GEE & LUXFORD
[2013] FCCA 271
•17 May 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| GEE & LUXFORD | [2013] FCCA 271 |
| Catchwords: FAMILY LAW – Property – Interim Orders – credit cards – whether applicant or respondent are liable for credit card debts – whether amounts owing are joint debts – where applicant denies she applied for credit cards in her name – where applicant denies she ever operated any of the credit cards – where respondent claims that the cards were used for payment of household expenses – where applicant claims that the respondent should indemnify her in respect of the credit card debts. |
| Legislation: Family Law Act 1975 (Cth), s.80 |
| Cases cited: Goode & Goode [2006] FamCA 1346; (2006) 36 Fam LR 422; FLC 93-286 |
| Applicant: | MS GEE |
| Respondent: | MR LUXFORD |
| File Number: | SYC 6710 of 2012 |
| Judgment of: | Judge Scarlett |
| Hearing date: | 8 May 2013 |
| Date of Last Submission: | 10 May 2013 |
| Delivered at: | Sydney |
| Delivered on: | 17 May 2013 |
REPRESENTATION
| Solicitor for the Applicant: | Mr James |
| Solicitors for the Applicant: | James & Associates |
| Solicitor for the Respondent: | Mr Nicolau |
| Solicitors for the Respondent: | Newtown Solicitors |
ORDERS
UNTIL FURTHER ORDER:
Within fourteen (14) days of the date of these Orders Respondent is to pay all amounts due and payable as and when they fall due in respect of:
(a)(omitted) Bank MasterCard (omitted) standing in the name of the Applicant; and
(b)(omitted) Bank MasterCard (omitted) standing in the name of the Applicant.
The Respondent is to indemnify the Applicant and keep her indemnified against all claims, demands, proceedings and judgments in respect of any past, current or future liability in respect of either or both of:
(a)The said (omitted) Bank MasterCard (omitted) standing in the name of the Applicant; and
(b)The said (omitted) Bank MasterCard (omitted) standing in the name of the Applicant.
The parties are to do all such things and sign all such documents necessary to close the said (omitted) Bank MasterCard and (omitted) Bank MasterCard accounts referred to in the above Orders standing in the name of the Applicant within fourteen (14) days of the date of these Orders.
IT IS NOTED that publication of this judgment under the pseudonym Gee & Luxford is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYC 6710 of 2012
| MS GEE |
Applicant
And
| MR LUXFORD |
Respondent
REASONS FOR JUDGMENT
Application
This is an Application for interim orders about credit cards. The Applicant seeks orders that the Respondent should make all payments due in respect of three credit cards in her name but which she claims she has never used. She seeks that the Respondent should indemnify her against all claims.
The Respondent claims that the credit card debts are not his debts alone, because all the debts incurred on those three cards were entered into with the Applicant’s knowledge and consent and were used household living expenses.
Background
The parties were married on (omitted) 2007 and separated under the one roof on 11th November 2011. The Applicant moved out to another house in the same street in July 2012.
There is one child of the marriage, a boy who was born on (omitted) 2006. The Applicant Wife has two adult children from a previous marriage, aged 18 and 19. They all live with her.
The Respondent owns a (omitted) shop business in (omitted) called (business omitted), which he operates with his brother.
The Applicant commenced proceedings for property and parenting orders on 9th November 2012.
Orders Sought
The Applicant seeks interim orders in her Second Amended Initiating Application filed on 29th January 2013. The Orders sought relate to three credit cards, all in her name, being:
a)(omitted) Bank Visa Card (omitted);
b)(omitted) Bank MasterCard (omitted); and
c)(omitted) Bank MasterCard (omitted).
All of these cards have outstanding balances and the banks concerned are seeking payment.
The Order now sought by the Applicant in a Minute of Order attached to a submission handed up by her solicitor on 8 May 2013 is:
That within fourteen (14) days of the date of this Order the Respondent, Mr Luxford, pay in full as and when they fall due all of the payments due and payable under the following credit cards in the name of the Applicant Ms Gee:
1.1 (omitted) Bank Visa Card (omitted); and
1.2 (omitted) Bank MasterCard (omitted);
1.3(omitted) Bank MasterCard (omitted)
AND the Respondent will indemnify the Applicant against all claims, demands, proceedings and judgements in respect of any past or future liability in regard to each of these credit cards.
The Respondent has not filed an Amended Response to meet the interim order sought in the Second Amended Application, but in his affidavit affirmed on 18th February 2013 he states at paragraph [15]:
I do not have the funds to pay for these credit cards. I submit that I should not be paying for credit cards which are in the name of the applicant wife and were used for living expenses. The debts should be paid following a final determination of the matter.[1]
[1] Affidavit of Mr Luxford 18.2.2013 at paragraph [15]
Evidence
The Applicant relies on her affidavit sworn 28th January 2013. The Respondent relies on his affidavit of 18th February 2013.
As the hearing was an interim hearing, neither party gave oral evidence. The parties’ solicitors were advised of the limitations on the Court in making findings of fact in the face of contradictory evidence which cannot be tested by cross-examination.
The Applicant deposed in her affidavit that, although the (omitted) Bank Visa card is in her name:
a)she does not recall ever operating it;
b)she is not aware when the card was obtained; and
c)she has never made a payment on the card.
As at 22nd December 2012 the Visa Card had a balance due of $9,219.00[2]. The Bank wrote to her on 14th January 2013, seeking payment of an overdue amount of $738.00.
[2] Estimated to be $9,483.00 as at the date of hearing
Annexed to the Applicant’s affidavit is a copy of a fax transmission dated 23rd March 2011 applying for a Bank of (omitted) Credit Card in her name, attaching what appears to be a payslip in her name from “(omitted) Pty Ltd/A (business omitted)” dated 18.3.2011, showing a weekly salary of $2092.10, and a photocopy of both sides of the Applicant’s current driver licence.
The Applicant deposed:
8…The Writing on the Coversheet of the fax is that of the Respondent.
…
10.I was not aware of the fax being annexure C and I did not authorise or approve of it being sent.[3]
[3] Affidavit of Ms Gee 28.1.2013 at [8] & [10]
She claims never to have attended the business as an employee or to have received a Group Certificate from (omitted) Pty Ltd for the year ending 30th June 2011.
As to the (omitted) Bank MasterCard, the Applicant claims in her affidavit that:
This card is in my name but I do not recall ever operating it. I have never made a payment on this credit card.[4]
[4] Ibid at [12]
Annexed to her affidavit are statements for the card from 6th March 2011 to 29th October 2012.
Again, with the (omitted) Bank MasterCard, the Applicant deposes:
This card is in my name but I do not recall ever operating it. I have never made a payment on this credit card.[5]
[5] Ibid at [16]
The Applicant annexed the following documents to her affidavit:
a)A statement from the bank for the period 5th October to 5th November 2012;
b)A Default Notice from the Bank dated 14th December 2012 claiming a failure to make payments totalling $893.00;
c)Statements for the card from 4th May 2011 to 4th October 2012;
d)(omitted) Bank receipts for transfers from the card on 11th, 14th and 18th April 2011; and
e)A copy of a (omitted) Bank receipt for a transfer on 3rd June 2011.
The Respondent’s affidavit of 18th February 2013 claims that the cost of living expenses for the household would often be greater than the parties’ combined earnings. The household comprised:
a)the Respondent;
b)the Applicant; the parties’ son; and
c)the Applicant’s two children from her previous marriage aged 18 and 19.
The Respondent’s case is set out in paragraphs [4] and [5] of his affidavit:
4.Our cost of living expenses would often be greater than our combined earnings. The Applicant and I then agreed that she would apply for credit cards to assist on those occasions when we had insufficient funds to meet the costs of running the household. The credit cards were applied for and she provided to me the pin numbers and the means to access the accounts.
5.With Ms Gee’s knowledge and consent, when we had insufficient monies to meet (our) expenses, usually I would withdraw monies from the credit card. Most withdrawals were in cash or a transfer into another account. The monies were applied towards the household and I do not use these funds for my personal use. I would then replenish those monies as soon as I was in a position to do so.[6]
[6] Affidavit of Mr Luxford 18.2.2013 at [4]-[5]
As to the (omitted) Visa card the Respondent claims that:
a)He was present at home and saw the Applicant complete the online application for the issue of the card;[7]
b)He denies that the writing on the fax coversheet at Annexure “C” to the Applicant’s affidavit is his;[8]
c)He denies any knowledge of the purported pay advice in that annexure;[9] and
d)The Applicant’s daughter was employed in his (omitted) business until 1st February 2013 “and continued to have full access to the shop including the office”.[10]
[7] Ibid at [7]
[8] Ibid at [9]
[9] Ibid
[10] Affidavit of Mr Luxford 18.2.2013 at [10]
As to the (omitted) Bank MasterCard, the Respondent deposed:
…I say that Ms Gee gave me access to the credit card which I used to pay for living expenses for the wife, our son and the applicant’s two children from a pervious relationship. I agree with the wife in that I have made most if not all of the payments on the credit card.[11]
[11] Ibid at [11]
On the subject of the (omitted) Bank MasterCard the Respondent deposed:
…I admit that Ms Gee has never made a payment on this credit card.[12]
[12] Ibid at [13]
He went on to assert that he had not seen any of the annexed documents before and:
…Ms Gee gave me access to the credit card which I used to pay for living expenses for the wife, our son and the applicant’s two children from a previous relationship.[13]
[13] Ibid at [14]
Submissions
The Applicant, in a written submission, submitted that the debts due under each of the three credit cards should be wholly payable by the Respondent on the basis that he obtained the sole benefit of the money due under each card. On the information from each of the credit card providers, there are no transactions that appear to relate to transactions for such usual household expenses as groceries or petrol.
Mr James, who appeared for the Applicant, conceded that it is not possible to make a finding of fact in regard to the fax document sent to the (omitted) Bank in respect of the (omitted) Bank Visa Card.
However, he submits that there is evidence that would support a finding that the (omitted) Visa card was used solely by the Respondent and the use was not for household expenses but his own personal use. The evidence relied on is:
a)The Applicant’s assertion in her affidavit that she does not recall operating the card, which the Respondent in his affidavit does not deny; and
b)The failure of the Respondent to adduce any evidence to support his assertion that the debts incurred on each of the three cards were for household expenses.
In support of the Applicant’s case regarding the (omitted) Bank MasterCard, Mr James drew the Court’s attention to a statement on page 48 of the annexed documents showing an Online Balance Transfer for a single transaction of $6,650.00. In a later statement for a period in March 2012 there were four transactions totalling $6,500.00 paid to the Respondent’s business. In the period from 11th April to 9th October 2012 there are further amounts of $1,600.00 and $1,000.00 drawn on the card and paid to the Respondent’s business.
The submission is that the card records show no transactions that relate to household expenses. The money from the credit card, it is submitted, has all gone directly into the Respondent’s business. The Respondent gives no explanation as to why the credit card was not used directly to pay the household expenses.
It is further submitted that it is a reasonable conclusion based on the evidence that the money due under the credit card was used by the Respondent for his personal benefit and that it must follow that he should be responsible for the payment of the whole of the debt due on the (omitted) Bank MasterCard.
In support of the Applicant’s case regarding the (omitted) Bank MasterCard, Mr James referred the Court to the credit card statements annexed to the Applicant’s affidavit. These statements show an opening balance of $960.20 and four Net Bank transfers on 8th, 11th, 14th and 18th April, each of $5,000.00. Each of those sums of $5,000.00 went directly to the Respondent's (omitted) Bank account.
A further Net Bank transfer of $5,000.00 is shown on 3rd June 2011.
It is submitted that the whole of the present debt arises from transactions where payments were made to an account of the Respondent, who gives no explanation and provides no evidence about any of those $5,000.00 transactions. Again, the Respondent has adduced no evidence to support his assertion that he used this money to pay household expenses.
The solicitor for the Respondent, Mr Nicolaou, submitted that the Applicant was relying on a “snapshot” of the credit card statements which is therefore unreliable.
He submitted that there was insufficient evidence to establish a liability by the Respondent for the moneys on the (omitted) Bank credit card.
He prepared a written table in which he calculated that the evidence showed that the total balance owing on the credit cards had increased from $16,772.86 over the period to $42,404.60, a total increase of $25,631.42. However, the Respondent had made payments or contributions totalling $23,875.88 over the period, leaving a difference of $1,755.54.
He submits that the Applicant is at a disadvantage of $1,755.54, where she has asked the Court for an order that the Respondent should pay the whole amount of approximately $43,000.00.
Mr Nicolaou submits that if the Applicant claims that she did not open the account with the (omitted) Bank it remains open to her to defend the bank’s claim and, on that basis, her request that the Respondent should pay any amount to the (omitted) Bank fails.
Further, it was submitted that the household in which the parties used to live until separation was not a normal household and that household expenses can be “huge”. He suggested that the Applicant should pay the amounts outstanding on the credit cards and call on the Respondent to reimburse her at the final hearing.
Legal principles to be considered
As this is an interim hearing, the Court must look to s. 80 of the Family Law Act 1975 (Cth) for its power to make orders. Subsection 80(1) gives the Court various powers, including the power to:
(b)order payment of a weekly, monthly, yearly or other periodic sum;
…
(h)make a permanent order, an order pending the disposal of proceedings or an order for a fixed term or for a life or during joint lives or until further order;
…
(k)make any other order (whether or not of the same nature as those mentioned in the preceding paragraphs of this section), which it thinks necessary to make to do justice;
In my view, the procedure for making interim property orders is similar to the procedure for making interim parenting orders referred to be the Full Court of the Family Court in Goode & Goode[14] at [68]:
…an abridged process where the scope of the enquiry is “significantly curtailed”. Where the court cannot make findings of fact it should not be drawn into issues of fact or matters relating to the substantive case where findings are not possible.[15]
[14] [2006[ FamCA 1346; (2006) 36 Fam LR 422; FLC 93-286
[15] Per Bryant CJ, Finn & Boland JJ at [68]
Thus, the Court is not in a position to make conclusions on disputed factual issues where the parties’ evidence has not been tested by cross-examination. The Court may, however, be able to make decisions based on the written evidence before it.
Consideration
In my view, noting the limitations referred to in [44] and [45] above, where neither party has sought to cross-examine the other, the Court should consider the parties’ written evidence as it applies to each of the three disputed credit card debts. Neither party has produced any of the cards or claimed to have all or any of them in his or her possession.
The Bank of (omitted) Visa Card
The Card is in the name of the Applicant. However, she claims that she did not apply for the card and that she has no recollection of ever having used it. She asserts that the writing on the fax coversheet applying for the card is that of the Respondent.
The Respondent asserts that he saw the Applicant complete an online application for the card and he denies that the writing on the fax coversheet is his. He makes no admissions of ever having used the card.
Without cross-examination of the parties in an oral hearing, or the provision of further documentary evidence on subpoena, or evidence from a handwriting expert, the Court is not in a position to make any conclusive finding of fact as to:
a)which of the parties applied for the card in the Applicant’s name;
b)which of the parties operated the card; or
c)for what purposes the transactions were made.
As the evidence is insufficient, the Court will make no finding or order in respect of this card. The matter will be left for determination at the final hearing.
The (omitted) Bank MasterCard
This card, too, is in the name of the Applicant. The address on the card is (omitted), which is the address of the former matrimonial home.
Again, the Applicant denies any recollection of ever operating the card or ever having made a payment on the card.
The Respondent, however, agrees that he used the card, which he said the Applicant permitted him to do. He claims to have used the card to pay for the family’s living expenses. He concedes that he made most if not all of the payments on the card.
In this instance, there is an amount of documentary evidence in the form of credit card statements at Annexure “D” of the Applicant’s affidavit. The statements consist of 48 pages, covering the period 7th February 2011 to 4th November 2012, some 21 months in all.
An examination of the card statements shows that the card had an opening balance of $0.00 at 7th February 2011. The statements then go on to show this transaction history:
a)3rd March 2011 Online Balance Transfer $6,650.00
b)6th March 2012 (business omitted) $1,200.00
c)9th March 2012 (business omitted) $1,300.00
d)13th March 2012 (business omitted) $2,000.00
e)13th March 2012 (business omitted) $2,000.00
f)11th April 2012 (business omitted) $1,000.00
g)11th April 2012 (business omitted) $ 600.00
h)8th October 2012 (business omitted) $1,000.00
TOTAL $15,750.00
There are no records of any transactions at supermarkets, pharmacies, hardware stories, petrol stations or any other retail establishments where credit cards are normally used for purchases. The Respondent gives no explanation as to why the parties needed a sum as large as $6,650.00 by way of an online transfer to another account on 3rd March 2011.
The Respondent’s unspecified “living expenses” for four adults and one child must indeed have been “huge”, to quote Mr Nicolaou, if the family required amounts as large as $1,200.00 on 6th March 2012, a further $1,300.00 only three days later on 9th March, and yet another $4,000.00 in two instalments, both on 13th March, only four days later. All of these transactions were made through the Respondents (omitted) business, but it is hard to believe that a family of four adults and one child would require $6,500.00 worth of (omitted) for their sustenance in a period of a week from 6th to 13th March 2012.
The Respondent provides no explanation for any of these transactions, or for the amount of $1,600.00 in instalments of $1,000.00 and $600.00 both on 11th April 2012 or, for that matter, a further sum of $1,000.00 on 8 October 2011, after the parties had physically separated.
The Respondent’s explanation of these unusual transactions is inherently implausible.
The Respondent was the one who used the card, for what appear to have been cash advances, and he was the one who made all the payments. In my view the Respondent should be responsible for the debt on the (omitted) Bank MasterCard and he should indemnify the Applicant against any liability. If the card account has not been terminated and the card destroyed, then this should happen immediately.
(The (omitted) MasterCard
This card is in the name of the Applicant. Again, the address on the card is that of the former matrimonial home.
The Applicant in her affidavit denies any recollection of ever having operated the card or ever having made a payment on it.
The Respondent in his affidavit admits that the Applicant never made a payment on the card but claims that she gave him access to the card to pay for the family living expenses.
There are credit card statements annexed to the Applicant’s affidavit at Annexure “H”, covering the period from 5th April 2011 to 4th October 2012. An examination of the credit card statements shows that on 5th April 2011 the card had an opening balance of $960.20. There were four NetBank transfers, each in the amount of $5,000.00, on 8th, 11th, 14th and 18th April 2011. Each of these transfers attracted a “(omitted) Bank fee” (meaning a fee for a cash advance) of $75.00.
The Respondent provides no explanation other than “living expenses” as to what this $20,000.00 over ten days in April 2011 was required for.
There was a further transfer of $5,000.00 by way of cash advance on 3rd June 2011 and two more, smaller amounts, of $1,000.00 and $2,900.00 on 7th February 2012. These amounts are unexplained by the Respondent except as “living expenses”.
Annexure “I” consists of receipts from the (omitted) Bank for the amounts of $5,000.00 on 11th April, 14th April, 18th April and 3rd June 2011. All of these amounts were paid into the same (omitted) Bank account of Mr Luxford.
What the Respondent does not explain is what living expenses for the family would require cash advances on his credit card to be paid into his own bank account. There are no transactions on the credit card statements extending over the 18 month period from 5th April 2011 to 4th October 2012 showing any purchases from any retail establishment. The credit card seems to have been used entirely as a source of cash advances.
The fact is that the credit card statements are not, as Mr Nicolaou so optimistically submitted, a “snapshot” of the state of the credit card accounts. The Applicant has provided evidence of 18 months’ use of the (omitted) Bank MasterCard and 21 months’ use of the (omitted) Bank MasterCard by the Respondent, and there is a clear pattern of use by the Respondent of these cards as a source of cash.
What retail establishments that provide for the living expenses of citizens of Sydney in the 21st Century only require payment in cash? Why has the Respondent, in his affidavit in reply to the Applicant’s affidavit in support of her claim that she should not be responsible for these credit card debts, not adduced evidence of one shop or practice or business that would require payments in cash of such large amounts that would necessitated the withdrawal of amounts of up to $5,000.00 at a time?
Again, the evidence relating to the (omitted) Bank MasterCard leads to the conclusion that this card was used for the Respondent’s own purposes and not for the family’s living expenses. The Respondent should be responsible for the debt on the (omitted) Bank MasterCard and should indemnify the Applicant against any liability. The card should be destroyed and the account closed.
I will order accordingly.
I certify that the preceding seventy-two (72) paragraphs are a true copy of the reasons for judgment of Judge Scarlett
Date: 13 May 2013
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