COTTARD & CRICHTON
[2016] FamCA 819
•28 September 2016
FAMILY COURT OF AUSTRALIA
| COTTARD & CRICHTON | [2016] FamCA 819 |
| FAMILY LAW - PRACTICE AND PROCEDURE – Objections to evidence – Where the husband objects to part of the evidence upon which the wife sought to rely – Where the wife attaches written communications in connection with an attempt to negotiate a settlement of the dispute – Where the material attracts provisions of s 131 of the Evidence Act 1995 (Cth) – Whether there should be a broad or narrow construction of s 131(2)(g) of the Evidence Act – Where the offers of settlement do not attract provisions of s 131(2)(g) of the Evidence Act– Where the objection is upheld. FAMILY LAW - PRACTICE AND PROCEDURE – Disqualification application – Where the husband makes a disqualification application on the basis that offers of settlement had been read – Where the application is dismissed. FAMILY LAW - PROPERTY – Interim – Where the wife seeks an order for a lump sum by way of interim property settlement or interim costs – Where the wife seeks spousal maintenance – Where the husband contends the wife is entitled to no order – Where the husband has current assets worth in excess of $25 million – Where the husband undertook to the wife to look after her financial requirements – Where the husband has ceased to provide any ongoing support for the wife – Where the parties’ luxurious lifestyle during their relationship is taken into account – Where the husband is ordered to pay the wife a lump sum amount and spousal maintenance – Where the wife’s interim needs will be reduced on a periodic basis by the amount of income the wife receives from her personal exertion – Where the wife’s applications in relation to a motor vehicle is dismissed. FAMILY LAW - INJUNCTIONS – Where application for property injunctions is dismissed. |
| Births, Deaths & Marriages Registration Act 1995 (NSW) Family Law Rules 2004 (Cth) | |
| Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 | |
| APPLICANT: | Ms Cottard |
| RESPONDENT: | Mr Crichton |
| FILE NUMBER: | SYC | 3980 | of | 2016 |
| DATE DELIVERED: | 28 September 2016 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Watts J |
| HEARING DATE: | 19 September 2016 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Gould |
| SOLICITOR FOR THE APPLICANT: | Searle & Associates |
| COUNSEL FOR THE RESPONDENT: | Mr Kearney, SC |
| SOLICITOR FOR THE RESPONDENT: | York Law |
Orders made 19.9.16
The husband’s objections to part of the evidence upon which the wife sought to rely is upheld and I reserve my reasons.
The husband’s application that I disqualify myself is dismissed and I reserve my reasons.
I reserve my judgment in respect of the wife’s interim applications.
Orders
Within 14 days the husband pay to the wife the sum of $50,000.
Pending further order, the husband pay to the wife by way of spousal maintenance the sum of $3,000 per week provided that the wife shall inform the husband in writing each quarter of the amount by which her net income has exceeded $3,120 each quarter ($240 per week x 13 weeks) and the husband will be entitled to deduct that amount from the payment or payments he is next due to make to the wife pursuant to this order.
The wife’s applications in relation to the German motor vehicle and for injunctions be dismissed.
Both parties’ costs are reserved.
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 Cottard & Crichton 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 SYDNEY |
FILE NUMBER: SYC 3980 of 2016
| Ms Cottard |
Applicant
And
| Mr Crichton |
Respondent
REASONS FOR JUDGMENT
This matter was heard in a busy duty list. The de facto wife (“the wife”) has applied for an order that the husband pay her a lump sum of $74,888 by way of interim property settlement or interim costs; interim spousal maintenance order of $3,000 per week; a declaration relating to a German motor vehicle and property injunctions. The de facto husband (“the husband”) seeks these applications be dismissed.
The husband has current assets and superannuation which he estimates are worth in excess of $25 million and he has liabilities of about $2 million. His income from investments is over $16,000 each week.
The husband is 77 years of age and the wife is 47 years of age. They met in the United States in August 2012 and got on well together. The husband says that he was free and looking for a new life after the death of his second wife in 2011.
Notwithstanding the differences in age (about 30 years), the husband has always been attracted to younger woman with enthusiasm for life. The parties spoke about being together and the husband invited the wife to come and live with him on acreage in Australia notwithstanding the fact that she was a “city girl”. The husband, being wealthy and retired, undertook to the wife to look after her financial requirements and her household expenses. He had enough money to easily do that. The husband did not want the wife working as he wanted the two of them to spend their time together.
At the time the parties met, the wife told the husband that she owned business in the United States and also had part time work. She gave up her business and work in the United States and travelled to Australia on a visitor’s visa in August 2012. Shortly prior to travelling, the husband purchased a complete wardrobe of clothes of approximately USD $10,000 for her.
In August 2012, before the wife came to Australia, she told the husband she did not want to have children. He agreed that he did not want any more children (he was 73 at the time and she was 43). By mutual agreement, the husband had a vasectomy.
The wife told the husband that she had been married five times before.
The wife asserts that the parties were in a de facto relationship from August 2012. The husband asserts that it was a “boyfriend/girlfriend” relationship until early/mid 2014 and that a de facto relationship did not commence until that time.
The husband provided the wife with an unlimited credit card to buy what she wanted in clothes and household items. The husband told the wife that the credit card had a cash advance limit of $1,000 per day and had a limit of $50,000. In mid-2014 the husband established a joint debit card facility in the parties’ joint names into which he deposited funds that were available for the wife to use.
In 2013 the husband was diagnosed with bladder cancer. The husband is now in remission. The wife alleges that she nursed him throughout his treatment. The husband in his sworn evidence takes issue with the notion that the wife nursed him. At [28] to [31] of his affidavit of 21 July 2016 he says that on the two occasions when he was hospitalised he drove himself to hospital. During his eight weeks of chemotherapy he says that the wife only accompanied him on one or two occasions and that he drove himself to any subsequent check-ups that occurred on a three and six monthly basis. He asserts that throughout his bladder cancer treatment, he was perfectly able to look after himself. The evidence in the husband’s affidavit is in some contrast to a statutory declaration the husband swore on 15 May 2014 where he says:
When I needed hospital treatment she stayed with me and she drove me home. When I went to Newcastle hospital for treatment it was stressful trying to make sure that she got there because she was not familiar with the area, but I knew she was determined to come because we are life companions and we will always seek to be by each other’s side for good events and bad.
The parties brought the wife’s dog, to Australia. After a quarantine period, the dog lived with the parties and the husband developed a fondness for the dog. The dog left with the wife at separation. The husband pined for the dog and has since expressed the intention that he would obtain a dog of a similar breed.
During the time that the parties were together, they lived what could only be described as a luxurious lifestyle. They went on 18 overseas trips in a period of just under four years. The husband estimates that the travel costs were about $1.5 million.
The wife estimates that the amount of money that she spent during the time the parties were together averaged $2,000 to $3,000 per week in respect of clothes, food, household requirements, lingerie, beauty treatments, petrol and telephone. The husband covered the cost of the parties’ accommodation, travel and entertainment. The husband purchased jewellery and other artefacts and chattels for the wife.
In May 2014 the husband sponsored the wife’s application for permanent residence in Australia and she was granted approval to stay in Australia pending determination of her immigration application.
On its face it appears as if the wife enthusiastically fulfilled the role which the husband desired of her. The husband provided the wife with advice about her appearance and her weight. The husband reminds the wife in a letter on 29 November 2013 that he told her he likes beautiful cars, houses and restaurants and beautiful women. The wife says that the husband paid for her beauty treatments and lingerie which he wanted her to wear for him. In May 2014 the husband speaks enthusiastically about the joy and satisfaction he is receiving out of his relationship with the wife.
A document prepared in May 2014 in connection with the wife’s application for permanent residence (which the husband neither confirms or denies is genuine), sets out his financial circumstances at that time. The husband’s wealth is put at $26,500,000 but had omitted the value of the property at B Street, Suburb C (“the former matrimonial home”), which the husband currently estimates has a value of $2.4 million.
On 30 May 2014 the parties registered their relationship under the Births, Deaths & Marriages Registration Act 1995 (NSW). Accordingly, there is no issue in relation to jurisdiction (see s 90SB(d) Family Law Act 1975 (Cth) (“the Act”)). There is some doubt around whether or not the husband concedes that a de facto relationship existed for at least two years, although the husband does concede that the parties were in a relationship for three and a half years (page 43 to the wife’s affidavit of 18 September 2016). In May 2014 the husband promised the wife he would look after the wife “after I am gone”.
In early 2015 the husband purchased a prestige car for the wife at a cost of $130,000.
The parties separated in either May 2016 (according to the husband) or 11 June 2016 (according to the wife).
It was the husband’s decision to end the relationship, making it clear that the wife was no longer welcome to live in either the former matrimonial home or another property that the husband had acquired during the relationship.
The husband has now ceased to provide any ongoing financial support for the wife. He has withdrawn his support for her application for permanent residence in Australia. Apparently the wife shall now be making an application for permanent residence based in part on assertions of family violence by the husband against her.
On 20 June 2016 the wife attended the former matrimonial home to remove items from the home and the prestige motor vehicle with the assistance of police.
In mid-June 2016 the wife removed $11,000 from the debit card facility which exhausted the funds in that facility. In July 2016 the husband closed the joint debit card account.
By mutual agreement, in July 2016 the prestige car was sold for $90,000 and the proceeds provided to the wife.
According to the husband, in June 2016, as part of the process of removing the wife’s personal effects from the former matrimonial home, over 50 boxes of her belongings were packed and something in the order of hundreds of dresses and approximately 200 pairs of shoes were made available to the wife for collection.
After the separation, the wife went to live at the home of mutual friends in Suburb D. On 2 September 2016 the husband wrote to the wife telling her that he did not believe it was correct that she stay with them at this time and that he would soon speak to his long term friend about him (I infer to dissuade) allowing the wife to stay at his home.
The wife has been hired as a part time trainee. She commenced in that role less than one month ago. She has been promised work for only one night per week at $240 gross per week. The wife hopes to be able to increase that to three nights per week which will total 24 hours and for which she will earn the sum of $720 gross per week.
The wife has obtained accommodation in Sydney for herself and the dog at $1,000 per week. The wife has placed a holding deposit of $1,000 and will need to pay a further $7,345 before she moves in.
OBJECTIONS TO EVIDENCE
During the hearing on 19 September 2016, I upheld the objection to the admissibility of documents attached to the wife’s two affidavits based upon s 131(1) of the Evidence Act 1995 (Cth) (“the Evidence Act”) and reserved my reasons. These are those reasons.
The husband’s Response filed 21 July 2016 seeks that the wife’s application for a property settlement order be dismissed and that she pay the husband’s costs on an indemnity basis. It is the husband’s contention that the wife is entitled to “nil” by way of property settlement and “nil” by way of spousal maintenance. The husband asserts that the wife has not made any substantial contributions during the course of the relationship and that any contributions that she may have made during the relationship were more than compensated for by the gifts, holidays and expenses that the husband provided and from cash that the husband suggests the wife withdrew from accounts. Further, he contends that nothing occurred during the course of the relationship that impacted upon the wife’s ability to earn an income and that the length of the relationship has not affected the skills that the wife has to earn an income. The husband’s contention is that the wife has the ability to return to the United States and work or recommence her business.
The wife attached to her affidavits written communications which were made between the wife and/or her lawyers and the husband and/or his lawyers in connection with an attempt to negotiate a settlement of the dispute.
Section 131(1) of the Evidence Act provides that evidence is not to be adduced of a communication that is made between parties in dispute in connection with an attempt to negotiate a settlement to the dispute or a document that has been prepared in connection with an attempt to negotiate a settlement of a dispute.
Counsel for the wife conceded that the material that was objected to attracted the provisions of s 131(1) of the Evidence Act but sought to rely upon ss 131(2)(g) which is in the following terms:
Subsection (1) does not apply if:
…
(g) evidence that has been adduced in the proceeding, or an inference from evidence that has been adduced in the proceeding, is likely to mislead the court unless evidence of the communication or document is adduced to contradict or to qualify that evidence
Section 133 of the Evidence Act provides that if a question arises under s 131 in relation to a document, the court may inspect the document for the purpose of determining the question. I read the documents to which the objections were taken.
The privileged material contains a sequence of written offers made by the husband.
On 10 June 2016 the husband made the wife an offer for property settlement.
The husband’s solicitors wrote a letter on 16 June 2016 which made an offer for spousal maintenance for a limited period.
In an email to the wife of 5 July 2016, the husband made a different offer to the wife to settle all claims she might have for property settlement and spousal maintenance.
On 2 September 2016 the husband made a further offer of spousal maintenance for a limited period.
On 18 September 2016 the husband wrote directly to the wife changing his offer for a final settlement in relation to property and spousal maintenance.
Counsel for the wife submits that the court would be misled by the evidence adduced by the husband in the proceedings as to the contributions made by the wife to the relationship or as to evidence that he has led relevant to matters referred to in s 90SF(3) of the Act which would support his overall contention that the wife should receive nothing by way of a property settlement order and nothing by way of a spousal maintenance order, if the court did not have available to it evidence of the offers that had been made by the husband.
Judicial thinking on the interpretation of s 131(2)(g) of the Evidence Act is split between a broad and a narrow construction. Counsel for the wife argues for the former; senior counsel for the husband argues for the later.
The normal approach to statutory interpretation applies. In Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 , the plurality said:
47 This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the text itself. Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which has actually been employed in the text of legislation is the surest guide to legislative intention. The meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy.
(Footnotes omitted)
The broad view looks at the ordinary and grammatical sense of the words in ss 131(2)(g) of the Evidence Act. Counsel for the wife submits that any evidence in privileged communications which simply contradicts or qualifies evidence already adduced attracts the exemption in s 131(2)(g) of the Evidence Act. So for example, if a spouse, in sworn evidence, says a payment by a parent was a loan but in a privileged communication had said the payment was a gift, that contradictory statement would be admissible, as otherwise the sworn evidence that the advance was a loan, is likely to mislead the court.
The narrow view seeks to read down the ordinary meaning of the words with reference to context, including the other exceptions listed in ss 131(2) of the Evidence Act; the existing state of the common law in 1995 and the general purpose and policy of s 131. Under the narrow view, the privileged statement that the payment by a parent was a gift would not be admissible because it is evidence in privileged communications that simply contradicts evidence already adduced.
In support of the broad construction, counsel for the wife relies upon Mulkearns v Chandos Developments Pty Ltd (No 4) [2005] NSWSC 511 where Young CJ at [67] took a broader view which admitted a settlement offer by a defendant so that the court would not be misled into thinking that the defendant was greedy and would not give an inch.
Senior counsel for the husband relies upon Emmett J’s exposition in Brown v Commissioner of Taxation (2001) 187 ALR 714. Emmett J said at [184] to [185]:
I consider that s 131(2)(g) is designed to deal with the sort of circumstances that arose in Pitts v Adney (1961) 78 WN (NSW) 886. Evidence of a “without prejudice” communication was admitted in that case in order to prove the fact of and the nature of the communication. It was not tendered in order to contradict evidence as to the matters in issue, or as an admission.
It is not appropriate to attempt an exhaustive exposition of the effect of s 131(2)(g). However, I consider that it will not be attracted simply because evidence to which s 131(1) applies contradicts or qualifies evidence that has already been adduced. Section 131(2)(g) will apply where the court would be likely to be misled as to the existence or contents of an excluded communication or document, where those matters are in issue in the proceeding.
The debate has not been settled at appellate level. In Nader v Sutherlands Shire Council [2008] NSWCA 265, Young CJ in Eq, with whom Beazley JA and Sackville AJA agreed, dealt with a ground of appeal based on a ruling by the trial judge that s 131(2)(g) did not permit the admission of evidence in circumstances where the statement in the privileged communications were said to contradict or qualify sworn evidence already given. At [54] Young CJ in Eq commented that “…at first blush the material might appear to be within a possible category of material covered by the exception under s 131(2)(g)…”. That is, Young CJ in Eq seemingly endorsed the broad construction of s 131(2)(g), but in that case found that the particular material relied upon would not “counter material which was otherwise likely to mislead the judge”. Had it in fact countered that material, it’s tolerably clear that the Court of Appeal would have found the trial judge erred in excluding the evidence in the privileged communication.
In Galafassi v Kelly [2014] NSWCA 190, the New South Wales Court of Appeal discussed the divergence of judicial opinion at [135] to [139]:
135.Section 131(2)(g) applies where the Court would be likely to be misled as to the existence or contents of an excluded communication or document, where those matters are in issue in the proceedings: Barrett Property at [52], citing Brown v Commissioner of Taxation (Brown) [2001] FCA 596; (2001) 187 ALR 714 at [184]- [185] (Emmett J).
136.Varying views have been expressed as to the breadth of s 131(2)(g). In Brown Emmett J at [183] rejected a broad construction that s 131(2)(g) applies where the evidence sought to be adduced simply contradicts or qualifies evidence that has already been adduced. Emmett J gave a brief exposition of the effect of s 131(2)(g) and at [185] said:
“... However, I consider that it will not be attracted simply because evidence to which s 131(1) applies contradicts or qualifies evidence that has already been adduced. Section 131(2)(g) will apply where the court would be likely to be misled as to the existence or contents of an excluded communication or document, where those matters are in issue in the proceeding. ...”.;
137.In Mulkearns v Chandos Developments Pty Ltd (No 4) (Mulkearns) [2005] NSWSC 511 at [66]- [67] Young CJ in Eq referred to the brief exposition of Emmett J in Brown and held, in relation to a claim by a purchaser for a return of the deposit, that a without prejudice offer made by the vendor to the purchaser in full settlement of the dispute was admissible because unless this additional fact was permitted into evidence, the purchaser may mislead the Court into thinking their case is one against a greedy vendor who would not give an inch, and this would be a factor to go to the Court’s discretion.
138.Subsequently this Court in Nader v Sutherland Shire Council [2008] NSWCA 265 at [50]- [52] (Young CJ in Eq; Beazley JA and Sackville AJA agreeing) noted that a prime example of a situation where, if the evidence were not admitted, other material before the Court was likely to mislead the Court, was provided by Kinsella J in McFadden v Snow (1952) 69 WN (NSW) 8 at 10, where it was put that a tenant had not replied to a letter sent by the landlord. There had in fact been a reply, but in a without prejudice letter. His Honour held that if the without prejudice letter were not admitted it would mislead the Court into thinking that there had been no reply to the landlord’s letter and thus an implied admission. At [51] Young CJ in Eq said that to qualify under the exception in s 131(2)(g) the relevant material must be presented where otherwise the Court is likely to be misled by the existing evidence.
139.In Barrett Property at [52]-[55], Bromberg J reviewed the authorities including Brown and Mulkearns, but not Nader v Sutherland Shire Council. His Honour agreed with the analysis of Emmett J at [185] in Brown in preference to a number of first instance decisions in New South Wales including Mulkearns, which his Honour considered had adopted a broader construction of s 131(2)(g) than applied in Brown. Subsequent first instance decisions in New South Wales have followed the approach in Brown: see Atlas Financial International Ltd v Nortbale Pty Ltd [2011] NSWSC 815 at [85] (Einstein J); Payne v Rowe [2012] NSWSC 685 at [45] (Ball J).
In Galafassi v Kelly the New South Wales Court of Appeal considered it unnecessary to resolve the debate in that case.
Senior counsel for the husband relies upon the commentary in Stephen Odgers Uniform Evidence Law (Thomason Reuters, 12th Edition, 2016) at [131.480] where the learned author expresses the view that “the approach of Emmett J appears now to be generally accepted as the correct approach”.
Speaking for myself, I see no reason why the ordinary and grammatical sense of the words in s 131(2)(g) of the Evidence Act should be read down. I accept that at the time of the introduction of the Evidence Act in 1995 the common law exception was considerably narrower than the words used by Parliament. I also accept the common law was the aetiology of the subsection. The commentary by Geoff Bellamy and Peter Meibusch, Commonwealth Evidence Law (Australian Government Publishing Service, 1995) at 122 refers to Pitts v Adney [1961] NSWR 535 (which in turn refers to McFadden v Snow (1952) 69 WN (NSW) 8). In Pitts v Adney, Walsh J explains at 539 that the common law rule was based upon public policy and he referred to an example where evidence had been given that there had been no reply to a letter and a letter in reply, headed “without prejudice” was admitted to disprove that evidence.
However, had Parliament wished to confine the exception in the narrow terms of those cases, the subsection could have been written in narrower language. The language used in the subsection, on its face, allows for the court to address a mischief which in my view the statute intended to remedy, namely a circumstance where a party could hide behind privileged communications to avoid being tested about the fact they said something was white in a privileged communication in circumstances where now in sworn evidence they say it was black.
The correction of the mischief of having a possible false statement in evidence, unchallenged by confronting a witness with their prior contradictory statement in a privileged document, is similar to the mischief referred to in s 131(2)(j) and (k) which creates an exception to allow the admission of confidential communications and documents which are in furtherance of a fraud or the abuse of power.
Relying upon the only obiter in any appeal decision of which I am aware (Nader v Sutherlands Shire Council), I prefer the broad construction of ss 131(2)(g).
Had I accepted the narrow approach, the wife’s tender of the without prejudice correspondence would have failed.
Having determined to adopt a broader approach, in the circumstances of this case, the wife’s tender of without prejudice communication must still fail. The fact that a litigant makes an offer (generous or otherwise) to end litigation may be motivated by a number of considerations, particularly in this jurisdiction. For evidence to be admissible it has to be relevant (s 56 of the Evidence Act). Relevant evidence is evidence that, if it were accepted, could rationally affect (directly or indirectly) the assessment of a probability of the existence of a fact in issue in the proceedings (s 55(1) of the Evidence Act). Relevance can go to issues of credit (s 55(2)). The question however is can evidence that somebody makes a particular offer to end litigation rationally affect (directly or indirectly) the assessment of the probability of evidence a party gives about a factual matter relating to contributions under s 90SM(4) (including s 90SF(3) considerations). The wife has not established any rational connection in this case.
The evidence objected to does not attract the provisions of s 131(2)(g) of the Evidence Act and accordingly attracts the confidentiality accorded by s 131(1). For that reason I upheld the objections.
There is another basis upon which the tender of the offers must fail. As mentioned, this matter was dealt with in a busy duty list. Neither counsel brought to my attention the provisions of s 117C(1) and (2) of the Act which is in the following terms:
Offers of settlement
(1) This section applies to proceedings under this Act other than the following proceedings:
(a) proceedings under Part VI;
(b) proceedings under Division 6, 9 or 13 of Part VII;
(c) proceedings to enforce a decree or injunction made under Division 6, 9 or 13 of Part VII.
(2) If:
(a) a party to proceedings to which this section applies makes an offer to the other party to the proceedings to settle the proceedings; and
(b) the offer is made in accordance with any applicable Rules of Court;
the fact that the offer has been made, or the terms of the offer, must not be disclosed to the court in which the proceedings are being heard except for the purposes of the consideration by the court of whether it should make an order as to costs under subsection 117(2) and the terms of any such order.
The relevant rules of court are contained in rule 10.01 and 10.02 Family Law Rules which are in the following terms:
Rule 10.01
How to make an offer
(1) A party may make an offer to another party to settle all or part of a case by serving on the other party an offer to settle at any time before the court makes an order disposing of the case.
Note: See also paragraph 117(2A)(f) and section 117C of the Act in relation to offers to settle.
…
(3) An offer to settle:
(a) must be in writing; and
(b) must not be filed.
…
Rule 10.02
Open and 'without prejudice' offer
(1) An offer to settle is made without prejudice (a without prejudice offer) unless the offer states that it is an open offer.
(2) A party must not mention the fact that a without prejudice offer has been made, or the terms of the offer:
(a) in any document filed; or
(b) at a hearing or trial.
…
The material to which objection is taken are without prejudice offers in writing by or on behalf of the husband to settle all or part of the case and accordingly are offers in accordance with the applicable Rules of Court which attract the protection of s 117C(2) of the Act.
By virtue of s 8 of the Evidence Act, s 117C(2) of the Act overrides s 133 of the Evidence Act.
For this additional reason, the documents should not have been attached to the wife’s affidavit nor mentioned at the hearing.
DISQUALIFICATION APPLICATION
Notwithstanding the husband’s success in respect of the objections, senior counsel for the husband made an oral application that I disqualify myself on the basis that I had read the offers.
The matter had proceeded upon the basis that if a question arises as to the confidentiality in relation to a document, the court may inspect the document for the purpose of determining the question (s 133 Evidence Act). As already indicated, had the provisions of s 117C(2) of the Act been considered, the wife would not have attached this material to her affidavits nor would counsel for the wife have mentioned or asked me to look at the offers.
The husband does not allege actual bias in this case.
The legal test in a disqualification application was stated by the majority in Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 as follows:
... a judge is disqualified if a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide.
The majority in Ebner also emphasised that judges have a duty to exercise their judicial functions when their jurisdiction is regularly invoked observing “judges do not choose their cases and litigants do not choose their judges” and that there needs to be substantial grounds for contending that a judge be disqualified. The majority commented that it would be intolerable if insubstantial objection allowed a litigant to influence the composition of the bench.
In Johnson v Johnson (2000) 201 CLR 488, the High Court said:
… the test is objective … the observer is taken to be reasonable; and the person being observed is “a professional judge whose training, tradition and oath or affirmation require [the judge] to discard the irrelevant, the immaterial and the prejudicial”.
The fair minded lay observer is one attributed with knowledge of all the circumstances of the case (Livesey v New South Wales Bar Association (1983) 151 CLR 288).
The relevant test is a multi-stepped process. The High Court in Johnson referred to a two stepped process. In Ebner there was a suggestion that the test is a three stepped process and in Isbester v Knox City Council (2015) 255 CLR 135 at 155-156 Gageler J identified a three stepped process, saying:
Step one is identification of the factor which it is hypothesised might cause a question to be resolved otherwise than as the result of a neutral evaluation of the merits. Step two is articulation of how the identified factor might cause that deviation from a neutral evaluation of the merits. Step three is consideration of the reasonableness of the apprehension of that deviation being caused by that factor in any way.
Senior counsel for the husband did not develop any argument which analysed this three stepped process. He identified the fact that I had read a variety of offers of settlement made by his client in the past, both on a final and interim basis and as to capital and periodic provision to the wife. He referred to the reference to “human frailty” in [8] of Ebner. He hypothesised that I would be unable to put the offers out of my mind so as to determine the applications, without deviation, based upon their merits.
Senior counsel had just been successful in arguing that s 131(2)(g) of the Evidence Act had no applicability because the offers made by the husband were irrelevant and unconnected to the issue of whether the husband could maintain at trial that no property settlement order and/or no spousal maintenance order should be made in favour of the wife. So how a matter which was irrelevant and unconnected to the determination of the relief sought might be able to cause the necessary deviation was not articulated by senior counsel. In relation to the third step, although senior counsel did assert the reasonableness of the husband’s apprehension of deviation, no argument was developed as to how a finding of reasonableness could be made.
Apart from a general reference to Ebner, senior counsel for the husband apologised for not being able to provide any more specific authority.
Two High Court authorities are of some specific relevance.
The first is R v Lusink and Anor: Ex parte Shaw (1980) FLC 90-884 where the High Court considered an application for an order prohibiting a trial judge from continuing with a hearing. Before evidence was called, the husband had made an offer for settlement in open court which was rejected by the wife. After evidence had been given by the wife and another witness in her case, the trial judge expressed views about the adequacy of the husband’s offer. An application was made for the trial judge to disqualify herself which she refused. An application was made to the High Court for an order prohibiting the trial judge from continuing with the hearing. By majority, the High Court held that the judge’s remarks would not have led a fair minded person to reasonably suspect that the trial judge had prejudged the matter. Significantly, in the context of this case, none of the judges of the High Court in Lusink suggested that the trial judge’s knowledge of the offer that had been made was a basis upon which a reasonable apprehension might arise.
The point was more specifically addressed by Gibbs CJ in R v Simpson; Ex parte Morrison (1984) 154 CLR 101. In that case a final hearing in respect of financial issues had commenced. At the conclusion of the husband’s cross examination, the judge made certain remarks. The parties continued their negotiations and finally reached settlement. Counsel for the parties went to see the judge and told the judge that the matter had been settled and of the terms upon which the agreement had been reached. It was agreed that counsel for the wife would prepare a deed for approval pursuant to the now obsolete s 87 of the Act, containing the terms of that settlement. Overnight the wife changed her mind and called off the settlement. Counsel for the husband requested the judge disqualify himself on two bases. Firstly because of the remarks he made the previous day and secondly his knowledge of the terms of the agreement which had been reached. The judge indicated that he intended to proceed with the hearing. The husband made an application to the High Court for a writ of prohibition directed to the judge prohibiting him from proceeding further to hear the matter. Gibbs CJ found that it was impossible to construe the words that the judge had used in a way that would found a claim for apprehended bias and then in relation to the second basis upon which the application was made said:
Similarly, the fact that he had been informed of the terms of the settlement does not mean that it would be a denial of natural justice to either party that he should proceed. In the circumstances, of course, it was perfectly proper to tell him that the matter had been settled. The learned judge would have been well aware that in reaching a settlement either or both parties may have made concessions, and may perhaps have gone some distance in doing so, and that the settlement does not necessarily indicate the order that the judge should make….
Accordingly, Gibbs CJ dismissed the application for a writ of prohibition.
A trial judge may read documents to rule on questions of different types of privilege, including legal professional privilege, litigation privilege, public interest immunity (s 130 of the Evidence Act) and as in this case, exclusion of evidence of settlement negotiations. Trial judges also regularly conduct voir dires which often lead to evidence being excluded (see s 189 Evidence Act). In addition, the court is often asked to exclude evidence on the basis that its probative value is substantially outweighed by the danger that the evidence might be unfairly prejudicial to a party (s 135 Evidence Act) or to limit the use of evidence if there is a danger that a particular use of the evidence might be unfairly prejudicial to a party (s 136 Evidence Act). In cases of unfairly prejudicial evidence, a trial judge may read and exclude material which, by definition, is highly prejudicial to one party. It cannot be the case that in all of these circumstances, having carried out the duty of a trial judge under the Evidence Act, a trial judge then would need to disqualify himself or herself from further hearing the case, thereby aborting the hearing.
The objective reasonable observer, whilst mindful of human frailty, is taken to observe a professional judge whose training, tradition and oath or affirmation requires the judge to discard the irrelevant, the immaterial and the prejudicial.
For those reasons, I dismissed the husband’s application that I disqualify myself.
Consistently with not being reminded of s 117C(1) and (2) of the Act, senior counsel for the husband did not draw to my attention the provisions of s 117C(3) which is in the following terms:
A judge of the court is not disqualified from sitting in the proceedings only because the fact that an offer has been made is, contrary to subsection (2), disclosed to the court.
Section 117C(3) of the Act only provides protection if the disclosure is of the fact that an offer has been made and not if the terms of the offer are disclosed. Consequently, the section does not provide any additional basis to dismiss the disqualification application in this case.
LUMP SUM PAYMENT SOUGHT
The wife seeks an interim property settlement order pursuant to s 90SM or alternatively, by way of an interim costs order pursuant to s 117 of the Act, in the approximate sum of $74,888.
The wife says that the amount is to be used by her to cover legal costs to date and anticipated legal costs both in this litigation and in relation to work by a lawyer on her visa application to gain permanent residence in Australia. I am unable to ascertain how the wife calculates $74,888 as the amounts referred to in [8] and [9] of her affidavit of 18 September 2016 total about $72,500 of which she has already paid from her own resources an amount of $24,700.
The wife currently has cash funds of $61,124 in Australia and an amount of USD $19,000 in two accounts in the United States.
I note, without making any further comment, that the wife’s Amended Initiating Application seeks a property settlement order equivalent to 20 per cent of the net assets of the husband which, on his current estimate of his worth, would be a property settlement order in the wife’s favour of an amount of approximately $4,600,000.
The husband seeks that the wife gets nothing by way of a property settlement order.
The wife points to contributions that she made over almost four years in the relationship. The wife asserts that she did all the shopping, cooking (except for barbequing) and cleaning (apart from a cleaner twice in four years).
As already indicated, the husband says that the wife did not make the contributions she claims and in any event has been more than adequately compensated for her contributions during the relationship by monies he has expended on her lifestyle.
The husband puts in issue what the wife did by way of domestic services during the relationship. He alleges that between August 2012 and the end of 2014 he did most of the cleaning of the house, save for the first 18 months where a cleaner attended the home once every one to two months. He concedes that the wife commenced to undertake cleaning in the last 18 months of their relationship. The husband seems to concede that the wife cooked for the parties in the last two years (saying that he undertook the cooking prior to that time). He also asserted that the wife cooked deep fried food that he did not eat but that she did. Ironing was done by an ironing lady (the wife does not allege she did ironing). He asserts that they each did their own laundry and he undertook lawn-mowing and gardening assisted by a gardener and that he did handyman work.
The husband relies on what he asserts is an approach to entitlements in short relationships which the husband also asserts is “well settled”, referring to Anastasio & Anastasio (1981) FLC 91-093; Bushby & Bushby (1988) FLC 91-919 and Beneke v Beneke (1996) FLC 92-698. Reference was made to comments made by Baker J in Anastasio & Anastasio (at 76,760):
Whilst I am not normally attracted to a mathematical approach to applications of this nature, in the present case, having regard to the facts already enumerated and, in particular, having regard to the shortness of the marriage, each party should take from this marriage what he or she contributed directly to it financially.
Reference was also made to the Full Court’s statement in Bushby & Bushby (at 76,667):
In a marriage of four years, with no dependent children being involved on either side, it ought to have been apparent… that each party’s actual financial contribution to the marriage was the primary issue.
The husband also submits that the wife needs to use the capital that she currently has before she be entitled to make an application for a lump sum payment.
The Full Court in Strahan & Strahan (2011) FLC 93-466 revisited the principles applicable to applications for interim property orders. An interim property decision involves two steps.
First, it must be established that s 90SS(1)(h) of the Act was enlivened to allow an interim property settlement under s 90SM of the Act. The test for this was not confined to “compelling circumstances”. The Court in Strahan revisited the earlier well known statement made in Harris & Harris (1993) FLC 92-378 where the Full Court had said:
The exercise of the power should be confined to cases where the circumstances presented at that time are compelling. As a generality, the interests of the parties and the Court are better served by there being one final hearing of s. 79 [here s 90SM] proceedings. However, circumstances may arise before there can be a final hearing which dictate that some part of the property of the parties should be the subject of orders. A common example is where both parties agree to the disposal of some assets pending the trial. However, we do not consider that it is confined to cases where the parties consent. Urgent situations may arise where it is necessary to exercise this power if injustice is to be avoided. Examples include cases where it is necessary to do so to avoid an asset being eroded or lost in the intervening period, and cases (beyond the maintenance power) where an order in favour of one party is necessary to preserve or obtain a home for or is otherwise necessary for the welfare of the children.
In Strahan, the Full Court said:
[132] In relation to the first stage, in our view, when considering whether to exercise the power under s 79 [here s 90SM] and s 80(1)(h) [here s 90SS(1)(h)] of the Act to make an interim property order the “overarching consideration” is the interests of justice. It is not necessary to establish compelling circumstances. All that is required is that in the circumstances it is appropriate to exercise the power. In exercising the wide and unfettered discretion conferred by the power to make such an order, regard should be had to the fact that the usual order pursuant to s 79 is a once and for all order made after a final hearing.
…
[139] We also emphasise that in order to establish an appropriate case for an interim property settlement order more is required than the mere fact that upon a final hearing the applicant would receive the property being sought (or an amount in excess of the funds being sought) from the other party.
As explained by the Full Court, s 90SS(1)(h) of the Act is a wide enabling provision for interim property decisions, and there is no reason to limit it, by requiring a finding of “compelling circumstances”. All that is required before the power to make an interim property order is exercised, is an assessment of whether it would be “appropriate” to make an interim order, with the “overarching consideration” being the interests of justice. There may need to be evidence of the likely cost of litigation, but only if that is the reason or part of the reason that is propounded as to why it is appropriate that the order be made.
As was discussed in Harris and confirmed in Strahan, the second step in making an interim property order is to have regard to the usual matters in a s 90SM order (ss 90SM(3) and 90SM(4) of the Act). A detailed inquiry is not required, but there must be some assessment of s 90SM factors. Given it is an imprecise exercise, the interim property order has to be “conservative” so that the final outcome of property settlement will not be compromised by the interim property order. Either the remaining property needs to be adequate to meet the legitimate expectations of both parties at the final hearing or the order that is contemplated needs to be capable of being reversed or adjusted if it is subsequently considered necessary to do so.
Being a preliminary property order, the recipient may choose to spend that money however they wish.
In Harris, the Full Court said:
As a generality, the interests of the parties and the Court are better served by there being one final hearing of sec 79 [here s 90SM] proceedings.
In Strahan, the Full Court said in exercising the wide and unfettered discretion conferred by s 90SM and s 90SS(1)(h) of the Act:
…regard should be had to the fact that the usual order pursuant to s 79 [here s 90SM] is a once and for all order made after a final hearing.
A corollary of these statements made by the Full Court in Harris and Strahan is the proposition that as a generality, the interests of the parties and the court are better served by there being as few interim property applications under s 90SM as is possible.
Having taken into account the money the wife has received since the separation, the wife asserts that the court will make some order in her favour and that order will, if nothing else, exceeds the interim lump sum that she seeks based on s 90SF(3) considerations and in particular, s 90SF(3)(g) which requires the court to take into account a standard of living that in all the circumstances is reasonable.
It does not seem contentious that for a period of almost four years the wife fulfilled the “homemaker” role that the husband expected of her. The wife, at the husband’s request, gave up a business and employment in the United States to come and live with the husband in Australia on the basis that he would fully support her. The other relevant s 90SF(3) consideration (whether under s 90SF(3)(k) or (r)) is how the duration of the de facto relationship has affected the wife’s earning capacity. The wife seemingly is making efforts to get what employment she can in Sydney relying upon her former skills. She has, at the request of the husband however, been out of the workforce for the last four years.
The court is not necessarily bound by the parameters of the husband’s application for final property settlement orders when considering an interim property application. A judgment has to be made as to whether or not taking a conservative approach, the order that is sought by the husband is on balance likely.
I find on balance and taking a conservative approach, the wife is likely to achieve a property settlement order and one that is in excess of the lump sum that she seeks in this interim application based on the uncontroversial material in the evidence that has been successfully tendered.
Compelling circumstances are no longer required. An assessment has to be made as to whether or not the orders sought by the wife are appropriate, with the overarching consideration being the interests of justice. Senior counsel for the husband argues that it would not be appropriate to make an interim order in circumstances where the wife could use her remaining capital to pay for outstanding legal fees. That argument needs to be viewed in light of the enormous disparity in the capital in the hands of each of the parties.
The wife’s outstanding prospective unpaid legal fees are in the order of $47,800 ($72,500 - $24,700). I infer that it is likely if the matter does not settle that she will have ongoing legal costs.
I find that it is appropriate and in the interests of justice to make a lump sum property order in the wife’s favour in the sum of $50,000.
In the alternative, the wife makes an application for a lump sum order relying on the provisions of s 117(2) of the Act.
The husband suggests that the wife is precluded from making an application for a lump sum pursuant to s 117(2) of the Act on the basis of the authorities referred to in Pearson v Pearson (2016) FamCA 558.
The relevant paragraphs in Pearson are as follows:
24. In Strahan v Strahan (2011) FLC 93-466 the Full Court stated at [94]:
In relation to an order under s 117(2) of the Act the Full Court in Zschokke at 83,216 said that provided such an order was by way of security or an interim order it is “desirable in most cases in the interests of according justice to each party” that an order or direction be made to the effect that “the sums paid pursuant to the order could be taken into account, or at least had regard to, in the determination of the property proceedings between the parties”.
25. In Strahan & Strahan at [96] the statement made by Brereton J in Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 578 was cited with approval that in relation to orders made pursuant to s 117:
·an applicant should have “at least an arguable case for substantive relief which deserves to be heard”: Chester v Chester (1995) FLC 92-612 (“Chester”) at 82,107 per Moss J;
·there should be evidence of the applicant’s “likely costs of the litigation”: see Wilson and Chester;
·“it is not an essential precondition” that the applicant’s legal representatives will not continue to act unless the costs are paid or secured on an ongoing basis: Columb and Columb (unreported, Family Court of Australia, Fogarty J, 27 November 1987); see however Coomes and Coomes [1995)] FamCA 103; (1995) FLC 92-558 per Cohen J;
·an order may “make a provision for litigation expenses at a rate that appears reasonable in all the circumstances”;
·an order can be made “in respect of costs already incurred as well as of future costs”;
·“whether an order is to be in respect of costs already incurred or costs to be incurred, and whether the applicant’s lawyers will continue to act in the absence of provision for costs to be incurred, may be relevant to the discretion to make an order, and its’ quantum”;
·“any such order should be framed to protect the parties from any risk of injustice arising from the manner in which the funds are expended” and this may be done “by requiring that the funds be administered solely by the applicant’s solicitors and applied only to meet the expenses referred to in the order, with detailed records being maintained to permit review by the Court at the time of the exercise of its discretion in the substantive property proceedings or on the final determination of the issue of costs”: Breen.
Had I needed to determine the matter pursuant to s 117 of the Act, I would have made the same lump sum order on the material that I have, except that order would have contained a provision as to the manner in which the funds were to be expended.
INTERIM SPOUSAL MAINTENANCE
The wife seeks an order that the husband pay an amount by way of interim spousal maintenance in the sum of $3,000 per week, backdated to 22 June 2016 until further order.
In interim proceedings, the Full Court in Redman and Redman (1987) FLC 91-805 endorsed a statement made by Fogarty J in Williamson and Williamson (1978) FLC 90-505 as follows:
Another consequence is that on an application for interim maintenance the court conducts “not as final or exhaustive a hearing as would be the case if one were hearing the matter finally” ... The evidence need not be so extensive and the findings not so precise.
Sections 90SE and s 90SS(1)(h) of the Act provide power to make an order for the interim maintenance of the wife if the court considers it is proper to do so. Section 90SF(1) of the Act provides that the court must apply the principle that a party to a de facto relationship must maintain the other party to the de facto relationship:
(a) only to the extent that the first-mentioned party is reasonably able to do so; and
(b) only if the second-mentioned party is unable to support himself or herself adequately whether:
(i) by reason of having the care and control of a child of the de facto relationship who has not attained the age of 18 years; or
(ii) by reason of age or physical or mental incapacity for appropriate gainful employment; or
(iii) for any other adequate reason.
The wife relies upon ss 90SF(1)(b)(iii) of the Act referring to the fact she abandoned her business and her employment in the United States and came to Australia at the request of the husband on the basis that he would fully support her and that she would not work. I find she has, at least in the short term, compromised her earning capacity and the provisions of s 90SF(1)(b)(iii) of the Act are satisfied.
The proposed interim property order has been earmarked for the payment of legal expenses and is consequently fully expended.
The husband points to the fact that following separation, the wife has had the benefit of the following funds:
119.1.$11,000 removed from a debit facility to which the husband solely contributed;
119.2.$90,000 being the sale proceeds of the prestige car motor vehicle; and
119.3.Having available to her the ability to travel at any time in the next 12 months on a ticket to the value of $5,200.
The husband also relies upon the fact that the wife still has $80,000 in a lump sum available to her. I accept the submission by counsel for the wife that the wife is not necessarily required to expend her capital prior to being entitled to an interim periodic spousal maintenance order.
The wife’s current guaranteed income for one night’s work is $240 gross per week but there are prospects that income may increase with additional hours. The husband criticises the wife for not leading any evidence as to any other attempts to obtain employment. Adopting a broad-brush approach, I find that the wife’s evidence about her attempts to re-establish her income earning capacity in Sydney is satisfactory for the purposes of this hearing.
The husband also disputes the wife’s assertion as to her financial needs.
The wife claims that she has the following weekly expenses:
Rent $1,000
Utilities and cable TV 150
Clothes and shoes 300
Entertainment 300
Drycleaning 100
Medical, dental, optical and private health insurance 175
Manicure 75
Gym membership 50
Hairdressing and toiletries 125
Spray tan and false eyelashes 180
Food 300
Household supplies 50
Prescription drugs 50
Taxi fares/other fares 200
Telephone 50
Books and magazines 25
The dog 50
$3,420
The wife has not included anything for holidays or gifts.
Some of the wife’s expenses may at first glance seem high but the amount that the wife seeks by way of interim spousal maintenance is to be considered having regard to the standard of living that in all the circumstances is reasonable given the lifestyle which the parties led during the de facto relationship.
The husband’s current weekly expenses give some indication as to the parties’ lifestyle during the relationship.
The husband, in his financial statement, indicates that his personal weekly expenses (excluding income tax, mortgage payments, rates and insurance) are in the sum of $8,887 and include $500 per week for food; $2,000 per week for entertainment and hobbies and $2,000 per week for holidays. The husband also maintains a boat at a rate of $1,800 per week.
I find that the wife’s claim for rental assistance is reasonable, particularly in circumstances where the husband has excluded her from the matrimonial home and indicated that he intended to talk to his friend about the wife continuing to live at his friend’s residence. In any event, it is reasonable for the wife to obtain her own independent accommodation and notwithstanding the husband’s evidence about the availability to the wife of cheaper rental properties, I take into account he continues to reside in the former matrimonial home which is worth $2.4 million.
I take into account that the wife’s new employer, as a condition of her contract, requires her to maintain a five star professional presentation standard and in the event that the wife’s employment progresses in the way she hopes, she has been told that she must keep her hair, makeup and hands and nails immaculate for the close-up cameras.
Overall expenses are reasonable when compared with those expended by the husband. The wife claims $300 on food where the husband claims $500. The wife claims $300 on entertainment where the husband claims $2,000 (and an additional $2,000 for holidays). Overall I find that the wife’s reasonable interim needs to be in the sum of $3,420 per week. That sum needs to be reduced by any monies the wife receives on a periodic basis as a result of personal exertions and the order will be structured in that way.
The husband said he was able to pay any amount which the court finds the wife requires to adequately support herself. As mentioned, his income is over $16,000 each week.
Taking into account the extent of the lifestyle led by the parties during their relationship and the husband’s concession that he has an ability to fund whatever order the court says is reasonable and having regard to the impact on the wife’s earning capacity of the circumstances and duration of the relationship, I find that the order sought by the wife for spousal maintenance in the sum of $3,000 per week is a proper one to make on an interim basis pending further order provided that that amount will be reduced by any net amount that the wife receives in excess of her current gross salary of $240 per week.
THE WIFE’S REQUEST FOR THE GERMAN MOTOR VEHICLE
The husband has eight motor vehicles, including a number of prestige and high performance cars.
It seems from the evidence that the wife drove the husband’s German motor vehicle more than she drove her prestige car. The husband asserts that the German motor vehicle is not properly amenable to an order declaring that the wife be solely entitled to that motor vehicle. I do not understand that submission as s 90SM and s 90SS(1)(h) of the Act would provide power to make such an order. The question is whether or not such an order is an appropriate order to make in circumstances where the wife has had available to her the prestige car and has chosen to sell it and has claimed and obtained in her application for spousal maintenance, an amount to cover personal transportation in the sum of $200 per week. It is not appropriate, just and equitable nor proper that I make an order in the terms sought by the wife in respect of the German motor vehicle.
INJUNCTIONS
In relation to the injunctive relief sought by the wife, there is no evidence adduced that would justify any such order being made (see Waugh v Waugh (2000) FLC 93-052 and Mullen and De Bry (2006) FLC 93-293). Counsel for the wife did not make any submissions in support of the wife’s application for injunctive relief and that part of the application will be dismissed.
I certify that the preceding one hundred and thirty-five (135) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts delivered on 28 September 2016
Associate:
Date: 28.9.2016
14
27