MERRICK & DENARD (No.3)

Case [2021] FCCA 478

FEDERAL CIRCUIT COURT OF AUSTRALIA

MERRICK & DENARD (No.3) [2021] FCCA 478

Catchwords:
FAMILY LAW – Parenting – best interests – two young children – allegations of family violence – parental responsibility.  

FAMILY LAW – Property – pool – short relationship –  expert valuation evidence –  estimate of business valuation by the applicant husband –  business valuation agreed – where the parties gave their own estimates of value in respect of certain assets – the manner in which the Court should treat “lay opinions” – the “opinion rule” – “admissions” against interest – a consideration of a “waiver of the rules of evidence” – “agreement as to facts” – allegations of “sham” transaction – allegation that assets were dissipated – consideration of notional “add backs” – contributions – future needs – justice and equity.

FAMILY LAW – Spousal maintenance – application for discharge of arrears – no “just cause” established – prospective order sought – entitlement not established.

Legislation:

Family Law Act 1975 (Cth), ss.60B, 60CA, 60CC, 61DA, 65DAA, 74, 75(2), 79, 81, 90SM, 90SF, 90SI, 90ST, 117
Evidence Act 1995 (Cth), ss.3, 55, 56, 76, 81, 140, 142, 190, 191, (schedule 2 (Dictionary))
Federal Circuit Court Rules 2001 (Cth), r.15.09

Cases cited:

Bevan & Bevan (1995) FLC 92-600

Briginshaw v Briginshaw (1938) 60 CLR 336

Carlson v Bowden (2008) 40 Fam LR 327
C & C [1998] FamCA 143
Charles & Charles [2017] FamCAFC 3

Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471

Frederick v Frederick (2019) 60 Fam LR 1
Hanas & Jolaha (No. 4) [2019] FamCA 483

Hett and Seer [2019] FamCA 362

Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd  (2008) 167 FCR 314

In the marriage of Chapman & Palmer (1978) FLC 90-510

in the Marriage of Hall (1979) 5 Fam LR 609

In the Marriage of Kowaliw (1981) FLC 91-092

In the Marriage of Lutzke (1979) 5 Fam LR 553

In the Marriage of Townsend (1994) 18 Fam LR 505

In the Marriage of Vakil (1997) 138 FLR 88

Merrick & Denard (No.2) [2020] FCCA 2111
Merrick & Denard [2020] FCCA 2110

Lewis v Condon (2013) 85 NSWLR 99

Mathieson v Hamilton (2006) 201 FLR 28

National Westminster Bank plc v Jones [2001] 1 BCLC 98

Pepsi Seven-Up Bottlers Perth Pty Ltd v Commissioner of Taxation (Cth) (1995) 62 FCR 289

Qantas Airways Ltd v Gama (2008) 167 FCR 537

Stanford v Stanford (2012) 247 CLR 108

Su v Chang (1999) 25 Fam LR 558

Trevi & Trevi [2018] FamCAFC 173

Vass v Vass (2015) 53 Fam LR 373
Watson v Ling (2013) FLC 93-527

White v Overland [2001] FCA 1333

Wreford v Caley (2010) 238 FLR 88
Applicant: MR MERRICK
Respondent: MS DENARD
File Number: BRC 11879 of 2017
Judgment of: Judge Howard
Hearing dates: 3, 4 and 5 August 2020, 12 February 2021
Date of Last Submission: 22 February 2021
Delivered at: Brisbane
Delivered on: 12 March 2021

REPRESENTATION

Counsel for the Applicant: Mr Galloway
Solicitors…

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AGLC
MERRICK & DENARD (No.3) [2021] FCCA 478
Case
[2021] FCCA 478
Decision Date

CaseChat Overview and Summary

This case concerned parenting and property disputes between Mr Merrick (the applicant husband) and Ms Denard (the respondent wife), involving two young children and allegations of family violence. The court was also required to determine an application for discharge of spousal maintenance arrears and a prospective spousal maintenance order.

The legal issues before the court included the primary considerations for determining the best interests of the children, specifically the benefit of a meaningful relationship with both parents, and how to treat "lay opinions" regarding asset valuations, including the "opinion rule" and "admissions against interest." The court also considered the waiver of evidence rules, agreements as to facts, allegations of sham transactions, dissipation of assets, and notional "add backs." Furthermore, the court had to assess contributions, future needs, and the overall justice and equity of the property division, as well as the grounds for discharging spousal maintenance arrears and the entitlement to prospective spousal maintenance.

In relation to parenting, the court accepted the observations of a family consultant that while both parents loved their children and had warm relationships with them, fundamental differences and discord had complicated their partnership. The court noted the father's frustration regarding time with the children and his inappropriate behaviour, such as public "naming and shaming" of the mother, which indicated a compromised ability to regulate emotions and was not child-focused. Regarding property, the court determined that the net pool was approximately $1,000,000, and ultimately ordered that the wife would receive 65% of the net pool and the husband 35%. The court also held the husband responsible for a $18,651.20 debt, deeming it his neglect of prior court orders, and stated it should not be a joint liability. The husband was ordered to pay spousal maintenance arrears up to 3 August 2020, with consideration given to a payment plan due to his earning capacity. The application for discharge of spousal maintenance arrears was not established, and entitlement to a prospective order was not proven.

The court made orders requiring the applicant to provide a proposed Final Order reflecting the Reasons for Judgment to the respondent and the court by 4:00 pm on 26 March 2021. The respondent was to provide any reply by 4:00 pm on 1 April 2021. The parties were directed to attempt to reach an agreed position on the wording of the Final Order by 4:00 pm on 15 April 2021. In the event of disagreement, the matter was to be listed for a Mention, with both parties to attend personally with their legal representatives.

Orders

Orders of the court

1.

That by no later than 4:00pm on 26 March 2021, the Applicant shall provide a copy of a proposed Final Order (reflecting the Reasons for Judgment) to the Respondent and a copy of the same to the Court at associate.judgehoward@federalcircuitcourt.gov.au.

2.

That by no later than 4:00pm on 1 April 2021, the Respondent shall provide any reply to the proposed Final Order to the Applicant and a copy of the same to the Court at associate.judgehoward@federalcircuitcourt.gov.au.

3.

That the parties shall attempt to reach an agreed position in relation to the wording of the Final Order (reflecting the Reasons for Judgment) and shall send a copy of same to the Court by no later than 4:00pm on 15 April 2021.

4.

That in the event the parties are unable to reach an agreed position in relation to the wording of the Final Order (and send a copy of same to the Court) within the time frame stated in paragraph 3 above herein – the matter shall be listed for Mention and each party shall attend personally along with their legal representative (if any) on a date to be fixed by the Court.

Background

Background to the litigation

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Evidence

Evidence Before The Court

That trial affidavit was filed on 13 July 2020. I note and accept the generous submission made by Mr Galloway where he stated in relation to paragraph 204:-“This is evidence before the Court, and again respectfully, before the Respondent who may have overlooked it.” However, I disagree with Mr Galloway as to the treatment of the current outstanding amount ($18,651.20) contained in the Letter of Demand. The view that I have formed is that the husband should be responsible for the payment of this amount. I do not consider that it should be deducted as a joint liability of the parties. This again forms part of the husband’s neglect in relation to his obligations pursuant to the Court order of Judge Turner from 14 May 2018. If I merely allow the figure to be included as part of the matrimonial liabilities – this will mean that the wife has contributed to an obligation that was the husband’s. The husband was obligated to pay his share of the mortgage after the order made by Judge Turner. This should not now become an obligation that gets shared between the parties. Therefore there should be included an order requiring a specific payment or reimbursement by the husband to the wife in relation to this sum – assuming that it will be the wife who will address the issue with the P Bank. At the time of the making of the final order the Court may need to hear a further submission on this point. I note that the further written submissions provided by Mr Jordan (on 19 February 2021) submitted that – in the event of a one pool approach the wife sought a division of 78% to the wife and 22% to the applicant. I acknowledge, of course, that Mr Jordan's submissions (in relation to the percentage of the division of the pool) relates to a different pool to the findings made by the Court. I have had regard to those submissions. I have also had regard to the submissions of Mr Galloway of counsel (on behalf of the husband received by the Court on 22 February 2021). Mr Galloway submitted that in respect of the property pool (being the one pool which is substantially similar to the pool contended for by the husband in Mr Galloway’s written submissions provided to the Court on 4 September 2020) – that there should be a division of 62.5% in favour of the wife and 37.5% in favour of the husband. The net pool is approximately $1,000,000. The DD Street, Suburb E unit is the major asset. It may be necessary for the unit to be sold – but this is a matter for the parties. I note that the wife would prefer to retain the unit – apparently with the financial assistance of her father. If it is sold, the mortgage on the unit can be paid out and the wife and the husband would receive a cash amount. Whatever occurs in relation to the DD Street, Suburb E unit the wife will leave the relationship with 65% of the net pool and the husband will leave the relationship with 35% of the net pool. The husband must pay the spousal maintenance arrears – up until 3 August 2020. I will refer to this issue in more detail shortly. I am satisfied that he has the earning capacity to make that payment. I will consider a request from the husband to pay that money over a period of time. I am satisfied that with his earning capacity he will be able to obtain some financial facility to help him comply with that obligation – whether it be with the assistance of his family or a bank etc. I note the evidence of Ms WW (which I have already accepted) to the effect that she had lent the sum of $440,000 to the husband to assist him with the initial purchase of the QQ Company franchise. As at the date of Ms WW’s July 2020 affidavit – all of that money had been repaid by the husband to his mother (Ms WW). This shows that the husband has the ability to raise money or to earn sufficient money to repay a significant loan in a relatively short period of time. It also shows the willingness and ability of the husband’s family members to assist him financially through the provision of loans. Of course, if the DD Street, Suburb E unit does not have to be sold – it may well be the case that, to the extent that there needs to be any payment from the wife to the husband in order to effect a 35% division of the net pool to the husband – one conceivable approach is for the wife to deduct the spousal maintenance arrears owed to her by the husband (as referred to below) and also to deduct the amount of money referred to in the ZZ Lawyers’ Notice of Demand ($18,641.20). These are matters for the parties to consider at the appropriate time and if the form of orders to reflect the Reasons for Judgment remains in dispute then the Court will hear from the parties in relation to the appropriate wording of the final orders.

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

Section 60CC(2) provides:-“(2) The primary considerations are:(a) the benefit to the child of having a meaningful relationship with both of the child's parents; and The first stated primary consideration is the benefit to the children of having a meaningful relationship with both of their parents. The parties went to see Ms U. Ms U has provided two family reports. The first family report is annexed to an affidavit filed 19 April 2018. In that first family report Ms U noted the following interactions between the children and their parents. Ms U stated in paragraphs 7.1 and 7.2:-“7.1 The interaction between the children and their mother was characterised by much warmth and familiarity. The boys frequently approached their mother for kisses, cuddles and affection. The children enjoy an obviously strong attachment to their mother. Both boys appeared happy and relaxed throughout the interaction. Ms Denard had lunch for them. Y copied his older brother, for example, in his choice of toys and activities. The children appear to have a very loving and close relationship with her (sic) mother.7.2 The relationship between the children and their father was also characterised by familiarity and warmth. Mr Merrick got down on the ground to play with the children and was physically affectionate toward them. The children engaged very comfortably with their father. Mr Merrick managed the sometimes-competing needs of the children well. Mr Merrick is obviously a very "hands on" father.” Ms U has noted two further important points relevant at this stage in paragraphs 8.1 and 8.2 of her first family report. In those paragraphs, Ms U has stated:-“8.1 There is little doubt that despite the fact that these parents obviously love their children and their sons respond in kind, their relationship was significantly complicated by starting a family prior to ensuring they had a robust, mutually respectful and well-considered partnership. There are enormous fundamental differences between them. These differences ultimately lead to the demise of the relationship and now underpin the angst, discord and loss of trust that is evident today.8.2 It is clear that Mr Merrick is extremely frustrated about the lack of time he spends with his children. These annoyance (sic) and Mr Merrick's perception that Ms Denard lacks empathy around his position/role as a father undoubtedly contributed to inappropriate behaviour, such as the Facebook posts ‘naming and shaming’ Ms Denard for limiting his time with the children. Such behaviour is not child-focused and possibly demonstrates a compromised ability to regulate emotions.” (Emphasis added). I agree with these observations made by Ms U and stated in paragraphs 8.1 and 8.2 above. I have emphasised those parts that I find particularly relevant. The early arrival of children in this relationship – and the birth of the two children in quick succession – seems to have contributed to the relationship spiralling out of control. The parents never seem to have been "on the same page" when it came to what they expected of the other once the children were born. The father appears to have embarked head long full-time into a very busy and (apparently) successful career as a businessman. He already, of course, was a businessman at the time the couple met. But, it appears, that he was working very hard after the boys were born and this meant that he did not have the time to be present to assist the mother to the extent that she wanted and to the extent that she felt she needed assistance.