Harper and Harper
[2017] FCCA 3309
•1 November 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| HARPER & HARPER | [2017] FCCA 3309 |
| Catchwords: FAMILY LAW – Final property adjustment – alleged premature distributions – “wastage” arguments – arguments regarding wastage related to transactions entirely during the relationship – knowledge of transactions – relevance of knowledge of transactions to foundation of wastage argument – composition of “pool of property” in light of post separation period – spouse maintenance – impact of assumption of debt upon contribution – weight given to home maker and parent contributions – significant disparity in income and earning capacity. |
| Legislation: Family Law Act 1975, ss.72, 75(2), 79 Federal Circuit Court Rules 2001, Division 14, rr.15.29, 16.05 |
| Cases cited: U v U (2002) 211 CLR 238 Browne & Green (1999) FLC 92-873 Cerini & Cerini [1998] FamCA 143 Harridge and Anor & Harridge and Anor [2010] FamCA 445 Stanford & Stanford [2012] HCA 52 |
| Applicant: | MR HARPER |
| Respondent: | MS HARPER |
| File Number: | PAC 2904 of 2015 |
| Judgment of: | Judge Harman |
| Hearing dates: | 21, 22 June 2017, 31 October 2017, 1 November 2017 |
| Date of Last Submission: | 1 November 2017 |
| Delivered at: | Parramatta |
| Delivered on: | 1 November 2017 |
REPRESENTATION
| Solicitors for the Applicant: | Mr Nagle of PGJ Solicitors |
| The Respondent appeared in person |
ORDERS
Mr Harper shall, no later than 5:00pm 2 February 2018, pay to Ms Harper a sum of $211,715.00.
Contemporaneous with tender of payment by Mr Harper to Ms Harper of the sum of $211,715.00:
(a)Ms Harper shall do all things, sign all documents and give all consents, authorities and instructions as may be necessary to transfer to Mr Harper the whole of her right, title and interest in the property known as and situate at, Property A, in the State of New South Wales being all that parcel and Certificate of Title folio identifier (omitted) (hereinafter “the Property A property”); and
(b)Mr Harper shall discharge any mortgage encumbering title of that property so as to render Ms Harper harmless with respect to same.
Pending compliance with the above Orders, each party shall do all things, sign all documents and give all consents, authorities and instructions as may be necessary to facilitate preparation for settlement, including providing instructions to any financial institution that will require payment or discharge of a liability on settlement, preparation of discharge authorities and the like.
In the event that payment is not tendered by Mr Harper to Ms Harper in accordance with the above Orders (namely, by 5:00pm 2 February 2018), then each party shall forthwith and thereafter do all acts and things, sign all documents and give all consents, authorities and instructions as may be necessary to list for sale and sell the Property A property by private treaty at a price, using a real estate Agent and solicitor/conveyancer agreed between them.
In the event that the parties are unable to agree upon an Agent/s, listing price or solicitor/conveyance on sale then:
(a)In the event that the parties cannot agree upon an Agent, then either party may make a request in writing to the President of the appropriate professional body for Agents in NSW requesting that an Agent be nominated and upon such nomination being made that Agent shall be retained and instructed by the parties and each shall do all things, sign all documents and give all consents, instructions and authorities as may be necessary to allow the Agent to list and advertise the property;
(b)In the event that the parties cannot agree on a listing price then the parties shall request that the agent instructed and retained by them nominate a “realistic sale price by an eager but not anxious vendor” and shall, upon being advised of that price, list the property for sale at a figure that is 105% of that figure and the parties shall then accept any offer for purchase at that price or not less than 95% thereof;
(c)In the event that the parties cannot agree upon a solicitor/conveyancer, then either party may make a request in writing to the President of the Law Society ACT requesting that a conveyancing solicitor be nominated and upon such nomination being made that Agent shall be retained and instructed by the parties and each shall do all things, sign all documents and give all consents, authorities and instructions as may be necessary to allow the solicitor to act on the sale.
Upon completion of any sale of the property as required by these Orders, each of the parties shall do all things, sign all documents and give all consents, authorities and instructions as may be necessary to then cause the net proceeds of sale resulting to be distributed as follows and in the following priority:
(a)In discharge of the mortgage encumbering the property;
(b)In payment of sales costs, including agents commission, auctioneers fees and solicitor/conveyancer fees;
(c)As to the balance then remaining to be divided as to 60% to Ms Harper and 40% to Mr Harper, provided, however, that should any arrears of mortgage have accrued such that the amount required to discharge the mortgage exceeds $147,143, then an amount equivalent to 60% of the amount by which the mortgage exceeded $147,143 shall be paid to Ms Harper from Mr Harper’s 40% share before any payment to Mr Harper.
Pending completion of any transfer or sale of the Property A property required by these Orders, Mr Harper shall:
(a)Make all payments of principal and interest as and when they fall due with respect to the mortgage encumbering the property;
(b)Attend to payment of all council and water rates and other service and utility fees relating to the property.
(c)Keep the property insured for its full insurable value at all times;
(d)Not remove from the Property A property any fixture or any portion of fitout, including the Mezzanine structure.
Pursuant to Section 78 of the Family Law Act 1975, each party shall respectively retain all interests in and entitlement to:
(a)All personal property in his/her respective possession or control;
(b)All interests in life insurance policies and superannuation funds standing in his/her sole name respectively.
(c)Monies standing to the credit of any bank account is to become the property of the party in whose name such bank account exists;
(d)Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders.
Mr Harper shall forthwith and forever indemnify and hold harmless Ms Harper with respect to any claim or suit by Ms D and with respect to any funds advanced by Ms D to the parties whether jointly or individually and any claim for costs, interest or otherwise upon such sums as were advanced.
In the event that either party refuses or neglects to execute any deed, document or instrument necessary to give effect to these Orders, then a Registrar of the Federal Circuit Court of Australia shall be appointed pursuant to section 106A of the Family Law Act 1975 to execute such deed, document or instrument in the name of the said party and do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of Affidavit.
All outstanding Applications and Responses are withdrawn and dismissed and all issues are removed from the list of matters awaiting hearing.
Upon the expiration of the Appeal period and in the event that no appeal is lodged that all exhibits then be returned to the party who tendered same and that all material produced on subpoena or pursuant to section 69ZW of the Family Law Act 1975 be returned to the person or organisation who produced same or securely destroyed.
IT IS NOTED that publication of this judgment under the pseudonym Harper & Harper is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PARRAMATTA |
PAC 2904 of 2015
| MR HARPER |
Applicant
And
| MS HARPER |
Respondent
REASONS FOR JUDGMENT
These proceedings relate to issues of property adjustment between parties, Mr Harper, the Applicant and the husband in the marriage, now dissolved, and which founded jurisdiction for these proceedings; and Ms Harper, the Respondent wife.
The parties have both participated in a lengthy and somewhat protracted process, although sadly, not as protracted as many cases. The matter has concluded in a period shorter than many cases including, regrettably, parenting cases. The matter has, however, on any description, been an ordeal for both parties and, no doubt, various others who are close and important to each of the parties, including their children.
The issues in dispute in the proceedings have, as is common, distilled towards the close of the hearing, although the issues in dispute remain numerous.
The substantial issue of property adjustment over which the parties litigate is somewhat subsumed by allegation of wastage that is agitated on behalf of Mr Harper. That issue assumes some real significance in the proceedings. The argument of wastage is also a context in which the relief sought by each of the parties is best understood.
By his Application Initiating Proceedings filed 18 June 2015, some two years and four months ago, Mr Harper sought property adjustment relief in the following terms:
That the Respondent [Ms Harper] do all acts and things and sign all documents necessary to cause and give effect to the transfer of the land known as Property A, Folio Identifier (omitted) in the State of New South Wales to the Applicant forthwith.
That property is one of several that the parties have owned in their relationship. Indeed, these parties have, in past times, been people of quite some substance. Regrettably, that is no longer the case.
Consequent upon the transfer of the Property A property, Mr Harper seeks to indemnify Ms Harper with respect to any future debt in relation to the property. There are, in addition, various other debts that will become apparent, one at least of which will need to be the subject of indemnity.
Mr Harper seeks to retain four motor vehicles which were, at the time the Application was filed, then in his possession. It would appear that two of the vehicles remain in his possession. Two others have been sold and two others acquired, although it would seem encumbered by finance arrangements for most, if not all, or perhaps in excess of, their value.
Mr Harper proposed that he would indemnify Ms Harper with respect to a debt alleged to be due and payable to a Ms D. Ms D, a witness in the case, is the aunt of Mr Harper, and a person of some significance as regards past financial dealings.
Mr Harper otherwise proposed that each party retain all assets in their respective possession, custody or control, and that Ms Harper pay his costs.
That remains, in effect, the relief that is sought by Mr Harper.
Ms Harper, by a Response filed 18 April 2016, some significant period after the Initiating Application was filed and served, seeks relief including that prior Orders made in these proceedings, a matter of some significance to which I will shortly turn, be set aside and that the proceedings be transferred to the Brisbane Registry.
The proceedings were not transferred although, with hindsight and in light of the resources this matter has consumed, as a matter of self-protection alone such transfer might have been desirable. That is not to say that I would willingly impose any additional burden upon my colleagues in another Registry. Suffice to record that the proceedings were not transferred and that refusal was dealt with in a separate Judgment. By the time the transfer Application was made, the matter had already advanced some significant way and it was apprehended, at that point, that the issues in dispute were somewhat more limited than has transpired.
Ms Harper, importantly, sought that the property at Property A be transferred to the husband but in return for payment of a sum certain and, if not paid, that the property be sold and the proceeds divided such as to achieve a 70/30% of the assets of the parties.
I make clear that relief sought in those terms is not to be encouraged. It is not relief that the Court is competent to entertain. The Court must have specific proposals and Orders sought (See, for example, the High Court’s discussion of the issue in U v U (2002) 211 CLR 238). An Order sought in broad terms such as, “that the property of the parties be divided so that the wife receives 70% of the pool” or “such order as is just and equitable”, and Orders of such fashion cannot afford due process to the other party who is then left to seek to determine what the pool might comprise and the value of such assets and then determine who holds what, retains what, and how it might play out. In any event, in this case, I am satisfied that the parties are each fully aware of that which the other seeks.
Ms Harper otherwise seeks that all other assets and resources lay where they presently lay and be retained by the party with ownership or possession. In addition, Ms Harper sought, as an ongoing and enduring Order, that she receive a payment from Mr Harper per week of $1,346, or such other sum as the Court deemed appropriate, by way of periodic spousal maintenance. Ms Harper also seeks costs. That portion of the Application is somewhat elusory at this point, as Ms Harper has, throughout this particular tranche of litigation, appeared on a self-represented basis.
Material considered
In dealing with the proceedings I have read and considered each of the following in the case of Mr Harper:
a)A substantial Affidavit of evidence-in-chief filed by Mr Harper sworn or affirmed 30 May 2017 and filed 31 May 2017. I have referred to the document as substantial as it is a document of some 556 pages in two volumes incorporating numerous annexures;
b)A further Affidavit of Mr Harper, being that which had been filed and relied upon at the time of an earlier undefended hearing, that being an Affidavit sworn or affirmed 14 May 2015 and filed 18 June 2015;
c)A further, albeit very brief, Affidavit of Mr Harper upon which turns for the purpose of factual findings, but being the further brief Affidavit filed 31 May 2017;
d)An Affidavit of Ms D sworn or affirmed 20 May 2017 and filed 26 May 2017;
e)An Affidavit of Ms J sworn or affirmed 20 May 2017 and filed 26 May 2017;
f)Two Financial Statements filed by Mr Harper on 31 May 2017 and 18 June 2015 respectively.
The historical comparison between the two Financial Statements does not create any real or significant issue regarding credit, or findings of fact.
The evidence filed in Ms Harper’s case is somewhat less substantial. It comprises, in addition to the Response already referred to:
a)An Affidavit of Ms Harper sworn or affirmed 9 June 2016;
b)A further Affidavit of Ms Harper sworn or affirmed 15 April 2016 and filed 18 April 2016;
c)An Affidavit of Ms Harper sworn or affirmed 26 May 2017 and filed the same date;
d)Two Financial Statements filed respectively on 18 April 2016 and 26 May 2017.
There are also a number of Affidavits by valuers or material annexed to Affidavits of the parties relating to value. That material comprises:
a)An Affidavit of Mr D sworn or affirmed 2 August 2016 and filed 3 August 2016;
b)An addendum valuation is also provided by Mr D dated 10 October 2016 and being Exhibit A8;
c)An Affidavit of Ms Harper, but which is in fact intended to relate to circumstances in which a valuation was commissioned and prepared and filed 1 June 2017. That valuation would not be admissible as an annexure to Ms Harper’s material. However, Ms Harper does, in fact, annex an Affidavit by the valuer, Mr A;
d)An Affidavit of Mr B, titled Affidavit of Single Expert Witness filed 29 July 2016. Clearly, the Affidavit is not that of a single expert. It recites at paragraph 2, “I have been instructed by the solicitors for the Respondent”.
In any event, those four valuations create some controversy. None of the valuers were called. Thankfully, for the benefit of the parties, if nothing else and the consequence of a sale of the property, a consequence Mr Harper has a desire to avoid, there is now agreement between these parties as to the value of the property at a figure of $500,000 even.
The range of values given by the valuers ranged from $400,000 at the lowest (the earlier Affidavit of Mr D asserted a value of $300,000, but that valuation is somewhat aged and had left out various aspects of the property) to an upper limit of $670,000. It is, of course, not open to the Court to average the valuations and it would have been impossible in the circumstances to prefer one value over the other. Thus, sale would have been necessary to ascertain the value. It is commendable that the parties have achieved that resolution while the matter has been stood briefly to allow further reading before these reasons were delivered.
It should also be made clear that this Judgment is delivered on an ex tempore basis, commencing at approximately 5:00pm. The reasons will, I would hope, be and be considered, in the event of future controversy, as adequate and sufficient, disclosing and demonstrating the facts relied upon and found, the law applied to those facts and the reasoning process to arrive at an outcome. However, one would hope that reality might be considered. If Judgment is not delivered on an ex tempore basis today, these parties will be required to wait some little time, hopefully not substantial, but certainly some short time.
The workload of the Court is such that commencing tomorrow, are two further two-day parenting hearings which have been waiting significantly longer for trial than this case, indeed, nearly twice as long. There would be no time for Judgment to be considered, which would then involve rereading several hundreds, verging upon a thousand, pages of material, notes from the four days of hearing as well as from earlier tranches of the litigation between the parties. It is unlikely that delay would bring greater clarity.
I make clear that these reasons are delivered on an ex tempore basis due to those pressures, but in circumstances where I am entirely satisfied that I have understood the evidence of the parties and am able to properly appreciate and understand their evidence and to give reasons today. If it were otherwise, the matter would, irrespective of the delay and disadvantage that the parties may perceive, be reserved.
There are also a number of documents that have been filed that have not been considered. In particular a number of Affidavits were filed by or on behalf of Mr Harper during a period when the matter was part-heard. I do not refer to these Affidavits to seek to raise criticism, save and accept one issue which I will touch upon briefly and for the sake of clarifying why that material is not considered.
Two further Affidavits of Mr Harper were filed on 27 July and 17 August 2017 respectively. An Affidavit by an accountant was also filed addressing certain aspects of the evidence, and in particular, the veracity or otherwise of certain transactions which had been the subject of comment, intended to be somewhat offhand, but taken very much to heart. The issue to which the accountant’s evidence goes largely relates to a suggested impropriety, the impropriety being suggested by Ms Harper, regarding certain transactions which had occurred in 2011 and 2012. Those transactions regard suggested payment from a business entity of Mr Harper, being Mr Harper personally trading through a business name to Ms Harper.
Why those transactions were raised as a criticism is unclear, as they led to advantage for these parties. Indeed, potentially, a significant advantage as I will touch upon in the evidence. However, it was not an issue that was ever going to cause concern with respect to Mr Harper’s behaviour either as regards findings of fact or credit. Accordingly, that Affidavit has not been admitted late in the trial, and when the matter is part-heard, and in circumstances where the Respondent is self-represented and, without intending any disrespect to her, falling within the broad umbrella of an unsophisticated litigant.
The two Affidavits of Mr Harper are not read for a variety of reasons, not the least of which are:
a)The documents are filed somewhat late in the day, and in circumstances, again, where Ms Harper is self-represented;
b)The more substantial of the two Affidavits, the first in time, does not lead evidence as such, but simply identifies documents which have now been disclosed by Mr Harper and which were, it would seem there is no dispute, some six weeks or so ago, delivered to Ms Harper by courier.
Those same disclosure documents are annexed to the Affidavit of Mr Harper, an Affidavit of some seven or eight paragraphs, and one and a half pages. The Affidavit, with those annexures, comprises three 20 litre archive boxes containing numerous ring binders of documents. The documents are certainly prolix and certainly exceed a length that is reasonable or proportionate to the issues in dispute and would likely be struck out as unnecessarily prolix pursuant to rule 15.29 of the Federal Circuit Court Rules 2001. However, that course is not necessary. They are filed simply not read. No leave was sought to adduce the evidence. Mr Harper was, at the time, under cross-examination.
The inclusion of three archive boxes of discovered documents to be admitted, as they would be if the Affidavit were read, is unnecessary. They do not take any issue further. Indeed, each of the parties has had a propensity to annex material to their Affidavits, perhaps one more so than the other, and simply state that the document speaks for itself. Indeed, documents do generally speak for themselves, but their relevance must be established. That is the fundamental principle set out in section 55 of the Evidence Act 1995.
The relevance of the documents, very substantial documents in three archived boxes, could not possibly, on their face, be established. The Affidavit does not refer to their relevance or purpose of tender and simply states that they are the documents that have been disclosed to the wife. The documents are rejected.
The issues in dispute, as indicated, largely hinge upon matters relating to wastage or premature distribution however they might be described. I will turn to those issues shortly after some consideration of the history of the proceedings, including the conduct of the trial and chronology of events.
History of the proceedings
The proceedings were commenced, as would be apparent, by an Application filed by Mr Harper quite some little time ago and by an Application Initiating Proceedings filed 18 June 2015. That Application was promptly served upon Ms Harper.
The Application came before the Court on 18 August 2015. On that date, the proceedings were adjourned and a number of Orders made with respect to disclosure. That is the first of many Orders that have been made with respect to disclosure.
Before the proceedings next returned before the Court an Order was made in Chambers, with the consent of the parties, varying the date by which Ms Harper was to file her material in the event that the matter was not resolved.
The matter then returned before the Court on 7 December 2015. On that date, Ms Harper appeared – certainly that is indicated on the bench sheet, although it is unclear whether that was by telephone or in person. Nothing turns upon any distinction. The proceedings were further adjourned as a Response had not been filed. An Order for costs was made and a further Order with respect to disclosure made. It is to be remembered that the Federal Circuit Court Rules 2001 do not permit interrogatories or formal discovery without leave of the Court and an appropriate declaration under Division 14 of the rules. Indeed, this is a matter in which disclosure, if not discovery and interrogatories, would have been significant at an early time. Regrettably, that did not occur. I make clear that the solicitors now retained by Mr Harper were not retained at that time.
The solicitors then retained by Mr Harper had advanced Mr Harper’s interests to a point of conclusion which I will come to shortly. However, both prior to that relative point of conclusion and post, the matter was conducted somewhat litigiously and it would seem, by reference to some of the material annexed to Mr Harper’s own Affidavit, unnecessarily so.
Returning to the issue of disclosure, a vexed issue for both parties and something of real significance throughout the proceedings, Mr Harper’s then attorneys, who shall remain nameless, had, as Ms Harper had complained during her cross-examination on what was, in effect, day 4 of the proceedings, directed to her various interrogatories. Of course, no leave had been sought to do so.
From a consideration of portions of the interrogatories, a matter of complaint by Ms Harper, at times valid, at others, perhaps not, that process was clearly unhelpful and unnecessary. For example, one letter addressed to Ms Harper’s then attorneys, dated 9 September 2016, is some 10 pages of length and seeks particulars with respect to specific transactions. The particular example that leaps from the document is a transaction involving an amount of $10.28 that appears to have been deposited to the bank account of one of the children. The letter includes:
Please have your client provide an explanation as to why this cheque was deposited into this account and details of other accounts in the children’s names or any other person that your client has deposited/ transferred share dividends into.
That was a transaction that would appear to have occurred in 1999, a good 14 years prior to the separation of the parties. Focus upon such issues has nothing to do with disclosure, discovery, definition of issues or indeed anything that a competent lawyer might do to assist a party to prosecute their legal interests, let alone bring the dispute to a conclusion by consensual resolution. It is unnecessarily litigious. It is not adversarial. The adversarial system is not to be conflated with aggression. Actions such as those above do little more than confuse issues, hide the matters which the parties should be turning their attention to and which have been fairly clear by the end of these proceedings.
Again, however, I make clear that those attorneys are not those presently retained by Mr Harper. They ceased to act for Mr Harper in circumstances whereby Mr Harper could no longer afford their fees, perhaps explicably so, as one might imagine a significant price tag would attach to a 10-page letter seeking interrogatories for which no leave has been granted, and for which no forensic purpose is apparent from or disclosed by the document.
In any event, those issues are something of a distraction. Proper discovery was important in the context of the property pool of these parties, and the issues that they have litigated but sadly lacking. On any view of the matter, the pool of property available for division between these parties at this time, noting the agreement now reached between the parties as to the value of the most significant asset comprising their pool of property, the Property A industrial unit, is less than half a million dollars.
Why one would need, in those circumstances, to ascertain the source of payment of a dividend received 14 years prior to separation and of only double-digit value is unclear. There were clearly bigger fish to fry in this case, and those more relevant issues have been extensively trolled through during the course of the hearing and its preparation.
When the matter came before the Court in March 2016, Ms Harper did not appear. Ms Harper had still not filed a Response, nor indeed, a Notice of Address for Service. Accordingly, and appropriately so, Counsel appeared, and the matter proceeded and was heard and determined on a final and undefended basis in Ms Harper’s absence.
The undefended hearing occupied most of one day. The matter was dealt with on a final basis and on an acceptance of Mr Harper’s then unchallenged evidence, as being more probably correct than not, and thus accepted on its face, as true. I pause to make clear that I do not intend to find that either party has been untruthful. There are certainly issues of credit very much at large, but it is not a matter that Mr Harper, having given one version, was caught out. Far from it. It is simply that there was another version of events, Ms Harper’s, which was not then before the Court.
No issue was being raised as to recusal or otherwise based upon that earlier determination having been made.
After the Orders were made and brought to the attention of Ms Harper, a Response was filed by Ms Harper seeking to exercise leave pursuant to rule 16.05 of the rules. The ability to seek that leave, and constrictions upon its exercise, had been included in the Orders made 21 March 2016.
The Application to relist made by Ms Harper through her then solicitors was made some few working days outside of the period fixed, a matter that was raised and canvassed at some length at a subsequent hearing of that interlocutory Application. However, the matter was relisted and proceeded on the basis of both the written evidence of the parties, oral submissions and brief written submissions. The parties were somewhat inconvenienced by changes to the date allocated due to illness, but the leave Application was ultimately heard on 9 June 2016. At the conclusion of detailed submissions, both as to evidence and points of law, Judgment was reserved, something I have been conscious to avoid for these parties on this occasion.
Whilst the matter was allocated a further return date, the Judgment was able to be prepared more expeditiously than anticipated and on 1 July 2016 a Judgment of some 50 pages was delivered granting Ms Harper's Application for leave to reopen. As already indicated, the Application to transfer to the Brisbane Registry was refused.
At the time that leave was granted, further Orders were made to guide the parties towards preparation for trial, including yet another Order with respect to disclosure, Orders with respect to valuation and a further return date allocated.
Portions of those directions were complied with, and when the matter returned before the Court on 12 October 2016, the parties were directed to a Conciliation Conference, further Orders made in relation to the exchange and provision of information and yet another adjourned return date allocated.
On the further adjourned return date, it was apparent that it had not been possible to achieve a resolution. The Registrar, who was seized with conduct of the Conference, had prepared a Bench Sheet, noting that the Conference did not, in fact, proceed, as there were issues with respect to outstanding disclosure and as valuations were not completed.
On that basis, when the matter returned, the proceedings were listed for final hearing. It seemed that there was little utility in any further Order or directions regarding preparation or disclosure, save for the parties to file their evidence.
The matter then commenced hearing on 21 June, 2017 the first of two scheduled trial dates. The second day, whilst portions of the day were occupied, did not occupy any substantial hearing time as such.
During the course of the first day of hearing, and whilst Mr Harper was under cross-examination, albeit by Ms Harper on a self-represented basis, a small glimmer of hope as to a prospect of resolution and a window of opportunity to achieve it through facilitated negotiation, was glimpsed. Arrangements were made urgently for a Registrar to be available to assist the parties.
The parties attended a Conference and negotiated for some little time, indeed, quite some time, until nearly 5:00pm. Upon returning the next day, an attempt was made to resume the matter, but with no great success. It was clear and apparent that each party complained of significant issues of non-disclosure, and an inability to thus present their evidence or test that of the other party. Detailed Orders with respect to disclosure, as well as the preparation of a summary of voluminous documents pursuant to section 50 of the Evidence Act 1995, were made. I incorporate those directions herein:
1. The parties are to attend a Conciliation Conference with Registrar Bartlett at 2:15pm on 7 August, 2017 and Mr Harper shall pay the conciliation conference fee (together with the conciliation conference fee for 21 June, 2017).
2. Ms Harper shall have leave to attend the conference by telephone.
Disclosure
3. Pursuant to Parts 14 and 24 Federal Circuit Court Rules that no later than 4pm Friday 14 July, 2017 the parties and each of them shall ensure (to the extent that it cannot be demonstrated to have already been done) that copies of the following documents are provided to the other party, namely:
a) Copies of income tax returns and assessment notices for from the financial year ending 30 June, 2005 to the financial year ending 2016 and being returns for that party personally and for any entity in which that party has an interest (such as a private company, trust or partnership);
b) All Business Activity Statements, Ledgers, Depreciation Schedules, Financial reports or other business records for any business operated or engaged in by either party for the financial years ending 30 June, 2015, 2016 and 2017;
c) Copies of all documents relating to or evidencing share trading activity (to include trading in shares, stock, bonds, annuities, currency, margin lending and derivatives) engaged in by either party (or the parties jointly) for the period commencing with the financial year ending 30 June, 2005 to date and such as to demonstrate all purchases, sales, profits and losses;
d) All documents including Bank Statements, Loan agreements or other written materials demonstrating the receipt of funds received from the sale of shares as well as demonstrating the source of funds for transactions;
e) Copies of bank statements for the period from the date of separation to date for any account in that party’s name (whether singularly or jointly with any other person or in trust) and in the name of any entity in which that party has or had an interest such as a private company, trust or partnership;
f) Copies of credit card statements for the period from the date of separation to date for any account in that party’s name (whether singularly or jointly with any other person or in trust) and in the name of any entity in which that party has an interest;
g) All documents relating to the sale of any parcel of real estate in which any party has had an interest and for the period 1 January, 2010 to date and including contracts for sale, transfers, settlement calculations and settlement statements together with Bank statements, ledgers and any other written document demonstrate the receipt, use and/or application of the proceeds of sale of the property;
h) All applications for finance whether by way of mortgage, personal loan, lease, Hire Purchase agreement or otherwise for the period 1 January, 2013 to date;
i) All documents relating to the purchase, sale (including by trade in) or acquisition (including by way of lease or Hire Purchase) of any motor vehicle for the period 1 January, 2013 to date;
j) All Bank Statements relating to and demonstrating any payment made with respect to any mortgage, loan or other liability (including personal loans, credit cards, leases and hire purchase contracts) for the period 1 January, 2013 and including documents calculating and/or demonstrating the balances outstanding with respect to those liabilities including as at today’s date;
k) All tax returns, ledgers, journals, financial statements or other documents relating to and evidencing the payments of $240,000 each ($480,000 in total) to the wife during the 2011 and 2012 financial years and including documents demonstrating the source or suggested source of such payments;
l) Any document within the possession, custody or control of that party which falls within the above classes or categories of documents and/or proving disproving or tending to prove or disprove any allegation contained in either party’s Financial Statement or Affidavit or which will be raised as an allegation of fact at hearing.
4. All documents within a specific category or class of documents shall be tabulated and labelled by reference to the above categories and the documents within each specific category or class of documents shall be paginated (numbered) for ease of identification and location.
5. Pursuant to s.50 Evidence Act 1995 Each party shall serve with the above documents a summary of the documents (if voluminous) which clearly sets out in a table:
a) The allegation of fact that the transaction or transactions are intended to prove or assist in providing;
b) The transaction/s or page/s of the original documents that support the allegation of fact.
Example:
| Alleged Fact | Documents tending to prove fact |
| That the property at Property C was sold 01.01.2012 for $670,000 | Contract for sale (document G 1-19) Transfer dated 01.02.2012 (document G 20) |
| That the proceeds of sale of $670,000 were applied as follows: Payment of mortgage to (omitted) Bank - $431,431.31 Payment of sale costs - $20,567.89 Balance to Wife's (omitted) Bank Acc ending (omitted) | Settlement Statement (document G 67) Correspondence (omitted) Bank (document G 68) Mortgage statement (document K 1-3) Letter Conveyancer (document G69-70) Letter from Agent (document G71-72) Bank statement re (omitted) Bank Acc (document E213) |
| That the funds received by the wife discharged various credit card debts | Bank Statement re (omitted) Bank (document E213) Mastercard Statement (document F38) Visa Statement (document F187) Amex Statement (document F376) |
| That the wife retained $21,987.65 | As above |
6. Any document which is, at the date of this order, in the possession, custody or control of a party and which is not disclosed and a copy provided to the other party in accordance with the above order will not be admitted into evidence.
7. Inspection of all documents produced by a party as above shall occur within 14 days of production (ie by 4pm 28 July, 2017).
8. The parties are to be in a position to advise the Registrar conducting the Conciliation Conference of the facts as alleged in any summary provided by the other party, which facts are agreed and which are in dispute and, in the event that any fact as alleged is disputes the party raising that dispute shall identify the documents which they suggest support their position and contradict the position of the other party.
9. No later than 4pm 28 July, 2017 each party shall do all things, sign all documents, pay such fees and give all consents, authorities and instructions as are necessary to cause the valuers retained by them to date to confer with a view to identifying the matters that are agreed and those which are in dispute between them and, if at all possible to agree upon a valuation of the Property A property as at the date of conferring and on the basis of the valuation of the property in its present presentation and state of repair and including the mezzanine constructed at the property and, in any event, the parties are to ensure that a single value for the property is fixed for the purpose of the conciliation conference.
Balance Sheet
10. The applicant shall within 21 days of today’s date serve upon the respondent a draft balance sheet to include all assets, liabilities, superannuation interests, financial resources and property suggested to be relevant and to include three columns for the value of each such item and being the values as alleged by each party and a column for agreed values and, further:
a. The respondent shall then within 14 days of receipt of the draft balance sheet make any additions to the balance sheet as required to reflect contra allegations by the respondent and any values that are agreed (if applicable); and,
b. Wheresoever controversy exists as to the inclusion of an item or the value of an item a footnote shall be appended to explain the controversy; and,
c. Upon completion of any Single expert valuation the balance sheet shall be amended to reflect determined/agreed values;
d. The balance sheet reflecting current agreements and controversies shall be provided to the Registrar conducting the Conciliation Conference not less than 24 hours prior to the conference and a final, settled version shall be filed prior to trial with the Case Outline filed by each person.
11. Leave is granted to the parties to issue such further subpoena as they may consider relevant, appropriate or useful and such leave expressly authorises and allows the issue of more than five subpoenas.
12. The proceedings are adjourned part heard for a further 2 days of hearing to 31 October & 1 November, 2017.
13. Leave is granted to the parties to issue such further subpoena as they may consider relevant appropriate or useful and such leave expressly authorises and allows the issue of more than five subpoenas.
Those directions were certainly successful in producing a vast volume of material. Part of the difficulty for Ms Harper, as a self-represented litigant, arose from the delivery by courier to her some weeks ago, of three archive boxes of material which no doubt gave the impression of her being presented with a haystack within which the promise of a needle lay. The Court was presented with the same material on the same basis with the accompanying Affidavit giving no clue as to relevance of any of the documents. However, the parties could not further complain, or at least not Ms Harper, that she has now had anything but complete disclosure.
The matter then resumed for two further days of hearing, 31 October and 1 November 2017. At a compliance check, shortly prior to those dates, it was ascertained that the matter was proceeding, although some hope of settlement was still held. That hope was not ultimately realised.
During the course of the hearing, each of the parties has been cross-examined, a number of documents have been tendered, and each of the individual witnesses and Ms D and Ms J have been cross-examined albeit briefly.
The documents that are tendered comprise:
a)Exhibit A1, certain assessment notices for the 2014 and 2015 financial year;
b)Exhibit A2, a schedule prepared by Ms D as to the repayments made to her with respect to advances she had made to the parties, whether with their full knowledge and consent, at the time of advance or otherwise;
c)Exhibit A3, a bank statement;
d)Exhibit A4, correspondence from (omitted) regarding an application for an early release of funds to Mr Harper from his superannuation entitlements;
e)Exhibit A5, returns from Ms Harper, partial at least, for the period 2004/2005 to 2009/2010;
f)Exhibit A6, an application to (omitted) Bank, being a hardship application made on behalf of all four registered proprietors of the then formal matrimonial home. The document is completed in the hand of and signed by Ms Harper;
g)Exhibit A7, a bankruptcy notice in relation to Mr Harper, such event thankfully averted;
h)Exhibit A8, a further valuation by Mr D;
i)Exhibit R1, a bank statement with respect to the balance of the mortgage encumbering the Property A property, at least as at 20 June 2017;
j)Exhibit R2, a letter from the husband’s then lawyer to the wife’s then lawyers, dated 10 October 2016, it would seem one of a considerable number of such letters;
k)Exhibit R3, what purports to be a settlement statement with respect to the sale of one or two properties at Property D, Queensland, which have been owned in the name of Mr Harper;
l)Exhibit R4, a loan agreement, dated 17 December 2008. Although expressed as a loan agreement the document is, perhaps, better described as an acknowledgment of debt, signed by Mr and Ms Harper;
m)Exhibit R5, the Affidavit of Ms Harper, annexing a valuation, although the valuation was already in evidence, it would seem.
The evidence
The parties are largely agreed with respect to the chronology of events. Accordingly, I propose to incorporate herein the chronology provided by each of the parties. Each chronology raises matters that are somewhat partisan, particularly as to how they express what has occurred with certain transactions, but on that basis the inclusion of each hopefully provides some balance.
Applicant’s Chronology
(omitted) 1921
Husband’s father – Mr J born
(omitted) 1925
Husband’s mother – Ms M born
(omitted) 1959
Husband born
(omitted) 1964
Wife born
(omitted) 1988
Parties married. Each party had about $40,000 at that time.
1988
Parties purchase property at Property D with husband’s parents for $300,000. Husband’s parents put in $150,000 and parties borrow $150,000 for their share. Husband agrees to pay the mortgage on the property, with high interest rates which went to 18% per annum. Husband carries out extensive renovations to the property worth over $500,000.
Early 1990’s
Husband purchased 3 bedroom Unit at Property E for $159,000. Husband paid deposit and stamp duty then borrowed balance of purchase price of $159,000. Property rented from outset.
(omitted) 1997
X born, now aged 19 years.
(omitted) 1999
Y born, now aged nearly 18 years.
Early 2000’s
Parties purchased property at the Property B for $839,000 jointly with the Husband’s parents. Purchase funded by borrowings. Property rented for about $50,000 per annum.
Early 2002
Wife commenced day trading in shares
(omitted) 2003
Z born, now nearly 14 years.
About 2004
Parties purchased factory unit at Property A for about $90,000 in the name of the wife. Husband spent about $200,000 on renovations.
About 2005
Husband sold Property E. Sale proceeds used to pay down debt on Property D.
About 2005
Parties purchased two properties at Property D for $550,000. Purchase financed by borrowings.
2006
Property D property sold for $1,200,000. Wife advises Proceeds used to pay down debt on Property B property. Parties move into the Property B property and husband’s parents moved into 2 bedroom granny flat attached to the Property B property.
2008/2009
Wife lost large sums of money share trading over an extended period of approx. 5 years. Inexcess (sic) of $1,500,000 drawn down on the mortgage over Property B property. $240,000 borrowed from husband’s Aunty Ms D. Property B property forced sale by bank for $1,500,000, mortgage was $1,700,000. $200,000 shortfall then secured over Property A factory Unit. Husband’s parents lost their monies.
26 June 2013
Parties separated
June 2014
Property D properties sold for less than their purchase price.
June 2014-17
(i)Wife abandons the house that the husband is paying $1000.00 per week in rent and moves.
(ii) Husband pays school fees and $90.00 each per week to the children and other things.
Respondent’s Chronology
Date
Event
(omitted) 1959
Applicant born, 58 years old
(omitted) 1964
Respondent born, 53 years old
(omitted) 1988
Applicant and respondent married. Respondent came to marriage with around $80,000 from a previous property settlement from a de facto relationship. Property in Property D purchased for around $300,000. Property was purchased in four names being Mr Harper, Ms Harper, Ms M, and Mr J. Loan for $150,000 was taken out by Mr Harper and Ms Harper, remainder of purchase price was put in by Ms M and Mr J from the sale of their house in (omitted).
(omitted) 1997
Property unit Property E is purchased as an investment property for rental purposes, in Applicants name only.
(omitted) 1997
X born, now aged 19 years, lives with Respondent in QLD, respondent solely covers rent, food, electricity, internet and phone bills and other living expenses. Applicant pays pocket money of approximately $90 a week directly to X’s bank account. X has just finished a Diploma course and is continuing study and working part time.
(omitted) 1999
Y born, now aged 18 years, lives with respondent in QLD, respondent solely covers rent, food, electricity, internet and phone bills and other living expenses. Applicant pays pocket money of approximately $90 a week directly to Y’s bank account. Y is studying in year 12 at present at (omitted) School, and has a part time job.
(omitted) 2001
Property at Property B purchased for $742,500 with intention of the family moving to the Property B, property in Sydney does not sell so bridging finance taken out to cover purchase price and property rented out for around $1,000 a week. Property purchased in 4 names, see above.
(omitted) 2002
2 properties purchased at Property D for approx $500,000 plus $40,000 furniture package for holiday rental purposes. Property in Applicant’s name solely.
2003
Around this time Respondent started day trading in shares at the Applicant’s suggestion. At this time it was purely on the Australian Stock Market.
(omitted) 2003
Z born, now aged 14 years, lives with respondent in QLD, respondent solely covers rent, food, electricity, internet and phone bills and other living expenses. Applicant pays pocket money of approx $90 a week directly into Z’s bank account. Z is currently in year 8 at (omitted) School.
(omitted) 2004
Commercial property at Property A purchased for 303,273.87 including GST. Property purchased in Respondent’s name only and rented to constructive constructions, the Applicant’s business.
2006
Property at Property D sold, sale proceeds paid towards loan and remainder deposited into Applicant’s bank account.
(omitted) 2006
Commercial property at 8/7 Property H purchased for $298,000 in Respondent’s name only, rented to constructive constructions for storage of tools.
(omitted) 2006
Applicant winds up his (omitted) business in Sydney, family move to Property B, with intention of Respondent making sufficient earnings on the Stock Market by day trading. Applicant is fully aware of this and in fact encouraged this to happen, and was at all times aware of the risks involved and the money being invested. As was the Applicant’s parents as they sort (sic) independent legal advice on a few occasions concerning their finances being integratably tied in with both the applicant’s and respondent’s.
2008/2009
Due to the GFC occurring there were losses incurred on the stock market, this led to a deficit in all our mortgages which further led to the bank insisting on the sale of the commercial property at Property H and the residence at Property B. Unfortunately because of the GFC property prices had been affected and the valuation of the Property B property of $2.1M, was not an appropriate reflection of the sale price.
2009
The Applicant moves back to Sydney to recommence his (omitted) business in the interim.
2010
Applicant is involved in an accident. Property at Property B is sold and family are set to move back to Sydney but after our furniture being shipped to Sydney, Applicant decides he wants family to stay on Property B.
2010-2013
Respondent works on the Property B with the Applicant working in Sydney and commuting back every 3-4 weeks to the rental property which family lived in.
26 June 2013
Applicant tells respondent that marriage is over but that he will continue to look after the family. This occurred until around late 2013 when demand letters started arriving for furniture and an insistence that the commercial property at Property A must be signed over to the Applicant. When the Respondent replied that legal advice would be needed all financial support from the Applicant stopped.
I do not propose to canvass and summarise the entirety of evidence by these parties. The evidence, that which is set out within their documents neatly captures, at least as to the significant events, that which is set out in the chronology of events incorporated above.
The parties have had a somewhat lengthy relationship. As would be apparent from the chronology, the parties were married in 1988 and separated on a final basis in 2013. During that time, three children have been born. All continue to live with Ms Harper, although two have now reached their majority. As Ms Harper has submitted from the bar table in her closing, the legal obligations arising from an assessment of child support with respect to those children might have ended, but Ms Harper considers that she continues to have at least a moral and social obligation to maintain and assist those children, obligations which are recognised by Full Court jurisprudence.[1]
[1] Bromwich & Bromwich [2007] FamCA 157.
The arrangements for those children are not contentious. The parties have never litigated in relation to their children and they have not needed to, they are very much in agreement, and notwithstanding the emotional vigour with which each has approached their property issues, they have been, and must be congratulated for, being exemplary in their approach towards their children and continuation of a relationship between those children and their father, particularly as since separation, indeed for some years prior to the final separation of the parties, Mr Harper has lived predominantly in Sydney and Ms Harper in Queensland with the children.
There are tensions between the parties. But notwithstanding those tensions, the children have maintained a relationship with and seen their father, albeit infrequently, but not through any lack of love or affection or commitment by either parent or the children.
There are real issues between the parties with respect to the financial support that has been and will continue to be provided for the children. There is no child support assessment and there never has been. Ms Harper has introduced some evidence, although it’s probative value is limited, both bearing in mind that it was objected to by Counsel for Mr Harper and as it is largely hearsay. However, the absence of a child support assessment is not in dispute.
That does not mean that financial provision has not been forthcoming for or to the children. However, there is perhaps the distinction to be drawn, as is submitted by Ms Harper, that whilst Mr Harper provides funds to the children those funds are not provided to Ms Harper to assist in the day-to-day care and upkeep of these children, putting a roof over their head through payment of rent, purchasing food, clothing and the like. There is no controversy that at whatever rate and for some years, Mr Harper has met private school fees for the children. It would seem those fees have significantly reduced of recent times, due to a hardship application having been made by Ms Harper.
Mr Harper has continued to provide $90 per week to each of the children, directly to their bank accounts, by way of what might be described, in old-fashioned terms, as pocket money, or in more modern terms, influenced by American jargon, an allowance. But as Ms Harper submits, it is not money that directly goes towards the day-to-day care and upkeep of the children. That is Ms Harper’s responsibility. Those issues have some relevance. I will touch upon them again shortly by reference to section 75(2) of the Family Law Act 1975.
The parties are also largely agreed as to the chronology of transactions with respect to the purchase and sale of real estate. There have been a number of properties bought and sold. I will not address all of them. They are set out in the chronologies. The parties moved from New South Wales to Queensland in or about 2006. At the time of sale of their then Sydney home, they had purchased their former matrimonial home in Queensland. The Queensland home was purchased jointly with Mr Harper’s parents, all joint registered proprietors. Sadly, Mr Harper’s mother has passed. Mr Harper’s father is aged and in a care facility.
To that end and lest there might be any suggestion to the contrary– although to her credit Ms Harper has not raised it, but she is without legal representation and may not have been aware that she could – there is no suggestion that Jones & Dunkel (1959) 101 CLR 298 inferences might be drawn through an absence of that gentleman’s, Mr J’s, evidence. Such a submission, if it had been put, would have been rejected, as a clear and appropriate explanation for his absence is given. Indeed, Ms D, without intending in any way to be offensive to her, is not young and sprightly. She has attended for cross-examination and remained to provide support to her nephew.
The Queensland home, having been purchased, was then the subject of a mortgage of $640,000 or thereabouts. The best evidence I have of that is Ms Harper’s, during her cross-examination, that the property had been purchased using, as she described, solicitor finance, in any event, bridging finance, whilst the parties still owned their property in Sydney, and ultimately that they refinanced with a bank mortgage.
Following that refinance a number of extensions to the mortgage, if they might be so described, have occurred. They have been the subject of extensive cross-examination. The extensions have, importantly, included a borrowing of $520,000. A portion of that advance at least, the parties at odds as to what that portion might have been, was applied towards share trading. Share trading is a significant issue in this case.
The parties again are very much agreed as to the chronology of that share trading undertaking. Trading commenced in 2000 or shortly thereafter. And at that point in time, it could not be argued by Mr Harper to the contrary, Mr Harper was fully aware of the share trading. So much is clear from paragraph 14 of his first Affidavit, filed 18 June 2015, in which he states:
In the early 2000 (sic) the Respondent had started day trading from home. Initially she made small trade (sic) for thousands of dollars. I financed it and was supportive of her. When we moved to Queensland the Respondent was trading futures. In 2008/2009 she lost vast sums of money in the share trading.
Indeed, that allegation of losing “vast sums” is not a fact in dispute in this case. Ms Harper, rather than referring to vast losses by share trading, refers to “substantial and devastating losses”.
The quantum of the losses is unclear. At the opening of this trial in June 2017, Mr Harper suggested the losses were in the order of $1.5 million. Ms Harper suggested the losses were $113,000. During the course of the trial, various other figures have been raised, $800,000, for example. The best evidence available is that which might be gleaned from Ms Harper’s tax returns, which suggest total losses for the period 2005 to 2010 financial years of $583,774. Some small and non-specific portion of those losses relates to real estate negative gearing. However, it is still a loss of at least half a million dollars or so. It is most assuredly apt that it would be described as a vast or devastating or substantial loss.
The parties’ real issue with respect to the share trading commences at or about the time that the particularly significant losses commenced in 2008 or possibly 2007 and continuing until late 2009, possibly early 2010. Prior to these losses being incurred, it is generally agreed on the evidence of the parties, although their evidence is somewhat brief on the issue, that the dealings went well. There was profit and sufficient profit to enable the parties to meet their expenses, including, with some income also earnt by Mr Harper and from monies from other sources, such as shares that the parties already held and which now would appear to have also been lost.
The cross-examination of Mr and Ms Harper has yielded various concessions which are of some significance, particularly in identifying the pool of property. Mr Harper concedes that he has had various dealings with cars post separation, but now holds four. They are not necessarily all the same cars as those which were held at separation, although the Court’s duty is to ascertain the present legal and equitable ownership of property, not to crystallise ownership at some past point. The best evidence I have as to value is the evidence of Mr Harper and his admissions against interests, including in his statement of financial circumstances. The motor vehicles are suggested by him at that point to be worth $53,000. That would appear the best figure available.
Specific cross-examination occurred with respect to some of the vehicles, largely focused around a (omitted) utility or perhaps, as the Americans might describe it, truck. It was conceded by Mr Harper that the truck is insured for $68,000, had, at some time prior to the trial, been listed for sale privately at $80,000 but not sold, and estimated by Mr Harper to have a value of $20,000.
A (vehicle omitted) which had been owned by Mr Harper at separation was sold. A (vehicle omitted) was retained and has a value of $21,000. A Ute had been traded or sold and another bought of higher value. A number of the vehicles have finance of one type or another. And to that extent, $53,000 is the only figure that could possibly be relied upon as to the combined value of the vehicles and then as an admission against interest.
It is clear from the evidence of Mr Harper and Ms J that money was advanced by Ms J to Mr Harper to enable him to pay a tax bill. I am satisfied that the tax was paid, the very tax bills that were the subject of the bankruptcy notice with which Mr Harper was served. I accept that service of the notice must have been a highly distressing circumstance for him, a hard-working man who has watched his assets and wealth largely deplete, and thus necessitating borrowing to be able to negotiate a compromised figure with the Commissioner and to discharge the debt and avoid the consequences of bankruptcy. That advance of $80,000, as it is described in Ms J’s evidence, has been reduced by payments of $18,000, but I accept still has a balance of $62,000 outstanding.
If it were purely a post-separation borrowing to meet post-separation tax, I would ignore it. However, I am satisfied the evidence establishes, particularly a statement of account that Mr Harper has annexed to his material, dated 24 May 2014, that at or proximate to separation that Mr Harper had an accrued tax liability of $121,000. That is, of course, tax assessed on income that was earnt during the relationship and, accordingly, both parties having had its benefit, both would be exposed to the liability. I propose to include the debt. It is established clearly through Mr Harper’s evidence.
What is also established is that Mr Harper and Ms J are not just friends, as Ms J had sworn in her Affidavit. They are, indeed, intimate partners, having undergone a commitment ceremony in (country omitted) recently. Much cross-examination arose with respect to the trip, its funding and the like. I am not satisfied anything can be drawn from it, save the reality that Ms J’s financial circumstances, other than her ability to advance funds to Mr Harper – and thankfully so for the benefit not only of Mr Harper but Ms Harper as if she was conducting this litigation with a trustee in bankruptcy, it would be even more unpleasant than it has no doubt been – are simply not known. What is known is that the advanced funds were drawn from a mortgage account and are being repaid by Mr Harper to the mortgage account. Those details, however, do not amount to issues of great moment.
Mr Harper conceded that he is now working full time, although that was not his intent and desire at the time that the parties moved to Queensland and sold up their home in New South Wales. The evidence of the parties is somewhat agreed that after first moving to Queensland in 2006 to probably 2008, that Mr Harper was not engaged in any substantial conduct of business as a (omitted), his chosen profession and one, clearly, that he is good at.
It was described in Mr Harper’s evidence that he had semi-retired and that it was his intent that the parties would live off the assets they had already accumulated at a relatively early age, be able to maintain a comfortable middle-class existence for themselves and through the support of income through share trading, which was then profitable. Mr Harper conceded that his taxable income for the 2016 tax year was $210,000. Accordingly, it is somewhat more than might have been otherwise gleaned and understood from his earlier Financial Statement.
There is no dispute that a child support assessment and payment of child support as such, (i.e., a payment by Mr Harper to Ms Harper to assist in the care and maintenance of the children) is not made, although the payments to which I have already referred have been made, to Mr Harper’s credit. Mr Harper does not, however – again, to repeat the point that Ms Harper raises – put food on the table or a roof over the children’s head.
There is no dispute that Mr Harper has maintained occupation of the Property A unit, from which he conducts his business. The unit is owned by Ms Harper as the sole registered proprietor. Prior to the separation of the parties, that arrangement had worked usefully for the parties, in relation to their tax affairs, in that Mr Harper would pay an occupation fee or rent, possibly at a premium, and Ms Harper would then meet the mortgage and claim a negative gearing loss. There is no impropriety regarding that arrangement. It is permitted by Australian taxation law.
However, at some point shortly after separation, that arrangement ceased, thus Ms Harper was left without that income. Mr Harper has maintained payments on the mortgage of the property. Indeed, there was an additional loan relating to a shortfall from sale of other properties at the time of separation. Mr Harper had also taken on that liability, which is now discharged. The Property A mortgage is not significantly reduced through the payments that are made, but it has certainly been sufficiently maintained and serviced to avoid any increase.
The parties are agreed that sums of money were borrowed by them – the issue is what knowledge each had at different points in time – from Mr Harper’s aunt, Ms D. Those advances, in accordance with the Exhibit that is tendered, have totalled $240,000. It is clear from Exhibit A2 and Mr Harper’s own evidence that payments have been made by him from the income he has earnt over the period from 2010, pre-separation, through to the present, totalling $289,000, that being apparent from Exhibit A2 itself, Ms D’s accounting, rigorous and complete as it is.
The difficulty I have, however, is that one of the documents introduced into evidence by Ms D is a document which purports to be a loan agreement, incorporating the payment of interest on those sums. I do not propose to treat the debt as incorporating that interest. Similarly, in relation to the advance by Ms J, I do not propose to include the 8% interest that is suggested as payable. There is nothing to indicate how that rate of interest is calculated, whether it is referable to the interest rate that is paid by Ms J on the mortgage from which funds were drawn, or otherwise.
But that is the least of the problems. There are clear and specific laws in New South Wales regarding finance contracts, what is required and how they are to be entered into. They have not been complied with. Duty has not been paid on the agreements. And, certainly, in the case of both Ms D and Ms J, the lenders are related to Mr Harper in some fashion and one would imagine that a civil claim in the District Court would not be prosecuted by either in relation to the agreement which purports to provide the benefit of interest. Indeed, they could not. The documents would be found inadmissible in their form and absent the payment of duty.
To the extent, however, that the parties have borrowed the funds, it is comforting for the Court, let alone Ms D, that she has been paid back. She has provided great largesse to try and stave off financial disaster, albeit that through no fault of hers, or possibly anyone else, that end has not been achieved.
There is also an issue with respect to the receipt by Mr Harper of proceeds or benefits from sale of two investment properties in Property D that had been owned by him. The amount that is suggested to have been received – although the parties do not agree as to what it represents – is $51,412.14, representing a payment of 34,882.14 and a second payment of $16,530. Ms Harper suggests that it is an accounting of deposit from the agent, surplus proceeds after discharge of liabilities. Certainly, from the evidence, brief and incomplete as it is regarding those transactions, that is perhaps improbable but not impossible.
Mr Harper concedes that the amounts were received. He suggests that they arise as a tax refund, as a consequence of a loss made on the properties for tax purposes. That is again difficult, particularly in the manner in which Mr Harper suggests the payment reached him, as a direct ex gratia payment, as it were, from the Tax Office at the time of sale, rather than awaiting lodgement of his tax return. However, it is possible. I need not ultimately determine which occurred, as there is agreement as to receipt. I do not propose, however, to include that amount as an asset for division, what would otherwise be called a “notional asset”. I am satisfied it is preferable that it be addressed by section 75(2)(o) of the Act and that is how I will proceed.
The parties are agreed as to the $520,000 mortgage advance with respect to the Queensland property. And there is agreement and concession by Mr Harper during his cross-examination that from that amount or from the sale of earlier real estate, that at least one credit card, an Amex card in his name, was paid out, that he bought the (vehicle omitted) motor vehicle and that other expenses of the parties, jointly or individually, were being paid.
The real issue of difference in the evidence of the parties is the issue of knowledge of share trading by Ms Harper, particularly at the time that losses began to occur and accumulate. That then extends to Mr Harper’s suggested knowledge of borrowings by Ms Harper, particularly from Ms D. Mr Harper’s evidence is clear and precise – he would not be shaken on the issue that he had no knowledge whatsoever of any borrowing by Ms Harper from his family, particularly Ms D, until a debt of $190,000 had already accrued.
One of the documents tendered by Ms Harper, Exhibit R4, is headed “Loan Between Ms Harper & Mr Harper from Ms D”, and evidencing borrowings at that date, December 2008, of $140,000. Very shortly thereafter, a further $50,000 was borrowed, thus increasing the debt to $190,000. Annexed to both Mr Harper and Ms D’s material is a similar document, indeed in identical terms, save and except for the date and the amount acknowledged as borrowed, being an acknowledgment of the debt of $190,000.
It is difficult to reconcile, Mr Harper’s strident rejection of any knowledge of borrowings from Ms D until the debt was already $190,000, in light of Exhibit R4. That document, I make clear, is admitted over objection by Counsel for Mr Harper, on the basis that it is suggested (and I do not put it in those terms to suggest that the submission is inappropriately put forth) that the document had not been earlier disclosed.
This is a case in which some very great many difficulties arise with respect to disclosure. I have permitted the document to come into evidence notwithstanding the objection of Mr Harper.
Ms Harper would appear to concede that the document was not previously disclosed. When asked why it had not been earlier disclosed, Ms Harper, at least inferentially, confirmed that it had not been disclosed and suggested that she had not realised it was such an issue and/or had forgotten about the existence of the document. That is somewhat implausible, in light of the centrality of the issue of share trading and share losses. It has been to the fore since the case commenced. However, as an exercise of discretion, I have determined, Ms Harper being unrepresented, it being such an issue of centrality and importance to the case, and disclosure having been so problematic, to admit the document. Mr Harper conceded the document in cross-examination prior to tender. On that basis, I am satisfied as to its admission.
There is also agreement that certain funds were provided, as Ms Harper describes, as a book entry from Mr Harper (or the business operated by him as a sole trader) to Ms Harper for tax purposes in each of the 2011 and 2012 tax years. They are two amounts of $240,000 and one amount of $32,000, totalling $512,000. I have not sought to pursue any issue that was raised by Ms Harper with respect to those transactions to any conclusion, as might lead, for example, to a referral. It would not seem necessary to do justice between these parties. And, in any event, it is unlikely to be of any great interest to the Commissioner, in light of the substantial payment already made and negotiated by Mr Harper.
But it must be observed that while substantial losses have occurred in Ms Harper’s name in the preceding years from share trading, a benefit would have been received by the parties, who were still together and not separated at that point, from those transactions. I also pause to observe that by referring to the losses as Ms Harper’s, I do so purely to reflect the reality that they are contained within her tax returns, not a joint tax return, which of course is not lodged. It is not to suggest that they are apportioned to Ms Harper as her responsibility. However, I do not accept Ms Harper’s position that one should thus deduct those amounts from her losses to produce a loss of $113,000 or thereabouts. The losses were or would have been, but for the provision of income against which the losses were adjusted, $625,000.[2]
[2] Positive income of $512,000 was applied against a loss of $625,000 to produce a net loss of $113,000.
The provision of those funds, at least on paper if not in reality, (and I accept that in reality both parties have had use and benefit of the funds, as they were still married and thus no impropriety should be imputed), would have created a benefit in terms of assessment of tax. If the $512,000 had remained in the hands of Mr Harper, working hard, generating income and thus assessed to pay tax on that income, one might imagine that even at a modest tax rate of, say, 30%, that there would have been a very large tax debt created. The assessment of such a debt was obviated by offsetting that income against the losses which had been incurred with share trading and, thus, of joint benefit to the parties was obtained.
The other issue which arises and which directly touches upon the issue of knowledge of the share trading debts that were being incurred, and thus whether a finding of wastage or premature distribution should be made, is the manner in which Mr Harper and Ms Harper have conducted their business affairs, treating the share trading as a business equally with Mr Harper’s building enterprise, during their marriage. Mr Harper decries all knowledge of losses with respect to the share trading, up and until the point already described in early 2009, when $190,000 had already been borrowed from Ms D. I have already commented upon the reality that might be reflected by Exhibit R4 of earlier knowledge.
Mr Harper has been consistent throughout his case in using the plea “if you can’t trust your wife who can you trust”, suggesting that Ms Harper, who there is no dispute was responsible for the bookwork of Mr Harper’s business, did not inform him, did not give him any basis for concern, through either the provision of information or anything else, that she was engaged in incurring losses which Mr Harper suggests arose from negligence on her part and that she was secretive about those losses, such that financial ruination or relative ruination eventually befell these parties.
It must be observed that whilst these parties have had a significant reduction in their net wealth from very comfortable middle-class status to, at least in the case of Ms Harper, being relatively impoverished, (Mr Harper perhaps not much further ahead, but certainly earning a very good income compared to Ms Harper), that they still remain in the top 3% of the world’s wealthy folk. Whilst they may now have an asset pool of approaching half a million dollars which is modest compared to their previous wealth, that is a great deal more than 97% of the world’s population own. That is cold comfort to these parties. I do not for one moment think that that knowledge will alleviate their distress at the calamitous events that have befallen them. However, it is a relative reduction in wealth that they have experienced, and certainly at this point in time, due to the disparity in income and earning ability of these parties, perhaps borne more so by Ms Harper or at least perceived by her to be so.
The business account of Mr Harper, there is no dispute, was the subject of Ms Harper’s oversight as regards bookwork – entering information into MYOB, generating spreadsheets and the like. The parties shared an accountant who prepared returns for each of them. The bookwork created by Ms Harper was provided to the accountants, and Mr Harper signed his tax returns. No one else. Mr Harper may or may not have had direct visual access to Ms Harper’s returns. Nothing of great moment turns on that. Certainly by 2010 and 2011, when there was no controversy that Mr Harper was fully aware of the scale of losses from share trading, steps were taken to seek to remedy those problems, through borrowing, through financing and the transfer of income, on paper, to Ms Harper.
What is also clear from the evidence is that Mr Harper had the ability to find out whatever he wanted. These parties were married. Mr Harper suggests there was a substantial degree of secrecy practiced by Ms Harper. He suggests, indeed, Ms D corroborates his evidence, that Ms Harper, spent significant periods of each and every day on her computer engaging in share trading, and later engaging in what the parties described as either riskier or more dangerous transactions in currency trading and the like. However, there was no practical or physical barrier to Mr Harper accessing whatever information he desired.
The closest Mr Harper comes to an assertion of secretiveness is to suggest that Ms Harper kept records upon a notepad computer which was accessed by her using her fingerprint. Ms Harper was clear in her evidence – and Mr Harper indicated he simply did not know, and thus I accept Ms Harper’s evidence as more direct and probable – that the computer could also be readily and easily operated using a password. Mr Harper denies any knowledge of the password. Ms Harper suggests that she used the same password for all purposes, including the same password for the notepad and a PC that had been at their former matrimonial home and that both parties agree at some point in time – Mr Harper is non-specific, but Ms Harper is more specific in saying 2010 or thereabouts – “blew up”, no doubt the suggestion being with a loss of all data and with no back-up.
The PC was within the home that both parties occupied. Ms Harper is clear, and Mr Harper does not challenge Ms Harper on that. The office in which Ms Harper conducted her trading on the computer was accessible by Mr Harper. Indeed, Mr Harper conceded that very occasionally – and very much occasionally – he might have used the computer, but predominantly used that of his daughter. However, the computer was accessible.
I am satisfied that the above passage is of significant application in this case. I am asked to focus upon and audit the losses.
At paragraph 72 of Shimizu & Tanner, and continuing through to paragraph 74 thereof Bryant CJ, as she then was, conducted an erudite discussion of the relevant principles, concluding with the adoption and approval of that which had fallen from Murphy J, an eminent jurist in his own right, in Kouper & Kouper (No 3) [2009] FamCA 1080. I incorporate those passages herein:
72. In Omacini & Omacini (2005) FLC 93-218 the Full Court noted the circumstances in which it is appropriate to notionally add back to the pool of assets falling into “three clear categories”. Where the parties have expended monies on legal fees; where there has been a premature distribution of matrimonial assets; and in the circumstances outlined in Kowaliw (supra). Those circumstances are, as articulated by Baker J, that although add-backs to the pool are the exception and not the rule, an exception can exist when one party has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets; the effect of which has reduced or minimised their value or the pool of assets.
73. The Full Court has emphasised that, without seeking to place a fetter on the exercise of discretion by the trial judge in individual cases, the concept of adding monies recently disposed of back into the pool ought to be the exception rather than the rule. In Cerini & Cerini [1998] FamCA 143 at par 46 the Full Court said “The parties are entitled to reasonably conduct their affairs post-separation in a manner that is consistent with properly getting on with their lives.”
74. In Kouper & Kouper (No 3) [2009] FamCA 1080 at paragraphs 90 to 113 Murphy J sought to distil the principles from the Full Court authorities on the question of add-backs by reference to five questions, which are as follows (at par 108):
(a) Is it contended that property (including money), that would otherwise be available for distribution between the parties if a s 79 order is made, has been dissipated with a consequential loss to the property otherwise potentially divisible between the parties at the date of trial?;
(b) If so, is it alleged that the dissipation of property was in respect of things other than what, in the particular circumstances of this particular marriage, can be classified as “reasonable living expenses”?;
(c) If it is asserted that any loss to the divisible property results from dissipation of property other than in respect of such expenses, why is it asserted that the result should be a sharing of that loss by the parties other than equally?
(d) If it is contended that this be the result, why should there be an add back (which brings to account, dollar for dollar, such past expenditure in current dollars) as distinct, for example, from there being an adjustment being made pursuant to s 75(2)(o)?; and
(e) How should either any “add back”, or adjustment pursuant to s 75(2)(o), be quantified?
Justice Murphy in Kouper & Kouper, as his Honour is wont to do (see, for example, Harridge and Anor & Harridge and Anor [2010] FamCA 445), posed a number of rhetorical questions regarding premature distributions, the answers to which would assist in guiding the application of principle.
It is a most helpful set of questions that his Honour proposes, and I intend to pose each of those questions and answer them:
Is it contended that property (including money), that would otherwise be available for distribution between the parties if a s 79 order is made, has been dissipated with a consequential loss to the property otherwise potentially divisible between the parties at the date of trial?
The answer must be yes, it is Mr Harper’s contention.
If so, is it alleged that the dissipation of property was in respect of things other than what, in the particular circumstances of this particular marriage, can be classified as “reasonable living expenses”?
Yes. The losses incurred in share trading were not reasonable living expenses, they were, in effect, business losses.
If it is asserted that any loss to the divisible property results from dissipation of property other than in respect of such expenses, why is it asserted that the result should be a sharing of that loss by the parties other than equally?
Mr Harper’s assertion is, as indicated, that Ms Harper’s conduct has been reckless, negligent or somehow irresponsible. I am not satisfied that it is, for the reasons already discussed above.
If it is contended that this be the result, why should there be an add back (which brings to account, dollar for dollar, such past expenditure in current dollars) as distinct, for example, from there being an adjustment made pursuant to s 75(2)(o)?
Mr Harper is non-specific as to his contention, but does seek that the loss be borne in its entirety, whether by add-back or 75(2) adjustment, by Ms Harper.
How should either any “add back”, or adjustment pursuant to s 75(2)(o), be quantified?
That is one of the real difficulties. It cannot be quantified. There are various difficulties with that very proposition, including the inadequacy of the evidence in permitting such an assessment.
The closest I can come to quantification is to observe that the losses are a figure somewhere, at its most, of $583,000 as disclosed by Ms Harper’s tax return, but one must then take into account:
a)The negative gearing losses which were included within that accumulated loss;
b)The benefit to the parties jointly of the $512,000 of income attributed to Ms Harper, which significantly reduced tax payable by the parties whilst they were still married and living together; and,
c)The rejection of the proposition that the losses arose from other than unfortunate events in business dealings, rather than negligence on the part of Ms Harper.
For those reasons, I am not satisfied that the losses can or should be taken into account, whether as a notional add-back or a section 75(2)(o) adjustment. That does not mean that the consequences may not remain relevant, particularly in relation to an assessment of contribution.
As the High Court of Australia has been clear in Stanford & Stanford [2012] HCA 52, in all that is done in the application of the legislative provisions to the facts of the case, justice and equity must be done. It is not a final step, where one steps back and looks back at various considerations to satisfy oneself that the outcome is good and just and equitable. It is an inherent requirement that the Court be satisfied that any Order is just and equitable, and that each step is infused with justice and equity.
I do not suggest that the High Court of Australia in Stanford & Stanford has suggested a threshold be met, whereby the parties must satisfy the Court from the outset that the making of an Order is just and equitable. It would be nonsensical for it to be so. Such an assessment could not be made without considering and balancing all of the evidence by which time, of course, the case is heard and the Court simply proceeds to determine what adjustment, if any, should be made.
What their Honours were perhaps saying is twofold. Firstly, the Court must be satisfied that it is appropriate to exercise jurisdiction, bearing in mind the specific facts and circumstances of Stanford & Stanford, and, secondly, that it should not be assumed that an Order will be made purely because one is sought. The Court must be satisfied that it is just and equitable to make an Order.
I am satisfied, certainly, that the assumption of jurisdiction is appropriate. That must be so if one has regard to the passage of Stanford & Stanford commencing at paragraph 42 and which I incorporate herein:
42 In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4).
These parties have separated and divorced. The parties owned property to which each has contributed but, in assessing the present legal and equitable interest in property, it is clear that the principle asset is the Property A parcel of real estate sole owned by Ms Harper. It would be unjust and inequitable to not permit Mr Harper to pursue a claim with respect to his contributions. Each party concedes that an Order adjusting interests should be made (after all the Property A property is registered in Ms Harper’s sole name and Ms Harper concedes that Mr Harper should receive 30% of the “pool” including that property). Accordingly, I intend to proceed with an assessment of contributions and consider adjustments pursuant to section 75(2) of the Act.
Present interests in property and the asset pool
Before doing so, and as the High Court of Australia made clear, I must assess the pool. I will discuss briefly that which I intend to include. But for the agreement between the parties as to a value for the property, achieved after submissions and prior to these reasons commencing, it would have been necessary for the industrial unit to be sold. Thankfully, as already indicated, it now need not be, as there is a sum certain agreed $500,000. The property is encumbered by a mortgage of $147,143, leaving equity of $352,857.
The other items I intend to include in the pool are:
a)Mr Harper’s savings with the (omitted) Bank, $25,505. They are included within his Case Outline and Financial Statement, and are, at best, an admission against interest but they are disclosed;
b)The motor vehicles retained by each of the parties. In the case of Mr Harper, by admission against interest, the vehicles he retains have a combined value of $53,000. It would seem common ground, certainly in any event, an admission by Ms Harper, that she has a motor vehicle worth $2,000.
Each party has opined a suggested value for their personal and similar items. I do not propose to rely upon those opinions or include those items. There is no basis to divide the clothing and personal chattels of individuals. They should each retain them and I am not satisfied that it would be just or equitable to do otherwise.
Mr Harper discloses stock and tools of trade with a value, again as an admission against interests if nothing else, of $25,000. I intend to include that amount.
I do not intend, as I have already described, to include any specific amount by way of notional add-back or otherwise for the funds received from the sale of the Property D properties, however those proceeds may have arisen. They can be dealt with by reference to section 75(2)(o) of the Act and that is the preferable course as variously comprised Full Courts have made clear.
Neither of these parties have any significant superannuation. Mr Harper has superannuation of $23,000, having withdrawn in excess of $80,000 from his superannuation to seek to plug the gap in finances of these parties following the calamitous and devastating consequences of the share trading losses. Ms Harper’s superannuation just reaches the splittable limit, being a little over $5,000.
In light of the contributions that each has made since separation, it seems that which each presently holds superannuation with a value roughly equivalent to that which they have contributed since separation. On that basis there should be, if nothing else, and without over-aggrandising the issue, a two-pool approach, such that each party’s superannuation sits to one side. And I am satisfied ultimately each should simply retain their superannuation.
There is very little, if anything, to be gained by seeking to split superannuation. There is no evidence of notice to trustees and thus the Court could not make a splitting Order. The amounts are so modest that it would not be just and equitable for that to proceed. Indeed, while the only plea, if one might be inferred in that regard, is the broad and ambit claim subject to the difficulties I have already described, of Ms Harper's Response seeking that the property of the parties be divided on a 70/30% division. Without wishing to be unduly formal or technical, superannuation is not property. The Court has jurisdiction to split superannuation and deal with it as though it is property but it is not.
Accordingly, and by reference to discussion that has occurred in the above authorities in relation to such issues, I am satisfied super should simply stay where it lies, together with other chattels and smaller items.
There are also a number of debts that the parties agitate for inclusion. Each of the parties has significant credit card debts. However, I am not satisfied that their inclusion is appropriate. Each of the parties, and it is perhaps an issue that will rankle more with Ms Harper, has been conducting their own financial affairs now for four years. The credit cards which presently exist would not appear to have any real connection or nexus to marriage or any matrimonial asset, matrimonial income or expenditure. Accordingly, I am satisfied they should simply lay where they lay.
I suggest that it might rankle more with Ms Harper purely as her income is so disparate from Mr Harper’s. She is very much living at or below the poverty line, if one accepts her evidence as to her present income, whereas Mr Harper, whilst he is struggling in meeting a quantity of debts, has, at least, the income that he earns of $210,000 last financial year and a relationship with some degree of financial resource available to him through borrowing, if nothing else.
Accordingly, I will exclude the credit cards each party invites me to include. I am not satisfied it would be just and equitable to either include them or, by their inclusion, to cause the other to contribute in any fashion to their payment.
There are two loans, however, that I am satisfied should be included. Certainly, the loan that Mr Harper has obtained from his partner, now with a balance of about $62,000, should be included. It would be unjust and inequitable for it to not be so. He has clearly borrowed funds, having compromised a significant tax debt accrued substantially, if not solely, during the relationship and related to income that the parties both had available to them for their use, benefit and enjoyment. He should have that included so that he is not solely liable for that amount. I do not propose, however, to incorporate interest for the reasons already discussed.
On Ms Harper’s side of the ledger she asserts a loan, as to which she has not been challenged, of a private nature from family which she describes she has needed to obtain simply to survive, to pay rent, put food on the table, etcetera.
Any consideration of premature distributions, as discussed by Baker J, in Kowaliw & Kowaliw, may lead to refusal by the Court to take account of expenditures when they have occurred prematurely but for good purpose and reason. Ms Harper’s loan is analogous, I am satisfied, to that circumstance. The debt that Ms Harper has incurred has been necessary. It is the only thing that has gotten her and the three children in her care to the present point of subsistence. Accordingly, I will include that debt at $50,000.
If one has regard to the assets which presently are held by each of these parties, leaving aside for one moment the parcel of real estate, that sees Ms Harper with a motor vehicle of $2,000, a loan of $50,000, and thus minus $48,000.
Mr Harper has his savings, motor vehicles, tools, plant and equipment, with a value of $103,505 less the debt he owes his partner, of $62,000, leaving him with $41,505 credit.
There is then, also, the equity in the property already described.
Contributions
I must assess contributions by reference to section 79(4) of the Act. Contributions are not confined to financial contributions, nor, for that matter, are they confined to contributions at any particular point in time or contributions that are positive.
Each of these parties is hard-working. Each has worked hard throughout their relationship. Ms Harper is presently working seven days a week. Mr Harper, in all probability, seven days a week or something not far short of that. They are both at a point in life where they would prefer to work less and, but for the events in 2008 and 2009, would very much be already acting upon their prior plan to live a life far more leisurely and far more financially healthy than they are.
That they are not does not impact their contribution, as I have not accepted the argument of wastage. However, each has contributed throughout this relationship. They have each contributed financially. There have been periods when Ms Harper’s financial contribution through share trading have been vast, in the same way that the losses have been vast. Mr Harper has always worked hard, as he described. He has never really retired, only slowed down, and he sees himself, as he described, probably “dying on the tools”. One accepts that that is probably true. Mr Harper is a committed man who enjoys work for what it does for him, his sense of self as well as the income it produces.
I am satisfied that the financial contributions of the parties have been equal. The parties have each contributed towards the maintenance of their family through provision of services, care and nurture, and support of the family.
Post-separation Ms Harper’s contribution to the maintenance of the children and her devotion to the role of homemaker and parent, including, at times, in subjugation to her participation in paid employment to her own disadvantage and through her, the children, indirectly, has been superior to that of Mr Harper. However, that must be balanced against the contribution Mr Harper has made through applying significant income to meeting substantial debt. He has paid out his aunt. He has begun to pay back his partner. He has paid out the second mortgage that was on the unit. Whilst he has not paid rent to Ms Harper, he has most assuredly paid what could be fairly described as an occupation fee through servicing the mortgage, council and water rates, and other expenses.
Accordingly, I am satisfied that each of them have, in that regard, made a contribution above and beyond the other, but that they ultimately are equal and balanced.
Accordingly, I am satisfied that the contributions of the parties should be assessed as equal.
That then leaves section 75(2) of the Act, relevant not only to property but the spouse maintenance plea of Ms Harper. Accordingly, I will address section 72 of the Act headed “Right of spouse to maintenance” before turning to section 75(2) of the Act. I must deal with the property issue first (see Bevan & Bevan (1995) FLC 92-600) but as section 75(2) of the Act is common to both, it is convenient to address it lastly. I incorporate section 72 herein.
(1) A party to a marriage is liable to maintain the other party, to the extent that the first-mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:
(a) by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
(b) by reason of age or physical or mental incapacity for appropriate gainful employment; or
(c) for any other adequate reason;
having regard to any relevant matter referred to in subsection 75(2).
(2) The liability under subsection (1) of a bankrupt party to a marriage to maintain the other party may be satisfied, in whole or in part, by way of the transfer of vested bankruptcy property in relation to the bankrupt party if the court makes an order under this Part for the transfer.
Clearly, it could not be suggested that Ms Harper, by reason of her age or physical or mental incapacity, is not able to participate in gainful employment. That is not to suggest that she desires to work seven days a week in a variety of, largely, menial jobs to support herself and her children, but she is clearly capable of employment.
Ms Harper certainly has the care of a child under the age of 18 years, although that does not preclude her participation in paid employment.
As to other adequate reasons, I am not satisfied one exists. Ms Harper has skills. She is able to use them. It is unfortunate that she does not receive and has not received ongoing financial support by way of periodic child support. If nothing else, it is clear and apparent from the concession made by Mr Harper and the acceptance of his evidence and consequent finding of this Court, that Mr Harper’s tax assessable income is $210,000 per annum at present. A child support assessment, of course, could not take into account all of that income, as there is a cap on income considered. However, Mr Harper would be assessed at the maximum rate of child support which would substantially exceed that which he has paid to date and presently pays to the children rather than Ms Harper. It is certainly largesse to the elder children, perhaps all three, that he provides them directly with funds. But, again, it does not feed them, clothe them or house them.
However, that is an issue relating to child support, not spouse maintenance, and I am not satisfied that any of the grounds that would, as the first consideration in address of the spouse maintenance claim, be made out. Lest I am wrong in that regard, I will further address those issues by reference to section 75(2) of the Act and particularly subsection (o).
In turning to section 75(2) of the Act, I will touch upon each of the factors briefly.
a) The age and state of health of each of the parties
The parties are comparable in age. They are both healthy, subject to some restrictions. One of the difficulties is that whilst I wholeheartedly accept that Mr Harper experienced a particularly nasty accident in 2010 whilst engaged in employment, sadly self-employed and with, one would think, little recourse as to compensation for his injury, his evidence as to future difficulties, incapacity or health issues which might affect his employment does not comply with the rules of evidence nor establish incapacity. There are ways by which such things are proven. I do not disregard what he says. There is certainly likely to be a limit on work but not preclusion.
I am satisfied that Mr Harper’s ongoing employment is physically demanding manual labour. He is not getting any younger. Accordingly, at this point in time, the best I can do is assess that both parties are capable of working, albeit that it may be onerous or more onerous for one or the other. Each has a limited employment life. I do not seek to be in any way offensive to the parties but Ms Harper also is not getting any younger.
Ms Harper’s employment skills are far more limited as regards to the income they can generate compared to Mr Harper. To the extent that there might, thus, be any acceptance of the otherwise inadmissible evidence as to future medical prognosis, it would, in any event, be balanced against that reality on Ms Harper’s part.
b) The income, property and financial resources of the parties and their capacity for work
I have already addressed work above. I am satisfied it need not be canvassed further.
As regards property and resources, as I have already indicated, Ms Harper, at this point in her life, owns a $2,000 motor vehicle which, she advises the Court, she slept in as her accommodation last night as she had no sufficient funds to meet a hotel in (omitted). The income of Ms Harper is dramatically less than Mr Harper. One of the difficulties also, with respect to the plea for spouse maintenance, is that the most recent Financial Statement by Ms Harper does not demonstrate a shortfall.
I accept that this is so because Ms Harper has completed her Financial Statement carefully to show what she actually spends, being what she actually has, and, further, that the borrowings that I have already referred to reflect her frugality and the inevitability that she still requires assistance.
However, these set of reasons will determine the financial plea between the parties, and in a relatively short time. Ms Harper will receive a capital sum paid to her in return for a transfer by her to Mr Harper of the Property A property, or, in failure of payment, proceeds of sale once it is sold. Accordingly, at that point, I am satisfied the parties will be put on a more level footing, if not exactly equal.
c) Whether a party has the care of a child under 18
Ms Harper remains responsible for the child under 18, practically, emotionally and financially. She is not presently receiving child support, although that is not to discount or dismiss the provision that has been made by Mr Harper, and in trying circumstances. But for the payment of an overwhelming, verging upon crippling, level of debt over the last few years since separation, Mr Harper would be roundly castigated for non-payment of child support beyond that which he has provided. But one cannot ignore the reality that these parties have done what they can to survive in the trying circumstances they are found. Accordingly, that criticism must be tempered to the point that it makes little or no difference.
d) Commitments of the parties to enable them to support others
This point, again by reference to the Kay J authority already referred to, must accept that each of the parents considers themselves morally obliged to continue to assist their adult children. Those children are both earning some degree of income, and thankfully so, as Ms Harper would no doubt now be homeless without that assistance and that of other relatives. However, those commitments, I am satisfied, will be attended to by both parents and, with respect to the younger child when they reach their majority, thus the subsection is somewhat neutral.
e) Responsibilities of the parties to support any other person
Neither does.
f) The eligibility of either parent to receive an income tested pension or benefit, or superannuation pension
Neither does. And to the extent that Ms Harper receives some assistance by way of Centrelink or Department of Human Services benefits; I am not satisfied that I can or should take those amounts into account. They are not income earned from exertion. They are a safety net provided, and thankfully so, to assist in these circumstances.
(g) Where the parties have divorced, the standard of living that in all the circumstances is reasonable
Neither party’s standard of living is great although, on balance, Mr Harper’s is slightly better. He has had the benefit of some overseas travel, even if others may have paid or contributed towards payment for it, and is able to eat out, for example, with some regularity, whereas that is simply aspirational for Ms Harper, and, accordingly, the children in her care. It is a slight factor but far from tipping the scale dramatically.
This factor will also be addressed through the finality of Orders made which will divide assets between the parties and will, as a consequence, as a capital sum will need to be paid by Mr Harper, increase his expense base and thus erode substantially the difference which might be presently perceived, especially by Ms Harper.
(h) A course of education or training
Neither party would benefit from a course of education or training and neither raises it as factor.
(ha) Protection of creditors
There is no need to make Orders for the protection of creditors. That which each party will receive or retain will be more than sufficient to meet their debts and liabilities.
(k) The duration of the marriage and the extent to which it has affected the earning capacity of the parties
In Ms Harper’s case she has subjugated participation in paid employed outside of the home and outside of share trading to caring for children. She has engaged in share trading but that, in light of the significant disasters that arose in 2008 and 2009, is not something she is likely to return to. Thus, she is left with the skills she has which are not insubstantial but do not generate an income of the level that Mr Harper is presently capable of earning.
However, Mr Harper’s earning capacity has not been positively or negatively impacted by the relationship. He came into the relationship with the skills he has. They are the skills he will continue to use and during the relationship those skills benefited the family.
(l) The need to protect the role of a party as a parent
The need to protect the role of a party as a parent is not raised.
(m) If either party is cohabiting with another person
Neither party is. Without wishing to open controversy as to the meaning of cohabitation it might be best to describe that Mr Harper has “re-partnered”, if that phrase might be used. Mr Harper and his partner stay together 2-3 nights per week. The financial circumstances of that relationship are not known, save the ability to have borrowed funds, thankfully so, to avoid even greater disaster than that which has already arisen.
(n) Property
Thankfully, there are no issues regarding interests of trustees or vested property. There are no issues with respect to other creditors or others who will be affected as a consequence of the Orders. All who are owed money can be and will, I am satisfied, be paid money by those who owe it.
(na) Child support
The payment of child support is a relevant consideration. I have already discussed that above and at length. It favours Ms Harper.
(o) Other facts and circumstances
It is at this point that I intend to address the issue regarding funds from Property D. As indicated, there is no controversy that an amount a little over $51,000, however it might have been constituted, was received and retained by Mr Harper. I am satisfied that there should not be a notional adding back of that amount. From the very passages I have quoted, that would be to deal with past sums in present day money and for parties for whom it would simply open a wound and create injustice, particularly for Mr Harper. That money has no doubt been largely consumed and applied, at least in some unquantifiable part, towards the payment of various debts and expenses throughout the post-separation period.
There is, however, an adjustment to be made as regards the disparity in the non-real estate assets which I have enumerated above, wherein Ms Harper has net assets in her possession and control at present of minus $48,000 whereas Mr Harper is somewhat better off.
To achieve justice and equity in that regard, I would need to take account of those amounts and there would need to be an adjustment in Ms Harper’s favour. I am satisfied that the adjustment need not be vast or substantial but it should be taken into account, as should be the receipt of funds from Property D. I do not propose to mathematise the calculation. I am not satisfied it is appropriate or just and equitable that this occur. I propose, instead, to acknowledge that the disparity between the asset position of non-real estate assets held by each party at present is in the order of $44,752 and that the Property D property has previously produced some benefit to Mr Harper, although, as indicated, whilst it has not been specifically accounted for, it has been at least contributed to payment, if not consumed by payment, of debt.
For those reasons, I am satisfied that the appropriate manner of addressing those two issues would be a modest adjustment under section 75(2) of the Act to accommodate not only those issues but the fairly marked income disparity between the parties at present together with the unknown financial benefit that might be available, (although on the basis that it is, at best, far from persuasive or weighty, simply a factor that might lend greater weight to those factors specifically identified), of Mr Harper’s relationship with Ms J.
For all those reasons I propose to make an adjustment under section 75(2)(o) of the Act in favour of Ms Harper in the amount of 10%. That 10%, however, will be limited to the equity in the parcel of real estate, as it is the only asset from which, realistically, any payment could derive or be secured, save and except cash funds presently held by Mr Harper, some of which he may have already been required to expend in legal fees, may well be required to expend in the future in either meeting the costs of this litigation or in meeting his costs of applying for and obtaining finance. A 10% adjustment in Ms Harper’s favour will produce a 20% difference that the parties will receive from the equity in the unit. That equates to approximately $70,000 and I am satisfied that is just and equitable.
On the basis that the parcel of real estate has equity of $352,857, that would require a payment to Ms Harper of $211,714.20 which I propose to round for the sake of convenience to $211,715.
Otherwise, all more minor assets, if they might be so described, will stay where they are.
It is necessary to make Orders for self-execution if payment is not made within a time period which I propose to fix at three months, bearing in mind Christmas is rapidly approaching. That will necessitate not only Orders for sale as a default but also Orders for preservation of the property pending sale.
I certify that the preceding two hundred and seventeen (217) paragraphs are a true copy of the reasons for judgment of Judge Harman
Date: 17 January 2018
Key Legal Topics
Areas of Law
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Family Law
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Property Law
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Civil Procedure
Legal Concepts
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Remedies
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Costs
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Injunction
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Jurisdiction
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Appeal
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Procedural Fairness
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