Connor and Cosgrove and Ors (No. 2)
[2018] FamCA 767
•26 September 2018
FAMILY COURT OF AUSTRALIA
| CONNOR & COSGROVE AND ORS (NO. 2) | [2018] FamCA 767 |
| FAMILY LAW – PROPERTY SETTLEMENT – Just and equitable – cohabitation of about fourteen years duration – five children – assessment of contributions – significance of wife’s contributions after 2006 and post separation. |
| Family Law Act 1975 (Cth) Family Law (Superannuation) Regulations 2001 (Cth) |
| Baglio v Baglio [2013] FamCA 105 Bevan v Bevan (2013) FLC 93-545 Brown v Green (1999) FLC 92-873 Cerini v Cerini [1998] FamCA 143 Chorn v Hopkins (2004) FLC 93-204 D v D (Costs) (No 2) (2010) FLC 93-435 DJM v JLM (1998) FLC 92-816 Harper v Harper [2013] FamCA 528 Hepworth v Hepworth (1963) 110 CLR 309 In the Marriage of Brandt (1997) FLC 92-758 In the Marriage of Clauson (1995) FLC 92-595 In the Marriage of Ferraro (1993) FLC 92-335 In the Marriage of Hickey (2003) FLC 93-143 In the Marriage of Kowaliw (1981) FLC 91-092 In the Marriage of Lee Steere (1985) FLC 91-626 In the Marriage of Mallet (1984) 156 CLR 605 In the Marriage of Pastrikos (1980) FLC 90-897 In the Marriage of Townsend (1995) FLC 92-569 In the Marriage of Waters and Jurek (1995) FLC 92-635 Kouper v Kouper (No 3) [2009] FamCA 1080 Lovine v Connor (2012) FLC 93-515 Marker v Marker [1998] FamCA 42 Norbis v Norbis (1986) 161 CLR 513 Omacini v Omacini (2005) FLC 93-218 Polonius v York [2010] FamCAFC 228 Stanford v Stanford (2012) 247 CLR 108 Steinbrenner v Steinbrenner [2008] FamCAFC 193 |
| APPLICANT: | Mr Connor |
| FIRST RESPONDENT: | Ms Cosgrove |
| SECOND RESPONDENT: | B Pty Ltd |
| INTERVENERS: | Mr C Connor and Ms D Connor as trustees for the E Trust |
| FILE NUMBER: | BRC | 3669 | of | 2014 |
| DATE DELIVERED: | 26 September 2018 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Hogan J |
| HEARING DATE: | 28, 29 and 30 May 2018 |
REPRESENTATION
| APPLICANT: | In person |
| COUNSEL FOR FIRST RESPONDENT: | Mr Galloway |
| SOLICITOR FOR FIRST RESPONDENT: | Hetherington Family Law |
| SECOND RESPONDENT: | Mr Connor in person |
| COUNSEL FOR THE INTERVENERS: | Mr Alexander |
| SOLICITOR FOR THE INTERVENERS: | Damien Greer Lawyers |
ORDERS
IT IS ORDERED BY WAY OF FINAL ORDER THAT
Subject to the further provisions of this order, Mr Connor and Ms Cosgrove shall each keep as his or her own property and to the exclusion of the other, all monies, things and interests, including superannuation interests, presently in the name of, under the control of, in the possession of or to which each is lawfully entitled.
Mr Connor’s interest in his J Super superannuation fund is the subject of a splitting order and, to give effect to this, it is ordered that :
(a)a base amount of $62,455.75 is allocated, as required by s 90MT(4) of the Family Law Act 1975 (Cth), to Ms Cosgrove, out of the interest of Mr Connor in the J Super superannuation fund (J Super); and
(b)in accordance with paragraph 90MT(1)(a) of the Family Law Act 1975 (Cth) whenever a splittable payment becomes payable out of the interest held by Mr Connor in J Super, the Trustee of J Super (the J Trustee) will:
(i)pay to Ms Cosgrove, or her administrators, executors, beneficiaries, heirs or assigns, the entitlements calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 (Cth); and
(ii)make the corresponding reduction in the entitlement Mr Connor would have had in J Super but for this order; and
(c)the J Trustee do all acts and things and sign all documents necessary so that, in accordance with the obligations set out in the Family Law Act 1975 (Cth) and Family Law (Superannuation) Regulations 2001 (Cth), the J Trustee can calculate the entitlement of, and make payment to Ms Cosgrove in accordance with paragraph (2)(b) of this order; and
(d)this order has effect from the operative time; and
(e)the operative time in relation to this order is deemed to be four (4) days after the date upon which the sealed copy of this order is served upon the Trustee of J Super; and
(f)upon becoming entitled to receive a splittable payment from J Super, Ms Cosgrove must elect to take the maximum available lump sum; and
(g)if the trust deed permits or if there is any future change in the legislation affecting the division of superannuation entitlements, then Mr Connor and Ms Cosgrove will do all acts and things and sign all documents reasonably necessary to request the Trustee of J Super to either pay to Ms Cosgrove or to roll over an interest in the fund (equivalent to the proportion that Ms Cosgrove is entitled to be paid calculated in accordance with the Regulations) into a separate fund to be nominated by Ms Cosgrove; and
(h)pending payment to Ms Cosgrove pursuant to order (2)(b)(i) or the rolling over of Ms Cosgrove’ entitlement pursuant to order (2)(g) of this order, Mr Connor is restrained from dealing with, charging, encumbering or disposing of any entitlements he has under J Super other than in accordance with the terms of this Order or with the consent of Ms Cosgrove, that consent is not to be unreasonably or arbitrarily withheld; and
(i)Mr Connor must immediately revoke any binding nomination of beneficiary and is restrained hereafter from making any binding nomination in favour of a child described in Regulation 13(1) and (2) of the Family Law (Superannuation) Regulations 2001 (Cth) or any other nomination where the effect of the nomination would be to render that payment a non-splittable payment and/or extinguish or reduce the entitlement of Ms Cosgrove under this order; and
(j)this order will be binding upon Mr Connor, his heirs, executors, administrators and personal representatives; and
(k)having been accorded procedural fairness, this order binds the Trustee of J Super.
Ms Cosgrove transfer to Mr Connor her share or shares in the company B Pty Ltd and resign from any office she may retain in that company.
Ms Cosgrove resign as a beneficiary of any trusts of lawyers of which Mr Connor and any corporation under his control, is trustee, and that any loan amount in any such trust that may stand to her credit, or be in deficit, be discharged.
Mr Connor indemnify Ms Cosgrove in respect of any taxation liability to which she may be assessed in respect of income, interest and penalties, earned or incurred by herself, Mr Connor or B Pty Ltd arising from the business carried on by the parties, B Pty Ltd, or by any of the trusts associated therewith.
If either Mr Connor or Ms Cosgrove refuses or neglects to sign any document or do anything as may be reasonably required to give effect to this Order within seven (7) days of the service of a demand upon him or her to sign the document or to do the thing:
(a)a Registrar of the Family Court of Australia is empowered under s 106A of the Family Law Act 1975 (Cth) to sign the document and to direct anything be done in the name of the party in default to give effect to this order; and
(b)evidence of refusal or neglect may be by an affidavit of one of the parties’ lawyers, or by the party; and
(c)the party in default will be responsible for payment of any legal costs incurred by the other party as a result of the failure or neglect.
All otherwise pending applications are dismissed.
NOTATION
(A)Nothing in this Order affects the liability of Mr Connor to pay costs as ordered on 5 April 2017, or to pay Ms Cosgrove any monies owing in respect of unpaid child support.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Connor & Cosgrove and Ors (No. 2) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth)
| FAMILY COURT OF AUSTRALIA AT BRISBANE |
FILE NUMBER: BRC 3669 of 2014
| Mr Connor |
Applicant
And
| Ms Cosgrove |
First Respondent
And
| B Pty Ltd |
Second Respondent
And
| Mr C Connor and Ms D Connor atf E Trust |
Interveners
REASONS FOR JUDGMENT
Mr Connor, the sole Director/Secretary and public officer of his private company, B Pty Ltd (the Second Respondent in these proceedings) was born in 1969. Ms Cosgrove, a public servant, was also born in 1969.
Mr Connor and Ms Cosgrove commenced cohabitation in April 1999. They married in 2000, separated on 2 April 2013 and divorced on 20 October 2015. They have five children:
a)V, born in 2002 and currently 16 years of age; and
b)W, born in 2003 and currently 15 years of age; and
c)X, born in 2005 and currently 13 years of age; and
d)Y, born in 2007 and currently 10 years of age; and
e)Z, born in 2010 and currently 8 years of age.
All of the children live with Ms Cosgrove, to whom sole parental responsibility was accorded by an order made on 25 August 2015. The August 2015 Order provides for the children to spend time with their father on alternate weekends and during school holidays.
There is no evidence from Ms Cosgrove about the manner in which the August 2015 Order has been implemented.
Mr Connor advanced that Ms Cosgrove denied him access to the children for six months prior to July 2015; for six months around January 2016; for six months around July 2016; for nine months around January 2017 and for over three months since 2 October 2017.[1] It appears the children spent time with their father during the December 2017/January 2018 school holidays – Mr Connor exhibited copies of photos taken between 11 and 18 January 2018 to his affidavit.[2]
[1] Affidavit of Mr Connor filed 9 April 2018 at [688].
[2] Affidavit of Mr Connor filed 9 April 2018 at [730] – [733].
However, Mr Connor also said that the children had had no contact with him since 22 January 2018[3] and that, prior to this, he did not see the children between January 2017 and September 2017.[4]
[3] Affidavit of Mr Connor filed 9 April 2018 at [687].
[4] Affidavit of Mr Connor filed 9 April 2018 at [701].
Given the evidence about the children’s interactions with Mr Connor after the parental separation in April 2013, it seems clear that Ms Cosgrove has been almost completely responsible for the children’s day-to-day care and support since that time.
Mr C Connor, who was born in 1925, is Mr Connor’s father. He and his wife, Ms D Connor (who was born in 1933) are co-trustees of the E Trust. The Trust intervened in these property settlement proceedings between Mr Connor and Ms Cosgrove to assert that those parties were indebted to it.
At the conclusion of the first day of the trial, I made orders which resolved this issue. The orders made that day include that the Interveners will receive funds currently held in trust on behalf of Mr Connor and Ms Cosgrove (in the amount of about $488,756.98) and that they will pay Ms Cosgrove the sum of $210,000.00. A further consequence is that certain aspects of the evidence relied upon by the parties is no longer relevant to the determination of the remaining issues as between Mr Connor and Ms Cosgrove.
The manner in which proceedings for property settlement are to be approached is well known[5] and requires no further elucidation. Before embarking on a consideration of the relevant matters, it is appropriate that I outline my findings about the parties’ respective credit.
[5] See, for example: In the Marriage of Pastrikos (1980) FLC 90-897; In the Marriage of Lee Steere (1985) FLC 91-626; In the Marriage of Ferraro (1993) FLC 92-335; In the Marriage of Waters & Jurek (1995) FLC 92-635; In the Marriage of Clauson (1995) FLC 92-595, In the Marriage of Hickey (2003) FLC 93-143 and Stanford v Stanford (2012) 247 CLR 108.
Veracity of the parties
Mr Connor’s affidavit evidence is that his “living expenses funded by debt”.[6] From the bar table on the first day of trial, Mr Connor said, in essence, that he obtains credit from “various sources.” He declined to provide further detail about these sources. However, nothing in the document he filed, which purports to be a Financial Statement, contains any asserted indebtedness to any third party. That is, he does not say that he owes any family member money borrowed by him for his self-support; nor does he say that he has borrowed any funds from any other person and used the same for his self-support. When he was asked during cross-examination how he was able to afford to travel with the children to New South Wales, he again said: “various sources”.
[6] Affidavit of Mr Connor filed 9 April 2018 at [1053].
When cross-examined by Counsel for Ms Cosgrove, Mr Connor said he had slept the previous night in the park, and managed to shower and shave using public amenities. He denied the suggestion that he was lying; he said that he managed to survive and prepare his Court material by begging on the street, shaking a tin. He accepted that he did not include in his affidavit material that he had been living on the streets and in the park and said such omission was not for any particular reason.
Mr Connor was not able to recall whether, since a period during 2014 where he stayed in a hotel in K Town, he had thereafter slept “rough”; he said his case had been very disturbing and he had lost his short term memory. At one point he said that he did not want to disclose his residential address for safety reasons; at another he said that he had been staying on a park bench.
Despite his evidence about the manner in which he alleged he had been supporting himself financially, Mr Connor accepted that he flew from Brisbane to L Town to spend time with the children during the December 2017/January 2018 school holiday period and, after spending overnight there with them in a hotel, he and all five children then flew to Sydney. He also said that, at the conclusion of the holiday period, he flew the children back to L Town.
In responding to queries about where the children were accommodated during this time – given his evidence about his own accommodation, his asserted lack of funds and the manner by which he said he accumulated whatever funds he had accumulated – Mr Connor said that they did not sleep in the park with him.
Mr Connor also said that he accumulated the funds he needed to fly the children around as outlined above by begging. Despite what on his account – if accepted – can only be the most austere of financial circumstances, he could not remember how much it cost him to spend time with the children during this relatively recent holiday period; he also could not say how much he managed to beg each day; he was unable to provide even an average of the amount he claimed to acquire via begging on the street each day.
I consider Mr Connor’s evidence incredible. I simply do not believe him. I consider it more likely than not that he simply decided to say that he was begging on the streets in order to avoid any inquiry into his current financial circumstances. I think it a likely manifestation of his determination not to pay child support to Ms Cosgrove.
I do not accept as likely that a person of his experience and qualifications (noting that he has a commerce degree and, at the time the parties commenced cohabitation, was working for a bank) and demonstrated drive and commitment to attempt to create a wealth-creation ‘business’ could not find paid employment in some field doing something.
Whilst Mr Connor denied being in a personal relationship at present and/or cohabiting with another person, I consider it highly likely that he approached the giving of his evidence about this issue in the manner that he did in order to obfuscate and prevent any inquiry into that aspect of his current financial circumstances also.
The manner in which Mr Connor chose to give his evidence and the content of the same – particularly about the issue of his current financial circumstances and the manner in which he said he is currently supporting himself financially – have combined to persuade me to prefer the evidence given by Ms Cosgrove to that given by Mr Connor where the two are in conflict, unless I specifically indicate otherwise.
Is it just and equitable to make orders pursuant to s 79(1) of the Family Law Act 1975 (Cth)?
I consider that the parties’ voluntary separation in about April 2013 has meant that they no longer enjoy the common use of property and superannuation in which their existing legal and equitable interests were acquired during their approximately fourteen year cohabitation. Such separation has also brought to an end the “assumption that any adjustment to those interests could be effected consensually as needed or desired”.[7] I accept that, in the circumstances, it is just and equitable within the meaning of s 79(2) of the Family Law Act 1975 (Cth) (“the Act”) that, pursuant to s 79(1) of the Act, orders altering the interests in property owned by each of them are made.
[7]Stanford v Stanford (2012) 247 CLR 108 at [42].
Mr Connor’s proposal
Mr Connor initially proposed that all money then held in the F Lawyers trust account be paid to the Interveners. He also sought various orders which would see Ms Cosgrove pay any fines, penalties or costs associated with, or arising out of the fact of, the late or overdue lodgement of tax returns to the Australian Taxation Office and ASIC for himself, B Pty Ltd, R Trusts and the M Trust. He also sought an order that Ms Cosgrove be responsible for paying half of the Accountant’s costs associated with the preparation of these returns; that she return property taken by her from the former matrimonial home to an address nominated by him (at her cost); that she return the 4WD motor vehicle in her possession to an address nominated by him (at her cost) and that she repay him the $10,000.00 she took from his bank account on 14 March 2014.
Mr Connor also initially proposed that the 4WD motor vehicle and the Sedan motor vehicle both be sold and that the sale proceeds of the same be paid to the Interveners.
After the Court ordered, on 28 May 2018, that the funds held in the F Lawyers trust account be paid to the Interveners, Mr Connor amended the orders he sought to propose that:
a)Mr N (of O Accountants) be appointed as accountant to prepare all outstanding tax returns in the “matrimonial estate”, including for B Pty Ltd, himself and Ms Cosgrove for all outstanding years from 2009 to present (with the objective of quantifying any potential liability to the Australian Taxation Office); and
b)Ms Cosgrove be compelled to comply with all requests for information made by Mr N; and
c)Mr N’s fees be paid by Ms Cosgrove; and
d)the sum of $210,000.00 (which is to be paid to Ms Cosgrove by the Interveners as a result of the Order made on 28 May 2018) be placed in the O Accountants trust account and be used to meet contingencies such as paying accounting fees and paying the potential (but unknown) Australian Taxation Office liability and any fines associated with the outstanding tax returns.
In his submissions, Mr Connor proposed the nett property of the parties – whatever that might be found to be – be apportioned equally between himself and Ms Cosgrove: that is, he advanced that the liabilities of the parties (as yet unquantified) should first be paid from the parties’ assets and any surplus then be divided equally.
There is no evidence from Mr N (whom has been the Interveners’ accountant and tax agent since about September 2009) before the Court about his willingness or ability to complete the work Mr Connor advanced or about the likely costs of the same. There is no evidence to suggest Mr N has access to, or holds, the documents necessary to complete the work adverted to by Mr Connor or that he would be willing to undertake such a task. Given this, Mr Connor’s suggestions are unpersuasive; further, as I remarked on a number of occasions during the trial, there has already been a significant opportunity for the parties to deal with the issue of the unprepared and unfiled tax returns; nothing persuades that the asserted prohibition to the same – namely, that each party says the other holds the documents needed to prepare the returns – is likely to resolve in the near future such that I could be confident that the returns will in fact be prepared.
Ms Cosgrove’ proposal
According to the Minute of Orders sought provided by Mr Galloway of Counsel for Ms Cosgrove at the commencement of his submissions, Ms Cosgrove proposes that she retain the funds payable to her by the Interveners and:
a)should she reach any agreement or accommodation with either or both of G Pty Ltd (to whom $82,817.79 is owed by the parties on a joint and several basis) and H Pty Ltd (to whom $89,190.88 is owed by the parties on a joint and several basis) to discharge the liability owing to them, Mr Connor indemnify her to the extent of one half of the sum she actually pays to them, by paying her such amount within twenty eight (28) days of being notified about the same; and
b)Mr Connor’s entitlements to superannuation be the subject of a splitting order such that she receive 50 per cent of the same (said to be the amount of $65,801.50) and retain her own entitlements to superannuation; and
c)she transfer to Mr Connor her share/s in B Pty Ltd and resign from any office she may still retain in that company; and
d)she resign as a beneficiary of any trust for which Mr Connor, or any corporation under his control, is trustee, with any loan amount in any such trust that may stand to her credit, or be in deficit, to be discharged; and
e)Mr Connor indemnify her in respect of any taxation liability which she may be assessed to have in respect of income, interest and penalties, earned or incurred by herself, Mr Connor or B Pty Ltd.
Whilst overtaken by the terms of the order made by consent on 28 May 2018, the Case Information document filed on Ms Cosgrove’ behalf on 9 April 2018 contained her earlier proposal that the debt owing to G Pty Ltd (in the amount of $82,817.79) and to H Pty Ltd (in the amount of $89,190.88) be paid from the money then held in the trust account of F Lawyers, and that, following this, any funds remaining be divided between herself and Mr Connor such that she receive 85 per cent of the same and he receive 15 per cent of the same. She also proposed that, from his 15 per cent, Mr Connor pay her:
a)$13,318.25: in payment of an account from Michael Lynch Family Lawyers;[8] and
b)$5,560.62: in discharge of an order for costs made by the Full Court of this Court on 5 April 2017; and
c)$73,496.23: being 85 per cent of the nett sale proceeds of real property (the Suburb P property); and
d)$15,293.48: in payment of outstanding child support due for the period to 5 November 2015; and
e)$16,181.27: in payment of outstanding child support payable for the period from 5 November 2015 to date.
[8] Whom she previously engaged to act on her behalf in the proceedings.
Ms Cosgrove also proposed that the 4WD motor vehicle be transferred to her and that Mr Connor provide the headrests for that car to her or pay her the sum of $675.40 to enable her to purchase replacements for it. She proposed that Mr Connor receive a Sedan motor vehicle, a speed boat and trailer. She proposed that his entitlements to superannuation be the subject of a splitting order such that she receive 50 per cent of the same and retain her own entitlements to superannuation and that he transfer to her half of the frequent flyer points which existed as at 2 April 2013.
Given the specific terms of the order sought by Counsel for Ms Cosgrove at the commencement of the submissions made on 30 May 2018 (as summarised in paragraph 27 above), I have proceeded on the basis that, other than in respect of the order for costs made by the Full Court on 5 April 2017, Ms Cosgrove no longer presses the relief particularised in the Case Information document filed on 9 April 2018.
The property of the parties and related issues
There are a number of disputes about the parties’[9] existing legal interests in property. Obviously, these require resolution.
[9] That is: Ms Cosgrove and Mr Connor.
$10,000.00 taken by Ms Cosgrove: 14 March 2014
Mr Connor asserted that Ms Cosgrove should be required to repay the sum of $10,000.00 to him because she removed this sum from his bank account without his permission on 14 March 2014. As I understood it, his position was, in essence, that justice and equity required the inclusion of such sum (albeit notionally) as property available for division because, without Ms Cosgrove’ actions, the total value of the property at trial would be $10,000.00 more than it currently is.
Ms Cosgrove accepted that she removed $10,000.00 from the parties’ bank accounts in about March 2014. She said she used these funds for her support and that of the children. She said that, save for this amount, the balance of the nett proceeds obtained from the sale of real property located at Q Street, Suburb P in February 2014 (an amount of $86,000.00), was paid into the parties’ Line of Credit.[10] I did not understand her to be challenged about this latter aspect.
[10] Affidavit of Ms Cosgrove filed 9 April 2018 at [90].
It has been said that the notional adding back of property no longer in existence is an exception rather than the rule in property settlement proceedings.[11] Such assertion is not, though, in my mind, a statement of binding principle: in Lovine v Connor and Anor,[12] the Full Court noted[13] that, within the exercise of the overall discretion to determine just and equitable property orders in the exercise of the discretionary jurisdiction conferred by s 79 of the Act, the resolution of a dispute about notional add-backs is not determined by the application of fixed legal rules; whilst guidelines have been formulated over time in a number of well-known authorities,[14] these do not constitute binding rules of law and the exercise is one of “a discretion within a discretion”: that is, a discretion about the manner in which the issue of the notional adding-back of property no longer in existence is to be treated within the overarching discretion of determining just and equitable orders pursuant to s 79 of the Act.
[11] Marker v Marker [1998] FamCA 42; Cerini v Cerini [1998] FamCA 143, [46]; Omacini v Omacini (2005) FLC 93-218, [39]; Kouper & Kouper (No 3) [2009] FamCA 1080, [107].
[12] (2012) FLC 93-515.
[13] At [101] – [103].
[14] Such as: Omacini v Omacini (2005) FLC 93-218; DJM v JLM (1998) FLC 92-816; In the Marriage of Townsend (1995) FLC 92-569; In the Marriage of Kowaliw (1981) FLC 91-092; Brown v Green (1999) FLC 92-873; Chorn v Hopkins (2004) FLC 93-204; Cerini & Cerini [1998] FamCA 143; Polonius v York [2010] FamCAFC 228.
I consider that the “overarching discretion” of determining just and equitable orders between Mr Connor and Ms Cosgrove can best be discharged by declining to add-back notionally the $10,000.00 removed by Ms Cosgrove. Consistent with what I consider to be the underlying theme of more recent authority,[15] with which I agree, I intend to consider the issue of the $10,000.00 when considering other relevant s 75(2) matters. Another way in which this issue could be considered, it seems to me, is during the consideration of the post-separation contributions by each of Ms Cosgrove and Mr Connor to the support of the children and to the support of Ms Cosgrove.
[15] Such as: Bevan v Bevan (2013) FLC 93-545 per the plurality at [79] and per Finn J at [160]; Baglio & Baglio [2013] FamCA 105 per Murphy J at [186]; Harper & Harper [2013] FamCA 528 per Macmillan J at [63] - [64].
Spectre of debts to Australian Taxation Office
Mr Connor asserts that there are a number of unpaid tax liabilities; that some of these tax liabilities relate to B Pty Ltd during a period of time when Ms Cosgrove was a director of the same; he adverts to the existence of “contingent fines” likely to be levied once tax returns are filed.
It is clear that tax returns for what Mr Connor has described as “the BPL Group” (being B Pty Ltd; F Lawyers and the M Trust) have not been prepared for the financial years from and including FY2009 onwards.
Whilst Mr Connor asserted that Ms Cosgrove had blocked the preparation of such tax returns by withholding financial information, the nature and detail of the same was not completely particularised. Further, Ms Cosgrove denied retaining any financial information about entities within the Group and asserted that, in fact, Mr Connor was the party whom had retained control over the financial documents after their separation. Given my overall assessment of Mr Connor’s lack of veracity, I prefer the evidence given by Ms Cosgrove in this respect to the evidence given by Mr Connor.
As was made clear during the hearing, I do not consider it appropriate to refrain from finalising the parties’ property settlement proceedings in case tax returns – now long overdue – might finally be prepared and submitted. To the extent that it is necessary that I do so, I record my conclusion that it is much more likely than not that it was Mr Connor who retained control and possession of the Group financial documents after the parental separation.
The absence of tax returns and tax assessments makes it impossible to determine a figure – if there is in fact one – to include as a liability in the calculation of the nett value of the property of the parties. Given my conclusion about the likely possession and control of the financial documents necessary to cause the overdue tax returns to be prepared, I consider it appropriate and just and equitable that, in the event that such tax returns are ever actually prepared and result in the assessment of indebtedness by Mr Connor or any of the entities known by the collective “the BPL Group”, Mr Connor be responsible for the same; it is also just and equitable, in my view, in such circumstances that he indemnify Ms Cosgrove for any liability which she may be determined to have arising from the operation of the business venture which was operated by the BPL Group entities. Whatever other orders are made, it is also appropriate that orders are made in the terms proposed by Ms Cosgrove (as set out in paragraphs 27 c) and d) above).[16]
[16] Section 81 Family Law Act (1975) (Cth).
As a result of the findings about the disputes resolved above, I find the existing interests of Mr Connor and Ms Cosgrove in property and the value of the same as at the date of trial to be as follows:
Item Ownership Description Value Assets 1. Ms Cosgrove Funds payable to Ms Cosgrove by Interveners as a consequence of the Order made 28 May 2018 $210,000.00 2. Ms Cosgrove S Bank account number #50 E$2,900.00 3. Ms Cosgrove Household contents E$500.00 4. Ms Cosgrove 4WD motor vehicle $1,000.00 5. Mr Connor Household contents NK 6. Mr Connor CUA accounts NK 7. Mr Connor B Pty Ltd NK 8. Mr Connor Sedan motor vehicle NK 9. Mr Connor Motor boat and trailer NK Total (gross) E$214,400.00 Liabilities 10. Joint G Pty Ltd $82,817.79 11. Joint H Pty Ltd $89,190.88 Total non-superannuation (nett) E$42,391.33 Superannuation Entitlement 12. Ms Cosgrove J Super – Accumulation $14,728.82 13. Ms Cosgrove T Super – Accumulation $58,811.35 14. Ms Cosgrove T Super – Deferred Retirement Benefit $98,193.71 15. Mr Connor U Super Fund/ Plum – Accumulation $44,264.51 16. Mr Connor J Super – Accumulation E$79,367.13[17] 17. Mr Connor J Super– Retirement Fund E$7,969.35 Total superannuation $303,334.87 Total E$345,726.20 [17] As at 14 October 2016. Affidavit of Ms Cosgrove filed by leave on 29 May 2018, Annexure “ASC-01”.
The reality in this case is that the only property (other than entitlements to superannuation) with any significant value is the funds which Ms Cosgrove will receive from the Interveners ($210,000.00). As noted elsewhere, Ms Cosgrove has previously attempted to negotiate a significate reduction in the amount payable to each of G Pty Ltd and H Pty Ltd such that, if she can persuade each entity to agree to receive the amounts previously agreed upon, the amount payable to G Pty Ltd might be $24,845.35 (a $57,972.44 discount on the debt owed: that is, a discount of about 70 percent) and the amount payable to H Pty Ltd might be $26,757.26 (a $62,433.62 discount on the debt owed: that is, a discount of about 70 per cent) rather than the amounts outlined above.
However, whilst it was previously the case that each creditor was prepared to accept payment of these amounts in full and final satisfaction of the parties’ outstanding liability to them, there is no evidence to suggest that their respective positions remain the same now or, in fact, to establish what their current respective positions are vis-à-vis the outstanding debt. Given this, I consider it appropriate that the full amount of the monies owing to these creditors is considered for the purpose of determining the nett value of the property of the parties.
What is clear though, is that any requirement that Ms Cosgrove and Mr Connor co-operate in relation to any approach to these creditors to ascertain their current attitudes would be an exercise in futility and frustration. I consider that the best that can be done is to leave it to Ms Cosgrove to attempt to negotiate with the creditors as she has in the past and to attempt to ensure that the liability of both herself and Mr Connor to these creditors is extinguished by the payment of funds in as lesser an amount as she may be able to negotiate. In the event that the creditors are unwilling to release both Mr Connor and Ms Cosgrove, then, given that they are each jointly and severally liable to these creditors, it will simply be a matter for each party individually to attempt to arrive at the best resolution each can with the creditors, noting, of course, that the creditors cannot recover twice.
At present – as is summarised above – Mr Connor has entitlement to superannuation in a total amount of $131,600.99 whilst Ms Cosgrove has entitlements to superannuation in a total amount of $171,733.88.
The s 79(4) considerations
In considering the relevant matters mandated by s 79 of the Act, it must be remembered that:
a)“community of ownership arising from marriage has no place in the common law”[18]; and
b)there is no presumption of equality of contribution between parties to a marriage, irrespective of the length of their union;[19] and
c)the exercise of the discretion conferred must not proceed on an assumption that the parties’ interests in property are or should be different from those determined by common law and equity.[20]
Financial and non-financial contributions to acquisition, conservation or improvement of property during cohabitation
[18] Stanford and Stanford (2012) 247 CLR 108, [39] citing Hepworth v Hepworth (1963) 110 CLR 309, 317 per Windeyer J.
[19] In the Marriage of Mallet (1984) 156 CLR 605.
[20] Bevan v Bevan (2013) FLC 93-545, [73].
I accept Ms Cosgrove’ evidence to the effect that, at the commencement of her cohabitation with Mr Connor in April 1999, she was working as a public servant and earning about $60,000.00 per year. I also accept that she owned shares valued at about $10,000.00; a car; some antique furniture and an entitlement to superannuation (unparticularised in amount) in V Super.
I also accept that, at the commencement of their cohabitation, Mr Connor, who has a degree, was working for a bank. I accept he owned a car (subject to a car loan) and that he had some credit card debt. The evidence is unclear about his entitlement to superannuation at that time.
I accept that Ms Cosgrove sold the shares she owned at the commencement of cohabitation and applied the sale proceeds of the same toward the deposit for the purchase of real property at W Street, Suburb X: this property was bought in January 2001 (about 21 months after their cohabitation commenced and about 12 months after they married) for about $315,000.00.
I accept that Ms Cosgrove worked full-time until the birth of the parties’ first child on 16 March 2002. I accept that, after this and until about 2009, she was primarily responsible for the care of the children and the home and that this arrangement was implemented after she and Mr Connor agreed that this was how they would manage their family responsibilities.
I accept that, after the parties commenced their cohabitation, Mr Connor remained in full-time paid employment until 2006. I accept that the income he earned from these endeavours during this time was applied to the financial support of the family unit.
I accept that, in about 2005/2006, Mr Connor raised with the Interveners the possibility of them lending money to Mr Connor and Ms Cosgrove so that they could use the same to acquire investment properties. I accept that the Interveners subsequently provided funds to Mr Connor and Ms Cosgrove for such purpose. I accept that Mr Connor ceased employment in about 2006 and that he and Ms Cosgrove thereafter embarked upon a venture of property acquisitions and rentals, initially in their own names and, later, via the company and trusts which together have been referred to as “the BPL Group”.
I accept that Mr Connor and Ms Cosgrove would not have been able to embark upon this course without the funds provided by the Interveners. I also note, though, that the terms of the 28 May 2018 Order included that the Interveners receive the entirety of the funds held in trust on behalf of Mr Connor and Ms Cosgrove: these funds were sourced from the sale of investment properties and the former matrimonial home and had been held in trust since about 2014 on an uninvested basis. That is, the agreement reached saw the funds repaid to the Interveners, who subsequently agreed to pay a proportion of their funds to Ms Cosgrove. Whilst he opposed such a course, Mr Connor’s position until then had always been that all of the funds held in trust be paid to the Interveners in order to repay them the money they had lent the parties to enable the acquisition of various rental properties.
I accept that, between about 2006 and 2014 or thereabouts, the Interveners permitted Mr Connor and Ms Cosgrove access to funds, which they used to fund property acquisitions and for their own personal financial support.
I accept that both Mr Connor and Ms Cosgrove were very involved in the operation of the business venture. I accept as likely that both attended various seminars in the hope that they could make their venture a success.
I also accept that both Mr Connor and Ms Cosgrove worked to establish a networking business of some sort, but this was ultimately unsuccessful. I accept that, in so far as this business venture was concerned, Ms Cosgrove’ tasks included: arranging promotional material and liaising with the printer of the same to have it delivered for letterbox delivery; making promotional clips (with Mr Connor) which were designed to have people visit their website; liaising on a weekly basis with a printer about artwork; co-ordinating the delivery of thousands of the business cards via a letterbox delivery service; and, with Mr Connor and others, putting these business cards under car windscreens at shopping centres on numerous occasions.
I accept that it is more likely than not that Ms Cosgrove performed a large number of tasks associated with the venture and that these included: travelling, marketing and advertising; placing newspaper advertisements seeking clients, managing business inquires and other administration concerned with running the business.
I accept that it is more likely than not that Mr Connor was responsible for the actual financial administration of the venture. I am buttressed in this conclusion by the fact that Mr Connor himself asserted he was the party responsible for “commercial” and contracts and for paying the mortgages and living expenses and for drawing on funds made available by the Interveners to meet any shortfalls between the rental income he and Ms Cosgrove received from their rental properties and the interest they were required to pay on borrowed funds. I think it much more likely than not that anything Ms Cosgrove did which related to financial aspects of the venture was done at Mr Connor’s direction or amounted to administrative support to implement his overarching financial decisions about the manner in which the venture would be operated.
I also accept as more likely than not that the parties were able to live as they did and to educate their children in the manner that they did during their cohabitation because they were able to access funds made available to them by the Interveners.
I accept Ms Cosgrove’ evidence about the extent to which she was involved in meeting the needs of the various homestay students she and Mr Connor had stay in their home from about 2009 onwards in order to supplement the household income. At the time they began to host homestay students, their household comprised two adults and four children, who ranged in age from about 12 months to 7 years of age. I accept that, when Mr Connor and Ms Cosgrove started to host homestay students, they initially hosted two students at a time; I accept that, after about 2012, they hosted three students at a time.
I accept that Mr Connor’s involvement with hosting the homestay students was limited to taking bookings from a website and taking the students on an introductory drive around the suburbs and other relevant locations.
I accept as much more likely than not that, in addition to performing the tasks associated with the day-to-day care of a household comprising two adults and four or five of their own children (depending on the year), Ms Cosgrove was primarily responsible for cooking and cleaning for the hosted homestay students. That is, I accept that she did many of these tasks, as well as doing the vast majority of the tasks associated with running and maintaining the home and meeting their five children’s needs. I consider that Ms Cosgrove made a greater contribution to the hosting of the homestay students than Mr Connor did.
I accept that the business venture struggled from about 2009 onwards and that Mr Connor returned to full-time employment between early 2010 and October 2012. I accept he was employed by Y Ltd at this time and applied the income he earned to the support of the family unit. I accept that, as far as Ms Cosgrove is aware, save than for a very short employment contract in 2013, Mr Connor has not been in paid employment since October 2012.
Ms Cosgrove advanced that, particularly during the last five years of her cohabitation with Mr Connor (that is, from about mid-2008 until April 2013) her contributions were far greater than his. She advanced that this was the case because he was not employed outside the venture (other than as outlined above) and provided minimal assistance around the home, whereas she was responsible for performing the tasks outlined above which were associated with the operation of the venture, caring for the children and ensuring that the homestay students’ needs were met. I accept the contention made on behalf of Ms Cosgrove in this respect.
Financial and non-financial contributions to acquisition, conservation or improvement of property after the April 2013 separation
Mr Connor asserted that, in the period from separation in April 2013 until about September 2014, he was the person responsible for ensuring that the loans secured by mortgages on the various rental properties were paid. It is clear that he used funds obtained from the Interveners to meet these obligations. There is no suggestion that he applied any funds he earned from personal exertions outside the business venture to meet these liabilities. Similarly, whilst he said that he also paid for a number of business costs and for work done on the former matrimonial home, these funds were also sourced from funds made available by the Interveners. Again, he did not apply any funds he earned from personal exertions outside business venture to meet these costs.
Whilst he advanced that Ms Cosgrove paid no money whatsoever into any of the mortgages the parties serviced during cohabitation and since the separation, the reality is that neither did he: instead, both Mr Connor and Ms Cosgrove used funds provided by the Interveners and monies derived from the business to meet the loan repayments; neither Mr Connor nor Ms Cosgrove applied any funds that either earned from any source other than the business venture to meeting these expenses because neither engaged in any income-producing enterprise after about 2006 other than hosting homestay students and Mr Connor’s engagement in full-time employment between early 2010 and October 2012.
Given that the funds held in trust were paid to the Interveners, the reality is that both Mr Connor and Ms Cosgrove contributed equally to whatever financial payments were made in the period from separation in April 2013 until about September 2014.
I accept that, at separation in April 2013, Ms Cosgrove and the children moved to North Queensland to live with her mother (the children’s maternal grandmother). I accept Ms Cosgrove’ evidence to the effect that she took only essential personal items with her at that time and that Mr Connor remained living in the former matrimonial home until it was sold in August 2014. I accept that, between about April 2013 and the sale of the former matrimonial home, Mr Connor did not apply any funds he earned from personal exertion outside the business venture to meeting the loan repayments: again, any funds that were applied by him in meeting necessary repayments in relation to the former matrimonial home were sourced from the Interveners, who were ultimately paid the funds in trust.
Contribution to the welfare of the family, including in the capacity of homemaker or parent (both during cohabitation and after the April 2013 separation)
I accept that Ms Cosgrove returned to part-time employment in February 2017. I accept that she received about $350.00 per week on average from this employment and that she has used these funds to financially support herself and the children.
I accept, as much more likely than not, that Mr Connor has made no direct financial contribution to the children’s day-to-day financial needs since the April 2013 separation. I accept that any monies he has applied since then to meet the children’s needs have been associated with enabling them to spend time with him.
I accept that it is highly likely that Ms Cosgrove has only been able to accommodate the children in the manner that she has because her mother has made her home available to them. I note her evidence is that Mr Connor is currently indebted to her in an amount of about $31,000.00, by way of unpaid and owing child support. Whether this amount is the subject of dispute does not detract from the fact that, since April 2013, Ms Cosgrove has been entirely responsible for meeting the children’s financial needs.
As already noted, whatever the cause, the reality is that, since the April 2013 separation, Ms Cosgrove has been overwhelmingly responsible for ensuring that the five children’s day-to-day needs, of whatever kind, have been met.
Conclusions as to Contributions: s 79(4)(a)-(c)
In assessing the contributions made by the parties the Court embarks upon a process involving the exercise of a broad discretion in respect of which reasonable minds may differ. Whilst this process is neither an accounting or mathematical exercise,[21] it does involve a movement from “a qualitative evaluation of contributions to a quantitative reflection of such evaluation” – that is, a “leap” from words to figures.[22] Further, the contribution of any party as a homemaker and parent must be assessed not in any “merely token way”, but in terms of its ‘true worth’ to the accumulation of property during the cohabitation.[23]
[21] See: Norbis v Norbis (1986) 161 CLR 513 at 522; In the Marriage of Brandt (1997) FLC 92-758.
[22]Steinbrenner v Steinbrenner [2008] FamCAFC 193 at [234] per Coleman J.
[23] See, for example, In the Marriage of Mallet (1984) 156 CLR 605.
Having regard to the evidence before me, I have concluded that, during the period from the commencement of their cohabitation in April 1999 until 2006, the contributions made by Mr Connor and Ms Cosgrove were, albeit made in different forms at different times, equal: both worked for remuneration and applied the same to their shared life until the birth of their first child, after which Ms Cosgrove assumed the major responsibility for the home and the parenting of their children and Mr Connor continued to work for remuneration to support their growing family.
However, I am not persuaded on the evidence before me that this equality of contribution – in whatever form – continued during the period from 2006 until the April 2013 separation. Rather, I consider that, during this time, the contributions made by Ms Cosgrove, when considered in their totality and which encompassed the overwhelming responsibility for meeting the children’s needs and taking care of the home and managing the homestay students and engaging in the business ventures in the manner outlined above, significantly exceeded those made by Mr Connor.
I have arrived at this conclusion even taking into account that the parties were only able to obtain access to the funds made available by the Interveners by virtue of Mr Connor’s familial relationship with them; here, the reality is that the Interveners were paid interest on the funds advanced and have been repaid the funds they provided from the funds held in trust, being monies derived from the sale of real property purchased by Mr Connor and Ms Cosgrove in the course of the business venture.
Further, I also consider that the contributions made by Ms Cosgrove after the April 2013 separation far exceed those made by Mr Connor: she has been almost totally responsible for meeting the five children’s day-to-day and financial needs and, in addition, it was her decision to reach agreement with the Interveners which has resulted in the value of the property the subject of these proceedings being increased by the amount of $210,000.00. This matter is, in my mind, particularly relevant given that Mr Connor’s position was that all of the funds held in trust (and more) should have been paid to the Interveners – that is, if his position had held sway, he and Ms Cosgrove would not have had available the $210,000.00 which the Interveners agreed to pay to Ms Cosgrove.
A proper consideration and evaluation of the totality of the various contributions made by Ms Cosgrove – as outlined above – persuades me that a quantification of contributions to trial as to 65 per cent to Ms Cosgrove and 35 per cent to Mr Connor is just and equitable between the parties.
The assessment of contributions in this manner results in a disparity in the parties’ respective financial positions in favour of Ms Cosgrove in an amount of about $103,717.86 which, I consider, appropriately reflects the extent by which her contributions (of whatsoever kind) exceed those made by Mr Connor.
It is sufficient simply to record that none of the orders proposed by either party will have any effect on the earning capacity of either party.
Relevant s 75(2) matters
Mr Connor was born in 1969. He is currently 49 years of age. Despite saying during his cross-examination that he is an “intelligent successful literate person”, he advanced that he does not work for remuneration – no occupation has been listed by him in any of the documents he has filed in the Court.
Mr Connor has never filed a properly completed Financial Statement. Rather, he has attached a document to his Initiating Application (filed 17 March 2016) which contains the assertion that it is in the form that it is because Ms Cosgrove has taken and withheld financial information from him. For reasons already expressed, I do not accept this contention.
Further, whilst a document filed by Mr Connor on 17 April 2018 is entitled “Financial Statement”, that affidavit is not a Financial Statement at all; it contains no information about Mr Connor’s bank accounts for example; whether he is employed or in receipt of Centrelink or other payments; how it is that he supports himself at present and funds his day-to-day living expenses. I have already expressed my rejection of his contention that he supports himself financially by begging on the streets.
Whilst Mr Connor said that he had “very limited time resources”, the cessation of this litigation will bring to an end any draw on his time caused by the same.
Whilst Mr Connor initially said, during his cross-examination that he had applied for plenty of jobs after the April 2013 separation, there is no evidence of his asserted attempts to find employment in his affidavit. When pressed further, he could not initially recall a single job he had applied for – he finally said that he had applied for a job in about 2014. He could not particularise any job he had applied for since 2014. There is no evidence before me to suggest that there is any medical reason which has prevented Mr Connor from seeking and/or obtaining paid employment since the April 2013 separation.
Ms Cosgrove is currently 49 years of age. She continues to work on a part-time basis; she receives about $350.00 per week for her one day a week employment. She also receives Centrelink payments in the sum of $967.00 per week. She and the children continue to live with the maternal grandmother in her home. Whilst Mr Connor is currently assessed to pay $136.55 per week by way of child support, no payments are made by him.
I also note that Ms Cosgrove provided correspondence, dated 22 November 2017, from the General Manager, Child Support Smart Centres to establish that Mr Connor has been found to be required to pay an amount of $15,293.48 to her by way of child support for the period 1 June 2013 to 28 July 2014. This is said to have arisen when his estimate of income (at $0.00) for the period was reconciled (on 5 November 2015) and found to be inaccurate.
Whatever the assessment and whatever the basis on which it has been made and whatever the outstanding child support liability, it is clear – as I have already outlined – that Ms Cosgrove has been entirely responsible for meeting the children’s financial needs since the April 2013 separation. Given the lack of financial assistance Mr Connor has provided since separation and his evidence about his financial circumstances at the trial, I am completely persuaded that it is inevitable that Ms Cosgrove will continue to be entirely responsible for meeting the five children’s future financial needs. The only respite may be that Mr Connor will pay for the children’s expenses during any time they spend with him in the future. In addition, Ms Cosgrove will continue to be almost entirely responsible for meeting all of the five children’s future day-today needs, of whatever kind.
Mr Connor’s failure to cause money in F Lawyers trust account to be invested
I accept that, by email sent on 21 August 2017, Ms Cosgrove invited Mr Connor and the Interveners to agree to her request that the funds held in the F Lawyers trust account be invested on behalf of the parties. I accept that on 15 February 2018 Mr Connor sent documents to F Lawyers to instruct that the funds be invested: this correspondence obviously followed the making of an order on 15 December 2017 that the firm be authorised to invest the money held in trust on behalf of the parties.
In arriving at my determination about the adjustment required following consideration of the relevant s 75(2) considerations so as properly to reflect those matters, I have also taken into account Ms Cosgrove proposition that Mr Connor’s failure to take up her suggestion about the investment of the funds in trust in a timely manner adversely affected the parties in that they failed to earn interest on that money that could otherwise have been earned.
Conclusions as to s 75(2) matters
I do not accept Mr Connor’s criticism of Ms Cosgrove’ decision at this time not to engage in full time employment; that he advanced such criticism in circumstances where he has ostensibly made no effort whatever to obtain employment (despite not being required to undertake the fulltime parenting responsibilities for their five children since April 2013 – when the children were all less than about 12 years of age) does him no credit at all. Whilst all of the children are at school, the reality of providing ongoing and unremitting care for five children should not, in my view, be underestimated in terms of its likely impact on Ms Cosgrove’s capacity to engage in paid employment for more hours than she currently does.
I note that Mr Connor also advanced that Ms Cosgrove’ earning capacity is greater than his because she could engage in a number of jobs whilst he could not. There is nothing in the evidence before me to suggest that he is incapable of engaging in other pursuits himself.
I am not persuaded that Ms Cosgrove’ earning capacity is greater than that possessed by Mr Connor. He, too, is tertiary educated; he has previously worked in various fields.
My conclusions as to the respective contributions of the parties will result in a 30 per cent differential between the parties: Ms Cosgrove will receive property and superannuation entitlements valued at $103,717.86 more than the property and superannuation entitlements received by Mr Connor.
In the exercise of the broad discretion accorded to trial judges and acknowledging that others may disagree, given the matters considered pursuant to s 75(2) as discussed above and the circumstances of this case as I have also outlined above, I am not satisfied that such an outcome would be just and equitable. Rather, having regard to the reality of the total value of the non-superannuation property of the parties in particular (being about $42,391.33 if the creditors cannot be persuaded to accept less than what they are owed) and that Ms Cosgrove will continue to be totally responsible for the day-to-day and financial support of the five children and that she will carry the responsibility of attempting to negotiate a reduced payment to the creditors for the benefit of both herself and Mr Connor, I consider that an adjustment of a further 15 per cent is appropriate, such that Ms Cosgrove will receive property and superannuation entitlements valued at $276,580.96 whilst Mr Connor will receive all of his entitlement to property via his retention of his entitlements to that superannuation which will remain after the necessary splitting order is made: he will retain superannuation entitlements valued at $69,145.24.
Justice and equity of the proposed orders
The consequence of the conclusions outlined above is that, having regard to the parties’ respective contributions to trial as I have found them to be and the relevant s 75(2) matters as I have found and assessed them to be, at the conclusion of an almost fourteen year cohabitation, productive of five children, Ms Cosgrove will receive property valued at $276,580.96 and Mr Connor will receive property valued at $69,145.24. He will also retain whatever other property he has in his possession, although his failure to provide any believable evidence about this means that it has not been possible to confidently identify and value the same.
It is appropriate that each of Ms Cosgrove and Mr Connor retain the property which each has in their respective possession and to which each is lawfully entitled. This means that Ms Cosgrove will receive and retain the funds due to her from the Interveners in the amount of $210,000.00, pursuant to the Order made 28 May 2018. Given her retention of the funds at bank in her S Bank account and the value ascribed to her household contents and the 4WD motor vehicle, she will receive property (exclusive of her entitlement to superannuation) with a (gross) value of $214,400.00. However, the two outstanding debts to H Pty Ltd and G Pty Ltd remain.
As discussed earlier, I consider that the only realistic manner in which these debts can be addressed is for Ms Cosgrove to again attempt to negotiate a reduction in the amount payable in order to extinguish the parties’ liability to these creditors. If she is able to persuade the creditors to accept the amounts previously the subject of discussion, then it is just and equitable that she retain the benefit of that persuasion to the exclusion of Mr Connor: that is, I consider it just and equitable and appropriate that she receive the entirety of whatever remains from the sum of $210,000.00 payable to her by the Interveners after the payment to the creditors of whatever amount she can negotiate for them to accept in full and final discharge of the amount owing to each of them.
Ms Cosgrove also sought an order that, should she reach any agreement with either of these two creditors, Mr Connor should indemnify her to the extent of one half of the sum paid by her to extinguish the parties’ indebtedness to that entity. Whilst I have given this proposal significant consideration, on balance I have decided that, given the circumstances of this case and the history of an absence of co-operation between Ms Cosgrove and Mr Connor, it is inevitably likely to be productive of such significant difficulty and cost in its implementation as to render it of marginal utility. Consequently, I decline to make such an order.
The value of the non-superannuation assets is such that it is necessary to make a splitting order in respect of one of Mr Connor’s superannuation entitlements in order to give effect to the determination outlined above. Ms Cosgrove seeks that the splitting order is made in relation to Mr Connor’s interest in his J Superannuation fund, such that she is allocated $65,801.50 from that fund as the base amount; such a splitting order would result in Ms Cosgrove receiving half of the value of Mr Connor’s entire entitlements to superannuation. However, the amount sought does not equate to that needed to be allocated as the base amount in order to give effect to the determination that those orders which are just and equitable are orders which will result in Ms Cosgrove receiving 80 per cent of the property and superannuation entitlements of the parties and Mr Connor 20 per cent of the same.
The effect of the orders outlined at the commencement of these Reasons is that Ms Cosgrove will receive non-superannuation property valued at $214,400.00 (being: $210,000.00 cash payable by the Interveners; $2,900.00 cash at bank; $500.00 by way of household items and a car valued at $1,000.00) and will be primarily responsible for attempting to negotiate the full and final settlement with creditors to whom a total of $172,008.67 is owed. In the event that she can negotiate a complete release for an amount less than this, she will retain whatever remains of the $210,000.00 for her use absolutely (although I suspect much of what remains may well be used to meet outstanding legal expenses). She will also retain her entitlements to superannuation (valued at $171,733.88) and receive the benefit of a splitting order, with an allocated base amount of $62,455.75, of Mr Connor’s J Superannuation fund, such that her overall entitlement to superannuation is valued at $234,189.63. In total, Ms Cosgrove will receive property and superannuation valued at $276,580.96[24] (which represents 80 per cent of the total value of the property and superannuation of the parties to the marriage; and her entitlement to superannuation will represent 77.20 per cent of the total entitlement to superannuation of the parties to the marriage).
[24] On the assumption that the full amount of the indebtedness to the creditors will have to be paid.
Mr Connor will retain his bank accounts, household contents, B Pty Ltd, the Sedan motor vehicle, a motor boat and trailer (the value of which is unknown as a consequence of an absence of relevant disclosure); he will also retain an entitlement to superannuation valued at $69,145.24 and will obtain the benefit of Ms Cosgrove’ negotiations with the creditors to extinguish the parties’ joint and several indebtedness to the same.
The costs reserved on 15 December 2017
Ms Cosgrove also sought an order that Mr Connor pay the costs of and incidental to the Application in a Case[25] which resulted in the Order made on 15 December 2017 and that he pay the costs of and incidental to the current Application, to be agreed or assessed.
[25] Initially filed on 25 October 2017 and subsequently amended on 29 November 2017.
By virtue of the Application in a Case, Ms Cosgrove sought, amongst other things, to be able to use the funds held in the F Lawyers trust account to pay to $24,845.35 to G Pty Ltd (to whom $82,817.79 is owed by herself and Mr Connor on a joint and several basis) in full and final settlement of the outstanding debt and to pay $26,757.26 to H Pty Ltd (to whom $89,190.88 is owed by herself and Mr Connor on a joint and several basis) in full and final settlement of the outstanding debt. Ms Cosgrove had been able, over time, to negotiate with each of these creditors such that each was then prepared to accept the reduced amount in full and final satisfaction of the debt owed to them by Mr Connor and Ms Cosgrove.
Whilst Ms Cosgrove’ proposal was imminently reasonable and sensible, orders could not be made on 15 December 2017 to facilitate the payment of these creditors using the funds in the trust account because Mr Connor, Ms Cosgrove and the Interveners were then in dispute about the ownership of those funds; however, the application did precipitate the matter being listed for final hearing so that that issue – and the others the subject of these Reasons - could finally be heard and determined. Ms Cosgrove’ application also resulted in an order (by consent) that F Lawyers be directed and authorised to do all that was required to invest the funds held in trust on behalf of the parties in an interest bearing account: this was something about which Ms Cosgrove had attempted to have Mr Connor and the Interveners agree, but without success.
Section 117(1) of the Act provides that each party to proceedings under the Act shall bear his or her own costs. However, if the Court is satisfied there are circumstances which justify it, the Court may make such order as to costs as it considers just.[26] In considering what order, if any, as to costs should be made, the Court must have regard to the matters set out in s 117(2A) of the Act.
[26] Section 117(2) Family Law Act (1975) (Cth).
In so far as the issue of the financial circumstances of Ms Cosgrove and Mr Connor is concerned, I accept that impecuniosity on the part of a party opposing the making of an order for costs is, of itself, no bar to an order for costs being made where it is otherwise warranted.[27]
[27] See, for example, D v D (Costs) (No 2) (2010) FLC 93-435.
Neither Ms Cosgrove nor Mr Connor were in receipt of Legal Aid. Ms Cosgrove was legally represented, whilst Mr Connor appeared on his own behalf. Ms Cosgrove’ financial circumstances are certainly significantly limited, whilst there is really no probative evidence about Mr Connor’s current financial circumstances.
It was not submitted that any aspect of the proceedings the subject of consideration in determining this application for costs, were necessitated by a failure of Mr Connor to comply with previous orders of the Court.
Ms Cosgrove was not wholly successful in her application: she obtained an order (by consent) that the funds held in trust be invested on behalf of the parties, but did not obtain other aspects of the relief sought in the Application in a Case, for the reasons adverted to earlier in these Reasons.
Whilst Mr Connor’s response to Mr Cosgrove’ suggestion that the funds in trust be invested on behalf of the parties was not timely, the reality is that the substantial aspect of the interim application could only be dealt with following a trial.
Given this reality and for the reason expressed, I am not persuaded that the circumstances justify the making of an order that Mr Connor pays Ms Cosgrove’ costs of and incidental to the Application in a Case determined on 15 December 2017 and I decline to make an order that he do so.
Similarly, I am not persuaded that the circumstances justify the making of an order that Mr Connor pay Ms Cosgrove’ costs of and incidental to the proceedings and I decline to make an order that he do so.
For the reasons outlined above, I am satisfied that, in all the circumstances of this case, it is just and equitable and appropriate that orders be made in the terms appearing at the commencement of these Reasons to give effect to the conclusions outlined above.
I certify that the preceding one hundred and fourteen (114) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Hogan delivered on 26 September 2018.
Associate:
Date: 26 September 2018
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