Ledford and Chatham and Anor

[2018] FCCA 1515

FEDERAL CIRCUIT COURT OF AUSTRALIA

LEDFORD & CHATHAM & ANOR [2018] FCCA 1515

Catchwords:
FAMILY LAW – Application for property adjustment orders – adverse credibility findings against applicant – parties to retain property in their respective possession, power or control – application dismissed.

Legislation:

Family Law Act 1975, s.79(4)

Applicant: MS LEDFORD

First Respondent: MR CHATHAM

Second Respondent: MR OBLEY

File Number: BRC 10054 of 2015

Judgment of: Judge Egan

Hearing date: 15 February 2018

Date of Last Submission: 15 February 2018

Delivered at: Brisbane

Delivered on: 15 February 2018

REPRESENTATION

Applicant: Self represented

Counsel for the First Respondent: Ms Cullen

Solicitors for the First Respondent:	Jurgensen Horne Lawyers
Second Respondent:	Self represented

ORDERS

1. That the Application be dismissed.

2. That the Applicant retain in her possession, to the exclusion of the First and Second Respondent, the following:

   (a)The Motor Vehicle owned by her;

   (b)The furniture in her possession

   (c)Her superannuation with Super Fund

3. That all parties respectively retain absolutely all property as is presently in their power, possession or control as at the date of these Orders, such property to include their monies in bank accounts and their respective Superannuation assets.

IT IS NOTED that publication of this judgment under the pseudonym Ledford & Chatham & Anor is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT BRISBANE

BRC 10054 of 2015

MS LEDFORD

Applicant

And

MR CHATHAM

First Respondent

MR OBLEY

Second Respondent

REASONS FOR JUDGMENT

1. I have before me an Initiating Application filed on behalf of Ms Ledford on 16 October 2015. Annexure A to that Initiating Application records the final Orders sought by her in her Application for property adjustment orders.

2. Paragraph 1 of the Application seeks an Order that she retain in her possession, to the exclusion of the First Respondent, various specified property, and I see no reason why an Order ought not to be made in that regard.

3. Paragraph 2 of the Orders sought relates to a claim that she is entitled to an apportionment of superannuation benefit entitlement in the amount of eighty-two thousand dollars $82,000, which is about half the amount of superannuation benefit entitlement accumulated by the First Respondent before the withdrawal by him of the amount of one hundred and forty-seven thousand dollars $147,000.00 as set out in paragraph 55 of his affidavit filed 1 February 2018.

4. Annexure C-04 to that affidavit is a superannuation statement of Super Fund for the period 1 July 2016 – 30 June 2017 which records that on 14 February 2017 the First Respondent withdrew, or had withdrawn from his account, the sum of one hundred and forty-seven thousand two hundred and fifty-five dollars and ninety-one cents $147,255.91. The balance as at 30 June 2017 was recorded as being in the amount of nine thousand and ninety dollars and twenty-six cents ($9,090.26).

5. The third substantive Order sought was a declaration that the de facto husband and Mr Obley hold the property situated at Property A, in the State of Queensland, more fully described as Lot in the County of, Title Reference, on a constructive or resulting trust as to two thirds to both the de facto husband and de facto wife, and as to one third to Mr Obley.

6. Additionally, the Applicant sought an Order that the de facto husband and the de facto wife do all things necessary to sell the property owned by the de facto husband jointly with Mr Obley at a reasonable market value on terms to be agreed, or on the basis that two thirds of the net proceeds of sale be paid to the de facto husband and the de facto wife as part of the property pool in accordance with any Orders of the Court.

7. The next Order sought was that all other matrimonial assets be sold, but that such matrimonial assets were not to include:

   a)The First Respondent’s half interest with the Second Respondent in a property situated at Property C; or

   b)A farm situated at (country omitted) in (country omitted)

8. Turning first to the Orders sought in relation to the Property A property, the Application recorded in paragraph 6 of the Initiating Application is, on its face, deficient, because it seeks an Order that the First Respondent and Applicant do all things necessary to sell the property owned by the First Respondent and Second Respondent but it does not seek an Order that the Second Respondent join in such sale. On its face, therefore, the Application is deficient and cannot be the subject of an enforceable and practical Order.

9. Secondly, the evidence is that the property situated at Property A, is jointly owned by the First Respondent and the Second Respondent, and that such property is held in a joint tenancy. It was said that the relationship between the First Respondent and Second Respondent is one which resembles that of a father and son. During the course of the trial, the Applicant conceded that she did not wish to make a claim against the Second Respondent and that she wanted any claim against Mr Obley, the Second Respondent, discontinued.

10. In doing so, by necessity, she has also, in respect of the Property A property, indicated that she has no intention of proceeding against the First Respondent in respect of such property due to the fact of the joint tenancy. There cannot, therefore, be a claim against the First Respondent in circumstances where the claim by the Applicant for a sale of the relevant property has been foregone against the other joint tenant. Such claim has been extinguished. In all of the circumstances, therefore, I cannot make Orders in respect of the Property A property as part of my determinations and I will not do so.

11. There is a claim that the First Respondent’s interest in a property situated at Property C should be included in the matrimonial pool of assets. Again, because of the joint tenancy reality, and because the Applicant has abandoned her claims against the Second Respondent, I am unable to make any determinations or property adjustment orders in respect of the property situated at Property C, and I will not do so.

12. During the course of the trial, I had the benefit of observing each of the Applicant, the First Respondent and the Second Respondent whilst they gave evidence and were cross examined. The trial was somewhat convoluted in its progression mainly due to the fact that there was little evidence confirming allegations of financial transactions alleged to have given rise to inferences able to be drawn by me in arriving at a decision. In particular, I found it difficult to make findings on certain facts which could have been ascertained easily by the subpoenaing of documents. Such facts could have been established if subpoenas had been issued. I would have thought that in circumstances where a request for disclosure of relevant documentation is made of a self-represented litigant but not forthcoming, that it is insufficient for lawyers on the record to merely point to the fact that the request was made before proceeding to trial as an explanation for the absence of documentary evidence at trial.  It is incumbent upon them to subpoena such relevant documents from whatever source such that the full financial picture is able to be painted at trial.

13. Nevertheless, what is clear from the evidence is that the relevant parties commenced their relationship in 2006 or 2007, and that they separated in 2014; a period of approximately eight (8) years. During the period of cohabitation, the Applicant and First Respondent largely kept their finances separate, apart from one year when joint accounts were used to pay bills and meet commitments.

14. The Applicant brought into the relationship a property which she then owned and which she continues to own. The First Respondent brought into the relationship a property which he then owned and which he still owns. During the course of the relationship, the Applicant was a (occupation omitted). She conducted a business, had a rent roll and managed properties. During the relationship, there were approximately ten (10) properties bought as part of a property purchase and sale business carried on by the Applicant and the First Respondent. The net effect of the carrying on of that business, at the end of the day, was that a loss was sustained. The business involved the acquisition, renovation, renting and on-sale of properties.

15. It became apparent during the course of evidence, that during the period of cohabitation, the First Respondent left all of the accounting to the Applicant who, I find, asserted that she was the best person to manage the financial affairs of both of them. In the end, I find that neither party has any assets of value arising out of the cohabitation. What I do find, however, is that the Applicant, through her control of accounts, has been able to keep financial details of the affairs of each of herself, the First Respondent, and the Second Respondent from being fully appreciated or known of by the First Respondent and the Second Respondent. In particular, there are some examples which I must refer to.

16. Annexure C-01 to the affidavit of Mr Chatham, the First Respondent filed on 8 February 2018, is a series of documents relating to a credit card obtained from Bank L subject to the making of a credit card application to that financier on 21 May 2007. That application was signed by the First Respondent, and it was recorded on such document that the Applicant was to be an additional cardholder and user. The Applicant’s signature appears on page two (2) of the credit card application.

17. Of interest is the fact that the First Respondent was to be responsible for the payment of fees incurred from the use of the card, and his address was given as the relevant residential address at which he lived. But the postal address for correspondence on the application was recorded as being PO Box Suburb A, which is a PO Box owned by the Applicant, and to which without doubt, the lender and credit provider sent regular statements. The First Respondent gave evidence to the effect that he did not know that he had a credit card issued in his name by Bank L, and I accept his evidence in that regard.

18. During the course of cross examination, the Applicant stated that the First Respondent was not well versed in matters of finance and that she used to get him to sign documents in the nature of finance applications which were filled out by him. I find that the filling out of the Bank L lending document was done in circumstances where the First Respondent did not fully appreciate the effect of what he was signing. Nor did he know, until he was contacted by an assignee of the creditor, of the existence of the credit card debt, or the amount owing on the card, or as to his liability to pay for the amount owing on the card.

19. At some stage, the postal address recorded on the original Bank L lending application form must have been changed to PO Box Suburb B. I asked the Applicant whether she was the owner of such PO Box and she said that she was, and I quote:

    “Yes, that’s for my business”

20. Annexure C-03 and annexure C-04 are Bank K statements which record that on 4 April 2012, a credit withdrawal was made from the credit card account in favour of the Applicant’s business (Team Ms Ledford Business) in the amount of seven thousand seven hundred and sixty-six dollars and eighty-three cents ($7,766.83). The Applicant admitted that she had made that withdrawal. That withdrawal, and some other smaller credit withdrawals, culminated in a company called Company D contacting the First Respondent in about February 2017 concerning the repayment of a debt in respect of that credit card in the amount of approximately fifteen thousand dollars ($15,000).

21. The increase in the debit balance owing as at 27 July 2012 of nine thousand seven hundred and ten dollars and fifty cents ($9,710.50) as disclosed in annexure C-04 as opposed to the debit balance of fifteen thousand dollars ($15,000) as at February 2017 is easily explicable on the basis of continuing accrual of default interest. That was a fact which the Applicant must have been known would occur, by reason of the fact that correspondence was being sent to her at PO Box at the Suburb B post office in respect of such account. To the extent that First Respondent has made out allegations that the Applicant opened that account and used such account without his knowledge, I accept that allegation

22. The next matter of interest is that the Applicant admitted that she owes the Second Respondent a sum of forty-three thousand dollars ($43,000.00) She sought to explain away the fact that she owed such admitted amount based upon the Second Respondent being in possession of some machinery, but I find that it is likely that the Applicant used her position of friendship with the Second Respondent in order to obtain such loan which has not been repaid. It is pertinent to note, in that regard, that the Applicant is currently an undischarged bankrupt, having voluntarily agreed to enter into bankruptcy in 2016. The recovery of such loan monies by the Second Respondent is therefore beyond his capability, particularly in circumstances where the Applicant has no assets against which he might levy.

23. A further matter of interest is that in relation to a proposed purchase of a property recommended to the Second Respondent by the Applicant, the Applicant convinced the Second Respondent to pay to her the sum of one hundred and thirty thousand dollars ($130,000.00) from his Superannuation fund. Though initially to be used by the Applicant to purchase another property, that property sale did not proceed, and the monies were retained by the Applicant. I find that the Applicant, without excuse, has so retained those monies for her own benefit, and that she has improperly profited thereby.

24. Another matter of concern arising out of the evidence before me today is the fact that in or about 2010 the Applicant convinced the Second Respondent to draw up, in her favour, a power of attorney document, whereby she was the donee of the Second Respondent’s powers. It is relevant that such power of attorney was entered into at that time because in or about 2011 a property situated at Property B was sold. That property was owned by Mr Obley. The letter from Company A to Company B dated 31 May 2011 records that the net proceeds of sale were in the amount of approximately four hundred thousand dollars ($400,000), particularly when one takes into account the payment of a deposit cheque of about forty thousand dollars ($40,000) received by real estate agents in respect of that sale. The records show that from the proceeds of sale there were two (2) bank cheques issued in favour of a company called Company C Pty Ltd, the first for one hundred and seventy thousand nine hundred and fifty-seven dollars and thirty-eight cents ($170.957.38), and the second for seventy-nine thousand one hundred and thirty-nine dollars and eighty-seven cents ($79,139.87); a total sum of approx. two hundred and fifty thousand dollars ($250,000). There was another cheque issued in favour of the Second Respondent (which the Second Respondent admits as having been received and banked by him), but in respect of the balance two hundred and fifty thousand dollars ($250,000.00), I accept the evidence of Mr Obley and the First Respondent to the effect that not until some forensic accounting had been undertaken did either he or the First Respondent know of the existence of Company C Pty Ltd, or the fact that approximately two hundred and fifty thousand dollars ($250,000) had been paid to that company.

25. What is of relevance though, is that in relation to correspondence sent to the Directors of Company C Pty Ltd on 6 June 2006 by a business called Company A, such correspondence was sent to PO Box Suburb A. When questioned in cross examination as to who the owner of such PO Box was, the Applicant admitted she was the owner. I find that the Applicant misappropriated, for her own benefit, the sum of approx. two hundred and fifty thousand dollars ($250,000) arising out of the sale of the Property B property, and that such misappropriation was without the knowledge or consent of the First Respondent or Second Respondent.

26. During the course of cross examination, the Applicant was cross examined about the question of financial contributions allegedly made by her as set out in paragraph 4 of her affidavit filed by leave today. In the second last dot point on page 5 of that affidavit, the Applicant swore that income received by her from rental commissions was not sufficient to cover her quarterly expenses, let alone her yearly expenses. She was cross examined by Counsel for the First Respondent who took her to task about that statement in the light of her ongoing use of monies obtained from the rental of jointly acquired properties, as well as in relation to the finances of the First Respondent and the Applicant generally. I found the Applicant’s evidence when so cross examined to be particularly evasive and unconvincing, and I do not believe her accounts as set out in her affidavit, either in that paragraph or generally.

27. The Applicant was unable to establish that she had made contributions of any substance toward the jointly acquired asset pool of the Applicant and the First Respondent during the period of their cohabitation. I am unconvinced by the Applicant’s evidence in that regard, and I find that the Applicant’s attempts to justify the making of some payments were untruthful. Indeed, Annexure H, pages 1 – 4 inclusive of her affidavit filed by leave today, purport to illustrate examples of how rental payments of allegedly jointly owned properties were in fact made.

28. But in fact, the statements attached only indicate that in respect of three (3) different properties, minor sums over monthly periods were made in respect of six (6) properties. No attempt was made to provide a chronologically ordered monthly account of what payments were in fact made. Such conduct is, again, consistent with falsification of evidence which I generally find the Applicant has participated in.

29. It is true that the First Respondent, during the period of cohabitation, would have had paid into his superannuation fund, the compulsory superannuation levies payable in respect of his employment. However, there is no evidence as to how much superannuation was in fact paid during the period of cohabitation. The First Respondent is saddled with responsibilities relating to the credit card debt earlier referred to by me, and he has indicated that he will meet that responsibility.

30. There is an uncertainty in my mind as to whether further such liabilities might also exist for him. I am satisfied that during the course of cohabitation, the Applicant spent monies largely without the knowledge of the First Respondent, and that it is most likely that she secreted funds away for her future benefit such is the lack of credibility I have found to exist in relation to her evidence generally.

31. The Applicant has remarried. As for the matters to which I must have regard when making an Order for property adjustment pursuant to the provisions of section 79(4) of the Family Law Act 1975 (Cth). I say as follows:

    a)I consider that the parties to the relationship each contributed directly and indirectly to the acquisition and improvement of properties purchased by them. However, I find that the Applicant was, due to her financial control of the properties, and the First Respondent’s reliance upon her to provide good advice in relation to the management and sale of such properties, largely responsible for the asset pool being in a negative situation;

    d)I consider that each of the Applicant and the First Respondent are able to continue to earn income into the future. The First Respondent is a (employment omitted) worker and is capable of ongoing employment. However, the vicissitudes of life are such that he may suffer an injury in the course of employment and be permanently disabled and unable to earn income in the future. Such a predicament is unlikely to befall the Applicant.

1. At the commencement of the trial the Applicant advised that she had been given leave by her trustee in bankruptcy to proceed with her Application for property settlement by way of court action. I have no reason to doubt that that is the case, but the reality is that if any Order was to be made in her favour, it is likely that parties other than the Applicant would benefit thereby, and even then, only to a small extent.

2. For all of the above reasons, and primarily because of the fact that I find there is a negative asset pool in terms of value, I dismiss the Application of the Applicant, save, as I indicated earlier, in respect of paragraph 1 of her Application.

3. An adjunct to the making of the Order in paragraph 1 is that there ought to also be an Order that the First Respondent retain in his possession, to the exclusion of the Applicant, all property presently in his possession.

I certify that the preceding thirty-four (34) paragraphs are a true copy of the reasons for judgment of Judge Egan

Date: 30 July 2018