ERINGTON & ERINGTON
[2020] FamCA 902
•27 October 2020
FAMILY COURT OF AUSTRALIA
| ERINGTON & ERINGTON | [2020] FamCA 902 |
| FAMILY LAW – PRACTICE AND PROCEDURE – Where the husband seeks leave under Rule 11.02(2)(c) of the Family Law Rules to proceed on an undefended basis against the wife – Where the wife has repeatedly failed to comply with previous orders including by not filing appropriate material – Where the wife has been on notice since June 2020 that the matter may proceed undefended if she again failed to file appropriate material – application granted. FAMILY LAW – PROPERTY SETTLEMENT – Where property pool consists only of debts and the parties’ respective superannuation entitlements – Where the husband submits that it would not be just and equitable to adjust the parties’ existing property interests – Where it is found that there is little difference between the parties’ superannuation interests once the part property settlement previously paid to the wife is taken into account – Where the husband has incurred significant costs, inflated by the wife’s conduct in these proceedings, to finalise this matter – Found that in all the circumstances it would not be just and equitable to alter the parties’ property interests. |
| Bankruptcy Act 1966(Cth) Family Law Rules 2004 |
| Bevan & Bevan (2013) FLC 93-545 Quinn v Quinn (1979) FLC 90-677 |
| APPLICANT: | Mr Erington |
| RESPONDENT: | Ms Erington |
| FILE NUMBER: | MLC | 9064 | of | 2015 |
| DATE DELIVERED: | 27 October 2020 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | McEvoy J |
| HEARING DATE: | 27 October 2020 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Smallwood SC |
| SOLICITOR FOR THE APPLICANT: | Lander & Rogers |
| COUNSEL FOR THE RESPONDENT: | Ms Wiener |
| SOLICITOR FOR THE RESPONDENT: | Fogarty Oliver & Rothschild |
Orders
The wife retain her PP Superannuation entitlements.
The husband retain his interest in the following:
(a) his legal and/or beneficial interest in the following entities and trusts:
(i)B Pty Ltd;
(ii)D Pty Ltd ATF Erington Family Trust;
(iii)Erington Pty Ltd ATF Erington Family Trust 2;
(iv)Erington Investments Pty Ltd ATF Erington Property Trust;
(v)QQ Pty Ltd;
(vi)Erington Investments Pty Ltd ATF Erington Investment Trust; and
(vii)any further or other entity or trust in which the husband has an interest
(the husband's entities)
(b) his PP Superannuation entitlements.
The husband be substituted as sole appointor for the husband's entities and the wife do all things and sign all documents required to effect that purpose at the husband's expense.
In the event the wife refuses or neglects to execute any instrument or document in accordance with order 3 herein within 3 days of being requested to do so in writing, the Registrar be and is hereby appointed pursuant to section 106A to execute such document or instrument in the name of the wife and do all acts and things necessary to give operation to the said document or instrument.
Unless specified in these orders each party be solely entitled to the exclusion of the other to all property (including choses in action) in the possession of such party as at this date including bank accounts and savings, chattels, insurance policies and personal effects.
All extant applications of the husband and the wife otherwise be dismissed.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Erington & Erington has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLC 9064 of 2015
| Mr Erington |
Applicant
And
| Ms Erington |
Respondent
EX TEMPORE REASONS FOR JUDGMENT
Introduction
Before the Court today is the husband’s Second Further Amended Initiating Application seeking final property orders.
The final orders pressed by the husband are as set out in Annexure A to his Outline of Case document filed 22 October 2020.
The husband seeks orders in the following terms:
1. That the wife retain her PP Superannuation entitlements.
2. That the husband retain his interest in the following:
2.1 his legal and/or beneficial interest in the following entities and trusts:
2.1.1 B Pty Ltd;
2.1.2 D Pty Ltd ATF Erington Family Trust;
2.1.3 Erington Pty Ltd ATF Erington Family Trust 2;
2.1.4Erington Investments Pty Ltd ATF Erington Property Trust;
2.1.5 QQ Pty Ltd;
2.1.6 Erington Investments Pty Ltd ATF Erington Investment Trust; and
2.1.7 Any further or other entity or trust in which the husband has an interest
(the husband's entities)
2.2 his PP Superannuation entitlements.
3.That the husband be substituted as sole appointor for the husband's entities.
4.That unless specified in these orders each party be solely entitled to the exclusion of the other to all property (including choses in action) in the possession of such party as at this date including bank accounts and savings, chattels, insurance policies and personal effects.
5. That the wife pay the costs of the husband of and incidental to these proceedings on an indemnity basis.
6.That all extant applications of the husband and the wife otherwise be dismissed.
The wife has filed an Amended Response to Initiating Application dated 22 October 2020. It is fair to say, and it will be necessary to return to this matter, that the wife’s amended response does not engage with the case which the husband puts. It contains applications for orders which are not capable of being made and, as has been submitted by senior counsel for the husband, is substantially unintelligible.
The problems with the wife’s case are not confined to her amended response. They extend to her affidavit, the final version of which was filed yesterday, 26 October 2020.
The husband is, rightly, concerned as to the state of the material before the Court filed by the wife. He has made an application pursuant to Rule 11.02(2)(c) of the Family Law Rules that he have leave to proceed undefended.
I heard the husband’s application in this respect this morning, and the opposition to it voiced by counsel for the wife. As I indicated to the parties, and as I will explain, I consider that it is appropriate that the husband have leave to proceed undefended.
I am also satisfied, in all the circumstances, that for reasons I will also explain it would not be just and equitable for the purposes of s 79(2) of the Family Law Act 1975 (Cth) (the Act) to vary the parties’ respective property interests, which in effect comprise only their respective superannuation entitlements. Accordingly the orders to be made will be substantially in accordance with Annexure A of the husband’s Outline of Case, subject to the issue of costs, to which I will return.
Background
The husband and wife are currently aged 49 and 48 years old respectively.
They married in 1998, separated in 2010 (according to the wife) and in 2014 (according to the husband), and finally divorced in 2016. There is one child of the marriage, G, born in 2005. On 24 August 2017 Cronin J made final parenting orders that G live with the wife, spend time with the husband, and the parties have equal shared parental responsibility.
The following matters, which I take from the husband’s Case Outline, are also relevant:
·1 October 2007 The husband purchased a sales business with premises at Suburb E and Suburb F, with his then business partner Mr H. The husband also acquired three commercial properties in partnership with Mr H.
·25 September 2015 The husband commenced proceedings for financial and parenting orders in the Family Court of Australia. There is extensive litigation between the parties from this period onwards in this Court.
·14 April 2016 The ANZ Bank served a Notice of Default on the husband pursuant to section 76 of the Transfer of Land Act 1958 (Vic) in relation to the husband's three commercial properties, which sought immediate payment of the total ANZ loan facilities in the sum of $9,668,577.
·20 May 2016 The husband and Mr H signed contracts to sell the three commercial properties to an entity controlled by Mr I for the total sum of $9,470,000. Pursuant to the order of Johns J dated 14 April 2016, the sales businesses were also sold to new entities, thereby diluting the husband's interests.
·24 August 2017 Cronin J, in addition to making final parenting orders in relation to G, also made interim orders appointing the husband as the trustee for the sale of four real properties which formed part of the property pool at that time:
a) EE Street, Suburb FF, Victoria (Suburb FF);
b) X Street, Suburb Y, Victoria (Suburb Y);
c) CC Street, Suburb DD, Queensland (Suburb DD); and
d) AA Street, Suburb BB, Victoria (Suburb BB)
·November 2018 The husband entered into a personal insolvency agreement with the Controlling Trustee, Mr RR of SS Ltd, pursuant to Part X of the Bankruptcy Act 1966 (Cth).
·21 December 2018 The husband's personal insolvency agreement was discharged.
·7 March 2019 The wife became bankrupt.
·10 October 2019 Lander & Rogers, the husband’s solicitors, wrote to the Court seeking a listing of the matter for final trial as the sale of the those four properties earlier mentioned had occurred.
Following eight further interim listings from 6 November 2019, the final hearing of these proceedings was listed to proceed on 27 October 2020.
History of Proceedings
The husband commenced proceedings by way of Initiating Application on 25 September 2015. There would seem to have been approximately 34 Court dates since that time. On 16 August 2017 the matter was listed for a final hearing before Cronin J to address financial and parenting issues. At that time there had already been interim orders made by the Court on 11 previous occasions providing for, amongst other matters, the orderly realisation of the former matrimonial home at TT Street, Suburb J, the husband’s interest in the sales business with premises at Suburb E and Suburb F, and three commercial real properties from which the sales businesses operated. A number of these hearings were as a result of the wife refusing to cooperate with this process and/or to compel her to comply with previous orders in relation to these matters, including for refusing to withdraw caveats which she had caused to be lodged over real properties or to return other property to extinguish debt of the marriage.
On 16 August 2017 the Court was unable to proceed with a final hearing in relation to financial matters, essentially because of the uncertain state of the property pool due the parties’ significant debts and uncertainty around the steps being taken by creditors in relation to those debts. However, final parenting orders were made by Cronin J following that hearing on 24 August 2017 (ultimately in the wife’s absence as she was self-represented and apparently left the Court before the conclusion of the hearing).
The interim property orders made on 24 August 2017 provided, amongst other things, that the husband was to be appointed as trustee for the sale of the four real properties which formed part of the property pool at that time.
It was also ordered that the property proceedings be adjourned to a date to be fixed after the sale of these four real properties, on the request of either party.
On 10 October 2019 Lander & Rogers wrote to the Court seeking a listing of the matter for final trial in circumstances where the sale of the four real properties had occurred.
On 6 December 2019 a registrar made orders adding these proceedings to the list of cases awaiting allocation to a judicial docket with priority.
Since that date, the proceedings have been listed on four occasions before the Chief Justice and on one occasion before another registrar for a Case Conference. The proceedings have not been able to be resolved by consent.
On 22 June 2020 the Chief Justice ordered that the matter be listed for final hearing on a date to be fixed, and subsequently the matter was listed for final hearing to take place on 27 October 2020 before the Court as presently constituted.
On 12 October 2020 the wife filed an Application in a Case seeking an adjournment of the final hearing on 27 October 2020 for three months to allow her time to inspect subpoenaed material. She also filed an Amended Application in a Case on 20 October 2020 seeking that Mr I be joined as a party to the proceedings.
On 20 October 2020 the husband filed his Response to the wife’s Application in a Case seeking a dismissal of the wife’s application, and that she file trial material and provide superannuation information, failing which the final hearing proceed on an undefended basis. He also sought an order for costs.
On 20 October 2020 I heard the wife’s Application in a Case and made orders dismissing that application, requiring her to provide documentary evidence of her current superannuation interests, and enlarged the time within which she was required to file trial material. I also reserved the costs of the day. I indicated to the wife that she would need to make any further joinder application at the trial the following week. It is to be noted that the joinder application was not pressed this morning.
Material Relied Upon
The husband relied upon:
a)Second Further Amended Initiating Application filed 29 September 2020;
b)his Trial Affidavit sworn and filed 29 September 2020;
c)a Financial Statement sworn and filed 29 September 2020; and
d)his Case Outline filed 22 October 2020.
The wife sought to rely upon a series of affidavits and other materials mentioned in her case outline filed on 22 October 2020. In particular she sought to rely on:
a)an Amended Response to Initiating Application filed 22 October 2020;
b)her Affidavit filed 22 October 2020;
c)a further Affidavit described as the Trial Affidavit filed 26 October 2020, which was somewhat although not greatly different to the affidavit that had been filed on 22 October 2020; and
d)her Case Outline filed 22 October 2020.
The Husband’s Application for the Trial to Proceed Undefended
The husband submits that these proceedings have been on foot since 2015. He points out that the wife is an undischarged bankrupt and that there is no evidence of any assets existing for division, save for the parties’ respective superannuation entitlements. He submits that the wife makes no tenable application to the Court, nor has she properly informed the Court of the circumstances and progress of her bankruptcy. The husband submits that he should be given leave to proceed undefended, in circumstances where the wife has consistently failed properly to engage in the financial proceedings before the Court.
The husband points, in particular, to the orders that were made on 22 June 2020 by the Chief Justice requiring each party to file and serve documents prior to the final hearing. He notes that he complied with his obligations pursuant to those orders.
The wife was required to comply with orders 4 and 5 as made by the Chief Justice as follows:
4.The Respondent file and serve any further affidavit to be relied upon by 4.00 pm on 14 days prior to the final hearing.
5.By 4.00 pm on 2 days prior to the final hearing, each party file and serve an outline of case document with respect to property issues including the following:
(a)a list of the documents to be relied upon;
(b)a brief chronology;
(c)a table listing all of the assets, liabilities and financial resources claimed to be part of the asset pool, with the values contended for by that party;
(d)the main contentions on disputes as to:
(i)what items are to be included in the pool; and
(ii)the value of each asset in the pool;
(e)a list of contributions claimed or contended for;
(f)a list of other factors relied upon (s 75(2) factors);
(g)the percentage adjustment contended for; and
(h)a statement of the precise orders sought.
The wife failed to comply with her obligations pursuant to those orders.
The Chief Justice’s orders of 22 June 2020 included a notation that in the event of a failure by either party to comply with the orders, directions, Rules or Regulations the proceedings may be directed to proceed undefended.
As I have mentioned, the matter was listed on 20 October 2020 before me upon the wife’s application for an adjournment of the final hearing date scheduled for today. The wife relied upon affidavit material sworn by her which, it was submitted on her behalf, disclosed bank account(s) of which she had been unaware, and which indicated she was liable for a debt of $500,000. Her assertion in that regard was withdrawn during the hearing as plainly mistaken, given that a perusal of the bank statement in question, which she produced, disclosed the outstanding balance of the relevant loan to be zero.
In the event I dismissed the wife’s application for an adjournment, and allowed an extension of time for her compliance with the orders previously made on 22 June 2020. My orders made on 20 October 2020 included two notations, the second of which recorded the husband’s intention to make an application to proceed undefended in the event the wife failed to comply.
It is apparent, however, that the wife has not complied with the Chief Justice’s orders of 22 June 2020, or in substance, my orders of 20 October 2020.
The wife is obliged under Rule 13.05 to file a Financial Statement. She is in default of that obligation. She has not provided the Court with any information about her current financial circumstances.
The husband submits that the wife remains in default of the order made 22 June 2020, and is in default of the order made on 20 October 2020. Whilst she has purported to file an Amended Response, and an affidavit in support thereof, the documents filed by her could not properly be described as complying with those directions.
As I have said, the Amended Response contains applications for orders which are not capable of being made. The document is unintelligible, and in all the circumstances it does not constitute compliance with the requirements that an Amended Response be filed. The husband submits that, alternatively, it constitutes an abuse of process and that it should be struck out.
The husband submits that the position adopted by the Amended Response is also untenable, and that for this reason it invites scrutiny as an abuse of process. The application for orders contained in that document demonstrates a failure to engage in the proceedings on a bona fide basis.
The husband points to paragraph 2, for example, which seeks, pursuant to s 106 of the Act, to set aside transactions which were in fact completed pursuant to the order of Johns J made on 14 April 2016.
The husband points also to paragraph 3, which seeks a transfer of a property to the wife and which property was sold in 2019 following an order for its sale. Ultimately the sale was by way of NAB foreclosure.
Paragraph 4 of the wife’s document seeks transfer of the “interests” to the wife of the husband in various corporate entities. His “interests” consist of directorships, and shareholdings. The wife of course is an undischarged bankrupt.
Paragraphs 4.4 and 7 of the wife’s response are directly contradictory of each other. One seeks the husband’s superannuation be transferred to the wife, the other seeks each party retain their own superannuation.
Paragraphs 9 to 17 seek orders unsupported by any evidence, or indeed even contentions as to their subject matter.
The husband submits that despite the statement of truth as to the contents adopted by the wife, that there is no proper basis for any of the orders sought. He contends that the document, although described as an Amended Response does not meet the requirements of such a document in that it does not contain an application capable of being dealt with by the Court.
The husband also submits that the document filed and described as an affidavit could not properly be described as one.
He points to the fact that the affidavit has no jurat, and that the exhibits to it are not all provided. He says that it does not comply with the mandatory provisions of Rule 15.09 (a) (b) (c) or (d). Whilst the current COVID-19 directions alleviate some formal requirements as to swearing, the document does not bear any of the characteristics essential to an affidavit as ordered.
The husband also submits that the wife’s affidavit is not confined to facts about issues in dispute. It is in the major part constituted by a commentary on historical events and court orders, the husband’s past affidavits, none of which are relied on for the final hearing, and the wife’s antipathy towards him. It is replete with hearsay, he says, and opinion about matters which are irrelevant to any division of remaining property between the parties, even if in admissible form. It is grossly prolix and fails to address any issue properly before the Court. All this in circumstances where the wife is legally represented.
The husband submits that the wife has failed to comply with the orders to file an affidavit, albeit she has filed a document described as one. He says that it appears the document so filed has been submitted in order ostensibly to comply with the Court’s requirements, but that its contents do not comply at all. The husband submits that the document should be struck out.
The husband also notes that the Case Summary Document filed by the wife fails to comply with any of the requirements of order 5 made on 22 June 2020.
In addition the husband points out that an order was made on 8 April 2020 that the wife provide an affidavit setting out the details of her bankruptcy by 18 May 2020. The wife filed an affidavit ostensibly in compliance with that order on 22 April 2020. However, it is submitted by the husband that the wife has not complied with that order either, in that no adequate detail is contained in the affidavit deposed to by her. That affidavit does not exhibit documents which would be pertinent to the wife’s bankruptcy. Whilst paragraph 17 of the affidavit deposes to a Ms GG being the wife’s major creditor, no details or confirmation are provided about that petition in the affidavit.
The husband submits that Ms GG was briefly present during these proceedings, in 2017, in the context of the wife asserting she owed Ms GG $250,000. An order was made on 7 December 2017 providing for payment of $259,064 to Ms GG, from the sale of the Suburb FF property. The husband sought orders at that time for the wife to retain the Suburb FF property proceeds after discharge of encumbrances. The wife agreed to an order that Ms GG be paid from the proceeds she would otherwise retain. The property was duly sold, and Ms GG was paid $158,576.51 on 15 May 2018. There was insufficient equity in the property, after discharge of the NAB mortgage, to pay the full amount to Ms GG.
As has been mentioned the wife has failed to disclose any documents with respect to her bankruptcy. She has failed to depose to her actions with respect to her obligations under Rule 6.18, being notification to her trustee of these proceedings. Nor has the wife at any time sought to join her trustee, and she has not provided any documents relevant to his administration of her estate.
The husband submits that the wife is also in default of the order made 8 April 2020. Contrary to the clear intention of the order made 8 April 2020, the Court has no detail before it as to the wife’s bankruptcy.
Counsel for the wife readily conceded this morning that she could not argue with the facts, and that the material was not in the form that it should be. All she was able to say was that the wife wished to be heard, and that she could not responsibly make an application for an adjournment. She did mention a claim that the Suburb DD property had in fact been repurchased by the husband, but she was not able to point to any evidence in support of that claim.
Senior counsel for the husband indicated that she had no need to call the wife – that there was not a single admissible statement in her affidavit that was worthy of cross-examination. She submitted also that it was plain that there was nothing left after the Suburb DD mortgage had been discharged, and that there was no evidence whatsoever that it had been repurchased by the husband.
In all the circumstances I accept the husband’s submissions that the wife has, in substance, failed to file any admissible affidavit material. The affidavit that she has filed does not contain relevant evidence for the purposes of s 55 of the Evidence Act 1995 (Cth) (the Evidence Act). Pursuant to s 56(2) of the Evidence Act her affidavit is inadmissible.
Rule 11.02 of the Family Law Rules 2004 (“the Rules”) provides that:
(1)If a step is taken after the time specified for taking the step by these Rules, the Regulations or a procedural order, the step is of no effect.
(2)If a party does not comply with these Rules, the Regulations or a procedural order, the court may:
(a)dismiss all or part of the case;
(b)set aside a step taken or an order made;
(c)determine the case as if it were undefended;
(d)make any of the orders mentioned in rule 11.01;
(e)order costs;
(f)prohibit the party from taking a further step in the case until the occurrence of a specified event; or
(g)make any other order the court considers necessary, having regard to the main purpose of these Rules (see rule 1.04).
The Explanatory Guide to the Rules describes “undefended basis” as follows:
[T]he court may order that a hearing or trial may proceed, because of the respondent’s failure to comply with a rule or order, as if a response has not been filed. The court may make the orders set out in the application on being satisfied by evidence that the orders should be made.
The Full Court, in upholding the decision of the trial Judge in striking out the husband’s response and refusing him the right to cross-examine the wife based upon what was described as a ‘continual delay; most of it due to the non-compliance of the husband’, said in Tate JRD v Tate MT (2000) FLC 93-047 as follows:
99.In attempting to match the limited resources of the Court to the demands of increasing lists, the principles of case management are assuming greater prominence. Never an end in themselves, they are and must always remain subject to and never prevail over the attainment of justice as “the paramount consideration” (State of Queensland v J.L. Holdings; supra) (original italics). But justice in matters such as this is due to each party to litigation (see the comments of Kirby J in Allesch v Maunz [2000] HCA 40 at paras 38-40). Case Management guidelines, principles and orders are designed to facilitate the ends of justice by encouraging: full frank and prompt disclosure; settlement; identification of the matters genuinely in dispute needing the Court’s determination; and the expeditious marshalling and presentation of relevant evidence. …
107.The Court, no less than those who litigate before it, is constrained by the interplay of competing principles. In the attainment of justice in individual matters, which will always remain the paramount consideration, appropriate sanctions are essential to see that its orders and directions are obeyed in the pursuit of that end. Such a goal overrides any notions of punishment for disobedience of such orders.
108.Where, as here, non-compliance with the orders and directions of the Court will, in the opinion of the trial Judge, defeat the attainment of justice, then suitable remedies must be found. In this instance the remedy necessarily excluded the husband from any further participation in the proceedings. Whilst such cases are “exceptional”, and indeed unusual, no litigant, whether legally represented or not, should harbour any doubt that a manipulation of the court processes, (as was attempted and indeed partially achieved in this instance), through disregard of and deliberate non-compliance with its orders and directions will attract other than the strongest measures from the Court. In doing justice to both parties, the exclusion of a defaulter, whose defaults threaten the achievement of justice, is not only an option, but, in such circumstances, becomes a regrettable necessity.
What the High Court said subsequently in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 adds obvious force to these observations.
It is in these cases where a party seeks to proceed undefended a matter of weighing up the competing rights of the parties and the interests of justice generally. The husband in this case is entitled to have his case heard irrespective, ultimately, of whether the wife chooses to participate, in any meaningful sense, in that process.
The wife has had many opportunities to comply with orders of this Court and to meet her obligations to provide affidavit and other material in response to the husband’s case. Nonetheless, she has not participated in these proceedings in a meaningful sense and I have little doubt but that her conduct in this regard would continue if I did not accede to the husband’s application to proceed on an undefended basis today.
The difficulty in this case is that the disadvantage to the husband is not one that can be addressed simply by a costs order. I am satisfied that the wife has consistently failed properly to participate in this litigation and that by this course of conduct she has caused significant prejudice to the husband. She has been on notice, since June 2020, that if she did not properly engage she may be the subject of an order that the husband’s case proceed undefended.
The husband is entitled to have his matter heard and a decision made. In all of the circumstances of this case, and weighing up the rights of both the husband and the wife, I propose to accede to the husband’s application and give leave to him to proceed undefended.
The Husband’s Case
The husband's financial position is as set out in his trial affidavit and financial statement sworn and filed on 29 September 2020 in accordance with the trial directions made on 22 June 2020. The one change to that is that the husband’s present superannuation balance is $384,909 and not $385,827.
I accept that the wife has consistently failed to provide financial disclosure in these proceedings, including most recently by failing to provide any documents whatsoever in answer to correspondence from Lander & Rogers dated 10 March 2020 and 6 April 2020, or even acknowledged those requests in any way. On 21 October 2020, the wife disclosed her superannuation as at 30 June 2020 as $193,073, although counsel for the wife has confirmed that figure is in fact $194,073. There is otherwise no transparency regarding the wife's property interests and financial resources.
Based on the information which has been provided by the wife, the bank statements for the National Australia Bank account number ending …11 that were annexed to the wife's affidavit filed on 20 October 2020, and the husband's sworn evidence as clarified this morning, the balance sheet as the husband understands it, and I accept, is as follows:
No.
Item
Owner
Value
1.
NAB bank account ending …36
Husband
$1
2.
Chattels
Husband
E$10,000
3.
Corporate Entities and Trusts (refer to paragraphs 28 to 41 of the husband's trial affidavit)
Husband
Nominal/$Nil
4.
Less: debt to National Australia Bank, being the shortfall from the sale proceeds of CC Street, Suburb DD Queensland property (NAB account number ending …11)
Husband
$Nil
5.
Less: outstanding council rates for AA Street, Suburb BB
Husband
($10,000)
6.
Less: professional fees owing to VV Accountants (husband's accountants)
Husband
($51,571)
7.
Less: professional fees owing to Lander & Rogers (husband's solicitors in these proceedings)
Husband
($85,829)
8.
Less: taxation debt referable to 2018 financial year, being CGT on sale of AA Street Suburb BB, Victoria and and X Street, Suburb Y, Victoria
Husband
($88,250)
9.
Less: Loan from Mr I
Husband
(E$150,000)
10.
Wife's assets and liabilities
Wife
Not known
Total
($375,649)
11.
PP Superannuation member balance as of 17 September 2020
Husband
$384,909
12.
PP Superannuation member balance as of 30 June 2020
Wife
$194,073
Total superannuation
$578,982
The husband says that he also has personal loans from family members which he has incurred post-separation and which he concedes should not be included in the matrimonial asset pool. These loans are deposed to in his Financial Statement sworn and filed on 29 September 2020 at item 50.
As I have said, the wife has failed to file any particularised application for alteration of the parties' property interests at any stage of the proceedings, nor has she particularised an asset pool. On 20 October 2020 before me the wife's legal representative submitted the wife’s application was that she be paid $5,000,000, but no context or justification was given for that submission either.
As I have observed, the wife is a bankrupt. She has provided no evidence that she has provided the obligatory notification to her trustee in bankruptcy of her engagement in these proceeding. She has provided no evidence from the trustee as to the debts proven, and outstanding, in her bankruptcy. She has not made an application to have her trustee in bankruptcy joined to the proceeding. Had she done so, which it is submitted would have been proper in bona fide proceedings, she would have no standing to make any submission with respect to vested property at all. I accept the husband’s submission that her failure to conduct the proceedings in a proper and orderly manner has caused the husband unnecessary and significant expense in legal costs, in circumstances where only the superannuation of the parties falls outside the wife’s estate in bankruptcy.
Insofar as contributions are concerned the husband seems to accept that they were broadly equal, all things considered. He notes that at the commencement of the parties' cohabitation in 1997, he was employed at WW Company in Suburb XX, that he had equity of approximately $20,000 in a property at X Street, Suburb Y, and no other assets of significance. He accepts that in 1997 the wife had an interest in a real property in Suburb FF, but says that the wife did not have any other assets of significance.
As has been mentioned, in 2007 the husband purchased an 85 percent interest in a sales business with premises at Suburb E and Suburb F via corporate entities and trusts. The husband's business partner, Mr H, held the remaining 15 percent interest in the business. The parties also acquired an 85 percent interest in three commercial properties from which the sales businesses operated.
The husband deposes that the wife operated a business known as V Pty Ltd, which received a large percentage of its customers from the sales businesses.
The husband says, and it is apparent that this is correct, that despite the parties enjoying a high standard of living during their marriage and amassing a significant residential and commercial property portfolio, their financial circumstances deteriorated from approximately 2015. As has been observed the husband entered a personal insolvency agreement and lost all interests in the Suburb E and Suburb F sales businesses and real properties, the wife is an undischarged bankrupt, and the only property available for division between the parties is their respective superannuation.
On the subject of s 79(2) factors, the husband is 49 years of age and is in good health. He is employed by YY Business and earns an annual salary of $100,000, with further benefits of a mobile phone and motor vehicle as part of his employment.
The wife, at 48 years of age, is apparently also in good health. It is submitted by the husband that the wife has an earning capacity comparable to the husband.
The parties’ daughter, G, continues to live with the wife and the husband pays child support as assessed by the Child Support Agency in accordance with the administrative assessment.
The husband submits that the manner in which the wife has conducted herself in these proceedings, including her chronic failure to provide financial disclosure and her conduct in causing the final hearing of the matter to be delayed throughout 2020 by misrepresenting to the Court the status of the husband's disclosure and the asset pool, should be taken into account as an additional factor under s 75(2)(o) of the Act.
The husband says that given the size and nature of the property pool, and the negative net equity in the non-superannuation pool, it would not be just and equitable to vary the parties' respective asset interests, which comprise only superannuation. The superannuation entitlements of the husband are some $190,836 more than those of the wife. He says that difference is insignificant when viewed in the context of the legal costs he has been forced to incur, as a direct result of the wife’s conduct in the proceeding.
Axiomatically, the Court’s task under s 79 of the Act is to consider whether it would be just and equitable to make an order adjusting the existing legal and equitable interests of the parties in the property of the marriage and, if so, to consider what order should be made by reference to s 79(4) of the Act. While the two inquiries are not to be conflated: Stanford & Stanford at [35], [40], [51], it is permissible for the s 79(4) factors to inform the inquiry under s 79(2): Bevan & Bevan (2013) FLC 93-545; 279 FLR 1 at [83]-[89], [163], [169], [171]-[172].
Consideration of whether it is just and equitable to make a property settlement order must begin with an identification of the existing legal and equitable property interests of the parties. It must not be assumed that the parties’ rights to or interests in marital property should be different from those that currently exist, or that a party has the right to have the parties’ property divided by reference to considerations set out in s 79(4) of the Act: Stanford & Stanford at [37]-[40], [50]; Bevan & Bevan at [73] (Bryant CJ and Thackray J), identifying these three matters as “fundamental propositions”.
If and once determined that it is just and equitable for the property interests of the parties to be altered, the process of evaluating the proper orders to make is dictated by the factors enumerated within s 79(4) of the Act. The Court must necessarily identify and assess the parties’ contributions within the meaning of ss 79(4)(a)-(c) and then take account of the relevant matters referred to in
ss 79(4)(d)-(g) of the Act, which include the matters referred to in s 75(2) of the Act, so far as they are relevant. The process of property adjustment calls for a discretionary and holistic value judgment: Quinn v Quinn (1979) FLC 90-677 at 78,615; Garrett v Garrett (1984) FLC 91-539 at 79,359, 79,372; Davey v Lee (1990) 13 Fam LR 688 at 689.
As has been mentioned, the husband appears to accept that the parties made equal contributions. He says that when the figure of $158,576.51 which the wife has had, effectively as a part property settlement, is taken into account and added to her existing superannuation she would have had the benefit of some $352,649.51.
The husband says that this amount is not much less than the $384,909 which represents his present superannuation. In circumstances where the evidence discloses that he has had to spend in the vicinity of $500,000 since 2015 attempting to finalise the property aspects of the marriage, he says that it would not be just and equitable to make any order under s 79 and the parties should be left with their respective superannuation interests.
The husband points also, in this respect, to the fact that he will retain the CGT liability of some $88,250 with respect to the Suburb BB property and the Suburb Y property.
In all the circumstances, and noting that it must not be assumed that the parties’ rights to or interests in the marital property should be different from those that currently exist, or that there is any right to a division of property by reference to the considerations set out in s 79(4) of the Act, I do not consider that it would be just and equitable for any order to be made altering the parties’ respective superannuation interests.
I reach this view on the basis that, allowing for the $158,576.51 already paid to Ms GG, there is not a substantial difference between the parties’ respective superannuation interests, which appears, on the evidence, to be all that remains. What little difference there is is more than accommodated, in the husband’s favour, by the very significant costs he has incurred bringing the matter to a final resolution.
Accordingly I will make orders set out at the commencement of these reasons. As will be apparent, orders 3 and 4 require the wife’s cooperation in the execution of documents and put in place a procedure if that cooperation is not forthcoming.
Ultimately, in all the circumstances, the husband did not press for an order that the wife pay the costs of the proceeding, and so I will make no order as to costs.
I certify that the preceding eighty eight (88) paragraphs are a true copy of the reasons for judgment of the Honourable Justice McEvoy delivered on 27 October 2020.
Associate:
Date: 4 November 2020
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