KOVACIC & WALSWORTH
[2020] FCCA 1912
•16 July 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| KOVACIC & WALSWORTH | [2020] FCCA 1912 |
| Catchwords: FAMILY LAW – Property orders – de facto relationship – application to proceed undefended given respondent’s non-compliance – respondent’s failure to participate in proceedings – response dismissed – application to proceed undefended granted – final orders – just and equitable. |
| Legislation: Family Law Act 1975 (Cth), ss.44, 90SF, 90SM, 90ST, 117 Federal Circuit Court Rules 2001 (Cth), rr.13.03A, 13.03B, 15.31, 16.05 |
| Cases cited: Chancellor & McCoy [2016] FamCAFC 256 Stanford & Stanford (2012) FLC 93-518 Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 Mundy & Bowman (1997) FLC 92-784 Prantage & Prantage [2013] FamCAFC 105 Penfold & Penfold (1980) 144 CLR 311 Latoudis & Casey (1990) 170 CLR 534 |
| Applicant: | MR KOVACIC |
| Respondent: | MS WALSWORTH |
| File Number: | DGC 3277 of 2018 |
| Judgment of: | Judge O'Sullivan |
| Hearing date: | 3 June 2020 |
| Date of Last Submission: | 3 June 2020 |
| Delivered at: | Dandenong |
| Delivered on: | 16 July 2020 |
REPRESENTATION
| Counsel for the Applicant: | Mr Lovering |
| Solicitors for the Applicant: | Macpherson Kelley Pty Ltd |
| Respondent: | No appearance |
ORDERS
That within 60 days, the respondent pay to the applicant by way of alteration of property interest the sum of $140,000.00.
That the respondent pay the costs of the applicant fixed in the amount of $3,120.00.
That in the event that the respondent fails to comply with the terms of Orders 1 and 2, the parties do all things necessary including executing all documents necessary to list for sale and sell the property situate at and known as B Street, Suburb C, Victoria by auction at the earliest possible date at a price to be agreed on between the parties and failing such agreement at a price to be determined by the President of the Real Estate Institute of Victoria (or any successor of it) or his/her nominee and to disburse the proceeds of the said sale in the following manner and priority:
(a)payment of agent's commission and advertising expenses and legal expenses of the sale.
(b)payment of costs incurred, if any, in relation to determination of value or selling price by the President of the Real Estate Institute of Victoria or his/her nominee.
(c)the balance then remaining to be divided as to:
(i)the amount owing pursuant to Orders 1 and 2 plus interest calculated in accordance with the Family Law Rules to the applicant; and
(ii)the remainder to the respondent.
That the parties shall do all acts and things necessary and give all consents and execute all documents and writings to give effect to these Orders in the time periods prescribed.
That 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 the Court be appointed pursuant to Section 106A of the Family Law Act1975 (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.
Unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these or any subsequent orders:
(a)each party be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the possession of such party as at the date of these orders;
(b)each party forego any claims they may have to any superannuation benefits belonging to or earned by the other;
(c)insurance policies remain the sole property of the named beneficiary;
(d)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled to pursuant to these orders;
(e)any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
The applicant to serve the respondent with a copy of these orders within 14 days from today at her last known residential address.
All extant applications be otherwise dismissed.
AND THE COURT NOTES:
A. Rule 16.05 of the Federal Circuit Rules 2001.
B.Orders were made on 3 June 2020 dismissing the response filed on 10 December 2018 and the applicant was granted leave to proceed undefended with the application for property settlement pursuant to Rules 13.03A(2)(a)(b)(ii)(vii) and 13.03B(2)(d) of the Federal Circuit Court Rules 2001.
IT IS NOTED that publication of this judgment under the pseudonym Kovacic & Walsworth is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT DANDENONG |
DGC 3277 of 2018
| MR KOVACIC |
Applicant
And
| MS WALSWORTH |
Respondent
REASONS FOR JUDGMENT
Introduction
These reasons concern the orders to be made following an undefended hearing for property settlement under the Family Law Act 1975 (Cth) (“the Act”) on 3 June 2020.
Mr Kovacic (“the applicant”) commenced these proceedings in 2018. The applicant named Ms Walsworth (“the respondent”) his former de facto partner as the other party to the proceedings.
Initially both parties were represented. However, following orders being made over twelve months ago, on 20 June 2019 by consent, when both parties were represented (which extended time for the applicant to bring proceedings) the respondent has been unrepresented, not complied with orders made by the Court, not participated properly in the proceedings and repeatedly abjured the opportunity to do so.
The hearing on 3 June 2020 had been fixed for some time. Orders had been made on 20 November 2019 setting the matter down for hearing and making orders and directions for that purpose.
Before the Court are affidavits making clear that the respondent had been served with those orders and had notice of the hearing. The respondent did not participate in the conciliation conference or at the mention in Court on 14 February 2020 and had not filed an application to set aside the orders of 20 November 2019.
Also before the Court are affidavits making clear that the respondent had been served with orders made on 14 February 2020 which maintained the hearing date and reserved the applicant’s costs. The respondent had not filed an application to set aside those orders either.
In the lead up to the hearing fixed for 3 June 2020 (and because of the restrictions imposed on the operations of the Court because of State and Commonwealth Government health directions as a result of COVID-19) the matter was mentioned by telephone. A notice of listing for the telephone mention was sent electronically (via email) to the parties. The respondent did not appear at the telephone mention. However, a number of inappropriate emails had been sent from the respondent’s email addresses in the lead up to that mention and nowhere in that correspondence was there any request for an adjournment. Just one example of those emails should suffice to illustrate that point. There was an email (sent from one email address (Ms Walsworth) that read as follows:
“PLEASE READ AND ACT!! Notice of Common Law Court Declaration, Served on the following, 30th April 2020: Australia - Scott Morrison -Prime Minister; Western Australia - Mark McGowan - Premier; Northern Territory - Michael Gunner -Chief Minister; South Australia - Steven Marshall - Premier; Queensland - Annastacia Palas - Premier; New South Wales - Gladys Berejiklian - Premier; Victoria - Daniel Andrews - Premier; Tasmania - Peter Gutwein - Premier.
Once you register yourself as a living being with the Common Law Court you can serve this on ANY public servant (Judge, magistrate, registrar, police officer etc etc) by post or personal email, or to their place of business, and, if they do not challenge it within 30 days, IT IS BINDING”Given the matters referred to above at the telephone mention , and as the Court was satisfied the respondent had notice of the telephone mention, the following orders were made on 19 May 2020:
“1. The matter remains listed on 3 June 2020 commencing from 10:00am as provided for in the orders of 20 November 2019, which will proceed by telephone.
2. Pursuant to Rule 6.14 and 6.15 of the Federal Circuit Court Rules 2001 (“the Rules”), personal service of these orders on the respondent be dispensed with and the applicant’s solicitor is permitted to serve a copy of these orders forthwith on the respondent, by email, at....
3. On the adjourned date, the Court will consider whether, pursuant to Rule 13.03A(2)(a)(b)(iii)(vii), 13.03B(2)(d) and 13.03C(1)(e) of the Rules, the response filed 10 December 2018 should be dismissed and the applicant be granted leave to proceed with the application for final orders.
Subject to orders 2 and 3 above, on the adjourned date, the applicant will seek liberty to apply for the following final orders:“1. That the Applicant be granted leave to proceed on an undefended basis.
2. That within 14 days, the Respondent pay to the Applicant by way of alteration of property interest the sum of $140,000.00.
3. That the Respondent pay the costs of the Applicant consisting of the following:3.1 Costs previously fixed by the Court in the sum of $3,120.00; and
3.2 Costs on an indemnity basis since the Conciliation Conference on 14 February 2020 in the sum of $7,700.00.4. That in the event that the Respondent fails to comply with the terms of Orders 2 and 3, the parties do all things necessary including executing all documents necessary to list for sale and sell the property situate at and known as B Street, Suburb C, VIC by auction at the earliest possible date at a price to be agreed on between the parties and failing such agreement at a price to be determined by the President of the Real Estate Institute of Victoria (or any successor of it) or his/her nominee and to disburse the proceeds of the said sale in the following manner and priority:
4.1 Payment of agent's commission and advertising expenses and legal expenses of the sale.
4.2 Payment of costs incurred, if any, in relation to determination of value or selling price by the President of the Real Estate Institute of Victoria or his/her nominee.
4.3 The balance then remaining to be divided as to:4.3.1 The amount owing pursuant to Orders 2 and 3 plus interest calculated in accordance with the Family Law Rules to the Applicant; and
4.3.2 The remainder to the Respondent.5. That the parties shall do all acts and things necessary and give all consents and execute all documents and writings to give effect to these Orders in the time periods prescribed.
6. That 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 the Court be appointed pursuant to Section 106A of the Family Law Act 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.
7. Unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these or any subsequent orders:7.1 each party be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the possession of such party as at the date of these orders;
7.2 each party forego any claims they may have to any superannuation benefits belonging to or earned by the other;
7.3 insurance policies remain the sole property of the named beneficiary;
7.4 each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled to pursuant to these orders;
7.5 any joint tenancy of the parties in any real or personal estate is hereby expressly severed.”AND THE COURT NOTES THAT:
A. The respondent has not filed any application for an adjournment or an application for an order pursuant to Rule 16.05 of the Rules.
B. The decision of Buljubasic & Buljubasic [1999] FamCA 474 regarding the scanned certificate dated 19 November 2019 and the decision in Malak & Malak [2016] FamCAFC 114 regarding Rule 16.05.
C. The emails sent:
Tuesday, 19 May 2020 at 9:59am from Ms Walsworth
Monday, 18 May 2020 at 1:34pm from...; and
Monday, 4 May 2020 at 5:01pm from ...
…”When the matter returned to Court on 3 June 2020 the respondent had not complied with the orders for final hearing, she had not filed an application for an adjournment, and she had not filed an application to set aside any of the orders previously made.
However, the emails sent by the respondent whilst bizarre, certainly indicated her knowledge of the proceedings and also the orders made by the Court and those sought by the applicant.
Counsel for the applicant put before the Court an affidavit from his instructor evidencing the respondent had been served (and in accordance) with the orders of 19 May 2020.
When the matter was called on for hearing Mr Lovering of Counsel appeared on behalf of the applicant. When an appearance by or on behalf of the respondent was called for the following exchange occurred:
“HIS HONOUR: Is there an appearance for the respondent, Ms Walsworth?
OTHER PARTY: I’m actually the principal of the Walsworth.
HIS HONOUR: I beg your pardon.
OTHER PARTY: I’m the principal of the Walsworth.
HIS HONOUR: Is your name ‑ ‑ ‑
OTHER PARTY: I’m actually living under – will be under the living being of the Walsworth. So my name is actually Ms Walsworth.
HIS HONOUR: All right. Is your name Ms Walsworth?
OTHER PARTY: No. My name is Ms Walsworth.
HIS HONOUR: Is your name Ms Walsworth and your address is B Street, Suburb C?
OTHER PARTY: No. My name is Ms Walsworth.
….
HIS HONOUR: ‑ ‑ ‑ are you Ms Walsworth?
OTHER PARTY: My name is Ms Walsworth.
HIS HONOUR: Are ‑ ‑ ‑
OTHER PARTY: And I’m a living being ‑ ‑ ‑
HIS HONOUR: ‑ ‑ ‑ you Ms Walsworth‑ ‑ ‑
OTHER PARTY: under the common law courts.
HIS HONOUR: ‑ ‑ ‑ Walsworth who lives at B Street, Suburb C?
OTHER PARTY: I am Ms Walsworth and I live at B Street, Suburb C.
HIS HONOUR: But you’re saying to me you’re not Ms Walsworth; is that right?
OTHER PARTY: That’s correct. I’m the principal of the Walsworth. So basically Ms Walsworth is actually over the principal – the person over Walsworth, so, yes, she can’t go any further with this…”
Given this, and as the Court was satisfied that the respondent had been served with the orders of 19 May 2020, was aware of the hearing, had not complied with the orders for same, had not responded to the applicant’s Notice to Admit Facts filed on 3 March 2020, had not filed any application to set aside the above orders, or sought to adjourn the hearing, and did not appear on 3 June 2020, orders were made pursuant to rr.13.03A(2) and 13.03B(2)(d) of the Federal Circuit Court Rules 2001 (“the Rules”) dismissing the response filed on 10 December 2018 and the applicant was given leave to proceed undefended.
This was because the respondent had failed to comply with her obligations and ignored the orders that had been made for the filing of documents. The respondent can only be taken to have chosen not to defend these proceedings and to have done so having had notice that would give rise to the risk her response may be struck out and the applicant be given leave to proceed undefended.
The Rules provide the Court with the authority to give judgment or to make any other order against the respondent. The respondent had not satisfied the applicant’s claim. The respondent had not defended the proceedings with due diligence. The respondent had not complied with an order of this Court and having regard to rr.13.03A(2)(a), 13.03A(2)(b)(ii) and (vii) the respondent was in default for the purposes of r.13.03B(2). A combination of Rules 13.03B(2)(d) and 13.03B(6) provided the Court with ample authority to give judgment or make any other order against the respondent as the Court deems is just and equitable.
The applicant pressed for the Court to determine his application for property settlement. Non participation in a proceeding may represent (to some at least) a means of impeding the determination of an application. When one party fails to appear in a proceeding the Court may order an undefended hearing. However, it does not follow that the orders sought by the only remaining participating party will be made.
It is therefore timely to turn to the consideration of what these orders were (which the respondent had notice of) as the applicant (who had complied with Court orders) was entitled to have his application determined. Before doing so it is necessary to summarise the factual background.
Background
The applicant was born in 1961 and is now 59 years old. The respondent was born in 1969 and is now 51 years old.
The parties commenced cohabitation at a property owned by the respondent in Suburb C in 2005 and separated in May 2016. There were no children of the relationship.
During the course of the relationship both parties worked in a business owned by the respondent (“E”). After the parties separated the applicant moved to live with his father (elsewhere in Suburb C) and established his own business (“D”).
Material relied on
Counsel for the applicant confirmed his client relied on the following material:
(a)Notice to Admit Facts filed on 3 March 2020;
(b)amended application filed on 1 August 2019;
(c)affidavit of applicant filed on 6 May 2020;
(d)outline of case filed on 29 May 2020; and
(e)minute of orders as set out at paragraph 4 of the orders of 19 May 2020.
After making brief submissions the Court reserved its decision. Given the respondent failed to comply with Court orders, and that in the face of respondent’s defaults, the applicant was given leave to proceed undefended, the applicant’s material is unchallenged and his evidence will be approached on that basis.
Legal Principles
These proceedings are governed by the provisions of Part VIIIAB of the Act. Section 90SM of the Act relevantly provides:
“Alteration of property interests
(1) In property settlement proceedings after the breakdown of a de facto relationship, the court may make such order as it considers appropriate:
(a) in the case of proceedings with respect to the property of the parties to the de facto relationship or either of them--altering the interests of the parties to the de facto relationship in the property; or
(b) in the case of proceedings with respect to the vested bankruptcy property in relation to a bankrupt party to the de facto relationship--altering the interests of the bankruptcy trustee in the vested bankruptcy property;
including:
(c) an order for a settlement of property in substitution for any interest in the property; and
(d) an order requiring:(i) either or both of the parties to the de facto relationship; or
(ii) the relevant bankruptcy trustee (if any);
to make, for the benefit of either or both of the parties to the de facto relationship or a child of the de facto relationship, such settlement or transfer of property as the court determines.Note 1: The geographical requirement in section 90SK must be satisfied.
Note 2: The court must be satisfied of at least one of the matters in section 90SB.
Note 3: For child of a de facto relationship , see section 90RB.
(2) If a party to the de facto relationship dies after the breakdown of the de facto relationship, an order made under subsection (1) in property settlement proceedings may be enforced on behalf of, or against, as the case may be, the estate of the deceased party.
(3) The court must not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
(4) In considering what order (if any) should be made under this section in property settlement proceedings, the court must take into account:(a) the financial contribution made directly or indirectly by or on behalf of a party to the de facto relationship, or a child of the de facto relationship:
(i) to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them; or
(ii) otherwise in relation to any of that last-mentioned property;whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the de facto relationship or either of them; and
(b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the de facto relationship, or a child of the de facto relationship:(i) to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them; or
(ii) otherwise in relation to any of that last-mentioned property;whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the de facto relationship or either of them; and
(c) the contribution made by a party to the de facto relationship to the welfare of the family constituted by the parties to the de facto relationship and any children of the de facto relationship, including any contribution made in the capacity of homemaker or parent; and
(d) the effect of any proposed order upon the earning capacity of either party to the de facto relationship; and
(e) the matters referred to in subsection 90SF(3) so far as they are relevant; and
(f) any other order made under this Act affecting a party to the de facto relationship or a child of the de facto relationship; and
(g) any child support under the Child Support (Assessment) Act 1989 that a party to the de facto relationship has provided, is to provide, or might be liable to provide in the future, for a child of the de facto relationship.
Section 90SM(4) incorporates the provisions contained in s.90SF(3) of the Act, which states:
“(3) The matters to be so taken into account are:
(a) the age and state of health of each of the parties to the de facto relationship (the subject de facto relationship); and
(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c) whether either party has the care or control of a child of the de facto relationship who has not attained the age of 18 years; and
(d) commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain; and
(e) the responsibilities of either party to support any other person; and
(f) subject to subsection (4), the eligibility of either party for a pension, allowance or benefit under:
(i) any law of the Commonwealth, of a State or Territory or of another country; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party; and
(g) a standard of living that in all the circumstances is reasonable; and
(h) the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
(i) the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant; and
(j) the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k) the duration of the de facto relationship and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l) the need to protect a party who wishes to continue that party's role as a parent; and
(m) if either party is cohabiting with another person--the financial circumstances relating to the cohabitation; and
(n) the terms of any order made or proposed to be made under section 90SM in relation to:
(i) the property of the parties; or
(ii) vested bankruptcy property in relation to a bankrupt party; and
(o) the terms of any order or declaration made, or proposed to be made, under this Part in relation to:
(i) a party to the subject de facto relationship (in relation to another de facto relationship); or
(ii) a person who is a party to another de facto relationship with a party to the subject de facto relationship; or
(iii) the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv) vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(p) the terms of any order or declaration made, or proposed to be made, under Part VIII in relation to:
(i) a party to the subject de facto relationship; or
(ii) a person who is a party to a marriage with a party to the subject de facto relationship; or
(iii) the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv) vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(q) any child support under the Child Support (Assessment) Act 1989 that a party to the subject de facto relationship has provided, is to provide, or might be liable to provide in the future, for a child of the subject de facto relationship; and
(r) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(s) the terms of any Part VIIIAB financial agreement that is binding on either or both of the parties to the subject de facto relationship; and
(t) the terms of any financial agreement that is binding on a party to the subject de facto relationship.”
For present purposes, those provisions are the same as those applicable to married couples in Part VIII of the Act. The relevant case law in respect of Part VIII is equally applicable to Part VIIIAB. The decision in Chancellor & McCoy [2016] FamCAFC 256 notes the applicability of Stanford & Stanford (2012) FLC 93-518 to de facto relationship property settlements.
In considering what property settlement order (if any) to make in the present case, I intend to apply the following approach:
(a)firstly, identify and value the assets, liabilities and financial resources of the parties;
(b)secondly, consider whether it is “just and equitable” to make a property settlement order;[1]
(c)if so, then the third step will be to identify and assess the respective contributions made by each of the parties towards the net assets pursuant to s.90SM(4)(a), s.90SM(4)(b) and s.90SM(4)(c);
(d)the fourth step will be to identify and assess what might be called the “future factors” (as relevant) contained in s.90SF(3), which are brought into consideration by operation of s.90SM(4)(e). I will also identify and assess the relevant matters set out in s.90SM(4)(d), (f) & (g) so far as is relevant. Having done so, I will then determine what (if any) adjustment ought to be made to each party’s respective contributions-based entitlement. In carrying out this step I will be mindful not only of percentages (which are often convenient to the Court) but also the underlying dollar figures that are involved (which are the practical consequence to the parties);
(e)finally, I will consider the effect of the findings and proposed orders so as to satisfy myself that any proposed property settlement order is “just and equitable”.[2]
[1] Stanford & Stanford (2012) FLC 93-518
[2] The pathway I am adopting is primarily based upon that endorsed by the Full Court in Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143, adapted by me to take into account the High Court’s decision in Stanford (supra).
Before proceeding further, I record that the respondent has failed to properly participate in these proceedings and has not made proper disclosure as to her financial circumstances. Therefore, I propose not to be unduly cautious about making findings in favour of the applicant.
De Facto Relationship
The Court is satisfied that the applicant and the respondent commenced a relationship in 2005 and their relationship subsisted as a genuine de facto relationship having regard to the definition under the Act from 2005 until May 2016 and that their relationship has come to an end.
Given this, and the orders made on 19 May 2020, I am satisfied that the Court has jurisdiction to determine the application for final orders.
Identifying and valuing the assets, liabilities and financial resources
The Rules in Division 15.5 provide a formal process whereby facts and the content of documents can be the subject of admissions as to their truth by a party to proceedings. On 3 March 2020, the solicitors for the applicant filed a Notice to Admit Facts pursuant to r.15.31 of the Rules.
Rule 15.31 provides as follows:
“15.31 Notice to admit facts or documents
(1) A party to a proceeding (the first party ) may, by notice in accordance with the approved form, ask another party to admit, for the proceeding, the facts or documents specified in the notice.
(2) If the other party does not, within 14 days, serve a notice on the first party disputing the fact or the authenticity of the document, the other party is taken to admit, for the proceeding only, the fact or the authenticity of the document.
(3) The other party may, with the Court's leave, withdraw an admission taken to have been made under subrule (2).
(4) Unless the Court otherwise orders, if the other party serves a notice disputing a fact or the authenticity of a document and the fact or the authenticity of the document is later proved in the proceeding, the party must pay the costs of the proof.”
There has been no notice filed disputing the facts contained in the Notice to Admit Facts. Accordingly, and by operation of those provisions of the Rules, and the evidence upon which the applicant relies, the assets and liabilities of the parties are:
Assets Value ($) B Street, Suburb C, Vic $365,000 respondent's bank accounts $193,336 respondent's Bartercard $10,143 respondent's term deposit $109,302 respondent's Motor Vehicle 1 $5,000 respondent's F Shares $1,204 applicant’s bank accounts $4,256 applicant’s Motor Vehicle 2 $1,000 applicant’s Motor Vehicle 3 $3,000 respondent’s G Super Fund $53,470 applicant’s H Super Fund $76,516 Total assets $822,227 Liabilities Value ($) respondent’s credit cards $4,078 applicant’s credit cards $51,544 applicant’s business creditors $8,000 Total liabilities $63,622 TOTAL NET ASSETS: $758,605
Whether it is just and equitable to make a property settlement order
The decision in Stanford & Stanford[3] emphasises the importance of making findings that any order is just and equitable for the purposes of s.90SM(4), independent of the s.90SF(3) process. If the just and equitable consideration was treated as a threshold issue in this case the parties have, by their actions (separation, and re-ordering of their financial lives since then), and claims (divergent claims about their property under s.90SM of the Act), indicated that they themselves consider it just and equitable that some order be made under s.90SM adjusting their property interests as presently held.
[3] (2012) FLC 93-518
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 and the continuation of the current legal ownership of the property would not afford them justice and equity.
Contributions
Identifying and assessing the respective contribution of the parties
In considering what orders (if any) should be made adjusting property interests under s.90SM the Court takes into account the financial contributions, direct and indirect made by or on behalf of a party to the relationship. In that context, financial contributions include the acquisition, conservatism or improvement of such property.
At the commencement of cohabitation the applicant did not have any significant assets or liabilities and had only $33,000 in superannuation. The applicant had worked as a labourer. In contrast to the applicant, the evidence is that the respondent had the B Street, Suburb C property and the business. The evidence is that the respondent had, shortly before the parties’ commenced cohabitation, established her “E” business.
The applicant’s evidence is that during the course of the relationship, by their joint endeavours the parties accumulated significant cash savings. The applicant’s evidence is that he worked, without receiving any “payments”, in the respondent’s business. The applicant’s evidence was this was in contrast to the respondent’s dog who (the applicant said) received pay cheques.
The applicant’s evidence is that he made significant non-financial contributions to the B Street, Suburb C property by undertaking renovations including building a pergola, laying pavers at the end of the decking, building a picket fence at the front of the property, tiling, installing new kitchen cabinets and purchasing air conditioning and lawn sprinkler systems.
The applicant’s case accepts that he did not make any direct cash contributions to the B Street, Suburb C property but he should be deemed to have made some contribution to it by having made a myriad of other financial and non-financial contributions during the course of the parties’ relationship.
After the parties separated, the applicant’s evidence is that the cash savings that were accumulated during the relationship “decreased”. The applicant’s evidence is that the respondent “retained” those (cash savings). The applicant’s evidence is that on the basis of what documents he had been able to get from the respondent by way of disclosure (before she ceased to participate in the proceedings) the respondent had withdrawn $50,000 from those savings in early 2019. The applicant’s evidence is that he was forced to draw down on his superannuation about “$66,000 for business supplies, solicitors fees and to assist a former girlfriend”.
Counsel for the applicant submitted that his client’s evidence acknowledged the B Street, Suburb C property was brought into the relationship by the respondent, but her business was in its “infancy” and his client’s evidence was that he worked in it (did not get paid for doing so) as a joint endeavour with the respondent.
Counsel for the applicant referred to his client’s evidence regarding the respondent’s control of the parties joint finances during the relationship and his client had also made substantial non financial contributions to the B Street, Suburb C property.
Identifying and assessing the relevant factors pursuant to s.90SF(3)
The parties are of relatively similar age. The applicant’s evidence is that his health is poor and he has caring responsibilities for his father, and whilst the respondent ‘may’ be taking medication for bi polar disorder, the applicant’s evidence did not suggest she otherwise had any health issues.
The parties are both capable of obtaining employment and given their skill levels, and that they each operate a business, the evidence does not suggest there is likely to be a significant disparity in income (even allowing for the applicant’s claims regarding the impact on his business as a result of COVID-19).
The assessment of s.90SF(3) matters is difficult because the respondent has not taken part in the proceedings. However, one of the things that can follow is that she has other assets or has a better income earning capacity than she is willing to put before and share with the Court. The applicant is in limited financial circumstances and does not own any real property.
Justice and equity of proposed order
By s.90ST the Court is obliged as far as is practicable to make orders so as to achieve the object of finally determining the financial relations of the parties and avoiding further proceedings between them.
Counsel for the applicant by reference to his client’s material noted, given the evidence before the Court of his client’s contributions and future needs and having regard to the length of the relationship, it was notable that his client was only seeking orders equivalent to “20% of the pool” as established by the Notice to Admit Facts.
Putting to one side the superannuation interests (which are modest but not widely disparate) if the Court were to make no adjustment as a result of the above considerations it would not be just and equitable.
In this matter, the majority of the contributions have been made by the respondent and whilst on the material it is possible to say the parties’ future needs are finely balanced it would not be just and equitable for the respondent’s contributions to be ignored and (whilst somewhat artificial to both in terms of percentages) they do warrant an adjustment.
The applicant does not wish to sell up the respondent’s property, but argues that after a relationship of over a decade where he made significant contributions, a payment to him would effect a just and equitable settlement. A payment by the respondent to the applicant in the amount sought would result (absent bringing into account the liabilities and keeping the superannuation separate) in a division roughly in accordance with Counsel’s calculations.
The applicant’s Counsel sought the orders which were referred to in paragraph 4 of the orders of 19 May 2020. In substance the applicant is seeking the same adjustment that the respondent is on notice of, and I am satisfied that it is just and equitable to make the orders and to make the orders in those terms.
The respondent will have the opportunity to make a monetary payment to the applicant and retain the home which is in her sole name.
On the basis of the evidence before the Court, there is no reason to find that the respondent is not in a position to increase the mortgage on the former matrimonial home in an effort to buy the applicant out. Whilst the applicant sought the respondent do that and pay him within 14 days because it was submitted there was a risk she might deplete the property available, I am prepared to allow 60 days to do so.
Subject to what follows, if she fails to make that payment within 60 days, then the orders provide for the home to be sold and for the applicant to be paid the amount of $140,000.00.
The applicant concedes that there is very little more that the Court can do than leave each party with their existing superannuation as it would not be appropriate to try and guess beyond the evidence before the Court what the respondent’s superannuation might be.
Otherwise, orders will be made that the parties retain that which is in their possession, including their superannuation, and this will otherwise see the end of the matter.
Costs
The applicant sought an order for costs (including costs previously fixed and reserved on 20 November 2019 and 14 February 2020). The applicant also sought an order (on an indemnity basis) for the costs since the conciliation conference on 14 February 2020. However, there are no “exceptional circumstances” in the sense referred to in the authorities[4] and the only costs reserved were as set out above.
[4] See Mundy & Bowman (1997) FLC 92-784 and Prantage & Prantage [2013] FamCAFC 105.
The normal rule in proceedings under the Act is that each party pay their own costs pursuant to s.117(1). Section 117(2) of the Act provides that in an appropriate case the Court may make an order for costs against one or other parties, notwithstanding the general rule in s.117(1) if there are circumstances that justify it in doing so. Section 117(2A) of the Act sets out the factors to which the Court shall have regard to when considering whether there are justifying circumstances for an order for costs.
The authorities make it clear it is for the Court to consider, having regard to the matters in s.117(2A), whether to exercise the discretion to make an order and that any order for costs is compensatory.[5]
[5] See Penfold & Penfold (1980) 144 CLR 311 and Latoudis & Casey (1990) 170 CLR 534.
Having considered each of the provisions of s.117(2A) leads to the conclusion that those factors most relevant in this matter are those set out in s.117(2A)(a), (c) and (d). Having regard to each of those matters, I am satisfied the presumption set out in s.117(1) of the Act, that each party pay their own costs, is displaced, and there should be an order for costs in favour of the applicant but not in the amount sought and for $3,120.00 only.
Conclusion
As to the specific orders, for the reasons set out above those will be the orders sought by the applicant save where indicated in these reasons, along with an order for the applicant to forward a copy of the orders made today to the respondent’s last known residential address.
There will also be the usual notation under rule 16.05(2)(a) of the Federal Circuit Court Rules 2001 that the Court may vary or set aside a judgment or order made in the absence of a party.
I certify that the preceding sixty two (62) paragraphs are a true copy of the reasons for judgment of Judge O'Sullivan
Associate:
Date: 16 July 2020
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