MARTELLI & WHEELER
[2018] FCCA 3640
•20 December 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MARTELLI & WHEELER | [2018] FCCA 3640 |
| Catchwords: FAMILY LAW – Application for an adjustment of property interests – undefended hearing – jurisdiction in de facto proceedings – leave to proceed – applicable principles – respondent had taken no part, and filed no evidence, in proceeding – respondent had accordingly made no financial disclosure – necessity for the applicant to prove case in absence of evidence from respondent – applicable principles – modest asset pool – applicant solely responsible for the care of the children – applicant’s contributions of a magnitude to support making of the orders applied for – just and equitable that an adjustment of property interest be made. |
| Legislation: Evidence Act1995 (Cth), s.140 Family Law Act 1975 (Cth), ss.4AA, 44, 75, 79, 90RA, 90SB, 90SF, 90SK, 90SL, 90SM, 90SS, 90ST Family Law Rules 2004 (Cth), rr.11.01, 11.02 Federal Circuit Court Rules 2001 (Cth), rr.24.03, 25.12 |
| Cases cited: A and Z [2006] FamCA 179 Abbott and Abbott [1995] FamCA 5; (1995) FLC 92-582 Althaus & Althaus (1982) FLC 91-233 Atkinson and Atkinson (1997) FLC 92-728 Baranski & Baranski [2012] FamCAFC 18 Bevan & Bevan [2014] FamCAFC 19 Black & Kellner (1992) FLC 92-287 Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 Bulleen & Bulleen [2010] FamCA 187 Chang & Su [2002] FamCA 156; (2002) FLC 93-117 Dey v Victorian Railways Commissioners(1949) 78 CLR 62 Dickons & Dickons [2012] FamCAFC 154; (2012) 50 Fam LR 244 Edmunds & Edmunds (2018) 50 FLC 93-847 Elkhouri & Amatullah[2017] FamCA 688 F and S [2005] FamCA 44; (2005) FLC 93-208 Fearne & Fearne (No 2) [2012] FMCAfam 917 Ferraro & Ferraro[1992] FamCA 64; (1993) FLC 92-335 Gadzen & Simkin [2018] FamCAFC 218 Giunti & Giunti[1986] FamCA 15; (1986) FLC 91-759 Hall and Hall (1979) FLC 90-679 Hickey & Hickey; the Attorney General for the Commonwealth of Australia[2003] FamCA 395; (2003) FLC 93-143 HML v R[2008] HCA 16; (2008) 235 CLR 334 Holden & Wolff (2014) 52 Fam LR 60 In the marriage of Briese & Briese[1985] FamCA 23; (1986) FLC 91-713 In the marriage of Krebs(1976) FLC 90-117 In the Marriage of Rolfe[1979] FamCA 65; (1979) FLC 90-629 Jacks & Parker[2011] FamCAFC 34 JEL v DDF(2001) FLC 93-075 Johnson v Page[2007] FamCA 1235; (2007) FLC 93,344 Jones v Dunkel (1959) 101 CLR 298 Kannis & Kannis (2003) FLC 93-135 Kennon & Kennon [1997] FamCA 27 Kennon v Spry (2008) 238 CLR 366 Kuglioski v Metrobus[2004] HCA 34; (2004) 220 CLR 363 Lanceley and Lanceley [1994] FamCA 94; (1994) FLC 92-491 Liversey v Jenkins[1984] UKHL 3; (1985) 1 All ER 106 Mallet v Mallet[1984] HCA 21; (1984) 156 CLR 605 Masland & Eaton (No 2) [2012] FMCAfam 407 McDermott & McDermott[2017] FamCA 376 McMahon and McMahon (1976) FLC 90-128 Mitchell & Nevis [2014] FCCA 376 Monte & Monte[1986] FamCA 1; (1986) FLC 91-757 Norton & Locke (2013) FLC 93-567 Oriolo & Oriolo[1985] FamCA 54; (1985) FLC 91-653 Sharp & Sharp (2011) 50 Fam LR 567 |
| Other texts cited: Cross on Evidence, 10th Ed (2015) |
| Applicant: | MS MARTELLI |
| Respondent: | MR WHEELER |
| File Number: | MLC 10046 of 2017 |
| Judgment of: | Judge A Kelly |
| Hearing date: | 5 December 2018 |
| Date of Last Submission: | 5 December 2018 |
| Orders pronounced: | 5 December 2018 |
| Delivered at: | Melbourne |
| Delivered on: | 20 December 2018 |
REPRESENTATION
| Counsel for the Applicant: | Ms Heggie |
| Solicitors for the Applicant: | Lander & Rogers |
| The Respondent did not appear |
ORDERS
Pursuant to s 90SL of the Family Law Act 1975 (Cth), declare that a de facto relationship existed between the parties to this proceeding.
Pursuant to s 44(6) of the Family Law Act 1975 (Cth), the Applicant have leave to proceed nunc pro tunc as a party to a de facto relationship seeking orders pursuant to section 90SM of the Act.
Pursuant to s 90SM(1)(d) of the Family Law Act 1975 (Cth), within 30 days the Respondent do all things and sign all documents as may be required to transfer to the Applicant (the Transfer) all of his right, title and interest in the property situate at Property A, in the State of Victoria, being the land more particularly described in Certificate of Title, Volume …Folio …(Property A Property).
Contemporaneously with the Transfer the Applicant discharge and/or refinance into her sole name, the mortgage number … in favour of the National Australia Bank (the Mortgage) encumbering the Property A Property and thereafter be responsible for and indemnify the Respondent with respect to the mortgage and all rates, taxes and outgoings and any other liability which may be incurred with respect to the Property A Property from the date of the Transfer.
In default of compliance with paragraph (3) of this Order:
(a)the Applicant have sole conduct of the Transfer of the Property A Property;
(b)the Applicant’s solicitor (being at the date of these Orders Ms Allison Nicholls of Lander & Rogers) be and is hereby appointed pursuant to s 106A of the Family Law Act 1975 (Cth) to sign or execute (including by electronic means) any deed or instrument in the name of the Respondent to give effect to the Transfer (including any withdrawal of caveat) and be authorised to do all other acts and things necessary to give full effect to the said Transfer including with respect to the discharge and/or refinancing of the mortgage.
Each party retain, to the absolute exclusion of the other, their entitlements in any superannuation fund in which they hold a member entitlement.
Unless otherwise specified in these Orders and save for the purposes of enforcing any monies due under these or any subsequent Orders:
(a)each party be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the possession of such party as at the date of these Orders;
(b)each party forego any claims they may have to any superannuation benefits belonging to or earned by the other;
(c)insurance policies remain the sole property of the beneficiary named therein;
(d)each party be solely liable for and indemnify the other against any encumbering any item of property to which that party is entitled pursuant to these orders; and
(e)each party be solely responsible for the repayment of and indemnify the other in relation to any outstanding credit card balances or personal loans in their name or in which they are personally liable.
Pursuant to s 11 of the Australian Passports Act2005 (Cth), the Applicant be solely authorised to execute all documents necessary to obtain a passport and/or passport renewals for and on behalf of the children or any of them as follows:
(a)[W] born …2001;
(b)[X] born …2005;
(c)[Y] born …2007; and
(d)[Z] born …2008.
AND THE COURT NOTES THAT
A.In accordance with s 90ST of the Family Law Act 1975 (Cth) it is intended that this Order will, as far as is practicable, finally determine the financial relationships between the parties and avoid the institution of further proceedings between them.
IT IS NOTED that publication of this judgment under the pseudonym Martelli & Wheeler is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 10046 of 2017
| MS MARTELLI |
Applicant
And
| MR WHEELER |
Respondent
REASONS FOR JUDGMENT
Introduction
These reasons for judgment explain why an Order was made on 5 December 2018 upon the hearing and determination of an undefended application for adjustment of property interests pursuant to s 90SM of the Family Law Act 1975 (Cth) (Act).
As these reasons indicate, the overall effect of the Order made provides for a property at Property A to be transferred to the applicant and for her to assume liability for the mortgage over that property. Each of the parties will retain their superannuation.
Procedural history
On 28 September 2017, the applicant filed an initiating application. The relief sought in that application mirrored substantially the relief that was sought at the final hearing.
The applicant also filed an affidavit and financial statement, together with a notice of risk, in support of the application.
Difficulties were encountered in effecting service on the respondent. When an attempt was made at personal service of process upon the respondent on 30 October 2017, he responded in a derisive manner and refused to accept service. On 6 November 2017, an order for substituted service was made. The respondent has taken no part in the proceeding.
On 5 February 2018 the matter was set down for hearing. An order was made that the application would proceed as an undefended hearing if the respondent did not file a response, financial statement and an answering affidavit within 2 months. He did not do so.
Background
The applicant is a tradesperson now aged 55 years.
The respondent whose occupation is unknown, is aged 54 years.
In 2000, the parties commenced a relationship from which four children were born in the period between 2001 – 2008.
The parties commenced cohabitation in 2007 after the purchase of the Property A property. They separated in March 2014. Regrettably, their relationship was marred by extensive domestic violence perpetrated by the respondent upon the applicant. Intervention orders were made against the respondent from August 2009 and most recently on 20 November 2018, which order was expressed to operate until further order.
In the circumstances that no evidence has been filed by the respondent, the applicant was left to prove the entirety of her case.
I accept her evidence that the Property A property is currently valued at $570,000 and is subject to a mortgage liability of $285,000. The applicant has a vehicle and assumed that the respondent likewise had a vehicle although she did not know this as a fact. She has negligible savings and no other assets. She has liabilities of $13,000 by way of unpaid school fees and has borrowed monies from her brother to assist her make ends meet. The respondent’s asset and liability position is unknown. In addition, the applicant has nominal superannuation and knows nothing of the respondent’s position regarding superannuation.
On the available evidence, I am able to find only that the parties’ net asset pool is $293,000. I address the applicant’s evidence below.
Financial disclosure
By rule 24.03 of the Federal Circuit Court Rules 2001 (Rules), a party who is required to file a financial statement is obliged to make full and frank disclosure of their financial position as detailed in that rule.
In Hickey & Hickey; the Attorney General for the Commonwealth of Australia[2003] FamCA 395; (2003) FLC 93-143 at [40], Nicholson CJ, Ellis and O’Ryan JJ held that because s 79 requires consideration of the parties’ entire property interests, they were obliged to make full and frank disclosure.
The failure to make full and frank disclosure of their financial position is important for at least five reasons: (1) the court’s determination of what orders (if any) are just and equitable by way of an adjustment of property interests is impeded; (2) legal, accounting and other costs incurred in proving a case are significantly increased; (3) delays which attend the just determination of proceedings are exacerbated; (4) the demands which are made on the limited resources of the court are compounded; (5) the determination of claims by other litigants is delayed: see, e.g., Oriolo & Oriolo[1985] FamCA 54; (1985) FLC 91-653, 80,256 (Emery, Fogarty and Murray JJ), citing Liversey v Jenkins[1984] UKHL 3; (1985) 1 All ER 106, 114 (Lord Brandon), and approving In the marriage of Briese & Briese[1985] FamCA 23; (1986) FLC 91-713 (Smithers J).
Collectively, those considerations serve to emphasise the positive obligation to which parties are subject to make financial disclosure in a comprehensive manner and without delay: Oriolo, 80,256. In Briese, Smithers J observed that the Rules of Court were not to be exploited as a vehicle to mask a party’s true financial position, or to be employed as a means of adding confusion, complexity or uncertainty as to the true financial position. Nor should those rules be misunderstood as marking the outer limits of the obligation. Rather they served to indicate the avenues by which disclosure ought properly to be made.
In proceedings for an adjustment of property interests, parties do not stand in the same relation as those conducting inter partes litigation. Parties to a marriage or a de facto relationship are not strangers who owe no duties to the other respecting disclosure of information relating to property which was acquired, improved or augmented in the course of their relationship. For this reason, they are obliged to make financial disclosure. In Oriolo, the Full Court emphasised that the need for each party to have an accurate understanding of the financial position of the other lay at the heart of an application for adjustment of property interests or maintenance: at 80,256-7 citing Briese. As the authorities illustrate, accurate disclosure of the financial position is essential to the exercise of the discretion in determining what is just and equitable when making orders adjusting property interests.
The primary task of identifying the parties’ interests in their property is made problematic where a party does not properly make financial disclosure. In such a case, the applicant and the court must confront how identification and valuation of the parties’ assets and liabilities may be addressed: Giunti & Giunti[1986] FamCA 15; (1986) FLC 91-759. There, Fogarty, Murray and Nygh JJ posed the rhetorical question of how it could be open to the party which had failed to comply with the obligation of disclosure to rely upon the absence of evidence which, if available, would otherwise support the making of a property order which was just and equitable? Their Honours concluded that the court must make a finding as to the existence and value of such property even though it was necessary to do so in the most general terms: at 75,555 citing Monte & Monte[1986] FamCA 1; (1986) FLC 91-757 (Simpson, Murray and Frederico JJ). The Full Court further recognised that faced with the task of making findings that the parties’ assets were of a likely certain value, it had been for the husband to explain such matters as were within his knowledge. The Court did not disturb the finding that the wife’s contributions (financial and non-financial) entitled her to an order representing 60% of the assessed value of such property. A party’s design of obfuscation and evasion is not an insuperable barrier to the determination of what orders are just and equitable in the adjustment of property interests: Black & Kellner(1992) FLC 92-287.
A different position falls for consideration where it is found that a party has deliberately failed to comply with an order to make financial disclosure. The court may then be less cautious in its approach in making findings favourable to the opposing party: Weir & Weir(1993) FLC 92,338 (Nicholson, Strauss and Nygh JJ). More recently, it has been suggested that financial non-disclosure means that “the Court need not shy away from a robust exercise of discretion in favour of the wife”: McDermott & McDermott[2017] FamCA 376, [301] (Foster J) citing Kannis & Kannis (2003) FLC 93-135; see also Jacks & Parker[2011] FamCAFC 34, [62], [122].
The holding in Weir has been regarded as meaning that “failure to disclose, such that the court cannot determine the content or value of the [asset] pool should not result in the other party failing in his or her case on the basis that the pool cannot be fully ascertained”: Elkhouri & Amatullah[2017] FamCA 688, [121] (Gill J). In this context, his Honour recognised that the High Court had been careful to emphasise that its decision in Stanford v Stanford[2012] HCA 52; (2012) 247 CLR 108, [46], should not be understood as: (1) charting the metes and bounds of what is just and equitable when making an order under s 79; (2) denying the importance of giving consideration to other countervailing factors which may bear upon what is just and equitable in a particular case. Gill J reasoned that where non-disclosure had impeded the identification of what property comprised an asset pool or the determination of the true value of such assets, the court was entitled to anchor property orders by reference to what it considered to be just and equitable in such circumstances. Conversely, it cannot be considered to be just and equitable to permit a defaulting party to withhold property by dent of such non-disclosure. His Honour also recognised that another basis on which to assess the matter was to have regard to the identified (but unvalued), property of the party in default as constituting a financial resource of that party.
A similar principle was stated in Chang & Su[2002] FamCA 156; (2002) FLC 93-117. There, Kay and Dawe JJ held (Finn J agreeing), that a failure to make full and frank disclosure of financial circumstances allowed the court to find that an indeterminate undisclosed amount was held by that party and to make property orders without reference to an overall pool. Kay and Dawe JJ at [67] considered that those principles were well settled.
More recently, in Elkhouri & Amatullah[2017] FamCA 688, Gill J considered the approach to be taken where there was a complete absence of evidence as to the value of certain property. His Honour, referring to Chang & Su observed that the Full Court had held that the only imperative the trial judge could fall back upon was that the order be just and equitable. Gill J held at [120] that this recognised, “from first to last, the s 79 discretion is governed by the principle that the exercise be just and equitable, both as to whether any order is made and as to whether a particular order is made.” See also Trang & Kingsley[2017] FamCAFC 120, [34], [46] (Kent J, Murphy and Strickland JJ agreeing). The distinction between the existence and value of property is important. Where property can be identified as being, or as having been, in existence, it may be considered.
Undefended hearing
Non-participation in a proceeding may represent another means of impeding the determination of an application. When one party fails to appear in a proceeding, whether at an interlocutory application or a final hearing, the court may order an undefended hearing. But where a proceeding is listed as an undefended hearing, it does not follow that the orders sought by the participating party will be made by the court.
Provided a party has acknowledged service, the court may proceed with the hearing of an application as if it were undefended: Rules, para 25.12(b). In determining what orders, to make, the court will ensure that the absent party is allowed procedural fairness: F and S [2005] FamCA 44; (2005) FLC 93-208 (Bryant CJ, Kay and Holden JJ). As such, it is imperative for the attending party to ascertain whether the absent party was properly put on notice that the hearing was listed and may be heard in their absence: see also rules 11.01 and 1.02 of the Family Law Rules2004.
In McMahon and McMahon (1976) FLC 90-128, the Full Court held that the court is not precluded from hearing proceedings in the absence of a party where adequate notice has been given. Evatt CJ, Pawley SJ and Ellis J stated at 75, 607 that where a court proceeds to deal with a matter on an undefended basis, it remains bound by the same general requirements as to proof as in a defended matter; however, “[t]his does not mean that a court necessarily has to insist on detailed evidence, make elaborate findings and give reasoned decisions in undefended matters. This would cast too onerous a burden on the court, and clog up already crowded lists. Nevertheless it must be satisfied that the evidence supports its findings and orders.” See also Zane & Allan[2008] FamCAFC 115, at [205] (May J).
A proceeding will be treated as undefended when the respondent does not challenge or put in issue any of the components of the cause of action in question. The fact that the respondent is opposed to the court making the order and/or wishes to defend the granting of the order which is sought does not make the proceeding defended if the issues raised by the respondent are irrelevant to the issues constituting the cause of action: see A and Z [2006] FamCA 179, [64] (Faulks DCJ, Warnick and Boland JJ) citing Abbott and Abbott [1995] FamCA 5; (1995) FLC 92-582. However, in A and Z at [22], the Full Court noted the settled principle that once it appears there is a real question to be determined (whether of fact or law) and that the parties’ rights depend upon it, then it is not competent for the court to dismiss the action as frivolous, vexatious or as an abuse of process: citing Dey v Victorian Railways Commissioners(1949) 78 CLR 62 at 91 (Dixon J). Those principles constrain the approach to be taken on an undefended hearing. More precisely, if the applicant in an undefended hearing advances an untenable claim or submission, it must be rejected.
The nature of an undefended hearing was also dealt with in Tate v Tate[2000] FamCA 1040; (2000) FLC 93-047. There, Nicholson CJ, Kay and Waddy JJ held at [107]-[108] that in exercising the discretion to order an undefended hearing, the court may in an exceptional case, proceed with a hearing as being undefended. Their Honours observed that “no litigant, whether legally represented or not, should harbour any doubt that manipulation of court processes . . . through disregard of and deliberate non-compliance with its order and directions will attract other than the strongest measures from the Court”: at [108]; see also Zane & Allen.
A similar result may obtain where a respondent chooses not to participate in a proceeding. In Lanceley and Lanceley [1994] FamCA 94; (1994) FLC 92-491, a respondent took no active part in the proceedings. Barblett DCJ, Frederico and Lindenmayer JJ said at 81,104:
A respondent who merely wishes to ask the court to dismiss the appellant’s application (and seeks no other order) and who wishes to place no evidence before the court, but who wishes to submit that the application should be dismissed even on the applicant’s evidence, is certainly not obliged by the Rules to file any answer or affidavit, but only a Notice of Address for Service. However, if such a respondent then attends the hearing and in fact makes no submissions against the application (as the husband did in this case) then, in anyone’s language, the application is ‘undefended’ or ‘unopposed’.
Those observations were endorsed in A and Z, at [66]; see also Zane & Allen, [210] citing Abbot, supra.
In Zane & Allen at [212], May J recorded certain principles that had been stated by the trial judge in relation to the conduct of an undefended hearing. They were stated to be as follows:
a)the Response then becomes a nullity (Rules of Court);
b)where an application has been struck out due to the default of a party to make full, frank and prompt disclosure of their financial affairs, the party ought have no further right to be heard without order of the court (Tate);
c)the applicant has a duty to the court to make full disclosure and deal with the court in good faith (In the marriage of Krebs(1976) FLC 90-117);
d)the applicant must establish the case with admissible evidence (Tate);
e)the court has the discretion to have regard only to the evidence of the party before the court and not the affidavit evidence of the excluded party (Tate). Conversely, the court retains a discretion to have regard to part or all of the affidavit evidence filed by the excluded party;
f)the court may exercise a discretion to have regard to agreements reached between the parties prior to the hearing as to such matters as value of property where such agreements have been noted on the court record or where there is admissible evidence establishing such agreement (Tate);
g)the court remains bound by the same general requirements as to proof as apply in a defended matter. This does not mean that a court necessarily has to insist on detailed evidence, make elaborate findings or give reasoned decisions in undefended matters. Nevertheless, it must be satisfied that the evidence supports its findings and its orders (McMahon);
h)subject to procedural fairness the court may allow the remaining party in an undefended hearing to rely on affidavit material filed and served on the excluding party together with oral evidence and the tendering of documents to establish a case: (F and S);
i)there is a wide discretion as to the extent of the involvement to be permitted to a defaulting party in the undefended hearing. This discretion must be tempered with regard to procedural fairness, natural justice and the requirement to do justice to all of the parties. Each case will demand an individual assessment by the court as to the appropriate procedure to be adopted. The reasons giving rise to the determination that the case should proceed undefended will no doubt have an impact upon decisions then made regulating the procedures to be adopted the hearing;
j)in appropriate cases the court may have regard to the evidence of the remaining party only.
Upon the application of those principles, May J recorded at [213] that the trial judge had held that the husband had forfeited a right to have his affidavits read upon the hearing. His Honour concluded at [238], by reiterating the Full Court’s observations in Tate which held that appropriate sanctions was essential to secure obedience to its orders and directions in pursuit of the paramount objective that the attainment of justice is achieved in the particular case.
As noted, a distinction is to be drawn between the approach taken in civil litigation and that appropriate to property proceedings under the Act. In part, this is because the court is not infrequently confronted with litigants who fail in their duties of full, frank and prompt disclosure of their financial affairs. Such a party may have no further right to be heard without an order of the court and it may be appropriate not to permit that material be tested by cross-examination: A and Z, at [68]-[69] citing Tate, 87,712. The trial judge also has the discretion to exclude affidavits from witnesses who are unavailable for cross-examination: see e.g. Atkinson and Atkinson (1997) FLC 92-728 (Baker, Lindenmayer & Smithers JJ); Chang and Su.
By extension, a settled rule of evidence commonly known as the rule in Jones v Dunkel is that in civil litigation, the unexplained failure of a party to give evidence on a material issue may (not must) support an inference more easily to be drawn from the evidence which had been called by the opposing party: see Cross on Evidence, 10th Ed (2015), [1215]. The rule is subject to exceptions. Relevantly, while the failure to call such evidence does entitle the court to take into account the fact of such failure, it does not entitle the court to conclude that the uncalled evidence would have been damaging to the case of the party who did not call it: HML v R[2008] HCA 16; (2008) 235 CLR 334, [303] (Heydon J). As importantly, the rule cannot be employed to fill gaps in the evidence: Jones v Dunkel (1959) 101 CLR 298, 308, 312, 321.
The rule in Jones v Dunkel operates in inter partes litigation where parties participate in and contest the issues at trial. However, in my opinion, the rule gains added force where the litigation is between parties to a marriage or de facto relationship where their property proceeding rests on a foundation that each is entitled to full and frank disclosure from the other in order that an assessment can properly be made as to what orders are just and equitable.
It follows that where the applicant has adduced evidence on an issue which the respondent might reasonably be expected to have answered, the failure to provide an answer – including by a failure to make disclosure – allows for an inference more confidently to be drawn from that evidence which the applicant has been able to adduce.
The intersection between principles which govern the determination of property settlement proceedings where a party has failed to make financial disclosure and the rules of evidence will operate so as to promote the paramount object that orders made are just and equitable.
I have had regard to those principles in the present case.
Jurisdiction
39.Part VIIIAB of the Act concerns the subject, Financial matters relating to De Facto relationships, and is comprised of ss 90RA – 90WA. Division 2 of Part VIIIAB concerns amongst other things, alteration of property interests of parties to a de facto relationship. Subdivision C of Div’n 2 in Part VIIIAB, which concerns declarations and alterations of property interests, is comprised of ss 90SK – 90ST.
The jurisdiction to make orders respecting the property of such parties is subject to a number of constraints that differ from parties to a marriage.
First, by para 90SB(a) the court may only make an order for the alteration of property interests where it is satisfied that, relevantly, the parties’ de facto relationship endured for a period exceeding two years, there is a child of the relationship or that the applicant had made substantial contributions to it: s 90SB. The expression de facto relationship is defined by s 4AA and exists where persons are not legally married, they are not related by marriage and, having regard to all the circumstances, they have a relationship as a couple. The circumstances relevant to the consideration of whether the parties have a relationship as a couple are listed in sub-s 4AA(2)(a)-(i). The court is not required to make a particular finding in relation to any circumstance in deciding whether parties have a de facto relationship and may have regard to such matters and attach such weight to the circumstances as seems appropriate in the particular case: sub-s 4AA(3)-(4).
Secondly, by s 90SK a geographical requirement is placed upon the engagement of the power to alter property interests of such parties. Relevantly, the court must be satisfied that one or both of the parties was ordinarily resident in a participating jurisdiction, which includes (as is applicable in this case), the State of Victoria: ss 90RA(1)(a).
Thus it is essential to the making of orders for an adjustment of interests in the property of parties to a de facto relationship that the court has been satisfied it has jurisdiction: Norton & Locke (2013) FLC 93-567, [78]-[80] (Bryant, Murphy and Benjamin JJ); Holden & Wolff (2014) 52 Fam LR 60, [42] (Ainslie-Wallace, Ryan and Aldridge JJ).
Leave to proceed
By s 44(5), a party to a de facto relationship may apply for an adjustment of property interests pursuant to s 90SM only if such proceeding is instituted within two years after the end of the relationship. The present application was not commenced within that two year period and instead was commenced less than two years after the expiry of that period.
By s 44(6) the court may grant leave to commence such an application out of time. The court’s discretion to extend time is constrained by a requirement that the applicant demonstrate that hardship would be sustained to herself or to a child if leave were not granted. If hardship is not demonstrated that is the end of the matter. If the court is satisfied that hardship is made out, the further question arises whether the court should otherwise exercise its discretion in favour of the grant of leave: Whitford & Whitford (1979) FLC 90-612, 78,144 (Asche, Pawley and Strauss JJ); Gadzen & Simkin [2018] FamCAFC 218, [29], (Murphy, Aldridge and Kent JJ).
The following propositions may be identified from Whitford:
a)the hardship referred to in s 44(4) is the hardship which would be caused to the applicant or a child of the marriage if leave were not granted – the concept of causation is employed on the issue;
b)the loss of the right to institute proceedings is not the hardship, to which the subsection refers. Rather, it is with the consequences of the loss of that right, with which the subsection is concerned;
c)accordingly, the applicant must demonstrate that he or she would probably succeed, if the substantive application were heard on the merits. From this it follows that if there is no real probability of success, the court cannot be satisfied that hardship would be caused;
d)the question is whether the applicant or a child would suffer hardship if leave were not granted. If the probable result of the hearing on the merits is that the hardship is not likely to be alleviated, the court cannot be satisfied that the applicant or a child would suffer hardship if leave were not granted.
The Full Court considered that the meaning of ‘hardship’ in sub-s 44(4) was “akin to such concepts as hardness, severity, privation, that which is hard to bear or a substantial detriment” but observed that while the word should bear its usual meaning, it ought not necessarily bear its most stringent connotation and that there was no warrant to find that the right or entitlement which would be lost must be a substantial one.
In Gadzen & Simkin, the Full Court examined the principles in Whitford and considered later authorities relevant to the concept of hardship within the meaning of s 44(6) and the analogue provision respecting the institution of a property application between parties to a marriage. The Full Court endorsed the following statements of principle in:
a)Althaus & Althaus (1982) FLC 91-233, 77,266 by Evatt CJ, with whom Marshall and Strauss JJ agreed) respecting the requirement that it was for the applicant to satisfy the court that she or he would probably succeed if leave to proceed was granted:
. . . sec. 44(3) and (4) are not intended to require a detailed hearing on the merits to determine whether the applicant’s claim will succeed. The exercise is to determine whether there is a reasonable claim to be heard. That is the essence of the inquiry into whether hardship will be suffered by denying the applicant the right to litigate that claim.
b)Hall and Hall (1979) FLC 90-679, 78,627 by Evatt CJ, Fogarty and Yuill JJ that:
Fundamental to [a finding of hardship] is a determination of the quality or character of the potential claim.
c)Sharp & Sharp (2011) 50 Fam LR 567, by May, Ainslie-Wallace and Young JJ that for the purposes of establishing hardship:
It is the consequences attending the loss of the right to commence proceedings that constitutes hardship.
And that accordingly:
. . ., leave will not be granted if to do so would not, in the substantive result, alleviate that hardship. However, whether or not hardship exits is not to be assessed only by reason of the monetary value of the probable order to be made if leave were granted.
See also Edmunds & Edmunds (2018) 50 FLC 93-847, [48] (Ryan, Aldridge and Watts JJ).
In Gadzen, the Full Court held at [37] that:
. . . the starting point in determining an application for leave is to consider the question of hardship which requires for its existence a conclusion that an applicant has a prima facie or arguable case of substance having regard to all of the circumstances of the case. That must take into account the costs or likely costs to be incurred . . .
Alteration of property interests
The alteration of property interests of parties to such a relationship is provided for by s 90SM. In proceedings with respect to the property of parties to a de facto relationship, the court is authorised by para 90SM(1)(a) to make such order as it considers appropriate. The power conferred by s 90SM is engaged only in a property settlement proceeding, being a proceeding with respect to the property of the parties or either of them. The power extends only to an adjustment of interests in the property of the parties.
Where one or both of the parties have instituted property settlement proceedings, para 90SM(1)(a) confines the ambit of the power to the making of orders that “alter the interests of the parties to the de facto relationship in the property.” Structurally, sub-s 90SM(1) first requires the court to identify the parties’ existing interests in property (as defined) and then authorises that the court may make orders that alter those interests.
Sub-section 90SM(3) proscribes the making of such property orders unless a certain criterion is satisfied. The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
Further, sub-s 90SM(4) requires that in the consideration of what (if any) order should be made in the alteration of property interests of parties to a de facto relationship, the court must take into account each of the seven matters contained in paras 90SM(4)(a)-(g).
Accordingly, sub-s 90SM(3) cannot be side-stepped. The analogue provision for alteration of property interests between parties to a marriage is found in sub-s 79(2) of the Act. The scope and operation of sub-s 79(2) was given detailed consideration in the seminal decision of Stanford v Stanford[2012] HCA 52; (2012) 247 CLR 108. The plurality held in relation to sub-s 79(2) that the determination whether it was just and equitable to make an order under sub-s 79(1), was an essential inquiry to be undertaken before any consideration was given to the matters prescribed by sub-s 79(4) (here, sub-s 90SM(4)). The plurality emphasised that the issues raised by sub-s 79(2) and (4) were not to be conflated or merged: [2012] HCA 52; (2012) 247 CLR 108, [35], [40], [51]. Parity of reasoning supports the conclusion that a like approach is required in a de facto property proceeding.
The criterion ‘just and equitable’ is a criterion that does not admit of exhaustive definition: Stanford at [36] citing Mallet v Mallet[1984] HCA 21; (1984) 156 CLR 605, 608 (Gibbs CJ). Rather the expression is to be understood as being a “qualitative description of a conclusion reached after examination of a range of potentially competing considerations.” Confirming that the power conferred by s 79 was not to be exercised by the application of fixed rules, the plurality identified three propositions that are of fundamental importance to the determination whether it was just and equitable for the court to make an order adjusting property rights: [2012] HCA 52; (2012) 247 CLR 108, [37]-[40]:
a)first, the consideration whether it is just and equitable to make an order must begin by the identification of the existing legal and equitable interests of the parties in the subject property;
b)secondly, the broad discretion conferred by s 79 is not unfettered;
c)thirdly, the analysis whether it is just and equitable to make an order adjusting property interests does not begin from an assumption that either party has the right to have the property of the parties divided.
Sub-s 90SM(4) factors
When considering what order (if any) should be made in a property settlement proceeding, sub-s 90SM(4) requires that the court shall take into account each of the seven matters addressed in paras (a)-(g). The circumstances which the court is required to take into account have been identified as falling within three broad categories: (1) the parties’ contributions of all kinds; (2) the parties’ present and future needs, means and resources, and earning capacity, actual and potential; (3) any other fact or circumstance which justice requires be taken into account: cf Mallet v Mallet.
I address paras 90SM(4)(a)-(g), so far as relevant, below.
Until Stanford, the settled approach to be taken to the determination of a claim for adjustment of property interests under s 79, entailed a four-stage process as articulated by the Full Court in Hickey & Hickey. There, Nicholson CJ, Ellis and O’Ryan JJ at [39] held the four-stage process under s 79, although interrelated, was as follows:
a)first, identify the parties’ assets, liabilities and financial resources at the date of hearing; calculating the net value of their property;
b)secondly, ascertain the parties’ contributions (both financial and non-financial), within the meaning of paras 79(4)(a)-(c) inclusive and then “determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property”;
c)thirdly, give consideration to the other factors prescribed by paras 79(4)(d)-(g), including the matters, so far as relevant, as referred to in sub-s 75(2) to decide if any further adjustment to the percentage assessment of contributions is warranted;
d)fourthly, consider the overall effect of those findings and determinations and resolve what order is just and equitable in all the circumstances of the case.
The four-stage process articulated in Hickey need not be followed rigidly: Bevan & Bevan[2014] FamCAFC 19, [18]-[19] (Bryant CJ and Thackeray J, Finn J agreeing). The Full Court has affirmed that a holistic approach should be taken when deciding an application under s 79: Wallis & Manning[2017] FamCAFC 14, [23]; citing Dickons & Dickons[2012] FamCAFC 154; (2012) 50 Fam LR 244, [24]. Where it is said that a holistic approach should be made, this is to be understood as permitting that, in some cases, a global assessment may be appropriate.
A global assessment may be appropriate where the asset pool is small.
In Bulleen & Bulleen, Cronin J recognised the caution of adopting an over-zealous ascertainment of the parties’ contributions and held that what is required is the ascertainment and weighting of the parties’ contributions; a process which his Honour described as follows:
The weighting process is not a simple mathematical calculation based upon financial contributions. It is the disparity in contributions which is important. The disparity is traditionally expressed in percentage terms: [2010] FamCA 187 at [19].
Cronin J identified at [20]ff that the underlying difficulty confronting the evaluative task arose from the need to make a crucial comparison between fundamentally different activities. Thus, while financial contributions were capable of objective assessment, the non-financial contributions were much more difficult of assessment. His Honour held that it would have been wholly inappropriate to retrospectively allocate non-financial contributions according to some monetary worth. On the facts as found in that case, Cronin J characterised the relationship as one in which the parties had regarded their respective roles as important and as being one in which they had contributed to a common goal. At the same time, his Honour acknowledged that there could be some contributions outside of their relationship which identifiably had also affected the parties’ wealth: at [26], [40].
Each of these principles is equally applicable in the present case.
Consideration
As the matter proceeded by way of an undefended final hearing, the applicant was not tested upon her evidence. Where there were inconsistencies in the evidence, the applicant was still required to prove her claim to the requisite standard of proof: sub-s 140(1) Evidence Act 1995 (Cth). Equally, the more serious her allegations, the more inclined I was to take into account the gravity of that issue in deciding whether it was made out: cf sub-s 140(2) Evidence Act; Johnson v Page[2007] FamCA 1235; (2007) FLC 93,344, [72]; Briginshaw v Briginshaw[1938] HCA 34; (1938) 60 CLR 336. Where the evidence does not permit the court to make an affirmative finding either way on a particular issue, the court is not bound to do so and may find that the party which bears the onus of proof has failed to discharge it: Kuglioski v Metrobus[2004] HCA 34; (2004) 220 CLR 363, [60].
At the same time, I have undertaken my assessment of the evidence, including that the respondent had been given notice of, and had several opportunities to attend and participate in, the proceeding but did not take those opportunities. The respondent could have but did not seek to expose particular aspects of the applicant’s evidence as being unreliable. Nor did he take the opportunity to adduce evidence so as to establish the truth of any matters to which he might have deposed. To this extent, the applicant is more readily entitled to some findings in her favour.
The respondent’s failure to make any financial disclosure posed an obstacle to the applicant’s case. The applicant confronted that issue.
The court has jurisdiction
I am satisfied that the applicant and the respondent were parties to a de facto relationship.
Their relationship was of some 14 years duration, four children were born of that relationship and they co-habited for seven years. I am also satisfied that the applicant was ordinarily resident in Victoria when the proceeding was commenced. I am further satisfied that the applicant was ordinarily resident in Victoria during at least a third of that relationship and further that the applicant had made substantial contributions in relation to their de facto relationship and was resident in Victoria when the relationship broke down.
Thus, I am satisfied the court has jurisdiction to make declarations and orders for an adjustment of property interests as sought in the proceeding.
Leave should be granted and it is just and equitable to make an order
I am satisfied that the applicant should have leave pursuant to s 44(6) to commence this application out of time. Hardship would be suffered by the applicant and her four children if leave was not granted. The hardship caused by the refusal of leave would include that (as appears below) the respondent would remain registered as proprietor of a joint interest in a property which interest was transferred to his name quite shortly before the end of the relationship. The assumption on which the parties held their interest in such property has been undermined by the end of their relationship. That this has occurred renders it just and equitable that there should be an adjustment of property interests.
On the facts of the case, which I must assess in an undefended hearing, the applicant has made very substantial contributions – both financial and non-financial – to the parties’ relationship at all times. She had reared the children alone before the acquisition of the property and shouldered near complete responsibility for the family during and after the end of the relationship. She has worked at all times and currently holds down two jobs to support the children. I find that the quality and character of the applicant’s claim is real and substantial and would outweigh any issue of costs in the circumstances.
For the purposes of the grant of leave, I am concerned with the consequences of the loss of a right to commence an application for an adjustment of property interests. I regard that right as being of substantial value in this case. The corollary of that conclusion is that the loss of that right would entail hardship. In all the circumstances, I am satisfied that hardship would result if leave were refused and that in the exercise of my discretion such leave should be granted nunc pro tunc.
I am also satisfied that it is just and equitable for an order to be made adjusting property interests because the parties no longer have common use of their property: cf Stanford, supra [2012] HCA 52; (2012) 247 CLR 108, [44]. This is a case in which the parties proceeded upon an implicit assumption, which subsisted during their relationship, concerning the common use of property. Their assumption ended upon the parties’ choice no longer to live in a relationship.
In the period of their relationship, the Property A property was the most significant asset that they acquired.
I conclude that the requirements of sub-s 90SM(3) are satisfied. It is therefore appropriate to turn to the further question of what, if any, order is appropriate to be made adjusting the parties’ property interests. Consideration is then required of the matters prescribed by sub-s.90SM(4). I consider each in turn.
Contributions
In considering what orders (if any) should be made adjusting property interests under s 90SM, the court shall take into account the financial contributions, direct and indirect, made by or on behalf of a party to the marriage: para 90SM(4)(a). In amplification of the concept of ‘financial contribution’, para 90SM(4)(a) explicitly includes each of the acquisition, conservation or improvement of such property.
While the parties’ relationship began in 2000, they did not cohabit until 2007 after the birth of their third child. In the interim, the respondent would visit the applicant at her home and visit the children, providing some $450 per month to assist in their upkeep.
Otherwise the parties kept their financial arrangements separate.
In 2007, the applicant and Mr B, her son from an earlier relationship, purchased the Property A property. Half of the deposit was paid by Mr B and the other half was paid by the respondent. The purchasers were registered as tenants in common in equal shares. The respondent was not registered on title as having a legal or equitable interest in the property. The purchase price of the property was $374,000.
The applicant and the children moved into the property in 2008.
From February 2008 until 30 August 2013, Mr B contributed $1,000 per month towards the mortgage while the respondent paid the remainder. At an indicative level this suggests that Mr B paid ~$60,000 towards that mortgage together with a 50% of a deposit on $374,000. Assuming that a 10% deposit was paid, Mr B also made an initial $18,700 contribution.
During this period, the applicant paid the council rates, utilities and for the majority of the household supplies and groceries.
On 30 August 2013, the property was transferred to the joint names of the applicant and respondent, the mortgage was refinanced and the parties opened a joint bank account.
The parties were finally separated in March 2014 and since that time the respondent has made no contributions to the mortgage liability.
The applicant was the sole carer of the children and did the majority of the cooking, cleaning and laundry for the family.
As noted above, the relationship was marred by the respondent’s significant violence toward the applicant which has continued to November 2018, some three years after the relationship had ended.
The respondent left the property in 2014 and has had no time with and has not supported the upkeep of the children since that date. This has meant that the applicant has been solely responsible for their care.
It has also meant that the applicant has been reliant on her brother and her son, Mr B, for financial support. On one occasion, her brother lent her the sum of $18,700 which was erroneously deposited to the parties’ joint account in 2015 where it remained until 2017. The sum loaned to the applicant was for the purpose of enabling her to install roller shutters for additional protection from the respondent. The bank refused to allow that deposit to be reversed as it had been paid to a joint account. Through the intercession of a third party, the respondent agreed to allow those funds to be withdrawn but on terms that, as he was being asked to sign passports for the children, the applicant would pay him the sum of $5,470.98 (being a debt which the respondent apparently alleged to be due to him by Mr B). This payment was made, the passports signed and the applicant obtained the balance of funds in the account.
As to financial contributions made during the period of the relationship, an assessment of those is impeded by the respondent’s failure to make financial disclosure. The respondent chose not to participate in the trial. In all of those circumstances, the court need not be unduly cautious in its approach in making findings favourable to the applicant.
As concerns non-financial contributions, para 90SM(4)(b) provides that in considering what order (if any) should be made in property settlement proceedings, the court shall take into account the non-financial contributions, direct and indirect, made by or on behalf of a party to the marriage. The court should have regard to non-financial contributions toward the acquisition, conservation or improvement of such property. I accept the applicant’s submission that non-financial contributions are neither less valuable nor less important than a party’s financial contributions: cf Ferraro & Ferraro[1992] FamCA 64; (1993) FLC 92-335 (Fogarty, Murray and Baker JJ); In the Marriage of Rolfe[1979] FamCA 65; (1979) FLC 90-629 at 78,272-78,273 (Evatt CJ).
The parties’ relationship had been of some 14 years duration. However, the parties did not cohabit until 2008 and for the preceding period the applicant had the day to day care of the children and the majority of their financial support which she provided with her family’s assistance.
The parties had otherwise been financially independent.
I am satisfied that the applicant’s financial contributions, including those made by Mr B and her brother as referred to in [80] and [87] above, should be accorded special recognition in circumstances where they were of a magnitude as to warrant special recognition: Masland & Eaton (No 2) [2012] FMCAfam 407, [169]-[170], [212] (Brown FM). I am also satisfied that in the circumstances of this case including the modest asset pool, the applicant’s overwhelming financial and non-financial contributions, and the respondent’s failure to make disclosure that it would constitute a marked injustice to not give full recognition to the applicant’s contributions: Mitchell & Nevis [2014] FCCA 376, [131]-[135] (Brown J).
The applicant worked throughout the relationship and had the added responsibilities of caring for the property and children.
The respondent’s financial contributions were ill-defined and his non-financial contributions were negligible. I find that the applicant’s non-financial contributions were of real significance. They are more appropriately to be evaluated under para 90SM(4)(c) (see below).
In relation to non-financial contributions, para 90SM(4)(c) provides that the court shall take into account the contributions made by a party to the relationship to the welfare of the family, including any contribution made in the capacity of homemaker and parent. It may be appropriate to attribute a significant value to a party’s non-financial contribution.
The respondent’s violence towards the applicant was extreme, included threats to kill and resulted in the offer of assistance by the Department of Health and Human Services. The applicant has had to seek refuge from the respondent on occasion. The respondent has attended the church on occasions when the applicant and children were at service for the purpose, it would seem, of simply intimidating her. Likewise, he has attended the business operated by Mr B and waited for hours to locate the applicant after the conclusion of her work. I find that the applicant’s non-financial contributions in this case were significant and that they were enhanced by reason of the respondent’s conduct: Kennon & Kennon [1997] FamCA 27, [169]-[170] (Baker J).
I accept the applicant’s submission that her contributions should attract greater weight by reason of the respondent’s conduct toward her during the period of the relationship: cf Baranski & Baranski [2012] FamCAFC 18. In Baranski, Bryant CJ, Coleman and Ainslie-Wallace JJ affirmed at [259] that “where the contributions of a party are rendered more arduous by the violent conduct of that party’s spouse, . . . that is a matter which is relevant to determining the nature and quality of the parties’ contributions.” To be applied, this principle requires a finding – and I so find – that the applicant’s contributions were rendered significantly more arduous as a consequence of the respondent’s violent conduct which continues.
Paragraph 90SM(4)(d) provides that the court shall take into account the effect of any order upon the earning capacity of either party. It was not suggested that para 90SM (4)(d) was relevant to this case.
Paragraph 90SM(4)(e) requires that regard be had to the matters referred to in sub-s 90SF(3), which matters I address separately below.
Paragraph 90SM(4)(f) requires that regard be had to any orders that have been made which affect a party to, or a child of, the relationship. Again, no reference was made to this consideration, however, I note the various intervention orders that have been made respecting the respondent and with which it would appear that he has failed to comply.
Paragraph 90SM(4)(g) requires that regard be had to any child support that a party to the relationship has provided. Conversely, I accept the applicant’s evidence that the respondent has paid none at all.
The respondent’s income, superannuation and indeed his residence are unknown. He may spend a few hours with the children on occasion but he has had very little to do with them as a father or carer.
Future need
Factors calling for consideration under sub-s 90SF(3) are required to be considered in the determination of what order, if any, the court should make in a property settlement proceeding: para 90SM(4)(e). These requirements bear a dual character. First, the text of sub-s 90SM(4) is expressed in imperative terms – the court shall take those factors into account. Secondly, para 90SM(4)(e) conditions that obligation in ambulatory terms – the matters in sub-s 90SF(3) shall be taken into account, so far as they are relevant.
Sub-section 90SF(3) prescribes some 19 matters that may be taken into account, and insofar as they are relevant, I have considered them.
The applicant said little to indicate that her health was other than good.
The applicant has near complete responsibility for the children. The children are now aged 10, 11, 12 and 17 years. The respondent spent no time with the children from March 2014 upon separation until early 2018 and now sees the children on an ad hoc basis. I see no basis for a conclusion that the respondent will provide child support in the future: Fearne & Fearne (No 2) [2012] FMCAfam 917, [97] (Brown FM).
The applicant derives a gross wage of $1,490 per week and is also reliant upon a weekly NewStart allowance of $714. The applicant works six days each week to support herself and her children. As detailed above, the applicant holds down two jobs to derive this income.
There is no evidence whether the respondent is entitled to a pension.
The applicant’s standard of living is modest. There is no evidence of the respondent’s standard of living.
Paragraph 90SF(3)(r) confers a discretion to consider any fact or circumstance which, in the court’s opinion, the justice of the case requires be taken into account. In my opinion, the justice of this case does require that I take into account the additional cost and delay to which the applicant has been subject in pressing this claim in the face of the respondent’s non-compliance with orders for disclosure. I also take into account that the applicant has effectively had, and will continue to have, near complete responsibility for the care of the parties’ four children in circumstances where the respondent has not and will not provide any child support for their care.
Conclusion
In the circumstances of this case, I approached the determination of final relief on the basis that the court need not shy away from a robust exercise of discretion. In giving effect to the determinations above, I have undertaken a review of the entirety of the facts and circumstances as presented in the evidence. I have done so for the purpose of reflecting, holistically, on what order is just and equitable in all of the circumstances.
I have concluded that a global property adjustment of the net asset pool should be made in this case and that I should do so on the terms sought so as to provide for the transfer of the Property A property to applicant on terms that she will assume liability for the mortgage.
By s 90ST, the court is obliged as far as is practicable, to make orders so as to achieve two objects: (1) to finally determine the financial relations of the parties; (2) to avoid further proceedings between them: JEL v DDF(2001) FLC 93-075, [152(i)].
I am satisfied that the Order made was just and equitable.
I certify that the preceding one hundred and fourteen (114) paragraphs are a true copy of the reasons for judgment of Judge A Kelly
Date: 20 December 2018
0
34
5