Dorney and Dorney - [2007] FMCAfam 617

FEDERAL MAGISTRATES COURT OF AUSTRALIA

DORNEY & DORNEY

[2007] FMCAfam 617

FAMILY LAW – Property settlement – gambling losses – where wife asserts that her losses did not exceed $10, 000, but where finding that losses amounted to approximately $170,000 – where no evidence that wife's gambling was pathological in nature – where wife simply denied of the quantum of the losses and that she had a serious gambling problem – where court required to determine quantum of wife's gambling losses – standard of proof regarding quantum of gambling losses – consideration of guidelines in Kowaliw (1981) FLC 91-092 – whether wife should bear the entirety or some other proportion of her gambling losses – whether husband acquiesced in wife's gambling losses – whether husband had a duty to protect wife from any weakness of character that might have predisposed her to financial irresponsibility.

Family Law Act 1975 (Cth)

Aleksovski (1996) 20 FamLR 894
Baxendale (2006) FamCA 883
Brandt (1997) 22 FamLR 97
Brice (2007) FamCA 170
Briginshaw (1938) 60 CLR 336
Browne v Green (1999) FLC 92
C & C (1998) 23 FamLR 291
Chorn & Hopkins (2004) FLC 93-204
Kennedy & Cahill (unreported – 1996) Appeal No NA44 of 1995.
Judgment date: 8 August 1996
Clauson (1995) FLC 92
Collins (1990) 14 FamLR 563
Crampton (2006) FLC 93-269
D & D (2005) FamCA 35
De Angelis (1999) 30 FamLR 304
Dickson (1999) 24 FamLR 460
Donnelly (2000) FamCA 387
Farmer & Bramley (2000) 27 FamLR 316
Ferraro (1993) FLC 92-335
Gill (1984) 9 FamLR 969
Hickey (2003) FamCA 395
Kowaliw (1981) FLC 91-092
Lee-Steere (1985) FLC 91-626
Levinson (2003) FamCA 937
McMahon (1995) FLC 92-606
Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449
Norbis (1986) FLC 91-712
Omacini (2005) FLC 93-218
OSF & OJK (2004) FLC 93
Pastrikos (1980) FLC 91
Plummer & O’Connor (1998) FamCA 53
Prestwich (1984) 9 FamLR 1069
Russell (1999) FLC 92-877
Townsend (1994) FLC 92
VJ & CJ (1997) 22 FamLR 166
Waters & Jurek (1995) FLC 92
Whitely (1996) FLC 92

Applicant:

MS DORNEY

Respondent:

MR DORNEY

File Number:

MLM 8254 of 2006

Judgment of:

Walters FM

Hearing date:

15 June 2007

Date of Last Submission:

15 June 2007

Delivered at:

Melbourne

Delivered on:

12 September 2007

REPRESENTATION

Counsel for the Applicant:

Mr Scriva

Solicitors for the Applicant:

Gleeson & Co

Counsel for the Respondent:

Mr Houlihan

Solicitors for the Respondent:

Ballards Solicitors

ORDERS

The husband pay to the wife’s solicitors, the sum of $148,313.00 (“the payment”) on or before the 12 day of November 2007 (“the date”).
Contemporaneously with the payment:
(a)the wife do all such acts and things and sign all such documents as may be required to transfer to the husband at the expense of the husband all of her right, title and interest in the real property situated at and known as W (“the real property”); and
(b)the husband indemnify the wife against all payments and liability pursuant to any mortgage and…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

AGLC: Dorney and Dorney [2007] FMCAfam 617
Case: [2007] FMCAfam 617
Decision Date: 12 September 2007

CaseChat Overview and Summary

Dorney and Dorney involved a dispute over the division of assets and liabilities following the separation of the parties. The case was heard in the Family Court of Australia. The central issue was the extent to which financial losses incurred by one party during the marriage should be shared between the spouses. The wife argued that her gambling losses, which were substantial, should be considered as a shared liability, while the husband contested this, asserting that the losses should not be attributed to the marriage.

The court had to determine whether financial losses incurred by one party during the marriage should be shared, and if so, under what circumstances. It considered the principle established in Townsend, which was discussed in Chorn & Hopkins, and noted that Townsend was concerned only with assets existing at the time of separation. The court also referred to the general principle in Kowaliw that the economic fruits of a marriage should be shared, but questioned whether the converse should also apply to financial losses. It concluded that such losses should be shared unless one party had acted recklessly or negligently, or had intentionally reduced the value of matrimonial assets.

In its decision, the court held that the wife's gambling losses should not be shared since they were incurred well before the separation. However, it ordered that certain assets and liabilities be divided equally between the parties, with specific instructions on the payment of a sum of money and the transfer of property interests. The court also stipulated that each party should bear their own legal costs and dismissed the wife's application in its entirety.

Orders

Orders of the court

The husband pay to the wife’s solicitors, the sum of $148,313.00 (“the payment”) on or before the 12 day of November 2007 (“the date”).

Contemporaneously with the payment:

(a) the wife do all such acts and things and sign all such documents as may be required to transfer to the husband at the expense of the husband all of her right, title and interest in the real property situated at and known as W (“the real property”); and

(b) the husband indemnify the wife against all payments and liability pursuant to any mortgage and all apportionable rates, taxes and outgoings of or with respect to the real property of whatsoever nature and kind.

In the event that the whole of the payment has not been made by the date then the real property be forthwith sold altogether out of Court (“the sale”), and upon completion of the sale, the proceeds of the sale be applied:

(a) first to pay all costs, commissions and expenses of the sale;

(b) secondly, to discharge the mortgage and any other encumbrance affecting the real property;

(c) thirdly, so much of the payment as is then outstanding (together with interest thereon at the rate set out in the Family Law Rules, adjusted monthly from the date) to the wife; and

(d) fourthly, the balance to the husband

Pending the payment or completion of the sale:

(a) the husband have the sole right to occupy the real property and, during such right of occupation, the husband pay all instalments pursuant to the mortgage and all rates and taxes and like apportionable outgoings of the real property as they fall due;

(b) the parties hold their respective interests in the real property upon trust pursuant to these orders; and

Each of the husband and the wife shall be entitled to recover 50% of the loan of $20,000.00 made by the parties to J and N.

Each of the husband and the wife shall be entitled to recover 50% of the loan of $60,000.00 made by the parties to C and C.

Unless otherwise specified in these orders, and save for the purposes of enforcing any monies due under these or any subsequent orders:

(a) each party be solely entitled to the exclusion of the other to all superannuation and other property (including choses-in-action) owned by or in the possession of such party as at the date of these orders;

(b) monies outstanding to the credit of the parties in any bank account are to become the property of the husband;

(d) each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders; and

(e) any joint tenancy of the parties in any real or personal estate is hereby expressly severed.

Each party pay his/her own costs of and incidental to the within proceedings.

The application of the wife filed on 7 June 2005 otherwise be dismissed.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

In Chorn & Hopkins (2004) FLC 93-204, the Full Court said:[41]It is important to bear in mind, and indeed it should be emphasised, that in Townsend the Full Court was concerned only with the situation where between separation and the hearing of property settlement proceedings, one party has disposed of an asset which could be described as “a matrimonial asset” in the sense that it was an asset which was owned by one or both of the parties at separation and in which the other party would have an legitimate interest…(emphasis added)[41] At paragraph 21 Although the Full Court in Chorn & Hopkins later said that it would refer to “the principle which emerges from Townsend”[42], it does not appear to have done so in a clear and an ambiguous fashion. Still, it did observe that Townsend “…was concerned only with the distribution of ‘matrimonial’ property in existence at separation”[43].[42] See paragraph 21[43] See paragraph 31. I conclude from the discussion of Townsend in Chorn & Hopkins that Townsend is of little assistance in the present case, because the wife’s gambling losses were incurred well before the parties separated in 2004. In Kowaliw, Baker J said (at page 76,643-4):Marriage is for most couples an economic partnership. Married couples live together and work together with the ultimate object of purchasing a home, paying it off, acquiring other assets with the overall object of attaining a higher standard of living. The reported decisions in respect of applications for settlement of property under sec.79 of the Act are unanimous that both parties should share the economic fruits of a marriage, having regard to the provisions of sec. 79(4) and sec. 75(2), although not necessarily equally.Is not, however, the converse equally sustainable? In other words, should not financial losses incurred by parties to a marriage or either of them, whether incurred jointly or severally, be shared by them in the same manner as the financial gains?As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally), except in the following circumstances:(a)where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or(b)where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value. In Browne v Green (1999) FLC 92-873, the Full Court said:While care should probably be taken … not to elevate Baker J's statement (in Kowaliw) to "a principle", we are nonetheless satisfied that it is certainly is a well-accepted guideline within the jurisdiction which has received the endorsement of successive Full Courts. I refer, as well, to the discussion of Kowaliw in Omacini (2005) FLC 93-218.