FEDERAL CIRCUIT COURT OF AUSTRALIA
| LECLAIR & ABEL | [2018] FCCA 2068 |
| Catchwords: FAMILY LAW – Property adjustment – very long relationship – questions of negligent non-disclosure by the Husband in compliance with Rules of Court that require full and frank [and ongoing] disclosure – Wife has significant health issues – Husband has re-partnered – use by parties of inheritance to their now adult children issue of who pays back this sum and how it should be done – Husband’s case to some degree focussed on how Wife’s orders sought if granted would result in her receiving less under her disability support pension – Husband has secured very well paid job – both parties submit “contributions” during the relationship should be considered to be “equal” – just and equitable considerations. |
| Legislation: Family Law Act 1975, ss.74, 75(2) Federal Circuit Court Rules 2001, rr.23.03, 23.04 |
| Cases cited: Chang v Su (2002) 170 FLR 244, (2002) 29 Fam LR 406 Dickons v Dickons (2014) 50 Fam LR 244 In the Marriage of Hickey (2003) 30 Fam LR 355 Marsh & Marsh (2014) FLC ¶93-576 In the Marriage of Tate (2000) 26 Fam LR 731 |
| Applicant: | MS LECLAIR |
| Respondent: | MR ABEL |
| File Number: | CAC 492 of 2016 |
| Judgment of: | Judge Neville |
| Hearing date: | 7 August 2017 |
| Date of Last Submission: | 19 December 2017 |
| Delivered at: | Canberra |
| Delivered on: | 3 August 2018 |
REPRESENTATION
| Counsel for the Applicant: | Mr G Stagg |
| Solicitors for the Applicant: | Watts McCray Lawyers (Canberra) |
| Solicitors for the Respondent: | Farrar Gesini Dunn (Canberra) |
ON A FINAL BASIS, THE COURT ORDERS THAT:
The Husband shall forthwith do all such things and sign .all such documents as are necessary to authorise Farrar Gesini Dunn to cause the sum of $125,984.28 held in their Trust Account to be paid to the solicitors for the Wife.
The Husband shall forthwith do all such things and sign all such documents as are necessary to authorise Eden Legal to cause the sum of $85,755.20 held in their Trust Account to be paid to the solicitors for the Husband.
Upon compliance with Orders 1 and 2 hereof, the Wife shall be solely responsible for, and indemnify the Husband with respect to, the repayment of the sum of $110,334.00 being the inheritance money owed to the children of the parties.
The Husband shall forthwith give all consents and sign all documents and do all things necessary to close his account held with Super Fund P and cause the whole proceeds (being $256,622.02 as at 24 July 2018) and any further interest held therein to be paid to the Wife AND pending such payment the Husband:
(a)shall hold the funds held in Super Fund P on trust for the Wife pending compliance with this Order,
(b)is restrained from withdrawing any funds from the Super Fund P account except for the purposes of compliance with this Order.
In accordance with section…
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- Leclair and Abel [2018] FCCA 2068
- Case
- [2018] FCCA 2068
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CaseChat Overview and Summary
This matter came before Judge Neville concerning financial orders sought by the Wife against the Husband. The dispute centred on the division of property and financial resources, with the Wife alleging significant non-disclosure and dissipation of assets by the Husband following their separation. The Wife contended that the Husband had received substantial sums, exceeding $631,000 in redundancy and superannuation payments, as well as wages and other income, between July 2015 and July 2017, to which she had received comparatively minimal financial support.
The court was required to determine several key legal issues. Firstly, it needed to assess the Husband's disclosure of financial receipts and transactions, particularly in light of the Wife's submissions that he had failed to disclose numerous financial dealings to his advantage, some of which reduced the available pool of assets for distribution. Secondly, the court had to consider the parties' respective contributions to the marriage, including the Husband's greater financial contributions from income and the Wife's contributions as a homemaker and mother, as well as the impact of inheritances received by the Wife. Thirdly, the court was tasked with evaluating the relevance of various section 75(2) factors, including the Wife's significant disability and inability to work, and the Husband's capacity to earn income. Finally, the court had to determine how to address the Husband's expenditure of significant funds for his sole benefit, considering principles of just and equitable distribution and the potential for adjustments under section 75(2)(o) of the *Family Law Act 1975* (Cth).
In reaching its decision, the court considered the Wife's submissions regarding the Husband's financial conduct, noting that where the Husband's evidence conflicted with the Wife's, the court would likely favour the Wife's evidence. The court acknowledged the principle established in *Chang v Su* that where deliberate non-disclosure occurs, the court's imperative is to make a just and equitable order, and in such circumstances, it should not be unduly cautious in favouring the innocent party. The court also had regard to the disparity in funds expended by the parties, drawing parallels with *Grier & Malphas*, and the need to address this disparity, either through "addbacks" or by reference to section 75(2)(o). The court was to consider that the Husband's use of funds for his sole benefit deprived the Wife of property to which she was entitled, requiring expression in some form within the final orders. The court was to consider all circumstances to make appropriate orders in accordance with the Applicant Wife's Amended Case Outline.
The court was required to determine several key legal issues. Firstly, it needed to assess the Husband's disclosure of financial receipts and transactions, particularly in light of the Wife's submissions that he had failed to disclose numerous financial dealings to his advantage, some of which reduced the available pool of assets for distribution. Secondly, the court had to consider the parties' respective contributions to the marriage, including the Husband's greater financial contributions from income and the Wife's contributions as a homemaker and mother, as well as the impact of inheritances received by the Wife. Thirdly, the court was tasked with evaluating the relevance of various section 75(2) factors, including the Wife's significant disability and inability to work, and the Husband's capacity to earn income. Finally, the court had to determine how to address the Husband's expenditure of significant funds for his sole benefit, considering principles of just and equitable distribution and the potential for adjustments under section 75(2)(o) of the *Family Law Act 1975* (Cth).
In reaching its decision, the court considered the Wife's submissions regarding the Husband's financial conduct, noting that where the Husband's evidence conflicted with the Wife's, the court would likely favour the Wife's evidence. The court acknowledged the principle established in *Chang v Su* that where deliberate non-disclosure occurs, the court's imperative is to make a just and equitable order, and in such circumstances, it should not be unduly cautious in favouring the innocent party. The court also had regard to the disparity in funds expended by the parties, drawing parallels with *Grier & Malphas*, and the need to address this disparity, either through "addbacks" or by reference to section 75(2)(o). The court was to consider that the Husband's use of funds for his sole benefit deprived the Wife of property to which she was entitled, requiring expression in some form within the final orders. The court was to consider all circumstances to make appropriate orders in accordance with the Applicant Wife's Amended Case Outline.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
The Wife’s Written Submissions, filed 5th September 2017, were as follows (footnotes omitted):Disclosure/Evidence/Credibility1) Between July 2015 and July 2017 the Husband received the sum of at least $631,016 not including wages and pension payments. This sum consists of redundancy payments, lump sum superannuation payments, selling Motor Vehicle 2 motor vehicle and increasing the mortgage on the Property A property above that necessary to fund purchase of the property. 2) Additionally the Husband received in excess of $150,000 in Super Fund Q pension payments and approximately $130,000 (employed since Jan/Feb 16) in wages over this period. He also currently salary sacrifices a leased motor vehicle thus reducing his taxable income from wages further.3) On the Husband’s own evidence during this time the Wife received a total of approximately $35,000 from the Husband by way of fortnightly payments and $28,000 from the sale of the Property B property ($4,000 of which she then loaned back to the Husband and which remains largely unrepaid). The amount the wife has received from the Husband represents less than 8% of what he received and largely expended to his personal benefit during the relevant time.4) The Joint Document Re Disclosure shows the husband failed to disclose to the wife a number of financial receipts and transactions to his advantage, and as recently as a month before the final hearing. Significantly, a number of the transactions reduced the existing pool available for distribution. 5) Additionally, Rule 24.03 of the Federal Circuit Court Rules requires disclosure to the Court by way of financial statement or affidavit of financial circumstances inter alia income for all sources, other financial resources, and any gifts or other property distribution made by a party since separation. The husband’s evidence, albeit disputed by the wife, was that separation occurred in January 2015. None of the “Amount’s Received” described in the Joint Document Re Disclosure are contained in any affidavit material from the Husband with the exception of the $33 000 received from the sale of the Property B property and some Super Fund P payments in his affidavit of 1 August 2017. It is submitted that the evidence of the husband filed in the proceedings created an inaccurate and misleading indication as to property received by and resources available to the husband from July 2015.6) In evidence and under cross-examination the Husband ascribed applying monies from multiple sources to the same renovations of the Property A home, including but not limited to:a) Monies drawn down from Super Fund R ($80,000 ascribed but actually total of $100,000 drawn down) – on 14 October 2015. b) $35,000 additional drawn down from Super Fund Rc) Proportion of $45,000 drawn down from Super Fund P on 18 December 2015.d) $50,000 additional funds borrowed at time of the Property A property purchase on 11 September 2015.7) By affidavit dated 1 August 2017 Husband asserted that he accessed a total of $68,391 from Super Fund P with an asserted breakdown of how it was spent. Under cross-examination and through subpoenaed material he acknowledged withdrawing a total of $95,000 from Super Fund P of which only $45 000 had been previously disclosed. 8) It is submitted that where the husband’s evidence is in conflict with that of the wife, the court would prefer the evidence of the wife. For someone who was employed as a high level (occupation omitted), his professed lack of knowledge concerning financial matters was difficult to accept. It is submitted that the court would appropriately find that the Husband’s evidence as to disclosure and what happened to the monies he received post July 2015 was at best unconvincing and at worst deliberately evasive. 9) The Full Court has approved the principle (Chang v Su [2002] FamCA 156; (2002) FLC 93-117) that where there is deliberate non-disclosure, the only imperative that the Court can fall back upon is that the order must be just and equitable. In such circumstances the court should not be unduly cautious about making findings in favour of the innocent party. It may well be appropriate to err on the side of generosity. It is submitted the court would appropriately apply such principle in the circumstances of this matter.The Husband’s Proposal10) The husband’s proposes firstly that the wife receive the monies currently in Super Fund P which he asserts, without documentary support, is $263,721 as at July 2017. The amount in Super Fund P has already been reduced by some $95,000 (the majority of which was not disclosed) and applied solely to the Husband’s benefit, including as recently as 28 June 2017. The husband’s proposal sees him receive the entirety of Property A including the entirety of the funds he applied (whatever that amount may be), from the $631,013+ he received in lump sum payments since July 2015. This is manifestly inequitable.11) The Husband proposes secondly that the wife receive no superannuation splitting but instead the husband will provide her with a proportion of what he receives from his Super Fund Q pension. He argues that this proposal will provide the wife with greater weekly payments than a superannuation splitting order. It however does not account for three important factors:a) If the husband predeceases the wife the superannuation payments will not survive and will in all likelihood go to his current partner, thus depriving the wife of any periodic pension payments; b) If the wife predeceases the husband he will take the full benefit of superannuation from that time, depriving the wife from any testamentary decisions for possible eligible children upon her death; andc) Such an arrangement would be at odds with the Court’s duty under section 81 of the Act to end financial relations between the parties.Contributions12) It is accepted that the Husband made the greater financial contribution from income during the relationship. The wife made greater contributions as mother and homemaker. The Full Court has recently stated:It is not a party’s “skill set” which must be considered, but their contributions. Contributions are the product of many things: talent, industry, selflessness and, indeed luck, to name a few. It is the contributions (in all senses in which that expression is used in s 79) that fall for consideration and assessment, not the combination of factors that has created the capacity for the making of those contributions. It is submitted contributions during the relationship were equal.13) The wife received the sum of $82,000 inheritance from her father’s estate which was applies to family expenses. A further $113,334 was inherited held on trust for the children. The husband suggests that this was applied to the mortgage. Even if this is unlimitedly repaid to the children, the benefit of monies has gone directly to husband by way of applying the majority of the Property B sale proceeds to the Property A property. The husband also borrowed $110,000 from the mortgage above that needed for purchase of the Property A property. It is submitted that an adjustment in favour of the wife for third party contributions is appropriate and that the Husband take full responsibility for repaying the children.14) It is accepted that the husband made mortgage payments on both the Property B and Property A properties. During this period the wife was mostly renting and meeting rental payments herself. The husband’s claim to have assisted in rental payments was rejected by the wife. The husband’s claim to have made rates payments on the Property B property to benefit the wife was shown to be incorrect. He did provide some limited other support to the wife. The amount was minimal.Section 75(2) FactorsSection 75(2)(a)&(b)15) The parties agree that the wife has a significant disability . It was not disputed that she is unable to work and is unlikely to do so in the further. She is 56 years of age. The husband is 59 years of age and in good health. He has taken a redundancy but continues to be employed on a significant wage working 3 days a week. The court can appropriately find he has the capacity to earn a significant wage for the at least the next 5 to 10 years, also enabling him to rebuild his superannuation savings.16) It is submitted that adjustment of 10 to 15% in favour of the wife is appropriate on section 75(2)(a) and (b) considerations.Section 72(2)(o)17) It is submitted that there would be a significant adjustment in favour of the wife to account for the husband receiving virtually the entirety of the benefit of the $631 000+ as contained in the Joint Document Re Disclosure. These funds were all derived from the time the parties were together and should have been available for the benefit of both parties.18) In a number of regards this matter has parallels with the recent Full Court decision of Grier & Malphas where matters addressed in the joint judgement of their Honours Murphy and Kent JJ at paragraphs 128 to 131 are directly on point to this matter and in particular:128. Each of the parties used funds available to them in the approximately four years between separation and trial. Included in purposes for which the sums were used were the reasonable living expenses of each. So-called “addbacks” are the “exception and not the rule”. Further, although always of course a matter of discretion it can be said that, in the usual course of events, amounts spent on reasonable living expenses would not often be added back.129. …, However, when significant sums of money are said by one party or the other to have been “wasted” or to amount to a unilateral “premature distribution of property” and the evidence is suggestive of either or both, an analysis of the relevant sums and their use is needed. …131. … we agree with the Chief Justice that the evidence discloses a very significant disparity in the sums expended by the parties and that her Honour did not address that disparity or examine the purposes for which the money was used. We repeat that this is a matter of discretion and could have been done either by “adding back” or, as has been suggested as often preferable by decisions of the Full Court, by reference to s 75(2)(o). 19) It is submitted that it matters not whether the disbursement of the $631 000+ by the husband is considered an addback, contribution, waste or not just and equitable. The reality is that his use of the funds for his sole benefit deprived the wife of property to which she was entitled and this, to use the words of her Honour Bryant CJ “requires expression in some form, either as a matter to take into account under section 75(2)(o)”, or otherwise.20) It is submitted that in considering all the circumstances of the case the court would find the appropriate orders are in those proposed in the Applicant Wife’s Amended Case Outline.
Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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