Morse & Duarte (No 5)
[2024] FedCFamC1F 7
•18 January 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Morse & Duarte (No 5) [2024] FedCFamC1F 7
File number(s): SYC 737 of 2014 Judgment of: HARPER J Date of judgment: 18 January 2024 Catchwords: FAMILY LAW – PROPERTY – Where property proceedings remitted after appeal – Where orders made for wife’s Response to be dismissed following non-compliance with Court orders and her failure to attend the compliance hearing – Where no appearance by wife or Second Respondent at the final hearing – Where wife filed no material – Wife emailed chambers the evening before the final hearing annexing medical certificates objecting to the hearing proceeding – Where no application for adjournment was made and no affidavit filed – Where hearing proceeded in absence of wife and Second Respondent – Where the substantial asset in the property pool is a property held in the name of wife and Second Respondent – Where Court had previously made declaration that Second Respondent had no beneficial or equitable interest in the property – Where Court ordered Second Respondent transfer his interest in the property to wife and subsequently be removed as a party to the proceedings – Orders not complied with and property remained registered in the names of wife and Second Respondent at date of final hearing – Where wife resides in the property – Husband has sole care of the children of the marriage – Husband found to have made greater contributions – Adjustment of 6 per cent made in favour of husband on account of s 75(2) factors – Where orders made for wife to provide vacant possession of the property to husband – Husband to facilitate the sale of the property – Net proceeds of the sale to be distributed 70 per cent to husband and balance to wife. Legislation: Family Law Act 1975 (Cth) Pt VIII, ss 79, 75(2), 80, 81 Cases cited: Aitken & Aitken (2023) FLC 94-142; [2023] FedCFamC1A 69
Anson & Meek (2017) FLC 93-816; [2017] FamCAFC 257
Barnell & Barnell (2020) FLC 93-961; [2020] FamCAFC 102
Benson & Drury (2020) FLC 93-998; [2020] FamCAFC 303
Bosanac v Commissioner of Taxation (2022) 275 CLR 37; [2022] HCA 34
Burke and Burke (1981) FLC 91-055
Candle & Falkner (2021) FLC 94-069; [2021] FedCFamC1A 102)
Dickons v Dickons (2012) 50 Fam LR 244; [2012] FamCAFC 154
Duarte & Morse (2019) FLC 93-902; [2019] FamCAFC 93
Duarte & Morse (No 3) [2023] FedCFamC1A 148
G and G (2000) FLC 93-043; [2000] FamCA 1075
Grunseth & Wighton (2022) FLC 94-099; [2022] FedCFamC1A 132
Hickey and Hickey and Attorney General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143; [2003] FamCA 395
Horrigan & Horrigan [2020] FamCAFC 25
Jabour & Jabour (2019) FLC 93-898; [2019] FamCAFC 78
JEL and DDF (2001) FLC 93-075; [2000] FamCA 1353
Kowalski and Kowalski (1993) FLC 92-342
Mallet v Mallet (1984) 156 CLR 605; [1984] HCA 21
Morse & Duarte (2017) 58 Fam LR 131; [2017] FamCA 1039
Morse & Duarte (No 2) [2022] FedCFamC1F 152
Morse & Duarte (No 3) FedCFamC1F 35
Norman & Norman [2010] FamCAFC 66
Stanford & Stanford (2012) 247 CLR 108; [2012] HCA 52
Zao & Lee [2019] FamCAFC 169
Division: Division 1 First Instance Number of paragraphs: 75 Date of hearing: 15 January 2024 Place: Sydney Counsel for the Applicant: Mr Othen Solicitor for the Applicant: Lander & Rogers The Respondents: No appearance ORDERS
SYC 737 of 2014 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR MORSE
Applicant
AND: MS DUARTE
First Respondent
MR TOLMAN
Second Respondent
ORDER MADE BY:
HARPER J
DATE OF ORDER:
18 JANUARY 2024
THE COURT ORDERS THAT:
Vacant possession
1.Within 14 days of the date of these orders, the First Respondent Wife (“the wife”):
(a)vacate the property situated at B Street, Suburb C in the State of NSW being the whole of the land in folio identifier … (“the Suburb C property”);
(b)provide vacant possession of the Suburb C property to the Applicant Husband (“the husband”);
(c)leave the Suburb C property in good order and repair and in a presentable condition; and
(d)not approach to within 600 meters of the Suburb C property or instruct any third party to approach within 600 meters of the Suburb C property.
2.In the event the wife fails, or refuses to comply with Order 1(a) and/or Order 1(b), then upon the filing of an affidavit of the husband or his legal representative confirming that the wife has failed to comply with Order 1(a) and/or Order 1(b) together with a Warrant for Possession of the Suburb C property in the form approved under the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (“the Rules”) and a copy for service, a Warrant for Possession shall be issued pursuant to r 11.56 of the Rules authorising an Enforcement Officer to forthwith attend at the Suburb C property and:
(a)enter the Suburb C property;
(b)give possession of the Suburb C property to the husband.
3.Upon obtaining vacant possession of the Suburb C property the husband:
(a)is authorised to change the locks to the premises at the Suburb C property;
(b)is to have sole use and occupation of the Suburb C pending its sale; and
(c)is to pay, as and when they fall due, all outgoings and costs associated with the Suburb C property which are incurred as and from the date he takes exclusive occupation of the Suburb C property.
4.The wife is solely responsible for and must pay, as and when they fall due, any and all outgoings and costs associated with the Suburb C property prior to the date on which the husband takes vacant possession of the Suburb C property, and must indemnify the husband in relation to those costs.
Transfer
5.Within 30 days of the husband obtaining vacant possession of the Suburb C property in accordance with these orders, the husband, the wife and the Second Respondent, Mr Tolman, do all acts and things and sign all such documents as may be necessary to transfer the Suburb C property to the husband’s sole name, at the husband’s cost, including executing a Transfer, nominating the husband as transferee, in registrable form in accordance with the provisions of the Real Property Act1900 (NSW).
Sale
6.Within 90 days of the date on which the Suburb C property is transferred to the husband’s sole name in accordance with Order 5, the husband is to do all acts and things and sign all such documents as may be necessary to list the Suburb C property for sale by private treaty:
(a)with an agent selected by the husband (“the Agent”);
(b)at a price nominated by the husband in consultation with the Agent;
(c)for an advertising campaign of the husband’s choice, in consultation with the Agent; and
(d)if an offer is made from a prospective purchaser where the purchase price is at or above 95 per cent of the list price, the offer must be accepted.
7.In the event a contract for sale is not entered pursuant to Order 6 within 30 days of the date the Suburb C property is listed for sale by private treaty in accordance with Order 6, then the Suburb C property is to be listed for auction, with the first auction to take place within 60 days of the date on which the Suburb C property is listed for auction:
(a)with an auctioneer selected by the husband (“the Auctioneer”);
(b)with a reserve price nominated by the husband in consultation with the Agent and/or Auctioneer; and
(c)in the event that the bidding does not reach the reserve price, the husband must sell the property to any proposed purchaser who makes a bid or offer at or above 95 per cent of the reserve price.
8.Should the Suburb C property not be disposed of at auction in accordance with Order 7, the Suburb C property be re-listed for sale by private treaty for a further period of 30 days with a further auction to be held forthwith at the expiration of the 30 day period. This auction is to be conducted in the same manner as specified in Order 7. The process specified in this order (Order 8) shall be repeated until such time as the Suburb C property is sold.
9.The husband engage a conveyancing solicitor, of his choice, to act as conveyancer for the sale of the Suburb C property.
10.Upon the Suburb C property being sold, the gross proceeds of sale be applied in the following order and manner:
(a)any commission and selling costs including but not limited to real estate commission, auctioneer’s fees and advertising fees incurred in relation to the Suburb C property;
(b)legal (conveyancing) costs incurred in relation to the sale of the Suburb C property;
(c)any adjustments under a Contract for Sale for rates, land tax and other outgoings;
(d)to the husband:
(i)first in reimbursement of all funds paid pursuant to Order 3(c);
(ii)second, an amount equal to 70 per cent of the balance of the proceeds then remaining less the amount of $120,568; and
(e)the balance of the proceeds of sale to the wife, subject to Order 11.
11.If the Agent recommends any repairs and/or maintenance be undertaken to the Suburb C property prior to it being listed for sale in accordance with these orders, the wife shall be solely liable for those costs, and:
(a)the husband is to meet the costs of such repairs and/or maintenance at first instance;
(b)the husband is to provide to the wife invoices evidencing the costs of said repairs and/or maintenance; and
(c)the costs of said repairs and/or maintenance shall be deducted from the wife’s entitlement pursuant to Order 10(e), prior to her receiving the same, and paid to the husband.
12.The wife is restrained from:
(a)lodging any caveat on the Suburb C property; and
(b)doing any act or thing or causing any other person to do any act or thing which would have the effect of interfering with or negatively impacting upon the sale of the Suburb C property.
Retention of Property
13.Pursuant to s 78 of the Family Law Act 1975 (Cth) (“the Act”) the husband is declared to be solely entitled to all his right, title, interest and entitlement in:
(a)the money paid to him pursuant to these orders; and
(b)all other items of property including money, motor vehicles, insurances, equities, superannuation entitlements, and personal effects currently in his possession or control.
14.Pursuant to s 78 of the Act the wife is declared to be solely entitled to all her right, title, interest and entitlement in:
(a)the money paid to her pursuant to these orders; and
(b)all other items of property including money, motor vehicles, insurances, equities, superannuation entitlements, and personal effects currently in her possession or control.
Indemnities
15.Pursuant to s 78 of the Act, the husband is declared to be solely liable for all liabilities in his name and shall indemnify and keep indemnified the wife in respect of the same.
16.Pursuant to s 78 of the Act the wife is declared solely liable for all liabilities in her name and shall indemnify and keep indemnified the husband in respect of the same.
17.Each party hereby releases the other from all actions, proceedings, claims, demands, costs and expenses whatsoever and howsoever arising which either of them had or may have against the other for or by reason of or in respect of any act, cause, matter or thing.
Other
18.Pursuant to s 81 of the Act the Court intends these orders to finally determine all financial relations and issues between the parties and avoid further proceedings between them.
19.Each party do all things necessary, including providing all consents and signing all necessary documents, to give effect to these orders in the time periods prescribed.
20.All outstanding applications, filed by any party to the proceedings be dismissed, save for the husband’s Application in a Proceeding filed 22 December 2017 and amended on 24 December 2019, which is yet to be determined.
Section 106A
21.In the event any party refuses or neglects to execute any deed, document or instrument necessary to give effect to all or any of these orders within 48 hours of a request for them to do so, then a Registrar of the Court shall be appointed pursuant to s 106A of the Act to execute such deed, document or instrument in the name of the said party and do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of affidavit.
Costs
22.Any application for costs is to be filed with an affidavit in support no later than 28 days from the date of these orders.
THE COURT NOTES THAT:
A.On 31 January 2023 the Court declared that the Second Respondent, Mr Tolman, has no beneficial interest in the Suburb C property.
B.Order 3 of the 31 January 2023 orders provided that:
As between the Applicant and the First Respondent and without prejudice to their respective rights at trial and without admissions as between them, within 7 days of the making of this order, the Second Respondent do all acts and things and sign all documents necessary to transfer his right, title and interest in the [Suburb C] property to the First Respondent.
C.Order 4 of the 31 January 2023 orders provided that:
Upon the transfer contemplated by Order 3, the Second Respondent be removed as a party to the proceedings.
D.At the time of the making of these order, Order 3 of the 31 January 2023 orders had not been carried out and the Second Respondent remains a party to these proceedings.
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.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Morse & Duarte has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
HARPER J:
INTRODUCTION
These are property proceedings pursuant to Pt VIII of the Family Law Act 1975 (Cth) (“the Act”) between the applicant husband, Mr Morse (“the husband”), the respondent wife, Ms Duarte (“the wife”) and the second respondent, Mr Tolman.
This matter has a lengthy and convoluted history in this Court, involving both property and parenting proceedings.
BACKGROUND
Some relevant background of this matter is set out in Morse & Duarte (No 2) [2022] FedCFamC1F 152 at [4]–[31] (“Morse & Duarte (No 2)") wherein I dealt with a summary dismissal application by the wife. I incorporate those details here, and I will not repeat what I have said unless necessary for this judgment.
In summary, the husband and wife commenced cohabitation in 2003, and were thereafter married in 2004. During the relationship, the parties had three children together: H, born 2006, J, born 2010, and K, born 2012 ("the children").
The parties separated on a final basis in late 2013, divorcing in 2015.
After separation, the wife formed a relationship with Mr Tolman in late 2013. They initially lived in S Street, Suburb Q (“Suburb Q”) but exchanged contracts to purchase B Street, Suburb C (“Suburb C”) in late 2013. I will return to this purchase later in these reasons.
The wife and Mr Tolman had two children. There was no evidence about these children or their care arrangements.
As will be explained, Suburb C is important because it is the single most substantial asset in the property pool considered in this judgment.
PROCEDURAL HISTORY
It is necessary to refer to some aspects of the lengthy and convoluted procedural history of these proceedings.
Final judgment was delivered by Le Poer Trench J (as he then was) on December 2017 (Morse & Duarte (2017) 58 Fam LR 131 (“Morse & Duarte”)). As a result of this judgment the children were placed in the sole care of the husband.
Orders were also made for division of matrimonial property. Specifically, Le Poer Trench J (as he then was) concluded Suburb C was held by the wife and Mr Tolman on constructive trust for the husband and the wife in equal shares as tenants in common. This conclusion was overturned on appeal and the proceedings remitted for further hearing on property issues only (Duarte & Morse (2019) FLC 93-902 (“Duarte & Morse").
Numerous applications have been brought by the wife since Morse & Duarte (No 2) and can be summarised as follows:
(1)Notice of Appeal filed by the wife on 7 April 2022 seeking leave to appeal the order of 17 March 2022 which dismissed her application for summary dismissal (Morse & Duarte (No 2)). Appeal dismissed on 4 August 2022;
(2)Application in a Proceeding filed by the wife on 8 April 2022 seeking a stay of the proceedings pending the outcome of the appeal from Morse & Duarte (No 2);
(3)Application in a Proceeding filed by the wife on 22 February 2023 seeking the appointment of a Registrar pursuant to s 106A of the Act to give effect to orders of 31 January 2023;
(4)Application in a Proceeding filed by the wife on 22 March 2023 seeking summary dismissal or permanent stay of the husband’s Fifth Amended Initiating Application filed on 4 December 2019. Application dismissed on 12 April 2023;
(5)Application in a Proceeding filed by the wife on 22 March 2023 seeking a number of procedural orders including that the 22 January 2024 trial dates be vacated and that the husband be restrained from funding further legal fees by way of unsecured loans. Application dismissed on 12 April 2023; and
(6)Notice of Appeal filed by the wife on 9 May 2023 seeking leave to appeal the orders of 12 April 2023 which dismissed the wife’s application for summary dismissal. The appeal was dismissed on 29 August 2023 and the wife was ordered to pay the husband’s costs in the sum of $15,000 (Duarte & Morse (No 3) [2023] FedCFamC1A 148).
The parties indicated to the Court on 30 September 2022 that as between themselves there was some agreement as to the nature and extent of Mr Tolman’s interest in Suburb C. The Court made orders pursuant to s 78 of the Act that the question of Mr Tolman’s interest in Suburb C be determined as a separate issue.
On 31 January 2023, following a hearing on the separate issue, the Court declared that Mr Tolman had no beneficial interest in the Suburb C property and orders were made for the wife and Mr Tolman to take the necessary steps to cause the transfer his right, title and interest in Suburb C to the wife (Morse & Duarte (No 3) FedCFamC1F 35). However, this order has not been complied with, and Mr Tolman remains as a registered proprietor of Suburb C with the wife and remains a party to the proceedings.
Orders were also made for the parties to attend a Conciliation Conference on 15 February 2023. The Conciliation Conference was terminated prior to its commencement.
On 20 March 2023, I listed the matter for final hearing with an estimate of four days commencing on 22 January 2024 and made detailed trial directions.
I made further procedural orders on 10 August 2023. There was no appearance from the wife at this Court event. The hearing dates were varied to commence earlier on 15 January 2023. I made orders putting the wife on notice that any default of operative Court orders by her would give leave to the husband to file an affidavit detailing those defaults and may result in her Response being dismissed and the final hearing proceeding as if undefended.
The matter was listed for compliance hearing on 8 December 2023, and again there was no appearance by the wife. The Court was satisfied that there had been non-compliance by the wife with procedural orders made by the Court on both 20 March 2023 and 10 August 2023. I made orders that the wife’s Response be dismissed and that she not be permitted to lead evidence in support of her Response without leave of the Court. The wife remained at liberty to cross-examine the husband on his evidence and tender any documents into evidence subject to objection.
There was no evidence, Case Outline or Financial Statement or draft balance sheet filed by the wife in accordance with the trial directions.
When the trial was called at 10.04 am on 15 January 2024, there was no appearance by either the wife or the second respondent. The wife made no application seeking leave of the Court to lead any evidence.
The evidence of the husband satisfied me that both respondents had been served with all of his material well before the final hearing.
This summary of the procedural history demonstrates that the wife has been assiduous in attempting to delay the further final hearing of the proceedings. It is necessary to make this observation because at 11.35 pm on 14 January 2024, the evening before the commencement of the final hearing, the wife emailed my chambers attaching medical certificates which in their terms suggested she would be unfit to participate in the trial commencing on 15 January 2024. Consequently, the wife objected to the trial proceeding in her absence. The wife also raised an issue of apprehended bias “arising from the former trial judge taking chambers […] alongside” counsel appearing for the husband. This email and its attachments were marked Exhibit “C”.
Counsel for the husband accepted that it would be appropriate for the Court to give consideration to the matters raised by the wife’s email. I have given them consideration. In my view the wife has provided no proper basis for adjourning the final hearing. There is no affidavit which annexed any compelling medical evidence. Her non-attendance at the compliance hearing on 8 December 2023 and her failure to file any material in relation to the final hearing commencing on 15 January 2024 indicate a failure to remain engaged with the process.
As to the mention of apprehended bias, this remains a mystery and had no relevance to the conduct of the trial.
It is apparent from the procedural history of this matter that the husband has been denied the opportunity to present his case for property adjustment for an extremely lengthy period of time. I saw no basis to conclude from the wife’s material that she has been denied any opportunity to present such case as she may have wished to make. I concluded that the trial should proceed as listed.
Therefore the only material before the Court was that relied upon by the husband, being his Case Outline filed on 8 January 2024, Sixth Amended Application for Final Orders and Financial Statement both filed on 11 December 2024, his affidavit filed on 12 December 2023 and the affidavit of the husband’s solicitor Matthew Doyle filed on 12 January 2024.
The evidence showed all these documents were properly served on both respondents.
PROPERTY ADJUSTMENT
Section 79 of Pt VIII of the Act gives the Court a broad discretion to adjust the property interests of parties to a marriage.
In property proceedings under the Act, parties generally rely upon the “four step process” set forth in Hickey and Hickey and Attorney General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 in the determination of an application under s 79, as follows:
1.Identify and value, the parties' property, liabilities and financial resources at the date of the hearing;
2.Identify and assess the contributions of the parties as referred to in s.79 of the Act and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties, whether examined on a global approach or an asset by asset approach;
3.Identify and assess the other factors relevant including, the matters referred to in s.75 of the Act and determine the adjustment (if any) to be made to the contribution entitlements at step two; and
4. Consider the effect of the above and resolve what order is just and equitable in all the circumstances of the case.
In Stanford & Stanford (2012) 247 CLR 108 (“Stanford”) the High Court made clear at [37] it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property.
Stanford also made clear that the requirement pursuant to s 79(2) that it would be just and equitable to make orders altering property should not be conflated with the requirements of s 79(4).
The Full Court has recently emphasised that having regard to the language of both s 79(1) and s 79(2) of the Act, the Court is required to make orders which are not only “just and equitable” but also “appropriate” (Zao & Lee [2019] FamCAFC 169 at [48]; Aitken & Aitken (2023) FLC 94-142 at [59]). Section 80 grants specific powers to make a range of different orders to adjust property interests. Section 81 reflects a policy of making orders which finally determine the financial relationship between the parties and avoid further proceedings, as far as practicable.
ASSETS AND LIABILITIES
The evidence of the husband established a balance sheet as follows:
Ownership Description Agreed value ASSETS 1. Suburb C $1,300,000 2. Husband Motor Vehicle 1 $9,000 3. Wife Motor Vehicle 2 $2,000 4. Husband AD Bank account ending #...45 $1,109 5. Husband AD Bank account ending #...40 $1,208 6. Wife ANZ Bank account ending #...53 Not known 7. Wife AD Bank account ending #...05 Not known 8. Husband Husband’s interest in AE Pty Ltd NIL 9. Husband Loan owing to Husband by AE Pty Ltd NIL 10. Husband Household contents and furniture and musical instruments $5,000 11. Wife Household contents and furniture and musical instruments $50,000 Total $1,368,317 ADD BACKS 12. Husband Paid legals – from interim distribution of $100,000 to the husband by order of Le Poer Trench J (as he then was) dated 26 May 2016 $80,000 13. Husband Paid legals – from proceeds from the sale of Suburb Q received by the husband pursuant to Order 27 of the orders of Le Poer Trench J (as he then was) dated 1 December 2017 $448,118 14. Husband Further loan from husband’s mother for legal fees $198,884 15. Wife Paid legal fees – wife and second respondent $85,000 Total $812,002 LIABILITIES 16. Husband Loan from husband’s mother for rent $52,000 17. Husband Further loan from husband’s mother for legal fees $198,884 Total $ 250,884 SUPERANNUATION Member Name of Fund Type of Interest Agreed value 18. Husband Superannuation Fund 1 Accumulation interest $121,039 19. Husband AE Pty Ltd as trustee for Superannuation Fund 2 SMSF $2,728 20. Wife Superannuation Fund 1 Accumulation interest $78,846 Total $202,613 NET POOL (INCLUDING SUPERANNUATION): $ 2,132,048
The balance sheet requires little additional comment, except as follows.
As a consequence of the declaratory relief granted on 31 January 2023, which remains undisturbed, Mr Tolman has no interest in Suburb C. If the January 2023 orders had been complied with, the property would be registered in the name of the wife, but this has not happened. In his final proposal, the husband seeks an order that the property be transferred to him, and then be sold with a proportionate division of the proceeds of sale 70 per cent in his favour, on an assessment of contributions. I will return to this question below. But since Mr Tolman has no beneficial interest in Suburb C, even if still registered as a proprietor, it should be included on the balance sheet as the asset of the wife.
The husband submitted that the value given for item 3 was taken from the most recent Financial Statement of the wife filed on 25 May 2022, which became Exhibit B. I accept this value. He then submitted that, on the same basis the value for item 11 should be $11,000 not $50,000. I also accept this to be correct. I accept items 12 and 13 are appropriately included as add backs, and the husband’s evidence demonstrates such legal fees have been paid.
I accept the husband’s submissions that the company AE Pty Ltd has no commercial value (item 8) and that the loan made to the company by the husband will be unlikely to be recoverable (item 9). I accept their value as nil on the balance sheet. I will consider AE Pty Ltd further under s 75(2) of the Act.
I accept the items 14 and 17 are the same, are proved by the husband’s evidence and effectively cancel each out.
The husband’s evidence made clear that item 15 was actually an amount paid by the wife to Mr Tolman between November 2013 and July 2014. He accepted that it was not appropriately included as an add back. I will exclude item 15.
I accept item 16 is established as a real liability by the husband’s evidence.
The value of the wife’s superannuation interest is again taken from Exhibit B. I note here also that its value is in part derived from compliance with one of the orders made on 1 December 2017. The husband did not seek any orders relating to superannuation.
After item 15 is excluded and the value of item 11 altered, the value of the property pool is $2,008,048.
Consequently, if there was no property adjustment, with the percentages rounded, the husband would hold 31 per cent and wife hold 69 per cent of the net assets.
CONTRIBUTIONS
Section 79(4) sets out the considerations to be taken into account by the Court in determining what order (if any) should be made under s 79 in property settlement proceedings.
In accordance with s 79(4) of the Act, it has been settled for many years that the Court must consider all the contributions, both financial and non-financial, to the acquisition, conservation, and improvement of the parties’ assets, as well as to the welfare of the family during cohabitation and after separation. The Court must consider the contributions in an overall sense (Norman & Norman [2010] FamCAFC 66 (“Norman”); Kowalski and Kowalski (1993) FLC 92-342 (“Kowalski”); G and G (2000) FLC 93-043 (“G & G”)). A broad approach is preferred, rather than reference to precise mathematical calculations (Burke and Burke (1981) FLC 91‑055 (“Burke”)), although an evaluation of each party’s respective contributions is necessary (JEL and DDF (2001) FLC 93-075 (“JEL”)). The Court must consider all the contributions in an overall sense, both financial and non-financial, to the acquisition, conservation, and improvement of the parties’ assets, as well as to the welfare of the family during cohabitation and after separation (Norman; Kowalski; G & G). A broad approach is preferred, rather than reference to precise mathematical calculations (Burke) although an evaluation of each party’s respective contributions is necessary (JEL). Assumptions about equality of contributions should not be made, and there is no assumption that equal division is the starting point for any exercise of the Court’s discretion (Mallet v Mallet (1984) 156 CLR 605 at 610, 613, 625, 635‑6, and 646–7).
In Dickons v Dickons (2012) 50 Fam LR 244, the Full Court said:
18. Any and all such contributions, whether or not they sound in, or are directly linked to, the property available for distribution, should be considered and assessed together with the nature, form and extent of all other contributions of all types contemplated otherwise by s 79(4).
19. That is true of assets or income generated within the relationship and it is equally true of assets or income coming from outside of the relationship (for example, as here, in the form of inheritances). In the same way, s 79(4) specifically requires the Court to take into account contributions made to the welfare of the family (and substantively and “...not in any merely token way...”; see, Mallett v Mallett [1984] HCA 21; (1984) 156 CLR 605 at 636 per Wilson J) notwithstanding that those contributions may not be, or cannot be seen to be, directly linked to the available property at trial, or any increase or decrease in the value of the property.
20. Put another way, consistent with authority, the s 79 discretion involves as a necessary requirement 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 an 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.” (In the Marriage of Aleksovski [1996] FamCA 111; (1996) FLC 92-705 at 83,437)…
21. Those same principles can be expressed as saying that the requirements of the section are met by approaching the assessment of contributions holistically and by analysing the nature, form, characteristics and origin of the property currently comprising that to which s 79 applies, and, in turn, analysing the nature, form and extent of the contributions (of all types) contemplated by s 79. That task is also undertaken by reference to the nature and form of the particular marriage partnership manifested by the particular circumstances of this particular marriage. Is it, for example, a relationship, as Deane J put it in Mallett at 640-641 “...where the parties have adopted the attitude that their marriage constituted a practical union of both lives and property...” or is it, for example, a union where parties lived very separate domestic and financial lives?
(See also Jabour & Jabour (2019) FLC 93-898 at [31]–[87]; Horrigan & Horrigan [2020] FamCAFC 25 at [35]–[49]; Barnell & Barnell (2020) FLC 93-961 at [30]–[43]; Benson & Drury (2020) FLC 93-998 at [35]).
At the date of cohabitation, the husband had about $290,000 worth of assets, including a business and superannuation. The wife had some savings, a motor vehicle and a musical instrument. The evidence did not disclose any value for the wife’s assets. Where the marriage is relatively short, initial contributions can take on a critical importance (Anson & Meek (2017) FLC 93-816 at [181]; adopted by the Full Court in Grunseth & Wighton (2022) FLC 94-099 at [73]). I accept this applies in the present matter.
During the marriage, the husband worked fulltime apart from a seven month period after he sold his business. He was employed by AF Company from 2007 earning about $70,000. Between 2006 until 2007 the husband and wife jointly earned about $50,000 working in a neighbourhood project with a local council. The wife did casual work, received scholarship money while completing studies, and occasionally helped the husband in his service business before it was sold.
After the children were born the wife was the primary carer and homemaker. However, I accept the husband also made some contribution to the care of the children and homemaker contributions during the relationship. The husband’s evidence showed he has been the sole carer for the children of the marriage since 2014.
During the relationship, the husband purchased shares, using his resources and on the basis of his research, after taking a course conducted by AG Institute. Between 2004 and 2006 he purchased over 300,000 shares in AH Company and AJ Company.
The husband and wife purchased Suburb Q for over $700,000 in 2007. This became the matrimonial home. The purchase was funded without a mortgage from the sale of the husband’s shares in AH Company which realised $1,033,644. Shares in AJ Company were also sold. The balance of the funds realised from these sales after the purchase of Suburb Q were placed in term deposits.
The husband paid for renovations to Suburb Q costing about $50,000 and contributed his labour as well.
There were further dealings with shares which do not require detailed recitation. Between 2009 and 2010, the husband and wife purchased 187,565 shares with 99,634 purchased in the wife’s sole name and 87,931 purchased in the name of the Morse Trust. What is important to record is that the funds realised by the share dealings were invested in BD Company and by 2011 the wife held in her sole name over 140,000 shares in BD Company.
The husband claimed that the purpose of transferring the shares into the wife’s sole name was for tax planning purposes. There was no evidence that the wife made any direct financial contribution to the purchase of the BD Company shares. However, the transfer of the shares into the wife’s name appears to have been voluntary and the evidence of the husband does not rebut an inference that the transfer was intended to advance the interests of the wife. A transfer for tax planning purposes is not inconsistent with advancing the interests of the wife. Accordingly, even though the presumption of advancement has been found to be “weak”, I am satisfied it has not been rebutted and thus find that the shares were the wife’s property (Duarte & Morse at [532]; Bosanac v Commissioner of Taxation (2022) 275 CLR 37 at [14], [15], [30], [31], [115] and [116]). It must be remembered that, even though these shares may have been the wife’s property, their characteristics and origin, and the manner in which she spent their proceeds are relevant. I observe here that the origin of the shares lay in the efforts and acumen of the husband in identifying, buying and selling both other shares and the purchase of the BD Company shares.
Sale of Suburb Q
Following separation, the husband moved out of the Suburb Q property in 2013.
In late 2013 the parties agreed to sell 20,000 of the remaining BD Company shares, receiving $91,500 by way of proceeds. The proceeds were deposited into a BD Company account, with $20,000 withdrawn by the wife with the husband’s consent for the purchased of a car. The remaining $71,500 was withdrawn by the wife without the husband’s consent two months later. Though as found above at [54] these funds were the property of the wife.
The Suburb Q property was sold in 2014 for $1,500,00. The wife received $388,931.25 from the proceeds of the sale. The balance of the proceeds, $728,259.30 were held by TX Lawyers. The wife revoked her consent for the balance of the proceeds to be released to the husband on 8 April 2014. In March 2016, the husband received $100,000 from the sale proceeds, to which the wife continued to object. The remainder of the sale proceeds were released to the husband following the delivery of the decision in Morse & Duarte by Le Poer Trench J (as he then was).
In early 2014, the wife disposed of over 120,000 BD Company shares for about $670,000. The wife used the proceeds of the share sale to purchase Suburb C. As pointed out already, the origin of these funds lay in earlier contributions of the husband in identifying and purchasing the BD Company shares.
Purchase of Suburb C
As noted, the wife and Mr Tolman entered into a contract to purchase Suburb C property in late 2013. The husband was not aware of this purchase until early 2014 when he found out that the wife had been served with a Notice to Complete by the vendor for the purchase of Suburb C, due to expire the following month. Accordingly, he agreed to the sale of Suburb Q to prevent the wife from being potentially sued for failing to complete the purchase of Suburb C, which would have eroded the property pool.
The purchase of Suburb C was completed in early 2014 with a purchase price of over $850,000. In addition to the amount of $388,931.25 received by the wife from the sale of Suburb Q, she completed the purchase of Suburb C using the sale proceeds of the BD Company shares. As noted, Mr Tolman contributed nothing to the purchase.
Mr Tolman purportedly resided at Suburb C between the date of the purchase and late 2019. The wife has remained living in the property since 2014, I infer with the children of her relationship with Mr Tolman.
Conclusion
Taking account of all these considerations, I assess the contributions of the husband to be 64 per cent and those of the wife at 36 per cent.
SECTION 75(2) ADJUSTMENT
It is necessary to consider the factors set forth in s 75(2) of the Act so far as they are relevant.
The husband is 60 years old. The wife is 46 years old. There is no evidence to suggest the wife does not enjoy reasonable health. The husband’s evidence shows that he suffered an injury while working for AF Company and has mobility problems. He has been diagnosed with a medical condition which has given him an impairment. He has high blood pressure.
The husband has sole care for the children. The oldest, H, is 17 years of age and is about to commence vocational studies. J is 13 years old and K is 11 years old. They are both attending AK School.
The husband operates a business through AE Pty Ltd. The husband is the sole director of the company. He and his mother are the shareholders. The company owns commercial equipment. I accept the husband’s evidence that the commercial value of the equipment is no more than $10,000. The company does not own any other plant and equipment. The company makes a modest annual profit.
The husband’s health problems and care responsibilities restrict his ability to work. He currently receives about $680 per fortnight as a salary from his business in AE Pty Ltd. His evidence establishes that he cannot receive a higher salary. He receives $1,934.02 per fortnight from Centrelink, and $18.90 per fortnight in child support from the wife.
There was no evidence from the wife about her future earning capacity, or current financial resources. The wife is completing tertiary studies. I infer she has material future earning capacity. I infer she cares for the children of her relationship with Mr Tolman but beyond that inference, there was no evidence about this.
The husband lives in a two bedroom flat owned by his mother with the children. He does not pay rent but has been accruing a debt to his mother for unpaid rent in the amount of $300 per week. This debt has been included in the balance sheet.
The husband also gave evidence for the purposes of s 75(2)(o) concerning the conduct of the wife during the proceedings. I am satisfied the wife consistently, over a number of years since 2015, failed to discharge her obligations of disclosure. She failed to file affidavit material in accordance with the Court’s directions. During the proceedings, she made no less than 20 interim applications or appeals which enjoyed limited success, and failed to appear multiple times.
Conclusion as to 75(2) factors
Taking account of these matters, I am satisfied there should be an adjustment in favour of the husband for s 75(2) factors of up to 6 per cent.
CONCLUSION
I am satisfied that it is just and equitable for the husband to receive assets of approximately 70 per cent of the asset pool. The husband seeks, in summary, a sale of Suburb C and 70 per cent of the net proceeds. It is difficult to be precise in achieving this outcome for several reasons. The first is that Suburb C has not been valued, and the value given in the balance sheet is approximate. This is at least in part a result of the wife’s failure to give any evidence of Suburb C’s value, and engage with the process to allow either an expert valuation or to reach an agreed value. The second is that the wife also failed to disclose the value of her superannuation.
However, in the circumstances, the appropriate approach is to take as settled the present total value of the net assets excluding Suburb C but including superannuation, which is $708,048. The husband holds 87 per cent of these assets, with a value of $616,201, whereas 70 per cent of $708,048 is $495,633, $120,568 less than $616,201. If the husband retains his existing assets and receives 70 per cent of the net proceeds of sale of Suburb C less $120,568 he will receive his entitlement. To the extent this approach cannot include some precise known values for the reasons given, it also accords with authority. The process required of the Court by s 79 is the exercise of a wide discretion, not the performance of a mathematical or accounting exercise, justifying a “broad brush” approach (Dickons at [25]; Candle & Falkner (2021) FLC 94-069 at [101]).
I am satisfied that in light of the history of these proceedings, including the non-compliance with the orders of 31 January 2023, that the orders sought by the husband which would place him in control of the sale process of Suburb C are appropriate.
COSTS
The husband seeks an order that the wife pay his costs incidental to these proceedings on an indemnity basis. Any application for costs will have to include a consideration of these reasons. There are also outstanding applications from earlier in the proceedings. The husband accepted that the question of costs would have to be considered separately after the delivery of these reasons. I will make provision in the orders for any application for costs to be made within 28 days of the delivery of judgment.
I certify that the preceding seventy-five (75) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Harper. Associate:
Dated: 18 January 2024
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