Kay and Kay and Anor (No.2) - [2016] FCCA 1841

FEDERAL CIRCUIT COURT OF AUSTRALIA

KAY & KAY & ANOR (No.2)

[2016] FCCA 1841

Catchwords:
FAMILY LAW – Property – Application for property settlement – litigation guardian – intervenor – where parties both aged in their seventies.

Legislation:

Family Law Act 1975 (Cth),ss.75, 77

Cases cited:
Baglio & Baglio [2013] FamCA 105
Bevan & Bevan (2013) 49 Fam LR 387; FLC 93-545; [2013] FamCAFC 116
Black & Kellner (1992) 15 Fam LR 343; FLC 92-287
Hickey & Hickey (2003) 30 fam LR 35; FLC 93-143; [2003] FamCA 395
Kay & Kay [2014] FCCA 2797
Kay & Kay & Anor [2015] FCCA 3622
Stanford v Stanford (2012) 247 CLR 108; 47 Fam LR 481; FLC 93-518; [2012] HCA 52
Weir & Weir (1992) 16 Fam LR 154; (1993) FLC 92-338

Applicant:

MS KAY (BY HER LITIGATION GUARDIAN) MS BRUCE

First Respondent:	MR KAY
Second Respondent:	MR KAY

File Number:

WOC 923 of 2013

Judgment of:

Judge Scarlett

Hearing dates:

2 April 2015 & 1 September 2015

Date of Last Submission:

15 September 2015

Delivered at:

Sydney

Delivered on:

22 July 2016

REPRESENTATION

Counsel for the Applicant:

Mr Campton SC

Solicitors for the Applicant:

Kells the Lawyers

Counsel for the First Respondent:

Mr Harper

Solicitors for the First Respondent:	Fulcrum Legal
Counsel for the Second Respondent:	Ms Humphreys

Solicitors for the Second Respondent:

Hansons Lawyers

ORDERS

Forthwith and within fourteen (14) days of the date of this Order, the First Respondent must do all acts and things and sign all such as may be necessary documents necessary to transfer to the Applicant all of his right, title and interest in and to the property at Property J, (hereinafter the “(omitted) property”) in the State of New South Wales being the whole of the land contained in Certificate of Title Folio Identifiers (omitted) and (omitted).
Within fourteen (14) days of the date of this Order, the First Respondent vacate the Property J property and thereafter both the First Respondent and the Second Respondent are restrained by injunction from approaching the Property J property or being upon it.
Pending the vacation by the First Respondent of the Property J property referred to in the above Order, the First Respondent and the Second Respondent are restrained by injunction from doing any act or thing to cause damage to, or otherwise adversely impact on the said property.
As between the Applicant, the First Respondent and the Second Respondent and subject to the above Orders, the Applicant, the First Respondent and the Second respondent shall each respectively retain all interest and entitlements to:
(a)all personal property now in his or her respective possession or control;
(b)all shares, debentures, units in unit trusts, bank, building society, credit union accounts standing in his or her sole name respectively; and
(c)all interests in all life insurance policies, superannuation funds standing in his or her sole name respectively.
If the Applicant seeks to apply for an Order for costs she is to file and serve an Application in…

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: [2016] FCCA 1841
Decision Date: 22 July 2016

CaseChat Overview and Summary

In *Kay and Kay and Anor (No.2)*, Judge Scarlett of the Federal Circuit and Family Court of Australia was required to make orders concerning property settlement and related matters between the Applicant (the wife) and the First Respondent (the husband), with the Second Respondent (presumably their son) also involved. The dispute centred on the husband's alleged deliberate or reckless failure to meet his disclosure obligations throughout the proceedings, which significantly impacted the court's ability to ascertain the true financial position of the parties.

The primary legal issues before the court were the extent of the husband's financial non-disclosure, the consequences of such failures on the proceedings, and the appropriate orders to be made regarding the division of property, particularly a property identified as Property J. The court also had to consider the interrelationship between the husband and the second respondent in relation to financial dealings and disclosure.

Judge Scarlett found that the husband's evidence was coloured by significant financial non-disclosure, which was either deliberate or reckless. The court adopted the applicant's submissions, highlighting the husband's failure to disclose his disposal and application of property, particularly in the shadow of his retirement and subsequent financial conduct. The duty of disclosure in such litigation was described as absolute and continuing, critical for justice and equity. The court noted that the husband's conduct, along with that of the second respondent, suggested a collective decision not to disclose relevant financial information, with evidence of them operating in tandem. The husband's evasiveness and inability to explain significant financial transactions and dispositions, contrasted with his recall of minor personal items, further undermined the integrity and reliability of his evidence.

Consequently, the court ordered the First Respondent to transfer all his right, title, and interest in Property J to the Applicant within fourteen days. The First Respondent was also ordered to vacate the property within the same timeframe, and both the First and Second Respondents were restrained from approaching or being upon Property J. Pending the First Respondent's vacation of the property, both respondents were enjoined from causing damage to it. The court further ordered that, subject to these orders, each party would retain their respective personal property, assets held in their sole name, and interests in life insurance and superannuation funds standing in their sole name. All other applications were dismissed, with a provision for the Applicant to apply for costs within twenty-eight days.

Orders

Orders of the court

Forthwith and within fourteen (14) days of the date of this Order, the First Respondent must do all acts and things and sign all such as may be necessary documents necessary to transfer to the Applicant all of his right, title and interest in and to the property at Property J, (hereinafter the “(omitted) property”) in the State of New South Wales being the whole of the land contained in Certificate of Title Folio Identifiers (omitted) and (omitted).

Within fourteen (14) days of the date of this Order, the First Respondent vacate the Property J property and thereafter both the First Respondent and the Second Respondent are restrained by injunction from approaching the Property J property or being upon it.

Pending the vacation by the First Respondent of the Property J property referred to in the above Order, the First Respondent and the Second Respondent are restrained by injunction from doing any act or thing to cause damage to, or otherwise adversely impact on the said property.

As between the Applicant, the First Respondent and the Second Respondent and subject to the above Orders, the Applicant, the First Respondent and the Second respondent shall each respectively retain all interest and entitlements to:

(a) all personal property now in his or her respective possession or control;

(b) all shares, debentures, units in unit trusts, bank, building society, credit union accounts standing in his or her sole name respectively; and

If the Applicant seeks to apply for an Order for costs she is to file and serve an Application in a Case supported by an affidavit setting out the amount of costs sought and the basis upon which those costs are calculated within twenty-eight (28) days of the date of this Order.

All other Applications are dismissed.

Background

Background to the litigation

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Evidence

Evidence Before The Court

The evidence of the Husband is coloured by the financial non-disclosure from very early on. The Applicant contends and the Court accepts, that the Husband has either deliberately or recklessly failed in his disclosure obligations throughout the course of the proceedings. Senior Counsel for the Applicant, in his written submissions, has very succinctly encapsulated the evidence of the Husband’s disclosure failures and in paragraph 21 to 34 of his written submissions, I adopt those and incorporate them into my reasons for judgment as follows:B. The evidence of the husband and his disclosure failures21. The husband’s mandatory disclosure of his relevant financial circumstances – including, but not limited to, his disposal and application of property in the shadow of his retirement from the (employer omitted) in 2004, and then his financial conduct from that time up to the commencement of the proceedings in 2013 and to date – has been the principal contest and issue through the course of the litigation.22. The duty of disclosure in S.79 litigation is absolute. It is a continuing onus throughout that litigation process. It is critical to the function of the jurisdiction and fundamental to achieving justice and equity.23.The disclosure failures of the husband go to matters as to relevant financial conduct post separation – how he used and applied property that he knew he ought adjust equally with the wife – and also as to his current property and resources.24.The progressive forensic enquiries undertaken by the applicant, at significant cost and expense, against a background of complaint and denial by the husband, has resulted in – after the evidence of the husband and the second respondent was completed – a clear illustration as to how this fundamental issue is now one of failure, doubt, contradiction in evidence and suppression of evidence.25.The applicant contends that the husband has either deliberately or recklessly failed in his disclosure obligations throughout the course of the proceedings. This conduct continued even during the course of the part-heard trial.26.The concession by his solicitor, Mr Williamson on 1 September 2015, as to the second respondent on occasions providing instructions ‘on behalf of his father’ to the husband’s prior solicitors Fulcrum Legal carries with it significant disquiet, casting a disturbing shadow over the conduct of the litigation by the husband and the second respondent. The construction of the affidavit evidence alone suggested that each respondent operated ‘in tandem’ with significant interrelationship and exchange occurring between them to achieve a common outcome or purpose. This shadow darkened considerably at the conclusion of the cross examination of each of the respondents.27.The disposition by the husband of his (omitted) shares and the proceeds of sale of the Property L property just before his retirement, and thereafter his application of his superannuation entitlements received after 2004, all occurred in conjunction with the second respondent. Both the husband and the second respondent had direct knowledge as to this relevant financial conduct. Between them they had the capacity to disclose relevant documents and information as to the husband’s use and application of property and funds. They both has access to records at Bank’s, records with financial advisors, and records with share registries. Their financial interrelationship continued throughout the course of the proceeding where, absent reasonable explanation, the husband engaged in a process of providing cash to the second respondent[13] who would then pay the husband’s legal fees.[13]At no time did the husband volunteer where the cash originated, or did he identify specific withdrawals from his accounts to provide cash to his son to then bank in the sons account to pay the solicitors!28.It became patent at the conclusion of the evidence that each of the husband and the second respondent were closely enmeshed in their financial circumstances, and that they each had capacity to enable disclosure of the relevant financial conduct identified below. The Court ought find that they made a collective conscious decision not to do so.29.The attitude of the husband to the authority and process of the Court was illustrated when he attended in Sydney for the purposes of the testing of his case without the benefit of his reading glasses. Your Honour correctly described this conduct as ‘astonishing’. His cross-examination progressed after alternate spectacles were obtained.30.He conceded that he first instructed solicitors in or about November 2013, and from that time he was aware of his obligations of disclosure. He adopted his affidavit and financial statements as truthful. He thereafter conceded that what he said in #42 of his affidavit as to only having documents that had been produced since February 2014 in his possession – that date of the last theft from his house, the theft being of his historical financial documents and nothing else – was patently untrue.[14][14] See annexure pages 11 through to 29.31. He denied in cross examination any knowledge of:a. The receipt of (omitted) periodic distributions payments into his bank accounts;b. Receiving lump sums by way of (omitted) distributions from 2011 onwards;c. Engaging with (omitted) Financial Planning. They facilitated his dealings with (omitted);d. The transfer in specie of 2779 (omitted) shares to the second respondent in 2003;e. His false representations to Centrelink;[15][15] Exhibit 8 – Husband’s Centrelink disability application executed 14 December 2004; Exhibit 9 – Husband’s income and asset statement executed 14 December 2004. Each of the relevant pages of the exhibits are attached to these submissions and marked ‘A’.f. Having ever “heard of” (omitted), or being employed by that entity, despite declaring the business as his employer in 2004 in the Centrelink forms;g. That he and the second respondent ever had a conversation about the (omitted) shareholdings that the second respondent received in specie from him in 2003 (2,779 (omitted) shares) – still retained in specie by Mr Kay;h. Any conversation with Mr Kay as to the 2nd respondent purchasing the adjoining property at Property J adjoining his residence in January 2015; andi. As to the provision of significant withdrawals from his bank accounts and term deposits in early 2013 to Mr Kay to fund his criminal proceedings, or to hide them from the wife.Additionally, he could not explain why he did not declare the disposition to the second respondent as to the proceeds of sale of the Property L property in 2002, or the transfer of the shares in 2003 in his 2004 Centrelink documentation.He could not provide any disclosure as to the amount he has spent on legal fees to date. At one time he said $34,000 and later $52,000;32. Notwithstanding his contended absences of his memory as to these significant events, the husband could recall that he had 6 custom made suits that he purchased prior to separation and their cost. He requested that they be returned to him as part of his property settlement. He could recall that he had prepared a schedule identifying the specific application of funds almost to the dollar from his superannuation monies to improve the Property J property, but could not recall in the witness box even approximate amounts he had recorded in the schedule that became annexure ‘C’ to his affidavit. It was unclear if he prepared this document either with or without invoices or receipts, but (as expected) failed to produce any of the invoices of receipts when a call was made for such production during the course of the proceedings. The absence of the integrity and reliability in his evidence is patent.33.The husband in his response to specific enquiries during cross-examination – grounded from the paragraphs of his recently sworn affidavit – said he ‘didn’t remember. He was unable to explain his recent financial conduct when confronted with documents produced on subpoena executed under his own hand[16] that contradicted that recent affidavit evidence.34.The wife submits that the disclosure failures of the husband grounded from the evidence are as follows:[16] By way of example, the numerous regular and significant withdrawals from the (omitted) – Exhibit 6. These funds then found their way directly into his (omitted) credit union account (Exhibit 12) and his (omitted) account (Exhibit 11)

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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