Craft and Craft

[2016] FCCA 422

FEDERAL CIRCUIT COURT OF AUSTRALIA

CRAFT & CRAFT [2016] FCCA 422

Catchwords:
FAMILY LAW – Property – undefended proceedings – matters to be considered – just and equitable – small property pool.

Legislation:

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

Federal Circuit Court Rules 2001, r:13.03A(2); 13.03B(2)(d); 13.1A

Taylor v Taylor (1979) 143 CLR 1
Lee Steere v Lee Steere (1998) FLC 91-626
Ferraro v Ferraro (1993) FLC 92-335
Clauson v Clauson (1995) FLC 92-595
Hickey v Hickey & Attorney General of the Commonwealth of Australia (Intervenor) (2003) FLC 93-143
Wardman & Hudson (1978) FLC 90-466
Biltoft & Biltoft (1995) FLC 92-614
Russell v Russell (1999) FamCA 187
Waters & Jurek (1995) FLC 92-635

Applicant: MS CRAFT

Respondent: MR CRAFT

File Number: ADC 3493 of 2015

Judgment of: Judge Brown

Hearing date: 29 February 2016

Date of Last Submission: 29 February 2016

Delivered at: Adelaide

Delivered on: 4 March 2016

REPRESENTATION

Counsel for the Applicant: Mr Swan

Solicitors for the Applicant: Swan Lawyers

Counsel for the Respondent: No appearance

ORDERS

1. This application proceed undefended.

2. The remaining proceeds of sale ("the proceeds of sale") of the parties' jointly owned property at Property T in the State of South Australia being the whole of the land comprised in Certificate of Title Register Book Volume (omitted) Folio (omitted) ("the Property T property") be applied as follows:

   (a)To the parties outstanding electricity liability to Energy Australia;

   (b)To the parties outstanding gas liability to Energy Australia;

   (c)The balance of proceeds to the mother by her solicitors Swan Family Lawyers Trust Account.

3. The wife be solely entitled to and to the exclusion of the husband the following:

   (a)The wife's superannuation policies and entitlements with (omitted) Superannuation;

   (b)All items of personalty, chattels, motor vehicles currently in the possession of or under the control of the wife as at the date of these orders; and

   (c)The balances of any bank accounts or like investments in the name of the wife or to the benefit of the wife as at the date of these orders.

4. The husband be solely entitled to and to the exclusion of the wife the following:

   (a)All items of personalty and chattels in the possession of or under the control of the husband as at the date of these orders.

5. The wife be at liberty to dispose of the Holden (omitted) as she considers appropriate.

6. All applications are otherwise dismissed.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT ADELAIDE

ADC 3493 of 2015

MS CRAFT

Applicant

And

MR CRAFT

Respondent

REASONS FOR JUDGMENT

Introduction

1. Ms Craft “the wife” and Mr Craft “the husband” were married on (omitted) 1996.  They separated on 15 January 2015. 

2. The marriage produced five children – V born (omitted) 2004; W born (omitted) 2002; X born (omitted) 2000; Y born (omitted) 1998 and Z born (omitted) 1997.

3. Z and Y now live independently.  W, V and X all live with the wife who is the applicant in these proceedings. 

4. The most significant item of property, which is subject to these proceedings, is the proceeds of sale of the parties’ former family home situated at Property T “the former family home”. 

5. The wife commenced these proceedings on 18 September 2015.  At that time, she was being pressured by the mortgagee in respect of the former family home.  The mortgage was in default and Ms Craft sought orders that the property be placed on the market as soon as practicable. 

6. Prior to the first mention of the case in court, the parties agreed that the former family home should be sold.  In early November of 2015 the parties accepted an offer to purchase the property in the sum of $315,000.00.  After payment of all selling costs and the discharge of the mortgage, a balance of $35,256.15 remained. 

7. Apart from this sum, the parties each own motor vehicles of modest value and have household contents which similarly have modest value.  The wife has superannuation relating to an earlier career in (employment omitted) of around $5,000.00.  The husband, who has been employed as a (occupation omitted), does not apparently have any superannuation.  At least no such superannuation has been disclosed to either the court or the wife.

8. At the first mention of the wife’s application, the husband appeared by telephone.  He had not filed any answering material.  At this stage, it was readily apparent that the pool of assets was small indeed and as a consequence, it was not appropriate that the parties accrue significant legal expenses in respect of resolving the matter.

9. In this context, the parties were referred to a conciliation conference with a registrar of the court on 14 December 2015.  The husband failed to attend this conference and to comply with an order made on 2 November 2015, that he file a response and affidavit in support within 14 days of that date.

10. The husband has failed to comply with a further order made on 18 December 2015, extending the time for him to file his answering material to 15 January 2016. 

11. On 18 December 2015, it was ordered that if the husband failed to file his answering material, as ordered, the wife would have leave to proceed on an undefended basis.  The proceedings were then adjourned until 29 February 2016. 

12. Mr Craft did not appear on 29 February 2016.  In addition, he has failed to file a response; a statement of his financial affairs; or any affidavit material whatsoever. 

13. As a consequence of Mr Craft’s failure to take part in the proceedings, I am satisfied that it is appropriate that Ms Craft’s application be dealt with on an undefended basis. 

The nature of an undefended hearing

1. It is a significant thing for proceedings to be determined in the absence of one of the parties.  The court has an obligation to ensure that the parties to proceedings before it have an opportunity to participate in those proceedings. 

2. Before a person can be adversely affected by judicial order, he or she must be afforded an adequate opportunity to be heard.[1]  I am satisfied that Mr Craft has been given an adequate opportunity to appear in these proceedings and put his position before the court. 

   [1]  See Taylor v Taylor (1979) 143 CLR 1

3. Ms Craft is entitled to have her application for settlement of matrimonial matters determined within a reasonable period of time pursuant to the applicable principles of law. 

4. As such, she needs neither Mr Craft’s formal imprimatur nor his cooperation to have her application determined.  Rather, there is an obligation on Mr Craft’s part if he wishes to be involved in the proceedings, for him to attend at court as required and pursue any application put by him or on his behalf with due diligence.

5. The Federal Circuit Court is a court of private law.  It determines disputes between parties according to law.  In this case, according to the provisions of Part VIII of the Family Law Act 1975 which relate to the division of property following the breakdown of a marital relationship. 

6. The court cannot compel a respondent to engage with litigation.  It is however obliged to give a respondent the opportunity to put evidence before the court and if he or she wishes to do so, contest any evidence relied upon by the applicant.

7. However, a respondent, whether by intransigence, disinterest or manipulation cannot succeed in denying an applicant a just resolution, according to law, to his or her application by choosing not to take part in proceedings because they do not proceed in the manner of his or her preference.

8. Order 13.1A of the Federal Circuit Court Rules deals with the court’s authority to enter judgment against a respondent if that respondent defaults in complying with a court order or fails to prosecute any proceedings with due diligence. 

9. Pursuant to Rule 13.03A(2) a respondent is in default if, amongst other things, he or she has failed to:

   ·Comply with an order of the court in the proceedings;

   ·Produce a document as required; or

   ·Defend the proceedings with due diligence.

10. I am satisfied that Mr Craft has failed to comply with relevant orders of the court.  As such, he has not defended the proceedings with due diligence.  In these circumstances, pursuant to the provisions of Rule 13.03B(2)(d), Ms Craft is entitled to judgement in default.

11. In addition, I am satisfied that Mr Craft has been given adequate notice of these proceedings.  Particularly that he was required to file answering material and if he did not do so the proceedings would be heard on an undefended basis. 

The legal principles applicable

1. The applicant is not entitled as of right to the orders which she seeks.  Rather, the onus remains on her to establish to the court that the orders which she seeks are just and equitable according to law. 

2. In this context, the wife must lead sufficient evidence to establish to the court that the orders which she seeks are just and equitable ones.  Otherwise, the court must impose the result in the case which it considers fair according to the law and the evidence available to it.

3. The wife seeks the following orders:

   a)That the application proceed on an undefended basis and that the balance of the proceeds from the sale of the former matrimonial home at Property T ("the home") held by (omitted) Conveyancing be paid to the Wife.

   b)That the Holden (omitted) be transferred into the Wife's name.

4. In support of her application, the wife relies on the following documents:

   i)A statement of her financial circumstances filed 18 September 2015;

   ii)Two affidavits of herself filed on 18 September 2015 and 17 December 2015 respectively. 

5. Essentially, it is the wife’s case that given the modest extent of the asset pool and her significant financial needs, particularly arising because of her responsibility to parent V, W and X, it is just and equitable that she receive the vast majority of the parties’ pool of matrimonial assets and retain her modest superannuation. 

6. I was informed by Mr Swan, counsel for the wife from the bar table that the (omitted) motor vehicle which does not have a large value, is currently at the property of a mutual friend of the parties where it is causing some level of inconvenience.  In these circumstances, the wife wishes to be able to dispose of the vehicle.

7. The process to be followed for the division of the parties’ property is well established by law.[2] The relevant legal principles are primarily contained in sections 79 and 75(2) of the Family Law Act 1975. I am required to follow a number of specific steps.

   [2]  See Lee Steere v Lee Steere (1998) FLC 91-626; Ferraro v Ferraro (1993) FLC 92-335;

8. Firstly, I must ascertain what are the parties’ assets and liabilities as at the date of trial.[3] This is because there is only one exercise by the court of the power conferred on it by section 79 to make a matrimonial property order.

   [3]  See Wardman & Hudson (1978) FLC 90-466; and Biltoft & Biltoft (1995) FLC 92-614

9. The second step involves the court ascertaining the contributions which each party has made towards the assets identified following the first step.  Contributions fall into two broad categories. 

10. The first kind is contributions to the property: financial contributions and non-financial contributions, made directly or indirectly, by or on behalf of a party to the marriage to the acquisition, conservation or improvement of any of the property.  

11. The second kind is contributions to the welfare of the family: in the words of the section, “the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage, including any contribution made in the capacity of home maker or parent.”[4] 

    [4] See Family Law Act s79(4)(c)

12. It is clear from the authorities that this second kind of contribution must be given appropriate weight and is not to be treated as a token matter or as a contribution which is inherently less valuable or important than a financial contribution to property.

13. The third step involves the assessment of the parties’ prospective needs, by reference to the factors set out in section 75(2) of the Family Law Act 1975. Pursuant to section 75(2)(o), the court is entitled to take into account “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account”. 

14. Finally in determining what order the court should make under section 79, the court must be satisfied that in all the circumstances it is just and equitable to make the relevant orders. Overall, it is the justice and equity of the actual orders that the court must consider.[5] 

    [5]  See Russell v Russell (1999) FamCA 187

Background

1. The wife was born on (omitted) 1971.  The husband was born on (omitted) 1974.  The parties met in Sydney in early 1996. 

2. At the time the wife was working for (employer omitted) and the husband was working as a (occupation omitted).  The wife ceased employment shortly prior to Z’s birth in (omitted) of 1997.  She has not been in paid employment since.

3. The former family home was purchased in 2000 for the sum of $96,000.00.  The purchase was financed by a deposit of $10,000.00, generated by joint savings and a mortgage loan for the remainder. 

4. Although the property has increased significantly in value since its purchase, it seems to be the case that the parties have not reduced their overall level of mortgage indebtedness.  Rather, from time to time, the mortgage has been refinanced. 

5. It is the wife’s case that she was the children’s primary provider of care and main homemaker during the period of the marriage.  The husband was employed as a (occupation omitted) at times on a part-time and at others on a full-time basis. 

6. It is the wife’s case that the parties separated for extended periods of time prior to their final separation which occurred in January of 2015.  During these periods of separation she remained responsible for the care of the parties’ children but did not return to the paid workforce.  In these circumstances, it is her evidence which I accept, that she struggled to keep her head above water financially. 

7. The parties reunited in April 2010, after a separation of approximately three years.  During this period, the husband had been self-employed as a (occupation omitted) but does not seem to have attended appropriately to his taxation and financial affairs.  When the parties resumed their relationship due to uncertainty about the husband’s level of income, the wife’s Centrelink payments were suspended.

8. The wife summarises the parties financial position, between 2010 and early 2015 as follows:

   “The father continued to work on an on again off again casual basis.  We struggled to pay mortgage payments and bills and groceries and were required to re-mortgage the home on multiple occasions.  On many occasions I had to seek extensions for late payments of bills.

   In January 2015 I separated from the father and he moved out of the home.  I remained in the home with the children.”[6]

   [6]  See affidavit filed 17 December 2015 at paragraph 12-13

9. Since the sale of the former family home, the wife has moved into rental accommodation with the three younger children.  Her rent is $500.00 per fortnight.  Currently, Ms Craft receives a Newstart allowance in the sum of $531.00 per fortnight and a family tax benefit payment of $815.22 per fortnight. 

10. Following separation, Mr Craft was assessed to pay child support to Ms Craft in an amount of $1,029.67 per month.  This was based on an adjusted taxable income for Mr Craft of $65,722.00.  It is the wife’s evidence, which I accept, that the husband has not paid any child support pursuant to this assessment. 

11. It is also Ms Craft’s evidence that since separation the husband has not spent any time with the children whatsoever.  In these circumstances, she has been responsible for providing all their financial needs which she has done on a very limited income. 

12. At the date of separation, Mr Craft was employed as a (occupation omitted).  However, he has recently injured his back and has been hospitalised on a number of occasions.  I have not been provided with any evidence regarding his current condition and what is the prognosis as far as his return to the workforce is concerned.

13. Ms Craft hopes to return to the paid workforce soon.  However, she has no specific skills to speak of and has not been employed for almost twenty years.  She is currently in good health. 

14. Given the non-involvement of Mr Craft in these pleadings and his failure to file any answering material, I have no evidence regarding his plans for the future.  It is Ms Craft’s position that the husband is not currently well disposed towards her or the children.  Since the sale of the former family home he has been able to negotiate a lease of the property with its new owner. 

Step One – the pool of assets

1. I accept the wife’s evidence that the parties’ pool of assets is as follows:

Proceeds of sale of Property T	Joint	$35,256.00
Toyota (omitted)	Wife	$500.00
(omitted) Bank Account ((omitted))	Wife	$3.00
Household contents	Wife	$1,500.00
Household contents	Husband	$1,500.00
Holden (omitted)	Husband	$2,000.00
Holden Red Car	Husband	$500.00
Nissan (omitted)	Husband	$500.00
Subtotal	$41,759.00
Liabilities
Energy Australia electricity account	Joint	$2,230.00
Energy Australia gas account	Joint	$153.00
Subtotal	$2,383.00
Non-superannuation pool subtotal	$39,376.00
Superannuation
(omitted) Superannuation	Wife	E$5,000.00
Superannuation pool subtotal	E$5,000.00
TOTAL	E$44,376.00

1. Two things need to be noted from this table.  Firstly, in real terms, the pool of property is extremely limited.  Secondly, it would appear more likely than not that the husband has at least some superannuation entitlements as he has been a PAYG tax payer in the past. 

Step two – the assessment of contributions

1. It is the wife’s case that during the parties' marriage of almost twenty years in duration, their respective contributions should be assessed, to all intents and purposes, as being equal.  I agree with this submission. 

Step three – the assessment of section 75(2) factors

a)In my view, on the evidence available to me, the various factors delineated in section 75(2) favour the wife significantly more than the husband. The wife has not been employed since March of 1997. She has no skills or qualifications to enable her easy return to the paid workforce. As such, it is inevitable that once she is employed, it will be in an unskilled position which is likely to be modestly remunerated.

1. In addition, the wife will remain responsible for parenting the parties’ three youngest children, currently aged 16, 13 and 11.  Her responsibilities in this regard are likely to impact upon the number of hours which she can work and limit her employment prospects.

2. Although there is uncertainty about the husband’s current level of fitness and state of health, the fact remains that he has a trade available to him as a (occupation omitted).  He has been employed in this capacity for many years until recently.  In this respect, in my view, he is significantly better placed than the wife.

3. In my view, in the context of an extremely limited asset pool, it is not particularly useful to speak in percentage terms.  Rather, it is more helpful for the court to consider what are the implications for the parties concerned in practical dollar and cent terms of any orders which it makes. 

4. In this case, following the assessment of contributions, a sum of $19,688.00 remains to be allocated by virtue of section 75(2) factors. It is not a large sum of money, particularly when regard is had to the wife’s anticipated legal costs which amount to $6,498.00. The husband, due to his non-involvement in the proceedings, has apparently incurred no legal costs.

1. I accept the wife’s evidence that she felt compelled to institute these proceedings because the parties’ mortgagee was threatening action and the husband himself was not capable of bringing matters to a satisfactory resolution.  Ms Craft cannot be regarded as a sophisticated person in terms of either financial or legal matters.  In these circumstances, it is not unreasonable that she should have commenced these proceedings and incurred legal costs in respect of them.

2. In this context, although Mr Craft has indicated his dissatisfaction with the sale price ultimately negotiated, in my view, the course adopted by the wife of a managed sale of the former family home represented a much better outcome for the parties than a forced mortgagee’s sale.  The only source of funds available to Ms Craft to pay her legal fees is her share of the proceeds of sale. 

3. Once these fees are paid, Ms Craft will be left with a significantly reduced sum.  From this sum, she will have to regroup financially, whilst having many calls on her resources and extremely limited prospects of paid employment. 

4. For reasons of this sort, the Full Court has commented that the centre of gravity, in the determination of many property cases, has shifted towards the assessment of section 75(2) factors and, as such, courts such as this one are directed to give the provisions concerned “real rather than token weight.”[7]

   [7]  See Waters & Jurek (1995) FLC 92-635 at 82,376

5. In a case such as the present one, in order to make any distribution of assets meaningful, so that proper weight can be given to the section 75(2) factors favouring the wife, any proper assessment of these factors, in percentage terms, must be in the range of 20% or more.

6. In terms of the non-superannuation assets, this equates to the wife receiving a further sum of around $8,000.00, leaving only a token sum for the husband.  In this context, I am concerned that, due to his non-involvement in the proceedings, the court has only an extremely limited picture of his financial position, particularly in regards to superannuation and earning capacity.

7. The wife’s superannuation holdings are modest and by necessary implication were accrued largely before the parties began to cohabit.  In all these circumstances, in my view, it is appropriate that the wife retain her superannuation entitlement given their nominal worth and the uncertainty surrounding the husband’s position.

8. Although it is not a usual course, in my view, there are some cases where the pool of assets is limited but the needs of one of the parties concerned are so significant that considerations of justice and equity dictate that that party should retain all or the vast majority of the relevant liquid assets.  In my view, this is one such case. 

9. After payment of her legal fees, this will leave Ms Craft with a sum of around $33,000.00.  I appreciate the husband will receive nothing.  However the wife has extremely limited employment opportunities; exclusive responsibility for three children; and is unlikely to receive any significant child support.  In these circumstances such a sum will not take her very far.  In my view, the confined financial circumstances of the parties render this outcome a just and equitable one.

10. For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.

I certify that the preceding seventy (70) paragraphs are a true copy of the reasons for judgment of Judge Brown

Date:         4 March 2016

and Clauson v Clauson (1995) FLC 92-595; Hickey v Hickey & Attorney General of the Commonwealth of Australia (Intervenor) 2003 FLC 93-143