Craig and Craig
[2011] FMCAfam 798
•23 February 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CRAIG & CRAIG | [2011] FMCAfam 798 |
| FAMILY LAW – Competing applications for property adjustment. |
| Family Law Act 1975, ss.75(2), 79, 81, 114AA, 117 |
| Calvary & Green (1984) 155 CLR 242 Pierce & Pierce [1998] FamCA 74 Kowaliw & Kowaliw (1981) FLC 91-092 Kennon & Kennon (1997) FLC 92-757 Weir & Weir [1993] FLC 92-338 Black & Kellner [1992] FLC 92-287 M & M [2006] FMCAfam 424 D & D [2003] FamCA 473 AJO v GRO [2005] FamCA 707 Burgoyne & Burgoyne (1978) FLC 90-467 Milankov & Milankov [2002] FamCA 195 Townsend & Townsend (1995) FLC 92-569 Farnell & Farnell (1996) FLC 92-681, 20 FamLR 513 C & C (1998) FamCA 143 (unreported) Re NHC & RCH [2004] FamCA 633 DJM & JLM (1998) FLC 92-816 Manna & Manna (1996 unreported) Rosati & Rosati [1998] FamCA 38 Mallet & Mallet (1984) 156 CLR 605 Kucera & Kucera [2009] FMCAfam 1032 Whelan & Whelan [2010] FamCA 530 Spence & Spence [2008] FamCA 263 |
| Applicant: | MS CRAIG |
| Respondent: | MR CRAIG |
| File Number: | DUC 471 of 2008 |
| Judgment of: | Harman FM |
| Hearing dates: | 21 & 22 February 2011 |
| Date of Last Submission: | 22 February 2011 |
| Delivered at: | Parramatta |
| Delivered on: | 23 February 2011 |
REPRESENTATION
| Counsel for the Applicant: | Ms McDonald |
| Solicitors for the Applicant: | Flynn Solicitors |
| Counsel for the Respondent: | Mr Kenny |
| Solicitors for the Respondent: | Kim Monnox & Associates |
ORDERS
That the husband shall forthwith and within 24 hours do all things, sign all documents and give all consents and authorities necessary to authorise, direct and instruct his solicitors, Kim Monnox & Associates, to pay to the wife the funds presently held by them in trust of $32,570.
The husband shall, no later than 29 April 2011, pay to the wife the sum of $150,000. Simultaneous with that payment, the wife will do everything necessary to transfer her interest in the property to Mr Craig and Mr Craig will discharge the mortgage and indemnify the wife with respect to any expenses or liabilities of the property.
Until the date of transfer of the property, or until 29 April 2011, whichever is the earlier, Mr Craig shall:
(a)Be solely responsible for making all mortgage payments with respect to the property, being payments of principal and interest.
(b)Make all payments of council and water rates and any other levies, charges and utility fees, as and when they fall due.
(c)Maintain the property in a neat, fit and proper state of repair, including attending to all and any necessary repairs and maintenance.
(d)Be and is hereby restrained from removing any fixtures or fittings from the property or any building erected thereon or causing any damage to the property or allowing any fault or defect to go unrepaired.
In the event that payment required by the husband is not made and results in any liability arising or increasing, or in the event that damage has occurred to the property during his occupation, whether by act, omission or removal of fixtures and fittings, the value of same shall be a charge upon all property otherwise retained by him.
Time shall be of the essence with respect to the performance of obligations pursuant to orders (1), (2) and (3) and if the husband has not or is not in a position to fully discharge those obligations by
29 April, which I think is about 10 weeks away, then the husband shall no longer be entitled to offer or tender payment to the wife and instead:
(a)The husband will forthwith and no later than 4 pm on 29 April vacate the property.
(b)The wife shall thereafter be immediately entitled to enter upon and take possession of the property.
(c)The wife shall, pursuant to s.114 of the Family Law Act 1975 (the Act) have sole and exclusive use and occupation of that property as against the husband.
(d)The husband will be restrained from returning to or entering upon the property.
(e)The wife will be entitled to retain or dispose of, by sale or otherwise, items of plant, equipment, machinery, furniture, personalty, chattels, livestock, horses or other items as remain on the property.
(f)The wife shall be appointed trustee for sale of the property on behalf of both parties and shall have sole carriage of the sale.
(g)The wife shall arrange for the sale of the property, as trustee for sale, and, on completion, distribute the proceeds in payment of sales costs, discharge the mortgage and retain the balance.
(h)Pending sale of the property, the wife shall be entitle to work or use it and shall be entitled to retain any profit, rental or agistment fees.
The husband shall, within 14 days and at a time and date nominated by wife, cause, allow and permit the wife, with such assistance as she may require or desire, to access and enter upon the property and any structures and for the purpose of locating and removing all of her items of personalty, including items the property of or formerly the property of the wife’s father and the husband shall, for the period nominated by the wife and for one hour before and after, remain away from the property, although entitled to have one or other of his sister or his partner, Ms T, present.
Whilst the wife is attending at or near the property then, pursuant to s.114 of the Act, the husband shall be and is hereby restrained from being at, upon or within a kilometre of the property, approaching the wife, speaking with or contacting the wife by any means whatsoever or assaulting, molesting, harassing or otherwise interfering with her.
The above order and injunction is an order for personal safety and protection of the wife and, as such, any police officer, who believes, on reasonable grounds, that the injunction has been breach, is authorised and empowered, pursuant to s.114AA of the Act to arrest the husband without warrant and to retain him in custody until brought before the court.
The superannuation splitting order, providing a base amount of $16,387, as against the [F] Super Fund, which represents equalising super, with provision for procedural fairness to be given by the husband’s solicitors within 28 days, relisting if there is any difficulty. Amendment by the slip rule if the trustee requires changes.
Otherwise, declarations that each party retain all property, subject to the above orders, that is presently in their respective possession. Each indemnify the other with respect to any debt in their sole name.
In the event that either party shall fail, neglect or refuse to sign any deed, document or instrument required by or to give effect to these orders then the Registrar of the Federal Magistrates Court Parramatta shall be and is hereby authorised, directed and empowered to sign such deed, document or instrument in the name of the defaulting party (same to be proved by production of an affidavit by the party requesting signature) and to thereafter do all things and acts necessary to give validity and operation to same.
Upon the expiration of the Appeal period and in the event that no appeal is lodged that all exhibits then be returned to the party who tendered same and that all material produced on subpoena be returned to the person or organisation who produced same.
IT IS NOTED that publication of this judgment under the pseudonym Craig & Craig is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PARRAMATTA |
DUC 471 of 2008
| MS CRAIG |
Applicant
And
| MR CRAIG |
Respondent
REASONS FOR JUDGMENT
These are proceedings involving competing applications for property adjustment between parties Ms C, previously known as Craig, and
Mr Craig. Ms C is the applicant in the proceedings and Mr Craig is the respondent. Each seeks orders with respect to property adjustment, which are markedly different.
History of the proceedings
These proceedings were commenced by Ms C, by application filed
23 December 2008, being a little over two years ago.
A response was filed by Mr Craig on 8 May 2009.
A conciliation conference was convened on 29 September 2009 and subsequently adjourned to 16 November 2009. Notwithstanding the good services of the Registrar, the parties were unable to reach agreement.
The proceedings were subsequently listed for hearing on 13 and
14 May 2010, but did not proceed on those days. The issue of a case guardian was raised at that time and a number of injunctions were entered into, largely as a consequence of Mr Craig having received, some short time prior to those dates and in April 2010, a sum of money by way of termination payment from [P], by whom he had until that time been employed. Those injunctions were somewhat extensive. Both parties appeared on that occasion and were represented by counsel and Dunkley FM made orders as follows:
Without written consent of the wife’s legal representatives and subject to the following, the husband ….. is hereby restrained from selling, disposing of, transferring, mortgaging, encumbering or alienating any asset in his possession, including, but not limited to any account with a financial institution, subject to the following orders: Plant or equipment, stock, including any horse or cattle, motor vehicle or other chattel.
The order otherwise restrained Mr Craig from dealing in any fashion with funds then held by him in a [omitted] credit union account that would have the effect of reducing its balance below a sum of $74,000. The orders went on to provide that the sum of $74,000 was to be transferred from the credit union account, operated by Mr Craig, into a controlled monies or trust account, to be held by his solicitors. The order did not specify as to the terms of the trust created by that transfer.
That order was certainly complied with.
The order was subsequently varied from its somewhat strict terms on 15 September 2009 and so as to allow and provide for some transactions by Mr Craig and, importantly, those variations allowed for Mr Craig to then deal with items of stock and horses maintained upon a farming property owned by these parties, save livestock and horses which were owned in the joint names of the husband and wife.
On 4 February, some few weeks prior to this hearing, an application in a case was filed by Mr Craig, who at that point in time was behind in a filing schedule that had been fixed by Dunkley FM, and seeking orders for the disclosure by the wife of certain matters relating to the affairs of her father, Mr C, who is still alive, although 88 years of age. That application was dismissed and a number of notations were made as well as other orders.
Subsequently a subpoena to produce documents and to give evidence was served on Mr C and he attended on the first day of trial, some documents having been produced, it would appear, after the issue of the subpoena, but prior to the commencement of the hearing and some very brief cross-examination of Mr C occurred. Matters with respect to Mr C were not otherwise taken any further during the course of the hearing.
The parties’ proposals
As indicated, each of the parties has filed an application or response and they each seek substantially different relief to the other.
The wife, in her case, both by the orders proposed in her application and by variation made, firstly, in a case outline document, filed by her counsel at the commencement of the trial, and subsequently in oral submissions at the conclusion of the case, has sought an adjustment of the total pool, such as it can be ascertained and determined, of 60 to 70 per cent in her favour.
The husband, for his part, has proposed orders wherein there would be a greater than equal split of superannuation to the wife together with a cash payment to her representing the funds that remain within the trust account of his solicitor, being presently $32,570. Each party would otherwise retain everything in their respective possession.
Whichever of those proposals represents as a percentage division of assets between the parties is difficult to ascertain for reasons that will become apparent.
The major issue in this case, although there are many and there is precious little factual agreement between the parties, is what assets and liabilities should be taken into account and at what amount in composing a pool of property for division.
The parties’ evidence
I have read all of the material that was identified by the respective parties in the case outlines filed by their counsel. I have also had the benefit of single expert reports in relation to the value of the matrimonial home, which is a farm property outside of [K] and in a hamlet or village, [D].
Each of the parties and a number of other witnesses in the case were required for cross-examination. Both Ms C and Mr Craig were cross-examined at some length, although Mr Craig significantly longer.
A treating psychiatrist of Mr Craig was also required for cross-examination.
The single expert, Mr M, was required for cross-examination and evidence was also given and very limited cross-examination occurred of Mr Craig’s present partner, who had come onto the scene fairly late in the piece and in late 2010.
The chronology of events between these parties is, by and large and until the separation of the parties, unremarkable.
The wife was born [in] 1952 and is, accordingly, 58, nearly 59 years of age. Mr Craig was born [in] 1961 and is, accordingly, soon to turn
50 years of age.
The wife has a child of a previous relationship, [X], who is now
28 years of age. Similarly, Mr Craig has a child of previous relationship, [Y], who is now 27 years of age. Mr Craig also has a second child of a previous relationship, [Z], who is 22. Nothing of great moment turns with respect to any of those children, save issues raised by Mr Craig in his case regarding [X] having lived, for a very significant period of the parties’ relationship, in the home and what this might mean with respect to contribution.
The parties commenced to live together in June 1988. There is some controversy between them as to what they each owned at that time. It is certainly common ground that Ms C, as a consequence of property adjustment orders between herself and her former partner purchased her former husband’s interest in a property at [M]. She also suggests that show owned a utility, some small cash, four horses and some horse equipment.
Mr Craig, for his part, asserts that he was, as a consequence of property settlement following his first relationship, entitled to receive the sum of $28,000, had very modest liabilities, owned a vehicle or possibly more and had some small savings.
Clearly at the time that Ms C purchased her former husband’s interest in the property at [M] there was some degree of contribution by
Mr Craig. There is, like so many aspects of the evidence in this case, controversy as to what that contribution was, but clearly there was a contribution which might be referred to as a Calvary v Green (1984) 155 CLR 242 contribution, through assistance by a joint borrowing application, as well as payment of some legal fees, there being a dispute as to whether that was $7,000 or $1,000.
There is also an issue as to whether the fund that Mr Craig was to receive was further diminished by payment of costs or whether the amount he received was net of costs.
In any event I am satisfied that not a great deal turns upon that, as these parties have endured a relationship of 19 years together and, accordingly, case law, such as Pierce & Pierce [1998] FamCA 74, indicates clearly that an initial contribution or, indeed, any extraordinary contribution during a relationship is exactly that, a contribution, to be weighed and balanced against all others. It would mean that, with the passage of time and without intending to offend previous decisions of the Full Court urging against seeing contribution has “eroded”, certainly its importance has diminished over time, in light of the myriad of transactions that have occurred by and between these parties.
During the relationship the parties conducted a number of businesses together. There was initially a [omitted] business. There was a business that was referred to in various parts of the evidence as a [omitted] business, but which would appear to have involved [omitted], as well as other enterprises.
There is no real suggestion that any of the enterprises was disastrous, but to the extent that several of the enterprises discontinued, whether for financial reasons or otherwise, there is no reason, as described by Baker J in Kowaliw & Kowaliw (1981) FLC 91-092, to seek to apportion any blame or loss to any particular party.
During 1988 Mr Craig attended [omitted] and, accordingly, trained to become and subsequently did become a [occupation omitted]. That would appear to have been the beginning of a number of unfortunate events, which have led to the parties being as they presently are and certainly their relationship disintegrated and significant animosity between them. There are perhaps other reasons for that as well, but clearly Mr Craig’s engagement in [P] did not end well.
In or about 2001 Mr Craig was involved in some actions with [occupation omitted]. There is some dispute, which is not particularly relevant or important for the purpose of these proceedings, as to what that involved and, in particular, whether it was a complaint against
Mr Craig or whether he was a witness in relation to the investigation of a complaint with respect to another [employee/s].
Certainly what has followed is that by 2002 there were some real difficulties for Mr Craig in his [occupation] with [P] and in June 2002 he took stress leave and was off for a period of about six months. During this time Ms C obtained employment. The parties had also, prior to this, sold the property they had previously owned and moved to rental accommodation.
In June 2004 the parties purchased their present property at Property D, just outside of [K]. The property would appear to have been purchased, and there is little controversy about this, for the sum of about $435,000. A mortgage was borrowed for more than the value of the property to cover the purchase price as well as to cover stamp duty, legal fees and some other expenses.
The sale of the property which the parties then owned and which had been occupied by them from time to time was then completed and funds used from that sale to reduce the mortgage that had been obtained as bridging finance.
Whilst the husband was experiencing difficulties in relation to his employment with [P], Ms C entered into employment outside of the home, as she had done at various times during the relationship.
The parties continued to lurch along until 23 November 2007, when the parties separated on a final basis. Ms C left the then matrimonial home, taking with her a car and some saddles and other horse equipment, a computer and some personal possessions. The wife also retained a cheque for the sale of some cattle of about $3700. Each of the parties had their own savings account at that time, although it is unclear exactly what amounts were in them and I will also return to that shortly.
In August 2008 Mr Craig commenced paid sick leave from [P] and following that ultimately and in March of 2010 Mr Craig was medically discharged from [P].
In April 2010, as I have indicated, a net termination payment, as a consequence of the medical discharge, was received in the sum of $134,098.54, which sum was deposited to Mr Craig’s [omitted] Credit Union account and the subject of the various injunctions to which I have referred.
There has been some degree of accounting, through evidence and production of documents, regarding expenditure of those funds but that is a matter of great moment in this case.
The issues that ultimately are left, without wishing to canvass every aspect of the evidence or of the chronology of these parties’ relationship, are as follows:
·What exactly is or should be included in the asset pool and what is the value of the various assets?
·What amounts received by the husband from assets that have been sold by him since separation should be added back, if any?
·Whether all or any of the funds received by the husband from [P] on termination of his employment should be added back or included.
·Whether tax that was deducted from that payment, but which may have subsequently been received by the husband, in whole or in part, by income tax return should be added back.
·What assets and particularly cattle and livestock existed at separation and how should they be treated, in particular whether, as is urged by Ms C, they should be added back or, as is urged by Mr Craig, they should, by and large be treated as assets that have been dealt with in the course of dealings which are consistent with the parties’ actions prior to separation.
·What is the present value, if any, of the rural business conducted by Mr Craig from the farm?
·What assets are presently held by Mr Craig and what is his interest in those assets, particularly a number of motor vehicles and a horse trailer?
·Should the parties’ paid legal fees be added back?
·What liabilities should be included?
·What should one make of the initial contributions?
·There is an issue raised in Ms C’s case as to what might be referred to as a Kennon & Kennon (1997) FLC 92-757 argument and whether her contributions during the relationship, as a homemaker and parent or otherwise, were made more onerous as a consequence of alleged domestic violence by Mr Craig.
·What post separation contribution should be found through the husband’s continuing use and occupation of the farm and other assets?
·What future needs, if any, do either of these parties have that would warrant an adjustment pursuant to s.75(2)?
·
What impact, if any, should an alleged chose in action of
Mr Craig, although presently unexercised, have on an assessment of s.75(2) adjustments?
·What income or earning capacity and general ability to support themselves exists for each of Mr Craig and Ms C?
Disclosure and credit
I am generally reluctant to embark on any examination of credit in any case, whether relating to property or parenting, unless there is some good reason for it or some absolute need to do so to be able to reach a point of clarity as to any of the steps required to be undertaken in the process.
In this case each of the parties raises issues regarding disclosure or alleged non-disclosure by the other.
In Mr Craig’s case that is clearly evidenced by the application in a case that was filed by him and determined by Dunkley FM on 4 February. That application alleged non-disclosure by Ms C of issues with respect to inheritance or prospective inheritance. Certainly, as it has transpired, clearly it is a prospective inheritance, as Ms C’s father is thankfully still with us and attended court.
It is suggested in Ms C’s case that Mr Craig’s disclosure has been poor. Mr Craig has given some reasons regarding aspects of this, some of which have been plausible, but some of which I have much greater difficulty with and, by and large, I am satisfied are somewhat disingenuous.
A great deal of information came from both parties, but particularly
Mr Craig during cross-examination. There is very clearly, and as urged upon me by counsel for Mr Craig, some need to temper criticism that might otherwise flow in relation to the ability of Mr Craig to fully and accurately recall events, transactions, dates and the like and that, by and large, is dealt with in expert evidence, addressed in two affidavits, although, in reality, only one is read for these proceedings, being an Affidavit and report of Mr Craig’s treating psychiatrist, Dr P. Dr P attended by telephone for cross-examination.
That goes some of the way towards addressing and certainly provides, as I have indicated, a plausible explanation for some gaps in memory. But during cross-examination a number of transactions caused me some concern.
Clearly a number of assets that existed at separation no longer do. On that test, if nothing else, it could be inferred, but to a large extent it is conceded, they were matrimonial assets jointly owned or to which each of these parties was jointly entitled. They were clearly retained and sold by Mr Craig.
Other assets were retained, adopted and used by Mr Craig as his own, including for the production of income, being livestock, horses and plant and equipment on the farm as well as occupation of the farm itself. That, of course, comes with some off setting cost. Mr Craig has to some extent, and that is an issue these parties, maintained the property during his occupation.
The cross-examination of Mr M, the valuer jointly instructed to undertake a valuation of the farm property, suggested that there had clearly been a deterioration of the property over the last couple of years, which would correspond with the period since separation. I am urged, in Ms C’s case, to be highly critical and, indeed, to find that this was a deliberate course of action by Mr Craig. I do not know whether it is, but it is conceded by Mr Craig that he has not been as diligent as he could be, but he has clearly made some real efforts and part of the difficulty faced is in relation to weed encroachment upon the property.
There are also photos tendered in Ms C’s case, showing the state of repair of the property and particularly its interior and nearby pastures at the time of separation which, on any cursory comparison with the photos attached to the valuation of Mr M, suggests deterioration, but Mr M has, in his evidence, been clear that he has taken that into account and that he does not feel, in any event, that it would make any significant difference to the value that is ascribed by him and I am inclined to accept Mr M’s valuation as it stands. Mr M had, in fact, prepared two valuations and the first produced a higher value.
Mr M has explained in cross examination that the reduction in value is as a consequence of methodology and changes in trends, rather than it having come about from any further deterioration in the state of the property. So, as indicated, I accept the value asserted by him at this time.
There was also a valuer retained in Ms C’s case, Mr G, who has valued largely plant equipment, chattels and cattle and horses.
Other aspects that arose, during cross-examination, relating to a number of transactions on eBay, wherein Mr Craig has bought and sold cars. There is material tendered as to specific vehicles. The evidence in relation to it is unclear, uncertain and largely vague. Whether it represents all of the transactions or only a glimpse, I do not know. It is suggested that this is as high as I can put it and that there are, in all probability, other transactions.
The more concerning aspect of it relates to the fashion in which nearly every transaction or every dealing with an asset that has been put to
Mr Craig has been addressed by him. Certainly with respect to transactions since separation and certainly since funds were received from [omitted] Credit Union Mr Craig asserts that the transactions are either not his or are his but in combination with other people, particularly his daughter and at times his son. Mr Craig asserts that the transactions conducted on his eBay account are not his at all and that other people have product them. That is possible and that is certainly the explanation offered by Mr Craig.
For a variety of reasons, I have some difficulty with Mr Craig’s evidence. As indicated, I accept that there may be some organic basis to some of the difficulties in Mr Craig’s evidence. Dr P has suggested that Mr Craig has some difficulties with retained memory and functioning in a stressful environment. I am happy to accept that any litigant appearing before any court would generally find that stressful, unless they were habitual offenders who are very used to appearing.
Dr P’s evidence can only partially explain things and it is somewhat a two-edged sword. An inability to remember or to prepare diligently is exactly that, irrespective of whether it is mischievous or whether it is organic. They do not alter the lack of evidence but simply explain it.
There are other aspects of Mr Craig’s evidence though that cause me greater difficulty and there are a number of incidences where quite clearly Mr Craig’s evidence would not appear to be supported by his own witnesses or his own documents.
One instance, something that occupied a significant amount of cross-examination, relates to the purchase of a gooseneck horse trailer. The horse trailer is asserted, on Mr Craig’s case, to have been bought by he and his daughter for $12,000. It was suggested, quite clearly, in his affidavit material that they were joint purchasers. It subsequently transpired in cross-examination that the basis upon which it is asserted that they were joint purchasers is not necessarily that the parties’ daughter, [name omitted], had contributed funds, but that she has contributed labour, for which she is rewarded by being given assets or shares of assets, in this case half of the gooseneck trailer.
The difficulties with that are manifest. Firstly, $14,000 was paid for the item in question and it was paid directly out of the [omitted] Credit Union account in Mr Craig’s name and from the monies received from [P]. Secondly, he has claimed it as his own in his tax return as an asset of his business, which is entirely inconsistent with what is asserted by him and I would prefer to think that the assertion, on whatever basis it is made, is incorrect as it is made to me rather than the Tax Office.
The explanation of other transactions have caused some difficulty. It is suggested by Mr Craig that he purchased a vehicle with his present partner. That vehicle was purchased after flying to Melbourne, inspecting vehicles and selecting one, paying for it and driving back. It was suggested that he and his partner paid half each.
The difficulties commence in that the vehicle would appear to have lost most, if not all, of its value in the space of time since its purchase only some months ago, at least on Mr Craig’s allegation. Mr Craig asserts that he paid his partner back the half that she had put into the vehicle, but that this was paid to her father, who operates a [omitted] business in [K].
Regrettably, Ms T, when called, indicated clearly that the money was paid directly to her. The suggestion had been put that the money was paid to Mr S, Ms T’s father, and was used to buy [goods omitted] and one is left with the potentially attractive conclusion that this may be so. It doesn’t alter the fact that all of the money for the purchase, directly or otherwise, came from Mr Craig and the evasion in answering is inexplicable.
There is a real issue with respect to the production of bank statements by Mr Craig since September, 2010. Mr Craig had, prior to September and injunctions that had been varied at that time, produced and, indeed, annexed to his affidavit a number of statements with respect to his [omitted] Credit Union account. They were unaltered. Statements since September have been substantially altered to obscure all but expenditure and income that clearly relates to operation at the farm.
Again, cogently, and with skilful assistance in re-examination by his counsel, Mr Craig indicated a basis that would be plausible for that, that he had understood that purely the transactions relating to expenditure for the farm were what were required and it made it much easier for him to keep track and to add up if he deleted the irrelevant and unnecessary entries which related to his personal expenditure and the like.
The difficulties I have with that suggestion are, again, several. Firstly, these are proceedings before this Court in the Family Law jurisdiction and principles with respect to disclosure have been well established by a long line of authorities, commencing with Weir & Weir [1993] FLC 92-338 and Black & Kelner [1992] FLC 92-287. Secondly, the varied injunctions in September provided that there was to be release of funds from the monies held in trust to meet Mr Craig’s personal expenses and, accordingly, an accounting for them must have been anticipated.
More importantly, however, Mr Craig, in cross-examination, indicated clearly before the latter explanation being proffered that he considered the account his own personal business and, accordingly, did not feel the need to disclose it or feel that there was any need to disclose those transactions of a personal nature to any other person. The two assertions are inconsistent.
A number of other transactions, particularly in relation to the sale of assets during the post separation period, (when it is to be remembered that the parties had jointly operated in partnership, for tax purposes and otherwise, a farming enterprise), caused some concern. It is certainly not uncommon in this jurisdiction that parties who have operated a business, whether as a partnership, a company or any other entity, beyond a pure personal capacity as a sole trader, have some difficulty, through their book work or through their actions, in differentiating between that which belongs to the legal entity and that which belongs to them individually.
From the point of separation onwards, clearly the assets of the partnership were assumed and consumed by Mr Craig. The difficulties with that are, again, manifest.
At the time of separation it is asserted by Ms C that the parties owned substantial plant and equipment and that plant and equipment is partially valued, Ms C says, and partially not as it items were not produced for valuation. That may be for a variety of reasons including that items have been sold, secreted, forgotten or otherwise. Annexures are contained in Ms C’s affidavit containing that which she asserts existed at separation, but which was not presented for valuation or accounted for.
Ms C asserts that there were about 100 cattle, plus horses on the farm at the time of separation. They, of course, were all retained by
Mr Craig. I accept the submissions of counsel for Mr Craig that certainly, in the course of running the farm business, it was common for these parties to buy and sell things and particularly to sell things to pay bills and/or in the usual course of operation of the enterprise.
It is sought to be asserted at different points, and primarily by
Mr Craig, that the cattle and other livestock that exist now are largely entirely separate and distinct from those which existed at separation. That is not at all clear and certainly in relation to the horses there are at least some that are the same, but again ownership of them, both now and at separation, is in dispute between these parties and Mr Craig seeks to assert that a number of the cattle and certainly a number of the horses, both at separation and now, were and are, in fact, the property of his daughter or other people.
I am satisfied that there has been a failure by Mr Craig to account for a number of transactions. I am also satisfied that Mr Craig has had the benefit of use and occupation, not only of the home, but of the farming property and its assets, including the livestock which has been bought and sold, motor vehicles and other plant and equipment that has been bought and sold.
In relation to the expenditure of funds from the [omitted] Credit Union account Mr Craig asserts that since May of 2010, when the first injunction, the more broad of the two, was put into place by
FM Dunkley on Ms C’s application, that he has been precluded from trading or earning any income and, accordingly, it has been necessary for him to draw on the funds received from [P]. However, since September 2010 that clearly has not been the case.
Further, during cross-examination, it was clearly conceded that there is some level of income, although it is not at all quantified, nor attempted to be so, received by Mr Craig through buying and selling cattle, horses, cars, other equipment and in providing horse training and/or riding lessons.
Other aspects of Mr Craig’s evidence I find are inconsistent with that of his treating psychiatrist. Dr P, who was cross-examined, was suggested by Mr Craig as having given him advice that he should undertake travel as a means of dealing with his psychological symptoms (rather than travel being for pleasure). It is to be remembered that Dr P offers the opinion that Mr Craig is totally and permanently incapacitated for all work.
The issue in relation to travel had some relevance, particularly as
Mr Craig’s evidence was that he can cope and function perfectly well when he is by himself and working by himself. His own evidence suggests that he has, from time to time, worked with others, particularly labouring for [omitted] contractors, repairing the property and certainly that he has travelled, albeit with others, to Melbourne and to Dream World. It was clearly indicated, through Ms T, that this was a holiday for her children and that is entirely appropriate, but it is inconsistent with the opinions expressed by his psychiatrist and, accordingly, I have some issue accepting the assertion that Mr Craig is totally and permanently incapacitated for all work and I find that those actions at least are inconsistent with the medical opinion.
Clearly, Mr Craig has undertaken some work. I do not seek to suggest for one moment that he is about to walk off this farm and obtain a job in an office and certainly not return to employment with [P], but he certainly operated the farm, whether with impediment or otherwise, and, whilst it is suggested that the farm has run at a loss since separation, there is nothing to suggest, from the limited material available, that it was running at any real profit before separation.
The other issue of great controversy between these parties relates to the Kennon argument that is raised in Ms C’s case. In relation to their evidence generally and without purporting for one moment to base any determination upon the parties’ demeanour I am satisfied and I accept Ms C as a witness of truth. There are no aspects of her evidence that I find are inconsistent or without objective corroboration, nor which are hyperbolised.
The criticism that arose of Ms C in her evidence is, to paraphrase, that she took every opportunity to put Mr Craig’s contributions, his efforts and his personality down. In that regard, if I am to accept Ms C’s evidence with respect to the incidences of domestic violence that occurred during the relationship, which I do, she may well have some good reason for that.
Similarly, however, Mr Craig is somewhat dismissive of the efforts that have been made by Ms C in the relationship, not only as a homemaker and parent, although these parties are diametrically opposed, each alleging that they performed the majority of that work, but also financially in operating the business and dealing with animals and the like.
In relation generally to those issues, as indicated, as regards issues of disclosure and/or frankness, I am guided to some extent by decisions such as Weir & Weir, Black & Kelner and M & M [2006] FMCAfam 424. M & M being a decision of a Federal Magistrate at first instance, is clearly not binding upon me, but contains a very useful dissertation of past case law arising from the Weir & Weir line of authorities. In that decision Brown FM refers back to authorities such as D & D [2003] FamCA 473 and indicates:
The task of the Court in proceedings under section 79 is not akin to an accounting exercise. The task is to examine the facts of each case carefully, to decide what is appropriate and just and equitable in the circumstances. There cannot be expected to be a universal answer to that question on any given set of facts. It is of the essence of judicial discretion that different minds may comfortably arrive at different conclusions
By and large marriage is a joint venture where parties can expect to buffer each other from the winds of misfortune that blow during the course of their relationship. The degree of the buffer may depend on how much individual sailing they do without consultation or, indeed, contrary to the wishes of the other, but there can be no certain answer to how much that should be when applying section 79 principles.
The overriding requirement of section 79 is the considerations of justice and equity should inform each step of the process. The exercise I must undertake is not a process of social engineering or of equalisation of assets or financial resources.
I hasten to add that, having regard to the comments of Brown FM, there is certainly clear evidence in Ms C’s case regarding what might well fall within that described in D & D and has a degree of solo sailing. I do not take account of those matters as issues of contribution or otherwise for the purpose of these reasons, but Brown FM goes on to summarise succinctly:
The parties to property proceedings brought under the Family Law Act in this Court are under a duty to make a full and frank disclosure of their financial circumstances. This duty has been described as being fundamental to the whole operation of the Family Law Act in financial cases. In Weir v Weir the Full Court said:
“The failure to disclosure undermines the whole process of adjudication of proceedings for a settlement of property in that the Court is unable to identify the property of the parties to properly assess contributions or to properly assess section 75(2) factors.”
Accordingly, the duty to make a full and frank disclosure in financial matters brought under the Family Law Act does not arise merely by virtue of the rules or practice of the Court, but rather is a fundamental rule of law, which arises because of the necessity for the court in each property proceedings to consider all aspects of the financial circumstances of the parties concerned.
In appropriate cases there may be adverse consequences for a party if it can be shown that he or she has deliberately failed to make a proper disclosure of some material financial fact.
Brown FM goes on to again quote Weir & Weir:
It seems to us that once it has been established that there has been a deliberate non-disclosure, then the Court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature. We should have thought that the Court’s jurisdiction to make an order going beyond the identified property arises once there is sufficient evidence to support a finding that the party has not made a full disclosure of his or her assets.
There is again, and largely as a credit to the substantial and strenuous submissions of counsel for Mr Craig, some explanation for some aspects of non-disclosure, which might have a more organic basis than perhaps a deliberate attempt to not disclose, but I am satisfied that there has been, at the very least, a wilful disregard for full and frank disclosure, even if not a deliberate attempt to conceal assets. An act of omission produces the same consequence as a deliberate secretion.
Interestingly, Brown FMs determination in M & M dealt with not dissimilar circumstances to this case and particularly insofar as it dealt with parties who had separated, having previously lived upon a farm and operated a farming business from it, and the assets having been retained at separation by one party and then some very great difficulty being encountered in ascertaining what had occurred with them and what had flowed from there.
Legislative framework
The four step approach to be taken by the court in determinations of Part VIII proceedings has been spelt out by the Full Court since the commencement of the Act and perhaps, most recently and succinctly, by the Full Court in AJO v GRO [2005] FamCA 707.
The Court is required to, firstly, identify the pool of property, usually doing so based on assets and their value at the date of trial.
Secondly, the Court is required to assess contributions.
Thirdly, the Court must consider what adjustments might be appropriate, having regard to the factors under s.75(2).
Lastly, I must consider whether the outcome arrived at by that process is just and equitable.
Section 79 carries with it a fundamental obligation for justice and equity, as, indeed, the Court’s jurisdiction is to make such order as are just and equitable in the circumstances, rather than the legislation seeking to formulaically prescribe any particular outcome.
As described by the Full Court, as far ago as 1978, in Burgoyne & Burgoyne (1978) FLC 90-467:
It is impossible for the Court to determine whether any particular order is just and equitable without first determining the nature and extent of the property of the parties at the time that the Court is making orders.
That leads to the fundamental issue in this case: What is the asset pool?
It is submitted, on behalf of Mr Craig, that the assets at separation are of little relevance to the present determination and that one cannot and should not freeze the assets as they existed at that date and seek some retrospective exercise of apportionment. I largely accept that contention.
There are, however, two important elements to consider in this case which would weigh against that proposition. Firstly, the court is required to determine the property affairs of these parties as at today’s date, but with some ability to go back to the extent that justice and equity requires it. Secondly, these parties have clearly engaged in a course of dealings which sees the buying and selling and the coming and going of assets from time to time, but the significant issue is that the assets that did exist at the date of separation were clearly retained by the husband and have, at least to some extent, been incorporated within the assets that presently exists, being the farming property now operated by Mr Craig with its various cattle, livestock, plant, equipment and machinery.
I move to Ms C’s case to engage in a process of extensive add-backs relating to a number of issues. A table of assets and liabilities was tendered at the commencement of the case and an amended asset and liability statement tendered at the conclusion of the case. A table was similarly tendered in Mr Craig’s case.
Of the assets alleged one is not in dispute, that being the property at [D], which clearly has a value of $490,000, as fixed by Mr M, and is encumbered by a mortgage of $347,728.
Clearly Ms C retains her motor vehicle, which everyone agrees has a value of $2500. However, thereafter dispute begins between the parties.
Ms C, in submissions and through her counsel, urges that I should include the totality of the [omitted] Credit Union account, including the tax that was taken from it or that I should include, in the alternative, that amount that was deposited to the solicitor’s trust account of $74,000 and that I should add back legal fees paid by Mr Craig of $10,000 to his former lawyers.
There is great contention regarding the figure or figures that should be used with respect to plant and equipment now and at separation, cattle and livestock now and at separation, and they really represent the substantial differences between the parties.
The other area of divergence is that I am urged by Ms C to add back sums of $26,000, in total, relating to the sale of a truck and Landcruiser. I am urged by Mr Craig to add back nothing in relation to them.
I propose to deal, for that reason, with each of those issues separately, as each of them has a different basis and potentially a different factual framework that I would rely upon.
In relation to add-backs or notional property, there is a reasonably long history of cases before both this Court and the Family Court. In Milankov & Milankov [2002] FamCA 195 the Full Court had this to say:
In several circumstances, well identified by the cases, this first step of ascertaining a pool of property often involves including in the pool of assets items which no longer exist, but which, in order to do justice and equity to the parties, need to be notionally considered in determining what a fair share of the existing pool of assets should be. [Thereafter referring to Kowaliw, Townsend & Townsend (1995) FLC 92-569, Farnell & Farnell (1996) FLC 92-681, 20 FamLR 513 and C & C (1998) FamCA 143 (unreported), amongst others]
Frequently this involves a notional consideration of assets which have been in the possession of one of the parties at some time after separation, but which have been disbursed for that party’s own use. It often includes adding back monies that each party has spent in respect of legal costs. Not to do so, would be to offend the principle of section 117 of the Family Law Act, which requires that each party to proceedings should bear their own costs.
Certainly the Full Court has, on many occasions, dealt with exactly that issue as regards the add-back of legal costs. That is a matter of less contention between these parties than other issues. In that regard I refer specifically to Re NHC & RCH [2004] FamCA 633.
AJO v GRO, which I have referred to as clearly and concisely setting out the four-step approach the Court should adopt, also dealt with add-backs. It identified three clear categories of add-backs, one being legal costs, as discussed, for instance, in DJM v JLM (1998) FLC 92-816 and in Farnell, amongst others. It also identified a premature distribution of matrimonial assets, as was discussed in Townsend and, thirdly, the category of cases that might be considered wastage, including Kowaliw.
Interestingly, AJO v GRO was very clear in cautioning against undue add-backs of properties, particularly when a party had spent money on reasonable self support. Therein lays the real issue as regards the funds received into the [omitted] Credit Union account.
Ms C asserts that the expenditure was not reasonable and not largely personal. Clearly some of the funds that were expended were not so, such as the gooseneck trailer, purchased for $14,000, other motor vehicles purchased from that fund, payment of legal fees and the like.
In relation to the general proposition of whether one should include that fund and particularly the tax that was taken out, the argument submitted in Ms C’s case is that it did not represent reasonable living expenses. The husband, it is asserted, had income that he had not disclosed, nor quantified, and had funds available to him through the disposal of other assets, including those which had existed at separation, as well as those bought and sold since and it is, accordingly, argued that those amounts could have and should have been used in priority in meeting that expenditure.
It is also asserted in Ms C’s case that the termination payment, whilst received post separation, related to employment that had occurred during the marriage and that clearly would appear to be so.
In Milankov the Full Court expressed the view that to not include costs expended from capital, representing matrimonial property, would be to fly in the fact of s.117. Similarly, to allow such expenditure, it is urged in Ms C’s case would be to provide from funds, which would otherwise be available to both parties, for Mr Craig’s support, which would be a de facto spouse maintenance application.
It is also asserted that the expenditure undertaken by Mr Craig, even to the extent that it might be personal expenditure necessary for his reasonable living expenses, was unnecessary and, again, relating back to capital purchases and the like, could have been met otherwise.
The other difficulty with the capital purchases is that they again are somewhat contradictory to the elements that are suggested regarding Mr Craig’s level of functioning. Why there would be a need for such plant, equipment and the like, in circumstances where it is suggested that there is incapacity which renders him completely unfit for any form of employment, is difficult to comprehend. One can’t have it both ways.
The argument with respect to adding back the tax liability paid from those funds is that Mr Craig’s tax return, exhibited in the proceedings and annexed to Mr Craig’s affidavit, shows a business loss for the same financial year as he received those funds. Accordingly, I am invited to infer that most, if not all, of those funds would have been returned to Mr Craig. Mr Craig indicated that he did receive some tax return, but was unable to quantify what was received. I am not satisfied I should infer the entire amount was received, but clearly something came back.
From Mr Craig’s perspective, it is asserted that the compensation payment represents, in reality, future wages or that the payment is calculated by reference to wages that would have been paid to
Mr Craig. Clearly the documentation that is annexed to Mr Craig’s material sets out the basis of calculation of the payment and it is by reference to years of employment and completion salary, but I am not satisfied I should treat it as future wages and, accordingly, not treat it other than as an asset in the hands of these parties.
Prior to the injunctions that were issued in May and in a very short space of time, significant funds had been expended by Mr Craig. That of itself, in my mind, suggests that it could not possibly all be asserted to have been reasonable living expenses. Similarly, some of the expenditure that has occurred post injunction, particularly in relation to payment of the mortgage on an interest only basis, has been claimed back, in whole or in part, on Mr Craig’s tax return and, accordingly, he will again receive the benefit of that directly or indirectly.
Having regard to all of those matters, I am satisfied that I should not include the tax component of the payment, but that I should include the totality of the payment as it was received less that amount.
Paid legal fees
Each of the parties has disclosed their paid and unpaid legal fees and they are exhibits before the Court, M1 and F1 respectively. What is regrettable, without intending it to be levied as an unwarranted criticism against anyone’s legal representative, is the quantum that the parties have expended.
Mr Craig has paid a sum of $10,000 to his former solicitors and exhibit F1 would suggest that up and until the first day of hearing he had incurred fees and been billed for further fees of a little under $64,000 and that it was anticipated that there were further fees up to and including the first day, not yet billed, of $18,000 and $3000 per day thereafter. That would appear to result then in a liability approaching $100,000.
Ms C, for her part, had paid legal fees of $20,013.36 to date, outstanding previously rendered costs of $26,291 and a further account of $22,564, meaning that her fees up until the start of this hearing were in the order of $68,000.
That, on the basis of the assets which presently exist, without any consideration of notional add-backs, exceeds the pool of property available for division between these parties. It is regrettable, for whatever reason, that this amount of expenditure has occurred in dealing with a very modest pool and a fairly long marriage.
In any event there is no suggestion by either of the parties that their paid legal fees, to the extent that they have come from capital, should not be included. However, I do not propose to include them.
Clearly there is authority, as previously referred to, that paid legal fees that have come from matrimonial assets should, unless there are exceptional circumstances, be added back. However, in the case of
Mr Craig, I am satisfied that if I include the funds received from the [omitted] Credit Union, from which legal fees were paid, I would be duplicating that amount.
In relation to Ms C, her evidence is clear that she has paid a sum of $500 from her own resources and that the balance of fees that she has paid to date have been borrowed and there is a liability she will have to repay. Accordingly, if I was to take into account the paid legals and the source of funding, being the loan, it would produce an outcome of nil. In fact it would produce a negative outcome. Accordingly, I do not propose to include either.
Savings at separation
It is contended that I should include the parties’ savings at separation and/or at present. Ms C has savings at present of about $556. It is suggested, at least in Ms C’s case, that Mr Craig has savings at present of about $1300. I am uncertain where that figure derives from.
At separation there was evidence given clearly by Ms C that she retained the funds from the sale of cattle of a little under $4000 and also had some funds in a bank account and subsequently received a tax refund cheque of about $4000.
I am entirely unclear as to what savings were held by Mr Craig at separation, what amounts were received by him by way of tax refund or otherwise and, accordingly, I do not propose to include either parties’ savings, either at separation or at present.
Indeed, to include them at separation I feel would be artificial and, to the extent that either of these parties had savings, they were
a)modest and
b)I accept, would have been expended by them in meeting reasonable expenses and certainly, in Ms C’s case, the costs of relocation and re-establishment.
To that extent I am satisfied separation savings, whatever they might have be, on Mr Craig’s side of the ledger, should not be added back and in relation to present savings that they are so modest and so little that they would make no difference to the exercise, particularly having regard to the other greater uncertainties regarding the pool.
The wife’s saddles and horse equipment
It is asserted by Mr Craig that at separation Ms C took with her her personalty, a motor vehicle and saddles and other equipment, with a value of $2350. I have no evidence to support that figure and I do not know where it comes from. However, I am satisfied that Mr Craig, similarly, retained items, whether they are now claimed as his, [daughter’s name omitted] or a combination of the two, as well as the use and occupation of all other matrimonial assets. Accordingly, I do not propose to include them.
Truck sale proceeds
At the time of separation Mr Craig retained, as I have indicated, all matrimonial assets, save a motor vehicle, Ms C’s personalty and some saddles. Included amongst that was a truck, which on the agreed evidence of the parties was a partnership asset.
The truck was subsequently sold and the sum of $18,000 received and retained by Mr Craig. Mr Craig gives clear evidence as to how he disposed of that, including the purchase of a motor vehicle for the parties’ daughter, which consumed a sizeable chunk of the money. However, it was money that both of these parties were entitled to and Ms C has no say or consultation as to the sale of the asset, its sale price or the manner in which the funds were used. Accordingly, I intend to include that amount.
Sale proceeds of a Toyota Landcruiser
For the same reasons as above, the sale proceeds of $8000 with respect to the Landcruiser retained by Mr Craig I propose to add back.
Husband’s post separation cars and equipment (including the gooseneck trailer)
It is urged upon by counsel for Ms C that I would include farm equipment presently held by Mr Craig, as well as farm equipment at separation and would add back the value of the farming enterprise conducted by Mr Craig, based on its Tax Office valuation or based on the tax return submitted by Mr Craig, being about $71,000. I do not accept that that should occur.
To the extent that it relates to motor vehicles, the gooseneck and other items, they were clearly purchased, by and large, if not totality, from the funds received from [P]. Accordingly, it would be to double count to then include them, as I am urged to do. These include items such as an Isuzu truck, a horse float and a Mazda Bravo motor vehicle. Further, I am not satisfied that I should include them, based on the values presently alleged for them as:
a)I have no evidence to support those values and
b)They were purchased within the last 12 months for amounts which in some instances, particularly in relation to the horse float, would represent 700 per cent depreciation.
I am satisfied that the more appropriate way to reflect the choices made by Mr Craig to purchase the items is to include the funds received on termination, rather than the individual items, which would appear to add up, on Ms C’s figures, to something in the order of $90,000, on
Mr Craig’s figures, something less than $10,000.
Plant and equipment now and at separation
I accept Ms C’s evidence as to the plant and equipment, machinery, stock and livestock that existed at separation. However, to the extent that values are asserted for those items, being $87,000 in relation to horses and cattle at separation, $5000 in relation to lucerne, which would appear agreed, was indeed growing, and farm equipment at separation of $31,755, I have no evidence upon which I can be satisfied as to value. There is nothing more scientific than a mere assertion as to value. But I do accept those assets existed. They had a value, both as assets and as the means to work this farm.
Those items would, however, have depreciated substantially, whether through action or inaction, over time and I cannot quantify their value at present or otherwise, save to the extent that they have been produced to Mr A and I accept that not all items that existed at separation were and the value ascribed to those items by Mr A must and should be included, representing what they are worth today, being $9180.
I am also satisfied that the figure I should include, accordingly, in relation to stock, cattle, horses and other miscellaneous livestock should be that which presently exists and which, again, is set by Mr A at $29,765.
I am urged by Mr Craig to reduce that figure by the amount that would be incurred in disposing of them, but I do not propose to make any order for their disposal and, accordingly, I do not propose to make such an allowance or deduction.
I am satisfied, however, that Ms C’s evidence, as to what existed at separation and how and by whom it was retained, is accurate. That leaves the issue of where the rest of it is, what it is worth, what use has been made of it and to what extent, particularly in relation to cattle and livestock, that reflects that which existed at separation and, to the extent that there has been a diminution, what has occurred with that.
The only two entries I can find that account for any sale of livestock relate to two deposits, shortly before receipt by Mr Craig of funds from [P] and in early 2010 as shown in the bank statements annexed to his affidavit.
There is no other disclosure of dealings with livestock, notwithstanding the submission, which I accept, that operating the farm business would involve dealing and buying and selling of livestock. It is regrettable that those documents have not been produced even though such transactions have clearly occurred.
On the above basis, I am very conscious of and reminded by the Full Court, that one should not engaged in add-backs to the extent that it produces an artificial outcome. To that extent, notwithstanding the findings I have made above, I propose to treat the asset pool, which is contained within a spreadsheet of assets and liabilities, for the purpose of these orders and not otherwise, as follows:
(1)The property at [D], with a value of $490,000, as set out by the single expert.
(2)The Holden Rodeo, retained by Ms C, with a value of $2500, which would appear agreed.
(3)The plant and equipment, with a value of $9180, as per Mr G’s evidence.
(4)The proceeds of sale of the truck, $18,000, which was conceded by Mr Craig.
(5)The proceeds of sale of the Landcruiser, again, as conceded by Mr Craig, $8000.
(6)The net payment received from [P], $134,098, as per exhibit M9.
(7)Cattle at present and as agreed, $37,690, being the figure fixed by Mr G, plus values in relation to horses, which would not appear to have been valued.
(8)And furniture, which was valued by Mr A, although no real submission was put with respect to it, at $500.
That produces a gross pool of $699,968. From that I propose to deduct the mortgage $347,728, Ms C’s credit card account, $15,715, (her evidence in that regard is that a balance of about $7000 existed at separation and that it has since increased), Mr Craig’s [omitted] Credit Union credit card, with a balance of $14,447, (again his evidence was it had some balance at separation and has increased, but I consider it just and equitable to include both).
That produces a pool with a net total of $322,078.
In addition, each of the parties have modest superannuation entitlements. There would appear to be agreement between the parties that there should be a superannuation splitting order. There has been no procedural fairness given to any of the trustees, so I propose, as invited by the parties, to suspend the operation of a splitting order until procedural fairness has been given and the matter, regrettably, will need to be relisted if there is any issue that arises from the trustees’ perspective.
The easiest way of doing that is to deal with the largest of the funds. Mr Craig has two funds, the main one with [F] Super, with a balance of $53,884, and a smaller fund with [A], with a value of $2800, which is unsplittable. Ms C has a [L] Super fund, with a balance of $23,910. Accordingly, superannuation entitlements total $80,594.
Contributions
It is asserted in Ms C’s case that her contributions at cohabitation were superior to those of Mr Craig. I accept that, modestly, they were. However, these parties, by reference to case law, such as Pierce & Pierce, have been married and endured a long relationship. Accordingly, I do not find that there would be or should be any real adjustment as regards initial contribution.
In relation to the Kennon issue that is raised by Ms C in her case, I note that during submissions a number of aspects of that matter were touched upon by all. Certainly as regards issues of credit, as indicated, I found Ms C to be a witness of truth and I accept her evidence in its totality, including with respect to the perpetration of domestic violence directed towards her and others and livestock.
The Full Court in Kennon quoted a review of case law that had preceded Coleman Js decision, the subject of that appeal, including the decision of Coleman J in Manna & Manna (unreported) and other case law, that of Chisholm J in Rosati & Rosati [1998] FamCA 38 and Coleman and Chisholm JJ both having referred to in Mallet & Mallet (1984) 156 CLR 605 case, a very longstanding authority in this jurisdiction.
Mallet’s case itself set the seed for the beginnings of the Kennon arguments. Wilson J, in that decision, is quoted as follows:
The quality of the contribution made by a wife as homemaker or a parent may vary enormously from the inadequate to the adequate, to the exceptionally good.
That line of reasoning is no longer considered good law, at least to the extent that one should attempt to assess the extent to which one performed one’s “wifely duties”, but the gravamen of those decisions really is stated succinctly, even before Coleman Js decision in Kennon, by Coleman J in Manna as follows:
If a party is subjected to a situation within a marriage relationship where they do endure, if one might use that expression, or are subject to some repeated discomfort, violence ill treatment, matters of that kind, by the other party and nevertheless they continue to perform the role of homemaker, then it is difficult to see that those matters can be left out of consideration the Court. Indeed, in particular circumstances it might be quite clear that rather special consideration has to be given to the efforts made by one or other of the parties, or even both parties, if they have mutual claims of ill treatment against the other, either psychological or physical, this role of homemaker must be given a special weighting or consideration in the case.
Succinct and more recent summations of the line of Kennon arguments are contained in two authorities, referred to respectively by myself and by counsel for Mr Craig during submissions, the first being a decision Kucera & Kucera [2009] FMCAfam 1032, decided by Altobelli FM, and which provides a most thorough and excellent review of Kennon decisions over time, the second being a decision of Le Poer Trench J, a case quoted as Whelan & Whelan [2010] FamCA 530, both of which arrive at the same conclusion, but, for the sake of convenience, it being perhaps more succinct, if nothing else, I quote from Le Poer Trench J as follows, commencing at paragraph 159 of that decision:
The Full Court in Kennon indicate that a course of violent conduct could be taken into account in property proceedings where it was demonstrated to have had a significant adverse impact upon a party’s contribution to the marriage or, to put it another way, to have made his or her contribution significantly more arduous than they ought to have been. Once findings of fact are made about a party’s conduct, it may or may not be possible to make findings about the physical or psychological effect of their conduct on the party
Whether or not that is possible in order to establish a Kennon claim, the Court needs to make some findings about the effect of conduct of one party upon contributions by the other. It may not be automatically assumed in a particular case that an effect on a party’s condition automatically means there is an effect upon the party’s contributions, for example, Strickland Js comments in Spence v Spence [2008] FamCA 263.
The above are then quoted as follows:
There is no doubt that there was some domestic violence during the marriage, but there is no basis to find there was a course of violent conduct by the husband which had a significant adverse impact upon the wife’s contributions to the marriage. There is simply no evidence provided by the wife to establish the link between any domestic violence by the husband and any impact on her contribution. Certainly the report of the psychologist does not assist in this regard.
His Honour otherwise concludes at paragraph 177 of that judgment:
I accept the evidence from the wife and the witnesses who corroborate her allegations of a history of violence and abusive conduct by the husband towards the wife during the time they were together. The evidence substantiates a pattern of behaviour that commenced at the beginning of the marriage and was a feature of the relationship between the husband and wife throughout their years together. There is some direct evidence of the practical and emotional effect the husband’s conduct had on the wife.
I am, in the context of this case, prepared to infer that the proven history of the husband’s violence in fact means that the contribution, which the husband concedes the wife made, were made in circumstances where they were significantly more arduous, as a result of the husband’s conduct, than they would have otherwise been if he had not behaved in the way that he did.
His Honour then goes on to make an adjustment of 10 per cent. Altobelli FM, in Kucera & Kucera, reached a similar conclusion as regards a percentage adjustment, although he did, cogently and importantly, discuss the somewhat artificial nature of a percentage adjustment of contribution, as a means of dealing with, addressing and reflecting those issues, but that is, after all, what one is left with under the Family Law Act as a means of seeking to deal with it.
I accept and am prepared in this case to follow the reasoning of Le Poer Trench J as regards the inference, following upon the findings I have made in accepting the wife’s evidence, as to that conduct and its effect.
There are other issues with respect to contribution, however, one of which relates to Ms C’s assertion that post separation her contribution should be assessed as greater, as she has been absent from and not had the use or benefit of any significant matrimonial asset, whereas
Mr Craig has and has assumed and consumed those assets to his own benefit.
Certainly it is clear that Mr Craig has retained the farm, all of its stock and equipment and the business that was operated, using both. He has treated them as his own. He has received tax benefits. He has received some forms of income, albeit I accept that the income is and always has been modest, but more than the nil that is suggested by Mr Craig in his financial statement, and that he has entirely used such assets for his benefit and has retained such income as is generated.
That then begs the question what should the wife’s contribution be assessed at?
I am satisfied and accept submissions put in Ms C’s case that that should represent a contribution of 60 to 70 per cent, but as against what?
Section 75(2) adjustments
It is contended by Mr Craig that there should be an adjustment in his favour. Ms C contends that there should be no adjustment at all.
The considerations under s.75(2) bear some brief consideration. Quite clearly, no party is seeking an order for spouse maintenance on an ongoing basis and I should be clear, to the extent that they might have that I would have difficulty, on the evidence as it stands, accepting that the threshold test had been made, let alone that an order would be appropriate.
I am required to take account of the age and state of health of the parties and that is probably the major limb of Mr Craig’s argument. In reliance upon Dr P’s report or reports, Mr Craig asserts that he is totally incapacitated from paid employment. I do not accept that
Mr Craig is, however, completely unable to support himself physically or financially.
Mr Craig has the assistance of the now adult child of the relationship and that is not to suggest that she is, by some quirk of biology and birth, fated to a life of serfdom supporting her father. Far from it. She is a separate individual and entitled to be accorded dignity and respect. However, she does provide assistance and has received the benefit of her father’s largesse.
Clearly, as I have indicated, I accept that some income has been produced by Mr Craig, through his efforts on this farm or otherwise, since separation and during the period of time that, firstly his treating psychiatrist indicates he is entirely incapable of employment, (although that was qualified in his evidence to indicate that functioning on the farm and working by himself was achievable), and secondly and more importantly, certainly capable of producing income, beyond that which is suggested by Mr Craig in his financial statement, being exactly nothing.
I accept also that Mr Craig has recently, and it is only recently and, accordingly, it does not bear any substantial weight in favour of Ms C, commenced to cohabit.
Mr Craig’s partner is not a woman of great wealth. She owns a property, but it is rented and produces income less than the expenses. She receives at present a carer’s pension and is not in paid employment. Accordingly, I am satisfied that all that combination of factors does is to produce a subsistence level of income for the three adults concerned.
However, Ms C’s income is far from substantial either and she has, for various periods during this long relationship, devoted herself to businesses operated by the parties and, for the last few years of the relationship, the farming enterprise, from which she has had no income and has not had any opportunity to participate, albeit that it was she who left. I am not critical of her for doing that. I have accepted her evidence with respect to violence and I would not expect her to do anything else but leave.
Neither party presently has the care of a child under 18.
The parties have commitments necessary to support themselves and, legally, no other person. No one has a responsibility to support any other person.
I am not advised that either party receives or is eligible to receive an income-tested pension or benefit.
The standard of living that both parties have maintained is, at best, frugal, but it probably is reflective of the standard they enjoyed prior to separation.
The proposed orders will not impact upon creditors.
I am satisfied that Ms C, in addition to the post separation contribution she has made through Mr Craig having sole use and benefit of all matrimonial assets of any significance has contributed to income, earning capacity, property and resources that have been received and retained by Mr Craig to date.
The marriage is long.
Neither party wishes to continue in the role of homemaker and parent.
As indicated, Mr Craig is cohabiting, but it is recent and it hardly produces any substantial financial benefit and does not produce any assets that are particularly available to him to enrich his lifestyle.
For all of those reasons, I am satisfied that there should be no adjustment with respect to s.75(2).
Justice and equity
The final step, as indicated, and that which informs each of the steps as part of this process, is to produce an outcome and a division of assets between these parties, which is not only final pursuant to s.81, but just and equitable. The difficulty in that, as is apparent from the passages from Kennon & Kennon, Weir & Weir and other cases quoted above, is that I simply cannot ascertain, with any accuracy or any great comfort, a pool of property that presently exists or that did exist at any point in time and certainly I cannot quantify what has occurred financially, whether in terms of transactions or dollar figures, between separation and now. It is on that basis and that basis alone that I have produced the schedule of assets and liabilities referred to above.
If I were to apply the finding of contribution that I am satisfied is appropriate in the case, being 60 to 70 per cent in Ms C’s favour, that would have the effect of producing exactly the outcome the Full Court cautions against, having regard to the add-backs that I feel should occur. It would see Ms C receiving more than presently exists and I am not prepared for that to occur. I do not think that that would be just and equitable as regards either parent and it would do very little more than to further fester the resentments between these parties and see them back in court, spending more money, in addition to the $170,000-odd already expended between them.
The best I can do is deal with the pool that is known and still exists at present, which is largely comprised of equity in the property at [D], plant and equipment, cattle and very little else, other than the sum of $32,000-odd in the trust account of Mr Craig’s lawyer.
I accept that if there were a larger pool of presently available assets that Ms C would receive a better outcome than she is going to receive under the orders that I will very shortly pronounce.
Another aspect of justice and equity that was not raised in final submissions, but certainly was raised during the case and put in cross-examination to Ms C, related to Mr Craig’s Aboriginality and his feeling a connection to the land, this being in the part of New South Wales that is the traditional lands of Mr Craig’s people.
I do not accept that that would have any influence upon justice and equity in this case, but I do not say that with any disrespect whatsoever to the traditional custodianship of the indigenous population of this country, who have endured 220 years of white occupation and what is sometimes referred to, although previously dismissed as inappropriate, genocide. However, the connection and the custodianship of the land does not involve proprietorial ownership.
I do accept, however, that Mr Craig has a connection to this property outside and beyond Aboriginality. It is something that he desperately wishes to retain and I accept submissions on his behalf that he should be afforded an opportunity, albeit limited and conditional, to do so.
Both of these parties need to be housed. Since separation, for a period now of nearly four years, Ms C has done so in frugal rented accommodation, according to her evidence, renting rooms in a shared house. For a woman of 58, that is probably far from the most desirable experience, but both of these parties need housing.
I have some comfort that if Mr Craig is able to retain the property he should. I cannot see how that is practicably possible, based on his limited evidence as to borrowing, which indicated inquiries had been made, but he is unsure as to what can be borrowed, but it can occur. But I am prepared to afford him that opportunity and he will have it, but it will be at a price. If it cannot be done, the orders will certainly express that the opportunity to pay money and refinance the mortgage is on the basis that time is of the essence and, accordingly, if it is not done within the time provided, the opportunity will end forthwith and the orders that I propose to make, which might otherwise seem somewhat harsh, are intended to ensure that the pool does not further diminish.
I am conscious that if Mr Craig remains in occupation, unless and until he refinances and pays a sum of money to Ms C, he will need to service the property. There is already an issue raised in the proceedings regarding suggestions or allegations that Mr Craig has damaged or deliberately let the property go. There is some concession. The state of the property is not as it was four years ago, but there may be good reasons for that, one of which could be, at the very least, that Ms C’s contribution towards the management and operation of the farm was as she described and, accordingly, absent her contribution, it is much harder to maintain the property.
I do not infer and I do not intend to signal, through the orders that I propose to make, which provide fairly strict regimes for vacating the property if Mr Craig cannot refinance and comply with his obligations, that it is accepted that he will necessarily engage in a path of behaviour that would diminish the value of the property. It should be clearly understood, however, that this would represent a contempt of court in all probability, but that is a matter for Ms C to raise and pursue at another time, if that need arises.
I am satisfied, for all of the above reasons, that I cannot achieve an outcome which results in a 60 to 70 per cent division in Ms C’s favour, as that would entirely impoverish Mr Craig. That remains relevant irrespective of what I have added back and the views I have formed as to the choices Mr Craig has made, as to how he has treated some assets, particularly the cash received, and that such an outcome would not be just and equitable.
I certainly do propose to make orders, but will do the best I can, with the particular difficulties that exist in this case regarding assessing a pool of property, to do justice and equity, as best I can, to Ms C, as well as dealing with the issues of justice and equity as regards Mr Craig, and as identified.
I certify that the preceding one hundred and ninety-two (192) paragraphs are a true copy of the reasons for judgment of Harman FM
Date: 4 August 2011
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