Hopkins & Elliott (No 7) - [2024] FedCFamC1F 312

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Hopkins & Elliott (No 7) [2024] FedCFamC1F 312

File number: SYC 5636 of 2021

Judgment of: ALDRIDGE J

Date of judgment: 15 May 2024

Catchwords: FAMILY LAW – PROPERTY – Application for final property orders – Modest asset pool – Repeated failure of the wife to comply with procedural directions – Husband has entered approved restructuring plan with the ATO to reduce his company’s assessed tax liability – ATO debt arises from income that provided benefits to the wife – ATO debt included on balance sheet – Wife seeks to add various assets, add backs and liabilities to the balance sheet – Where company debts and an interest in a property were already taken into account in the business valuations – Where there was no evidence for a number of balance sheet items claimed by the wife – Wife claimed she helped grow the husband’s business – Evidence suggests the wife did no valuable work in the business – Financial support substantially provided by the husband – Limited non-financial contributions made by the wife – Wife has capacity for future employment – Net assets to be divided 20 per cent to the wife and 80 per cent to the husband.
FAMILY LAW – PROPERTY – SPOUSAL MAINTENANCE – Wife sought periodic spousal maintenance – Test for capacity is governed by the word “adequate” – Various claimed expenses cannot be considered required for the wife to support herself adequately – Medical evidence does not prove the wife is incapable of supporting herself adequately – Husband lacks reasonable capacity to pay maintenance – Application dismissed.
FAMILY LAW – PRACTICE AND PROCEDURE – Vexatious proceedings – Husband sought an order declaring the wife a vexatious litigant pursuant to s 102QB of the Family Law Act 1975 (Cth) – Affidavits filed by the wife were not proceedings – Notices of objection to subpoenas fit within definition of a proceeding – Husband fails to explain why the notices of objection were vexatious – Where the wife has brought a number of Applications in a Proceeding, Applications for Review, appeals and Applications in an Appeal – Husband has not established the wife has frequently commenced or conducted vexatious proceedings – Application refused.

Legislation: Family Law Act 1975 (Cth) ss 4, 72, 79, 102Q, 102QB

Cases cited:
Citta Hobart Pty Ltd v Cawthorn (2022) 276 CLR 216; [2022] HCA 16

Elliot & Hopkins (No 2) (2023) FLC 94-157; [2023] FedCFamC1A 142

Hopkins & Elliot (No 6) [2024] FedCFamC1F 116

Kowaliw and Kowaliw (1981) FLC 91-092

NHC & RCH (2004) FLC 93-204; [2004] FamCA 633

Official Trustee in Bankruptcy v Gargan (No 2) [2009] FCA 398

Pencious & Searle (2017) FLC 93-805; [2017] FamCAFC 210

Potier v Attorney General (NSW) (2015) 89 NSWLR 284; [2015] NSWCA 129

Trustee of the Property of G Lemnos, a Bankrupt & Lemnos and Anor (2009) FLC 93-394; [2009] FamCAFC 20

Division: Division 1 First Instance

Number of paragraphs: 196

Date of…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2024] FedCFamC1F 312
Decision Date: 15 May 2024

CaseChat Overview and Summary

In Hopkins & Elliott (No 7), the Federal Circuit and Family Court of Australia (Division 1) dealt with a property settlement and spousal maintenance application in the context of a modest asset pool. The husband had entered an approved restructuring plan with the Australian Taxation Office (ATO) to reduce his company’s assessed tax liability. The ATO debt arose from income that provided benefits to the wife. The wife sought to add various assets, add backs, and liabilities to the balance sheet, but the court found that several of these items had already been considered in the business valuations. Additionally, there was no evidence to support some of the balance sheet items claimed by the wife. The court concluded that the wife had limited capacity for future employment, and that she had not made significant financial or non-financial contributions to the husband’s business. The net assets were divided 20 per cent to the wife and 80 per cent to the husband.

The wife also sought periodic spousal maintenance, but the court held that the test for capacity is governed by the word “adequate.” The court found that the wife did not provide evidence to prove she was incapable of supporting herself adequately, and that the husband lacked the reasonable capacity to pay maintenance. The application for spousal maintenance was dismissed. Furthermore, the husband sought to declare the wife a vexatious litigant under section 102QB of the Family Law Act 1975 (Cth). The court found that the husband failed to establish that the wife had frequently commenced or conducted vexatious proceedings, and the application was refused.

The court's reasoning was grounded in the evidence presented, which largely came from the husband's side, as the wife did not provide substantial evidence-in-chief beyond her Financial Statement. The court examined the value of the husband's companies and related loans, finding that some of the wife’s claims were redundant as they had already been accounted for. The court also considered the wife's capacity for future employment and her contributions to the husband’s business. In relation to spousal maintenance, the court emphasised that the wife did not meet the burden of proving her need for maintenance, and the husband's financial capacity to pay was insufficient. Finally, the court dismissed the vexatious litigant application, noting the lack of evidence to support the husband’s claims.

Orders

Orders of the court

SYC 5636 of 2021

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MR HOPKINS

Applicant

AND:

MS ELLIOTT

Respondent

ORDER MADE BY:

ALDRIDGE J

DATE OF ORDER:

15 MAY 2024

THE COURT ORDERS THAT:

1. Order 7 of the orders made on 4 April 2022 is discharged.

2. Order 1 of the orders made on 5 March 2024 is discharged.

3. The applicant is at liberty to pay the Australian Taxation Office the sums of $50,540 and $130,000 from the net proceeds of sale of the property at B Street, Suburb C as and when such amounts fall due for payment.

4. Order 2 of the orders made on 5 March 2024 is discharged.

5. The applicant is declared the sole legal and beneficial owner of the following:

(a) The applicant’s motor vehicle registered in the name of D Pty Ltd;

(b) The applicant’s business/es;

(d) The applicant’s superannuation;

(e) The home contents and effects in the applicant’s possession; and

(f) All items of personalty and realty including but not limited to monies standing to the credit of the applicant in any bank or building society, shareholdings, real property, motor vehicles, entitlements to superannuation and any present or future expectation pursuant to a trust or estate which items may presently be registered in the name of the applicant or in his possession.

6. The applicant, within 28 days of the date of these orders, pay to the respondent $174,842.

7. Each party is solely legally and equitably liable for and indemnifies the other party in respect of any liability in that party’s name, whether solely or jointly with any other person or entity.

8. The balance of the applicant’s Amended Initiating Application filed 7 July 2023 and the balance of the respondent’s Amended Response to Initiating Application filed 27 February 2024 are dismissed.

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

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

Background

Background to the litigation

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Evidence

Evidence Before The Court

It followed that the evidence relied upon by the wife at the hearing was her Financial Statement filed 19 February 2024 (counsel did not seek to rely on the version filed on 27 February 2024 as identified in the wife’s case outline), an affidavit of Mr M sworn 17 August 2023 and filed 19 February 2024 (incorrectly identified as filed on 22 February 2024 in the wife’s case outline) and an affidavit of Ms X also filed 19 February 2024 but affirmed 21 January 2022.The evidence It follows from the above that there was no evidence-in-chief from the wife other than her Financial Statement. Her counsel was, of course, free to cross-examine the husband and his witnesses and to tender such documents as he wished. However, relatively few documents were tendered. A number of documents were identified by witnesses and marked for identification but were subsequently not tendered by the wife’s counsel. Accordingly, the matter has proceeded largely on the basis of the husband’s evidence, the evidence of the single expert accountant (which was not challenged by any cross-examination) and the relatively small number of exhibits. PROPERTYThe property to be divided A joint balance sheet was filed on 18 March 2024. That did not prevent counsel for the wife from requesting to substitute an amended joint balance sheet at the commencement of the hearing (Exhibit 1). It included, most unhelpfully, an asset at an “unknown” value and included a property at Suburb G at a value of $420,000. The husband’s companies and related loans The husband’s two companies were valued by an expert account engaged by the husband. That expert concluded that Hopkins Group had a value of $180,266 (Report of Ms L dated 23 February 2024, paragraph 6). The expert identified D Pty Ltd as having a negative value (Report of Ms L dated 23 February 2024, paragraph 6). Consequently, the husband’s shares in D Pty Ltd have no value and should be reflected in the balance sheet as such. The wife asserts that D Pty Ltd does indeed have a positive value and seeks to include loans owed to that company by the husband in the sum of $145,663 and $130,000 as assets of the company and therefore of the parties. The expert was not cross-examined as to whether that was the correct approach. The argument is that the husband failed to include these debts and they should now therefore be taken into account. In determining the market value of D Pty Ltd, the expert included a director’s loan made by the husband to the company in the sum of $145,663 as an asset. That is precisely the sum that the wife seeks to have included on the balance sheet in addition to the company’s value. As to the $130,000, the expert said this: 72.The current liabilities also include a combined $668,384 of payables to the ATO. I was instructed that, as of 9 November 2023, this amount reached $728,958.73.I am instructed that [D Pty Ltd] entered a restructuring plan to deal with this debt. Under this plan, the ATO agreed to remit [D Pty Ltd’s] debt in exchange for a Director’s contribution of $130,000.74.The table at Schedule A4 assesses the market value of the assets and liabilities owned by [D Pty Ltd].75.I have assumed the Husband will be able to comply with the restructuring plan, and therefore, I have disregarded the debts to the ATO.76.The balance sheet for 2023 includes a loan of $15,663 from the Husband. I have increased this loan on the assumption that the husband paid the $130,000 required for the restructure. This loan from the Husband should be included with his assets in the Family Law balance sheets.(Report of Ms L dated 23 February 2024, Appendix A)

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

File number:	SYC 5636 of 2021
Judgment of:	ALDRIDGE J
Date of judgment:	15 May 2024
Catchwords:	FAMILY LAW – PROPERTY – Application for final property orders – Modest asset pool – Repeated failure of the wife to comply with procedural directions – Husband has entered approved restructuring plan with the ATO to reduce his company’s assessed tax liability – ATO debt arises from income that provided benefits to the wife – ATO debt included on balance sheet – Wife seeks to add various assets, add backs and liabilities to the balance sheet – Where company debts and an interest in a property were already taken into account in the business valuations – Where there was no evidence for a number of balance sheet items claimed by the wife – Wife claimed she helped grow the husband’s business – Evidence suggests the wife did no valuable work in the business – Financial support substantially provided by the husband – Limited non-financial contributions made by the wife – Wife has capacity for future employment – Net assets to be divided 20 per cent to the wife and 80 per cent to the husband. FAMILY LAW – PROPERTY – SPOUSAL MAINTENANCE – Wife sought periodic spousal maintenance – Test for capacity is governed by the word “adequate” – Various claimed expenses cannot be considered required for the wife to support herself adequately – Medical evidence does not prove the wife is incapable of supporting herself adequately – Husband lacks reasonable capacity to pay maintenance – Application dismissed. FAMILY LAW – PRACTICE AND PROCEDURE – Vexatious proceedings – Husband sought an order declaring the wife a vexatious litigant pursuant to s 102QB of the Family Law Act 1975 (Cth) – Affidavits filed by the wife were not proceedings – Notices of objection to subpoenas fit within definition of a proceeding – Husband fails to explain why the notices of objection were vexatious – Where the wife has brought a number of Applications in a Proceeding, Applications for Review, appeals and Applications in an Appeal – Husband has not established the wife has frequently commenced or conducted vexatious proceedings – Application refused.
Legislation:	Family Law Act 1975 (Cth) ss 4, 72, 79, 102Q, 102QB
Cases cited:	Citta Hobart Pty Ltd v Cawthorn (2022) 276 CLR 216; [2022] HCA 16 Elliot & Hopkins (No 2) (2023) FLC 94-157; [2023] FedCFamC1A 142 Hopkins & Elliot (No 6) [2024] FedCFamC1F 116 Kowaliw and Kowaliw (1981) FLC 91-092 NHC & RCH (2004) FLC 93-204; [2004] FamCA 633 Official Trustee in Bankruptcy v Gargan (No 2) [2009] FCA 398 Pencious & Searle (2017) FLC 93-805; [2017] FamCAFC 210 Potier v Attorney General (NSW) (2015) 89 NSWLR 284; [2015] NSWCA 129 Trustee of the Property of G Lemnos, a Bankrupt & Lemnos and Anor (2009) FLC 93-394; [2009] FamCAFC 20
Division:	Division 1 First Instance
Number of paragraphs:	196
Date of…