C and C - [2003] FMCAfam 145

FEDERAL MAGISTRATES COURT OF AUSTRALIA

C & C

[2003] FMCAfam 145

FAMILY LAW – Property – extent of property – outstanding professional fees – whether domestic violence should affect contribution – whether adjustment should be made for needs.

Family Law Act 1975

Kennon v Kennon (1997) FLC 92-757
Doherty v Doherty (1996) FLC 92-652
JEL v DDF (2001) FLC 93-075

Applicant:

M E C

Respondent:

R I C

File No:

ZM 6438 of 2001

Delivered on:

9 May 2003

Delivered at:

Melbourne

Hearing Dates:

25 & 26 July, 13 August 2002

Judgment of:

Phipps FM

REPRESENTATION

Counsel for the Applicant:

Mr P M O'Shannessy

Solicitors for the Applicant:

Fleming Muntz

Counsel for the Respondent:

In person on 25 & 26 July 2002

Mr Devries on 13 August 2002

Solicitors for the Respondent:

Kempson and Co.

ORDERS

THAT the Husband and the Wife do all such acts and things and sign all such documents as may be required to sell all their right, title and interest in the real property and the water license relating to the property known as “S” in accordance with paragraph 3 of the Order made 19 February 2002.
THAT upon completion of the sale, the proceeds of the sale be applied:
(i)First, to pay all costs, commissions and expenses of the sale;
(ii)Second, to discharge the mortgage and any other income payments affecting the real property;
(iii)Third, 55 per cent of the balance then remaining be paid to the Wife;
(iv)Fourth, from the balance then remaining, the sum of $12,307.70 to the Wife;
(v)Fifth, the balance then remaining to the Husband.
THAT if not already sold, the parties do all such acts and things and sign all such documents as required to sell all shares held by the parties including but not limited to the NRMA shares, R G shares and W B shares as required by paragraph 5 of the Order made 19 February 2002 and that the proceeds be paid into the parties B B joint account number 116341108.
THAT the B B account be divided 55 per cent to the Wife and 45 per cent to the Husband.
THAT the Husband indemnify the Wife in relation to all income taxation and goods and services tax in respect of the Husband’s valuation business and any profit or income from the parties farming business.
THAT if found, the following shall remain the property of the Husband:
(i)the Husband’s gold medal and clasp;
(ii)the Husband’s calling collections;
(iii)the Husband’s gold necklace and chain.
THAT otherwise, each party be solely entitled to the exclusion of the other to all property (including choses in action) in the possession of such party at the date of these Orders.
THAT the Husband be liable for and indemnify the Wife against all payments in respect of the loan for the motorcar which he drives and retains pursuant to these Orders.
THAT each party forgoes any claim they may have to superannuation benefits belonging to or earned by the other.
THAT insurance policies remain the sole property of the owner named therein.
Otherwise the application is dismissed and removed from the Pending Cases List.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
MELBOURNE

ZM 6938 of 2001

M E C

Applicant

And

R I C

Respondent

REASONS FOR JUDGMENT

Introduction

This is a property Application brought by the Wife after a long marriage.

Background

The parties were married on 17 January 1969 and separated on 27 May 2001. There are three adult children of the marriage born in 1972, 1975 and 1980. The Husband is 58 and the Wife 57.
After the marriage, the parties first lived in S A where they purchased a dwelling with $2000.00 from proceeds from the sale of a block of land owned by the Wife, some savings and borrowed money. They then moved to the N T where they lived in rented premises for seven and a quarter years.
Subsequently, in 1978 they moved back to S A and purchased another dwelling. In April 1981, they moved to the A C T where they purchased a home using monies received from the property in S A to assist in the purchase. At that point, they owned two properties in S A.
In 1989, the other property in S A was sold and the proceeds used to clear the mortgage on the home in C. They purchased an investment unit in Q.
In September 1991, they moved to a property "S" at F in N S W with an area of about 500 acres.
That property was sold about two years after and the parties purchased two acres of land with a house on it known as "S". At about the same time, they purchased a 200 acre property known as "S".
Subsequent to the separation, the matrimonial home, "S" was sold for $191,000.00 and pursuant to interim Orders, the net proceeds of the sale were divided equally between the Applicant and the Respondent. The property "S" is on the market for sale.
The Husband, after qualifying, was employed as a trainee valuer by the C of A during the early period of the marriage, and the Wife was employed as a secretary.
The Husband worked as a valuer throughout the marriage. The Wife had some employment including a screen printing business which she established in C and in F.
The Wife now lives in A where she moved after the separation; she obtained employment in A. She has had some periods of unemployment and now has a three month contract employed as a R M by P in the conduct of a retirement village in A. She has completed two years of a three-year degree in Bachelor of Business.
The Husband had a by-pass operation in 1991. He suffers from depression and has for a long period of time. He takes medication daily and sees his treating psychiatrist on a regular basis.

Issues

There are some issues over what is matrimonial property and how it should be valued.
There is one issue only on the question of contribution. That is the Wife’s claim that domestic violence should be taken into account in determining her contribution. It was common ground that, apart from this issue, the parties' contribution to acquisition and improvement of matrimonial property over the course of the long marriage was equal.
The parties are at issue over what, if any, adjustments should be made for needs.
The submission on behalf of the Wife is that a combination of domestic violence and needs should have her share adjusted by 10 per cent so that she receives 60 per cent of the asset pool. The Husband seeks equal shares.
Both parties have purchased property with the proceeds of the sale of "S". It was common ground that this property was irrelevant to the proceedings other than a possible need to take the equal distribution of proceeds into account in any final adjustment of property.

Matrimonial property

The matrimonial property consists of the property “S” and its associated water rights, possibly shares in the A W B and shares, debentures and bonds in the R C. There is a joint account with the B B. Each party has a motor vehicle and the Husband has a loan against his motor vehicle.
It was common ground that fees owing to the Husband in his valuation business were matrimonial property and to be included in the pool. There was a dispute as to their value.
On 26 March 2002, Consent Orders were made fixing the Application for hearing on 25 July 2002 and requiring each party to file and serve an updated financial statement and Affidavits. At that time, the Husband was represented. Subsequently, he became unrepresented and was so on the first two days of the hearing. He had not filed an updated financial statement or any Affidavit material. He had been served with a Notice to Produce and had with him in Court eight boxes of documents.
The Wife, or those advising her, had not been able to inspect the documents.
The Wife gave evidence that invoices or accounts for valuation fees were kept in a black folder. That was not produced. She gave evidence that accounting records for the valuation business were kept on a computer and that she had assisted in the keeping of the accounts.
The Husband initially was un-cooperative. When called upon to produce documents, he would indicate the eight boxes he had brought with him and say that Counsel or anyone else was welcome to search through them and find the document if they can. That problem was overcome because the hearing did not finish on 26 July 2002 and was adjourned to 13 August 2002. On 26 July 2002, I made Orders which gave the Wife and her advisers access to the eight boxes of documents. On 13 August 2002, the Husband was represented and it was accepted, without the Wife giving evidence, that she had searched through all the documents and had not found the black folder which she had described.
The Wife’s evidence was that the valuation fees owing at any given time, varied between $10,000.00 and $40,000.00. It was submitted on her behalf that the midpoint of $25,0000.00 less tax at the marginal rate of 48 cents, should be included in the property pool; an amount of $13,000.00.
The Husband produced a printed document which he had prepared and which he said showed, amongst other things, the fees outstanding at the date of separation; a total, including GST of $3187.80.
His evidence was that he had done the best he could, but his documents and records were in disarray. Following separation, he had had an Apprehended Violence Order made against him. That excluded him from the matrimonial home and he had a very short time to remove his possessions and records. The records had been put in boxes and moved with the assistance of friends. There had been three moves in total.
The Wife’s search of the documents during the hearing found three further invoices showing fees outstanding for a total of $1412.00 including GST. One of them, dated 17 May 2001, was for $862.00 consisting of accommodation, $170.00 and $692.00 for travel at 50 cents a kilometre.
The Husband’s written document contained a list of expenses which exceeded the amount of the invoices. Many of these are personal expenses and only a proper accounting would produce the true picture. A proper accounting is not possible.
No tax returns were produced by the Husband.
It was submitted, on behalf of the Wife, that given that the Husband had not complied with his obligation of disclosure, I should take a generous view of the evidence from the Wife’s perspective and accept what she said. I do not consider that I need to do this. There is sufficient evidence to allow an assessment of outstanding fees to be made.
The available material shows valuation fees ranging from under $200.00 to $800.00 in one instance. If an average of $300.00 is assumed, four valuations a week for 45 weeks a year, there is a total $54,000.00. That is a gross amount. It would seem reasonable that about one-tenth of this would be outstanding at any time. An average of $25,000.00, as submitted on behalf of the Wife, would suggest a gross income of $250,000.00. $50,00.00 to $60,000.00 per year seems more in keeping with the assets and lifestyle of the parties than $250,000.00 per year. Doing the best I can, I assess outstanding fees at $5,000.00 per year.

Domestic violence

The Wife, both in her Affidavit and oral evidence, described a relationship of abuse and violence. The Wife’s evidence was that the Husband often slapped her, punched her, pushed her and pushed her into furniture. She described the slapping as slapping to her face, and demonstrated it as being very hard. She said that at one stage she went to the doctor because her jaw was not operating. She said that the context was sometimes something which affected the Husband at work. Sometimes it was something that she did that he didn't agree with and sometimes it was the children.
She described one of the earliest incidents as an occasion when she had taken the children to school and pre-school. The Husband was running late and he was getting agitated. He hit her, she ran to the car for safety and locked herself in. She says he broke the windscreen. A neighbour came. The Husband demanded that she open the door and sat alongside her and demanded that she drive him to work. She went around the corner, was crying and frightened, and could not see properly driving so she stopped the car and came back home. She said that as she got out of the car to go home, she had a lap full of shattered glass. She said she remembered it coming down and onto the road as she stepped out.
She said that things improved for about 18 months from 1990, when the Husband was seeing a psychiatrist, and there had been a period of two or three years there was no hitting. They both received some counselling.
In 1992 they sold their farm and she said the Husband was upset about that and the anger returned. She said there were many times when she retreated to the car to avoid the Husband’s anger.
She described the incident that led to the separation. She said he took the top of her arm and shook her hard. He appeared to be very angry and was spitting and his saliva hit her in the face. She said she started to walk out of the room and the Husband came towards her and spat full in her face.
A short time later she said she heard a motor car leave and when she checked she found that the Husband had taken her car, and she believed he had taken the key to his own car. She barricaded the doors of the house with furniture and telephoned the police. As a result of speaking with the police, she left the home.
Subsequently the police issued a Summons under the Apprehended Domestic Violence legislation of N S W, and as a consequence of that the Husband was compelled to leave the matrimonial home.
In other evidence, the Wife said that during the last three years, she could not get into the car with the Husband. He would be angry with her and this will manifest itself in speeding and erratic driving.
The Wife was cross-examined by the Husband in person. Analysing the evidence presents some difficulties because much of what the Wife said was not directly challenged.
For instance, the Wife gave evidence that the Husband had, on occasions, threatened to shoot her. When first married, he had had a gun and she had persuaded him to dispose of it. She did, however, later find ammunition and cleaning equipment. The Husband’s cross-examination about this revolved around him not having a gun and he did not challenge the evidence of threats.
The Husband put to the Wife in cross-examination, and she agreed, that he had installed a punching bag on the advice of his psychiatrist. The Husband put to the Wife that he had been advised by his psychiatrist to find a socially acceptable way of venting his anger. Thus, he put to her that he would go outside and kick a wall and that he had the punching bag. The Husband gave evidence of this himself and to an extent the Wife agreed, but she not resile from her evidence of his physical violence and abuse.
In cross-examination, the Husband put to the Wife some photographs which showed a wound on the upper part of a body near the neck. The Wife said she recognised them and that they were of the Husband. In cross-examination, the Husband was intent on having the Wife admit that she had caused this wound or mark, or been responsible for it. He was intent on not permitting the Wife to give an explanation of how that occurred.
The Wife did give an explanation in re-examination. She said that the Husband came home from work one Friday, very angry as a consequence of pressure on him at work. He had been doing valuations in Family Law disputes. She said she knew from experience that if she sat down with him and cuddled him she might calm him down. She also knew that having sex would calm him down.
She said she agreed, on this occasion, to have sex, but she had miss-judged the Husband’s mood and he was biting her and hurting her and she pushed him off and her fingernails dug in.
What eventually emerged from the evidence, including the evidence of the Husband, is that he suffers from depression and has for many years. He takes medication daily and sees his psychiatrist regularly.
His anger is a manifestation of the depression. The Husband denied striking the Wife, but it was he who first brought forward that he had engaged in, what he described as, a socially acceptable way of venting his anger. This was kicking a wall or a punching bag.
The Husband did not call any evidence from his psychiatrist. The inference I draw is that this evidence would not have assisted his denial of long term abuse, including physical violence of the Wife.
The detail the Wife gave in specific incidents she described was convincing. The Husband’s denial is unconvincing. Given that he described the need for a socially acceptable means of venting his anger, that this involved kicking a wall or a punching bag, and that he did not call his psychiatrist to explain the nature of his problem, I consider I have corroboration for the Wife of the Husband’s behaviour.
In cross-examination, the Husband put to the Wife that she had, on an occasion, written to his then psychiatrist. He did not put the letter to her, but in re-examination I permitted it to be tendered. It shows the Wife describing a very difficult situation at that time in May of 1995. She stated in the letter that she was very concerned about the Husband and had been suggesting for many months that he visit the psychiatrist. She said that the Husband did not appear to want her present at the appointment, scheduled for the next day, and she said she had not told him she was writing for fear he would cancel his appointment. She said that she was happy for the psychiatrist to tell the Husband of her writing if he so wished. She describes constant abuse still continuing. She describes his inability to co-habit, lack of daily hygiene, laziness, eating binges on food forbidden by his heart surgeon and lack of control when minor incidences occur.
The letter is a contemporary account by the Wife of the difficulties she faced with the Husband. Although written by her, it corroborates what she says. It is written in circumstances where there was a strong incentive for her to be truthful. She wanted the Husband to attend the psychiatrist, not only to assist him, but to assist her. Improvement in the Husband’s condition, which might be brought about by his attending the appointment with the psychiatrist, could only benefit the Wife.
She had no motive for fabricating matters or exaggerating them to the psychiatrist. Indeed, it was in her own interests that she be truthful and accurate in writing to the psychiatrist. It would not assist the psychiatrist in assessing, and perhaps treating the Husband, if what the Wife said to him was not accurate, and that must have been apparent to her.
For these reasons, I accept the Wife’s evidence and accept that there was long term violence, abuse and threats as she describes.

The law

The issue of violence and its effect on contribution, was considered by a Full Court of the Family Court in Kennon v Kennon (1997) FLC 92-757. After a lengthy discussion, the majority, Fogarty and Lindenmayer JJ, said at page 85, 294:
"Put shortly, our view is that where there is a course of violent conduct by one party towards the other during the marriage, which is demonstrated to have had a significant adverse impact upon the parties' contributions to the marriage, or, put the other way, to have made his or her contributions significantly more arduous than they ought to have been, that is a fact which a trial judge is entitled to take into account in assessing the parties' respective contributions within s.79. We prefer this approach to the concept of "negative contributions" which is sometimes referred to in this discussion.
In the above formulation, we have referred only to domestic violence, for the reasons which we indicated earlier, but its application is not limited to that.
We think the earlier cases may have overlooked the distinction, which more recent cases have emphasised. However, if it is thought now to be artificial to distinguish those long standing authorities in that way, it appears to us, having regarding to the re-consideration which has been given to this matter over recent times, that it may now be appropriate for this Court to treat those authorities as no longer binding, and to be subject to the qualifications and distinguishing feature referred to in the recent decisions of this Court. There have been marked changes in perceptions, both legal and social, about domestic violence and its impact in recent times, and it appears to be appropriate to give effect to them; see Nguyen (1990) 169 CLR 245; Farnell v Farnell (1996) FLC 92-681, and Ivanovic v Ivanovic (1996) FLC 92-689.
However, it is important to consider the "flood gates" argument. That is, these principles which should only apply to exceptional cases, may become common coinage in property cases and be used inappropriately as tactical weapons or for personal attacks, and so return this Court default and misconduct in property matters; a circumstance which proved so debilitating in the past. In addition, there is the risk of substantial additional time and cost.
However, in our view, s.79 should encompass the exceptional cases, which we described above. It would not be appropriate to exclude them as a matter of policy because of this risk. It is a matter of common sense for the lawyers involved and, where that may not be sufficient, it is a matter for a firm hand by the Court at an early stage where a case appears to raise these issues.
It is essential to bear in mind the relatively narrow band of cases to which these considerations apply. To be relevant, it would be necessary to show that the conduct occurred during the course of the marriage and had a discernible impact upon the contributions of the other party. It is not directed to conduct which does not have that effect, and of necessity it does not encompass (as in Ferguson) conduct related to the breakdown of the marriage (basically because it would not have had a sufficient duration for this impact to be relevant to contributions). Similarly, in Killick v Killick (1997) 21 Fam LR331 at 334, in proceedings under the De Facto Relationship Act 1984 (NSW), the Court of Appeal rejected the argument for the male partner that incidents if infidelity during the relationship by the female partner should be taken into account as diminishing her contribution as homemaker or parent."

Counsel for the Wife referred me to an unreported decision of Nicholson CJ in November of 1998. He set out the passage from Kennon above, and also a passage from the dissenting judgment of Baker J and what was said by Baker J in Doherty v Doherty (1996) FLC 92-652. Baker J's statements do not contain the warnings in the majority's judgment, and in particular, does not say that the principles should only apply to exceptional cases. Baker J adopts the approach that domestic violence is a factor to be taken into account in contribution.
The Chief Justice said this:
"I may say with great respect to the views expressed by Fogarty and Lindenmayer JJ, that I prefer the formulation of Baker J and I would be concerned if too much weight was to be placed upon the "flood gates" principle that they adopted in Kennon's case."
In JEL v DDF (2001) FLC 93-075 the Full Court said this at 88,331:
One can imagine a number of examples where a “special” contribution may not necessarily result in assets value of millions of dollars but which will nevertheless to be recognised. We recognise that "special", "extra" or "extraordinary" contributions made in the role as homemaker and parent or to the welfare of the family ought to be accorded the same recognition.
As this Court has acknowledged that contributions made in this role may be accorded additional weight where the role has been performed in difficult circumstances such as in domestic violence situations ought where the role has been performed without the financial, physical or emotional support of the other party. See, for example, Ferraro (supra) , Kennon v Kennon (1997) FLC 92 757 and C v C (1998) FLC 9- 824.
Counsel for the Husband submitted that Kennon is a decision of a Full Court of the Family Court, and so the majority decision is a binding precedent for a Federal Magistrate exercising Family Law jurisdiction. I accept that it is correct, and in reaching my conclusion I have applied the formulation of the majority, and kept in mind the warnings contained within the majority judgment.
Here, the Husband has suffered from depression throughout a long marriage. He was treated by psychiatrists at various times, and is currently seeing a psychiatrist regularly and taking medication daily. One of the results of his depression has been anger. When I say that it is a result, I must qualify that by saying that there is no expert evidence to that effect. That is not because it might not have been available, but it was not called. The Husband’s psychiatrist, it might be expected, could explain the relationship, if any, between the Husband’s depression and his anger.
However, the inference to be drawn from the evidence of the Husband and Wife is that his anger is a consequence of the depression.
The violence described by the Wife was significant but the issue is whether it made her contributions so significantly more arduous that this is one of the exceptional cases where an adjustment should be made.
The Wife had to manage the family and the Husband, and deal with the manifestation of his depression in that context. It made her contribution as homemaker more arduous. It is apparent that without the Wife coping with the Husband and managing affairs in the home accordingly, the Husband’s ability to work and so contribute to the accumulation of property would have been significantly less. The Husband’s conduct made the Wife’s contribution more significantly arduous than it ought to have been. . I consider that this an exceptional case of the sort contemplated by the majority in Kennon.
Next, the question is how much of an adjustment in contribution should be made. This was a 32 year marriage, which is the most significant consideration in determining contributions. I consider that a small adjustment of 5 per cent is appropriate in the circumstances.

Needs

Both parties are in their 50's. Both have health difficulties. The Husband has potentially higher income earning capacity, but on the other hand, the Wife is studying and so improving her employment prospects. The Wife is very capable at organising her affairs. With the proceeds of sale of property that she has already received, she has purchased property for her own accommodation and to provide income. She has borrowed but has organised her investments so that the rent received equals the mortgage payments.
The Husband is not so capable in organising his affairs. An illustration of this is that he appeared on the first day of the hearing unrepresented. This was not for lack of funds. This was a mis-judgment on his part. It may have been another manifestation of his depression, but for whatever reason, I consider it illustrates a deficiency in his thinking and ability to organise his own affairs.
In the circumstances I do not think any adjustment between the parties for the circumstances set out in s.75(2) of the Family Law Act 1975 should be made.

Conclusion

In the Orders proposed by Counsel for the Wife, he sought an Order that the Husband be declared to have received the whole of any profit, income or loss from the parties' farming operation, and the Wife not to have received any income, wages or emoluments from the Husband’s valuation business. The reason that this was sought was because of doubt about income tax returns and goods and services tax returns.

I did not think that is appropriate. Any Order the Court makes cannot alter the effect of the taxation laws and cannot be binding on the Commissioner for Taxation. A more appropriate way of dealing with the issue is by Ordering that the Husband indemnify the Wife for any outstanding income tax liability, and goods and services tax liability in relation to the operation of the farm or the Husband’s valuation business. I consider this is the appropriate Order because any income received over outgoings has gone to the Husband.
The S property is rented. The Husband is receiving the rent and is paying the loan. Initially there appeared to be an issue concerning the adjustment of these amounts, but the evidence showed that largely they are balancing out so that a reconciliation and adjustment is not necessary. The Husband has a motor vehicle, which is worth more than the Wife’s, but given the period of time since separation, the partial property settlement and purchase of property irrelevant to these proceedings, I consider it is appropriate to ignore the motor vehicles.
A horse and horse equipment was an issue at the commencement of the proceedings, but the Husband’s evidence was that the horse has been given away, its value not worth the cost of agistment. It is therefore not something that needs to be dealt with. A trailer and stock crate has been given to one of the children. There seems no need to make an Order in relation to it. The Wife has about $900.00 superannuation; not significant enough to be taken into account.
Each party received $91,577.00 from the proceeds of sale of “S”.

A 5 per cent adjustment in favour of the Wife is $9,557.70. 55 per cent of the outstanding fees of $5,000.00 is $2,750.00. It may be that the shares in the A W B and shares in other investments in the R C have already been sold. I will Order that if not sold they be sold and the amount credited to the parties joint bank account and that the proceeds of that bank account then be divided 55 per cent to the Wife and 45 per cent to the Husband. Otherwise, the property "S" is to be sold and the balance divided 55 per cent to the Wife and 45 per cent to the Husband.
The Husband claimed certain personal property which the Wife said was not in her possession. The Wife does not claim it. I will make an Order that that remain the property of the Husband and be returned to the Husband when found by the Wife.
Finally, I must consider whether the Order I propose is just and equitable. I consider that it is.

I certify that the preceding seventy-two (72) paragraphs are a true copy of the reasons for judgment of Phipps FM

Associate:

Date: