IMBERG & CABREY
[2020] FCCA 1053
•18 May 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| IMBERG & CABREY | [2020] FCCA 1053 |
| Catchwords: FAMILY LAW – Property – undefended hearing – where respondent did not participate in Court proceedings. |
| Legislation: Family Law Act 1975 (Cth), ss.75, 79, 117. |
| Cases cited: In the Marriage of Blackand Kellner (1992) 106 FLR 154 |
| Applicant: | MS IMBERG |
| Respondent: | MR CABREY |
| File Number: | SYC 2614 of 2019 |
| Judgment of: | Judge Morley |
| Hearing date: | 4 February 2020 |
| Date of Last Submission: | 4 February 2020 |
| Delivered at: | Sydney |
| Delivered on: | 18 May 2020 |
REPRESENTATION
| Counsel for the Applicant: | Mr Rosic |
| Solicitors for the Applicant: | Mills Oakley Lawyers |
| No appearance by the Respondent |
ORDERS
That within 60 days of the date of these orders, the husband shall:
(a)Do all things and sign all documents as may be necessary to transfer to the wife the whole of his right, title and interest in the property situated at and known as A Street, Suburb B in the State of New South Wales, being the whole of the land comprised in Lot ... of deposited plan ..., folio identifier at ... (“the A Street, Suburb B property”); and
(b)Pay to the wife the sum of $100,000 by way of adjustment of property interests pursuant to section 79 of the Family Law Act 1975 (Cth);
That simultaneously with the husband’s compliance with order (1) hereof, the wife do all acts and things and sign all documents to:
(a)Refinance the ANZ mortgage ... secured against the A Street, Suburb B property into her sole name;
(b)Obtain a release from ANZ in respect of any guarantee provided by the husband in relation to the ANZ mortgage ... secured against the property situated at and known as C Street, Suburb D in the State of New South Wales, being all the land comprised at folio identifier ... (“the C Street, Suburb D property”) in relation to loan accounts BSB ... account ..66 and BSB ... account ...54;
and shall thereafter indemnify the husband in relation to any liability arising with respect to the said mortgages and loan accounts.
That within 14 days of the date of these orders, the parties shall do all such things and sign all such documents as may be necessary to:
(a)Transfer and assign any credit or debit loan account held by the wife in the E Trust to the husband; and
(b)Relinquish the wife’s right as to capital and income in the E Trust; and
(c)Retire the wife as a beneficiary of the E Trust.
That the husband indemnify the wife in respect of all liabilities, claims, actions, and suits in relation to the E Trust and F Pty Ltd, including but not limited to outstanding income tax.
That the husband indemnify the wife in relation to all loans obtained by the husband in relation to and all debts associated with G franchises.
That the wife be solely entitled to the funds held in the trust account of Coleman Greig Lawyers in respect of the sale of the parties’ properties at Suburb H and at J Street, Suburb K, and these orders operate as authority and direction to Coleman Greig Lawyers to pay such funds to the wife.
That the wife is solely entitled to the funds held in the ANZ Bank offset account number ...92 in the joint names of the parties, and the parties shall forthwith do all things necessary to have those funds paid over to the sole benefit of the wife.
That unless as otherwise provided for in these orders, the wife is the sole owner in law and in equity as between herself and the husband of the C Street, Suburb D property, the Motor Vehicle 1 registration ..., the whole of her entitlement to benefits as a member of the L Super Fund, and all other real property, personal property, financial assets and financial resources currently within her power, possession or control.
That unless as otherwise provided for in these orders, the husband is the sole owner in law and in equity as between himself and the wife of his shares in F Pty Ltd, his interest in the E Trust, the real property at M Street, Suburb N in the State of New South Wales, being all of the land comprised in folio identifier ... (“the M Street, Suburb N property”), and all other real property, personal property, financial assets and financial resources currently within his power, possession or control.
That in the event that either party fails, refuses or neglects to execute any deed, document or instrument necessary to give effect to these orders, then the Court appoints pursuant to section 106A of the Family Law Act 1975 (Cth) the registrars of the Federal Circuit Court of Australia, Sydney Registry, to execute such deed, document, or instrument in the name of the party who has so failed, refused or neglected, and to do all acts and things necessary to give the liberty and the operation to such deed, document or instrument.
That pending compliance by the husband with order 1(b) hereof:
(a)The husband is restrained from disposing of, or further encumbering or otherwise dealing with his interest in the M Street, Suburb N property; and
(b)The payment due to the wife pursuant to order 1(b) is charged against the interest of the husband in the M Street, Suburb N property, and for the purposes of this order the wife is permitted to lodge a caveat against the title to the M Street, Suburb N property and the wife shall cause that caveat to be withdrawn within 48 hours of receiving payment from the husband.
That in the event that the husband fails to comply with order 1(b) hereof:
(a)The husband shall pay to the wife, in addition to the said sum of $100,000, interest thereon at the rate prescribed from time to time by the Family Law Rules 2004 (Cth), in accordance with rule 22.01 of the Federal Circuit Court Rules 2001 (Cth) from the date 60 days after the date of these orders until the date of payment;
(b)The wife is, upon the failure of the husband to comply with order 1(b), appointed as trustee for the sale of the M Street, Suburb N property and shall thereafter do all such things that may be necessary to list the M Street, Suburb N property for sale by private treaty or auction and to sell the M Street, Suburb N property for the best price reasonably obtainable as soon as practicable and to distribute the proceeds of such sale as follows:
(i)in payment of real estate agent’s commission and expenses on the sale;
(ii)in payment of proper legal costs and disbursements of and incidental to the sale;
(iii)in discharge of the mortgage to Westpac Banking Corporation secured over the M Street, Suburb N property;
(iv)in adjustment of rates, levies and taxes on the M Street, Suburb N property;
(v)in payment to the wife of the sum of $100,000 or so much as is then still owing to the wife pursuant to order 1(b) together with the interest payable thereon; and
(vi)in payment of the balance then remaining to the husband;
(c)in the event that the wife does not receive sufficient moneys from a sale of the M Street, Suburb N property to constitute full compliance by the husband with order 1(b) and together with any interest accrued thereon, then the wife is at liberty to file and serve a third party debt notice upon O Pty Ltd and P Pty Ltd as trustee for P Pty Ltd Trust to garnish the weekly payments due to the husband and/or due to F Pty Ltd as trustee of the E Trust pursuant to the Sale of Business agreement dated April 2019, in favour of the wife for the sum outstanding and due to the wife pursuant to order 1(b) and any interest accrued thereon.
That any application to be made by the husband pursuant to rule 16.05(2) of the Federal Circuit Court Rules 2001 (Cth) must be made within 28 days after service upon him of a copy of these orders.
That the wife cause a copy of these orders to be served upon the husband within seven days by each of the following methods:
(a)By forwarding the same as an attachment to an email to ...;
(b)By forwarding a sealed copy of the orders by ordinary prepaid post addressed to the husband at Q Street, Suburb R, NSW;
(c)By forwarding a sealed copy by ordinary prepaid post addressed to the husband care of S Street, Suburb T, NSW.
That there be no order as to costs in relation to the preparation for the undefended final hearing and for the undefended final hearing.
IT IS NOTED that publication of this judgment under the pseudonym Imberg & Cabrey is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYC 2614 of 2019
| MS IMBERG |
Applicant
And
| MR CABREY |
Respondent
REASONS FOR JUDGMENT
Introduction
These Reasons relate to final property proceedings initiated by the applicant wife, Ms Imberg (“the wife”).
The wife and the respondent husband, Mr Cabrey (“the husband”), began cohabitation in 2016, married in 2017, and separated on 18 September 2018, a total cohabitation period of 23 months.
At separation, the husband left the matrimonial home. The wife remained in occupation and has continued in occupation up to the present time.
There are no children of the relationship. The wife has no children. The husband may have become a father with his new partner subsequent to the hearing of these proceedings.
On 4 February 2020, I conducted an undefended hearing of the wife’s application for property settlement orders pursuant to section 79 of the Family Law Act 1975 (Cth) (“the Act”). The wife was represented by Mr Rosic of Counsel.
The proceedings were commenced by the wife filing her initiating application on 24 April 2019 in the Family Court of Australia at Sydney. The husband at no time took any part in the proceedings – he did not file any document in the proceedings, he did not himself appear at any Court event, and was not represented at any Court event.
The wife was 36 years of age and the husband 31 years of age at the time of the undefended hearing.
There are three matters that arose in this hearing that I intend to address in this judgment. They are as follows:
a)The matter proceeding on an undefended basis;
b)The wife’s application for an adjustment of property interests pursuant to section 79 of the Family Law Act; and
c)The wife’s application for costs of these proceedings.
Proceeding on an undefended basis
Initial attempts to serve the wife’s initiating application and supporting documents on the husband in person were unsuccessful. Service was attempted on five occasions at a business addresses known to be occupied by businesses with which the husband was associated, either as an operator (through a corporate entity) or involved as, perhaps, a silent participant with his new partner, Ms U (“Ms U”).
As stated, all those attempts were unsuccessful. Thereafter, the initiating documents were forwarded to the husband as attachments to an email sent to the email address .... I am satisfied there is evidence of that email address being used by the husband to send and receive emails as at 9 January, 8 April 2019, and 12 April 2019.[1] The email with the wife’s material was sent to that email address on 17 May 2019.
[1] Affidavit of Ms Imberg filed 21 January 2020, [104], exhibit [VC64].
By an application in the case filed 18 June 2019, the wife sought an order for substituted service, being for service of the originating documents of the proceedings on the husband by:
a)Email to the email address ...;
b)By post to S Street, Suburb T, NSW; and
c)By causing a text message to be sent to two named mobile telephone numbers.
I am satisfied on the evidence that the address referred to was, at the relevant time, the address of the husband’s parents, and that the second of the mobile telephone numbers referred to in the application in the case (ending in ...) was a mobile telephone number used by the husband to make and receive telephone calls at the relevant times.
On 24 June 2019, a Registrar of the Family Court of Australia made a substituted service order in terms of the orders sought by the wife in her application in the case, and with additional service by way of personal service at M Street, Suburb N, NSW, “…a residence the wife believes the H has recently purchased and residing in.”[2]
[2] Orders of Registrar Chayna on 24 June 2019, [8].
I am satisfied on the evidence that, at the relevant time, the husband had purchased the real estate property at that address, and, at the relevant time, he was residing there.
On 4 July 2019, a process server served the initiating application, the financial statement, and affidavit of the wife filed with the initiating application, together with the Court brochure ‘Marriage, Families and Separation’ and a copy of the orders made 24 June 2019 on the husband by putting the documents down in his presence at M Street, Suburb N, and bringing the nature of the documents to his attention. The process server identified the husband by use of a photograph supplied for that purpose and annexed to the resultant affidavit of service.
Further documents were served on the husband personally by the same process server at the M Street, Suburb N address on 11 August 2019, again by putting the documents down in the presence of the husband and drawing his attention to the nature of the documents, the husband having refused to receive the documents. Once again, the husband was identified by the process server by use of a photograph provided to him for that purpose and annexed to the resultant affidavit of service.
The documents served on this occasion were a copy of the affidavit of the wife sworn 9 August 2019, a letter dated 9 August 2019 addressed to the husband from the solicitors for the wife, and a copy of a Minute of Orders sought by the wife for an interim hearing on 14 August 2019.
The said letter from the wife’s solicitors drew the husband’s attention to the matter being listed before the court on 14 August 2019 for consideration of interim orders sought by the wife.
On 14 August 2019, the matter was before Senior Registrar Campbell in the Family Court of Australia. Orders were made by the Senior Registrar in accordance with the interim orders sought in the wife’s initiating application, providing for:
a)A sale of real property jointly owned by the parties at Suburb H in New South Wales and deposit of any net proceeds of sale into a specified loan account;
b)Completion of a purchase and immediate sale of a property at J Street, Suburb K in New South Wales and the deposit of any net proceeds of sale into a specified loan account;
c)The husband to pay into a joint account in the names of the parties with ANZ Bank moneys being 50 per cent of the payments required on loan accounts with the ANZ Bank secured by a mortgage on real properties at C Street, Suburb D, A Street, Suburb B and Suburb H for the period from 18 February 2019 to 14 August 2019;
d)An order requiring the husband to pay 50 per cent of the payments required on loan accounts with the ANZ Bank secured by a mortgage on the C Street, Suburb D and A Street, Suburb B properties each month, and specifying the BSB and account numbers for the four applicable loan accounts;
e)A restraint on the husband from disposing of any property held by him in his personal capacity or in a corporation or a trust in which he has an interest, except in the ordinary course of business and on provision of 28 days written notice that the wife, pending further orders of the Court;
f)The husband to give full and frank financial disclosure in accordance with rule 13.04 of the Family Law Rules 2004 (Cth);
g)The filing by each party of an undertaking as to disclosure in accordance with rule 13.15 of the Family Law Rules 2004 (Cth);
h)The husband file and serve his response, financial statement and affidavit within 28 days; and
i)An order that the husband pay the wife’s costs of an incidental to the application before the court on that day for interim orders on an indemnity basis.
A copy of the orders made 14 August 2019 were to be served on the husband in accordance with the previous orders for substituted service and same was carried out by service to the email address, by messages sent to the mobile telephone numbers, and by engagement of a process server to serve the husband at the M Street, Suburb N address. The attempts to serve the husband at the M Street, Suburb N address were unsuccessful.
On 12 September 2019, in accordance with further information that had come to the attention of the wife’s solicitors, a copy of the orders made 14 August 2019 was forwarded to the husband as an attachment to an email sent to ..., that email address having been identified from a copy of a loan application document completed by the husband and submitted to the V Bank dated 17 May 2019 in relation to the purchase of the M Street, Suburb N property.
That document had been produced under subpoena by Westpac Banking Corporation. On that same day, 12 September 2019, the solicitor who forwarded the email received three replies from the husband, each sent from the email address ....
On 13 September 2019, the solicitor acting for the wife received a telephone call from the husband from the mobile telephone number ending ... and had a discussion with the husband about the proceedings. Later that day, the solicitor telephoned to the husband on that mobile telephone number and had a further discussion.
During the first discussion, the solicitor said to the husband “The matter is listed on Tuesday 17 September 2019 at 9.30 at court in Sydney. You need to attend court.”[3]
[3] Affidavit of Mr W filed 17 September 2019, [9].
During the second telephone conversation, the solicitor said to the husband “Would you be coming to court on Tuesday?”[4] The Husband responded “No. This is a waste of time.”[5]
[4] Affidavit of Mr W filed 17 September 2019, [10].
[5] Affidavit of Mr W filed 17 September 2019, [10].
On 17 September 2019, the matter came before me and I made, inter alia, orders for the following:
a)An order listing the matter for an undefended hearing at 9.30am on 4 February 2020;
b)Orders requiring the wife to file and serve any further affidavit material on which she would seek to rely at the undefended hearing by no later than 4pm on 10 January 2020; and
c)Orders requiring any such further documents filed and a copy of the orders made 17 September 2019 to be served on the husband by forwarding same as an attachment to an email directly to ....
I am satisfied that service in relation to both orders was carried out. I made a further order that, by no later than 29 November 2019, a solicitor acting for the wife was to telephone the respondent husband on the mobile telephone number ending in ...and, if answered, to notify the respondent, or whoever answered that telephone, that:
… the matter has been listed for undefended hearing at 9:30am on 4 February 2020 and that the matter will proceed on that day in his absence and final orders will be made in relation to property settlement orders between the parties, unless he complies with orders made hereunder in relation to the filing of the appropriate documents in compliance with the rules.[6]
[6] Orders of Judge Morley on 17 September 2019, [5].
In due course, that order was complied with by a solicitor for the wife by making five attempts – four from a fixed landline and one from a mobile telephone number – with each being unsuccessful, receiving an automated notification that the number had been disconnected.
I have read and considered all of the evidence contained in the following documents relating to service upon the husband and notification of the husband of the various court events from 14 August 2019 onwards. I am satisfied, and I find that the husband had knowledge of the undefended hearing that took place on 4 February 2020, and that the matter would proceed on that day as a final hearing in his absence if he did not appear or have representation before the court on that day and if he had not filed response and supporting documents in compliance with the rules by that day. Those documents are as follows:
a)Affidavit of service by Ms X filed 28 May 2019;
b)Affidavit of service by Mr Y filed 28 May 2019;
c)Application in a case filed 18 June 2019 seeking the substituted service orders;
d)Affidavit of Ms X filed 18 June 2019;
e)Affidavit of the wife filed 20 June 2019;
f)Affidavit of service by Mr Z filed 11 July 2019;
g)Affidavit of service Mr Z filed 13 August 2019;
h)Affidavit of Mr W filed 17 September 2019;
i)Affidavit of Mr W filed 9 January 2020;
j)Affidavit of the wife filed 12 February 2020 (subsequent to the undefended hearing but in compliance with orders made on that day);
k)Paragraph 6 of the wife’s affidavit filed 21 January 2020 and exhibit 1A therein; and
l)Paragraphs 101 to 114 of the wife’s affidavit filed 21 January 2020 and exhibits 62 to 65 inclusive to that affidavit.
Having found that the husband had knowledge of the matter proceeding to undefended hearing on 4 February 2020, on the basis of all of the evidence referred to in the last preceding paragraph and of all of the evidence in this matter, I am satisfied that the husband has been afforded procedural fairness in the matter and has not been denied natural justice in the matter proceeding to undefended hearing as it did.
The property matter
History of the matter
It bears briefly mentioning the history of this matter, first in the Family Court of Australia and now the Federal Circuit Court of Australia.
The matter first came before Registrar Chayna on 28 May 2019. On that occasion, the wife had filed her initiating application, her affidavit sworn or affirmed 26 April 2019, and her financial statement sworn 26 April 2019. On the first return of the matter, the Registrar made orders providing for all applications to be listed for a telephone procedural hearing on 24 June 2019.
The Registrar also notated that consideration would be given on the next occasion to transferring the matter to the FCC, and foreshadowed an application in a case filed by the wife for substituted service.
On 18 June 2019, the wife filed an application in a case and affidavit sworn or affirmed by Ms X, a solicitor at the firm retained by the wife. That application sought orders in the following terms which I extract as follows:
1. That this Application be heard on short notice and on an ex parte basis.
2. That pursuant to Rule 7.18 of the Family Law Rules2004 (Cth), personal service of:
(a) the Initiating Application filed on 26 April 2019;
(b) the Financial Statement of Ms Imberg filed 26 April 2019;
(c) the Affidavit of Ms Imberg filed 26 April 2019;
(d) the tender bundle of Exhibits to the Affidavit of Ms Imberg filed 26 April 2019;
(e) Brochure entitled “Marriage, Families and Separation”
(“the Documents”) upon the Respondent be dispensed with.
3. That substituted service of the Documents referred to at Order 2 hereof be ordered and that such service be effected by sending a copy of the Documents to the Respondent by means of the following:
(a) by email to ...;
(b) by post to S Street, Suburb T, NSW;
(c) by causing a text message to be sent to the Respondent at:
(i) ...;
(ii) ....[7]
[7] Wife’s Application in a Case filed 18 June 2020, [6].
The matter was listed with apparent urgency before Senior Registrar Campbell two days later on 20 June 2019. On that occasion, Ms X appeared for the wife, and there was no appearance by or for the husband.
On that occasion, the Senior Registrar made orders granting leave to the wife to approach Registrar Chayna (the docket Registrar) with an application in relation to substituted service, and adjourning the matter to a date to be advised after the determination of any such application for substituted service.
The wife filed an amended case application later that day, along with an affidavit sworn or affirmed by her on 18 June 2019 and an affidavit sworn by Ms X on 20 June 2020.
That amended case application sought the following orders for substituted service, which I reproduce herein with the orders underlined to indicate an addition and struck out to indicate an omission as is the course under the Family Law Rules 2004 (Cth):
1. That this Application be heard on short notice and on an ex parte basis.
2. That pursuant to Rule 7.18 of the Family Law Rules2004 (Cth), personal service of:
(a) the Initiating Application filed on 26 April 2019;
(b) the Financial Statement of Ms Imberg filed 26 April 2019;
(c) the Affidavit of Ms Imberg filed 26 April 2019;
(d) the tender bundle of Exhibits to the Affidavit of Ms Imberg filed 26 April 2019;
(e) Brochure entitled “Marriage, Families and Separation”
(“the Documents”) upon the Respondent be dispensed with.
3. That substituted service of the Documents referred to at Order 2 hereof be ordered and that such service be effected by sending a copy of the Documents to the Respondent by means of the following:(a) by email to ...;(b) by post to S Street, Suburb T, NSW;(c) by causing a text message to be sent to the Respondent at:(i) ...;(ii) ....4. That substituted service of the Documents referred to at Order 2 hereof be ordered and that such service be deemed to have been effected on 17 May 2019 by sending a copy of the Documents to the Respondent by email to ... on 17 May 2019.
5. That the Application in a Case filed 26 April 2019 be listed urgently in the judicial duty list.
6. That the Respondent pay the Applicant’s costs of and incidental to this Application on an indemnity basis.[8]
[8] Wife’s Application in a Case filed 20 June 2020, [6].
The matter came before Registrar Chayna on 24 June 2019. On this occasion, the Registrar made orders in Chambers providing for, inter alia, the following:
…
6. The Applicant must forthwith notify all other parties in writing to their last known address of the orders made today and the possible consequences of a further non-attendance at the next court event, in accordance with the substituted service order made herein. …
8. That a substituted service order be made in accordance with the wife’s application in a case filed on 18.06.19, orders sought 1 – 3 , where in addition, the wife also serve the said documents to the address “M Street, Suburb N, NSW”, a residence the wife believes the H has recently purchased and residing in.
Notations
The Court notes the following:
9. Consideration should be given on the next occasion as to suitability of the matter to transfer the matter to the FCC.[9]
[9] Orders of Registrar Chayna on 20 June 2020 (emphasis added).
I note here that despite having filed an amended case application, the learned Registrar elected to make orders in accordance with those sought in the wife’s primary application in a case.
On 11 July 2019, the wife filed a further affidavit of service sworn by Mr Z. In that affidavit, Mr Z deposed that he had had a conversation with the husband, had identified that he was speaking with the husband by reference to a supplied photograph, and had left the documents in the husband’s presence.
On 9 August 2019, the wife filed a further affidavit sworn by her upon which she sought to rely at the upcoming hearing before Senior Registrar Campbell. She filed a further affidavit of service five days later on 13 August 2019, again sworn by Mr Z.
The matter then came before Senior Registrar Campbell on 14 August 2019, who made orders in accordance with the minute sought by the wife on an ex parte and undefended basis. I have referred to those orders earlier in these reasons.
On 20 August 2019, Registrar McGrath transferred the matter to the Federal Circuit Court of Australia. The wife filed an undertaking as to disclosure as required by order 9 made by the Senior Registrar the next day.
The wife filed an affidavit affirmed by Mr W on 17 September 2019. The substance of that affidavit deposes to attempts by him as a solicitor of the firm acting for the wife to effect service of the documents upon the husband.
That day, the matter came before me for the first time for mention. On that occasion, the wife was represented by Ms X, and the husband did not make an appearance.
I made orders listing the matter for undefended hearing to occur in February 2020. I also made orders, inter alia, for the filing of further material for that undefended hearing, and orders providing for service of all material in the following terms:
a)That a copy of the orders made that day be served on the husband by forwarding same as an attachment to an email directed to ...;
b)That the wife be given leave to serve any further documents filed by her on which she will rely at the undefended hearing by forwarding same as attachments to an email directed to ...;
c)That the wife’s solicitors telephone the husband on the number ending with ..., and, if the call is answered, to notify the husband, or whoever answers that telephone, that the matter has been listed for undefended hearing at 9:30am on 4 February 2020, that the matter will proceed on that day in his absence, and that final orders will be made in relation to property settlement orders between the parties, unless he complies with orders made hereunder in relation to the filing of the appropriate documents in compliance with the rules.
d)That should the husband wish to file any material in the matter, that he file any response and, if filed, with it an affidavit in compliance with the Federal Circuit Court Rules 2001 (Cth) and a financial statement in compliance with the Federal Circuit Court Rules 2001 (Cth) by no later than 4:00pm on 6 December 2019; and
e)That the matter would proceed on the February 2020 date even if the husband appeared or was legally represented before the Court on that date, if no material was filed in the matter by the December deadline.
On 4 November 2019, the wife filed a third party debt notice pursuant to the orders made by Senior Registrar Campbell on 14 August 2019. That notice was addressed to Westpac Banking Corporation and sought payment of $34,465.47, being $33,838.47 plus $627 (the costs of the third party debt notice). She filed a further affidavit in support of the third party debt notice, in which she deposed that:
a)Order 5 of the orders made by Senior Registrar Campbell on 14 August 2019 required the husband to pay an amount equal to 50 per cent of the mortgage repayments owing in respect of the properties at C Street, Suburb D, A Street, Suburb B, and Suburb H for the period 18 February 2019 to 14 August 2019 into the parties’ Joint Offset Account ending ...92;[10]
b)Order 6 of those orders required the husband pay half of the mortgage repayments for the C Street, Suburb D and A Street, Suburb B properties as and when repayments fall due for four specific ANZ loan accounts;
c)The amount owing by the husband pursuant to order 5 of the orders totalled $24,767.31, and she set out a matrix of the repayments owing;
d)The amount owing by the husband pursuant to order 6 of the orders totalled $9,071.16, and she set out a matrix of the repayments owing;
e)The husband had not made the loan repayments in compliance with the order.
[10] Affidavit of Ms Imberg filed 4 November 2019, [4].
The third party debt notice and its supporting affidavit were sealed by Registrar Turner on 7 November 2019.
On 14 November 2019, the wife filed an affidavit sworn or affirmed by her in relation to her costs incurred for and incidental to the hearing before Senior Registrar Campbell on 14 August 2019. The wife annexes to that affidavit as annexure 3 a letter to the husband dated 3 October 2019, enclosing an Itemised Costs Account pursuant to rule 19.22 of the Family Law Rules 2004 (Cth). To that document, the wife annexes an 18 page invoice for work completed in her matter and invoiced for the period 18 April 2019 to 25 September 2019 (a period of about five months), totalling $34,505.46. The invoice also lists disbursements paid for on her behalf during that same period totalling $1,439.80, bringing the total invoice to $35,945.26.
The deadline for the husband’s material of 6 December 2019 came and went without any material being filed for the husband.
On 9 January 2020, the wife filed a further affidavit by Mr W deposing to attempts made by him to contact the husband on the mobile telephone number ending .... Specifically, Mr W deposes that he made five attempts to contact the husband, all without success.
The wife filed her substantive trial material on 21 January 2020, comprising an affidavit sworn by her, an updated financial statement, and an affidavit sworn by Mr AA, a valuer with BB Valuations, annexing a valuation dated 11 December 2019 for the A Street, Suburb B property.
On 31 January 2020, the wife filed an affidavit sworn by Mr CC, the wife’s father. That affidavit gives evidence in relation to a purported unsecured loan provided to the wife by her parents for the purchase of the C Street, Suburb D property.
The matter then came before me for undefended hearing.
Material relied upon at the hearing
At the undefended hearing, the wife relied on the following material:
a)A Case Outline document prepared by Mr Rosic of Counsel and dated 30 January 2020;
b)The wife’s initiating application filed 26 April 2019;
c)The wife’s trial affidavit sworn 20 January and filed 21 January 2020 and exhibits “1A” to “65” thereto;
d)The wife’s trial financial statement sworn 20 January and filed 21 January 2020;
e)The affidavit of Mr CC (the wife’s father) sworn 29 January and filed 31 January 2020;
f)The affidavit of Mr AA sworn and filed 21 January 2020, being the expert evidence in relation to the valuation of the A Street, Suburb B property; and
g)The undertaking as to disclosure completed by the wife and filed at 21 August 2019.
The evidence
The evidence in the undefended hearing relevant to the matters under section 79 of the Act was contained in:
a)The wife’s affidavit and the very comprehensive set of exhibits to that affidavit;
b)The wife’s financial statement; and
c)The affidavit by her father.
I accept all the evidence of the wife, almost all of it being backed by documentation presented in the exhibits to her affidavit, and there being no contrary evidence or objections.
I accept the evidence of Mr CC, the wife’s father, in relation to a loan of $220,000 provided to the wife by her parents to assist her with purchase of a property at C Street, Suburb D in 2009.
I accept the evidence of Mr AA, valuer, in relation to the value of the real property at A Street, Suburb B. In his affidavit, he:
a)Deposes that he is a valuer employed by BB Valuations;[11]
b)Annexes his valuation report which indicates that he is a registered valuer with the Australian Property Institute (‘the API’);[12]
c)Deposes that he has read and understands division 15.2 of the Federal Circuit Court Rules 2001 (Cth);[13] and
d)Deposes that he has complied with the requirements of his professional codes of conduct, being the API’s Professional Code of Practice 2004 and all associated guidance notes.[14]
[11] Affidavit of Mr AA filed 21 January 2020, [1].
[12] Affidavit of Mr AA filed 21 January 2020, [4], annexure [B].
[13] Affidavit of Mr AA filed 21 January 2020, [8].
[14] Affidavit of Mr AA filed 21 January 2020, [9].
Mr AA valued the A Street, Suburb B property as at 11 December 2019 at $1,325,000.[15]
[15] Affidavit of Mr AA filed 21 January 2020, 9.
I am satisfied on the basis of the undertaking as to disclosure completed by the wife and filed on 21 August 2019 that she complied with her obligations at that time under the Family Law Rules 2004 (Cth) as to full and frank disclosure and that, accordingly, she has complied with her obligations under part 24 of the Federal Circuit Court Rules 2001 (Cth).
The parties commenced cohabitation in about 2016 and were married in 2017, separated on a final basis on 18 September 2018 at which time the husband vacated the matrimonial home at A Street, Suburb B and the wife remained in occupation.
There are no children of the relationship.
At the commencement of cohabitation, the wife held the following assets and liabilities:
| NET ASSETS OF THE WIFE AT COMMENCEMENT OF COHABITATION | |
| C Street, Suburb D (“the C Street, Suburb D property”) | $550,000 |
| Motor Vehicle 2 | E$40,000 |
| Motor Vehicle 3, | E$5,000 |
| Cash at bank | E$10,000 |
| L Super Fund | $74,833 |
| SUBTOTAL OF ASSETS | $679,833 |
| Loan from parents, unsecured, in relation to the C Street, Suburb D property | ($220,000) |
| Mortgage to ANZ Bank secured against the C Street, Suburb D property | ($55,951) |
| SUBTOTAL OF LIABILITIES | ($275,951) |
| NET ASSETS OF THE WIFE AT COMMENCEMENT OF COHABITATION | $403,882 |
Accordingly, at the commencement of cohabitation, the wife had a net asset position with a value of $403,882.
The ownership by the wife at the commencement of cohabitation of the C Street, Suburb D property with an estimated value of $550,000, subject to security by way of mortgage for a loan account owed to ANZ bank by the wife solely in the sum of $55,951, is of particular significance in the assessment of contributions later in these Reasons. This is because the equity held by the wife in that property was used to the benefit of the parties by way of further borrowings secured on that property, and applied toward purchases by the parties (including stamp duty payments) of three subsequent real estate properties during their cohabitation, as well as for other purposes.
At the commencement of cohabitation, the husband held the following assets and liabilities:
a)An entitlement as a beneficiary in the E Trust which, through the trustee F Pty Ltd (of which the husband was the sole director and shareholder) operated a half-interest in G franchises at City DD and at Suburb EE, estimated value $500,000;
b)A debt in relation to vendor finance for which the husband was presumably a personal guarantor as director of F Pty Ltd relating to a purchase of the G franchises at Suburb EE, estimated at $100,000;
c)A liability presumably through a personal guarantee as director of F Pty Ltd for a business loan in relation to the purchase of the G franchise at City DD, estimated at $100,000;
d)
Credit card debts and personal debts of the husband, estimated at $30,000.
| NET ASSETS OF THE HUSBAND AT COMMENCEMENT OF COHABITATION | |
| Sole director and shareholder of F Pty Ltd, as trustee for E Trust, with half-interest in G franchises in City DD and Suburb EE | E$500,000 |
| SUBTOTAL OF ASSETS | E$500,000 |
| Vendor finance in relation to purchase by F Pty Ltd of G at Suburb EE | (E$100,000) |
| Personal guarantee as director of F Pty Ltd for business loan relating to purchase of G franchise at City DD | (E$100,000) |
| Credit card debts and personal debts | (E$30,000) |
| SUBTOTAL OF LIABILITIES | (E$230,000) |
| NET ASSETS OF THE HUSBAND AT COMMENCEMENT OF COHABITATION | E$270,000 |
Accordingly, at the commencement of cohabitation, the husband had a net asset holding through his interest in the E Trust with a value estimated at $270,000.
At the commencement of cohabitation, the husband may have had superannuation, but due to his nonparticipation in any way in the proceedings, there is no evidence in relation to his superannuation entitlements, if any, at any time whether before cohabitation, at the commencement of cohabitation, during cohabitation, or after separation.
During cohabitation, the wife was employed on a full time basis as a Professional. At the commencement of cohabitation, the husband was employed in relation to the G franchises operated at City DD and Suburb EE through the E Trust in partnership with another trust (which owned the other half interest in those franchise businesses).
I find that throughout the short period of the parties’ cohabitation (about 23 months), the parties’ income was sufficiently similar to find that they made equal contribution from their income from gainful employment and personal exertion for payment during that time.
I find that during the parties’ cohabitation, they contributed equally toward the payment of all necessary outgoings.
When the parties started living together, the husband moved into the wife’s apartment at the C Street, Suburb D property where the wife had lived prior to the cohabitation.
The wife purchased the C Street, Suburb D property in 2009 for $400,000, applying $220,000 lent to her by her parents and repayable upon the first of either a sale of the C Street, Suburb D property or her parents’ retirement (neither of which had occurred at the time of the undefended hearing), and a loan of $180,000 from the ANZ Bank secured by mortgage of the C Street, Suburb D property.
Between purchase in 2009 and commencement of cohabitation in 2016, the wife had reduced the amount owing on the loan account from $180,000 down to $55,951.
Immediately upon commencing cohabitation, the parties applied for and obtained finance from ANZ Bank in their joint names and applied part of that finance toward discharge of the loan account in the wife’s name secured on the C Street, Suburb D property. The parties’ joint finance was secured on the C Street, Suburb D property.
In 2016, shortly before the parties entered into cohabitation, they exchanged contracts to jointly purchase vacant land at A Street, Suburb B, for $620,000. The deposit of $60,460 was obtained by a redraw on the loan account secured on the C Street, Suburb D property and the balance of the purchase money was obtained from a loan with the ANZ Bank secured by mortgage on the A Street, Suburb B property. The stamp duty payable on the purchase of $23,438 was also funded from the joint loan secured against the C Street, Suburb D property and paid on 11 October 2016.
The parties then sought further finance from ANZ Bank, obtained a loan in the sum of $646,000 secured on the A Street, Suburb B property, and paid $771,328 for the erection of a home on the property. The home was completed in August 2018, a month before the parties separated.
In 2017 the parties jointly purchased ‘off the plan’ an apartment at J Street, Suburb K (“the J Street, Suburb K off-the-plan property”) as an investment for $625,000. Contracts were exchanged in 2017 and a deposit of $62,500 was paid by redrawing on the loan account secured on the C Street, Suburb D property. Stamp duty on the purchase of $23,663 was paid on 7 June 2018 by redraw on the loan account secured on the C Street, Suburb D property.
The J Street, Suburb K off-the-plan property was due for completion in September 2019, a year after the parties separated.
In 2018 the parties jointly purchased vacant land at Suburb H (“the Suburb H property”) for $175,000. Contracts were exchanged in 2018 and the deposit of $18,500 was funded by redraw on the existing loan secured against the C Street, Suburb D property. The purchase settled on in 2018 and the balance of purchase price was funded by a loan from ANZ Bank secured by mortgage over the Suburb H property in the sum of $140,000.
The shortfall in purchase was funded by further redraw from the loan account secured against the C Street, Suburb D property in the sum of $18,118.58. Stamp duty on the purchase of $4,635 was paid in 2018 and funded from redraw on the loan account secured on the C Street, Suburb D property.
The loan accounts secured on the C Street, Suburb D property referred to above were in relation to two borrowings made by the parties and secured on the C Street, Suburb D property, being $370,000 in 2016 and $126,000 in 2017.
In addition to the application of redrawn funds from loan accounts secured on the C Street, Suburb D property as referred to above in relation to the purchase of the three properties, funds were applied from the loan account secured on the C Street, Suburb D property toward the costs of the parties’ wedding in Country FF ($7,000), repayment in finalisation of the vendor finance for which the husband had a personal liability associated with the purchase of the G franchise in Suburb EE ($38,000), and a payment of a tax liability for the E Trust for the financial year ended 30 June 2017 in a sum of $31,118.20.
The E Trust was established by a discretionary trust deed in 2011 and the trustee, F Pty Ltd, was incorporated on that day with the husband as sole director and sole shareholder. On establishment of the trust, the husband and another person were the named beneficiaries. The deed appointed the husband as the Principal of the trust. On 25 May 2017 the trustee company passed a resolution approving the amendment of the trust deed and enacting an Amending Deed dated that day, those amendments appointing the husband as appointor of the trust and naming the husband and the wife as ‘first group’ beneficiaries and any children of theirs as the ‘second group’ beneficiaries and any grandchildren of theirs as the ‘third group’ beneficiaries.
In mid-2018, a few months before the parties separated, the business partnership between E Trust and GG Trust – a vehicle of the husband’s ‘business partner’ Mr HH, and the E Trust’s equal business partner in the two G franchises – split. By agreement, the E Trust retained the City DD franchise and the GG Trust retained the Suburb EE franchise.
After the husband vacated the matrimonial home at A Street, Suburb B on 18 September 2018, which the parties had occupied about a month prior, he continued to contribute one half of the required repayments toward the loan account secured by way of mortgages on the four properties – the A Street, Suburb B property, the J Street, Suburb K off-the-plan property, the Suburb H property, and the C Street, Suburb D property - until 18 February 2019, at which time he ceased contributing to those repayments.
The parties had correspondence between their then solicitors with a view to negotiating a property settlement through late 2018 and early 2019. Those attempts were unsuccessful, and the wife commenced these proceedings by filing her initiating application on 24 April 2019.
The immediate prompt for the commencement of those proceedings was the coming to the wife’s attention on 12 April 2019 that the husband had, shortly before that, sold, through E Trust, the G franchise in City DD to P Pty Ltd as trustee for P Pty Ltd Trust, the business vehicles of the manager formerly employed by the husband for that business, O Pty Ltd.
The business was sold on the basis of a written contract setting the sale price at $350,000 payable in weekly instalments of $1,347 per week over a period of five years. Subsequent to that sale, payments were made pursuant to the contract in the sum of $1,347 into a V Bank account in the sole name of the husband, but amongst subpoenaed documents in the evidence are bank statements of a V Bank account in the sole name of the husband’s new partner, Ms U, with credit entries in sums ranging between $630 and $653 per week titled “JJ” or “JJ”.
It was submitted in the undefended hearing on behalf of the wife that such payments may be by way of payment of the purchase price in addition to that set out in the written contract by Mr KK or his business vehicles to Ms U for the benefit of the husband. I cannot find that the evidence is in any way conclusive in this regard and, accordingly, I cannot make a finding to that effect.
In the wife’s initiating application, she sought interim orders (as previously described herein), inter alia, for:
a)The sales of the Suburb H property and the J Street, Suburb K off-the-plan property, and the application of the proceeds of those sales to a reduction of loan accounts;
b)The husband to pay into a joint ANZ account in the name of the parties one half of the ANZ loan account repayments the accounts secured on the C Street, Suburb D, A Street, Suburb B and Suburb H properties between 18 February 2019 and the making of such orders; and
c)The husband to pay one half of the loan account repayments required on loan accounts secured with the ANZ Bank over the C Street, Suburb D, A Street, Suburb B and Suburb H properties each month as and when such repayments fall due in reduction of five named loan accounts.
The wife pressed that application, amongst other orders sought, before the Court on 14 August 2019. Senior Registrar Campbell made those orders, inter alia, including an order that the husband pay the wife’s costs of and incidental to the application on an indemnity basis.
The order was brought to the husband’s attention as I have found earlier in these reasons. The husband made no payments in compliance with those orders.
On 4 November 2019, the wife filed a third party debt notice addressed to Westpac Banking Corporation seeking that any moneys held by that bank for the husband up to a sum of $34,465.47, being the amount owing under the orders together with the costs of the third party debt notice application, be paid in accordance with the orders made 14 August 2019.
That amount did not include any element of costs other than the $627 costs for the third party debt notice. The third party debt notice was supported by an affidavit of the wife sworn or affirmed 1 November 2019 and filed 4 November 2019, in compliance with the rules. The third party debt notice was issued by the Registrar on 7 November 2019.
The amount recovered from Westpac Banking Corporation in relation to the third party debt notice was $903.02 (after deduction by the bank of their expenses) leaving a balance owing in relation to the orders of $42,744.37.
The total amount claimed by the wife for her costs pursuant to the indemnity costs order made by Senior Registrar Campbell on 14 August 2019 is $35,945.26, in relation to which the wife filed an itemised costs account and supporting affidavit by the wife sworn or affirmed 11 November 2019 on 14 November 2019. I have no evidence that any payment has been made by the husband in reduction of the balance of moneys payable by him pursuant to the orders relating to loan account repayments or in relation to the indemnity costs order, to the date of hearing.
I note here that orders 5 and 6 of the orders made by the Senior Registrar provide for repayments on the loan accounts for the period 18 February 2019 to 14 August 2019 be made into a joint account in the name of the parties with the ANZ Bank.
At paragraph 48 of her trial affidavit, the wife details the amounts owed by the husband for his share of the loans secured against the four properties. Between 18 February 2019 and 20 January 2020 (the date the wife swore her trial affidavit), the Husband’s share of the mortgages was $43,647.39, in relation to which the wife recovered $903.02 from Westpac Banking Corporation under the third party debt notice. This leaves a balance not paid by the husband of $42,744.37.
The purchase by the parties of the J Street, Suburb K off-the-plan property was completed on 17 October 2019 and the parties simultaneously completed a sale of that property for $600,000. The net proceeds of sale were $23,874.02, that sum being paid into the trust account of the wife’s solicitors, Coleman Greig Solicitors. Taking into account the deposit paid by the parties on purchase and the stamp duty paid on purchase, the parties suffered a loss of $62,289 on the sale.
The parties sold the Suburb H property on 28 June 2019 for $175,000, with the sale settling on 9 August 2019. Net proceeds of sale were $31,114.43. Taking into account the moneys paid by the parties toward the deposit on purchase and stamp duty on purchase, the parties suffered a loss of $9,139 on the sale of the property. Net proceeds of the sale of $31,114.43 were paid into the trust account of the wife’s solicitors, Coleman Greig Solicitors.
The wife sold the Motor Vehicle 2 owned by her at the commencement of cohabitation in 2018 for $30,000, applying $19,500 toward purchase of a Motor Vehicle 1 after trade-in on that purchase of the wife’s Motor Vehicle 3 held by her at the commencement of cohabitation. The balance of the proceeds of sale of the wife’s Motor Vehicle 2 in the sum of $10,500 were placed into the parties’ joint ANZ savings account.
The wife retains the Motor Vehicle 1.
In 2018, F Pty Ltd as trustee for the E Trust purchased a Motor Vehicle 4, with $5,000 toward the purchase price coming from the parties’ personal funds and the balance being financed through LL Finance. Following separation, the wife retained the Motor Vehicle 4 , but F Pty Ltd failed to make the required repayments on the finance and on 9 August 2019 the Motor Vehicle 4 was repossessed by LL Finance.
In 2018, two months prior to separation, F Pty Ltd as trustee for the E Trust purchased a Motor Vehicle 5 for use by the husband. That vehicle was sold in 2019, at which time the husband purchased a Motor Vehicle 6 with the assistance of finance from V Bank.
On 18 April 2019, the husband purchased in his sole name real property at M Street, Suburb N (“the M Street, Suburb N property”) for $495,000. The purchase was funded by a loan from V Bank for $498,010.
The husband appears to have occupied the property as his residence together with his partner Ms U, for some time as evidenced by him being personally served with documents related to these proceedings at that property on 4 July 2019 and 11 August 2019.
Later in 2019, the husband leased that property under a residential tenancy agreement to a tenant at a rent of $450 per week. On the evidence, the husband moved from the M Street, Suburb N property to leased premises at Q Street, Suburb R and pays weekly rent of $550. The husband resides at that property with Ms U, who is in receipt of Centrelink Newstart Allowance and who was, at the time of the hearing, expecting the couple’s first baby.
The husband appears on the evidence to be deriving income from employment with ‘Employer OO’, possibly as an apprentice.
Subsequent to the parties’ separation, the husband has been involved in a business either owned solely by Ms U or owned by Ms U and the husband jointly and trading as ‘PP Enterprises’ in the City DD area, and perhaps elsewhere, and a business ‘PP Enterprises’ which relates to entertainment by the husband and Ms U for gain.
In conversations referred to in the evidence, the husband denies any interest in ‘PP Enterprises’.
The wife continues to reside in the A Street, Suburb B property and has been solely responsible for all repayments of the loan accounts secured on the J Street, Suburb K off-the-plan and the Suburb H properties prior to their sale and the C Street, Suburb D property and the A Street, Suburb B property up to the time of hearing, as between herself and the husband.
As at the date of hearing, the wife had not received payment, except for the $903.02 from Westpac, from the husband in compliance with the orders made by Senior Registrar Campbell on 14 August 2019 – $42,744.37 owing as at the date of hearing – nor under the order that the husband pay the wife’s costs of the interim application as ordered on 14 August 2019 on an indemnity basis. The wife claims that such costs are in an amount of $34,945.46.
Other than:
a)That the husband, as at the date of hearing, was residing in the rental property at Suburb NN for a rental payment of $550 a week; and
b)That the husband was in receipt of about $700 per week from employment with ‘PP Enterprises’ and $1,347 per week from the purchaser of the G franchise at City DD,
there is no evidence in relation to the husband’s financial circumstances, the husband not having participated in the proceedings at all.
The wife continues in her employment as a professional employed by a corporation, has been in that employment to the time of hearing for four and a quarter years, and earns a salary from that employment of $191,932 per annum.
The wife continues to reside in the A Street, Suburb B property and to pay the repayments on the loan account secured on the A Street, Suburb B property and the C Street, Suburb D property. The wife has not re-partnered.
Matrimonial asset pool
As stated previously, in light of the matter going to undefended hearing, the husband taking no participation in the proceedings at any time and all of the evidence of the wife being accepted, I find that the matrimonial asset pool is composed of the assets as asserted by the wife in the evidence and at the values proposed by the wife, where known by her, and that the liabilities are as stated by the wife in her evidence.
I find the matrimonial asset pool to be composed as follows:-
| GROSS MATRIMONIAL ASSET POOL | ||
| A Street, Suburb B | Joint | $1,325,000 |
| C Street, Suburb D, NSW | Wife | $500,000 |
| M Street, Suburb N NSW | Husband | $495,000 |
| Funds from the sale of the J Street, Suburb K off-the-plan property and the Suburb H property in the trust account of Coleman & Greig Solicitors | Joint | $54,988 |
| F Pty Ltd | Husband | $1 |
| E Trust | Husband | Not known |
| Proceeds of sale of G franchise City DD | Husband | $350,000 |
| PP Enterpises business | Husband | Not known |
| ANZ account ending #...92 | Joint | $18,554 |
| ANZ Online Saver account ending #...28 | Joint | $6 |
| ANZ Access Advantage Account ending #...36 | Joint | $85 |
| ANZ account ending #...28 | Wife | $16,561 |
| Motor Vehicle 1 | Wife | $14,000 |
| V Bank account ending #...17 | Husband | Not known |
| NAB Account | Husband | Not known |
| QQ business | Husband | Not known |
| Motor Vehicle 6 | Husband | $78,452 |
| Motorcycle 7 | Husband | $13,990 |
| Motor Vehicle 1 | Husband | $13,000 |
| TOTAL (plus not known) | $2,879,637 | |
I find that the G franchise in City DD was sold by E Trust by the trustee company to another for $350,000, payable at $1,347 per week for five years, and that, accordingly, the capital sum represented by that sale should be regarded, for the purpose of this property settlement, as an asset of the E Trust, being a combination of moneys paid and moneys due and payable, and that as between the husband and the wife, only the husband will benefit from the E Trust.
I find on the evidence, that the husband has involvement to the level of, at least, co-ownership if not sole ownership of ‘QQ Business’, a business, the value of which is not known.
I find that the husband has accounts current at the time of the hearing with V Bank, being an account ending #...17 and with National Australia Bank, account details unknown, with the amount of any credit or debit balance not being known.
I find that any value of the E Trust beyond the $350,000 found above is not known due to the husband’s failure to participate in the proceedings.
I find that the husband had an interest as proprietor in a business known as ‘PP Enterpises’ and that the value of that business, if it subsisted at the time of hearing, is not known due to the husband’s non-participation in the proceedings.
I find that the known liabilities of the parties at the time of hearing are as follows:
| GROSS MATRIMONIAL LIABILITIES | ||
| ANZ loan account #...66 secured on the C Street, Suburb D property | Joint | $454,920 |
| ANZ Bank loan account #...49 secured on the A Street, Suburb B property | Joint | $1,087,912 |
| Debt owed by the wife to her parents in relation to purchase of the C Street, Suburb D property | Wife | $220,000 |
| V Bank loan account secured on the M Street, Suburb N property | Husband | $495,000 |
| TOTAL | $2,257,832 | |
I find that the husband has a liability in relation to finance obtained by him for purchase of the Motor Vehicle 6, but there is no evidence as to an amount owing in relation to that finance due to the husband’s non-participation in the proceedings.
I find that the wife has superannuation entitlements through L Super Fund, an accumulation fund, in the sum of $133,576 at the time of hearing.
There is no evidence as to whether or not the husband has at any time been entitled to superannuation benefits and, in particular, as to whether the husband was entitled to any superannuation benefits at the time of hearing, due to the non-participation of the husband in the proceedings.
I find that the gross value of the assets in the matrimonial asset pool, so far as values are known, is $2,879,637. I find that the total liabilities, so far as they are known, is $2,257,832, giving a net matrimonial asset pool without superannuation of $621,805. I find that the net matrimonial asset pool when including the wife’s superannuation (any superannuation entitlements of the husband being unknown) is $755,381.
In the case outline document prepared by Mr Rosic of Counsel on behalf of the wife, he has set out a balance sheet that includes the sale price of the G franchise, City DD of $350,000 as an add-back.
I do not regard the sale price of that business as an add-back, being on the basis of the commercial contract entered into for the sale of the franchise, moneys due and payable by the purchaser to the vendor (F Proprietary Limited as trustee for the E Trust), that would be reflected in the financial statements of the Trust as either cash received and, if not retained, distributed to the husband as a beneficiary and for the unpaid balance as an asset of the Trust by way of moneys owed to the Trust.
On the basis that the husband has failed to participate in the proceedings, despite having knowledge of the proceedings, despite having been given adequate opportunity to participate, and despite there being evidence that the regular weekly payments of $1,347 pursuant to the sale contract of the business are being paid into a bank account in the sole name of the husband, I find that as an exercise of the court’s discretion, the whole of the purchase price of $350,000 should be dealt with as an asset of the E Trust, forming part (the only known part) of its value and so being included in the balance sheet as an asset in the matrimonial asset pool.
The law
The law relating to the alteration of property interests between two parties to a marriage is governed by section 79 of the Act.[16] Relevant in this case, section 79(1) vests the Court with power to alter the interests of the parties in property,[17] and the power to make orders providing for the settlement or transfer of property, as determined by the Court.[18]
[16] Family Law Act 1975 (Cth) s 79.
[17] Family Law Act 1975 (Cth) s 79(1)(a).
[18] Family Law Act 1975 (Cth) s 79(1)(d).
However, the Court must not make an order under section 79 unless the Court is satisfied that, in all of the circumstances, it is just and equitable to do so.[19] To give proper consideration to the legislative process required by section 79, it is necessary to consider the High Court decision in Stanford & Stanford.[20]
[19] Family Law Act 1975 (Cth) s 79(2).
[20] Stanford & Stanford (2012) 247 CLR 108.
In that decision, the High Court held that section 79(2) requires that at the outset of the Court’s decision-making process the Court must consider whether or not, in all the circumstances, it is just and equitable to make an order under section 79(1) altering the interests of the parties to the marriage in property.
Is it just and equitable to make an order under section 79?
In considering the proposition posed by this first step, a Court should start by identifying items under the following categories:
a)The existing legal and equitable interests of the parties in property, according to ordinary common law and equitable principles;
b)The existing liabilities of the parties, according to ordinary common law and equitable principles and under legislation; and
c)The rights of the parties, if any, according to ordinary common law and equitable principles and under legislation, in relation to any asserted resources of the parties that may, if it is considered just and equitable to proceed with the property settlement, be taken into account in the Court’s consideration of the matters referred to in section 75(2) of the Act, to which section 79(4)(e) directs the Court’s attention.[21]
[21] Stanford & Stanford (2012) 247 CLR 108; see especially [37].
That the interests as described above are ‘existing’ is of importance, as the Court noted, because the text of the section gives reference to ‘altering’ the interests.[22] This is to be borne in mind in this case, in circumstances where the asset pool is far from ascertained. I make no criticism of the legal representatives acting in this matter for that observation.
[22] Stanford & Stanford (2012) 247 CLR 108, [37].
I further note the comments of the High Court in Stanford at paragraph 42 which I reproduce in full here:
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).[23]
[23] Stanford & Stanford (2012) 247 CLR 108, [42] (emphasis added).
The application of the wife seeks an alteration of the parties’ interests in property, in that she seeks orders providing that the husband transfer to her the whole of his interest in the A Street, Suburb B property, and that she receive the whole of the funds currently held upon trust for the parties by her solicitors consequent upon the sale of the Suburb H property and the J Street, Suburb K off-the-plan property, both of which were in the joint legal and beneficial ownership of the parties.
The wife also seeks an order that she retain, solely, all of the funds held in an ANZ Bank account ending #...92 in the joint names of the parties. Without the making of orders for alteration of the parties’ interests in property under section 79 of the Act, the parties would remain in joint ownership of those assets and their financial affairs would remain consequently entangled unless they voluntarily took steps to divide that property between them.
The non-participation of the husband in these proceedings indicates that the wife will have considerable difficulty in having the husband participate with her in so dividing those assets. Further, the evidence outlined above indicates that there has been both an inequality of contribution to a degree between the parties on an overall basis from the commencement of their cohabitation to the time of hearing, and that a division of jointly held assets along general law and equity entitlement lines would be unjust.
The husband presents no active opposition to the orders sought by the wife and proposes no alternative orders. He has failed to participate in the proceedings.
Accordingly, I find that it is just and equitable to proceed with alteration of the parties’ interests in their property as reflected in the matrimonial asset pool.
What orders under section 79 are appropriate to be made?
Having determined that it is indeed just and equitable to make an order under section 79, the Court is then tasked with the job of considering what orders are appropriate to be made. In doing so, I follow the four-step process set out in Hickey & Hickey.[24]
[24] Hickey & Hickey & Attorney-General for the Commonwealth of Australia (‘Hickey’) [2003] FamCA 395, [39].
In Hickey, the Full Court of the Family Court set out a process of four inter-related steps that must be taken by a court when determining a property application:
a)First, “the Court should make findings as to the identity and value of the property, liabilities, and financial resources of the parties at the date of the hearing”;[25]
b)Second, “the Court should identify and assess the contributions of the parties within the meaning of section 79(4)(a), (b), and (c), and determine the contribution-based entitlements of the parties expressed as a percentage of the net value of the property of the parties”; [26]
c)Third, “the Court should identify and assess the relevant matters … (“the other factors”) including…the matters referred to in section 75(2) so far as they are relevant…”;[27]
d)Fourth, “the Court should … resolve what order is just and equitable in all the circumstances of the case”.[28]
[25] Hickey [2003] FamCA 395, [39].
[26] Hickey [2003] FamCA 395, [39]. See also Family Law Act 1975 (Cth) s 79(4)(a)-(c):
[27] Hickey [2003] FamCA 395, [39].
[28] Hickey [2003] FamCA 395, [39].
A significant issue in this matter was the alleged non-disclosure of the husband.
Attempting to deal with non-disclosure often puts the other spouse to considerable difficulty with regards to investigating their financial affairs. The Full Court in In the Marriage of Weir[29] made the following statement regarding the duty to disclose and the Court’s powers where non-disclosure has been found:
This Court has pointed out in a line of cases leading up to the recent decision of the Full Court in In Marriage of Black (1992) 106 FLR 154, that it is the duty of a party involved in property proceedings in this jurisdiction to make a full disclosure of their financial affairs. See also In Marriage of Giunti [1986] FLC 75, 548 and In Marriage of Mezzacappa (1987) 90 FLR 350. It is clear enough from his Honour's findings in the present case that the husband had not done so and had in fact pocketed the proceeds of a substantial number of cash sales. It is obvious that in most cases of this nature it is difficult enough for the other party to establish that fact let alone establish the quantum of what has been taken.
It seems to us that once it has been established that there has been a deliberate non-disclosure, which follows from his Honour's findings in this case, then the Court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature …
We appreciate that this is something of a broad brush approach, but, as we have said, where there is clear evidence of non-disclosure as there was here, the Court should not be unduly cautious about making findings in favour of the other party. It has been said by one commentator (O'Ryan and Broadfoot, 5th National Family Law Conference Handbook, p 249) the failure to disclose undermines the whole process of adjudication of proceedings for a settlement of property in that the court is unable to identify the property of the parties, to properly assess contribution, or to properly assess s 75(2) factors.[30]
[29] In the Marriage of Weir (1992) 110 FLR 403.
[30] In the Marriage of Weir (1992) 110 FLR 403, 407-409
Contributions
At the commencement of cohabitation, the wife contributed to the C Street, Suburb D property, then valued at $550,000 and subject to a mortgage securing the loan account, owing about $56,000. In addition, the wife had a few motor vehicles – the Motor Vehicle 2 and the Motor Vehicle 3 – some cash at the bank and entitlements through L Super Fund of just under $75,000 in value.
At cohabitation, the husband had his interests under the E Trust, which held a half‑share in the G franchises at City DD and at Suburb EE, and which was liable for the finance obtained for the purchase of those franchises. The husband had some credit card and personal loan liabilities of about $30,000. It is not known as to whether the husband had any superannuation entitlements at that, or at any other, time.
The C Street, Suburb D property was refinanced by the parties at about the time of commencement of cohabitation and the equity in that property was used to provide funds toward purchase of the A Street, Suburb B property, the J Street, Suburb K off the plan property, and the Suburb H property.
During the cohabitation, the husband arranged a business deal whereby the partnership between E Trust and the discretionary trust operated by Mr HH was terminated, with E Trust taking the G franchise at City DD and Mr HH’s trust taking the G franchise at Suburb EE.
The redraws on finance (made possible by the equity in the wife’s C Street, Suburb D property) was also applied during the cohabitation toward the final repayment of the vendor finance provided to E Trust when the G franchise at Suburb EE was purchased, and in payment of tax liabilities for the E Trust for the financial year ended 30 June 2017.
Each of the parties was earning income during the period of their cohabitation, the wife through her employment as a professional and the husband through his employment in the businesses operated by the E Trust. As submitted by the wife at the hearing, the contributions in relation to income earned during cohabitation were equal.
Both parties made a non‑financial contribution in the nature of arranging loans and identifying properties for purchase and being involved in the mechanics of those purchases.
The husband’s property at M Street, Suburb N was purchased after the parties separated, but there is no evidence available to the Court to indicate where the deposit paid of $49,500 came from, nor the source of any stamp duty paid. There is, however, evidence that the husband obtained loan finance from V Bank in the sum of $498,010 for purchase of the property for $495,000. Presumably, the bank would have sought security beyond the M Street, Suburb N property, having lent the husband in excess of 100 per cent of the purchase price, but there is no evidence in relation to any such arrangement.
The wife has maintained the repayments required in relation to the loan accounts secured on the A Street, Suburb B property and the C Street, Suburb D property from her own resources from 19 February 2019 up to the hearing, and maintained the repayments on the loan accounts secured on the Suburb H property from 19 February 2019 until 28 June 2019 when that property sold, and on the J Street, Suburb K -off-the-plan property up to 17 October 2019 when that property was sold, though the purchase and sale of the J Street, Suburb K -off-the-plan property were simultaneous.
The parties had the benefit of occupying the wife’s C Street, Suburb D property as their matrimonial home from commencement of cohabitation until August 2018 (one month before they separated) when they moved into the new house on the A Street, Suburb B property.
I have no evidence in relation to the contributions of either party to the welfare of the family unit in relation to undertaking the homemaker role during the period of their cohabitation.
Post‑separation, the husband has been solely responsible, as between himself and the wife, for any expenditure or exertion of effort that has gone to create value in the business ‘PP Enterprises’ and ‘QQ Business’, but I have no evidence as to those businesses other than as to their existence, and I am unable to place any value on those businesses due to lack of evidence. Accordingly, I do not take any effort or expenditure of the husband in relation to those businesses into account in assessing the parties’ contributions.
I find, overall, when assessing the contributions of the parties on a holistic basis, in taking into account all of the contributions of each of the parties of any nature from the commencement of their relationship up to the time of hearing, that the wife has made a greater contribution than the husband. I assess the wife’s contribution at 53 per cent and the husband’s contribution at 47 per cent, a differential of 6 per cent.
Consideration of the matters under section 79(4)(e)
I will now consider the list of considerations referred to in section 79(4)(e), being the list of factors in section 75(2).
There is no evidence that indicates that either of the parties is subject to any ill health. The parties are both in their thirties, the wife five years older than the husband, and both have a long working life ahead of them.[31]
[31] Family Law Act 1975 (Cth) s 75(2)(a).
I have a financial statement from the wife, but I do not have a financial statement from the husband. I cannot compare their current incomes. On the evidence, I find that each of the parties is capable of engaging in appropriate gainful employment and that each is doing so.[32]
[32] Family Law Act 1975 (Cth) s 75(2)(b).
In the wife’s financial statement, I have her evidence of the commitments necessary to enable the wife to support herself, but I do not have any similar evidence in relation to the husband.
Whilst the wife’s financial statement indicates that she is not responsible for the support of any other person,[33] it is in the evidence that the husband has a new partner, Ms U, and from a single statement contained in an email from the husband to the wife’s solicitors, I understand that Ms U is expecting their first baby. Be that as it may, without having the financial detail from the husband required under the rules by way of a financial statement complying with rule 24.03 of the Federal Circuit Court Rules 2001 (Cth), and disclosure of documents by the husband under rule 24.04 of those rules, I am not able to make any proper comparison of the financial circumstances of the parties and how that may bear on the responsibility of the husband to support any other persons.
[33] Family Law Act 1975 (Cth) s 75(2)(d).
The wife is not eligible for any pension, allowance or benefit under the rule of the Commonwealth or of the State or Territory or another country, and I have no evidence in relation to any such entitlement on the part of the husband.[34]
[34] Family Law Act 1975 (Cth) s 75(2)(f)(i).
At the age of each of the parties at hearing, neither would be entitled to any income stream or other benefit by way of lump sum or lump sums from superannuation entitlements, and I have no evidence as to whether or not the husband has, or has ever, had any superannuation entitlements.[35] As he was not, himself, the owner of the G franchises at the time during cohabitation that he was working in those franchises, it could be assumed that he was in employment with the trustee company and that the trustee company was therefore required by law to make employer compulsory superannuation contributions for the husband. Accordingly, it is likely that the husband has some superannuation entitlements, but, as I have said, there is no evidence of such.
[35] Family Law Act 1975 (Cth) s 75(2)(f)(ii).
During the period of cohabitation, each of the parties contributed to the income, earning capacity, property and financial resources of the other party by their relationship of mutual personal and financial support.[36]
[36] Family Law Act 1975 (Cth) s 75(2)(j).
The duration of the marriage has not, on the evidence, affected, in any detrimental manner, the earning capacity of either of the parties and the period of the relationship is of too short a time for it to have had any real effect to the benefit of the earning capacity of either party.[37] Other than that, both parties have been in employment throughout the period and they were both maintaining and developing their employment value in the marketplace.
[37] Family Law Act 1975 (Cth) s 75(2)(k).
The wife is not cohabitating with any other person.[38] On the evidence, the husband would appear to be cohabiting with Ms U, but we have no evidence in relation to the financial circumstances of that cohabitation. I note here that a subpoena for production issued by the Court at the request of the wife to Ms U was not complied with.
[38] Family Law Act 1975 (Cth) s 75(2)(m).
Section 75(2)(o) directs the Court’s attention to “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account”,[39] when assessing the future needs factors between the parties.
[39] Family Law Act 1975 (Cth) s 75(2)(o).
This is a matter where the husband has chosen not to participate in the Court process of these proceedings at all. That is the husband’s right. I refer to the judgment of his Honour Judge Jarrett in Yannes & Judkins,[40] and I say that I agree with the comments made therein by his Honour about compellability or otherwise in relation to engaging in property proceedings.[41]
[40] Yannes & Judkins [2019] FCCA 1656.
[41] See, especially, Yannes & Judkins [2019] FCCA 1656, [33].
The difficulty for an applicant in undefended proceedings is that the evidence gathering process may be rendered more difficult and more expensive. The risk for the non‑participating respondent is that the matter will be decided on the evidence of the applicant, including of the values put forward by the applicant. In this case, the husband as respondent was aware of the proceedings and, in particular, of the date and time set for the undefended hearing, and chose not to present evidence. In making that choice, the respondent had the evidence to be relied upon by the applicant.
The wife asserts that there has been a failure of disclosure by the husband in that he has not provided full and frank disclosure of all of the relevant matters going to the financial matters before the Court. Whilst there is, in the evidence, detail of some disclosure being made by the husband through solicitors acting for him at various times prior to the commencement of the litigation proceedings, there has certainly not been disclosure by the husband that would amount to full and frank disclosure, beginning with the failure to engage in the proceedings and file a financial statement. I reiterate that it is his right to refuse to engage in the proceedings, and in exercising that right, he takes the risks of the matter being decided on the basis of the applicant’s case taken at its highest.
Due to the husband’s lack of full and frank disclosure, the Court is entitled to apply the principles outlined by the Full Court of the Family Court in In the Marriage of Black and Kellner [42] and In the marriage of SW and WH Weir. In exercise of the Court’s discretion, I will not do so. My decision here is consequent upon having made the finding that the whole of the contracted purchase price of $350,000 relating to the sale by E Trust of the G franchise in City DD is property in the hands of that trust, and that, as between the parties, only the husband will benefit.
[42] In the Marriage of Black (‘Black & Kellner’) (1992) 106 FLR 154.
Accordingly, I find that there is no adjustment to be made between the parties consequent upon the husband’s failure to give full and frank disclosure, including of any superannuation entitlements.
Overall, and as submitted by the wife at hearing should be the case, I find that there is no adjustment to be made between the parties for future needs factors under consideration set out in section 75(2) of the Act as referred to in section 79(4)(e).[43]
[43] Family Law Act 1975 (Cth) ss 75(2), 79(4).
Conclusion
I find that the appropriate division of the matrimonial asset pool between the parties is as to 53 per cent to the wife and 47 per cent to the husband.
As to how that division is to be achieved through orders, I find that the orders as sought by the wife on hearing will give that result, and are the appropriate orders to be made to achieve a just and equitable settlement between the parties.
In considering the difficulties that may be faced by the wife consequent upon any continuing refusal by the husband to participate in the proceedings by way of cooperation in implementation of the orders, I find that it is appropriate to make the orders as sought by the wife that would provide for enforcement in the event that there is a failure by the husband to comply.
The application for costs
In her application, the wife seeks that her costs of the proceedings be paid by the husband on the indemnity basis.
Costs under the Act are governed by section 117 which provides in subsection 117(1) that, subject to certain sections not applicable here, each party to the proceedings under the Act shall bear his and her own costs.[44] Pursuant to subsection 117(2), the Court may make such order as to costs as the Court considers just if the Court is of opinion that there are circumstances that justify in doing so.[45] In considering what order (if any) should be made under subsection (2), the Court must have regard to the matters set out in subsection 117(2A).[46]
[44] Family Law Act 1975 (Cth) s 117(1).
[45] Family Law Act 1975 (Cth) s 117(2).
[46] Family Law Act 1975 (Cth) s 117(2A).
I have evidence as to the financial circumstances of the wife, but not of the husband.[47]
[47] Family Law Act 1975 (Cth) s 117(2A)(a).
Neither party is in receipt of assistance by way of Legal Aid for the proceedings.[48]
[48] Family Law Act 1975 (Cth) s 117(2A)(b).
The wife has been wholly successful in the proceedings, in that the orders made are the orders sought by her at the undefended hearing, but it cannot be said that the respondent husband has been wholly unsuccessful in the proceedings.[49] The husband exercised his right not to engage with the proceedings. Though he does not engage with the proceedings, the husband is a party to the proceedings. Though a party to the proceedings, he is not compelled to engage in the proceedings.[50]
[49] Family Law Act 1975 (Cth) s 117(2A)(e).
[50] Yannes & Judkins [2019] FCCA 1656.
Is the husband’s failure to engage with the proceedings a circumstance which renders him “wholly unsuccessful in the proceedings”[51] and is it “conduct of [a] party to the proceedings in relation to the proceedings”[52] which constitute circumstances justifying the Court in making a costs order?
[51] Family Law Act 1975 (Cth) s 117(2A)(e).
[52] Family Law Act 1975 (Cth) s 117(2A)(c).
The risk a party runs in not engaging in the proceedings is that the proceedings will be decided in favour of the applicant and not of the non-engaging respondent in consequence of the only evidence being received being that of the applicant. In property proceedings under section 79 of the Act, a Court is required to only make property settlement orders by way of adjustment between the parties that are just and equitable. The Court is not entitled to simply ‘knee jerk’ the orders sought by the applicant, simply because they are not opposed by the respondent in a manner similar to an entry of a default judgment on a liquidated claim in other civil jurisdictions.
As a matter of the Court’s discretion, I find that there are not circumstances that justify the making of a costs order in favour of the wife against the husband.
However, as I intend to make an order that any application to be made by the husband pursuant to rule 16.05(2) of the Federal Circuit Court Rules 2001 (Cth) must be made within 28 days of the date of orders, I note that in the event that an application is made by the husband to set aside or vary the orders pursuant to that rule, then whether or not that application is successful, there is very likely to be a circumstance that does justify the making of a costs order in favour of the wife and against the husband in relation to the proceedings.
Accordingly, I make the orders as set out at the commencement of these reasons.
I certify that the preceding one hundred and ninety-one (191) paragraphs are a true copy of the reasons for judgment of Judge Morley
Associate:
Date: 18 May 2020
(4) In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
(a) the financial contribution made directly or indirectly by or on behalf of a party …
(b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party …;
(c) the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage … including any contribution made in the capacity of homemaker or parent; …
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