Nest & Nest (No 3)
[2014] FamCA 519
•16 July 2014
FAMILY COURT OF AUSTRALIA
| NEST & NEST (NO. 3) | [2014] FamCA 519 |
| FAMILY LAW – PROPERTY – Final Orders – lengthy litigation where husband’s deliberate disregard for the Court has resulted in the proceedings becoming more complex – modest asset pool – husband involved in litigation in other jurisdictions over a number of years – balancing cost and effort of successfully defending proceedings in other jurisdiction against benefit to the family – husband received inheritance from his mother – wife was primary caregiver and made financial contributions throughout the long marriage – just and equitable – adjustment in favour of the wife 55:45. |
| Evidence Act 1995 (Cth) s 128 Family Law Act 1975 (Cth) s 75, 79 |
| Bevan & Bevan [2014] FamCAFC 19 Stanford v Stanford (2012) 247 CLR 108 Tate & Tate (2000) FLC 93-047 Weir & Weir (1993) FLC 92-338 |
| APPLICANT: | Ms Nest |
| RESPONDENT: | Mr Nest |
| FILE NUMBER: | ADC | 1821 | of | 2008 |
| DATE DELIVERED: | 16 July 2014 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Adelaide |
| JUDGMENT OF: | Berman J |
| HEARING DATE: | 28 and 19 January 2014, and 26 February 2014. |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Morosini |
| SOLICITOR FOR THE APPLICANT: | Di Morosini & Co |
| COUNSEL FOR THE RESPONDENT: | Litigant in person 28 and 29 January, no appearance 16 February 2014 |
| SOLICITOR FOR THE RESPONDENT: | Litigant in person 28 and 29 January 2014, no appearance 26 February 2014 |
Orders*
In full and final settlement of any claim that either party may have or hereafter have against the other for settlement of property:-
(a)That within 90 days of the date of this order the husband do pay to the trust account of Morosini and Co for and on behalf of the wife the sum of SEVEN HUNDRED THOUSAND AND NINE DOLLARS ($700,009);
(b)That contemporaneously with the payment of the said settlement sum in paragraph (1) (a) hereof, the wife do all things necessary and sign all such documents as shall be required to transfer her interest in the property situate at C Street, Suburb K in the State of South Australia being the whole of the land contained in Certificate of Title Register Book Volume … Folio … (“the K property”) to the intent that she shall have no remaining interest therein;
(c)That in default of the payment of the settlement sum as provided for in paragraph (1) (a) hereof, the husband do transfer to the wife the property at P Street, Suburb S being the whole of the land contained in Certificate of Title Volume …, Folio … (“the S property”) together with all improvements thereon and that he execute a memorandum of transfer in registrable form forthwith upon the same having been tendered to him, such memorandum of transfer to be prepared by and at the cost of the wife and submitted to the husband pursuant to these orders;
(d)That as provided for in paragraph 1 (c) hereof contemporaneously with the transfer of the said S property, the wife do pay to the husband the settlement sum of
NINETY SEVEN THOUSAND FOUR HUNDRED AND EIGHTY ONE DOLLARS ($97,481)EIGHTY NINE THOUSAND NINE HUNDRED AND NINETY DOLLARS ($89,990);(e)That in default of the payment of the settlement sum as provided for in paragraph (1) (d) hereof and should such default continue for a period greater than 30 days then the S property shall be forthwith placed on the market for sale upon such terms and conditions as the parties may agree but in default of agreement as may be ordered by this Honourable Court and from the net proceeds of sale, the husband shall receive the sum of
NINETY SEVEN THOUSAND FOUR HUNDRED AND EIGHTY ONE DOLLARS ($97,481)EIGHTY NINE THOUSAND NINE HUNDRED AND NINETY DOLLARS ($89,990); together with default interest at the rate of 10 per centum per annum with the wife to receive the balance of the net proceeds remaining;(f)That contemporaneously with any of the following:-
(i)The transfer of the S property to the wife;
(ii)The sale of the said S property and the disbursement of the net proceeds pursuant to these orders;
The wife will do all things necessary to transfer to the husband her interest in the property situate at C Street, Suburb K being the whole of the land contained in Certificate of Title Volume … Folio … (“the K property”) to the intent that she shall have no remaining interest therein.
(g)The husband shall indemnify the wife in respect of any liability pertaining to the S and the K properties and he shall bear the sole responsibility for the discharge of any liability in respect of the properties and in default the discharge of any liability shall be effected from the husband’s entitlement pursuant to paragraphs 1 (a) (d) and (e).
(h)That subject to these orders each party shall release the other from any liability for any claim that either may have against the other and each party do discharge their several debts and liabilities without calling upon the other to contribute (including any income tax liability assessed in their respective names) and the husband and wife agree that neither of them will hereafter pledge the credit of the other.
(i)Except as otherwise provided for in these orders as against each other, the husband and the wife are entitled to be the sole legal and beneficial owners of all items of property including money, accounts in financial institutions, motor vehicles, insurances, equities, superannuation, employee entitlements and personal effects currently in the possession or control of each of them respectively;
(j)That each party do all such acts and things and sign all such necessary documents to give effect to the terms of this order;
(k)That the husband be restrained and an injunction granted restraining him from transferring, selling or assigning his interest in the S property or from further encumbering save and except as may be required to give effect to the terms of this order.
(l)That it be a condition of these orders that if either party shall refuse or neglect to execute any Memorandum of Transfer or any other document necessary to give effect to the terms hereof in the proper form within seven (7) days after the same shall have been tendered to that party by or on behalf of the other party THEN in such case a Registrar of the Family Court of Australia upon proof by affidavit of such refusal or neglect, is hereby appointed to execute and if in his or her opinion it shall be necessary to do so, to settle the same and do all such other acts and things and execute all such other documents a shall be necessary to give full force and effect thereto.
That all matters be removed from the Active Pending List of Cases.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Nest & Nest has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT |
FILE NUMBER: ADC 1821 of 2008
| Ms Nest |
Applicant
And
| Mr Nest |
Respondent
REASONS FOR JUDGMENT
INTRODUCTION
By Amended Initiating Application for final orders filed in the Family Court of Australia on 10 October 2013, Ms Nest (“the wife”) seeks orders for property settlement following a period of cohabitation with Mr Nest (“the husband”) spanning about 19 years.
The short history of the matter is as follows:-
1951 Date of birth of husband
1960 Date of birth of wife
Nov 1986 Date of commencement of cohabitation
1987 Date of marriage
3.1.2006 Date of final separation
There are two adult children of the marriage namely V Nest born in 1988 and M Nest born in 1990. As at the date of separation V was 17 years of age and M was 15 years of age.
The wife is employed in customer service in the travel industry. It appears her health is good. The husband is not currently employed and notwithstanding his anxiety in respect of the litigation, there is no evidence to suggest that there are any health considerations that impact adversely on his ability to undertake gainful employment. There is however no evidence of the husband’s recent employment history.
The proceedings commenced with the wife filing an Application for final orders on 14 September 2006.
The wife sought that the “net value of the assets” be divided as to 65 per cent to the wife and 35 per cent to the husband, with her superannuation be the subject of a superannuation split of 35 per cent of her entitlement to be rolled over to a fund nominated by the husband.
The husband filed a Response on 29 November 2006. The broad summary of the orders sought by him is that “net value of the assets” be divided as to 10 per cent to the wife and 90 per cent to the husband, with the wife’s superannuation to be the subject of a superannuation split as to 70 per cent. In addition, the husband sought that the X shares held by the wife be divided equally.
It is from that Application of the wife and the Response of the husband that the current hearing has its genesis.
There remains a substantial dispute between the parties. The husband filed a further Response on 15 August 2007 seeking more detailed orders for property settlement. A broad summary is that taking into account the extensive “add backs” as sought by the husband, the preponderance of the property of the parties would be adjusted in his favour.
The husband has filed no other response document and other than interim proceedings has not participated in the trial process save for his part-attendance at trial.
The wife was represented by her solicitor who appeared as her counsel.
It was of assistance that at the commencement of the proceedings, the wife’s counsel provided an Outline of Case document which promoted the orders sought in the Amended Initiating Application.
The trial commenced on 28 January 2014 on a “undefended basis” with the husband being given leave to cross examine the wife and make final submissions. Her evidence commenced at about 11.45am on the first day and her cross examination by the husband continued on 29 January 2014. The proceedings were then adjourned to 19 February 2014, further considered on 21 February 2014 and were finally listed on 26 February 2014. On that occasion the husband did not appear. The proceedings were not further adjourned and the wife’s case was closed, final submissions heard and judgment reserved.
The contention of the wife is that the proceedings must be seen against a long history where for various reasons the proceedings have not been able to be brought to a final conclusion. The wife alleges that the husband has adopted a recalcitrant attitude. To the extent that the husband participated in the trial, whilst he would acknowledge that the proceedings have been outstanding for a number of years, he attributes the delay to the need to resolve litigation involving third parties in order to crystalize the asset pool.
The wife asserts that at the date of marriage each of the parties introduced substantial assets of approximately equal value into the relationship. The wife was the principal income earner during the marriage, whereas the husband engaged in the operation of a number of small businesses which were generally unsuccessful and not remunerative. The wife says she was the principal homemaker and importantly, since separation she has received no support for herself or the children.
A significant issue for the wife centres upon what she says was “serious waste” on the part of the husband by his refusal or neglect to generate rental income from a property at Suburb S in his possession and control. A similar argument is raised in relation to a property at Suburb K also under the control of the husband.
She also contends that the husband made no contribution to her superannuation and if anything, his actions have had the net effect of diminishing the value of the property of the parties to the detriment of each of them, but in particular the wife.
The orders sought by the wife would see the transfer to her of the property at P Street, Suburb S (“the S property”) and the sale of the property at C Street, Suburb K (“the K property”) or in the alternative, that both properties be sold and taking into account the property currently held by the wife, the net proceeds of sale should be adjusted as to 65 per cent in her favour and the balance to the husband.
PROCEDURAL HISTORY
The proceedings have been outstanding in the Court since 14 September 2006. The history of the matter is complex, but some contextual background is required to place the trial in perspective.
The proceedings were initially listed for trial by Burr J on 23 September 2008. On 3 September 2008, the trial was vacated to await the conclusion of Supreme Court proceedings in relation to the estate of the late Ms F Nest. On 12 November 2010 after several adjournments, Burr J referred the matter to the Registrar for the general preparation of the matter for trial. There were further delays and by an order of a Registrar on 28 August 2012, the matter was referred to the pool of matters awaiting a trial allocation. The estimated length of trial was set at 2 days.
On 4 July 2013 Cronin J made orders referring the matter to me for a first day hearing on 4 September 2013. The husband appealed his Honour’s orders, but ultimately I made trial directions on 4 September 2013 listing all outstanding applications for final orders for hearing before me on 28 January 2014.
A trial regime was set, with the wife to file and serve her trial documents by 11 October 2013 and the husband to file and serve his trial documents by 22 November 2013. The matter was listed for mention to consider compliance with the trial directions on 9 December 2013.
The issue of the valuations of the S and K properties had been raised on a number of occasions before Burr J. The husband was keen to call his own valuation evidence rather than be required to accept either the valuations of B Company which form the annexures to the affidavit of the wife filed 1 February 2008 or a revised and updated version. The husband was mistrustful of the wife and the valuations undertaken by the commercial valuer Ms J.
Following short argument, I made the following order:-
12. That each be at liberty to separately instruct a licensed real estate valuer to provide a valuation report in respect of the properties situate at [P Street, Suburb S] and [C Street, Suburb K] in the said State upon the following conditions:-
(a) that such report and reports be published and distributed and filed in this Court on or before 21 November 2013;
(b) that upon giving seven (7) day’s notice the husband will ensure that the valuer appointed by the wife will have access to the said premises for the purpose of conducting the valuation pursuant to these orders.
On 9 December 2013, the wife had complied with the trial directions, the husband had not. He did however file an Application in a Case which amongst other orders sought that the trial listed for hearing on 28 January 2014 be vacated.
Arising out of a further affidavit filed by the husband on 10 December 2013, I determined that the husband was also seeking that I disqualify myself. I heard and determined that application and delivered ex-tempore reasons dismissing the husband’s application. The following orders were made:-
(1) The oral application of the husband that I disqualify myself from these proceedings be dismissed.
(2) The time as provided for in Order 5 of the Orders made 4 September 2013 be extended to 4pm on Friday 17 January 2014.
(3) Order 4 of the Order made 4 September 2013 namely that the applicant pay the setting down fee by 6 September 2013 be discharged.
(4) That the respondent husband in the substantive proceedings pay all setting down and trial fees by 4pm on 24 December 2013 and that the respondent be at liberty to make application for a waiver of the setting down fee.
(5) Further consideration of paragraph 6 of the husband’s Application in a Case filed 8 December 2013 (the said Application) be adjourned to 4pm on 17 December 2013.
(6) By 4pm Friday 13 December 2013 the husband do file and serve a document setting out the affidavits from the Court file on which he intends to rely for the final hearing.
(7) Order 1 of the Order made 9 December 2013 be discharged.
(8) Paragraphs 2 and 3 of the said Application be dismissed.
It is important to note that in order to assist the husband and notwithstanding that the same accommodation was not offered to the wife, I was prepared to receive at least as part of the husband’s case any affidavit that was currently on the Court file if they were still relevant. The idea as expressed to the husband was to reduce the extent to which trial affidavits would need to be prepared. Significant history according to the husband was already on the Court file and if he was able to rely upon those documents then the further evidence to be presented was really by way of an update.
On 17 December 2013, on the application of the husband, I granted him a Certificate pursuant to Section 128 of the Evidence Act1995 (Cth) on the basis that he submitted that there remained an impediment to the preparation of affidavit material because some of the matters he would wish to rely upon may raise the possibility of a criminal prosecution. The application was not opposed. Whilst the basis of the Certificate as presented by the husband was not strong, it was at least arguable.
On 23 January 2014, I heard and determined an Application filed by the husband on 24 December 2013 seeking that there be a stay of orders made by me, but in particular vacating the trial to commence on 28 January 2014 until the husband’s leave to appeal and appeal against my earlier orders was heard and determined by the Full Court of the Family Court of Australia.
The husband’s Application in a Case was dismissed.
The trial commenced on 28 January 2014. The husband brought a further Application seeking to adjourn the proceedings on the basis that he had not been given an appropriate or sufficient opportunity to prepare his case. I refused that application. The husband also raised the issue of his health having an impact on the proceedings. It was suggested by the husband that the temperature of the day and what he anticipated to be in his words “the upcoming heatwave” was a basis for an adjournment. I refused the husband’s application. The trial proceeded with the wife relying upon the following documents:-
·Amended Initiating Application filed 10 October 2013
·Affidavit of wife filed 30 January 2008 Annexure “D”
·Trial Affidavit of the wife filed 10 October 2013
·Financial Statement of the wife filed 10 October 2013
·Affidavit of John Albert Swift enclosing update valuations of the K and S properties filed 5 November 2013 together with my leave, further examination in chief.
At the conclusion of the second day of hearing namely 29 January 2014, the husband was observed to be some way through his cross examination.
Notwithstanding that the matter had been listed for continuation on 30 January 2014, because of an intervening but unrelated hearing, the matter was listed to conclude on 31 January 2014.
The husband sought to further adjourn the proceedings by asserting that there were matters of substance in respect of his health set out in a medical report which would make it difficult and unfair to require him to continue with the trial.
I was critical of the report and did not consider that it provided any proper basis for an adjournment of the proceedings. Extempore reasons were delivered on 31 January 2014.
I made the following orders:-
(1) That the further hearing of the matter on 31 January 2014 be vacated.
(2) That the matter be adjourned for hearing as a reserve listing for three days commencing Wednesday 19 February 2014.
(3) That the husband attend on 19 February 2014 either in person or by way of legal representative properly instructed.
(4) That if the husband seeks to rely upon medical evidence from Dr [Z] or any other medical practitioner or psychologist for the purpose of asserting that it is not proper for him (the husband) to conduct the proceedings and that the trial as currently listed must be further adjourned, then that evidence is to be given on oath and in person by such doctor or doctors and be available for cross examination on 19 February 2014 at 10am.
(5) …
(6) That by 4pm on 7 February 2014 the wife’s solicitor do forward correspondence to the husband setting out and informing him of the following matters:-
(i) That the matter proceeded today in his absence;
(ii) That the proceedings were adjourned for further hearing of the trial for three days commencing 19 February 2014.
(7) That if the husband does not attend on the adjourned date either personally or by legal representation final orders in respect of the proceedings may be made in his absence.
On 21 February 2014 the wife was represented by her counsel and the husband appeared by telephone. The following orders were made:-
(1) This matter be adjourned to commence as a primary matter on Wednesday 26 February 2014 at 10am for 3 days before Justice Berman.
(2) The husband attend in person on 26 February 2014 or by legal representative properly instructed.
(3) If the husband seeks to rely on medical evidence from Dr [Z] or any other medical practitioner or psychologist for the purpose of asserting that it is not proper for him to conduct the proceedings as listed for trial on 26 February 2014 then that evidence be given on oath and in person by such doctor or practitioner and such practitioner be available for cross examination on 26 February 2014 at 10am.
The further hearing was required to ensure that procedural fairness was afforded to the husband in circumstances where he was not before the Court on 19 February 2014.
The trial resumed on 26 February 2014. The husband however had filed an Application in a Case on 25 February 2014 seeking that the trial be adjourned and further alleging that my continued involvement supported the contention that there was either bias or apprehended bias. It was asserted that I did not bring a balanced approach to the matter, was not neutral and that I was supportive of the wife’s case.
The husband did also provide further medical grounds upon which he argues the proceedings should be adjourned.
I gave careful consideration to those matters and for the ex tempore reasons delivered on 26 February 2014, I dismissed the husband’s application.
I gave the husband an opportunity to attend Court and if necessary offered to hold the matter over for 24 hours to enable him to attend. The husband refused that offer and the trial continued. The wife relied upon the affidavit material filed pursuant to my trial direction orders, the wife’s counsel made submissions and judgment was reserved.
BACKGROUND
The parties met in 1986. The wife had been previously employed in the travel industry and up until 1987 had worked as a customer service officer.
The parties commenced cohabitation prior to their marriage in 1987. The wife had an interest in a property at N Street, Suburb O (“the O property”). The O property had been purchased in 1985 for about $63,000 and it is the evidence of the wife that the equity was represented by about one half of the property value, namely $30,000.
The husband had an interest in the S property. There is no historical value, but it is the wife’s evidence that it was in a dilapidated condition.
The husband was a cleaner and was the sole proprietor of a business known as “K Company” which operated from the K property. At that time it was rented from a government department. In addition to the interest of the wife in the O property, she had modest savings, furniture and a motor vehicle.
The husband had his interest in the S property which the wife accepts was valued at about $85,000, some furniture and other effects to the modest value of $1,500, a motor vehicle and his cleaning business and his recycling business which she asserts was of little or no value.
Shortly after marriage, the parties embarked upon a significant redevelopment of the S property. The family resided in the wife’s O property and they borrowed $60,000 from a lending institution in order to undertake the renovations. It was an integral part of the plan that the S property would have a front unit that could be rented out.
I accept that each of the parties worked hard in the development of the property and where they could undertake some of the building works they did so.
It took five years for the development to be completed. Thereafter, the family took up occupation in the property. Notwithstanding that the borrowings were jointly held, the husband remained as the sole registered proprietor of the property.
In 1987 the wife gave up her employment and worked with the husband in the recycling business. I accept that she was involved in a wide range of managerial duties which included advertising, sales and cleaning.
In addition, the wife undertook the duties of a homemaker and was the primary carer for the children of the marriage.
It seems that the husband was keen to expand the business interests of the parties and became involved in a variety of other business areas. The wife remained primarily involved in the management and day to day affairs of the recycling business, enabling the husband to pursue other business interests.
Ultimately, the husband was not successful and I accept that the parties sustained significant financial loss as a result. That is not to accept the position of the wife that any blame should attach to the husband for these failed ventures.
In 1991 the parties purchased as joint tenants the K property from a government agency for $200,000.
The husband’s mother Ms F Nest provided the parties with $150,000 and they borrowed a further $50,000 from the State Bank of South Australia. Those funds were used to effect the purchase of the K property.
The wife’s case is that the monies provided by the husband’s mother was not a loan in the sense that there were any defined terms and conditions of its repayment, but rather, it was provided to the parties by way of a trade-off for the parties allowing the husband’s mother to take up residence in the front unit of the S property free of rent.
It is not controversial that the husband’s mother remained in occupation for 14 years. It was only when she became frail, required a carer and was losing her eyesight that she vacated the premises on 30 June 2005 to live with her daughter.
The wife’s position was one of ambivalence in respect of the monies provided by the husband’s mother. She alleges that when the husband’s mother left the S property in 2005 she sought the repayment by the parties of the $150,000 that she had advanced directly to the government agency for the purchase of the K property. She says that the husband refused the request of his mother and he alleges that he told her that the money paid by his mother did not cover the notional rental lost in respect of the front unit during her period of occupation.
In short, taking into account inter-vivos gifts that his mother had made to other siblings, he considered that the $150,000 was a “pre-inheritance gift”.
The husband’s mother died in 2006. Litigation ensued in respect of a number of matters, but in particular the sum of $150,000 as provided by her.
Paragraphs 71, 72 and 73 of the wife’s trial affidavit set out her perception of the husband’s involvement in various litigation over the years. The wife alleges that the husband was vexatious and litigious, that his efforts usually amounted to no gain and in many cases resulted in a net loss. Even if there was not significant money involved, the husband spent many hours engaged in the litigation, was consumed by it and this then took his focus away from the recycling business, the home and other ventures.
There is no doubt that the husband found himself involved in ongoing litigation from 1988 until 2012. The family finances may well have suffered and the constant tension and anxiety arising out of the litigation would have been distressing and placed a significant burden on each of the parties both in terms of their relationship but also, their ability to undertake their various roles and obligations within the marriage.
Notwithstanding the criticism of the wife, the litigation in the Supreme Court in respect of the mother’s Will took six years to resolve but had as its focus the executor (the husband’s sister) of his mother’s estate taking action to recover from the husband $258,000, which included the disputed sum of $150,000.
Ultimately, the husband was successful in defending the action and whilst he was not able to gain a greater share of his mother’s estate, the property of the parties was at least not further diminished by a return to the estate of the monies provided in 1991.
In 2011, a sequestration order was made against the husband in respect of the costs of litigation involving his mother’s estate. If the husband had become bankrupt that may well have been adverse to the financial interests of the parties. The husband was successful in his appeal to the Federal Court and the order of sequestration was discharged.
Whilst the long period of involvement in litigation was regrettable and it may well have been the source of ongoing irritation and anxiety to the wife, nonetheless I do not consider that this is a matter that should necessarily reflect itself in considerations of property settlement either in terms that might be relevant to the contribution that each of the parties have made, or to factors that I need to consider pursuant to Section 75 (2) of the Family Law Act 1975(Cth) (“the Act”).
In 1995, the wife returned to work in the travel industry and has remained employed to the present date. Her income is modest and taking into account overtime and other benefits, she receives between $45,000 and $65,000 per annum. The husband’s income during the period of cohabitation was negligible.
In April 1998, the wife sold the O property for $89,000. Those funds were used to discharge in part the liabilities of the parties. The wife was keen to erect a warehouse on the K property with a view to renting out the front unit and the newly developed warehouse. A credit facility with Bank SA was established for $350,000. The wife says that on the basis of the joint responsibility for the credit facility, the husband agreed to transfer the S property into their joint names. Ultimately, the husband reneged on his agreement. I accept the evidence of the wife on this point.
The wife alleges that the husband’s behaviour in refusing to rent out the front unit of the S property and also the commercial premises at K, denied the parties significant rental income. It is the wife’s assessment that from the S property alone from July 2005 to the present the rental would have amounted to over $150,000. In terms of the K property, the money lost according to the wife would amount to $29,500 per annum. Whilst the position in respect of the K property is more uncertain given that the warehouse was not completed and the construction materials remain unutilised, the same cannot be said for the S property which was vacant and habitable from July 2005.
The parties separated on 30 January 2006 with the wife and the children moving out of the S property and taking up rental accommodation.
DISCOVERY AND DISCLOSURE
The wife has been critical of the husband for his refusal to provide adequate discovery. There has been no recent discovery made by each of the parties, but the Court record reflects a short list of discovery filed by the wife on 14 October 2008. That document advises the husband that the documents referred to in the list were available for inspection. Given the significant period of separation, it is likely that the documents discovered by the wife in April 2008 would have been in a general sense comprehensive of the issues that were relevant at the time. From 2006 there has been little or no change to the circumstances of the wife other than the normal fluctuations in employment remuneration.
The husband however has made no discovery.
In Weir & Weir (1993) FLC 92-338, the Full Court said at page 79,593:-
Once it has been established that there has been a deliberate non-disclosure…the Court shall not be unduly cautious about making findings in favour of the innocent part…the Court’s jurisdiction to make an order going beyond the identified property arises once there is sufficient evidence to support a finding that the party has not made a full disclosure of his or her assets.
In Tate & Tate (2000) FLC 93-047, the Full Court said at paragraph 51:-
The law in Australia on this point is the same as in England.
In Orielo & Orielo (1985) FLC 91-653 (a decision of Emery, Fogarty and Murray JJ), the Full Court held at 80,256:-
We consider that there is clear obligation on a party to proceedings in this Court to make a full and frank disclosure of all the relevant financial circumstances.
As was said by Lord Brandon before the House of Lords in Livesey v Jenkins (1985) 1 All ER 106 at page 114:-
I stated earlier that, unless the Court is provided with correct, complete and up to date information on the matter to which, under Section 25 (1), it is required to have regard, it cannot lawfully or properly exercise discretion in the manner ordained by that subsection. It follows necessarily from this that each party concerned in claims for financial division and property adjustment (or other forms of ancillary relief not material in the present case) owes a duty to the Court to make full and frank disclosure of all material facts to the other party and to the Court. This principle of full and frank disclosure in proceedings of this kind has long been recognised and enforced as a matter of practice. The legal basis of that principle, and a jurisdiction for it are to be found in the statutory provisions to which I have referred.
To the extent that it is necessary for me to do so, I am therefore entitled to draw an adverse inference against the husband if there is evidence or material upon which such an inference can be based.
The husband has been quite deliberate in his disregard for the Court proceedings.
Notwithstanding that there was significant opportunity for the husband to comply with trial directions, to rely if necessary upon previously filed affidavit material, to provide fresh information and to make discovery and disclosure of documents that clearly would be relevant to the issues raised, but in particular the long understood case to be presented by the wife, his refusal and/or disregard to do so is a significant matter. I consider that the husband chose to disregard his obligations in circumstances where the information that could have been presented may have had a high level of relevance to the proceedings.
I think it is fair to say that his refusal to engage in the proceedings in any constructive manner has resulted in the proceedings becoming more complex.
LEGAL PRINCIPLES TO BE APPLIED
“Property” is defined in Section 4 of the Act as meaning property to which those parties are, or that party is, as the case may be, entitled, whether in possession or reversion.
Prior to the considerations of Section 79 (2) of the Act by the High Court in Stanford v Stanford (2012) 247 CLR 108, “the preferred approach” is best encapsulated in the approach adopted and endorsed by the Full Court in Hickey & Hickey & Attorney General for the Commonwealth of Australia (2003) FLC 93-143 namely, what has commonly been referred to as “a four step approach”. In summary, after the determination of the pool of assets, the focus of the Court then turns to the contributions of the parties, the factors that may be relevant and referred to in Section 75 (2) and then a consideration of whether the orders are in all the circumstances just and equitable.
In Hickey (supra) there was not a close examination of Section 79 (2) in terms of whether it was just and equitable to make any order. The position in respect of the proceedings before me is different. The wife seeks orders that would see either a transfer of the husband’s interest in the S property or alternatively, an order that would see the S and K properties sold. It is the wife’s contention that it would be just and equitable for her to receive a significant proportion of the remaining property.
The husband’s position is demonstrably uncertain. At the commencement of the proceedings, the husband did raise the principle as discussed in Stanford but it was ill considered and of little assistance. The best that I can do is to interpolate the husband’s position, which is that the wife is entitled to little interest in the property of the parties because she has failed to make any or any substantial contribution.
In setting out the husband’s position, I acknowledge that I may well be doing his presentation an injustice. I am reminded however that in both of his response documents there was a concession that the wife was entitled to some share of the property of the parties. I also do not want to complicate the consideration of the husband’s position by referring to the concept of contribution as a factor relevant to the considerations that are now necessary pursuant to Section 79 (2) of the Act.
Ultimately, I come to the view that the parties are at least agreed that Section 79 (2) of the Act is satisfied and that it would be just and equitable to embark upon an exercise that would see an adjustment of property. To consider otherwise would be to make a nonsense of the orders sought by each of the parties in their application and response documents.
In Stanford the majority held:-
[35]It will be recalled that Section 79 (2) provides that “the Court shall not make an order under this section unless it is satisfied that, in all the circumstance it is just and equitable to make the order”. Section 79 (4) prescribes matters that must be taken into account in considering what order (if any) should be made under the section. The requirements of the two subsections are not to be conflated. In every case in which a property settlement order under Section 79 is sought, it is necessary to satisfy the Court, that in all the circumstances, it is just and equitable to make the order.
[36]The expression “just and equitable” is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its metes and bounds.
Importantly, the Court found:-
Whether it is just and equitable to make the order is not to be answered by assuming that the party’s rights to all interests in marital property are or should be different from those that then exist.
It is therefore not a matter of assumption that a party to a marriage has a right to an interest in property by reference to matters arising under Section 79 (4). A party cannot pull themselves up by their own bootstraps by asserting a contribution under Section 79 (4) and therefore use that position to satisfy the obligation created by Section 79 (2).
Whilst the Court has a significant obligation to consider the justice and equity of making any order that adjusts the property rights of the parties, I do not consider that Stanford goes so far as to suggest that there can be no regard to the very matters that might fall for consideration under Section 79 (4). It is the very nature of the suite of contributions made by the parties to a marriage which in and of themselves have the ability to create equitable interests in the property of each of them.
In Bevan (supra), the majority of the Full Court said (in relation to the previously quoted paragraph in Stanford):-
[70]In our experience the circumstances described in the paragraph above encapsulates the vast majority of cases. Hence the reminder in Stanford of the pivotal role of Section 79 (2) is unlikely to have any impact in most cases, although it will serve as a reminder to trial judges that the precondition to making any order is a finding that it is just and equitable to do so.
Accordingly, and by reference to the decisions of Bevan and Stanford , there are three “fundamental propositions”:-
(1)A Court needs to consider the existing property interests of the parties and to identify those interests,( by reference to common law or equity);
(2)The direction must be exercised in accordance with legal principles and not in respect of any assumption that the parties interests should be different from those determined by common law equity; and
(3)Section 79(2) cannot be conflated by reference only to matters in Section 79 (4).
LEGAL AND EQUITABLE INTERESTS OF THE PARTIES
The period of cohabitation is about 19 years. The parties held various employment but generally speaking, the wife was engaged in the travel industry save for those few years when she assisted and then managed the recycling business. The husband ran a number of modest business ventures none of which appear to have borne significant fruit, although it is not intended that such a comment be pejorative of the husband’s contribution in that regard. At worst, he lacked the necessary business acumen.
It is clear that against the backdrop of a long marriage and in circumstances where the parties have made a mutual commitment to each other, it would be unconscionable to suggest that each of the parties did not uphold a significant and substantial and equitable interest in the property of the other. In any event, the K property is held in the joint names of the parties and on the wife’s case, the retention and control of that property is likely to require orders that will affect the property interests of each of the parties.
I am satisfied that by having regard to Section 79 (2) of the Act that it is just and equitable to adjust the property interests of the parties. I consider that such an outcome is an inevitable consequence of the proper application of principles arising from Stanford and I come to the decision independently of any consent, tacit or otherwise of the parties that there should be an adjustment of property interests.
LEGAL FEES
The wife does not have any significant outstanding legal fees. By reference to her financial statement filed 10 October 2013, she reveals that her legal fees have been paid from post-separation savings. By that expression I understand that the wife generated income from her employment and that she paid her legal fees as and when they fell due.
Obviously I know nothing as to the circumstances of the husband in respect of any legal fees that he may have incurred or are currently outstanding. I do not propose to bring to account the respective legal fees of each of the parties. I am not asked to do so by the wife and in any event there would appear to be no proper basis on the evidence for that to occur.
SUPERANNUATION
The wife has a superannuation entitlement with X Superannuation in the sum of $54,618. There is no information which would assist in determining whether the husband has any entitlement in respect of superannuation.
There were no submissions made as to how that should be treated, but it appears from the orders sought by the wife that she does not seek a superannuation splitting order. The sum is modest particularly when compared to the property of the parties.
Taking into account the age of the parties, I do not consider that it would be sensible to effect a superannuation split in favour of the husband.
I consider it is appropriate to depart from the approach promoted by the Full Court in Hickey & Hickey (2002) FLC 93-143 and Coghlan & Coghlan (2005) FLC 93-222 by treating the superannuation entitlements of the wife “as if they were assets” and to include the wife’s entitlement in a global approach to the respective interests of the property in their separate and joint property.
LIST OF ASSETS AND LIABILITIES OF PARTIES
Real Estate
The husband is the sole registered proprietor of the S property. The parties hold as joint tenants their interest in the K property. Historically the parties instructed a single expert to value the properties in December 2007. As part of the trial direction orders, the parties were at liberty to obtain and adduce separate adversarial evidence. The husband did not do, but the wife sought and obtained valuation reports in respect of the S and K properties from H Firm, licensed valuers. Those valuation reports are before the Court as annexures to the affidavit of the wife’s solicitor John Albert Swift. They are not the subject of challenge and I accept the value as determined namely, in relation to the S property in the sum of $790,000 and for the K property $500,000. The parties also jointly instructed Mr L to undertake a valuation of household and business effects located at the separate residences of the parties. That report is dated 17 January 2007 and appears as “Annexure D” to the affidavit of the wife filed 30 January 2008. The parties have not sought any further or update valuation and doing the best that I can, the valuation is the best and only evidence available.
The only significant difference is that at the time of valuation the wife held a 1997 Toyota motor vehicle valued at $4,500. That vehicle was traded in on a vehicle purchased by the wife after separation now valued at $10,000, but with an outstanding liability to the wife’s mother of $20,500.
The wife asks me to bring to account the motor vehicles currently in the possession of the husband but referred to in the valuation report. I consider that it would not be appropriate to bring to account the current motor vehicle of the wife together with the residual liability, but rather to add back into the pool the value of the Toyota as at the date of valuation.
Additionally, I propose to exclude the wife’s assessment of the value of the residual stock in the husband’s possession, but to include the wife’s X shares.
As discussed, I propose to treat the wife’s X superannuation entitlement as if it were property and bring it back into the separate property of the parties.
Accordingly, the parties hold the following assets and liabilities:-
Husband
P Street, Suburb S
790,000
Furniture
1,420
Steelwork at K property
7,500
Y motor vehicle
13,500
Ford Falcon motor vehicle
7,500
Trailer and shipping container
900
Plant and equipment
3,125
TOTAL
823,945
Wife
Furniture
1,500
Value of Toyota motor vehicle (sold)
4,500
X shares (1,184)
1,960
X superannuation
54,618
TOTAL
62,578
Joint Assets
C Street, Suburb K
500,000
TOTAL
$1,386,523
CONTRIBUTIONS
Section 79 (4) (a) – financial contributions
The relevant period of cohabitation is 19 years. There are two adult children. The only evidence as to the extent of the property held by each of the parties at the commencement of cohabitation is derived from the trial affidavit of the wife, but also from certain concessions made by her under cross examination.
Each of the parties had an interest in property. It is likely that the net value of the husband interest in Suburb S was greater than that of the wife’s interest in her unit at Suburb R.
In addition, the wife admitted that the husband owned the Y motor vehicle. It is also likely that the S property development required financial input of about $20,000 which the husband says he brought into the relationship.
On balance, I consider that more weight ought to be given to the husband than the wife to reflect his greater contribution at the time of cohabitation.
It is also necessary to consider the contributions made by each of the parties during the course of the marriage and post separation. Both parties undertook substantial effort in order to make adequate financial provision for the family. The wife initially worked in the travel industry and then resigned from that employment in order to take over the management and day to day running of the recycling business.
I have already considered the husband’s failed involvement in various other ventures and his steady engagement in ongoing litigation over an extended period.
Ultimately, the litigation was a two edged sword. Significant time, energy and money was expended and to that extent the wife bore a significantly greater burden of bringing money into the household (once she returned to work in 1995), but also to reflect her superior contribution as a homemaker.
If the litigation arising out of the husband’s mother’s estate had been unsuccessful, the parties may have needed to find a significant sum but certainly more than $150,000 to repay into the estate. The successful defence of those proceedings was clearly to the advantage of the family.
It would seem axiomatic that the husband seeks credit in order to give proper recognition to the contribution of the sum of $150,000 by the husband’s mother.
Clearly, the monies provided were not by way of a loan and accordingly, are either a gift in which case credit should be given, save and except that it is likely that the gift was given to both the husband and the wife. Put simply, in the ordinary course of events, money provided by the family of one of the parties has a clear nexus and this would be a factor that would be brought to account in favour of the husband. The circumstances in this case however are somewhat different. Whilst the money was most certainly provided, the trade-off was the residence by the husband’s mother in the front unit of the S property for 14 years but without the payment of rent.
I find that if the monies were by way of a gift then it was to both parties, or in the alternative, that it was some prior compensation or payment in advance for the ability of the husband’s mother to reside in the front unit rent free for an indefinite period.
I am not satisfied that the circumstances surrounding money provided by the husband’s mother should be regarded as a contribution by or on behalf of the husband.
In White & White (1982) FLC 91-246 at page 77,365, the Full Court commented on the treatment of monies provided by the husband’s father which was the major financial contribution to the house:-
His Honour went on to discuss the question of whether the financial contribution of the husband’s father should be regarded as a contribution by the husband under Section 79 (4) or “as a fact or circumstance relevant under Section 75 (2) (o). His Honour preferred the latter view as expressed in Antmann & Antmann (1980) FLC 90-908 at page 75,745 but in the circumstances of this case we are of the opinion that the financial contribution by the husband’s father should be regarded as indirect financial contribution by the husband.
The Court considered the “principle” in Crawford’s Case (1979) FLC 90-647 said that:-
The principle of that case is that an original contribution should not be carried forward as a mathematical portion and that such a contribution is but one of a number of factors to be considered. The longer the marriage the more likely that there will be other supervening factors of significance. In the presence case, the original advancement by the husband’s father was of greater significance in the initial stages of the marriage. In the end, it had to be weighed with all other relevant factors, including the contributions by each of the parties during the marriage. Those other factors reduce the significance of that original contribution, but it remained a significant factor to which proper weight should have been given along with the parties other contributions and the other relevant factors.
In this case the wife alleges that the husband made no meaningful matrimonial contribution. Whilst I do not consider that summary accurately reflects the position, there can be no suggestion of any diminution in the significant contribution of the wife both financially in terms of income derived from her employment and by her major role as a homemaker.
Following separation, the children remained in the care of the wife and she was entirely responsible for their care and financial support to the complete exclusion of the husband. Additionally, he had the advantage of residing in the former matrimonial home and notwithstanding that it was not utilised to good effect (and on the wife’s case to the financial detriment of the parties), the husband also had the use of the Kk property. The wife has had the financial burden of rental accommodation and the husband has not. See Lalor & Lalor (1990) FLC92-164.
I have had regard to the decision of the Full Court in Pearce & Pearce (1999) FLC92-844:-
In our opinion it is not so much a matter of contribution but a question of what weight should be attached, in all the circumstances, to the initial contribution. It is necessary to weight the initial contribution by the party with all other relevant contributions both of the husband and the wife. In considering the weight to be attached to the initial contribution, in this case the husband, regard must be had to the use made by the parties of that contribution…
There is no principle that the length of the marriage leads to a likelihood that other contributions will outweigh or weigh equally with a particular contribution. It is a matter of assessing the contributions of all relevant kinds in each case to arrive at an outcome, which is both appropriate and just and equitable. In some cases particular contributions may be outweighed or equalled by other ones. In other cases particular contributions may be so disproportionate as to other contributions as to merit special recognition.
Section 79 (4) (b)
There is scant evidence as to the significance of any non-financial contribution made directly or indirectly to the property of the parties. The complaint by the wife is that the property was wasted in the sense of a lost opportunity to obtain rental income from the front unit at Suburb S and the commercial premises (if they had been developed) at Suburb K.
Section 79 (4) (c)
There is little doubt that the overwhelming homemaker contribution was made by the wife. I accept that the husband was significantly engaged in litigation and other activities and certainly post separation, it could not be said that he made any meaningful contribution in terms of the care of the children, the family or as a homemaker generally. Weight must be given therefore to the contributions of the wife and I find that they significantly outweigh those of the husband.
I consider it appropriate to reflect on whether there is any residual significance attached to the “four step” approach to property settlement. Whilst I do not consider that there remains any validity to a formulaic approach to property settlement, nonetheless in an appropriate case it is permissible to have regard to and determine the weight to be given to factors reflecting the respective contributions of the parties and the relevant Section 75 (2) factors.
In Bevan & Bevan [2014] FamCAFC 19 in his written submissions, senior counsel for the husband said:-
[16]The adoption of the above [four step] approach is not intended to presuppose a positive answer to the question imposed by Section 79 (2), nor to suggest that it is an appropriate approach in all proceedings. Rather, and provided that the fundamental proposition outlined by the High Court in Stanford (2012) 293 ALR 70…are not obscured, such approach is intended to and does no more than provide a principled, disciplined and structured means by which all of the matters arising for consideration pursuant to Section 79 can be conveniently and properly identified and assessed.
[17]Further, and whilst not said critically nor in a matter which seeks to cavil with the decision in this appeal, neither approach to the determination emerges readily from either Stanford nor the decision in this appeal. It is respectfully submitted that provided the “fundamental propositions” articulated in Stanford are not obscured, and whilst not universally so as has always been recognised, the approach set out above continues to provide a proper, transparent, certain and structures approach to the presentation and determination of applications pursuant to Section 79.
At paragraph 19 in commenting on the written submissions the Full Court said:-
We have no issue with what senior counsel has said about the utility of the “four step” process, which we accept provides a convenient way to structure both submissions and judgments, provided that the caveat mentioned is not overlooked.
Accordingly, and taking into account the various contributions of the parties and the relevant contribution factors, I consider there should be an apportionment of 55/45 in favour of the wife.
Section 79 (4) (d)
The wife remains employed. The employment circumstances of the husband are uncertain but he is likely to be unemployed. The likely effect of the settlement will significantly alter the property held by each of the parties. Demonstrably, the husband will either have to find a significant settlement sum by borrowed funds, or one or more of the properties will need to be sold. Obviously, if the husband borrows money to fund the settlement this will impact adversely on his income to the extent of borrowing costs and ongoing mortgage supplement.
It is however more likely that property will need to be sold. The husband does not currently yield any income from either the S property or the K property and accordingly if they are sold and/or transferred there will be no impact on the earning capacity of the husband. In terms of the wife, the likely settlement will have no impact on her earning capacity.
SECTION 75 (2) FACTORS
The wife is 53 years of age. The husband is 62 years of age. The children are no longer dependent on the parties.
The wife has employment in the travel industry but she says that there is uncertainty in respect of the industry generally and her job in particular. For the moment however she has modestly paid employment. The husband did not provide evidence as to his circumstances. There was no discovery presented by the husband which would assist in determining the current state of his employment if any, or the prospects of future employment.
In a general sense, the certainty of the wife’s position is in stark contrast to the uncertainty of the husband’s position.
In the absence however of any clear understanding of the husband’s circumstances, it is difficult to make any findings of sufficient certainty that would lend themselves to an adjustment in favour of one party or the other.
In all the circumstances, I do not propose to make any adjustment or allowance.
CONCLUSION
Accordingly, the entitlements of the parties in respect of matrimonial property held jointly severally should be adjusted on the basis of 55 per cent of the total combined pool (including the wife’s superannuation) to the wife and 45 per cent to the husband.
Of a total pool of $1,386,523, the wife should retain $762,587.
If the wife retains the following:-
Furniture $ 1,500
Proceeds of Toyota motor vehicle $ 4,500
X shares $ 1,960
X superannuation $54,618
TOTAL $62,578
The wife is therefore entitled to $700,009.
The husband would not appear to have the ability to pay out from available property the proposed settlement sum.
It may be that he would wish to attempt to sell the K property and then borrow sufficient funds necessary to effect the settlement. If the husband is not able to do so it would be appropriate for him to transfer the S property to the wife with an appropriate adjustment to the husband to reflect his overall entitlement of 45 per cent of the combined property of the parties, namely a sum of $623,935 less property retained by him namely:-
Furniture $ 1,420
Steelwork $ 7,500
Y motor vehicle $ 13,500
Ford falcon motor vehicle $ 7,500
Trailer and shipping container $ 900
Plant and equipment $ 3,125
K property $500,000
TOTAL $533,945
leaving a settlement sum payable to him of $97,481 together with a transfer of the wife’s interest in the K property.
Orders will be made as set out at the commencement of these reasons.
I certify that the preceding one hundred and forty five (145) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 16 July 2014.
Associate:
Date: 16 July 2014.
Key Legal Topics
Areas of Law
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Civil Procedure
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Equity & Trusts
Legal Concepts
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Abuse of Process
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Estoppel
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Res Judicata
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Stay of Proceedings
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