Bowler and Shulman

[2015] FCCA 28

FEDERAL CIRCUIT COURT OF AUSTRALIA

BOWLER & SHULMAN [2015] FCCA 28

Catchwords:
FAMILY LAW – Property – funds held in trust for the parties – failure to provide withdrawal of caveat as ordered – failure to make full and frank disclosure – homemaker and parent contributions – subsection 75(2) factors – assignment of debt owed to the wife.

Legislation:

Family Law Act 1975

Evidence Act 1995, s.140
Federal Circuit Court Rules 2001, rr.24.03, 24.04

Briginshaw v Briginshaw (1938) 60 CLR 336
Clauson (1995) FLC 92-595
C & C (2005) FLC 93-220
Elias v Elias (1977) FLC 90-267
Ferraro  (1993) FLC 92-335
Gollings & Scott (2007) FLC 93-319
Gosper & Gosper (1987) FLC 91-818
Hickey (2003) FLC 93-143
Jordan & Jordan (1997) FLC 92-736
Kannis & Kannis (2003) FLC 93-135
Kessey & Kessey (1994) FLC 92-495
Lee Steere (1985) FLC 91-626
Mallet v Mallet (1984) FLC 91-507
Neil v Nott and Another (1994) 121 ALR 148
OSF and OJK (2004) FLC 93-191
R v Watson; Ex parte Armstrong [1976] HCA 39; (1976) 136 CLR 248
Rolfe and Rolfe (1979) FLC 90-62
Russell v Russell (1999) FLC 92-877
Stanford v Stanford (2012) FLC 93-518; (2013) 293 ALR 70
Weir v Weir (1993) FLC 92-338

Applicant: MR BOWLER

Respondent: MS SHULMAN

File Number: MLC 462 of 2012

Judgment of: Judge Roberts

Hearing dates: 28 & 29 April and 19 & 20 May 2014

Date of Last Submission: 20 May 2014

Delivered at: Launceston

Delivered on: 29 January 2015

REPRESENTATION

Counsel for the Applicant: Appeared unrepresented

Solicitors for the Applicant: Not applicable

Counsel for the Respondent: Ms J Elleray

Solicitors for the Respondent: Perry Weston Lawyers

ORDERS

1. That all funds held in Westpac Bank account number [omitted] by ROSE MARY BRONDOLINO & CO in trust for MS SHULMAN (“the wife”) and MR BOWLER (“the husband”) inclusive of any interest thereon be forthwith released to the wife.

2. That the wife be solely responsible for paying an outstanding account payable to Ms M in the approximate sum of $1,585.

3. That the wife be solely responsible for paying any tax that she may owe to the Australian Taxation Office.

4. That within 21 days the wife must transfer and assign to the husband all her right, title and interest in a debt owed to her by [S] Pty Ltd as trustee for the [Bowler] Family Trust (ABN [omitted]) in the sum of $61,708.

5. That within 21 days the wife must transfer to the husband any interest she may have in any motor vehicles currently in the possession or control of the husband.

6. That unless specified in these Orders:

   (a)each party is solely entitled to the exclusion of the other to all other property in possession of that party as at the date of these Orders;

   (b)any claim that the wife may have to any superannuation benefit belonging to or earned by the husband is extinguished;

   (c)each party will be solely liable for and must indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders; and

   (d)any joint tenancy of the parties in any real or personal estate is hereby expressly severed. 

IT IS NOTED that publication of this judgment under the pseudonym Bowler & Shulman is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA

AT LAUNCESTON

MLC 462 of 2012

MR BOWLER

Applicant

And

MS SHULMAN

Respondent

REASONS FOR JUDGMENT

The proceedings between the parties

1. On 17 May 2012 MR BOWLER (“the husband”) filed an Application in this court seeking parenting orders and orders for property settlement.  The property order sought by the husband at that time was that the wife should receive “assets valued at 55% of the parties’ total net assets”.  He sought to be excused from further particularising the final orders to be sought by him “pending the filing of a financial statement and discovery by the wife and any required valuations”.  He was represented by lawyers at that time. 

2. The Respondent is MS SHULMAN (“the wife”).  Her lawyer at that time filed a Response on 29 May 2012.  No property orders were sought in that Response, but her lawyer subsequently filed an Amended Response on 24 July 2012 in which an order was sought that the wife be excused from “precisely formulating the financial orders sought until there has been full and frank disclosure” by the husband.

3. The matter came on before Judge Hartnett on 30 May 2012 and she made certain orders by consent that I do not need to recite in full here.  They included orders for the sale of the parties’ former matrimonial home in [T] (“the former matrimonial home”) and for the net proceeds of that sale to be held in trust for the parties by the wife’s former solicitors in Fitzroy, Rose Mary Brondolino & Co (“the Fitzroy solicitors”).  The former matrimonial home was subsequently sold and the funds are still being held by the Fitzroy solicitors on trust for the parties in an interest bearing account (“the trust money”).  The balance of the trust money at the time of the hearing was approximately $290,000.

4. Interim parenting orders were made on a number of occasions between May 2012 and November 2012. 

5. On 23 August 2012 the matter was set down for hearing before me and on 6 June 2013 I made final orders by consent in relation to parenting matters.  In summary, those orders provided that:

   ·the parties were to have equal shared parental responsibility for their child;

   ·the child was to live with the wife;

   ·the child was to spend time with the father each second weekend and one night during the other week; and

   ·the child was to spend time with the father during holidays and on designated special occasions.

6. Procedural orders were also made in relation to the parties competing applications for property orders.  They included provisions for the parties to provide discovery and for the valuation of various assets.  There were also orders:

   ·requiring the parties to do all things necessary to have the trust money held by the Fitzroy solicitors transferred and held on trust by the wife’s current solicitors - that has not happened and I shall refer to that further below; and

   ·permitting the wife to sell a property at [S] (“the [S] property”) and requiring the husband to withdraw a caveat to allow a sale to proceed – at the start of the hearing that had not happened either, and I shall also refer to that below.    

7. In June 2013 the parties competing property applications were adjourned for final hearing before me on 13 November 2013, with an estimated hearing time of only one day.

8. On 13 November 2013 further orders for discovery and valuation were made by consent and the matter was set down for hearing on 28 April 2014 and “noting a time allocation of 2 days”.

9. On 13 November 2013 the husband’s former solicitors filed an Application in a Case seeking leave to intervene in the proceedings, essentially to secure payment of their costs of $48,630.32 plus costs and interest “from any funds due to the husband (pursuant to order of this court or by agreement of the parties or otherwise)” from the funds held on trust by the Fitzroy solicitors, the wife’s current solicitors and/or any other solicitor or agent.  On 17 December 2013 the husband’s former solicitors were granted leave to intervene in the proceedings.

10. When the matter came on for final hearing on 28 April 2014, orders were made by consent at the start of the hearing, which provided inter alia as follows:

    In the event that the Court orders pursuant to section 79 of the Family Law Act 1975 that any portion of the funds held on trust for the husband and the wife pursuant to the orders of 30 May 2013 be released to the husband, both the husband and the wife shall do all things and sign all documents as may be required to pay to [the husband’s former solicitors] the sum of $48,630.32 from that portion.

11. Certain other procedural orders were also made but the Court noted that the wife consented to the orders without prejudice to her application for an order that the entirety of the trust money be released to her unconditionally (and consequently, the husband would have no entitlement to any of those funds). The Application in a Case was dismissed and the husband’s former solicitors then withdrew from the proceedings.

12. The husband made an oral application to adjourn the proceedings, but that application was dismissed.

13. The hearing of the husband’s and the wife’s competing applications for property orders then continued on 28 April, 29 April, 19 May and 20 May 2014.  For convenience, I will simply refer to those four dates as Day 1 to Day 4 respectively.

14. At the end of Day 2 it was clear that the hearing would require a further two days, so it was adjourned to enable me to return to Melbourne approximately three weeks later.  At that time I made an order requiring the husband to file an affidavit from his accountant one week before the resumption of the hearing and he filed that affidavit on 12 May 2014 (“the accountant’s affidavit”). 

Relevant background facts

1. Unless a contrary intention is clear from the context, where I refer to facts in these Reasons, they should be regarded as findings of fact, particularly when there is a dispute between the parties in relation to those facts.  (I will make more specific comments about the credibility of the parties below.)

2. The parties are both 48 years old.  They started living together in mid-1994 and were married in 1995.  At that time the husband was a [occupation omitted] and the wife was a self-employed [omitted].  The parties’ daughter was born in 2001 (“the child”).

3. They separated in December 2008 and their divorce became effective in April 2012.

4. The husband is qualified as a [omitted] and the wife has [omitted] qualifications.

5. The child lived with the wife after the parties separated, and she continues to live with her mother pursuant to the orders made by consent on 6 June 2013.  She is thirteen years old.

6. The parties purchased a property at [T] in mid-1997 (‘the [T] property”) with the assistance of funds from family, their own savings and a loan from a bank (which was later taken over by the Commonwealth Bank). The [T] property was initially registered in the sole name of the wife.

7. From 2000 the husband’s business activities were generally conducted by [S] Pty Ltd as trustee for the [Bowler] Family Trust (“the Family Trust”) and in mid-2002 the wife “sold” the [T] property to the Family Trust.  With the assistance of further borrowings, the existing house was demolished and three units were built on the [T] property.  The Family Trust then sold two of those units and transferred the remaining unit into the wife’s sole name.  The parties then retained that unit as their residence (“the former matrimonial home”).  As a result of those transactions, the wife was owed a net sum of $61,708 by the Family Trust which has not been paid to her and that “loan” continues to appear in the accounts of the Family Trust.[1].

   [1] See the accountant’s affidavit filed 12 may 2014

8. In 2002 the wife’s father transferred the [S] property to her as a gift.  The husband agreed that it was only “a block of dirt” and that “there’s nothing on it [but] a couple of pine trees”.[2]   The only contributions that the parties made to that property were to pay rates between that time and their separation in 2008.  After the parties separated, the wife had difficulty meeting the rates payments and the local shire council subsequently obtained a judgement against the wife for unpaid rates.  At the time of the hearing, the wife was paying off that judgement and the outstanding balance was approximately $2,000.

   [2] Transcript: Day 2 at page 110

9. In about June 2004 the parties obtained a credit facility from the Commonwealth Bank (“the line of credit”) secured by a mortgage over the former matrimonial home.

10. The husband bought an XY Ford Falcon motor vehicle in 2005 with a friend.  His share cost him $20,000 and those funds were withdrawn from the line of credit.  During cross-examination, the husband conceded that he had subsequently bought his friend’s share of the vehicle and become the sole owner of it.[3]

    [3] Transcript: Day 2 at page 127

11. In 2007 the husband began [occupation omitted] (“Mr N”).  He subsequently withdrew $50,000 from the line of credit in 2008 to buy a half share in Mr N’s business (“[A]”).

12. The parties separated in late December 2008 and at that time the debit balance of the line of credit was $167,411.[4]

    [4] See Exhibit “W6”

13. In his first affidavit the husband said this at paragraph 53:

    By the time the wife and I separated in 2008, the partnership was not going well.  I was doing significantly greater work in the business but Mr N reported that the business was not doing well financially (he was responsible for our bookkeeping).  I incurred significant credit card debt, to meet business expenses at this time, where the business was running at a loss.  I then discovered that Mr N had been using our employee and partnership resources to undertake private work, outside of our partnership.  These matters led to the end of our partnership in 2010.

14. The wife says that the husband was “thrown out of the business by his partner as a result of dishonesty”.[5]  However, because neither party provided any corroboration of their evidence for the husband’s departure from [A] or called Mr N as a witness, I am unable to make any findings about that.  After the husband parted company from [A], he worked on a self-employed basis as a [omitted], and in 2012 he claimed to be earning $30,000 per annum.[6] 

    [5] Paragraph 12 of the wife’s trial affidavit

    [6] Paragraph 54 of his first affidavit

15. In early 2011 the parties refinanced the line of credit through a loan facility from the ANZ bank (“the ANZ loan”).  The credit limit of the ANZ loan was $320,000, but the first draw down on that loan facility on 9 March 2011 was $250,000 (in round figures).  Subsequent withdrawals by the husband and interest charges took the debit balance to its limit of $320,000 by December 2012.  Between the initial draw down in March 2011 and the closure of the account, the husband paid nothing at all off that ANZ loan but made withdrawals of approximately $32,500.  The interest charges over the same period were approximately $33,500.[7] 

    [7] See Exhibit “W7”

16. In July 2012 the husband received $8,662.50 when an investment intended to be an education fund for the child matured.  The husband retained those funds.

17. The ANZ loan was discharged when the former matrimonial home was sold in late 2012.  However, a total of $365,172 was paid to the ANZ bank at that time because a business loan liability of approximately $48,000 incurred by the trustee of the Family Trust was also required to be paid out.[8]   After paying out other expenses of the sale, the balance proceeds of sale were held in trust for the parties by the wife’s former solicitors as referred to in paragraph 3 above.  Various fees and expenses were paid from the trust money and, as stated above, the balance of the trust money at the time of the hearing was approximately $290,000. [9]

    [8] Transcript: Day 2 at pages 105 and 106

    [9] See Exhibit “H5”

18. In 2013 the parties agreed that the [S] property could be sold and it was placed on the market.  An offer of $89,000 was received in January 2014 and the selling agent recommended that it be accepted.  Notwithstanding the existence of the orders referred to in paragraph 5 above, the husband failed to provide a withdrawal of the caveat that he had placed over the title to that property because he considered the [S] property to be worth $140,000. 

19. The husband did not provide a withdrawal of his caveat over the title to the [S] property until early May 2014 (i.e. between the adjournment on Day 2 and the resumption of the hearing approximately three weeks later).[10]

    [10] See Exhibit “W13”

The parties’ positions at the hearing

1. Counsel for the wife indicated on Day 1 that the wife’s position was essentially that:

   ·the wife should retain all the trust money (from the sale of the [T] property) and retain the [S] property; and

   ·the husband should retain his business and the vehicles in his possession.  

2. The husband indicated towards the end of Day 2 that his position was that he should receive $140,000 from the trust money and the wife should receive the balance, while retaining her [S] property.  It was implicit that he would retain his interest in the Family Trust.

Relevant Law

1. Prior to the High Court decision in Stanford v Stanford,[11] the general approach to the determination of a property settlement application appeared to have been well established by authority as a multi-step process.[12]  The steps were said to involve:

   a)Firstly, an identification and valuation of the property, liabilities and financial resources of the parties;

   b)Secondly, an evaluation of the contributions made by the parties as defined in section 79(4) of the Act;

   c)Thirdly, a consideration of any relevant matters under subsection 75(2) of the Act; and

   d)Fourthly, before making an order adjusting property interests, being satisfied in all the circumstances that it is just and equitable to do so under subsection 79(2).[13] 

   [11] Stanford v Stanford (2012) FLC 93-518; (2013) 293 ALR 70

   [12] See Lee Steere (1985) FLC 91-626; Ferraro  (1993) FLC 92-335; Clauson (1995) FLC 92-595, Hickey (2003) FLC 93-143 and C & C (2005) FLC 93-220

   [13] Also see Russell v Russell (1999) FLC 92-877

2. However, in Stanford, at paragraph 37, their Honours French CJ, Hayne, Kiefel and Bell JJ said:

   37. First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property.

3. In paragraph 40 of Stanford, their Honours went on to say:

   40. Third, whether making a property settlement order is “just and equitable” is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s 79(4). The power to make a property settlement order must be exercised “in accordance with legal principles, including the principles which the Act itself lays down”.[14] To conclude that making an order is “just and equitable” only because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act.

   [14] R v Watson; Ex parte Armstrong [1976] HCA 39; (1976) 136 CLR 248 at 257

4. It is now clear that being satisfied “in all the circumstances” that it is just and equitable to make an order is not the last in a series of four steps and, with the benefit of that hindsight, it may have been wise for judicial officers over the years to have paid more heed to the words of Federal Magistrate Walters, as he was then,[15] when he said:

   In my view, however, the testing of any proposed orders by reference to section 79(2) is not a fourth substantive step (properly so called) in the property settlement exercise, and there is no fourth step in that sense.[16]

   [15] Now Justice Walters of the Family Court of Western Australia

   [16] OSF and OJK (2004) FLC 93-191 at paragraph 16

5. Subsection 79(1) of the Act reads in part as follows:

   In property settlement proceedings, the court may make such order as it considers appropriate:

   (a) in the case of proceedings with respect to the property of the parties to the marriage or either of them - altering the interests of the parties to the marriage in the property;

6. Subsection 79(2) provides that 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”

1. Subsection 79(4) provides:

   In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:

   (a) the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and

   (b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and

   (c) the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and

   (d) the effect of any proposed order upon the earning capacity of either party to the marriage; and

   (e) the matters referred to in subsection 75(2) so far as they are relevant; and

   (f) any other order made under this Act affecting a party to the marriage or a child of the marriage; and

   (g) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.

2. In this matter, the parties are each seeking different orders for the disposition of the funds currently held by the Fitzroy solicitors in an interest bearing account in trust for the parties pursuant to the orders of this Court of 30 May 2012 “pending written agreement of the parties (through their respective solicitors) or further order of the Court”.  Clearly, the parties are unable to agree upon the disposition of those funds and it would be unjust and inequitable for me not to make any order at all in relation to their disposition.  Consequently, justice and equity requires me to make orders under section 79.    

The conduct of the proceedings

1. The husband filed his application on 17 May 2012 and the first court date was on 30 May 2012. 

2. Rule 24.03 of this Court’s Rules[17] provides:

   [17] Federal Circuit Court Rules 2001

   24.03(1)  A party required under this Part to file a financial statement or affidavit of financial circumstances must make in the statement or affidavit a full and frank disclosure of his or her financial circumstances, including details of:

   (a) any vested or contingent interest in property (including real or personal property, superannuation and legal and equitable interests); and 

   (b) income from all sources, including any benefit received in relation to, or in connection with, the party's employment or business interests; and 

   (c) the party's other financial resources; and 

   (d) any trust:

   (i) of which the party is, or has been since the separation of the parties, the appointor or trustee; or

   (ii) of which the party, or the party's child, spouse or de facto partner is, or has been since the separation of the parties, an eligible beneficiary as to capital or income; or

   (iii) of which a corporation is an eligible beneficiary as to capital or income if the party, or the party's child, spouse or de facto partner is, or has been since the separation of the parties, a shareholder or director of the corporation; or

   (iv) over which the party has, or has had since the separation of the parties, any direct or indirect power or control; or

   (v) of which the party has, or has had since the separation of the parties, the direct or indirect power to remove or appoint a trustee; or

   (vi) of which the party has, or has had since the separation of the parties, the power (whether subject to the concurrence of another person or not) to amend the terms; or

   (vii) of which the party has, or has had since the separation of the parties, the power to disapprove a proposed amendment of the terms or the appointment or removal of a trustee; or

   (viii) over which a corporation has, or has had since the separation of the parties, a power mentioned in subparagraphs (iv) to (vii), if the party is a director or shareholder of the corporation; and 

   (e) any gift or other disposition of property made by the party since the separation of the parties; and 

   (f) if there is a partnership, trust or company (except a public company) in which the party has an interest, copies of the 3 most recent financial statements and the last 4 business activity statements lodged by the partnership, trust or company. 

3. In addition, Rule 24.04 provides:

   Unless the Court or a Registrar otherwise orders, a party required under this Part to file a financial statement or affidavit of financial circumstances (other than a respondent in a proceeding for maintenance only) must serve on each other party who has an address for service in the proceeding the following documents:

   (a) copies of the party's 3 most recent taxation returns;

   (b) copies of the party's 3 most recent taxation assessments;

   (c) if the party is a member of a superannuation plan:

   (i) if not already filed or exchanged - the completed superannuation information form for any superannuation interest of the party; and

   (ii) for a self-managed superannuation fund - the trust deed and copies of the 3 most recent financial statements for the fund;

   (d) if the party has an Australian Business Number, copies of the last 4 business activity statements lodged;

   (e) if there is a partnership, trust or company (except a public company) in which the party has an interest, copies of the 3 most recent financial statements and the last 4 business activity statements lodged by the partnership, trust or company.

4. That Rule also provides that those documents must be served within 14 days of the first court date.

5. It follows that the husband should have made full and frank disclosure of his financial circumstances and served the relevant documents by mid-June 2012.  However, it is perfectly clear that the husband did not make proper disclosure of his financial circumstances, nor did he produce to the wife’s lawyers the documents that he should have produced.

6. The husband’s failure to properly disclose his financial position from the outset was exacerbated by the fact that he also failed to comply with specific orders for disclosure and production of documents.  Such orders were made on 6 June and 13 November 2013.

7. On Day 2 the husband produced a spreadsheet in order to explain some of his expenditure.[18]  During his cross-examination by the wife’s counsel, it became apparent that his preparation of that spreadsheet was intended to show that much of his expenditure had been for the benefit of the wife and the child.  However, it also became apparent that the husband had significantly overstated any such benefit to them.  Counsel for the wife subsequently described that spreadsheet as “self-serving and inaccurate”,[19] and I accept that to a large degree that description is appropriate. Indeed, I said on Day 4 that “I cannot help but come to the conclusion that the spreadsheet, which is an exhibit, is not an accurate spreadsheet in any event.”[20]

   [18] Exhibit “H4”

   [19] Transcript: Day 3 at the foot of page 87

   [20] Transcript: Day 4 at page 153

8. At the start of Day 3, after an adjournment of approximately three weeks, the husband sought to produce a revised spreadsheet that had only been made available to the wife’s counsel at 10 a.m. on that day.  It should not have come as a surprise to the husband that I asked him why the document had not been produced “years ago” or that I refused to allow that revised spreadsheet to form part of the evidence.[21] 

   [21] Transcript: Day 3 at pages 12 to 14

9. On Day 3 the husband also sought to put various telephone accounts and EBay records to the wife in cross-examination.  Those documents had not been previously produced to the wife or her solicitors, so I permitted the wife’s counsel to take instructions about them during the luncheon adjournment (notwithstanding that her client was still being cross-examined).  I subsequently refused to allow those documents into evidence. 

10. By orders made on 6 June and 13 November 2013 the husband was required to participate in processes to obtain valuations for his business and his Ford Falcon.  That did not happen, notwithstanding that any valuation costs were to be paid from the trust money under the control of the Fitzroy solicitors.  Responsibility for his failure to comply must lie squarely at the feet of the husband.

11. I also note (and accept) the wife’s evidence that she had been prepared to jointly instruct valuers to provide a valuation of the [S] property in early 2013, and that she communicated that to the husband’s solicitors.  However, the husband failed to complete the necessary authorities to allow that to happen.[22] 

    [22] Transcript: Day 4 at pages 187 and 188, and Exhibit “W12”

12. The husband was not represented by a lawyer during the hearing, but being a self-represented litigant does not mean that there should be any relaxation of the rules of evidence or compliance with applicable Rules and procedures of the Court.  More often than not, having a self-represented party creates difficulties for the Court.  That was clearly recognised in the following statement by the High Court in Neil v Nott and Another: [23]

    [23] Neil v Nott and Another (1994) 121 ALR 148 at page150

13. Counsel for the wife submitted in closing that the husband had either misled the ANZ bank or had misled the Court.  In relation to that, the husband had stated in paragraph 54 of his affidavit filed 17 May 2012 that he was a self-employed [omitted] and that he earned approximately $30,000 per annum.  However, a Statement of Financial Position provided to the ANZ bank on 16 February 2011 indicated that his gross earnings were $72,000 per annum.[24]  The husband attempted to explain that away by disowning the document because it had not been signed by him.  He said that he had not provided that information to the ANZ bank and “What I’m saying is that sometimes bank managers can put in figures for you that don’t necessarily reflect the reality, okay.”[25]

    [24] See Exhibit “W3”

    [25] Transcript: Day 1 at page 51

14. Although that Statement of Financial Position was not actually signed by the husband, I am satisfied that the information contained in it was provided to the ANZ bank by the husband.  Notwithstanding that, it seems to me that the “Elias principle”[26] is applicable.  In that regard, Chisholm J explained that principle in Jordan & Jordan as follows:

    When a party has made representations of fact to third parties and has gained advantage from so doing, it is open to the court in subsequent proceedings under s 79 of the Family Law Act to decline to accept from that party evidence which contradicts those representations.

    [26] See Elias v Elias (1977) FLC 90-267

15. I find that the husband made representations to the ANZ bank that his income was $72,000 per annum and, because the loan was approved and granted, he clearly “gained advantage from so doing”. I am therefore satisfied on the balance of probabilities that the husband was earning $72,000 per annum and not $30,000.  

16. During the hearing the husband attempted to persuade me that, because he was not able to use his work vehicle, his income earning capacity was significantly reduced.  He had said the following in an affidavit sworn and filed on Day 1 of the hearing:

    I’ve also … had visits from the Sheriff who has taken my work van off the road …[28]

    [28] See paragraph 11

17. During cross-examination on the first day of the hearing, he was asked by the wife’s counsel to produce correspondence from the Sheriff’s office the following day.  The documents that he produced as a result of that call show that he was informed on 15 April 2013 that the option of obtaining a payment order was available to him (so he could have his work vehicle on the road), but it was not until 29 November 2013 that he obtained a payment order from the Magistrates Court to pay off $2,375.70 in unpaid fines at the rate of $50 per month commencing on 11 January 2014.[29]  That would have enabled him to have his work van back on the road.  However, he had failed to mention that in his affidavit sworn and filed on 28 April 2014 and I note that it was only after the wife’s counsel called for the documents that the husband revealed that he had “recently gone on a payment plan”.[30]

    [29] See Exhibit “W10”

    [30] Transcript: Day 1 at page 33

18. In view of the above, I have no difficulty in concluding that the husband still has a capacity to earn $72,000 per annum or more.

19. The husband was also deliberately evasive at times when answering questions put to him in cross-examination.  For example, when he was asked whether he had valuable parts for the XY Ford Falcon “wrapped up in almost cotton wool”, his answer was “Yes”.  Only two questions later, he was asked whether he had parts for that vehicle, and his answer was “No, I don’t”.  Almost immediately thereafter he indicated that he did have “loose parts” for the vehicle.[31]  I shall refer to that vehicle further below.

    [31] Transcript: Day 2 at page 128

20. I note also that the wife’s evidence was not entirely reliable.  For example, she stated in paragraph 22 of her trial affidavit.

    In early 2012 the Applicant withdrew $40,000 from the facility just prior to instituting legal proceedings without explanation.  I presume the funds were applied to his legal fees.

21. There is no evidence that the husband withdrew $40,000 just prior to instituting legal proceedings.  Indeed, the ANZ bank records produced by the wife show quite clearly that he did not withdraw anything like that sum.  As mentioned at paragraph 29 above, the total withdrawals by the husband over the whole period of the ANZ loan were approximately $32,500.

22. Having said that, I do not attribute any deliberate dishonesty to the wife in relation to what she said about the possibility of the husband having paid his lawyers $40,000 from that joint loan.  I accept that the wife was genuinely mistaken about that and note that, to his credit, the husband conceded that he had paid his former lawyers $10,000 at about the time that he instituted the proceedings and that was in addition to the $48,630.32 that he still owes those former lawyers, as mentioned in paragraph 9 above.[32]

    [32] Transcript: Day 4 at pages 219 and 220

The asset pool

1. The Court is presented with some difficulty in ascertaining the nature and value of the asset pool for division between the parties.  This is because of the unsatisfactory state of the evidence, that is essentially the result of:

   ·the husband’s failure to make full and frank disclosure; and

   ·his failure to comply with orders in relation to valuations. 

2. As explained in more detail in the paragraphs and footnotes below, I find that the asset pool for potential division between the parties is as follows:

Assets	Value
Trust money with wife’s former solicitors	$290,000
Debt owed by Family Trust to wife	$61,708
Ford Falcon	$30,000
LandCruiser motor vehicle	$9,500
Hiace Van	$8,350
Cressida motor vehicle	$1,000
Husband’s superannuation[33]	$3,953
Asset total value	$404,511
Liabilities
Wife’s tax debt[34]	$8,250
Debt to the child’s counsellor, Ms M[35]	$1,585
Liabilities total value	$9,835
Net total value	$394,676

[33] See Exhibit “H3”

[34] Item 53 in her Financial Statement

[35] Transcript: Day 3 at page 131

1. It is somewhat difficult to attribute any particular value to the husband’s business, as conducted by [S] Pty Ltd as trustee of the Family Trust.  Included in Exhibit “W5” are the financial statements of the Family Trust for 30 June 2012 and I note that it made a small profit of $11,471 in that financial year.  However, the balance sheet of assets and liabilities is confusing.  Notwithstanding that, I make the following comments:

   ·Figures relating to [A] appear to have been carried forward from the previous year but both parties’ evidence was that he has severed his association with [A].  Consequently, the net debt to [A] of $23,754 should be discounted;

   ·The business debt to the ANZ bank was discharged upon the settlement of the sale of the former matrimonial home in late 2012; and

   ·As mentioned in paragraph 21 above, the wife is owed $61,708 by the Family Trust.  It was her evidence that that debt (as an asset notionally in her hands) has caused her some difficulties with Centrelink. 

2. It follows that if one removes any liabilities to [A], the ANZ bank and the wife from the balance sheet of the Family Trust, the equity would be positive rather than the significant deficiency shown in the 2012 financial statements.  Notwithstanding that, it is still exceedingly difficult to attribute any particular net value to the assets of the Family Trust, primarily because the 2013 and 2014 financial statements are not available to me and because of the husband’s cavalier attitude to disclosure of financial matters generally.

3. It is clear, however, the wife is entitled to be paid $61,708 by the Family Trust, so that should properly be treated as an asset in her hands.  The husband’s accountant says that the only options of which he is aware to extinguish that debt in the books of the Family Trust would be for the Family Trust to pay that sum to the wife or alternatively, for her to forgive the debt.  It follows that at present that sum of $61,708 remains a liability in the hands of the trust and an asset in the hands of the wife.

4. The wife’s evidence in relation to the Ford Falcon was as follows:[36]

   The 1970 XY Ford Falcon purchased by the [husband] and [a named friend] in August 2005 for $30,000 … is a very valuable

   vehicle and even more so if it were sold for parts.  It is a collectable vehicle and highly sought after.  The parts are no longer available.  The [husband] advised me that he bought his partner’s share in the car in approximately 2010, I presume using funds from the Viridian loan.  The [husband] refuses to have it valued and has taken the vehicle apart in order to make valuation difficult.  I say that prior to separation we had a number of people come to our door making offers to buy the vehicle just from seeing it in our driveway.  Offers of $40,000 to $50,000 were common.  I am happy to treat the vehicle as being worth what the [husband] and his partner paid for it, being $30,000.

   [36] See paragraph 31 of her trial affidavit

5. I note that in his evidence the husband conceded that it was possible that people may have come to the home and made offers to buy the Ford Falcon when he was not there.[37]  He also said he would be prepared to sell it for $30,000.[38] 

   [37] Transcript : Day 2 at page 99

   [38] Transcript : Day 2 at page 128

6. I also note that in a text message to the wife on 25 February 2012, when the wife was threatening to have the Ford Falcon removed from the driveway to the former matrimonial home, the husband said:

   I would prefer to move the car items myself as some of them are very delicate & brittle, not to mention original and irreplaceable …[39]

   [39] See Exhibit “W14”

7. In my opinion, it is reasonable to infer that if parts for the car are both “original and irreplaceable”, they must be sought after by collectors and that gives credence to the wife’s evidence that the vehicle may be more valuable if it was to be sold for its parts.

8. In the circumstances, I consider it appropriate to attribute a value of $30,000 to the XY Ford Falcon for the purposes of these proceedings.

1. I have accepted the Redbook values attributed by the husband in paragraph 84 of his affidavit filed 5 June 2013 for the Toyota Hiace and the Toyota Cressida.  In that same paragraph he attributed a Redbook value of $9,500 for the Toyota LandCruiser, but he sought to reduce that because of engine and panel damage.  However, I do not accept that reduction in value.  That is because he rents that vehicle to a friend and receives $6,240 per annum gross in rental payments.  I am therefore of the view that I should attribute the full Redbook value of $9,500 to the LandCruiser.

2. It is appropriate to include the husband’s superannuation in the same pool as the other assets.   That is because it is of minor value in relation to the other assets, and that is in accordance with the reasoning of the majority in C & C.[40]

   [40] C & C (2005) FLC 93-220

3. I have not included any chattels (other than motor vehicles) in the table above because the parties assign values of “minimal” and “nil” to their household contents in their Financial Statements filed in these proceedings.

4. Although the parties must each have incurred substantial legal costs in relation to these proceedings, I do not consider it appropriate to include legal costs as liabilities in the asset pool.  My reasons for that are:

   a)It is not usual in Family Law proceedings to include the party’s legal costs when considering the asset pool.

   b)I have no accurate figures in relation to the parties’ total legal costs.  However, I am aware that the husband drew down funds from the ANZ bank in order to pay his lawyers approximately $10,000.  In addition to that, he owes them at least $48,630.32 as set out in paragraph 9 above, and his estimate at the start of the hearing was that his legal costs were “hitting $80,000”.[41]  On the other hand, the only evidence I have about the wife’s legal costs is that she owes the Fitzroy solicitors $32,000,[42] but the Court file reveals that she ceased instructing them in December 2012 and her current solicitors filed a Notice of Address for Service on 23^rd of May 2013.

   [41] Transcript: Day 1 at page 19

   [42] Item 54 of her Financial Statement

5. I comment at this stage that the wife says that the Trust money was not transferred to her current solicitors in accordance with the Orders of 6 June 2013 because the Fitzroy solicitors “refused to release those funds on the basis that [she has] outstanding costs with them”.[43]  While I have some concerns about that, I make no particular findings in relation to the conduct of the Fitzroy solicitors.

   [43] See subparagraph 40(e) of her trial affidavit

6. I have not included the [S] property in the table above because it seems clear to me that neither party contributed greatly to the acquisition, conservation or improvement of that property.  I have referred to that at paragraph 22 above.  Because the property was registered solely in the name of the wife, it is clear that the gift by her father was intended to benefit her alone. 

7. I also note that in Kessey & Kessey,[44] Baker, Finn and McCall JJ said:

   In other words, a contribution by a parent of a party to a marriage to the property of the marriage will be taken to be a contribution made by or on behalf of the party who is the child of the parent unless there is evidence which establishes it was not the intention of the parent to benefit only his or her child.[45]

   [44] Kessey & Kessey (1994) FLC 92-495

   [45] Their emphasis – see page 81,150

8. In an earlier decision of Gosper & Gosper,[46] Fogarty J said that a gift made by the parents of one spouse can be treated as a financial contribution made directly on behalf of that spouse alone, because it is often “clear that the motivating circumstance was the relationship”[47] between parents and their son or daughter, and that it was intended to benefit their son or daughter.

   [46] Gosper & Gosper (1987) FLC 91-818

   [47] See page 76,168

9. I also note that when the wife was asked what she wanted to do with the [S] property, she said:

   I’d like to sit on it and just leave it for my daughter.  It was a gift to me from my father, who owed me money from years ago, and I would like to hand it down to my daughter.[48]

   [48] Transcript: Day 4 at page 188

10. Leaving the [S] property out of the asset pool for potential division between the parties will give effect to the intention of the wife’s father, and possibly enable the wife to give effect to her wish as set out in the paragraph immediately above. 

11. References below to “the asset pool” are intended to refer to what is set out in the table at paragraph 67 above.  

Contributions

1. I am satisfied that in the early years of their relationship both parties worked hard for their mutual benefit; the husband as a [omitted] and the wife as a [omitted].  Paragraphs 48 to 56 of the husband’s affidavit of 17 May 2012 sets out the parties’ employment during their relationship, and notes that the wife undertook part-time [omitted] after their child was born.  I do not need to repeat those facts in full here because they were not really disputed. 

2. It is also clear that contributions “made in the capacity of homemaker or parent”[49] should not merely be recognised in a token manner, but rather, they should be recognised in a substantial way.[50]  To his credit, the husband did not criticise the wife’s role as a homemaker and parent.

   [49] See section 79(4)(c)

   [50] See Rolfe and Rolfe (1979) FLC 90-62, Mallet v Mallet (1984) FLC 91-507 and Ferraro (1993) FLC 92-335

3. In her affidavit material and in the witness box, the wife made occasional references and allusions to the husband being involved in illicit drug use during and after their relationship.  I assume that it was her intention to persuade the Court that illicit drug use on his part was an explanation for funds that she considered had been “squandered”.  For example, when she was being cross-examined by the husband, she said: “I believe a lot of the money that you … the majority of the money you drew from the account was to pay for your drug habit.”[51] 

   [51] Transcript: Day 3 at page 112

4. Such allegations are clearly serious, and I note from the well-known decision in Briginshaw v Briginshaw[52] that the degree of satisfaction which the civil standard of proof calls for may vary, having regard to the gravity of the facts to be proved. That concept is also specifically incorporated in sub-section 140(2) of the Evidence Act 1995, which reads:

   [52] Briginshaw v Briginshaw (1938) 60 CLR 336

   Without limiting the matters that the court may take into account in deciding whether it is so satisfied, it is to take into account:

   (a) the nature of the cause of action or defence; and

   (b) the nature of the subject-matter of the proceeding; and

   (c) the gravity of the matters alleged.[53]

   [53] My emphasis

5. A passage of Dixon J’s judgment in Briginshaw reads as follows: [54]

   The truth is, that when the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found. It cannot be found as a result of a mere mechanical comparison of probabilities independent of any belief in its reality.

   [54] Briginshaw at page 361

6. In relation to this particular matter, I note that the husband was not specifically questioned about any illicit drug taking and the wife produced no other evidence to corroborate her allegations.  I am therefore not prepared to make a finding that any significant sums of money drawn from the parties’ accounts were to pay for drugs.  However, that does not mean that I am entirely satisfied with the husband’s explanations in relation to his expenditure after the parties separated. 

7. Although the husband purports to set out in his spreadsheet (Exhibit “H4”) the application of funds from the Commonwealth Bank and ANZ Bank loans, he fails to disclose any income deposited to those accounts (or any other accounts).  In any event, his expenditure in relation to the ongoing expenses of the wife and his daughter as disclosed in Exhibit “H4” was somewhat meagre. His minimal expenditure on his daughter’s educational and extracurricular expenses is an example:

   ·During the calendar year 2009 he paid only $140 towards those expenses and at that time he was paying no Child Support under the Child Support (Assessment) Act 1989. 

   ·His payments in 2010 amounted to $1148.90, and he was still not paying any assessed Child Support. 

   ·Similarly, in 2011 those payments were only $642.50. 

   ·He did not start paying assessed Child Support until May 2012 and in that calendar year he paid only $192.50 towards his daughter’s educational and extracurricular expenses.

8. It is therefore very clear that the wife’s contributions, including direct financial contributions and as a homemaker and parent after separation significantly outweighed those of the husband.  It should also be noted that the period between separation and the hearing was more than five years.

9. In those circumstances, the wife’s overall contributions must be given greater weight that those of the husband.

Subsection 75(2) factors

1. The husband is aged 48 years, and I have already concluded that he has the capacity to earn $72,000 per annum or more. 

2. The wife is also aged 48 years, but her evidence in relation to her capacity for employment is:

   With respect to my current ability to work, I confirm that up until recently I have lived in a refuge with my daughter and as such could not work as a [omitted] at home as I have in the past nor have I been able to look for work because I do not know where I will be living following these proceedings.  I am currently on a mental health care plan.  My doctor … has advised Centrelink that I am suffering from anxiety, depression and post-traumatic stress disorder and am unfit for work at present.  I say that condition has been bought on by the abuse I have suffered during my relationship with the [husband] and the stress and trauma associated with the [husband]’s behaviour since separation and in relation to these proceedings.  I currently see a psychologist … as part of my VOCAT funded health care plan.  Hopefully once these matters are resolved and I am able to get permanent accommodation for [the child] and I, I will be in a position to get some part time work but I say it is unlikely that I will be able to look at full time work in the foreseeable future.  I have commenced studying a [omitted] course on line, which hopefully will provide me with some employment opportunities in the future. The reality however is that I have not worked full time since 1999.

3. She was not seriously challenged in relation to that evidence.

4. The wife has the full-time care and control of the parties’ 13 year old daughter, and if the past is any indicator of the future, it is likely that she will be primarily responsible for the financial support of her daughter in the future.  Given the husband’s failure to be co-operative in relation to financial matters pertaining to these proceedings, I think it is unlikely that he will be forthcoming with financial information in relation to his obligations under the Child Support (Assessment) Act 1989.

5. When these Subsection 75(2) factors are taken into account, it is clear that there needs to be an additional weighting in favour of the wife.

Discussion

1. The husband’s accountant stated in his affidavit that the only options available to extinguish the loan of $61,708 in the accounts of the Family Trust “is for either the Trust to pay the Respondent that debt or alternatively, for the Respondent to forgive the debt”.[55]  The wife’s counsel made it clear in her closing submissions that the wife was not prepared to forgive that debt. 

   [55] At paragraph 10

2. Although the Family Trust does not appear to have a present capacity to pay that debt, there would be distinct advantages to both parties if the wife was to assign that debt to the husband.  For example:

   ·It will satisfy the wife’s request as set out in paragraph 15 of her trial affidavit, where she said: “I say that as part of the finalisation of these proceedings, the Applicant should be required to do all things necessary to discharge that loan or transfer it into his own name in such a manner that no liability for taxation or otherwise will be incurred by me as a result of same.” and

   ·The husband could have confidence that the wife would not be calling in that debt at some time in the future if the Family Trust’s financial position improves.

3. An order requiring the wife to assign that debt to the husband would also be in accordance with the Court’s obligation to “make such orders as will finally determine the financial relationships between the parties”.[56]

   [56] See section 81 of the Family Law Act 1975

4. Such an assignment would mean that the husband would retain assets as follows:

Debt owed by Family Trust	$61,708
Ford Falcon	$30,000
LandCruiser motor vehicle	$9,500
Hiace Van	$8,350
Cressida motor vehicle	$1,000
His superannuation	$3,953
Total	$114,511

1. I note that $114,511 is approximately 30% of the total net value of the asset pool as set out at paragraph 67 above.  It follows that if the wife was to retain the Trust money currently held by the Fitzroy solicitors ($290,000) and pay her tax debt and the debt to the child’s counsellor (total $9,835), she will retain approximately 70% of the total net value of that asset pool. 

2. In my view, those are appropriate percentages to be retained by the parties, because:

   ·I have concluded that the wife’s overall contributions were greater than those of the husband;

   ·there needs to be an additional weighting in favour of the wife under section 75(2) of the Act;

   ·the husband increased the parties’ joint liabilities by paying at least $10,000 of his legal costs; and

   ·he retained for his own benefit the sum of $8,662.50 that was intended for the child’s education.

3. In my view, it is also relevant that the husband failed to make full and frank disclosure of his financial position, and I note that there is judicial authority for the Court to err on the side of generosity when one party is not completely candid about his or her finances.  The obligation to make full disclosure in financial matters is absolute.  Kannis & Kannis is reported in an edited version only in relation the issue of the removal of a next friend,[57] but in the unedited version of the decision of Nicholson CJ, Buckley and Kay JJ delivered on 24 December 2002, their Honours said this:[58]

   Whether the non-disclosure is wilful or accidental, is a result of misfeasance, or malfeasance or nonfeasance, is beside the point.  The duty to disclose is absolute.  Where the Court is satisfied the whole truth has not come out it might readily conclude the asset pool is greater than demonstrated.  In those circumstances it may be appropriate to err on the side of generosity to the party who might be otherwise be seen to be disadvantaged by the lack of complete candour.  This is the course the trial Judge adopted.  It was a course clearly open to him and one that does not merit appellate interference.[59]

   [57] Kannis & Kannis (2003) FLC 93-135

   [58] At paragraph 51

   [59] My emphasis

4. I also note what Courts have said about failure to make full and frank disclosure in Giunti and Giunti, Hickey, Weir v Weir and Gollings & Scott. [60]

   [60] Giunti and Giunti (1986) FLC 91-759; Hickey (2003) FLC 93-143; Weir v Weir (1993) FLC 92-338; Gollings & Scott (2007) FLC 93-319

5. I will make orders to take account of what I have said above.  They will include orders for the wife to transfer and assign to the husband all her interest in the debt owed to her by the Family Trust, and for her to receive the entirety of the funds held in trust by the Fitzroy solicitors.  There is no need for me to make a specific order in relation to the [S] property, because the wife is the sole owner of that property.

Procedure

1. I heard this matter in Melbourne but I will be delivering this decision in Tasmania.  My Associate will therefore make arrangements to provide copies of these Reasons and the Orders to the husband and the wife’s lawyers by mail or by electronic means. 

I certify that the preceding one-hundred and ten (110) paragraphs are a true copy of the reasons for judgment of Judge Roberts

Associate: 

Date:  29 January 2015

[27] Jordan & Jordan (1997) FLC 92-736 at 83927