DANAHER & REDLING
[2020] FCCA 2768
•9 October 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| DANAHER & REDLING | [2020] FCCA 2768 |
| Catchwords: HELD – Determination there be no adjustment for contributions – there be a 10% adjustment in favour of the de facto Wife for s.90SF(3) factors – splitting order in relation to the self-managed superannuation fund such that the de facto Wife receives a base amount of $50,000 – orders for a cash payment to be made to the de facto Wife by the de facto Husband in the event the splitting order cannot be complied with within 60 days. |
| Legislation: Family Law Act 1995 (Cth), ss.90SM, 90SF(3) |
| Cases cited: Stanford v Stanford [2012] HCA 52 |
| Applicant: | MS DANAHER |
| Respondent: | MR REDLING |
| File Number: | MLC 8949 of 2019 |
| Judgment of: | Judge Bender |
| Hearing date: | 18 September 2020 |
| Date of Last Submission: | 18 September 2020 |
| Delivered at: | Melbourne (by Videoconference) |
| Delivered on: | 9 October 2020 |
REPRESENTATION
| Counsel for the Applicant: | Mr Andrew Robinson |
| Solicitors for the Applicant: | Pearsons Lawyers Pty Ltd |
| Counsel for the Respondent: | Mr Anthony Fronis |
| Solicitors for the Respondent: | A ACE Solicitors |
ORDERS
The Respondent pay to the Applicant the sum of $71,028.20 (“the payment”) on or before 8 December 2020 (“the date”) being 60 days from the date of these orders.
Orders (3) – (6) herein are subject to orders (7)-(8) herein.
In respect of superannuation:
(a)a base amount of $50,000 be allocated by the Court as required by section 90XT(4) of the Family Law Act 1975, to the Applicant out of the Respondent’s interest (“the Respondent”) in the B Super Fund (“the Fund”) of which the Trustee is B Super Pty Ltd (“the Trustee”).
(b)pursuant to section 90XT(1)(a) of the Family Law Act 1975, whenever a splittable payment becomes payable from the Respondent’s interest in the superannuation Fund, the Trustee shall pay to the Applicant an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001, using the base amount of $50,000 and there be a corresponding reduction in the entitlement that the Respondent would have had in the superannuation Fund but for these Orders.
(c)if, before a splittable payment becomes payable in respect of the Respondent’s superannuation interest, the Trustee is permitted (be legislation and the Trust Deed of the Superannuation Fund) to make a payment to the Applicant (and accordingly reduce the Respondent’s benefit) then the Trustee may make that payment (and reduce the Husband’s benefit by the amount calculated by the Trustee) in full satisfaction of its obligations under these Orders.
(d)the Trustee shall do all such acts and things and sign all such documents as may be necessary to:
(i)Calculate, in accordance with the requirements of the Family Law Act1975 and the Family Law (Superannuation) Regulations2001, the entitlement for the Applicant created by Order (3) of these Orders.
(ii)Pay the entitlement whenever the Trustee makes a splittable payment out of the Respondent’s interest in the superannuation Fund; and
(iii)the Respondent shall do all acts and things and sign all such documents as may be required so that in accordance with the obligations set out under the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001 the Trustee of the Superannuation Fund can calculate the entitlement of, and make payment to, the Applicant in accordance with these Orders.
(e)This Order binds the Trustee of the Fund.
This Order have effect from the operative time and the operative time is four (4) clear business days after the service of a sealed copy of these Orders on the Trustee.
By no later than 8 December 2020 the parties, in their capacities as Trustees of the fund do all necessary acts and things and sign all such documents as may be required to transfer and roll-out the whole of the Applicant’s member account and/or entitlement in the Fund to such other superannuation Fund as she shall nominate at the equal shared expense of the parties (“the Super Roll Out”).
Orders (2)-(5) of these orders are binding on the parties in their capacities as directors of the Trustee and on that basis procedural fairness has been afforded on the Trustee.
In order to give effect to orders (2)-(6) herein, the Respondent shall do all acts and things necessary to have $50,000.00 of the monies currently invested on behalf of the Fund with Company C placed into the Fund’s Commonwealth Bank of Australia account by no later than 8 November 2020 and provide proof of same to the Applicant’s solicitors.
In the event the Respondent fails to comply with order (7) herein, orders (2)-(6) herein shall be discharged and the Respondent do all things necessary to pay the Applicant the sum of $50,000 (the default payment”) by no later than 8 December 2020 (“the default payment date”).
At the time of the Super Roll Out pursuant to order (5) herein or if the Respondent fails to comply with order (7) herein, whichever is the sooner, the Applicant do all acts and things and sign all documents as may be necessary at the expense of the Respondent to resign as:
(a)a Director of the Trustee of the Fund;
(b)transfer her one (1) ordinary share in the Trustee of the Fund to the Respondent; and
(c)Member of the Fund;
Pending the Super Roll Out or order (8) coming into effect, each of the Applicant and Respondent be and are restrained from:
(a)dealing with, charging, encumbering or disposing of any property of the Fund other than in accordance with the terms of this order or with the consent in writing of the other; and
(b)rolling over or transferring their member benefits to another superannuation fund.
Immediately following implementation of the Super Roll Out or order (8) coming into effect, the Respondent be solely liable for and indemnify and keep indemnified the Applicant in relation to any and all liabilities, including but not limited to any Taxation Payable, of or in relation to the Fund and including any liability in respect of any obligation of the Applicant as a Trustee and from all interest, penalties, costs, fines, claims, demands and proceedings of and in relation to the Fund and her role as a Director of the Trustee.
In the event the Respondent fails to make the payment by the date and/or the default payment by the default payment date, the Respondent sign all documents and do all acts and things necessary to transfer to the Applicant the real property at D Street, Suburb E (“D Street, Suburb E”) to be held on trust for sale and upon completion of the sale, the proceeds of be applied:-
(a)firstly, to pay sale costs and expenses;
(b)secondly, to discharge the registered mortgage;
(c)thirdly, so much of the payment or the default payment as is then outstanding from the due date together with interest at the rate of 7% per annum to the Applicant; and
(d)the balance (if any) to the Respondent.
Pending the date, the default payment date or the completion of the sale of D Street, Suburb E, the Respondent have the sole and exclusive right, enjoyment and benefit of D Street, Suburb E and during such right he shall pay all repayments pursuant to the mortgage and all outgoings in relation to the property of whatsoever nature and kind.
In the event that the payment and/or the default payment has not been made by the date or the default payment date, the Respondent shall forthwith vacate the property and provide vacant possession to the Applicant.
Pending the sale of D Street, Suburb E:
(a)the Respondent continue to pay the mortgage instalment repayments of principal and interest and all outgoings of the property as and when they fall due;
(b)the Respondent hold his interest in D Street, Suburb E upon trust pursuant to these Orders; and
(c)the Respondent not deal with, encumber, gift, alienate or otherwise dispose of his interest in D Street, Suburb E or any other property or financial resource other than with the Applicant’s written consent or Court Orders first obtained.
The Respondent forthwith do all acts and things necessary to sell the F Boat and G Boat Trailer registered in his name and the proceeds of sale be divided on the basis the Applicant receives 60% and the Respondent receives 40% and to give effect to these orders, the Applicant co-operate with the Respondent in making the speedboat available for inspection by potential purchases.
The Applicant otherwise retain for her sole and exclusive use, enjoyment and benefit all other items of property (both real and personal and including choses-in-action and financial resources) in her name, possession and/or control including but not limited to:
(a)the proceeds of sale of H Street, Suburb E already received by her;
(b)the proceeds of sale of the Motor Vehicle 1 and caravan already received by her;
(c)camper trailer;
(d)her personal belongings and effects;
(e)the furniture, furnishings and household contents in her possession;
(f)her bank accounts and savings; and
(g)her Super Fund J contributions and entitlements.
Subject to compliance with these Orders the Respondent retain for his sole and exclusive use, enjoyment and benefit all other items of property in his name (including D Street, Suburb E, choses-in-action and financial resources) and include:
(a)the proceeds that he received from the sale of H Street, Suburb E;
(b)his share of the proceeds of sale of the Motor Vehicle 1 and caravan;
(c)K Motorcycle;
(d)inheritance from his late mother;
(e)his bank accounts and savings;
(f)motor vehicles registered in his name including Motor Vehicle 2, Motor Vehicle 3 and Motor Vehicle 4;
(g)B Super Fund (including funds removed therefrom) subject to orders (2)-(6) herein; and
(h)Super Fund L entitlements.
The Applicant shall be solely liable for and indemnify the Respondent in relation to all debts and liabilities in her name or attaching to any item of property that she is retaining pursuant to these Orders;
The Respondent shall be solely liable for and indemnify the Applicant in relation to all debts and liabilities in his name or attaching to any item of property that he is retaining pursuant to these Orders;
Upon receipt of the payment and compliance by the Respondent with orders (2)-(7) herein and/or payment of the default payment, the Applicant withdraw, at her expense, any Caveat lodged by her or on her behalf over D Street, Suburb E.
IT IS NOTED that publication of this judgment under the pseudonym Danaher & Redling is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 8949 of 2019
| MS DANAHER |
Applicant
And
| MR REDLING |
Respondent
REASONS FOR JUDGMENT
Introduction
The parties are seeking property orders be made following the breakdown of their lengthy de facto relationship.
The Applicant de facto Wife (“the Applicant”) is seeking orders she receive 65% of the property pool. If the property pool is as set out by the Applicant in her Outline of Case, it would mean a payment to her by the Respondent de facto Husband (“the Respondent”) of $185,000.00 on the basis the Respondent retain all of the parties’ self-managed superannuation fund.
The Respondent seeks orders the parties’ property, including superannuation be divided equally between them. If the property pool is as set out in the Respondent’s Outline of Case, the Respondent would need to pay the Applicant $7,678.26 and there be a superannuation splitting order in the Applicant’s favour of $50,000.00 from the parties’ self-managed superannuation fund.
Background
The Applicant was born in 1977 and is aged 43 years. She is employed on a permanent part-time basis working 15 hours per week as an administration assistant and earns approximately $20,000 per annum. She is also engaged in full-time studies which she will complete at the end of this year. She has not re-partnered.
The Respondent was born in 1975 and is aged 45 years. He is a tradesman whose income ranged between $150,000 and $190,000 in the financial years ending June 2017, 2018 and 2019. It is his evidence that because the COVID-19 pandemic has affected the building industry, he is currently only working 2-3 days a week and is currently earning between $1,000 and $1,600 net per week.
The Respondent is engaged to Ms M. Whilst previously co-habituating, the Respondent and Ms M are currently living apart as they resolve some issues.
The parties began their relationship in 1994 and commenced co-habitation in 1998. There are two children of the relationship, Ms X born in 1999 (“Ms X”) and Mr Y born in 2000 (“Mr Y”).
For the majority of the relationship, the Applicant worked part-time as an administration assistant as well as performing the role of parent and homemaker. The Respondent was employed on a full-time basis throughout the relationship, including some two years when he worked and stayed in Town N during the week.
In 2002 the property at O Street, Suburb E (“O Street, Suburb E”) was purchased in the Respondent’s sole name.
In 2008, the parties established B Pty Ltd to purchase a Business franchise. The Applicant was made sole director and the parties were made joint shareholders of B Pty Ltd. This was done on the advice of the parties’ accountant to protect O Street, Suburb E. The franchise was managed by third-party Business Manager/s.
At an unknown date, the parties established a self-managed superannuation fund named the B Super Fund The trustee of the fund is B Pty Ltd. Both parties are directors of the Trustee Company. There is no evidence before the Court as to which of the parties contributed to this fund or who was responsible for its management albeit, the Respondent has, since separation, dealt with the fund as if it is in his own by investing the superannuation funds without consulting the Applicant.
In 2012 O Street, Suburb E was sold and the property at H Street, Suburb E (“H Street, Suburb E”) was purchased. This property was also purchased in the Respondent’s sole name.
The parties separated on 26 June 2015 when the Applicant left H Street, Suburb E. By agreement, Ms X and Mr Y lived equally between the parties after separation. Initially the Respondent paid the Applicant $200 per week in Child Support which reduced to $100 per week when Ms X turned 18 years old and ceased completely when Mr Y commenced his apprenticeship.
In 2016, the Respondent sold his Motor Vehicle 1 for $10,000. These funds were divided equally between the parties.
In 2016, the Respondent inherited $171,000 from his late Mother’s estate.
In April 2017, the Respondent sold H Street, Suburb E and settlement was effected on 3 September 2018. The net proceeds of sale of $432,047.30 were put into the Respondent’s bank account.
Contemporaneously with the settlement of the sale of H Street, Suburb E, the Respondent settled the purchase of D Street, Suburb E (“D Street, Suburb E”) utilising at least part of the proceeds of sale of H Street, Suburb E to complete that purchase.
On 9 August 2019, the Applicant commenced proceedings in the Federal Circuit Court seeking leave to proceed out of time pursuant to section 44(6) of the Family Law Act 1975 (Cth) (“the Act”) as well as orders for disclosure, discovery and a property division.
In September 2019 the Applicant paid $209,000.00 into the Applicant’s then solicitors’ trust account. This figure was made up of $200,000.00 from the proceeds of sale of H Street, Suburb E and a further $9,000.00 being 50% of the proceeds of sale of the parties’ caravan which was sold by the Respondent in September 2019.
On 14 October 2019 orders were made that the Applicant have leave to institute property proceedings out of time pursuant to 44(6) of the Act. Orders were also made by consent for the Respondent to file and serve his responding material within 7 days of the orders and for the parties to exchange listed documents by way of disclosure.
The Respondent filed his Response, Financial Statement and answering affidavit on 15 October 2019.
On 21 November 2019 the parties attended a conciliation conference which was unable to proceed because of the Respondent’s failure to comply with the orders for financial disclosure. Registrar George made orders by consent that the Respondent pay the Applicant’s costs of the conciliation conference in the sum of $2,500 within 21 days and he otherwise provide the Applicant with copies of his personal bank statements.
The Applicant filed an Application in a Case in December 2019 and an Amended Application in a Case in January 2020 seeking orders for the sale or winding up of the Business franchise, restraints on the Respondent dealing with his bank accounts, the return of $100,000 which was transferred by the Respondent from the B Super Fund’s Commonwealth Bank account to Company C and for enforcement of the 21 November 2019 costs order.
On 5 February 2020 Judge Riethmuller made the following orders:-
THE COURT ORDERS THAT:
Withdrawn Funds
(1) The Respondent forthwith replace the sum of $100,000.00 as withdrawn by the Respondent on 24 January 2020 to the B Super Fund Commonwealth Bank of Australia CDIA Account ...55.
(2) The Respondent be liable for and make payment of any interest lost as cause of the withdrawal from the Commonwealth Bank of Australia CDIA Account ...55 to the CDIA Account within 7 days of these Orders.
Restraints
(3) The Respondent be forthwith restrained from dealing with any and all accounts currently held in his name solely or jointly with any other party including but not limited to:
(a) National Australia Bank Loan Account No. ...32;
(b) National Australia Bank Redraw Account No. ...95;
(c) Commonwealth Bank of Australia CDIA Account No. ...55;
(d) Commonwealth Bank of Australia B Pty Ltd accounts;
(e) P Bank Account ...63.
Discovery
(4) The Respondent forthwith provide documentation pertaining to Company C including but not limited to P Bank Account ...63.
(5) Within 14 days of receiving a certified copy of these orders that National Australia Bank provide full details and explanations of the transactions that took place on 7 September 2018 to 14 September 2018 with regard to the joint Home Loan Account ...67 including but not limited to:
(a) The account owner of the deposited sum of $774,975.40 on 7 September 2018;
(b) The account owner of the withdrawal sum of $774,975.40 on 10 September 2018;
(c) Any other documentation/information pertaining to the whereabouts of the remaining balance.
Previous Costs Order
(6) The Respondent forthwith make payment to the Applicant’s Solicitor’s Trust Account in the sum of $2,500.00 being costs of the Conciliation Conference awarded to the Applicant on
21 November 2019.
(7) In the event that the Respondent does not deposit the sum of $2,500.00 within 7 days of 5 February 2019, the following shall occur:
(a) The Court issue a warrant to enforce the Respondent’s obligation to pay the sum of $2,500.00 plus 10 percent (10%) per annum adjusted monthly by seizure and consequent sale of the K Motorbike owned by the Respondent as articulated in the Respondent’s Financial Statement filed 19 November 2019;
(b) The Respondent be restrained from selling, transferring or otherwise dealing with any property without a Court order;
(c) That any balance of funds after the payment of sale costs be held in the Applicant’s Solicitor’s Trust Account until further order of the Court.
The Franchise Business
(8) Simultaneously and immediately the Applicant will:
(a) Make enquiries of the other businesses in the area as to whether they wish to purchase B PTY LTD (“B Pty Ltd”);
(b) Advise Business Marketing that she wishes to sell the franchise in order to ascertain as to whether Business Marketing have any party registered to purchase a franchise, and
(c) Place B Pty Ltd on the open market for sale.
(9) The Respondent shall return the company owned Motor Vehicle 4 to the B Pty Ltd premises within 28 days at an agreed time arranged between the parties by email.
(10) In the event an offer to sell B Pty Ltd occurring the parties will do all things and sign all documents necessary to sell B Pty Ltd, as agreed and failing agreement as directed by Q Business Group located at R Street, Suburb E in the State of Victoria.
(11) In the event an offer to sell B Super Fund is not receive on or before 28 February 2020 (unless otherwise agreed) the parties do all things necessary and sign all documents necessary to wind up B Pty Ltd.
(12) Upon the sale of B Super Fund the parties apply the proceeds of the sale (if any) and thereafter the parties meet in equal shares:
(a) The costs of the sale;
(b) Any surplus funds are to be held in the Wife’s Solicitor’s Trust Account until further order by the Court or agreement in writing.
Part Property Settlement
(13) The Applicant be at liberty to withdraw the funds held in the Trust Account of Company S by way of part property settlement.
Registrar to Sign
(14) Pursuant to S.106A of the Family Law Act 1975:
(a) In the event a party fails to comply with an order of this Court to sign an document, a Registrar of the Federal Circuit Court be appointed to execute all documents in the name of the party in default and do all acts and things necessary to give validity and operation to these orders;
(b) The defaulting party is ordered to pay all reasonable costs incurred by the other party for the purposes of enforcing this order; and
(c) For the purposes of this order, an affidavit setting out the defaulting party’s failure to comply with the orders shall be sufficient evidence of default.
Additional Orders
(15) The parties be restrained from dealing with any other asset of the relationship without written agreement of the other.
(16) The Applicant’s costs associated with this application be reserved.
(17) Liberty to apply.
On 28 February 2020 the Respondent issued proceedings in the Supreme Court of Victoria seeking orders that B Pty Ltd be wound up because the Applicant had not entered into a contract of sale for the Business Franchise.
On 27 February 2020 the Applicant received an Offer of Purchase for B Pty Ltd. On 3 March 2020 the Applicant forwarded a copy of the Offer of Purchase to the Respondent seeking he withdraw his application before the Supreme Court.
On 13 March 2020 the Respondent’s application came before the Supreme Court. Associate Justice T dismissed the Respondent’s originating proceedings and ordered he pay 70% of B Pty Ltd’s costs.
It is the Applicant’s evidence that because of the uncertainty caused by the Respondent’s Supreme Court proceedings, the Offer to Purchase was withdrawn. With the impact of COVID-19, the business became untenable, no purchaser could be found so it was closed and is now in the hands of administrators U Liquidators.
In breach of the orders of Judge Riethmuller of 5 February 2020 the Respondent has:
a)not replaced the $100,000 into the B Super Fund CBA account;
b)not discovered the documents pertaining to Company C;
c)not discovered the documents relevant to the joint NAB home loan account; and
d)paid only $500 of the $2,500 costs owing to the Applicant.
In breach of the orders of Associate Justice T, the Respondent has not paid 70% of the costs of B Pty Ltd arising from his Supreme Court proceedings.
Subsequent to the 5 February 2020 orders the Respondent withdrew $42,000 from his Super Fund L entitlements and invested those monies in Company C, presumably as part of the investment by B Super Fund. The Respondent did not tell the Applicant of this.
In response to a further Application in a Case filed by the Applicant seeking compliance by the Respondent with Judge Riethmuller’ s orders of 5 February 2020 and documents from the Respondent’s fiancé, Ms M, Judge Stewart made orders on 2 April 2020 for the Respondent to cause a Financial Statement to be filed by Ms M within 28 days of those orders.
The Evidence
The Applicant relies on the following documents:
a)her Further Amended Initiating Application filed 25 August 2020;
b)her trial affidavit filed 21 August 2020;
c)her Financial Statement filed 21 August 2020;
d)documents produced under subpoena;
e)the orders of the Court made 14 October 2019, 21 November 2019, 5 February 2020 and 3 April 2020; and
f)her Outline of Case filed 16 September 2020.
The Applicant also gave viva voce evidence at the final hearing.
Despite orders requiring he do so, the Respondent did not file a trial affidavit. Accordingly, he sought to rely on:
a)his affidavit filed 15 October 2019;
b)his Financial Statement filed 15 October 2019;;
c)the Financial Statement of Ms M filed 11 May 2020; and
d)his Outline of Case filed 17 September 2020.
The Respondent also gave viva voce evidence at the final hearing.
Credit
The Respondent
Having listened to and carefully watched the Respondent giving his oral evidence, I am of the view that where there is any matter where the Applicant puts the Respondent’s evidence into issue, unless there is an undisputed piece of corroborative evidence, I cannot accept the Respondent’s evidence.
There were many occasions when the Respondent said he did not know something, was unable to remember something or his answers beggared belief. I am of the view the Respondent was being, at the very least, evasive. Examples of this are as follows:-
·the Respondent advised the Court he invested the inheritance of $170,000 from his late Mother’s estate in a company called “V” through the auspices of his friend, Mr W. He could not remember when or where he met Mr W and did not know if Mr W’s surname had an “e” on the end. When asked how his investment was progressing he answered “Dunno – still invested. I’m going to chase that up.”
·the Respondent was asked why he had invested $100,000 of the self-managed superfund monies in Company C. The Respondent explained he met a gentleman by the name of Mr Z at his gym. The Respondent was complaining to Mr Z about the low interest rate the fund’s monies were earning with the Commonwealth Bank of Australia and Mr Z told him he “had a couple of projects and I could invest with [him]”. Mr Z offered 7% interest over three years with the interest being paid annually. This appears to be the extent of the Respondent’s research into making the decision to invest the $100,000 with Mr Z.
·Tendered into evidence was the Respondent’s subpoenaed NAB bank records. He was taken through the statement relating to his current NAB home loan and asked to explain eight withdrawals he made between February 2018 and November 2019 ranging from $1,800 to $50,000. The Respondent could not remember what any of the withdrawals were made for save one of $50,000 which he remembered had been invested via Mr Z in Company C.
·The Respondent advised the Court and the Applicant that the $42,000 he withdrew from his Super Fund L has been invested via Mr Z in Company C. When asked why he had withdrawn these monies from a well-respected and high performing superannuation fund, he did not reply. The Respondent confirmed he withdrew the $42,000 from Super Fund L after the court orders made 5 February 2020. When asked why he did this given it was clear the Court did not condone him dealing with his superannuation, the Respondent did not answer.
·The Respondent was asked why he has not complied with the Court orders to replace the $100,000 he withdrew from the B Super Fund’s Commonwealth Bank account. The Respondent’s evidence is he asked Mr Z for the money and Mr Z said “no” because it was “hard to get the money”. Despite this, the Respondent told the Court that Mr Z will pay any amount ordered to equalise the parties’ superannuation entitlements.
·Whilst it had been “too hard” to get the money from Mr Z to comply with the Court’s orders to forthwith replace the $100,000 into the B Super Fund CBA bank account, the sum of $50,000 has recently been paid from the monies invested by the Respondent with Mr Z to pay the Respondent’s legal costs. The Respondent’s lawyers were recommended to him by Mr Z and represent Mr Z in ongoing proceedings in relation to alleged corruption by Mr Z. The Respondent does not see this as a conflict of interest.
·The Respondent was asked why he had not paid all of the $2,500 costs he was ordered to pay by Registrar George. He told the Court “I am going to pay that”.
·Registered in the Respondent’s name is a Motor Vehicle 2 which was purchased on 5 June 2020 for $57,625.50. It is the Respondent’s evidence this vehicle belongs to Ms M and is only in his name because Ms M could not obtain finance to purchase the vehicle herself. The Respondent’s evidence is that the vehicle is fully financed and it is Ms M who makes the repayments on the loan. The Respondent explained that Ms M’s previous vehicle “kept breaking down so the decision was made to buy the Motor Vehicle 2.” The Respondent disclosed no documents evidencing the existence of the loan on the Motor Vehicle 2. When asked where such documents were, the Respondent advised “I gave them to my solicitor”.
The Law
Section 90SM of the Family Law Act 1975 (“the Act”) defines the Court’s powers in determining applications for property settlements after the breakdown of a de facto relationship. Section 90SM(2) of the Act provides that:
“The Court must 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.”
Section 90SM(4) of the Act sets out the matters the Court must take into account when considering what orders should be made for the alteration of the interest of the parties in property. Those matters are:
“(a) the financial contribution made directly or indirectly by or on behalf of a party to the de facto relationship or a child of the de facto relationship to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the de facto relationship or either of them; and
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the de facto relationship or a child of the de facto relationship to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the de facto relationship or either of them; and
(c)the contribution made by a party to the de facto relationship to the welfare of the family constituted by the parties to the de facto relationship and any children of the de facto relationship, including any contribution made in the capacity of homemaker or parent; and
(d)the effect of any proposed order upon the earning capacity of either party to the de facto relationship; and
(e) the matters referred to in subsection 90SF(3) so far as they are relevant; and
(f)any other order made under this Act affecting a party to the de facto relationship or a child of the de facto relationship; and
(g)any child support under the Child Support (Assessment) Act 1989 that a party to the de facto relationship has provided, is to provide, or might be liable to provide in the future, for a child of the de facto relationship.”
The matters to be taken into account under section 90SF(3) of the Act are as follows:
“(a) the age and state of health of each of the parties; and
(b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c)whether either party has the care or control of a child of the de facto relationship who has not attained the age of 18 years; and
(d)commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain; and
(e)the responsibilities of either party to support any other person; and
(f)subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
(i) any law of the Commonwealth, of a State or Territory or of another country; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party; and
(g)where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable; and
(h)the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
(ha)the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant; and
(j)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k)the duration of the de facto relationship and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l)the need to protect a party who wishes to continue that party's role as a parent; and
(m)if either party is cohabiting with another person--the financial circumstances relating to the cohabitation; and
(n)the terms of any order made or proposed to be made under section 90SM in relation to:
(i) the property of the parties; or
(ii) vested bankruptcy property in relation to a bankrupt party; and
(o) the terms of any order or declaration made, or proposed to be made, under this Part in relation to:
(i) a party to the subject de facto relationship (in relation to another de facto relationship); or
(ii) a person who is a party to another de facto relationship with a party to the subject de facto relationship; or
(iii) the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv) vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(p) the terms of any order or declaration made, or proposed to be made, under Part VIII in relation to:
(i) a party to the subject de facto relationship; or
(ii) a person who is a party to a marriage with a party to the subject de facto relationship; or
(iii) the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv) vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(q) any child support under the Child Support (Assessment) Act 1989 that a party to the subject de facto relationship has provided, is to provide, or might be liable to provide in the future, for a child of the subject de facto relationship; and
(r) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(s)the terms of any Part VIIIAB financial agreement that is binding on either or both of the parties to the subject de facto relationship; and
(t) the terms of any financial agreement that is binding on a party to the subject de facto relationship.”
The High Court in the matter of Stanford v Stanford [2012] HCA 52 held that prior to making orders for the division of the property in which the parties have an equitable interest in accordance with the provisions of section 79 of the Act, the Court must first determine that is just and equitable that the Court make such orders.
The High Court in Stanford (supra) held that in the majority of matters the decision as to whether it is just and equitable for the court to make property orders is easily resolved by the breakdown of the marital relationship and the mutual desire of both parties for orders altering their respective property interests.
This is such a matter. It is apparent therefore that it is just and equitable that orders be made adjusting property matters between the parties.
In Karlovsky & Karlovsky (No. 3) [2019] FamCA 847, Justice Watts at paragraph [242] under the heading “Approach” sets out the steps to be taken by the Court when determining property matters as follows:
“(a) Identify according to ordinary common law and equitable principles and then value the property, assets, financial resources and liabilities of the parties;
(b) Determine whether it is just and equitable to make an order altering those interests and if so;
(i) Identify relevant contributions and assess them;
(ii) Consider relevant matters referred to in s 79(4)(d) – (g) of the Family Law Act 1975 (“Cth”) (“the Act”); and
(c) Determine what order adjusting the property, assets and liabilities of the parties is just and equitable.”
The Issues
Having read the documents relied upon by the parties, heard their evidence and listened to the submissions made by the parties’ Counsel on their behalf, the issues central to the determination of this matter are as follows:
(a)what constitutes the pool of assets for the parties particularly given:
(i)the Respondent’s failure to make full and frank disclosure and the question of his credit as a witness;
(ii)the parties separation five years ago and their subsequent acquisition and use of assets;
(b)should there be an adjustment for contributions;
(c)should there be an adjustment for s90SF(3) factors in the Applicant’s favour and in particular:
(i)the Respondent’s greater earning capacity;
(ii)the Respondent’s greater financial resources; and
(iii)the Respondent’s alleged negative contribution arising from his Supreme Court action which the Applicant argues prevented the sale of the Business franchise;
(d)should the Court make a superannuation splitting order to equalise the parties’ superannuation entitlements or should it make an order for a cash payment to the Applicant given the Respondent’s failure to comply with the orders made by Judge Riethmuller to replace monies removed by him from the parties’ self-managed superannuation fund and therefore a concern that any splitting order could be complied with.
The Parties’ Property
The Respondent’s failure to make full and frank disclosure
In Karlovksy (Supra) at paragraphs [163]-[165], Justice Watts under the heading “Full and Frank Disclosure by the Husband” sets out the law relevant to this issue as follows:
“[163] A party to property proceedings is required to make a full and frank disclosure of their financial position (Oriolo & Oriolo (1985) FLC 91-653; Black & Kellner (1992) FLC 92-287 (“Black & Kellner”); Weir & Weir (1993) FLC 92-338 (“Weir & Weir”)). That case law is reinforced by the Family Law Rules 2004 (Cth) (“the Rules”), specifically, Parts 13.01 and 13.02.
[164] In Weir & Weir, the Court stated at 79,593 that:
It seems to us that once it has been established that there has been a deliberate non-disclosure, which follows from his Honour's findings in this case, 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.
[165] Whilst this general statement is often quoted, it is important to engage in the particular facts of the non-disclosure and the inferences that should be drawn from them. There are those cases where a finding of non-disclosure is no more than one which complicates the fact finding process (see Franklin & Ennis [2019] FamCAFC 91 at [9]). There are other cases where the nature and extent of the non-disclosure make the approach described in Weir & Weir thoroughly permissible (also see the discussion in the English cases referred to in Al Baker & Al Baker [2016] EWHC 2510 (Fam) at [17] – [18]).”
There is no doubt in this matter that the Respondent has failed to make full and frank disclosure during these proceedings. The Applicant was forced to issue subpoenas in order to obtain the Respondent’s bank accounts, details of motor vehicles owned by him and other relevant financial information.
The Respondent failed to file a trial affidavit and up to date Financial Statement such that the only sworn evidence before the court in written form was his affidavit filed nearly 12 months ago.
My findings in relation to the veracity of the Respondent’s viva voce evidence is set out clearly in paragraph [38] of this judgment and it is fair to say that unlike the Applicant, the Respondent did not impress as a witness of truth.
It was submitted on behalf of the Applicant that in these circumstances the Court can have little to no confidence in the Respondent’s evidence as to his financial circumstances. The Applicant submits it would be impossible for the Court to identify the property in which the Respondent has an equitable interest and that in accordance with the principles set down in Weir & Weir (Supra) the Court should not be unduly cautious.
There is however no dispute between the parties in relation to their assets at separation. At that time they owned H Street, Suburb E, the Business Franchise, they each had a motor vehicle, there was the self-managed B Super Fund, the Respondent had superannuation with Super Fund L and the Applicant had superannuation with Super Fund J.
After separation the Respondent inherited $171,000 from the estate of his late mother.
After separation H Street, Suburb E was sold and the net proceeds of sale were $423,047. The Applicant received $200,000 of those proceeds of sale and the Respondent received $223,047.
It is the Applicant’s evidence that the monies received by her from the proceeds of sale have been utilised in the payment of debts, the purchase of a new motor vehicle and in general living expenses.
The Respondent utilised at least part of the proceeds of sale of H Street, Suburb E to purchase D Street, Suburb E.
What is completely unclear as a result of the manner in which the Respondent’s evidence was placed before the court is how he has managed his financial affairs since separation. This includes the investment of the inheritance the Respondent received from his mother, the drawdown of at least $50,000 against the home loan on D Street, Suburb E, his management of the self-managed B Super Fund and the purchase of the Motor Vehicle 2.
What is also uncertain is the Respondent’s capacity to comply with any splitting order to equalise the parties’ superannuation entitlement given his evidence that compliance with orders for the return of $100,000 to the superannuation fund’s Commonwealth Bank account has not been possible as Mr Z who manages the investment in which he placed those monies advised him it would be “too hard”.
Because of this, the Court is able to determine the pool of assets for division between the parties. What is not possible to determine with any specificity is the financial resources that are available to the Respondent.
I therefore find that the parties’ table of assets, liabilities and financial resources for the purposes of this matter is as follows:
Assets and Liabilities
| Assets | Value |
| Proceeds of Sale of H Street, Suburb E | $432,047 |
| Proceeds of Sale of Motor Vehicle 1 | $10,000 |
| Proceeds of Sale of Caravan | $18,000 |
| Respondent’s K Motorbike | $15,000 |
| F Boat (in the Respondent’s name but the Applicant’s possession) | $5,000 |
| Applicants Camper Trailer | $5,000 |
| B Pty Ltd (Registered owner of Business Franchise) | In liquidation |
| = $485 ,047.00 | |
| Superannuation | |
| B Super Fund Self-Managed Superannuation Fund including money invested with Company C | $150,000 |
| Respondent’s Super Fund L | $11,269.00 |
| Applicant’s Super Fund J | $54,472.35 |
| = $207,741.35 |
Financial Resources
| Resource | Value | Resource | Value |
| Applicant | Respondent | ||
| Motor Vehicle 5 | $10,000.00 | Investment with Company C | $50,000.000 * |
| Investment with “V” | $171,000.00 (Estimated) ** | ||
| Motor Vehicle 2 | $57,000.00 *** | ||
| Money in Bank | $6,000.00 | ||
| Motor Vehicle 4 less finance | $50,000 - $50,000 = $ NIL | ||
| D Street, Suburb E less NAB mortgage | $690,000 - $520,000 = $170,000 | ||
| $10,000.00 | = $464,000.00 |
* Allegedly used by the Respondent’s to meet legal costs (however no documents have been provided substantiating same).
** Documents substantiating this investment have not been provided to the Court.
*** Allegedly subject to finance of same amount as the value of the vehicle
(however, no documents have been provided substantiating same).
Contributions
The parties were in a relationship for 17 years and have two now adult children; Ms X aged 21 years and Mr Y aged 19 years. Both Ms X and Mr Y are financially independent.
During the relationship the Applicant, other than for a brief period of maternity leave, was primarily employed on a part time basis as a admin assistant as well as undertaking the bulk of the parenting and domestic duties.
The Respondent was in full time employment for the entirety of the relationship including a period when he worked away from home and periods when he worked more than one job.
After separation the parties shared the care of their children. The Respondent paid the Applicant by informal agreement the sum of $100 per week for each of the children until they Ms X turns 18 and Mr Y commences an apprenticeship.
In 2008, the parties purchased a franchise in Suburb E through a corporate entity B Pty Ltd. Neither party was actively involved in the management of this business leaving the day to day running of the franchise in the hands of managers.
In 2019, the Applicant agitated for the sale of the franchise and orders were made by Judge Riethmuller in February 2020 addressing the sale of the business.
At or about the same time as the Applicant received an offer to purchase the business, the Respondent commenced Supreme Court proceedings seeking orders to wind up the business. That application was dismissed in the Supreme Court in March of 2020 with an order that the Respondent pay 70% of the legal costs of B Pty Ltd.
It is the Applicant’s evidence that because of the uncertainty created by the proceedings commenced by the Respondent, the sale of the business fell through.
The business has since been placed into the hands of administrators.
The Applicant submits that the Respondent’s action in commencing the unnecessary Supreme Court proceedings resulted in the parties’ suffering a loss as they were unable to sell the business. It is submitted that this constitutes a negative contribution by the Respondent and is a factor this Court should take into account when determining the parties’ respective contributions.
The difficulty with the Applicant’s submission in relation to the Business Franchise is that the Applicant placed no evidence before the Court in relation to whether the sale of the business would have generated any profit to the parties or whether it would only have met the business debts so that is did not need to be placed into administration.
The Applicant also concedes that the onset of COVID-19 had a negative impact on the business and was a major factor in it not attracting further buyers and for it having to close.
It is therefore unknown whether it was the Supreme Court proceedings or COVID-19 which prevented the business selling and whether a sale would have resulted in a profit to the parties. As such, the Respondent’s Supreme Court proceedings cannot be found to be a negative contribution.
Having considered the parties’ contributions both during and after separation, I am of the view that the parties’ contributions should be considered equal and there should be no adjustment in either parties favour for contributions.
S90SF(3) factors
It is submitted on behalf of the Applicant that there should be an adjustment in her favour of 15% for section 90SF(3) factors.
The basis for this adjustment is argued to be the discrepancy in the parties’ earning capacity, the Respondent’s greater financial resources and his failure to make full and frank disclosure.
Whilst it is accepted that the Respondent’s current earnings are impacted by COVID-19, his tax returns for the financial years ending 30 June 2017, 2018 and 2019 disclose his earnings as a tradesman were between $150,000 and $200,000 a year. There is no reason to believe he will not be able to earn at that level once COVID-19 restrictions are lifted.
In comparison the Applicant is a full time student and currently only working 15 hours per week. Her income is $400 a week.
The Applicant is studying and hopes to graduate at the end of this year. She will then do a year as a graduate health care worker, after which time she has the capacity to earn between $70,000 and $80,000 per annum.
It is submitted on behalf of the Applicant that even when fully qualified, the Respondent’s earning capacity is at least double her own.
It is further submitted on behalf of the Applicant that the Respondent’s financial resources greatly exceed hers. He has equity in his home, he has investments as a result of the inheritance received from his mother and further investments through his friend Mr Z.
It is submitted on behalf of the Applicant that the Court should not trouble itself too much with trying to quantify the extent of the Respondent’s financial resources given his failure to provide full and frank disclosure and the lack of any credibility in the evidence given by him in relation to his current financial situation.
It is submitted on behalf of the Respondent that there should be no adjustment between the parties for section 90SF(3) factors. The Respondent argues that once qualified, the Applicant will be more than able to support herself going forward and whilst the Respondent’s earning capacity is greater than that of the Applicant, it is not so crushingly different that it justifies an adjustment.
No submissions were made on behalf of the Respondent in relation to his financial resources.
I am satisfied that there should be an adjustment in the Applicant’s favour for section 90SF(3) factors.
Even when the Applicant completes her training and graduate year, the Respondent’s earning capacity will more than double that of the Applicant.
I am also satisfied that the Respondent has considerably greater financial resources than has the Applicant.
It is not possible to quantify the Respondent’s financial resources with any precision given the manner in which the Respondent presented his case. I am satisfied however that those resources are in the hundreds of thousands of dollars.
On that basis I am of the view that the adjustment in the Applicant’s favour should be 10%, reflecting a 5% adjustment for the income disparity between the parties and 5% for the Respondent’s greater financial resources.
The property pool for division between the parties, excluding superannuation and the speed boat which neither party wishes to retain is $480,047.00. 60% of that pool is $288,028,20. The Applicant has already had the benefit of $214,000 and she has the camper worth $5,000 in her possession. This means that the Respondent must pay the Applicant $69,028.20 in order to achieve an adjustment of the parties’ property as has been determined by me as just and equitable.
As neither party wishes to retain the speed boat and the trailer which it is on, the boat and trailer should be sold and the proceeds of sale divided between the parties on a 60/40 basis.
Superannuation
Both parties were in agreement that their superannuation should be equalised. This in practical terms would involve a splitting order of $50,000 out of the self-managed superannuation fund in the Applicant’s favour.
It was submitted on behalf of the Applicant that given the Respondent’s failure to comply with the orders that the $100,000 that he invested from the B Super Fund’s bank account with his friend Mr Z be redeposited into the Fund’s bank account, this court can have no confidence that the Respondent will comply with any superannuation splitting order it may make.
It was therefore submitted on behalf of the Applicant that this Court should make an order for the Respondent to pay the Applicant $50,000 cash and that he retain the totality of the self-managed superannuation fund and his superannuation with Super Fund L.
In response to this submission, Counsel for the Respondent proposed that the Court should make a superannuation splitting order in respect to the self-managed superannuation fund with a specific date for compliance and that if the fund was unable to make the necessary payment by the specified date, the orders provide for the Respondent to make a cash payment of $50,000 to the Applicant.
Whilst I harbour some doubt about the Respondent doing all things necessary to enable the B Super Fund to comply with a superannuation splitting order, I note that on the Respondent’s evidence he was able to liberate $50,000 from his investment with Mr Z in order to meet his legal fees. This evidences shows some capacity on the Respondent’s behalf to liberate the necessary funds from Mr Z in order to comply with a splitting order.
I am therefore of the view an order in the terms proposed by the Respondent allows the parties’ superannuation to be equalised but ensures that if the Respondent again fails to comply with Court orders that he do all things necessary to enable the splitting order to be effected in a timely manner, the Applicant will receive a cash payment in lieu of superannuation from the Responded so that she is not left at a disadvantage.
Conclusion
Just and Equitable
The orders that are proposed by the Court will see the Applicant receive a capital payment which will give her a degree of financial security whilst she completes her qualifications. The Applicant will also receive either an appropriate increase in her superannuation to reflect the parties’ joint endeavours over a lengthy relationship or alternatively receive a further cash payment which will provide her with a further degree of financial security.
The Respondent has the capacity to earn a considerable income and get himself back on his feet. If his evidence is accepted, he has a proven borrowing capacity as it would appear in the last 12 months he has been able to borrow over $100,000 in order to purchase expensive motor vehicles.
The Respondent therefore should be able to borrow the funds to pay the Applicant and retain his home and move on with his life.
I am therefore satisfied that the orders proposed by the Court are just and equitable.
As previously noted in this judgment, the Respondent has not paid the Applicant the full amount of the costs he was ordered to pay at the conciliation conference. Accordingly, orders will be made for the Respondent to pay the Applicant the sum of $7,1028.20 within 60 days being the payment required to achieve a 60/40 adjustment of the parties’ realisable property and the outstanding costs of $2,000.00.
A splitting order will be made in the Applicant’s favour requiring the Trustee of the B Super Fund to roll out the sum of $50,000.000 to a fund nominated by the Applicant.
To ensure the Trustee of the B Super Fund is able to comply with the splitting order, the Respondent will be ordered to cause the sum of $50,000.00 to be deposited in the B Super Fund’s Commonwealth Bank account within 30 days and provide proof of same to the Applicant’s solicitors.
In the event that the Respondent fails to cause the sum of $50,000.00 to be deposited into the B Super Fund’s Commonwealth Bank account within 30 days, the orders will provide that the Respondent is to pay the Applicant $50,000.00 in a cash payment within 60 days (“the default payment”).
In the event the Respondent fails to make the payment of $71,028.20, and/or fails to make the default payment, orders will be made for the Respondent’s D Street, Suburb E property to be transferred to the Applicant for sale and for the Applicant to receive from the net proceeds of sale all monies owing to her together with penalty interest of 7% from the date.
The orders will also provide for the Respondent, as he is the registered owner, to sell the speed boat and the trailer it is on and that the proceeds of sale be divided between the parties such that the Applicant receives 60% and the Respondent receives 40%.
Finally, given the manner in which the Respondent has dealt with the B Super Fund since separation and that he will be retaining the balance of the monies in that fund, orders will be made requiring the Applicant to resign as shareholder and director of the Trustee of the Fund and for the Respondent to be responsible for all things necessary to ensure compliance by the Fund with the regulations for the management of the Fund and that he indemnify the Applicant against all liabilities incurred by the Fund including any tax or penalties that may arise as a result of any non-compliance.
I certify that the preceding one hundred and eight (108) paragraphs are a true copy of the reasons for judgment of Judge Bender
Associate:
Date: 8 October 2020
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