Da Gama & Fabien

Case [2025] FedCFamC1F 21

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Da Gama & Fabien [2025] FedCFamC1F 21

File number: MLC 7136 of 2020
Judgment of: MCGUIRE J
Date of judgment: 6 February 2025
Catchwords: FAMILY LAW – PROPERTY – Application by husband for alteration of property interests – Significant dispute and difference in parties’ views as to contents of the property pool – Lack of forensic accounting evidence – Not for judge to assume experts role - Add-backs – Orders that ultimately give the husband 58.55 percent of the value of the property pool
Legislation: Family Law Act 1975 (Cth) s 79(2)
Cases cited:

Carlson & Carlson [2019] FamCAFC 245; (2019) FLC 93-934

C & C [1998] FamCA 143

Dawes & Dawes (1990) FLC 92–108

Elias v Elias (1977) FLC 90-267

Horrigan & Horrigan [2020] FamCAFC 25

Jordan & Jordan (1997) FLC 92-737

Kowaliw & Kowaliw (1981) FLC 91-092

Marker & Marker [1998] FamCA 42

Nelson v Nelson (1995) 184 CLR 538

Norbis v Norbis (1986) 161 CLR 513

Omacini & Omacini (2005) FLC 93–218

R v Watson: Ex parte Armstrong (1976) 136 CLR 248 at 257; [1976] HCA 39

Stanford & Stanford (2012) 247 CLR 108; [2012] HCA 52

Trevi & Trevi (2018) FLC 93–858

Watts G, Lies, Damned Lies and Tax Returns – Television Education Network – November 2000
Division: Division 1 First Instance
Number of paragraphs: 102
Date of last submissions: 6 November 2024 by Microsoft Teams to Hobart
Date of hearing: 29, 30, 31 October and 1 November 2024
Place: Melbourne
Counsel for the Applicant: Mr Lethlean
Solicitor for the Applicant: Mark M Morgan Solicitors
Counsel for the Respondent: Ms Finemore
Solicitor for the Respondent: Velocity Legal

ORDERS

MLC 7136 of 2020

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN:

MR DA GAMA

Applicant
AND:

MS FABIEN

Respondent

ORDER MADE BY:

MCGUIRE J

DATE OF ORDER:

6 FEBRUARY 2025

THE COURT ORDERS THAT:

1.Within seven days, the parties do all acts and sign any documents necessary to direct D Lawyers to release the net proceeds of sale of the Suburb B and Suburb C properties held in the D Lawyers Trust Account in the sum of $375,939.08 plus accrued interest to the parties as follows:

(a)50 per cent to the solicitors for the wife; and

(b)50 per cent to the solicitors for the husband.

2.Save as is otherwise provided for in these Orders, the wife retain her right, title and interest in the following property to the exclusion of the husband:

(a)the property at E Street, Melbourne, Victoria;

(b)the property at F Street, Suburb G, Victoria;

(c)the property at H Street, Melbourne, Victoria;

(d)the balance of any bank accounts or like investments held in the name of or to the benefit of the wife as at the date of these Orders;

(e)any personalty, furniture and chattels in the possession or control of the wife as at the date of these Orders;

(f)her superannuation entitlements; and

(g)the part property settlement payment in the total…

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Da Gama & Fabien [2025] FedCFamC1F 21
Case
[2025] FedCFamC1F 21
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CaseChat Overview and Summary

The case of Da Gama & Fabien involves a property dispute between a husband and wife following their divorce. The husband applied for an alteration of the property interests under section 79 of the Family Law Act 1975 (Cth). The central issue for the court was determining the contents of the property pool and how to divide it fairly between the parties, considering their respective contributions and section 75(2) factors. The wife argued for a 50/50 division of the property pool, while the husband sought a larger share based on his income and potential earnings.

The court considered the husband's superior income and potential income compared to the wife, and also took into account the wife's health issues and the short duration of the marriage. The court found it just and equitable to award the wife a 5% adjustment under section 75(2) factors. Ultimately, the court accepted the wife's proposal to divide the trust funds equally, resulting in the husband receiving 58.55% of the property pool. The court reasoned that it was not necessary to delve into forensic accounting details when the parties' views were significantly different. The court also noted that it was not the judge's role to assume the role of an expert in this regard.

The final orders of the court provided for the division of the property between the parties, with specific allocations of real estate, personal property, and financial assets. The court also addressed the issue of legal fees and the "Elias principle," which prevents a party from contradicting previous representations made to third parties. The orders included provisions for the release of trust funds, the indemnification of each party against liabilities associated with the other's property, and the removal of certain caveats.

In summary, the court's decision resulted in a property division that favored the husband to a significant extent, taking into account the various factors considered under the Family Law Act 1975 (Cth). The final orders aimed to finally determine the financial relationship between the parties and avoid further proceedings.

Orders

Orders of the court

MLC 7136 of 2020

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MR DA GAMA

Applicant

AND:

MS FABIEN

Respondent

ORDER MADE BY:

MCGUIRE J

DATE OF ORDER:

6 FEBRUARY 2025

THE COURT ORDERS THAT:

1. Within seven days, the parties do all acts and sign any documents necessary to direct D Lawyers to release the net proceeds of sale of the Suburb B and Suburb C properties held in the D Lawyers Trust Account in the sum of $375,939.08 plus accrued interest to the parties as follows:

(a) 50 per cent to the solicitors for the wife; and

(b) 50 per cent to the solicitors for the husband.

2. Save as is otherwise provided for in these Orders, the wife retain her right, title and interest in the following property to the exclusion of the husband:

(a) the property at E Street, Melbourne, Victoria;

(b) the property at F Street, Suburb G, Victoria;

(c) the property at H Street, Melbourne, Victoria;

(d) the balance of any bank accounts or like investments held in the name of or to the benefit of the wife as at the date of these Orders;

(e) any personalty, furniture and chattels in the possession or control of the wife as at the date of these Orders;

(f) her superannuation entitlements; and

(g) the part property settlement payment in the total sum of $80,000.

3. Save as is otherwise provided for in these Orders, the husband retains his right, title and interest in the following property to the exclusion of the wife:

(a) the property at J Street, Suburb K, Queensland;

(b) the property situated at L Street, City M, Region N, Country O;

(c) his interest and shareholding in P Pty Ltd (ACN …) including any assets of the Company;

(d) the balance of any bank accounts or like in the name of or to the benefit of the husband as at the date of these Orders;

(e) the proceeds of sale received from Motor Vehicle 1;

(f) the proceeds of sale received from the sale of the two watches;

(g) any personalty, furniture and chattels in the possession or control of the husband as at the date of these Orders;

(h) his superannuation entitlements; and

(i) the part property settlement payment in the total sum of $80,000.

4. The wife be solely liable for and indemnify the husband against any liability in the wife’s name or encumbering any item of property to which the wife is entitled pursuant to these Orders, howsoever arising, past, present and future, including but not limited to:

(a) the ANZ mortgage encumbering the property at E Street, Melbourne, Victoria; and

(b) the ANZ mortgage encumbering the property at H Street, Melbourne, Victoria.

5. The husband be solely liable for and indemnify the wife against any liability in the husband’s name or encumbering any item of property to which the husband is entitled pursuant to these Orders, howsoever arising, past, present and future, including but not limited to the ANZ mortgage encumbering the property at J Street, Suburb K, Queensland.

6. Within 7 days from the date of these Orders the husband at his sole expense withdraw the following caveats:

(a) Caveat … lodged on the property at H Street, Melbourne, Victoria and more particularly described as Volume … Folio …;

(b) Caveat … lodged on the property at F Street, Suburb G, Victoria and more particularly described as Volume … Folio …; and

(c) Caveat … lodged on the property at E Street, Melbourne, Victoria and more particularly described as Volume … Folio ….

7. Pursuant to s 81 of the Family Law Act 1975 (Cth) the parties intend that these Orders shall as far as practicable finally determine the financial relationship between them and avoid further proceedings between them.

8. All extant property and financial applications be dismissed except costs applications between the parties, if any, which are to be dealt with in accordance with the Family Law Rules 2021 (Cth).

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).

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

Background

Background to the litigation

Where the parties’ superannuation entitlements are minimal albeit with some discrepancy between the parties, counsel for each indicated that I need not consider any alteration or consideration of superannuation and given the very short duration of the relationship I agreed to this approach. BACKGROUND The wife was born in Country O. She is 42 years of age. She has lived in Australia since 2006 and is an Australian citizen. The wife works three days per week as a professional with a state government department. She earns $54,000 per annum supplemented by rental income. The wife has qualifications as a finance professional. There is no evidence before me that the wife has re partnered in any financially dependent or supportive way. The wife asserts a number of health issues including diagnoses of mental health disorders. The husband is 40 years old. He too was born in Country O. He too came to Australia in 2006. He maintains family business interests and family connections in Country O. The husband is self-employed through a complex corporate and business structure (at least historically). His business is to assist others from Country O in Australia. There is no evidence that the husband is other than in good health. The husband is remarried to Ms Q. They have a child born 2020. Ms Q is a student. She is the owner of two residential properties in Brisbane. The husband and his family live in one of those Brisbane properties. The husband deposes at [96] of his trial affidavit and in his sworn financial statement of a taxable income of $400 per week from his business. The financial statements of the business show a gross income closer to $250,000 per annum. The husband receives benefits from the business. The parties commenced a relationship in about mid-2016. They married in 2017. They separated on 7 July 2019 when the husband vacated the former matrimonial home at Suburb B. In 2019, the parties’ daughter X passed away. The parties were divorced in late 2020. Each of the parties has received $80,000 partial property settlement/litigation funding by instalments of $40,000 to each on 23 March 2021 and 22 July 2021.RELEVANT LEGAL PRINCIPLES The Court derives power to alter the property interests of parties from s 79 of the Act. “Property” includes both assets and liabilities with amendments to the Act providing that “superannuation may be treated as property”. In R v Watson: Ex parte Armstrong[2] the High Court noted the broad discretion in the Court being limited only by the Statute itself in the stating: …The judge called upon to decide proceedings of that kind is not entitled to do what has been described as “palm tree justice”. No doubt he is given a wide discretion, but he must exercise it in accordance with legal principles, including the principles which the Act itself lays down. …[2] (1976) 136 CLR 248 at 257; [1976] HCA 39. Significantly, s 79(2) of the Act provides:The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

On the force of the evidence, and on the balance of probabilities, I am satisfied that the husband has superior income and income potential to that of the wife. In all of those circumstances I find it just and equitable to make an adjustment on account of s 75(2) factors to the wife of 5 per cent.CONCLUSION Consequently, I find that the property of the parties should be divided as to 52.5 per cent to the husband and 47.5 per cent to the wife after consideration of both contribution and s 75(2) factors. The net property pool sits at value of $2,058,000. The husband has in his possession the following: Should the husband achieve 52.5 per cent of the property pool he would be entitled to value of $1,080,450 and hence would receive $63,450 cash from the monies held in trust. Nevertheless, the wife’s proposal put in final submissions by her counsel is that the monies on trust be divided equally between the parties in the sum of $187,969.54 to each. The husband would then receive $1,204,969.56 which I calculate to be 58.55 per cent of the property pool. Whilst my findings and determinations are based on justice and equity and where I am not bound by choice between the proposals of the parties, in this matter I accept the proposal of the wife as consistently put and argued by her since prior to the commencement of the trial. As such I will order that each party receive on half of the monies held in trust and that each otherwise retain those assets currently held by each as evidenced in these Reasons.

Ratio Decidendi

Legal Principle Established

Nevertheless, it is generally accepted that the expenditure on legal fees by a party from joint funds or funds that existed at separation will result in an “add-back” as distinct from funds used to pay legal fees which have been generated by a party post-separation either through their remunerative employment or by personal borrowings. In my view, it is also simpler to include in the list of assets any “partial property entitlements”, as in the $80,000 received by each of the parties here. CONSIDERATION OF THE ISSUE OF THE HUSBAND’S ASSERTED OWNERSHIP OF PROPERTIES AT SUBURB K, BRISBANE, QUEENSLAND AND REGION N, COUNTRY O – “ELIAS PRINCIPLE” The husband holds the titles to both properties. He says that he is not the beneficial owner of either. Nevertheless, in respect of the property at Suburb K, he concedes that he has historically claimed tax deductions by reasons of the property being tenanted together with a mortgage and hence it being negatively geared. As indicated to the husband’s counsel during submissions, this raises an issue of the “Elias principle.”[10] The “principle” is essentially one of admissibility of evidence or evidence estoppel. The original “principle” is identified in a subsequent judgment of Jordan & Jordan[11] which considered the effect of “Elias” as:When a party has made representations of fact to third parties and has gained advantage from so doing, it is open for the court in subsequent proceedings under section 79 of the Family Law Act to decline to accept from that party evidence which contradicts those representations.[10] Elias v Elias (1977) FLC 90-267.[11] (1997) FLC 92-737 at p 83, 927. The principle in “Elias” appears to have received endorsement and support in subsequent cases including in the Full Court in Dawes v Dawes[12] where their Honours say:… that a party to proceedings in this Court cannot be allowed to have his cake and eat it too. If, during the course of the marriage, the party represents to the Commissioner of Taxation that his or her spouse is a partner in a business operated by that party, or is a bona fide employee of such a business and is paid a salary as such, that party cannot be heard to say, in subsequent proceedings in this Court, that his or her spouse was not in fact a partner or was not in fact a bona fides employee, as the case may be… We think that it is a very sound principle, and its enunciation by Goldstein J in Elias & Elias (supra) was given at least tacit approval by the Full Court in Lee Steere and Lee Steere (1985) FLC 91–626 at p 80,078. We are aware that it has received more explicit approval by other Judges at first instance in unreported cases.[12] (1990) FLC 92–108 at p 77,725. Later jurisprudence cast doubt on the status of Elias as “principle” or being mandatory. Chisholm J in Jordan & Jordan (supra) did not apply such a principle in circumstances where the husband had not relied on the representation of the wife and that such representation was by a single statement rather than course of conduct. His Honour considered the proportionality of potential penalty from the prior false misrepresentation as against the advantages gained. Chisholm J stated at [83,925]:In these circumstances, it is necessary to consider the basis of the Elias principle. For reasons already given, while it may well be that the facts of such cases as Elias would justify a decision based on equitable estoppel, the rule acted on in the Family Court authorities is not expressly based on reliance, and it would do violence to the language of the decisions (and the actual decision in Cestaro) to limit it to circumstances falling within the equitable principles. It follows, I think that the basis for the rule must lie in the Family Law Act: as argued by the husband, it is a rule specific to family law.