Fazarri and Hsiao (No. 2)
[2018] FamCA 447
•19 June 2018
AMENDED PURSUANT TO RULE 17.02 OF THE FAMILY LAW RULES 2004
FAMILY COURT OF AUSTRALIA
| FAZARRI & HSIAO (NO. 2) | [2018] FamCA 447 |
| PROPERTY SETTLEMENT – Undefended proceeding – where the wife was refused an adjournment and then did not participate further, refusing to return to the court on the second day – where the husband satisfies the court that his contribution both financial and non-financial was overwhelming by comparison to that of the wife – where the s 75(2) factors do not assist the wife because of the absence of evidence and because of the fact that the husband maintained that the wife could obtain employment – s 106A order made on the basis of anticipatory non-compliance by the wife. |
| Family Law Act 1975 (Cth) |
| Beneke and Beneke (1996) 20 FamLR 841 Gabel & Yardley [2008] FamCAFC 162; [2008] 40 Fam LR 66 Livesey v Jenkins [1984] UKHL 3; (1985) 1 All E.R. 106 Oriolo v Oriolo (1985) FLC 91-653 Stanford v Stanford (2012) 247 CLR 208 Tate & Tate [2000] FamCA 1040 |
| APPLICANT: | Mr Fazarri |
| RESPONDENT: | Ms Hsiao |
| FILE NUMBER: | MLC | 11418 | of | 2016 |
| DATE DELIVERED: | 19 June 2018 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Cronin J |
| HEARING DATE: | 15 June 2018 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr North SC with Mr Schmidt |
| SOLICITOR FOR THE APPLICANT: | Taussig Cherrie Fildes |
| THE RESPONDENT: | No Appearance |
Orders
That the husband pay to the wife $100,000 by 4.00pm on 1 August 2018.
That the joint tenancy of the parties in the real property at G Street, Suburb H being the whole of the land described in Certificate of Title Volume … Folio … is forthwith severed and each party forthwith holds any interest in that property in accordance with these orders.
That by 4.00pm on 1 August 2018, the wife sign a transfer of land prepared by and at the expense of the husband, to him, of all of her interest in the property at G Street, Suburb H being the land described in the title referred to above.
That the wife provide to the husband through his solicitors, within 14 days, the spare key to the husband’s motor vehicle and the remote keys for the property at G Street.
If the wife fails to comply with her obligations under these orders, then pursuant to s 106A of the Family Law Act 1975 (Cth), the registrar of the Family Court of Australia at Melbourne is authorised to execute all necessary deeds and documents in the name of the wife and to do all acts and things necessary to give validity and operation to these orders.
To give effect to these orders, the registrar shall be entitled to be satisfied of the wife’s failure to comply upon the affidavit of the solicitor for the husband.
That each party otherwise retain, to the exclusion of the other, all other property (including choses in action) in the possession of such party as at the date of these orders noting that the only interest that the wife has in G Street forthwith is to the extent of $100,000 provided by these orders.
That any party seeking costs arising out of these proceedings, make such application by written submission to be delivered to the court and served on the other party by no later than 4.00pm on 1 August 2018 and subject to any response by the other party no later than 14 days later, the matter be determined in chambers.
That the application of the husband filed 18 May 2018 is otherwise 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 Fazarri & Hsiao (No. 2) 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 11418 of 2016
| Mr Fazarri |
Applicant
And
| Ms Hsiao |
Respondent
REASONS FOR JUDGMENT
These reasons concern property proceedings between Mr Fazarri (“the husband”) and Ms Hsiao (“the wife”). There are other judgments of the Court which may give further context but I do not intend to recite all of the details for reasons which should soon be obvious.
The proceedings were begun in November 2016 by the husband in the Federal Circuit Court. A hearing date of 14 February 2017 was allocated. The wife filed a response at that hearing. Both parties had set out the relief they sought with particularity. On 19 September 2017, the proceedings were transferred to this Court.
There have been a number of interlocutory hearings since then which might be described as relating to litigation funding and spousal maintenance. For reasons given in other judgments, the wife’s allegation of lack of discovery by the husband has loomed large. He has consistently denied any lack of disclosure.
In April 2018, the case was set down for final hearing at the request of the husband and over opposition of the wife. A timetable for filing of evidence by affidavit was ordered. The husband complied, the wife did not.
Only days prior to the final hearing was due to commence and on the day after the wife’s evidence by affidavit was due to be filed, her solicitors filed a notice that they were ceasing to act for her. Because of the relatively short timeframe thereafter, the solicitors briefed counsel to attend to formally seek permission to withdraw.
On 14 June 2018, the wife appeared without legal representation whilst the husband appeared represented by Mr North of senior counsel leading Mr Schmidt.
The wife filed an application in a case on the day before the hearing was due to commence. In essence, she sought orders for me to recuse myself, the adjournment of the trial and other matters that are no longer relevant to these reasons. I heard the wife’s submissions over the course of the day. They took considerable time because although her application and its supporting affidavit appeared to set out the ambit of the recusal based on conflict of interest and apprehended bias, her oral submissions strayed much wider.
I refused the wife’s application for an adjournment and recusal and as the day had ended, I said I would start the trial on the following morning. The wife announced that she could not attend. I warned her that her absence may lead to the matter proceeding in her absence.
The wife did not attend on 15 June.
Mr North told the court that he, his junior counsel and his instructing solicitor had spoken to the wife outside of the courtroom the previous evening. As there were three people apparently present, I did not require details of what occurred to be given in formal evidence but the transcript can be examined to correct any misunderstanding on my part. According to Mr North, the wife was asked what evidence she was relying upon having regard to the fact that she had not complied with the timetable and her adjournment application had been refused. Mr North said the wife told the group that she was not able to conduct the trial and that she would not represent herself. Mr North said he asked whether she would be represented by someone else and she replied that she would not. When asked whether she would be attending, the wife said she was not in a position to be present at the court. The latter statement was also a statement that the wife made at the bar table in the courtroom on the previous evening when she was told that the matter would be proceeding the following day.
There is no acceptable basis for the wife not to attend. I am aware of her suggestion of personal problems associated with medical treatment that she had had, or was about to have, but no details were provided in affidavit form.
To be clear, the wife filed significant affidavits about the conflict of interest and discovery issues. On 13 June, so the day before the hearing began, she filed another affidavit in which she set out the following matters about her health.
First, she relied upon three earlier affidavits about her health but that does not assist her because, without leave, they could only be used for the purposes for which they were filed. That was made clear in the trial orders.
In respect of her current health, the wife said that in February 2018, she had sprained her foot. Nothing about that injury or its treatment indicated why the discovery and litigation funding issues were not then dealt with. She then said that on 24 April, she became aware of the requirement for surgery for “a condition previously unknown to me” and that was booked for 1 June. That surgery occurred on that date but I also note that on the morning of that same day, the wife attended with counsel before Registrar Field on a subpoena objection issue. I do not doubt she had surgery, although for what is unclear, but she was able to otherwise participate in an argument about documentary relevance.
Whilst there may be a suggestion she was not well enough to deal with the evidentiary matters, her lawyers do not appear to have made any specific application about the timetable. In that same period, and dated 4 June 2018, was a letter from the wife’s solicitor to the administrative officials of the court which I have mentioned in the other reasons delivered concerning the apprehended bias application. A perusal of that letter (exhibit W1) shows considerable preparation about those matters.
Thus, I find there is nothing in relation to her medical condition to suggest incapacity to attend to and comply with, the filing of documents. As her solicitors were undoubtedly aware of the impending trial and had the same obligations as she had (rule 1.08), there is no plausible reason given for non-compliance. I do not accept that the discovery issue precluded her preparation. To the extent that her impecuniosity was a basis for the lawyers not to do anything unless paid, the depth of the letter to which I have just referred would indicate otherwise. Even if funding was a difficulty, no application was filed. Thus, the silence of the lawyers indicates that the wife was not preparing as she should have been.
As also noted in the reasons for rejecting the adjournment, the wife was unable to tell the court when she would be ready to proceed. I held that any adjournment was therefore futile as it would be unlikely that she had any clear plan to resolve her own dilemma. Returning then to the husband’s application to proceed in the absence of the wife, there is no indication of the wife’s intention to comply with orders. There is no indication that she intended to participate through having solicitors and counsel.
As the Full Court observed in Tate & Tate [2000] FamCA 1040:
[74]The interlocutory orders made by the trial Judge by way of case management, were no less orders of the Court. There were entitled to full and punctilious obedience. This Court has a duty to order its business with justice according to law. The Rules of Court are there to assist in the fair and timely preparation of matters for expeditious trial. Litigants in such matters also have the duty of full and frank – and we would add prompt – disclosure of relevant financial matters. Against that background the trial Judge’s specific orders achieved an even greater potency. They did not have to be expressed as “unless” or “guillotine” orders: they were interlocutory orders of a judge of a superior court of record and to be obeyed as such according to their terms, which included specific times for performance.
[75].It is not for litigants, appearing in person or otherwise, to pick and choose which orders they will or will not obey, or when they may condescend to comply with them. Such an attitude, amply evidenced in this matter, if adopted, brings its own nemesis. That is not only because it is contemptuous of the Court’s orders. It is also because it works injustice to the parties who do comply, and unfairness to that myriad of litigants waiting to have their matters despatched as soon as the Court can hear them. The luxury of procrastination – let alone deliberate disobedience – is a luxury of the past if it ever existed.
Access to justice is a cornerstone of democracy and where there is a justiciable issue, litigants have the right to have the court determine it expeditiously. There comes a time when the courts have to consider resources to ensure that they are not wasted but also it must not be forgotten that there is another litigant in the case as well. In this case, as early as December 2017 at least in this court, the husband has been endeavouring to obtain a final hearing. At most of those hearings, the wife’s position about readiness concerned discovery and funding. None of those matters has been handled expeditiously; indeed, I consider they have been distinctly and unnecessarily delayed. In respect of the resources of the court, I am conscious of both government and public criticism of the courts because of delays in getting cases heard and determined.
In contemplating the oral application of the husband to proceed in the absence of the wife, particularly accepting the remarks attributed to her, I take into consideration the unchallenged evidence of the husband that underpins the relief he seeks. In an interlocutory hearing, the wife’s counsel referred to the fact that this was not a 50 per cent case but he asserted that she would be entitled to more than $200,000 which is what she was seeking by way of litigation funding. In this case, the wife’s statement was that she would not return but neither did she indicate how the matter would be advanced or when. Thus, the only evidence I have to rely on and by which to assess any relief that might have been sought by the wife is to carefully examine the evidence of the husband. Unless it is implausible, that evidence should be accepted.
Insofar as the wife disputes the adequacy of disclosure, I reject that and have separately ruled on that issue. Nothing in the wife’s material satisfies me that the husband has not comprehensively presented what was his disclosure obligation. I take into account that the wife did not pursue discovery in the various hearings.
Discovery is a continuing process and parties must make a full and frank disclosure of all relevant financial circumstances which may involve a duty of continuing discovery (Oriolo v Oriolo (1985) FLC 91-653). The purpose of the strictness of that obligation can be seen in all of the authorities that do not have to be restated here but apart from the litigants knowing what might otherwise be unknown and to their disadvantage, the court cannot lawfully or properly exercise its discretion in the manner required by (in this case) s 75(2) of the Act (see Lord Brandon for the House of Lords is Livesey v Jenkins [1984] UKHL 3; (1985) 1 All E.R. 106 at page 114)
The evidence of the husband seems plausible. There is no evidence from the wife that would satisfy me that his discovery has been inadequate. That conclusion is drawn from the following affidavit material.
In her affidavit filed 13 June, the wife began by referring to the order of Judge Riley of the Federal Circuit Court made on 14 February 2017. That was a consent order and indeed, it is clear that the parties had worked out what the husband had to provide. The wife’s point was that to the extent that documents were provided electronically, a year later, that access was ended. There was then set out a long list of “non-compliance” in quite specific detail. The level of the detail is perplexing because it would suggest that if the wife prepared this herself, she had the ability to get herself ready for trial at least in terms of an affidavit of evidence in chief. In respect of the items identified in discussion, the husband was able to point to when and how a response had been provided. That detail was shown in the spreadsheet provided by Mr North in addition to the materials set out in the affidavit of his instructor Ms E.
The wife asserted that the husband had not provided such documents as “company constitutions”, tax returns, BAS statements and minutes of meetings. Even if that were so, it is difficult to see how these could be relevant to any financial issue between the parties bearing in mind the duration of the relationship even on the wife’s case. However, as best I can determine, the relevant documents relating to the financial status and reports of the companies were provided. The formal documents obtained by the wife through searches would hardly have advanced the matter.
The wife focused on the Fazarri Family Trust. Doing the best I can with a complicated spreadsheet, I consider the necessary documents about the trust were provided and the copy of the stamped trust deed is in evidence. The spreadsheet shows that many of these documents were provided in March 2017 to the wife’s then lawyers. It was not said by the wife that she had trouble obtaining her file from those lawyers.
The wife says that the husband owns real property. Indeed, he does and it is disclosed in his “balance sheet” of assets and liabilities.
The wife says that the husband has superannuation funds but that he had not disclosed his “most recent” statements. That assertion is inconsistent with the husband’s statement that on 15 January 2018, documents were provided to the wife’s solicitors BSA Legal.
The wife referred to the husband’s financial statement and challenged some of his figures but as I observed in the hearing, she could cross-examine him about those. Much of it seemed to relate to 2015.
The wife said that the husband told her that in respect of his settlement with his former wife he had undervalued his assets yet, it was not suggested that she was disadvantaged in some way. Presumably if he did, the values she said he told he was bringing into the relationship were higher. That does not assist her in respect of her contribution.
I found the wife’s attention to detail indicated that she had carefully worked out what she said was to be discovered yet there was no indication that her interest arose from any direct contribution in a financial sense to those assets. This relationship was short and there was no acknowledgment that what the husband asserted about her financial position at the start of the relationship was incorrect. To the extent that the substantive issue was spousal maintenance, I have a financial statement from the husband. He earns a significant income so it would seem on a cursory examination that he could meet any obligation anyway. Discovery for spousal maintenance purposes would therefore not assist much.
I find in the circumstances that the husband should be permitted to proceed on his own unchallenged evidence as that course does not create any significant prejudice to the wife not of her own making.
The husband’s amended application for relief sought orders that:
(a)The wife transfer the property at G Street Suburb H to him and provide all necessary keys;
(b)If money is left over from the wife’s $80,000 litigation funding order which he paid, it be refunded or used to satisfy an order for costs against her in the husband’s favour;
(c)A deed of gift be revoked;
(d)the usual s 106A order; and
(e)Otherwise each keep what they have.
The husband sought costs but Mr North asked that that be undertaken by written submission to avoid the parties coming back to court.
The evidence of the husband to justify the relief sought can be simply set out.
The husband is 58 years of age and the wife 44 years.
Both parties would appear to have health problems although with the absence of the wife, I do not know what impact that has on her earning capacity.
The parties had an intimate relationship which began in August 2012 at a time when the husband was still residing with his then wife. He was living in his home and the wife was living in her former partner’s home.
In March 2013, the husband separated from his now former wife and in April 2013, leased premises. The wife remained in her apartment. Each stayed overnight with the other at various times. The husband’s evidence is that subsequently, he moved to another rental property in June 2016. He described the wife as bringing an overnight bag when she stayed and that she did not keep personal items at his residence. All of this evidence suggests that the relationship was an intimate one but hardly one that would satisfy the criteria for a de facto relationship.
The husband travelled internationally and the wife went with him often. Whilst she organised various things for these trips, so did his administrative staff. The wife had, in one of the interlocutory hearings, been described by her counsel from an affidavit that she filed at that time, as a personal assistant. On the husband’s unchallenged evidence even if that was right, it must have been a limited role. That also focuses on an earlier observation I made about detriments and benefits. It would seem that the wife was not engaged in paid employment of substance and as such, was able to spend time with the husband when he travelled. But, the amount of time and the social events in which she participated have to be seen as part of the off-setting benefits of the detriment in being away from home and supporting the husband’s career.
There were some things about which the husband complained in respect of that role. For example, he said that the wife organised an upgrade in the accommodation but the extra came out of his pocket rather than the business. The upgrade must therefore be seen as a benefit received by the wife.
The husband’s evidence was that the wife did not support his career or work and social events were rare. Be that as it may, the wife certainly travelled with him apparently extensively.
At the time of meeting the wife, the husband had clearly not resolved his financial obligations with his former wife but on any view, that settlement took a substantial part of the assets. He thought prior to the settlement with his former wife, he had assets of approximately $20 million.
On the other hand, when the parties met, the wife had few assets.
The husband continued to earn a substantial income and he supported the wife. She had access to his bank accounts and his emails and telephone. He made her a beneficiary of the family trust. He advanced $20,000 to her superannuation fund. He allowed her to use his credit card facility and paid for her expenses.
Nothing in the evidence thus far mentioned suggests that the wife’s role was of a financial nature. Her contribution was confined to non-financial matters and although they are not to be disregarded, having regard to the benefits she was receiving, the husband was making a greater contribution.
One area which cannot be ignored, nor minimised, is the husband’s evidence about the wife’s role in endeavouring to have a child. Whilst the husband said that he was unhappy about the idea, he went along with it and that cannot be ignored. The pregnancy attempts were unsuccessful.
The parties had not lived together in any sense of a committed relationship when in April 2014, the husband purchased G Street. It was bought for $2.2 million and the funds were provided by the husband and borrowings from the ANZ Bank. With the wife not in paid employment, the obligation fell to the husband.
G Street is now unencumbered. When acquired, the husband said the wife “insisted” that she have an interest. He provided that with a 10 per cent interest as a tenant in common. That becomes relevant for purposes to which I shall return as I consider that this should be seen as a gift by the husband.
The house was not then habitable, the parties had not married and their relationship was not one in which there was a single residence.
Having acquired G Street, the wife asked the husband to increase her interest to 50 per cent and that occurred although in controversial circumstances. He said that whilst in hospital with a suspected heart attack, the wife demanded he sign a transfer and he did. The title was altered from 27 February 2015. Unlike the 10 per cent, this could not be seen as a gift because of the circumstances under which it arose. I accept the husband’s unchallenged evidence that the wife pressured him at a vulnerable time.
Mr North submitted that it could be argued that this was a resulting trust because the husband provided the money for the acquisition. However, leaving aside arguments about whether this had ever been raised as an issue before and leaving aside the legal constraints thrown up by the presumption of advancement, it could only apply in respect of the 10 per cent because the initial title appears to have been set up with the wife that way. When the alteration occurred, and that had nothing to do with the acquisition. I accept the husband was badgered by the wife to give her 40 per cent of his interest. But it is also relevant that what was initially a tenancy in common became a joint tenancy. It must be inferred from that action that the husband intended the wife to be the owner of the whole undivided property with him and the sole proprietor if he pre-deceased her. It is difficult in those circumstances to see any trust arising favouring the husband. There is no evidence that his intention was to do anything other than comply with the demands of the wife when she sought the equality of ownership but I take into account that the husband does not dispute the joint proprietorship. Thus, it is difficult also to see how he can simply ignore the creation of the 10 per cent interest in the first place because that was not anything other than deliberate even if he did it under the wife’s “insistence”.
G Street was then renovated substantially and the husband says that he spent approximately $43,000 on repairs by September 2016. This too becomes relevant because there is no evidence of any contribution by the wife of any sort to G Street and hence, any contribution by her must be seen as indirect by virtue of other things she did in the relationship or the contribution of the 10 per cent which the husband had given her.
In March 2015, the husband and wife executed a deed under seal which is the document referred to in the relief sought by the husband. The agreement was that the wife’s siblings were to be provided for to the extent of $500,000 each if the wife died before the husband. The deed is quite explicit.
In my view, the only relevance here is the nature of the relief sought because no money was involved at the time of execution.
Paragraph 7 of the deed provides:
The parties agree that this deed will have no application in the event that:
(a)The Parties do not own the Property (G Street) as joint tenants as at (the wife’s ) death ; or
(b)(the husband) predeceases (the wife)
Because of the orders I intend to make, the parties will immediately no longer own the property as joint tenants. I propose to sever the tenancy by the orders and that brings the application of the deed to an end.
In 2015, $40,000 was taken by the wife from the trust without the husband’s authority. Significant sums of money were used by the wife around that time including on credit facilities of the husband. What remains important however is that parties thereafter married. One would wonder why that happened if there was dissatisfaction with the wife’s use of the husband’s money. It does however reflect the level of money under the husband’s control but used by the wife as a benefit for herself. That can be seen in the purchase of a $77,300 engagement ring, $28,000 for wedding expenses and $63,000 for the acquisition of a motor car for the wife.
The husband’s evidence set out his unhappiness relating to violent episodes in the relationship but they are of no assistance here because he continued the association when he could have brought it to an end. That is not to treat family violence as insignificant or irrelevant but rather to observe that in this property matter, there is no suggestion that the husband’s role in the relationship, which seems to have primarily been about asset creation, was made more arduous. The exception to that can be seen in the incident to which the husband referred in which he called off the parties’ wedding and the wife smashed his computer. Again, I am not sure what the relevance of those matters may be.
Within their relationship, the husband said he did most of his own cooking, cleaning and grocery shopping.
Perhaps unusually, in August 2016, the parties did go through a ceremony of marriage. The marriage lasted 23 days.
In assessing the nature and extent of the parties’ relationship, the only conclusion open on the evidence is that it was short and made up of intermittent periods when the parties were together. The duration of the relationship is irrelevant save that it sets the physical parameters of the focus of the court on what each did.
To the extent that there could have been any financial contribution here, save for the 10 per cent of G Street issue, all of the contributions came from the husband.
In respect of non-financial contributions, I do not consider the wife’s travel with the husband assists her much because, on the evidence, she enjoyed the benefits of that arrangement. There was no suggestion in the husband’s evidence that the wife was thereby inhibited from, or precluded from, earning an income. That conclusion is supported by the amounts of money used by the wife.
The husband’s contribution is also corroborated by the obligation that he was prepared to undertake in 2015 concerning the wife’s siblings. Such was the seriousness of that obligation that the parties saw the benefit of a deed so that consideration for contractual purposes became irrelevant. But as with many things in fractured or tortuous relationships, obligations made in good times are often reconsidered in the bad times. The husband now wants to be relieved of that obligation. Intentional or otherwise, the drafting of the deed sees the husband obtaining a revocation of his responsibilities by default. Even on the wife’s initiating application, had she received the relief she there sought, on my reading of the deed, the obligation would have come to an end. Whilst the deed makes reference to a breakdown of the parties’ relationship, that is entirely irrelevant if the deed has no application as the clause I mentioned indicates.
I am satisfied on the evidence that the wife’s role in the relationship was modest. I could not find there was a financial contribution by her. Her non-financial contribution was modest if not nominal and that must be seen in two areas. First, there is the role of her contribution towards the welfare of the family. On any view of this family, that contribution was small. To the extent that the contribution was to the husband’s career, that had already been established and her time with the husband was still modest. In addition, she had the benefits he bestowed upon her or those that she took. Secondly, although it is something of a contradiction, there is the contribution of her 10 per cent towards G Street. It is a contradiction because there can be no doubt that the money came from the husband but that he then gifted her that interest. That too means that her contribution has to be looked at in the light of the original source of the funds.
To the extent that she fulfilled a role as homemaker, it is hard to see where as G Street was not the parties’ home and they each seemed to retain separate residences. To the extent that she made a non-financial contribution otherwise, the words of s 79(4)(b) which refers to contribution towards the acquisition, conservation and improvement of property, indicate it’s modesty.
I find in the circumstances that not only was the husband’s contribution as a whole overwhelmingly greater than that of the wife but that hers was small.
It is unnecessary that I set out the precise details of the assets of the parties. I accept that the husband has set out a table which, with superannuation, shows he has assets of $9.1 million. The wife has assets of $330,000.
Of the husband’s assets, $5 million is in superannuation.
Nothing in the husband’s evidence suggests that there are assets missing. The trust is shown as well as the interest he has in J Pty Ltd.
I accept the husband’s evidence as to the legal and equitable interests he has in the assets described.
Section 79 of the Act provides that in property settlement proceedings, the court may make such orders as it considers appropriate altering the interests of parties in their property. Significantly, s 79(2) provides that it shall not make an order unless satisfied that, in all the circumstances, it is just and equitable to make the order.
The reference in s 79 is not to “matrimonial” property, joint property or property accrued to the parties or either of them, during their relationship. The simple reference is to the property of the parties.
The first step therefore is to determine what interests the parties have whether legal or equitable in various properties. I have done that above.
In Stanford v Stanford (2012) 247 CLR 208, the High Court of Australia determined (at paragraph 39) that it should not be assumed that the parties’ interests in the property “are or should be different from those that then exist”. That is, just because the marriage has ended, or indeed because the parties were married at all, it does not follow that there will automatically be some form of adjustment of property interest. Here, I accept the submission of Mr North that the expectations of a de facto or married life relationship have all come to an end. There is no basis to presume or assume that the parties intended anything other than a long term relationship when G Street was acquired. The intention behind the ownership is different from the intention to use the asset as part of the long term relationship as a place to share their lives. That point was one of the issues that was contemplated in Stanford.
Relevantly in Stanford, the High Court said (at paragraph 41) that the court must adhere to the “fundamental propositions” when exercising its power under s 79 which included “the need to preserve and protect the institution of marriage identified in s 43(1)(a) as a principle to be applied by courts”. That is, for parties seeking orders, unlike those for whom a financial agreement as defined in the Act applies, the parties may have “expressly considered but not put in writing” how they want their property interests arranged and the principles in s 43(1)(a) serve to “accommodate that fact”. I conclude these parties had those expectations but they were quickly seen to be unfulfilled.
That lack of fulfilment here is the “principled reason for interfering” with the property interests of them both.
In Stanford, the High Court (at paragraph 41) made clear that a conclusion cannot be reached that the making of an order is just and equitable “only because of, and by reference to various matters in s 79(4), without a separate consideration of s 79(2)”. To do otherwise would conflate the statutory requirements and as the High Court said, that would ignore the principles laid down by the Act. That cannot be ignored here where the wife’s entitlement, if any, can be seen in the matters raised by s 79(4)(e) and the issue of the interest she contributed in G Street.
The term “just and equitable” discussed in Stanford was described as a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its meets and bounds.
In Norbis and Norbis [1986] HCA 17; (1986) 65 ALR 12 Brennan J referred to this vague notation of justice and equity and observed (at page 28) that an unfettered discretion is a versatile means of doing justice in particular cases, but unevenness in its exercise diminishes confidence in the legal process. Here, there is little, if any, authority to guide the approach to the alteration of the parties’ interests. It requires an assessment of the s 79(4) factors because justice and equity require the current interests to be altered.
Mr North acknowledged the broad width of the discretion but asked for an opportunity to address any issues that might give rise to the Court deviating from the relief proposed by the husband. That discussion took place in three areas:
(a)The deed of gift;
(b)The G Street interest of the wife; and
(c)The wife having had an $80,000 payment.
Mr North acknowledged that if the G Street interest was altered from joint tenancy, the relief sought to revoke it was unnecessary. I agree.
In respect of the G Street interest, I suggested that the 10 per cent interest could not be seen in the same light as the 40 per cent. In respect of the latter, the husband was under pressure and I accept his evidence that he was not in a position to argue. The absence of evidence from the wife means that that version of events is plausible and I should accept it.
The 10 per cent interest however was at best under “insistence”. I do not accept that could be seen as pressure. The husband had already acquired the property even if only in equity, and therefore, his nominating the wife as a proprietor could only be explained as a gift if the resulting trust argument is rejected. I do reject it here on the basis of the timing of the acquisition as described by the husband. His evidence is that he was emotionally dependent upon the wife. That suggests that at the time he made the arrangement, he wanted the wife to have the benefit.
The fact that the wife made no financial contribution of the nature described in s 79(4) does not assist as indirectly, s 79(4)(e) requires the court to consider s 75(2) so long as the matters there are relevant and the third last of those relates to “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account”. Absent any other reason, I struggle to see how the husband can be seen to be making a gift (albeit he may not describe it that way) and then come to court and have the court accept that as he paid for the item in the first place, on strict contribution lines, he should have it back. In my view, that sort of approach offends justice.
That is not to say that the wife gets 10 per cent but rather that it is a matter that should be taken into account with all of the other matters in s 79 that must be considered to arrive at a just and equitable outcome. In my view, this is a case where percentages, an approach often used by courts, is entirely inappropriate because of the limited evidence of contribution which can identify specific entitlements whilst taking into accounts benefits also received.
Here, I assess the contributions of the husband as overwhelming by comparison to those of the wife. In assessing the fact that she contributed the 10 per cent interest in G Street, I take into account that the husband subsequently renovated it. On 31 January 2018, I made an order that the husband pay the wife $80,000 by way of litigation funding. That money has presumably, although I do not know, been spent on lawyers. My concern is that to ignore that amount would mean that the husband was paying the wife’s legal costs. Whilst that might be justifiable under s 117 of the Act here, my earlier criticisms ought be seen to be indicating that I do not accept that the wife has diligently approached the issues that concerned this litigation. Litigation funding using the s 117 power as I applied in the reasoning of 31 January 2018 was an exercise of discretion because there was not a “level playing field”. However, the subsequent conduct of the litigation by the wife must enable the court to adjust that position by virtue of the events thereafter. In my view, that money, if spent, was not appropriated properly. I rely upon the absence of the further litigation funding and discovery issues being put before the court.
Thus, in my view, whilst the discretion under s 79 remains broad, it is informed and constrained by what is contained in the Act itself.
As Kay J indicated in Beneke and Beneke (1996) 20 FamLR 841, a case of a similar short relationship but with significant gifts (at page 860):
In my view while the fact of marriage may open a door to an exercise of discretion which would otherwise not exist, it does not axiomatically follow that the discretion should be exercised merely because there has been an imbalance of contributions between the parties. Where property passes by way of unconditional gift, then absent any other factor, it may be a proper exercise of discretion not to order the return of all or any part of the property to the donor should the marriage between the parties fail after a short time.
I respectfully adopt that approach.
The just and equitable requirement in s 79 is not a threshold issue, but rather one permeating the entire process and as such, s 75(2)(o) is very relevant in not confining the court to strict contributions of the nature described in s 79(4). In Gabel & Yardley [2008] FamCAFC 162; [2008] 40 Fam LR 66, Bryant CJ and Coleman J, in the context of a partial property settlement amount being clawed back, at paragraph [72] said:
...when the Court finally determined the proceedings which had been adjourned, whether categorised as “partial”, “interim”, or otherwise, earlier orders altering property interests could be varied or reversed without resort to section 79A of the Act or an appeal, the power to make such orders not having been “spent” or “exhausted”.
In my view, the $80,000 has been spent and it came from the husband’s resources. It should be adjusted against any entitlement that the wife might otherwise have here.
Having considered the contributions of the wife minimal and those of the husband much greater than hers, it is important not to ignore the other factors in s 75(2). The absence of the wife’s evidence makes that exercise difficult but not impossible.
In assessing the respective contributions I have not ignored s 79(4)(d) and (f). The wife did not provide any evidence about her earning capacity but it is the husband’s position that she has the ability to work. Nothing in the orders that I propose to make affects the earning capacity of the husband.
In respect of the orders I propose affecting the wife, G Street has never been her home and so returning the legal interest to the husband is not an issue. In respect of the family trust, the beneficiaries named in the definition provision of the deed includes the spouses and former spouses of the husband. However, the only entitlement of the beneficiary is to the due administration of the trust and accepting, as I do, the trust deed tendered in evidence, K Pty Ltd is the trustee. With that being under the husband’s control, it seems unlikely that the wife would ever be entitled to a distribution or likely to get a distribution and at best, she was entitled to be considered as a beneficiary presumably if she asked. The orders proposed by the husband therefore have little impact upon that entitlement.
The final matter that requires consideration is s 79(4)(e). There is a significant difficulty where the wife does not present any evidence. At best, I can only work from the matters raised by the husband.
For the purposes of s 75(2)(a) and (b), both parties have health difficulties although the husband sets those out in some detail. Nothing he indicated shows that he cannot continue to earn a living. I know little about the wife’s current circumstances although in 2017, I certainly read the affidavits relating to her medical background for the purposes of the interlocutory application then made. Just how those matters affect her earning capacity, I am unable to find.
I take into account that neither party asserts having responsibilities to support any other person. To the extent that it is necessary to say so, the husband has repartnered but there is no legal obligation involved. In respect of the deed of settlement relating to siblings of the wife, I know of no legal obligation on the part of the wife to provide for them and as I have already observed, the deed had provided for the husband being able to remove his obligation in the event that the parties were not the joint tenants of G Street.
Neither party asserts being eligible for any pension and neither party is of an age where they can access superannuation entitlement.
Section 75(2)(g) requires the court to take into account where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable. The wife did not provide any detail about that living standard but it is permissible to take into account here that she had an application before the court for interim spousal maintenance which I stayed because there were obligations that she did not fulfil. Months have gone by as I have already observed, and no further application was made. I can only presume therefore that she is able to support herself adequately without maintenance.
Section 75(2)(h) requires the court to look at the extent to which maintenance for the wife would increase her earning capacity. Again, the court is bereft of detail because of the way the wife has conducted the proceedings. I propose therefore to presume that it is not an issue.
Spousal maintenance has been an issue as I have already mentioned and s 75(2)(j) requires the court to take into account the extent to which the wife has contributed to the income, earning capacity, property and financial resources of the husband. Here, on the findings I have made, I find that the wife has made no contribution to those. This is a short marriage of days and the relationship as a whole, modest. None of that can be seen to have had affected the earning capacity of the wife apart from the fact that she has failed to provide any evidence that would support such an assertion to the contrary.
Undoubtedly, the court is obliged to take into account the terms of any order. The wife came into this relationship with nominal assets and the husband had substantial assets. The absence of material from the wife makes it difficult for me to assess each of these factors but the clear tenor of s 79(4) is about contribution and I have already made findings in respect of that that do not favour the wife. Section 79(1) provides that the court may make such order as it considers appropriate and the last of the matters that are relevant is in s75(2)(o) which mandates the court to consider any fact or circumstances which the justice of the case requires to be taken into account. As discussed in submissions with Mr North, the 10 per cent contribution by the wife (as distinct from the 40 per cent obtained under pressure) was a deliberate conferral of property on the wife by the husband and in my view, it would be unjust to have him then take it back on the basis that he gave it to her in expectation that they would have a long and happy life together and that such expectation has not been met. His evidence was that he gave it to her out of insistence rather than him voluntarily giving it to her out of some expectation of a future together or a magnanimous gesture. The very fact that G Street was acquired by the husband in his name alone initially and with his money, must mean that he gave the wife the 10 per cent interest.
Offset against that however is the fact that there was a mortgage so to that extent, the 10 per cent could not be seen as $220,000. That was not the equity at the time of the acquisition. In addition, subsequent to its acquisition, the property has been renovated at the husband’s expense and never lived in by the husband and wife together.
Section 75(2) requires the court to consider whether any further adjustment should be made to what is evolving by virtue of the contributions assessment. I find in the circumstances that there is a justification for an adjustment in favour of the wife but not on a percentage basis because that would make a farce of the contribution assessment.
In my view, the appropriate order here is that the husband pay the wife $100,000 within 60 days and that otherwise, the wife transfer to him her interest in G Street and each party otherwise retain the assets that they have. I do not propose to make an adjustment as sought by the husband for the return of the unused portion of the $80,000 litigation funding nor do I propose to make an order that the $12,000 costs that the wife owes him be paid. As part of the overall payment of $100,000 to the wife, those obligations are discharged.
In my view, those orders are just and equitable.
Mr North foreshadowed the possibility of a costs application and I shall make orders providing for that to be undertaken by written submission.
The husband also sought an order under s 106A of the Act to have documents signed in the event that the wife did not comply with her obligations under orders. The court should normally start from the premise that an order is made and a party will comply with it. Here however, the non-cooperation of the wife in respect of the conduct of the litigation together with the fact that she did not comply with the order relating to the provision of the details about the WhatsApp messages, justifies an order that would see the implementation of these orders if the wife did not comply. To avoid further open court litigation, I propose to make an order that the registrar be entitled to sign any document in the name of the wife upon the evidence provided by the husband in the form of an affidavit signed by his solicitor indicating the nature of the correspondence to the wife, her responses and taking into account any applications that the wife might otherwise make in the meantime.
I certify that the preceding one hundred and ten (110) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 19 June 2018.
Associate:
Date: 19 June 2018
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