Denning & Denning
[2011] FamCA 160
FAMILY COURT OF AUSTRALIA
| DENNING & DENNING AND ANOR (NO 3) | [2011] FamCA 160 |
| FAMILY LAW – PROPERTY SETTLEMENT – Just and equitable – Add-backs – Credit card debts – Limited pool – Where the intervenor sought the payment of debts incurred by the applicant husband – Discussion of approach to assessment of contributions per s 79(4) of the Family Law Act 1975 (Cth) and s 75(2) factors FAMILY LAW – PROPERTY SETTLEMENT – Superannuation – Where the husband asserted that he had only minimal or no superannuation entitlements FAMILY LAW – EVIDENCE - Documentary evidence – Allegations that the applicant husband diverted funds from the asset pool – Standard of proof applicable – Expert evidence of chartered accountant FAMILY LAW – WITNESSES – Discretion to draw inferences FAMILY LAW – SPOUSAL MAINTENANCE - Factors considered – Where periodic spousal maintenance application of the wife reserved FAMILY LAW – COSTS - Circumstances justifying order – Previous costs orders in favour of the applicant husband – Where applicant husband sought a cost order against the respondent wife pursuant to s 117AB of the Family Law Act 1975 (Cth) FAMILY LAW – COSTS - Circumstances justifying order – Where the intervenor claimed its costs on an indemnity basis against the applicant husband |
| Evidence Act 1995 (Cth), s 140 Family Law Act 1975 (Cth), s 72, s 74, s 75(2), s 79(4), s 117(2A), s117AB Family Law Rules 2004 (Cth), r 17.03 |
| AJO & GRO (2005) FLC 93-218; (2005) 33 Fam LR 134, cited Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34, applied C & C [1998] FamCA 143, applied Clives & Clives (2008) FLC 93-385; (2008) 40 FAm LR 273, applied Dobbs & Brayson (No 2) (2007) FLC 93-354; (2007) 38 Fam LR 95, cited Fabre v Arenales (1992) 27 NSWLR 437, discussed Ferguson & Ferguson (1978) FLC 90-500; (1978) 4 Fam LR 312, cited Garrett & Garrett (1984) FLC 91-539, applied Government Insurance Office of New South Wales v Bailey (1992) 27 NSWLR 304, applied GWR v VAR (2006) 36 Fam LR 237;[2006] FamCA 894, applied Hickey & Hickey (2003) FLC 93-143; (2003) 30 Fam LR 355, applied Hunt & Zuryn (2005) FLC 93-226; (2005) 34 Fam LR 169, applied In the Marriage of Clauson (1995) FLC 92-595; (1995) 18 Fam LR 693, applied In re J (a child) (FC) [2006] 1 AC 80; [2005] UKHL 40, applied Johnson & Page (2007) FLC 93-344; [2007] FamCA 1235, cited Kennon v Kennon (1997) FLC 92-757; (1997) 22 Fam LR 1, applied Mallet v Mallet (1984) 156 CLR 605; [1984] HCA 21, applied Neil v Nott (1994) 68 ALJR 509; [1994] HCA 23, cited Pierce v Pierce (1999) FLC 92-844; (1999) 24 Fam LR 377, cited Townsend & Townsend (1995) FLC 92-569; (1994) 18 Fam LR 505, discussed West v Government Insurance Office of New South Wales - 5#5 (1981) 148 CLR 62; [1981] HCA 38, applied Qantas Airways Ltd v Gama (2008) 167 FCR 537; [2008] FCAFC 69, cited |
| APPLICANT: | Mr Denning |
| RESPONDENT: | Ms Denning |
| INTERVENOR: | B Pty Ltd |
| FILE NUMBER: | MLC | 463 | of | 2008 |
| DATE DELIVERED: | 8 March 2011 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Young J |
| HEARING DATE: | 31 January and 1, 2 and 3 February 2011 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | In person |
| SOLICITOR FOR THE APPLICANT: |
| COUNSEL FOR THE RESPONDENT: | Mr McConchie |
| SOLICITOR FOR THE RESPONDENT: | F Butera & CO |
| COUNSEL FOR THE INTERVENOR: | Mr Crozier-Durham RFD |
| SOLICITOR FOR THE INTERVENOR: | Mason Sier Turnbull |
ORDERS
IT IS ORDERED:
THAT the total sum of monies currently invested in each of the Westpac term deposits, by the wife’s solicitors on behalf of the parties, and all interest accrued thereon, be paid out within sixty (60) days by the solicitor as follows:
(a) as to 75 per cent to the wife, but always subject to order 2 hereof;
(b)as to 25 per cent to the intervenor’s solicitors on behalf of their client and as a reduction in the quantum of the judgment debt and legal costs owing them by the husband.
THAT the costs as were ordered to be paid by the wife to the husband pursuant to Family Court Orders dated 2 June 2008 and 22 December 2008 in the total sum of $6,576, and the further sum of $2,000 now fixed and payable pursuant to the Order of 15 September 2008 be forthwith paid by the wife’s solicitors from her share of the Westpac term deposit monies to the solicitors for the intervenor on behalf of their client and prior to any distribution of monies to the wife pursuant to Order 1(a) hereof.
THAT the husband be and remain solely responsible for payment of the:
(a) Citibank credit card and all monies and interest owing thereon;
(b)his CBA MasterCard, ANZ visa card, Aussie MasterCard, St George visa card and GE Wizard MasterCard and all monies and interest owing thereon;
(c)any monies owed to his mother.
THAT the wife be solely responsible for:
(a) any monies owing to her adult daughter, Ms C;
(b) any monies owing to her previous solicitors;
(c) any monies owing to D Pty Ltd;
(d) any monies owing to the E Trust.THAT the wife retain sole ownership and possession of motor vehicle 1 now registered in her sole name and she be responsible for all ongoing costs and expenses of that motor vehicle and the husband retain all proceeds of sale of the motor vehicle 2.
THAT the wife’s ongoing entitlement to future periodic spousal maintenance be reserved and that she be hereafter entitled to re-apply upon proper material filed and served.
THAT otherwise each of the husband and wife retain all personal chattels, furniture and items as are now in their respective possession.
THAT otherwise each of the husband and wife be liable for all debts, liabilities and outgoings as have been incurred by them in their name or on their behalf.
THAT the husband pay the intervenor’s costs and disbursements of and incidental to this hearing and fixed in the sum of $27,000 and that such costs be paid within sixty (60) days and in default of payment interest thereafter accrue quarterly in arrears on all such costs outstanding from time to time and at the rate prescribed pursuant to the Family Law Rules 2004 (‘the Rules’) (Rule 17.03).
THAT otherwise all extant applications, both interim and final, (but not the wife’s periodic spousal maintenance application) be dismissed and the proceedings be removed from the docket of Young J.
THAT the costs of each of the husband and wife as against each other are otherwise reserved pending any application which must be filed within twenty-eight days of the date hereof and be supported by written submissions of no more than five (5) pages in length.
IT IS CERTIFIED
THAT pursuant to Rule 19.50 of the Family Law Rules this matter reasonably required the attendance of Counsel for each of wife and intervenor.
IT IS NOTED that publication of this judgment under the pseudonym Denning & Denning is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLC 463 of 2008
| Mr Denning |
Applicant
And
| Ms Denning |
Respondent
And
B Pty Ltd
Intervenor
REASONS FOR JUDGMENT
ISSUE
The Court was required to determine a just and equitable division of property as between the husband and wife in circumstances where an intervenor claimed all of the husband’s assets to satisfy a judgment debt and costs. Much of the focus of the case was as to the quantum and whereabouts of the proceeds of sale of various property developments and the hearing was mainly concentrated upon what sum of money correctly represented the available pool of net assets for division between the parties and for payment out to the intervenor.
ORDERS SOUGHT
Husband
By his amended initiating application filed 30 November 2010 the husband sought final division of property orders (in summary) as follows:
§that the costs orders made in his favour on 2 June 2008 and 22 December 2008 in the sums of $4,274 and $2,302 be paid on his behalf from the wife’s share of any property division;
§that the costs reserved order arising from the court hearing on 15 September 2008 be fixed and the costs be paid on his behalf by the wife from her share of any property division;
§that the costs of the intervenor be paid directly from the monies presently held on behalf of the parties in Westpac Term Deposit accounts and invested by the wife’s solicitors pursuant to orders of this Court made 5 March 2010 (“the term deposits”);
§that 50 per cent of the balance of monies held in any bank account by the wife’s daughter Ms C be paid out to the husband;
§that the Citibank credit card balance of approximately $67,500 be forthwith paid to Citibank from the term deposits held by the solicitors for the parties;
§that any legal fees owing to the husband’s former solicitors ($3,819) be forthwith paid from that solicitor’s account;
§that each of the husband’s post separation credit cards be wholly repaid from that solicitor’s account;
§that the wife pay a cash sum of $10,000 to the husband for her retention of furniture, chattels and possessions in the former matrimonial home and the holiday home;
§that motor vehicle 1 be transferred to the wife at her sole cost and expense;
§that any remaining monies in the solicitor’s trust account be equally paid out to the husband and wife after discharge of all identified debts above.
The husband’s case was opened and conducted upon the basis that any monies to be paid to him as his share of a division of property be redirected to the intervenor in payment of the agreed sum and costs owing to them by the husband for past litigation fees paid and costs and interest owing thereon. Any balance (if any) would then be paid to him.
Wife
By a response to the application for final orders filed 12 January 2011 the wife sought (in summary) the following orders:
§that the husband be ordered to pay all monies to the wife which he has diverted from her and as described in the affidavits and reports of the forensic accountant Mr I;
§that the husband be ordered to pay all monies he has diverted from the wife’s family, including her children, as identified in the affidavits and reports of the forensic accountant;
§that all monies held in the term deposits be paid out to the wife;
§that the husband pay all legal costs of the wife incurred in this matter;
§that the final orders sought by the husband in paragraphs 1 to 12 (inclusive) of his application be otherwise dismissed.
The wife’s earlier response had been filed 2 March 2009 and in that document she sought various other property orders including an adjustment of the husband’s superannuation and payment of a lump sum as spousal maintenance. Those orders were omitted from the final orders sought in her response before this hearing.
During the hearing the wife applied for leave to amend her orders sought and to claim periodic spousal maintenance in the sum of $300 per week.
That application was opposed by the husband and the intervenor and I delivered separate ex tempore reasons for judgment during the hearing permitting the wife to forthwith file an application for periodic spousal maintenance as outlined.
That application was filed by leave on 2 February 2011 although it was erroneously filed as an application in a case. I have treated the order sought as a final and ongoing periodic spousal maintenance payment and I have determined a just and equitable outcome of that application in these proceedings.
Additionally the wife’s legal practitioners somewhat curiously sought an order for child maintenance for G in the sum of $150 per week. Leave for that application to be filed was refused.
Intervenor
The intervenor sought payment of a capital sum of $155,991.75 together with interest at the rate of 10 per cent per annum to be calculated and paid from 1 February 2011 until payment of that outstanding sum. This was the total sum of legal fees, expenses and interest accrued thereon to 1 February 2011 that it had paid the husband’s former solicitors on his behalf together with interest, costs and penalties accrued thereon to the commencement date of this hearing. It excluded additional legal costs of and incidental to the hearing. These continuing contingent costs of the intervenor up to the conclusion of this hearing, and inclusive of counsel and instructing solicitor have been assessed at $37,511 inclusive of counsel’s agreed preparation fee of $1,750.
The husband consented to the payment of that capital sum to the intervenor. His case was conducted on the basis that whatever monies were paid to him as a just and equitable settlement of property should be directed to the intervenor in reduction of his debt to them.
The wife opposed the payment of any sum to the intervenor as on her application all available monies would be paid to her and she sought that no monies be paid to either of the husband or the intervenor.
In their final submissions the intervenor sought orders enforcing two previous costs orders, totalling $6,576 which the wife had been ordered to pay to the husband and for those monies to be instead paid to the intervenor. Additionally any like costs assessed from the hearing of 15 September 2008 in favour of the husband were likewise sought to be paid directly to the intervenor.
A further injunctive order was sought by the intervenor in the following terms:
Until payment in full to the Intervenor of the monies due pursuant to these orders the Husband be restrained form (sic) receiving, using or otherwise dealing with monies invested in the said Westpac Bank term deposits.
AFFIDAVITS RELIED UPON
Husband
The husband relied upon:
§his voluminous trial affidavit filed 26 November 2010 and the substantial annexures thereto; (and reference was likewise made by the professional witness as to the earlier substantial affidavit of the husband filed 15 June 2010 and its many annexures);
§his Financial Statement filed 26 November 2010;
§his earlier Financial Statement filed 15 December 2009;
§his Outline of Submissions;
§his balance sheet of assets and liabilities filed at the commencement of the proceedings and dated 20 January 2011;
§his statement of legal costs and disbursements.
Additionally, and as background I have read the earlier affidavit of the husband filed 18 January 2008 and some parts of his affidavit and annexures filed 15 June 2010.
Wife
The wife relied upon the following documents:
§her trial affidavit filed 14 December 2010 and the various annexures thereto;
§her Financial Statement filed 14 December 2010;
§the affidavit of her brother Mr H filed 24 January 2011;
§the affidavits of Mr I, Chartered Accountant, filed 30 June 2010 and 17 November 2010;
§her balance sheet of assets and liabilities filed 24 January 2011;
§her counsel’s Outline of Submissions filed 24 January 2011;
§her statement of legal costs and disbursements filed 24 January 2011.
Intervenor
The intervenor relied upon:
§the affidavits of its Chief Executive Officer, Mr J filed 25 August 2010 and 28 January 2011;
§its actions in consenting to the uplifting the caveat which it had lodged to secure its debt against the title to the property at K Street, Suburb L, as was evidenced by the annexures to the affidavit of its Chief Executive Officer.
BACKGROUND FACTS
Personal
The following personal facts are agreed:
§the husband was born in 1967 and is 43 years of age;
§the wife was born in 1963 and is 47 years of age;
§the parties commenced cohabitation in 1996;
§the parties were married in 1999;
§the wife’s daughter from her prior marriage, Ms C was born in 1992 and is now 18 years of age;
§the child of the marriage, G was born in October 2000 and is now almost 11 years of age;
§the parties separated on 5 December 2007;
§a divorce was pronounced on 28 February 2009;
§the husband remarried in July 2009;
§the wife has not re-partnered.
Property Dealings and Employment History
The following particulars of various property dealings and the employment history of the husband was agreed upon (in summary):
07/09/1992Commenced work with P Pty Ltd group of companies as Administration Manager
01/07/1995Commenced new role as Financial Controller with the P Pty Ltd group of Companies
01/03/1997purchased land situated at 1 K Street, Suburb L for $70,000
15/12/1999Built house on land at 1 K Street, Suburb L for approx $180,000
01/06/2000Moved into the house at 1 K Street, Suburb L;
Sept 2001Purchased property situated at 2 K Street, Suburb L for $233,000
March 2002Purchased property situated at 3 K Street, Suburb L for $220,000
May 2002Purchased property situated at M Street, Suburb L for $370,000
June 2004Purchased property situated at N Street, O Town for $255,000
July 2004Commenced new role as for P Pty Ltd
June 2005Purchased property at 4 K Street, Suburb L for $307,000
June 2006Commenced construction of three dwellings at M Street Road, Suburb L
Sept 2006Left employment with P Pty Ltd
2006 / 2007Subdivided M Street, Suburb L
August 2007 Construction of three dwellings at M Street, Suburb L finished and Certificate of Occupancy issued
26/05/2008Property at 2 K Street, Suburb L sold for $342,000
Sept 2008Property at 3 K Street, Suburb L sold for $323,000
Dec 2008Property at 1/M Street, Suburb L sold for $430,000
Dec 2008Property at 3/M Street, Suburb L sold for $370,000
March 2009Property at 2/M Street, Suburb L sold for $400,000
June 2009Property at 4 K Street, Suburb L sold for $440,000
10/5/2010Bendigo Bank takes possession of N Street, O Town as mortgagee in possession
05/07/2010Property situate at 1 K Street, Suburb L sold and settled for $801,000. Surplus funds of $232,252.80 was paid into F Butera & Co Solicitor’s Trust Account
20/1/2010Sale and settlement of N Street, O Town – sold for $422,000.
INTERVENOR’S CLAIM
The intervenor obtained judgment against the husband on 24 June 2010 for the then amount of $144,898.78 plus interest accruing at a rate of 10 per cent per annum pursuant to the Supreme Court Act of Queensland.
All up the parties agree that the arithmetic of that total intervenor’s claim, excluding further legal costs incurred, is $155,991.75.
The total costs and expenses, including of this hearing and earlier proceedings now sought by the intervenor are $37,511 and additionally it would be submitted that interest charges continue to accrue thereon.
PREVIOUS COURT ORDERS
In an interim defended hearing on 12 March 2008 Brown J had ordered:
(c)third, the balance then remaining to be paid into an interest-bearing account in the name of both parties, held in trust with the husband’s solicitor until further order (“the trust account”).
(18)That until further order the husband do all things necessary to ensure that the nett rental income received from the managing agent in respect of the following properties be paid to the trust account :
(a) [2 M Street, Suburb L];
(b) [3 M Street, Suburb L]; and(15) That within fourteen days the husband and wife do all things necessary to effect the sale of the following real properties :
(a) [2 K Street, Suburb L];
(b) [3 K Street, Suburb L];
(c) [1 M Street, Suburb L];
(“the investment properties”).
(16)That for the purpose of each of the sales, and subject to any agreement to the contrary between the parties :
(a) the selling agent be [Q Pty Ltd.];
(b)the conveyancing be undertaken by [MM Conveyancing];
(c)the sales be by private treaty or such other method as recommended by the selling agent;
(d)the wife do all things necessary to provide withdrawals of caveats lodged over the investment properties; and
(e)there be liberty to apply with respect to the terms and conditions of the sales of the investment properties.
(17)That the proceeds of each of the sales of the investment properties be applied as follows :
(a)first, to pay the cost and commission of the sale;
(b)second, to discharge all mortgages secured over the title of the property sold; and
(c) [4 K Street, Suburb L].
(19)That until further order, sums held in the trust account be applied as follows :
(a)to pay instalments of mortgage as and when they fall due in relation to the following properties :
(i) the investment properties;
(ii)the former matrimonial home at [1 K Street, Suburb L];
(iii) [N Street, O Town],
(iv) [2, M Street, Suburb L];
(v) [3, M Street, Suburb L];
(vi) [4 K Street, Suburb L];
(b)all rates, outgoings and insurances in respect of the properties described in sub-paragraph (a) hereof;
(c)all necessary maintenance and other expenses in respect of the properties described in paragraph (19)(a) hereof which are rented, in the event those expenses have not been paid from the gross rental by the managing agent in respect of the relevant property;
(d)the minimum payment due on the Citibank credit card in the husband’s name;
(e)the lease payments in relation to [the motor vehicle 2] and [motor vehicle 1] in the possession of the parties; and
(f)such other expenses as may be agreed upon in writing between the parties.
(20) That payments made pursuant to paragraph (19) hereof be characterised in due course by the trial judge.
(21) That until further order the husband account to the wife, in writing and on a monthly basis, in respect of income and outgoings relating to the properties described in paragraph (19)(a) herein, and such written account be provided no later than the fourteenth day of the following month, and the first such account be provided on 14 April, 2008.
The parties have complied with these orders and all of the real property identified therein has been sold. It is the conduct and outcome of some of those sales and borrowings, and the available monies from those sales and borrowings that is central to the issues which the parties have investigated and presented for determination to this Court. The payments of the past mortgage liabilities and other property outgoings were reserved by her Honour to the trial judge for characterisation and to be adjusted within an overall just and equitable division of property. This I have done.
COSTS ORDERS
On 2 June 2008 the husband was represented by counsel and the wife appeared in person before Dessau J and it was ordered that the wife pay the husband’s costs fixed in a total sum of $4,274 and that such sum be paid ultimately from the wife’s share of the property settlement.
On 22 December 2008 with both parties represented before me I ordered that the wife pay the husband’s costs fixed in the sum of $2,302 and that payment be stayed pending the resolution of all property and financial proceedings before the Court.
On 15 September 2008 the husband was represented by counsel and there was no appearance by or on behalf of the wife. I then ordered that the costs of the husband of and incidental to that interim hearing be reserved. That was a limited hearing at which the husband was represented and occupied approximately one hour of Court time.
No evidence was presented to me during this hearing as to the quantum of those reserved costs notwithstanding of the husband being reminded of his obligation to have such evidence of payments made and costs incurred submitted to the Court. In his final submissions the husband endeavoured to tender the account of fees and disbursements from his solicitor for that hearing. Objection was taken and I declined to accept that document after evidence had concluded. I however know from the order itself that experienced junior counsel appeared for the husband, instructed by his then solicitor. I propose to estimate scale legal costs of $2,000 for that limited hearing on that day as being a just sum, no doubt very considerably less than that charged the husband.
As to the costs orders made on 2 June 2008 and 22 December 2008 I have ordered that those monies be paid from the wife’s division of property directly to the intervenor in reduction of the husband’s liability. I find that to be a just outcome.
As to the reserved costs I conclude that it is just and proper pursuant to s 117 of the Family Law Act 1975 (Cth) (‘the Act’) to order that the wife pay $2,000 from her division of property to the intervenor and I have so ordered. I have evaluated the factors set out in s 117(2A) of the Act including the financial circumstances of the parties and the conduct and result of the proceedings on that day in concluding that outcome.
LITIGANT IN PERSON
As the husband was self represented I endeavoured at all times to ensure procedural fairness and that he had a proper understanding of the procedures of trial and of his rights in conducting his own case. I am satisfied that the husband had a very substantial factual knowledge of all matters in issue. He was firm and positive in the way he presented his submissions to the Court and asked questions of the wife and her witnesses. He conducted himself very appropriately in Court and at all times was fully informed of the financial, contribution and factual issues that were in argument before the Court.
The decision of the Full Court in Re F: Litigants in Person Guidelines,[1] modified the guidelines used in proceedings where a litigant appeared without representation from what was previously said by the Full Court in Johnson v Johnson.[2]
[1] (2001) FLC 93-072.
[2] (1997) FLC 92-764.
Those Guidelines are explained by the Full Court to be as follows (in summary):
(a)a judge should ensure as far as is possible that procedural fairness is afforded to all parties whether represented or appearing in person in order to ensure a fair trial;
(b)a judge should inform the litigant in person of the manner in which the trial is to proceed, the order of calling witnesses and the right which he or she has to cross examine the witnesses;
(c)a judge should explain to the litigant in person any procedures relevant to the litigation;
(d)a judge should generally assist the litigant in person by taking basic information from witnesses called, such as name, address and occupation;
(e)if a change in the normal procedure is requested by the other parties such as the calling of witnesses out of turn the judge may, if he/she considered that there is any serious possibility of such a change causing any injustice to a litigant in person, explain to the unrepresented party the effect and perhaps the undesirability of the interposition of witnesses and his or her right to object to that course;
(f)a judge may provide general advice to a litigant in person that he or she has the right to object to inadmissible evidence, and to inquire whether he or she so objects. A judge is not obliged to provide advice on each occasion that particular questions or documents arise;
(g)if a question is asked, or evidence is sought to be tendered in respect of which the litigant in person has a possible claim of privilege, to inform the litigant of his or her rights;
(h)a judge should attempt to clarify the substance of the submissions of the litigant in person, especially in cases where, because of garrulous or misconceived advocacy, the substantive issues are either ignored, given little attention or obfuscated;[3]
(i)where the interests of justice and the circumstances of the case require it, a judge may:
§draw attention to the law applied by the court in determining issues before it;
§question witnesses;
§identify applications or submissions which ought to be put to the Court;
§suggest procedural steps that may be taken by a party;
§clarify the particulars of the orders sought by a litigant in person or the bases for such orders.
[3] Neil v Nott (1994) 121 ALR 148 at 150.
The above list is not intended to be exhaustive and there may well be other interventions that a judge may properly make without giving rise to an apprehension of bias.
The Full Court in Re F: Litigants in Person Guidelines, after stating that the skill set of each individual litigant in person could vary greatly, further held at that:[4]
With these matters in mind, we think that the giving of such assistance should lie in the discretion of the trial judge and should not be required by mandatory guidelines nor should the nature of the interventions from the bench be rigidly proscribed or prescribed. The exercise of such discretion serves the goal of achieving a fair trial so that the interests of justice can be served. Therefore, the application of the guidelines must depend on the circumstances of the particular case.
[4] (2001) FLC 93-072 at [229].
The Full Court had earlier said:[5]
…we think it is necessary to appreciate that the imperative to do substantive justice as between the parties requires the conduct of the presiding judge to be assessed by a standard which is properly informed. The informed nature of that standard must, in our view, take account of the responsibility of the Court seized of the family law matter to properly understand the litigant in person’s position within the litigation.
[5] (2001) FLC 93-072 at [225].
The decision in Re F: Litigants in Person Guidelines has been affirmed and followed in subsequent decisions of the Full Court. In particular the Full Court in Dobbs & Brayson (No 2)[6] upheld its applicability to Less Adversarial Trials under Division 12A:
These guidelines were formulated in respect of trials prior to the introduction of Division 12A by the amending Act. However, we think the statements set out in the guidelines generally remain relevant and apposite to child related proceedings conducted under Division 12A.
[6] (2007) FLC 93-354 at [82,076].
As I said earlier the trial was conducted in a manner designed to ensure that the husband understood the process and his rights. I am wholly satisfied that he was given procedural fairness and his final submissions on financial issues dealt with the issues that were factually and financially important to him or seen by him to be contentious in the hearing.
OBSERVATION OF WITNESSES
I have had what I consider to be in this case the very real benefit of observing the husband and wife, as witnesses in giving their evidence on oath, and have observed their demeanour, behaviour and character and their conduct under cross examination. That observation of them has been of real assistance in formulating appropriate orders. Those observations are acutely available to a trial judge and the authority for such a position is found in the judgment of Kirby J (as his Honour then was) in Government Insurance Office of New South Wales v Bailey:[7]
By conventional theory, the observations made by a trial judge of the appearance and demeanour of a witness giving evidence are not only available to be used in the determination of a dispute but amount to important ingredients of the decision-making process. They normally provide the primary decision-maker a distinct advance which controls, and even limits, the exercise by the appellate court of its statutory functions in an appeal by way of re-hearing: see Owners of Steamship Hontestroom v Owners of Steamship Sagaporack [1927] AC 37 at 47; Jones v Hyde (1989) 63 ALJR 349 at 351; 85 ALR 23 at 27; Abalos v Australian Postal Commission (1990) 171 CLR 167 at 178ff..
[7] (1992) 27 NSWLR 304 at 313. See also Minagall v Ayres (1966) SASR 151 at 154 per Hogarth J.
I have had the significant benefit of hearing all of the evidence in its entirety, of reading carefully all of the affidavits, the annexures to the affidavits and the other exhibits in the proceedings. I have reflected upon and have weighed all parts of the individual testimony against the balance of all evidence prior to delivering these reasons for judgment. I stress that, in this case, my Court observations of the parties were of real benefit and importance.
The unique role and observations of a trial judge have been highlighted by the House of Lords In re J (a child) (FC).[8] In paragraphs 4, 10 to 12 Baroness Hale discusses the role of the trial judge in the evaluation of oral evidence:
10.The Court of Appeal appears to have intervened on the basis, first, that the judge’s conclusion on the risk was not justified by the evidence and second, that he had given it too much weight in his overall conclusion. Yet the assessment of the risk depended entirely on the judge’s evaluation of the father’s present intentions and likely future behaviour and its impact upon the child. There was objective evidence of the risk in the fact that the father had made the allegations in writing and then withdrawn them when he saw that they were damaging rather than helping his case. Whether he might do so again depended crucially on the judge’s evaluation of his oral evidence. The judge was the only person who could do this. He concluded that, while the father was sincere in his current intention not to raise such allegations again, there was a serious risk that if disputes arose in future, as they might easily do, he would resurrect them. These were findings of credibility and primary fact with which, for all the reasons explained by Lord Hoffmann in Piglowska v Piglowski [1999] 1 WLR 1360, at pp 1372-3, an appeal court is not entitled to interfere.
[8] [2006] 1 AC 80, per Baroness Hale, with Lords Nicholls, Hoffman, Walker and Brown agreeing.
I have made findings upon the evidence of the parties and my acceptance of their truthfulness and credit throughout these proceedings and those issues are identified in more detail later in these reasons for judgment.
STANDARD OF PROOF
The appropriate standard of proof that I have applied is the civil standard, namely the balance of probabilities. The more serious that a matter was, or its importance in this case, the more strictly I have examined the level of proof required.
Section 140(1) of the Evidence Act 1995 (Cth) provides that a Court must find the case of a party proved if it is satisfied that the case has been proved on the balance of probabilities. Subsection (2) further provides that, without limiting the matters that the Court may take into account in deciding whether it is so satisfied, it is to take into account (in summary):
(a) the nature of the cause of action or defence; and
(b) the nature of the subject matter of the proceeding; and
(c) the gravity of the matters alleged.In Briginshaw v Briginshaw Dixon J said:[9]
Except upon criminal issues to be proved by the prosecution, it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal. But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal.
[9] (1938) 60 CLR 336 at 361 to 362.
While Dixon J.’s classic discussion in Briginshaw’s case of the operation of the civil standard of proof does express the considerations which s 140(2) of the Evidence Act 1995 (Cth) requires a court to take into account, the correct approach, as recently observed by Branson J in Qantas Airways Ltd v Gama is that:[10]
…references to, for example, “the Briginshaw standard” or “the onerous Briginshaw test”… have a tendency to lead a trier of facts into error. The correct approach to the standard of proof in a civil proceeding in a federal court is that for which s 140 of the Evidence Act provides.
[10] (2008) 247 ALR 273 at 139, French and Jacobson JJ agreeing.
Similarly, in Johnson & Page[11] the Full Court of this Court expressly agreed with the view that “reference to the Evidence Act, rather than Briginshaw, is appropriate”.
[11] (2007) FLC 93-344 at [81,891].
FAMILY LAW ACT 1975 (CTH)
The proper approach to determining a section 79 application is now well established, both by the Act and by case law.[12]
[12]See In the Marriage of Steere (1985) FLC 91-626; In the Marriage of Davut & Raif (1994) FLC 92-503; In the Marriage of Clauson (1995) FLC 92-595), Mallet v Mallet (1984) 156 CLR 605; Hickey & Hickey (2003) FLC 93-143; In the Marriage of Waters & Jurek (1995) FLC 92-635 and Norbis v Norbis (1986) 161 CLR 513.
Section 79(2) requires that any order made by the Court must be just and equitable and provides that:
[Just and equitable requirement] The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
Section 79(1) of the Act directs a Court to make such an order as it considers appropriate. Such an order must be just and equitable. As has recently been highlighted by Cronin J in Bulleen v Bullen,[13] the process by which the Court determines such an order may appear arbitrary and without any particular arithmetical approach but that is the way in which the Act was drawn, proclaimed and has served our community from 1975. It is discretionary and His Honour has observed that “it is also not governed by morality but fairness”.
[13] (2010) 43 Fam LR 489 at paragraphs 34 to 45 (inclusive).
It is therefore a balanced and properly explained assessment by a trial judge having heard and carefully evaluated all of the admissible facts and evidence of what division of property and what other orders are to be made between the parties to achieve a just and equitable result. That is the process which I have carefully undertaken and explained within these reasons for judgment.
Primarily for the better understanding of the husband I have set out both the approach to s 79(4) issues of contribution and the relevant factors which I have considered within s 75(2) of the Act.
Section 79(4) involves a four step exercise which I have undertaken in this judgment, namely:
§the identification of the property of the parties, their assets and financial resources and the net of their liabilities;
§the evaluation of the “contributions” and s 79(4) issues;
§the evaluation of the matters referred to in section 75(2);
§a determination as to whether the result is just and equitable by reference to section 79(2) of the Act. In determining whether the outcome is just and equitable it is “the real impact in money terms which is ultimately the critical issue”.[14]
[14]JEL v DDF (2001) FLC 93-075 at [140] citing the Full Court In the Marriage of Clauson (1995) FLC 92-595 at 81,911.
In considering the alteration of property interests I have identified the net assets of the parties and then evaluated the very specific contributions, direct and indirect, financial and non-financial, and other contributions including that of homemaker and parent. I have throughout this judgment identified and incorporated within my consideration and evaluation all such issues and findings. The reference point for the just and equitable requirement is clearly emphasised by the decision of the Full Court in Hickey where it was said:[15]
The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s 79. That approach involves four inter-related steps. Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss 79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss 79(4)(d), (e), (f) and (g), (‘the other factors’) including, because of s 79(4)(e), the matters referred to in s 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all of the circumstances of the case.
[15] Supra at [39], p 78,386.
I have emphasised in my approach the overriding obligation upon the Court to evaluate and properly assess all of the evidence for the purpose of pronouncing an order which is just and equitable.
There is a very significant obligation imposed upon the Court, in the exercise of its judicial discretion, to assess, balance and evaluate all contributions under the umbrella of s 79(4) and for the exclusive purpose of concluding a just and equitable order.
It is necessary for courts to assess both the “value” and “the quality with which any particular role was performed” and a very helpful assessment of this concept is developed by Warnick J in SL & EHL[16] and by Cronin J in Bulleen’s case.[17]
[16][2005] FamCA 132, in particular paragraphs 233 to 290 (inclusive).
[17] Supra.
The mandatory prescription of the Act is to evaluate contributions. In Pierce v Pierce[18] the Full Court per Ellis, Baker and O’Ryan JJ said:
There is an obligation on the trial judge not only to identify the relevant contributions but also to assess them.
[18] (1999) FLC 92-844 at [30], p 85,881.
It is not the purpose of the relevant provisions of the Act to “equalise the financial strengths of the parties”, per Wilson J in Mallet.[19] I have carefully safeguarded against utilising the provisions of s 79(4) of the Act as a “source of social engineering or as a means of evening up the financial positions of the parties” per Kennon v Kennon.[20]
[19] Supra.
[20] (1997) FLC 92-757 at p 84,303.
SECTION 75(2) FACTORS
The relevant factors which I have considered and evaluated throughout this judgment are (in summary):
(a)the age and state of health of each of the parties;
(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;
(c)whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;
(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;
(e)the responsibilities of either party to support any other person;
(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;
(g)where the parties have separated or divorced, a standard of living that in all circumstances is reasonable;
(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
(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 marriage 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 79 in relation to the property of the parties;
(na) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
(o)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account.
ADD-BACKS – CASE LAW
Each of the husband and wife’s case was conducted on the basis of various financial adjustments or add backs and the parties both sought to establish that the other had inappropriately and unfairly benefited from monies received to their benefit or otherwise should not be repaid expenses and liabilities or had financially mismanaged monies and investments that otherwise would have fallen within the net pool of assets available for division between them.
I have hereafter evaluated all of the evidence touching upon these financial dealing, adjustments and add-backs and have done so with the approach that a factual assessment was required of the reasonableness of all of the parties actions.
If is important for the parties to understand that there were inflows and outflows of capital, property sales, income and liabilities incurred throughout the marriage and the ongoing financial transactions post separation and pending hearing must be understood and evaluated on the evidence and with a good understanding of the financial and other conduct of each of them.
In M & M[21] per Baker, Kay and Chisholm JJ it was said that:
There seems to be no appropriate basis for notionally adding back monies that existed at separation but which have been subsequently spent on meeting reasonably incurred necessary living expenses. Neither the Family Law Act nor the case law required at parties going to a state of suspended economic animation once their marriage breaks down pending the resolution of their financial arrangements. Parties are entitled to continue to provide for their own support.
[21] [1998] FamCA 42.
This decision of M & M[22] was favourably quoted by the Full Court in C & C[23] per Nicholson CJ, Ellis and Kay JJ where they said “whilst not seeking to place a fetter upon the exercise of discretion of a trial judge in individual cases, it seems to us that the concept of adding monies reasonably disposed of back into the pool ought to be the exception rather than the rule. The parties are entitled to reasonably conduct their affairs post separation in a manner that is consistent with properly getting on with their lives.”
[22] Supra.
[23] [1998] FamCA 143.
In AJO & GRO[24] the Full Court per Holden, Warnick and Le Poer Trench JJ found that the trial judge had incorporated a number of add-backs without making any specific finding that the expenditure of the husband was wanton or reckless. They found that to justify an add-back it was required that the judge make an assessment of the reasonableness of the expenditures, and that had not occurred.
[24] (2005) FLC 93-218.
In contrast, in Townsend & Townsend[25] the husband had after separation sold a taxi licence and spent the proceeds for his own benefit. Nicholson CJ said at:
In my view, what occurred in this case, as I said during the course of argument was, in fact, a premature distribution of a proportion of the matrimonial assets. What the husband did was to distribute to himself an asset in which the wife had a legitimate interest. In such circumstances I consider that it would be unjust in the extreme to simply treat such conduct by the husband as a matter to which regard should be had under section 75(2). It seems to me that the husband has had the benefit of that money. Had he retained, for example, the taxi licence instead of selling it, that would have been brought into account as an item of property which would have been dealt with in the same way as the remaining items of property in this case. Accordingly, I am of the view that the correct way in which to deal with the husband’s receipt of those moneys is to bring them into the pool of assets on a notional basis and make a distribution accordingly.
[25] (1995) FLC 92-569 at [81,654].
Accordingly and excluding all superannuation matters I have concluded that it is not proper or reasonable to add-back to the net pool of assets monies that have been spent or transferred or cannot be adequately identified.
MATHEMATICAL APPROACH
I am not persuaded to adopt a strict mathematical approach notwithstanding the very focused financial approach of the husband.
In Norbis[26] in the judgment of Mason and Deane JJ it was said:
In G and G, a case decided after Mallet and the decision of the Full Court in the present case, Nygh J. expressed his agreement with the proposition ‘that it cannot be required of the Family Court that it assesses contributions with mathematical precision with respect to each item’.
. . .
In this respect we agree with the comment of Nygh J in G and G that, although mathematical precision is certainly not required, there is ordinarily a need to know the circumstances in which assets were acquired and the general extent of each party’s contribution to them.
[26] Supra at 522.
In Hunt & Zuryn[27]the Full Court per Kay, May and Boland JJ said:
Such an assessment ought adequately recognise that much of the parties’ wealth can be attributed to the capital growth in the assets introduced by the husband at the commencement of the marriage but at the same time bringing into consideration a myriad of other contributions each made in the course of their relationship.
[27] (2005) FLC 93-226 at [79,730].
In Clives & Clives[28] the Full Court said:
We accept that the task to be undertaken by a trial judge in assessing weight to be attached to initial contributions, and other contributions, is not always an easy one and not discharged by a strict accounting exercise.
[28](2008) FLC 93-385 at [44].
In Garrett & Garrett[29] the Full Court per Evatt CJ, Lindenmayer and Strauss JJ said:
The wide and indefinite terms of para (a) themselves suggest that where appropriate, and certainly in a case like the present, a broad estimate of the financial contribution of each party must be made. Under sec. 79(4)(b) non-financial contribution of each is to be taken into account. This must of necessity be a matter of judgment and not of computation. Similar indications can be found amongst the relevant matters in sec. 75(2). It is also worth noting that para. (a) and (b) refer to the “contribution” and not to the contributions of each party.
In this case it has been possible to determine with some degree of accuracy what the parties brought into the marriage and what they received during cohabitation from their respective families. However, the long term significance of these contributions is not determined as a mathematical exercise. They enhanced the life style of the parties and their children who all benefited from them.
[29] (1984) FLC 91-539 at [79,372].
Whilst I have carefully evaluated all of the financial evidence and particularly the contributions made by or on behalf of the parties and the s 75(2) factors I have done so without a rigid and specific mathematical approach, though of course I was at all times acutely aware of the financial impact of and the outcome of my orders. I endorse the statement of the Full Court in Garrett’s case that the long term significance of the various contributions made by each of the parties enhanced their lifestyle and that of their children and they have all benefited from their work and effort over the marriage and the resulting net asset pool now to be divided between them.
INFERENCES
The principle authority supporting the appropriateness of the Court, in the exercise of its discretion, drawing an inferences from the failure of a party to call a relevant witness is Jones v Dunkel.[30] The so called “rule” in Jones v Dunkel was recently explained by the Full Court of the Family Court in GWR v VAR:[31]
The decision of the High Court in Jones v Dunkel does little more than confirm what common sense suggests would be the case, namely that where it would be reasonable to expect a party to have called evidence from a witness in relation to an issue, the unexplained failure to do so can justify drawing the inference that the evidence of that witness would not have assisted that party’s cause.
[30] (1959) 101 CLR 298.
[31] [2006] FamCA 894 at [29].
There are some circumstances in which the inference may not be available or may be of little significance and this was explained by Mahoney JA in Fabre v Arenales:[32]
But there are circumstances in which it has been recognised that such an inference is not available or, if available, is of little significance. The party may not be in a position to call the witness. He may not be sufficiently aware of what the witness would say to warrant the inference that, in the relevant sense, he feared to call him. The reason why the witness is not called may have no relevant relationship with the fact in issue: it may be related to, for example, the fact that the party simply does not know what the witness will say. A party is not, under pain of a detrimental inference, required to call a witness “blind”.
…A Jones v Dunkel inference may not arise if, for example, the witness has a reason for not telling the truth or refusing to assist and the party who may well call him is aware of this.
[32] (1992) 27 NSWLR 437 at 449 to 450.
The Court cannot use an inference to fill in gaps that may exist in the state of the evidence before the Court.[33] It remains at the discretion of the Court to determine whether inferences should, in all of the circumstances be properly drawn.
[33] Jones v Dunkel (1959) 101 CLR 298; West v Government Insurance Office of New South Wales (1981)
There were additional witnesses that could have been called by both the husband and wife in support of their case. In particular evidence of the husband’s receipt, investment or indeed the disposition of his superannuation could and should have been the subject of further evidence. I have however exercised substantial caution in relying upon any inference “to fill in gaps in evidence”.
POOL OF ASSETS
As Agreed
All parties agreed that the balance of capital and interest within the Westpac term deposits, invested by the wife’s solicitor on behalf of the parties should be included in the total sum of $289,301.54. Interest will continue to be earned on each of those term deposits pending the date when they are paid out pursuant to these orders. Accordingly I have pronounced the orders in a manner inclusive of that further accrued interest and subject to any other bank charges or fees.
In Dispute
There were various assets which the husband or the intervenor asserted should be added back into the pool of assets. They were:
§CBA Bendigo bank account $5,200
§Bendigo bank account in name
of daughter Ms C $11,000
§Sandhurst Select Mortgage Fund
in name of Ms C $45,000
§motor vehicle 1 $9,000
§Household furniture and belongings $25,000
I have hereafter made findings on each of the above items, though I immediately record there was no evidence in the hearing and no application from any party to include the Commonwealth Bank amount of $5,200 and which was said to be held by the husband as to $200 and by the wife as to $5,000. I have therefore not further considered that claim and have not included that sum within the pool of assets.
POOL OF LIABILITIES
As Agreed
All parties agreed to the quantum of the judgment debt and costs and interest hereon owing to the intervenor in the sum of $155,991.75 plus interest at a rate of 10 per cent per annum accrued as and from 1 February 2011 and until payment.
In Dispute
The wife asserted that the Court should accept and make proper financial provision for the following liabilities:
§E Trust $123,924
§Ms C (her eldest daughter) $25,500
§Tolhurst Druce & Emmerson (her previous
Solicitors) $11,615
§D Pty Ltd $76,841
The husband asserted that there were liabilities which he had incurred, either on behalf of the parties or by himself jointly which should be allowed and they were:
§Citibank Credit Card $67,571
§Debt owing to his mother $40,000
§Debt owing on unpaid credit cards
in his name to CBA, ANZ, St George
Aussie MasterCard and GE Wizard
MasterCard totalling $58,892Additionally the husband asserted that the wife, as a discretionary beneficiary of the E Trust, has available to her a financial resource which should be brought to account in the proceedings. He asserted that the full value of the Trust as at 30 June 2008 should be included in the sum of $1,600,000. That was very obviously a substantially misguided and wildly optimistic claim and which otherwise wholly ignored the structure of the Trust and the further primary beneficiaries and the additional beneficiary of the Trust.
ORDERS SOUGHT IN FINAL SUBMISSIONS
Husband
At the conclusion of the evidence all parties addressed the Court upon what should be found to be the assets and liabilities and there were substantial concessions made at that time by all parties.
I have accepted those concessions, which were all very properly made in light of the evidence given before the Court, to limit my consideration of many of the factual matters in dispute.
The husband finally identified the pool of assets to include:
§the term deposits $289,301
§motor vehicle 1 $9,000
§monies previously invested in Ms C’s name $56,000
As to the liabilities the husband maintained his demand for the entire debt and legal costs owing to the intervenor to be paid as a priority from the term deposits and prior to division of those monies between the parties. He further updated the total liability, including interest, on the Citibank credit card to a sum of $70,000 which he also required to be paid from the term deposits before any division of those monies.
The husband then conceded that the Court should not have regard to the following liabilities:
§his former solicitors debt $3,819
§his accrued post separation credit
card debts (approx) $59,000
§the loan to his mother $40,000
The husband opposed the quantum of the ongoing costs of the legal representation of the intervenor in this hearing. What was claimed on their behalf was $37,511 and ongoing interest at a rate of 10 per cent per annum from the date of hearing. Those costs were claimed on an indemnity basis. The husband’s submission was that the costs were excessive and in any event should be assessed at a much lesser sum and not on an indemnity basis.
I have found that it is just that the costs of this hearing of the intervenor be paid by the husband and I have hereafter carefully evaluated the submissions and evidence and determined a just cost sum to be paid by the husband from his share of the balance of the term deposits as I have divided pursuant to s 79 of the Act.
In his submission the husband developed a further claim against the wife founded upon s 117AB of the Act. He claimed that the wife, her solicitors and investigating chartered accountant had made false allegations against him and false statements in the proceedings. On that basis he applied for an order for the totality of his legal costs and disbursements, or otherwise for a substantial percentage thereof to be paid by the wife from the term deposit monies before any payment to her of any sum. I have hereafter determined that application, which I emphasis was made only in final addresses and with the husband having the benefit of being the last person to address the Court. The wife’s counsel had no right of reply and did not seek to reply to that submission.
The general submission of the husband as to division of the term deposit monies, after payment of the Citibank credit card and the debt and costs owing the intervenor was for the balance then remaining to be divided on a 50 per cent equal basis as between the husband and wife.
Wife
The wife sought to exclude from the pool of assets the monies previously held in accounts by Ms C and motor vehicle 1.
As to liabilities she did not pursue her claim to include the following:
§the alleged debt to her eldest daughter $25,500
§the debt to her previous solicitors $11,615
§her liability to D Pty Ltd $76,841
The wife did not concede the liability to the E Trust. She asserted that those monies should be repaid from the term deposits prior to any division of those monies between the husband and wife.
She strongly asserted that any judgment sum or other costs and disbursements owing by the husband to the intervenor should be paid from any division of monies which he received in the proceedings payable from the term deposits and that if there was a significant shortfall of monies then that remained the sole and ongoing responsibility of the husband.
Generally her counsel addressed upon the husband’s undisclosed superannuation entitlements and submitted that an inference could and should be drawn from all of the evidence that the husband should be found to have a significant superannuation sum available to him. No quantum was suggested to the Court as the appropriate dollar value and interest and bonuses accrued thereon.
The wife’s counsel, on instructions, proposed a division of the term deposits, upon the basis of the payment of the wife’s liabilities, so that she received 90 per cent and the husband 10 per cent of the balance of those term deposit monies. He further submitted that the wife should not be required to pay previous costs orders made in favour of the husband.
Intervenor
The intervenor submitted that the pool of assets should include the term deposits, the motor vehicle 1 and the daughter’s cash monies of $56,000.
The intervenor opposed any liability being deducted from that pool of assets.
The orders sought by the intervenor were for a division of property 60 per cent in favour of the wife and 40 per cent in favour of the husband save that from the wife’s share of the property she should pay to the intervenor all previous Court orders for costs made or fixed in favour of the husband.
Central to the submissions of the intervenor was that the financial entitlements of the husband be paid exclusively to the intervenor in satisfaction of their judgment debt and continuing legal costs and disbursements and they reserved the right to further take action against the husband in respect of any balance of monies that remain unpaid after these proceedings.
As to the proposed periodic spousal maintenance order now sought by the wife that was opposed by the husband. It was also opposed to any periodic sum by the intervenor save that they indicated they would not oppose any ongoing reservation of spousal maintenance to be re-assessed at a future date if the financial circumstances of the husband and wife then warranted such an order.
The indemnity costs of the intervenor of and incidental to this hearing were sought in a total sum of $37,511.
HUSBAND
Mr Denning is 43 years of age. He is a self employed accountant but his registration with any professional accounting body has lapsed. He has a casual approach to his work and his income earning capabilities. His evidence was that he had “difficulties with employment because [he is] too multi skilled”. He obtained a Degree in 2004, on a part time basis. He is a registered tax agent. He is registered as a re-seller of software.
In his trial affidavit filed 26 November 2010, and in his prior affidavits filed with the Court, he had failed to disclose a number of very relevant facts notwithstanding the substantial care and precision with which he disclosed and developed other facts and financial information.
The husband married his new wife in July 2009. Her name is Ms R. She is 31 years of age and has a daughter, S aged 7 years.
The husband had detailed various overseas trips to Country T in and about 2008 and thereafter but made reference only to business trips and related expenditure. Under questioning he disclosed that he had first met his new wife in Country T in August 2008 and after several more trips to that country and where he spent time with her she eventually travelled to Australia where they married at a small wedding ceremony in July 2009. Thereafter his new wife returned to Country T because the subsequent evidence from the husband was that she has permanently resided in Melbourne with him from April 2010. His evidence was that he spent no more than $15,000 on his various trips to and from Country T.
In his Financial Statement filed 26 November 2010, and indeed in his earlier Financial Statement filed 15 December 2009, there is no disclosure of his new wife, of any income that she may have within the household or of any expenses or outgoings paid on her behalf. All of those facts should have been voluntarily disclosed by the husband to the Court. I firmly conclude that on this issue, and many other issues, the husband was careful and selective in his affidavits and in his financial disclosure. He has provided limited financial evidence of income and expenditure and his current domestic circumstances and lifestyle were guarded.
The husband’s evidence is that his wife does not work and is supported by government benefits and family allowance payments.
The husband had failed to disclose his residential address. He had provided his mother’s address which is said to be his place of work. He paid rent to his mother of approximately $9,000 and $5,400 in each of the past two years for a work room in the home, ostensibly for the purposes of carrying on his business.
The husband, his new wife and her daughter live at U Street, Suburb V. It is a townhouse which he rents for $410 per week. It is approximately 200 metres from his parents’ home. It is rented at arms-length from the landlord and his evidence is that he pays a commercial rent. He said that his mother substantially assists with payment of his rental. That may be correct but I have been reluctant to accept the financial evidence and disclosure of the husband where it is not reasonably corroborated. He failed to call his mother to give supporting evidence.
The child of the marriage, G, attends W School and is enrolled for her secondary education at X School. The husband evidence was that he pays all primary school fees and related clothing and like items, including school uniforms. He is assessed by the Child Support Agency to pay $98 per calendar month. He has stopped payment and is involved in an ongoing dispute with that Agency. His current arrears of payments are approximately $4,000. Exhibit “H20” are copies of documents evidencing expenses paid over the past two years by the husband for G. I accept those paid expenses. The husband has previously meticulously forwarded all receipts to the Child Support Agency and requested all payments to be debited against his continuing arrears with the effect that, for all practical purposes, those modest outgoings are paid as child support and no cash payment is made. He later said that he has now discontinued that practice. I cannot resolve that issue.
In the course of the hearing counsel for the wife foreshadowed an application to apply for child maintenance. For reasons explained in a brief ex tempore judgment which I delivered during the hearing I declined to allow any such application to be filed and heard. In the context of that legal submission the husband emphasised to the Court his commitment to pay all ongoing school fees and related educational expenses and clothing for his daughter and that financial commitment and promise to pay by the husband has been accepted and, without any order in that regard, it is one of the s 75(2) factors that I have balanced in his favour in determining the overall just and equitable division of property.
Of course the ongoing assessment to pay $98 per calendar month remains alive and I have, in no way, varied that financial commitment or indicated that the husband should not immediately bring up to date his substantial arrears and make ongoing and proper payments as assessed, subject to his various challenges to that Agency. I have no child support departure application before me. I will not offset any estimate of the arrears as against the husband’s s 79 property interests. I have no satisfactory proof of the actual sum of the child support debt. If it does occur that the husband decreases his payment of expenses for G then that may support any future periodic spousal maintenance application reinstated by the wife. I carefully make no further findings on that matter.
The parties had previously resolved all child and parenting issues by Court order and the husband spends four nights per fortnight with his daughter together with half of school holidays and on other special days by agreement.
Aside from his visits to Country T, which he said were five or six trips, the husband visited Hong Kong and China for what he said were business related purposes and which are hinted at, but not properly identified, in paragraph 54 of his affidavit.
More recently the husband spent approximately four nights in Queensland with his new wife and her child and G. They flew to Queensland, stayed on the 51st floor of Q1 Apartments on the Gold Coast at a cost of no less than $380 per night. A car was hired and they visited the various theme parks to the north of the Gold Coast. I have considered exhibit “W15”, but it is not admissible evidence and it does not greatly assist me with its printout of nightly charges for that apartment. The husband said he did not pay and that, not unexpectedly, he said his mother paid for that holiday. No evidence was submitted by the husband and I do not accept his explanation of the cost of the holiday. I emphasise that the holiday was reasonable and no doubt very enjoyable to G. I observed that child is in a very difficult position when questioned by her mother, or reporting to her mother, on all of her holiday and other weekend activities with her father.
The husband’s primary work experience is professional advisor. He now works from a room in his mother’s home and gave evidence of having 5 to 10 active clients spread throughout the engineering, IT, meat and lamb wholesale business. He maintained that his average income is approximately $400 per week but expressed the hope “that it will increase”.
In paragraph 30 of his affidavit he disclosed the establishment of the company, Y Pty Ltd, of which he was the sole director and shareholder. I accept that it is presently dormant and has no commercial value. It was for this business that the husband prepared his work resume (“W12”) and sought to obtain a builder’s licence. That application is elsewhere considered in these reasons for judgment but the husband, under cross examination from counsel for the intervenor, asserted that he had never actually lodged that fraudulent application document.
In paragraph 31 of his affidavit he and his sometime business partner and close friend, Mr Z established a business venture for the wholesale purchase and distribution of water tanks. I accept that business did not trade, no profitable sales were made and the husband’s evidence was “that he missed his timing in the market for that product”.
The husband’s 2009 and 2010 tax returns were submitted as exhibits “H3” and “H4”. The 2009 return disclosed the husband’s business income was only $8,125. He offset that income by an expenditure claim of $36,942 including:
§rent expenses $9,000
§interest expenses $7,245
§motor vehicle expenses $9,552
§all other expenses $11,145
$36,942
Therefore in that year his total loss claimed was $28,817.
On his property investments held in that year, which were the five remaining investment properties all registered in his name, the income loss claimed was $8,041.
In the 2010 financial year the husband’s business income was $26,659 including some limited income earned whilst employed by Mr Z. He nevertheless claimed expenses greater than his income and for that reason received a nil assessment of tax, as proved by exhibit “H5”.
The husband maintained that he was paid no superannuation during his limited employment with Mr Z. He re-asserted his evidence that he has no superannuation entitlements.
Central to the husband’s evidence was his repeated assertion that he fully discussed all financial issues with his wife. Specifically as to exhibit “W3” he said the wife was a party to that false document. He insisted that she agreed with all actions to borrow money, on whatever misleading and false basis. Likewise he asserted her complicity with documents “W4” and “W5”. I do not accept his evidence on that matter.
As to exhibit “W8” the husband asserted that it was the wife’s idea to prepare that document. As to exhibit “W10” the husband asserted that it was a joint application, they discussed the document and the wife was aware of their intended actions.
In relation to all of the false and misleading loan applications and other documents, hereafter considered at some length, the husband maintained the joint knowledge and involvement of the wife.
I do not accept any of the husband’s evidence in relation to the wife’s then knowledge and involvement in preparation of false documents. I find the husband alone was responsible for their creation. He had the corporate and computer skills to prepare all documents and indeed it is apparent from the evidence of the chartered accountant expert called on behalf of the wife that he too was deceived by the ingenuity and creativity of the husband.
As to each of the investment properties the husband asserted, in response to questions asked of him in cross examination, that there are no hidden funds. He said that:
I have not diverted any funds at all … from any of the developments … all has been done properly …
The wife’s solicitor and her investigating chartered accountant have carefully examined the available records and information on the sales of various investment properties, the matrimonial home at 1 K Street, Suburb L and the holiday home at O Town. Likewise in the course of his hearing counsel for the intervenor has analysed the solicitor’s records and other documents annexed to the husband’s affidavit, or before the Court as tendered exhibits. With that background I have not found it necessary to carefully and arithmetically examine the settlement of the sale of the various investment properties save for M Street, Suburb L.
The orders of Brown J, of 12 March 2008 were complied with and monies from the sale of investment properties were paid through the established solicitor’s trust account and disbursed pursuant to orders of the Court. The cross examination of the husband by counsel for the intervenor generally established that the reasonably expected sale proceeds were accounted for in respect of the various properties save M Street, Suburb L and perhaps the holiday home at O Town.
I have separately assessed and given weight to the financial contribution made by the wife with monies borrowed from the E Trust, or her daughter Ms C to the matrimonial home and the holiday home.
I have focused attention upon the development of the three townhouses and the settlement of their sale and the inability to firmly establish the direction of monies paid on settlement and the alleged involvement of AA Pty Ltd and other friends or business associates of the husband.
Ultimately, while questions may remain unanswered, and the evidence of the charted accountant is wholly suspicious of the alleged financial misconduct of the husband, those matters cannot be proved to the reasonable standard required on the balance of probabilities so as to add-back any alleged shortfall to the pool of assets or otherwise make financial adjustments as against the husband’s entitlement to a division of property. The evidence was incomplete and the outcome uncertain, notwithstanding whatever level of suspicion may reasonably arise.
CROSS EXAMINATION OF HUSBAND
The husband had asserted in paragraph 7 of his affidavit that he ceased his full time employment with P Pty Ltd in August 2006 to spend time looking after the respondent and the two children given the then recent hospitalisation and medical issues of the wife.
Exhibit “W1” is a wages and conditions claim form prepared and lodged by the husband to the Office of Workplace Services. It was lodged, with accompanying documents, to support his claim against his then employer for salary payments, annual leave and long leave payments and superannuation. His covering letter was dated 6 September 2006.
The document established to my satisfaction that the husband ceased employment on or about 3 August 2006 because of a dispute with the employer or other members of their family or staff. The catalyst was likely a financial argument over the quantum of the July E-Tag account.
In the formal document the husband complained of harassment and intimidation and that he had been locked out of his place of employment. He alleged that his employment had been terminated and the supporting documents sought a proper financial payout.
The husband’s then annual salary package was approximately $70,000 per annum plus vehicle and superannuation. He was subsequently paid all annual leave in 2007 and long service leave in 2008. The husband’s period of employment with this company was approximately 13 years and 10 months.
The primary reason his employment ceased was substantially by the actions of his employer and disputes that had arisen within the work place. There was, however, good reason for his then concern for his wife and family and having time to care for them while his wife was hospitalised. That however was not the reason for his dismissal.
In paragraph 8 of his affidavit the husband deposed to his work history and that he earned $80,000 per annum, or thereabouts when his employment was terminated in August 2006.
Counsel for the wife submitted various documents which have been accepted into evidence. They all highlight that the husband, deliberately and systematically, exaggerated his income for borrowing purposes. Many of the loan approval applications hereafter considered were intentionally false, misleading and fraudulent.
Exhibit “W2” is a loan summary document for which the husband admitted he provided instructions for its preparation. He did not admit that he prepared the summary payment statement identifying his salary at $200,000 per annum for the financial year 2005 to 2006. The accompanying document evidenced a purported additional $110,000 in gross rental income. The document was prepared and lodged with a friendly finance broker, BB Pty Ltd.
Exhibit “W3” are further pay slips and a summary prepared evidencing the purported salary of the husband in early 2007. Those documents are fraudulent. The husband had ceased his employment at P Pty Ltd in August 2006 and these documents purported to evidence his salary paid by that firm in January and February of 2007, long after his position had been terminated.
The husband’s evidence was that he had a negotiated salary increase far in addition to that which he was actually paid and the documents were meant to incorporate that future payment. That of course is totally false and misleading as he then no longer held that employment. He did not leave on good terms with his employer having alleged harassment and intimidation. I do not accept those documents were prepared by a member of staff of that employer. The documents could only have been the creation of the husband to support false and misleading applications for borrowings and finance for other projects and developments.
Exhibit “W4” is a letter dated 18 October 2004, purported signed by the Managing Director of his former employer. It exaggerates the husband’s salary and the accompanying pay advices, purportedly prepared on behalf of his then employer, are false. The documents were used to support further borrowing and loan applications through the mortgage broker.
Exhibit “W5” are documents prepared for that finance broker and relate to the financial year ended 30 June 2005. They evidence the husband’s then income to be $189,000. They are said to be computer signed again by his employer, Mr CC. The documents were prepared to support a borrowing application in the sum of $265,000. Included among the then assets of the husband was motor vehicle 2 then said to be valued at $44,000 and which the husband said he had privately sold, post separation, to a person in Sydney, on a private sale basis for $12,500. The husband’s evidence was that he used those monies to pay his private debts and liabilities post separation. Those monies have been brought to account by me as having been paid to the husband.
Exhibit “W6” is a work history form which was prepared by the husband and contributed to by various of his friends and accomplices. It is a false document that was created for the purposes of the husband’s application to obtain a builder’s licence for his entity, Y Pty Ltd. It purported to identify the husband’s work in the building and construction industry from May 2001 until mid 2008. It is a false document supported by false testimonials from his long term friends and others within the building industry.
My conclusion is that the wife should be responsible for these borrowings. I reject her claim that it be treated as a liability to be deducted from the pool of assets with the monies paid out to Mr H. That is and must be the wife’s responsibility. I record the wife’s evidence was that “she would like to repay it if she could”. It may be that it is eventually adjusted against her family entitlements but that is not a matter for this Court.
In his final submissions her counsel accepted that this liability should not be adjusted against the pool of assets and that is what I have concluded is a just and equitable outcome.
In respect of the holiday property at O Town Mr H attended at the recent auction and was the successful bidder. He was commissioned to bid on behalf of his cousin, Mr KK. I accept that there were a large crowd of potential buyers and onlookers at that auction. The property was offered for sale by the Adelaide Bank. I find that the sale was genuine. Somewhat ironically the under bidder was Mr LL, a builder and perhaps friend of the husband whose name has figured prominently in documents filed in these proceedings.
The purchase price of O Town was $422,000. After the auction Mr KK attended and he personally paid the 10 per cent required deposit.
I accept the evidence that the sale of O Town has now settled and the property is registered in the names of Mr KK and his wife. The wife’s evidence identified that she recently spent nights there during January with her cousins and G.
MR I – CHARTERED ACCOUNTANT
Mr I is a chartered accountant in private practice who was engaged by the wife and her solicitors to review the assets and liabilities within the matrimonial pool and report on related property and financial dealings by the husband.
The three affidavits of Mr I which I have read, and his annexed reports were filed 26 May 2009, 30 June 2010 and 19 November 2010. Mr I’s curriculum vitae accompanied his report and it identified that he had over thirty years experience in professional and commercial accounting and finance and specialised in forensic accounting, including for Family Law matters.
His qualifications are a Diploma of Business Studies at the Warnambool Institute of Advanced Education, now Deakin University. He is an associate member of the Institute of Chartered Accountants and is a member of both forensic accounting and business valuation special interest groups.
I mention in detail his qualifications and experience because the husband initially took objection on the basis that he held no University Degree and had no postgraduate training.
I do not accept the husband’s concerns and I have no hesitation in finding that the experience, training and qualifications of this witness are wholly appropriate for him to prepare a report and give evidence on the matters within his affidavit and reports.
The husband was further concerned as to any contact or relationship that this witness may previously have had with the H family. When questioned Mr I said that he had met the wife’s brother, Mr H, only on the morning of the hearing and prior to this engagement with the family he had not met any family member and has had no business or financial relationship with any of them. I accept that evidence and the fact that this witness was an independent professional expert witness. I reject any allegation made by the husband that he was biased in favour of the wife’s case.
The first report of Mr I dated 25 May 2009 was very preliminary in nature and it expressed the opinion that further detailed investigation and reconciliation of financial transactions was required. It identified certain transactions and financiers and in attached schedules identified property transactions and some account transactions at the Commonwealth Bank. It was a preliminary affidavit and document, and did not assist the Court on the substantial matters in dispute between the parties.
As a background to his two further reports Mr I advised the Court that he had inspected many documents and considered a vast variety of P Pty Ltd transactions and detailed bank accounts. He said he had looked at all major transactions during the marriage and in particular focused upon how they should have financially impacted upon and improved the level of matrimonial assets.
He examined the husband’s income but wrongly accepted some of the financial statements and pay slips as evidence of the husband’s salary. This was inaccurate as I have elsewhere clearly illustrated within these reasons for judgment.
The substantial affidavit of the husband filed 15 June 2010 and its many voluminous but helpful annexures were largely the cornerstone upon which the further reports and conclusions of Mr I were founded
Much of the husband’s cross examination of this witness, and his complaint about the accuracy of the final report was founded on the failure to properly investigate and balance the financial transactions in and out of the Commonwealth Streamline bank account held in the name of the husband.
Throughout this case there has been a substantial complaint by the husband that, on separation, all of his financial accounts and documents were left in filing cabinets within the home and therefore they were taken by the wife and not returned to him. There is some validity in that argument and in this case the wife did have many pages of that particular bank account which could have likely answered some of the questions and financial concerns over the husband’s dealings. They would however not have answered all issues and accounted for all monies.
Relying in part on the wife’s documents supplied to him and otherwise on the husband’s disclosures in that 15 June 2010 affidavit, Mr I prepared a working paper, exhibit “H10” for the purposes of ongoing out of court discussions with the husband.
Those discussions occurred and a number of questions were resolved but ultimately Mr I then remained convinced, and after cross examination in this hearing remains firm in his resolve that a substantial sum of money, arising from property transactions and borrowings, remains unknown and unexplained.
The proceeds of the sale of various investment properties, and of the matrimonial home have generally been accounted for in the trust account of the husband’s solicitor or otherwise in various bank deposits and transactions. The properties at 2 K Street, 3 K Street and 4 K Street were generally acknowledged by this witness to have been disclosed, not with precision but with reasonable accuracy.
Likewise the monies received upon the sale of the former matrimonial home had generally been accounted for, save for the need to further borrow against it to fund the development of the three townhouses at M Street.
The conclusion of Mr I was that the borrowings upon the M Street property should have covered the cost of that development without additional borrowings secured against the matrimonial home. Any excessive borrowings and the expenditure of all monies were not satisfactorily explained to this witness by the husband’s assertion that it related “to additional living expenses”.
The second report and affidavit of Mr I, filed 30 June 2010, and following upon his conferences with the husband raised a number of questions which then remain unanswered as to the M Street development, borrowings on properties sold and further borrowings and loan draw downs made to an entity, AA Pty Ltd, a company owned by Mr Z.
Indeed at the very centre of the wife’s concerns in these proceedings is the fact that this company (“AA”) allegedly finished up with approximately $500,000 of monies diverted from the matrimonial properties and assets. That matter was considered in paragraph 6 of his second report by Mr I who identified payments being made to that company and invoices purportedly being drawn from a firm of builders, LL Pty Ltd, and it was said that those invoices supported the basis of the application to the bank for further draw downs totalling approximately $200,000. None of those P Pty Ltd financial issues were resolved by that second report of Mr I or by any evidence given by or on behalf of the wife. The third affidavit of Mr I and his annexed report dated 20 September 2010 further identified the financial outcome of his investigations. Again attention focused upon the M Street development and the professional opinion of this witness was that:
§there should have been a net surplus of proceeds of $147,000;
§the borrowings against the security of that property were sufficient to cover all purchase, development and holding costs;
§there was therefore no need for the additional borrowings against both the matrimonial home and the holiday home at O Town in a total sum of almost $500,000;
§the husband explained that these funds were applied to living expenses and that answer was rejected by this witness as being highly unlikely and somewhat convenient.
The conclusion reached by Mr I was that the husband and wife should have benefited from the capital profits and increase in value of their various home, holiday and investment properties, at least by $800,000 or thereabouts.
Mr I did examine the husband’s salary and included his investigations in paragraph 8 of his final report. He unfortunately accepted the accuracy and honesty of the husband in the supplied salary documents and they were all false and misleading.
Another matter of concern, and which remains wholly unexplained was that the husband received payments from P Pty Ltd of $120,000 on 24 May 2005 and $47,000 on 17 January 2006. The husband explained the first of the payments as a repayment of a loan made by him to his employer in the 2003 financial year and the latter as a repayment of expenses from the same source. The husband’s evidence was that P Pty Ltd did not have a credit card and he paid various Telstra and communication bills on his own credit card and was repaid.
I do find that answer very difficult to accept as it somewhat defies business logic and has the husband wholly exposing his family and his credit card rating to pay the expense of his employer. There is no satisfactory answer to these questions involving substantial sums then paid out to the husband. In particular there is no evidence supporting the original expenditure made by the husband and no receipts or other documents have ever been produced to substantiate these curious and wholly unexplained financial transactions.
Mr I was asked his opinion of the financial knowledge and competency of the husband. He replied “that it was at the upper end of a level of financial skills”. He said that the husband was very adept and skilled in financial management and financial documents.
In contrast the wife, in his many discussions with her had displayed little or no knowledge or understanding of finance or of property. She was wholly confused and uninformed on many of the issues that have been raised in these proceedings.
The conclusion reached by Mr I was that, based upon all information available to him, the matrimonial pool of assets should have benefited considerably from (in summary):
§the capital appreciation of the matrimonial home;
§the capital appreciation of the holiday home;
§the additional rental income declared in loan applications;
§the profits generated from the development at M Street and the other investment properties.
I have accepted the honest and hardworking approach adopted by Mr I but ultimately his opinion was given on the basis of “a best estimate”. He identified what should have been a net surplus in various developments but he could not satisfactorily prove the diversion of monies by or on behalf of the husband. The inferences are largely circumstantial and most probably other witnesses could have been subpoenaed to provide evidence and “follow the trail of the money”. That evidence was not before me and ultimately I am not prepared to add-back to the available net pool of assets monies that have been said to have been taken or diverted by the husband, or on his behalf.
My most particular concern was as to the alleged requirement for additional borrowings secured against the home and the holiday home and what thereafter became of the whole of those monies. I cannot act on suspicion and, after very careful evaluation of the evidence I do not find the conclusions that the wife so earnestly believed of the husband’s deliberate financial misconduct.
MS C
Ms C is the now adult first daughter of the wife. When the husband and wife commenced cohabitation she was 4 years of age and for many years thereafter the husband made both a financial and non-financial contribution to her upbringing.
The wife deposed in paragraph 23 of her affidavit, and I accept, that Ms C’s father paid $69,220 in child support up to the date of her mother’s remarriage and thereafter paid approximately a further $70,000 up to her eighteenth birthday on 19 May 2010. A detailed statement of all Child Support Agency payments is annexed to the wife’s affidavit as annexure “CLDA-06” and that enables a careful calculation to be made of all of that child support and, otherwise and of significance the child support paid by the husband in this case, post separation and commencing 9 April 2008. That quantum of the husband’s child support is only approximately $1,000 for that first eight month period post separation.
The deposit for O Town was borrowed by the wife but I accept her evidence in paragraph 64 of her affidavit that the source of the funds was the money saved from Ms C’s child support payments.
Given that the husband was then in employment and his income paid for the primary and secondary school expenses of his step-daughter, and otherwise he maintained her and the household for many years, I have determined not to give any additional weight to the wife’s claim to her financial contribution paid towards the deposit on O Town.
What the husband sought to include within the asset pool, and this was supported by the intervenor was the accumulated child support monies which were saved in accounts at the Bendigo Bank and Sandhurst Select Mortgage Fund in the child’s name. Those accounts held respective amounts of $11,000 and $45,000, a total of $56,000.
The husband identified this issue in paragraphs 47 and 48 of his affidavit. He there identified the earlier affidavits of the wife where she had disclosed withdrawal and transfer of monies to Ms C. The husband had financially supported Ms C since she was 4 years old and I accept his financial contributions paid on her behalf. I do not accept that other child support monies paid by her natural father were agreed to be repaid to the husband. I have read exhibit (“PJD-14”) being the wife’s earlier affidavit filed 26 November 2009. Ms C has had particular expenses because of her public speaking engagements and her travels, including to Dubai and Egypt. Those expenses were reasonable.
If child support monies were agreed to be paid to the husband, as he alleged, then that should have occurred progressively throughout the marriage and at least, in part, prior to separation. That was not the case. I do not accept the husband’s evidence.
The monies have all been expended and most recently with a balance of $38,000 being paid to Ms C on her eighteenth birthday. Ms C has just completed her first year of tertiary education.
In summary therefore the whole of the $56,000 has been transferred or expended, primarily on Ms C or on the household. It would not be just and equitable to add-back any of those monies to the pool of assets and accordingly I reject those submissions of the husband and the intervenor.
HOUSEHOLD FURNITURE AND CHATTELS
The husband initially claimed that $25,000 should be added to the pool of assets because of the contents of the matrimonial home and O Town. The wife did retain items but many of them are in storage or now with other people. I have no evidence of value. The husband acknowledged that his estimate of value was excessive. The intervenor did not include any value for this item in his pool of assets.
I have not estimated any value of undescribed and unknown furniture and I have excluded any further consideration of its value in determining just and equitable orders. Whatever furniture or chattels remain in the wife’s possession, she may retain them.
MOTOR VEHICLE 1
I accept that a fair value for the wife’s motor vehicle 1 is $9,000. That is a “Red Book” value and the wife’s counsel did not disagree with or object to that sum.
The husband had sought an order that he transfer that motor vehicle to the wife, subject to its value being included within the pool of assets. It was registered in his sole name. Somewhat as a matter of surprise the wife gave evidence that she personally attended at Vic Roads, produced her divorce certificate, paid a fee of $30 and had registration transferred to her name. Thus there is no need for any transfer order. The issue remains only as to its inclusion within the pool of assets.
The other family motor vehicle was motor vehicle 2. It was registered in the husband’s name and he sold it to a person in Sydney for $12,500 post separation. He retained those monies for himself and his lifestyle.
I propose to allow each party to retain their respective motor vehicles or the proceeds of sale from those vehicles. It is true that as a result the husband profits by approximately $3,500 but I have concluded the proper approach is that neither motor vehicle be brought into account in the proceedings and therefore not be included within the pool of assets.
PERIODIC SPOUSAL MAINTENANCE
By her amended application the wife sought periodic maintenance in the sum of $300 per week.
Section 72 of the Act provides that a party to a marriage is liable to maintain the other party, to the extent that the first-mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately where (in summary):
(a)by reason of having the care and control of a child who has not attained the age of 18 years;
(b)by reason of age or physical or mental incapacity for appropriate gainful employment; or
(c)for any other adequate reason.
In considering the right of a spouse to maintenance the Court is directed to have regard to relevant matters identified within s 75(2) of the Act. The Court’s powers with respect to maintenance and making such an order as it considers proper for the provision of maintenance is set out in s 74 of the Act.
The wife clearly has a right and a need for spousal maintenance. She has a child of the marriage under the age of 18 years. Both her physical and mental state of health highlight that she has no capacity for gainful employment. She has no appropriate work skills or recent experience.
On the financial information presently before the Court the husband, despite his qualifications, skills and work experience does not have a job from which sufficient income is derived to pay spousal maintenance. Presently he is not reasonably able to pay spousal maintenance and I have regard both to his income and to his promise to pay school fees, clothing and related expenses for his daughter G.
It is just and proper that I reserve the wife’s spousal maintenance application so that, if and when the husband earns an income appropriate to his work skills and experience then the wife can re-apply for ongoing spousal maintenance on a periodic basis. Accordingly my orders reserve her spousal maintenance entitlements and I have balanced the s 79 division of property orders on the basis of that reservation of her future right to spousal maintenance.
INTERVENOR COSTS – INDEMNITY BASIS CLAIMED
The intervenor has submitted a request for costs of and incidental to this hearing and fixed in the sum of $37,511 to be paid by the husband.
I have carefully evaluated the factors set out in s 117(2A) of the Act within the principle that each party to proceedings should pay their own costs save if it is just for the Court to otherwise order.
It is just and proper that the husband pay or contribute towards the costs of the intervenor and the appearance of their solicitor and counsel in this hearing.
The usual order for costs is on a party / party basis. Indemnity costs are sought in circumstances where there are particular reasons and facts that would substantiate all of the costs and disbursements being paid.
Counsel for the intervenor did not address upon the many reported cases and principles which underline the basis for an indemnity costs order. Without particularly detailing those cases I have considered and referred to all principles and this is not a case where costs should be awarded on an indemnity basis.
I have however made a significant award of costs, above that which would be paid on an itemised bill of costs when assessed by a Registrar of the Family Court. I have concluded that it is just that I fix a quantum of costs to avoid all further costs, expenses and delay in the process. I have fixed the costs to be paid by the husband to the intervenor, of and incidental to this hearing in the sum of $27,000. That is a figure somewhat beyond party and party costs but in all of the unique circumstances of this case it is just and a proper outcome for the intervenor.
SECTION 117AB – COSTS ORDER SOUGHT BY HUSBAND
Without prior notice to the Court or to the other parties the husband in his final submission sought the wife to pay his costs and disbursements previously incurred to his former solicitor. The basis of the submission was that the Court could and should be satisfied that the wife had knowingly made a false allegation or statement in previous Court hearings.
In earlier case management hearings, before me and other judges, there has been an issue as to the husband’s level of financial disclosure of documents. He had always maintained that all documents of, and related to, business and property transactions, and personal documents, were left on separation in the matrimonial home and therefore were available to the wife.
In these proceedings the wife has acknowledged that many documents were left in the home and she has accessed them. She said that she has only partial knowledge of the documents as “it would be a mammoth task to sort through all that remained”. She has passed certain documents to her solicitor and investigating chartered accountant and they have conducted certain financial investigations. Some of the documents are exhibited to her affidavits. All of the false and misleading documents prepared by the husband for various purposes are, in part, before the Court and annexed to the wife’s trial affidavit.
The husband gave evidence that he had been able to access all of the documents because they were stored on the hard drive of an old computer at the holiday home at O Town. He had downloaded all documents and accordingly was not in any way disadvantaged in the presentation of his case.
His submission focused upon the past complaints and the time taken by his solicitors to respond by letters or in Court hearings.
I have balanced the financial cost and inconvenience to the husband against the wife’s lack of knowledge and understanding of many documents and her requirement that the husband explain to the Court and produce the documents himself. Costs remain an exercise of discretion and the overriding principle expressed in s 117 of the Act is that each party bear their own costs of proceedings. On balance and after careful evaluation it would not be just to order the wife to pay or contribute to the husband’s past legal costs and expenses, save otherwise where specifically ordered on three prior occasions. I therefore dismiss the husband’s late submission, which did not form part of the argument in the case and was not responded to by counsel for the wife or the intervenor.
SECTION 79(4) CONTRIBUTIONS
I have throughout these reasons for judgment described the various contributions, both financial and non-financial made by each of the husband and wife to the acquisition, conservation and improvement of the property within the marriage. I have given proper consideration to the role of homemaker and parent.
The husband worked regularly throughout the marriage and his actual income paid was reflective of a good job and earning capacity. He exercised considerable investment skills in his share trading and related product activities. He displayed skills in developing residential properties. He significantly financially supported his step-daughter Ms C and otherwise provided a home and a holiday home for his family.
In evaluating contribution it is proper to consider the net result, that is the net asset pool before the Court for division between the parties and, in this case it is limited and subject to some uncertainties as to the proceeds of sale of certain properties and other assets. The “value” that the husband derived from his financial efforts throughout the marriage was ultimately somewhat limited, notwithstanding his work and effort in relation to the various acquisitions.
The wife’s contributions of a financial nature were the significant investments made by her family through the E Trust. Otherwise the wife’s non-direct financial contributions were limited.
As a homemaker and parent the wife played the primary role, though assisted by the husband, particularly in the periods of her illness and hospitalisation.
There were other contributions financially made by the wife in contributing the monies that she had acquired pre-marriage and the child support monies paid on behalf of her first daughter. I have given proper but limited weight to these contributions.
Within contributions it is proper to generally assess the various s 75(2) factors and this I have carefully undertaken.
Subparagraph (g) of s 79(4) recognises the child support provided to G, or that which the husband might likely provide in the future for her education and upbringing. These are matters I have assessed on the basis of the current payments and the husband’s promise to continue with his substantial financial assistance for his daughter. That is a factor which I have assessed in favour of the husband in evaluating the financial outcome of their respective contributions.
I emphasise that I have not in any way financially penalised the husband on the basis of his creation of so many false and misleading documents. He was at all times motivated to obtain funds to develop properties and, certainly in the early years of the marriage did so with the intent of developing family assets. The financial outcome of his efforts are clearly very limited, subject to all of my findings about his superannuation entitlements and otherwise the concerns expressed by the wife about the diversion of monies and the other alleged financial conduct of the husband. Where matters are not proved to my reasonable satisfaction I have not made financial adjustments to the division of property.
On the basis of contributions and all of the s 79(4) issues I have assessed the wife at 60 per cent and the husband at 40 per cent and have now proceeded to evaluate the s 75(2) factors.
ASSESSMENT OF S 75(2) FACTORS
I have previously outlined those relevant factors which I have considered throughout the judgment.
The state of health of the wife is a matter of primary importance to which I have given considerable weight. The husband enjoys good health and has an active and alert mind capable of ongoing business and commercial transactions.
The wife has no mental or physical capacity for employment as contrasted to all of the opportunities available to the husband as I have discussed in detail throughout these reasons for judgment.
The wife has her two children living with her and the child of the marriage is still attending primary school and will need very focused time and involvement from the wife.
Both parties have substantial financial liabilities and commitments as a result of the apportionment of their debts. Each of them will be responsible to pay the liabilities which remain in their name.
The husband has financial commitments to support his new wife and her child and I have balanced those matters.
I have made careful and specific findings on the husband’s superannuation as it should have been, and they are relevant to my overall findings in relation to the s 75(2) factors.
The reality is that neither party will enjoy the standard of living with their home, holiday home and investment properties that they enjoyed throughout the marriage. The wife now lives in particularly difficult circumstances with her parents and other family members and has few assets, no partner and very limited financial assets and no income earning capacity.
I have not pronounced any spousal maintenance order and thus I have not made any specific adjustment pursuant to subparagraphs (h) and (j) in favour of the wife.
It is important to understand and protect the wife’s role as parent and that is a factor which is modestly reflected in the division of property that I have ordered. I repeat my finding that the wife has no earning capacity though that is primarily brought about by her health, illness, lack of qualifications and skills and the length of period over which she has not been employed.
I do not know the circumstances of the husband’s remarriage and cohabitation and he has largely elected to withhold, or belatedly disclose, those financial matters which have not impacted upon my orders.
Pursuant to subparagraph (n) I have reflected and reviewed the proposed property division orders to ensure that it is, in all of the circumstances, just and equitable.
Pursuant to subparagraph (na) I have thoroughly considered and endeavoured to understand child support and its relevance and the husband’s ongoing promise to pay for G at least that which he now pays and, in future years, the costs of her secondary education at X School.
Pursuant to my careful consideration and evaluation of each of the relevant s 75(2) factors it is proper that I reassess the percentage division of assets between the parties which I determined on a contribution only basis. It is proper that an additional 15 per cent be allocated to the wife and that would have the effect that the assets of the parties are divided pursuant to s 79 of the Act on the basis of 75 per cent to the wife and 25 per cent to the husband.
OVERVIEW OF ORDERS
The fourth step of the required approach to a property settlement division is for the Court to pause and then reflect upon the overall justice of the pending decision. For all of the reasons which I have outlined in greater detail in these reasons for judgment I conclude that the division of property on the basis of 75 per cent to the wife and 25 per cent to the husband is just and equitable.
MONETARY EFFECT OF THE ORDERS
As part of my judicial overview of the proposed orders I carefully reflected upon the actual dollar sums to be received by each of the parties and whether that represented a just and equitable division of property.
On a 75 per cent division of the term deposits the wife would receive a cash sum paid out to her of $216,975. From that sum, and before receipt by her, she must pay the previous costs ordered and now fixed in the total sum of $8,576 to the husband. The wife would therefore be paid, subject to her legal costs and expenses in these proceedings a sum of $208,400.
On a 25 per cent division of the term deposits the husband would be paid $72,325 and, in addition, the costs sums from previous orders and thus he would be entitled to receive a total sum of $80,901. All of that sum would of course be paid directly to the solicitors for the intervenor pursuant to the consent agreement between the husband and intervenor supported by the way in which the husband presented his case in these proceedings.
Any balance of monies owing to the intervenor by the husband would be his sole responsibility and there would be no claim or right to claim as against the wife for any greater financial contribution.
Each of the husband and wife otherwise remain liable to pay all debts and liabilities in their sole name and subject to all of the particular matters and outcomes which I have detailed in the reasons for judgment.
COSTS
I had not pronounced any costs order in this defended hearing though I do clearly, but initially, observe that neither the husband nor wife obtained their orders sought.
The husband must pay the costs of the intervenor of and incidental to this hearing and those costs have been discussed in my reasons for judgment and, in the exercise of my discretion, I have fixed such costs at $27,000. They must be paid within sixty days and in default interest is to be paid at the rate prescribed from time to time by the Rules pursuant to r 17.03.
If either the husband or wife are to instruct their solicitors to make any costs application after a careful reading and evaluation of these reasons for judgment then an application must be filed within twenty-eight days supported by written submissions, with such submissions not to exceed five pages in length.
FINAL ORDERS
I have concluded a very lengthy and careful evaluation of the evidence in this case. I have listened carefully to the submissions of all the parties and I have concluded final s 79 orders on the basis of what I find to be a just and equitable outcome.
I certify that the preceding Three Hundred and Seventy Five
(375) paragraphs are a true copy of the reasons
for judgment of the Honourable Justice Young
delivered on 8 March 2011.
Associate: ……………………………………………………………
Date: …………………………………………………………………
148 CLR 62.
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