In April 2013, the parties purchased the Property. The purchase price for the Property was $350,000 of which $275,000 was financed by way of mortgage obtained from the (omitted) Bank. The applicant contended that the balance was contributed by her as to: (a) $50,000 from her mother, and; (b) $25,000 from savings that she had accumulated during the relationship. The respondent agreed in this account of the purchase, save that he denied the final contribution was from the applicant alone. He said the parties had accumulated that sum of $25,000 during the period of their relationship by virtue of an agreement which they had made, whereby one wage would be applied to household bills and the other would be saved. The applicant challenged the respondent’s version of events as to his having made any contribution in relation to the purchase of the Property.
The applicant conceded that the respondent had indeed started saving when the applicant told him that she had been doing so. The applicant further said that the respondent had in fact also saved $25,000 which he had agreed to, but did not, contribute toward the purchase price.
The applicant further deposed that although she had said to the respondent that they should be on title to the Property as joint tenants and not as tenants in common, he had not agreed to this. The applicant said that she ‘never got around to consulting a lawyer about this.’ By their respective financial statements each of the parties disclosed that the parties owned the Property. The title was not put into evidence.
In addition, the respondent deposed that the parties shared a joint credit card and that most of the parties spending came from the credit which was available in that account. He contended that the applicant did not account for her wages and that he had no access to those wages.
At the same time, the respondent contributed in the way of white goods such as a washing machine, some furniture and solar panels.
In late April 2013, the respondent sustained injury to his knee while he was at work. He has not worked since that injury was sustained. The injury exacerbated a pre-existing (omitted) injury.
The parties’ child was born on (omitted) 2013. The respondent deposed that as a result of his unemployment following his injury, he was able to care for the child while the applicant worked. The applicant contested this, deposing that the respondent looked after the child for perhaps two days a week while her mother otherwise cared for the child.
On 4 August 2013, the respondent underwent surgery to his knee. Following that surgery, on 20 August 2013 the respondent became violent and then left the home, taking some cash and various electronic goods including the home phone and a modem. When leaving, the respondent said he would disconnect the electricity. While the respondent was absent from the Property, the applicant consulted a nurse who suggested a diagnosis of post-natal depression.
The respondent returned to the Property after an absence of about two weeks. The applicant deposed that from this time the respondent had nothing to do with the child or his care and for the most part slept on a couch. The respondent began to go out at odd hours of the day. He also had a propensity to lock himself in the garage.
In September 2013:
(a)the applicant was made redundant and from a redundancy payment (of about $12,000) purchased a car;
(b)the respondent began an (omitted) job at which he worked on a part-time basis for about four hours per day;
(c)the respondent’s mother and niece came to stay at the Property. The arrival of the respondent’s mother and niece at the Property occurred without notice to the applicant.
In October 2013, while the respondent was entertaining his friends, the applicant asked him if he was consuming drugs. He said that he was. An ice pipe fell from the respondent’s pocket. An argument ensued. The applicant objected that the Property was not to become a drug house. The respondent stated that he would do as he wished. The applicant deposed that the respondent’s drug habit had begun while he was living in (country omitted) and said that he had started with marijuana, progressed to cocaine and moved to ice. The respondent denied this.
From October 2013, the respondent was increasingly absent from the Property. When he was present, the parties’ arguments ensued. The respondent spoke incessantly of his injured knee. The applicant kept the Property and cared for the child with little if any help from the respondent. She became increasingly anxious for her safety.
From early 2014, the respondent experienced episodes of escalated fury which he directed at the applicant. On one occasion, when the parties were to attend the applicant’s widowed mother on the anniversary of her husband’s death, the respondent became irrational. Later, the respondent admitted to his drug addiction and said that he would try to withdraw from drug usage. Instead, the respondent’s violence toward the applicant intensified until the parties’ separation.
In May 2014, a conversation took place between the respondent, the applicant and her brother as a result of which the parties agreed that the respondent would remain in the Property and pay outgoings pending a sale of the Property. The respondent reneged on this proposal.
The applicant returned to work in about June 2014. She deposed that she had made payments in reduction of the mortgage liability in the period that she had been on maternity leave.
In July 2014, the applicant resumed occupation of the Property with the child and her dog. The parties did not cohabit. The respondent was frequently absent. He continued to spend time in the garage in the company of his friends. The respondent deposed that even when he was living away from the Property he would return on a daily basis to spend time with his son.
In September 2014, the applicant discovered that the respondent had withdrawn $2,000 from the parties’ mortgage account. Following this discovery, the applicant contacted the bank to remove the possibility that the respondent could do so again.
The applicant was without income from September 2013 to July 2014. During that period she had to rely upon the respondent for such support as he would provide.
Following the parties’ separation, on 8 October 2014, the respondent sought and obtained a family violence intervention order against the applicant. The order was made ex parte and on an interim basis. The order restricted the applicant from attending the Property. On the return of the application, restraining orders were made against each of the parties. Those orders apparently remain on foot.
Since October 2014, the applicant has made attempts to resolve the parties’ property claims but says that the respondent has not responded to his requests. The respondent countered that he was advised by a duty lawyer not to contact the applicant by reason of the operative terms of the intervention orders.
In 2015, the respondent also made several attempts to resolve, by mediation, disputes in relation to parenting. The respondent deposed that the applicant declined to participate in those sessions. The applicant cited several examples in which she too had sought unsuccessfully to mediate a broad resolution of the matter.
Since at least November 2015, the applicant has been unemployed and dependent upon her mother for housing and support.
The respondent had been in receipt of WorkCover payments which ceased in September 2015. In addition, the respondent received a lump sum payment of $118,000 after expenses from a claim on his (omitted) superannuation policy. The respondent deposed that he is unemployed and, as at June 2016, that the lump sum had depleted to $50,000. He swore that he found being unemployed very challenging, that he has no qualifications and faces an uncertain future until the determination of his claim for assessment of his general damages upon his injury. The respondent exhibited a report from an orthopaedic specialist which confirmed the nature of his knee injury and its severity.
While the applicant believes the respondent has been preparing a claim for recovery of compensation in respect of his injured knee, she adduced no evidence about that claim. The respondent provided some detail. As at February 2014, the respondent’s treating orthopaedic specialist considered that his patient’s prognosis was poor: “Clinically, he is struggling with his lack of movement, along with the pain and swelling . . . he is at the cross-roads now to be looking at using his previous work experience to look at more appropriate work for the future.” A medico-legal opinion obtained in April 2015 by the Victorian WorkCover Authority concluded that the respondent was permanently unfit for his prior employ but that he had a capacity for some alternative sedentary employment. A medico-legal specialist also opined that as at 27 May 2015, the respondent was immediately fit for full time employment, subject to his physical limitations.
The respondent deposed that he had not damaged the Property, that he consented to an appraisal of the Property by an agent and had been paying one half of the mortgage instalments. He said he had also paid all of the other outgoings incurred in relation to the Property. The applicant provided a table which outlined the various text messages that had been sent her from October 2014 – November 2015, the majority of which were too cryptic to attribute meaning to (but which, the applicant said, contained a sub-text that was generally insulting).
On 20 May 2016, the Property was given a market appraisal by a local agent who placed a value on it of $450,000 to $490,000. The market appraisal was made pursuant to an order of the court. The agent provided details of some 12 comparable properties which had sold for $445,000 – $535,000. The agent recommended that an optimal return on the Property would be achieved if it were sold by public auction. The market appraisal did not provide title particulars to the Property.
For a time the applicant continued to pay the mortgage instalments of $800 each month but could not afford to continue to do so. The respondent adopted the stance that he would pay bills when he chose to do so. The respondent has paid no child support at any time.
While the applicant and her child have continued to live with her mother, she recognises that she has over-extended her stay. The applicant has been wholly responsible for the care and upkeep of the child by reason that the respondent has provided no child support.
The applicant has enrolled in a (course omitted).
The result of the respondent’s claim for compensation is unknown.
Since at least December 2016, the mortgage has been in arrears.
Procedural history
On 24 December 2015, the applicant commenced this proceeding. Relief sought by the applicant included that the respondent vacate the Property, that the Property be sold, the mortgage be discharged and that the net proceeds of sale be divided between them as to 90% in favour of the applicant and 10% in favour of the respondent. Ancillary relief was also sought that the respondent pay outgoings on the Property pending sale and that the respondent make financial disclosure.
At the first mention date, there was no appearance by or on behalf of the respondent and the matter was adjourned.
On 17 May 2016, the respondent appeared in person and consented to orders that each party make financial disclosure to the other, the Property be made available for inspection, the parties attend a conciliation conference and that the applicant have liberty to apply for the matter to be heard on an undefended basis.
On 23 June 2016, the respondent filed a response, financial statement and affidavit in reply. However, the lawyers who had prepared those documents on his behalf then withdrew as solicitors on the record.
By his solicitors, the respondent filed a response in which he sought parenting orders and that the property application be deferred until the applicant had made full and frank disclosure of her financial position. By his notice of risk, he denied any family violence.
The parties attended the conciliation conference.
On 24 October 2016, final orders were made by consent respecting the parenting application. Orders were made for the preparation for trial of the property application on all issues.
On 16 December 2016 (and again on 20 April 2017), the applicant filed an application in a case by which she sought liberty to proceed on an undefended basis in respect of her application for adjustment of property interests and that the net proceeds of sale of the Property now not be divided, but instead be paid as to 100% in her favour.
Conformably with orders made on 24 October 2016, the applicant served subpoenas on the mortgagee, the Victorian WorkCover Authority and Victoria Police. No evidence was adduced from any of those sources.
As noted, since December 2016, the mortgage has been in arrears.
The respondent appeared at the hearing of the application in a case listed on 16 February 2017 and consented to orders that the applicant have sole parenting responsibility for the child. In relation to the property application, the parties also agreed in orders that the respondent pay arrears then outstanding on and future instalments due under, the mortgage together with other outgoings on the Property.
A further order was made that would facilitate inspection of the file retained by the respondent’s solicitors concerning his workers compensation claim and, again, that he provide financial disclosure. No evidence was adduced from his solicitor’s file.
The respondent did not make financial disclosure pursuant to the orders that were made, and then extended, by consent. The respondent has accordingly not disclosed the precise details of his accumulated superannuation entitlements. Nor has he disclosed any payment made to him in relation to his claim for compensation or the progress of his proceeding for such payment.
The respondent has not complied with orders that he undergo random drug screening, despite requests of the applicant’s lawyers to do so.
On 9 May (and again on 25 May 2017), the matter was listed for mention and on each of those dates the respondent did not appear. The matter was set down for an undefended hearing. Orders were made setting the matter down for an undefended hearing because instalments due under the mortgage were not being paid and so the equity in the Property was being eroded. Opportunities afforded to the respondent had not been taken. The applicant was entitled to a hearing.
When the matter was set down for hearing, an order was made that the applicant could affect service of her outline of case by transmitting that outline to the respondent’s email address. I was satisfied by an affidavit of service that the applicant’s solicitor had affected service of the applicant’s outline in accordance with that order.
Financial disclosure
By rule 24.03 of the Federal Circuit Court Rules 2001, a party who is required to file a financial statement is obliged to make full and frank disclosure of their financial position as detailed in that rule.
The failure to make full and frank disclosure of their financial position is important for at least five reasons: (1) the court’s determination of what orders (if any) are just and equitable by way of an adjustment of property interests is impeded; (2) legal, accounting and other costs incurred in proving a case are significantly increased; (3) delays which attend the just determination of proceedings are exacerbated; (4) the demands which are made on the limited resources of the court are compounded; (5) the determination of claims by other litigants is delayed: see, e.g., Oriolo & Oriolo (1985) FLC 91-653, 80,256 (Emery, Fogarty and Murray JJ), citing Liversey v Jenkins (1985) 1 All ER 106, 114 (Lord Brandon), and approving In the marriage of Briese & Briese (1986) FLC 91-713 (Smithers J).
Collectively, those considerations serve to emphasise the positive obligation to which parties are subject to make financial disclosure in a comprehensive manner and without delay: Oriolo, 80,256. In Briese, Smithers J observed that the Rules of Court were not to be exploited as a vehicle to mask a party’s true financial position, or to be employed as a means of adding confusion, complexity or uncertainty as to the true financial position. Nor should those rules be misunderstood as marking the outer limits of the obligation. Rather they served to indicate the avenues by which disclosure ought properly to be made.
In proceedings for an adjustment of property interests, parties do not stand in the same relation as those conducting inter partes litigation. Parties to a marriage or a de facto relationship are not strangers who owe no duties to the other respecting disclosure of information relating to property which was acquired, improved or augmented in the course of their relationship. For this reason, they are obliged to make financial disclosure. In Oriolo, the Full Court emphasised that the need for each party to have an accurate understanding of the financial position of the other lay at the heart of an application for adjustment of property interests or maintenance: at 80,256-7 citing Briese. As the authorities illustrate, accurate disclosure of the financial position is essential to the exercise of the discretion in determining what is just and equitable when making orders adjusting property interests.
The primary task of identifying the parties’ interests in their property is made problematic where a party does not properly make financial disclosure. In such a case, the applicant and the court must confront how identification and valuation of the parties assets and liabilities may be addressed: Giunti & Giunti (1986) FLC 91-759. There, Fogarty, Murray and Nygh JJ posed the rhetorical question of how it could be open to the party which had failed to comply with the obligation of disclosure to rely upon the absence of evidence which, if available, would otherwise support the making of a property order which was just and equitable? Their Honours concluded that the court must make a finding as to the existence and value of such property even though it was necessary to do so in the most general terms: at 75,555 citing Monte & Monte (1986) FLC 91-757 (Simpson, Murray and Frederico JJ). The Full Court further recognised, that faced with the task of making findings that the parties’ assets were of a likely certain value, it had been for the husband to explain such matters as were within his knowledge. The Court did not disturb the finding that the wife’s contributions (financial and non-financial) entitled her to an order representing 60% of the assessed value of such property. A parties’ design of obfuscation and evasion is not an insuperable barrier to the determination of what orders are just and equitable in the adjustment of property interests: see also Black & Kellner (1992) FLC 92-287.
A different position falls for consideration where it is found that a party has deliberately failed to comply with an order to make financial disclosure. The court may then be less cautious in its approach in making findings favourable to the opposing party: Weir & Weir (1993) FLC 92,338 (Nicholson, Strauss and Nygh JJ). More recently, it has been suggested that financial non-disclosure means that “the Court need not shy away from a robust exercise of discretion in favour of the wife”: McDermott & McDermott [2017] FamCA 376, [301] (Foster J) citing Kannis and Kannis (2003) FLC 93-135; see also Jacks & Parker [2011] FamCAFC 34, [62], [122].
The holding in Weir has been regarded as meaning that “failure to disclose, such that the court cannot determine the content or value of the pool should not result in the other party failing in his or her case on the basis that the pool cannot be fully ascertained”: Elkhouri & Amatullah [2017] FamCA 688, [121] (Gill J). In this context, Gill J recognised that the High Court has been careful to emphasise that its decision in Stanhope v Stanhope (2012) 247 CLR 108, [46], should not be understood as: (1) charting the metes and bounds of what is just and equitable when making an order under s 79; (2) denying the importance of giving consideration to other countervailing factors which may bear upon what is just and equitable in a particular case. Gill J reasoned that where non-disclosure has impeded the identification of what property comprises an asset pool or the determination of the true value of such assets, the court was entitled to anchor property orders by reference to what it considered to be just and equitable in those circumstances. Conversely, it cannot be considered to be just and equitable to permit a defaulting party to withhold property by dent of such non-disclosure. His Honour also recognised that another basis on which to assess the matter was to have regard to the identified (but unvalued), property of the party in default as constituting a financial resource of that party.
A similar principle was stated in Chang & Su (2002) FLC 93-117. There, Kay and Dawe JJ held (Finn J agreeing), that a failure to make full and frank disclosure of financial circumstances allowed the court to find that an indeterminate undisclosed amount was held by that party and to make property orders without reference to an overall pool. Kay and Dawe JJ at [67] considered that those principles were well settled.
In Hickey & Hickey; the Attorney General for the Commonwealth of Australia (2003) FLC 93-143 at [40], Nicholson CJ, Ellis and O’Ryan JJ held that because s 79 requires consideration of the parties’ entire property interests, they were obliged to make full and frank disclosure.
More recently, in Elkhouri & Amatullah [2017] FamCA 688, Gill J considered the approach to be taken where there was a complete absence of evidence as to the value of certain property. His Honour, referring to Chang & Su observed that the Full Court had held that the only imperative the trial judge could fall back upon was that the order be just and equitable. Gill J held at [120] that this recognised, “from first to last, the s 79 discretion is governed by the principle that the exercise be just and equitable, both as to whether any order is made and as to whether a particular order is made.” See also Trang & Kingsley [2017] FamCAFC 120, [34], [46] (Kent J, Murphy and Strickland JJ agreeing). The distinction between the existence and value of property is important. Where property can be identified as being, or as having been, in existence, it may be considered.
Undefended hearing
Non-participation in a proceeding may represent another means of impeding the determination of an application. When one party fails to appear in a proceeding, whether at an interlocutory application or a final hearing, the court may order an undefended hearing. But where a proceeding is listed as an undefended hearing, it does not follow that the orders sought by the participating party will be made by the court.
Provided a party has acknowledged service, the court may proceed with the hearing of an application as if it were undefended: para 25.12(b) Federal Circuit Court Rules 2001. In determining what orders, to make, the court will ensure that the absent party is allowed procedural fairness: F and S (2005) FLC 93-208 (Bryant CJ, Kay and Holden JJ). As such it is imperative for the attending party to ascertain whether the absent party was properly put on notice that the hearing was listed and may be heard in their absence: see also rules and of the Family Law Rules 2004.
In McMahon and McMahon (1976) FLC 90-128, the Full Court held that the court is not precluded from hearing proceedings in the absence of a party where adequate notice has been given. Evatt CJ, Pawley SJ and Ellis J stated at 75, 607 that where a court proceeds to deal with a matter as an undefended matter it remains bound by the same general requirements as to proof as in a defended matter; however, “This does not mean that a court necessarily has to insist on detailed evidence, make elaborate findings and give reasoned decisions in undefended matters. This would cast too onerous a burden on the court, and clog up already crowded lists. Nevertheless it must be satisfied that the evidence supports its findings and orders.” See also Zane & Allan [2008] FamCAFC 115, at [205] (May J).
A proceeding will be treated as undefended when the respondent does not challenge or put in issue any of the components of the cause of action in question. The fact that the respondent is opposed to the court making the order and/or wishes to defend the granting of the order which is sought does not make the proceeding defended if the issues raised by the respondent are irrelevant to the issues constituting the cause of action: see A and Z [2006] FamCA 179, [64] (Faulks DCJ, Warnick and Boland JJ) citing Abbott and Abbott (1995) FLC 92-582. However, in A and Z at [22], the Full Court noted the settled principle that once it appears there is a real question to be determined (whether of fact or law) and that the parties’ rights depend upon it, then it is not competent for the court to dismiss the action as frivolous, vexatious or as an abuse of process: citing Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91 (Dixon J). Those principles constrain the approach to be taken on an undefended hearing. More precisely, if the applicant in an undefended hearing advances an untenable claim or submission, it must be rejected.
The nature of an undefended hearing was also dealt with in Tate v Tate (2000) FLC 93-047. There, Nicholson CJ, Kay and Waddy JJ held at [107]-[108] that in exercising the discretion to order an undefended hearing, the court may in an exceptional case, proceed with a hearing as being undefended. Their Honours observed that “no litigant, whether legally represented or not, should harbour any doubt that manipulation of court processes . . . through disregard of and deliberate non-compliance with its order and directions will attract other than the strongest measures from the Court”: at [108]; see also Zane & Allen [2008] FamCAFC 115.
A similar result may obtain where a respondent chooses not to participate in a proceeding. In Lanceley and Lanceley (1994) FLC 92-491, a respondent took no active part in the proceedings. Barblett DCJ, Frederico and Lindenmayer JJ said at 81,104:
A respondent who merely wishes to ask the court to dismiss the appellant’s application (and seeks no other order) and who wishes to place no evidence before the court, but who wishes to submit that the application should be dismissed even on the applicant’s evidence, is certainly not obliged by the Rules to file any answer or affidavit, but only a Notice of Address for Service. However, if such a respondent then attends the hearing and in fact makes no submissions against the application (as the husband did in this case) then, in anyone’s language, the application is ‘undefended’ or ‘unopposed’.
Those observations were endorsed in A and Z, at [66]; see also Zane & Allen [2008] FamCAFC 115, [210] (May J) citing Abbot, supra.
In Zane & Allen [2008] FamCAFC 115 at [2012], May J recorded certain principles that had been stated by the trial judge in relation to the conduct of an undefended hearing. They were as follows:
(a)the Response then becomes a nullity (Rules of Court);
(b)where an application has been struck out due to the default of a party to make full frank and prompt disclosure of their financial affairs, the party ought have no further right to be heard without order of the court (Tate and Tate);
(c)the applicant has a duty to the court to make full disclosure and deal with the court in good faith (In the marriage ofKrebs (1976) FLC 90-117);
(d)the applicant must establish the case with admissible evidence (Tate);
(e)the court has the discretion to have regard only to the evidence of the party before the court and not the affidavit evidence of the excluded party (Tate). Conversely, the court retains a discretion to have regard to part or all of the affidavit evidence filed by the excluded party;
(f)the court may exercise a discretion to have regard to agreements reached between the parties prior to the hearing as to such matters as value of property where such agreements have been noted on the court record or where there is admissible evidence establishing such agreement (Tate);
(g)the court remains bound by the same general requirements as to proof as apply in a defended matter. This does not mean that a court necessarily has to insist on detailed evidence, make elaborate findings or give reasoned decisions in undefended matters. Nevertheless, it must be satisfied that the evidence supports its findings and its orders (McMahon and McMahon (1976) FLC 90-128);
(h)subject to procedural fairness the court may allow the remaining party in an undefended hearing to rely on affidavit material filed and served on the excluding party together with oral evidence and the tendering of documents to establish a case: (F and S (2005) FLC 93-208);
(i)there is a wide discretion as to the extent of the involvement to be permitted to a defaulting party in the undefended hearing. This discretion must be tempered with regard to procedural fairness, natural justice and the requirement to do justice to all of the parties. Each case will demand an individual assessment by the court as to the appropriate procedure to be adopted. The reasons giving rise to the determination that the case should proceed undefended will no doubt have an impact upon decisions then made regulating the procedures to be adopted the hearing;
(j)in appropriate cases the court may have regard to the evidence of the remaining party only.
Upon the application of those principles, May J recorded at [213] that the trial judge had held that the husband had forfeited a right to have his affidavits read upon the hearing. His Honour concluded at [238], by reiterating the Full Court’s observations in Tate & Tate which held that appropriate sanctions are essential to secure obedience to its orders and directions in pursuit of the paramount objective that the attainment of justice is achieved in the particular case.
As noted, a distinction is to be drawn between the approach taken in civil litigation and that appropriate to property proceedings under the Act. In part, this is because the court is not infrequently confronted with litigants who fail in their duties of full, frank and prompt disclosure of their financial affairs. Such a party may have no further right to be heard without an order of the court and it may be appropriate not to permit that material be tested by cross-examination: A and Z, at [68]-[69] citing Tate v Tate (2000) FLC 93-047, 87,712. The trial judge also has the discretion to exclude affidavits from witnesses who are unavailable for cross-examination: see e.g. Atkinson and Atkinson (1997) FLC 92-728 (Baker, Lindenmayer & Smithers JJ) Chang and Su (2002) FLC 93-117 (Finn, Kay and Dawe JJ).
By extension, a settled rule of evidence commonly known as the rule in Jones v Dunkel is that in civil litigation, the unexplained failure of a party to give evidence on a material issue may (not must) support an inference more easily to be drawn from the evidence which had been called by the opposing party: see Cross on Evidence, 10th Ed (2015), [1215]. The rule is subject to exceptions. Relevantly, while the failure to call such evidence does entitle the court to take into account the fact of such failure, it does not entitle the court to conclude that the uncalled evidence would have been damaging to the case of the party who did not call it: HML v R (2008) 235 CLR 334, [303] (Heydon J). As importantly, the rule cannot be employed to fill gaps in the evidence: Jones v Dunkel (1959) 101 CLR 298, 308, 312, 321.
The rule in Jones v Dunkel operates most clearly in inter partes litigation where parties participate in and contest the issues at trial. However, in my opinion, the rule gains added force where the litigation is between parties to a marriage or de facto relationship where their property proceeding rests on a foundation that each is entitled to full and frank disclosure from the other in order that an assessment can properly be made as to what orders are just and equitable.
It follows that where the applicant has adduced evidence on an issue which the respondent might reasonably be expected to have answered, the failure to provide an answer – including by a failure to make disclosure – allows for an inference more confidently to be drawn from that evidence which the applicant has been able to adduce.
The intersection between principles which govern the determination of property settlement proceedings where a party has failed to make financial disclosure and the rules of evidence will operate so as to promote the paramount object that orders made are just and equitable.
I have had regard to those principles in the present case.
Adjustment of property interests
Part VIIIAB of the Act concerns the subject, Financial matters relating to De Facto relationships, and is comprised of ss 90RA – 90WA. Division 2 of Part VIIIAB concerns amongst other things, alteration of property interests of parties to a de facto relationship. Subdivision C of Div’n 2 in Part VIIIAB, which concerns declarations and alterations of property interests, is comprised of ss 90SK – 90ST.
The power of the court to make orders respecting the property of such parties is subject to a number of constraints that differ from parties to a marriage. First, by para 90SB(a) the court may only make an order for the alteration of property interests where it is satisfied that the period of the parties’ de facto relationship endured for a period exceeding two years. Secondly, by s 90SK a geographical requirement is placed upon the engagement of the power to alter property interests of such parties.
The alteration of property interests of parties to such a relationship is provided for by s 90SM. In proceedings with respect to the property of parties to a de facto relationship, the court is authorised by para 90SM(1)(a) to make such order as it considers appropriate.
The power conferred by s 90SM is engaged only in a property settlement proceeding, being a proceeding with respect to the property of the parties or either of them. The power extends only to an adjustment of interests in the property of the parties.
Where one or both of the parties have instituted property settlement proceedings, para 90SM(1)(a) confines the ambit of the power to the making of orders that “alter the interests of the parties to the marriage in the property.”
Structurally, sub-s 90SM(1) first requires the court to identify the parties’ existing interests in property (as defined) and then authorises that the court may make orders that alter those existing interests.
Sub-section 90SM(3) proscribes the making of such property orders unless a certain criterion is satisfied. It reads:
The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
The operation of this provision is of pivotal importance.
Further, sub-s 90SM(4) requires that in the consideration of what (if any) order should be made in the alteration of property interests of parties to a de facto relationship, the court must take into account each of the seven matters contained in paras 90SM(4)(a)-(g).
However, sub-s 90SM(2) cannot be side-stepped. The analogue provision for alteration of property interests between parties to a marriage is found in sub-s 79(2) of the Act. The scope and operation of sub-s 79(2) was given detailed consideration in the seminal decision of Stanford v Stanford (2012) 247 CLR 108. The plurality held in relation to sub-s 79(2) that the determination whether it was just and equitable to make an order under sub-s 79(1), was an essential inquiry to be undertaken before any consideration was given to the matters prescribed by sub-s 79(4) (here, sub-s 90SM(4)). The plurality emphasised that the issues raised by sub-s 79(2) and (4) were not to be conflated or merged: (2012) 247 CLR 108, [35], [40], [51]. Parity of reasoning supports the conclusion that a like approach is required here.
The criterion ‘just and equitable’ is a criterion that does not admit of exhaustive definition: Stanford at [36] citing Mallet v Mallet (1984) 156 CLR 605, 608 (Gibbs CJ). Rather the expression is to be understood as being a “qualitative description of a conclusion reached after examination of a range of potentially competing considerations.” Confirming that the power conferred by s 79 was not to be exercised by the application of fixed rules, the plurality identified three propositions that it regarded as being of fundamental importance to the determination whether it was just and equitable for the court to make an order adjusting property rights: (2012) 247 CLR 108, [37]-[40]:
(a)first, the consideration whether it is just and equitable to make an order must begin by the identification of the existing legal and equitable interests of the parties in the subject property;
(b)secondly, the broad discretion conferred by s 79 is not unfettered;
(c)thirdly, the analysis whether it is just and equitable to make an order adjusting property interests does not begin from an assumption that either party has the right to have the property of the parties divided.
Sub-s 90SM(4) factors
When considering what order (if any) should be made in a property settlement proceeding, sub-s 90SM(4) requires that the court shall take into account each of the seven matters addressed in paras (a)-(g). The circumstances which the court is required to take into account have been identified as falling within three broad categories: (1) the parties’ contributions of all kinds; (2) the parties’ present and future needs, means and resources, earning capacity, actual and potential; (3) any other fact or circumstance which justice requires be taken into account: cf Mallet v Mallet (1984) 156 CLR 605, 608 (Gibbs CJ).
I address paras 90SM(4)(a)-(g), so far as relevant, below. Before doing so, it is necessary to identify the settled principles for the determination of an application for adjustment of property interests.
Until Stanford, the settled approach to be taken to the determination of a claim for adjustment of property interests under s 79, entailed a four-stage process as articulated by the Full Court in Hickey & Hickey; the Attorney General for the Commonwealth of Australia (2003) FLC 93-143. There, Nicholson CJ, Ellis and O’Ryan JJ at [39] held the four-stage process under s 79, although interrelated, was as follows:
(a)first, identify the parties’ assets, liabilities and financial resources at the date of hearing; calculating the net value of their property;
(b)secondly, ascertain the parties’ contributions (both financial and non-financial), within the meaning of paras 79(4)(a)-(c) inclusive and then “determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property”;
(c)thirdly, give consideration to the other factors prescribed by paras 79(4)(d)-(g), including the matters, so far as relevant, as referred to in sub-s 75(2) to decide if any further adjustment to the percentage assessment of contributions is warranted;
(d)fourthly, consider the overall effect of those findings and determinations and resolve what order is just and equitable in all the circumstances of the case.
The four-stage process articulated in Hickey need not be followed rigidly: Bevan & Bevan [2014] FamCAFC 19, [18]-[19] (Bryant CJ and Thackeray J), [97] (Finn J agreeing). The Full Court has affirmed that a holistic approach should also be made when deciding an application under s 79: Wallis & Manning [2017] FamCAFC 14, [23]; citing Dickons & Dickons (2012) 50 Fam LR 244, [24]. Where it is said that a holistic approach should be made this is to be understood as permitting that, in some cases, a global assessment is appropriate.
A global assessment may be appropriate where the asset pool is small.
In Bulleen & Bulleen, Cronin J recognised the caution of adopting an over-zealous ascertainment of the parties’ contributions and held that what is required is the ascertainment and weighting of the parties’ contributions; a process which his Honour described as follows:
The weighting process is not a simple mathematical calculation based upon financial contributions. It is the disparity in contributions which is important. The disparity is traditionally expressed in percentage terms: [2010] FamCA 187 at [19].
Cronin J identified at [20]ff that the underlying difficulty that confronted the evaluative task arose from the need to make a crucial comparison between fundamentally different activities. Thus, while financial contributions were capable of objective assessment, the non-financial contributions were much more difficult of assessment. His Honour held that it would have been wholly inappropriate to retrospectively allocate non-financial contributions according to some monetary worth. On the facts as found in that case, Cronin J characterised the relationship as one in which the parties had regarded their respective roles as important and as being one in which they had contributed to a common goal. At the same time, his Honour acknowledged that there could be some contributions outside of their partnership which identifiably affected the parties’ wealth: at [26], [40].
Each of these principles is equally applicable in the present case.
Consideration
As the matter proceeded by way of an undefended final hearing, the parties were not tested upon their evidence. Where there were inconsistencies in the evidence, the applicant was still required to prove her claim to the requisite standard of proof: sub-s 140(1) Evidence Act 1995 (Cth). Equally, the more serious her allegations, the more inclined I was to take into account the gravity of her allegation in deciding whether the allegation was made out: cf sub-s 140(2) Evidence Act; Johnson v Page (2007) FLC 93,344, [72]; Briginshaw v Briginshaw (1938) 60 CLR 336. Where the evidence does not permit the court to make an affirmative finding either way on a particular issue, the court is not bound to do so and may find that the party which bears the onus of proof has failed to discharge it: Kuglioski v Metrobus (2004) 220 CLR 363.
At the same time, I have undertaken my assessment of the evidence, including that the respondent had been given notice of, and several opportunities to attend and participate in the trial but did not take those opportunities. The respondent did not seek to expose particular aspects of the applicant’s evidence as being unreliable. Nor did he take the opportunity to adduce evidence so as to affirmatively establish the truth of matters to which he deposed. To this extent, the applicant is more readily entitled to some findings in her favour.
The respondent’s failure to make full financial disclosure posed an obstacle to the applicant’s case. The applicant confronted that issue.
While the respondent has not taken the opportunity to fully participate in the proceeding or in the trial, for a time he did so. The respondent did file a response, an answering affidavit and a financial statement. Accordingly, I have had regard to those documents and considered where the respondent’s material corroborated the applicant’s case or was otherwise relevant to this property settlement proceeding.
Asset pool
Based upon the totality of the evidence adduced at trial, I find that the parties’ asset pool comprised their accumulated assets and few liabilities as follows:
Asset Ownership Value Property Joint $450,000 Bank Account (omitted) Respondent $ 43,000 (omitted) Bank Applicant $ 6,000 (omitted) Bank Applicant $ 4,316 Motor vehicle Applicant $ 13,000 Motor vehicle Respondent $ 3,500 Liabilities Ownership Value (omitted) Bank Mortgage Joint $250,000 (omitted) Mastercard Applicant $ 700 Other credit cards Respondent unknown Unpaid insurance and outgoings Joint unknown Superannuation Ownership Value Superannuation Applicant $20,000 Superannuation Respondent $30,000
To the extent that those findings may have been different had the respondent elected to participate in the trial is not a matter I consider.
Negligence claim as ‘property’
However, I do give separate consideration to the circumstance that the respondent has not made financial disclosure and that the progress and possible award of compensation has not been adequately disclosed.
The applicant appeared to mount her case on the premise that it was just and equitable for an order to be made that she have 100% of the net proceeds of sale because the respondent would be able to retain 100% of his compensation claim. The applicant’s outline of case contended that the value of the award of compensation payable to the respondent was an asset that formed part of the asset pool. Yet, the applicant’s outline did not include such claim as an item in her asset pool and made no attempt to attribute any particular value to it.
A question, which was not addressed in the applicant’s submissions, was whether the respondent’s claim constituted property under the Act.
The power to make property orders extends only to an adjustment of the parties’ interests in property. By s 4 of the Family Law Act 1975, ‘property’ means:
. . . property to which those parties are, or that party is, as the case may be, entitled, whether in possession or reversion.
As this definition confirms, a property settlement proceeding is concerned with property to which the parties are entitled, whether by way of possession or reversion: Stanford, (2012) 247 CLR 108, [37]. By comparison, s 90SL(1), authorises the court is to grant declaratory relief concerning the right or title of a party to existing interests in property and ancillary relief by way of sale, partition or possession. The ascertainment of existing property interests is to be undertaken upon settled common law and equitable principles as govern the rights of any two persons who are not spouses: Stanford, (2012) 247 CLR 108, [39] citing Hepworth v Hepworth (1963) 110 CLR 309, 317 (Windeyer J); Wirth v Wirth (1956) 98 CLR 228, 231-2 (Dixon CJ).
The term ‘property’ as used in the Act is used in a comprehensive sense and extends to the property of the parties or either of them: Kennon v Spry (2008) 238 CLR 366, [52], [78] (French CJ); [91], [126] (Hayne and Gummow JJ), [154], [175] (Heydon J), [200], [224] (Kiefel J); Beklar & Beklar [2013] FamCA 327, (Ryan J). Kennon illustrates the point neatly. While the wife had only an expectant interest in trust property, the husband had a presently enforceable right as trustee to control that property. The husband’s legal right to vest property was property within the meaning of the Act. It was not to the point that the wife had no interest. The court’s power to make orders was available.
It is well settled that the power conferred by s 79 of the Act (and thus s 90SM), operates only in respect of the alteration of legal or equitable interests in property: Mullane v Mullane (1983) 158 CLR 436, 445 (Mason ACJ, Wilson, Brennan, Deane and Dawson JJ). As the Court recognised at 441, it could frequently happen that orders were made to ‘settle’ property upon one of the parties to a marriage: see also s 90SM(1)(c). The ability to make such an order requires that that property is in existence at the time the order is made. In Mullane, the Court observed that an “interest in property is a right of a proprietary nature.” It follows that, absent a right of a proprietary nature, there is no interest in property in respect of which an order may be made.
A settled distinction may also be drawn between income and capital: Federal Commissioner for Taxation v Everett (1980) 143 CLR 440. In Everett, one distinction considered by the Court was between present and future property. The Court considered the circumstances in which an assignment of future property was in truth an assignment of a mere expectancy – there being no certainty that the interest assigned would in fact be earned or derived: pp. 450-451.
For ‘property’ to fall within the definition of property in s 4, a party must have a present entitlement to that property: Marlowe-Dawson & Dawson (No. 2) [2014] FamCA 599 at [49], (Kent J). For that reason, a contingent interest does not constitute property for the purposes of the Act; Crapp & Crapp (1979) FLC 90-615 (Fogarty J). Equally, a mere expectation of income or gain is not property, irrespective of how real or imminent it may be: W & W (1980) FLC 90-872, (Nygh J).
These illustrations assist in consideration of the present case. The respondent’s claim is for the recovery of damages for negligence. On the evidence, that claim has not crystallised or merged in a judgment.
In Williams v Williams (1985) 61 ALR 215, the High Court, in revoking special leave to appeal, considered the position of a capital sum received by way of settlement of a personal injuries claim. Mason CJ, Wilson, Brennan, Deane and Dawson JJ observed:
. . . when the property available for division between the parties represents an award of damages for pain, suffering and loss of amenity, it may be relevant, in some situations, to have regard to the circumstances relating to that award, but there is no general presumption that the award should be left out of account in determining what order should be made under s 79 . . .
The present case is distinguishable from Williams because there the damages were the property available for division between the parties.
The present case may also be contrasted with Jacks & Parker (2011) FLC 93-462 at [16], [136] where the Full Court considered the wife’s failure to make disclosure of a settlement of $50,000 that she had received in the compromise of a claim for professional negligence. Again, the payment in settlement of the claim had been made.
The applicant submitted that the respondent’s interest in that cause of action was an interest in property, relying on Aleksovski & Aleksovski (1996) FLC 92-705. Aleksovski concerned the modest assets of parties to an 18 year marriage (during which the wife had received a capital sum in settlement of a negligence claim). The issue of significance in the appeal was to identify the time at which that capital receipt had occurred in the course of the marriage. In my view, the present significance of Aleksovski is that the capital receipt represented by the payment of compensation to the wife was a payment that had in fact been made. Here, no such payment has been made and for that reason, Aleksovski is also distinguishable from the present case.
In Zorbas & Zorbas (1990) FLC 92-160, McCall J held at 78,114 that a right to recover damages for negligence resulting in personal injury was not capable of assignment at law or in equity and that, a bare right of action, being a purely personal right, did not constitute a right of a proprietary nature and was not property within the meaning of the Act.
In Marlowe-Dawson & Dawson (No. 2) [2014] FamCA 599 at [53], Kent J held that an claim in tort for unliquidated damages for personal injuries did not constitute property under the Act: citing Saba & Saba(1984) FLC 91-579; Palmer & Palmer(1985) FLC 91-606; Pleym & Pleym(1986) FLC 91-762; Zorbas & Zorbas (1990) FLC 92-160. Upon a comprehensive analysis of authority, Kent J held at [67]:
It would seem to follow that for a right (as distinct from an object) to constitute “property” the right must be recognised by, and be enforceable, at law, be legally capable of ownership; and have a value not personal to the individual.
Kent J accepted, however, that some entitlements in a chose in action which became enforceable in the future could constitute a present entitlement to a property interest: see at [69]-[71]. It will depend.
I conclude that the respondent’s cause of action represented by the claim for damages is not a species of property within the meaning of the Act. The respondent’s claim is personal. It is a bare right of action.
Were it relevant, I have no basis upon which to assess the respondent’s prospect of establishing liability for this claim. Nor have I any basis for ascribing a particular value to the quantum of the claim.
No evidence was adduced on the merit, progress or quantum of the claim. The failure to do so may be considered in the context that the applicant had secured an order which permitted her to inspect the file of the respondent’s lawyers relating to such claim and that she had also served on the Victorian WorkCover Authority a subpoena relating to that claim. Despite the paucity of detail on this issue, nonetheless, it is apparent that the respondent had sustained injury to his knee as a result of an industrial accident, the prognosis for which indicates an enduring affect upon the respondent’s employment prospects. The respondent was paid WorkCover entitlements for a period and also received a disablement payment under his (omitted) superannuation policy.
Irrespective of the prospects of the claim succeeding, the applicant’s solicitor asserted that, based upon his experience, the respondent could expect to recover compensation of at least $300,000. No evidentiary basis was offered for a conclusion that the respondent would recover $300,000 or indeed, any amount at all. I reject that submission.
Again, the respondent has not made full disclosure and his entitlement to a capital sum represented by the amount of compensation that he may be paid remains unknown. All that is known is that he sustained injury and perhaps, that his claim was being pursued. Only those matters have been established on the balance of probabilities.
While the court may more confidently draw an inference concerning the existence of the respondent’s claim for compensation, there is no evidence upon which the court can infer whether that claim is viable or what range of quantum might be awarded. In all of those circumstances, I cannot characterise the claim as property or assign any value to that claim irrespective of how imminent that claim may be.
As stated above, the respondent’s cause of action has not merged in a judgment. I conclude that it remains a chose in action in the respondent’s hands but is a bare right of action, a mere expectancy, and is not property. For those reasons, I decline to ascribe any value to that expectancy or to include such value in the asset pool.
This conclusion raises a question as to whether account may be taken of the respondent’s claim; an issue that I consider below at [160]-[161].
Net asset pool
Based upon my findings as to the issues raised in this application, I find that the net asset pool is as follows:
Asset Ownership Value Property Joint $450,000 Bank Account (omitted) Respondent $ 43,000 (omitted) Bank Applicant $ 6,000 (omitted) Bank Applicant $ 4,316 Motor vehicle Applicant $ 13,000 Motor vehicle Respondent $ 3,500 White goods & solar panels Respondent Unknown Subtotal $519,816 Superannuation Applicant $20,000 Respondent $30,000 Total assets 569,816 Liabilities Ownership Value (omitted) Bank Mortgage Joint $250,000 (omitted) Mastercard Applicant $ 700 Other credit cards Respondent Unknown Unpaid insurance and outgoings Joint Unknown Subtotal $250,700 Net asset pool $319,116
It is just and equitable to make an order
In the present case it is just and equitable for an order to be made adjusting property interests because the parties no longer have common use of their Property: cf Stanford, supra (2012) 247 CLR 108, [44]. This is a case in which the parties proceeded upon an implicit assumption, which subsisted during their relationship, concerning the common use of property. Their assumption ended upon the parties’ choice no longer to live in a relationship. In the period of their relationship, the Property was the most significant asset that they acquired. Yet the respondent has lived there to the exclusion of the applicant from October 2014 to the present date.
I conclude that the requirements of sub-s 90SM(3) are satisfied. It is therefore appropriate to turn to the further question of what, if any, order is appropriate to be made adjusting the parties’ property interests. Consideration is then required of the matters prescribed by sub-s90SM(4). I consider each in turn.
Contributions
In considering what orders (if any) should be made adjusting property interests under s 90SM, the court shall take into account of the financial contributions, direct and indirect, made by or on behalf of a party to the marriage: para 90SM(4)(a). In amplification of the concept of ‘financial contribution’, para 90SM (4)(a) explicitly includes each of the acquisition, conservation or improvement of such property.
The applicant submitted that neither party had assets of any significant value at the commencement of their relationship. I reject that submission. The applicant’s outline of case (confirmed by the evidence) was that both parties had accumulated superannuation. I find that the respondent had so accumulated such a fund despite having ceased work in early 2013. I find that both parties had accumulated some of their superannuation by the commencement of their relationship. The value of that superannuation is unknown.
As to financial contributions made during the period of the relationship, an assessment must be made of those contributions also. As to this, the respondent’s affidavit accepted that the applicant’s mother had contributed $50,000 toward the purchase price of the Property but disputed that the applicant had contributed the remaining $25,000 toward that purchase. I accept the applicant’s version of events upon this issue. First, the respondent made no attempt to corroborate his evidence that he had also contributed an equal sum from his savings. This evidence could easily have been adduced by production of bank statements to that effect. There was no such evidence. Secondly, the respondent has not made financial disclosure. Thirdly, the respondent chose not to participate in the trial. In all of those circumstances, the court need not be unduly cautious in its approach in making findings favourable to the applicant.
Moreover, the evidence does disclose that each of the parties did make contributions towards the payments due in respect of the mortgage. Again, it was within the applicant’s power to adduce precise evidence of the extent of her contributions (and those of the respondent), but she did not do so. This is the more notable in light of the subpoena that was issued by the applicant and served on the mortgagee.
At the same time, it was the applicant’s own case that the respondent had contributed something in the way of white goods, electrical goods and solar panels to the parties’ asset pool. Yet I am unable to ascribe a precise value to those contributions by reason of the respondent’s failure to comply with consent orders for financial disclosure and his decision not to participate at the trial.
In addition, the applicant and respondent identified the amounts that were standing to the credit of their savings accounts from time to time. In this regard the applicant conceded in favour of the respondent that, of the $50,000 he still had from his disablement payment from his superannuation fund as at 2016, such sum had been further depleted by the date of trial to a sum of $43,000. I accept that concession and note the respondent’s failure to adduce evidence to the contrary.
While the applicant merely provided an estimate of her own superannuation, this issue was not the subject of examination at trial.
As to financial contributions made during the relationship, it was submitted, and I accept, that the parties’ contributions were equal.
As concerns non-financial contributions, para 90SM(4)(b) provides that in considering what order (if any) should be made in property settlement proceedings, the court shall take into account the non-financial contributions, direct and indirect, made by or on behalf of a party to the marriage. The court should have regard to non-financial contributions toward the acquisition, conservation or improvement of such property. I accept the applicant’s submission that non-financial contributions are neither less valuable nor less important than a party’s financial contributions: cf Ferraro & Ferraro (1993) FLC 92-335 (Fogarty, Murray and Baker JJ); In the Marriage of Rolfe (1979) FLC 90-629 at 78,272-78,273 (Evatt CJ).
The parties’ cohabitation had been of at least five years duration.
The parties had been financially dependent upon one another for the entirety of that relationship and had worked for much of that period; however, the respondent was forced from employment in 2013 and has not worked since that date. From 2013, the applicant was the only person working and had the added responsibilities of caring for the Property and the child.
Each of the parties had made financial and non-financial contributions to the marriage over a five year period. I find that the applicant’s non-financial contributions were of real significance. They are more appropriately to be evaluated under para 90SM(4)(c) (see below).
In relation to non-financial contributions, para 90SM(4)(c) provides that the court shall take into account the contributions made by a party to the relationship to the welfare of the family, including any contribution made in the capacity of homemaker and parent. It may be appropriate to attribute a significant value to a party’s non-financial contribution under this heading. Yet the quality of the contribution made in the capacity of homemaker and parent may vary enormously, from the inadequate to the exceptionally good.
I consider that the applicant’s non-financial contributions in this case were significant and that they were enhanced by reason of the respondent’s conduct during the relationship. I accept the applicant’s submission that the applicant’s contributions should attract greater weight by reason of the respondent’s conduct toward her during the period of the relationship: cf Baranski & Baranski [2012] FamFC 18. There, Bryant CJ, Coleman and Ainslie-Wallace JJ affirmed at [259] that “where the contributions of a party are rendered more arduous by the violent conduct of that party’s spouse, . . . that is a matter which is relevant to determining the nature and quality of the parties’ contributions.” To be applied, this principle requires a finding – and I so find – that the applicant’s contributions were rendered more arduous as a consequence of the respondent’s violent conduct.
Paragraph 90SM(4)(d) provides that the court shall take into account the effect of any order upon the earning capacity of either party. It was not suggested that para 90SM (4)(d) was relevant to this case.
Paragraph 90SM(4)(e) requires that regard be had to the matters referred to in sub-s 90SF(3), which matters I address separately below.
Paragraph 90SM(4)(f) requires that regard be had to any orders that have been made which affect a party to, or a child of, the relationship. Again, no reference was made to this consideration, however, I note the various interim orders that have been made respecting the payment of the mortgage and outgoings. The evidence is that the respondent has failed to comply with those orders to some extent.
Paragraph 90SM(4)(g) requires that regard be had to any child support that a party to the relationship has provided. Conversely, I accept the applicant’s evidence that the respondent has paid none at all.
The applicant made no submissions as to post-separation contributions. Yet there is some evidence that, for some time, each of the parties has continued to service the instalments due under the mortgage.
Future need
Factors calling for consideration under sub-s 90SF(3) are required to be considered in the determination of what order, if any, the court should make in a property settlement proceeding: para 90SM(4)(e). These requirements bear a dual character. First, the text of sub-s 90SM(4) is expressed in mandatory terms – the court shall take into account. Secondly, para 90SM(4)(e) conditions that mandatory obligation in ambulatory terms – the matters in sub-s 90SF(3) shall be taken into account – but only so far as they are relevant.
Sub-section 90SF(3) prescribes some 19 matters that may be taken into account, and insofar as they are relevant, I consider them below.
The applicant said little to indicate that her health was other than good. The applicant is now obtaining a (qualifications omitted). By contrast, the respondent provided some evidence, including independent medical evidence, which suggests that his working prospects are moderate. He has no qualifications and has only been accustomed to perform physical labour for which he is no longer suited.
The applicant has responsibility for the child who is still quite young. She has been excluded from the home (to which she made the most significant financial contributions), since separation in October 2014.
There is no evidence whether the respondent is entitled to a pension.
The parties’ standard of living is modest.
Paragraph 90SF(3)(r) confers a discretion to consider any fact or circumstance which in the court’s opinion the justice of the case requires be taken into account. There are three matters which, in my opinion, the justice of this case does require to be taken into account.
First, as concerned the respondents non-disclosure of the progress or quantum of his compensation claim, I note that by force of sub-ss 90SM(5)-(7), it was open to the applicant to request that the proceeding be adjourned in order that the possibility of a change in the respondent’s financial circumstances might crystallise into something certain. The applicant, who was represented by her lawyer throughout the proceeding, adopted a deliberate choice to issue, not one but two, applications in a case seeking that the proceeding be heard urgently on an undefended basis. Rather than make an application for such an adjournment, the applicant was determined to press for final relief. The applicant obtained an order for inspection of, but adduced no evidence as to the contents of the file retained by the respondent’s lawyer in relation to the respondent’s claim. The absence of evidence of the content of that file supports no inference whether or not the respondent’s claim was strong or weak or as to its quantum. Of more immediate significance is that the applicant chose to pursue a claim for final property relief notwithstanding the respondent’s claim for compensation was extant, and despite the fact that the injury had been sustained in April 2013. From one perspective, it may be inferred that the resolution of the claim was imminent.
As the applicant pressed for final relief with knowledge of the extant claim for compensation and with knowledge that the respondent had not made financial disclosure of this claim, I am of the opinion that as a matter of justice and equity, the respondent’s claim is something which may be taken into account pursuant to para 90SF(3)(r). I take it into account in the context that the applicant deliberately chose not to seek an order pursuant to sub-s 90SM(5) such that final relief should not be determined until after result of the respondent’s claim was known. In short, the applicant conducted her case on the basis that final orders were being sought and that the respondent would retain the capital sum (if any), that was paid to him in respect of his industrial accident.
Secondly, the respondent has been in occupation of the Property, rent free, since separation in May 2014. There is evidence that the respondent has failed to pay the mortgage and outgoings (possibly including insurance, land tax, council rates, water, gas and electricity). In my judgment, to the extent all and any such outgoings remain unpaid, it is just and equitable that the respondent should be liable for those unpaid liabilities. He consented in the making of orders that he would pay such outgoings. So while it will be necessary to pay out many of those liabilities in order that completion of a sale may occur, there is room to recognise that inter se, the respondent should bear any extant liabilities for such amounts. Again, the question of what orders are appropriate is complicated by the paucity of evidence as to the extent to which the respondent has failed to pay the mortgage and outgoings. I am of the opinion that the respondent’s liability for unpaid mortgage instalments and other outgoings are matters which may be taken into account pursuant to para 90SF(3)(r).
Thirdly, I take into account also the additional cost and delay to which the applicant has been subject in pressing this claim in the face of the respondent’s sustained non-compliance with orders for disclosure.
What orders are appropriate?
Concerning all of the contributions made by the parties, I conclude that the primary property adjustment of the asset pool should be made as to 80% in favour of the applicant and 20% in favour of the respondent.
I further consider that having regard to the factors in para 90SF(3) including, in particular, the matters arising under para 90SF(3)(r) that it is just and equitable to make a further adjustment in favour of the applicant of 5% of the net asset pool.
I approach the determination of final relief on the basis that the court need not shy away from a robust exercise of discretion.
In giving effect to the determinations above, I have undertaken a review of the entirety of the facts and circumstances as presented in the evidence. I have done so for the purpose of reflecting, holistically, on what order is just and equitable in all of the circumstances.
I have concluded that a property adjustment of the net asset pool should be made as to 85% to the applicant and 15% to the respondent.
Framing of orders
Section 90SS, which concerns general powers of the court, confers a range of specific powers to make orders under Part VIIIAB, including orders: (a) for the payment of a lump sum; (b) imposing terms and conditions, and; (c) as may be necessary to do justice between the parties: see para 90SS(a), (i) and (k): cfKennon v Spry (2008) 238 CLR 366, [200] (Kiefel J). The section does not in or of itself provide an independent source of power to make orders otherwise than in accordance with s 90SM: cf Hickey, (2003) FLC 93-143, [41]-[48]. By s 90ST, the court is obliged as far as is practicable, to make orders so as to achieve two objects: (1) to finally determine the financial relations of the parties; (2) to avoid further proceedings between them.
It is necessary to address the orders as sought by the applicant. In substance, the applicant sought an order for sale. Although I will make that order, the applicant has not provided title particulars as to the Property. Nor has she provided particulars of the mortgage. A number of adjustments are required to achieve a result that is just and equitable.
First, the mortgage and certain outgoings must be paid in order that a purchaser may obtain clear title to the Property. The amount outstanding under the mortgage is unknown. The closest the evidence came to identifying the mortgage is in the applicant’s trial affidavit which exhibited an email from the (omitted) Bank that stated the amount of the arrears on the mortgage and in doing so, identified the account as being a home loan ending in (omitted). Suffice to say, the sale will not be completed unless the mortgage is discharged.
Secondly, the parties should share all of the costs of sale equally.
Thirdly, an adjustment is then required to be made of the balance of the proceeds of sale in order to achieve the result that the parties’ interests in the asset pool are adjusted as to 85% in favour of the applicant and 15% in favour of the respondent respectively. This adjustment is required because each of the parties presently has possession of certain assets that form a part of the asset pool. Upon my findings as to the asset pool:
(a)the applicant has retained her: (1) bank accounts which have a balance of $10,316 (2) her motor vehicle which has a value of $13,000 and; (3) superannuation of $20,000. The total value of those assets is $43,316.
(b)the respondent has retained his: (1) bank account which has a balance of $43,000 (2) his motor vehicle which has a value of $3,500 (3) superannuation of $30,000 and; (4) the chattels (value unknown). The total value of those assets is $76,500.
The total value of the assets already held by the parties should be taken into account before any payment is made from the proceeds of sale.
The final calculation of what amount is to be payable from the net proceeds of sale requires that account be taken of the assets that are presently held by the applicant and respondent. The calculation of the sum that is required to pay the applicant a sum equivalent to 85% and the respondent 15% of the total asset pool requires that the assets already held by them be included in a calculation of what share of the proceeds each should take. Orders have been moulded to that effect.
In all of those circumstances, I have concluded that the Property should be sold and the net proceeds of sale paid into an interest bearing account to be held by the conveyancer who conducts the sale of the Property. Following settlement upon sale of the Property, more concrete figures will be known and the parties’ entitlement to their respective share in the balance of the proceeds of sale will crystalise.
Fourthly, in light of the history of the matter, there remain possibilities that one or either of the parties may not comply with their primary obligations under the orders. To that end supplementary orders will be made that provide for the consequences of non-compliance.
Accordingly, I have included an ancillary order pursuant to s 106A authorising the Registrar to do all things necessary (in default of performance and observance of their obligations respecting the sale of the Property), to give effect to the substantive orders in the proceeding (including, as by the drawing up and execution of documents).
The orders that are to be made in this proceeding in the exercise of the court’s discretion under s 90SM recognise the broad principle that orders made adjusting property interests should, so far as is practicable, finally determine the parties’ financial relations: JEL v DDF (2000) FLC 93-075, [152(i)]. As I am required to do, I have reflected upon and I am satisfied that the orders made are just and equitable.
I certify that the preceding one hundred and seventy-eight (178) paragraphs are a true copy of the reasons for judgment of Judge A Kelly
Date: 24 November 2017
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