HARTY & HARTY

[2017] FamCA 10

FAMILY COURT OF AUSTRALIA

HARTY & HARTY [2017] FamCA 10

FAMILY LAW – PROPERTY – Discovery – where litigant in person has confusing and convoluted application the order in which, are not supported by evidence – application dismissed.

FAMILY LAW – SPOUSAL MAINTNENACE – s 83 variation application where husband consented to orders – not sufficient evidence to justify – application dismissed.

Family Law Act 1975 (Cth)

APPLICANT: Mr Harty

RESPONDENT: Ms Harty

FILE NUMBER: MLC 11676 of 2015

DATE DELIVERED: 18 January 2017

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 10 January 2016

REPRESENTATION

THE APPLICANT: In Person

THE RESPONDENT: In Person

Orders

1. The four applications in a case filed by the wife on 13 December and 19 December 2016 are dismissed.

2. The application in a case filed by the husband on 28 November 2016 is dismissed.

3. The response of the husband filed on 7 November 2016 is dismissed.

4. The amended application (initiating proceedings) filed by the wife on 5 April 2016 and the amended response of the husband thereto filed 29 February 2016 are adjourned to a registrar’s directions hearing on 1 March 2017 at 9.30am for the purposes of assessing the readiness of the parties for trial and, if necessary, the making of orders for discovery.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Harty & Harty has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 11676  of 2015

Mr Harty

Applicant

And

Ms Harty

Respondent

REASONS FOR JUDGMENT

1. In 2015, property and maintenance proceedings were commenced in the Federal Circuit Court by Ms Harty (“the wife”).  Mr Harty (“the husband”) was the respondent.  In 2016, those proceedings were transferred to this court.

2. The court file is in a number of volumes, housed in a box and the most recently-filed document is numbered over 80.  For a modest financial dispute, this litigation has been unguided and under-controlled.  The reasons that follow indicate the problem.

3. In culling the court file, numerous annexures attached to affidavits kept together by “bulldog” clips were returned to the parties who, although previously represented by lawyers, now face the daunting prospect of representing themselves in their property dispute because, as they would have it, they can no longer afford representation let alone legal advice.  That dilemma however, severely impacts upon the resources of the court as it tries to identify relevant issues and what evidence supports any orders for relief being made. 

4. In the busy Judicial Duty List, the task just mentioned was not only more daunting than usual but also had implications for other litigants desirous having their interim hearings determined.  The lack of respect and trust between the parties was not only palpable, it contributed to the difficulty in isolating what the parties were arguing about.

5. I do not propose to set out more than the basic detail here necessary to make clear why the orders I have published are proper in the circumstances.

The transfer of proceedings

1. The transfer of proceedings of itself from the Federal Circuit Court in this case has created two problems.  First, the delay has prejudiced the parties getting on with their lives.  They had anticipated a final hearing in August 2016 but that said, on what I heard from them, they would hardly have been ready for judicial determination.  The husband maintained the transfer was a delaying tactic of the wife caused by her filing a large bundle of papers on the court at the last minute causing the relevant judge frustration. 

2. It was apparently suggested in the Federal Circuit Court that the case would take five days and that time was not available.  Now knowing what the parties are disputing, that estimate seems wildly inaccurate.  This case is relatively simple.

3. Without making any finding about why the transfer occurred, the documents filed in this Court by the wife would indicate some concern to which I shall also return. 

4. The second problem is that, at a time when both parties were represented, they filed applications for final orders that were imprecise.  Whilst that is permissible where there is uncertainty about what property is to be divided, here, the wife claimed that she had been a significant part of the business over a number of years yet she found that she was not an owner.  Why she would not have known what property was to be divided, is puzzling.

5. For his part, the husband too pleaded imprecisely indicating he wanted discovery from the wife.  When asked what discovery it was he wanted now (if ever), he said he did not want any documents.  Having regard to the wife’s apparent impecunious circumstances, I am not surprised.

6. This litigation therefore got off on the wrong foot. 

7. Even as late as the transfer to this Court, still no pleading had been undertaken with particularity by either party.  When challenged, neither party was able to articulate what final orders they would be seeking even on some percentage basis other than the husband said that the wife was entitled to 50 per cent of the increase in the value of the assets subsequent to their relationship commencing.  Because of that uncertainty, orders will be made requiring the parties to commence the long road to trial on a proper footing.

Maintenance

1. Before the transfer occurred, a hearing was conducted before Judge Burchardt in April 2016.  Then, and with both parties represented by counsel, his Honour was asked to make a consent order that the husband pay the wife $1000 per week way of spousal maintenance.  It is the husband’s evidence that the order was to continue only until the foreshadowed final hearing in August 2016.  The orders certainly did not read that way.  It read that the wife was to be supported by the husband until further order.

2. Spousal maintenance is one of the two issues in the immediate dispute and the husband said that he was “forced” to agree to the order.  He clearly signed the minute of proposed order and thus, any complaint about the process by which it was made, cannot be levelled at the court. 

Expert witnesses

1. When the next (and different) Federal Circuit Court judge had control of the matter for the purposes of the final trial, the transfer was ordered to this Court.  That was in August 2016.  Again, both parties were represented by counsel at that hearing. 

2. At the time of the proposed final hearing, the main dispute seems to have been about the husband’s business interests.  An order had been made that a Mr B value those interests.  Indeed, in the Federal Circuit Court, that Court’s orders (drawn by the parties’ lawyers) referred to Mr B as the “single expert”.  To pay for that exercise, the parties’ mortgage redraw facility was to be used.

3. As part of the valuation, a variety of documents was to be provided to Mr B. Rather oddly, it seemed common ground that whatever documents Mr B was to view, they were not to be shown to the wife.  How that now stands procedurally, with the wife as an unrepresented litigant, remains a mystery.  I doubt that such an order should have been made in the first place.

Shadow expert

1. In addition to orders relating to Mr B, other provisions required the same documents to be made available to “the wife’s expert accountant, [Mr C]”.  I stress again that these orders were not drawn by the court.

2. The status of Mr C remains confusing as he is described by both parties as “a shadow” expert.  Although rarely mentioned, it would seem that the husband also has a “shadow” expert.

Mr B’s valuation

1. It seems common ground that neither party was content with what Mr B produced.  From the husband’s perspective, the purported valuation was too high, wrong and not anywhere near the market value.  However, Mr B was not valuing this interest for market purposes.  As was evident from an affidavit on the court file that I was obliged to sort through, the exercise was undertaken to assess a future maintainable earnings valuation.

2. From the wife’s perspective, Mr B not only had insufficient documents, his value was incorrect and out of date.  She asserts that rather than it being an interest of less than $1 million, the value is many millions.  The foundation for that belief is questionable.  There may be some evidence in the future but doing the best I can on what I have heard and read, such an optimistic view depends upon evidence that the husband has done something to hide documents that would make a substantial difference to how a future income stream was assessed. 

The business structure

1. What has also remained remarkably unspoken here is the nature of the structure of the business.  The head company is an entity of which the husband and a business partner are directors.  That latter person has not been joined as a litigant yet it would seem on the wife’s most optimistic basis, a large sum of money would have to be paid by the husband to her.  How that would occur without the cooperation of the husband’s business partner let alone joinder of the company itself does not appear to have been addressed.  So too, how the tax implications (if any) would affect the outcome if the wife’s position was correct, remain a mystery.  The focus of the parties, perhaps unsurprisingly, is misguided. 

2. In a heated but understandably frustrated way, the husband said he would accept the wife’s value (although it is unclear just what that is) but in any event, the wife was not attracted to the idea.  If the husband is correct about the market value concept, it is hard to see how a sale would result in the “many millions” envisaged by the wife.

3. To add to the complexity, there is an added problem that little attention has been paid to the issue of the parties’ respective contributions.  The husband argued that he owned the business before the wife came along.  As I have indicated, the wife said she thought she had been an owner only to be disappointed.  Having regard to the formal structure just described, that confusion is also hard to fathom particularly where the lawyers had been involved until 2016. 

4. I turn then to the two issues.

The interim applications

1. The husband commenced the proceedings first by application for interim orders filed on 28 November 2016 (although he filed a response to some indefinable application on 7 November 2016).  He sought orders to “stop” his spousal maintenance obligation but when queried as to what he meant, he pondered the idea and then said that he thought it should be reduced to $500 per week rather than the $1000 per week.

2. In and around the time the husband filed the application, the wife filed some form of application electronically.  It seems she wanted to enforce unpaid spousal maintenance obligations but for reasons that I could not decipher, that application was not only not accepted by the court but has also disappeared.  Whilst that would normally be concerning, the wife then filed four new applications and made no mention of her enforcement application knowing that her earlier application had not been issued.  She sought an order that the husband’s “stop” application, be determined at the same time as her “discovery” application but otherwise gave no indication of any enforcement requirement.  As she had not taken any action to rectify the problem, it was not fair to the husband to permit a new application. 

3. The wife’s four applications were really one.  I have not been given any explanation as to why four became necessary.  She sought in language peculiar to the retail industry, documents that she asserted the husband had, but had not given her.  He could not give them to her anyway because there was (and is) a restraint on her seeing them but what she wanted was what her “shadow” expert desired produced.  No affidavit was filed by this expert but an email to the wife from him was exhibited to an affidavit she filed.  Unfortunately, the email was neither comprehensive nor intelligible. 

4. Most important of all however, was the fact that the husband consistently maintained that he had provided everything that he had in his possession.  He said he had given it to Mr B and in due course, Mr B had given it to Mr C.  All of his “files” are electronically stored. 

5. The wife accused the husband of deleting relevant and important documents that would assist Mr C but the husband’s denial was adamant.

6. With the convoluted and incomprehensible nature of the wife’s evidence, the only solution was to allow limited cross-examination.  That then descended into a farce.  The wife would not allow the husband to speak and when he did, she spoke over him.  Her cross-examination was a series of statements rather than questions to which he responded with similar argument and heated invective.

7. Any attempt to understand what was said by resort to the transcript will be nigh on impossible.

8. The husband maintained the wife was not only incorrect about the position she held but nothing I heard in cross-examination indicated that he was not being truthful.

9. The wife had convinced a registrar to issue a number of subpoenae to produce documents.  Despite a warning to the wife to challenge the husband in cross-examination with the documents that she said she had seen in subpoenaed material to disprove his denials, she did not do so.  In the end, she resorted to comment and argument with the husband about things that had happened even in their relationship which I ruled to be irrelevant.  Ultimately, the wife sat down as frustrated as the husband.

10. Before concluding her cross-examination, the wife asked about spousal maintenance issues including as to the husband’s expenditure including in relation to a trip that he took to Sydney.  He drew cash from a cash machine but explained that as being associated with some form of business trip.  She accused him of going to the casino and he agreed he did but there was no suggestion of what amount of money was wasted in that exercise.  She then put to him that he had gambled during their relationship and he agreed he had.  A series of questions was put to the husband about the fact that his expenses were being paid by a company which was described as a commission company and he denied that.  Whilst there were indications that his rent was being paid by the company, that reference was in a 2015 taxation return and he said that the accountant had not permitted that to occur and so he had changed it to being paid from his personal account.

11. No reference was made by the wife to whether there were undrawn profits in either the head company or the commission company and she had possession of the husband’s financial statement filed in this court on 7 November 2016.

12. Many of the items in the husband’s financial statement were not the subject of any challenge.

13. Nothing the husband said in response to any questions indicated he was being deliberately evasive.  Having said that, the issue of the husband’s application to vary the spousal maintenance can be resolved on his own evidence to which I refer below.

The wife’s application for discovery

1. There is a problem looming in that even if Mr C wanted or had access to more documents, his evidence is not admissible. Whilst that is not an insurmountable hurdle, some evidence is immediately necessary from Mr C to indicate the relevance of the documents that he is producing and how it is said that the husband has not fulfilled his obligations in discovery. Nothing I have been able to discern indicates that Rules 15.41 et seq of the Family Law Rules 2004 have been addressed. Mr C is not the single expert and at this stage, has not been qualified as an expert. To the extent that Mr C needs documents for a particular purpose, the evidence should come from him rather than the annexure by the wife of bits and pieces of an email from Mr C. As I have indicated, the email annexed to the wife’s affidavit was hard to follow. Mr C sent an email wherein the paragraphs were numbered but they were not consecutive. I do not know whether the email had been doctored. Nothing I have seen indicated at this stage that it was proposed for Mr C to be an adversarial witness. The problem is compounded by the fact that the wife, apparently with the consent of her lawyers at the time, consented to an arrangement under which she was not to see any of the documents. I do not know what the attitude of the husband’s partner is in relation to the questions of confidentiality.

2. Over a break in the proceedings, the wife said that she had contacted her former lawyer who advised her that Mr C was “a shadow expert”.  Nothing I have seen supports a conclusion that the filing of any material is permissible by the wife through Mr C at this stage.

3. When this matter ultimately returns to a registrar, attention should be given to the process of how the evidence would be presented.  I readily accept that the husband has strict discovery obligations but in circumstances where he has given evidence on oath and been tested under cross-examination and made denials not only about the wife’s accusations of fraudulent conduct in doctoring the files but indicated that he has given all of the necessary documents in his possession, it is hard to see how the wife’s current application has any basis.  All of that could be rectified by a proper affidavit by Mr C and a proper application by the wife indicating that she proposed to rely upon Mr C as an adversarial witness noting the difficulties she will have to overcome in Chapter 15 of the rules of the court.  Both parties also need to address the question of Mr B.  If indeed he is the single expert witness, the parties could agree to discharge him.

The 2016 tax return

1. In the annexed email to which I have already referred, mention was made by Mr C (apparently) that the husband could get the company’s 2016 tax returns done now notwithstanding they did not have to be filed with the Australia Taxation Office until May.  No doubt that observation is correct but there are two problems.  The first is that the husband presumably has to have the consensus of the directors and he is only one.  Neither Mr C nor the wife addressed that problem.  It is not an insurmountable problem because the husband has already indicated (as a second point) instructions have been given to the accountant but he has been placed in the queue because it is not the sort of work that the accountant would be doing for him at this time of the year.  The court would need to be careful about making any coercive orders against the husband in relation to such a step bearing in mind the legal role he holds in the company.

The discovery determination

1. Because I could find no relevance in what the wife seeks and with the paucity of evidence, along with the imprecise pleadings, the only conclusion I can draw is that this litigation is not only unguided, it is misguided.  On the findings about the evidence of the husband, there is no basis for me to make the orders sought by the wife.  Her application therefore fails. 

The spousal maintenance claim

1. The husband’s application is indeed for a variation and as such, falls to be dealt with under s 83 of the Act.

2. Section 83(1) of the Act provides as follows:

   (1)      If there is in force an order (whether made before or after the commencement of this Act) with respect to the maintenance of a party to a marriage:

   (a)      made by the court; or

   (b)made by another court and registered in the first‑mentioned court in accordance with the applicable Rules of Court;

   the court may, subject to section 111AA:

   (c)      discharge the order if there is any just cause for so doing;

   (d)suspend its operation wholly or in part and either until further order or until a fixed time or the happening of some future event;

   (e)revive wholly or in part an order suspended under paragraph (d); or

   (f)subject to subsection (2), vary the order so as to increase or decrease any amount ordered to be paid or in any other manner.

1. It would appear that the husband is pursuing orders of the type in s 83(1)(f). As such, subsection (2) becomes important. It provides:

   (2)The court shall not make an order increasing or decreasing an amount ordered to be paid by an order unless it is satisfied:

   (a)that, since the order was made or last varied:

   (i)the circumstances of a person for whose benefit the order was made have so changed (including the person entering into a stable and continuing de facto relationship);

   (ii)the circumstances of the person liable to make payments under the order have so changed; or

   (iii)in the case of an order that operates in favour of, or is binding on, a legal personal representative--the circumstances of the estate are such;

   as to justify its so doing;

   (b)that, since the order was made, or last varied, the cost of living has changed to such an extent as to justify its so doing;

   (ba)in a case where the order was made by consent--that the amount ordered to be paid is not proper or adequate;

   (c)that material facts were withheld from the court that made the order or from a court that varied the order or material evidence previously given before such a court was false.

2. The provision in (ba) might be seen to be relevant having regard to the husband’s assertions that he was “forced” to agree and in any event, the order had a limited life. However, as he was represented by counsel at the time, neither of those concepts have any merit. He could take up his complaint through the relevant professional bodies and if he did not read what he was signing, he has been the master of his own misfortune. He is an intelligent businessman.

3. Without the Court being assisted by submission and argument, I am left to try and decipher what the basis is for any change. It would seem that his basis is s 83(2)(a)(ii) as he did not submit that the wife’s circumstances had changed.

4. His unchallenged evidence is that with limited income and credit cards with balances “maxed out”, he had met a number of challenges in 2016. He received an account from Mr B for $10,563.05 and accordingly, reduced the payment to the wife to meet that. He went on a holiday to Ireland but did so at the cheapest possible rate by staying with family and only spending $5,000. But, that was $5,000 that should have been allocated as a priority towards maintenance before the luxury of even a limited holiday.

5. What is disconcerting however is that if financial circumstances statement of the husband from November is indicative of what his financial position was in April 2016, it is hard to see how he could then have been capable of meeting a commitment of $1000 per week. Even allowing for reductions for unreasonable expenditure, the following weekly picture emerges:

   Income  $3201

   Tax  $1018  

   Rent  752  

   Mortgage (wife’s home)  308

   Child support (previous family)         545

   Living (say)  300

   Utilities  75

   Clothing (say)  100

   Medical (say)  100

   Chemist  30

   Total  $3228

   But in addition to that, the husband’s “maxed out” credit cards had to be serviced. He owes $25,000 and was paying them off at the rate of $800 per week perhaps unnecessarily.

6. It was not argued, and I do not consider I can determine the matter on the basis that, the consent order was not proper at the time for the reasons I have already given.

7. It is obvious however that there is little money to go around here and also unsurprising that neither party can afford lawyers.

8. The husband complained bitterly that the wife had filed all of the large volume of documents in August to delay the hearing and as such, caused him significant legal bills. He complained that he had to pay those bills in circumstances where the wife was incessantly contacting his lawyers and running up accounts. Whilst I understand the dilemma, he could have given instructions that they were not to deal with the wife in those peculiar circumstances. If, as I suspect, the wife is misguided or unguided as to what she is doing, this case needs an urgent final hearing but that is not possible until the issue of valuation is sorted out. Unfortunately, the further delay will mean that the maintenance obligation will go on.

9. I find that the husband has not shown a change of circumstances since April 2016. He had financial problems in April which only seem to have worsened because of the legal costs just mentioned but he somehow found the necessary funds to travel to Ireland. He found the funds to travel to Sydney for business purposes.

10. The wife did not put to the husband whether there were undrawn profits or how any value could be drawn from the company but then again, the husband did not present that evidence either.

11. The husband has not satisfied me that there has been a change of circumstances and his application must fail.

I certify that the preceding Fifty Six (56) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 18 January 2017.

Associate: 

Date:  18 January 2017