Gartrell & Deakin
[2023] FedCFamC2F 714
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Gartrell & Deakin [2023] FedCFamC2F 714
File number(s): NCC 1450 of 2022 Judgment of: JUDGE BETTS Date of judgment: 31 May 2023 Catchwords: FAMILY LAW – Property – de facto property proceedings – short relationship – where the respondent failed to make full and frank financial disclosure and failed to participate in the proceedings in a fulsome manner – section 90SB(c)(i) and (ii) of the Family Law Act1975 – the meaning of “substantial contributions” and “serious injustice” – whether “just and equitable” to make any orders – just and equitable outcome – order made for payment of fixed amount. Legislation: Commonwealth Evidence Act 1995
Family Law Act 1975 (Cth) Pt VIII
De Facto Relationships Act 1991 (NT)
Domestic Relationships Act 1994 (ACT)
Family Provision Act 1982 (NSW)
Property Law Act 1974 (QLD))
Property (Relationships) Act 1976 (NZ)
Cases cited: Barone & Whittle [2019] FamCA 924
Beaumont & Schultes [2019] FCCA 1831
Black & Kellner (1992) FLC 92-287
Fairbairn & Radecki (2022) 64 Fam LR 604
Gibbons v Vowles (2003) 22 FRNZ 946
Harriott & Arena [2016] FamCAFC 69
Henry v Williams [2004] 2 NZLR 132
V & K [2005] FCWA 80
Lee & Hutton (2013) 50 Fam LR 322
LF v RA [2005] QSC 375
LS v ZJ [2005] NZFLR 932
McMaster & Wilkie-Snow [2011] ACTSC 183
Mezzacappa & Mezzacappa (1987) FLC 91-853
Miller & Trent [2011] FMCAfam 324
Palser v Grinling [1948] AC
Redmond & Mullins [2015] FamCAFC 69
Stanford & Stanford (2012) 247 CLR 108
Thorburn & Oswald [2007] FCWA 43
Tillmans Butcheries Pty Ltd v The Australasian Meat Industry Employees’ Union [1979] FCA 85
Van Jole v Cole [2000] NTSC 18
Wall & Mitchell [2012] FamCA 114
Webb & Douglas [2012] FMCAfam 1049
Wentworth & Wentworth (1995) 37 NSWLR 703
X and Y [2010] NZHC 287.
Division: Division 2 Family Law Number of paragraphs: 188 Date of last submission/s: 20 March 2023 Date of hearing: 6, 7, 17 and 20 March 2023 Place: Newcastle Solicitors for the Applicant: Powe & White Family Lawyers Counsel for the Respondent: Ms Ticehurst Solicitors for the Respondent: Kailash Lawyers & Consultants ORDERS
NCC 1450 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR GARTRELL
Applicant
AND: MS DEAKIN
Respondent
order made by:
JUDGE BETTS
DATE OF ORDER:
31 MAY 2023
THE COURT ORDERS THAT:
1.The Court declares that the parties were in a defacto relationship within the meaning of section 4AA of the Family Law Act 1975 from the end of July/beginning of August 2020 until on or about 25 November 2021.
2.Pursuant to section 90SB(c)(i) and (ii) of the Family Law Act1975, the Court declares that the Applicant to the defacto relationship in this case made substantial contributions of a kind mentioned in paragraph 90SM(4)(a),(b) or (c) and that a failure to make an Order or declaration would result in serious injustice to the Applicant.
3.The Respondent pay the Applicant the sum of $35,000.00 by way of property settlement pursuant to section 90SM of the Family Law Act 1975, with such payment to be made within three (3) months.
4.Until further Order, the Wife be restrained from encumbering, further encumbering or divesting herself in any way of any interest she has in the Suburb B property pursuant to section 114(2A)(c) of the Family Law Act.
5.The proceedings are listed for further mention on 14 August 2023 at 9.30am in relation to any costs application, or any other issues arising concerning enforcement of Order 3 herein.
6.Each party has general liberty to apply to re-list the proceedings on short notice concerning the injunction in Order 4.
7.Today’s reasons be taken out in writing and published.
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.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Gartrell & Deakin has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE BETTS
These reasons for judgment were delivered orally. They have been corrected from the transcript in order to make them easier to read.
INTRODUCTION
These are property settlement proceedings arising out of the breakdown of a brief de facto relationship between the applicant Mr Gartrell (who for convenience I will refer to as “the husband”), and the respondent, Ms Deakin (who for convenience I will refer to as “the wife”).
The husband is a 42-year old entertainment worker. Due to his strained financial circumstances he is living with his mother at this time. According to his Financial Statement filed 22 February 2023 he earns an income of $800 per week; his expenses are $612 per week (including “board” of $50 per week which he pays to his mother). He has property valued at $7,577. His debts come to $29,469 comprising a loan for legal fees of $27,000 and an income tax debt of $2,469. He has $47,853 in superannuation. The husband has a son, C, who has consistently spent time with him on alternate weekends and for half school holidays.
The wife is also 42 years of age. She lives in her own home at Suburb B, which the parties agreed was valued at $790,000. The property is subject to a mortgage with a balance of around $570,000, meaning that the wife’s equity in the property is around $220,000. The wife has three (3) children to a prior marriage. Her eldest child now lives in Sydney with his father, her ex-husband Mr D. Her other two (2) children still live with her at the Suburb B property.
The wife is employed as a allied health worker. She currently works for an organisation known as “Employer E”. She started working for them early this year. According to her Financial Statement of 9 March 2023 her income is $1,509 each week from that employment. She additionally receives Family Tax Benefits of $95 per week so that her total income is $1,604 per week. Her weekly expenses are stated to be $1,889.
The wife also conducts a business at Company F, which I will refer to in a little more detail later. She runs that business on weekends when there are events. She says that she earns $488 per week on average in that business and that the business is no more than a “break even” proposition, taking into account expenses and various borrowing costs. But she also admitted that she receives some business income by way of cash, which is not declared to the ATO, and on her evidence this equates to about 30% of her income, that is to say, her declared income is only about 70% of what she receives. She also said in the witness box that she keeps cash at home, which she estimated at around $2,000.
In this case the evidence clearly establishes that the wife has been involved in the cash economy ever since setting up the business with the husband’s assistance in around mid-2021.
The wife’s true financial position is and remains opaque and, in my view, deliberately opaque.
In the leadup to these proceedings the husband had his solicitors write to the wife in an attempt to negotiate a resolution and save the costs of going to Court. The wife ignored their correspondence. She refused to participate in any mediation. Once the proceedings were commenced she then actively avoided service of the husband’s material.
In the course of these proceedings, despite being ordered to make full and frank disclosure, she failed to do so. Indeed, she provided the husband with a raft of bank records only the week before the final hearing.
Though the wife consistently denied that the parties had ever been in a de facto relationship, she ultimately conceded prior to trial that a de facto relationship had, in fact, formed between the parties at some point during the period they were together, which was acknowledged to be from mid-2020 to November 2021. The parties nonetheless remain in dispute about the exact length of the relationship.
Ultimately, the husband comes to this court seeking a property settlement from the wife of some $88,000. He calculates this as being 40 % of the net equity in the Suburb B property. This percentage seems strikingly high for what was on any view a very short relationship, but some perspective needs to be included here. That is to say, when the parties separated the wife’s mortgage balance was just $228,000. It seems that the wife has since “run up” the mortgage balance to its current $570,000 with seemingly very little to show for it on the face of her Financial Statement. Mr White, who appeared for the husband, conceded that although the 40 % claim of the net equity appeared at first blush to be high, nonetheless, it needed to be looked at in the context of what equity there would have been available had the wife not “run up” the mortgage debt. Indeed, his figure of $88,000 would have equated to probably around 15 % of the net equity in the home at the time of separation.
As for the wife, she has submitted consistently through the proceedings that the husband’s application ought to be entirely struck out.
Initially her position was that there never was a de facto relationship, although, as noted above, she made a belated concession at trial that the relationship had become a de facto relationship at some point. The wife’s “fallback” position is that if the court determines that a property settlement order ought to be made, then it ought not to exceed the sum of $10,000.
WHAT ARE THE ISSUES THAT I HAVE TO DETERMINE IN THIS CASE?
The first issue, though it really is of somewhat lesser importance, is the actual length of the de facto relationship.
The second issue is perhaps the most vigorously contested between the parties, and it occupied much of the time at trial and in submissions. That is to say, because, on any view, this relationship was less than two (2) years in duration, the husband has some additional jurisdictional hurdles to get over, as provided for in section 90SB of the Act, before any order for property settlement can be made.
SECTION 90SB WHEN THIS DIVISION APPLIES – LENGTH OF RELATIONSHIP ETC
90SBA court may make an order under section 90SE, 90SG or 90SM, or a declaration under section 90SL, in relation to a de facto relationship only if the court is satisfied:
(a)that the period, or the total of the periods, of the de facto relationship is at least 2 years; or
(b) that there is a child of the de facto relationship; or
(c) that:
(i)the party to the de facto relationship who applies for the order or declaration made substantial contributions of a kind mentioned in paragraph 90SM(4)(a), (b) or (c); and
(ii)a failure to make the order or declaration would result in serious injustice to the applicant; or
(d)that the relationship is or was registered under a prescribed law of a State or Territory.
In this case it is common ground that section 90SB(a), (b) and (d) do not apply. The only gateway to relief for the husband is through section 90SB(c)(i) and (ii), that is to say he must establish that he made “substantial contributions” of the kind mentioned in the subsection and that a failure to make the order would result in “serious injustice” to him. He needs to get over both of these bars before the Court can consider whether it would then be just and equitable to make a property settlement order. The wife says that he does not get over either of the bars.
The third issue is that the wife says that, even if the husband does get over those jurisdictional hurdles, that it would still not be “just and equitable” to make an order. So the question of justice and equity then becomes the next issue that arises if the Court determines the issues under section 90SB in the husband’s favour.
Assuming that the husband succeeds on that point, the Court must then consider the contributions and future factors in respect of section 90SM and 90SF and determine what order, if any, is just and equitable.
There is an inevitable amount of doubling-up in the Court’s analysis, having regard to the wording of the legislation. In particular, section 90SB, which creates the jurisdictional issue in paragraph (c)(i), necessarily involves consideration of the contributions issues that would normally arise under section 90SM.
I do not want to be overly repetitive in these reasons. I propose to address them as I go along. I merely make the observation that there is obviously the potential for significant overlap as to factual matters. Indeed, the jurisdictional issues raised in 90SB(c) clearly are inextricably linked with the Court’s assessment of contributions made by each party as part of what would normally be the substantive exercise of determining what, if any, order would be just and equitable in a property settlement case.
There is one issue between the parties that is not really in dispute, and I simply set it out now, that is to say, the Balance Sheet. It is agreed that the wife’s Suburb B property is valued at $790,000, as set out earlier, with a mortgage of $570,000, leaving equity of $220,000. The business of the wife has not been formally valued, but the wife contends that it is valued at $5,000. I do not understand the husband to take any serious issue with that figure. His primary argument is that that business has more of a value as an “income stream” rather than having significant value in and of itself, although there are obvious uncertainties given that the business takes a significant portion of its income by way of undeclared cash earnings.
THE FINAL HEARING & MATERIAL RELIED UPON
The matter proceeded to final hearing before me over three (3) days, namely on 6 and 7 March, 17 March and then concluding on 20 March 2023.
Throughout the hearing Mr White, solicitor, appeared for the husband, and Ms Ticehurst of counsel appeared for the wife.
The husband relied upon the following documents:
(a)Case Outline filed 3 March 2023;
(b)Initiating Application filed 25 May 2022;
(c)Husband’s affidavit filed 22 February 2023;
(d)Husband’s Financial Statement filed 22 February 2023.
The wife relied upon the following documents:
(a)Case Outline filed 3 March 2023;
(b)Wife’s affidavit filed 22 February 2023;
(c)Wife’s Financial Statement filed 1 March 2023;
(d)affidavit of the wife’s sister, Mr G, filed 22 February 2023;
(e)affidavit of the wife’s father, Mr H, filed 22 February 2023; and
(f)affidavit of the wife’s ex-husband, Mr D, filed 22 February 2023.
In the course of the hearing the parties tendered numerous exhibits, primarily bank statements and schedules prepared by them pursuant to the provisions of section 50 of the Commonwealth Evidence Act. I will refer to the exhibits as relevant.
At the final hearing the parties agreed that, rather than the matter being dealt with by way of a discrete preliminary hearing under section 90SB to determine the jurisdictional issue, that instead all issues should be determined collectively and at the one time. There is precedent for the court taking such an approach given the obvious overlapping nature of section 90SB(c) and section 90SM: see for example the decision of Harper J in Barone & Whittle [2019] FamCA 924.
I should pause here to observe that the wife’s position up to the final hearing had been that there was no concession that a de facto relationship had ever existed. She therefore contended that that it was outside of the court’s jurisdiction to make orders for disclosure. Nonetheless, orders for disclosure were made in the course of the proceedings, and, as I have indicated, the wife did not provide full and frank disclosure. Her asserted basis for not doing so, namely, that she did not concede the existence of a de facto relationship is a matter which was no longer pressed by her at the hearing. This resulted in a “late flurry of disclosure” to the husband, but even that material was incomplete.
I certainly take the view, to be clear, that the wife failed to provide full and frank disclosure to the husband, and it is a matter that I am obliged to take into consideration, having regard to authorities such as Black & Kellner (1992) FLC 92-287 and Mezzacappa & Mezzacappa (1987) FLC 91-853.
ISSUE #1: LENGTH OF THE DE FACTO RELATIONSHIP
I start then with the first issue, namely, the length of the de facto relationship.
The parties met on an online dating site in 2020 and immediately commenced a relationship of sorts. The husband’s affidavit includes a Facebook post made by the wife in 2021 celebrating their 1-year anniversary where the wife says:
365 days around the [sun emoji] with this guy [love heart emoji]. We have certainly packed a lot into one year through the good and the bad. You have always been on my side. Even in the moments I wasn’t sure of myself you were my biggest cheerleader propping me up and giving me the courage I needed. The world is a better place because you are in it.
Of course, this rather cheerful celebration of their relationship does not mean that the parties were formally in a de facto relationship from the moment they met. Such a finding defies ordinary human experience and would be, frankly, absurd.
Section 4AA of the Family Law Act defines a de facto relationship in these terms:
SECTION 4AA DE FACTO RELATIONSHIPS
4AA(1) A person is in a de facto relationship with another person if:
(a) the persons are not legally married to each other; and
(b) the persons are not related by family …; and
(c) having regard to all the circumstances of their relationship, they have a relationship as a couple living together on a genuine domestic basis.
Section 4AA(2) sets out various circumstances to which the court may have regard in determining whether a de facto relationship exists, and section 4AA(3) provides that:
No particular finding in relation to any circumstance is to be regarded as necessary in deciding whether the persons have a de facto relationship.
The question is ultimately a matter of the court attaching such weight to the circumstances of the relationship as it considers appropriate in the circumstances: section 4AA(4).
It is quite clear on the evidence that the parties commenced a sexual relationship immediately. The husband stayed over at the wife’s house.
It is clear that there was much public affection between them and that they engaged in social activities together, although I should say that they did not much interact with the wife’s family. As best I can discern from reading the affidavits of the wife’s family members, they did not hold a particularly high opinion of the husband.
Initially, the husband was still paying board to his mother with whom he had been living at the time of the relationship commencing. He was paying her $75 per week, and he continued such payments until July 2020 (exhibit 1). By the end of July 2020 the husband was living full-time with the wife.
The wife says that when the husband began staying at her home she told him that he had to make some financial contribution and that he said he was happy to pay rent and groceries. The husband adamantly denied that any such conversation took place. I have real reservations about the reliability of the evidence of the parties in this matter, particularly the wife, and I am unable to make any specific finding about exactly what was agreed beyond observing that the parties did have some discussion about how they were to pay the various bills. I will deal with those matters in more detail later.
I do accept the wife’s evidence that around August 2020 the husband updated his Facebook status to say that he was in a relationship, and at that time he invited the wife to formally acknowledge this by joining his Facebook account. She apparently told him that it was “too soon” for that, and she says that he reacted awkwardly, asking her if she was embarrassed about him and that he became upset.
She ultimately accepted his invitation at or about that time, and given this public pronouncement, their ongoing sexual relationship, their public interactions with others, their discussions about sharing bills and the like, and the fact that the husband had stopped paying board to his mother, I consider, having regard to all of these matters, that the de facto relationship was on foot by the end of July/beginning of August 2020.
One feature of this particular de facto relationship is that the husband, for some reason, never changed his mailing address to the wife’s Suburb B property. That is just a curious factor in this matter that on its own does not take me very far.
ISSUE #2: THE JURISDICTIONAL REQUIREMENTS OF SECTION 90SB(C)
I turn then to the next issue: the jurisdictional questions.
I begin with the first jurisdictional question under section 90SB(c)(i) - did the husband make “substantial contributions” of the kind mentioned in that section? In this regard it is necessary to look at the history of the relationship, which is somewhat controversial.
At the outset, I should say that the court’s role in this case is made more difficult by the nature of the parties’ affairs. I have already noted that the wife was dealing in the cash economy and that she failed to make full and frank disclosure, but that is not to say that the husband’s evidence is entirely reliable either. It is quite clear that the husband has had a longstanding problem with alcohol abuse which continued during this relationship. For instance, he admitted drinking on a daily basis while he was with the wife. He already had two (2) prior drink-driving charges before he met her, and he had an interlock device fitted to his car when their relationship began. I accept the wife’s evidence that he admitted to her that he suffered from “anxiety and alcoholism.”
Additionally, the husband had an unfortunate and illegal illicit drug habit. The wife says that the husband introduced her to an illicit drug, and, on balance, I accept her evidence. She also used, although, somewhat hypocritically in her affidavit, she referred to the husband doing so without mentioning her own use. The evidence established that during the relationship they bought illicit drugs for cash for between $250 and $300 a bag. It is quite impossible for the Court to fix an exact dollar figure in terms of the amount of drugs consumed by the parties - predominantly and overwhelmingly by the husband. Such a finding is impossible on the state of the evidence and the nature of cash purchases of drugs such as this.
Also complicating this matter, significantly in my view, is that the husband used sexual or offensive references in his own bank statements in respect of many money transfers to the wife. He did so because, in his explanation, it was just a “private joke”, that is to say, he was being silly. Some of the silliness was quite deliberate and was used to disguise transactions for the purchase of drugs. Others were apparently payments made for the benefit of the wife. For example there were transaction references reading “nice cunt”, which he explained was a reference to him being generous with the wife. That is to say, the husband was being (in his own terminology) a “nice cunt”. He also made various transactions with such flippant references as “root” or “root tonight” and one or more which refer to “anal bleaching”, all of which is flippant and silly, but all of which makes it rather more difficult for the court to be overly precise about exactly how the money was spent.
Beyond the husband deliberately obscuring some of the transactions related to drug purchases, I do not consider such references were him being dishonest so much as just being silly. In the course of the hearing I gained rather the impression that the husband was something of a “Peter Pan” that perhaps had never fully grown up.
In any event, it is impossible for the court to trace exactly how the parties spent their money in the course of the relationship. The court is required to draw inferences and, necessarily, to make estimates. It is, of course, best to have as much precision as possible in any property case, particularly where a relationship is very short. But having said this, the assessment of contributions is not and has never been a strictly mathematical exercise.
I turn then to the contributions.
When the parties started their relationship the wife owned the Suburb B house with a mortgage, she had a car, she had superannuation and she was working as an allied health worker for “Employer J”. Her three (3) children, then aged 16, 15 and 6 were living with her but spending regular time with their father in Sydney.
The husband was living with his mother, and had recently inherited $105,000 from the estate of his late father, so that he had about $107,000 in the bank which was quite a significant amount of cash. He also owned a Motor Vehicle 1 and had some superannuation. He worked as an entertainment worker most Friday and Saturday nights from 9 or 10 pm through to about 4 am, and his son, C, as I have indicated, was spending alternate weekends and half holidays with him.
Very early on the parties set up a room for C at the wife’s home and had some discussions about financial matters.
In terms of each party’s employment the wife initially worked for Employer J, as I have indicated, and as at 30 June 2021 she had earned a taxable income of $72,053 (exhibit 9). She admits that she left that work around May 2021. It was at this time that she set up the business, although at this stage it was more in the nature of a “food” business which later morphed into the business that she now runs. At that stage she was dealing in cash, but the amounts involved were fairly modest such that by 4 August 2021 she had returned to work with Employer K. For the financial year ending 30 June 2022 the wife’s taxable income, including her business income, was stated to be $21,855 (exhibit 10). But this is clearly a false figure given that the wife received cash income that she did not declare, both in her initial “food” business and later in the business which was up and running after the parties separated whose income would be included in the 2022 financial year. That is to say, the wife’s taxable income figures are simply false and unreliable.
For his part, the husband worked as an entertainment worker throughout the relationship. His income was fairly modest. In the financial year ending 30 June 2021 his taxable income was just $35,000. He did, however, work fairly consistently during the relationship apart from a period of about two (2) months or nine weeks between August and October of 2021 when there was a COVID lockdown.
In terms of how the parties managed their financial affairs, as I have indicated, there was a significant dispute as to what was actually agreed, and also a significant dispute as to what in fact happened. It is fortunate for the court that I have had the benefit of the section 50 schedules prepared by the parties, and I express my gratitude both to Mr White and to Ms Ticehurst and her instructors for that assistance.
In terms of what the wife paid for, the husband concedes that she paid all of the utilities bills; that is not in issue. The wife says that she paid $3,943 a month in terms of her regular expenses, which included all the utilities and also the mortgage. Notably, the wife does not include in her affidavit (paragraph 21) any grocery expenses, although I am sure, from time to time, she did incur some such expenses. In this respect I do accept the husband’s evidence that, by and large, he was the one who paid for the groceries. He regularly shopped, going to the shops practically every day to purchase groceries. He also bought alcohol while he was there. I accept his evidence that the wife shopped much less regularly than he did but that when she did shop she would tend to do more of a “big shop”.
The wife says that the husband only sporadically paid for the groceries as well as sporadically paying what was, effectively, rent to her. She tells me in her affidavit that starting around July 2020 he did transfer various amounts of money to her account to pay for food and alcohol. She says, self-servingly and I do not believe her - that when the husband’s payments exceeded the amount of his food consumption that she would then return all excess moneys to him in cash.
She also said that the husband often transferred money into her account without her confirmation which he then asked her to withdraw to use for drugs, alcohol or gambling. She says that she initially agreed to make those withdrawals for the husband, but that over time she became increasingly resistant to doing so. When she expressed that resistance she says he then became aggressive and demanding, so she simply “gave in” as it were, and continued to withdraw the moneys as he requested.
She said at paragraph 25 of her affidavit that she:
…returned all those moneys to [Mr Gartrell] in cash, which he transferred into my account, by withdrawing those moneys from ATMs.
I do not believe the wife’s evidence in terms of returning all of the moneys to the husband. Mr White was able to take me to various transactions where her allegation that she did so was patently untrue, and, ultimately, the wife retreated from the position set out in her affidavit and instead suggested that she had returned all of the “large” payments. I do not believe that either.
There were a great many deposits from the husband’s account to the wife’s account that were not immediately repaid, and, indeed, I am satisfied that the overwhelming bulk were not repaid.
I turn then to the section 50 schedules in terms of a more detailed analysis for how the parties shared their finances although with this caveat: what follows is, necessarily, an incomplete picture, given the dealings in the cash economy and given some imprecision in the evidence in relation to the full extent of drug and alcohol use and noting that drugs, in particular, were bought with cash.
From exhibit 5, I accept that in the period of the relationship the husband received deposits into his bank account of $79,358. I accept, from exhibit 8, that between 1 July 2020 and 18 November 2021, the husband paid $75,744 into the wife’s account, which I calculate at around $4,700 per month. It is no small amount of money that he paid to her. I note that 1 July does slightly predate the de facto relationship but I consider this to be academic given the way the parties were conducting their finances at this time.
In terms of the breakdown for the moneys paid to the wife’s account, the best evidence before me appears to be as follows:
·that the sum of $18,130 was specified by the husband as being related to the mortgage/house/car/loan. This is the husband’s description;
·the sum of $11,759 related to the business and included like references. Those moneys were deposited between 29 September 2021 and 18 November 2021;
·there are deposits with “unusual references” being the silly or flippant or sexual references I referred to earlier, in the amount of $11,995;
·the sum of $21,780 was transferred for which the husband gave no description at all in his bank statement; and
·there were other payments totalling $12,080 relating to references of all other kinds;
·being a total of $75,744.
I note, particularly, that during the period the wife was out of work between May and August 2021 the husband transferred $20,000 cash into her account. This is included in the figure of $75,744. I am satisfied that the wife, in fact, needed that money from the husband to help pay the bills. I refer, particularly, to exhibit 4 in relation to relevant bank statements.
To highlight the observation that the husband was supporting the wife during her unemployed period while she was running the food business in its then embryonic state, I note that:
·on 6 June 2021, the wife’s day-to-day or operating bank account had depleted to only $50.46. On that date, with a balance of just $50.46, the husband paid her another $1,400. It was noteworthy that the wife denied that she actually needed this money to support herself. The evidence was to the contrary;
·a few days later the wife’s account was down to $128; the husband then transferred her $2,600. I am satisfied that the husband was providing her with financial support and enabling her to meet her bills and expenses.
On 25 May 2021 the husband transferred the wife the sum of $5,000. It was suggested to the wife in cross-examination that the money was transferred so that she could buy a car. The wife denies this, although she said that she had bought a car for “a friend”, one Ms L, who I note on 4 April 2021 had paid $20,000 into the wife’s account. I pause here to observe that all of this is a little odd. I do not know why Ms L had to put money into the wife’s account to be able to buy a car for herself, and it only highlights some of the observations I have made about the difficulties in this case and, particularly, dealings in cash and other opaque transactions.
The wife says that on 21 May 2021 she repaid the husband the $5,000 that he gave her out of the income from the embryonic - at that stage – food business. I do not accept her evidence about that. I consider that those amounts were never repaid, and I am satisfied that, on balance, those moneys form part of the moneys paid by the husband for the business rather than for a motor vehicle for Ms L.
I want to specifically mention a few particular matters which are included in the $75,744 paid by the husband into the wife’s account.
Firstly, in relation to the business I accept the husband’s evidence that he has paid the wife a sum of $11,759 in total to set up the business. I accept his evidence that in the first instance they had a joint meeting with the accountant to set up the business and that the accountant told them it was not worth incorporating a company at that stage; that given the relatively small scale of the operation it simply would not be tax-effective to incorporate.
The wife registered an ABN for her initial business on 28 September 2021, but as I have indicated she was effectively trading at that stage in the cash economy.
On 30 September 2021 the husband gave the wife the sum of $5,000 which, on 21 October 2021, she paid to the “Company M” as a deposit/refundable bond in respect of her intended business at the Company F. She has never repaid that amount to the husband, and she agreed to as much in the witness box. She claimed she had repaid the other $6,759 he loaned her, but I reject her evidence and find that it remains unpaid.
Secondly, there is one other curious and specific financial transaction that I would refer to. That is, on 18 October 2021 the husband paid the wife the sum of $5,000. He puts the date as being 29 October 2021. The husband says that the wife told him she needed this money to pay her parents’ tax bill. The wife denies it, and her father, who gave an affidavit in the proceedings, denied the existence of any such tax debt.
It seems clear enough that the husband did pay a sum of $5,000 to the wife in October 2021 on account of what she said to him was her parents’ tax debt, although I do not positively find that the parents had a tax debt or that the moneys were applied for that purpose. That is to say, I accept the husband’s evidence that he paid the $5,000 to the wife on the stated basis that it was for her parents’ tax debt without finding that there was any such debt.
It may be thought that this $5,000 payment is one and the same payment that the wife ultimately then paid to the Company F a few days later, and, indeed, the timing suggests that it may be the same money. But I am satisfied that the husband did pay the sum of $5,000 to the wife in respect of the stated tax debt, and if I am wrong about the particular date of the payment I nonetheless accept that such payment was made and that such moneys have never been refunded to him. As I indicate, there is some murkiness in relation to the finances of these parties.
I turn then to house improvements and other general contributions said to have been made by the husband towards the wife’s home.
In December 2020 I accept that the husband paid “Company N” to replace the front and rear screen doors at the home, at a cost of $1,884. I accept that he and the wife created a feature wall in the lounge room, although I note that one of her family members describes it as really rather “horrible” and not adding any value at all. The husband and wife also installed some internal cladding in the hallway. The husband reimbursed the wife for some money she had spent at a hardware store, but the amounts are unknown. The parties did some interior painting at the house, and the husband installed some garden beds with the wife’s help, some planters and some planter boxes, and I note the husband’s mother also assisted in this respect.
I pause here to observe that I actually have no evidence whatsoever as to what impact, if any, any of these works actually had on the value of the Suburb B property.
Before turning to homemaking and parenting contributions, it is convenient now to address two (2) issues raised by the wife which were said, effectively, to constitute evidence of “waste” on the husband’s part, namely, drugs use and alcohol use.
I begin with the illicit drugs. I have already observed that both parties used it during the relationship at a cost of $250 to $300 a bag. The husband, in my view, understated the use of drugs by both he and the wife during the relationship. He initially said that they had used about one (1) bag a month and that they would share the bag in a night.
But just before separation, on 23 November 2021, when the husband was attempting to keep the relationship going, he texted the wife a happy photograph of them (taken earlier) and saying:
This was our happy place just before lockdown and months of partying, alcohol and drugs abuse. We can be back there. I feel it in my heart and soul.
At around the same time the husband also texted the wife to say (exhibit 12):
Babe, I’m begging you. Please give this another go. X
I take the “X” to mean a kiss, and this was followed by a text:
The drugs was a massive part of anxiety and behaviour.
In the face of this rather damning evidence, the husband conceded that there were times when he or they would have used more than one bag of drugs per month, but he was not able to give details of any exact usage. On further being pressed about the issue he then admitted they probably used a bag of drugs a week during the lockdown period. Recapping here, the parties agreed they had been in lockdown for about nine (9) weeks from August to October of 2021 just prior to the end of the relationship.
In re-examination the wife said that they had used two (2) to four (4) bags of drugs per week. She said their drugs use built up over time, that she liked the drugs, and they were using it regularly.
The wife probably exaggerated the drugs use to some extent because, in my view, she apprehended that it was helpful to her case to maximise the drugs use as much as possible in the same way as the husband minimised it. I have already observed the wife’s hypocrisy in that her affidavit stated that it was the husband who was the drug user and not her. Yet his evidence established that she had messaged him talking about putting the kids to bed and being about to “have a line” and saying that she was “high, I shouldn’t be driving”.
I have little doubt both parties were abusing drugs.
It really is not possible for me to be precise about the drugs expenditure, given the inconsistencies in the evidence, but I have done the best I can to estimate and infer what the parties have spent on drugs based on the evidence before me. It is not an exact science; there are obvious limits to it, but I do so in order to gauge the contributions in this matter and to properly consider questions of “waste” and whether the husband satisfies the requirement of establishing substantial contributions.
Doing the best I can, I consider that the parties were, in all likelihood, using something in the order of 2 ½ bags - that is, 2 to 3 bags a week, for the nine (9) weeks that they were in lockdown. I estimate such expenses as being $700 per week for nine weeks or $6,300. Otherwise, outside of the lockdown periods for the other 14 months or so they were together, I would estimate that the parties used one to two bags a month, which I would estimate at around $6,000 in total on the basis of about $425 in expenditure per week.
That is to say, these parties probably spent around $12,300 on drugs. At least some of the money to purchase that drugs was sent by the husband to the wife, and it is included in the figures referred to earlier, namely, in the total of $75,744 that he paid to her account.
I consider all such moneys, by definition, to be “waste”, given that drugs is plainly illegal; it plainly could not be said to be money applied for the benefit of any property, be property preservation or improvement; it in no way constitutes a contribution under section 90SM, and I consider that such amount really ought to be treated as moneys thrown away.
But that is not to say that all of this money was paid by the husband to the wife dollar-for-dollar and to be deducted from the $75,744 figure. Quite the contrary. The husband had his own income, and I am satisfied that a significant chunk of that income was used to pay for drugs and that a significant chunk of the likely $12,300-odd that he paid on account of drugs, as I have found earlier, was paid to the wife’s account. I cannot be any more specific than that.
In terms of alcohol use the husband, as I have indicated, drank alcohol every single day that he was with the wife. The wife tendered as exhibit 13 a document showing that the husband had spent $483 on alcohol in the month of May 2020, which was just before the relationship began. To be fair, there was a lockdown in place in May 2020, and the husband was clearly drinking more during lockdown periods.
The husband said that during the relationship he often bought beer or wine on the way home when getting groceries. He said that the wife sometimes bought alcohol as well. The husband says he only transferred money to the wife for alcohol on a handful of occasions, and I accept his evidence about that. There is no reason for him to have transferred money to the wife to buy alcohol when he was buying it so regularly himself.
It is, again, impossible to be precise as to the amount spent buying alcohol each month. The husband’s expenditure, though, was probably in the order of around $400 per month during the period of the relationship save perhaps during the periods of lockdown when it may have been a little more. I would estimate that he probably spent a total of something like $7,000 on alcohol during the relationship, some of which was included in moneys paid to the wife, some of which was paid out of his own income.
Alcohol is a legal drug; it is different to illicit drugs. To the extent that the parties both drank alcohol, each of them benefited from the other contributing money in that respect, and to that extent this, in turn, enabled the parties to save their money and thereby preserve their own assets. Nonetheless, the level of alcohol consumption in this case was hazardous and, in my view, at wasteful levels. I cannot be any more specific about this.
The wife also raised an issue about gambling - suggesting that the husband was using poker machines at least twice a month during the period of the relationship. The husband said that he played the pokies “twice”.
I do not believe either of these parties, and I would consider it far more likely that the husband played the poker machines much more often than he admits and much less often than the wife would have me believe. But I simply do not have any real evidence as to the amount spent by the husband or any real evidence from which I could legitimately make any findings beyond pure conjecture.
I turn then to homemaking and parenting contributions.
By the nature of the husband’s employment he worked odd hours, that is to say, late at night or early in the mornings. The husband did practically all of the cooking for the parties during the relationship. This included taking meals to the wife when she was at work. His affidavit annexes a Facebook post from the wife glowingly speaking about him. The post contains a photograph of a meal he has prepared for her, and her post reads:
…when he brings me lunch in torrential rain that I might add he made himself.
I also accept the husband’s evidence that he regularly assisted with school and OOSH collections and drop-offs for the wife’s children, as well as looking after her children from time to time when necessary, particularly when the wife was at work. I also accept however that the wife had other family members who provided significant assistance for her children as well.
The husband did undertake some changeovers between her children and their father at the Region O. I accept the husband’s evidence that the wife told him she suffered from anxiety driving on the freeway, and she did not much enjoy doing the trip herself (about a 100 kilometre round trip). I also accept, though, that the wife’s sister also assisted with changeovers. She lives in Sydney and commutes regularly between the City P and Sydney regions. I also accept the wife’s evidence that the husband used the wife’s personal car (which her ex-husband paid the fuel for) or used her work car (which her employer paid for).
The husband also helped the wife’s son with his learner driver’s test. He took him to Services New South Wales to get his L-plates in 2020.
In terms of the housework, the husband did most of the cleaning, most of the washing, and most of the tidying, though not to say all of it. I also accept that the wife undertook domestic and other tasks as well - to a lesser extent than he did.
The parties separated, seemingly, on 25 November 2021, although their relationship seems to have been “on the rocks” for at least some days if not weeks beforehand.
I accept the wife’s evidence that, in the early hours of the morning on 25 November, the husband turned up at her home uninvited after she had not been returning his messages. He was slurring his words. He was demanding to speak to her. He became angry. He tried to get into the home and he ended up ripping out pot plants, throwing a concrete birdbath, smashing or damaging the front door and some windows, throwing an outdoor setting chair into the back door and breaking it. Police were called. An AVO was taken out, which the husband promptly breached three (3) times within a matter of hours when he again attempted to contact the wife. The husband later pleaded guilty to offences of stalk/intimidate, intentionally destroying property and unlawful entry to enclosed lands. He was also convicted of breaching the AVO and an 18-month AVO with broad conditions was put in place on 10 February 2022.
After separation, the wife put much of the husband’s property into his car boot at the suggestion of police. She stored various other, bigger items in a garage that she rented out. These included such things as a bed frame, mattress, cabinet, fridge, etcetera. She contacted one of the husband’s friends, who collected those items for him.
The husband says that the wife still has possession of two of his couches. The wife agrees that she still has one couch, but not two. The husband says that the wife kept his TV and a cabinet, a bed, a barbeque and his son C’s money box that had money in it. I accept the husband’s evidence in this respect but I have no value for any of that property.
And I also note that the husband had himself damaged the wife’s property when he attended there on 25 November 2021.
In terms of post-separation contributions, the husband continued working as an entertainer, as he had always done, and moved back in with his mother.
The wife stayed in the Suburb B property and, as I have indicated, she significantly increased the mortgage debt. Her initial embryonic food business morphed into the business when she entered into an agreement with the Company F to lease a room there. In the meantime, she had also re-partnered with a man by the name of “Mr Q”, who was seemingly staying regularly at her home and living there at some point in fairly early to mid-2022.
The wife obdurately refused to respond to any efforts by the husband’s solicitors in an attempt to try to negotiate an amicable resolution of this matter. Their letters of 28 January and 7 March 2022 were ignored. On 22 March ’22, the wife established the company which now conducts the business, namely, “R Pty Ltd”. This is the business which I said was the subject of evidence by the wife to the effect that it was a “break-even” proposition, although, as I have indicated, some 30 % of the takings are undeclared cash.
The wife has been running the business for about 30 weekends per year, essentially whenever there are events, and she said she earns about $488 per week, but this is based only on the EFTPOS transactions which are recorded and takes no account of the cash income she receives. The wife would have the court believe that, taking into account the various borrowings associated with the business, that it is effectively “in the red”.
The husband’s further attempt to get the wife to participate in family dispute resolution by way of letter of 11 May 2022 was again ignored by the wife (exhibit 17). As I have indicated, the husband then attempted to serve the wife with his proceedings and she persistently avoided service in a way that does her no credit whatsoever (in June 2022).
In the meantime, in July 2022 the wife refinanced the mortgage over the Suburb B property, apparently with an organisation known as “Company S”. She said this was a low-document loan, and it is one of the most extraordinary refinancing arrangements I have seen in a while.
The wife, effectively, had to pay a whopping $58,000 to Company S seemingly for the privilege of them agreeing to give her a loan. In this respect, there was $35,000 worth of pre-paid 6 months’ interest in advance at 13.95 %, plus an additional $21,000 in “facilitation” type fees for the loan, and a further $2,000 in legal fees.
True it was the wife’s house and, indeed, remains so; but this seems, really, rather a wasteful refinance to me.
In January of 2023, the wife borrowed another $63,000 through Company T, which apparently was a requirement of her having initially taken out this loan with Company S. At that point, the mortgage balance increased to around $570,000, thus greatly depleting the equity in her home.
According to exhibit 4, the best that can be ascertained is that the wife applied the post-separation borrowings in the following way.
She made cash withdrawals of $62,558. The wife said these related to buying from business suppliers who preferred to be paid in cash. I accept that is true to a degree, but I am certainly unable to make any definitive finding that all of the money was applied for that purpose.
There were payments to “Mr Q” described in the wife’s bank statements, rather, as payments to “Mr Q Baby” totaling the substantial amount of $42,860. The wife explained that Mr Q had been unemployed at different times and that he had a business loan that had to be repaid. There was also, apparently, some work that had to be done on a van that he owned.
Notably, and consistent with my finding about the wife not making full and frank disclosure, Mr Q did not rate a mention in her Financial Statement of 9 August 2020, nor was he mentioned in her most recent Financial Statement as a fellow income-earning occupant of the Suburb B home, even though she said that he did, in fact, now earn an income.
As I said, the wife’s finances are opaque, and deliberately so.
The wife made payments to third parties of $61,324, which included numerous amounts paid to family and friends and legal fees of $30,068.
Additionally in the evidence it was established that the wife had bought a new coffee machine for the business as well as a coffee cart for some $23,000, which cart she claimed later to have sold for the same or a similar amount to what she had paid for it.
The wife was asked by Mr White whether her withdrawals post-separation, in combination with running up the mortgage significantly, were simply a matter of the wife being deliberately “sneaky” and simply choosing to “park money” with friends and family. She adamantly denied it. It was put to Mr D that he was holding money for the wife, which he rejected. I must say I was impressed by Mr D as a witness and I accept his evidence that he is not holding money for the wife. For separated parties, he and the wife have had an amicable, indeed surprisingly and refreshingly amicable, relationship. They have worked together in a financial sense and helped each other out when required, and I do not see any reason to doubt Mr D’s genuineness and honesty in this respect.
As for the wife’s partner Mr Q, I hold little or no such confidence. I know very little about him and, as I have indicated, the wife was quite reluctant, certainly in her Financial Statements, even to make the most basal disclosure in relation to him. She did not call him to give evidence. I consider it a real likelihood that he may be holding cash for the wife but I cannot make a finding about it. It is also a real likelihood that other people are holding cash for the wife or that she has moved cash around in a way that this court will never know the truth.
Has the husband made “substantial contributions” as required by section 90SB(c)(i)?
Mr White legitimately points to the husband’s significant financial contributions during the relationship. He also refers me to a decision of the Full Court of the then Family Court of Australia in Harriott & Arena [2016] FamCAFC 69, a decision of Thackray, Ryan & Murphy JJ. That authority dealt with section 90SK(1)(b)(ii) rather than section 90SB(c)(i), but, relevantly, the sections are identical in the relevant respect. That is to say, the relevant question under section 90SK(1)(b)(ii) is whether or not the applicant, for the purpose of that section, made “substantial contributions” of a kind mentioned in section 90SM(4)(a), (b) or (c). Thus the case is not relevantly distinguishable and, indeed, is binding upon me, at least to the extent there is any ratio decidendi therein.
In that case, their Honours reviewed case law concerning what was regarded as a “substantial” contribution and particularly starting with an older authority from 2005, being a decision of Holden J in V & K [2005] FCWA 80. There, in the context of essentially identical state legislation in Western Australia, his Honour had observed that substantial meant “something more than usual or ordinary”. The section was looking to what would be exceptional circumstances. Usual and ordinary contributions would not be sufficient.
This decision was seemingly followed by Watts J in Lee & Hutton (2013) 50 Fam LR 322 and in Wall & Mitchell [2012] FamCA 114 wherein Johnston J observed that:
If usual or ordinary contributions were sufficient to amount to “substantial contributions” within the meaning of section 90SB(c), then there would be little purpose in the two-year requirement being included in section 90SB(a) of the Act.
Returning then to Harriott & Arena (supra), their Honours on the Full Court referred to the (with respect) powerful opinion expressed in the judgment of then-Federal Magistrate Altobelli in the matter of Webb & Douglas [2012] FMCAfam 1049. Therein, Altobelli FM (as his Honour then was) made these observations:
21.The cases therefore seem to suggest that before a contribution can be substantial, it must be more than usual or ordinary. This is a vague and subjective standard. In the diversity of relationships that present before courts exercising jurisdiction under the Family Law Act how is “usual” or “ordinary” to be determined other than by reference to the facts of the case before the court at the time? How could a judicial officer make the comparisons that need to be made by using this standard without referring to extrinsic evidence ie. the judicial officer’s own perception of contribution in other cases?
22.By contrast it is interesting to note that FM in Miller & Trent referred to dictionary definitions of “substantial” at paragraph 59 of his judgment. He noted, for example, that the Macquarie Encyclopaedic Dictionary defined substantial as “an ample or considerable amount as well as something having real worth or value”. His Honour also referred to the Concise Oxford Dictionary meaning of “having real importance or value and to a considerable amount”. Federal Magistrate Coates also referred to a Family Provision Act 1982 (NSW) decision in Wentworth & Wentworth (1995) 37 NSWLR 703 where the court held that substantial means “not illusory, something considerable or large”.
23.Whereas the V & K and Miller & Trent definition of substantial invite comparison to other cases, the dictionary definitions invite a more contextual analysis. In other words the question is whether the contribution is substantial in the context of the case being determined, and not by reference to other cases.
After referring to Webb & Douglas (supra), the Full Court went on:
63.To the best of our knowledge, the meaning of “substantial contributions” has not been the subject of careful consideration by this Full Court, although the matter was touched on in Redmond & Mullins [2015] FamCAFC 69, where V & K was cited. However, the meaning of “substantial” has been the subject of much discussion by other courts. Our review of those authorities indicates support for these observations of Deane J in Tillmans Butcheries Pty Ltd v The Australasian Meat Industry Employees’ Union [1979] FCA 85; (1979) 27 ALR 367 at 382:
The word “substantial” is not only susceptible of ambiguity; it is a word calculated to conceal a lack of precision. In the phrase “substantial loss or damage”, it can, in an appropriate context, mean real or of substance as distinct from ephemeral or nominal. It can also mean large, weighty or big. It can be used in a relative sense or can indicate an absolute significance, quantity or size. The difficulties and uncertainties which the use of the word is liable to cause are well illustrated by the guidance given by Viscount Simon in Palser v Grinling ([1948] AC 291 at 317), where, after holding that, in the context there under consideration, the meaning of the word was equivalent to “considerable, solid or big”, he said, ‘Applying the word in this sense, it must be left to the discretion of the judge of fact to decide as best he can, according to the circumstances of each case…
64.Clearly the “substantial contributions” test is a subjective one. Any effort to elucidate its meaning by use of other words or phrases will simply replace one subjective test with another. It will remain a matter of impression whether the contributions are considered to be “substantial”. While recognising that the test is subjective, we are nevertheless inclined to agree with Thackray J, who said in Thorburn & Oswald [2007] FCWA 43 at 54 said that a trial judge:
would need to interpret the word “substantial” in the context of the financial position of the parties. What might appear to be a “substantial contribution” for people of limited financial resources, might not be substantial in a case involving very wealthy parties.
I should add that these observations by the Full Court have been followed in subsequent authorities.
Mr White seizes upon the essential thrust of what the Full Court said in Harriott & Arena, namely that the question of whether a contribution is “substantial” is inevitably a matter that requires a consideration of relativity of the party making the contribution. That is to say, the weight to attach to a contribution by a party might be greater where the party has limited means than might be the case where a party is, for example, very wealthy.
Ms Ticehurst for the wife conceded that the husband had made contributions but contended that they were not “substantial”. She referred to his drug and alcohol abuse. I have already touched on those matters earlier.
Ms Ticehurst also pointed to contributions the wife had made, which need to be considered. That is to say, the wife made homemaking and parenting contributions of a lesser extent, to which I have briefly referred. She also did not strictly charge rent to the husband or to C when they were living at the home. The wife also spent some $17,533 on the husband and on C for fuel, food, clothing and alcohol, etcetera. She also withdrew money at ATMs and gave it to the husband. The total withdrawn by her at ATMs during the relationship was $46,556, but I am satisfied that only a modest fraction, which I would find did not exceed $10,000, was in fact ever given back to the husband or reimbursed to him.
Nonetheless, these are all contributions which must be taken into consideration. Contributions are not a “one-way street”.
Another matter that looms in this case is, as I have indicated, the wife’s very late and incomplete disclosure. Having conceded the existence of a de facto relationship and thus effectively acquiescing to the court’s jurisdiction to make orders for disclosure, the wife did not then provide full and frank disclosure in any event.
She has never disclosed any financial statements relating to the business. Nor did she disclose what are described as “Zeller” statements in respect of the business. “Zeller” is an app used by parties to hold moneys. The app is, effectively, a holding account, for want of a better description. The user of the app can see what moneys are in there and then transfer the moneys into an account nominated by that party. The wife did not provide the Zeller records for the business (see exhibit 6). The wife also received cash income, as I have indicated and I will not reiterate again.
The wife also provided a raft of very late disclosure in her proof of evidence, which was tendered as exhibit 7.
I have already indicated the court should be reluctant to make findings in favour of a party who has failed to provide full and frank disclosure.
I also am mindful of the fact that the husband’s money, which essentially came from an inheritance, is all but gone. For all intents and purposes, the husband is entirely impecunious. Some of this is his own fault, no doubt, in terms of his alcohol and drug use. Nonetheless, weighing all of these matters into consideration, and particularly the financial contributions that the husband made, I consider that he has made “substantial contributions” as required by section 90SB(c)(i) of the Act.
Is there a “serious injustice” then, in not allowing the husband’s claim against the wife to proceed?
I was referred to numerous authorities as to the meaning of “serious injustice”. The authorities were helpfully reviewed by her Honour Judge Turner of the former Federal Circuit Court of Australia in the unreported decision of Beaumont & Schultes [2019] FCCA 1831, handed down by her Honour on 17 July 2019.
Her Honour, relevantly, reviews the authorities at paragraph 131 of the judgment, and in particular her Honour makes the following observations:
What is the meaning of ‘serious injustice’?
131.The meaning of “serious injustice” was considered in Ollie where Judge Whelan at [19] to [29] said:
“[19] In Miller, Coates FM dealt with the issue of ‘serious injustice’ in the following passage:
‘The Act recognises that an injustice may occur and so sets a higher test being a serious injustice. The word serious in this context, taken from the Concise Oxford Dictionary, must mean not slight. The Macquarie Encyclopedic Dictionary uses the words weighty or important. These meanings show a difference by marked degree from a mere injustice’
[20] His Honour later referred to the difference between a ‘serious injustice’ and an order made on the basis of justice and equity:
‘While an assessment of the possible division of property without testing the evidence is to some extent a hypothetical exercise, any division of course must be made on a justice and equity basis. But because the order altering the property must be just and equitable, as well as the percentage division, it follows that this aspect of justice and equity is not the same as a person suffering a serious injustice, because a claim was not allowed to proceed’
[21]The Respondent referred the Court to two judgments concerning similar legislation to the Act provisions where the concept of ‘serious injustice’ was considered. The first of these is a judgment of Potter J of the New Zealand High Court in X and Y [2010] NZHC 287. The judgment was in an appeal against a decision of the Family Court concerning s.14A of the Property (Relationships) Act 1976 (NZ) (the ‘PRA’). Section 14A of the PRA provides:
‘(1) This section applies if a de facto relationship is a relationship of short duration (as defined in section 2E).
(Section 2E defined a relation for a period of less than three years as a relationship of short duration).
(2) If this section applies, an order cannot be made under this Act for the division of relationship property unless –
(a) the Court is satisfied –
(i) that there is a child of the de facto relationship; or
(ii) that the applicant has made a substantial contribution to the de facto relationship; and
(b) the Court is satisfied that failure to make the order would result in serious injustice’
[22] The Judge at first instance had referred to the meaning of ‘serious injustice’ in various judgments where the term was considered. Heath J in Henry v Williams [2004] 2 NZLR 132, for example, said:
‘... the term ‘serious injustice’ suggests injustice of a type that the Court cannot tolerate. While not creating a standard as high as the “repugnant to the interests of justice” test used in s 13 of the 1976 Act ... the term requires a degree of injustice sufficient to require the Court to intervene’
[23] Her Honour noted that both Judge Inglis QC in Gibbons v Vowles (2003) 22 FRNZ 946 (‘Gibbons’) and Judge Ullrich in LS v ZJ [2005] NZFLR 932 had considered that:
‘... the injustice must be sufficiently serious to justify departure from the general rule that where the de facto relationship is of short duration no order can be made, the primary rule being that de facto relationships of short duration do not come under the PRA at all’
[24] Justice Potter, on the appeal, found that:
‘... there is an implicit requirement for the applicant who seeks orders from the Court under s 14A to place before the Court evidence which will both satisfy the Court that one or other of the threshold requirements has been met and that the situation is such that serious injustice would result from failure to make an order’
[25] His Honour quoted from the judgment of Judge Inglis QC in Gibbons where he said:
‘I consider that this door [to s.14A(3)] cannot be opened in the absence of detailed and specific evidence indicating in precisely what respects not opening the door could result in an injustice which is sufficiently serious to justify departure from the general rule that where the de facto relationship is of short duration no order ... can be made’
[26] Justice Potter further quoted from Gibbons where his Honour said:
‘The exercise of determining whether ‘serious injustice’ does or does not arise necessarily involves comparison between the consequence for the parties as the result of the determination, though other factors which may assist in a finding whether or not there is ‘serious injustice’ are not excluded’
[27] The Respondent also referred to the decision of Besanko J in the Supreme Court of the ACT in McMaster & Wilkie-Snow [2011] ACTSC 183, a judgment concerning s.15(1) of the Domestic Relationships Act 1994 (ACT) (the ‘DRA’). That matter concerned an application to set aside a domestic relationship agreement on the grounds that, in the circumstances, the enforcement of the agreement would result in serious injustice. In that judgment, her Honour said the following about the term ‘serious injustice’:
‘The meaning of serious injustice was considered by Riley J in
Van Jole v Cole [2000] NTSC 18; 26 Fam LR 228. His Honour said that the words ‘serious injustice’ in s 46 of the De Facto Relationships Act 1991 (NT) were to be accorded their ordinary meaning which was a considerable wrong or unfairness. I accept those observations, although one could also describe the requirement in terms of significant or substantial unfairness ...’[28] In Van Jole v Cole [2000] NTSC 18; (2000) 26 Fam LR 228 (‘Van Jole’), Riley J of the Northern Territory Supreme Court was also dealing with the issue of whether a separation agreement made under the DRA should be set aside. His Honour stated:
‘It is clear that the Court will not interfere with a separation agreement simply because it believes a different form of agreement was more appropriate. Further it will not interfere where there is simple injustice. Rather, it must be satisfied that a failure to intervene would result in “serious injustice” between the parties...
An injustice is the opposite of justice and includes the concepts of a wrong or unfairness. The word serious in this context suggests weighty, grave or considerable’
[29] In LF v RA [2005] QSC 375; (2005) 34 Fam LR 536, White J of the Queensland Supreme Court was dealing with an application for a property adjustment order pursuant to s.286 of the Property Law Act 1974 (Qld) (the ‘PLA’). The parties had entered into a cohabitation agreement. Section 276 of the PLA provided that, on application for a property adjustment order, the Court may vary the provisions of such an agreement if it was satisfied that enforcement would result in serious injustice for a party to the agreement. His Honour adopted the approach in Van Jole and commented:
It is not, of course, a serious imbalance of itself which will give rise to a conclusion of serious injustice. The detail of the relationship and the parties’ financial and other contributions to the acquisition of the assets in the course of the relationship will be determinative of that question’”
In Beaumont & Schultes (supra), Her Honour Judge Turner ultimately held:
132.Upon reading the relevant authorities, the elements in order to establish serious injustice include:
(a) There must be something more than just “mere injustice” or “simple injustice”;
(b) The injustice must be “sufficiently serious” where there is “considerable wrong” or “unfairness”;
(c)There is more to be taken into account than a “comparison of consequences”;
(d)There must be a “weighty, grave or considerable” serious “imbalance”.
I pause here to make my own observation, which is to say that it must be inherent in section 90SB that the legislature recognises that de facto relationships of short duration, which for present purposes is two (2) years or less, where there is no child, should not ordinarily come before this court. There is a reason that the Legislature set the high bar as they do and that they require not only substantial contributions but also a “serious injustice”. It is true that an injustice or a mere injustice, by and of itself, will not suffice. It must be something more than a mere injustice. It must be inherently a serious injustice because, in a public policy context, there would be potential injustice to many litigants in this country if this court were to be proverbially “clogged up” with de facto property applications arising out of very short relationships. It is a matter of the Parliament drawing a line as to where the injustice should lie in terms of individual injustice in any given case versus a more broad public injustice that can arise from the slowing down of the administration of justice. Litigation is a necessary evil. It is both necessary and, at times, unfortunately, somewhat evil in its impact. As a general statement, litigation is not to be encouraged but is meant to be avoided.
Mr White contends that there is a “serious injustice” here. He points to the wife admitting that she owed the husband money. Particularly, he points to her text to him of 22 October 2021 which is in these terms:
Wife: You do know this is our business, not just mine? Babe, I can desk –
[which I think that is meant to read “I can deal”]
with everything else, but please don’t start giving me a hard time about this, as I am about to lose it, literally.
Husband:Babe, I just get worried we’ll have no savings left. That is all, and that stresses me. X
Wife:What do you think I’m doing, babe? I’ve killer [sic] myself this week to make sure you aren’t stressed and the one thing I need is causing stress. I can’t fucking win.
Wife: What do you want from me?
Wife: Tell me.
Husband: I’m sorry, babe. It’s all good. I love you. XX
And then, three days later, the husband texts the wife:
I might try win 40G. I can’t believe my account is in 20G vibes. Going to be less soon. I could die tomorrow so all is good. Get a bag.
The wife responds:
Baby, seriously, it’s fine. The business opens in a week and a half. We got this. It’s going to be amazing. XX
Husband: I love you more than love.
The wife accepted in the witness box that the tenor of her messaging was that she was saying she would be able to pay the husband back. It is also quite apparent to me that the husband was very stressed about money by this stage. The reference to a “bag” in this text of 25 October is almost certainly a reference to a bag of drugs.
Another text the wife sent the husband around the time of separation was to this effect:
I love you and care about you so much and I’ll make sure that you have everything you deserve and more from the house and this relationship, but I can’t continue in this world we created. It’s killing me.
Mr White submits that the wife was, effectively, acknowledging debt to the husband and I agree.
He submits to me that, if this court does not act, then the husband may have to seek a remedy elsewhere which will only involve further cost and potential delays. That is to say, he could potentially bring proceedings in relation to the incorporated company which conducts the business perhaps either being instituted in the Federal Court or in the Federal Circuit and Family Court of Australia (Division 2). He could bring Local Court proceedings in relation to debt. He could bring Supreme Court proceedings in relation to a possible equitable claim over the wife’s house.
I am not so sure about the latter but, in any event, his point is well made that the wife acknowledges in those texts a debt to the husband shortly prior to the end of the relationship and Mr White submits that it would be unconscionable in those circumstances for the wife to be able to effectively say “Aha! You’re outside the jurisdictional requirement of section 90SB so I’m not paying you.”
I also note the wife’s persistent avoidance of any attempt to resolve the matter with the husband and also her avoiding of service of his proceedings.
Ms Ticehurst submits that there is no injustice that would amount to “serious” injustice. She points to the modest value of the business and says that it is not possible for the husband to establish that the injustice, which is not admitted, amounts to injustice that is “serious”.
In this particular case, I note the substantial contributions that I have already found were made by the husband, particularly his financial contributions. The wife acknowledges a debt, which I am satisfied is in the amount of $16,759, owed to him, consisting of $11,759 for the business plus an additional $5,000 paid to the wife on account of “a tax debt for her parents”, which is what she told him the money was for and which was never repaid.
I also take into consideration the husband’s vastly impoverished financial position, as is evident from his Financial Statement.
The debt of $16,759 is, in my view, a significant matter. It is not a trifling amount. It might be a trifling amount for somebody of great means and wealth. It is not a trifling amount for this man. I consider that, in the same way as substantial contributions require a consideration of relativity of the financial positions of the parties, so too serious injustice falls into a similar category.
In the circumstances, and particularly having regard to the moneys that I consider the wife owes the husband in a practical sense, I consider that there would be a serious injustice if this court did not proceed to deal with the matter now.
ISSUE #3: IS IT “JUST AND EQUITABLE” TO MAKE AN ORDER?
This is an interesting question. The High Court in Stanford & Stanford (2012) 247 CLR 108 held that it cannot be presumed that, when a relationship breaks down, it would be “just and equitable” for there to be a division of property. The court has to consider what each party owns. There is no commonality or community of property under our legal system and the court cannot simply assume, by reference to the relevant contributions and future factors set out in section 90SM and section SF respectively (or section 79(4) and 75(2) in the case of a married couple) that there is an entitlement to a property settlement order.
Mr White referred me to the decision of the High Court in Fairbairn & Radecki (2022) 64 Fam LR 604. Mr White referred to the fact that in that case, the High Court held that the husband was not making the “necessary or desirable adjustments” in respect of the property of his de facto wife in circumstances where she was at a great disadvantage. Hence this was a basis for the High Court finding that their de facto relationship had broken down. The analogy to this case is clear enough.
It should also be noted that, in Stanford (supra), the reverse was true, as Mr White submitted. Namely, appropriate adjustments were being made in that case and there was no need for the court to intervene and make a property settlement order.
Mr White points out that, in this case, the wife is saying to the husband, “I owe you money but you can’t make me pay it due to section 90SB.” He also submitted that the situation may have been different if the wife had repaid a figure of – he nominated $20,000.
Ms Ticehurst submitted that it was hard to argue that it was “just and equitable” to make any order in relation to the wife’s home. After all, she owned it before she met the husband. It was the home of herself and her children. It was never in the name of the husband, and Ms Ticehurst contended that there was no proper basis to find that the husband had a contributions-based entitlement to the home, per se. That is to say, the home was very much the property of the wife and whatever contributions the husband made ought not to be fixed by reference to some percentage value of the equity in that home.
Ms Ticehurst also submitted that the business was only a modest enterprise, of limited value in any event, and this was another matter which was said to be relevant to the question of whether it was “just and equitable” to make any order. I should also add that it was a matter Ms Ticehurst had also raised in the context of “serious injustice” and I should have referred to it earlier, though I reject her submission in that particular context.
On the “just and equitable” question I agree with Ms Ticehurst that it would not be just and equitable for this Court to fix the husband with a defined percentage interest or to make a specific percentage finding by reference to what equity remains in the wife’s home. The home was always hers. It was never a joint property.
But I do consider that it would be just and equitable to order that the wife pay the husband a cash sum of a fixed amount on account of the contributions made by him and having regard to future factors.
ISSUE #4: CONTRIBUTIONS ASSESSMENT
Against the backdrop of what is a very short relationship, I turn to contributions and merely reiterate what I have already found earlier. I consider that the husband’s contributions-based entitlement in the unusual facts of this case is a payment from the wife of $16,759 on account of the moneys loaned to her, as identified earlier.
I do not consider that the husband’s contributions-based entitlements rise to a higher figure than this, but it is nonetheless a substantial figure in the circumstances of this case.
ISSUE #5: FUTURE FACTORS
In terms of future factors, this was such a short relationship the court has to be very careful.
Both parties work. Both parties have a history of working. No-one can suggest that either party has had their work career shortened as a result of the relationship or been otherwise placed at a disadvantage by reason of the relationship.
The wife is in a stronger financial position than the husband. She has the ongoing benefit of the business which he, effectively, helped fund, as well as all of its income, including cash income that the court will never know anything more meaningful about. Only the wife knows what the true income of the business is.
In my view, given the wife’s lack of full and frank disclosure and having regard to the business income stream of an unknown amount, I consider it is appropriate for me to provide an “uplift” to the husband’s cash figure that he ought receive from the wife. I consider that it would be appropriate to increase that figure from $16,759 to $35,000.
I consider this to be a just and equitable outcome.
POSTSCRIPT
I am going to add a postscript to the reasons.
Upon delivering reasons in this matter, I have been advised by Mr White today that the wife has, apparently, divested herself of a one-half interest in the Suburb B property by way of a transfer to her ex-husband, Mr D. It seems that, in April of 2023, the wife may have placed the property on the market for sale (without consent of the husband and without the Court being advised) and that, on 11 May 2023, Mr White’s office wrote to the wife’s solicitor seeking an undertaking that the wife not proceed with any sale.
On 12 May 2023, the wife’s solicitors apparently responded to indicate that there was no sale taking place, and then on 17 May it appears that the wife disposed of a one-half interest to Mr D.
Apparently, the mortgage encumbering the property was discharged and it may well have been refinanced, but I have no details before me at the moment.
This is a matter that Mr White only discovered today and is a matter that Ms Ticehurst has been unable to get instructions on.
In the circumstances Mr White contends that, consistent with some of the adverse findings that I have already made about her in these reasons, that the wife may be seeking to subvert or otherwise defeat an order made by the court today for the payment of $35,000.
In the circumstances, Mr White brings an urgent oral application pursuant to section 114 of the Family Law Act, namely he seeks an injunction in relation to the Suburb B property.
Mr White brings an oral application for an urgent injunction pursuant to section 114(2A)(c) of the Family Law Act, which empowers the court to grant such injunction as it considers “proper” with respect to the property of the parties to the de facto relationship. Ms Ticehurst is not in a position to meet that application nor to make any real submissions about it given the absence of instructions.
I have already made some adverse findings in relation to the wife’s credit in this matter and it may be, though I make no finding about it, that there is real merit in Mr White’s concern that the wife may be trying to subvert the order. Certainly, it troubles me enormously that the wife is divesting herself of a half-interest in the home, and I am told that the consideration was one dollar, which is, of course, entirely nominal.
I do not know, nor does anyone else before me know, the true financial circumstances surrounding the transfer, but it is a serious matter.
It seems to me that, out of an abundance of caution, I am obligated to make an injunction lest the wife take steps to divest herself of assets and defeat the order that I have just made. I have already indicated her attempts to avoid service and her general obstructiveness in terms of pre-litigation procedures. It may potentially be that this conduct is more of the same. If it is, I would caution her that she does not want to “dig a bigger hole” for herself.
CONCLUSION & ORDERS
For these reasons, I make the orders set out at the commencement herein.
I certify that the preceding one hundred and eighty-eight (188) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Betts. Associate:
Dated: 31 May 2023
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