Keem & Polmear
[2023] FedCFamC2F 196
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Keem & Polmear [2023] FedCFamC2F 196
File number(s): PAC 1498 of 2020 Judgment of: JUDGE NEWBRUN Date of judgment: 23 February 2023 Catchwords: FAMILY LAW – PROPERTY– Just and equitable property Orders made. Legislation: Family Law Act 1975 (Cth) ss 4AA, 90SF(3), 90SM(3) Cases cited: Bevan v Bevan (2013) 49 Fam LR 387
Black & Kellner (1992) 15 Fam LR 343
In the Marriage of SW and WH Weir (1992) 16 Fam LR 154
Lotta & Lotta [2017] FamCA 50
AJO & GRO (2005) 33 Fam LR 134
Division: Division 2 Family Law Number of paragraphs: 89 Date of hearing: 9–10 February 2023 Place: Parramatta Counsel for the Applicant: Mr Hogg Solicitor for the Applicant: Maatouks Law Group Respondent: The Respondent appeared in person ORDERS
PAC 1498 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS KEEM
Applicant
AND: MR POLMEAR
Respondent
order made by:
JUDGE NEWBRUN
DATE OF ORDER:
23 FEBRUARY 2023
THE COURT ORDERS THAT:
1.Within 42 days of the date of these Orders, the de facto husband is to pay to the de facto wife’s solicitors’ trust account the sum of $465,458 on behalf of the de facto wife.
2.On payment of the above sum of $465,458 by the de facto husband in compliance with the above Order, the parties shall forthwith take all necessary steps to cause the total trust monies of $344,001 to be paid to the de facto wife (such trust monies held by Caldwell Martin Cox and Maatouks Law Group).
3.On compliance by the parties with the above Orders, the parties shall retain the assets in their respective names or possession to the exclusion of the other.
4.In the event that the de facto husband fails, neglects, or omits to comply with Order 1 above, then:
(a)The parties shall forthwith take all necessary steps to cause the above trust monies of $344,001 to be paid as follows:
(i)$189,200 to the de facto wife;
(ii)$154,800 to the de facto husband;
(b)The de facto husband shall forthwith do all acts and things and sign all documents necessary so as to effect the sale of R Street, Town Q NSW and better described as Lot … in DP … (“the R Street, Town Q property”) for the best price reasonably obtainable in the following manner:
(i)The de facto wife through her solicitor will provide to the de facto husband within 14 days, the names and expected costs associated with three real estate agents she proposes to sell the R Street, Town Q property, with the de facto husband to nominate one of the three real estate agents provided within a further 14 days;
(ii)The de facto wife through her solicitor will provide to the de facto husband within 14 days, the names and expected costs associates of three solicitors/conveyancers she proposes to act for the parties in relation to the sale of the R Street, Town Q property, with the de facto husband to nominate one of the three solicitors/conveyancers within a further 14 days;
(iii)The de facto husband shall do all acts and things and sign all documents to appoint the nominated real estate agent and solicitor/conveyancer within 35 days;
(iv)The manner and form of the sale and selling price at which the R Street, Town Q property shall be listed is to be mutually agreed upon between the parties or in the event that an agreement cannot be reached within 7 days, the parties will accept the reasonable recommendation as advised by the above nominated real estate agent in writing;
(c)The de facto husband shall cooperate in every way with the above nominated real estate agent including (without limiting the generality of the foregoing):
(i)Making the keys available to the agent;
(ii)Allowing inspection of the R Street, Town Q property at all reasonable times requested by the agent;
(iii)Doing or saying nothing to hinder or prevent the sale of the R Street, Town Q property;
(iv)Ensuring the R Street, Town Q property, including its grounds, are in a neat and clean condition at the time of inspection by the agent and prospective purchasers;
(v)Signing all documents requested by the agents in relating to the listing for sale of the R Street, Town Q property;
(vi)Signing all contracts or agreements for sale to give effect to the sale;
(vii)Providing the R Street, Town Q property as vacant possession 14 days prior to settlement;
(d)On settlement of the sale of the R Street, Town Q property, the proceeds of sale will be paid in the following manner and priority:
(i)All costs and expenses of the sale including legal costs and disbursements, agent’s commission, valuer’s fees, and any auction expenses as advised by the agent, with no additional costs to be incurred unless agreed to by both parties in writing;
(ii)Then the balance remaining to be paid as follows:
A.$620, 259 to the de facto wife but less her half share of the above costs and expenses;
B.$429, 741 to the de facto husband but less his half share of the above costs and expenses.
(e)The de facto wife shall retain her car ($2,000);
(f)The de facto husband shall retain the R Street, Town Q Property Chattels previously valued at $79,380.
5.In the event that either party refuses or neglects to execute any deed, document or instrument necessary to give effect to these Orders, the Registrar of this Court be appointed pursuant to section 106A of the Family Law Act 1975 (Cth) to execute such deed, document or instrument in the name of the said party and do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of affidavit.
6.Each party has liberty to apply in relation to the implementation or enforcement of these Orders upon 14 days’ notice.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Keem & Polmear has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
REASONS FOR JUDGMENT
JUDGE NEWBRUN:
INTRODUCTION
These are Reasons for Judgment relating to a final property hearing held before the Court on 9 and 10 February 2023.
The de facto wife appeared being legally represented. The de facto husband appeared, legally unrepresented, his former solicitors having filed a Notice of Ceasing to Act on 2 February 2023. The de facto husband told the Court that he was ready to proceed with the final hearing on 9 February 2023. He told the Court that he could read. On 10 February 2023, he told the Court that despite delayed dialysis treatment that morning he was “okay” and happy to proceed with the final hearing.
The de facto husband informed the Court as to the property orders he was seeking and the documents that he was relying upon, clarified his position in respect to the de facto wife’s balance sheet (set out in her case outline), and the Court explained to him the course of the final property hearing including cross-examination by himself of the de facto wife. He was informed by the Court that he was permitted to inspect subpoenaed documents before the Court and tender any relevant document from such documents.
On 29 March 2021 this Court, after a contested jurisdictional hearing between the parties, had declared that the parties were in a de facto relationship, within the meaning of section 4AA of the Family Law Act 1975 (Cth) (“the Act”) from about 1977 to about October 2019.
On 16 December 2021 trial directions were made by the Court with a call over and compliance check and possible allocation of a hearing date appointed for 23 May 2022. On 23 May 2022 the matter was listed for compliance hearing on 22 August 2022, and the parties were directed to comply with previous trial directions made on 15 December 2021 within 28 days. On 18 August 2022, the compliance hearing listed for 22 August 2022 was vacated and, by consent, the parties were ordered to comply with previous trial directions made on 16 December 2021 within 28 days. On 21 November 2022 the proceedings were set out the final hearing on 9 February 2023 (estimate two days), and the parties were directed to file and serve their trial documents within 28 days.
During submissions at the final hearing, counsel for the de facto wife informed the court that no Kennon claim (in respect to alleged family violence) would be made on behalf of the de facto wife.
PROPOSALS
The de facto husband informed the Court that:
(a)He wanted to retain the property at R Street, Town Q, (the R Street, Town Q property);
(b)The de facto wife should be paid $300,000 from the joint trust monies, and he should receive the balance ($44,001);
(c)The net proceeds of sale of the R Street, Town Q property chattels ($79,380) be divided equally between the parties.
The de facto wife sought an equal division of the sum of $1,991,442 being a sum calculated by reference to the parties’ total assets and addbacks (contended by the de facto wife but disputed by the de facto husband) that were set out in the de facto wife’s balance sheet.
MATERIAL RELIED UPON
The de facto wife relied upon the following documents:
(a)Her Initiating Application filed 27 March 2020;
(b)Her affidavit filed 18 November 2022;
(a)Affidavit of Ms A Polmear filed 18 November 2022;
(b)Her Financial Statement filed 27 March 2020;
(c)Case Outline filed 6 February 2023.
The de facto husband relied upon the following documents:
(a)His affidavits filed 22 October 2020 and 17 February 2021;
(b)His Financial Statement filed 22 October 2020.
The exhibits were as follows:
(a)Exhibit A: Report of Dr S dated 28 November 2022, and report of Dr T dated 27 December 2022;
(b)Exhibit B: Summary document prepared by husband relating to monies allegedly spent by him from the proceeds of sale of the property at U Street, Town K.
EVIDENCE
The Court has considered the documentary material relied upon by the parties discussed above, and the parties’ oral evidence.
The standard of proof applied by the Court in respect to the evidence is the balance of probabilities. The Court does not propose to set out the entirety of the evidence. Relevant evidence relating to the issues to be determined will be set out below and under the headings “Balance sheet”, “Contributions”, and “Section 90SF(3)”. Where there is any conflict between the evidence referred to below and in those sections of these Reasons, the evidence under the headings “Balance sheet”, “Contributions” and “Section 90SF(3)” shall take precedence.
Where there is any conflict between the evidence of the parties, the court prefers the evidence of the de facto wife and Ms A Polmear, the parties’ daughter. The de facto husband declined to cross-examine either the de facto wife or Ms A Polmear. The de facto husband was cross-examined by the de facto wife’s counsel. Despite a Court Order, made by consent, on 4 June 2020, that the de facto husband would provide an account, including documents to verify, as to how he had disbursed the proceeds of sale of the U Street, Town K property, he failed to do so. His statements (by telephone from Country V) to the Registrar on 4 June 2020 that there was only about $130,000 left in a Bank W account from the proceeds of sale of the U Street, Town K property received by him in the sum of $1,640,000, having used such proceeds to purchase the R Street, Town Q property and build a granny flat, living expenses and gambling, failed to disclose that between 25 May 2020 and 3 June 2020 he had transferred a total of $500,000 in ten internet overseas bank transfers.
The parties lived together, during the course of their relationship, at various properties. For a significant period, the parties and their daughter, Ms A Polmear, went back and forth between a Housing Commission property at Suburb H (let to the wife) and a property at Town I where they resided together.
The de facto wife and the parties’ daughter were not cross-examined by the de facto husband after he was afforded an opportunity to do so and the Court had confirmed with him as to what were the issues in the property proceedings. The de facto husband had also been previously afforded reasonable time to read the de facto wife’s trial material.
The de facto wife stated, when briefly questioned by the Court, that she does not yet have the results of her past cancer treatment. She is to see her specialist doctor, Dr X, this coming Monday on 13 February 2023 as to these results and as to future treatment. She is presently not aware of what her life expectancy might be in relation to her cancer. She stated that her medical treatment expenses are paid through Medicare.
The valuation of the property at R Street, Town Q (annexed to the affidavit of the de facto wife) indicates that that property is about 1593 m² and comprises a dwelling providing three bedrooms, two bathrooms with an attached double garage, and a detached self-contained weatherboard studio (the studio provides one bedroom, one bathroom accommodation with the kitchen/living area and external laundry facilities). The valuation notes that from RP Data the R Street, Town Q property was acquired on 18 September 2019 for $655,000.
The parties’ daughter Ms A Polmear, now aged 45 years, swore an affidavit which was filed on 18 November 2022. The de facto husband declined to cross-examine her. Ms A Polmear stated, inter alia, that she had lived with her parents her entire life except for a period of three and a half years between January 2010 and mid 2013 when she was living elsewhere. She stated that she was regularly seeing them when the parties were living between Suburb H and the U Street, Town K property. She stated that even during time she was not living with the parties she would see them regularly for multiple times each week. Since the parties separated in late 2019 she has lived with the de facto wife.
Ms A Polmear stated that the de facto wife provided nearly all the care for her when growing up. She stated that the de facto wife performed nearly all the household chores, including maintaining the gardens. She stated that her parents worked seven days a week throughout her childhood and into adulthood to provide for the family.
Ms A Polmear stated that in about 1995 the de facto husband suffered a heart attack after which his health worsened and he struggled to get around and work. As these problems arose the de facto wife would help the de facto husband shower and dress himself, take the de facto husband to all his doctor appointments, helped the de facto husband get in and out of the car, and care for him when he was ill.
Ms A Polmear states that during her childhood she worked on weekends with her family selling goods. She stated the de facto husband took her out of school in Year 10 and then she worked for the family’s businesses seven days per week. She worked at Company J when the de facto husband grew ill following his heart attack in about 1995.
The de facto husband states that he purchased the R Street, Town Q property with some of the proceeds of sale of the U Street, Town K property and the balance he put in the bank. He states that the settlement of the purchase of the R Street, Town Q property was simultaneous with the settlement of the sale of the U Street, Town K property. He states that in about late November 2019 he moved to the R Street, Town Q property alone.
The de facto husband states that after separation in about late 2019 he had moved to live at the R Street, Town Q property and he became particularly unwell. He was in hospital for six days with pneumonia. He advertised for a carer. He obtained the assistance of carers including his present wife who hails from Country V. The de facto husband had become engaged to his present wife in about early 2020 and they had travelled to Country V in early 2020 for a holiday and to extend the de facto husband’s new wife’s Visa. They could not return to Australia immediately due to the COVID-19 pandemic. They f in Country V in 2020. As at 22 October 2020 the de facto husband was still in Country V. He asserts that it was very difficult instructing his solicitor from Country V and he does not read very well. The de facto husband was hospitalised in Country V at the beginning of August 2020 and had further hospital admissions since then in Country V. The de facto husband asserts that he used a lot of his money on medical expenses. He asserts, in his affidavit filed 22 October 2020, that he was due to return to Australia in early November 2020.
In the de facto husband’s affidavit filed 17 February 2021 he stated that he currently resides at the R Street, Town Q property but his new wife remains in Country V and he and his new wife are in the process of making arrangements for her to return to Australia to live. He stated that in about late 2019 he told Ms A Polmear that he could not clean a big house, and that he didn’t need a big house.
In cross examination, the de facto husband stated, inter alia, that he receives an age pension in the sum of $701 per fortnight.
The de facto husband stated that when he purchased the R Street, Town Q property the house was not liveable; there were sewer problems and no water, and he paid for repairs to that property.
The de facto husband stated that in relation to various transfers of significant sums of money between his bank accounts, together with transfers of sums of money overseas, all occurring following receipt by him of the sum of $919,442 in late November 2019, none of these transfers were carried out by him to thwart the wife’s property proceedings against him. He stated that he had spent a significant amount of money on hospital health treatment in Country V.
The de facto husband stated that he previously had had a number of receipts for his claimed expenditure in Exhibit B however these receipts had been previously in a safe at the R Street, Town Q property and that safe had been broken into and thereafter such receipts were not available.
The de facto husband stated that it might cost about $400 per week to rent a flat in the R Street, Town Q area.
LEGAL PRINCIPLES
In Lotta & Lotta [2017] FamCA 50 Foster J stated:
281 The approach to the determination of an application under s 79 of the Act is set out in Stanford v Stanford (2012) 247 CLR 108 and further considered by the Full Court in Bevan & Bevan [2014] FamCAFC 19, Chapman & Chapman (2014) FLC 93–592 and Scott & Danton [2014] FamCAFC 203.
282The Court must identify the existing legal and equitable interests of the parties in the property, the liabilities and financial resources of the parties at the time of the hearing and then whether it is just and equitable to make a property settlement order.
283Such a consideration should not be guided by an assumption that the parties’ rights to or interests in property are or should be different from those that then exist. The question is whether those rights and interests should be altered.
284There is no presumption that one or other party has the right to have the property of the parties divided between them or a right to an interest in marital property that is fixed by reference to the various matters in s 79(4). The Court needs to conclude that it would be unjust or unfair to leave property rights intact under s 79(2) of the Act.
285In many cases this requirement is readily satisfied where the parties are no longer in a marital or de facto relationship and, thus, for example, the common ownership or use of property by husband and wife will no longer be possible or the express or implicit assumptions that underpinned existing property arrangements such as the accumulation of assets or financial resources by one for the benefit of both have been brought to an end with the relationship.
286In particular, such a circumstance arises where both parties seek property adjustment orders but are unable to agree as to same. Here the wife seeks an order for adjustment of property and the husband contends that there should be no such adjustment.
287It is thus important to ascertain the present property and resources of the parties so as to facilitate a consideration of the s 79(2) question.
288In some circumstances it is not possible to determine whether it is just and equitable to make adjustment orders as to the parties’ present property rights without a consideration of s 79 (4) matters.
289Section 79(4) requires a consideration of the contributions made by the parties as defined in s 79(4)(a) to (c). The Court must then consider s 79(4)(d) to (g) in particular the subjective considerations as to the parties by having regard to the provisions of s 75(2) in so far as they are relevant (s 79(4)(e)).
290The Court can then consider the “justice and equity” of the actual orders to be made: Russell & Russell (1999) FLC 92–877; Teal & Teal [2010] FamCAFC 120, in the context of the Court’s obligation to make “appropriate orders” as provided for in s 79(1) of the Act.
The above legal principles are also applicable to these de facto property proceedings.
BALANCE SHEET
The balance sheet of the parties is now set out:
BALANCE SHEET Ownership Description Applicant’s value Respondent’s value Assets 1 R R Street, Town Q NSW
("the R Street, Town Q Property")$1,050,000 $1,050,000 2 Joint Trust monies (Caldwell Martin Cox) $110,000 $110,000 3 Joint Trust monies (Maatouks Law Group) $234,001 $234,001 4 R R Street, Town Q property chattels $79,380 $79,380 5 A CBA account ending in #...73 Minimal 6 A Motor Vehicle 1 $2,000 Total $1,475,381 Addbacks 12 Unaccounted proceeds from sale of the
U Street, Town K Property$555,441 NIL Total $555,441 Net Total Assets Total $2,030,822
As to item 12, the sum of $555,441, being the wife’s contended addback relating to alleged unaccounted proceeds from the sale of the U Street, Town K property, the Court will deal with this issue under section 90SF(3)(r) and the Court refers to its discussions below under section 90SF(3).
The final balance sheet accordingly will be as follows:
FINAL BALANCE SHEET Ownership Description Applicant’s value Respondent’s value Assets 1 R R Street, Town Q NSW Respondent $1,050,000.00
("the R Street, Town Q Property")$1,050,000 2 Joint Trust monies (Caldwell Martin Cox) $110,000 3 Joint Trust monies (Maatouks Law Group) $234,001 4 R R Street, Town Q property chattels $79,380 5 A CBA account ending in #...73 Minimal 6 A Motor Vehicle 1 $2,000 Total $1,475,381 Net Total Assets Total $1,475,381
From the above, it can be seen that the parties’ net assets are $1,475,381.
SECTION 90 SM(3) OF THE ACT
The Court is satisfied that it is just and equitable in this case to alter the property interests of the parties in light of the breakdown of their relationship, the fact that they will no longer have the joint use and enjoyment of their property, and the fact that the continuance of the current legal ownership of their property would not afford them justice and equity.
CONTRIBUTIONS
The parties’ de facto relationship commenced in about 1977 and continued until about October 2019. The Court had made a formal declaration to this effect on 29 March 2021 after a contested jurisdictional hearing.
Neither party had significant assets at the commencement of the relationship.
In 1977 the parties’ daughter Ms A Polmear was born.
In about 1979 the de facto wife received Housing Commission accommodation at Suburb H that she had been on the waiting list for. The parties and Ms A Polmear moved into that accommodation in about mid 1979.
From about 1979 the parties ran several family businesses together including sales and selling secondhand goods. In 1982 the parties had purchased a caravan using money earned from their businesses and in 1984 they traded in the caravan for an empty block of land at Town I. The parties and Ms A Polmear did restoration work on that property as well as assembling a prebuilt house on that property. The prebuilt house had been obtained for free. That property was sold in 2001.
In the early 1990s the trucks were sold. The money from the sale of the trucks went towards the purchase by the parties of a business called Company J which occurred in about late 1993 or early 1994. The de facto husband ran this business and the de facto wife and Ms A Polmear also worked in the business. The de facto wife was not paid for her work in the business nor did she receive superannuation. In about January 1998 the de facto husband sold this business and the parties both began receiving government pensions as their source of income.
In 1994 the parties had purchased a property at U Street, Town K $487,000 and which was placed in the de facto husband’s name. The de facto husband told the de facto wife that this property needed to be in his name because the loan was tied to the business Company J’s, and if the property was placed in joint names, the de facto wife would lose her Housing Commission residence at Suburb H. The deposit was paid for by funds from the parties’ relationship. The parties went looking at this property together with the de facto husband asking the de facto wife, “Are you happy with this?” before the purchase of the property. This was a farm property that the parties raised animals on for sale and used as a storage site for the business Company J. The parties built a cabin on the property. Both parties performed maintenance work on that property. A mortgage loan had been taken out for the U Street, Town K property purchase and repayments for this loan were made by the de facto husband from the parties’ business income.
The U Street, Town K property was sold in about late September 2019 and, at about the same time, the de facto husband used the sale proceeds to purchase the property at R Street, Town Q for about $650,000. The sale proceeds of the U Street, Town K property of $1,640,000 were placed into the de facto husband’s bank account and the de facto wife never saw any of that money or had any access to it. Prior to settlement of the purchase of the R Street, Town Q property in about December 2019, the de facto husband obtained permission from the vendor of the U Street, Town K property to install a prebuilt granny flat at this property and this was done prior to settlement. Prior to settlement the de facto husband told the de facto wife that he proposed to rent out the granny flat.
The Court accepts the de facto wife’s evidence that during the parties’ relationship she was the primary carer of Ms A Polmear and predominantly performed all household chores at the parties’ various properties; the de facto wife made a far superior contribution as homemaker and parent than the de facto husband and this was a contribution of substance. The Court finds that during the time that the de facto wife made this homemaker and parent contribution the de facto husband was usually working in the parties’ various businesses and/or maintaining or improving the parties’ properties.
During the vast majority of the parties’ relationship, at various times, the de facto wife provided support and cared for the de facto husband due to his health conditions, and this contribution was also a contribution of substance by the de facto wife. The Court accepts the de facto wife’s evidence in this regard. The Court does not accept that the de facto husband paid the de facto wife for any of such care provided by the de facto wife to the de facto husband.
Taking into account the above matters, and viewing the parties’ overall contributions holistically, the Court assesses the parties’ contributions to the de facto relationship assets of $1,475,381 to be about equal.
SECTION 90SF(3) OF THE ACT
The de facto husband is 66 years, and the de facto wife 73 years.
The parties’ child Ms A Polmear is aged 45 years. Ms A Polmear lives with the de facto wife and cares for her.
The de facto wife is presently receiving treatment for cancer and her life expectancy is not known. She needs to purchase a new mobility scooter for a back disability. The de facto wife suffers from a medical condition and she needs to purchase a machine to help her condition.
The de facto wife is retired and has no earning capacity. She lives in a Housing Commission apartment in Region Y Sydney; the rental for this accommodation is paid out of her pension.
The de facto husband, aged 66 years, is retired and has no earning capacity.
The de facto husband has a number of serious medical conditions including Type 2 diabetes and other medical conditions. His medical expenses are paid by Medicare. There should be no adjustment under section 90SF(3) of the Act for his future medical treatment.
The de facto wife sought no adjustment under section 90SF(3) of the Act.
The Court will now deal with the de facto wife’s contended addback issue, pursuant to section 90SF(3)(r) of the Act. Again, she contended that there was unaccounted proceeds of sale from the sale of the U Street, Town K property in the sum of $555,441.
In relation to this addback issue, the following legal principles are relevant.
In AJO & GRO (2005) 33 Fam LR 134 the Full Court of the Family Court of Australia stated:
[30]To date, three clear categories of cases have emerged where the court has determined that it is appropriate to notionally add back to the pool of assets, that is, assets that no longer exist. They are:
(a)Where the parties have expended money on legal fees. In In the Marriage of DJM and JLM (1998) 23 Fam LR 396 ; (1998) FLC 92-816 ; [1998] FamCA 97 the Full Court said at [11.6]
[11.6] For reasons set out in Farnell, s 117 provides that each party to proceedings under the Family Law Act shall bear their own costs unless the Court otherwise orders. Failing to add back monies expended by parties on costs frequently has the effect of defeating the policy of s 117 by permitting the pool of available assets for distribution between the parties to be diminished by any monies that either of the parties have managed to spend on their costs up to the date of trial. We are of the view that the normal approach ought be to add costs already paid back into the pool. Whilst there may be cases where that approach is inappropriate, the reasons why it is not taken ought normally be spelt out.
(b)Where there has been a premature distribution of matrimonial assets. In In the Marriage of Townsend (1994) 18 Fam LR 505 ; (1995) FLC 92-569 Nicholson CJ as he then was with whom Fogarty and Jordan JJ agreed, said at Fam LR 509 ; FLC 81,654:
In my view, what occurred in this case, as I said during the course of argument was, in fact, a premature distribution of a proportion of the matrimonial assets. What the husband did was to distribute to himself an asset in which the wife had a legitimate interest. In such circumstances I consider that it would be unjust in the extreme to simply treat such conduct by the husband as a matter to which regard should be had under section 75(2). It seems to me that the husband has had the benefit of that money. Had he retained, for example, the taxi licence instead of selling it, that would have been brought into account as an item of property which would have been dealt with in the same way as the remaining items of property in this case. Accordingly, I am of the view that the correct way in which to deal with the husband’s receipt of those moneys is to bring them into the pool of assets on a notional basis and make a distribution accordingly.
(c)In the circumstances outlined by Baker J in In the Marriage of Kowaliw (1981) 7 Fam LN N13 ; (1981) FLC 91-092 at FLC 76,644:
As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a)where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b)where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para (a) and (b) above having economic consequences is clearly in my view relevant under s 75(2)(o) to applications for settlement of property instituted under the provisions of s 79.
…
[39]Her Honour seems to be saying that the mere fact that a party has expended money realised from the disposition of assets that existed as at the date of separation, will result in that expenditure being added back “in the usual way” as a premature distribution of assets with nothing more. If that is what her Honour is saying, in our view, she is being unduly simplistic. In our opinion, it was a necessary requirement for her Honour to examine and make some assessment of the reasonableness or otherwise of the expenditure.
In Bevan v Bevan (2013) 49 Fam LR 387 at [79] the Full Court stated:
[79]We observe that “notional property”, which is sometimes “added back” to a list of assets to account for the unilateral disposal of assets, is unlikely to constitute “property of the parties to the marriage or either of them”, and thus is not amenable to alteration under s 79. It is important to deal with such disposals carefully, recognising the assets no longer exist, but that the disposal of them forms part of the history of the marriage – and potentially an important part. As the question does not arise here, we need say nothing more on this topic, save to note that s 79(4) and in particular s 75(2)(o) gives ample scope to ensure a just and equitable outcome when dealing with the unilateral disposal of property.
In this context, the Court will also deal with the de facto wife’s contention that the de facto husband has failed to make full and frank disclosure. As to the parties’ duty to make full and frank disclosure see Black & Kellner (1992) 15 Fam LR 343, and Part 6.1 (especially rule 6.06) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth). In In the Marriage of SW and WH Weir (1992) 16 Fam LR 154 the Full Court of the Family Court of Australia had, inter alia, stated at page 158:
…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.
On 4 June 2020 the de facto husband had told the Court (Registrar Z) that he had used the money from the sale of the U Street, Town K property to purchase the R Street, Town Q property and build a granny flat, on living expenses and on gambling. He told the de facto wife at this time that these living expenses related to his time in Country V and he had also spent money from the sale of the U Street, Town K property on medical bills.
On 4 June 2020, the Registrar ordered, by consent, inter alia, that within 28 days the de facto husband provide an account, including documents to verify, how he has disbursed the proceeds of sale (of the U Street, Town K property) and noted that the de facto husband may subpoena documents to comply with this Order. On 4 June 2020, the de facto husband was legally represented and his solicitors continued to act for him until about 2 February 2023.
Despite the above Order on 4 June 2020 for specific financial disclosure by the de facto husband as to how he had disbursed the proceeds of sale of the U Street, Town K property, and despite being legally represented from at least this date up until 2 February 2023, the de facto husband, prior to the final hearing commencing, failed to provide to the de facto wife, through her solicitors, full and frank disclosure, in a timely fashion.
In the de facto husband’s affidavit filed 22 October 2020, the de facto husband states that he purchased the R Street, Town Q property with some of the proceeds of sale of the U Street, Town K property and the balance he put in the bank. He refers to engaging carers for himself following ill-health after the parties’ separation. He refers travelling to Country V with his new wife in early March 2020 but then getting stuck in Country V by reason of the COVID-19 pandemic. He refers to ill-health in Country V. And being hospitalised and incurring significant hospital bills. He refers to using a lot of “my money on medical expenses”.
At the final hearing, consistent with the de facto wife’s affidavit filed 18 November 2022 including annexed historical bank records of the de facto husband, the de facto wife contended that the de facto husband received a total amount of $919,442 in sale proceeds from the sale of the U Street, Town K property and after the property at R Street, Town Q had been purchased; he had received $853,600 from “e-conveyance settlement” on 21 November 2019 and $65,842 from AB Real Estate the next day with such monies entering his bank account ending #...42. The Court accepts those contentions and make findings accordingly.
The Court finds that of this sum of $919,442, ultimately the total sum of $344,001 was placed into the trust accounts of the parties’ solicitors.
The Court also finds as follows from the de facto husband’s bank records and evidence:
(a)Between 23 November 2019 and 29 February 2020, the de facto husband, from bank account ending #...42 was regularly making ATM withdrawals of $1,000 each, a cash withdrawal of $20,000 was made on 2 December 2020, foreign telegraphic transfers of $5,000 each were made on three occasions, and with other foreign telegraphic transfers made for lesser sums during such period. Cash withdrawals of $5,000 each were made on at least two occasions during this period;
(b)Between 20 March 2020 and 3 July 2020, from account ending #...42, various withdrawals in Country V appear in account ending #...42 in sums slightly in excess of about $1,000;
(c)On 25 November 2019 the de facto husband transferred $600,000 from his account ending #...42 to his bank account ending #...60;
(d)Then between 25 May 2020 and 1 June 2020 the de facto husband made six separate transfers of $100,000 each back to his account ending #...42;
(e)Between 25 May 2020 and 3 June 2020 the de facto husband transferred $500,000 overseas through ten separate transfers of $50,000 from account ending #...42 (with the Court observing that the bank statement entry for each transfer refers to “Internet overseas TT”).
At the final hearing, the de facto husband tendered in evidence, Exhibit B, a typed document that he prepared containing 33 different descriptions (items 1–33 in Exhibit B) of separate sums of money ($494,200 in total) that he asserted were spent by him in dissipation of the balance of proceeds of sale of the U Street, Town K property (being the balance of proceeds of sale after the purchase of the property at R Street, Town Q).
In addition to this sum of $494,200, the de facto husband stated that the following sums of money were also spent by him from the proceeds of sale of the U Street, Town K property: stamp duty on the purchase of the R Street, Town Q property, about $24,500; agent’s commission on the sale of the U Street, Town K property, about $31,440 (2.1 per cent of $1,640,000); legal fees of $2,800 relating to the sale of the U Street, Town K property; and legal fees relating to these property proceedings between $30,000–40,000 (the Court observes that these legal fees are not specifically referred to in Exhibit B). The Court finds that it is likely that such sums were expended by the de facto husband from the proceeds of sale of the U Street, Town K property. The sums of money for stamp duty, agent’s commission, and legal fees of $2,800, being sums totalling $58,740 should be found to have been reasonably spent by the de facto husband and relating to the sale of the U Street, Town K property and purchase of the R Street, Town Q property.
Turning then to Exhibit B (referring to items 1–33) and the de facto husband’s oral evidence and contentions relating thereto, the Court makes the following findings:
(a)From the sale proceeds of the U Street, Town K property the R Street, Town Q property was purchased in the sum of $655,000, and after payment of $58,740 relating to the expenses associated with such sale and purchase, the de facto husband received $919,442 in late November 2019;
(b)From the sum of $919,442, the total trust monies of $344,001 presently exist; the difference between these two sums is an amount of $575,441, however the Court observes that the claimed addback of the de facto wife is the lesser sum of $555,441 (see paragraph 148 of the de facto wife’s trial affidavit and her case outline referring to the claimed addback which both refer to a sum of $555,441). This sum of $555,441 was the amount that the de facto husband was confronted with in these property proceedings as an amount that he had allegedly failed to account for from the proceeds of sale of the U Street, Town K property, not the higher amount of $575,441;
(c)Item 2 – Hospital bill in Country V, 18 days, $60,000: the de facto husband stated that the majority of his hospital receipts were left in Country V. The de facto husband annexes to his affidavit filed 22 October 2020 some hospital bills totalling about 72,015 Country V, which sum translates to about AUD3,024. The hospital bill for AC Hospital for just one overnight admission (from 3 October 2020 to 4 October 2020) was 27,615 which converts to about AUD1,160. The annexed hospital bills appear to relate to only about four days of hospital treatment, again totalling about AUD3,024. The Court accepts that the de facto husband spent 18 days in total in Country V hospitals. Adding a further 14 days of hospital expenses at $1,160 per day one arrives at $16,240. The Court finds that the de facto husband’s reasonable hospital expenditure in Country V (18 days) was $19,264 ($3,024 + $16,240);
(d)Item 3 – Tractor, water pump and machinery in Country V, $145,000: the de facto husband stated that he had purchased such goods for his new wife and such goods presently exist on her mother’s farm in Country V and such money was reflected in his bank account ending #...42 at page 45 of the de facto wife’s trial affidavit. The Court accepts that about this sum of money was spent on such goods in Country V, however such expenditure should be found to constitute a premature distribution of assets arising out of the parties de facto relationship by the de facto husband, and which should be taken into account by the court under section 90SF(3)(r) in favour of the de facto wife as discussed below;
(e)Items 4, 19, 20, 22, 24, 25, 33, are found by the Court to represent reasonable expenditure by the de facto husband relating to his living related expenses post separation;
(f)Items 1, 5, 6, 7, 8, 9, 10, 16, 17, 18, 21, are found by the Court to represent reasonable expenditure by the de facto husband relating to various repair and other expenditures for the R Street, Town Q property after its purchase;
(g)Items 28, 29, 30, 32, are found by the Court to represent reasonable expenditure by the de facto husband relating to the purchase of various items of equipment likely purchased to enable him to earn income as a licensed dealer in the buying and selling of such goods and/or to maintain the R Street, Town Q property, with the Court accepting that items 28 and 29 were stolen with the de facto husband having no insurance;
(h)Item 31 – Money in safe stolen from the R Street, Town Q property, $30,000: the Court accepts the de facto husband’s evidence in relation to this item, in particular that such monies were placed in the safe before the de facto husband travelled to Country V (the de facto husband originally only intending to travel to Country V for about two weeks), that such monies were intended for the purchase of a shed to be put on the property at R Street, Town Q, and that such monies were stolen;
(i)As to items 13 (Visa for de facto husband’s new wife: $18,000), item 14 (money to support de facto husband’s new wife: $20,000), item 15 (Visa agent for de facto husband’s new wife: $2000); items 26 and 27 (wedding and party and wedding ring for de facto husband’s new wife: $10,500); item 23 (transfer money from Country V to Sydney: $20,000 being unexplained expenditure by de facto husband): such expenditures should be found to constitute premature distributions of assets arising out of the parties’ de facto relationship (such assets being monies arising from the sale of the U Street, Town K property which property arose out of the parties’ de facto relationship) by the de facto husband, and which should be taken into account by the Court under 90SF(3)(r) in favour of the de facto wife as discussed below.
From the above, the Court finds that from the proceeds of sale of the U Street, Town K property, again representing property of the parties arising out of their de facto relationship, the following sums referred to in Exhibit B should be found to constitute premature distributions of assets arising out of the parties’ de facto relationship (such assets being monies arising from the sale of the U Street, Town K property which property arose out of the parties’ de facto relationship) by the de facto husband, and which should be taken into account by the Court under section 90SF(3)(r) in favour of the de facto wife as discussed below:
·Item 2 – Excessive claim for Country V hospital bills: $40,736 ($60,000 – $19,264);
·Item 3 – Goods in Country V: $145,000;
·Item 13 – Visa for de facto husband’s new wife: $18,000;
·Item 14 – Money to support de facto husband’s new wife: $20,000;
·Item 15 – Visa agent for the de facto husband’s new wife: $2,000;
·Item 23 – Transfer money from Country V to Sydney: $20,000;
·Items 26–27 – Wedding, party and wedding ring for the de facto husband’s new wife: total $10,500;
With the above sums totalling $256,236.
In addition to the above sum of $256,236, the Court finds that the de facto husband spent between $30,000–$40,000 on legal fees related to these property proceedings from the proceeds of sale of the U Street, Town K property and which should be taken into account by the court under section 90SF(3)(r) in favour of the de facto wife as discussed below; doing the best it can, the Court will adopt a mid-point figure of $35,000.
Accordingly, the total figure is $291,236 ($256,236 + $35,000).
As to this sum of $291,236, and noting the Court’s previous contributions finding of equality between the parties, the de facto husband should be found to have effectively deprived the de facto wife of half of this sum of $291,236, calculated to be the sum of $145,618, by way of his premature distributions totalling $291,236.
The Court has taken into account, in making the above findings, that the de facto husband, prior to the commencement of the final hearing and after 4 June 2020, failed to provide full and frank financial disclosure in a timely fashion relating to his significant expenditures from the proceeds of sale of the U Street, Town K property. In this context, the Court has also taken into account that certain relevant bank records of the de facto husband formed part of the evidence before the Court at the final hearing, that the de facto husband himself produced documentary evidence, albeit limited, relating to his expenditure from the proceeds of sale of the U Street, Town K property, that certain documentary records (for example, hospital invoices and receipts, and documents relating to purchase of equipment) may only exist in Country V, that numerous expenditures in Exhibit B were likely cash transactions, and for certain expenditures in Exhibit B (for example, food) one would not reasonably expect the de facto husband to retain documentary records.
The Court makes no allowance in favour of the de facto wife for the de facto husband’s gambling expenditure (stated to the Court on 4 June 2020) there being no suggestion in the evidence that the de facto husband could have obtained documentary evidence relating thereto, there is no evidence as to quantum in this regard, and the de facto husband’s oral evidence including cross examination was silent on this issue.
The Court is not satisfied on the balance of probabilities that the de facto husband has an interest in any property in Country AD of any significant value. The de facto wife’s evidence in this context was not persuasive with the Court observing that the de facto husband’s oral evidence including cross examination was silent on this issue.
Whilst the de facto husband did not provide any disclosure relating to rental income he may have received from the granny flat at the R Street, Town Q property after separation, the de facto wife’s evidence in this regard suggests that the de facto husband post separation at certain times was advertising for a carer who could reside in the flat rent free.
The Court is not persuaded, on the balance of probabilities, that the parties’ daughter Ms A Polmear, in the presence of the de facto wife, took a valuable Coin from the de facto husband’s safe which the de facto husband alleges had a value of $30,000, or that the de facto wife has had the benefit of such coin. The de facto husband’s initial allegation in this regard, in paragraph 54 of his affidavit filed 22 October 2020, states that Ms A Polmear opened the safe, with the de facto wife present, and took everything from it, including the Coin, apart from two rings. He fails to state whether or not he was physically present when Ms A Polmear took the Coin from the safe. One might reasonably ask, if the de facto husband was so present, why he allowed Ms A Polmear to take the Coin away. Or one might reasonably ask, if the de facto husband was not so present, what is the source of his alleged knowledge that Ms A Polmear did so take such Coin away. In the de facto husband’s later affidavit filed 17 February 21, paragraph 48, he vaguely states that, “To the best of my recollection the site was last opened by Ms A Polmear.” The Court observes that there is no valuation evidence adduced by the de facto husband in relation to the Coin’s alleged value of $30,000. The Court also observes, in this context, that the de facto husband made a deliberate decision at the final hearing not cross-examine the wife or Ms A Polmear.
The Court, doing the best it can, and taking into account the above matters, determines that there should be an adjustment in favour of the de facto wife of five per cent. Thus the adjusted contributions finding is 55 per cent to the de facto wife and 45 per cent to the de facto husband. With the net property pool being $1,475,381, such adjusted contributions finding results in the de facto wife receiving $811,459 and the de facto husband $663,921 representing a difference of $147,538.
JUSTICE AND EQUITY
Pursuant to the Court’s adjusted contribution assessment, the de facto husband should be left with assets representing, in value, 45 per cent of the net assets, being $663,921 (45 per cent of $1,475,381).
The de facto wife will be entitled to 55 per cent of the net assets, a sum of $811,459 (55 per cent of $1,475,381).
In view of the Court’s adjusted contribution findings, and the parties’ entitlements referred to above, noting that the de facto husband has no earning capacity and could not therefore service repayments on a significant mortgage loan to pay out the de facto wife’s entitlements arising from these property proceedings, and the husband not having adduced any persuasive evidence that he could otherwise raise sufficient monies to pay out the de facto wife’s entitlements, the property at R Street, Town Q will probably have to be sold. Nevertheless, the court will afford the husband an opportunity to retain this property.
Should the de facto husband retain:
(a)The R Street, Town Q property: $1,050,000;
(b)The R Street, Town Q property chattels: $79,380;
Totalling $1,129,380,
And the wife retain:(a)The trust monies: $344,001;
(b)Her car: $2,000;
totalling $346,001,
then he will need to pay the wife the sum of $465,458 ($811,459 less $346,001). The husband should be given 6 weeks to pay this sum to the wife, failing which the R Street, Town Q property should be sold.The Court now turns to what should occur if the R Street, Town Q property is sold.
Should the de facto wife retain:
(a)55 per cent of the trust monies: $189,200;
(b)Her car: $2,000;
Totalling $191,200,
then the de facto wife will need to receive cash of $620,259 (being $811,459 less $191,200). Such cash can be paid to the de facto wife from the net proceeds of sale of the R Street, Town Q property. The de facto wife presently has Housing Commission accommodation.Should the de facto husband retain:
(a)45 percent of the trust monies: $154,800;
(b)The R Street, Town Q property chattels: $79,380;
leaving him with net assets of $234,180,
then the de facto husband will need to receive cash of $429,741 (being $663,921 less $234,180). Such cash can be paid from the net sale proceeds of the R Street, Town Q property. In these circumstances, the de facto husband will retain cash totalling $584,541, the R Street, Town Q property chattels of $79,380 (which he can retain or sell) and with which he could invest and rent accommodation or possibly utilise towards the purchase of a modest residence.The Court is of the view that its proposed property adjustment orders will represent a just and equitable property settlement between the parties.
The Court makes Orders accordingly.
I certify that the preceding eighty-nine (89) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Newbrun. Associate:
Dated: 23 February 2023
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