Falk & Falk (No 2)

Case [2024] FedCFamC1F 97

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Falk & Falk (No 2) [2024] FedCFamC1F 97

File number: SYC 4653 of 2019
Judgment of: CAMPTON J
Date of judgment: 28 February 2024
Catchwords: FAMILY LAW – PROPERTY – Where the husband’s solicitors filed a Notice of Ceasing Act the morning of the trial, and his legal representatives attended obtaining leave to withdraw on termination of their retainer – Where the husband was not in attendance at the trial and did not make an application to attend electronically – Where the husband indirectly communicated a request for adjournment but did not did avail himself of the alternative mechanisms to make such application  – Where the trial proceeded undefended – Where the husband is currently residing in a property of which the wife is the legal owner and the wife is residing in rental accommodation – Weight attached to direct initial financial contributions and the use made of them – Where the wife makes a Kennon v Kennon (1997) FLC 92-757 contention that her contributions were made significantly more arduous – Where the wife does not establish that contention – Where consideration is given to the use and application of capital by the parties over the lengthy period of time subsequent to their separation – Orders made adjusting the property of the parties 75 per cent to the husband and 25 per cent to the wife.
Legislation:

Family Law Act 1975 (Cth) ss 75 and 79

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) ch 11, rr 3.10, 15.15 and 15.16

Cases cited:

AJO & GRO (2005) FLC 93-218; [2005] FamCA 195

Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 174; [2009] HCA 27

Barrett & Winnie (2022) FLC 94-093; [2022] FedCFamC1A 99

Bevan & Bevan (2013) FLC 93-545; [2013] FamCAFC 116

Carter & Wilson (2023) FLC 94-129; [2023] FedCFamC1A 9

DJM & JLM (1998) FLC 92-816; [1998] FamCA 97

Edgehill & Edgehill [2007] FamCA 1102

Franklin & Ennis [2019] FamCAFC 91

Gollings & Scott (2007) FLC 93-319; [2007] FamCA 397

Horrigan & Horrigan [2020] FamCAFC 25

Kennon v Kennon (1997) FLC 92-757; [1997] FamCA 27

Kowaliw and Kowaliw (1981) FLC 91-092; [1981] FamCA 70

NHC & RCH (2004) FLC 93-204; [2004] FamCA 633

Pierce v Pierce (1999) FLC 92-844; [1998] FamCA 74

Rosati & Rosati (1998) FLC 92-555; [1998] FamCA 38

Saha & Lahiri (No 3) (2023) FLC 94-158; [2023] FedCFamC1A 144

Stanford & Stanford (2012) 247 CLR 108; [2012] HCA 52

Townsend & Townsend (1995) FLC 92-569; [1994] FamCA 144

Trevi & Trevi [2018] FamCAFC 173

Weir and Weir (1993) FLC 92-338; [1992] FamCA 69

Division: Division 1 First Instance
Number of paragraphs: 138
Date of hearing: 26 February 2024
Place: Sydney
Counsel for the Applicant: Mr Ahmad
Solicitor for the Applicant: Dorter Family Lawyers and Mediators
Solicitor for the Respondent: No appearance

ORDERS

SYC 4653 of 2019

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN:

MS…

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Falk & Falk (No 2) [2024] FedCFamC1F 97
Case
[2024] FedCFamC1F 97
Decision Date

CaseChat Overview and Summary

The Federal Circuit and Family Court of Australia, Division 1, heard a property settlement dispute between Ms Falk and Mr Falk. Ms Falk sought a contribution finding in her favor of 37.5% of the property of the parties, based on her direct financial contributions and the hardship she faced in making those contributions. The court was required to assess the respective contributions of the parties over the course of their relationship and post-separation period. The court also had to consider the wife's contention that her contributions were made under significantly more arduous circumstances and whether this contention was substantiated.

The court found that the wife's initial financial contributions and the use made of those contributions, along with the husband's retention of rental income from other properties, were significant factors in favor of the wife. However, the court rejected the wife's contention that her contributions were made under significantly more arduous circumstances. The court also considered the use and application of capital by the parties over the lengthy period of time subsequent to their separation. Ultimately, the court assessed the contributions as 20% to the wife and 80% to the husband, resulting in the wife receiving property to the value of $2,017,977 and the husband receiving property to the value of $8,071,910.

The court's reasoning was based on a holistic assessment of all the contributions made by both parties, without compartmentalizing one against the others or the remainder. The court found that the wife's financial contributions and the hardship she faced in making those contributions were significant factors in favor of the wife, but the contention that her contributions were made under significantly more arduous circumstances was not substantiated. The court also considered the use and application of capital by the parties over the lengthy period of time subsequent to their separation.

The final orders of the court were that the wife receive property to the value of $2,017,977 and the husband receive property to the value of $8,071,910. The court's decision was based on a holistic assessment of all the contributions made by both parties, taking into account the wife's initial financial contributions and the hardship she faced in making those contributions, as well as the use and application of capital by the parties over the lengthy period of time subsequent to their separation. The court rejected the wife's contention that her contributions were made under significantly more arduous circumstances, and found that the husband's contributions were greater overall.

Orders

Orders of the court

SYC 4653 of 2019

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MS FALK

Applicant

AND:

MR FALK

Respondent

ORDER MADE BY:

CAMPTON J

DATE OF ORDER:

28 FEBRUARY 2024

THE COURT ORDERS THAT:

1.

Background

Background to the litigation

The wife sought a contribution finding in her favour as to 33 per cent of the property of the parties and an adjustment to that finding in her favour of a further 4.5 per cent, such that she would receive 37.5 per cent of the property of the parties. BACKGROUND In 1995 the wife purchased the Suburb C property for $248,000. The funds used to pay the purchase price were comprised of $160,000 provided to her by her father and $80,000 from a loan secured by a mortgage over the property from KK Bank. The wife resided in that property from the time it was purchased until cohabitation. The wife in her trial affidavit said, and I accept:8.In 2007, about two years preceding cohabitation, the business [the husband] founded and which traded as [LL Limited] was sold to [AC Holdings]. I am not aware of, nor have I received any disclosure in these proceedings of the total share price. As part of that transaction, I am aware he received ordinary shares in [AC Holdings] at an issue price of $14.9529 per share that were subject to a voluntary escrow period of 3 years ending on 30 July 2010…9.By the date of our cohabitation [the husband] remained employed by [LL Limited] as Chief Executive Officer. At this time [AC Holdings] had suffered a huge wipe in its market value and its share price had plummeted. Exhibited hereto and marked “[MF-2]” is a copy of share holding statement dated 10 May 2011 that identifies the balance of [AC Holdings] shares escrowed to 30 July 2010 as NIL and the balance of 129,063 ordinary fully paid [AC Holdings] shares at $711,137.13. Ultimately the value of the [AC Holdings] shares continued to plummet and to the best of my knowledge they became far less in value to [the husband].(Emphasis in original) In her Case Outline, the wife conceded, and I accept, that the husband received remuneration of $244,413 per annum from his employment at LL Limited. Prior to cohabitation the wife was employed as a manager, earning approximately $120,000 per annum inclusive of superannuation and a company car. Shortly preceding cohabitation, she was made redundant from this role. It was the wife’s evidence, and I accept, that the husband requested she not return to gainful employment, and that the husband said he would pay her a monthly allowance to “take care of him, the household and our financial and non-financial affairs”. She said, and I accept, that the monthly allowance was applied towards living expenses. At cohabitation, the parties commenced to reside in the husband’s Suburb D property. The Suburb C property was rented out for $500 per week. The rental repayments were utilised to meet the expenses of the property and mortgage repayments. That property continued to be leased until 28 February 2017. The parties lived at the Suburb D property until 2011, when the husband ceased to be employed by LL Limited. That property was thereafter, and continues to be, leased to tenants. It was the wife’s evidence, and I accept, that:During the marriage [the husband] and I held joint accounts and at times the rental income received from each of the [Suburb D], [Suburb E] and [Suburb C] properties was pooled together into a joint account and paid towards each of the mortgage instalments and outgoings respectively for each property.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

Since separation, the wife contends, and I accept, that she has been solely responsible for and paid the outgoings in relation to the Suburb C property. The husband has lived rent-free at Suburb C since a time commencing in the period between April and August 2020. The current outgoings paid by the wife for rates and strata fees are $142 per week. In addition, the wife has met the cost of her own rent since separation, from either the $1,000,000 she accessed at separation, or in mor recent times a combination of those funds and her income. It is currently $675 per week. The wife has paid the cost of storage of the husband’s personal items since the parties moved from Country F from the same sources. It is currently paid at a rate of $62 per week. During the period the husband has occupied the Suburb C property at no cost to him, he additionally retained the benefit of rental income from both the Suburb D and Suburb E properties. The wife did not particularise the net value of this benefit after payment of mortgages or other outgoings on his real properties in the evidence. These post-separation factors weigh in favour of the wife.Conclusion as to contributions The wife sought a contribution finding of 37.5 per cent in her favour of the property of the parties. The Full Court in Horrigan & Horrigan [2020] FamCAFC 25 emphasised that the proper approach to the assessment of contributions is:35 …well established that an assessment of contributions is not a mathematical exercise, but rather involves the identification and assessment of all of the parties respective contributions, in a holistic way across the course of the relationship and in the post separation period to the point of assessment. As to that holistic assessment, all contributions must be weighed collectively and not by way of compartmentalising one against others or the remainder. Taking into account all the contributions identified in these reasons, the contributions are assessed as 20 per cent to the wife and 80 per cent to the husband. This will see the wife receiving property to the value of $2,017,977 and the husband receiving property to the value of $8,071,910.ADJUSTMENT TO THE CONTRIBUTION FINDING The wife is 65 years of age and reports that she is in fair health. I so find. She engages with a psychologist for support from time to time. The wife obtained casual employment commencing from late 2020, and full-time work from late 2021. She is currently an assistant earning $110,000 per annum plus superannuation. I accept there is some uncertainty as to how long she will continue to work having regard to her age. The husband is 60 years of age. Professor V opined, in October 2020, that the husband had “voluntarily rehabilitated”. He provided a diagnosis and opined that he does not need surgery “at the moment”, and that he should be reviewed again in six months. In March 2021, the Professor reviewed the husband and opined that he “just requires regular review now”, and that he does not require any tests apart from his routine medication. In respect of the husband’s life expectancy, Professor V said:Although [the husband] was on death’s door (so to speak ) in early 2020, he has made a remarkable recovery and he now ,as mentioned , has [a less serious illness] in place. I would expect that he will have reduced life expectancy because of all this but his mortality over the next five years would only be in the vicinity of 5 to 10% provided he [complies with medical instructions].(As per the original).

Ratio Decidendi

Legal Principle Established

The husband and the wife separated on a final basis on 10 April 2019. The wife moved out of the serviced apartment that day.Events following separation In 2019 the wife’s father died in Country PP. The wife said, and I accept, that she received no benefit from her late father’s modest estate, it passing to her mother. Her mother continues to live in Country PP. Following separation, the wife transferred $1,000,000 from the parties joint Q Bank account. I accept the wife’s evidence as to the use and application of those funds, being;(a)Partial property settlement payable to the husband pursuant to an order in August 2020 of $200,000;(b)Legal fees, including this proceeding and two proceedings in the Supreme Court of NSW, in the sum of approximately $385,000; and(c)Living expenses of approximately $363,000; and(d)That $53,000 remains in wife’s bank account. As to the husband’s use and application of the balance of funds in the joint account at separation, I accept the husband’s evidence, as relied upon by the wife, at paragraph 313 of his affidavit filed 19 December 2023:313.After [the wife] withdrew approximately $1,000,000 AUD from our joint bank accounts between 8 April 2019 and 24 May 2019, I was left with HKD $2,637,753 (approximately $474,000 AUD) in those accounts. Since separation I have spent all of those funds as follows:-(a)Approximately $172,000 AUD to pay for my living expenses noting that I had to replace my personal belongings and furnish the [Suburb C] property;(b) Approximately $185,000 AUD for the purchase of items of jewellery which was gifted to [Ms SS] in return for her caring for me when I was seriously ill and paying some of my medical and travel bills;(c) Approximately $44,000 AUD paid to my former solicitors, [QQ Lawyers];(d)Approximately $54,000 AUD paid to [Ms SS] to meet my living and medical expenses as deposed to below.(e) $5,000 AUD paid to [AD lawyers].(f)Approximately $14,000 AUD paid to an account. I cannot recall what this payment was for, have no recollection of the bank account those funds were paid to. I have made enquiries and understand that this is not an account held in my name or [Ms SS’s] name. I continue to make inquiries to try and determine what this payment related to.Exhibited hereto and marked with the letter “[F] 66” is a schedule setting out details of the above transactions.(Emphasis in original)The husband’s medical issues, power of attorney and appointment of a case guardian for the husband The husband was admitted to hospital for problems in early 2020. He was transferred to a hospital in Sydney. A diagnosis was made with a serious prognosis. He was discharged from hospital in early 2020. A summons was filed in the Supreme Court of NSW seeking the wife’s removal as the husband’s Enduring Guardian and Power of Attorney, and for Mr S, the husband’s aunt, Ms RR, and his sister, Ms R, all to be appointed in that position. In early 2020 a consent order was made in the Supreme Court of NSW, for the husband’s sister, Ms R, to be appointed to the positions of Enduring Guardian and Power of Attorney.