Hallywell & Ramon
[2023] FedCFamC1F 505
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Hallywell & Ramon [2023] FedCFamC1F 505
File number(s): BRC 6031 of 2017 Judgment of: BAUMANN J Date of judgment: 8 March 2023 Catchwords: FAMILY LAW – PROPERTY – Where the wife asserted the husband had failed to make proper disclosure of his financial circumstances – Where the husband owned a business which was placed into liquidation –Final orders made for the orderly winding up of a likely to be non-compliant self-managed superannuation fund Legislation: Family Law Act1975 (Cth) ss 75, 79, 79A, 102NA, 117 Division: Division 1 First Instance Number of paragraphs: 26 Date of hearing: 8 March 2023 Place: Brisbane Counsel for the Applicant: Mr Leneham Solicitor for the Applicant: Kilmartin Legal Solicitor for the Respondent: Litigant in person ORDERS
BRC 6031 of 2017 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR HALLYWELL
Applicant
AND: MS RAMON
Respondent
order made by:
BAUMANN J
DATE OF ORDER:
8 MARCH 2023
THE COURT ORDERS ON A FINAL BASIS:
1.That noting that the Self-Managed Superannuation Fund 1 (“the Fund”) which the parties are currently the joint trustees is likely to be non-compliant from failure to file financial statements since 2016, but with a view to providing finality in the proceedings and to give effect to section 81 of the Family Law Act 1975 (“the Act”):
(a)the parties, as trustees, sign all documents necessary to effect an orderly wind up of the Fund;
(b)if the Respondent wife fails to sign documents as requested, then a Registrar of the Federal Circuit and Family Court of Australia (Division 1) shall be empowered pursuant to s 106A of the Act to sign any such documents to give effect to the winding up of the fund; and
(c)the Applicant husband be responsible of the costs of any audit and fees associated with the winding up of the Fund.
2.That each party shall retain all other legal and equitable interests in property, both personal and real including bank accounts, motor vehicles, chattels, and personally in their possession, power, and control at the date of this order to the exclusion of the other party.
3.That each party shall be responsible for and indemnify the other party against any debts or liabilities they personally have at the date of these orders.
4.That the Applicant husband’s Application for costs be dismissed.
5.That all applications before the Court be otherwise dismissed.
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 the pseudonym Hallywell & Ramon has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
EX TEMPORE REASONS FOR JUDGMENT
(Settled from the oral reasons delivered)BAUMANN J:
The Applicant husband, Mr Hallywell, is 45 years of age. He lives in Victoria and is self‑employed. The Respondent wife, Ms Ramon, is 46 years of age, lives in Queensland and works as a health professional. She is now bankrupt. These parties were in a relationship that commenced in approximately 1992. They were married in 1996, separated in April 2017 after what can be seen to have been a long relationship of over 25 years and were divorced in 2019. Not long after separation, the husband brought a parenting Application seeking orders in respect of the children of the relationship, X, who was born 2007 and Y, who was born 2008. The girls are now nearly 16 years and 14 years respectively.
Clearly at the time of separation, they were six years younger. The mother’s Response to the father’s initial Application filed in the Federal Circuit Court of Australia (as it was then known) introduced property proceedings. During the four year period between August 2017 until the transfer to the Family Court of Australia (as it was then known) in October 2021, various Judges and Registrars in the Court sought to manage this complex case where consistently the wife asserted the husband had failed to make proper disclosure of his financial circumstances and the husband asserted the wife had effectively alienated the children from him.
It needs to be acknowledged that the husband’s position of alleged “alienation” did not seem to take into account (until the end) his conduct during the relationship, including the criminal conduct against the wife that caused him to be charged and convicted of an offence against her. Be that as it may, when the matter was transferred to this Court and came into my docket, it seemed apparent to me that the two major issues of parenting and property could be resolved by sensible negotiation and proper disclosure. In November 2021, I resolved issues relating to the appointment of a valuer for the husband’s business known generally as “[B Company]” that had a number of outlets in Victoria.
Ultimately a valuer appointed by the Court provided a report in February 2022. The wife never accepted that report as accurate. It revealed, on a certain methodology, that the value of the entities was minimal. However, ultimately the business valuation, untested as it was, was overtaken by the fact that the business owned by corporations controlled by the husband were placed into liquidation. A report from the liquidator has been filed and was considered by the Court.
After a few more events and with some reluctance, understandably, the husband accepted that little could be now done to reconcile his relationship with his daughters and that will be something which would need to take place perhaps when they are adults.
As a result, final parenting Orders were made by me and by consent on 8 July 2022 where the children were ordered to live with the wife; where she was to exercise sole parental responsibility and the husband was at liberty to send emails, messages and make phone calls from time to time to the children.
At that time, the Court once again expressed the seemingly lack of utility of having a trial in the matter related to property proceedings. At least on the untested evidence at that stage, there was no property interests to alter, save for some very modest superannuation; the full extent of that being unknown. Interestingly, I now know, as a result of the documents that have been tendered today as Exhibit 1, that on 1 July 2022, the husband, through his lawyers, made an offer to settle the property proceedings to the wife in which, at paragraph 1 of such order, he offered a settlement on the basis that:
[t]he [w]ife retain 60%of the [s]uperannuation pool and that the SMSF rollout your client’s member balance of $19,703.65 together with the difference split to equate to 60% in favour of your client to an industry fund of her choosing.
I refer to that because that is at about the same time as the parenting Orders had been made and on its face, if the offer is to be taken seriously, as Mr Leneham of Counsel for the husband says I should, that suggested there was at least something in order of $30,000 to $40,000 in the member benefits, if that order could be given effect. I will return to that subject shortly. The wife was unable to accept that the husband did not have undisclosed funds and assets under his control. I continued to indicate to her through her lawyer on the record at the time, Ms C, who I assume may have been acting on a pro bono basis, that this Court is a court of law that requires evidence.
Though the wife may have had suspicions, in the absence of evidence, the available assets available for alteration on the material at that time was very small. Nonetheless, as directed by the Court and after, no doubt, some sensible contemplation by the wife, on 23 September 2022, the wife filed an amended Initiating Application seeking orders including that the husband pay her $350,000, interestingly to be paid to the trust account of her lawyer. I say “interestingly” because Exhibit 1 also identifies that after the first offer of 1 July 2022 was not accepted, a further offer was made on 17 August 2022 by the solicitors retained for the husband to the solicitors then retained by the wife, in which the cost of rectification of the superannuation fund was offered.
I have read that offer which is similar to the orders I am making now today. By 10 October 2022, after the husband filed an amended Response seeking that the wife transfer her interests in the self-managed superannuation fund to the husband and that she relinquish any claims, him being responsible for the costs, I came to the regrettable conclusion that the only solution to bring this matter to an end was to list the matter for a one day hearing beginning today. At that time, I made an order as mandated under s 102NA of the Family Law Act1975 (Cth) (“the Act”) for both parties to have the benefit, at the cost to the public purse and no expense to themselves, of a lawyer appointed by Legal Aid Queensland under what is known as the Cross-Examination Scheme.
Section 102NA of the Act, of course, prevents an unrepresented litigant from cross-examining, in certain circumstances, the other party. Two weeks after listing the matter for trial, the wife became bankrupt on her own debtor’s petition. I have not seen the petition. I do not know what debts caused her to take that option, but it obviously had the effect of bringing any repayment of debts she had at the time to an end. The wife’s trustee in bankruptcy, not surprisingly, has confirmed to the husband that he does not wish to participate in the application that is remaining before the Court. Upon her bankruptcy, two other issues occurred:
(a)the wife’s long-serving solicitors ceased to act for her from 9 November 2022; and
(b)the wife filed a Notice of Discontinuance in respect of her application for property settlement.
As a result, the husband was entitled to press his cross-application, which he has done, and relies upon his Reply filed 10 October 2022 and short affidavit filed 1 March 2023. The wife filed no case outline, but did file an affidavit on 2 March 2023. I have read all that material. I note that Mr Lenehan says that the wife’s affidavit was not properly served upon the husband, but he has read it because it was on the Commonwealth Courts Portal. I received no application to adjourn the matter today or to adduce further evidence.
That is quite simply because, as a result of, I think, sensible negotiations and discussions between the Bench and the parties, the parties do not seek to contest the order I proposed earlier in relation to how to deal with the only remaining connection the parties have, namely the self-managed superannuation fund.
The husband now accepts, especially bearing in mind that in terms of the superannuation regulations that any account of less than $5000 is not splitable, that if the fund only has $3,402 in it, then it will not cover the costs estimated in his letter of 17 August 2022 and that to wind up the fund, those additional costs will need to be met. The husband should meet those costs, in my view. He accepts that is the case. In fact, that was his application. As I sit here today, with this long litigated matter coming to an end, I accept there are uncertainties that exist which I cannot resolve on the evidence, namely:
(a)compliance with and value of the interests of the members of the self-managed superannuation fund. The husband, through his Counsel, confirms that there have been no accounts prepared and audited for the fund since approximately 2016. There is at least one school of thought in family law jurisprudence that a non-complying superannuation fund is, as a result of its non-compliance, not property at all that the Court can deal with. I am not asked to deal with the member benefits of the fund. I am asked and I will be making orders that wind-up the fund, with the cost to be met by the husband. I accept the uncertainty for the wife is that she says she does not know where her contributions, which she claims to be $67,000 (but which are said by the husband to be less), have gone. They do not appear to exist in the fund. Now, as I said, the lack of auditor’s report for the self-managed superannuation fund has not enabled that issue to be clarified; and
(b)although two of the husband’s companies involved with the business are in liquidation, the husband seeks orders that he retain an entity he calls “The [B Company Trust]”. They are the orders he sought. I do not specifically deal with that in the order. I have no current evidence of whether this enterprise still exists; its value; its assets or anything. The husband has not produced any of those financial details. However, I am prepared to accept that there is minimal value at this stage. On the evidence available, the wife cannot otherwise assert and does not do so.
Although the wife’s affidavit bears little relevance to the Orders now made, I do take on board that she says albeit it is a relevant consideration that the child support liability of the husband, as a result of the certificate from the Department, is currently at a figure of about $65,138. On the evidence before the Court, there seems little likelihood of any of that sum being recovered. It, of course, relates to many years of past alleged liability for child support. In circumstances where the Orders I make are effectively by consent – although they are directed by me and will be not shown as a consent order – I did not say much about why those Orders are just equitable.
The well-known and well-worn four-step pathway in determining any property case under s 79 of the Act is not controversial. The husband’s evidence is that the pool is less than $10,000. There are, of course, associated vehicles and furniture that the parties no doubt have in their possession. It was a long marriage. The husband concedes and I accept there was a proper concession, as material that the wife was the primary carer of the children and homemaker. That is not to say the wife did not work during the marriage, because she did. That is not to say the husband did not make a contribution to his children and their care and welfare, because he did. But the parties seem to have adopted fairly traditional roles in the relationship with the husband being the bread-winner and the wife being the major homemaker and carer.
The s 75(2) factors in this case do not need many findings. The wife has minimal income as a health professional. She is bankrupt. She has few assets. Her financial future is hardly rosy. The husband’s Financial Statement, old as it is, does not reveal any substantial income and yet, perhaps with family support or other benefits which could be a financial resource if I knew a bit more about it, he has been able to retain and choose to retain private solicitors and counsel to represent him in this case. I say no more about their competing financial positions because I just do not know.
The Orders which I have pronounced which will appear at the commencement of these Reasons are just and equitable.
Having made those Orders, Mr Leneham was instructed – and I accept they were his instructions – to press for the order for costs which the case outline identified. I heard his submissions. The order sought by the husband was that the wife pay the husband’s costs of and incidental to the property proceedings, fixed in the sum of $35,750. Clearly at that level, bearing in mind the comments I have had with Mr Lenehan today, that would be on an indemnity basis. Before, however, the Court starts looking at quantification, the Court is required to be satisfied that there are circumstances in the case that justify departing from the usual rule created by s 117(1) of the Act; namely that each party bears their own costs.
Clearly it would not be appropriate to consider any component of costs incurred by the parties in respect to the parenting proceedings which have been finished by consent. In view of the offers made, which is relied upon highly by Mr Leneham in his submissions, I find it difficult to accept costs of some $33,000 were incurred, even on an indemnity basis since August 2022 at least until now, based on the material filed in these proceedings since then. I say that because in my view, up until those offers, there were no circumstances that would justify departing from the usual rule. Certainly the parties were engaged in litigation and were incurring costs whether they were paying them or incurring them on some other conditional payment basis from their lawyers.
There were legitimate arguments that were advanced about whether the husband and did make full and complete disclosure. It can be said that the wife’s beliefs caused her to maintain the litigation longer than it probably should have. I am prepared to accept that she should have seriously considered the offers made in July and August. However, when, in July 2022, the offer made included clearly on its face, on whatever basis, that the wife would receive some superannuation, how that could have even possibly been achieved today, when there is nothing left, must raise some questions about whether the offer was ever able to be put in to effect and how. There is no evidence that helps me in that respect.
Mr Leneham quite properly identifies that impecuniosity is not of itself a basis for a court not making an order, although the financial positions of the parties is a relevant consideration under s 117(2A)(a). I take into account the offers. I also take into account the behaviour of the parties during the course of the proceedings. Sadly, when the relationship broke down in 2017, if not created beforehand, the relationship between these parties was just toxic. They continued to fight in relation to their children and the children have, in many ways, not been served well by the outcome ultimately. Whether that is what happens in the long term in their relationship with their father, only time will tell.
Nothing could be said to the wife at any time that assuaged her strongly held and entrenched belief that the husband had money that he had not disclosed to the Court. This belief is reflected in her most recent self-prepared affidavit where she talks about the husband apparently having overseas holidays, paid for by somebody.
I make it clear to the parties that of course s 79A of the Act, the remedial section, is available if at some future point in time a court is convinced that there has been a suppression of evidence during these proceedings, such that a miscarriage of justice has occurred today.
What is clear, however, is that that evidence is not available to the Court today. I do regard it as a relevant consideration that the husband does not appear to have paid child support to the wife. Although that is tangential to the exercise of discretion, it is a factor that I take into account. In all the circumstances, I do not believe circumstances exist to make an order for costs. The husband’s application for costs is dismissed.
I make the orders which appear at the commencement of these Reasons.
I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the ex tempore Reasons for Judgment of the Honourable Justice Baumann.
Associate:
Dated: 28 June 2023
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