Kay and Kay and Anor (No.2)
[2016] FCCA 1841
•22 July 2016
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 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.
IT IS NOTED that publication of this judgment under the pseudonym Kay & Kay & Anor (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
WOC 923 of 2013
| MS KAY BY HER LITIGATION GUARDIAN MS BRUCE |
Applicant
And
| MR KAY |
First Respondent
And
| MR KAY |
Second Respondent
REASONS FOR JUDGMENT
Application
This is an Application for property settlement in accordance with section 79 of the Family Law Act 1975 (Cth) by the litigation guardian (the daughter of the parties) for the wife and amended by her Amended Application filed on 28th August 2015. The Husband’s response filed on 27th February 2014 was amended by his further document filed on 19th March 2015. The Second Respondent (the son of the parties), who was initially a witness to be relied upon by the Husband in accordance with an affidavit filed by the Husband’s solicitor, was ultimately successful in an Application to intervene in the proceedings by way of a decision I delivered on 2nd April 2015, despite opposition to the application by the litigation guardian (Kay & Kay & Anor[1]).
[1] [2016] FCCA 3622
Evidence
The Applicant Wife relied on the following documents:
a)her Amended Initiating Application filed on 12th December 2014;
b)affidavit of the litigation guardian sworn 17th March 2015 and filed on the same date; and
c)the Amended financial statement of the litigation guardian sworn 17th March 2015 and filed on the same date.
The First Respondent husband relied on the following documents:
a)his Amended response filed 19th March 2015;
b)affidavit of the Respondent Husband sworn 18th March 2015 and filed on 19th March 2015; and
c)the financial statement of the Respondent Husband sworn on 18th March 2015 and filed on 19th March 2015.
The Second Respondent relied on:
a)his affidavit sworn 18th March 2015 and filed on 19th March 2015 by the solicitors for the First Respondent Husband;
b)the Application to Intervene filed on 31st March 2015;
c)the affidavit of the Second Respondent sworn on 30th March 2015 and filed on 31st March 2015;
d)the affidavit of the Second Respondent sworn on 20th April 2015 and filed on 22nd April 2015;
e)his Financial Statement sworn on 20th April and filed on 22nd April 2015.
Court experts
The Court experts relied upon were three valuation reports with respect to the property at Property J, in the State of New South Wales.
Orders
Orders appointing the litigation guardian were made on 3rd March 2014. Orders adjourning the matter to permit investigation of the husband’s superannuation were made on 17th June 2014. Orders appointing a valuation of the Husband’s property at Property J and directions for interim hearing were made on 20th August 2014. Judge Altobelli made Orders on 5th December 2014 providing the Applicant Wife liberty to apply to amend her Application to seek declaratory relief with respect to the Husband’s interest in the Property C property, in the State of New South Wales) in Mr Kay’s name and directions for final hearing were made on 5th December 2014. Consent orders to receive $46,165.00 by way of partial property settlement were made on 3rd February 2015.
Background
The Respondent Husband is 74 years of age, having been born on (omitted) 1941. He has been retired from his previous employment at (employer omitted) since August 2004. At that time he received a superannuation payment of approximately $205,000.00.
The Wife is also 74, having been born on (omitted) 1941.
Both parties are aged pensioners. They married in (country omitted) in 1961 and moved to Australia later in the same year. Their son, who is the intervenor (Second Respondent) in these proceedings, was born in 1962 and is 53 years old. The daughter, who is the litigation guardian, is now 52 years of age.
The parties separated in 1993 when the Husband left Mr Kay’s home at Property C. Since then, the Husband has resided in the property at Property J, while the Wife continued to live in the son’s home until shortly before moving to the (omitted) nursing home in March 2013 where she remains.
The parties divorced on 17th January 2014 by Order of this Court.
Neither party had assets of significant value at the commencement of their relationship. During the marriage the Husband was the income earner for the family and the Wife was involved in the role of parent and homemaker. The Husband, in 1965, purchased a property at Property L and the parties lived there until 1992 when they moved in with their son. In July 1977, the Husband purchased a property at Property J. That property was tenanted out until 1993, when the Husband moved in following separation. In 2002, the Husband effected the sale of Property L property for $140,000.00 and instructed his solicitor to pay the balance of the proceeds to Mr Kay. The Wife alleges that both the sale and the distribution of the net proceeds to Mr Kay were without her knowledge or consent. Mr Kay used the sale proceeds to pay down or pay off his mortgage on the Property C property. The Wife, through her litigation guardian, claims that this created an equitable interest in his property.
The Husband claims in his evidence that soon after they separated in 1993, he wanted to transfer the Property L property to the Wife and he would keep the Property J property. He said he obtained advice from the chamber magistrate that all the parties’ property should go half and half between him and the Wife and that he said that to the Wife in a phone call. He further says that she said, “No, I don’t want any money” and hung up. The Wife denies this.
In January 2013, there was a falling out between the Wife and her son and an incident occurred whereby she fractured her hip and was moved from his premises into hospital as a result and remained in hospital until March 2013 when she moved into (omitted), the nursing home where she continues to live.
On 3rd March 2014, Judge Altobelli appointed the daughter the litigation guardian for the Wife and in a latter judgment delivered on 5th December 2014, he says at paragraphs 11, 12 and 13 as follows:
11. On 3 March 2014, I appointed the present Litigation Guardian for the Applicant Wife. I do not have the reasons for judgment pertaining to that Court event. My note indicates that “Respondent Husband agrees the Wife needs a litigation guardian, but Husband is estranged from the daughter”. The solicitor currently representing the Husband appeared for the Husband on that date. Doing the best the Court can, the appointment of the Litigation Guardian was, therefore, either by consent or was unopposed. No appeal has been filed against that decision.
12. The matter has been before the Court on several occasions since 3 March 2014, including an unsuccessful Conciliation Conference. On each event, those appearing for the Wife have complained about the Respondent Husband’s lack of disclosure, and compliance with the Federal Circuit Court Rules 2001. Conversely, those appearing on behalf of the Respondent Husband have expressed frustration that, in circumstances where separation took place nearly two decades ago, and the Husband retired one decade ago, both the Respondent Husband and those representing them had done all they possibly had to provide disclosure in circumstances where financial records no longer exist.
13. By way of further background as to the nature and intensity of this family feud, there have been at least two unrelated proceedings between members of the family, including an unsuccessful assault charge against the son arising out of the Mother’s fall while she was living in his home, and unsuccessful proceedings in the NCAT between the children. The evidence filed before the Court, which includes Affidavits of the Husband, the son and the daughter as Litigation Guardian, contains mutual allegations of fraud, dishonesty and threats.[2]
[2] Kay (By her Litigation Guardian) & Kay [2014] FCCA 2797 at [11]-[13]
His Honour then proceeded to consider the issue of interim property orders and the question of the discharge of the litigation guardian. Judge Altobelli then says in paragraph 28 and 29 as follows:
28. All the Applicant Wife had to do was to say that she needed the funds for legal costs. That is not said by her or on her behalf. Her need, which of course does not need to be in any way compelling, is simply left to inference and guesswork. The Court’s discretion under s.79 in making an interim order under s.80 cannot be exercised by reference to inference and guesswork. The Wife’s Application for interim orders fails on the basis of the evidence presently before the Court.
29. As for the Respondent Husband’s Application for the Litigation Guardian to be discharged, it is not entirely clear what is the basis of the same. In the circumstances, particularly the Court’s note that the Respondent Husband either consented to, or at least did not oppose, the appointment of the Litigation Guardian, he cannot be complaining about circumstances that existed at that time. Doing the best the Court can, it seems that his concern may be based on subsequent events and the escalation in the conflict that has occurred, but even that is left to inference and guesswork. The Affidavits of both the Husband and the son allege impropriety on behalf of the Litigation Guardian arising out of the circumstances of the discovery of cash at the son’s home and the alleged removal of other moneys. Even if the event in question occurred after the appointment of the Litigation Guardian, the allegations against the Litigation Guardian are expressed in the most general of terms and are no more than mere allegations. For example, at paragraph 20 of the son’s Affidavit sworn 30 September 2014, which is in curiously similar terms to the Affidavit of his father, the Husband in these proceedings, contains an allegation about the removal of a handbag containing cash and coins which was collected by the Wife, her daughter and the daughter’s husband. It is not even a specific allegation against the Litigation Guardian! The Application to discharge the Litigation Guardian is misconceived, and is dismissed.[3]
[3] Kay & Kay at [28]-[29]
He then proceeded to make orders in terms of paragraphs 30 to 33 as follows:
Orders
30. Orders will be made in accordance with Order 7 of her Application in a Case filed 18 August 2014.
31. The matter has been set down for hearing on 2 April 2015 at 10:00am. The final evidence in the case must be filed no less than 14 days before that date and, in addition, the usual directions will be made as set out in the orders.
32. The matter will come back before the Court early February for further possible directions necessitated by any response that is filed on behalf of the third party sought to be joined.
33. In circumstances where there is such lack of clarity about the evidence and the substantive merits or otherwise of the competing applications, the Court will reserve the costs of all parties.[4]
[4] Ibid at [30]-[33]
The Proper Approach to Determination of a Property Application
The law with respect to the determination of applications for property settlement under s.79, until the determination of the High Court in Stanford v Stanford[5], was considered to be a four step process as set out in Hickey & Hickey[6]. The four steps set out in that decision are (summarised):
1) identify and value the net property;
2) have regard to the contributions of the parties under s.79(4)(a)-(c);
3) consider the s.75(2) factors; and
4) determine whether the order proposed is just and equitable (as provided by s.79(2) ).[7]
[5] (2012) 247 CLR 108; 47 Fam LR 481; FLC 93-518; [2012] HCA 52
[6] (2013) 30 Fam LR 35; FLC 93-143; [2003] FamCA 395
[7] [2003] FamCA 395 at [39] per Nicholson CJ, Ellis & O’Ryan JJ
The High Court in Stanford laid down three fundamental propositions which provide useful guidance in determining applications pursuant to s.79. The author of CCH sets those out at page 36-010 as follows:
1. Determination of a just and equitable outcome of an application for property settlement begins with the identification of existing property interests (as determined by common law and equity);
2. The discretion conferred by the statute must be exercised in accordance with legal principles and must not proceed on an assumption that the parties’ interests in the property are or should be different from those determined by common law and equity;
[8]3. A determination that a party has a right to a division of property fixed by reference only to the matters in s 79(4), and without separate consideration of s 79(2), would erroneously conflate what are distinct statutory requirements.[9]
[9] Stanford v Stanford at [37]-[38], [40]
The High Court in Stanford did not refer to or endorse the four step process. The Full Court in Bevan & Bevan[10], when discussing the decision of Stanford, noted that the High Court neither approved nor disapproved of the process but indicated that the decision served to refocus attention on the obligation only to make an order adjusting property interests where it was just and equitable to do so. Murphy J in Baglio & Baglio[11] stated at [181]:
As a result of those matters, the Court’s approach to s 79 may be less compartmentalised than what a strict or unthinking adherence to four (or three) ‘steps’ might otherwise reveal. The task is essentially holistic; is it just and equitable in the particular circumstances of the particular relationship or marriage under consideration to make an order and, if so, its terms must similarly meet that criteria. Of course, holistic though the approach is, it must be referenced to what the Act requires and care must be taken to ensure that the Court’s reasons make that clear…”
[10] (2013) 49 Fam LR 387; FLC 93-545; [2013] FamCAFC 116
[11] [2013] FamCA 105
Conclusions
It is perhaps pertinent to reflect on what Judge Altobelli had to say at the commencement of his judgment at [3]:
3. Let there be no misunderstanding, the present application is merely one battle forming part of the war that is going on between the family. The parties’ daughter was appointed Litigation Guardian for the Applicant Wife, in circumstances that will be discussed below. She is aligned with her mother’s interests. She does not get on well with her father, the Respondent. The parties’ son, sought to be joined as a third party in these proceedings, is aligned with his father, the Respondent Husband. The son does not get on well with his sister.[12]
[12] [2014] FCCA 2797 at [3]
The evidence of the litigation guardian I found to be truthful, as she tried to answer questions in a responsive way. She was questioned about the finding by her brother of $46,165.00 in cash in her mother’s room after her mother had vacated the property. I agree with the contention of Senior Counsel for the litigation guardian that her evidence had a ring of authenticity about it. Had she been aware of the existence of the cash, it would have been highly likely that she would have raised the issue before being told about it. I also think that it is not surprising that having regard to her mother’s health disabilities, that when she asked her mother about the money her mother was not aware where the funds had originated from. What is clear, however, is that she was able to accumulate over $46,000.00 in cash over 20 years from her pension. It is more than likely that Mr Kay provided for the Applicant over the 20 year period with perhaps a modest contribution from his mother. This would still be consistent with what the litigation guardian says of her observation of her mother providing her brother with monies to assist with living expenses from time to time.
The litigation guardian was also very clear and consistent in her denials of the alleged conversations involving she, her mother and her brother as to there being an agreement that her mother did not want anything from the Husband from the proceeds of the sale of the Property L property. Furthermore, there was no cross-examination about any alleged conversation between the Husband and the Wife on this issue. She also denied the proposition that her mother had said any benefit from the Property L property would adversely affect her pension. It is interesting to note that the Husband, at or about the time of the sale of the Property L property, says he had legal advice from a Chamber Magistrate that the Wife was entitled to one half of the assets, yet nothing was done to record the Applicant’s alleged agreement to forego her entitlement and transfer her share of the proceeds to Mr Kay.
There was certainly no challenge to the evidence of the litigation guardian that since her mother has been resident in the high care residential unit at (omitted), she has very little left from her pension.
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 failures
21. 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; and
i. 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)
Topic
Evidence
(omitted)
By way of letter 22 July 2014 the applicant sought disclosure of information and documents relating to (omitted) distributions that appeared by way of regular periodic deposits and lump sum deposits in bank accounts of the husband produced under subpoena – see applicant #25 as to the subpoenas that were required to be issued, and #26 annexure ‘N’ as to the chain of correspondence. This included a request as to disclosure of legal fees paid and the source of funds.
The response from the husband’s solicitors by way of letter 24 July 2015 includes: ‘He does not recall what this is but does recall he visited a number of financial planners at the time of his retirement (sic 2004 but did not proceed with any of them. My client does not have any documents related to this.’
There is a suggestion that the applicant should issue a subpoena in relation to the issue, rather than seek disclosure from the respondent beggars belief (it was his conduct that was the subject of enquiry – he could attend the financial institution and make any number of enquiries).
The contents of the letter from Fulcrum Legal 24 July 2014 were deliberately misleading.
Exhibit 7 is the executed application for membership of the (omitted) retirement fund of the husband dated 30 July 2002.
Exhibit 6 contains the documents from (omitted) evidencing the husband’s withdrawals of the investment by way of the following redemptions – in addition to receiving a periodic deposit each month into his account:
1 March 2011 - $4,868.50
29 March 2011 - $7,288.81
2 May 2011 - $6,533.01
29 June 2011 - $3,563.11
29 July 2011 - $4,185.79
30 August 2011 - $2,497.69
29 September 2011 - $2,000
27 October 2011 - $2,000
These monies were deposited into his (omitted) account – exhibit 11.
Some of these funds were used to buy his car.
He signed each redemption application.
His financial advisor facilitated each redemption transaction.
The husband’s evidence in his affidavit #43 as to the (omitted) deposit was patently an effort to suppress evidence and give false evidence to the Court.
His oral evidence that he ‘forgot’ was simply unbelievable.
The letter 4 August 2014 to the husband’s solicitors confirmed that real and substantive issues existed as to the husband’s compliance with his obligations of disclosure and he was specifically referred to rule 24.03 of the Federal Circuit Court Rules.
The letter from Fulcrum Legal to the Applicant’s solicitors 5 August 2015 is nothing short of audacious. The vitriolic contents are self-evident. The failure to provide any disclosure in relation to the (omitted) investment and the disposition of the (omitted) shares is patent and deliberate.
The transfer of 2,779 (omitted) shares by the husband to Mr Kay in April 2003
The issue as to the husband’s disposition of these shares emerged during the adjournment in the trial after April 2015. The relevant letters passing between the respective solicitors are contained in exhibit 5.
The husband and/or the second respondent were acutely aware of the disposition of the shares, and remained silent as to their conduct.
Absent meaningful response the litigation guardian caused a subpoena to issue to Computershare – see exhibit 13.
The documents produced on subpoena by Computershare (exhibit 10) executed by the husband and the second respondent confirmed the registration of the transfer of the shares.
The current value of the shares is $70,836.71 (See Aide A to exhibit 10 annexed to these submissions are marked ‘B’).
The dividend stream produced by the shares from the date of transfer to the current time obtained by the second respondent is $27,876.84. (See Aide B to exhibit 10 annexed to these submissions and marked ‘C’).
The disposition occurred absent the knowledge or consent of the wife.
It is contended that the disposition occurred in circumstances designed to achieve an advantage by way of Centrelink, and to defeat any potential claim of the wife to the monies arising from the product of the shares.
The failure of the husband and the second respondent to disclose the disposition of the shares until confronted forensically with their deceptions in Court on 2 September 2015 strikes at the very heart of the S.79(2) mandate.
The husband’s failure to disclose the pre disposition of the shares to Centrelink for the purposes of obtaining a pension benefit compounds the absence of integrity in his evidence.
Failure of husband to provide any meaningful accounting in relation to the use and application of the $205,137 he received on or about 6 August 2004
His affidavit evidence on this issue was inadequate and unreliable. His efforts to establish that he had used most of these towards maintaining or improving the Property J property was fanciful. See the submissions above as to the absence of integrity or reliability in the schedule contained within Annexure “C” to his affidavit.
The implication is that the (omitted) investments originated from this source, but were later dissipated.
He has an obligation to give at least some accounting in relation to the use and application of the very significant quantum of $205,137. His medical costs – if not covered by Medicare – were vaguely said to be $6,000 and this was modest when cast against the magnitude of the sum received.
Some of the monies appeared to have ended up in the husband’s bank accounts and remained there for about 10 years – until 2013.
The husband conceded in cross-examination that he had more than $100,000 in term deposits in 2013. There was a rapid withdrawal from those accounts (see exhibit 11 as to the term deposits in the (omitted) credit union and exhibit 12 as to the term deposit in the (omitted) Bank). In early 2013 of more than $56,000. He was unable to advise or give any meaningful evidence as to the use and application of these funds. A strong implication exists that these funds were used to meet the costs of the second respondent’s criminal proceedings.
The husband was unable to explain large movements of cash transferred out of his accounts in 2014 and 2014 in cross-examination. Again, this use and application of funds has at all times been a substantive issue in the proceedings.
The last term deposit, in an amount in excess of $70,000, appears at least in part to have been used to pay his legal fees.
The wife has received no benefit of any of these term deposit monies.
It is contended that the Husband’s evidence ought be found to be largely unreliable and unsatisfactory, and when he expressed ignorance in relation to a number of matters that ought have been within his knowledge, he avoided answering the questions put to him.
The evidence of the Second Respondent is, in my view, very much tarnished by the evidence of his father, in that, as spelled out by the Applicant, they were closely enmeshed in their financial circumstances. The Second Respondent was originally a witness in his father’s case before he became a party. He conceded that he gave instructions to his father’s solicitor at Fulcrum Legal on behalf of his father during the course of the litigation. He then sat in Court while his father gave evidence. Furthermore, he conceded in cross-examination, after he had listened to his father’s evidence, that he was intending to notify the Applicant and the Court about the transfer of the 2,779 (omitted) shares to himself by his father and indeed he has retained those shares, which at the time of the hearing had a value of $70,836.71. Those shares have produced $27,876.84 by way of dividend income to him.
He also confirmed that he had not disclosed all of his current assets in his financial statement. Further, all of his current property in the financial statement has emanated from his father. However, he was unable to say what amount of money his father had given him in cash to pay for his father’s legal costs. He did, however, explain in detail the use of the $140,000.00 proceeds of sale from the Property L property. He indicated there was approximately $135,000.00 after deduction for selling costs that his father provided him with from the sale and that he used $80,000.00 to $90,000.00 to pay out his mortgage on the property owned by him at Property C. Finally, $45,000.00 was used to buy a share portfolio and the balance was used to travel to (country omitted) for two and half years between 2004 and 2006. In cross-examination, he would not say whether he would allow his father to live with him in the event that the father’s property at Property J was disposed of by way of these proceedings. I simply did not believe him on this issue.
The Husband, in asking for the Wife’s claim to be dismissed, relies on the Court making a finding in his favour that the Wife agreed to transfer the Property L property, or proceeds, to the second-named respondent on the basis that she was entitled to half of their assets. The Second Respondent also relies on such a finding. As I have already indicated, I do not accept either the First Respondent or the Second Respondent’s evidence on that issue. Such a finding would be inconsistent with the conduct of the Husband and, to a lesser extent, that of the son following the transfer of those funds. As I have indicated, they have embarked on a deliberate course of conduct in respect to non-disclosure of the Husband’s financial circumstances. The Husband also contends that because of the lack of evidence by the Wife herself in respect to the alleged agreement that the son should receive the proceeds of the Property L property. He says that it is the daughter, as the litigation guardian, who is determined to make the property application. I am satisfied that such a finding flies in the face of the judgment of Judge Altobelli, where he indicated that his notes state, “…the Respondent husband agrees that the wife needs a litigation guardian but the husband is estranged from the daughter. Doing the best the Court can, the appointment of the litigation guardian was therefore by consent or unopposed.” In these circumstances, I am satisfied, having regard to the wife’s health, disabilities that no criticism ought to be directed to the Applicant for her failure to give evidence.
What is more, I agree with the contentions of Senior Counsel for the Applicant, Mr Campton, that the authorities are clear where the evidence of the First Respondent is wholly unreliable and unsatisfactory and where he has suppressed facts relating to his financial circumstances, his conduct is within the cases considered by the Full Court of the Family Court in Black & Kellner[17] and Weir & Weir[18] (1993) FLC 92-338 where guidance is given to the trial judges “not to be unduly cautious in making findings in favour of the innocent party”.
[17] (1992) 15 Fam LR 343; FLC 92-287
[18] (1992) 16 Fam LR 154; (1993) FLC 92-338
In this case the Applicant contends that the requirements identified in Stanford are readily satisfied. The fact that the Husband’s concessions as to the Wife being entitled to one half of the property shortly after separation is sufficient to satisfy that it is just and equitable to make an order under s.79 and secondly, under his Amended Response, the Husband himself seeks orders adjusting property. But perhaps most significantly, the Husband, nowhere in his case suggests that he relied on the representation by the Wife that she would not seek any property adjustment. It is a further contention of the Applicant that it is unconscionable for Mr Kay, as legal owner of the property at Property C and the 2,779 (omitted) shares, to assert his overall beneficial ownership of all of that property. The Applicant contends that these assets, being the property at Property C and the shares, were the subject of an implied agreement or understanding between him and his father as to sharing the beneficial ownership of these assets. I do not accept that submission, albeit that the Second Respondent has supported his father’s non-disclosure and has received the benefit of property and assets that his mother might have otherwise been entitled to share. Nor do I find that the circumstances of the transfer of the property and shares give rise to a constructive trust.
In my view, the fact that the Applicant lived with the Second Respondent for 20 years and received a significant contribution from him by way of accommodation and the provision of living expenses during which time she was able to save some $46,000.00 from her pension establishes that the Applicant as against the Second Respondent has effectively waived her rights. It would be unfair and unjust if the remedy that is sought by the Applicant against the Second Respondent were to be granted.
In further applying the principles of Stanford, the Court is required to identify and value the net property. In that respect, it is useful to refer to the balance sheet set out in paragraph 52 of the Applicant’s written submissions as follows:
The balance sheet
The litigation guardian contends the pool of property available for adjustment between the parties is as follows:
| ASSETS | ||||
| Ownership | Description | Wife/de facto partner’s value | Husband/de facto partner’s value | |
| 1 | Husband | Property at Property J | 475,000 | 475,000 |
| 2 | Husband | (omitted) Term Deposit | NIL | NIL |
| 3 | Husband | (omitted) Bank Account | E 36,185 | 36,185.24 |
| 4 | Husband | Ford Focus motor vehicle | 2,300 | 2,300 |
| 5 | Husband | Box trailer | 50 | 50 |
| 6 | Husband | Furniture and effects | Nominal | Nominal |
| 7 | Wife | (omitted) Saver Account | E 882 | Not known |
| 8 | Wife | Burial Plot at (omitted) | E 3,610 | E 3,610 |
| 9 | Wife | Funds held in Kells trust account | NIL | 46,165 |
| Total | $518,027 | $563,310.24 | ||
| ADDBACKS | ||||
| Ownership | Description | Wife/de facto partner’s value | Husband/de facto partner’s value | |
| 10 | Husband | Superannuation payout | 205,137.71 | NIL |
| 11 | Husband | Funds gifted by Husband to Mr Kay from proceeds of sale of Property L property in 2002 | 140,000 | NIL |
| 12 | Husband | Income stream from (omitted) investment (“(omitted)”) | 11,977.03 | NIL |
| 13 | Husband | Legal fees paid | E 36,000 | |
| 14 | Wife | Legal fees paid | E 84,411 | |
| 15 | Husband | (omitted) shares transferred to Mr Kay on 01/04/2003 (2,779 shares @ $25.49 as at 28/8/2015) | 70,836.71 | |
| 16 | Husband | (omitted) shares transferred to Mr Kay on 14/01/2003 (701 shares @ $0.10 as at 28/8/2015) | 70.10 | |
| 17 | Husband | (omitted) shares received by Mr Kay as bonus from (omitted) shareholding (2,779 shares @ $1.545 as at 28/8/2015) | 4,293.56 | |
| 18 | Husband | (omitted) shares disposed of by Husband (6,335 shares on 7/8/2002 and 827 shares on 17/01/2003 - @ $25.49 as at 28/8/2015) | 182,559.38 | |
| 19 | Husband | (omitted) share dividends received by Mr Kay from 1/04/2003 to date | 27,876.84 | |
| Total | $763,162.33 | $ 0 | ||
| LIABILITIES | ||||||
| Ownership | Description | Wife/de facto partner’s value | Husband/de facto partner’s value | |||
| 20 | Wife | Personal loan to Ms Bruce & Mr Bruce | E 34,310 | NIL | ||
| Total | $ E 34,310 | $ 0 | ||||
| SUPERANNUATION | ||||||
| Member | Name of fund | Type of Interest | Wife/de facto partner’s value | Husband/de facto partner’s value | ||
| 21 | ||||||
| Total | $ 0 | $ 0 | ||||
| FINANCIAL RESOURCES | ||||||
| Ownership | Description | Wife/de facto partner’s value | Husband/de facto partner’s value | |||
| 22 | ||||||
| Total | $ 0 | $ 0 | ||||
| NETT TOTAL ASSETS (including Superannuation) | E 1,246,879.30 | $ 563,310.24 | ||||
I certainly intend to take into account the Husband’s use of various other assets as described under addbacks in determining who receives what from the current assets, namely, the property at Property J and the bank accounts.
The Contributions of the Parties
The contributions of the parties during the course of the marriage of 32 years were, in my view, equal. Neither party brought in any initial financial contribution and during the marriage, the Husband was the breadwinner and the Wife was involved as parent and homemaker.
From the date of separation until the time of the hearing, the Husband has had the use and benefits of all of the assets and in particular the following:
a)the net proceeds of sale of the Property L property of $140,000.00 which the Husband unilaterally disposed of;
b)the $205,000.00 (approximately) which he received from superannuation;
c)the (omitted) shares transferred by the Husband to the Second Respondent on 1st April 2003 totalling $70,836.71 in value; and
d)the (omitted) shares (6,335) disposed of by the Husband in 2002 and 2003 totalling $182,559.00 in value,
making a grand total of $598,395.71. Further, the Husband has lived in the property at Property J since separation.
While the superannuation entitlements accumulated at least partially in the post-separation period, I have ignored the interest and dividends that would have been available from the funds to the Husband and if I applied them as add-backs, then the Wife would receive less than half, if she is to receive the whole of the Property J property.
In assessing those assets, I have not included the $46,000.00 of the Wife’s, found in the son’s house because clearly the Husband has made no contribution to those funds and I have otherwise ignored the bank accounts in both parties names as they will be exhausted by payment of legal fees.
Other Factors taken into account under subsection 79(4)(d) to (g)
Paragraph (d) of subsection 79(4) requires the Court to take into account the effect of any proposed order on the working capacity of either party. The parties are no longer in the workforce and are on the aged pension. There will be no effect on the working capacity of either party.
Subsection 75(2) matters
So far as the s.75(2) factors are concerned: both parties are in their mid-seventies, the Wife suffers from diabetes and arthritis and uses a walking frame. The Husband is in fair health only and both rely on the aged pension. Although the orders that I propose to make will mean that the Husband will need to find alternative accommodation, I am satisfied that despite the Second Respondent’s evidence about whether he would accommodate his father in his home, I cannot believe that he would not. In those circumstances the parties’ respective needs other than for accommodation will be equal. I am clearly satisfied that medical evidence provided by the Wife is such that she will be able to live in a property on her own with some assistance from her family.
I am therefore satisfied that if I transfer the Property J property to the Wife and otherwise allow each of the parties to retain their assets in their respective possessions that those arrangements at least will be a just and equitable outcome of the proceedings. I propose to allow the Husband fourteen days to make arrangements.
Orders will be made accordingly.
I certify that the preceding forty-one (41) paragraphs are a true copy of the reasons for judgment of Judge Scarlett
Date: 22 July 2016
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