Cheshire and Cheshire

[2018] FCCA 153

FEDERAL CIRCUIT COURT OF AUSTRALIA

CHESHIRE & CHESHIRE [2018] FCCA 153

Catchwords:
FAMILY LAW – Property settlement – where the parties are in high conflict – where the asset pool is minimal – where the wife’s previous solicitors have been joined to the proceedings in order to secure fees they claim are owing.

Legislation:

Family Law Act 1975, ss.79(2), 79(4), 75(2)

Cases cited:

Stanford v Stanford (2012) FLC 93-518

Bevan & Bevan [2013] FamCAFC 116

Applicant: MR CHESHIRE

Respondent: MS CHESHIRE

Intervenor: TRAPSKI FAMILY LAW

File Number: MLC 11906 of 2015

Judgment of: Judge Small

Hearing date: 13 October 2017

Date of Last Submission: 13 October 2017

Delivered at: Melbourne

Delivered on: 5 February 2018

REPRESENTATION

Counsel for the Applicant: Mr Cheshire in person

Solicitors for the Applicant: None

Counsel for the Respondent: Ms Cheshire in person

Solicitors for the Respondent: None

Counsel for the Intervenor: Ms Trapski

Solicitors for the Intervenor: Trapski Family Law

ORDERS

1. That the monies held in trust for the parties in the trust account of Trapski Family Law be disbursed $50,363 to the husband and $8,162 to the wife.

2. That the wife retain for her sole use and benefit the (vehicle omitted) motor vehicle registration number (omitted).

3. Unless otherwise specified in these Orders and save for the purposes of enforcing any monies due under these any subsequent Orders:

   (a)each party be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the possession of such party as at the date of these Orders;

   (b)monies standing to the credit of the parties in any joint bank account shall be divided between the parties in the proportion of 60 per cent to the wife and 40 per cent to the husband;

   (c)insurance policies remain the sole property of the owner named thereon;

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

   (e)each party forgoes any claim they may have to any inheritances to which the other party is entitled to either presently or in the future; and

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

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLC 11906 of 2015

MR CHESHIRE

Applicant

And

MS CHESHIRE

Respondent

TRAPSKI FAMILY LAW

Intervenor

REASONS FOR JUDGMENT

Introduction

1. This is a property matter arising from the breakdown in the marriage between Mr Cheshire (“Mr Cheshire” or “the husband”) and Ms Cheshire (“Ms Cheshire” or “the wife”).

2. The Intervenor, Ms Alison Trapski of Trapski Family Law, sought and was granted leave to discontinue her Application to intervene on the day of the Final Hearing.

3. At trial, the husband sought orders for the property pool to be divided equally between the parties, and for the return of chattels and furniture he claims the wife has in her possession.

4. The wife seeks orders for the property pool to be divided 60% to her and 40% to the husband. She also seeks orders for the husband to pay her costs.

5. Ms Trapski sought an order that she be at liberty to transfer the sum of $30,000 from her firm’s trust account to its office account in accordance with an agreement reached with the wife regarding the payment of legal fees. This order was made on the day of the Final Hearing, and the $30,000 was characterised as a part property settlement to the wife.

6. Therefore, the issues to be decided in this case, as in all marital property cases, are:

   A.Is it just and equitable to alter the parties’ property interests?

   B.If it is just and equitable, what are the property interests of the parties and what is their value?

   C.What were the parties’ contributions to the property?

   D.Should there be an adjustment to the contribution-based entitlements of the parties after a consideration of the matters set out in s.75(2) of the Family Law Act 1975 (Cth) (“the Act”)?

   E.In light of those findings, what Orders should be made to effect a just and equitable division of property between the parties?

Background

1. Mr Cheshire was born on (omitted) 1973 and is therefore now 45 years old. He has most recently been employed as a (occupation omitted), although at the time of trial he was not working and was in receipt of Sickness Benefits from Centrelink following an accident at work. At trial the husband stated that he would not be able to work as a (occupation omitted) in the future due to the ongoing complications from the accident.

2. Ms Cheshire was born on (omitted) 1972 and is currently 45 years old. Her current occupation is as a (occupation omitted) and she owns a business called (business omitted), although she now works as an employed (occupation omitted). She has two children from a previous marriage: X aged 15 (“X”) and Y aged 13 (“Y”).

3. The parties commenced co-habitation in about (omitted) 2010 (according to the husband) or (omitted) 2011 (according to the wife) and were married on (omitted) 2011 in the (country omitted).

4. They migrated to Australia a few months after their wedding.

5. They separated on 12 November 2015 following an incident at the family home which resulted in Victoria Police issuing a Family Violence Safety Notice excluding Mr Cheshire from the property, and him being charged with intentionally causing damage to the wife’s property.

6. Also on 12 November 2015, Victoria Police obtained an Interim Intervention Order against the husband for the protection of Ms Cheshire and her two children, X, then aged 13 and Y, then 11. That Order was made by consent without Mr Cheshire admitting to the allegations.

7. There are no children of the relationship, although both have children from previous relationships.

8. There was an Intervention Order in place against the husband at the time of trial which was due to expire on 23 November 2017.

Procedural History

1. The matter commenced with Mr Cheshire filing an Initiating Application, sworn Financial Statement and Affidavit in Support on 18 December 2015.

2. The wife filed a Response, Financial Statement and Affidavit in Support on 9 March 2016.

3. The matter first came before me in the Duty List on 15 March 2016. On that day I ordered that the parties’ property at Property A in the State of Victoria (“the real property”) be placed on the market for sale. I also ordered that the proceeds be distributed to pay all costs of the sale and to discharge of any encumbrances owed, and for the remainder to be held by the wife’s solicitors in an interest bearing trust account in the joint names of the parties.

4. I made further orders for discovery and for the parties to attend a Conciliation Conference on 4 July 2016. I otherwise adjourned the matter for Mention on 7 July 2016.

5. The matter did not settle at the Conciliation Conference and came before me again on 7 July 2016. I set the matter down for trial on 13 October 2017 and ordered that the wife have sole authority to conduct the sale of the real property.

6. On 25 May 2017 the Intervenor filed an Application in a Case and Affidavit in support seeking leave to intervene in the proceedings, for the funds from the sale of the property to remain in trust in the Trapski Family Law Trust Account, and for a declaration that the Intervenor holds a solicitor’s lien of up to $50,000 over funds held in trust so far as they were attributable to the debt of the wife.

7. On 29 May 2017 I gave the Intervenor leave to intervene in the proceedings. I ordered the wife to file a Response and Affidavit in response to the Application in a Case filed by the Intervenor. I also ordered that Trapski Family Law retain the funds held in trust until further order, and otherwise adjourned the matter to 24 July 2017.

8. On 24 July 2017 the matter came before me again for Mention and I ordered that the Intervenor pay the husband the sum of $10,000 from the sale proceeds held in trust for the parties as a part property settlement.

9. I also ordered that the husband and wife do all things necessary to allow the Intervenor to establish an interest bearing account in their joint names, and for the remaining monies held on behalf of the parties to be transferred to that account. I ordered that the parties be restrained from allowing the balance of the account to fall below $40,000.

10. On 13 October 2017 the matter came before me for trial and proceeded for one day. As previously stated, the Intervenor was granted leave to withdraw on that day.

11. The only witnesses were the parties, each of whom subjected the other to a form of cross-examination.

12. At the conclusion of the trial I reserved my decision.

Issues and Evidence

1. It should not be assumed that I have not considered a piece of evidence if it is not specifically mentioned in this judgement. I have read all affidavit material filed in this matter, and in addition to the impressions I gained of the parties at trial, I have had the benefit of reading the entire transcript of the proceedings.

A.  Is it just and equitable to alter the parties’ property interests?

1. This question arises from the operation of s.79(2) of the Family Law Act 1975 (Cth) (“the Act”), which states that a Court may only make orders adjusting the property interests of married parties if it is just and equitable to do so.

2. In Stanford v Stanford[1] the High Court of Australia stated that it is not a simple matter to decide what is just and equitable. At paragraph 36 of their judgment, their Honours stated:

   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.

   [1] Stanford v Stanford (2012) FLC 93-518.

3. Nevertheless, the High Court went on to say, at paragraph 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 the 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.

4. In Bevan & Bevan [2013] FamCAFC 116, the Full Court of the Family Court of Australia said that the circumstances described in that passage of the Stanford judgment “encapsulate the vast majority of cases”[2].

   [2] Bevan & Bevan [2013] FamCAFC 116 paragraph 70.

5. In this case, the parties were married and acquired property which, because of their separation, can no longer be jointly enjoyed. There is nothing in the circumstances of the present case which would remove it from the category of “the vast majority of cases” in this context, and therefore I find that it is just and equitable to alter the property interests of the parties.

B.  If it is just and equitable, what are the property interests of the parties and what is their value?

1. At the commencement of the trial, Ms Trapski advised the court that she retained the sum of $88,525.23 in her trust account on behalf of the parties.

2. Apparently my orders requiring the monies to be placed in an interest-bearing account were not complied with, as the parties never provided Ms Trapski with the documentation required to open such an account, and she does not hold a practising certificate allowing her to hold trust monies in an interest-bearing account.

3. Mr Cheshire received the sum of $10,000 pursuant to the orders made on 24 July 2017. That sum will therefore be added back to the property pool for the purposes of distribution, bringing the total amount of cash to be distributed between the parties to $98,525.23.

4. Ms Trapski also advised the court that she and Ms Cheshire had come to an agreement about the payment of her fees, that agreement being that Ms Cheshire would pay Ms Trapski the sum of $30,000 in full and final settlement of that dispute, that sum to be considered as a part property settlement.

5. I made an order to that effect on the day of trial.

6. That $30,000 was to be paid from the funds retained in trust and will therefore be considered as part of the property pool, although it is part of the $88,525.23 held in trust and therefore does not need to be added back to that sum.

7. Therefore, the notional cash to be distributed between the parties is $98,525, but the husband has already had the benefit of $10,000 of that sum and the wife has had the benefit of $30,000.

8. The actual cash to be distributed therefore amounts to $58,525.

9. The property interests of the parties, insofar as they can be ascertained, can therefore be set out thus[3]:

   [3] These figures have been taken from the Financial Statements of the parties sworn in 2015 (husband) and 2016 (wife). Neither has sworn a Financial Statement since then.

Assets	Ownership	Value
Proceeds of sale from the property at Property A	Joint	$98, 525
The wife’s (vehicle omitted) motor vehicle Reg. No. (omitted)	Wife	$9,850
(omitted) bank account	Wife	$9,819
Household contents	Wife	$5,000
(omitted) chairs	Wife	$3,200
Total Assets	$126,394
Liabilities[4]	Ownership	Value
Nil	N/A	Nil
Superannuation benefits	Wife	$30,513
Husband	$4000
Total superannuation benefits	$34,513
Total property	$160,907

[4] Joint liabilities of unknown quantum were paid from the sale proceeds of the family home before the residual funds were placed in the trust account of Trapski Law. As far as the court is aware, there have not been any joint liabilities incurred post-separation.

C.  What were the parties’ contributions to the property?

1. This question arises from s.79(4) of the Act which reads:

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

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

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

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

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

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

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

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

Initial contributions

1. The husband stated at trial that the parties had brought cash in the sum of (omitted)50,000 in savings to Australia when they migrated, but that none of that money remained by the date of separation (although it is possible that some of it was applied to the purchase of the family home).

2. The parties are agreed that other than those monies, neither had any significant assets at the commencement of their relationship, save that each had professional tools and equipment related to their work.

3. The contributions they brought into the relationship can therefore be considered to have been equal.

Contributions during the relationship

1. During the marriage both parties were working and contributing their income to a joint account from which mortgage payments and daily living expenses were taken.

2. X and Y were living with the parties, and while Mr Cheshire claims to have cared for them as though they were his own children, it is clear that Ms Cheshire was their primary parent.

3. There is little or no evidence about who contributed to household chores during the marriage.

4. In those circumstances I find that the parties’ contributions during the marriage were 52.5% on behalf the wife and 47.5% on the behalf of the husband, based on the wife’s slightly higher contribution as a homemaker and parent.

Post-separation contributions

1. The parties separated in circumstances where Mr Cheshire was forced to leave the family home when Victoria Police issued a Family Violence Safety Notice against him on 12 November 2015.

2. After that time, and until the property was sold in late 2016, the vast majority of the mortgage payments, and household expenses such as utilities and liability payments, were paid by Ms Cheshire[5], despite the fact that she and the children left the property on or around 3 January 2016 because, she says, she was in fear of Mr Cheshire, believing him to have been responsible for considerable vandalism to the property.

   [5] Ms Cheshire deposes that those payments fell $28,356 to her and $4,228 to the husband between the date of separation and 6 July 2017.

3. I cannot make any positive findings about that matter, and note that the husband was interviewed by police but no charges were laid. Nevertheless, after Ms Cheshire vacated the property, there is evidence that Mr Cheshire moved in, although his evidence was that he had only occupied the property for some four to five weeks before going overseas.

4. Orders were made for the sale of the property on15 March, 2016, and Ms Cheshire was forced to come back to court to obtain further orders because Mr Cheshire refused to sign documents, told the chosen estate agent that the property was no longer for sale, removed security lights, and generally behaved in an obstructive manner. That behaviour can only be classed as a negative contribution which made the wife’s post-separation contributions more onerous.

5. In all of those circumstances, I find that post separation contributions to the parties’ property between November 2015 and November 2016 were made 85% by the wife and 15% by the husband.

Overall contributions

1. When I take all of the matters set out in s.79(4) into account, I find that the overall contributions to the property fall 60% to the wife and 40% the husband, keeping in mind that this was a relatively short marriage.

D.  Should there be an adjustment to the contribution-based entitlements of the parties after a consideration of the matters set out in s.75(2) of the Family Law Act 1975 (Cth) (“the Act”)?

1. Section 75(2) of the Act sets out the factors the Court must take into consideration when making orders for the maintenance of a party to a marriage.

2. The inclusion of this exercise in property proceedings is required by s.79(4)(e) (see above).

3. Section 75(2) states that the court must consider the following matters:

   (a) the age and state of health of each of the parties; and

   (b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and

   (c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years; and

   (d) commitments of each of the parties that are necessary to enable the party to support:

   (i)himself or herself; and

   (ii)a child or another person that the party has a duty to maintain; and

   (e) the responsibilities of either party to support any other person; and

   (f) subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:

   (i) any law of the Commonwealth, of a State or Territory or of another country; or

   (ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;

   and the rate of any such pension, allowance or benefit being paid to either party; and

   (g) where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable; and

   (h) the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and

   ha)  the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant; and

   (j) the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and

   (k) the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and

   (l) the need to protect a party who wishes to continue that party’s role as a parent; and

   (m) if either party is cohabiting with another person—the financial circumstances relating to the cohabitation; and

   (n) the terms of any order made or proposed to be made under section 79 in relation to:

   (i) the property of the parties; or

   (ii) vested bankruptcy property in relation to a bankrupt party; and

   (naa) the terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to:

   (i) a party to the marriage; or

   (ii) a person who is a party to a de facto relationship with a party to the marriage; or

   (iii) the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or

   (iv) vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and

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

   (o) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and

   (p) the terms of any financial agreement that is binding on the parties to the marriage; and

   (q) the terms of any Part VIIIAB financial agreement that is binding on a party to the marriage.

1. In this case the parties are of the same age.

2. Ms Cheshire was in full-time work, and in good health at the time of trial.

3. Mr Cheshire suffered a work injury to his back in (omitted) 2016, and has a personal injury damages claim on foot as a result. It was his evidence that he was in receipt of Centrelink Sickness Benefits at the time of trial while those proceedings were being resolved. He is otherwise in good health.

4. However, he provided no independent evidence of that injury, nor of his prognosis in terms of his working capacity, and his evidence about the legal proceedings in relation to the injury was somewhat chaotic.

5. Neither party owned any real property at the time of trial, and both are engaged in employment and have capacity to work for the foreseeable future (although it is possible that the husband may not be able to work, in which case it is likely he will receive compensation for that situation from his personal injuries claim).

6. Both have superannuation benefits, albeit that the wife’s entitlements are considerably larger than the husband’s.

7. The marriage was of relatively short duration, and neither party’s earning capacity has been affected by that fact.

8. There is no evidence of either party cohabiting with another partner.

9. While there are no children of the marriage, the wife has the care and control of the two children of her previous marriage, and I note that their father is deceased, which means that Ms Cheshire is solely responsible for their care and their financial support.

10. Both parties need to house themselves and provide for their daily living needs.

11. In the above circumstances, I find that it is not appropriate to adjust the parties’ contribution-based entitlements on the basis of the matters set out in s.75(2) of the Act, as I find that the parental responsibilities of the wife are balanced by her greater superannuation entitlements, and there is no clear evidence about any compensation Mr Cheshire might be entitled to as a result of his accident.

12. Therefore, I find that the parties’ property should be divided 60% to the wife and 40% the husband, and that there should be no adjustment to their superannuation entitlements by way of superannuation split, as I have accounted for the discrepancy in their superannuation under s.75(2).

E.  In light of those findings, what Orders should be made to effect a just and equitable division of property between the parties?

1. The total property of the parties as set out in paragraph 41 of these Reasons, including their superannuation entitlements, is worth $160,907.

2. I have decided that that property should be divided 60% to the wife and 40% the husband.

3. Therefore the wife should receive or retain property worth $96,544 and the husband should receive property worth $64,363.

4. The husband has received a part property settlement of $10,000 and has retained his superannuation entitlements of $4,000, property worth a total of $14,000.

5. The wife has received a part property settlement of $30,000 and has retained her motor vehicle worth $9,850, her (omitted) chairs worth $3,200, her bank account worth $9,819, and her household contents worth $5,000, as well as her superannuation worth $30,513, property worth a total of $88,382.

6. Therefore the wife should receive a further $8,162 ($96,544 - $88,382) and the husband a further $50,363 ($64,363 - $14,000).

7. So the monies held in trust by Trapski Family Law will be divided $8,162 to the wife and $50,363 to the husband.

8. I will make orders to that effect noting that Ms Trapski advised the court that she does not hold a practising certificate which would allow her to hold trust monies in an interest-bearing account, and that the parties had not complied with orders made on 24 July 2017 requiring them to do all things necessary to open an ordinary joint interest bearing back account into which trust funds could be transferred. Therefore there should not be any further funds owing to the parties. If there are they should be divided 60% to the wife and 40% to the husband.

Conclusion

1. The animus and mistrust between these parties was palpable every time they appeared before me.

2. There were several times, at interlocutory hearings as well as at the trial, when I had to speak to Mr Cheshire about his aggressive language and behaviour, and he impressed as an immature, argumentative and spiteful man who sought to punish the wife for having ended the marriage and obtained an Intervention Order against him.

3. His insight into that issue was entirely lacking, and he referred to “this Intervention Order rubbish” more than once during the trial. I note, in that regard, that it was Victoria Police who issued a Family Protection Safety Notice to remove him from the family home and who applied for the Intervention Order.

4. While her behaviour and attitude did not extend to the lengths of the husband’s, the wife impressed as being stubborn and determined to obtain her pound of flesh from him. She did not present in court as being afraid of him, although she was careful throughout the proceedings to have her address kept from him.

5. Neither party was willing to give an inch over a property pool that, ultimately, was quite meagre and there is little doubt that they spent more money on lawyers through the proceedings than the amount they were arguing about.

6. The term “cutting off your nose to spite your face” came to me multiple times as I listened to the parties bickering about minor or irrelevant issues like adolescents.

7. Nevertheless, they consciously left the decision to the court, and the court has now made that decision.

8. Both parties will now be able to get on with their lives without consideration of or for the other, which is clearly what both want.

I certify that the preceding eighty-six (86) paragraphs are a true copy of the reasons for judgment of Judge Small

Date:  5 February 2018