MILLS & MILLS

[2018] FamCA 61

FAMILY COURT OF AUSTRALIA

MILLS & MILLS [2018] FamCA 61

FAMILY LAW – PROPERTY – Where the wife has disengaged from proceedings – Where the parties’ debts are greater than their assets – Where the husband has made greater financial contributions to the marriage 

FAMILY LAW – PRACTICE AND PROCEDURE – Undefended final hearing – Where the wife has disengaged from the proceedings – Where the wife failed to appear on six occasions prior to final hearing – Where it is appropriate for the matter to proceed in the absence of the wife. 

Family Law Act 1975 (Cth) ss 75(2), 79
Family Law Rules 2004 (Cth) r 16.07

Aleksovski v Aleksovski (1996) FLC 92-705
Bevan & Bevan [2014] FamCAFC 19
Chapman & Chapman [2014] FamCAFC 91
Harris (1991) 104 FLR 458
Russell & Russell (1999) FLC 92-877
Stanford v Stanford [2012] HCA 52
Teal & Teal [2010] FamCAFC 120

APPLICANT: Ms Mills

RESPONDENT: Mr Mills

FILE NUMBER: PAC 5354 of 2013

DATE DELIVERED: 9 February 2018

PLACE DELIVERED: Parramatta

PLACE HEARD: Parramatta

JUDGMENT OF: Foster J

HEARING DATE: 12 December 2017

REPRESENTATION

APPLICANT – SELF-REPRESENTED LITIGANT: No appearance

RESPONDENT – SELF-REPRESENTED LITIGANT: Mr Mills

Orders

1. That the husband Mr Mills be and is hereby authorised to do all things necessary and to sign all necessary documents on behalf of himself and the wife Ms Mills to direct B Lawyers to forthwith pay all funds presently held by that firm on behalf of the parties or either of them to the husband or as he may otherwise direct in writing.

2. That these proceedings be removed from the active pending cases list.

Note: The form of the order is subject to the entry of the order in the Court’s records.

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

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT PARRAMATTA

FILE NUMBER: PAC 5354  of 2013

Ms Mills

Applicant

And

Mr Mills

Respondent

REASONS FOR JUDGMENT

Introduction

1. These are property proceedings commenced in this Court in December 2013 by the Applicant wife, Ms Mills. Her former husband, Mr Mills, is the Respondent.

Context

1. The wife is aged 58 and the husband is aged 61.

2. The parties commenced cohabitation in about March 2000 and married in 2002. They separated in July 2013.

3. There are no children of the relationship. The wife has two children from a previous relationship.

Procedural history

1. On 14 March 2014 the parties came before the Registrar and orders were made for the parties to provide specific disclosure and for the husband to complete and provide to the wife his business tax returns. 

2. On the occasions the matter was before the Registrar in the subsequent 12 months issues were raised by the wife as to lack of disclosure by the husband and valuation of the husband’s business.

3. On 18 May 2015 the following orders were made by consent:

   1.That within 7 days of service upon them of a copy of this order, the husband’s former solicitors, [C Lawyers], pay to each of the parties the sum of $30,000.00 from the moneys currently held by those solicitors in a Controlled Money Account through their Trust Account:

   (a)The $30,000.00 to be paid to the husband be paid as he directs C Lawyers;

   (b)The $30,000.00 to be paid to the wife be paid into the Trust Account of the wife’s solicitors, [B Lawyers], and for this purpose a Trust Account cheque made in favour of “[B Lawyers] in trust for [Ms Mills]” shall be sufficient.

   2.That the trial judge may determine how the payments referred to in order 1 shall be characterised in final orders.

   3.That the parties appoint [D] Auctions to value such motor vehicles and/or equipment as may be necessary to provide value data to the forensic accountant appointed elsewhere in these orders for the purposes of the forensic accounting valuations, and for this purpose [D] Auctions are single court expert.

   4.That within 14 days the Applicant nominate to the Respondent in writing 3 forensic accountants for the purpose of preparation by a forensic accountant of a valuation of each of the following:

   (a)The shareholding of either or both of the parties in “[E Pty Ltd]”;

   (b)The shareholding of either or both of the parties in “[F Pty Ltd]”;

   (c)The partnership of the Applicant and the Respondent trading as “[G Pty Ltd];

   (d)The shareholding of either or both of the parties shareholding in “[H Pty Ltd]”.

   5.That within 7 days after receipt by the Respondent of the nominations referred to in order 4 the Respondent notify the Applicant’s solicitors in writing the forensic accountant he selects from those so nominated.

   6.That within 3 days of receipt of the Respondent’s selection pursuant to order 5 the Applicant forward a Letter of Instructions to the selected forensic accountant and a copy of that letter to the Respondent, and for this purpose the selected forensic accountant is a single court expert.

   7.That in the event that the Respondent has not complied with order 5 within 14 days of compliance by the Applicant with order 4 the Applicant shall select a forensic accountant from those nominated to the Respondent and shall notify the Respondent in writing of that selection and forthwith on selection forward a Letter of Instructions to the selected forensic accountant and a copy of that letter to the Respondent, and for this purpose the selected forensic accountant is a single court expert.

   8.That the costs of the single court experts referred to in orders 3 and 6 or 7 shall be paid, upon presentation of their Tax Invoice, from the moneys currently held by [C Lawyers] on trust for the parties in a Controlled Money Account.

   9.The matter is adjourned to Monday 13 July 2015 at 10:00am before the Docket Registrar for the purposes of the Registrar if appropriate making appropriate directions for the preparation and conduct of a Conciliation Conference.

4. It was noted on that date that if during the period of the adjournment the parties were able to reach agreement on final property orders, they were at liberty to file terms for the purposes of orders being made in Chambers. 

5. On 31 August 2015 it was noted that the parties consented to the costs of valuation of the business being paid from the money held in trust. 

6. The matter was adjourned on a number of occasions due to issues arising with the outstanding business valuation.

7. On 16 May 2016 both parties, who were by this stage self-represented, agreed to authorise the release of $14,000.00 from trust monies to pay the accountant for the business.

8. On 18 July 2016 it was noted that valuation was not yet completed and the wife had revoked her consent to release of trust funds to pay the business’ accountant. In subsequent appearances the parties informed the Registrar that valuations could not be completed due to the parties having insufficient funds.  

9. On 17 January 2017 the parties were ordered to do all things necessary to authorise the funds held in trust for the parties by the wife’s former solicitors to be transferred to a different solicitor to be held on trust for the parties pending final determination of the matter. It was noted that the matter had significant prospects for resolution.

10. There was no appearance by the wife before the Registrar on 6 March 2017 and it was noted that the husband contended the wife had refused to comply with orders made on 17 January 2017 as to part payment of funds.

11. The matter was listed for judicial case management on 26 April 2017 and orders were made for the parties to file financial questionnaires and a joint balance sheet. The wife was put on notice that in the event she did not attend Court and comply with orders and directions the matter may proceed in her absence and be listed for undefended hearing.   

12. On 26 April 2017 there was no appearance by or on behalf of the wife. The husband appeared in person. On that date the wife’s Initiating Application was struck out and dismissed and the husband’s Response as to property was listed for undefended hearing.  

13. On 27 April 2017 there was no appearance by or on behalf of either party and the following notation was made:

    The matter was listed for judicial case management on 26 April 2017.  However Orders made on 6 March 2017 posted to the parties had a typographical error advising the adjourned date was 27 April 2017.  Although the Respondent father attended on 26 April 2017 the Applicant mother did not attend today as per the orders received by her.  The matter has been adjourned to a further judicial case management listing to enable both parties to attend.

14. On 18 May 2017 the wife appeared in person but there was no appearance by or on behalf of the husband. The orders made on 26 April 2017 for the wife’s Initiating Application to be struck out and listing the matter for undefended hearing were vacated.  

15. On 6 June 2017 the matter was listed for a conciliation conference on 20 July 2017.

16. There was no appearance by the wife at the conciliation conference scheduled for 20 July 2017 and she failed to pay the fee for the conference. An order was made listing the matter for judicial case management on 19 September 2017.

17. On 19 September 2017 there was no appearance by or on behalf of the wife and the matter was listed for undefended hearing on 12 December 2017. Orders were made for the husband to file and serve an amended response and updating affidavit and to effect service on the wife by email and post.

18. On 12 December 2017 there was again no appearance by or on behalf of the wife. The husband tendered an email to the wife with an attached affidavit evidencing that he had affected service on the wife in accordance with orders of 19 September 2017: Exh “B”.  

19. Rule 16.07 of the Family Law Rules 2004 (Cth) (“the Rules”) relevantly provides:

    Parties' participation

    (1) Each party to an application set down for hearing on the first day before the Judge must attend in person and, if legally represented, with their legal representatives.

    Note: The court may dispense with compliance with a rule (see rule 1.12).

    (2) If a party does not attend on the first day before the Judge, the other party may seek the orders sought in that party's application by, if necessary, adducing evidence to establish an entitlement to those orders in a manner ordered by the court.

    (3)…

20. On 12 December 2017 the Court was satisfied that all reasonable attempts had been made to contact the wife and it was appropriate to proceed with the matter in her absence. Judgment was subsequently reserved.

The husband’s documents

1. The husband relied upon the following documents:

   a)His Response filed 6 March 2014;

   b)His Affidavit filed 14 April 2015; and

   c)His Financial Statement filed 4 April 2017.  

2. Although these proceedings were undefended, in order to clarify the relevant evidence regard has been had to the wife’s filed documents as follows:

   a)Her Initiating Application filed 9 December 2013;

   b)Her Financial Questionnaire filed 24 April 2017;

   c)Her Financial Statement filed 9 December 2013;

   d)Her Financial Statement filed  29 April 2015;

   e)Her Financial Statement filed 15 May 2017.

3. The wife in her Application sought orders that in summary provided for:

   a)Her to “retain” 60 per cent of the matrimonial assets comprising:

   i)Her Superannuation;

   ii)Motor car 1;

   iii)Sale proceeds of the home (then about $107,000.00);

   iv)The contents of the home;

   v)Any necessary cash adjustment.

4. The husband to retain 40 per cent of the matrimonial assets comprising:

   i)His superannuation;

   ii)The business interests of the parties including E Pty Ltd, F Pty Ltd; the Mills Partnership trading as “G Pty Ltd”.

5. The husband seeks orders in summary that:

   a)The balance of the proceeds of sale of the property at J Street, Suburb K (“former matrimonial home”) held on trust be disbursed in payment of debts and liabilities of the marriage and the remainder be divided equally between the parties;

   b)Each party be declared the sole owner of all property in their possession and have sole liability for debts in their sole name;

   c)The Registrar be authorised to give effect to the orders in the event one party fails to do so.   

The evidence

1. At the time of the marriage the husband owned and operated the business “E”.

2. The wife asserts her assets at cohabitation comprised her car subject to a loan and some household contents. She asserts that the husband’s assets at cohabitation comprised his property at L Street, Suburb M about $300,000.00 subject to mortgage and his AMP superannuation of about $50,000.00.

3. Subsequent to marriage in 2005 the parties set up two businesses: “F Pty Ltd” and “G Pty Ltd”. The parties jointly operated these businesses until their separation in 2013.

4. Valuations completed at the husband’s expense in 2013 and annexed to the husband’s affidavit value each of the three companies at a net loss in the event that the companies do not obtain a contract with the Department of Education.

5. The husband was unable to renew his contract with his primary client for his services in 2016.

6. Valuations ordered to be conducted by the Court in 2015 were not completed due to lack of funds and the current value of the companies is unknown.

7. The parties separated under the one roof in mid-2013 and at that time agreed to sell the matrimonial home at J Street, Suburb K that had been purchased by them early in the relationship. The husband paid the $30,000.00 deposit at the time of purchase (presumably from the sale of his property owned at cohabitation) with the balance funded by a mortgage advance.

8. The wife’s employment with the parties’ entities ceased shortly after separation.

9. As at May 2017 the wife was in full time employment as a project coordinator earning about $52,000.00 per annum.

10. On 6 November 2013 the husband obtained a property order from Suburb K Local Court for the husband to be granted access to the former matrimonial home by the wife in order for him to collect 20 items of personal property, such access to be arranged by the wife and a police officer. In accordance with that order the husband attended the property in the presence of police on 17 November 2013 to collect various personal belongings.  

11. Subsequent to separation on 12 December 2013 the former matrimonial home at J Street, Suburb K was sold and the net proceeds held in the trust account of the wife’s solicitors. There is no evidence as to the financial circumstances of the acquisition of that property. The net proceeds of $107,818.00 were held on trust by C Lawyers for the parties. The husband had been paying the outgoings and the mortgage for the property since the time of separation despite the wife continuing to live in the property during this period.    

12. The husband says that the debts of the relationship at the time of separation exceeded $170,000.00, including a loan to shareholders and associates of the parties’ companies of $79,158.00 and outstanding credit card debts and overdue income tax debts. Such debts are indicative of income being used more for lifestyle than for payment of necessary liabilities. The wife has refused to allow those debts to be paid from the money currently held on trust for the parties.

13. The husband’s current personal debt by his account exceeds $230,000.00 in addition to the debts of the relationship totalling $170,000.00. He says that he is facing bankruptcy.  

14. The proceeds of sale of the former matrimonial home held on trust for the parties has been depleted during the course of these proceedings as outlined above with interim distributions in May 2015 to each party of $30,000.00. There should be about $47,000.00 currently held on trust for the parties.

15. As outlined above, the parties various entities were the subject of an assessment as to value in December 2013 based on financial statements up to June 2012. The assessment assumes the continuation of the primary contract of E Pty Ltd. That contract was not renewed. As a consequence the entities were assessed on an asset backing basis at a net deficit of about $70,000.00. Most of the entities’ assets were the subject of leasing finance or borrowings. Some assets have since been sold to reduce debt. Some company liabilities have been guaranteed by the parties personally.

16. As at June 2013 the entities had taxation liabilities as follows:

    E Pty Ltd (Tax)  $31,584.00

    E Pty Ltd (GST)  $25,161.00

    G Pty Ltd Partnership (Tax)  $16,644.00

    G Pty Ltd Partnership (GST)  $18,640.00

    F (GST)$2,981.00

17. It may be that the corporate entities are wound up by creditors and, if so, there is a prospect that the parties will be pursued personally by creditors.

18. The husband presently continues to contract his services through E Pty Ltd earning about $50,000.00 per annum.   The company operates a 17 year old equipment he asserts is worth about $27,000.00 and otherwise owns another 12 year old piece of equipment he asserts is worth about $33,000.00. The company has a primary liability to the ANZ Bank of $100,000.00.

19. The husband lives in rented accommodation. He has some personalty and accrued superannuation.

20. The husband (and the wife) has credit card liabilities totalling about $76,000.00 that date back to cohabitation. He has been making ongoing payments since separation for credit card debt and other liabilities in part paid from the $30,000.00 distribution to him. The wife has paid nothing toward the matrimonial debts.

Property

1. The approach to the determination of an application under s 79 of the Family Law Act 1975 (Cth) (“the Act”) is set out in Stanford v Stanford [2012] HCA 52 and further considered by the Full Court in Bevan & Bevan [2014] FamCAFC 19 and Chapman & Chapman [2014] FamCAFC 91.

2. Thus, the process ordinarily involves a staged process.

3. The Court must identify the existing legal and equitable interests of the parties in the property, the liabilities and financial resources of the parties at the time of the hearing and then whether it is just and equitable to make a property settlement order. 

4. In many cases this requirement is readily satisfied where the parties are no longer in a marital or de facto relationship and, thus, for example, the common ownership or use of property by husband and wife will no longer be possible or the express or implicit assumptions that underpinned existing property arrangements such as the accumulation of assets or financial resources by one for the benefit of both have been brought to an end with the relationship. In particular, such a circumstance arises where both or one of the parties seek adjustive orders but are unable to agree as to same.

5. The circumstances of this matter as outlined above clearly demonstrated that it is appropriate and just and equitable for an order adjusting the property rights of the parties.

6. Once the s 79(2) issue is resolved, the Court then considers the contributions made by the parties as defined in s 79(4)(a) to (c).

7. The Court must then consider s 79(4)(d) to (g), in particular, the subjective considerations as to the parties by having regard to the provisions of s 75(2) in so far as they are relevant (s 79(4)(e)).

8. The Court can then consider the “justice and equity” of the actual orders to be made: Russell & Russell (1999) FLC 92-877; Teal & Teal [2010] FamCAFC 120, in the context of the Court’s obligation to make “appropriate orders” as provided for in s 79(1) of the Act.

1. The assets of the parties including interim distributions as best can be determined are:

   Assets

   Joint Balance proceeds of property sale         $     47,000.00

   Husband E Pty Ltd   $              0.00

   Husband Interim distribution   $     30,000.00

   Husband Household contents   $      1,500.00

   Joint F Pty Ltd  $              0.00

   Joint G Pty Ltd partnership  $              0.00

   Husband AMP Superannuation (April 2017)        $     84,231.00

   Wife Interim distribution   $     30,000.00

   Wife Motor car 2   $     25,000.00

   Wife Household contents   $      5,000.00

   WifeSuperannuation AMP  $     30,000.00

   $251,731.00

   Liabilities:

   Joint Tax debt (June 2013) estimate                $  103,000.00

   Wife Personal loan   $     20,000.00

   Wife Finance car loan   $     25,000.00

   Wife Visa Credit Card  $      6,000.00

   Husband Credit Card debt (April 2017)                $     65,971.00

   Husband N Bank Loan (April 2017)   $     20,862.00

   HusbandO Finance Loan (April 2017)                 $     16,536.00

   $257,369.00

2. The total net asset pool available for distribution minus the parties’ liabilities is, therefore, negative $4,638.00.  On the available evidence the parties’ liabilities exceed their assets.

Contributions

1. In Aleksovski v Aleksovski (1996) FLC 92-705, Baker and Rowlands JJ said at 83,437:

   It is therefore necessary that trial Judges weigh and assess the contributions of all kinds and from all sources made by each of the parties throughout the period of their cohabitation and then translate such assessment into a percentage of the overall property of the parties or provide for a transfer of property in specie in accordance with that assessment.  

   It really comes down to questions of weight. Whilst weight would and must be given to a contribution which a party makes shortly before the separation, less weight may be given to a contribution made by one of the parties to a marriage early in the cohabitation period of a long marriage, particularly in circumstances where the contribution has gone into the parties' assets or been used up in the payment of family expenses.

2. In the same case Kay J said at 83,443:

   What is important is to somehow give a reasonable value to all of the elements that go to making up the entirety of the marriage relationship. Just as early capital contribution is diminished by subsequent events during the marriage, late capital contribution which leads to an accelerated improvement in the value of the assets of the parties may also be given something less than directly proportional weight because of those other elements.

3. In Harris (1991) 104 FLR 458 the Full Court said in assessing contributions:

   The task of the court in proceedings under section 79 [and thus s 90SM(4)] is not akin to an accounting exercise. To borrow a phrase used by McClelland J in Davey v Lee (1990) DFC 95-084; (1990) 13 Fam LR 688 at 689 in relation to s 20 of the Property (Relationships) Act 1984 (NSW):

   “The Court is required to make a holistic value judgment in the exercise of a discretionary power of a very general kind”.

4. The husband established and ran his business E Pty Ltd and obtained his long-standing contract with his primary client two decades prior to commencing a relationship with the wife. Otherwise, since at least 2005, when the parties established their two other companies, he accepts the wife played some role in all his business operations.

5. The husband brought a property into the marriage that was subsequently sold. The husband then paid the deposit to purchase the former matrimonial home, being $30,000.00, and following separation he continued to pay the outgoings and mortgage on the property despite the wife also continuing to reside at the property and the wife having exclusive occupation for approximately three months prior to sale.

6. The husband has been solely responsible for any repayments made towards the parties’ and their entities’ debts since separation in 2013.

7. The wife worked in the primary business and was paid a wage.

8. As best as can be determined on the evidence the parties have lived beyond their means and have managed to accumulate significant debt during the relationship.

9. Given the husband’s significant initial contributions in bringing in a property and an established business into the marriage and his ongoing payment of debts it is clear that contributions must favour him by a reasonable margin.

10. Yet the end result matters little by reason of the parties’ accumulation of significant debt including debt to the ATO during cohabitation. The modest sum left in trust will have little impact on such debt.

Section 75(2) factors relevant

1. The parties are 58 and 61 respectively and both appear to be in good health.

2. The wife is in employment and has some superannuation accrued. 

3. The husband remains working in his business. He has some superannuation. It is clear that the husband and the entities are in financial distress and may be facing bankruptcy and the entities winding up.

4. Both parties have received $30,000.00 from the monies held on trust for them from the sale of the former matrimonial home and this will be treated as a part property distribution as discussed above.

5. Under the present circumstances no adjustment to contribution findings is called for or sought by the husband.

Conclusion

1. Both parties have assets in their possession or control as identified above (at paragraph [57]). They will retain the same together with what appears to be personal liabilities not including the parties’ liabilities to the ATO.

2. Given the parties’ (and their entities’) liabilities and that the husband has serviced these debts since separation it is appropriate that the remaining monies held on trust for the parties be paid out to him. This results in an overall distribution as follows:

   To the husband:

   Husband Proceeds of property sale  $     47,000.00

   Husband E Pty Ltd  $              0.00

   Husband Interim distribution  $     30,000.00

   Husband Household contents  $      1,500.00 

   Husband AMP Superannuation (April 2017)        $     84,231.00

   $162,731.00

   Minus liabilities

   Husband Credit Card debt (April 2017)                $     65,971.00

   Husband N Bank Loan (April 2017)  $     20,862.00

   Husband O Finance Loan (April 2017)                 $     16,536.00

   $103,369.00

   To the wife:

   Wife Interim distribution  $     30,000.00

   Wife Motor car 2 car   $        25,000.00

   Wife Household contents  $      5,000.00

   WifeSuperannuation AMP  $     30,000.00

   $90,000.00

   Minus liabilities

   Wife Personal loan   $     20,000.00

   Wife Finance car loan   $     25,000.00

   Wife Visa Credit Card  $      6,000.00

   $51,000.00

3. Such orders are considered just and equitable in the circumstances of this matter.

4. Orders will be made accordingly.

I certify that the preceding seventy-eight (78) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 9 February 2018.

Associate:

Date:  9 February 2018