Cisek & Farrah (No 2)

Case [2023] FedCFamC1F 804

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Cisek & Farrah (No 2) [2023] FedCFamC1F 804

File number: PAC 1160 of 2021
Judgment of: HARTNETT J
Date of judgment: 22 September 2023
Catchwords:

FAMILY LAW – PROPERTY – Where the first respondent claimed to be in two overlapping de facto relationships – Where the applicant and the first respondent had a sixteen year de facto relationship with two children – Where the applicant alleged serious family violence by the first respondent – Where the applicant and the first respondent acquired real property and a business in the first respondent’s name – Where the first respondent and the second respondent had a proceeding in the Supreme Court of New South Wales running concurrently not disclosed to the applicant until shortly before a trial date in the Supreme Court of New South Wales – Where a joinder of the applicant and transfer of those proceedings occurred and consolidation with the proceedings in the Court – Where a declaration of a de facto relationship was made between the first and second respondents – Where leave was granted to the second respondent to seek orders pursuant to s 90SM(4) of the Act – Where the second respondent proceeded with an application that a constructive trust be found between the first respondent and the second respondent – Where the first respondent had the use of over $2 million of the second respondent’s funds – Where the first respondent did not make proper disclosure of his use of the second respondent’s funds – Where the applicant seeks an adjustment under Kennon – Order for sale of property – Order for applicant and second respondent to receive proceeds of sale – Superannuation splitting order.

FAMILY LAW – COSTS – Where the first respondent has failed to comply with two costs orders – Costs order made for the first respondent to make payment to the applicant.

Legislation:

Evidence Act 1995 (Cth) s 140

Family Law Act 1975 (Cth) ss 4AA, 44, 51, 79, 90RD, 90SB, 90SF, 90SM, 90XT, 106A

Marriage Act 1961 (Cth)

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 3.12, 3.16

Civil Procedure Act 2005 (NSW) ss 100, 101

Real Property Act 1900 (NSW) s 74O
Cases cited:

Benson & Drury (2020) 62 Fam LR 1

Bevan & Bevan (2013) FLC 93-545

Biltoft and Biltoft (1995) 19 Fam LR 82

Blandford & Esmore [2022] FedCFamC1A 67

Jones v Dunkel (1959) 101 CLR 298

Kennon & Kennon (1997) 22 Fam LR 1

Lovine & Connor (2012) FLC 93-515

Maine & Maine (2016) 56 Fam LR 500

Mallet v Mallet (1984) 156 CLR 605

Massalski & Riley [2019] FamCA 1013

Muschinski v Dodds (1985) 160 CLR 583

Petruski v Balewa (2013) 49 Fam LR 116

Rodgers & Rodgers (No 2) (2016) 55 Fam LR 167

Roverati & Roverati (2021) FLC 94-027

Stanford v Stanford (2012) 247 CLR 108

Steinbrenner & Steinbrenner [2008] FamCAFC 193

Weir & Weir (1992) 16 Fam LR 154

Continue reading Cisek & Farrah (No 2)

Sign in free to access the full text

Details
AGLC
Cisek & Farrah (No 2) [2023] FedCFamC1F 804
Case
[2023] FedCFamC1F 804
Decision Date

CaseChat Overview and Summary

In the case of Cisek & Farrah (No 2), the Federal Circuit and Family Court of Australia (Division 1) dealt with complex property disputes arising from a de facto relationship between Ms Cisek and Mr Farrah, and a subsequent relationship between Mr Farrah and Ms Elsner. Ms Cisek sought an adjustment of property interests under the Family Law Act 1975 (Cth), alleging that Mr Farrah had failed to make proper disclosure of his financial dealings and had used Ms Elsner’s funds without adequate disclosure. The court found that a de facto relationship existed between Ms Cisek and Mr Farrah for nearly 16 years, during which they acquired significant property, including a house and superannuation. The court also found that a de facto relationship existed between Mr Farrah and Ms Elsner from October 2016 to September 2017, during which Mr Farrah made substantial financial contributions.

The court ordered that the house be sold, with the proceeds distributed between Ms Cisek and Ms Elsner, and that Mr Farrah vacate the property and return Ms Elsner’s belongings. A superannuation splitting order was also made in favour of Ms Cisek. The court further ordered Mr Farrah to pay Ms Cisek the outstanding costs and directed that all other applications be dismissed.

The court's decision was based on the principles of justice and equity, considering the contributions of each party, the length of the relationships, and the need to prevent unjust enrichment. The reasoning underscores the importance of compliance with court orders and the necessity of transparent financial disclosure in family law matters. The outcome ensures a fair distribution of assets between the parties involved, reflecting the court’s commitment to resolving disputes in a manner that upholds the principles of fairness and equity.

Orders

Orders of the court

PAC 1160 of 2021

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MS CISEK

Applicant

AND:

MR FARRAH

First Respondent

NEW SOUTH WALES TRUSTEE AND GUARDIAN ON BEHALF OF MS ELSNER

Second Respondent

ORDER MADE BY:

HARTNETT J

DATE OF ORDER:

22 SEPTEMBER 2023

THE COURT DECLARES THAT:

A. Pursuant to s 90RD(1) of the Family Law Act 1975 (Cth) (“the Act”) a de facto relationship existed between the first respondent and the second respondent from October 2016, concluding on or about September 2017.

B. Pursuant to s 90RD(2)(c) of the Act the second respondent in the de facto relationship with the first respondent made substantial contributions of a kind mentioned in s 90SM(4)(a)-(b) of the Act.

AND THE COURT ORDERS THAT:

1. Pursuant to s 44(6) of the Act, the second respondent be granted leave to initiate proceedings for adjustment of property interests pursuant to s 90SM of the Act as between the applicant, the first respondent and the second respondent.

2. The New South Wales Trustee and Guardian (“NSWTAG”) as financial manager for the second respondent be appointed as trustee for the sale of the property at Q Street, Suburb E in the State of New South Wales (“the Suburb E property”) on behalf of the parties, being the whole of the land in Folio Identifier ….

3. Within fourteen (14) days hereof the first respondent and the applicant do all acts and things and execute all necessary documents to authorise and direct NSWTAG to cause the Suburb E property to be listed for sale as follows:

(a) the NSWTAG shall sign all selling authorities necessary to enable the Suburb E property to be listed for sale with licensed real estate agents as appointed by the NSWTAG;

(b) the NSWTAG shall sell the Suburb E property for the best price reasonably attainable;

(c) the NSWTAG shall appoint a solicitor or conveyancer to act on the sale of the Suburb E property within 7 days of these Orders;

(d) the NSWTAG shall sell the Suburb E property by public auction through a licensed Auctioneer appointed by the NSWTAG;

(e) a reserve price shall be fixed by the NSWTAG in consultation together with the selling agent;

(f) the licenced real estate agents conducting the sale in consultation with the auctioneer shall nominate the date of sale, which will be no more than 2 months after the auctioneer has been appointed; and

(g) if agreements for the sale of the Suburb E property are not exchanged at a price of not more than 5% below the reserve price within 14 days of the auction taking place, then the NSWTAG shall forthwith re-list the Suburb E property for sale by private treaty with the auctioneer and shall sell the Suburb E property at the highest price offered in writing and received by the auctioneer within 30 days from the date of the auction, or such later date as the NSWTAG may nominate in writing, provided that such price is not more than 10% below the reserve price for the Suburb E property. In the event that the highest price offered as aforesaid is less than 10% below the said reserve price, the NSWTAG will forthwith list the Suburb E property for sale by public auction with the auctioneer, and the auctioneer will determine the auction date and the Suburb E property shall be sold to the highest bidder at that auction.

4. The net proceeds of sale of the Suburb E property be applied as follows:

(a) payment of any and all real estate agent’s and auctioneer’s fees and commissions together with advertising expenses of the sale;

(b) payment to NSWTAG of their costs of acting on the sale;

(c) discharge of the mortgage on the Suburb E property to U Ltd (Noting that all loans secured by this mortgage have been fully repaid); and

(d) payment of the then remaining balance as follows:

(i) $625,711 less 50% of the costs of sale to the second respondent; and

(ii) the balance to the applicant.

5. Within 28 days of the date of these Orders the first respondent:

(a) vacate the Suburb E property and subject to the provisions of Order 11 herein, remove all items and home contents personally owned by the first respondent or otherwise in his possession at the Suburb E property; and

(b) remove and dispose of at the first respondent’s cost, all rubbish and any remaining refuse at the Suburb E property;

(c) engage professional cleaners at the first respondent’s cost to clean the Suburb E property in preparation for sale;

(d) not remove from the property any chattel or item affixed to the property; and

(e) forthwith after vacating to deliver to the NSWTAG or such third-party organisation as is authorised by the NSWTAG, all keys to all locks and remote control devices for the Suburb E property.

6. Pending the first respondent providing vacant possession of the Suburb E property to NSWTAG:

(a) the first respondent shall pay all council rates, water rates, insurance premiums and utility expenses in relation to the Suburb E property as and when they fall due;

(b) the first respondent shall keep the Suburb E property in a clean, tidy and well‑maintained state of repair; and

(c) the first respondent shall permit NSWTAG, or its authorised agent, to access and enter the Suburb E property on reasonable notice for the purposes of the marketing and sale of the property.

7. Following the implementation of Order 5 herein the first respondent be restrained by injunction from:

(a) entry upon the Suburb E property, other than in accordance with the written consent or authority of the NSWTAG, or further order of the Court; and

(b) interfering in any way with the orderly sale of the Suburb E property as provided for in these Orders.

8. In accordance with the sale of the Suburb E property:

(a) the first respondent forthwith do all acts and things and sign all documents necessary to discharge or cause the discharge of the following encumbrances on the title of the Suburb E property:

(i) Registered Mortgage …;

(ii) Caveat …; and

(iii) any other encumbrance to settlement of the sale of the Suburb E property as provided by these Orders.

(b) the applicant forthwith do all acts and things and sign all documents necessary to discharge the Caveat … on the title of the Suburb E property;

(c) the first respondent and the applicant forthwith upon compliance with the provisions of this Order, advise the NSWTAG of such compliance in writing, and forthwith provide a copy of all documents confirming proof of such compliance.

9. From this day until settlement of the sale of the Suburb E property as provided in these Orders, the first respondent be restrained from further charging or encumbering the Property, or creating or increasing any liability secured against the Suburb E property without the prior written consent of the second respondent and the applicant which consent must not be unreasonably withheld.

10. There is leave to the NSWTAG to relist this matter on 7 days’ notice for the purposes of the implementation of these orders in relation to the vacant possession and sale of the Suburb E property.

11. The first respondent cause to be delivered to the second respondent at such address as may be nominated by the NSWTAG within 14 days of the date of the date of these Orders, all such property of the second respondent in the possession and/or control of the first respondent in undamaged condition, with such costs of transport to be paid solely by the first respondent as and when due. All such property shall include but not be limited to the following chattels and goods:

(a) Motor Vehicle 1 – last known registration …;

(b) Antique furniture;

(c) Dining table and chairs;

(d) Mirror;

(e) Chest of drawers;

(f) Clock;

(g) Artwork; and

(h) Watch, if the first respondent is able to locate same.

12. The Court allocates, as required by s 90XT(4) of the Act, a base amount of $118,219.41 to Ms Cisek (“the non-member party”) applicant out of the member interest of Mr Farrah (“the member party”) first respondent in Superannuation Fund 2, having member number ….

13. In accordance with s 90XT(1)(a) of the Act:

(a) the non-member party (or the non-member party’s financial manager, administrators, executors, beneficiaries, heirs or assigns) is entitled to be paid, using the base amount allocated in the immediately preceding order, the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001; and

(b) the entitlement of the member party in the member party’s superannuation interest (or the entitlement of such other person who becomes entitled to receive a payment out of the member party’s superannuation interest) is correspondingly reduced by force of this Order.

14. The Trustee of the member party’s Superannuation Interest shall do all such acts and things and sign all such documents as may be necessary to:

(a) calculate, in accordance with the requirements of the Act the entitlement awarded to the non-member party's interest in the immediately preceding clause of this Order; and

(b) pay the entitlement whenever the Trustee makes a splitable payment from the member party's interest in the member party's Superannuation Interest.

15. This order has effect from the Operative Time and the Operative Time is 4 business days after service of this Order upon the Trustee.

16. After service of the payment split notice in accordance with the Superannuation Industry (Superannuation) Regulations 1994 (“the SIS Regulations”), the non-member party shall do all such things and sign all such documents as may be necessary, including but not limited to exercising the non-member party’s request in accordance with the SIS Regulations, for the rollover or transfer of the non-member party’s interest to a complying superannuation fund of the non-member party's choosing in accordance with the SIS Regulations.

AND THE COURT NOTES THAT:

A. The value of the non-member spouse interest is calculated in accordance with the SIS Regulations; and

B. Any payments from the member party's Superannuation Interest made after the Trustee has created a new interest in the non-member party’s name in the Fund are not splitable payments in accordance with the requirements of the Family Law (Superannuation) Regulations 2001.

AND THE COURT ORDERS THAT:

17. Subject to these Orders the applicant, the first respondent and the second respondent each retain to the exclusion of the other parties, all items of respective personality, savings, motor vehicles, home contents and all other property currently held within each party's possession.

18. Pursuant to s 106A of the Act if any party fails or neglects to do anything, sign any documents, or give any necessary authorisation to give effect to these orders or any part of them including the executing all such documents as may be needed to comply with these Orders within the time provided:

(a) a Judicial Registrar of the Federal Circuit and Family Court of Australia (Division1) or such other person appointed by the Court be authorised to do all such acts and execute all such documents on behalf of the non-complying party; and

(b) if any party procures compliance with this order by obtaining execution of documents pursuant to this order, then the party procuring such execution of documents will be indemnified by the non-compliant party for his or her costs and expenses incurred in obtaining such compliance.

19. There be liberty to the applicant and the second respondent to apply in respect of the question of costs within 30 days of these orders and not thereafter.

20. The first respondent pay to the applicant the outstanding costs orders made 14 June 2022 and 18 August 2022 in the total sum of $16,200 within 30 days of this date.

21. All extant applications in the proceedings in this Court and in the transferred Supreme Court of New South Wales proceedings case number 2021/… be otherwise dismissed and the matter removed from the list.

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

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

The second respondent relied upon the following material:(1)Further Amended Statement of Claim filed late 2022 in the Supreme Court of New South Wales;(2)Amended Statement of Claim filed late 2022 in the Supreme Court of New South Wales;(3)affidavit of the first respondent filed early 2022 in the Supreme Court of New South Wales;(4)affidavits of Ms X, a legal officer employed at NSWTAG, filed on two dates in late 2022 in the Supreme Court of New South Wales;(5)affidavit of Ms X, a legal officer employed at NSWTAG, filed late 2022; (6)affidavits of Ms Y, the second respondent’s sister, filed on three dates between late 2021 and late 2022 in the Supreme Court of New South Wales, certain paragraphs and/or parts thereof which were objectionable and struck out; (7)affidavit of Ms Z, the second respondent’s sister, filed late 2021 in the Supreme Court of New South Wales, certain paragraphs and/or parts thereof which were objectionable and struck out; and(8)Written submissions filed 17 April 2023.EVIDENCE Statements of fact in these reasons are findings of fact on the balance of probabilities, unless the context indicates otherwise.[3] [3] Evidence Act 1995 (Cth) s 140. It is not necessary in these reasons for judgment to comment upon the entirety of the evidence including the evidence of each witness, nor to comment on every exhibit tendered. Nor have I done so. However, every piece of evidence relied upon by the parties has been read and carefully considered by me.Credibility The applicant was a reliable witness who gave her evidence in a straightforward manner. Save in the very limited instances indicated hereafter, where there was a dispute of fact in the evidence given by the applicant and the first respondent, I prefer the evidence of the applicant to that of the first respondent. The first respondent was an unreliable witness. He was often inconsistent in the giving of his evidence, much of it which was garbled, he often giving contradictory evidence, and he appeared to answer questions on the basis of what he perceived would be the most favourable answer to promote his case, regardless of its lack of truthfulness. He was both non-responsive at times, and argumentative at others. He gave at other times, answers in cross-examination that were simply implausible. The second respondent was medically incapable of giving evidence.RELEVANT FACTUAL FINDINGS The second respondent was born in Australia in 1941 and was aged 81 years at the time of trial. The first respondent was born in Country C in 1966, and was aged 56 years at the time of trial. He was employed full time as a retail worker and claimed to be in receipt of a gross income of $108,869 per annum. He had worked in a shop either as an owner and/or employee for approximately thirty years. The job involved extensive physical labour. He resided in the Suburb E property of which he is the sole registered proprietor, and which is the subject of claim by the other parties in this proceeding. The applicant was born in Country B in 1980, and was aged 42 years at the time of trial. She was in compromised health suffering from a number of conditions. The applicant was seeing a counsellor and taking pain medication as prescribed by her general practitioner. She was unemployed and deriving income from Centrelink of approximately $18,876 per annum. The applicant resided in New South Wales Department of Housing rental accommodation, having obtained such accommodation through a domestic violence accommodation service.

Decision

Reasons for decision

The applicant submitted the first respondent has failed to pay the two costs orders and failed to comply with Court orders as to the filing of material. His abject failure to comply with disclosure obligations shows a continued disdain by the first respondent for the authority of the Court and its processes. The applicant seeks, and I shall make, further orders requiring the first respondent to pay the outstanding costs orders.CONCLUSION In my view the alteration of property interests between the applicant and the first respondent, and thereafter between the first respondent and the second respondent, and ultimately between the applicant and the first and second respondents as provided for above is just and equitable in the circumstances of the case.

Ratio Decidendi

Legal Principle Established

In Rodgers & Rodgers (No 2) (2016) 55 Fam LR 167 the Full Court of the Family Court of Australia at [40], by way of reiteration and emphasis of what was said in Biltoft, said further “the manner in which a particular liability should be treated is, ultimately, dependent upon the nature of the liability, the circumstances surrounding the liability and the dictates of justice and equity shaped by each”.IS IT JUST AND EQUITABLE TO MAKE AN ALTERATION OF PROPERTY INTERESTS? The Court finds that it is just and equitable to make orders under s 90SM of the Act because:(1)in respect of the applicant and the first respondent: (a)the applicant and first respondent were in a de facto relationship for nearly 16 years. There are two children of the relationship (now both adults);(b)the parties acquired property during their relationship, including the Suburb E property and the accumulation of the first respondent’s superannuation;(c)the only significant property of the parties is the Suburb E property and the first respondent’s superannuation. The first respondent is the sole legal owner of the Suburb E property;(d)the applicant made financial contributions, non-financial contributions, and contributions as homemaker and parent, of the kind referred to in s 90SM(4) of the Act;(e)the first respondent is not paying any rent to the applicant in respect of his occupation of the Suburb E property; and(f)if the Court does not make property adjustment orders under s 90SM the Act in favour of the Applicant, the result will be that the Respondent retains all the property owned by the parties.(2)in respect of the first respondent and the second respondent:(a)the relationship has ended and the first respondent remains in the Suburb E property in respect of which he pays no mortgage or rent and the second respondent resides in an aged care facility in respect of which payments are required to be made by her, and can only be met by Centrelink benefits; and(b)the first respondent made significant financial contributions to the Suburb E property, contributions to the purchase of the businesses, and some limited non‑financial contributions during the period the parties resided in the Suburb FF property, all such contributions being of the kind referred to in s 90SM(4) of the Act. Further, there is a need for a change in legal ownership of the Suburb E property given the contributions and windfall constructive trust in favour of the second respondent with respect to that property. At trial, both the applicant and the second respondent had a caveat lodged on the Suburb E property. BD Pty Ltd had also lodged a caveat over the Suburb E property to secure a debt owed to them by the first respondent pursuant to agreement dated January 2021 for an amount of $9,107.80.THE ASSET TABLE The following tables outlines the legal and/or equitable interests of the applicant and the first respondent as determined by the Court including superannuation: The Court finds the first respondent failed to provide disclosure in respect of the above accounts as held by him and referred to as “unknown”.Superannuation