BURNS & SHEDDON

[2018] FamCA 557

FAMILY COURT OF AUSTRALIA

BURNS & SHEDDON [2018] FamCA 557

FAMILY LAW – PROPERTY SETTLEMENT – Just and equitable – Property acquired before the marriage – Entitlement to claim total permanent disability payment acquired before the date of the marriage – Contribution – Stanford v Stanford (2012) 247 CLR 108 – Short marriage – Where there has been an informal settlement of property between the parties – Where it is not just and equitable to alter the parties interests in property.

FAMILY LAW – PRACTICE AND PROCEDURE – Non-appearance of a party – Where the husband did not comply with trial directions – Where the husband had notice of the proceedings – Oral application by the wife to proceed on an undefended basis in the absence of the husband.

Family Law Act 1975 (Cth) s 79

Bevan & Bevan [2013] FamCAFC 116
Stanford v Stanford (2012) 247 CLR 108
Zaruba & Zaruba [2017] FamCAFC 91

APPLICANT: Mr Burns

RESPONDENT: Mr Sheddon

FILE NUMBER: ADC 4348 of 2017

DATE DELIVERED: 27 July 2018

PLACE DELIVERED: Adelaide

PLACE HEARD: Adelaide

JUDGMENT OF: Berman J

HEARING DATE: 16 July 2018

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Richards

SOLICITOR FOR THE APPLICANT: Lindbloms Lawyers

SOLICITOR FOR THE RESPONDENT: No appearance

Orders

1. That in full and final settlement of the claims of the parties for settlement of property pursuant to Part VIII of the Family Law Act 1975 (Cth) as amended, the wife and the husband are each entitled to be the sole legal and beneficial owners of all items of property including money, motor vehicles, insurances, equities, superannuation entitlement and personal effects currently in the possession or control of each of them without claim by the other.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Burns & Sheddon has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT ADELAIDE

FILE NUMBER: ADC 4348 of 2017

Mr Burns

Applicant

And

Mr Sheddon

Respondent

REASONS FOR JUDGMENT

Introduction

1. The proceedings between Mr Burns (“the wife”) and Mr Sheddon (“the husband”) arise from an Initiating Application filed by the wife on 12 February 2018 and relate to the settlement of property following the breakdown of the parties’ four month marriage.

2. By Amended Initiating Application filed 7 June 2018 the wife seeks orders for the adjustment of the parties’ property interests pursuant to Part VIII of the Family Law Act 1975 (Cth) (“the Act”). It is her position that the parties should each retain all assets and liabilities in their respective possession and control.

3. By Response filed 29 March 2018 the husband opposes the wife’s application and seeks that it be dismissed. He seeks no orders with respect to the property of the parties.

4. On the first day of hearing the wife appeared represented by counsel. The husband did not appear. Counsel for the wife made an oral application that the matter proceed on an undefended basis.

Materials relied upon

1. The wife relies upon the following material:

   a)Outline of Case Document;

   b)Amended Initiating Application filed 7 June 2018;

   c)Trial Affidavit filed 7 June 2018;

   d)Amended Financial Statement filed 7 June 2018.

2. The husband did not file any materials in compliance with the trial direction orders made 24 April 2018. The husband’s Response filed 29 March 2018 seeks that the wife’s application be dismissed. The affidavit filed contemporaneously with the husband’s Response does not particularise any claim, and many of the contents of the affidavit are not compliant with the Family Law Rules 2004 (Cth) (“the Rules”).

Background

1. The wife was born in 1979 and is 39 years old. She holds a number of qualifications.

2. The wife has a son from a previous marriage. There are no children of the parties’ marriage.

3. The husband was born in 1978 and is 40 years old. He operates his own business and is a student.

4. The parties met through an online dating service in March 2017 and commenced a relationship. The parties commenced living together in the husband’s rented accommodation on 1 May 2017 and were married in mid- 2017. The parties separated on 9 October 2017 and there is no prospect of reconciliation.

5. The parties appeared before this court on 24 April 2018. The wife was represented by counsel and the husband appeared as a litigant in person.

6. The wife sought that the matter be listed for final hearing urgently. She has been advised by her treating medical practitioners that her health conditions are not responsive to treatment and that her condition is terminal. She does not know her estimated life span.

7. The husband opposed the wife’s application. It was his position that there were matters in the wife’s filed materials which required correcting. He had not filed a Financial Statement with his Response filed 29 March 2018 and explained that he had not filed his own Financial Statement due to “deficiencies” in the wife’s Financial Statement.

8. The matter was listed for trial on 16 and 17 July 2018.

9. The husband had notice of the hearing. He was present as a litigant in person when the matter was listed. Counsel for the wife advised that the husband had attended at the wife’s solicitor’s office to view documents on 9 July 2018 and he was served with the wife’s Outline of Case Document by email.

10. The matter proceeded in the absence of the husband on an undefended basis. The wife’s position is that there should be no adjustment of property. Judgment was reserved.

Property considerations

1. It is submitted on behalf of the wife that the Court should not be satisfied that it is just and equitable for an order to be made that alters the property interests of the parties pursuant to s 79(2) of the Act.

2. If the wife’s position is accepted then no s 79 order need be made and the parties would retain their separate legal and equitable interests free from any claim by the other.

3. The wife contends that the only property that has been disclosed is held by her and can be traced back to the wife receiving significant payouts from her superannuation interest by reason of a total and permanent disability claim.

4. The husband has not disclosed any interest in property. He has not filed a financial statement nor a trial affidavit. There is no evidence that would assist the Court in understanding his financial position and in particular whether he contends that he has any legal or equitable interest in property held by him or that he has any interest in the wife’s property.

5. The evidence of the wife supports her claim that at the commencement of cohabitation she gave the husband $24,643 to assist in the reduction of substantial pre-cohabitation debts held by him.

6. Prior to the consideration of s 79(2) by the High Court in Stanford v Stanford (2012) 247 CLR 108 the “preferred approach” is best encapsulated in the approach adopted and endorsed by the Full Court in Hickey & Hickey & The Attorney General for the Commonwealth of Australia (2003) FLC 93-143 where the Full court supported what had been commonly referred to as the “four step approach”.

7. The wife seeks that the parties each retain their separate legal and equitable interests in property held by them. The husband’s position is to oppose the orders sought but not to advance or seek any other relief.

8. In Stanford (supra) the majority held:-

   [35]It will be recalled that section 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

9. The Court found that whether it is just and equitable to make an order is not to be answered by assuming that the parties rights to all interest in marital property is or should be different from those that then exist.

10. It is therefore not a matter of assumption that a party to a marriage has a right to an interest in property by reference to matters arising under s 79(4). A party cannot pull themselves up by their own bootstraps by asserting a contribution under s 79(4) and therefore using the position to satisfy the obligation imposed by s 79(2).

11. The following appears in Stanford (supra) at [43]:-

    By contrast, the bare fact of separation, when involuntary, does not show that it is just and equitable to make a property settlement order. It does not permit a court to disregard the rights and interests of the parties in their respective property and to make whatever orders may seem to it to be fair and just.

12. While clearly the court has some significant obligation to consider the justice and equity of making any order that adjusts the property rights of parties, I do not consider that Stanford goes so far as to suggest that there can be no regard to the matters that might fall for consideration under s 79(4) of the Act. It is the very nature of the suite of contributions made by parties to a relationship which in and of themselves have the ability to created equitable interests in the property of each of them.

13. In Stanford the High Court sought to define its likely application to future cases in the following manner:-

    [42]In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as a result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the Court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4).

14. In Bevan & Bevan [2013] FamCAFC 116 the majority of the Full Court said (in relation to the previously quoted paragraph in Stanford):-

    [70]     In our experience, the circumstances described in the paragraph above encapsulate the vast majority of cases. Hence, the reminder in Stanford of the pivotal role of s 79(2) is unlikely to have any impact in most cases, although it will serve as a reminder to trial judges that the precondition to making any order is a finding that it is just and equitable to do so.

15. The Full Court in Bevan stated that the decision of Stanford can be reduced to three fundamental propositions as summarised at [73]:-

    (1)The Court needs to consider the existing property interests of the parties and to identify those interests by reference to common law and equity;

    (2)The discretion must be exercised in accordance with legal principles and not in respect of any assumption that the parties interests should be different from those determined by common law equity; and

    (3)Section 79(2) cannot be conflated by reference to matters in s 79(4).

16. In  Zaruba & Zaruba [2017] FamCAFC 91 the Full Court said:-

    [38]In the vast majority of cases, it will be appropriate to address the s 79(2) question by ascertaining the legal and equitable interests in property without making distinctions between individual assets. That is because [referring to Stanford] the “express and implicit assumptions that underpinned the existing property arrangements” can be seen to apply (to the extent and degree to which they do apply) to all of the property of the parties or either of them, including property in which the legal interests vary.

    [39] However, the position is likely to be different in circumstances where, as here, the characteristics of the property and the circumstances of its acquisition, improvement and the like can be seen to differ significantly and where, as here, the parties’ relationship has taken on a quite different characteristics during the period to which the s 79 inquiry is directed.

PROPERTY OF THE PARTIES

1. The wife holds the following property:-

Cash at bank	$280,000
Cash at bank (on trust for son)	$ 25,731
Motor vehicle	$ 54,000
Household contents	$ 40,000
Jewellery	$ 20,000
Wife’s Chose in Action	NK
TOTAL	$419,731

1. As discussed, the husband has not filed any affidavit material, a Financial Statement or any document that would assist the court in understanding what are his assets and liabilities.

2. The wife’s health is poor. She has not been employed since 14 November 2013 and has been diagnosed with a number of rare blood vessel and respiratory diseases.

3. She has significant loss of nerve function, neuropathic pain and numbness in hands and feet. Unfortunately her medical prognosis is poor. She appears unresponsive to treatment.

4. The wife’s trial affidavit annexes medical reports of her treating medical practitioners. She will not experience normal longevity. However, her estimated lifespan is unknown.

5. The prognosis was such that she was able to claim an entitlement pursuant to her total permanent disability.

6. She received the following sums:-

   ·From C Superannuation Limited (“CSL”) – the sum of $277,079.24

   ·From B Superannuation Pty Ltd (“BPL”) – the sum of $473,914.95

7. In October 2017 she received payment of interest of a further $17,500 from CSL and $28,000 from BPL.

8. As at the date of commencement of cohabitation on 1 May 2017, the wife’s entitlement to claim under the total permanent disability benefit was extant.

9. At the commencement of cohabitation the husband was unemployed. There was no contribution by the husband to the financial circumstances of the parties.

10. The husband was engaged in various litigation, some arising from previous relationships.

11. The wife alleges that the husband had the following liabilities:-

    ·$15,000 to D Pty Ltd;

    ·$200,000 to the Australian Taxation Office;

    ·$10,000 to E Solicitors for ongoing legal fees;

    ·$20,000 to F Solicitors for outstanding legal fees.

12. The respondent also had outstanding child support liabilities.

13. Between August and October 2017 the wife paid substantial liabilities for and on behalf of the husband:-

    (1)$12,220 to F Solicitors;

    (2)$2,922 to E Solicitors;

    (3)$1,000 in respect of the dispute against D Pty Ltd;

    (4)$3,500 to F Solicitors;

    (5)$5,000 for Federal Circuit Court transcription fees.

14. The parties married in mid-2017 and separated on 9 October 2017.

15. The parties discussed their financial separation and on 16 October 2017 the wife paid the husband a sum of $5,000 by way of informal property settlement, with the effect that he would retain the furniture and effects within the former matrimonial home.

16. The wife’s application is also supported by the observations of the plurality in Stanford at [41]:-

    … If the parties have made a financial agreement about the property of one or both of the parties that is binding under Pt VIIIA of the Act, then, subject to that Part, a court cannot (s 71A) make a property settlement order under s 79. But if the parties to a marriage have expressly considered, but not put in writing in a way that complies with Pt VIIIA, how their property interests should be arranged between them during the continuance of their marriage, the application of these principles accommodates that fact. …

17. The only assistance provided by the husband to the Court is contained in his Affidavit filed 29 March 2018. The contents are not relevant to the proceedings and contain remarks that are both scandalous and offensive.

18. The husband has provided no assistance to the Court and even on the most generous view of the husband’s presentation I am easily able to accept the wife’s evidence in its entirety.

19. I must have regard to whether it is just and equitable to alter the property interests of the parties. I do not consider that it is proper to do so.

20. The property that is able to be identified is referable entirely to the wife and can be traced back to her Total Permanent Disability payments. There has been no action or conduct on behalf of the husband which would enable the Court to find that he has any legal or equitable interest in the wife’s property and it could not be said that the nature of the relationship, in particular of four months duration, could be said to constitute a marital partnership. There is no evidence that it was the intention of the parties that there would be common use of property and I do not consider that there is any assumption express or implicit in respect of the property arrangements between the parties that have been brought to an end by the parties’ separation.

21. I accept the wife’s evidence that the $5,000 paid by her to the husband together with his retention of the household furniture constitutes a clear recognition that he has no legal or equitable interest in the wife’s property.

22. Whilst not required to be considered, in the circumstances of this case any monies paid to the husband would appear to be founded in overwhelming generosity by the wife rather than in recognition of a satisfaction of a legal obligation or entitlement on behalf of the husband.

CONCLUSION

1. For these reasons I do not consider that it is just and equitable to alter the property interests of the parties and propose to make orders in terms of the wife’s amended initiating application.

I certify that the preceding fifty-six (56) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 27 July 2018.

Associate: 

Date:  27 July 2018