FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Fowles & Fowles (No 4) [2023] FedCFamC1F 819
File number: MLC 8587 of 2015 Judgment of: BENNETT J Date of judgment: 6 October 2023 Catchwords: FAMILY LAW— FINANCIAL — where the parties had a long marriage — where the husband failed to make full and frank disclosure of his financial circumstances —where the husband made the proceedings more complicated than they should have been — where the court takes a robust approach to resolution of the matter given the husband’s lack of disclosure.
FAMILY LAW— FINANCIAL — where a series of documents purporting to substantiate a loan from the husband’s father to the husband is found to be a “sham” or alternatively that any monies advanced by way of loan are not repayable.
FAMILY LAW— FINANCIAL — where a series of transactions are made by and through trusts which are found to be a puppet of the husband.
FAMILY LAW— SPOUSAL MAINTENANCE — where wife seeks lump sum spousal maintenance but is found not to be in need of maintenance given amount of capital to be retained by her.
FAMILY LAW— CHILD SUPPORT— where parties applications are dismissed for want of particularity, evidence and submissions.
FAMILY LAW— COSTS — where each party brought an application for costs against the other — where costs are fixed by the court and offset against one another.Legislation: Family Law Act 1975 (Cth) Cases cited: Ascot Investment Pty Ltd v Harper (1981) 148 CLR 337; (1981) FLC 91-000
Bevan & Bevan (2013) 49 Fam LR 387; (2013) FLC 93-545
Browne v Green (1999) FLC 92-873
Cerini & Cerini [1998] FamCA 143
Chorn v Hopkins (2004) 186 FLR 240; (2004) FLC 93-204
Gould & Gould; Swire Investments Ltd (1993) 115 FLR 371; [1993] FamCA 126
GVC v HPC (1998) FamCA 143
In the marriage of Af Petersens & Af Petersens (1981) 7 Fam LR 402; (1981) FLC 91-095
In the marriage of Biltoft (1995) 126 FLR 385; [1995] FamCA 45
In the marriage of Weir (1993) FLC 93-339
Jabour & Jabour (2019) 59 Fam LR 475; [2019] FamCAFC 78
Marker v Marker (1998) FamCA 42
Omacini & Omacini (2005) 191 FLR 317; [2005] FLC 92-218
Sharment Pty Ltd & Ord v Official Trustee in Bankruptcy (1988) 82 ALR 530
SMB & MFB [2006] FamCA 46
Williams & Williams [2007] FamCA 313
Division: Division 1 First Instance Number of paragraphs: 512 Date of hearing: 19, 20, 21, 22 & 23 March 2018, 26 & 27 March 2018,
26, 27, 28 & 29 June 2018,
4 & 5 July 2018,
10 September 2018,
4, 5, 6, 7 & 8 February 2019,
21 March 2019,
19 June 2019,
4 November 2019, 6, 7 & 8 November 2019,
9 December 2019, 12 December 2019,
4 February 2020,
19, 20, 21 & 22 October 2020, 27 & 28 October 2020,
31 August 2021,
1, 2 & 3 September 2021, 6,…
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- Case
- [2023] FedCFamC1F 819
- Decision Date
CaseChat Overview and Summary
The court found that several documents presented by the husband were either part of a "sham" or, if genuine, did not constitute a repayable loan. Additionally, transactions through trusts were deemed to be controlled by the husband. The wife's request for lump-sum spousal maintenance was denied due to her significant capital holdings, while both parties' applications for child support were dismissed due to lack of specificity and insufficient evidence. The court also addressed the issue of costs, fixing and offsetting the expenses between the parties.
In its reasoning, the court adopted a robust approach due to the husband's lack of disclosure, leading to a comprehensive but unwieldy body of evidence. The court quantified the wife's entitlement to an alteration of property interests at 60%, amounting to $4,140,504. The husband was ordered to transfer specific assets to the wife, including repaying a loan on a property and making a direct payment. The court further mandated that the husband manage certain entities to facilitate the wife's access to her share of the marital assets. Costs were also apportioned between the parties, with specific instructions on how and when payments were to be made. The court reserved the right for either party to apply for further orders related to the implementation of the decision.
Orders
Orders of the court
MLC 8587 of 2015
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN:
MS FOWLES
Applicant
AND:
MR FOWLES
Respondent
ORDER MADE BY:
BENNETT J
DATE OF ORDER:
6 OCTOBER 2023
THE COURT ORDERS THAT:
1. As and by way of alteration of property interests, within 90 days, the husband do all things and sign all documents to:
(a) repay any loan secured by the property situate at X Street, Melbourne, Victoria and known as Volume … Folio … ("X Street Apartment") and otherwise cause the discharge of the mortgage numbered … registered to the Westpac Banking Corporation ("the mortgage"); and
(b) transfer to the wife all of his rights, title and interest in the X Street Apartment free of encumbrance ("the transfer").
2. In the alternative to paragraph 1 of this Order within the lesser period of 30 days from the making of this Order, the husband be at liberty to:
(i) repay any loan secured by the X Street and otherwise cause the discharge of the mortgage; and
(ii) to gift all of his rights, title and interest in the X Street property to the wife free of any encumbrance in lieu of and in satisfaction of any order for the transfer of the X Street Apartment to the wife pursuant to paragraph 1 of this Order.
3. By way of further alteration of property interests, within 30 days the husband pay to the wife the sum of $1,240,231 ("the Payment").
4. Within 90 days the husband pay to the wife all amounts due by way of outstanding spousal maintenance due pursuant to paragraph 2 of the Order made on 5 October 2015 ("the 2015 Order") or paragraph 6 of the Order made on 5 July 2018 (“the 2018 Order”).
5. If the whole of any payment, including the Payment and/or arrears due under the 2015 Order and/or the 2018 Order due pursuant to this Order has not been made by the due date for such payment, then penalty interest at the rate specified in the Family Law Rules accrue in respect of so much of the payment as remains outstanding, such interest to be calculated with monthly rests.
6. That pending the compliance by the husband with regard to any and all obligations pursuant to these Orders ("the Obligations"):-
(a) the wife have sole use and occupation of the X Street Apartment and the husband to pay and be responsible for all mortgage repayments in respect of the loan secured over the title to the X Street Apartment, owners levies, body corporate charges, rates taxes and like apportionable outgoings during the wife’s occupation;
(b) paragraph 6 of the 2018 Order continue in full force and effect;
(c) the wife retains a right of charge against any and all instruments of ownership (including shares) held by the husband in respect of the husband's interest in corporation or entity in Australia;
(d) the husband is to execute a Resignation as Director or Secretary with regard to any entity referred to in the preceding paragraph, to be held in escrow pending any default by the husband with regard to such obligations.
7. In support of the preceding paragraphs and pending compliance by the husband with regard to the Obligations then (at the option of the wife) the husband do all things and sign all documents (including any documents necessary pursuant to any exercise of power by the Husband as a Director or Trustee herein) as may be required to enable the wife her servants or agents to manage, liquidate or call in for sale the following entities:
(a) L Pty Ltd; and
(b) T Inc.
8. The proceeds of sale of any entity referred to above be applied as follows:
(a) In payment of the costs commissions and expenses of such sale;
(b) In payment of any costs owing to the wife pursuant to this Order;
(c) In payment of any other obligations owing to the wife herein by way of property settlement, and lump sum or periodic spousal maintenance (see hereunder);
(d) The balance to be held in trust pending further order by this Honourable Court
9. The wife retain all of her rights, title and interest in her share portfolio with DS Ltd to the sole exclusion of the husband.
10. By way of costs and reimbursement of expenses:
(a) The husband be liable for and pay the wife $40,000 on account of her costs of his recusal application;
(b) The wife be liable for and pay the husband $20,000 on account of his costs of her application to tender documents;
(c) The wife pay the husband $13,750 by way of reimbursement of valuation expenses –
such payments to be effected by the husband paying to the wife the sum of $6,250 in 30 days with the effect that the liabilities referred to in (a), (b) and (c) of this Order are not recoverable independently of one another.
11. Liberty be reserved to the parties to apply in relation to implementation of this Order.
Pending full, final and complete compliance with this Order, each party do all acts and things necessary to ensure that his or her address for service, including an email address is notified to the court and service on the party to the email address is deemed to be effective service even if the document is returned marked “Not Delivered” or words to that effect.
12. If the husband fails or neglects to comply with paragraph 1(a) and/or 1(b) of this Order, the wife may take a transfer of the title to the X Street Apartment into her name without prejudice to her entitlement to enforce any part of this Order.
13. In the event that the husband fails to comply with any paragraphs of this Order by failing or neglecting to execute a document necessary to give effect to this Order, a Registrar or any other appropriate officer of the Federal Circuit and Family Court of Australia be, and is hereby, appointed pursuant to section 106A to do all things and execute all documents necessary on behalf of the husband to comply with this Order.
14. For the purpose of activating the preceding order under s 106A it is sufficient proof of the husband having failed or neglected to execute a document necessary to give effect to this Order if the solicitor for the wife provides an affidavit by himself or herself deposing:
(a) to the necessity for a document to be executed to give effect to this Order;
(b) details of how such document was provided to the husband for execution and return;
(c) that not less than seven (7) days has elapsed since the document was provided;
(d) the husband has not returned the document duly executed -
such affidavit to be filed and served on the husband at his address for service as last notified to the court.
15. Unless otherwise specified in this Order and save for the purposes of enforcing any monies due under these or any subsequent orders:
(a) Each party be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the possession of such party as at the date of these Orders including but not limited to, their respective bank accounts and motor vehicles;
(b) Each party forego any claims they may have to any superannuation benefits belonging to or earned by the other;
(c) Insurance policies remain the sole property of the beneficiary named therein; and
(d) Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders or, in relation to any outstanding credit card balances or personal loan in their name or in which they are personally liable.
16. The parties’ applications in relation to child support be and are hereby dismissed for lack of specificity as to orders sought and grounds relied upon and/or without submissions relevant thereto having been made by either party.
17. Liberty be reserved to apply in relation to any slip rule application, implementation, enforcement of this Order and any such application may be listed before me in the event that I am reasonably available and without any intervening or preliminary listing of the enforcement application before a registrar or like officer exercising delegated judicial power.
18. Otherwise, all extant applications be and are hereby dismissed and this matter be removed from the docket of the Honourable Justice Bennett.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
It is submitted on behalf of the husband that the proposed orders of the wife will impede the capacity of the husband’s creditors, including the Australian Taxation Office, of recovering debts. The husband’s accountants Mr DD and Mr HH provided evidence of debts owing by the husband but not of property or assets at his disposal. There is not sufficient transparency in the husband’s case for me to be satisfied that any creditors are at risk. Payment by the husband of monies owing by him will depend upon his capacity to pay but also upon his willingness to pay. The duration of the marriage and the extent to which it has affected the earing capacity of the party whose maintenance is under consideration (s75(2)(k)) It is a long marriage and the wife was employed within the home for the majority of the marriage. She has not been employed by a third party, unrelated to the husband, since in or around 2002. Her income earning capacity is modest and at 62 years of age and a chronic pain problem her capacity for employment is not good. Any fact or circumstance which, in the opinion of the court, the justice requires to be taken into account (s75(2)(o))Add backs The wife seeks addbacks against the husband and the husband seeks addbacks against the wife. It is to be remembered, however, that addbacks are only effective if there is property against which to adjust them. Each party claims that certain monies of which the other party has had use since separation ought to be added to the value of existing property to be divided and be regarded as received by that party on account of his or her entitlement to an alteration of property interests. I will refer to the monies as “add backs”. The law in relation to add backs is settled so I will mention just a few of the authorities. In GVC v HPC (1998) FamCA 143 the Full Court comprising Nicholson C J, Ellis & Kay JJ) stated at [46]: Whilst not seeking to place a fetter upon the exercise of discretion of a Trial Judge in individual cases, it seems to us that the concept of adding monies reasonably disposed of back into the pool, ought be the exception rather than the rule. The parties are entitled to reasonably conduct their affairs post separation in a manner that is consistent with properly getting on with their lives. In the decision of Marker v Marker, (1998) FamCA 42, the Full Court, comprising Baker, Kay and Chisholm JJ observed;There seems to be no appropriate basis for notionally adding back monies that existed at separation but which have been subsequently spent on meeting reasonably incurred necessary living expenses. Neither the Family Law Act nor the case law requires that parties go into a state of suspended economic animation once their marriage breaks down pending the resolution of their financial arrangements. Parties are entitled to continue to provide for their own support. Whether any expenditure so incurred is reasonable or extravagant is a matter that can be determined by the Trial Judge.