Cutler & Halford

Case •

[2022] FedCFamC2F 1510

Federal Circuit and Family Court of Australia

(DIVISION 2)

Cutler & Halford [2022] FedCFamC2F 1510   

File number(s): CAC 975 of 2022
Judgment of: JUDGE MURDOCH
Date of judgment: 8 November 2022
Catchwords:  FAMILY LAW – PROPERTY SETTLEMENT – Application to Review the Registrar’s Decision to dismiss Application for Consent Orders on the basis that they were not just and equitable - Application for Consent Orders contemplates division 14% of asset pool to de facto wife and 86% to de facto husband – 13 year relationship – one child - equal contributions - child to reside with applicant de facto wife – order sought are not just and equitable - Application to Review dismissed.
Legislation:

Family Law Act 1975 (Cth) s 90SF(3)

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 rr 14.05, 14.07, 14.07(2)

Cases cited:

Harris v Caladine [1991] HCA 9; (1991) 172 CLR

In the Marriage of Smith [1984] FamCA 8

Division: Division 2 Family Law
Number of paragraphs: 31
Date of hearing: 8 November 2022
Place: Sydney
Solicitor for the Applicant:  Farrar Gesini Dunn Family Lawyers  
Solicitor for the Respondent:  Litigant in Person

ORDERS

CAC 975 of 2022

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN:

MS CUTLER

Applicant
AND:

MR HALFORD

Respondent

order made by:

JUDGE MURDOCH

DATE OF ORDER:

8 NOVEMBER 2022

THE COURT ORDERS THAT:

1.The Application for Review filed on 16 September 2022 is dismissed.

Note:   The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

IT IS NOTED that publication of this judgment by this Court under a pseudonym Cutler & Halford has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

EX TEMPORE REASONS FOR JUDGMENT

JUDGE MURDOCH

INTRODUCTION

  1. Listed before me today is an Application for Review filed by the Applicant de facto wife on 16 September 2022. This Application seeks to review orders made by a Judicial Registrar on 1 September 2022 dismissing the Application for Consent Orders filed by the parties on 26 May 2022 (“the Consent Application”). The Consent Application seeks to adjust the property of the parties pursuant to section 90SM of the Family Law Act 1975 (Cth) (“The Act”).

    EVIDENCE

  2. In this matter I have read the following documents:-

    ·Application for Review filed by the de facto wife on 16 September 2022;

    ·the Affidavit of the de facto husband filed 31 August 2022;

    ·the Affidavit of the de facto wife filed 1 August 2022;

    ·the Amended Application for Consent Orders filed 1 September 2022;

    ·the Application for Consent Orders filed 26th of May 2022;

    ·the terms of settlement filed 26th of May 2022;

    ·the letter from the Judicial Registrar to the parties dated 10 June 2022;

    ·the letter from the Judicial Registrar to the parties dated 22 July 2022; and

    ·the letter from the de facto wife’s solicitor to the court dated 31 August 2022.

    BACKGROUND

  3. The parties commenced living together in February 2004 and separated in December 2017.

  4. There is one child of the relationship; X born in 2014. X is currently 8 years and 1 month of age.

  5. On the 26 May 2022 the parties filed an Application for Consent Orders seeking an adjustment of the property of the parties pursuant to s 90SM of the Family Law Act 1965 (Cth). 

  6. Whilst the Consent Application stated that it was prepared by the firm currently appearing for the de facto wife in the matter today and the address for service appears to be the firm’s address, the Statement of Independent Legal Advice, being part K of the Consent Application was not signed by a legal practitioner.  The de facto husband was self-represented.  Part M of the Consent Application, being the Statement of Independent Legal Advice was not signed by a legal practitioner for the de facto husband.

  7. On 10 June 2022 a letter was forwarded by way of email to the parties from the Judicial Registrar advising the parties that the Consent Application had been considered in Chambers on that day.  It stated that orders were not made for various reasons including that:-

    ·the Statement of Independent Legal Advice was not signed by the legal representative for the de facto wife;  and

    ·the Judicial Registrar was not satisfied that the proposed orders were just and equitable based on the material filed in the matter to date, particularly having regard to the length of the relationship and the proposed division of property contained in the Consent terms. 

  8. Directions were made by the Judicial Registrar for each of the parties to file an Affidavit setting out sufficient facts relating to the division of property to enable the court to be satisfied and find that the proposed orders are just and equitable in the circumstances.  Such Affidavits were to be filed within six weeks of the correspondence, failing which the Application would potentially be dismissed without further notice. 

  9. On 22 July 2022 a further letter was forwarded by the Judicial Registrar to the parties noting that the requisitions raised with respect to the Application had not been answered and advising that unless the requisitions were satisfactorily answered by no later than 1 September 2022 the Consent Application would be dismissed without further notice.

  10. On 31 August 2022 the legal practitioner appearing for the de facto wife forwarded to the Judicial Registrar documents in answer to the requisitions.  This included an Affidavit of each of the parties together with an Amended Application for Consent Orders and a further copy of the prior terms of settlement filed with the court. The Amended Application did not vary the terms of settlement reached between the parties that were the subject of requisitions raised by the Judicial Registrar, but only amended the Application for Consent Orders insofar as Part K, the Statement of Independent Legal Advice, was signed by the solicitor for the de facto wife.

  11. On 1 September 2022 the Judicial Registrar dismissed the Application for Consent Orders.

  12. On 23 September 2022 the de facto wife filed the Application for Review of the Registrar’s decision to dismiss the Application for Consent Orders.   The orders sought by the de facto wife in the review are those sought by the parties in the original terms of settlement filed with the court.

    THE PROPOSED CONSENT ORDERS

  13. The total agreed value of the superannuation and non-superannuation property of the parties is $4,474,397.00. Of this, the de facto wife currently has at law property and superannuation entitlements to the value of $2,188,481 or 49% of the agreed value of the parties’ assets and superannuation entitlements.

  14. The de facto husband currently has at law property and superannuation entitlements to the value of $2,285,916 or 51% of the agreed value of the parties’ assets and superannuation entitlements.

  15. The effect of the proposed division of the property including superannuation is to affect a division of property and superannuation entitlements to the value of $639,626 or 14% of parties’ property including superannuation to the de facto wife. It affects a division of $3,834,771 or 86% of the parties’ property and superannuation entitlements to the de facto husband.

  16. The de facto wife deposes that:-

    ·The parties lived together for a period of 12 years and 11 months.

    ·The main assets of the parties is the business; the B Pty Ltd acting as trustee for the Halford Trust and C Pty Ltd acting as trustee for the C Trust.  The main asset is a property at Town D in Canberra. As of June 2022 the entities were valued at $7 million.

    ·Neither of the parties had any significant property at the commencement of the relationship.

    ·The parties’ financial contributions during the relationship were relatively equal.

    ·During the relationship the de facto wife undertook the majority of homemaker and parental responsibilities.

    ·Subsequent to the parties’ separation they have both continued to operate the business.  The de facto husband lives on the property owned by the business and is responsible for all of the day-to-day business activity including property and farm maintenance.  The de facto wife resides in Western Australia and has maintained the administration, IT and customer interfaces for the business.

    ·The child X is currently being assessed for autism. There is no evidence before the court as to the parenting arrangements subsequent to the parties’ separation save that as at the date of filing the Amended Application for Consent Orders, X was residing with the de facto wife.

    ·As part of the proposed orders the de facto husband will retain all of the financial entities and will indemnify the de facto wife with respect to all of the liabilities.  The de facto wife deposes that she is eager to be removed from the business and all of its related liabilities and risks.  The de facto wife has chronic pneumonia due to the living and working conditions on the farm and has had a chronic medical condition for the last 15 years.  It is the de facto wife’s position that it is important to her that she can reduce the stress of maintaining the business and purchase a property in Western Australia to provide stability for herself and X.

    ·She has had the opportunity to make her own enquiries and requests for financial disclosure and has herself full access to the business accounts.

    ·She is a financially sophisticated person, has had comprehensive legal advice and plenty of “time and space” to consider all of the different of the options available to her.

    The Amended Application for Consent Orders deposes that there is currently no child support being paid by either of the parties for X.  The de facto wife deposes that the parties in the future will continue to manage the costs for X on a private basis and that she understands she has avenues to pursue child support if she wishes to do so in the future.

    ·The de facto wife deposes that she does not wish the joint marital assets to be diminished by way of property proceedings.  She wishes to protect a co-parenting relationship taking into account X’s best interests.  The agreement provides her with liquid assets to obtain her own property and to continue to live comfortably in Western Australia.  In light of the formal advice she has received, the de facto wife wishes to proceed with the proposed orders.

  17. By way of his affidavit, the de facto husband deposes that he agrees with the factual assertions made by the de facto wife in her affidavit.  He deposes that he cannot afford to borrow a larger sum than he will be required to pay the de facto wife if the proposed orders are made by the court and would be required to sell the business and real estate from which it operates if a larger sum was required to be paid. 

    THE LAW

  18. Pursuant to rule 14.05 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) a party may seek a review of an exercise of power by a Registrar by filing an Application for Review within 21 days of the Registrar’s decision. The Review Application was filed within such timeframe.

  19. Rule 14.07 of the Rules states that the hearing of an Application for Review of a Registrar’s decision is an “original hearing”; that is, the Court will hear the whole matter afresh rather than determining whether the original decision was in error. The Court may receive further evidence in addition to the evidence before the Registrar: Rule 14.07(2).

  20. The de facto wife presses for the court to make orders in accordance with the terms of settlement filed by the parties on 26 May 2022.  She is represented today.

  21. The de facto husband also presses for the court to make orders in accordance with the terms of settlement filed by the parties on 26 May 2022.  The de facto husband is not represented today and has not received legal advice in this matter.

  22. Thus the question to be determined by the court today is whether the court should exercise its discretion to make orders adjusting the property of the parties as sought in the Application for Consent Orders.

  23. Pursuant to section 90SM (3) of the Act, the court must not make an order pursuant to the section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order. This is so even if the parties seek property settlement orders be made by consent: see Harris v Caladine [1991] HCA 9. However, the court may take into account that the parties agree to the terms of a property order in deciding whether the order meets the mandatory requirement to be “just and equitable” for the purposes of the Act, at least where the parties have received the benefit of legal advice: In the Marriage of Smith [1984] FamCA 8.

  24. I cannot be comfortably satisfied in the circumstances of this matter that the proposed settlement is just and equitable, as:

    ·This is a relationship of almost 13 years duration.

    ·The parties agree that the financial contributions during the course of the relationship were relatively equal.

    ·The parties agree that the de facto wife undertook the majority of the homemaker and parental responsibilities during the relationship. 

    ·Both the parties have continued to make contributions to the operation and running of the business post separation.

    ·There is no evidence as to the post separation parenting arrangements for X, save that the Application states that at the time of its execution by the parties X was residing with the de facto wife in Western Australia whilst the de facto husband resides in Canberra.

    ·The parties earn similar incomes at this stage from their respective employment with the Employer E and as owners of the farm. The de facto wife asserts that her income will remain the same after ceasing work for the financial entities; and  

    ·It appears that it is proposed that X will continue to live with the de facto wife.  It is the parties’ evidence that the de facto husband is not paying child support. The de facto wife asserts that the parties will continue to meet the costs for X on a private basis. There is no evidence as to what financial support is proposed to be paid by the de facto husband.

  25. In those circumstances it would appear that the court would be minded to make a finding that the de facto wife at least has made an equal contribution to the acquisition and conservation of the parties’ assets. It would further appear that some adjustment would be likely to be made pursuant to section 90SF(3) of the Act in favour of the de facto wife where it appears that she will have primary care of X and the parties will be residing at a significant distance from each other. There is no evidence as to what financial support the de facto husband will be providing for X in the future.

  26. Whilst the de facto wife deposes that the indemnity she is to receive from the de facto husband with respect to the liabilities arising from the financial entities is of “significant value” to her; such indemnity could be achieved by other means.

  27. Notwithstanding the parties’ consent and the de facto wife having had the benefit of legal advice, in the circumstances of this matter there is no warrant on the evidence to ground a finding that the proposed adjustment of the property of the parties achieves the section 90SM(3) mandate to be just and equitable.

  28. An adjustment of only 14% to the de facto wife is significantly outside a reasonable range of likely outcomes if the matter were to proceed to a defended hearing. Pursuant to the proposed Consent Orders, the de facto wife would receive assets to the value of $639,626 and the de facto husband $3,834,771. This is a differential of $3,195,145.00 in the value of the assets each of the party would be retaining if the orders were made.

  29. I cannot therefore be satisfied that the proposed orders are just and equitable and I refuse to make them.

  30. If the parties wish to enter into an arrangement by way of a different course, that is a matter for them.

  31. For the reasons I have stated, the Review Application will be dismissed.

I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the ex tempore Reasons for Judgment of Judge Murdoch.

Associate:

Dated:       8 November 2022

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Harris v Caladine [1991] HCA 9