Morrigan & Hilma

Case [2024] FedCFamC1F 155

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Morrigan & Hilma [2024] FedCFamC1F 155

File number(s): SYC 179 of 2022
Judgment of: SCHONELL J
Date of judgment: 19 March 2024
Catchwords:

FAMILY LAW – PROPERTY – Assessment of contributions – Where the parties had a relationship of 14 years – Where there are no children of the relationship – Where the husband has three children from a prior relationship who lived with the parties for half the time – Where the initial contributions of the husband exceeded the wife’s – Where during the relationship, both parties used their best endeavours and applied their energies toward the relationship – Where interests that the husband had in various corporate entities at the commencement of the relationship provided significant financial benefits to the parties – Where after separation, the companies ultimately failed – Where the wife submitted that the Court should consider this when weighing contributions – Where there was no suggestion put to the husband that he was reckless or acting in other than what he perceived to be in the best interests of the companies – Where this is a matter of history rather than fault or conduct – Where the failure of the companies did not diminish the husband’s contributions.

FAMILY LAW – PROPERTY – Addbacks  – Paid legal fees – Where the husband contended that the Court should exclude his paid legal fees from the Balance Sheet, apart from an amount allegedly sourced from capital, as the funds were allegedly derived from his post-separation income – Where the wife submitted that the Court should either include or exclude all paid legal fees – Where it is artificial to draw the distinction sought by the husband – Where the husband was able to pay his legal fees from post-separation income because he retained the benefit of income from his businesses and his earning capacity, to which the wife contributed – Where other paid legal fees are excluded from the Balance Sheet.

FAMILY LAW – PROPERTY – s 75(2) adjustment – Alleged uncrystallised liability – Where the husband asserts there should be an adjustment in his favour because of the likelihood he will be pursued by the ATO in consequence of the liquidator seeking to recover allegedly unfair preference payments – Where there is no evidence before the Court as to the quantum of the amount that may be pursued – Where there is no evidence that the liquidator will actually seek to recover the payments – Where there is no evidence of the husband’s potential defences – Where it was within the husband’s purview to adduce such evidence – No adjustment made.

FAMILY LAW – PROPERTY – s 75(2)(o) adjustment – Where the wife submitted there should be an adjustment made in her favour for her contributions toward the care of the husband’s children from his prior relationship – Where it was found that the wife’s contribution was a significant and substantial contribution – Adjustment made in the wife’s…

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Morrigan & Hilma [2024] FedCFamC1F 155
Case
[2024] FedCFamC1F 155
Decision Date

CaseChat Overview and Summary

The case of Morrigan & Hilma involved a property dispute between the husband and wife following the end of their 14-year relationship. The key legal issues included the assessment of contributions made by each party during the relationship, the consideration of addbacks such as paid legal fees, potential adjustments under section 75(2) of the Family Law Act 1975, and the division of assets in a fair and equitable manner. The court had to decide whether the failure of companies owned by the husband should affect the assessment of his contributions, the inclusion of paid legal fees in the balance sheet, the need for an adjustment due to potential tax liabilities, and whether the wife's care contributions towards the husband's children from a previous relationship warranted an adjustment in her favour.

The court found that despite the failure of the husband's companies, his initial and ongoing contributions to the relationship were significant and should not be diminished. Paid legal fees were considered on a case-by-case basis, and the court decided to exclude some but not all of the husband's paid legal fees. No adjustment was made regarding potential tax liabilities as there was insufficient evidence to support such a claim. However, the court did make a 6 per cent adjustment in the wife's favour for her substantial contributions to the care of the husband's children from a previous relationship. The court concluded that a 57 per cent to 43 per cent division of assets in favour of the husband was just and equitable, taking into account all contributions and factors under section 75(2).

The final orders directed the parties to confer and submit an agreed Minute of Order reflecting the court's reasons and percentage division, or if they could not agree, to submit their respective proposed orders identifying areas of dispute. This ensures that the court's detailed reasoning and findings are accurately translated into enforceable orders.

Orders

Orders of the court

SYC 179 of 2022

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MR MORRIGAN

Applicant

AND:

MS HILMA

Respondent

ORDER MADE BY:

SCHONELL J

DATE OF ORDER:

19 MARCH 2024

THE COURT DIRECTS THAT:

1. Within seven days, the parties are to confer and submit to Chambers an agreed Minute of Order, in the format of Exhibit 26, that reflects the percentage division in, and otherwise accords with, these Reasons for Judgment.

2. In the event the parties are unable to reach agreement in accordance with Order 1 above, they are to submit a Minute of Order to Chambers within a further seven days, in the format of Exhibit 26, which they contend reflects the percentage division in, and otherwise accords with, these Reasons for Judgment and which clearly identifies the areas of dispute.

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

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

Background

Background to the litigation

For reasons that will become apparent, I am not satisfied that either party’s position is just and equitable.BACKGROUND The husband was born in 1964. The wife was born in 1968. Both parties are 56 years old. The parties commenced cohabitation in 2004. They separated on 1 August 2018. This was a relationship of 14 years. According to the wife, in 2003, prior to the commencement of cohabitation, B Pty Ltd was incorporated. The husband was the sole director of B Pty Ltd, and C Pty Ltd as Trustee for (“ATF”) the Morrigan Family Trust was the sole shareholder. These entities, amongst others, are referred to in more detail in these Reasons for Judgment. The wife deposed that in 2004, she relocated from Melbourne to live with the husband at his home in Sydney, situated at 1 D Street, Suburb E, NSW (“1 D Street property”). The husband’s former partner lived at 2 D Street (“2 D Street property”). The husband and his former partner have three children. At the commencement of cohabitation, the children were aged ten, seven, and five, and they lived between the husband and his partner on an alternate-night basis. The husband and her were assisted in their care of the children by a nanny. The parties agree that, at the commencement of cohabitation, the husband had the following assets, liabilities, and/or financial resources: (a)Units in the F Unit Trust. This trust was established in 1999. The units were held equally by G Pty Ltd, an entity associated with the husband’s business partner, Mr H, and C Pty Ltd;(b)Interest in C Pty Ltd, ATF the Morrigan Family Trust. This entity had a 48.5 per cent interest in J Pty Ltd; (c)Interest in the Morrigan Family Trust No 2; and (d)Interest in the Morrigan Family Superannuation Fund, a self-managed super fund. The parties agree that, at the commencement of cohabitation, the wife had the following assets, liabilities, and/or financial resources: (a)K Street, Suburb L, Victoria (“Suburb L property”), subject to a mortgage; (b)A business, M Company, purchased shortly before cohabitation; (c)Cash at bank;(d)A credit card account; and (e)Superannuation with Superannuation Fund 1. At the commencement of cohabitation, the husband worked full-time at J Pty Ltd. The wife operated M Company from the 1 D Street property, which was owned by the F Unit Trust, subject to a mortgage. According to the wife, at the end of the school year in 2004, the nanny advised that she would not be returning the following year. The wife contended that the parties chose not to hire another nanny and that the wife, with the husband’s assistance, undertook the majority of the care of the children while they were staying at the 1 D Street property. The wife deposed that she often collected the children from school, supervised them in the afternoons, and prepared their school lunches. For the remainder of the time, the wife said, the children were taken care of by their mother. The husband deposed that he was a very involved parent, and that housework and administrative matters were shared between the parties. He gave evidence that he and the wife worked together, depending on their individual daily commitments, to wake the children, get them breakfast, and pack their school bags. He deposed that the wife prepared the children’s school lunches, and that he attended to other household tasks.

Evidence

Evidence Before The Court

The husband’s senior counsel then advised the administrator would be available to give evidence at 10.00 am on the fourth day of the hearing. The wife’s senior counsel indicated that this still did not provide her with sufficient time, and the matter would have to be adjourned. Following a short adjournment, the husband’s senior counsel indicated the husband would not seek to rely on the affidavit.EVIDENCE AND CREDIT I have read all of the evidence relied upon in the proceedings, including the Exhibits, but do not propose to repeat all of it in these reasons. As the High Court reminds in Whisprun Pty Ltd v Dixon (2003) 200 ALR 447:62. … A judge’s reasons are not required to mention every fact or argument relied on by the losing party as relevant to an issue. Judgments of trial judges would soon become longer than they already are if a judge’s failure to mention such facts and arguments would be evidence that he or she had not properly considered the losing party’s case. Each of the parties were cross-examined. I carefully observed them give their evidence and the way they each answered questions. The husband was careful in the way in which he gave his evidence. On a number of occasions, he was at pains to ensure that his answer was comprehensive, and he often did not agree with the contentions put by the wife’s senior counsel. The mere fact that he did not make concessions is not illustrative of mendacity. Nor is a failure to concede a hallmark of a witness who seeks to mislead or obfuscate. It can equally be the mark of one who is assured of the correctness of their position. Senior counsel for the wife urged that I make a credit finding in relation to the evidence of the husband and, where there is some disputed issue of fact, that I should prefer the evidence of the wife to that of the husband. I am conscious of what the Full Court said in Adamson & Adamson (2014) FLC 93-622:89.In Carlson & Fluvium [2012] FamCA 32 (“Carlson”) at [165] to [169] Kent J made the following observations concerning the making of adverse credit findings against a parent in a parenting case:165.As a general proposition, civil courts usually refrain from specific adverse credit findings against litigants if the disposition of the case can legitimately be achieved otherwise. There are good reasons for that approach. For example, a specific finding that a litigant has misled the court might be tantamount to a finding of perjury. Further, it can be accepted as a given that human beings have the capacity to reconstruct or rationalise or even misconstrue past events or conduct, or to engage in self-justification, particularly in recounting events in highly emotive settings or in respect of highly emotive issues. This may make the distinction between an honest, although wrong, account on the one hand, and a deliberate and calculated obfuscation on the other, difficult to draw. 166.To deny significant limitations in the capacity to use assessment of the demeanour of a witness as an entirely reliable guide to his or her truthfulness would be to deny the existence of plausible liars; or those who may be timid, uncertain or unconvincing, but nevertheless truthful, in relating events. 167.Moderation in this respect is also called for when it is recognised that adverse credit findings in arriving at a decision at first instance may present a significant hurdle to legitimate rights of review of that decision on appeal.

Decision

Reasons for decision

Having regard to all the above matters, I am satisfied that a 6 per cent adjustment in favour of the wife is warranted.CONCLUSION Having regard to my findings, both as to contribution and in relation to matters under s 75(2) of the Act, I am satisfied that a just and equitable result sees the assets of the parties divided in the proportions as to 57 per cent to the husband and 43 per cent to the wife.

Ratio Decidendi

Legal Principle Established

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