NAUGHTON & NAUGHTON

[2013] FCCA 1161

FEDERAL CIRCUIT COURT OF AUSTRALIA

NAUGHTON & NAUGHTON [2013] FCCA 1161

Catchwords:
FAMILY LAW – Property dispute – mother having effectively sole care of two young children, one of whom is autistic – father failing to file any materials and further not complying with obligation to disclose – uncertainty about size of property pool arising solely from father’s non-disclosure – robust approach – future needs factors greatly in mother’s favour – only disposable asset being proceeds of former matrimonial home – proceeds divided 80/20 in mother’s favour.

Legislation:  
Family Law Act 1975 (Cth), ss.75(2), 79(2)

Chang v Su (2002) FLC 93-117
In the marriage of Weir (1993) FLC 92-338
Kennon v Kennon (1997) FLC-72-757
Townsend v Townsend (1995) FLC 92-959
Stanford v Stanford [2012] HCA 52

Applicant: MS NAUGHTON

Respondent: MR NAUGHTON

File Number: MLC 9710 of 2012

Judgment of: Judge Burchardt

Hearing date: 19 June 2013

Date of Last Submission: 19 June 2013

Delivered at: Melbourne

Delivered on: 28 August 2013

REPRESENTATION

Counsel for the Applicant: Mr McFarlane

Solicitors for the Applicant: Perisic & Thomas Lawyers

The Respondent: In person

DRAFT ORDERS

1. That 80 per cent of the net proceeds of sale of the former matrimonial home currently held on trust by the wife’s solicitors be forthwith paid to the wife (“the payment”), and 20 per cent to the husband. 

2. The husband be solely liable for and indemnify the wife against all payments and liability in relation to any monies due and owing:

   (a)To any member of the husband’s family;

   (b)On any credit card in the husband’s name or the joint names of the parties;

   (c)To Vodafone;

   (d)To the (omitted) Bank;

   (e)To any other person, corporate entity or financial institution. 

3. That the husband retains the proceeds of sale of the parties’ (omitted) Business and the husband shall indemnify the wife absolutely of all of the liabilities of the business including without limiting the generality of the above any liability arising in respect of income tax, repayment of loans and/or bank overdraft loan facilities operated by the business. 

4. The husband shall retain:

   (a)The proceeds of sale of the parties’ (omitted) Business;

   (b)The balance of any monies held in any bank account in his name or in the joint names of the parties;

   (c)His superannuation;

   (d)His motor vehicle;

   (e)All chattels, tools, furniture and other personal items currently in his possession. 

5. The wife shall retain:

   (a)Her Holden (omitted);

   (b)The balance of any monies held in any bank account in her name;

   (c)The furniture and chattels held in the former matrimonial home currently in her possession;

   (d)Her personal possessions and jewellery.

6. That each party shall be liable for and indemnify the other against all payments in respect to any credit card issued in their respective names. 

7. That unless otherwise specified in these orders:

   (a)Each party be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the possession of such party as at the date of these orders;

   (b)Monies standing to the credit of the parties in any joint bank account are to become the property of the husband;

   (c)Each party forego any claims they may have to any superannuation benefits belonging to or earned by the other;

   (d)Insurance policies remain the sole property of the owner named therein;

   (e)Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders;

   (f)Any joint tenancy of the parties in any real or personal estate is hereby expressly severed. 

8. The Application of the wife is otherwise dismissed. 

9. Certify for Advocacy. 

IT IS NOTED that publication of this judgment under the pseudonym Naughton & Naughton is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT OF AUSTRALIA

AT MELBOURNE

MLC 9710 of 2012

MS NAUGHTON

Applicant

And

MR NAUGHTON

Respondent

REASONS FOR JUDGMENT

Introductory

1. Although the Initiating Application filed on 25 October 2012 traversed both parenting and property issues, only the property dispute is still extant.  The parties entered into Minutes of Consent Orders disposing of their parenting dispute on 4 December 2012. 

2. On any view the pool is a small one predominantly made up of the proceeds of the former matrimonial home in the sum of approximately $64,000.

3. Notwithstanding its small size, however, there are a number of aspects of the property pool that are difficult if not impossible to evaluate.  For the reasons that follow, I am going to order a division of the property pool, subject to some allocation of debts, as to 80 per cent to the applicant mother and 20 per cent to the respondent father.  Given that the parties are divorced and the applicant mother has in fact remarried, I will refer to the parties as mother and father respectively even though the parenting aspect of their dispute is resolved. 

Some uncontroversial facts

1. The father has filed no materials in the proceeding whatever, a matter to which I will return, and what follows is taken from the mother’s materials which do not appear to me to have been put in issue. 

2. The mother was born on (omitted) 1985, and the father on (omitted) 1979.  They met following an introduction through their families.  The mother was born and, as I infer, was at that stage still living in (country omitted) in (omitted) 2004 and the first contact was made by a family member of the father who lives in (country omitted).  They are both clearly of (country omitted) extraction. 

3. The mother came to Australia on (omitted) 2005 and the parties were married on (omitted) 2005.  Final separation took place in October 2011 and they have subsequently divorced. 

4. The parties have two children, namely X born (omitted) 2006 who is autistic (although the father, who could profess no professional or other relevant qualification, asserted at trial that he was in the lower range of autism) and Y born (omitted) 2007. 

5. The mother’s affidavit material discloses substantial domestic violence and it is common cause that there have been at least two Intervention Orders issued against the father from time to time. 

6. It should be noted that the mother’s affidavit material discloses significant domestic violence including, were it to be true, a very serious threat to kill. 

7. Throughout the currency of the relationship the father worked at a (omitted) business he conducted, although it would seem from exhibit A1 that the (omitted) business was the subject of a Contract of Sale of Business executed by the father on 10 April 2012.  It is clear that the mother, whose English would have been rudimentary in any event at the time of her arrival in Australia, stayed at home and looked after the house and children when they came.  The father worked very long hours at the (omitted) business until he sold it.

8. The parties entered into a parenting plan on 11 April 2012 which was the date of one of the Intervention Orders.  A parenting plan was entered into at that time but the mother says, in effect, that she did not understand its terms.   In any event the final parenting orders made on 4 December 2012 were inconsistent with that parenting agreement.

9. In 2006 the parties bought the former matrimonial home.  There was some disagreement as to what the source of purchase funds were but it is not in my view of any moment.

10. Despite the parenting orders made in December 2012, it appears that the father has elected not to spend time with the children since April 2013.

Relevant procedural matters

1. As earlier indicated the father has filed no materials.  That is so notwithstanding that on 4 December 2012, at a time when the father was legally represented, consent orders were made for the father to provide financial disclosure.  These orders were made by consent.  Since then, despite numerous requests for information, and there were requests before December 2012 in any event, the father has failed comprehensively to comply with his obligations as to disclosure.  I refer generally to the affidavit of Ms M sworn 14 June 2013 which sets out the comprehensive endeavours made by the solicitors for the mother, albeit unavailingly, to get the father to provide relevant financial information. 

2. Indeed I had not anticipated that the father would participate in the hearing at all, but he attended on the date of trial and was permitted by me to participate as best he was able.  It should be noted that the father made no application for any adjournment of the proceedings to get his affairs better in order.  In the circumstances, I would not have granted any such application in any event.

3. The father’s failure to comply with his obligations as to disclosure is clearly intentional and, in my view, reprehensible.  It not only entitles but, in the particular circumstances of this case requires, the Court to take a relatively robust approach to the matter.  There have been longstanding authorities that support such a robust approach.  In Chang v Su (2002) FLC 93-117, Kay and Dawe JJ quoted at [70] from the decision of the Full Court in In the marriage of Weir (1993) FLC 92-338, where the Court set out with approval the following relevant passage:

   “It seems to us that once it has been established that there has been a deliberate non disclosure, which follows from his Honour's findings in this case, then the court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature.”

4. At [72] Kay and Dawe JJ continued, in respect to the finding of the primary Judge:

   “She was extremely hampered in the exercise of that discretion by the non-disclosure by the husband of his financial position and in those circumstances was entitled to take the more robust view that she did.”

5. Given the father’s deliberate non-disclosure in this case I think I should give full weight to the approach approved by the Court in Chang v Su. 

The evidence given in court

1. The mother, by leave, gave some further evidence-in-chief.  She said she was divorced on 11 December 2012 and remarried her new husband, Mr T, who is aged 29, on (omitted) 2013.  Mr T was said to be studying (omitted) and working part time for a salary of $300 per week.

2. The mother said she had been ordered to receive $15 per week child support but the payments had stopped in October 2012.  She is paying rent of some $1,700 per month.  She said her car does not now work because the motor is dead. 

3. She said that X is now six years old and is at a school for autistic children.  She said the last time the father saw the children was in about April 2013. 

4. The father, who was of course representing himself, had the difficulties in cross-examination that one might expect.  Much of what was put in cross-examination was more by way of assertion from the bar table by the father than actual questions.

5. He put in issue in a rather unstructured way the purchase moneys put to buy the (omitted) business, what had happened to the mother’s jewellery (the mother had said the sale proceeds had been expended on gambling by the father), and some other issues.

6. It should be noted that the mother was in my view to the limited extent that it is possible to assess credit in these circumstances, a good witness whose answers were given with conviction and in a straight-forward way. 

7. The father made an opening statement in which he asserted that he had offered the mother half the value of the former matrimonial home and for her to live there but that she had refused.  He inferred, as I understand it, that for the mother to pay rent was unnecessary. 

8. The father said that he had worked seven days per week and twelve hours per day.  He asserted some involvement in taking his elder child to school.  He said that he did not want to be responsible for all the outstanding bills and that he had re-partnered.  He said that his credit card debt arose from ordinary living expenses, and that he was still paying an $18,000 business loan debt.

9. Once sworn, the father said that he was working for (omitted) as a (omitted) fulltime and earning $607 per week after tax. 

10. The father was cross-examined about the sale proceeds of the (omitted) business.  He asserted that in net terms he had in fact not received $21,000 (the sale price indicated by exhibit A1) but rather $5,720.  The disparity was asserted to have arisen because he had to pay the rent for some months after the sale had taken place. 

11. The father said his credit card had been closed some three years ago and that he moved to his parents where he presently lives (rent free) and that he was depressed. 

12. The father asserted that both parties gambled but that he had not done so for 14 months and that he had a new girlfriend. 

13. He said he had paid $18,000 for the (omitted) business. 

14. The father denied all the domestic violence alleged against him by the mother and sought to minimise the gambling that he had undertaken.  He said that the mother had sold her jewellery and kept the money and that the mother had also kept the baby bonus, which the mother had asserted was used to purchase the former matrimonial home.

15. Tellingly, although perhaps he did not realise this, the father said he did not pay rates on the former matrimonial home because he was not living there.  He said he had paid the mother $100 per week as Child Support but alleged she had spent it gambling. 

16. The father said that he was not paying Child Support since he had not been seeing the children since April 2013 and denied that he had ceased payments in October 2012. 

17. He further asserted he was paying $67 per fortnight in Child Support, not the $15 per week alleged by the mother.  He said that this was increased when he had obtained employment. 

18. The father took the occasion to make a number of generalised and, in my view, unsubstantiated criticisms of the mother. 

19. The father continued under cross-examination to deny in some detail the various allegations of assault and domestic violence alleged against him.  He went as far as to suggest that the mother had only applied for an Intervention Order because she had a new partner and that she did this, at least in part, to ensure that their son’s condition did not improve.  This extraordinary assertion, if I have understood it correctly, requires no further comment. 

20. The father denied having any superannuation arising out of his prior employment by (omitted), but it should be noted that he worked for (omitted) for some five to six years at a salary of approximately $40,000 per annum.  His denial of superannuation is difficult to sustain. 

Submissions of the parties – the mother

1. Counsel for the mother submitted that the asset pool was as in his Case Outline and was substantially constituted by the $64,000 held on trust by his solicitors.  He submitted that there was no evidence of other debts, and that orders for discovery had been ignored.  It was submitted that this was a Kennon v Kennon (1997) FLC-72-757 (“Kennon”) case which should give rise to a greater award to the mother.

2. Having dealt with the obvious difficulties faced by the mother in looking after the two children, and the elder child’s autism, it was submitted that the father had paid little, if any, Child Support and not seen the children since April 2013. 

3. Counsel submitted that the mother should receive the entire amount of the funds held in trust and referred the Court to the case of Townsend v Townsend (1995) FLC 92-959, in this regard.

4. Counsel laid emphasis upon the intentional non-disclosure evidenced by the father. 

The submissions of the parties – the father

1. The father’s final submissions contained not only submissions but yet further assertions as to the facts.  He asserted he was not living with his partner.  He asserted that his son was on the low percentile of the autism spectrum.  He said the (omitted) business had been sold for $21,000 but bought by non-citizens and it had closed four months later.  He asserted that the balance remaining had been paid to his sister for his lawyers.  He asserted that a Ford car formerly in his possession had $7,000 owing on it when it was repossessed. 

2. The father asserted that problems only arose in the relationship after the mother had received her citizenship.  He said he would like $60,000 to be applied to the debts of the parties and that the remaining $20,000 should be split evenly, albeit in four ways with two parts to be held in trust for the children. 

3. The father asserted that he had a $14,000 credit card debt, there was $7,000 owing on the Ford (which had been repossessed), $500 owed to Vodafone, and $18,000 owing in respect of the business. 

Conclusions on the evidence

1. I have already said that I found the mother to be a generally good witness.  I regret to say that so far as demeanour is concerned the obverse would be true of the father.  In making this comment, however, I am conscious that the father was self-represented.  This meant both that he had no forensic skills to cross-examine the mother, and that he had not any of the advantages of having had his material put on affidavit by competent legal representatives.  I also note that, in any event, the evidence was not all that extensive, so I approach the demeanour aspects of this case with a measure of caution. 

2. Nonetheless, I should make it clear that I find that the mother’s assertions of family violence should be accepted.  The fact is that she has obtained a number of Intervention Orders, and although there is often room for qualification about the circumstances in which such orders are created, the fact is that they exist.  Furthermore, the father’s assertion, by way of denial, that the events alleged took place when he was at work was not supported by any of the witnesses whom he suggested might have been in a position to support him.  Moreover, the mother’s assertions have about them a ring of conviction. 

3. I further note that notwithstanding the qualifications I have expressed above, I am quite clear in my mind that the father has simply refused to pay Child Support and appears to have made no significant effort to see his children for some months.  This may well relate to his re-partnering or an element of disdain for the mother’s remarriage. 

4. The father’s hostility to the mother was clear and appeared to in part arise out of an implication that the mother had only married him to obtain citizenship. 

5. The father’s explanation for the alleged deficiency in the net sale proceeds of the (omitted) business was extremely unconvincing. 

6. Even accepting, if one were to do so, that he remained liable under an on‑going lease (the lease was not of course tendered nor any documentation relating to its operation) the proposition that some $16,000 was wasted as a result seems hard to align with objectively known facts.  If the father was liable on an on-going basis pursuant to a lease, and if the new tenants, the purchasers of his business, had defaulted for some reason, then there is nothing to suggest that he would not continue to be liable for the entire term of the lease whatever that might be.  The reality is that the only reason I am not in a position to make positive findings about this aspect of the matter is the father’s own failure to disclosure.  

7. I note further that the figures advanced by the father were to an extent inconsistent (for example the net proceeds of the (omitted) business) and/or confusing.  Against this I move to the conventional methodology in property cases. 

Section 79(2) considerations

1. The High Court has made it clear in the case of Stanford v Stanford [2012] HCA 52 that the first step is to consider the parties’ legal and equitable interests and decide whether it is appropriate to contemplate making a property adjustment order. It should be noted, however, that the High Court made it clear that in most cases this would not be a very difficult matter. 

1. This case is one of what will clearly be the vast majority of cases.  The changed circumstances of the parties, including their separation and divorce, means that it is obviously appropriate to contemplate moving to some form of adjustment. 

The pool

1. Counsel for the mother submitted that the pool was as set out in his Outline of Case. 

2. This would indicate that if the pool consists of the following known ascertained items:

   Assets:

   a)Proceeds of former matrimonial home (net)

   (plus any interest that has accrued thereon)                   $64,118

   b)Proceeds of sale of (omitted) business  $15,000

   Liabilities:

   c)Mother’s Victoria Legal Aid debt  $  2,249

   d)Father's (omitted) credit debt  $14,481

   e)Father’s Vodafone debt  $     582

   Father's Ford (omitted) $  6,212

   (the husband asserts $7,000 but has provided no supporting documentation). 

3. From the evidence as given, it would not appear that it is possible to assert what, if any, superannuation the father has, but, as I find, he would have some superannuation in any event. Even 9 per cent of $40,000 per year for some six years would amount to something. Doing the best I can I will assume that the father has $15,000 in superannuation. Even if the husband earned 9 per cent superannuation on $40,000 a year for five years, this would amount to $18,000. The estimate of $15,000 is therefore a conservative one. The wife has none.

4. The (omitted) business is very difficult to work out.  On any view any funds that were obtained from it remained in the father’s sole control.  I note that in the case cited to me by counsel for the mother, namely Townsend, the Full Court made it clear that in circumstances such as these an asset of this sort should be included in the pool.  The difficulty, of course, is working out at what level it should be included. 

5. Doing the best I can, and taking the robust approach indicated in Chang v Su, I will allot a figure of some $15,000 net to the father. I note that the schedule to the lease referred to in exhibit A1 (see schedule C) does not itemise the rent, but notes that a copy of the schedule had been provided by the father to the purchasers. He clearly had a copy of the lease available to him which would have indicated what the rental was. Even if the father is correct and that the obligations under the lease, so to speak, devolved to him for some period of time after the nominal purchase of the business, it is clear that the lease no longer subsists. The father’s evidence, as I understood it, was that he had to pay the rent for some months. This was not the language of payments from year to year. In choosing a figure of $15,000, I note that even on the husband’s best case, the period for which he was liable does not appear to have been extensive and I note that the premises rented for the business were in (omitted) where it may be reasonably assumed that rentals were not that of Melbourne city levels. There is of course a complete imprecision in the methodology I have adopted, but it should be noted that it gives the father the benefit of doubt (i.e. whether the purchase price was dissipated in any way at all, as he suggests) to which he may well not be entitled.  To the extent that he suffers by this robust approach it is one he has brought wholly upon himself.

6. The father has suggested that there are various other debts still owing, but I accept counsel for the mother’s position that there is no proof of any such debts whatever.  Once again, the father pays the penalties, should there be any, of his own failure to cooperate. 

Contributions

1. Although the father’s violence as I have found it (in effect as alleged by the mother) is extremely disturbing and off-putting, this is not in my view a Kennon case.  Each case turns on its own facts.  Kennon, as I understand it, is authority for the proposition that in circumstances where one party’s contribution to the marriage has been made more onerous by virtue of such matters as violence then it should be given greater weight.  This was not a relationship of a very considerable period of time.  The violence alleged is horrible but not, I regret to say, at the extremes of domestic violence that this Court confronts from time to time.  I am not prepared to give the mother’s contribution a greater weighting on this footing. 

2. The fact is that the mother stayed at home, looked after the house, and looked after the children, a matter that would have required more effort than usual given the autism and associated difficulties of the eldest child. I roundly reject the father’s evidence (or more accurately inference) that the elder child is not difficult because he is at the lower end of the autism spectrum. 

3. The father did work on any view very long hours in the (omitted) business even though it did not prosper that greatly. 

4. In all the circumstances, the contributions of the parties should be assessed as equal.

Future needs – the section 75(2) factors

1. Both parties are in unexceptionable health and are relatively young. The mother has re-partnered but at least at the moment her new partner is of little assistance to her in financial terms, although I would infer that he must assist with the children. No evidence was actually given about this.

2. The father has also re-partnered. About his partner I know even less than the mother’s. Nonetheless, unlike the mother, he is in employment and has some $600 per week clear to spend upon himself given that he pays no rent and does not otherwise contribute to his parents’ household where he lives. The father pays no Child Support and will continue not to do so in all probability.

3. The mother’s future needs will be considerable.  Although there is no expert evidence about the circumstances of the elder child’s autism, it is sufficient to note that this condition is far more likely than otherwise to make the task of child-rearing onerous and excessively demanding.  She will have the care of the younger children for many years to come.

4. In all the circumstances, in my view, there should be a 20 per cent adjustment in the mother’s favour. 

Just and equitable

1. This is a small pool on any view.  There is but little money to divide between people who are never going to be wealthy, it would appear.  The mother desperately needs funds with which to re-establish herself to the extent that she can.  The mother seeks that the entirety of the proceeds of sale of the matrimonial home be given to her and that in effect each party bear the debts in their name. 

2. It is readily apparent that it would be possible to play with the figures in a number of different ways. The fact is however that the husband will retain his $15,000 of superannuation (the figure I suspect will be substantially higher than that he concedes) and he has already had the benefit of $15,000 as I find in relation to the sale of the (omitted) business, although it may well have been the full $21,000 or something very close to it.

3. These are substantial figures in the scheme of net cash of just over $64,000.

4. Even if one were to notionally take out all the debts of the matrimonial property pool, including the father’s credit card debts and the like, which amount in total to $21,000, the result figure of the pool would still be net approximately $73,000 ($64,000 plus $15,000 for the (omitted) business plus $15,000 superannuation, less the father and mother’s debts of approximately $21,000). 

5. If one were to allot 30 per cent of that figure to the father the total would be approximately $21,000. 

6. In the particular circumstances of this case, I think that the mother should receive 80 per cent of the net proceeds of sale of the matrimonial property.  Each party should retain their debts that stand, so to speak against them, which as I find are in respect of the mother, the Legal Aid debt and in respect of the father his credit card debt, the vodafone debt and his car debt. 

7. While this might superficially leave the father in net deficit, it needs to be borne in mind that he still retains his benefit of his superannuation. In my view, this is in all the circumstances a just and equitable outcome.

8. I am not satisfied that there are any other enforceable debts as the father asserts, but if there are then they are ones that he alone should bear the burden of.  In my view, in the circumstances, this is also a just and equitable outcome.

9. At the risk of gross over-repetition, I would say again that the father’s failure properly to discharge his obligations as to discovery of financial information clearly and obviously relevant to the case, when he had agreed through his lawyer to do so and had been given every opportunity to do so, is one that deserves to give rise to the sort of robust approach that I have adopted.

10. I have prepared draft orders to give effect to these conclusions and will give an opportunity to the parties to consider them and hear any further submissions. 

I certify that the preceding seventy-eight (78) paragraphs are a true copy of the reasons for judgment of Judge Burchardt

Date:  28 August 2013