Close and Beake and Anor (No.2)
[2018] FCCA 3373
•20 November 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| CLOSE & BEAKE & ANOR (No.2) | [2018] FCCA 3373 |
| Catchwords: FAMILY LAW – Property – Application for property adjustment orders – undefended hearing – failure to make full and frank disclosure. |
| Legislation: Family Law Act 1975, ss.75, 79, 117 Federal Circuit Court Rules 2001, r.16.05 |
| Cases cited: Stanford & Stanford [2012] HCA 52 Hickey & Hickey & Commonwealth (2003) FLC 93-143, 30 FamLR 355 Black & Kellner (1992) 15 FamLR 343; [1992] FLC 92-287 |
| Applicant: | MS CLOSE |
| First Respondent: | MR BEAKE |
| Second Respondent: | MR A BEAKE |
| File Number: | BRC 1092 of 2015 |
| Judgment of: | Judge Lapthorn |
| Hearing date: | 9 February 2018 |
| Date of Last Submission: | 9 February 2018 |
| Delivered at: | Brisbane |
| Delivered on: | 20 November 2018 |
REPRESENTATION
| Counsel for the Applicant: | Dr Sayers |
| Solicitors for the Applicant: | Best Wilson Buckley |
| Solicitors for the First Respondent: | No appearance |
| Solicitors for the Second Respondent: | No appearance |
ORDERS
That the Court declares pursuant to section 79(2) of the Family Law Act that it is just and equitable and otherwise proper to make orders relating to the alteration of property rights as between the parties.
Retention of property by the Applicant Wife
That the Applicant Wife (Wife) retain as her absolute property the title to and possession of and the Husband forthwith relinquish, transfer and assign (if necessary) to the Wife and/or relinquish all right, title and interest if any, to and in:
(a)her interest in the property located at Property A;
(b)the furniture and items of household adornment in her possession;
(c)the bank accounts in her name;
(d)her shares in Shares 1;
(e)her shares in Shares 2;
(f)her shares in Shares 3;
(g)her jewellery and items of personal adornment; and
(h)her superannuation entitlements held with Super Fund S.
Retention of property by the First Respondent
That subject to his compliance with obligations set out in these Orders, the First Respondent (Husband) retain as his absolute property the title to and possession of and the Wife forthwith relinquish, transfer and assign (if necessary) to the Husband and/or relinquish all right, title and interest if any, to and in:
(a)his interests and/or shareholdings in:
(i)Company F Pty Ltd; and
(ii)Company G Pty Ltd;
(b)his beneficial interests or entitlements in The Investment Trust;
(c)any bank accounts in his sole name;
(d)any household contents and items of household adornment in his possession; and
(e)jewellery and items of personal adornment.
General retention of property
That except for the property and financial resources dealt with under these orders, each party retain as his or her own property all assets or financial resources or both of which that party is the legal owner or which is in their possession or control as at the date of the parties signing these orders.
Liabilities
That the Wife be forthwith responsible for and meet payment when due of any liability in the Wife's name (not otherwise dealt with by these orders) including:
(a)The mortgage liability owing to Bank K and secured over the property located at Property A;
(b)the wife's credit card liability owing to Bank K;
(c)the wife's loan account owing to Mr Close trading under the name or style of Company H;
(d)the wife's personal tax liability (if any) including any general interest charges applied to such liability;
(e)any other liability that the Wife has incurred in her own name since separation; and
the Wife indemnify and keep indemnified the Husband from all liability howsoever arising therein.
That the Husband be forthwith responsible for and meet payment when due of any liability in the Husband's name (not otherwise dealt with by these orders) including:
(a)the Husband's credit card liability; and
(b)any other liability that the Husband has incurred in his own name or any associated corporate entity;
the husband indemnify and keep indemnified the wife from all liability howsoever arising therein.
Superannuation splitting provision
That Orders 8 to 10 (inclusive) of these Orders are binding on Super Fund T (the Trustee) as Trustee of Super Fund T (the Fund).
That in accordance with Section 90MT(1)(b)(i) of the Family Law Act 1975 (the Act), whenever a splittable payment within the meaning of section 90ME of the Act becomes payable to or on behalf of the Respondent, Mr Beake from his interest in the Fund, the Applicant, Ms Close, is entitled to be paid by the Trustee of the Fund 100% of the splittable payment and there is to be a corresponding reduction in the entitlement Mr Beake would have had but for these Orders.
That pending the payment of the transferrable benefits by the Trustee to the superannuation fund nominated by the Wife, the First Respondent or his agents are restrained from and an injunction is hereby granted restraining the First Respondent or his agents from dealing with the First Respondent's superannuation entitlements in the Fund other than in compliance with these Orders.
The operative time for paragraph 8 is four (4) business days after the service of a copy of these signed and sealed Orders on the Trustees with such orders to be verified as a true and correct copy in accordance with section 148 of the Evidence Act 1995.
Transfer of Scholarship Fund
That within 14 days of the date of these Orders, the First Respondent do all acts and things and sign all documents necessary to transfer to the Applicant all of his right, title, and interest in and to the following scholarship fund held by (Scholarship Fund):
(a)Benefit number (The Education Fund);
(b)Benefit number (Supplementary Education Program); and
(c)Benefit number (Supplementary Education Program).
That as and from the date of these Orders, the First Respondent or his agents are restrained and an injunction is hereby granted restraining the First Respondent or his agents for dealing with the (Scholarship Fund) other than in compliance with these Orders.
Payment of a cash sum
That within 35 days of the date of these Orders (the date of settlement), the First Respondent pay or cause to be paid to the Applicant's Solicitors' Law Practice Trust Account the sum of $639,000 as and by way of property settlement.
That in the event that the First Respondent does not make the cash payment referred to in Order 13 above within the time stipulated, the First Respondent will be liable to pay interest on any sum outstanding to the Applicant at the rate specified and calculated under rule 17.03 of the Family Law Rules 2004 calculated from the date of settlement until the time of full payment on so much thereof as is from time to time is outstanding.
Security
That in the event of a default under paragraphs 13 or 14, Orders 16 to 25 apply.
That in the event that the First Respondent does not make the payments referred to within the time period stipulated under order 13 above, the Applicant be at liberty to appoint Mr S of Chartered Accountants as Receiver and Manager of:
(a)Company I;
(b)Company F Pty Ltd;
(c)Company J Pty Ltd; and
(d)Company G Pty Ltd as Trustee for The Investment Trust;
(The Beake Group)
to enable an orderly sale of so much of the assets of the entities of The Beake Group to enable any cash payments under these Orders to be made to the Applicant.
That the Applicant, by these Orders, is granted a security interest in and to all property owned by any entity compromising The Beake Group in accordance with Section 12 of the Personal Property Securities Act 2009.
That the Applicant and/or the Receiver and Manager be at liberty to perfect the registration of any security interests over any and all assets of entities within The Beake Group in order to secure the interest of the Applicant.
That the Receiver and Manager be, by these Orders, have all necessary powers as set out in the Corporations Act relevant to External Administrators and be at liberty to:
(a)Take control and possession of all assets and undertakings of The Beake Group;
(b)Exercise the Powers of a Director of all entities in The Beake Group;
(c)Conduct an audit of the books of account of the entities comprising The Beake Group;
(d)Call in any and all trade debtors of The Beake Group;
(e)Claw back any payments made by any entity in The Beake Group to any related person or entity for the period six (6) months preceding the date of these Orders;
(f)Have first charge over the receipt of any payments to be made to any entity within The Beake Group as and from the date of these Orders;
(g)Enter into any contract for the sale of any assets of the entities comprising The Beake Group;
(h)Appoint any valuer to undertake valuations of property owned by The Beake Group;
(i)Appoint any agent to sell any item of property owned by The Beake Group on such terms as the Receiver and Manager sees fit; and
(j)Take possession of any item of property, including plant, machinery, equipment (mobile or fixed) vehicles, or aircraft and if necessary impound such property for the duration of his appointment;
That immediately upon default by the First Respondent, then the First Respondent, his employees, servants or agents are hereby restrained and an injunction is granted restraining them from:
(a)Moving any plant, equipment, vehicles or aircraft from their current locations;
(b)Dealing with or disposing of any plant, equipment, vehicles or aircraft owned by The Beake Group;
(c)Encumbering or further encumbering any property, plant, equipment, vehicles or aircraft owned by The Beake Group.
That upon the appointment of Mr S, the powers of the existing directors are suspended in relation to dealing with the assets of all entities in The Beake Group.
That the cost of and incidental to the appointment of the Receiver and Manager be paid from the realisation of any assets from his appointment in priority to any distributions under these orders.
That the Receiver and Manager is granted a charge over any remaining assets of The Beake Group as and by way of security for the payment of his fees.
That once able to do so, the Receiver and Manager make such payments including any interest on amounts outstanding as calculated by reference to these Orders to the Applicant in accordance with these Orders.
That subject to Orders 31 to 33 below, on the payment of all obligations and costs in favour of the Applicant, the Receiver and Manager be at liberty to account to the First Respondent and Second Respondent as to the balance of any money or property remaining after his obligations under these Orders have been discharged.
That upon the actions occurring at paragraph 25 above, Mr S be discharged as Receiver and Manager.
Miscellaneous
That any duty levied pursuant to the Duties Act 2001 (Qld) payable on transactions arising from these Orders or any documents executed pursuant to these Orders be paid by the transferee spouse or the spouse receiving the benefit of same.
That the parties promptly comply with the requirements of the Duties Act and associated legislation and all requisitions issued by the Office of State Revenue, Department of Natural Resources and Mines, Department of Transport and Main Roads and any other government department in relation to any document executed or transaction pursuant to or putting into effect the terms and conditions of this order. In default of either of the parties hereto complying with any requisition so issued within fourteen (14) days of the date upon which any requisitions issue, the party not in default will be entitled to comply with any outstanding requisition and recover from the other party in default the costs and outlays incurred in complying with any requisition, such costs to be calculated in accordance with the Family Law Rules.
Default provisions
That each party do and procure the doing of all things and sign and procure the signing of all documents necessary to give full force and effect to the provisions of these Orders and in the event either party refuses or neglects to comply with any provision of these Orders within 14 days of a written request to do so, then pursuant to section 106A a Deputy Registrar of this Court at Brisbane is appointed to execute all documents in the name of that party and do all acts and things necessary to give validity and operation to these Orders.
Preparation of transfer documents and costs of preparation
That the transferee spouse prepare the documentation necessary to give effect to the provisions of these Orders at their cost and further be responsible for the payment of registration fees, if any, in relation to the transfer of the property to their name.
Costs
That the First Respondent pay the Applicants costs of and incidental to these proceedings on an indemnity basis.
That the First Respondent be responsible for the payment of costs of any Cost Assessment to be obtained by the Applicant.
That the Receiver and Manager be at liberty to pay such amounts from the sale of any property of The Beake Group as required to meet the order for costs.
Liberty to apply
That the parties and the Receiver and Manager may apply to the Court after giving 7 days written notice to the other party about the interpretation or enforcement of these orders.
NOTATION:
A.That this matter has proceeded by way of undefended hearing in the absence of the First Respondent and the Second Respondent and pursuant to Rule 16.05(2)(a) of the Federal Circuit Court Rules2001 the First Respondent and the Second Respondent may apply to have these orders set aside.
IT IS NOTED that publication of this judgment under the pseudonym Close & Beake & Anor (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRC 1092 of 2015
| MS CLOSE |
Applicant
And
| MR BEAKE |
First Respondent
And
| MR A BEAKE |
Second Respondent
REASONS FOR JUDGMENT
Introduction
I am asked by the Applicant wife to make a property adjustment order in this matter which proceeded on an undefended basis on 9 February 2018 as neither the first or second respondent attended court or filed material for the hearing. The wife also sought an order that the husband pay her costs of and incidental to these proceedings.
Throughout this judgment I will refer to the applicant as the wife and the first respondent as the husband. I mean no disrespect in doing so. I will also refer to a number of facts throughout these reasons. Any such reference should be regarded as a finding of fact unless a contrary intention is clear from the context. As the matter proceeded on an undefended basis the only evidence before me was that relied on by the wife. Consequently her evidence in chief was not challenged and has been accepted by me.
Material relied on
The wife relied on:
a)Her Amended Outline of Argument filed 8 February 2018;
b)Her Further Amended Initiating Application filed 1 December 2017;
c)Her consolidated affidavit of evidence in chief filed 12 January 2018;
d)The affidavits of Mr A filed:
i)29 June 2017;
ii)5 February 2018; and
iii)9 February 2018.
e)The affidavit of Mr J filed 30 August 2016;
f)The affidavit of Mr S filed 9 February 2018.
Neither the husband nor the second respondent attended court to prosecute their case and accordingly, I have not had regard to any material they have filed, save for that which the wife tendered and/or relied on.
A number of documents were tendered into evidence.[1]
[1] W1 Pages 1 to 3 of the subpoena produced by Bank L.
Background
Both the wife and the husband are aged 36 with the husband having been born on 1982 and the wife on 1982. They commenced their relationship in early 2008 but did not commencing living together until September 2011. They were married on 2012, separated on 18 February 2014, and a divorce order was made on 15 March 2016. The only child to their relationship, [X], was born 2012. Both have re-partnered although at the time of the hearing the wife was not living with her new partner.
The wife commenced these proceedings by filing her Initiating Application on 10 February 2015 seeking both parenting and property orders. The matter was allocated a trial on 4 October 2016 but it did not proceed on that occasion. Orders were however made by consent joining the husband’s father, Mr A Beake as the second respondent.
The parties were able to reach a final agreement at mediation in relation to the parenting proceedings and I made orders by consent in chambers on 3 March 2017. However, following an alleged violent attack by the husband on the wife on 22 October 2017, the wife’s solicitors made an oral application the following day and I suspended the child’s time and communication with the husband. At the time of the undefended hearing on 9 February 2018, criminal charges against the husband were pending. The ongoing parenting proceedings have been transferred to the Family Court of Australia for determination.
The second respondent to these proceedings, Mr A Beake, is the husband’s father and was joined by consent on 4 October 2016.
On 3 July 2017, I ordered by consent:
2. that the Second Respondent be at liberty to participate in the undefended hearing subject to the Second Respondent filing material setting out the nature and quantum of his claim at least 21 days prior to the undefended hearing
and adjourned the matter for directions to 23 October 2017. On 23 October 2017, the property proceedings were listed for an undefended hearing on 9 February 2018 and ordered both the wife and the second respondent to file a consolidated affidavit by no later than 12 January 2018 and a case outline by 4.00pm 2 February 2018. Notwithstanding that the solicitors for second respondent withdrew just three days prior to the undefended hearing, he had not filed any material as directed nor did he or his legal representative appear at Court on 9 February 2018 although he had provided disclosure to the wife and attended mediation.
Legal Approach
In determining property proceedings, the court is firstly required to identify according to ordinary common law and equitable principles the existing legal and equitable interests of the parties in the property that is available for distribution between them. It is then necessary to determine whether it is just and equitable to make an order altering the parties’ interests in the property. If so satisfied the court must then consider the contributions made by each of them under the various s.79(4) considerations before looking at their future needs by reference to the s.75(2) factors. [2]
The property of the parties
[2] Section79(2) & (4), Stanford [2012] HCA 52. See Hickey & Hickey & Commonwealth (2003) FLC 93-143, 30 FamLR 355 for approach prior to the High Court decision in Stanford
The Beake Group
The determination of the property pool in these proceedings was hindered by the lack of disclosure and compliance by the husband, particularly in relation to the value of The Beake Group of companies and his interest therein. Parties to proceedings such as this are required to make full and frank disclosure of their financial affairs.[3] The husband, his father, and the husband’s brother, Mr C, own and operate a number of companies collectively known as The Beake Group. Throughout the proceedings, numerous orders were made, many by consent with each party being legally represented, for the husband and his father to provide disclosure to both the wife and to the jointly appointed court expert, accountant Mr J.
[3] Black & Kellner (1992) 15 FamLR 343; [1992] FLC 92-287
Prior to the first return date, consent orders made in chambers 29 April 2015 appointed Mr J to value:
[32.] …
a. the businesses:
i. Company K;
ii. Company I; and
iii. any other business or subsidiary of Companies I & K
b. the companies:
i. Company F Pty Ltd;
ii. Company G Pty Ltd;
iii. Company J Pty Ltd;
c.any other company or trust in which the parties jointly or individually hold a position as a director, shareholder, secretary, or trustee;
Notwithstanding the above consent order, as shown in exhibit W5 at paragraph 193 of the husband’s affidavit filed 15 June 2015, the husband only listed his ownership of Company F Pty Ltd with an estimated value “Not known” and at item 59 of his financial statement filed the same day disclosed that he transferred to his father 100 shares in Company G Pty Ltd for nil consideration. The husband did not list any other interest or any part thereof in The Beake Group.
The wife asserted that The Beake Group of companies was comprised of the following[4]:
[4] The wife’s affidavit filed 12 January 2018 at page 24, paragraph 138.
a) Company J Pty Ltd in which Mr A Beake owns all of the shares but [the husband] is the sole director;
b) Company F Pty Ltd in which [the husband] owns all of the shares and is the sole director;
c) Company G Pty Ltd as trustee of the Investment Trust of which Mr A Beake is the sole director and shareholder of the trustee company; and
d) a new company, Company L Pty Ltd which was incorporated on 11 November 2015. Mr C is the sole director and shareholder. … no disclosure has been made by [the husband] about it; and
e) a new company, Company M Pty Ltd. This company was incorporated on 9 January 2017. The incorporation documents suggest that the incorporation was handled by [the husband]’s accountants,. … [The husband] is the sole director and shareholder. The principle place of business for the company is … where [the husband] resides with his partner.
The wife also asserted that the husband had a proprietary interest in The Beake Group despite him not being a shareholder in all of the entities noting:
a)he is a named beneficiary of the Investment Trust;
b)he disclosed at item 59 of his financial statement filed 15 June 2015 that he transferred to his father 100 shares in Company G Pty Ltd for nil consideration; and
c)in an email annexed to the wife’s trial affidavit from the husband’s mother dated 12 January 2017 in which she wrote to a third party:
… I had heard that Ms Close was commencing property proceedings against Mr Beake. It was discussed that for asset protection the [Company J Pty Ltd] shares should be transferred to Mr A Beake, until such time as refinancing was undertaken …
Beake Group valuation
The husband’s father, Mr A Beake, was joined by consent on 4 October 2016 as the second respondent and I made orders for both the husband and his father to make disclosure. On 6 March 2017 I made consent orders for inter alia that the husband and his father make further disclosure and use their best endeavours to ensure the 2015 and 2016 financial statements for Company F Pty Ltd, Company J Pty Ltd and the Investment Trust (Company G Pty Ltd as trustee) to be completed and disclosed to all parties.
In addition to orders of the court requiring disclosure to be made, the valuer, Mr J, had also written to the parties on numerous occasions between 10 June 2015 and 27 June 2016 requesting the documents required in order to complete his valuation. Ultimately after the husband’s repeated failure to provide the necessary and requested documents, Mr J provided a valuation of The Beake Group based on the most recent financial information provided to him. He ascribed a value of $4,735,011 as at 30 June 2014.
The husband’s interest in The Beake Group
Dr Sayers, counsel for the wife conceded that the second respondent and the husband’s brother, Mr C, have a legitimate interest in The Beake Group, however it was difficult from the evidence to ascertain the extent of and to quantify those interests. The wife calculated the husband’s interest at $1,578,337 by dividing the valuation of $4,735,011 by three. Dr Sayers conceded there was insufficient evidence to make a finding that the husband held a one third interest, however in light of the matter proceeding undefended, I was invited to find that this figure was “more than indicative, less than definitive.” The Court was referred to an email from the husband’s mother dated 12 January 2017, in which she wrote that should a third party “purchase the Beake Group all debts are to be repaid and Mr Beake will take 2 million and depart, with his plane and motor vehicle.”[5]
[5] The wife’s affidavit filed 12 January 2018 at page 77 being page 2 of Annexure C-05
Dr Sayers further argued that the wife was able to meet the necessary onus on the balance of probabilities[6] in that having regard to the husband’s conduct in failing to make full and frank disclosure and to take part in these proceedings the ascribed value: “is the best that’s possible in the circumstances.” In Weir & Weir[7] the Full Court[8] held that where there is clear evidence of a party not making full and frank disclosure, the court should not be unduly cautious of making findings in favour of the innocent party. In such circumstances the court has jurisdiction to make an order in relation to unidentified and undisclosed property. Given the lack of up to date evidence as to the value of the entities in question and the husband’s share in them, and that the lack of evidence is due to the husband’s failure to make full and frank disclosure, I am satisfied that it is appropriate to accept the wife’s submissions. Accordingly I will adopt the figure urged upon me by her.
[6] Turner & Turner [2016] FamCAFC 121
[7] (1992) 16 FamLR 154; [1993] FLC 92-338
[8] Nicholson CJ, Strauss and Nygh JJ
Conclusion as to the Property pool
The wife’s amended outline of argument document annexed a table setting the assets and liabilities of the parties as at 30 January 2018, which I reproduce below, excluding her commentary column:
| Description | Ownership | Estimated value |
| Assets | ||
| Real property | ||
| Property A | Applicant | $340,000 |
| Property B | SOLD | |
| Bank K Main Account | Applicant | $700 |
| Bank K | Applicant | $15,000 |
| Bank K | Joint | $Closed |
| Bank L | First Respondent | $18,092 |
| Companies and entities | ||
| Shares 1 | Applicant | $9,968 |
| Shares 2 | Applicant | NIL |
| Company F Pty Ltd | First Respondent | $1,578,337 |
| Company G Pty Ltd | First Respondent | |
| Other property | ||
| Scholarship fund for [X] | First Respondent | $30,710.18 |
| Shares 3 | Applicant | $672.10 |
| Household contents – Property A | Applicant | $15,000 |
| Household contents – Property B | Joint | $6,000 |
| Jewellery | Applicant | $15,000 |
| Subtotal | $2,029,479.28 | |
| Liabilities | ||
| Investment property loan | Applicant | ($154,600.12) |
| Bank K Mastercard | Applicant | ($986.75) |
| Bank K Visa | Applicant | ($1,000) |
| Mr Beake’s credit card accounts | First Respondent | Not Known |
| Company H loan account | Applicant | ($339,475.81) |
| Shortfall on sale of Property B | Joint | ($65,982.37) |
| Subtotal | ($562,045.05) | |
| Superannuation | ||
| Super Fund S | Applicant | $56,323.99 |
| Mr Beake’s superannuation | First Respondent | $80,627 |
| Subtotal | $136,950.99 | |
| TOTAL NET VALUE | $1,604,385.22 |
Property interests snapshot
| Description | Estimated value |
| Gross assets | $2,029,479.28 |
| Gross liabilities | ($562,045.05) |
| Net non-superannuation property | $1,467,434.23 |
| Gross superannuation entitlements | $136,950.99 |
| Total property interests | 1,604,385.22 |
I am satisfied that it is appropriate to adopt the figures used by the wife as the evidence would appear to be consistent with the summary given in the above tables. The wife included a liability to her family’s company, Company H. Although that is a debt in her name, I am satisfied that it largely arose out of the wife’s need for financial assistance post separation as a result of the husband’s failure to meet his commitments and to provide support for her and their child. The shortfall on the sale of the former marital home was also met by the wife’s parents and is owed to them. It is appropriate in those circumstances to include them. Given these proceedings were heard undefended, the wife’s evidence is unchallenged and accepted by me I therefore find accordingly.
Is it just and equitable to alter the property interests?
In Stanford[9] the majority held:
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. 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).
[9] [2012] HCA 52
Notwithstanding there is no longer any jointly held property between the parties, I am satisfied that justice and equity would not be afforded them if the maintenance of the current legal ownership of their property was to continue without a property adjustment order. To do otherwise would see the wife carry the burden of debt that was acquired jointly and would not see an appropriate financial settlement between them. I am satisfied that it is appropriate to make the declaration sought by the wife in that regard.
Contributions
I now turn to the assessment of the parties’ contributions having regard to the following provisions of s.79(4):
Section 79(4) In considering what order (if any) should be made under this section in proceedings with respect to any property of the parties to a marriage or either of them, 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;
(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;
(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.
Commencement & during the relationship
The wife’s evidence was that at the commencement of the relationship she brought in cash savings of approximately $5,000, superannuation of $40,000, shares valued at $522 and a property in Town A with a net equity of $42,000.[10] I am not able to make any definitive finding as to the husband’s financial position at the commencement of the relationship but the wife’s evidence was that he had a shareholding in Company F Pty Ltd.
[10] Paragraph [69] of her affidavit filed 12 January 2018 sets out the history of the purchase of this property and how it was funded.
In 2008 the wife purchased the company B Pty Ltd for $4,500 from her own savings. Her evidence was that the husband did not make any contribution to this purchase.
The parties commenced living together in separate residences in September 2011 and purchased a property at Property B in joint names, which ultimately became the marital home. The purchase price was $292,000 and was largely financed by way of mortgage with a bank. The wife’s property in Town A was also used as security. To complete the purchase, however each party contributed $35,000 although only $42,000 was applied to the purchase. The remaining $28,000 was deposited into a joint account. The wife’s contribution was obtained by way of a loan from her parents and the husband sourced his contribution from Company K. The wife was not aware if this was by way of loan to him or by way of distribution of profits. Prior to the parties moving into this property, it was used to accommodate employees of Company K. The company was to pay the rent to reduce the mortgage but the wife was not aware if this in fact occurred.
In December 2011, the husband purchased a Cessna airplane through his company, Company F Pty Ltd.
The wife worked in her family’s business, Company H as a general manager earning $65,000 per year, including superannuation; accommodation on the farm and electricity paid for. Her salary covered most of her expenses including those related to their child. When the parties opened a joint account she deposited $10,000 a year to it. The husband worked for his family business Company K. The wife tendered paragraphs of the husband’s affidavit filed 15 June 2015[11] where at paragraph 198(c) the he swore that from 2007 he was paid a gross salary of $110,000 per annum. It was the wife’s evidence that the husband did not access his salary to pay for personal items such fuel, travel costs, personal accommodation, telephone, gifts and meals but rather put such expenses on the credit card which was paid for by the business.
[11] Exhibit W5
The husband made financial contributions to the Scholarship Fund for [X]. This fund had a balance of $30,710 at the date of the hearing.
The wife made non-financial contributions as homemaker and was the primary carer for their child during the relationship. She also did unpaid administration work on behalf of Company K at times. The wife invited the Court to make the finding that the husband worked long hours and thus his non-financial contributions were minimal. It was ultimately submitted by counsel for the wife that the husband had made the overwhelming direct financial contributions to the date of separation but the wife had made the greater nonfinancial contributions. Although I accept those submissions it is important to note that the most significant asset in the pool is the ascribed value of his interest in The Beake Group of which he has been the main contributor.
Post separation
Since separation in February 2014, the wife has been the primary carer for the child and the husband was assessed by the Department of Human Services to pay child support at $254.28 per week. As at 8 January 2018 he was in arrears in the sum of $19,813.34.
At the date of separation the joint account had a balance of $85,000. The husband’s wage of $1,522 per week was paid by Company F Pty Ltd or Company J Pty Ltd into this account until June 2014. Until July 2014 the wife received $400 per week from this account to cover her expenses. The wife no longer received this amount when the husband’s income ceased being paid into this account. The mortgage payments continued to be met from this account. The husband withdrew $16,142 from the account in June and August 2014 to pay his legal fees and his share of family dispute resolution. As a consequence the wife, on 8 August 2014, transferred $65,000 from the account into an account in her sole name. Her evidence was that she used these funds to pay for private health insurance for both [X] and her, the child’s day care fees, insurance on the former marital home, payment of the husband’s share of mortgage repayments when he had not paid them and for maintenance and repairs to the property. As at 8 January 2018 this account had a balance of $15,000. The joint account which remained open went into overdraft in late 2014. It was closed upon the sale of the property.
Notwithstanding living in the former marital home until June 2015, for the twelve months prior to his vacating the home, the husband did not make any mortgage payments on the property. His share of the mortgage repayments were being met from the redraw facility effectively eroding the equity in the property.
On 29 April 2015 I made by consent orders that inter alia:
a)the husband bring the joint account into order, pay out any accumulated debit balance so as to enable the account to be closed;
b)the husband to vacate the property within 7 days;
c)the marital home be sold; and
d)the husband and wife share equally any short fall in relation to mortgage repayments, council rates, water and other outgoings on the marital home, and maintenance and upkeep of the property.
The husband did not vacate the property as ordered, remaining in the home until June 2015. He also failed to bring the joint account into order and did not meet his half of the associated costs of the home.
In accordance with the 29 April 2015 orders the marital home was to be sold and was scheduled to be auctioned on 4 September 2015, however because the appropriate real estate listing authority had expired, and the husband refused to sign a new authority, the property could not be auctioned. When the matter came back before me on 11 November 2015 I made consent orders for inter alia the wife to be appointed as the Trustee for sale of the marital home, a s.106A order and for the husband to make further disclosure. Due to a lack of interest in the property, the wife arranged for the home to be rented and the rent assisted the wife meeting the shortfall against the mortgage and outgoings. When the martial home was finally sold, there was a shortfall of $65,982.37 due to Bank K, which the wife funded by obtaining a loan from her family’s business.
The wife’s Town A property
At the time of hearing, the wife’s Town A property was tenanted, and the rent was applied to service the mortgage over that property.
Assistance by the wife’s family
The wife has been assisted financially by her family during the relationship but particularly since separation. Post separation, her family have allowed her and the child to live rent free in a property, paid her electricity bills; provided a motor vehicle for her use including the payment of registration and insurance; payment of her home and contents insurance, her life insurance; and provided her with a loan to cover the $65,982.37 shortfall when the marital home was sold.
Looking at all of the contributions, I accept the submission advanced by counsel for the wife that the husband’s contributions to date of separation have been somewhat diminished by his lack of contributions post separation. Having said that, in the context of this relatively short relationship, I would still assess his contributions to the asset pool to be greater than those of the wife. Given the lack of disclosure, it is difficult to quantify by way of percentages their respective contributions. Doing the best I can on the material before me, however I would assess the contributions at around 75% to the husband and 25 % to the wife.
Section 75(2) factors
Having determined the contribution elements, the court is required to have regard to the provisions of section 75(2).
Both parties are of comparable age. Whilst the wife is generally of good health she has suffered physically and psychologically as a result of the attack on her on 22 October 2017. She continues to receive therapeutic support. I have no evidence to suggest the husband has any health issues that would impact his ability to maintain gainful employment.
The wife earns approximately $23,000 gross per annum from her part time employment and receives $198.70 per week from government allowances. She gave evidence that despite holding a (qualifications omitted), she had not used her qualifications for over nine years and was unable to return to the position she previously held in her family’s business as this work has since been contracted out to a third party.
The evidence[12] suggests that the husband earns $110,000 per annum although given his failure to participate in the final hearing and to make full and frank disclosure, I am unable to make a definitive finding. Notwithstanding that difficulty, having regard to his historical earnings, I am satisfied there is a significant disparity in the earning capacity of each of the parties favouring the husband. At the time of the hearing, the husband was facing charges in relation to the incident on 22 October 2017. Should the husband ultimately be found guilty of these offences, a term of imprisonment may well be imposed. Incarceration would have a negative impact on his ability to earn an income.
[12] Exhibit W5 - paragraph 198(c) of the husband’s affidavit filed 15 June 2015.
Whilst the evidence of the husband’s interest in his family’s business is limited, I am satisfied that it is a financial resource for him, being not only a source of income but also a resource where he can obtain company loans (as he did for his contribution to the purchase of the marital home) and make purchases that enable him to fund his lifestyle (as he did when putting personal expenses on a credit card that was paid for by the business). He also has access to a light aircraft owned by Company F Pty Ltd.
The wife owns a property in Town A which is rented out. The evidence suggests this rent covers the mortgage. This is a long term financial resource for the wife. The wife has also had the advantage of assistance from her family from time to time.
The child’s time with the husband has been suspended and therefore at the time of the hearing, the wife had the sole care and responsibility for him. The wife is currently seeking parenting orders that would deny the husband any time with the child. Regardless of the outcome of those proceedings she is likely to remain the child’s primary carer. He is currently six years of age.
The husband is liable to pay child support assessed at $254.28 per week. As at 8 January 2018 he was in arrears in the sum of $19,813.34.
I was invited by the wife to have regard to the husband’s conduct during the course of these proceedings as another factor deserving consideration. The wife argued that the husband’s failure to make full and frank disclosure and his disengagement from the proceedings was intentional in order to thwart her claim for property settlement. I was also invited to find that the husband had attempted to divest his interest in certain entities in order to limit the size of the pool of assets. In making that submission, she relied on the husband’s transfer of 100 shares in Company G Pty Ltd for nil consideration to his father and the email from the husband’s mother when discussing the transfer of the shares in Company J wherein she referred to steps being undertaken “for asset protection” upon hearing the wife had commenced these property proceedings.
I accept those submissions and am satisfied that it is appropriate to take into account the husband’s conduct in these proceedings when assessing any appropriate s.75(2)(o) adjustment.
I was also invited to have regard to the wife’s allegations that it was the husband that assaulted her in October 2017 in an attempt to have her withdraw her property application. I am not in a position to make any findings in relation to this issue other to accept that the wife was attacked and received significant physical injuries and continues to suffer psychologically from the attack. Accordingly, I have not had regard to this incident in determining an adjustment under s.75(2)(o).
Having had regard to the above factors, and in particular: the earning disparity; the mother’s primary care of a young child; the husband being in arrears of child support; and the husband’s failure to make full and frank disclosure, I am satisfied that an adjustment in the wife’s favour is warranted. I would assess that adjustment at 15%.
Are the Orders proposed just and equitable
The next stage of the process is to step back and assess whether in all of the circumstances it is just and equitable to make the proposed orders.
The wife sought orders that would provide for her to receive a superannuation splitting order in her favour of 100% of the husband’s superannuation and a cash adjustment from him in the sum of $639,000 and otherwise the parties would each retain their assets and liabilities. She also sought an order that the $30,710 held in the scholarship fund with the (Scholarship Fund) Bank Account L to be transferred to her sole name. Given she is the child’s primary carer I find that it would be appropriate for such an order to be made.
I am satisfied that procedural fairness has been afforded the trustees of the husband’s superannuation fund. I am further satisfied that given the husband’s failure in the past to comply with orders of the court a superannuation splitting order would go some way towards providing a sense of security for the wife. This alone though would not achieve a just and equitable outcome. I am satisfied the cash figure sought by the wife would achieve close to 40% of the ascribed pool which would be consistent with my findings. In all of the circumstances, I am satisfied that the orders proposed by her are just and equitable.
Effect of any proposed order on creditor or third party
The orders proposed by the wife, however included a default order that in the event the husband failed to make the cash payment, a Receiver and Manager of The Beake Group be appointed and authorised to sell as much as is necessary to enable the cash payment to be made.
Mr S has agreed to act in the role of Receiver and Manager. Should it be necessary for this order to be utilised the second respondent would be affected. I take into account that he chose not to take part in the hearing notwithstanding he was put on notice of the potential for such an order to be made. In the circumstances, and noting the second respondent would have rights under rule 16.05(2)(a) to seek to have the order set aside or varied, I am satisfied that it is appropriate to make this order.
Costs
The wife sought that the husband pay her costs of an incidental to these proceedings as ordered by the Court or in accordance with any cost assessment obtained by the wife and the husband be responsible for the costs of any such assessment.
Ordinarily each party to proceedings under the Family Law Act would bear his or her own costs.[13] However, if the court is of the opinion that there are circumstances justifying a costs order, the court may make such order as it considers just.[14]
[13] S.117(1)
[14] S.117(2)
In determining whether to make such an order, the court is required to have regard to a number of the factors set out in section 117(2A).
Financial circumstances of each of the parties
Having regard to my earlier findings as to the financial position of the parties, it can be seen that the husband is in a much stronger financial position to that of the wife.
Legal Aid
Neither party was in receipt of a grant of legal aid.
The conduct of the parties to the proceedings
The husband’s failure throughout these proceedings to make timely full and frank disclosure and to comply with orders has led the wife and her solicitors to do more than they otherwise would have had to leading to delay and incurring greater costs than necessary.
I accept the wife’s evidence as to the husband’s conduct summarised below:
a)Consent orders made 29 April 2015 for specific disclosure – the husband’s disclosure was very limited;
b)Consent orders made 3 July 2015 was complied with in that the wife’s costs of issuing certain subpoena costing approximately $1,000 was paid from the husband’s solicitors’ trust account.
c)Orders of the Court made 27 August 2015 extending the husband’s time to provide the documents set out in the orders of 29 April 2015 to the court expert by 25 September 2015 – the husband’s disclosure was very limited;
d)Consent orders made 11 November 2015 inter alia for:
i)the parties to share the mortgage payments and associated costs of the marital home till its sale - the husband failed to make these payments. The last mortgage payment by the husband was on 3 July 2015;
ii)the parties to share any shortfall between the proceeds of sale and the amount necessary to discharge the liabilities of that property – the husband did not contribute to the shortfall;
iii)the husband pay half the home insurance – the husband did not pay the full amount and the shortfall was paid from funds in the joint account;
iv)the husband provide disclosure, appoint accountants to prepare the 2015 financials – no compliance;
v)the parties appoint valuers and the husband provide disclosure of plant and equipment – no compliance by the husband;
vi)the parties attend mediation on 4 February 2016 – mediation did not occur as the valuations were not finalised.
e)Orders of the Court made 26 February 2016 for the parties to file trial affidavits and case outline by 29 September 2016 for final hearing commencing 4 October 2016 – the husband complied with the trial affidavit but not the case outline
f)Consent orders made 4 October 2016 for inter alia:
i)the 2015 financial statements for Company F Pty Ltd, Company J Pty Ltd and the Investment Trust (Company G Pty Ltd as trustee) to be completed – no compliance;
ii)time for the husband provide disclosure of plant and equipment to the plant valuer as ordered 11 November 2015 be extended – no compliance;
iii)mediation occur before 14 April 2017 – mediation postponed three times as the valuation was not available.
g)Consent orders made 6 March 2017 for inter alia:
i)mediation occur on 19 June 2017 – mediation did not occur as the valuation and financial statements were not finalised;
ii)the husband and second respondent use their best endeavours to ensure the 2015 and 2016 financial statements for Company F Pty Ltd, Company J Pty Ltd and the Investment Trust (Company G Pty Ltd as trustee) are completed and disclosed to all parties – the second respondent provided some financial statements to the valuer but there was no compliance by the husband;
iii)the husband and second respondent provide disclosure of specified financial documents in relation to the above order to the wife – no compliance;
iv)the husband provide the plant valuer a list of machinery, plant and equipment – the husband complied on 3 July 2017
v)the parties jointly instruct the plant valuer to value the machinery, plant and equipment – the husband failed to sign the joint letter of instruction;
h)Consent orders made 3 July 2017 for inter alia:
i)the valuer provide an estimated valuation based on the information in his possession if the husband fails to provide the necessary documents, and this be at the husband’s expense – no compliance by the husband;
ii)the parties attend mediation on 18 September 2017 – this was complied with;
iii)the husband pay the outstanding monies due to the valuer – partial compliance by the husband. He paid $7,000 in July 2017 but $3,322.91 remained outstanding;
i)On 23 October 2017 the husband failed to attend court as he had been arrested following his alleged attack on the wife the day before. The legal representatives for the second respondent were in attendance.
j)On 9 February 2018 neither the husband nor the second respondent attended court for the undefended final hearing in relation to property proceedings.
Whether the proceedings were necessitated by the failure of a party to comply with previous orders of the court.
This factor is not applicable.
Whether any party has been wholly unsuccessful
As the matter proceeded by way of undefended hearing it could be said that the wife has been wholly successful.
Consideration of offers made in writing
I was not provided with any evidence of offers in writing.
Conclusions as to whether a costs order should be made
When I take into account the husband’s conduct and his greater financial positon, I am satisfied that it is appropriate for him to pay the wife’s costs.
Should an indemnity costs order be made
The wife argued that the costs that the husband should bear should be on a solicitor and client basis or in other words on an indemnity basis. In Colgate Palmolive v Cussons[15] Sheppard J considered the jurisprudence in relation to the question of costs and confirmed the long standing practice is that such orders are to be on a party and party basis. His Honour held that the court must not make an order on another basis unless the circumstances of the case warrant it departing from the usual practice. In exercising its discretion, the court would look to the particular facts and circumstances of the case and consider whether there is “some special or unusual feature in the case to justify the court in departing from the ordinary practice.”[16]
[15] (1993) 118 ALR 248
[16] Preston v Preston [1982] 1 All ER 41
Counsel for the wife argued that the husband’s repeated failure to fully engage in the property proceedings, although there had been some engagement, was sufficient to warrant a departure from the usual practice. Counsel also referred to an order made 27 August 2015 putting the husband on notice of the potential for an indemnity costs order if he failed to comply. It was submitted that although that order referred only to the next court date thereafter, there could be no doubt the husband was aware of the potential for such an order. I accept those submissions and am satisfied that the husband’s conduct has been such that a departure from the usual practice is warranted. I will order that he pay the wife’s costs of and incidental to the property proceedings on an indemnity basis.
For the above reasons I will make the orders set out in the beginning of this judgment.
I certify that the preceding seventy-three (73) paragraphs are a true copy of the reasons for judgment of Judge Lapthorn
Date: 20 November 2018
W2 Pages from the subpoena produced by Queensland Police Service
W3 Wife’s Tender Bundle of Documents
W4 Wife’s Amended Orders sought
W5 Paragraphs 193 to 196 (inclusive) of the First Respondent’s affidavit filed 15 June 2015
Key Legal Topics
Areas of Law
-
Family Law
-
Civil Procedure
Legal Concepts
-
Remedies
-
Injunction
-
Costs
-
Jurisdiction
-
Procedural Fairness
0
3
3