Macey and Macey
[2017] FCCA 52
•24 January 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MACEY & MACEY | [2017] FCCA 52 |
| Catchwords: FAMILY LAW – Property – undefended – Husband’s failure to participate in the proceedings – Section 75(2) factors – business assets – Husband’s failure to provide full and frank disclosure – failure to comply with orders and directions of the Court. |
| Legislation: Family Law Act 1975, ss.75, 75(2), 75(2)n, 79, 79(2), 79(4), Part VIIA Federal Circuit Court Rules 2001, rr.1.03, 9.03(2), 13.03C, 16.05 Federal Court of Australia Act 1976, ss.37M, 37N |
| Cases cited: Allesch v Maunz [2000] HCA 40 Irwin v Irwin [2016] FCA 1565 |
| Applicant: | MS MACEY |
| Respondent: | MR MACEY |
| File Number: | MLC 9 of 2016 |
| Judgment of: | Judge Stewart |
| Hearing date: | 2 December 2016 |
| Date of Last Submission: | 2 December 2016 |
| Delivered at: | Melbourne |
| Delivered on: | 24 January 2017 |
REPRESENTATION
| Counsel for the Applicant: | Mr Puckey |
| Solicitors for the Applicant: | Camerons Lawyers Pty Ltd |
| No appearance by the Respondent. |
ORDERS
The Husband forthwith make payment to the Wife to her nominated bank account the sum of $36,240.00 pursuant to Court orders made on 1 March 2016 and $1,650.00 pursuant to Court orders made on 17 August 2016.
The Husband pay to the Wife the sum of $274,000.00 (“the payment”) within 45 days from the date hereof (“the date”).
Contemporaneously with the payment:-
(a)the Husband retain to the exclusion of the Wife, and the Wife relinquish all her right, title and interest in:-
(i)Company A;
(ii)Company B;
(iii)Company C; and
(iv)Company D;
(collectively referred to as “the business”); and
(b)the parties do all such acts and things and sign all such documents to remove the Wife from any office she may have in the business.
Pending the payment:-
(a)the Husband be and is hereby restrained by injunction from and/or causing the business from selling, encumbering, disposing or depleting the interest of the parties or either of them in the business, save and except by written consent of the parties or otherwise in the ordinary course of business; and
(b)the Husband and the Wife hold their respective interests in the business upon trust pursuant to these orders.
In the event that the payment has not been made by the date, the Husband, in his personal capacity or in his capacity as director and/or partner of the business forthwith arrange for the assets of the business to be sold out of Court (“the business sale”) on terms and conditions as agreed between the parties and failing agreement to be determined by such other agent nominated by the Wife, and upon completion of the business sale, the proceeds of the business sale be applied in the following order and priority:-
(a)firstly, to pay all costs, commissions and expenses of the business sale;
(b)secondly, to discharge any encumbrance affecting the assets to be sold;
(c)thirdly, so much of the payment outstanding owing to the Wife with interest pursuant to statute;
(d)fourthly, so much of the loan facilities still owing as is required to release the Wife from the guarantee to Bank A in the sum of $589,500.00 (“the guarantee”); and
(e)fifthly, the balance to the Husband.
For the better implementation of order 5 hereof, the Husband shall pay to the selling agent any sums requested for advertising or auction expenses and the Husband shall be reimbursed of such payments from the sale proceeds of the business sale before any division to the parties.
The Husband forthwith refinance any and all loan facilities and do all such acts and things and sign all such documents in order to release the Wife from the guarantee.
The Husband forthwith assume all liability for and shall pay and indemnify the Wife in respect of any and all debts and liabilities, now and in the future, of the business, including but not limited to the guarantee and any and all income and other tax liability assessed or to be assessed accruing to the business and/or individually to the parties arising out of the conduct of the business and/or the payment.
The Wife retain the real property situate at Property A in the State of Victoria, being more particularly described in Certificate of Title (omitted) (“the Property A property”) to the exclusion of the Husband and the Husband relinquish all his right, title and interest in the Property A property.
The Husband indemnify the Wife and keep the Wife indemnified with respect to the following:-
(a)the loan from Bank B for the Husband’s jetski;
(b)the loan for the Husband’s 2015 (omitted) Motorcycle;
(c)the loan from (omitted) Financial Services for the (omitted) Ute; and
(d)the loan from Mr J and Ms M in the sum of $15,000.00.
The Wife indemnify the Husband and keep the Husband indemnified with respect to the following:-
(a)the (omitted) Credit Card;
(b)the (omitted) Visa Credit Card; and
(c)the loan from Mr J and Ms M in the sum of $244,874.00.
Each party shall do all such acts and things reasonably required by the other including the signing or execution of all necessary documents to give effect to the provisions of these orders within 14 days of a written request to so do.
If either party refuses or neglects to sign or execute and return a document within 14 days of a written request to do so pursuant to order 16 hereof then the Registrar of the Family Court of Australia at the Melbourne Registry is hereby appointed under section 106A of the Family Law Act 1975 to sign or execute such document on behalf of that party upon lodgment of such document and the filing of an affidavit of a solicitor on behalf of the requesting party as to the said neglect or refusal.
A defaulting party pursuant to order 17 hereof shall pay the other party’s costs of and incidental to such request and production of documents to the Registrar on an indemnity basis.
Unless otherwise specified in these orders and except for the purposes of enforcing the payment of any monies due under these or any subsequent orders:-
(a)each party be solely entitled to the exclusion of the other to all property (including choses in action) in the possession of such party as at the date (the furniture, personal possessions and like chattels in the Property A property are deemed to be in the Wife’s possession and the furniture, personal possessions and like chattels in the Property B property are deemed to be in the Husband’s possession);
(b)money standing to the credit of the parties in any joint bank account is to become the property of the Wife and the parties forthwith do all such acts and things and sign all such documents necessary to close any joint bank accounts;
(c)any monies standing to the credit of the parties in a bank account are to be retained by the party in whose name the account appears;
(d)each party hereby forgoes any claim they may have to any superannuation benefits belonging to or earned by the other;
(e)all insurance policies are to become the sole property of the owner named thereon;
(f)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders; and
(g)any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
Liberty is granted to each of the parties to apply in relation to the implementation and enforcement of these orders.
Liberty is granted to each of the parties to apply in relation to the terms of the sale and/or the business sale.
Pursuant to rule 16.05(2)(a) of the Federal Circuit Court Rules 2001, the Court may vary or set aside a judgment or order made in the absence of a party.
IT IS NOTED that publication of this judgment under the pseudonym Macey & Macey is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SHEPPARTON |
MLC 9 of 2016
| MS MACEY |
Applicant
And
| MR MACEY |
Respondent
REASONS FOR JUDGMENT
These are proceedings in relation to the Wife’s application for a property adjustment pursuant to section 79 of the Family Law Act 1975 (“the Act”).
The proceedings have been heard on an undefended basis in the absence of the Husband. I am well satisfied that the Husband is aware of the proceedings but has not appeared to either defend the application of the Wife, nor prosecute the orders sought in his Response filed 3 March 2016.
Before I turn to the Husband’s lack of participation in the proceedings I shall briefly set out the background of the parties and the circumstances of their marriage.
These proceedings come before the Court on the Initiating Application of the Wife. The Wife seeks orders in accordance with her Amended Initiating Application filed 14 November 2016, shortly prior to hearing.
In essence, the Wife seeks orders that the Husband retain his interests in a business comprised of four corporate entities:-
a)Company A;
b)Company B;
c)Company C; and
d)Company D.
I shall refer collectively to those business interests as “the business”. In general terms, the business operates as a (omitted) business and has been valued on an expert basis by Mr B (“Mr B”), a forensic accountant who was engaged by the Applicant Wife to prepare valuations.
In her Amended Initiating Application, the Wife proposes that the Husband retain the business assets and indemnify her with respect to liabilities of the business. In terms of the other assets available for distribution between the parties the Wife seeks:-
a)to retain the real property situate at Property A in the State of Victoria, being more particularly described in Certificate of Title Volume (omitted) (“the Property A property”);
b)further orders with respect to the retention of various chattels together with various indemnities with respect to assets retained variously by each of the parties; and
c)for the Husband to pay the Wife the sum of $274,000, together with two further payments pursuant to previous court orders in the total sum of $37,890.
The Wife sets out in detail the orders that she seek in the proceedings in her Amended Initiating Application. In a general sense, the Wife seeks a division of assets to her of approximately 60% and 40% to the Husband.
The Wife sought to proceed on an undefended basis and submissions were received during the circuit sittings of the Court in Property A(omitted) on 2 December 2016. On that day the Husband was called but did not appear. I have reserved judgment in these proceedings to consider the matter, particularly given the decision of the Full Court of the Family Court of Australia in Turner & Turner & Anor [2016] FamCAFC 121.
Background
The Wife was born in 1971 and is 45 years old. The Husband was born in 1969 and is 47 years old. The parties met in 1994 and married in (omitted) 1995, around 12 months later.
Their marriage produced two children, [X] (“[X]”) born (omitted) 1998 and [Y] (“[Y]”) born (omitted) 2000 (collectively “the children”). [X] is now 18 years old and [Y] 16 years old. Both [X] and [Y] live with the Wife and spend limited time with the Husband on an informal basis.
[X] has special needs and has been diagnosed with Asperger Syndrome, Anxiety Disorder, Attention Deficit Disorder and learning difficulties. Due to his special needs, [X] will continue to require financial assistance for the entirety of his life.
The parties separated in (omitted) 2014 and divorced on 4 July 2016 after approximately 19 years of marriage and cohabitation.
The Husband is self-employed, running the business built up by the parties during their marriage. Although that business is run through various corporate entities, the business in its totality has been acquired and developed by the parties during their marriage. The Husband has been primarily involved with undertaking business activities throughout the marriage.
The Wife is currently employed as an (occupation omitted) working on a permanent part-time basis (approximately 33 hours a week). During the marriage the Wife assisted the Husband in the business completing administrative tasks, which ceased upon separation. During the marriage the Wife was primarily responsible for the care of the children and home duties.
The property
Before and during their marriage the parties acquired assets, resources and superannuation interests. The parties worked hard during their marriage in their respective roles and the evidence suggests that there is now an asset pool of around $968,500 (including superannuation) which is available for adjustment.
Six months prior to marriage the parties purchased a real property in Property C, in the State New South Wales (“the Property C property”). The purchase was funded by equal contributions of $18,000 to the deposit and they obtained a mortgage. They commenced living together in that property. Around five years later the Property C property was sold for a profit and the parties purchased the Property B property in Victoria as a commercial property to establish and expand the business which had been commenced by the parties in partnership two years earlier. That Property B property was initially purchased by the parties as joint registered proprietors and was later put into the Wife’s sole name. This occurred almost contemporaneously with the business being incorporated as Company A in 2007.
Following separation in (omitted) 2014 the parties purchased a block of land in Property A and the following year entered a contract for the construction of a home on that land. The vacant land was funded by way of proceeds from the sale of a (omitted) in the business and the Husband made a further payment of $99,500 in 2015, presumably by way of funds derived from the operation of the business.
The Husband worked in the business and was assisted by the Wife from time to time. The Wife also engaged in paid employment away from the business, particularly at around the time of the global financial crisis as the business was struggling. It would seem that the parties both made significant contributions to the acquisition, conservation and improvement of matrimonial assets and resources.
The business evolved from the one entity corporate structure into a three entity structure in 2010 when the further companies, Company B and Company C were established.
In order to complete the overall picture of events I note that in July 2015 there was a violent incident. The incident resulted in an Intervention Order being obtained by the police on behalf of the Wife. That Intervention Order expired in February 2016.
The procedural history
The Wife instituted her application on 1 January 2016, seeking various orders for property adjustment and superannuation interests, together with an unspecified cash payment for an amount “as determined by the Court”. On an interim basis the Wife sought maintenance in the sum of $1,200 per week, other orders with respect to financial disclosure, valuations, a financial injunction and orders designed to facilitate payments of liabilities owed by the parties and/or the business. The Wife’s application was supported by an affidavit and a Financial Statement.
The Husband filed a Response on 3 March 2016 via his then solicitors. He sought “orders so as to achieve a 50/50 division of matrimonial property between the parties” with no further particularity at that time. The interim orders sought by the Husband were various orders with respect to financial disclosure, financial injunctions, valuations and an order for the exclusive use and occupation of the Property B property (from which the business was run). The Husband supported his Response by an affidavit and a Financial Statement.
Orders were made on 1 March 2016 in the Property A sittings of this Court. Both parties were represented by Counsel. The orders provided for procedural directions and the proceedings were listed for a Conciliation Conference and final hearing. Additionally, the parties consented to a number of orders including a payment by the Husband of $1,200 per week to the Wife, the characterisation of which was to be determined at final hearing. There were further orders made for financial disclosure, injunctions restraining the Husband’s dealings with the business (other than in the ordinary course of business), orders for joint valuations and an order for the Husband to meet various payments (including mortgage repayments for the Property B property).
On 4 May 2016 the parties were scheduled to attend a Conciliation Conference with a Registrar of this Court. That Conciliation Conference was vacated administratively on 29 April 2016 and the order records that the parties had jointly requested that the Conciliation Conference be vacated on the basis that they had been unable to undertake valuations.
On 25 May 2016 further orders were made by consent. On this occasion the Wife was represented by Counsel and the Husband was represented by his solicitor. The orders provided for the Husband to make up arrears of maintenance pursuant to the orders which had previously been made by consent on 1 March 2016. Further orders were made for the sale of the Property B property, with the net proceeds of sale to be placed in an interest bearing trust account by the Wife’s solicitors. There were further orders made to facilitate the sale of the Property B property and for financial disclosure. In lieu of the Conciliation Conference the parties were to attend a private mediation, and procedural orders were made listing the proceedings for final hearing in the August sittings of the Court in Property A.
On 9 August 2016 the solicitor for the Husband filed a Notice of Intention to Withdraw as Lawyer. That notice incorporates a clause which states:-
Regardless of paragraph 3 above, [advising the Husband that should he fail to appoint another lawyer or file a notice of address for service that he may not be served with future documents] the Court and other parties involved in the case can use the following address and telephone number (which is your last known residential or business address and telephone number) as your address for service (your contact address) until you appoint another lawyer or file a notice of address for service.
That document also specified the next hearing date of 17 August 2016 and pursuant to rule 9.03(2) of the Federal Circuit Court Rules 2001 that notice was required to be served on the Husband at least 7 days prior to the filing of the notice. On 16 August 2016 the solicitor for the Husband filed a Notice of Withdrawal as Lawyer with the same address specified as the Husband’s last known residential or business address (being the Property B property) and telephone number in the Notice of Intention to Withdraw as a lawyer.
The Wife filed a further affidavit on 9 August 2016.
On 17 August 2016 the matter was listed for final hearing. There was no appearance by or on behalf of the Husband. On that day orders were made in the Husband’s absence that he comply with the payment of maintenance and arrears owing, pursuant to the March and May orders. Further orders were made that the Husband comply with the order to attend financial mediation mediation pursuant to the May orders, with such mediation to take by 31 October 2016. There was an order for the transfer of water share rights to purchaser of the Property B property, which had been sold, and an order that the Husband pay the Wife’s costs in the sum of $1,650. The matter was again listed for final hearing on 30 November 2016.
On 14 and 15 November 2016 the Wife filed a further affidavit setting out the history of the matter, an Amended Initiating Application setting out the particularised orders sought by her and an updated Financial Statement. In addition to those documents the Wife also filed an Outline of Case document.
On 1 December 2016 the Wife filed an affidavit sworn by Mr B attaching his business valuation report dated 21 October 2016 and a supplementary report dated 9 November 2016. The Wife also filed an affidavit sworn by Mr W (“Mr W”), a Certified Practicing Land Valuer, deposing to the value of the Property A property.
The matter was listed in the November sittings of this Court on 30 November 2016. Due to the busy nature of a circuit list the matter was rolled over from that date to 1 December 2016 and then to 2 December 2016. The Husband did not appear on any of those days.
Accordingly, the Wife sought orders on an undefended basis on 2 December 2016 and I heard submissions with respect to her application. On the date of hearing, Counsel for the Wife tendered a letter dated 15 November 2016 that was forwarded by the solicitor for the Wife to the Husband. That letter advised the Husband of the listing date of 30 November 2016 and enclosed the Wife’s Amended Initiating Application, her recent Financial Statement, her most recent affidavit and the Outline of Case document prepared on her behalf.
An affidavit of personal service of the aforementioned documents was filed on behalf of the Wife on 28 November 2016, but given the nature of circuit had not yet been placed on the Court file and as such was placed into evidence at the commencement of the hearing. The affidavit of service set out that personal service had been effected on the Husband on the morning of 18 November 2016. That document evidences the following conversation between the deponent Mr A (“Mr A”) and the Husband:-
I/S [I said] Are you Mr Macey?
H/S [he said] Yes.
I/S Is your former wife Ms Macey?
H/S Yes.
I/S I have documents from her Solicitor regarding a schdulled [sic] court hearing in Property A on 30 November 2016.
H/S Thanks.
The legal principles with respect to undefended hearings
Pursuant to rule 13.03C of the Federal Circuit Court Rules 2001 (“FCC Rules”):-
(1) If a party to a proceeding is absent from a hearing (including a first court date), the Court may do 1 or more of the following:
(a) adjourn the hearing to a specific date or generally;
(b) order that there is not to be any hearing, unless:
(i) the proceeding is again set down for hearing; or
(ii) any other steps that the Court directs are taken;
(c) if the absent party is an applicant--dismiss the application;
(d) if the absent party is a party who has made an interlocutory application or a cross-claim--dismiss the interlocutory application or cross-claim;
(e) proceed with the hearing generally or in relation to any claim for relief in the proceeding.
(2) If a party to a proceeding is absent from a hearing, the Court may also make an order of the kind mentioned in subrule 13.03B(1), (2) or (4), or any other order, or may give any directions, and specify any consequences for non-compliance with the order, that the Court thinks just.
The High Court authority of Allesch v Maunz [2000] HCA 40 stands for the proposition that a party has the right to appear or be heard on a matter. As was pointed out by Justice Kirby at paragraphs 38 to 40:-
…Sometimes, through stubbornness, confusion, misunderstanding, fear or other emotions, a party may not take advantage of the opportunity to be heard, although such opportunity is provided. Affording the opportunity is all that the law and principle require.
Decision-makers, including the courts, cannot generally force people to protect their own rights, to adduce evidence or other materials, to present submissions or to act rationally in their own best interests. This consideration may be especially relevant in relation to the Family Court where emotions, often engendered by the highly personal issues involved, can sometimes cloud rational thought.
Nor are courts obliged to delay proceedings indefinitely because one party, although proved to be on notice of the proceedings, refuses or fails to appear in person or to be represented by a lawyer or some other individual permitted to speak for them who can explain the need for an adjournment. The rights of other parties are commonly involved. In the Family Court, the rights of non-parties (especially children) may be affected. Additionally (as this Court has itself accepted), the rights of the public in the efficient discharge by courts of their functions must be weighed against unreasonable delay in concluding litigation.
Furthermore, in the recent decision of Justice Charlesworth in the Federal Court of Australia of Irwin v Irwin [2016] FCA 1565, and in analysing the approach of hearing proceedings in the absence of a party, her Honour said at paragraphs 38 and 39 as follows:-
It is the obligation of a party to an action in the Court to conduct the proceeding in a way that is consistent with the overarching purpose: s 37N.
The overarching purpose of s37M does not include the objective of punishing a litigant in respect of his or her conduct in a proceeding. Having said that, it must be recognised that many civil practice and procedure provisions empower the Court to make orders having the practical effect of imposing an adverse and serious consequence upon a party where the party has departed in some way from the requirements of some other civil practice and procedure provision or an order made pursuant to such a provision. The purpose for imposing the consequence is not, however, to punish the party concerned, but to promote the overarching purpose stated in s 37M of the Act.
Rule 1.03 of the Federal Circuit Court Rules 2001 states as follows:-
(1) The object of these Rules is to assist the just, efficient and economical resolution of proceedings.
(2) In accordance with the objects of the Act, the Rules aim to help the Court:
* to operate as informally as possible
* to use streamlined processes
* to encourage the use of appropriate dispute resolution procedures.
(3) The Court will apply the Rules in accordance with their objects.
(4) To assist the Court, the parties must:
* avoid undue delay, expense and technicality
* consider options for primary dispute resolution as early as possible.
(5) If appropriate, the Court will help to implement primary dispute resolution.
Although Charlesworth J was referring to the provisions of section 37M of the Federal Court of Australia Act 1976, which outlines the overarching purpose of civil practice and procedure provisions, the principles set out are echoed in the objects of the Federal Circuit Court Rules 2001, namely rule 1.03. Therefore, Her Honour’s comments are relevant of undefended proceedings in family law matters with the additional consideration that the approach in proceedings for an adjustment of property interests pursuant to Part VIIA of the Family Law Act 1975, is overlaid by a requirement to consider whether it is just and equitable to make an order at first instance (see Stanford v Stanford [2012] HCA 52) and ultimately, and if appropriate, to make orders which do justice to the parties having regard to, inter alia, the provisions of sections 79 and 75 of the Family Law Act 1975.
Accordingly, in assessing whether to proceed on an undefended basis I have regard to the serious nature of the consequences which I am about to impose on the Husband whilst also considering the overarching purpose set out in rule 1.03 as it relates to each of the parties’ interests. In particular, I consider a balancing exercise between the consequences imposed on the Husband to proceed in his absence, and the interests of the Wife in having the matter determined with undue delay, expense and technicality.
I further note that rule 16.05 of the Federal Circuit Court Rules 2001 has an ameliorating affect with respect to the imposition of an order on the Husband. Rule 16.05 of the Federal Circuit Court Rules 2001 provides:-
Setting aside
(1) The Court may vary or set aside its judgment or order before it has been entered.
(2) The Court may vary or set aside its judgment or order after it has been entered if:
(a) the order is made in the absence of a party; or
(b) the order is obtained by fraud; or
(c) the order is interlocutory; or
(d) the order is an injunction or for the appointment of a receiver; or
(e) the order does not reflect the intention of the Court; or
(f) the party in whose favour the order is made consents.
(3) This rule does not affect the power of the Court to vary or terminate the operation of an order by a further order.
Although this rule does not impart a right to have the orders made in the absence of the Husband set aside, it does provide a procedure within the judicial processes of the first instance Court to revisit a decision made in the absence of a party. That would no doubt involve a consideration of why the absent party has failed to attend at the hearing, the merits of the absent party’s claim in the event that the original order is set aside, and numerous other matters relevant to the exercise of discretion. Nevertheless, it provides a procedure available without the necessity of resorting to the appeal process.
Should the matter proceed on an undefended basis?
It is appropriate to proceed with this matter on an undefended basis.
Having regard to the history set out above, I am satisfied that the Husband was, or reasonably should have been, aware that the proceedings were listed for hearing in the November/December sittings of this Court in Property A.
There are also other factors set out in the evidence which would tend to indicate a recalcitrant attitude by the Husband and which tend to suggest that his failure to participate in the proceedings is a deliberate decision made by him. For instance:-
a)in her first affidavit, the Wife describes the Husband as becoming increasingly difficult following separation in 2014, especially when there were discussions about property issues;
b)in general terms, the Wife describes an overbearing attitude by the Husband during the marriage which was characterised by emotional blackmail and threats;
c)following separation, the Wife depicts unusual behaviour exhibited by the Husband, including driving a large “(omitted)” truck into the driveway of her residential property. The Wife perceived this action as a threat of assault. The Husband denies this was a violent incident in his affidavit and provides a context for his actions, although he does agree he drove the truck close to her residence when he discovered a real estate agent on the property who was there to conduct a valuation;
d)following separation the Husband indulged in extravagant spending on holidays, the purchase of a motor bike (omitted) the purchase of a new utility vehicle, and he also increased debt on the business. The Husband in his affidavit denies excessive spending and irresponsible financial decisions;
e)the Husband also refused to honour a loan from the Wife’s parents and engaged in spending and trading within the business which was out of character. In his affidavit the Husband acknowledges the loan from the Wife’s parents, confirmed by way of Deed, but says that he does not think the Wife’s parents would enforce payment. The Wife’s concern was that these actions were undertaken to make good the Husband’s angry threats to ensure the business was insolvent and that there was no property to be divided between them;
f)although the Husband and/or the business continued to pay the sum of $1,200 to the Wife following separation (which the Husband describes as being child support payments), following the orders in March 2016 for payment of that sum and the orders in May 2016 for payment of arrears in default of compliance with the March 2016 order, the Husband has not complied with the orders;
g)although the Husband in his affidavit had professed a willingness to supply financial disclosure, he has failed to comply with the March 2016 and May 2016 orders and failed to remove a caveat which he had agreed to do and was ordered to do;
h)the Husband unilaterally sold a vintage (omitted) motor vehicle through the business for $132,000 which he said was to “prop up the business”; and
i)the Wife received an SMS text message from the Husband in or around early August 2016 just prior to his lawyers withdrawing saying “Looks like it is going to go on for another few years then…”, which was a reference to the continuing litigation.
These matters caused the Wife to assert that the Husband had shown a reckless disregard for the proceedings. I agree that the Husband has repeatedly failed to honour his obligations pursuant to Court orders and seems intent on avoiding an outcome in the proceedings, culminating in his non-attendance at Court and his failure to comply with orders and directions to file documents for trial.
In the circumstances of this case, it would be unreasonable and untenable to continue the proceedings and provide the Husband with a further chance to participate, particularly in circumstances where it is unlikely he would avail himself of a future opportunity to be heard. Further, it would not do justice to the Wife, who has adhered to her obligations in this litigation, to deny an outcome to her at this stage.
Accordingly, I propose to proceed with this matter on an undefended basis.
Evidence and Documents
The Wife relies on the following documents which I have read and taken into account:
a)her Initiating Application filed on 1 January 2016;
b)her Financial Statement filed on 1 January 2016;
c)her affidavit affirmed on 22 December 2015 and filed on 1 January 2016;
d)her affidavit affirmed on 9 August 2016 and filed on 9 August 2016;
e)her Amended Initiating Application filed on 14 November 2016;
f)her Amended Financial Statement filed on 14 November 2016;
g)her affidavit affirmed on 14 November 2016 and filed on 15 November 2016;
h)the affidavit of service on the Husband filed by the Wife on 28 November 2011; and
i)the affidavits of Mr B and Mr W, affirmed and sworn respectively on and filed on 1 December 2016.
Although the Husband has not participated in these proceedings I have read the following documents:-
a)his Response filed on 3 March 2016;
b)his Financial Statement filed on 3 March 2016; and
c)his affidavit sworn on 22 February 2016 and filed on 3 March 2016.
These documents had been previously filed by him in the proceedings.
Where there is no significant controversy between the Husband’s version of events and the Wife’s version of events I have taken the evidence of the Husband into account. Where the Husband has made concessions and admissions against interests in his own sworn evidence I have also taken that into account. Where there is a conflict between the evidence of the Husband and the evidence of the Wife, which has an impact on the outcome of these proceedings, I have accepted the evidence of the Wife on the basis that the Husband has had an opportunity to be heard in these proceedings and has failed to appear to prosecute his case and make assertions as to facts and matters made by him.
Given the matter proceeded on an undefended basis, there was no viva voce evidence provided by any witness and the matter proceeded on the papers. Given the way the evidence has been presented it is not practicable to refer to each and every issue raised in the proceedings, nor is it necessary to do so. If I have not referred to a particular fact or matter it does not necessarily follow that I have not had regard to it.
In these reasons, unless it is clear from the context that this is not so, a statement of fact is a finding of fact.
Consideration of the appropriate orders to be made
Part VIIA of Act provides for the division of property between parties to a marriage.
Section 79 of the Family Law Act 1975 enables the Court to make such orders as it considers appropriate in altering the interests of the parties in their property.
Section 79 sets out a number of significant matters that must be considered in order to determine what orders are appropriate.
The High Court considered the operation of section 79 of the Act in Stanford v Stanford [2012] HCA 52, and the provisions of section 79(2) and section 79(4).
The High Court said at paragraph 40:-
To conclude that making an order is “just and equitable” only because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act.
Their Honours further observed, at paragraph 42, that:-
In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied…
In this case, the factors which would suggest that it is just and equitable to make an order for alteration of property between the parties are:-
a)the fact that the parties have separated after years of marriage, during which they acquired property and superannuation interests either jointly or individually;
b)there are numerous items of property held by the parties or either of them which will require transfer and indemnities to separate the parties’ financial interests;
c)the parties have liabilities both within and without the ] business which will need to be allocated between them as to responsibility;
d)there are various guarantees and indemnities provided by the Wife which will require consideration;
e)following the separation of these parties there can and will no longer be the joint use and enjoyment of property available to the parties as there was during the relationship;
f)the Wife asserts that the Court should make a property order; and
g)the Husband, by virtue of his Response, concedes that the Court should make a property order.
In the circumstances of this case I am satisfied that the interests of justice and equity require that the Court should proceed to make a property order.
Short history of the acquisition conservation and improvement of property and resources
Prior to the marriage and cohabitation the parties jointly purchased the Property C property. The parties each contributed the sum of $18,000 for the deposit and jointly borrowed money from the (omitted) Bank, as it then was.
In 1998 the parties went into partnership in a business named Company D, as it then was.
In late 2000 the Property C property was sold and the net proceeds of sale as put by the Wife were approximating $120,000. At this time the parties purchased Property B property and relocated to the Property A region. That Property B property is close to the greater Property A city. That Property B property was used to purchase and fund the expansion of the ] business. The property was purchased for $320,000 utilising the proceeds of sale from the Property C property, a joint mortgage and shortly thereafter sum of approximately $35,500 from the Wife’s redundancy package. Initially the property was purchased in the parties joint names, however, in 2007 the Husband was removed from the title of the Property B property and the Wife became the sole registered proprietor. At this time the business was incorporated and begun trading as Company A. The business experienced hard times during the global financial crisis.
In October 2014 the parties purchased an empty block of land where the Property A property is now situated. The land was purchased for the sum of $121,000 that was wholly paid from the sale of a truck. In early 2015 the parties entered a contract a builder to construct a dwelling (the building of the Property A property) on the land, following which the Husband made a further payment of $99,500. These transactions took place after separation. In August 2015 the Wife entered into a loan agreement with her parents in the sum of $244,874 in order to complete progress payments to the builder of the Property A property.
In essence, the significant property of the parties available for division consists of the business assets, the Property A property motor vehicles and motorcycles. There are also some modest shareholdings, a boat and minimal cash investments.
The Wife filed an Outline Of Case Document setting out the pool of assets at page 5:-
ASSETS
Wife’s Figures
Husband’s Figures (per affidavit & Financial Statement 22 February 2016)
Property A property
$470,000 (as per valuation)
$464,000
(omitted) Bank Accounts x 2 (Wife)
$217.44
$Not known
150 ( omitted) Shares (Wife)
$12,000
$Not known
1062 (omitted) Shares
$6,403.86
$Not known
The Business (Comprising Company D partnership)
$545,082 (as per valuation)
$Not known
The Business (comprising Company A, Company B and Company C)
$NIL (as per valuation)
$303,414 – Husband estimates Company A to be worth $5,000,000 less debts of $4,696,586
Husband’s Bank Accounts x 2
$Not known
$2,500
2015 (omitted) motorcycle (Husband)
$25,000
$25,000
Jetski (Husband)
$15,000
$15,000
(omitted) Utility Ute (Husband)
$30,000
$20,000
Boat
$15,000
$8,000
Various motor vehicles and speedboat (registration (omitted)) purchased by Husband (Husband)
$Not known
$Not known
(omitted) bond
$1,675
$Not known
Sub-total
$1,120,378.30
$837,914
LIABILITIES
(omitted) Credit Card (Wife)
$5,805.08
$Not known
(omitted) Visa Credit Card (Wife)
$2,500
$Not known
Finance for 2015 (omitted) motorcycle (Husband)
$Not known
$20,000
Finance for (omitted) ute (Husband)
$Not known
$22,501
Finance for Jetski (Husband)
$Not known
$6,785
Husband’s loan from Mr J & Ms M
$15,000
$15,000
Wife’s loan from Mr J and Ms M
$244,874
$Not known
Potential Tax Liabilities for selling of shares/business assets
$Nominal
$Not known
Sub-Total
$268,179.08
$64,286
TOTAL CASH POOL
$852,199.22
$773,628
SUPERANNUATION
(omitted) Super (Wife)
$65,666.25
$Not known
(omitted) Super (Husband)
$42,038.41 (Form 6)
$37,000
(omitted) Super (Husband)
$8,545.21 (Form 6)
Total Superannuation
$116,249.87
$37,000
TOTAL ASSET POOL
$968,449.09
$810,628
In the pool of assets there are some unknowns with respect to the assets and liabilities held by the Husband due to the failure to comply with financial disclosure orders and his obligation to make full and frank financial disclosure generally.
For instance, the value of the (motor vehicle omitted) is not conceded by the Wife at $132,000 and there is a concern that it was disposed of by the Husband for less than its true value. It was conceded by Counsel for the Wife that the proceeds of that sale did go into the business. There are also issues with respect to various motor vehicles and a speedboat purchased by the Husband with an unknown value. Accordingly, although the Wife has made an attempt to estimate the value of the assets and liabilities between the parties it should be noted that that those figures are somewhat amorphous due to matters that are unknown to her.
The expert report of Mr B dated 21 October 2016 and his Addendum report dated 9 November 2016, affirmed in an affidavit by him on 1 December 2016 that was filed the same day, valued the business as at June 2015 to be worth $545,082. I accept that valuation. I should also note that that valuation has been prepared on 2015 figures as the 2016 financials had not been prepared by the Husband.
The Wife’s application.
The Wife asserts the following outcome as set out in her Outline Of Case Document:
a)that the Wife retain 60% of the cash pool, approximately in the sum of $511,319.53.
b)the Wife’s portion of the cash pool be retained as follows:
i)the Husband pay to the Wife the sum of $274,000;
ii)the Wife retain the Property A property;
iii)the Wife remains in possession of her bank account balances at $217.44;
iv)the Wife remains in possession of the shares in her name approximating the sum of $18,403.86; and
v)the Wife retain her (omitted) bond in the sum of $1675.
c)the Wife proposes that she retains the following liabilities:
i)her credit card, owing the sum of $8,30.08; and
ii)the loan from her parents, owing the sum of $244,874.00.
d)it is proposed by the Wife that the balance of the cash pool (i.e. non-superannuation assets) be retained by the Husband.
e)the Wife does not propose a superannuation split.
Accordingly, and in general terms, it is proposed that the Wife retain 60% of the cash asset pool and that each party retain superannuation entitlements held by them. The Wife holds marginally more superannuation entitlements then the Husband.
Contributions during the marriage
Section 79(4) of the Act requires consideration of the contributions of the parties. The relevant parts of section 79(4) are as follows:-
(4) In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:–
(a) the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c) the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent…
Taking contribution factors into account pursuant to section 79(4), it is the position of the Wife that the parties had nominal assets at the start of the relationship and equally contributed to the purchase of the Property C property, being the first matrimonial property.
Each of the parties made contributions to the acquisition of the business which is the significant assets between the parties. Although there was a division of labour between the parties with respect to home duties and the running of the business I accept that the Wife has made contributions to the business and the family property, including taking up part-time employment in 2010, when the business was experiencing an economic downturn due to the global financial crisis.
The marriage produced two children, and it seems to me that each of the parties contributed to the marriage to the best of the respective abilities. Furthermore, post separation the parties jointly acquired the Property A property with monies coming from their joint resources via the business and family borrowings.
When I assess contributions overall, both direct and indirect and financial and non-financial, I assess the parties respective contributions to the assets of the marriage as being roughly equal.
The Wife in her application seeks reimbursement of the $1,200 a week. I have considered whether or not to enforce that order or rather to take it in to account in a more general sense in terms of her post separation contributions. There is a further outstanding cost order in the sum of $1,650 which the Wife also seeks as a payment. On balance, I propose to enforce the order and have the payment made in total to the Wife as being an appropriate exercise of my discretion. Accordingly I will not take that into account as post separation financial contribution but rather note that the money will be paid to the Wife. Therefore, each of the parties post separation have made financial contributions to the welfare of the children generally post separation.
I will in a general sense, however, take into account the contributions made by the Wife to the welfare of the children personally post separation.
I now turn to assess the section 75(2) factors in so far as they are applicable to the parties in these proceedings.
The Wife is 45 and the Husband 47. Both parties enjoy good health. The Wife is employed outside of the home as an administrative assistant on a permanent part-time basis earning just over $51,000 per annum. I find that it is reasonable that the Wife that the works on a part-time basis given the demands of caring for the children, particularly [X] with his health issues of Asperger’s Syndrome and Attention Deficit Disorder. It is difficult to assess with accuracy Husband’s actual earnings due to his lack of financial disclosure and because he draws his income directly from the business. However, I note that he previously agreed to an order that he pay the Wife the sum of $1,200 per week from the business, notwithstanding that his deposed income in his Financial Statement filed in March 2016 was $300 per week. It must be said that the preparation of the Husband’s financial statement leaves a lot to be desired with many relevant features being absent.
I find that each of the parties have a capacity for further gainful remunerative employment.
The Wife has the two children of the marriage in her care. [X] is 18 but suffers from health difficulties and [Y] is 16. The children live with the Wife and spend time with the Husband on an informal basis, with no current formal parenting arrangements. Due to [X]’s health ailments it is likely that he will continue to be dependent on the Wife long into adulthood.
In addition to the Wife’s income from remunerative employment she receives some limited Centrelink benefits, including a carers allowance in relation to [X]. The Wife will continue to have the care of the children, which is a section 75(2) factor weighing in her favour.
Each of the parties have the usual commitments that are necessary to enable them to support themselves and, in the Wife’s case, the children. Besides the children I am not aware of any other obligation to support any other person on behalf of either of the parties. The Wife does not propose a continuation of the $1,200 payment per week and therefore her future maintenance is not under consideration.
Each of the parties should maintain a reasonable standard of living pursuant to the orders that I propose to make.
I find that the marriage has impacted on the Wife’s earning capacity. For example, when the marriage commenced in 1995 the Wife was promoted to a managerial position in the (employer omitted), and she gave up that position to relocate to Property C with the Husband. It is likely that the Wife’s income would have continued to improve without the move to Property C and then to Property A.
Pursuant to section 75(2)(n), I must consider the terms of any order made or proposed to be made under section 79. In relation to the property of the parties I agree with the submissions of the Wife at page 9 of her Outline of Case Document, which sets out as follows:-
The final orders sought may involve the Husband refinancing or restructuring the trucking business to make payment to the Wife out of the equity in the business.
It is noted that the expert report of Mr B indicate that if the trading history was repeated in 2016 and acquisitions of further major equipment were on hold then there would be an expected positive improvement in the cash position of the (omitted) business of $777,340.00. It is the expert’s opinion that “freehold land [Property B Property held by the Company D partnership] is under process of conversion to cash. There should be adequate ability to pay out the equity”.
The Property B Property is sold for $625,000.00. Settlement is on 30 November 2016. The proceeds will be used to discharge the mortgage of approximately $66,931.23 and two (bank omitted) loans secured by the Property B Property of approximately $602,929.23.
Although there is an anticipated shortfall of around $65,000.00 at settlement (taking into account sale expenses) it is expected that the Husband will be able to refinance or restructure the trucking business to meet the settlement payment to the Wife given that the two (bank omitted) loans to the business will be significantly paid out.
The sale of the Property B Property may be subject to capital gains tax. However, in Mr B’ expert opinion “as neither party had taxable profits in 2015, if this is repeated in 2017, the amount of capital gains tax may be reasonably light”.
The assets and property to be retained by the Husband will provide him with sufficient funds to discharge the order for payment without sale of the business or any consequent realisation costs which may then be incurred. I am therefore satisfied, in accordance with the principles set out at paragraph 69 of the Full Court’s decision in Turner & Turner (ibid):-
… in our view, there was some onus on the wife seeking orders in an undefended hearing to establish on the balance of probabilities that the fixed money order could be met from sources other than the sale of the shares if she was urging the court to ignore otherwise probable deductions.
that the Wife has discharged her onus and I do not need to allow for any discount in assessment of any assets or liability of the parties due to realisation costs.
There is a further final issue in terms of the Husband’s sale of the Vintage (motor vehicle omitted) which the Wife asserts was worth approximately $200,000, which the Husband undervalues as being worth $132,000. There is little evidence in relation to the value of that vehicle and whether it was sold for less than market value. I accept the evidence of the Wife that the monies went back into the business and therefore will have been taken into account in the business valuation. I do not make any further adjustment for this particular factor.
In consideration of the section 79 and section 75(2) factors, I am of the view that there should indeed be a 10% adjustment in the Wife’s favour. The section 75(2) factors weigh in her favour in terms of her care of the children and the other matters as set out. Accordingly, I propose to make the orders as sought by the Wife, which will result in her receiving approximately $170,439.84 more than the Husband.
The net effect of these orders is that the Husband will have approximately $170,439.84 less than the Wife, in that his 40% of the non-superannuation cash pool will equate to $340,879.69 in comparison to the Wife’s share of $511,319.53, and with the Wife retaining moderately more superannuation entitlements than the Husband.
Conclusion
In all circumstances, I find that the orders proposed are a just and equitable division of property between the parties.
I certify that the preceding ninety-three (93) paragraphs are a true copy of the reasons for judgment of Judge Stewart
Associate:
Date: 24 January 2017
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