Liddle and Fowler

FAMILY COURT OF AUSTRALIA

LIDDLE & FOWLER

[2013] FamCA 1022

FAMILY LAW – PROPERTY SETTLEMENT – Greater initial contributions and throughout marriage by wife – Quantum of property pool largely due to inflation of real estate valuations accruing throughout marriage and post-separation – Whether any adjustment in respect of section 75(2) of the Family Law Act 1975 (Cth) where the husband has a pending compensation payout and where the wife will continue to operate a business – Whether any adjustment as to the husband’s health is required having regard to the pending compensation payout.

Evidence Act 1995 (Cth)
Family Law Act 1975 (Cth)
Family Law Rules 2001 (Cth)

Bevan & Bevan [2013] FamCAFC 116

Harris & Harris (1991) FLC 92-254

Kessey & Kessey (1994) FLC 92-495

Stanford v Stanford (2012) 247 CLR 108

APPLICANT:

Ms Liddle

RESPONDENT:

Mr Fowler

FILE NUMBER:

NCC 3033

of 2010

DATE DELIVERED:

20 December 2013

PLACE DELIVERED:

Parramatta

PLACE HEARD:

Parramatta

JUDGMENT OF:

Foster J

HEARING DATE:

10 & 11 December 2013

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Sweet

SOLICITOR FOR THE APPLICANT:

Browns The Family Lawyers

COUNSEL FOR THE RESPONDENT:

Mr Cook

SOLICITOR FOR THE RESPONDENT:

Brydens Law Office

Orders

That within six (6) weeks from the date of these Orders the wife pay to the husband the sum of $250,000.
That within three (3) months from the date of these Orders the wife pay to the husband the further sum of $250,000, and in consideration of such payment, the husband transfer to the wife his right, title and interest in the following properties:
(a)       4 M Road, Suburb P;
(b)       4a M Road, Suburb P;
(c)       4b M Road, Suburb P; and
(d)       3 I Street, Suburb L
And, that concurrently with such transfer, the wife do all necessary things so as to discharge any mortgage encumbrance presently secured against the said properties so as to release the husband from all or any liability in regard thereto.
That within six (6) months from the date of these Orders the wife pay to the husband the further sum of $390,000.
That otherwise each of the husband and the wife shall be and are hereby declared the sole and absolute owners at law and equity of all items of real estate, furniture, furnishings, personalty, chattels, jewellery and monies (whether held in cash or in deposit with any bank, building society, credit union or other financial institution) presently in each party’s possession, custody or control, together with all contributions to or benefits or entitlements arising from membership of any fund of insurance or superannuation, subject to Orders made herein.
That liberty is granted to the parties to apply as to implementation or enforcement of these Orders.
That all outstanding applications and cross-applications are dismissed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Liddle & Fowler has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT PARRAMATTA

FILE NUMBER: NCC 3033 of 2010

Ms Liddle

Applicant

And

Mr Fowler

Respondent

REASONS FOR JUDGMENT

The Proceedings

These are proceedings for property settlement commenced by the Applicant wife as against the Respondent husband.
The history of the relationship between the husband and wife is marred by a serious sexual assault perpetrated by the husband upon the wife in June 2005. The husband in March 2006 pleaded guilty and was sentenced to a period of five years imprisonment. He was released on parole in June 2009.
Subsequent to his release on parole and on 12 February 2010 the husband was involved in a motor vehicle accident as a consequence of which he has received a significant brain injury. His compensation claim arising from that accident remains unresolved.
At the commencement of the trial and in her case outline (Exhibit A) the wife sought orders that, in summary, provided for:
a)the payment to the husband of $580,000;
b)that upon payment of that sum the husband transfer to the wife his interest in the properties situated at 4, 4a and 4b M Road, Suburb P and the property at 3 I Street Suburb L;
c)that upon transfer of the said properties the wife discharge any mortgage encumbrance secured against the said properties so as to indemnify the husband from any liability arising from those mortgages;
d)that the wife be declared solely entitled to the property at 4 I Street Suburb L and to her interest in the property at Suburb N; and
e)that the wife be declared solely entitled to the business known as W Services Pty Ltd (“the company”).
The husband at trial sought orders that provided to him a cash payment equivalent to 70 per cent of the matrimonial asset pool, as determined by the Court.
At the commencement of the trial the wife’s son was a party to the proceedings as the Second Respondent. During the course of the trial the husband abandoned the relief sought by him as against the Second Respondent and the Second Respondent was excused from the proceedings and an order in respect of his costs as against the husband was made by consent.

Recent procedural history and the husbands Case Guardian

The proceedings were commenced in 2011 by the Applicant wife.
On 4 July 2013 proceedings were listed before Johnston J for the purposes of procedural directions. The Court ordered, in summary:
a)that the parties file and serve all affidavits in chief together with financial statements by 30 August 2013;
b)that proceedings be adjourned for mention on 4 September 2013;
c)that the parties arrange for valuers who have provided valuations in the proceedings to update such valuations, initially at the cost of the wife; and
d)the Court noted that efforts would be made to arrange for a solicitor to speak with the unrepresented husband with a view to him instructing a solicitor in these proceedings.
On 4 September 2013 the proceedings were once again before Johnston J for directions. On that day the husband was not represented. The Court ordered, in summary:
a)that the wife be permitted to obtain a historical valuation as at September 1993 in relation to the property at M Road, Suburb P;
b)that the wife be permitted to obtain a historical valuation of the company as at February 2004 and other valuations to be prepared by Mr V;
c)that the time for each party to file and serve an affidavit in chief and one affidavit in chief for each of their witnesses together with financial statement by 6 November 2013;
d)that the proceedings be listed for two days commencing on 18 November 2013 as an undefended hearing ; and
e)that the wife forward within seven days to the husband a letter with a copy of the Orders notifying the husband that in the event that he fails to comply with these Orders and fails to appear on 18 November 2013 the wife proposes to ask the Court to hear her application on an undefended basis.
On 18 November 2013 the matter was once again before the Court and it was clear that the matter was not ready to proceed and that there were concerns as to the capacity of the husband to represent himself. The Court made the following relevant Orders, in summary:
a)that the hearing dates be vacated and proceedings be listed for hearing commencing at 12 noon on Tuesday 10 December 2013;
b)that the Respondent husband file and serve an Application in a Case seeking the appointment of his sister Ms R as his Case Guardian in these proceedings, together with appropriate affidavit evidence in support of that application and that application be listed for hearing on 29 November 2013, and in this regard the Court noted that the Applicant wife and Second Respondent will have no objection to the orders sought and subject to appropriate evidence being before the Court, the Court proposed to make that order by consent excusing the parties attendance;
c)that the husband file and serve affidavit evidence by his treating practitioner or practitioners that touch upon relevant section 75 (2) matters by 2 December 2013;
d)that leave is granted to the applicant to administer a request for answers to specific questions to the husband’s solicitors by 22 November 2013;
e)that the Respondent husband’s solicitors provide a response to those questions by 2 December 2013; and
f)that costs thrown away by the adjournment that day of the Applicant wife and Second Respondent be reserved as against the Respondent husband.
Subsequently, an application for appointment of the husband’s sister as Case Guardian was filed and that application was supported by an affidavit by his sister that provided a report from Dr K, a consultant forensic psychiatrist. Those documents indicate that the husband suffered a brain injury when his motorbike when stationary was struck from behind by another vehicle and the husband was then struck by another vehicle at speed.
The husband’s psychiatric diagnosis is one of organic brain syndrome. The disorder is characterised by a significant alteration of the habitual patterns of premorbid behaviour. The expression of emotions, needs and impulses is particularly affected. Cognitive functions may be defective mainly or even exclusively in the areas of planning and anticipating the likely personal and social consequences, as in the so-called frontal lobe syndrome. As a result of his injuries he has suffered a consequent personality change. He is unable to persist with most tasks. In the context of the husband’s ongoing personal injuries claim he was diagnosed as unable to give consistent instructions in a rational manner and the appointment of a tutor in those proceedings was recommended.
The Court was satisfied that the husband was not capable of adequately conducting or giving adequate instructions for the conduct of the present proceedings and the husband’s sister was appointed as his Case Guardian.

Background

The wife is aged 57 and the husband aged 54.
The parties commenced cohabitation in September 1993 and married in 1994. The parties, the wife asserts, separated in February 2004 and are now divorced. The husband asserts that following his release on parole there was a resumption of marital cohabitation between himself and the wife. Whilst the evidence is indicative of some form of relationship between the husband and wife in the period from his release on parole in June 2009 until his accident in February 2010, the Court is not satisfied there was a resumption of marital cohabitation.
Nothing turns on the date of separation in terms of any assessment of contributions or other issues in these proceedings. The Court accepts the wife’s evidence that separation occurred in 2004.
There are no children of the parties’ relationship, however the wife has four adult children of her previous relationship. The children formed part of the household for various periods. The parties’ income from the company provided for some of her children’s financial needs.
The husband has three children of his first marriage; all now adults.

At cohabitation

At the commencement of cohabitation the wife had the following assets:
a)the property at 4 M Road, Suburb P having a value at that time as determined by the single expert of $190,000 and subject to a mortgage of $20,000. Lot 4 now has a value of $530,000 after later subdivision. During cohabitation some improvements were carried out to the property funded from the parties’ income from the company. Subsequent to separation and in 2006 the wife’s brother renovated both bathrooms in the home. The wife paid for materials from income and her brother undertook other work at no charge. In 2008 the wife installed a new kitchen in the premises.
b)a 1979 Holden motor car sold by her in 1994 for $2500;
c)furniture and furnishings in the property at 4 M Road, Suburb P; and
d)some savings.
At commencement of cohabitation the wife was a self-employed cleaner doing cleaning as a sole trader.
At the commencement of cohabitation the husband had the following assets:
a)the business and equipment of T Services operating from rented premises at Suburb L. The husband operated this business as a sole trader;
b)the business and equipment of W Services Pty Ltd, also operated by the husband as a sole trader;
c)a utility motor vehicle used for his work purposes;
d)furniture and household effects sold shortly after cohabitation for the sum of about $2,000; and
e)some savings.
During the parties’ cohabitation they operated separate accounts, although each of the parties had authority to operate the other’s account until 1996.
In the early years of the relationship the wife received child support from her former husband in respect of her children, who at times formed part of the household.
From about 2000 the husband made little contribution to the household financially. He retained his income from the company as an employee for his own purposes.
The husband was absent from the home on frequent occasions for long periods of time. In the final four years of the relationship he was absent for extended overnight periods at least once a month, and on other occasions would be away for the weekend undertaking sporting activities, which consumed a significant part of his income.
During the cohabitation the wife made a substantial contribution to the domestic chores within the home, but concedes that she and the husband attended to lawns and gardening mostly equally.

Early history

Six months after the commencement of the parties’ cohabitation the wife commenced to work in the husband’s business. The duties were primarily in sales administration, deliveries, record-keeping and client liaison. The husband, who had limited literacy skills, was primarily responsible for the manual tasks.
In 1994 the husband and wife purchased a property at 3 I Street, Suburb L in order that the business conducted by the husband could be operated from those premises. The property was purchased for the sum of $170,000. To facilitate the purchase, the mortgagee required the wife’s property at 4 M Road, Suburb P to be transferred into the parties’ joint names as the property at I Street was being purchased in joint names with the mortgagee taking security over the M Road property as collateral security. This property was later improved and renovated for the purpose of the business. Much of this work was done by the husband.
From 1994 the business began employing staff, and by 1996, the business had three employed staff. Subsequent to 1994 the husband’s contribution to the business became unreliable in that his attendance at the business became irregular, although the wife concedes that when he was in attendance he performed his duties well. The husband, from time to time, behaved abusively towards staff and customers. Prior to the parties’ separation it was difficult for the business to retain staff for any longer than about 12 months.

Incorporation of the business

From 1994 the business of the husband was conducted in partnership between the parties. This was the case until July 1999 when the company was incorporated. On incorporation one ordinarily equity share was issued to the wife and a DVR share was issued to the husband. The husband’s share was a redeemable preference share entitling the husband to discretionary dividends only.
This structure, ostensibly demonstrating the wife’s ownership and control, was set up to permit the business to continue to deal with the relevant business authority after the husband had failed to comply with authority requirements. At the same time the trading licence was transferred to the wife. However, the husband remained working in the business.
By 2000 the wife had already obtained against the husband Apprehended Violence Orders restricting his behaviour, most particularly as to being in the wife’s presence or returning to the matrimonial home when under the influence of alcohol.
The husband’s attendance at the business became progressively worse from 2000 onwards, and by the time of separation in 2004, he was attending the premises on rare occasions. The wife estimates that between 2004 and 2006, at which time the husband received a custodial sentence for the sexual assault of the wife, the husband attended the business premises on less than 10 occasions, and when he did he would argue with the wife and other staff members and do no productive work.

1 I Street, Suburb L

In November 1999 the company purchased the property at 1 I Street, Suburb L for $200,000. A small deposit was paid with funds available in the company at that time and the balance of purchase price was borrowed by way of mortgage. Subsequent to purchase, mortgage payments and property outgoings were paid by the company.
The property was purchased so as to allow the business to expand its premises for storage of equipment.

4 I Street, Suburb L

In 2001 the property at 4 I Street, Suburb L, that adjoined the company premises, was purchased in the wife’s name for the sum of $$275,000, inclusive of GST.
The purchase price was funded entirely by way of a mortgage borrowing and payments in relation to property outgoings and the mortgage had been paid from rental payments paid by the company to the wife.
The premises were used for storage purposes. The husband undertook various improvements to the property to facilitate this use.
The mortgage on this property was substantially reduced in about 2007 on sale by the wife of her property at O Street, Suburb B (as referred to below).
The property is now unencumbered.

Unit at O Street, Suburb B

In May 2000 the wife purchased a home unit property at O Street, Suburb B for $63,000. The purchase price comprised a deposit from the wife’s savings at that time and the balance of about $48,600 by way of mortgage borrowing.
For a period of about four years the wife’s daughter rented the property. Otherwise, the property was tenanted and the wife met the mortgage and outgoings from the rent and her income from the company.
The property was sold in about 2007 for $155,000 and the proceeds of sale were applied to discharge of the then mortgage balance of about $20,000 and the balance was applied by the wife in reduction of the mortgage secured over the property in her name at 4 I Street, Suburb L.

4, 4a and 4b M Road, Suburb P

In 1996 the husband and wife jointly purchased vacant land at 4a M Road, Suburb P for about $50,000. A deposit of about $20,000 was paid from funds available to the parties at that time and the balance of the purchase price of about $30,000 was borrowed by way of mortgage.
This property became the parties’ matrimonial home.
By February 1999 the wife had received distributions from her late father’s estate totalling $29,647. These funds were applied in substantial reduction of the mortgage borrowing secured against the property. In general terms, the wife paid for about 60 per cent of the property from her inherited funds.
In 2000 the parties jointly made an application for the subdivision of lots 4 and 4a, resulting in the three blocks being divided into lots 4, 4a and 4b M Road, Suburb P. Following subdivision, the properties were fenced and hardstand installed.
The two lots 4a and 4b, comprising vacant land now, have a value of $535,000.

The wife’s compensation verdict

In 2000 the wife received compensation for medical negligence that caused nerve damage to her face. The wife received a settlement sum of $72,000 after deduction of a retention fund of $8,000. After legal costs, the wife the sum of $41,369 and subsequently received the retained funds of $8,000.
Of these funds received by the wife, $30,232 was applied to discharge the mortgage then secured against the jointly owned property at 3 I Street, Suburb L. The payment was made by the wife on 8 April 2002.

One-third interest in the Suburb N property

In 2010, post-separation, the wife, in conjunction with her son and his partner, jointly purchased a property at Suburb N for the sum of $590,000. The wife acquired a one-third interest in the property, contributing $15,000 towards the purchase of her one-third interest and borrowing by way of mortgage about $170,000 to finance the balance of the purchase of that interest. The wife’s son and his partner separately financed the acquisition of their two-thirds interest in the property.

Post separation

Following the assault on her by the husband in June 2005, the wife felt traumatised and found it difficult to work and operate the business. Her son G provided to her significant assistance on a voluntary basis. At this time, her son was completing his apprenticeship.
In 2007 the wife’s son completed his apprenticeship and commenced employment for the company on a full-time basis. The wife suggested to him that should he do so, she would give to him half of the business.
On 5 November 2008 the DVR shareholding in the company was transferred from the husband to the wife’s son with the husband’s knowledge. Subsequent to that transfer, he has received no dividends from the company.
The wife’s son has remained a valued employee of the company since his commencement of employment and receives a salary from the company of about $78,000 per annum.

The wife’s current circumstances

The wife remains employed by the company, drawing a salary of about $78,000 per annum. Superannuation contributions are made by the company commensurate with her salary. Her superannuation benefits as at July 2013 were in the sum of $104,147.
It is the wife’s expectation that we she will continue to operate the company into the foreseeable future.
The wife also receives rental payments from the company in relation to the properties 3 and 4 I Street, Suburb L, totalling about $692 per week, from which she meets property outgoings.

The husband’s current circumstances and compensation claim

The husband was released on parole on 4 June 2009. Inter alia, his parole conditions included total abstinence from alcohol, random drug testing, if directed to undergo psychological and/or psychiatric assessment and counselling, compliance with all directions of the mental health team, including treatment and medication, and not to attend the victim’s (the wife’s) premises between the hours of 10.00 pm and 6.00 am without the approval of his supervising probation and parole officer. The husband remained on parole until 13 March 2011.
After his release on parole the husband asked the wife for work and she permitted him to work for the company, but by February 2010, his attendances were inconsistent. After his accident his previously irregular attendances gradually ceased altogether by March 2010, and he later commenced to receive workers compensation payments.
The husband is presently in receipt of workers compensation benefits in the sum of $187 per week, in addition to which he receives his share of rental payments in relation to the property at 3 I Street, Suburb L of $250 per week.
He is living in a rented caravan on his brother’s premises at Town X, NSW.

The husband’s personal injuries claim

In April 2013 the husband by his tutor, his sister Ms R, commenced proceedings in the District Court of New South Wales by way of Statement of Claim (Exhibit M) seeking damages as a consequence of injuries received by him in the motor vehicle accident in February 2010.
Regrettably, disclosure in relation to this claim was not forthcoming until the commencement of the trial, notwithstanding that the husband’s solicitors are also acting on his behalf in relation to the personal injuries claim. The matters set out below in relation to the husband’s personal injuries claim are as a result of documents produced very late in the proceedings by the husband’s solicitors.
On 12 August 2013 the defendant in those proceedings filed a defence in which liability was admitted. As a consequence, the only issue for determination is the quantum of damages to be awarded to the husband.
The husband seeks damages for economic loss in the following categories:
a)future out-of-pocket expenses for treatment: $100,000;
b)claim for past and future domestic assistance;
c)claim for loss of income whereby the husband particularises his post-incarceration income from the company of $550 per week, claiming economic loss at that rate for one year, and thereafter, economic loss equivalent to net average weekly earnings of $1,093 per week during his working life expectancy;
d)past superannuation loss at 9 per cent on $550 per week for 12 months;
e)future superannuation loss at 12 per cent;
f)loss of opportunity of acquiring and developing his own wrecking business, being a claim for $500,000; and
g)in the alternative: if not for the injury, it would have been open to him to assume control and/or ownership of the company earning an income up to $2,000 per week with such claim being from the date of the accident to anticipated retirement age.
In July 2013 the husband made an application to the District Court of New South Wales by way of Notice of Motion (Exhibit K) for an advance payment of $35,000 in relation to his compensation claim. That Notice of Motion was supported by affidavits by the husband and his tutor in those proceedings (Exhibit K).
It was common ground between the parties that no adjournment was being sought to await the outcome of the husband’s compensation claim.
It is to be noted that all of his economic loss as claimed postdates separation and that general damages, if any, would be peculiar to the husband.
However, it was conceded by both parties that the Court would have regard to the reality of the existing claim in the context of considering section 75 (2) factors.

The husband’s health

Marked into evidence as Exhibit I are documents relating to the husband’s attendances at the X Medical Centre. In February 2013 the husband attended the XX Brain Injury Clinic on referral from his general practitioner on 3 January 2013. The husband was interviewed on the 5 February 2013 and a report provided to the husband’s general practitioner.
The report provides an overview of the husband’s circumstances. The report notes that the husband’s symptoms are consistent with a brain injury involving disruption to frontal-lobe functioning.
A neuropsychological assessment conducted on 18 July 2011 indicated that at that time the husband was exhibiting impaired verbal reasoning, reduced verbal fluency and attention difficulties, significantly reduced speed of thinking and impaired verbal recall in the context of lifelong literacy difficulties. His speech was dysarthric and a slight left facial droop meant that saliva continuously dribbled out of that side of his mouth.
On interview at the clinic the husband presented as a very angry man who shouted throughout most of the interview. He was deeply fixated on what he regarded as an injustice regarding his divorce and his rights to workers compensation. These were in fact his main purpose for attending the clinic, the report notes, as he wanted to obtain evidence to support his claim that he was not in a position to make appropriate judgements at that time or to argue his case effectively due to the brain injury. It was impossible, it is noted in the report, to move him off the topic, and all attempts to do so were met with a bitter tirade about the way he had duped and his need for justice.
In terms of impression and recommendations, the report notes that:
(The husband) presents as a very angry, bitter and emotionally intemperate man. He is not interested in improving his behaviour, as he believes he is quite justified in his anger…
… the current presentation is well outside acceptable social limits and would be entirely consistent with changes to frontal lobe functioning consequent upon the injury, and further exacerbated by a perceived injustice.
… Unfortunately, his behaviour now, with the angry and relentless yelling and the intimidating personal style, is not likely to assist him in prosecuting his case, regardless of its merits. …
It is to be noted that on the first day of the trial the husband attended in person accompanied by his Case Guardian. During the course of the cross-examination of the wife by his counsel the husband became agitated and aggressive. He stood up, yelled verbal abuse, threw papers he was holding on the ground behind his solicitor. He yelled and pointed to the wife and to the wife’s son (the former Second Respondent). The husband was directed to leave the courtroom and, after several requests, was accompanied out of the courtroom by a security officer. On the second day of the trial the husband failed to attend Court at all.

The husband’s trial affidavit

At the commencement of the husband’s case counsel for the husband sought to rely upon the husband’s trial affidavit sworn on 7 November 2013 and filed on 8 November 2013. It was clear at that time that by reason of what had transpired early on day one of the trial that the husband would not be available for cross-examination. Indeed, there were concerns that, should he be subjected to cross-examination, behavioural manifestations (as referred to above) would most certainly arise providing to those in the courtroom some concerns as to their safety.
Counsel for the husband sought to rely on the affidavit in the absence of the husband being available for cross-examination. This was opposed by counsel for the wife.
Rule 15.14 of the Family Law Rules 2004 (Cth) (“the Rules”) provides that if a deponent of an affidavit is required for cross-examination then, at least 14 days before the relevant date, notice in writing is to be provided to the other party. It was conceded by counsel for the wife that, whilst notice had been given, such notice was only dated 6 December 2012 and that there was thus no compliance with the requirements of this rule.
Alternatively, counsel for the wife contended that leave to rely on the affidavit in the absence of the husband being available for cross examination should be refused by reason of the provisions of section 135 of the Evidence Act 1995 (Cth) (“the Evidence Act”).
Section 135 of the Evidence Act provides that the Court may refuse to admit evidence if its probative value is substantially outweighed by the danger that the evidence might be unfairly prejudicial to a party or be misleading or confusing or could result in an undue waste of time.
Counsel for the wife submitted that there is a normal requirement that a party is required for cross-examination. However, the common law position is subject to the provisions of the Family Law Act 1975 (Cth) (“the Act”) and its Rules.
Ultimately, counsel for the wife objected on the basis that admission of the affidavit would be unfairly prejudicial to his client. When pressed, counsel for the wife was unable to demonstrate in the terms of the affidavit sought to be relied upon in the husband’s case any issue will that could be regarded as “unfairly prejudicial” to his client.
However, ultimately, the Court needs to determine that the probative value of the evidence sought to be relied upon is “substantially outweighed” by any unfair prejudice to the wife. Counsel for the wife was unable to direct the Court to any factor that would lead the Court to make such a determination or, indeed, even enliven such a question.
In the circumstances, the Court ordered that the husband’s affidavit be admitted into evidence. It is clear that, in the absence of the husband being available for cross-examination, the Court can afford to the evidence in that affidavit such weight as it considers appropriate.
Counsel for the husband sought to tender the affidavit under the provisions of section 64 of the Evidence Act. For the purposes of that section the affidavit represents a document that contains representations by the husband that otherwise would be hearsay. The section provides an exception to the hearsay rule in circumstances where it will cause undue expense or undue delay, or would not be reasonably practicable to call the person who made the representation to give evidence. In the circumstances of the husband’s mental health issues as referred to above it was contended by counsel for the husband that it would not be reasonably practicable to call him for the purposes of cross examination. The court agrees with that submission.
However, the provisions of section 64 of the Evidence Act have notice requirements as set out in section 67 of the Evidence Act. That section provides that a party seeking to adduce evidence to which section 64 applies must give reasonable notice in writing to the other party of the intention to adduce such evidence. The Regulations to the Family Law Act provide a form of notice.
Section 67 provides that if notice has not been given, the Court may, on application, direct that section 64 may apply despite failure to give notice.
Counsel for the husband made an oral application for the dispensing of notice in all the circumstances. The Court, having regard to the circumstances of and manifestations relating to the husband’s mental health (as referred to above), is satisfied that the requirement of notice as provided for in section 67 of the Evidence Act be dispensed with, and in the absence of the husband being available for cross-examination, the affidavit be admitted into evidence and the Court give such weight to the affidavit of the husband that, in all circumstances, is appropriate.

Discussion

The approach to the determination of an application under s 79 of the Act is set out in Stanford v Stanford (2012) 247 CLR 108 and that decision was the subject of detailed consideration by the Full Court of the Family Court of Australia in Bevan & Bevan [2013] FamCAFC 116.
The Court should firstly identify the present assets, financial resources and liabilities of the parties.
The Court should then consider whether, having regard to the circumstances before it, it would be unjust and unfair not to make orders for alteration of the property interests of the parties having regard to the provisions of section 79(2) of the Act.
The Court can then proceed to consider the contributions by each of the parties as contemplated by section 79(4)(a) – (c) of the Act.
Having determined the contribution-based entitlements of the parties, the Court can then consider the various factors set out in section 75(2) of the Act and whether any further adjustment to the parties’ contribution-based entitlements is appropriate.
The Court is then required to consider the justice and equity of the proposed orders and whether, in all the circumstances, the orders to be made are appropriate.

The property of the parties

The Court is firstly required, as a starting point, to identify the existing legal and equitable interests of the parties in property, their liabilities and financial resources at the time of the hearing.
At trial there was substantial agreement as to a majority of the assets and liabilities for consideration, but there were also discrete issues as to particular items, as to whether or not they should be included or excluded in the pool of assets for the purposes of present pool or for adjustment between the parties.
The parties’ respective contentions at trial as to the parties’ present assets and liabilities were provided to the Court in the form of draft balance sheet admitted into evidence as Exhibit E.
After concessions, that amended balance sheet is set out below:
Assets:
Joint              4 M Road, Suburb P  $530,000
Joint              4a M Road, Suburb P  $270,000
Joint              4b M Road, Suburb P  $265,000
Joint              3 I Street, Suburb L  $410,000
Wife               4 I Street, Suburb L  $410,000
Wife               One-third share in the Suburb N property  $223,333
Wife               Holden motor vehicle  $    4,000
Wife               Motorcycle      $ 17,000
Husband       Holden motor vehicle  $    4,299
Husband       Motorbike       $    4,200
Wife               CBA account - …865  $    4,734
Wife               CBA account - …576  $ 28,453
Husband       St George bank - …447  $    5,963
Husband       St George Bank - …106  $ 33,627
Wife               Telstra shares  $    4,830
Wife               Shareholding in W Services  $630,000
Wife               Household contents  $ 20,000
Husband       Caravan  $    9,445
Husband       Telstra shares  $    4,030
Liabilities:
Wife               Suburb N       mortgage  $159,476
Wife               Director’s loan from W Services  $ 22,965
Superannuation:
Wife               Australian Super  $104,147
Husband       Australian Super  $ 43,158
Husband       Ausfund Super  $      298

Unjust or unfair not to make orders

Firstly, the Court should determine whether it is just and equitable to make a property settlement order. The Court needs to conclude that it would be unjust or unfair to leave present property rights intact.
In many cases this requirement is readily satisfied where the parties are no longer in a marital or de facto relationship and thus, for example, the common ownership or use of property by husband and wife will no longer be possible or the express or implicit assumptions that underpinned existing property arrangements, such as the accumulation of assets or financial resources by one for the benefit of both, have been brought to an end with the relationship.
In particular, such a circumstance arises where both parties seek adjustment orders but are unable to agree as to same.
In this matter over the period of the parties’ relationship, which was for nearly 11 years until physical separation, the parties accumulated property and financial resources. The strong inference being that such assets were accumulated for the common purpose of providing for their life into the future. Such accumulation continued by reason of increasing property values after separation and the ongoing operation of the company.
As a consequence of the commencement of proceedings some years after separation as to property settlement, in respect to which both parties seek disparate property adjustment orders, identified earlier in these reasons, the Court is satisfied that it is just and equitable to make orders as to property adjustment under section 79 of the Act.

The balance sheet for adjustment purposes

That ultimate balance sheet for adjustment between the parties, following submissions, is set out below and represents the property, the liabilities and financial resources of the parties at the time of hearing agreed for the purposes of adjustment:
Assets:
Joint              4 M Road, Suburb P  $530,000
Joint              4a M Road, Suburb P  $270,000
Joint              4b M Road, Suburb P  $265,000
Joint              3 I Street, Suburb L  $410,000
Wife               4 I Street, Suburb L  $410,000
Wife               Holden motor vehicle  $    4,000
Wife               Motorcycle      $ 17,000
Husband       Holden motor vehicle  $    4,299
Husband       Motorbike       $    4,200
Wife               CBA account - …865  $    4,734
Wife               CBA account - …576  $ 28,453
Husband       St George bank - …447  $    5,963
Wife               Telstra shares  $    4,830
Wife               Shareholding in W Services  $630,000
Wife               Household contents  $ 20,000
Husband       Caravan  $    9,445
Husband       Telstra shares  $    2,892
$2,620,816
Liabilities:
Wife               Director’s loan from W Services     $ 22,965
$2,597,851
Superannuation:
Wife               Australian Super  $104,147
Husband       Australian Super  $ 43,158
Husband       Ausfund Super  $      298
$147,603
The total asset pool for adjustment is $2,745,454.

Contributions

The Court is next required to evaluate and assess contributions, not only in the context of their asserted monetary value but also in the context of indirect contributions of a non-financial nature, to the accumulation and preservation of assets and the parties’ roles in so far as homemaker and parenting.

In Kessey & Kessey(1994) FLC 92-495 at 81,151 the Full Court made clear that ultimately all that is necessary is to evaluate the weight that should be given to each party’s contributions relative to the contributions of the other party:
... In many – indeed probably in most – property settlement cases the Court has to evaluate and assess contributions to property in the absence of precise valuations of the contributions in question. Indeed, where the contributions to property are indirect or non-financial, precise valuation is impossible, and even where the contributions are direct or financial so that a valuation might be provided, other factors (not capable of precise mathematical statement) may well have eroded the initial value of such contributions. In a case such as the present, it is not necessary to arrive at precise mathematical valuations of the parties’ contributions - all that is necessary is to evaluate the weight that should be given to each party’s contributions relative to the contributions of the other party.
In assessing contributions the Full Court in Harris & Harris (1991) FLC 92-254 observed at 78,705:
The task of the court in proceedings under section 79 is not akin to an accounting exercise. To borrow a phrase used by McLelland J in Davey v Lee (1990) DFC 95-084; (1990) 13 Fam LR 688 at 689 in relation to section 20 of the De Facto Relationships Act 1984 (NSW) ''the Court is required to make a holistic value judgment in the exercise of a discretionary power of a very general kind”.
It is submitted by counsel for the wife that contributions overall should favour the wife as to 70 per cent and as to 30 per cent to the husband. He submits that this adjustment is called for, by reason of the wife’s initial contribution that exceeded that of the husband, together with the inheritance of some $29,000 from her father’s estate and receipt by her of some $50,000 in a compensation verdict.
On the asset pool agreed for the purposes of adjustment that would create a disparity between the parties of $1,098,000. The equity in the wife’s property at cohabitation was about $170,000. In addition she had some other modest assets. The husband introduced into the relationship the business that he ran that ultimately provided for the parties during the entirety of their relationship and has continued to provide for the wife post-separation by reason of her own personal exertion continuing to operate the company. The husband has also continued to receive his share of rent in relation to the property rented by the company. This partially offsets the wife’s initial contribution.
The primary balance sheet asset of the company has at all times been the land and buildings from which the business is conducted, those being the premises at 1 I Street, Suburb L purchased in November 1999 by the company.
As at 30 June 2004, shortly after separation, the business had a value of about $197,000. This figure comprised in substance the net equity at that time in the underlying real estate, together with the sum of about $110,000 owed to the company by the wife at that time.
Subsequent to separation in 2004, the wife has been the principal of the business, and in the years during the husband’s incarceration and after his release, she has continued to be so. However, the history of the business demonstrates that net profit over the years has been minimal and the business has, in reality, paid salaries and director’s fees to the wife as principal. Her contributions, in this regard, have not, in general terms, increased the value of the business, save that income generated has been applied to discharge the mortgage secured over the underlying real estate. Otherwise, the wife has received remuneration for her efforts by way of salary and director’s fees over the years since separation. This ongoing contribution by the wife is deserving of recognition.
The current value of the company is agreed at $630,000, and of that sum, the value of the underlying real estate premises represents $456,000, with the balance of the valuation represented mostly by cash at bank, stock on hand and the wife’s director’s loan. The primary cause of the accretion in value of the company has been the increase in value of the underlying real estate over time.
Counsel for the husband submitted that initial contributions would favour the wife, but contributions to the company and other assets should be seen as equal to the date of separation as the husband had the expertise and ongoing contacts to ensure the viability of the business until separation.
Overall, to the date of hearing, counsel for the husband submitted that contributions should be regarded as equal. However, counsel for the husband did not articulate his underlying premise in this regard and made no comment in relation to the wife’s initial contribution, inheritance or compensation payment received during cohabitation and how they would be offset by other contributions by the husband.
The introduction into the relationship by the wife of the property at the commencement of cohabitation, a property that had potential subdivision prospects, her inheritance, her compensation funds and the sale proceeds of the Suburb B investment property are deserving of recognition.
Significantly, the present value of the asset pool is primarily attributable to increasing property values over time, as distinct from any particular contribution by a party, other than identified above.
The wife’s children formed part of the parties’ household for various periods and income derived from the company by both parties contributed to their welfare. In respect to the husband, this represents a contribution that can be considered in the context of section 75 (2)(o), but in the circumstances of this case, it is appropriate to consider it a modest offset as against the wife’s contributions.
Overall, the other non-financial and homemaker contributions are to be considered as equal.
Accordingly, overall the Court finds that contributions favour the wife as to 65 per cent to the husband’s 35 per cent. Such an adjustment creates a disparity of about $823,636 between the parties.

Section 75(2) Factors

The Court is next required to consider section 75(2) factors as are applicable.
The Court has had regard to all of the relevant factors, but particularly to each of the considerations set out below:

The parties’ age and health

The wife is presently aged 57 years and is in good health.
The husband is presently aged 54. His health circumstances have been considered in detail above.

Income and resources of the parties

The Court has had regard to the present assets, financial resources and liabilities of the parties as set out above.
The wife is working in the company with an income of about $78,000 per annum. She proposes to continue to operate the company. She, subject to the company’s trading circumstances, may have some prospect of distribution from profits.
The husband is in receipt of workers compensation payments and, at present, some rent. He has limited prospects of anything other than manual employment, even if his health enables him to undertake such work. That prospect is problematic by reason of his agitated and unpredictable behaviour at times.

Commitments for support

The wife makes no complaint about her capacity for her own support.
The husband, however, at present lives in somewhat straitened circumstances. He is residing in a rented caravan on a property owned by his brother and sister-in-law with that property, itself, under threat of mortgagee sale. His regular income from workers compensation payments and part rent from one of the parties’ jointly owned properties provides him with a most modest income. Otherwise, at present, he has been able to secure a preliminary capital payment in relation to his personal injuries claim.
The husband seeks his property entitlement by way of a cash payment. Thus, on the making of orders by the Court, and subject to the cash payment to him, his income will be reduced by the rent he receives, but thereafter supplemented by interest he will be able to earn on the capital payment paid to him. Such payment will be in the order of $890,000. At 5 per cent, he will accrue interest the rate of about $45,000 per annum.
The husband has pending a personal injuries claim in respect of which liability has been admitted and subject to quantum the husband will receive the funds reflecting past economic loss, future medical needs and future economic loss. It is a reasonable expectation that his circumstances, once he receives his compensation funds, will be satisfactory.

The parties’ superannuation etc.

The wife has entitlements in an accumulation superannuation fund that will increase over time with statutory contributions.
The husband has modest entitlements and, at least in the foreseeable future, will not accrue any by reason of his health circumstances.
Counsel for the husband submits that an adjustment in favour of the husband of 20 per cent is called for, even though the factor in considering the husband’s health and capacity for work will, in effect, be met from the husband’s personal injuries claim. Such an adjustment would see a disparity of over $1,000,000 between the parties. Such an adjustment is not called for.
Counsel for the wife submits that no adjustment is called for by reason of the husband’s expectations from his personal injuries claim.
Considering the relevant factors referred to above, in all the circumstances, the Court agrees that no adjustment is called for.

Other considerations

The orders proposed have no effect on the earning capacity of either party.

Overall

The husband seeks an order that he receive a cash payment reflecting his entitlement to property. The primary assets of the parties are in real estate and, accordingly, any payment to the husband will depend upon firstly, the wife’s ability to finance all or part of that payment in the short term, and secondly, the realisation by her, if necessary, of such property as is required to meet the payment to the husband.
The husband is entitled to 35 per cent of the property pool available for adjustment. This is the sum of $960,909.
He has in his possession assets to the value of $70,255. He is entitled to a payment of $890,654. Such payment will be rounded to $890,000.
The wife will be required to pay to the husband the sum of $250,000 within 6 weeks of the date of orders, a further sum of $250,000 within three months from the date of orders, in consideration of which the husband shall transfer his interest in jointly held properties to the wife, and a final payment of $390,000 within 6 months from the date of orders.
The deferred final payment is to facilitate the wife, if necessary, selling property to meet the payment to the husband. Interest will accrue on any late payment by reason of the Rules.
The Court is satisfied that the proposed orders are both just and equitable and appropriate.

I certify that the preceding one hundred and forty-five (145) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 20 December 2013.

Legal Associate:

Date: 20 December 2013

[2013] FamCA 1022

Key Legal Topics

Areas of Law

Family Law

Property Law

Legal Concepts

Appeal

Causation

Damages

Duty of Care

Negligence

Remedies