BURKETT & NOVACK
[2019] FCCA 1362
•23 May 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| BURKETT & NOVACK | [2019] FCCA 1362 |
| Catchwords: PRACTICE AND PROCEDURE – Use of summaries – communication with chambers. |
| Legislation: Evidence Act 1995 (Cth) ss.48(4), 50, 50(2) |
| Cases cited: Bevan v Bevan [2013] FamCAFC 116 |
| Applicant: | MS BURKETT |
| Respondent: | MR NOVACK |
| File Number: | MLC 8541 of 2017 |
| Judgment of: | Judge Harland |
| Hearing dates: | 11 and 12 April 2019 |
| Date of Last Submission: | 12 April 2019 |
| Delivered at: | Melbourne |
| Delivered on: | 23 May 2019 |
REPRESENTATION
| Counsel for the Applicant: | Ms Colla |
| Solicitors for the Applicant: | Barbayannis Lawyers |
| The Respondent appearing in person |
ORDERS
That within 21 days the parties do all acts and things and sign all documents necessary to cause the entirety of the funds held in the account of Business A Pty Ltd (“Business A”) with the Westpac Bank in a Westpac Business One account, BSB … account number …, in the approximate sum of $134,627.00, be paid to Barbayannis Lawyers on behalf of the wife.
To aid compliance with order 1 the wife be at liberty to serve a sealed copy of these orders upon the Proper Officer of the Westpac Banking Corporation.
That pursuant to s.90SL of the Family Law Act1975 (Cth) that each of the husband and the wife shall be and hereby are declared to be the sole and absolute owners at law and in equity of:
(a)all items of furniture, furnishings, personalty, chattels and jewellery;
(b)all monies (whether held in cash or in deposit with any financial institution);
(c)any motor vehicle;
(d)all contributions to or benefits or entitlements arising from membership of any fund of insurance or superannuation whether such interest be present, contingent or expectant;
in the possession, custody or control in which either has an interest which are not otherwise dealt with in these orders.
The Respondent indemnify and keep the Applicant indemnified with respect to all debts in his name or jointly with another person.
That in the event that either party should fail, neglect or refuse to sign or execute any deed, document or instrument required by or to give effect to these Orders then pursuant to s.106A of the Family Law Act 1975 (Cth) that the Registrar of the Federal Circuit Court of Australia, Melbourne Registry shall be and is hereby authorised, empowered and directed to sign and execute such deed, document or instrument in the place and instead of such party and to thereafter do all things and acts as are necessary to give validity and operation to same.
That within 28 days the Applicant file written submissions in support of her costs application and any minute of orders sought with respect to the Respondent’s superannuation and Business A Pty Ltd.
That within 28 days thereafter, the Respondent file written submissions in response to the Applicant’s cost application and any minute of orders sought that the parties have liberty to apply with respect to the implementation of these orders.
IT IS NOTED that publication of this judgment under the pseudonym Burkett & Novack is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 8541 of 2017
| MS BURKETT |
Applicant
And
| MR NOVACK |
Respondent
REASONS FOR JUDGMENT
The applicant defacto wife commenced proceedings on 22 August 2017. In her initiating application the defacto wife sought non-particularised property orders due to non-disclosure in addition to a periodic or lump sum payment of defacto spousal maintenance.
The respondent defacto husband filed his response on 1 September 2017 seeking on a final basis that there be an equal split of the funds in the Business A Pty Ltd (“Business A”) Westpac bank account.
For ease of reference, I will refer to the parties as husband and wife.
The drafting of the affidavits unfortunately make it difficult to follow the chronology and the details of various financial transactions.
Background
The wife was born on … 1966 and is 52 years of age. The husband was born on … 1962 and is 56 years of age.
The parties commenced living together around late 2010 or early 2011. The parties never married. They separated on 11 March 2017.
The parties do not have any children of the relationship. The respondent has two children from a previous relationship; [X] aged 12 and [Y] aged 11.
During the relationship the children spent time with the husband on alternate weekends at Property B (“the Property B property”) and five days per fortnight when the parties resided at Property C, (“the Property C property”). The wife does not have any children of her own.
The issues I am asked to determine
The issues I need to determine are:
a)The parties’ contributions;
b)dissipation of the husband’s superannuation;
c)dissipation of funds from the sale of properties and in the Business A account;
d)non-disclosure of information by each party;
e)the wife’s maintenance application.
Assets at the beginning of the relationship
The wife owned the Property B property at the commencement of the relationship. She had equity in that property of $320,000. She also had Westpac shares which she says were worth $12,000 and a motor vehicle. The wife has superannuation. She annexes a superannuation statement to her trial affidavit showing she had superannuation entitlements with Super Fund D of $50,044 as at 30 June 2011. The husband conceded that the wife sold her shares on 13 January 2015 and deposited two sums of $6,000 and $6,600 into the Business A account.
The husband agreed that the wife had equity of $320,000, superannuation and a car.
The husband says that at cohabitation he had superannuation worth $135,000 but does not provide any documents to verify this. He also had a car. During cross-examination the husband claimed he had provided these documents. The wife’s Counsel called for them to be produced. The husband did not produce any document in answer to the call.
Contributions during the relationship
The wife claims at paragraph 12 of her affidavit filed 6 February 2019 that for the first six months when they lived at the Property B property the husband did not contribute to the mortgage or outgoings as he was unemployed.
The wife also claims that she contributed towards the care of the husband’s two children by taking them to and from school, helping with the completion of homework in addition to their educational and extracurricular activities whilst in the parties’ care. However, during cross-examination the wife conceded that she did not pick up and drop off the children to and from school while living at the Property B property for that 20 month period. During cross-examination the husband conceded that the wife assisted with the children when in their care, however stated that she did not do a reasonable job of looking after them in the final three to four years of the parties’ relationship.
While living in Property B, the husband’s mother moved in with the parties for a few months. At paragraph 12 of the wife’s affidavit filed 6 February 2019 she briefly indicates that she also cared for the mother who was suffering from dementia when she moved in with them.
The husband says that throughout the relationship he earned $100,000 a year apart from two short periods where he was made redundant. He says the redundancy packages were enough for him to continue to support himself. He says the wife worked on and off earning about $60,000 per annum. The husband’s evidence with respect to his employment was inconsistent. The tax returns the husband provided also do not support his contention about his income.
The husband says he paid for various holidays and paid the rent and expenses for the Property C property.
In late 2012 the parties moved out of the Property B property. They began renting at the Property C property. The rental income received from the Property B property was applied to its mortgage.
The husband continues to reside and pay rent at the Property C property.
Business A Proprietary Limited
In … 2014 the parties jointly established the company Business A Pty Ltd (“Business A”) for the purposes of the parties purchasing a property to develop into their family home. The parties were joint directors and equal shareholders of the company.
Purchase of Property E
In … 2014 the parties purchased a property at Property E, (“the Property E property”) in the name of Business A for $500,000.
The parties borrowed $400,000 from Westpac to complete the purchase of this property. The wife claims at paragraph 13 of her affidavit filed 22 August 2017 that the 10% deposit was borrowed against the Property B property and added to the mortgage. The husband claims in his affidavit filed 1 September 2017 at paragraph 11 that the wife’s statement about the deposit was untrue and that he supplied $120,000 to the purchase of the Property E property.
The wife agrees that the husband contributed $50,000 towards the purchase of Property E. She says he also contributed $25,000 towards the stamp duty expenses.
I am satisfied that both parties contributed to the purchase of the Property E property.
The sale of the Property B property
Annexure A to the wife’s trial affidavit is the settlement statement dated 5 March 2015 for the sale of the Property B property which shows Perpetual Limited being paid $124,924.61 in discharge of the mortgage. The wife says that reflects the increase in the mortgage of $50,000 to pay for the Property E property deposit.
During the course of cross-examination the husband conceded that the Mortgage Settlements Australia documents show that the mortgage totalled $135,000 being the $80,000 at the commencement of the relationship and the $55,000 drawdown. For the first time during cross-examination the husband said he used the $55,000 for a side business that he was trying to get off the ground. He denied making things up as he went along but that is the impression that I have from his evidence. He conceded that in Exhibit 22, which is the refinancing documents for the Property B mortgage, that there is no mention of a side business. I prefer the wife’s evidence that she arranged for the further financing so that they could purchase a property.
The husband also agreed that Exhibit 9 showed that he took out $12,000 in three tranches. He said he could not recall what he used those monies for. The wife’s Counsel suggested to the husband that one of the reasons the wife ended the relationship was because he would take money from their accounts without discussing it with her. He denied this.
The Property F property
The parties decided to buy a property at Property F (“the Property F property”). They signed the contract on … 2015 for a purchase price of $1,900,000. They paid a holding deposit of $5,000 which was subsequently returned to the wife.
The husband at paragraph 14 of his affidavit indicates that the wife did not provide any funds towards the deposit of $185,000 and that as a result he had to withdraw from the purchase.
The wife at paragraph 27 of her affidavit filed 6 February 2019 states that between 4 and 12 June 2018 she did transfer the sum of $190,000 into the company’s bank account for the purposes of paying the remainder of the deposit following payment of the holding deposit.
Exhibit 8 is a transaction statement for the Westpac business flexi account showing a deposit of $84,000 on 22 May 2015. The wife says that this was the cheque that she provided to the husband for the Property F property deposit. She said she does not know why it is described as a deposit and not a cheque on the transaction statement. The husband conceded that the transaction statement aligns with the contract for the purchase the Property F property.
The wife says the contract was rescinded after the husband failed to pay the remainder of the deposit of $185,000 despite her depositing that amount from the proceeds of sale for Property B property into the Business A account. The wife states that the husband did not pay the remainder of the deposit and she is unaware of where the sum of $185,000 has gone. She says that money remains unaccounted for.
Proceeds of sale Property B and Property E properties
The wife sold the Property B property and received $385,000 after payment of the mortgage and other expenses. She annexes her ANZ account statements showing a transfer of $369,454 into her account on 6 March 2015 being the day after settlement of the sale and then several withdrawals over the next several months Her case is that the husband insisted that they deposit that sum into the Business A bank account to use it to develop the Property E property and to buy the property in Property F. The husband says this was a joint decision.
The wife arranged for the Business A bank account with Westpac to be frozen when she realised that the balance was only approximately $134,600. She says about $315,000 was deposited into that account so that approximately $180,000 is unaccounted for. The wife says she confronted the husband about the missing funds but he did not account for them. The wife obtained an intervention order from the Magistrates’ Court on 21 April 2017.
Exhibit 12 is the subpoenaed records produced by Victoria Police. The police incident report dated 6 July 2017 records the wife reporting the husband breaching the intervention order by withdrawing $4,000 from her account without the wife’s authorisation. The terms of the intervention order restrained the husband from dealing with any accounts in their joint names or in the wife’s sole name without her written authorisation. The wife reported the breach on 23 May 2017. She produced her bank statement showing an ANZ internet bank transfer for $4,000 to the husband. The husband was charged. Exhibit 4 is a letter from Victoria Police to the wife dated 10 April 2019 advising her that the husband was found guilty and was sentenced without conviction and ordered to pay $750 into the court fund. The husband gave brief evidence in chief about this and said that the problem was that the account was overdrawn. That is no answer as he was not entitled to withdraw funds at all.
The parties decided to sell the Property E property rather than build on it and realised the sum of $218,697.27 in profit on 1 March 2017. The wife agrees that the husband contributed $50,000 towards the purchase of Property E.
The wife says she confronted the husband about the missing money he paid her the sum of $28,600 in three payments on 2 March, 3 March and 7 March. She refers to that being in 2016 in her affidavit but that is clearly a typographical error and should be 2017. The husband says he gave her that money because she wanted to purchase a car.
Joint Commonwealth Bank of Australia account
The parties opened a joint account with the Commonwealth Bank of Australia. The wife says it was only open for a short time. They opened the account on 24 January 2017 with a nil balance. When cross-examined the wife said she did not deposit her salary into that account because she says that the husband was making withdrawals that he would not explain. The husband made one deposit of his salary in the sum of $5,699.31 on 14 February 2017. He made one payment of rent and transferred the rest over the course of a couple of weeks in February 2017. This period is leading up to the breakdown of the relationship.
The husband’s self-managed super fund
The husband set up a self-managed super fund. In 2015 he rolled over $137,850 into the fund. Later he rolled out $138,000. In cross-examination he said he set up the fund as he was hoping to invest in property with his superannuation funds. The husband claimed he did not produce the document requested showing the current balance of his superannuation funds because the wife had not provided documents either. I do not accept that and as was pointed out to him in cross-examination and in the wife’s case outline filed for the first trial which was not reached, she indicated that she did not know what the balance was of his superannuation fund. He also did not put to the wife that there were documents that he requested that had not been provided apart from the authority to Super Fund G (a company providing investment and superannuation products).
In the husband’s most recent financial statement he said he had superannuation of $20,000. In his financial statement filed in August 2017 he said he had $143,000.
The husband claims he spent the $123,000 on living expenses because he was unemployed. The husband’s evidence about this was not credible. He then had to concede that he started with his current employer in July 2016.
The Australian Taxation Office has sent correspondence to the husband requiring him to rectify the non-compliance of his self-managed superannuation fund.
The husband says he does not recall paying any money from Business A into his superannuation fund.
The husband’s wastage and criminal history
The husband was cross-examined about his criminal records which were subpoenaed. In 2000 he was convicted of obtaining property by deception and false documents. He changed two payees on cheques during the course of his employment. As part of his sentence of a community corrections order, the husband was also ordered to attend an education program and counselling for gambling. When cross-examined about this the husband said he did not have a gambling problem and that the police took his answers to their questions about gambling out of context.
The husband denied having a gambling problem historically or currently. He denied that one reason for his relationship with the wife breaking down was his financial mismanagement.
I have already referred to the husband being found guilty of breaching the intervention order by taking the $4,000.
In addition to a significant portion of the proceeds of sale of the Property B property being unaccounted for, the husband has also greatly reduced his superannuation entitlements.
The wife says the husband has failed to account for about $310,000 in total from the proceeds of sale of the Property B property and the Property F property deposit, $125,000 being from the proceeds of sale and $185,000 being the Property F property deposit.
The wife subpoenaed documents from VCAT with respect to the husband’s guardianship of his mother’s finances and his removal as guardian by the Tribunal. The subpoenaed records from the Commonwealth Bank of Australia show that between 14 March 2015 and 22 April 2016 he transferred sums totalling $159,000 from his mother’s account to his. He denied spending the sums on himself and said he sent monies to her family in Country H and provided some for her stay at the Aged Care nursing home.
The husband signed the accommodation bond through his mother’s guarantor. The husband settled his mother’s family law matter on her behalf and she received $232,000. He conceded that his mother could not pay the accommodation debt because he sent $50,000 to Country H and he had the benefit of $125,000. The documents show that Company J (the organisation owed money of the accommodation bond) did not seek to recover funds from the husband because according to those records he was unemployed and did not have property. The husband did not disclose his interest in Business A. He said he did not realise that he had to mention Business A given that there was another director as well.
Company J later pursued him and he entered into a deed of settlement. He owes approximately $45,000.
The husband disagrees that he disadvantaged his mother financially by his actions but he had to submit hardship documents with the Department of Health and Human Services on her behalf.
Exhibit 24 is the statement of further and better particulars with respect to the Magistrates’ Court proceedings between the husband’s former wife. In that statement she makes allegations of family violence and says that on 14 September 2009 the husband sent her an email saying that he borrowed money from a loan shark and had been threatened as he has not paid the debt and that because of this that she was also at risk. The email is annexed to the statement and says that he had to pay $14,000 by 5pm that day. Later in that statement says that the husband later told her that that email was a deceitful ruse trying to get money from her.
The husband denies having any money in Country H and says that his family there does not keep in contact with him. The husband says that he does not know where the proceeds of the Property B property have gone but he takes full responsibility for the other money.
The husband says that he probably made the majority of the withdrawals in May 2015 but claims that he did not spend the money he gave back to the wife and has no idea what she did with it as it is her money. I do not accept his evidence. Both parties had access to the account which the wife could just as easily have withdrawn the money herself if she wanted to.
The husband also claimed when asked in cross-examination about the wife’s tax returns that her 2016 return does not reflect her income and claims that she did not declare all of her income to Centrelink. He did not put that proposition to the wife in cross-examination. He conceded that her taxable income was as follows:
2016 $32,642.00
2017 $39,973.00
2018 $34,837.00
The husband was cross-examined about the ANZ bank statements showing deposits in 2015. He claims that the deposit of $50,000 on 17 August 2015 was from him and that was from his personal account. I do not see how he could have deposited $50,000 unless this was part of the money he had taken from his superannuation fund.
The husband was also cross-examined about statements which show the husband making withdrawals at Crown Casino in 2014. Exhibit 29 supports the allegations of the husband gambling.
Allegations against the wife
The husband makes various allegations against the wife in his trial affidavit that are not specified and are inadmissible, including references to drug use, gambling and the wife’s inability to get along with people. He claims she has wasted funds on drugs. The affidavit was prepared with the assistance of the father’s lawyer before he ceased to act. It did not assist the husband.
The husband cross-examined the wife about her work history. She worked for her cousin for a period of time and said she stopped working there as one of the women there had a personal conflict with her. This cross-examination did not advance anything.
Allegations with respect to disclosure
Each accuses the other of not providing full and frank disclosure. The husband did not cross-examine the wife about this. The husband was cross-examined. The husband said he did not provide documents because the wife did not. That is unsatisfactory.
The husband produced his personal tax returns and tax returns for his superannuation fund at the trial. He agreed in cross-examination that his taxable income was as follows:
2015 $23,613.00
2016 $17,427.00
2017 $127,647.00
The husband says he set up his self-managed super fund as he was hoping to invest in property. He rolled in a sum of $137,850 in 2015 and then rolled out $138,000. From July to September 2016 his employer paid his superannuation into his Super Fund K and then instructed his superannuation be paid into his self-managed superannuation fund.
The superannuation tax returns show:
2016 $1.00
2017 $5,500.00
The husband says he has not gotten around to doing the 2018 returns. Exhibit 13 is a letter from the husband’s accountant dated 4 February 2019 stating that all the income tax returns for the Novack Superannuation Fund had been lodged and are up-to-date. The husband acknowledged that his accountant prepares the returns and that he controls the fund. The wife’s Counsel called on the husband to produce a current balance for his superannuation fund. She put to the husband that the case outline prepared for the trial that was not reached on 4 March 2019 referred to the wife not knowing what his superannuation balance was. He said that he also would like a lot of information that he asked for and never got. He did not put those things to the wife when he cross-examined her.
In his financial statement filed in August 2017 the husband deposes that he had $143,000 in superannuation. His February 2019 financial statement discloses a $20,000 balance. He says he spent the $123,000 on living expenses because there was a period when he was unemployed. The timing does not make sense and is also inconsistent with his affidavit evidence. He then changed his evidence and said that he was unemployed for about 18 months from January 2015 until July 2016 when he started with his current employer. He says he gradually took out superannuation when he needed it during his period of unemployment. He agreed that he did not tell the wife and he said this was because he was managing the finances that time.
His superannuation fund is non-compliant. The Australian Taxation Office expects him to repay those funds.
The husband conceded that the first time he said he withdrew those funds for living expenses was during his cross-examination.
Exhibit 14 is the subpoenaed records from the husband’s employer. The wife had to issue several subpoenas in order to get this information.
Super Fund G
One of the issues in dispute is whether or not the husband has any superannuation entitlements or managed funds with Super Fund G. The husband signed an authority to Super Fund G at the wife’s insistence. He says he has never had an interest in Super Fund G. The wife annexes correspondence from Super Fund G addressed to the husband dated 10 June 2015 and a further letter dated 4 August 2015 addressed to Business A to the attention of the husband. The first letter refers to the husband withdrawing from his managed funds a total of $63,715.32. The letter dated 4 August 2015 refers to the husband investing $60,000 in their derivative investment management scheme. The letter is addressed to Business A, marked to the husband’s attention, which refers to him investing a further $160,000. The wife’s solicitors sought the husband sign the authority after unsuccessfully seeking information directly from Super Fund G on the basis that she is a joint director and shareholder of Business A.
The husband denies have any dealings with Super Fund G. He claims that the wife made up those documents. The wife’s Counsel put to the husband that the wife is asking him where the proceeds of sale from the Property B property went and that the husband was secretive. The husband denied being secretive and said that the parties made decisions together.
The husband denied making up the Super Fund G documents to show her and placate her. I am not satisfied that the wife created these documents. It does not advance her case. I did not find the husband to be a credible witness about his superannuation funds and disclosure.
The wife’s Counsel suggested to the husband that the wife’s solicitors had to issue several subpoenas because of the husband’s failure to provide documents. He said that he did initially and has emails to show that. She called for those emails. Exhibit 18 is a bundle of requests for documents from the wife’s solicitors seeking disclosure documents. There are multiple requests and it is consistent with the wife’s solicitors issuing subpoenas after the hearing was not reached on 4 March 2019. It would not have been necessary if the husband has complied with his disclosure obligations.
The parties legal and equitable interests as at the date of hearing
The parties have the following legal and equitable interests:
a)Monies in the Business A bank account of $134,687.
b)There is no documentary evidence of the husband’s current superannuation entitlements. In his financial statement filed on 8 February 2019 he deposes having $20,000.
c)Wife’s superannuation of $100,000.
The figures for the parties’ superannuation interests are taken from the parties financial statements filed on 6 and 8 February 2019. I cannot be confident that the husband’s estimate is correct. One of the difficulties for the wife in this matter has been her inability to provide a precise order of the superannuation split she seeks from the husband’s superannuation fund is because she did not have the details.
The husband has a motor vehicle which he estimates to be worth $15,000. He also lists several liabilities including six credit cards, hire purchase and a loan with Company J.
Legal principles
There is no dispute between the parties that they were in a de facto relationship of more than two years duration. Section 90SB(a) of the Family Law Act 1975 (Cth) (“Family Law Act”) is satisfied. Section 90SD being the geographical requirement is also satisfied.
Part VIIIA is the part of the Family Law Act dealing with property, spousal maintenance and maintenance agreement between de facto partners. The major provisions relating to de facto property division are contained in sections 90SM(1); 90SM(3), 90SM(4); and 90SF(3) of the Family Law Act.
Until the High Court decision in Stanford & Stanford (2012) 247 CLR 108, the position in respect of the process to be applied to the resolution of matrimonial property cases was said to be well settled with a preferred approach as set out by the Full Court in Hickey & Hickey & Attorney-General (Intervener) (2003) FLC 93-143 at 78,386 [39].
The High Court considered the operation of s.79 of the Family Law Act (which has almost identical terms to s.90SM) in the matter of Stanford. In this case, the majority stated at [35]-[36] that:
35. “It will be recalled that s 79(2) provides that "[t]he 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. Section 79(4) prescribes matters that must be taken into account in considering what order (if any) should be made under the section. The requirements of the two sub-sections are not to be conflated. In every case in which a property settlement order under s 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order.”
36. The expression “just and equitable” is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its metes and bounds.” [Footnotes omitted]
The High Court found three fundamental propositions with respect to the application of s.79, which can be summarised as follows:
1. Firstly, in order to ascertain whether it is just and equitable to make a property settlement order, it is necessary to identify the existing legal and equitable interests of the parties in the property. The High Court emphasised the word ‘existing’.
2. Secondly, although s.79 gives the court a broad power to make property settlement orders it may not be exercised in an unprincipled fashion. There must be no assumption that the parties’ interests are or should be different to their existing interests.
3. Thirdly, when considering whether making a property settlement order is just and equitable the court must not assume that one or the other party has the right to a property adjustment order. The court must give separate consideration to s.79(2) in addition to the matters referred to in s.79(4).
In Stanford the High Court indicated that, in the vast majority of matrimonial property cases, the requirements of s.79(2) will be readily satisfied, largely as a result of a consideration of the circumstances of the parties concerned, particularly the nature of their separation.
The High Court also pointed out that what is just and equitable is different in every case.
The principles referred to in Stanford & Stanford are equally applicable to de facto property matters.[1]
[1] See Watson & Ling (2013) 49 Fam LR 303
The principles with respect to addbacks are well-known. The Court has a discretion as to whether or not to addback items to the pool and take them into account under s.90SF(3)(r).[2]
[2] See Bevan v Bevan [2013] FamCAFC 116
I am satisfied that it is just and equitable to make property adjustment orders.
Conclusions with respect to property
The husband was not a credible witness. He changed his evidence during the course of cross-examination in an effort to suit his case. Parts of his evidence was illogical and did not withstand scrutiny. I find on the balance of probabilities that the husband has wasted significant funds that he has failed to account for. There is missing money from the proceeds of sale, his mother’s estate and his superannuation fund.
In closing submissions the wife’s Counsel refers to Chang & Su [2002] FamCA156.
The wife made significant initial financial contributions and she is now significantly worse off because of the husband’s malfeasance. In those circumstances it is just and equitable for the wife to receive all of the remaining funds in the company’s bank account and a split from the husband’s superannuation fund. The husband’s income is also significantly greater than the wife’s.
I find it is just and equitable to the wife to receive the whole of the funds in the Business A Westpac bank account. I will order that there be a split of $20,000 from the husband’s superannuation fund to the wife’s. The wife will keep the whole of her superannuation interests of approximately $100,000. I will make the order for the release of the funds held by Westpac to the wife.
Exhibit 1 is the minute of orders sought by the wife at trial. I set out orders 3 and 4 of the minute of orders sought by the wife:
3. That the entirety of the Respondent’s superannuation entitlements less $1.00 be transferred to the Applicant at the Respondent’s cost. The Applicant is unable to advise the Court that she has provided procedural fairness to the Trustee of the Respondent’s superannuation fund/s, as the Respondent has refused to provide information as to his superannuation.
4. That upon receipt by Barbayannis Lawyers of the monies as referred to in sub-paragraph 1 hereof, the company be wound up at the expense of the Respondent.
I cannot make those orders. They are not enforceable. The wife was unable to draft a superannuation splitting order with any particularity given the husband’s lack of disclosure. The husband says there is about $20,000 in his superannuation but he did not provide any statement to the court. Exhibit 13, being the letter from his accountant dated 4 February 2019, simply says the superannuation fund tax returns are up to date. Despite this, the husband has not produced tax returns from the superannuation fund for 2018. I am unaware if there will be other practical difficulties with a superannuation split given the fund is non-compliant.
Whilst I find that it would be just and equitable for the wife to receive a superannuation split from the husband’s superannuation of $20,000 (assuming that is what remains in the fund) the wife will need to address these practical issues and submit a form of order to Chambers. I cannot simply make an order that the parties wind up the company apart from the issue of form. Apart from the fact that the order as drafted is unenforceable, no submissions were made with respect to the source of power I have to make such an order under the relevant corporation legislation.
The wife has not sought an alternative order with respect to this. I will give the wife 28 days to submit orders to Chambers together with brief written submissions if required addressing these issues. This can be submitted at the same time as any costs submissions. The husband will be able to reply together with any costs submissions.
Maintenance
The wife also seeks periodic maintenance in the sum of $500 a week with an open-ended order as her circumstances are unlikely to change. In the alternative she seeks here a maintenance order for five years. Counsel referred to the allegations of family violence in her affidavit which were not challenged by the husband though she conceded that a Kennon[3] claim has not been made out. She says that there was financial abuse in the relationship and refers to the fact that the wife was in her mid-40s when they started their relationship and had equity in the home. She made significant financial and non-financial contributions during the relationship including to the husband’s children, as he had two dependents he had to support and was not in a strong financial position. She said that she did not know about his criminal history.
[3] Kennon & Kennon [1997] FamCA 27.
She lives as a border paying $250 a week and has casual employment without benefits.
The wife submits that she is entitled to a reasonable standard of living. The husband opposes a maintenance order being made against him. He says he has several debts he is obliged to pay. The financial statement filed on 6 February 2019 by the wife discloses an estimated income of $1,000 a week. She listed expenses in Part N of her financial statement totalling $633 a week. She was not challenged about her expenses. They are not extravagant. She shows a shortfall of just $66 a week. However I acknowledged that where she is currently living is important, paying $250 a week, and if she were to rent a property this expense would be higher though I have not been provided any evidence with respect to this. Her liabilities consist of legal fees and accounting fees.
In the husband’s financial statement filed on 8 February 2019 the husband discloses an income of $2548 a week which includes a car maintenance allowance for visiting and entertaining medical clients. He does not show his superannuation benefit in Part D of the form but claims superannuation expenditure in paragraph 20 of Part G of the form of $201 a week. In cross examination he said he was only receiving the employer contributions. Therefore this amount is incorrect and can be removed from his expenses. He discloses paying rent of $461 a week. He discloses car payments of $465 a week however he conceded that in the statement from M Financial Services it is about $360 a week and he will finish paying it off in September or October 2019. Exhibit 26 is a bundle of documents from M Financial Services. Included in that bundle the statement of assets and liabilities that he signed on 21 August 2012 in support of his application for finance he discloses having a principal place of residence valued at $450,000 with a mortgage of $110,000. He makes no reference to the wife’s interest in the property and the fact that it is in her name. The bundle also shows the husband made the repayments that during the initial part of his loan but dishonoured payments on 12 occasions and fell into arrears. The documents also show that the husband made an application for hardship but then did not follow through with that and later made a complaint to the Credit and Investment Ombudsman.
The husband says he has about $6,700 left in credit card debts. He owes Company J about $45,000 for his mother’s accommodation bond.
At Part N of his financial statement the husband discloses expenses for the children of $386 per week and expenses for himself of $1,054 per week. I accept that the husband has expenses for his children when they spend time with him. However some of those expenses, particularly his, are excessive. For example he says he spends $100 a week on clothes and shoes from himself. He says he needs to buy one or two new suits a year for his work as he meets with clients.
It is well established that an applicant for maintenance does not need to deplete all of his or her capital before seeking maintenance:[4]
[4] In the Marriage of Bevan 19 Fam LR 35.
Part VIIIAB of the Subdivision B of the Family Law Act contains the maintenance provisions with respect to de facto relationships. The jurisdictional requirements set out in section 90SD and 90SB are satisfied.
Section 90SD addresses the powers of the court in maintenance proceedings, subject to the jurisdictional requirements referred to above being satisfied and the de facto relationship having broken down, the wording of this section mirrors s74[5].
[5] Sections, 72, 74, and 75(2) set out maintenance provisions with respect to married couples.
Section 90SF sets out the matters the court must consider with respect to maintenance. Section 90SF(1) states:
S.90SF Matters to be taken into consideration in relation to maintenance
(1) In exercising jurisdiction under section 90SE (after being satisfied of the matters in subsections 44(5) and (6) and sections 90SB and 90SD), the court must apply the principle that a party to a de facto relationship must maintain the other party to the de facto relationship:
(a) only to the extent that the first-mentioned party is reasonably able to do so; and
(b) only if the second-mentioned party is unable to support himself or herself adequately whether:
(i) by reason of having the care and control of a child of the de facto relationship who has not attained the age of 18 years; or
(ii) by reason of age or physical or mental incapacity for appropriate gainful employment; or
(iii) for any other adequate reason.
Section 90SF(1) largely mirrors s74(1) The court may only take into account the matters listed in s90SF(3).
Section 90SF(1) sets out a threshold which the applicant’s maintenance has the onus of meeting.
As acknowledged by the wife’s Counsel in closing submissions, maintenance is not ordered as a form of punishment or restitution[6]. Misconduct is not relevant to maintenance.[7]
[6] See Slattery and Slattery (1976) FLC 90 – 110
[7] See In the Marriage of Soblusky (1976) FLC 90-124
The husband has a greater income than the wife. The wife’s financial position is modest. She is in a worse financial position now than she was at the beginning of the relationship.
There is a paucity of evidence in the wife’s affidavit about her need for maintenance. In her trial affidavit she refers to the husband “clearly acknowledging her health issues” in his 2017 affidavit and acknowledging that she has had difficulties with employment in the past few years. In her trial affidavit she says this is because of the husband’s treatment of her and says that he was physically and verbally abusive. She does not produce any medical evidence. She does not refer to any attempts to seek other employment.
I accept that the wife’s financial circumstances are modest. The husband has a higher income but the wife must get over the threshold requirements and establish that she is unable to support herself adequately by reasons of her age, health, capacity for employment or other adequate reason and this simply has not been addressed adequately in her affidavit. I dismiss her maintenance application.
Costs
The applicant seeks costs. Applications for costs are dealt with pursuant to s.117 of the Family Law Act. I will order that the applicant file written submissions in support of her costs application within 28 days and that the husband file written submissions in response 28 days thereafter. I will thereafter determine the costs application in Chambers unless either party advises Chambers that they wish to have the costs application dealt with by way of oral submissions in open court.
Practice and procedure
Aspects of the preparation and presentation of this matter have been unsatisfactory. In their trial affidavits, both parties refer to their previous affidavits and sought to rely on them in breach of the trial directions. Both parties were legally represented when the affidavits were prepared, however the husband appeared for himself at the trial and in those circumstances I allowed the parties to do so.
What was of more concern was that the wife’s legal representatives prepared a lever arch folder of the material which they sought to tender. That in itself is not the difficulty and indeed can be of assistance when there are many documents. However they sought to rely on several summary documents but did not provide those documents to the husband in advance of the trial. It is unfair to produce a significant bundle of documents with summaries at the commencement of the trial and expect the other party to be able to study those summaries and the supporting documents to see whether or not the summaries are accurate and will consent to the summaries being tendered.
That unfairness is compounded when the other party is unrepresented and to expect that party to be able to address those issues overnight in the middle of the trial is unrealistic and unfair. In those circumstances the work in preparing those summaries which would have been significant was a waste and is of particular concern given the small size of the pool. One summary was a summary of the wife’s financial contributions covering the period from 2011 to 2017. It was unreasonable to expect the husband to be in a position to consider that summary against the original records during the trial for the purposes of accepting the summary as correct.
I draw attention to s.48(4) of the Evidence Act 1995 (Cth) which permits reliance on secondary evidence of a document, such as a summary when the contents of the document is not in issue. In order for it not to be in issue, the husband needed to have a reasonable opportunity to satisfy himself as to the accuracy of the source documents. Section 50 of the Evidence Act does not assist the wife. That provision allows a party to apply to the court to rely on a summary of a document if it would not be possible to conveniently examine the evidence because of volume or complexity. Section 50(2) requires the party seeking to rely on a summary to provide the other party with the particulars of who prepared the summary and give the other party a reasonable opportunity to inspect the documents the summary relies on.
One of the issues in dispute between the parties is that of disclosure. The dispute about disclosure was a live issue with both parties raised, including at Court on 4 March 2019 when the matter was not reached.
On 16 April 2019 wife’s lawyer wrote to Chambers, copying in the husband, seeking to bring correspondence with respect to disclosure to my attention addressing the husband’s tenders. My associate informed me of the general content of the first letter. I have not read that correspondence, nor any of the documents sent with it. I have not taken it into account in reaching my decision.
I instructed my staff to respond pointing out that the only proper way to bring such matters to my attention after judgment has been reserved is to bring an application to seek to reopen the trial. That has not occurred.
Further correspondence was received by Chambers from the wife’s lawyer on 10 May 2019 advising that Counsel for the wife had advised her instructors that in closing addresses, I indicated that if a response to the letters requested in discovery could be located that they should be forwarded to Chambers.
I instructed my staff to listen to the recording.
The husband alleged that there several of his letters addressed to the applicant’s lawyers asking for documents which went unanswered. During his re-examination the husband tendered correspondence which he alleged were not answered. The applicant’s Counsel did not have an instructing solicitor in court and that is not unusual in Victoria particular where there is a modest asset pool. Counsel did not have her instructor’s correspondence file and could not address those. She said “I’ll get the dates of the documents from your associate and I’ll check with my instructor to see if she replied, just to check.” She did not raise it again. She did not seek to tender further documents. She did not seek an order permitting her to in effect tender documents by emailing them to Chambers after judgment was reserved. This is not a course I would have endorsed, particularly when it is not by consent and one party is not legally represented.
I am most troubled by this occurrence.
I certify that the preceding one hundred and twenty two (122) paragraphs are a true copy of the reasons for judgment of Judge Harland
Date: 23 May 2019
Key Legal Topics
Areas of Law
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Family Law
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Civil Procedure
Legal Concepts
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Costs
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Remedies
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Breach
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Procedural Fairness
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Statutory Construction
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