LEPANTO & LEPANTO
[2018] FamCA 791
•4 October 2018
FAMILY COURT OF AUSTRALIA
| LEPANTO & LEPANTO | [2018] FamCA 791 |
| FAMILY LAW – PROPERTY – Undefended final hearing – Where the husband has failed to participate in proceedings – Where the husband has not made full and frank disclosure – Where the husband’s contributions to property is found to be slightly higher than the wife’s – Where the husband’s failure to disclose warrants a robust consideration by the Court of the wife’s entitlement – Where the wife is unable to obtain full time employment due to mental health – Where the wife is appointed Trustee for Sale of the matrimonial home – Where the proceeds of sale of the matrimonial home be retained by the wife. FAMILY LAW – SPOUSAL MAINTENANCE – Where the wife unable to support herself adequately by reason of her health circumstances – Where the husband has capacity to support the wife – Where appropriate that order for spousal maintenance be made for a closed period. |
| Family Law Act 1975 (Cth) ss 72, 75, 79 Family Law Rules 2004 (Cth) r 16.07 |
| Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 Bevan & Bevan [2014] FamCAFC 19 Black and Kellner (1992) FLC 92-287 Chang & Su [2002] FamCA 156 Chapman & Chapman [2014] FamCAFC 91 Jarrah & Fadel [2014] FamCAFC 14 Kannis and Kannis (2003) FLC 93-135 Mezzacappa & Mezzacappa [1987] FamCA 20 Russell & Russell (1999) FLC 92-877 Scott & Danton [2014] FamCAFC 203 Shaw & Shaw [2014] FamCAFC 146 Stanford & Stanford [2012] HCA 52 Stein & Stein [1986] FamCA 27 Tate & Tate [2000] FamCA 1040 Teal & Teal [2010] FamCAFC 120 Weir & Weir (1993) FLC 92-338 |
| APPLICANT: | Ms Lepanto |
| RESPONDENT: | Mr Lepanto |
| FILE NUMBER: | PAC | 398 | of | 2016 |
| DATE DELIVERED: | 4 October 2018 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Foster J |
| HEARING DATE: | 14 September 2018 |
REPRESENTATION
| SOLICITOR FOR THE APPLICANT: | Cheryl Orr Family Law |
| RESPONDENT – SELF-REPRESENTED LITIGANT: | No Appearance |
Orders
That the husband pay by way of spousal maintenance for the wife the sum of $500.00 per week for a period of 104 weeks from the date of these orders first payment within seven days payable to the wife or as she may otherwise direct the husband in writing.
That the wife, Ms Lepanto, is by reason of this order appointed Trustee for Sale of the real estate property situate at B Street, Suburb C being the whole of the land comprised in Folio identifier … and for such purpose the said property shall vest in the wife as trustee for sale for the purpose of the wife obtaining vacant possession thereof and selling the said property at the best price reasonably obtainable and by such method of sale as she may reasonably determine with the net proceeds of sale to be disbursed as follows:
(a)in payment of agents commission, advertising expenses and legal expenses of sale;
(b)in payment of all amounts necessary to discharge outstanding council and water rates and utilities in respect of the said property and any other adjustments as required pursuant to the usual contract for sale;
(c)in discharge of the mortgage encumbrances presently secured over the said property in favour of the National Australia Bank;
(d)in payment of the balance then remaining to the wife.
That the husband pay as they fall due and payable all council and water rates and utilities in respect of the Suburb C property and all mortgage payments including both capital and interest payments as they fall due and payable in respect of the said property and indemnify the wife in respect of any arrears of such payments as at the date of settlement of the sale of the property.
That any application for costs of and incidental to these proceedings for property adjustment be made by way of written submission with such submission to be filed and served within one month from the date of these orders and any submissions in response to be filed and served within a further 14 days thereafter and upon receipt of submissions judgment as to costs is reserved to chambers.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Lepanto & Lepanto has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT PARRAMATTA |
FILE NUMBER: PAC 398 of 2016
| Ms Lepanto |
Applicant
And
| Mr Lepanto |
Respondent
REASONS FOR JUDGMENT
In February 2016 the applicant wife commenced proceedings for final orders as to parenting and property adjustment against the husband.
On 6 November 2017 final orders as to parenting were made in relation to the parties’ child then aged seven. The orders, in summary, provided that the mother and father have equal shared parental responsibility for the child, that the child live with the father and that the child have time with the mother as agreed between the parties or in default of agreement as defined by the orders.
Outstanding property issues were listed before the Court for judicial case management on 27 February 2018 and on that date there was no appearance by or on behalf of the husband when the matter was first before the Court. He ultimately appeared before the Court in person following the luncheon adjournment. Orders and notations were relevantly then made in the following terms:
1.…
2.…
3.By consent, the husband within 14 days from this date sign all necessary documents and do all necessary things so as to register [Motor vehicle 1] in his name and that thereafter he, in the same time period, do all necessary things and sign all necessary documents to provide to the wife duly executed transfer documents as to the said motor vehicle transferring that vehicle to the wife or her nominee and concurrently with the transfer documents being provided to the wife he do all things necessary to discharge the existing motor vehicle lease facility presently encumbering the vehicle in favour of [B Finance] to the effect that the vehicle is transferred to the wife unencumbered.
4.Upon receipt of the duly executed transfer documents from the husband the wife thereafter do all things necessary to procure the transfer of the registration of that vehicle to her name or the name of her nominee.
THE COURT NOTES THAT
5.The husband’s undertaking to proceed to obtaining a grant of probate in relation to the estate of his late mother who passed away in August 2017 noting that he today informs the Court that her estate comprises of a free standing home at [C Street, Suburb D] together with some funds at bank.
6.The husband has unilaterally tenanted the former matrimonial home at [Suburb C] from 27 March 2017 at a rental of $1,500.00 per week with payments being applied to mortgage payments and/or outgoings in relation to the property and that in relation to the rental of that property no partnership returns have yet been filed by the husband and wife nor has the husband and the wife filed their 2017 personal taxation returns.
7.The husband and wife do all things necessary to instruct an agreed accountant to prepare partnership tax returns in relation to the former matrimonial home [Suburb C] with those returns to be finalised and lodged as soon as practicable.
8.The father today informs the Court that he is self-employed as a consultant retained by [E Pty Ltd] as a contractor and that income from [E Pty Ltd] apart from rental income is his only source of income.
9.Financial statements for the husband’s self-managed superannuation fund have been completed to June 2016 and that the husband will attend to complete in-audited accounts for that self-managed superannuation fund as soon as practicable and provide copies of the Fund’s financial statements to the wife’s solicitors promptly upon them being completed.
10.The former matrimonial home and the wife’s real estate interest in Melbourne have previously been valued by a single expert valuer and it is the expectation of the Court that those single expert valuations will be updated in a timely fashion prior to the trial.
IT IS FURTHER ORDERED THAT
TRIAL DIRECTIONS
PROPERTY
Amended Application/Response
1.Both parties file and serve any amended application or response and updated financial statement upon which they intend to rely by no later than Friday, 23 March 2018.
Affidavits
2.Neither party may rely on any affidavit filed previously in these proceedings without leave of the Court.
3.Each party file and serve one consolidated affidavit of their evidence in chief and one affidavit from each of the witnesses upon which they rely in support of the orders sought by them with such affidavits to be in compliance with rule 15.12 of the Family Law Rules 2004, by no later than Friday, 18 May 2018.
4.Neither party may rely on any documents filed other than in compliance with these orders without leave of the Court and in the event of non-compliance with these filing directions the Court will at its discretion either vacate the trial dates, list other matters with priority or deal with the matter on an undefended basis.
Setting Down and Hearing Fees
5.In the event of any applicable setting down and/or hearing fee not having been reduced on the basis of financial hardship, the Applicant and Respondent shall pay any such fees equally no later than the date fixed for Compliance Listing before the Registrar.
Subpoenas
6.The parties are granted leave to issue such subpoena as they consider relevant to the issues for determination before the Court with such subpoena to be returnable by no later than 7 days before the commencement of the trial.
Liberty to Re-List
7.The parties or either of them have liberty to re-list the proceedings for mention before the Court in the event of issues arising in relation to preparation for trial.
Notice to Single Expert
8.Where a party wishes to cross examine a Single Expert Report writer at the final hearing, that party shall provide written confirmation to the Single Expert writer within 14 days from the date of allocation of trial dates and in the event that no notice is given to the Single Expert writer and the Single Expert writer is unavailable the Single Expert Report will be admitted into evidence without cross examination subject only to evidentiary objection.
Joint Trial Balance Sheet
9.The Applicant provide to the Respondent no later than 28 days before the commencement of trial a draft Joint Trial Balance Sheet setting out the asset pool contended for by the Applicant including assets, liabilities and financial resources and their asserted value and the Respondent within a further 7 days shall insert into that Balance Sheet the Respondent’s contentions as to the asset pool contended for by the Respondent including assets, liabilities and financial resources and their asserted value and return the Joint Trial Balance Sheet to the Applicant no later than 7 days before the commencement of the trial.
10.In relation to any issue or dispute in the completed Joint Trial Balance Sheet the parties are to footnote their reason for their contention.
11.The Applicant is to cause the completed Joint Trial Balance Sheet to be forwarded to the Court for filing by no later than 48 hours before the commencement of the trial.
Outline of Case: Marriage
12.Each party file and serve an Outline of Case document by no later than 7 days before the commencement of trial setting out:
(a)A list of documents to be read in their case;
(b)A brief summary of argument setting out:
(i)The party’s contention as to the percentage contribution based entitlement asserted and the evidence relied on,
(ii)The party’s contention as to any s 75(2) percentage adjustment sought, the factors in s 75(2) relied on and the evidence relied on;
(iii)A draft of the order sought to give effect to the overall entitlement asserted; and
(iv)A list of authorities to be relied upon.
Objections to Evidence
13.Each party shall not less than 14 days before the commencement of the trial:
(a)Notify the other party in writing of any objection to any material in any affidavit filed by the other party;
(b)Specify the paragraph or part of the paragraph objected to; and
(c)Details the grounds of objection.
14.The other party shall reply to the objections in writing not less than 48 hours before the commencement of the trial.
15.The parties shall prior to the trial confer in relation to any objections and provide to the Court at the commencement of the trial a list setting out:
(a)The agreed deletions from each affidavit: and
(b)The objections to be argued on the hearing date and the grounds for the objections.
Costs Disclosure
16.No later than 7 day before the commencement of the trial each party shall serve on the other and file with the Court a Costs Disclosure Statement setting out:
(a)The parties costs to the date of the statement;
(b)Anticipated costs to the conclusion of the first day of the trial;
(c)Anticipated costs for each subsequent day of the trial;
(d)The total sum paid in respect of that party’s costs to date and the source of funds for such payment; and
(e)In respect to anticipated costs for the trial, the source of funds to meet those anticipated costs.
Compliance Check
17.The proceedings be listed for before a Registrar at 9.15am on Thursday, 24 May 2018 as to the parties compliance with these directions for trial and payment of the setting down and hearing fees and in the event of noncompliance to consider whether the proceedings should be referred for further judicial case management and in the event of compliance to remit the matter to the List Clerk for allocation of trial dates.
…
THE COURT NOTES THAT
11.The Court is informed today that the parties perhaps remain close in terms of a final resolution and in the event the matter can be resolved the parties are at liberty to forward final terms of settlement to the Court in chambers and in that event orders will be made by consent and the matter removed from the active pending cases list.
IT IS FURTHER ORDERED THAT
12.By consent, the husband is to pay the wife’s costs thrown away by reason of his late attendance today in the sum of $500.00 payable direct to the wife or as she may otherwise direct in writing.
On 24 May 2018 the matter was listed before a Registrar for a compliance check. The applicant wife was represented by her solicitor and there was no appearance by the respondent husband. The wife had not filed her trial affidavit nor had the husband. The Registrar directed that proceedings be adjourned to the next compliance list on 26 July 2018 and that the time for filing of affidavits be extended to 19 July 2018.
On 26 July 2018 the matter was again before the Registrar for the adjourned compliance listing. The wife was represented by her solicitor and again there was no appearance by or on behalf of the husband. The wife had filed her affidavit on 23 July 2018 and the husband had filed no material. The Registrar ordered:
a)that proceedings be listed for judicial case management 11.30 am 10 September 2018;
b)that the wife advise the husband via email of these orders and directions and the possible listing for undefended hearing on 10 September 2018.
On 10 September 2018 proceedings were before the Court. There was no appearance by or on behalf of the husband and the wife appeared with her solicitor. Orders were made as follows:
UPON NOTING THERE WAS NO APPEARANCE BY OR ON BEHALF OF THE HUSBAND IN THESE PROCEEDINGS, IT IS ORDERED THAT
1.The proceedings be adjourned for undefended hearing as to final property to 11.30am on Friday, 14 September 2018.
2.Each party file and serve an Outline of Case document by no later than Friday, 24 September 2018 setting out:
(a)A list of documents to be read in their case;
(b)A brief summary of argument setting out:
(i)The party’s contention as to the percentage contribution based entitlement asserted and the evidence relied on,
(ii)The party’s contention as to any s 75(2) percentage adjustment sought, the factors in s 75(2) relied on and the evidence relied on;
(iii)A draft of the order sought to give effect to the overall entitlement asserted; and
(iv)A list of authorities to be relied upon.
THE COURT NOTES THAT
3.The wife’s trial affidavit was filed 23 July 2018 together with an updated financial statement.
On 14 September 2018 proceedings were before the Court for undefended hearing. Again there was no appearance by or on behalf of the respondent husband. The Court was satisfied that the husband had been informed of orders made on 26 July by the Registrar and also orders made by the Court on 10 September 2018.
Procedural fairness
Rule 16.07 of the Family Law Rules 2004 (Cth) (“the Rules”) relevantly provides:
Parties' participation
(1) Each party to an application set down for hearing on the first day before the Judge must attend in person and, if legally represented, with their legal representatives.
Note: The court may dispense with compliance with a rule (see rule 1.12).
(2) If a party does not attend on the first day before the Judge, the other party may seek the orders sought in that party's application by, if necessary, adducing evidence to establish an entitlement to those orders in a manner ordered by the court.
(3) …
In the event that the Court was not disposed to apply the provisions of Rule 16.07, an adjournment of the proceedings would have been necessitated. The future conduct of the proceedings would be problematic in relation to the husband’s failure to engage in the proceedings.
Considerations pertaining to an adjournment of proceedings, particularly in relation to parenting proceedings, were considered by the Full Court in Jarrah & Fadel [2014] FamCAFC 14. Ainslie-Wallace J referred to Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, in which the majority of the High Court said at [217]:
… delay and costs are undesirable and that delay has deleterious effect not only upon the party to the proceedings in question but to other litigants. … It would impact on other litigants seeking a resolution of their cases.
Financial proceedings between the parties have been ongoing for well over two years. In the circumstances of this matter it is appropriate that the matter proceed to an undefended hearing in the absence of the husband.
Context
The wife relied upon the following documents:
a)her Amended Initiating Application filed 23 July 2018;
b)her Financial Statement filed 23 July 2000; and
c)her trial affidavit filed 23 July 2000; and
d)the affidavit of Cheryl Orr, solicitor as to notification to the husband of previous orders;
e)the affidavit of Ms F, psychologist as to the wife’s mental health circumstances.
Otherwise, various documents were tendered into evidence and will be referred to in these reasons for judgment.
In her Amended Initiating Application the wife, in summary, seeks the following orders:
a)That she be appointed trustee for sale of the real estate properties situated B Street, Suburb C New South Wales to sell the property for the best price reasonably obtainable and to disburse the proceeds of sale as follows:
i)in payment of agents commission, advertising expenses and legal expenses of sale;
ii)in payment of outstanding utilities and rates and taxes;
iii)in discharge of the mortgage encumbrances secured on the said property in favour of the National Australia Bank;
iv)as to the remaining proceeds of sale to be paid to the wife.
b)That pending sale of the real estate property the husband continue to pay as they fall due and payable mortgage payments, rates and taxes, utilities and house and contents insurance.
c)That there be a declaration that the husband has no right title or interest in respect to the wife’s 25 per cent interest in real estate properties situated G Street and H Street, J Town Victoria.
d)That within seven days from the date of orders the husband deliver up to the wife items of household furniture and effects described more particularly in Schedule A attached to her Amended Initiating Application.
e)That there be a splitting order in relation to the parties’ self-managed super fund Lepanto Superannuation Fund providing that a base amount of $44,111.00 be allocated to the wife out of the husband’s interest in the said fund.
f)That the husband pay by way of spousal maintenance to the wife or otherwise as directed by her in writing for a period of five years from the date of orders the sum of $500.00 per week.
Background
The wife is presently aged nearly 48 and the husband 54 years of age.
The parties married in 1991. They separated under the one roof in the former matrimonial home at Suburb C in January 2015 and finally separated on 28 November 2016.
There are three children of the marriage surviving. The youngest child referred to above now aged 10. Older twins are now aged 26.
Prior to marriage and in August 1990 the parties purchased a block of land at K Street, Suburb L for $119,000.00. The husband contributed $30,000.00 to the purchase and the balance of the purchase price of about $88,000.00 was gifted to the parties by the wife’s father.
The wife fell pregnant shortly after marriage and regrettably that child died at the age of eight months. Otherwise, the wife remained as a full-time mother and wife during the marriage. Throughout cohabitation the wife was the primary home maker and caregiver for the children of the relationship. She was assisted with some domestic help once a fortnight in the last five years of cohabitation.
The wife’s role as primary caregiver for the children was significant as the husband travelled interstate and overseas regularly by reason of his business obligations.
The husband was at the commencement of cohabitation employed, later working for E Pty Ltd. He remains employed with that company as a contractor.
The wife asserts that during cohabitation the husband controlled the family’s finances and made precious little disclosure of his financial circumstances to the wife.
In the financial year ended June 2015 the husband’s gross taxable income was declared at $164,786.00 notwithstanding very significant funds totalling over $600,000.00 deposited to his Westpac Banking Corporation and National Australia Bank accounts. The husband’s gross taxable income as a PAYE earner was declared by him in the financial year ended June 2014 to be $229,367.00 with deductions for interest of $98,400.00. Yet deposits to his bank accounts in that period totalled over $850,000.00. In the year ended June 2012 the husband’s gross taxable income was $229,382.00, yet bank deposits totalled over $500,000.00.
Notwithstanding requests to do so during the currency of this matter the husband has failed to reconcile the inconsistency between his income and total bank deposits.
Otherwise, during cohabitation the husband engaged in other financial dealings and investments outside the scope of his regular employment.
In February 2006 the husband remitted $1.296 million to a Mr M through a bank in Country N.
The wife is aware that the husband invested funds in O Pty Ltd with a share certificate as at 4 July 2014 evidencing the husband holding 1,313,000 shares in that company.
Documents evidence that as at 1 June 2015 the husband’s shareholding in the company were compulsorily acquired for $1.30 per share totalling $1,706,900.00. The wife is unaware as to how these funds were dealt with by the husband.
The husband, otherwise, acquired an interest in P Pty Ltd that was placed in liquidation in February 2016. She is unaware as to the circumstances relating to this investment.
Otherwise, in September 2009, the husband registered the company Q Pty Ltd. The wife asserts that the company had offices in Sydney, Melbourne, Brisbane and North America. However, the company was placed in administration in April 2016. Documents and information from the administrator reveal that the company had not lodged tax returns since 2011. The company has now been wound up and deregistered.
The husband, otherwise, retains an ABN number.
The wife’s enquiries reveal that the husband is also employed by R Pty Ltd, a company that provides management services.
Property transactions
During the marriage the parties, sometimes with others, acquired, built and/or renovated various properties that were on sold for a profit. The wife was significantly involved in these enterprises, coordinating design, colours and styling and furnishings and liaising with builders and architects.
The wife’s father, a tradesman, was significantly involved in the construction and/or renovation of properties over the first 12 years of the parties’ marriage.
The parties constructed a home on land purchased by them at Suburb L as referred to above. The construction of the home was undertaken by the husband and the wife’s father.
The Suburb L property was sold in January 1995 for $540,000.00. The proceeds of sale were used to purchase a property at S Street, Suburb C for $530,000.00. This property was substantially renovated with the assistance of the wife’s father over a period of years until 2014. The property was sold in August 2014 for $3.28 million.
In August 2001 the wife’s father gifted to the parties about $100,000.00 from the proceeds of the sale of the property.
In August 2014 the parties purchased the present matrimonial home at B Street, Suburb C for $2,480,000.00. The purchase price comprised the proceeds of sale of a former property owned by the parties at Suburb C of $1 million and a National Australia Bank mortgage of $1.5 million. The present balance outstanding under the mortgage is about $1.36 million.
Subsequent to separation and in February 2017 the husband unilaterally leased the Suburb C property. The husband has not been forthcoming in providing details as to the tenancy save for asserting that the property is tenanted for $1,500.00 per week with rental income being paid to the mortgage account.
The wife is unaware as to the husband’s present residential circumstances notwithstanding a request for him to disclose those details.
The wife’s inheritance
The wife’s father passed away in 2003. From his estate she inherited a one quarter interest in two commercial properties in J Town, Victoria that are tenanted. The wife’s interest in those properties has been valued by the Single Expert at $880,000.00 (Exh “C”). The wife receives a proportion of the rental income being about $40,000.00 per annum which she applies to her household and living expenses. During cohabitation her rental income was applied to the matrimonial household and its expenses.
The husband’s inheritance
The husband’s mother passed away in August 2007. The husband is the sole beneficiary of his late mother’s estate and he has previously represented to the Court that the estate comprises a home at Suburb D in Sydney and funds held at bank. It is the wife’s belief that the estate has a value of about $3 million but, notwithstanding requests to do so, the husband has failed to provide particulars nor any disclosure as to the estate.
The matrimonial pool
The wife contends that the matrimonial pool, at least insofar as it is known to her, comprises the following:
Assets:
Joint B Street, Suburb C $ 3,100,000.00
Wife Interest in investment properties $ 880,000.00
Wife CBA accounts $ 1,760.00
Wife NAB account $ 0.00
Husband his late Mother’s estate 3,000,000E
Husband Motor vehicle 1 NK
Husband Motor vehicle 2 NK
Husband Motor vehicle 3 NK
Joint Household contents 43,000E
Liabilities:
Joint Mortgage Suburb C $ 1,435,727.00
Joint Mortgage Suburb C $ 98,937.00
Joint S Street property $ 8,100.00
Wife ATO tax liability $ 48,000.00
Wife Personal loan – car repairs $ 8,000.00
Wife Personal loan Legal fees $ 200,000.00
Husband B Finance Lease $ 44,100.00
Husband Capital Lender loan $ 32,720.00
The matrimonial home at Suburb C is the subject of a single expert valuation: (Exh “D”)
The Motor vehicle 1 was ordered to be transferred to the wife unencumbered on 27 February 2018.
Superannuation
As at 8 September 2009 the husband had accumulated superannuation in his AMP superannuation fund of $206,032.00. This superannuation entitlement was transferred to the husband’s self-managed superannuation fund by transfer to the fund ANZ bank account.
Subsequently on 30 September 2009 the husband withdrew about $204,000.00 from the self-managed Lepanto Superannuation Fund account and thereafter various withdrawals were made by him such that in his financial statement sworn 9 March 2016 he deposes to a superannuation interest of only $41,000.00.
Section 75(2) considerations
In 2009 the wife was diagnosed with depression and anxiety. From 2009 to 2012 such issues became significantly debilitating for the wife in the context of conflict between herself and the husband and his lack of emotional and financial support. She was prescribed medication and hospitalised on several occasions.
Since 2013 she has consulted her treating mental health practitioner Ms F, psychologist. In 2016 she was diagnosed with “generalised anxiety” with symptoms consistent with post-traumatic stress disorder. The wife complained to her mental health practitioner of the husband’s ongoing harassment, emotional blackmail and financial control.
In the context of parenting proceedings a Single Expert Report was prepared by Ms T clinical psychologist (Exh “B”). That report was dated 20 November 2016. After reviewing the wife’s mental health history both from a history given by the wife and by reference to objective documents Ms T reported:
in sum, (the wife) appears to have a lengthy history of serious psychological problems, and diagnosable mental illnesses, including PTSD, GAD, panic disorder and major depression. She has a familial history of mental illness. Although she has sought treatment in the form of medication and psychotherapy, it appears that she has some issues with compliance of medication, and that her engagement in therapy has not been sufficiently frequent or sustained to adequately address the symptoms. While her treating psychologist suggested that she was stable in early 2016, it seems difficult to reconcile such an opinion with the observations just two weeks prior of her being in crisis. To that end, a referral to a psychiatrist for review of diagnosis and medication would be prudent and ongoing regular psychological intervention is warranted.
The wife asserts that having been out of the workforce for so long and that by reason of her ongoing mental health issues she has no capacity for full-time work.
Failure to Disclose
There has been significant correspondence between the wife’s solicitors and those representing the husband seeking discovery and disclosure as to the husband’s real financial circumstances.
There have been subpoena for production of documents issued to the husband resulting again in incomplete, inadequate and little disclosure.
In Tate & Tate [2000] FamCA 1040 the Full Court said:
50.It is useful to recall that discovery is a continuing process (see Brambles Holdings Ltd v Trade Practices Commission (1983) 47 ALR 69). Indeed, had there even been a compliance with the rules of court or practice directions on one occasion it would not obviate the need for a party to a property proceedings in this court to make a full and frank disclosure of all relevant financial circumstances which may involve a duty of continuing discovery. Indeed it is difficult to see how it could not.
51.The law in Australia on this point is the same as in England. In Oriolo v Oriolo (1985) FLC 91-653 (a decision of Emery, Fogarty and Murray JJ), the Full Court held at 80,256:
“We consider that there is a clear obligation on a party to proceedings in this court to make a full and frank disclosure of all relevant financial circumstances. As was said by Lord Brandon for the House of Lords is Livessey v Jenkins (1985) 1 AllER 106 at page 114:
“I stated earlier that, unless a court is provided with correct, complete and up to date information on the matters to which, under Section 25(1), it is required to have regard, it cannot lawfully or properly exercise its discretion in the manner ordained by that sub-section. It follows necessarily from this that each party concerned in claims for financial provision and property adjustment (or other forms of ancillary relief not material in the present case) owes a duty to the court to make full and frank disclosure of all material facts to the other party and the court. This principle of full and frank disclosure in proceedings of this kind has long been recognised and enforced as a matter of practice. The legal basis of that principle, and the justification for it are to be found in the statutory provisions to which I have referred.”
52.In that decision the Full Court also approved the statement of Smithers J in Briese and Briese (then unreported 27 June 1985) (1986) FLC 91-713 at 75,180):
“I believe that a person in the position of the husband in this case has a positive obligation to set out at an early stage his financial position in a clear and comprehensive manner.”… “The need for each party to understand the financial position of the other party is at the very heart of cases concerning property and maintenance. Unless each party adopts a positive approach in this regard delays will ensue with the consequent escalation of legal, accounting and other expenses, always assuming that a party has the strength to continue the struggle for information and understanding.
In this case it is possible, but I believe largely with the benefit of hindsight, to suggest one or two other strategies which the wife could have employed in her search for the facts before the trial. On the whole however, I do not believe that her case was conducted other than appropriately and reasonably. It was in the power of the husband to curtail the costs by making adequate disclosure.
Although the case relates to quite different circumstances, I believe that the conclusion in the House of Lords in the case of Livesey v Jenkins (1985) 1 All E.R. 106 is apposite, namely that in financial proceedings between spouses each party must make a full and frank disclosure of all material facts. In that case it was made clear that full and frank disclosure was required as a matter of principle in the light of the fact that it was the duty of the court, taking into account a number of designated criteria, to make a decision which basically involved the exercise of a discretion. This is quite different from common law litigation between strangers, in which such a general duty does not exist, and obligations would only exist in so far as statute or court rules required.
In my view it is fundamental to the whole operation of the Family Law Act in financial cases that there is an obligation of the nature to which I have referred. Livesey v Jenkins make it clear that mere compliance with rules of court or practice directions does not alter the basic principle of the need for full and frank disclosure by the parties…
53.The position in this Court is indeed quite unlike that of the Common Law Courts. Full and frank disclosure is required as a matter of “principle in the light of the fact that that it is the duty of the Court, taking into account a number of designated criteria to make a decision which basically involves the exercise of a discretion”.
The husband’s failure to make full and frank disclosure means that “the Court need not shy away from a robust exercise of discretion in favour of the wife”: Kannis & Kannis (2003) FLC 93-135.
As the Full Court said in Chang & Su [2002] FamCA 156:
101. Of course it is the obligation of parties to make a full and proper disclosure of the financial circumstances, either as to assets, liabilities or income (Marriage of Black and Kellner (1992) 15 Fam LR 343 and Marriage of Weir (1992) 16 Fam LR 154). As the latter case makes clear, where there has been non-disclosure by one party, the Court should not be ‘unduly cautious’ about making findings in favour of the other party…
Regard should also be had to the similar sentiments in Stein & Stein [1986] FamCA 27; Mezzacappa & Mezzacappa [1987] FamCA 20; Black and Kellner (1992) FLC 92-287; and Weir & Weir (1993) FLC 92-338; Shaw & Shaw [2014] FamCAFC 146.
It is thus open to the Court to be robust in determining the wife’s entitlement to property where in reality the known pool comprises the home at Suburb C subject to a significant mortgage debt.
Property
The approach to the determination of an application under s 79 of the Family Law Act 1975 (Cth) (“the Act”) is set out in Stanford & Stanford [2012] HCA 52 and further considered by the Full Court in Bevan & Bevan [2014] FamCAFC 19, Chapman & Chapman [2014] FamCAFC 91 and Scott & Danton [2014] FamCAFC 203.
The 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.
Such 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.
There 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 in the application of s 79(2) of the Act needs to conclude that it would be unjust or unfair to leave the parties’ property rights intact.
In many cases such as the present matter, 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.
In 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 so as to end the joint ownership of the matrimonial home.
It would, in some circumstances, be unjust or unfair to leave property rights intact where there is common ownership and discrete assets are sought by each. Such is the case in this matter and the parties both agree that their common ownership of property is to be brought to an end so as to reflect their respective contentions as to entitlement.
It is appropriate that property adjustment orders be made.
Otherwise, a consideration of s 79(4) factors as discussed below reveals it would be unjust or unfair to leave the parties’ property rights as they are.
Section 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)).
The 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 “Asset Pool”
The assets available for present division are set out above to the best of the wife’s knowledge.
Yet unexplained are the funds remitted by the husband overseas, the dissipation of his superannuation entitlements, the unexplained deposits to his bank accounts totalling many thousands of dollars, his interest in various corporate entities and his present financial circumstances.
Contributions
The wife introduced funds early into the marriage through the gift of funds from her father that in effect started the parties’ significant property dealings over the years.
The husband clearly was the significant income earner with the wife’s income from her estate interest supplementing from 2009 onwards.
The wife was the primary homemaker and carer for the children with her role late in the relationship impacted by her mental health issues.
The wife was involved in the property dealing of the parties as outlined above.
However overall absent evidence from the husband such as would quantify his financial contribution to the acquisition of assets, evidence that he has failed to adduce, there is little to suggest that contributions, leaving aside inheritances, should not be seen as equal to the date of final separation in November 2016.
Thereafter the husband has had the primary care of the youngest child of the marriage by reason of the wife’s health circumstances. The child spends limited time with the wife.
On balance overall contributions favour the husband 52.5 per cent to the wife’s 47.5 per cent as to the known pool of assets absent inheritances (that will be considered below).
Section 75(2) factors
The parties’ ages are referred to above. There is no evidence as to any ill health suffered by the husband. The wife on the other hand suffers historically from mental health issues.
There is no evidence that the husband cannot continue to earn as he has done in the past as evidenced by his 2014 and 2015 tax returns. The wife has static investment income of about $50,000.00 per year from property rentals. The wife adduces evidence as to mental health issues up to 2016 but no evidence thereafter. She asserts no capacity for full time work. There is no evidence to suggest that she has some capacity for employment.
The husband it is asserted has a significant inheritance expectancy from his mother’s estate as he represented to the Court on 27 February 2018 as noted above.
The wife has inherited property of about $880,000.00. It provides her with investment income. It is not asserted that the husband made any contribution to such inheritance.
The husband has the primary care of the parties’ youngest child now aged 10.
The wife has financial commitments for the support of herself only. Her Financial Statement asserts expenses for herself of about $1,165.00 per week, she has rent of $710.00 per week currently being paid the husband who also pays $200.00 per week by way of interim spousal maintenance. Her reasonable needs appear to $1,865.00 per week.
The wife has no superannuation being out of the work force for many years. The husband has inexplicable dissipated significant superannuation entitlements. It is to be inferred that he will continue to accrue superannuation into the future. There is no direct evidence as to the balance of his present superannuation nor any evidence as to the financial circumstances both historically or at present of his self-managed superannuation fund or whether by reason of his conduct it is non-complying.
The wife remained out of the work force throughout cohabitation in circumstances that facilitated the husband pursuing business interests whilst she attended to the home and children until late in the relationship when health issues impacted on her capacity. Her absence from employment over the duration of the marriage has, she asserts, impacted on her earning capacity.
The husband has remarried but nothing is known of the financial circumstances of the relationship.
The wife pays no child support for the child in the husband’s primary care probably by reason of the disparity in their financial position.
Otherwise, the Court is faced with the husband’s failure to engage in the proceedings as to financial issues. His failure to give proper or indeed any meaningful disclosure or discovery despite many requests from the wife’s solicitors to do so and in turn direction from the Court to do so, facilitate a most robust approach by the Court to the known assets.
Overall
Overall, notwithstanding an assessment of contributions that favour the husband to an extent and a consideration of s 75(2) factors relating to property that justify an adjustment of the contribution based entitlement of 10 per cent in favour of the wife, that would see a known pool of assets adjusted in her favour, the “pool” is simply not known.
There is significant suspicion that the husband has either dissipated or not disclosed assets and income in his control.
The present adjustive pool is in reality the Suburb C home subject to a significant mortgage. The wife has but little at bank and an entitlement to the Motor vehicle 1.
There is insufficient evidence as to the reality of the husband’s self-managed superfund so a splitting order is not called for.
In the circumstances of this matter, it is just and equitable that the wife be appointed trustee for the sale of the Suburb C home and subject to the payment of property related liabilities she be entitled to the proceeds of sale.
She will retain her taxation liability, the cause of which is not explained.
Property orders will be made accordingly.
Spousal Maintenance
Section 72 of the Act sets out the relevant provisions in relation to the right to spousal maintenance. Section 72 provides that a party to a marriage is liable to maintain the other party, to the extent that the first mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:
a)By reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
b)By reason of age or a physical or mental incapacity for appropriate gainful employment; or
c)For any other adequate reason;
having regard to any relevant matter referred to in s 75(2) of the Act.
The mother asserts no capacity for employment as a consequence of well documented mental health issues. The Court is satisfied such is the case.
If so, what are the mother’s reasonable needs? Her Financial Statement asserts expenses for herself of about $1,165.00 per week, she has rent of $710.00 per week currently being paid the husband who also pays $200.00 per week by way of interim spousal maintenance. Her reasonable needs appear to be $1,865.00 per week.
The capacity of the father to make a contribution towards those needs is not in issue by reason of his present payments and such as it is evidence of his income in recent years.
Section 75(2) considerations have been discussed above.
The mother asserts her reasonable needs at $1,865.00 per week including rent. She has an income of $1,000.00 per week from her property holdings. She makes no provision for income tax.
Some of the mother’s expenses in her Financial Statement appear to be discretionary such as fitness expenses, entertainment, gifts and car parking and fares when she does not work. Some discount should thus be made as to the reasonableness of such expenditure.
Her reasonable expenses are on the little evidence available assessed at $1,650.00 per week. She seeks an order for a closed period of five years at $500.00 per week.
In all the circumstances, it is appropriate that there be an order for spousal maintenance of $500.00 per week. Such order will be limited to a period of two years to facilitate a reconsideration of the wife’s capacity for work on the basis of updated mental health opinion and to facilitate the wife seeking to obtain some employment skills.
The wife will be able to seek to vary the order by extension in proper circumstances and the husband will be able to seek to vary his obligation on proper grounds.
I certify that the preceding one hundred and seven (107) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 28 September 2018.
Associate:
Date: 4 October 2018