Defries & Kemeny (No 4)
[2023] FedCFamC1F 1106
•18 December 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Defries & Kemeny (No 4) [2023] FedCFamC1F 1106
File number(s): BRC 10850 of 2013 Judgment of: HOGAN J Date of judgment: 18 December 2023 Catchwords: FAMILY LAW – PROPERTY – Where the parties cohabited for 16 years – Where there are two children of the marriage – Where the parties have been separated for 10 years – Where the applicant made overwhelmingly substantial financial and non-financial contributions during and after the cohabitation – Where the respondent made limited financial and non-financial contributions – Where the applicant has been the children’s sole carer since December 2013 – Where there is a significant history of family violence – Where the applicant has a substantial judgment and an indemnity costs order against the respondent for a physical attack perpetrated by him – Where the respondent became bankrupt on his own petition. Legislation: Bankruptcy Act 1966 (Cth)
Family Law Act 1975 (Cth)
Cases cited: Bevan & Bevan (2014) FLC 93-572; [2014] FamCAFC 19
Black and Kellner (1992) FLC 92-287; [1992] FamCA 2
Brandt and Brandt (1997) FLC 92-758; [1997] FamCA 21
Candle & Falkner [2021] FedCFamC1A 102
Chapman & Chapman (2014) FLC 93-592; [2014] FamCAFC 91
Chorn and Hopkins (2004) FLC 93-204; [2004] FamCA 633
Clauson and Clauson (1995) FLC 92-595; [1995] FamCA 10
Ferraro and Ferraro (1993) FLC 92-335; [1992] FamCA 64
Hepworth v Hepworth (1963) 110 CLR 309; [1963] HCA 49
Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143; [2003] FamCA 395
Hicks & Trustee of the Bankrupt Estate of Hicks and Anor (2021) FLC 94-006; [2021] FamCAFC 19
Kennon v Kennon (1997) FLC 92-757; [1997] FamCA 27
Kowaliw & Kowaliw (1981) FLC 91-092
Lee Steere and Lee Steere (1985) FLC 91-626; [1985] FamCA 57
Mallet v Mallet (1984) 156 CLR 605; [1984] HCA 21
Marsh v Marsh (1994) FLC 92-443; [1993] FamCA 57
Norbis v Norbis (1986) 161 CLR 513; [1986] HCA 17
Omacini & Omacini (2005) FLC 93-218; [2005] FamCA 195
Pastrikos and Pastrikos (1980) FLC 90-897; [1979] FamCA 56
Stanford and Stanford (2012) 247 CLR 108; [2012] HCA 52
Steinbrenner & Steinbrenner [2008] FamCAFC 193
Suiker and Suiker (1993) FLC 92-436; [1993] FamCA 141
Townsend & Townsend (1995) FLC 92-569; [1994] FamCA 144
Trevi & Trevi (2018) FLC 93-858; [2018] FamCAFC 173
Vass v Vass (2015) 53 Fam LR 373; [2015] FamCAFC 51
Waters and Jurek (1995) FLC 92-635; [1995] FamCA 101
Weir & Weir (1992) 16 Fam LR 154; [1992] FamCA 69
Division: First Instance Number of paragraphs: 105 Date of hearing: 12 December 2023 Place: Brisbane Counsel for the Applicant: Mr Coulsen Solicitor for the Applicant: Evans Brandon Family Lawyers For the Respondent: No appearance Counsel for the Other: Mr Fisher Solicitor for the Other: CJM Lawyers ORDERS
BRC 10850 of 2013 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS BINGHAM AS CASE GUARDIAN FOR MS DEFRIES
Applicant
AND: MR KEMENY
Respondent
MR RODRIGO (AS TRUSTEE IN BANKRUPTCY OF MR KEMENY)
Other
ORDER MADE BY:
HOGAN J
DATE OF ORDER:
18 DECEMBER 2023
THE COURT ORDERS BY WAY OF FINAL ORDER PURSUANT TO S 79(1) OF THE FAMILY LAW ACT 1975 (CTH) THAT:
1.By this order, Evans Brandon Family Lawyers are hereby authorised to cause the balance of the funds held in their trust account in the names of Ms Defries and Mr Kemeny, being the balance of the net sale proceeds of the property situated at AB Street, Suburb AC in the State of Queensland, to be paid to the Applicant or as she may direct within the next seven (7) days.
2.All of the Applicant’s interest in the following items of artwork:
(a)Artwork 1
(b)Artwork 2; and
(c)Artwork 3; and
(d)Artwork 4; and
(e)Artwork 5,
is transferred to Mr Rodrigo (as Trustee in Bankruptcy of Mr Kemeny).
3.Within twenty-eight (28) days of the date of these Orders, the Applicant shall make available for collection by an agent of the Trustee of the Property of Mr Kemeny, a Bankrupt, from the office of the Applicant’s solicitors, the following items of artwork:
(a)Artwork 1
(b)Artwork 2; and
(c)Artwork 3; and
(d)Artwork 4; and
(e)Artwork 5.
4.The Applicant retain, free from any claim by the Respondent, the following assets:
(a)her shareholding in AD Pty Ltd; and
(b)her shareholding in AE Pty Ltd; and
(c)her interest in the AF Trust; and
(d)her shareholding in AG Ltd; and
(e)her interest in the commercial real property at AH Street, Suburb AJ in the State of Queensland, subject to the ANZ loan secured against the title to that property; and
(f)the contents of her bank accounts; and
(g)the funds payable to her as a consequence of order 1; and
(h)subject to this order, the household contents and personal items in her possession; and
(i)her superannuation entitlements; and
(j)her interest as creditor in respect of each of:
(i)the Supreme Court proceedings No. … and the costs ordered for that proceeding; and
(ii)the Respondent’s Appeal from the Supreme Court trial Judge’s decision (CA No. …) including costs ordered for that proceeding.
5.Subject to the administration of the Respondent’s bankruptcy estate by The Trustee of the Property of Mr Kemeny, a Bankrupt and the operation of the Bankruptcy Act 1966 (Cth), the Respondent retain, free from any claim by the Applicant, any of the following assets that are not vested bankruptcy property:
(a)the contents of his bank accounts; and
(b)the entities in which he has an interest; and
(c)the household contents and personal items in his possession; and
(d)his superannuation, disability and income protection entitlements; and
(e)any chose in action in relation to his mother, father or siblings, or any entity in which any one or more of them have an interest.
6.The Applicant shall bear responsibility for and indemnify the Respondent for and in respect of the following liabilities:
(a)the loan secured against the title to the property at AH Street, Suburb AJ in the State of Queensland; and
(b)any credit, store or other cards in her name; and
(c)any liability howsoever arising and in relation to any entity in which the Applicant wife has an interest howsoever held, including but not limited to AG Ltd, AD Pty Ltd, AE Pty Ltd and the AF Trust; and
(d)any other liability incurred by her or in her name.
7.Subject to the administration of the Respondent’s bankruptcy estate by The Trustee of the Property of Mr Kemeny, a Bankrupt and the operation of the Bankruptcy Act 1966 (Cth), the Respondent shall bear responsibility for and indemnify the Applicant for and in respect of the following liabilities that are not:
(a)any credit, store or other cards in his name; and
(b)any loans asserted to be owed by the Respondent to any members of his family or any entity in which any members of his family have an interest or any other chose in action against him or against the Applicant which is maintainable by any one or more members of his family or any entity in which they have an interest; and
(c)any other liability incurred by him or in his name.
8.The Applicant is released from her undertaking given and accepted by the Court on 9 July 2021.
9.All outstanding applications are otherwise dismissed and removed from the list of cases requiring finalisation.
IT IS NOTED THAT
A.There is no Court known by the name “Federal Circuit and Family Court of Australia”.
B.The design of the seal affixed to this order issued by the Federal Circuit and Family Court of Australia (Division 1) has been determined by the Attorney-General pursuant to the undated Federal Circuit and Family Court of Australia (Seal) Determination 2021 signed by the Attorney-General.
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 the pseudonym Defries & Kemeny has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
HOGAN J:
On 20 September 2023, I heard, amongst other applications, the Respondent’s application to adjourn the trial of the competing applications for property settlement orders pursuant to s 79 of the Family Law Act 1975 (Cth)(the Act), then listed to commence on 3 October 2023.
On 25 September 2023, the Respondent presented a debtor’s petition. He did so after making initial inquiries, via CJM Lawyers, with Mr Rodrigo on 13 September 2023 and again on 19 September 2023 about his willingness to accept appointment as his trustee. On 19 September 2023, a family member of the Respondent contacted Mr Rodrigo to verify the banking details of the account into which the required up-front payment was to be deposited before Mr Rodrigo accepted appointment as trustee. On 22 September 2023, the Respondent again made contact with Mr Rodrigo to provide further background information in relation to his affairs.
The Respondent was made bankrupt on 25 September 2023 on lodgement of a debtor’s petition and Mr Rodrigo was appointed as trustee of his bankrupt estate. Unless there is an objection to his discharge (or his bankruptcy is annulled earlier), the Respondent will be automatically discharged from bankruptcy on 26 September 2026.
On 26 September 2023, I declined to accede to the Respondent’s application to adjourn the trial; I also ordered, amongst other things, that, for the reasons expressed in the Reasons for Judgment delivered on 28 September 2023, the proceedings be determined as if they were undefended.
Once advised of the Respondent’s bankruptcy, the Applicant’s solicitors made an urgent application for the matter to be mentioned.
On 29 September 2023, I vacated the hearing dates, listed the matter for mention on 27 October 2023[1] and gave the Applicant leave to provide the Respondent’s Trustee in Bankruptcy (the Trustee) with a copy of the material filed in the proceedings.
[1]So as to enable the Trustee the required time to decide whether or not to seek to intervene in the proceedings.
On 27 October 2023, the Trustee was joined to these proceedings, and they were listed to commence on 12 December 2023.
At the commencement of the hearing on 12 December 2023, Counsel for the Applicant and the Trustee agreed that none of the witnesses from whom evidence was called in their respective cases were required for cross-examination; it was also agreed that the Court would simply receive submissions on behalf of each of the Applicant and the Trustee about the issues in dispute and the manner in which the Court should exercise the various discretions which disposition of proceedings such as these require.
Consequently, Counsel for the Applicant relied on the Outline of Submissions filed on her behalf[2] and made additional oral submissions in support of the relief sought; Counsel for the Trustee adopted the same course.[3]
[2] Outline of submissions on behalf of the Applicant sealed 6 December 2023.
[3] Outline of Submissions on behalf of the Second Respondent sealed 11 December 2023.
A BRIEF BACKGROUND
The Applicant and Respondent commenced cohabitation in 1997 and married in 1998. Their first child was born in 2001; their second child in 2006. They separated in September 2013. They were divorced in 2015.
In late 2013, the Applicant was seriously assaulted by the Respondent in the former matrimonial home. Subsequent criminal proceedings against the Respondent were finalised when he was acquitted of the charges in 2016.[4]
[4] Outline of submissions on behalf of the Applicant sealed 6 December 2023 at paragraph 48b.
The parenting aspect of the proceedings, commenced by the Applicant on 10 December 2013,[5] was finalised by an order made on 11 November 2020.
[5] Application for Final Orders filed 10 December 2013.
In his Response to Initiating Application filed on 5 February 2014, the Respondent sought both parenting orders and orders pursuant to s 79 of the Act: the order sought in relation to the property settlement aspect of the proceedings was then framed as “that the net matrimonial assets be calculated and divided between the parties in the shares of sixty five percent (65%) to the Respondent and thirty five percent (35%) to the Wife”.[6]
[6] Response to Initiating Application filed on 5 February 2014, paragraph 13.
The Applicant subsequently brought proceedings in the Supreme Court of Queensland seeking damages against the Respondent.
In late 2022, Cooper J ordered[7] that the Respondent pay the Applicant $967,113.40 by way of damages to compensate her for the impacts of the Respondent’s assault; the award is comprised of the following:
[7] [citation omitted to comply with s 121 of the Family Law Act1975 (Cth)]
(a)$8,410: general damages; and
(b)$358,123: past economic loss; and
(c)$58,302: interest on past economic loss; and
(d)$343,081: future economic loss; and
(e)$35,560: gratuitous services; and
(f)$13,412.40: special damages; and
(g)$1,899: interest on special damages; and
(h)$13,126: future special damages; and
(i)$50,000: aggravated damages; and
(j)$17,600: interest on aggravated damages; and
(k)$50,000: exemplary damages; and
(l)$17,600: interest on exemplary damages.
The Respondent was later ordered to pay the Applicant’s costs of and incidental to the proceedings on the basis of 75 per cent of the indemnity basis. This amount is yet to be quantified.
In mid-2023, the Queensland Court of Appeal dismissed the Respondent’s appeal against the order made by Cooper J in late 2022 and ordered that he pay her costs.[8] This amount also remains unquantified.
[8]Affidavit of the Applicant filed 28 August 2023, paragraph 11.
CONSIDERATION
One of the consequences of the parties’ voluntary separation in September 2013 is that they no longer enjoy the common use of property and superannuation in which their existing legal and equitable interests were acquired during a relatively lengthy cohabitation of some 16 years’ duration. Such separation has also brought to an end any “assumption that any adjustment to those interests could be effected consensually as needed or desired”.[9] Both the Applicant and the Trustee contend and I accept that, in the circumstances, it is just and equitable within the meaning of s 79(2) of the Act that, pursuant to s 79(1) of the Act, orders altering the interests in property owned by the Applicant and the Respondent are made.[10]
[9] Stanford and Stanford (2012) 247 CLR 108, [42].
[10] Ibid at [42].
There is no dispute about the well-known approach the Court should take in determining those orders which, in all the circumstances, and having regard to the relevant statutory considerations, are appropriate. [11]
The competing proposals[12]
[11]See, for example: Pastrikos and Pastrikos (1980) FLC 90-897; Lee Steere and Lee Steere (1985) FLC 91-626; Ferraro and Ferraro (1993) FLC 92-335; Waters and Jurek (1995) FLC 92-635; Clauson and Clauson (1995) FLC 92-595, Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143; Stanford v Stanford (2012) 247 CLR 108; Bevan & Bevan (2014) FLC 93-572; Chapman & Chapman (2014) FLC 93-592.
[12] Other than as they relate to the specified artwork, which will be the subject of particular consideration.
On the basis that the Court accepts her contentions about the composition and value of the property of the parties the subject of these proceedings, the Applicant advances that the orders which are appropriate in the circumstances and just and equitable are orders which, by way of broad summary, would see her receive the balance of the funds held in trust (sourced from the sale of the former matrimonial home) and retain all other property and interests in her name, including her interest as a creditor in relation to the bankrupt Respondent’s estate. She proposed that, subject to the administration of his bankruptcy estate, the Respondent retain all assets and interests in his name that are not vested bankruptcy property.[13]
[13] Case Outline on behalf of the Applicant sealed 6 December 2023.
It was submitted on the Applicant’s behalf that, if the Court accepts her contentions about the composition and value of the property of the parties and makes orders in the terms sought, this will mean that she would receive property and superannuation in an amount that would represent about 75 per cent of the total value of the property and superannuation of the parties.
On the basis that the Court accepts his contentions about the composition and value of the property of the parties the subject of these proceedings, the Trustee advances that the orders which are appropriate in the circumstances and just and equitable are orders which, by way of broad summary, would see him[14] receive the balance of the funds held in trust (sourced from the sale of the former matrimonial home) and a sum paid by the Applicant in an amount that is the equivalent of 30 per cent of the net property pool, less the net value of assets and liabilities otherwise received by the trustee. The Trustee proposed that, save for this, the Applicant retain all other property or entitlement to superannuation and that, subject to the to the administration of the Respondent’s bankrupt estate, the Respondent retain any assets that are not vested bankruptcy property.[15]
[14] In his capacity as Trustee of the Respondent’s bankrupt estate.
[15] Case Outline on behalf of the Trustee sealed 11 December 2023.
It was accepted that, if the Court accepted the Trustee’s contentions about the composition and value of the property of the parties the subject of these proceedings and made orders in terms sought by the Trustee, the amount which the Applicant would be required to pay to the Trustee would be $1,844,225.
The property of the parties and related issues
There is no dispute about the parties’ existing legal interests in the property and superannuation interests. The Applicant and the Trustee agree about the values of the property and superannuation interests set out in the table below – this is the property that actually exists; it is exclusive of any asserted add-backs, the Applicant’s entitlements arising out of the Supreme Court proceedings (and the Respondent’s associated indebtedness) and the agreed notional add‑backs which relate to payments received by the Respondent by way of early payment or release of his entitlement to superannuation and a lump sum policy payment received in 2018.
| Description | Ownership | Value |
| ASSETS | ||
| Interest in AD Pty Ltd | Applicant | $227,000.00 |
| Interest in AE Pty Ltd and the AF Trust | Applicant | $273,000.00 |
| Shareholding in AG Ltd (over 700,000 shares) | Applicant | $3,440,729.00 |
| Sale proceeds of AB Street, AK Property | Joint | $58,278.50 |
| AH Street, Suburb AJ | Applicant | $3,000,000.00 |
| ANZ account …67 | Applicant | $166.00 |
| ANZ account …39 | Applicant | $2,856.00 |
| ANZ account …09 | Applicant | $6.00 |
| CBA Account …21 | Respondent | ------- |
| AL Bank Account …11 | Respondent | ------- |
| Household Contents | Applicant | $10,000.00 |
| Household Contents | Respondent | $3,000.00 |
| Artworks | Joint | $50,000.00 |
| Cryptocurrency portfolio [as asserted by the Respondent] | Respondent | |
| Total Assets | $7,065,035.50 | |
| LIABILITIES | ||
| ANZ Mortgage over AH Street Property | Applicant | $100,000.00 |
| Applicant's NAB Credit Card ending …16 | Applicant | $21,958.00 |
| Applicant's AMEX Credit Card ending …06 | Applicant | $29,442.00 |
| Applicant's accounting fees owed to Lutz & Associates | Applicant | $15,000.00 |
| Income Tax Liability (including CGT from sale of AG Ltd shares) | Applicant | $108,000.00 |
| Applicant's Related Party Loans – per Ms V Single Expert report | Applicant | $168,000.00 |
| Total Liabilities | $442,400.00 | |
| SUPERANNUATION | ||
| Superannuation: Superannuation Fund 1 | Applicant | $498,426.00 |
| Total Superannuation | $498,426.00 | |
| NET POOL (excluding all other matters the subject of dispute) | $7,121,061.50 | |
The Respondent’s asserted cryptocurrency
I accept that the Respondent has asserted to the Trustee that he has an estimated $410 million in cryptocurrency. I accept that the Trustee has been unable to value this asserted property as he has been unable, at this time, to locate it or to find evidence of its existence. Whilst I also accept that the Trustee has sought further information from the Respondent about this asserted property in order to verify its existence, there is no evidence to suggest that such inquiries have been productive.
Consequently, I accept, as was submitted on behalf of the Applicant, that there is no evidence that this asserted property exists. In fact, the Balance Sheet filed on behalf of the Respondent, which was sealed on 8 September 2023 (approximately 17 days before the Respondent was adjudged to be bankrupt following his presentation of a debtor’s petition) does not mention this asserted property at all.
The alleged missing shares
I am not persuaded that the Trustee has established that the Applicant has failed to disclose the existence of six shares in AG Pty Ltd. I accept the submissions made by Counsel for the Applicant in relation to this issue.
Addbacks[16]
[16]See the principles enunciated in cases such as: Kowaliw & Kowaliw (1981) FLC 91-092; Townsend & Townsend (1995) FLC 92-569; Chorn and Hopkins (2004) FLC 93-204; Omacini & Omacini (2005) FLC 93-218; Vass v Vass (2015) 53 Fam LR 373 at [138] & [139]; Trevi & Trevi (2018) FLC 93-858 at [28]–[30] & [47]; Candle & Falkner [2021] FedCFamC1A 102 at [52] - [58].
As agreed
The Applicant and the Trustee agree that the sum of $95,000 and the sum of $163,306 previously received by the Respondent should be notionally added back for the purpose of calculating the net value of the property of the parties to the marriage.
The Respondent’s previously owned interest in H Pty Ltd
I accept that the Respondent disposed of his 50 per cent interest in H Pty Ltd in 2016 in the circumstances established by the Applicant’s evidence and as summarised in the Outline of Submissions filed on her behalf. I accept that this disposition was without notice to the Applicant, occurred well after these property settlement proceedings had commenced and was not necessitated by any reason other than the Respondent’s desire to divest himself of an asset which would otherwise have been available for consideration in these proceedings.
Given that I accept:
(a)the submissions made on the Applicant’s behalf in urging that the Respondent’s 50 per cent interest, valued as at 31 December 2021, be notionally added back for the purpose of ascertaining the total value of the property of the parties to the marriage; and that
(b)the divestment by the Respondent of his 50 per cent interest in the company was either done:
(i)as part of a deliberate course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets; and/or
(ii)recklessly, negligently or wantonly given that the evidence establishes that the Respondent sold his interest to his sister for $1.00[17] despite it having a value of $488,000; and that
(c)if the Respondent in fact received more than $1.00 from the disposition of his 50 per cent interest in the company, whatever amount received by him was applied solely to meet his own financial needs and did not in any way go to meeting the financial needs of the Applicant or the parents’ children and did not find its way back into the property of the parties to the marriage,
I am easily satisfied that, in the particular circumstances of this case and notwithstanding that to notionally add-back the value of property which is no longer owned by a party to a marriage is exceptional, justice and equity require the exercise of discretion in favour of notionally adding-back the value of this asset for the purpose of determining the value of the property of the parties.
[17]Affidavit of the Applicant filed 28 August 2023, paragraph 122.
I accept the submissions made on the Applicant’s behalf in support of the value to be accorded to this asset and prefer them to those made by Counsel for the Trustee. I accept that, but for the Respondent’s unilateral decision to divest himself of his interest in this entity, the value of the property of the parties to the marriage would have been $832,000 more than it is.
Given the findings expressed above, I intend to notionally add this value to the value of the property of the parties and to regard the Respondent as having had the benefit of the same.
The Respondent’s previously owned interest in the AM Partnership (including physical assets)
I accept that, in about mid-2016, the Respondent disposed of his interest in the AM Partnership (the partnership). I accept that the partnership owns more than 150 assets located on the H Pty Ltd business premises and is entitled to rent out these assets (which it has typically done) or sell, transfer or encumber them.[18]
[18] Affidavit of the Applicant filed 28 August 2023, paragraphs 96-98.
I accept that this disposition was without notice to the Applicant, occurred well after these property settlement proceedings had commenced and was not necessitated by any reason other than the Respondent’s desire to divest himself of an asset which would otherwise have been available for consideration in these proceedings. I accept that the Applicant was only advised in mid-2017 (almost a year after the Respondent had divested himself of his interest) that the Respondent had disposed of his interest.
I accept the Applicant’s evidence to the effect that, whilst the Respondent has previously asserted that the transfer of his interest was for $388,000, which was allegedly applied to extinguish debts, she has not been provided with information to explain what gave rise to these alleged debts; I accept the Applicant’s evidence to the effect that what was described as “limited disclosure” provided by those who were previously joined to the proceedings (namely, the previous Second to Seventh Respondents inclusively) contains no indication that any payments were made to or on behalf of the Respondent as a result of his disposition of his interest in the partnership or the shareholding the subject of discussion above.
Given that I accept:
(a)the submissions made on the Applicant’s behalf in urging that the Respondent’s previous interest in the partnership, valued as at 31 December 2021, be notionally added back for the purpose of ascertaining the total value of the property of the parties to the marriage; and
(b)the Applicant’s submissions about not being unduly cautious in making findings which favour her given what I accept has been the Respondent’s absence of frankness and deliberate failure to comply fully with the ongoing obligation of disclosure; and that
(c)the divestment by the Respondent of his previous interest in the partnership was either done as part of a deliberate course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets or was done recklessly or wantonly; and
(d)any financial benefit the Respondent received from the disposition of his interest in the partnership was applied solely to meet his own financial needs or for his financial benefit alone and did not in any way go toward meeting the financial needs of the Applicant or the parents’ children and did not find its way back into the property of the parties to the marriage,
I am easily satisfied that, in the particular circumstances of this case and notwithstanding that to notionally add-back the value of property which is no longer owned by a party to a marriage is exceptional, justice and equity requires the exercise of discretion in favour of notionally adding-back the value of this asset for the purpose of determining the value of the property of the parties.
I accept the submissions made on the Applicant’s behalf in support of the value to be accorded to this asset and prefer them to those made by Counsel for the Trustee. I accept that, but for the Respondent’s unilateral decision to divest himself of his interest in the partnership, the value of the property of the parties to the marriage would have been $862,000 more than it is.
Given the findings expressed above, I intend to notionally add this value to the value of the property of the parties and to regard the Respondent as having had the benefit of the same.
Given the findings I have made about notionally adding back the value of the Respondent’s divested interests in H Pty Ltd and in the AM Partnership, it was agreed that the Respondent’s related party loans, as calculated by the single expert in the amount of $408,000, should also be included as a (notional) liability for the purpose of determining the net value of the property of the parties to the marriage.
The legal fees of the Applicant and the Respondent associated with the family law and domestic violence proceedings
The Applicant proposed that the Court notionally add back the following amounts which it was asserted have been spent on legal fees:
(a)$556,638.96 – the Applicant’s paid legal fees; and
(b)$516,035.00 – the Respondent’s paid legal fees;[19] and
(c)$60,000 – the sum paid to the Respondent pursuant to an interim order made by consent on 28 April 2022.[20]
[19]Rounded up from the $516,034.77 referred to in the Costs Notice provided to the Respondent by his then solicitors U Lawyers and sealed 19 September 2023 – whilst not specifically listed under the heading “Materials to be read” in the Outline of submissions on behalf of the Applicant sealed 6 December 2023, it was specifically referred to at paragraph 88 of the same and, consequently, I have taken it to have been relied upon by the Applicant.
[20]Order 11 of the Orders made by consent on 28 April 2022 is in the following terms: “Within forty-five (45) days open orders being published on the Commonwealth Courts Portal, the Wife shall do all acts and things necessary to cause the sum of $60,000 to be paid into the trust account of the Husband’s solicitors by way of partial property settlement for the purposes of the Husband’s legal expenses.”
The Trustee submitted that none of these amounts should be notionally added-back for the purpose of determining the net value of the property of the parties to the marriage.
I generally accept and prefer the submissions made on behalf of the Applicant in support of the amounts spent on legal fees by each of the Applicant and the Respondent being notionally added-back for the purpose of determining the net value of the property of the parties to the marriage and as to the manner in which, given the absence of disclosure by the Respondent to identify the source of funds expended on legal fees and the absence of any evidence from him about this, I should approach the determination of whether to notionally add-back the funds spent by the Respondent on legal fees.[21]
[21]See, in particular, the reference to Weir & Weir (1992) 16 Fam LR 154 and the comments therein about the court not being unduly cautious about making findings in favour of the other party where there has been clear evidence of non-disclosure.
Counsel for the Trustee submitted that the $60.000 paid in accordance with the order made on 28 April 2022 should be regarded as being included within the $516,035 and that to include it separately would amount to a double counting of that sum. However, the Costs Notice filed by U Lawyers[22] on 19 September 2023 (the September 2023 Costs Notice) describes the $516,035 as being the amount of legal fees and disbursements paid to “previous solicitors” – that is, to legal representatives other than U Lawyers. Given this, I am unpersuaded that the $60,000 paid into the U Lawyers trust account in accordance with the 28 April 2022 order is part of the $516,035 and I am also unpersuaded that including it as a separate notional amount for the purpose of determining the net value of the property of the parties to the marriage would result in any double counting.
[22] Who filed a Notice of Address for Service on 4 May 2021.
I also consider that, given the Respondent’s failure to disclose or identify in sworn material the source of the funds used to pay his legal fees, failing to notionally add these amounts back would in effect require the Applicant to contribute towards the same. I am not persuaded that this could in any way be regarded as being something which is just and equitable or otherwise appropriate.
The interim distribution of $150,000 to each of the Applicant and the Respondent
As a consequence of an order made by consent on 9 July 2021 (the July 2021 order), the Applicant and the Respondent each received $150,000 by way of partial property settlement. These funds were paid to their respective solicitors’ trust accounts and were sourced from the sale proceeds of the AB Street property (which was the former matrimonial home).
The Trustee proposed that neither amount be notionally added-back for the purpose of determining the net value of the property of the parties to the marriage. Whilst she proposed that the $150,000 she received was not notionally added-back, the Applicant contended that the Court would notionally add-back the $150,000 received by the Respondent.
It was submitted, in essence, on behalf of the Applicant that the Court would be persuaded not to notionally add-back the funds she received because they were spent on meeting:[23]
(a)part of her legal costs of these proceedings (in the amount of $48,574.26) and, therefore, to notionally add the sum back in addition to the accepted add-back of her total legal fees would result in a double-counting; and
(b)part of the amount of her legal costs of the Supreme Court proceedings (in the amount of $91,425.74), which was the consequence of the Respondent’s assault on her in late 2013; and
(c)her living expenses and outgoings and those of the children (in the amount of $10,000), which the Court would be persuaded were reasonable in the circumstances.
[23] Affidavit of the Applicant filed 28 August 2023, paragraph 68.
I accept the submissions made on behalf of the Applicant in support of these contentions; I accept that to notionally add back the amount noted in paragraph 47(a) would result in double counting of this amount given the Applicant's contention that all of the funds spent on her legal fees related to this and the domestic violence proceedings should be notionally added back; I accept that the amount noted in paragraph 47(c) was reasonable expenditure for the support of the Applicant and the children. Given that the Applicant’s expenditure of the amount noted in paragraph 47(b) was, in one sense, vindicated by her successful prosecution of the Supreme Court proceedings, I am not persuaded that such expenditure was unreasonable or that the overarching requirement of justice and equity persuades of notionally adding this amount back for the purpose of determining the value of the property of the parties to the marriage.
Counsel for the Applicant submitted, in essence, that, in contrast to the position propounded in relation to the funds received by the Applicant, the Court would be persuaded to notionally add-back the $150,00 received by the Respondent because there is no evidence from him about the use to which he put such funds and, consequently, the Court could not be persuaded that the same were used to meet reasonable living expenses.
Counsel for the Trustee submitted, in essence, that the Court would not notionally add-back the $150,000 received by the Respondent because to do so would result in a double counting as these funds were likely applied by the Respondent to meet the legal costs of $516,035 which have already been the subject of discussion in these Reasons.
As I understood it, Counsel for the Applicant submitted that the Court would not be persuaded that this was the case because:
(a)having filed a Notice of Address for Service on 4 May 2021, U Lawyers had been the solicitors on the record for the Respondent for not quite nine weeks when the July 2021 order was made; and
(b)given that the September 2023 Costs Notice describes the $516,035 as being the amount paid by way of legal fees and disbursements to “previous solicitors”, that sum cannot have included any of the $150,000 paid to the Respondent in accordance with the July 2021 order.
I accept the submissions made by Counsel for the Applicant in this respect.
Counsel for the Applicant also submitted, in essence, that whilst the terms of the 2023 Costs Notice are such that the Court is unable to determine from that document whether the Respondent’s legal fees with U Lawyers (asserted to be $305,470 in total) have been paid using some or all of the $150,000 paid to the Respondent, the fact that the Trustee has received a proof of debt from that firm in the amount of $266,020.43 suggests that, at the very best for the Respondent, about $39,450 has been paid toward this debt.
Doing the best that I can, it seems to me to be likely that $39,450 of the $150,000 received by the Respondent was used to pay his legal expenses and should be notionally added-back for the purpose of determining the net value of the property of the parties to the marriage. Insofar as the balance of the $150,000 is concerned, I accept the submissions made by Counsel for the Applicant to the effect that, whilst the Court knows that the Respondent received $150,000, his failure to provide evidence about the use to which he put the remaining approximately $110,000 means that the Court would not be persuaded that it was used to meet reasonable living expenses. Consequently, in the broad exercise of the discretion, I consider it appropriate to notionally add-back this amount as well, given that it was sourced from the sale proceeds of the former matrimonial home.
Having regard to the findings expressed above, I find that the property of the parties to the marriage and the value of the same for the purposes of these proceedings is as follows:
| Description | Ownership | Value |
| ASSETS | ||
| Interest in AD Pty Ltd | Applicant | $227,000.00 |
| Interest in AE Pty Ltd and the AF Trust | Applicant | $273,000.00 |
| Shareholding in AG Ltd (over 700,000 shares) | Applicant | $3,440,729.00 |
| Sale proceeds of AB Street, AK Property | Joint | $58,278.50 |
| AH Street, Suburb AJ | Applicant | $3,000,000.00 |
| ANZ account …67 | Applicant | $166.00 |
| ANZ account …39 | Applicant | $2,856.00 |
| ANZ account …09 | Applicant | $6.00 |
| CBA Account …21 | Respondent | ------- |
| AL Bank Account …11 | Respondent | ------- |
| Household Contents | Applicant | $10,000.00 |
| Household Contents | Respondent | $3,000.00 |
| Artworks | Joint | $50,000.00 |
| Cryptocurrency portfolio [asserted by the Respondent but not established by the evidence] | Respondent | |
| Total Assets | $7,065,035.50 | |
| LIABILITIES | ||
| ANZ Mortgage over AH Street Property | Applicant | $100,000.00 |
| Applicant's NAB Credit Card ending …16 | Applicant | $21,958.00 |
| Applicant's AMEX Credit Card ending …06 | Applicant | $29,442.00 |
| Applicant's accounting fees owed to Lutz & Associates | Applicant | $15,000.00 |
| Income Tax Liability (including CGT from sale of AG Ltd shares) | Applicant | $108,000.00 |
| Applicant's Related Party Loans - per Ms V Single Expert report | Applicant | $168,000.00 |
| Total Liabilities | $442,400.00 | |
| SUPERANNUATION | ||
| Superannuation: Superannuation Fund 1 | Applicant | $498,426.00 |
| Total Superannuation | $498,426.00 | |
| NET VALUE (excluding all other matters the subject of dispute) | $7,121,061.50 | |
| ADDBACKS | ||
| Notional assets | ||
| Interest in H Pty Ltd | Respondent | $832,000.00 |
| Interest in the AM Partnership | Respondent | $862,000.00 |
| Paid legal fees | Applicant | $556,638.96 |
| Paid legal fees | Respondent | $516,035.00 |
| Interim payment pursuant to consent order of 28 April 2022 | Respondent | $60,000.00 |
| Interim payment pursuant to consent order of 9 July 2021 | Respondent | $150,000.00 |
| As agreed | ||
| Release of super | Respondent | $95,000.00 |
| Lump Sum IP payment 2018 | Respondent | $163,306.00 |
| Total notional addbacks (gross) | $3,234,979.96 | |
| Notional liabilities | ||
| Respondent’s related party loans | Respondent | $408,000.00 |
| Total notional liabilities | $408,000.00 | |
| TOTAL ADDBACKS (net) | $2,826,979.96 | |
| TOTAL NET VALUE OF THE PROPERTY OF THE PARTIES TO THE MARRIAGE AS DETERMINED FOR THE PURPUSE OF THESE PROCEEEDINGS | $9,948,041.46 | |
It is obvious that the table set out immediately above does not include, as a liability, the Applicant’s legal fees which relate to the claim for assault she successfully prosecuted against the Respondent in the Supreme Court; it does not include, as an asset for the Applicant, the Judgment amount, interest and costs payable to her by the Respondent consequent on the decision delivered in late 2022 or, correspondingly, the same as a liability for the Respondent. This is because I have decided, in the exercise of the discretion, that the most appropriate course and the one which is most likely to achieve justice and equity as between the parties in the relatively unique circumstances of this case is to consider, during my consideration of the relevant s 75(2) considerations, the financial consequences for both the Applicant and the Respondent[24] which are the result of those proceedings.
[24] In whose shoes the Trustee now stands.
Having regard to the property set out in the table in paragraph 55, the Respondent has, or has already had the benefit of, property of a total value of $2,323,341 – which represents 23.35% of the total value of the property of the parties to the marriage as found.
The s 79(4) considerations
In considering the relevant matters mandated by s 79 of the Act, it must be remembered that:
(a)“community of ownership arising from marriage has no place in the common law”[25]; and
(b)there is no presumption of equality of contribution between parties to a marriage, irrespective of the length of their union;[26] and
(c)the exercise of the discretion conferred must not proceed on an assumption that the parties’ interests in the property are, or should be, different from those determined by common law and equity.[27]
[25]Stanford and Stanford (2012) 247 CLR 108, [39] citing Hepworth v Hepworth (1963) 110 CLR 309, 317 per Windeyer J.
[26] Mallet v Mallet (1984) 156 CLR 605.
[27] Bevan & Bevan [2013] FamCAFC 116, [73].
I accept that, through her pre-cohabitation work in the financial services section of AN Company, the Applicant had dealings with the AO Company business; I accept that, when AN Company closed their financial services section (in which she worked) in 1997 (prior to the start of cohabitation), the Applicant negotiated with AO Company to bring her client register across and then worked under the auspices of that business. I accept that, after she worked at AO Company for six months, the Applicant was offered the opportunity, in 1997, to buy into the business. I accept the buy-in price was $54,000 (payable over three years) and that, given the purchase was vendor-financed, the Applicant paid this sum by not taking distributions for three years.[28]
[28] Affidavit of the Applicant filed 28 August 2023, paragraphs 19 and 195.
I accept that a consequence of the Applicant buying-in to the AO Company business was that she acquired shares in two companies associated with it: namely, six shares in AG2 Pty Ltd and 22 shares in AP Pty Ltd (later known as AG3 Pty Ltd).[29]
[29] Affidavit of the Applicant filed 28 August 2023, paragraph 196.
I accept that, when the 25-year-old Applicant and Respondent started to live together in 1997:
(a)the Applicant owned the following property:
(i)savings of approximately $45,000; and
(ii)her client register, which she had developed during her pre-cohabitation work in the financial services section at AN Company; and
(iii)the interests in the entities associated with the AO Company business referred to above; and
(iv)furniture and household items; and
(v)a small collection of jewellery; and
(vi)limited superannuation.[30]
(b)to the best of the Applicant’s knowledge, the Respondent owned the following property:
(i)Motor Vehicle 1 in a very poor condition; and
(ii)his shareholding in H Pty Ltd; and
(iii)a number of assets located in the H Pty Ltd complex, encumbered by the associated debt used to purchase them, to the extent that there was little or no equity; and
(iv)limited superannuation or other property.[31]
[30] Affidavit of the Applicant filed 28 August 2023, paragraph 188.
[31] Affidavit of the Applicant filed 28 August 2023, paragraph 198.
I accept the Applicant’s evidence to the effect that, when she moved to live with the Respondent in a caretaker apartment at the H Pty Ltd complex, she paid him $180 per week in rent.[32] I accept that the Applicant and the Respondent and, later, the children lived in this between 1997 and 2006 and that, during their cohabitation, they added a large extension and a deck to the property.
[32] Affidavit of the Applicant filed 28 August 2023, paragraphs 199 and 200.
I accept that, from 1997 until 2003, the Applicant worked at AO Company and the Respondent worked as manager for the H Pty Ltd complex. I accept that after 2003, the Applicant continued in her role with AO Company whilst the Respondent worked in a number of different roles which included: as a manager with H Pty Ltd, L Pty Ltd (in various roles) and in a sales business. I accept that the Respondent continued to hold his interests in H Pty Ltd and the AM Partnership until he disposed of them as discussed elsewhere in these Reasons. I also accept the Applicant’s evidence about how establishing her insurance brokerage practice led to her acquisition of her significant shareholding in AG Ltd.
I accept that the Applicant paid all the costs associated with the real properties she bought during the marriage. I accept that she acquired AH Street, Suburb AJ (the AH Street property) in 2001 for $290,000 plus GST: this property is mainly fenced industrial land with a small office and toilet block. I accept the Applicant funded her purchase of this property as follows:
(a)she paid the deposit of $29,000 from her savings; and
(b)she borrowed $188,500 from a commercial lender which took security over the AH Street property; and
(c)she paid the balance of the purchase price ($103,589.56) from her savings.
I accept that the mortgage repayments were met using the rental income from the property and $700 per week from the Applicant’s personal income. I accept that, since 2003, the AH Street property has been leased to AQ Company (which is associated with AR Ltd, later known as AS Company) and that the tenant installed its own moveable fixtures (of which it retains ownership) comprising tenant-specific items. I accept that the rent paid by this tenant was applied to pay the mortgage repayments until the borrowings were fully repaid and the loan account closed in 2004.
Whilst the Respondent managed the AH Street property between 2010 and the separation in September 2013, I accept that he was remunerated for his efforts – in fact, the Applicant asserted that the Respondent charged her substantial management fees. I also accept the Applicant’s evidence to the effect that the rental income from this property, which the Respondent directed to two entities he owned, was almost exclusively the only income received by those entities and that, when the Applicant ceased paying the Respondent’s invoices after the September 2013 separation, those entities ceased to operate shortly thereafter.
I accept that the Applicant paid all of the costs associated with the acquisition of the property at AB Street, Suburb AC (either through the application of funds she earned or by borrowings secured over the AH Street property) into which she, the Respondent and the children moved in 2006. This property has been sold and was the source of payments made to each of the Applicant and the Respondent; the balance of the sale proceeds of $58,278.50 are referred to in the table above.
I accept the Applicant’s evidence that, during the course of the marriage, the Respondent worked for H Pty Ltd (owned by him and his family) and would have received income from the AM Partnership, although she is unable – because the Respondent did not tell her what he earned or received and any funds he received were not paid into any bank account in her name – to say what the quantum of these are. I also accept the Applicant’s evidence to the effect that the Respondent’s income appears to have been applied to his personal expenses and some day‑to‑day costs for the children.
Whilst the Applicant contended that the Respondent occasionally met incidental costs for the children and/or the household, I accept her evidence that she was the person responsible for meeting the overwhelming majority of the family’s household and living costs over the course of the cohabitation and that this included paying for the children’s educational needs, including tuition.
I accept the Applicant’s evidence to the effect that, whilst the Respondent assisted with some household chores and parenting of the children during the cohabitation, he spent significant amounts of time away from the home in the five years prior to the September 2013 separation. During this time, I accept that she was required to take on even more of the responsibilities for parenting the children and running the household than had previously been the case.
I accept the Applicant’s evidence about her contributions to the care of the children from the time of their respective births until the September 2013 separation. I accept the Applicant did the overwhelming majority of the tasks (of whatever kind) required to maintain the children and the household until the September 2013 separation. I accept that the Applicant’s contributions during the cohabitation were made significantly more arduous[33] by the Respondent’s course of violent conduct about which she gives evidence – in particular, I accept the Applicant’s evidence to the effect that:
[33] Kennon v Kennon (1997) FLC 92-757.
(a)in 2004, the Respondent punched her to the side of the head with sufficient force to cause injury; and
(b)in 2005, the Respondent approached her, handed her ‘divorce papers’ and wanted her to agree to transfer the AB Street Property, the AH Street Property and assets she then owned in H Pty Ltd into his sole name – when she told him she did not want to sign anything without having legal advice, he said: “You will do as you are told or I will destroy you”; and
(c)in 2007, during an argument about the attendance of the Respondent’s sister at the first birthday and christening of their youngest child, the Respondent grabbed her by the neck and choked her; and
(d)in 2008, after having told her that he had been having an affair with another woman earlier in the year, the Respondent subsequently threatened to drive his car into a lake and commit suicide, which resulted in her allowing him to return to the former matrimonial home; and
(e)in 2012, at a time the Applicant was required by her doctor to use medical equipment due to her ongoing stress and associated issues, the Respondent punched her in the area of the equipment and shouted “I hope you die” during an argument; and
(f)in 2013, the Respondent pushed her and caused her to fall over two chairs and hit her head on the ground; and
(g)in 2013, the Respondent threw a punch with a closed fist at her head during an argument – whilst she dodged the punch, his fist hit the wall and left a mark there; and
(h)in 2013, after she asked him to change the television channel back to what she had previously been watching, the Respondent called her a “cunt” and forcefully slapped her across the face with his open hand; and
(i)in 2013, when she left the room after he yelled at her for not cleaning up, the Respondent followed her and punched her; when she returned to the home later, the Respondent was still angry and said words to the effect of “cunt” and threatened to “punch her head in”; and
(j)in 2013, during an argument about finances and travel, the Respondent shoved her into a cupboard; and
(k)in 2013, the Respondent travelled to a business conference she attended and placed fliers accusing her of having an affair and breaking up marriages on many cars in the car park; he then sent her a text which included a photograph of the flyer on the windshield of her car and which said: “made sure this went on all the cars [around AK Property] this morning”.
I also accept, given the conduct summarised above, that the Applicant was hypervigilant during the cohabitation in her attempts to try to ensure that the Respondent did not continue to behave as he did. It is within this context that all of the contributions (be they financial and non‑financial and to the welfare of the family and care of the children) I have accepted she made during the cohabitation were made.
I accept that, after the Respondent violently assaulted her in the former matrimonial home in late 2013 (being the assault that was the subject of the Supreme Court proceedings), the Applicant vacated the premises. I accept that, having been vacant for about two years (other than for four months when some of the Applicant’s friends stayed there), the AB Street property was tenanted from 2015 until it was sold in 2018. I accept that the Applicant met all costs associated with the retention of this property from the September 2013 separation until its sale.
I accept that, following the September 2013 separation, the Applicant has met all of the children’s day-to-day needs and has provided all of the care they have required; given the Respondent’s conduct toward her during their cohabitation (as summarised above) and his assault of her in late 2013 in the manner outlined in the Reasons for Judgment delivered by Cooper J in late 2022, I am easily satisfied that the Applicant’s post-separation contributions of whatever nature were made significantly more arduous[34] by the Respondent’s course of violence.
[34] Kennon v Kennon (1997) FLC 92-757.
Save for the contribution by the Respondent of $600-$700 in Woolworths cards between September 2013 and December 2013, I accept that the Applicant has met all the children’s financial needs of whatever kind from September 2013 onwards.
Consideration
In assessing the contributions made by the parties the Court embarks upon a process involving the exercise of a broad discretion in respect of which reasonable minds may differ. Whilst this process is neither an accounting or mathematical exercise,[35] it does involve a movement from “a qualitative evaluation of contributions to a quantitative reflection of such evaluation” – that is, a “leap” from words to figures.[36]
[35] See: Norbis v Norbis (1986) 161 CLR 513 at 522; Brandt and Brandt (1997) FLC 92-758.
[36]Steinbrenner & Steinbrenner [2008] FamCAFC 193 at [234] per Coleman J.
Given:
(a)the Applicant’s overwhelmingly superior financial contributions from cohabitation to trial – which resulted in the acquisition and retention of the AH Street property, the former matrimonial home (until it was sold in 2018), her interests in AD Pty Ltd, AE Pty Ltd, the AF Trust, her shareholding in AG Ltd and her entitlement to superannuation; and
(b)the paucity of the Respondent’s financial contributions from cohabitation to trial other than in respect of his interests in H Pty Ltd and the AM Partnership which have already been the subject of discussion; and
(c)the Applicant’s overwhelmingly superior contributions in the capacity of homemaker and parent during the cohabitation and that the same were made more arduous by the Respondent’s violent course of conduct toward her; and
(d)that the Applicant has made all of the parenting contributions and has met all of the children’s needs of whatever kind since the late 2013 assault (at which time the oldest child was 12 years of age and the younger child was 7 years of age) and that the same have been made more arduous by the Respondent’s violent course of conduct toward her, which culminated in his violent assault of her in late 2013,
I assess the Applicant’s contributions at 75 per cent and the Respondent’s contributions at 25 per cent.
Having regard only to the value of the property set out in paragraph 55, such assessment would see the Respondent having to receive property (be it notional or actual) having a total value of $2,487,010. As already noted, he has already had the benefit of property having a total value of $2,323,341.
None of the orders proposed by either the Applicant or the Trustee will have any effect on the earning capacity of either the Applicant or the Respondent.
Relevant s 75(2) matters
Other than those associated with the Supreme Court proceedings
The Applicant is 52 years old. I accept that she suffers significant psychological trauma as a consequence of the Respondent’s assault of her in late 2013 and that she has consistently attended upon a psychologist since then. I accept her evidence about the deleterious impacts the assault has had on her generally and in relation to her capacity to function and handle day‑to‑day tasks (which fluctuates) and her capacity to generate clients, manage and grow her business and maximise her earnings. The impact of the Respondent’s conduct on the Applicant should not be underestimated.
I accept that the Applicant continues to support the children; whilst the elder is now 22 years of age, the younger is 17 years of age (although she will be 18 years of age in 2024). I think it is much more likely than not that the Applicant will continue to support the children financially, at least to some extent, for at least the next couple of years and that she will continue to provide them both with emotional support, as she has previously done.[37]
[37] Family Law Act 1975 (Cth), s 75(2)(o).
I accept that the Applicant’s current earning capacity represents her likely maximum future earning capacity and that she relies upon the property she owns for her financial support and to support the children.
The Respondent is also 52 years of age. Given his failure to comply with directions which provided for the filing of a trial affidavit, there is no evidence from him about his current circumstances before me at this hearing. However, the Applicant’s evidence includes that the Respondent: lives with his de-facto partner and child in a home she owns; has received payments from Centrelink and Services Australia since 2016, although he has not provided any significant disclosure about the same; had back issues during the cohabitation but these were not such as to interfere with his work or prevent him from living a normal life; had surgery in 2013 from which he recovered well; is studying for a postgraduate qualification; receives payments from an income protection policy (which she had arranged for him during the cohabitation) and will likely do so until he reaches the age of 65 years, albeit that he immediately transfers these payments from the bank account in his name (into which they are deposited) into a bank account in his partner’s name; has not provided any disclosure in relation to which bank account he uses to meet his day-to-day needs.
The absence of evidence from the Respondent about his current financial circumstances, other than that he recently voluntarily entered into bankruptcy, means that they are otherwise relatively unknown. What is clear, though, is that, absent any application to extend the same, he will leave bankruptcy in late September 2026, at which time he will be 55 years of age. Further, the consequences for him of his bankruptcy will, of course, be that all current liabilities, including that to the Applicant arising out of the Supreme Court proceedings, will be extinguished. I also accept, as was submitted on behalf of the Applicant, that, given the Respondent’s failure to make full and frank disclosure of all information relevant to the proceeding in a timely manner and his failure to take up the opportunity to give evidence about his financial circumstances, it is open to me to infer (as I do[38]) that he has made whatever financial arrangements are suitable to him for his support, such that no further adjustment in his favour for this consideration is required.
[38]See, for example: Black and Kellner (1992) FLC 92-287; Suiker and Suiker (1993) FLC 92-436; Weir and Weir (1993) FLC 92-338; Hicks & Trustee of the Bankrupt Estate of Hicks and Anor (2021) FLC 94-006 at [86] – [88].
The Supreme Court proceedings
As already noted, in late 2022, Cooper J entered judgment against the Respondent in favour of the Applicant in the sum of over $950,000. The interest on this amount is currently calculated to be $95,000.
In late 2022, Cooper J ordered that the Respondent pay 75 per cent of the Applicant’s costs of and incidental to the proceeding, including reserved costs, with the amount to be assessed on the indemnity basis if not agreed. As the Applicant’s costs of the Supreme Court proceedings were $2,271,278.91[39] (of which $1,967,619.26 remains owing), it was submitted that the Court can be satisfied that any assessment of the Applicant’s costs would result in an amount of about $1,703,459.18.
[39] Including GST.
The consequence of the orders made to resolve the Supreme Court proceedings was, therefore, that the Respondent was required to pay the amount of about $2,670,572.58 (exclusive of interest) to the Applicant; as at the hearing, the amount is about $2,765,572.58 (inclusive of interest).
In addition, the Court of Appeal dismissed the Respondent’s appeal with costs although, as already noted, there is no evidence about the quantification of this.
The Respondent did not pay any of the judgment sum, the interest accruing on it or the costs associated with the trial proceedings to the Applicant before he entered into bankruptcy.
Consequently, the Applicant is now a judgment creditor of the Respondent’s bankrupt estate and her Judgment Debt (and associated costs and interest claims entitlements) are now provable in the Respondent’s bankruptcy.
Consideration
In Marsh v Marsh[40] Coleman J (sitting at first instance) was asked by the Applicant, as part of his Honour’s determination of those orders which were just and equitable pursuant to s 79 of the Act, to determine her claim for damages for an assault and battery she asserted had been perpetrated against her by the Respondent. Having found that he was satisfied on the balance of probabilities that the Respondent had assaulted the Applicant and having assessed damages (being general, aggravated and exemplary), his Honour said he did not believe it was legitimate to make the award of damages that he had and then to take the same into account under s 75(2)(o) of the Act to reduce what was otherwise the Applicant’s proper entitlement.
[40] (1994) FLC 92-443.
I entirely agree.
The circumstances in Marsh differ from the circumstances of this case. In Marsh, the property of the parties to the marriage was such that the Court was able to ensure that the damages assessed were paid by the Respondent from the property which the Court determined it was just and equitable that he receive.
In this case, as was submitted on behalf of the Trustee, whether or not the Applicant ultimately receives a dividend from the distribution of assets from the bankrupt estate of the Respondent remains to be determined in the finalisation of the administration of his bankruptcy.
Whilst I accept that the Trustee’s investigations are not yet complete, it seems to me to be much more likely than not that the Applicant will receive very very little, if anything at all, of the money owed to her by the Respondent as a consequence of the orders made to finalise the Supreme Court proceedings – especially given that the Trustee’s evidence includes that:
(a)the Balance Sheet filed by the Respondent on 8 September 2023 is inconsistent with the assets and liabilities notified to him by the Respondent, including the details in the Respondent’s Bankruptcy Form; and
(b)Mr P (trading as AT Lawyers) has informed him that the Respondent owes him $451,532.20 and that he (Mr P) holds security, although the Trustee is yet to verify that assertion; and
(c)the administration of the bankruptcy is estimated at this very early stage, to cost approximately $54,997.24 (inclusive of GST).
I accept the thrust of the submissions made by Counsel for the Applicant in support of the contention that there should be no adjustment in favour of the Respondent by virtue of the relevant section 75(2) considerations.
In fact, in the circumstances of this case, I consider that there should be an adjustment in favour of the Applicant to reflect the highly likely reality that she will not recover any funds at all from the Respondent consequent upon the Judgment entered in her favour in the Supreme Court (whether by way of payment in respect of the amount of the Judgment or interest on the same or to defray the costs ordered to be paid) and that she will, therefore, be left to bear the entirety of her legal costs associated with that proceeding, which vindicated her claim against the Respondent, without the benefit of the sums awarded in her favour. In contrast, the Respondent will emerge from his bankruptcy in September 2026 absolved of his obligation to pay the Respondent the amounts ordered in the Supreme Court proceedings, or the costs associated with them.
Whilst others may disagree, in the exercise of the wide discretion afforded to judges at first instance, I consider that justice and equity in the circumstances of this case, having regard to the evidence before me, requires that there is a further adjustment in the Applicant’s favour. I specifically record that this adjustment is not to punish the Respondent for entering into bankruptcy (as is the right of all citizens according to law); rather, it simply reflects my assessment of the almost inevitable consequences for the Applicant of that decision.
Given the reality of this situation, I consider it unnecessary to assess the extent of this adjustment other than to quantify it at no less than two per cent.
What orders are just and equitable?
The consequence of the conclusions outlined above is that, having regard to the contributions of the Applicant and the Respondent to trial and the relevant s 75(2) matters, at the conclusion of a 16 year cohabitation which ended a decade ago, the Applicant shall be entitled to property valued at 77 per cent of the total property of the parties to the marriage, as found for these proceedings at paragraph 55 the Respondent shall be entitled to property valued at 23 per cent of the total property of the parties to the marriage, as found for these proceedings at paragraph 55.
Given the reality of the situation and that the Respondent has already received property valued at $2,323,341, I consider that the orders set out at the commencement of these Reasons (which will, as far as practicable, determine the financial relationship between the Applicant and the Respondent save for the Applicant’s ongoing right to prove in the Respondent’s bankruptcy) are the orders which are just and equitable and appropriate to be made in the circumstances of this case.
ORDER ABOUT THE ARTWORKS
It is agreed that the Applicant will ensure that a number of specified works of art are delivered up to the Trustee.
Given the submissions made by Counsel for the Applicant and the Trustee, I am persuaded that it is appropriate to make the orders in relation to the same in the terms expressed in the order which will issue.
RELEASE FROM THE UNDERTAKING
On 9 July 2021, the Applicant gave an undertaking that she would not sell, transfer or encumber or otherwise deal with her shareholding in AG Ltd, AE Pty Ltd, or AD Pty Ltd without first giving the Respondent via his solicitors no less than 30 days’ notice in writing, with that notice to include: the nature of the intended dealing; the reason for the intended dealing being entered into; if known, the identity of the intended transferee (if applicable); and the terms of the intended dealing, including but not limited to the consideration to be paid to or benefit to be derived by the Applicant in respect of the intended dealing.
Given these proceedings will be finalised by the making of the orders to which these Reasons relate, it is appropriate and proper that the Applicant is released from her undertaking.
I certify that the preceding one hundred and five (105) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Hogan. Associate:
Dated: 18 December 2023
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