Newett & Newett (No. 3)
[2021] FamCA 187
•8 April 2021
FAMILY COURT OF AUSTRALIA
Newett & Newett (No. 3) [2021] FamCA 187
File number(s): BRC 2179 of 2018 Judgment of: BAUMANN J Date of judgment: 8 April 2021 Catchwords: FAMILY LAW – PROPERTY – Where the wife failed to return to Court for the property hearing – Where the Court proceeded to hear the competing property applications in the wife’s absence – Assessment of contributions – Modest pool – final property adjustment orders to be made after further submissions Legislation: Family Law Act 1975 (Cth) ss 75, 79, 102NA Cases cited: Hickey & Hickey (2003) FLC 93-143
Kowaliw & Kowaliw (1981) FLC 91-092
Newett & Newett & Anor (No. 5) [2020] FamCA 1023
Pierce & Pierce (1998) FLC 92-844
Stanford & Stanford [2012] HCA 52
Number of paragraphs: 67 Date of hearing: 30 November 2020 and 1 December 2020 Place: Brisbane Counsel for the Applicant: Mr N McGregor Solicitor for the Applicant: Damien Greer Lawyers Solicitor for the Respondent: Self-represented ORDERS
BRC 2179 of 2018 BETWEEN: MR NEWETT
Applicant
AND: MS NEWETT
Respondent
ORDER MADE BY:
BAUMANN J
DATE OF ORDER:
8 APRIL 2021
THE COURT ORDERS:
1.That these proceedings be adjourned for further submissions as to the form of property orders, at 12.00pm (noon) on 10 May 2021 in the Family Court of Australia at Brisbane.
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 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Newett & Newett has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BAUMANN J:
These reasons relate to part of a much larger dispute between the Applicant husband, Mr Newett and the Respondent wife, Ms Newett.
The property and parenting issues were listed for a five day trial commencing Monday, 30 November 2020. The parenting trial could not proceed and the Court decided to bifurcate the proceedings so that the property proceeding could proceed.
The reasons for those actions are more fully set out in the Reasons for Judgment published by the Court (see Newett & Newett & Anor (No. 5) [2020] FamCA 1023).
IMPEDIMENTS
After the Court had decided for the reasons already identified that the property proceedings would proceed, late on the afternoon of Monday, 30 November 2020, the Court directed the solicitors for the husband to again provide the wife with discovery, which she asserted she nor her former solicitors had not received. The solicitors for the husband say full discovery was made.
The Court had received at Exhibit 4 a copy of a letter from the solicitors for the husband to the then solicitors for the wife attaching various documents.
The wife was handed in Court a copy of the MYOB trial balances for the company VV Pty Ltd for the period of 1 April 2018 to 31 October 2020.
I was satisfied that, when the wife left the Court on Monday, 30 November 2020, she was well aware that it was the Court’s intention to proceed with the property applications the following day. The wife indicated it was her intention, from her being well aware of the inhibitions to cross-examination that arose from the application in this case of s 102NA of the Family Law Act 1975 (Cth) (“the Act”), that she would obtain a lawyer. I had no doubt she sought to do so.
I also indicated to the wife that it seemed, in circumstances where she had not (she would say as a result of her solicitor’s failure to follow her instructions) filed an affidavit of evidence-in-chief by 16 November 2020, that her case outline which she had prepared and had been filed at 2.27pm on Saturday, 28 November 2020 in which she set out a very substantial “master chronology of events” (emphasis removed), could be relied upon as her evidence-in-chief if she swore that it were true.
The Court had no understanding as to what the wife’s position would be on the following day, but it became apparent quickly upon the resumption of the trial what it was. It should be noted that the wife is highly articulate and, I would find, intelligent. She has an impressive capacity to prepare documents and articulate in writing her position. As a first year law student (whose course is currently deferred at her election) she has even demonstrated a capacity to research the law and try to apply what she says are the lessons of her research. This is most pointedly identified by the number of private criminal prosecutions that the wife launched in the period about one month before the trial was to begin and it was fully referred to in the earlier Reasons above.
Perhaps, therefore, it was not a surprise that when the Court resumed, the wife, who is unrepresented, produced an affidavit which I gave her leave to rely upon and which was marked as Exhibit 6. In accordance with the current COVID-19 rules, it is signed but not witnessed.
At paragraphs 7, 8 and 9 of that affidavit, the wife says:
7.I swear by Almighty God that the contents of my Case Outline ad Chronology filed 28 November 2020 are true and correct to the best of my knowledge and ability.
8.Missing from my chronology was the fact that in 2008, I worked two simultaneous at 70hrs per week in order to pay for our … wedding which was $88,000 and which Mr Newett did not personally contribute towards. My parents put $10,000 towards the wedding. I expect Mr Newett would be required to equally contribute in add-backs to this cost.
9.There was the matter of a $15,000 expense on a trip to … in 2006 under similar circumstances, where I lost a $70,000 contract by virtue of his demand to go on the holiday or end the relationship.
(As per the original)
It can be seen by those statements that the wife took on board the invitation to adopt the chronology as a true and correct record of the history and as her evidence. Clearly, she turned her mind to anything else she may have wished to have told the Court by the incorporation of the statements at paragraphs 8 and 9.
The following matters were then raised by the wife with a view to seeking the Court’s Order that the property trial be adjourned, namely:
(a)The wife asserts that outside the Courthouse on Monday, she overheard a conversation between the husband and his “girlfriend” which led the wife to form the view that “one would hope that a pre-arranged decision has not been made in relation to the outcomes of the case but the statement indicates such”. The opinion of the wife has no factual foundation and if it is said to suggest some predetermination by the Court, such suggestion is rejected;
(b)Noting how it is the wife who has commenced a range of private criminal prosecutions which includes, on her description, that the father’s solicitor, Mr Richardson, is being prosecuted for “torturing the mother” and will be a witness to be cross-examined, she submits that Mr Richardson has a conflict of interest and is not entitled to instruct any barrister in respect of the pending property matter. I reject that suggestion. Mr McGregor, a very experienced Counsel, had been retained in that matter and was the one who made the submissions to the Court;
(c)At paragraphs 15 to 18 of the wife’s new affidavit, she asserted that her former solicitors had not received documents that were said to have been sent as set out in Exhibit 4. I read the transcript of the various email exchanges which took place over the 24 hours preceding the hearing, but that was supplemented by Exhibit 5, tendered by Mr McGregor, in respect of the application by the wife to adjourn where the wife’s solicitor at that time, on the record, indicated that:
The e-mail system for this firm failed on the 2nd November 2020 and was restored on 6th November 2020. We established a temporary G-mail account for urgent communications during that period.
Following e-mail communications from you yesterday, we have reviewed that G-mail account. We have identified that e-mails were received in that account from Damien Greer solicitors on 11th November 2020 attaching documentation.
This firm has ceased checking that G mail account after the reinstatement of the e-mail system and hence the e-mails sent by Damien Greer received on 11th November 2020 had not been seen until today.
(As per the original)
As a result of that statement, the mother’s suggestion in her affidavit that the father’s solicitor gave evidence that was “fabricated” has no foundation. Whilst it may be that her lawyer neglected to follow up on materials that were due, that can hardly be the responsibility of the husband or his lawyers. Nonetheless, I made arrangements for the documents, which were short in nature and have now formed part of Exhibit 4, to be made available to the wife when I adjourned the matter after rejecting the application for adjournment, for some thirty minutes; and
(d)Not surprisingly, at paragraphs 19 to 20 of the wife’s affidavit, she identified the number of enquiries she had made of an additional solicitor, visited two barristers and made a number of telephone calls. Not surprisingly, each and every professional advised that they were unavailable on such short notice. To the extent that it is suggested that some or all of these unidentified legal practitioners had a view about whether the matter should proceed and assert what would happen if the matter did proceed, I give it no weight.
Before the mother left the Court and did not return, I had sought to try to identify from her what her orders sought were, as there was a significant confusion, in my mind, between the orders sought in the case outline, her amended Response filed 7.59pm on 27 November 2020 and what I understood the wife’s case to be. The wife’s case simply is that the house at R Street, which is registered in the husband’s name solely, should be transferred to her unencumbered, that the husband should repay her a debt that she claims to be arising from income he has received from VV Pty Ltd which, from the bar table, she had described amounted to $627,718 and further other relief.
When trying to make some sense of her application so far as it is contained in the Response and seemingly alerting herself to what she believes is the lack of assets that the husband actually has, she then asserted that she was seeking some lien against assets of the husband’s parents, presumably because they have assets while the husband does not. In attempting to describe such a claim as a “nonsense” the mother collected her papers and left the Court, despite her supporters who were in the back of the Court, pleading with her to remain.
When the matter was called on and she had been called three times in the body of the Court, she did not appear. Accordingly, the Court proceeded to hear the case. The transcript will demonstrate how the Court did its best to test and, if one likes, challenge some of the assertions raised by Counsel for the husband in a way that, to some degree, sought to ascertain a response to the broad propositions relied upon by the wife. However, it was not the Court’s duty to run the wife’s case, specifically where:
(a)she had failed to file any evidence-in-chief with her allegations of fact;
(b)she failed to make proper disclosure; and
(c)where she elected to leave the Court and not participate.
STATUTORY PATHWAY
Shortly stated, but more concisely and elaborately described in the Full Court decision in Hickey & Hickey (2003) FLC 93-143, in a property settlement case, the Court must adopt a well-known four-step process, essentially:
(a)to identify the pool of assets and liabilities generally, and usually at the time of hearing;
(b)to assess the relative contributions of both the financial, non-financial, direct and indirect nature as specified by s 79(4);
(c)to consider the factors as are relevant contained in s 75(2) of the Act; and
(d)finally, consider the ultimate analysis to determine whether the order the Court proposes to make is just and equitable to both parties.
BACKGROUND
Statements of fact which appear hereafter should be regarded as findings of fact.
As I did not have any evidence of either the husband or the wife tested in the witness box, I do not propose to make any specific findings as to credit. In fact, there was one witness tested in cross-examination and that was Ms Adlam, the wife’s mother. I called her for cross-examination in respect of an affidavit she filed in her daughter’s case on 23 November 2020 that related to alleged distributions to the daughter from the UU Trust, a Trust I am satisfied is a Trust operated by and controlled by Ms Adlam and her seriously ill husband Mr Adlam.
In respect of this issue, I have no concerns with accepting the evidence of Ms Adlam, namely, that she and her husband controlled the Trust; that she has provided some payments to her daughter towards her legal expenses (see Exhibit 7) but that her daughter has not received any distribution of income from the Trust and has no right to demand any payments from the Trust.
The Trust is a modest entity and the balance she had attached to her affidavit reveals effectively, it has a property at Suburb AK, a term deposit and that the total assets of approximately $253,783 is consumed by an unsecured beneficiary loan which I find is a loan owed to Ms Adlam and her husband of $253,771.
I now return to the more general background. In so doing, the husband relies upon in this case his affidavit of evidence-in-chief and annexures filed 16 November 2020, the updated financial statement filed 16 November 2020, the affidavit from his accountant and annexures, Mr WW filed 16 November 2020 and a further affidavit from the husband as to discovery filed 12 October 2020. Whilst most of the annexures to his trial affidavit relate to parenting issues, of course, at page 586 of the index to exhibits, a balance sheet is offered to the Court. Also relevantly in this case, at page 626 and thereafter, financial statements for the entity VV Pty Ltd for the year ending 30 June 2020 which incorporates financial statements for the entity.
In circumstances where the wife did not participate, I have, however, taken into consideration the wife’s case outline chronology filed 28 November 2020, amended Response filed 27 November 2020, her financial statement filed 27 November 2020 and an earlier financial statement filed 10 April 2018.
Additionally, I permitted to be tendered in the property proceedings material from AL Bank insurance (marked Exhibit 8) that identified the level of the husband’s current superannuation entitlement and further document which reveals that he had become a member of the superannuation plan on or about 31 May 2005.
The husband is 45 years of age and the wife is 43 years of age. The wife has significant tertiary qualifications. She graduated with a Bachelor Degree from AC University in 1997 and graduated with a Master's Degree from AE University in 2002.
Her case outline sets out an impressive number of positions she has held in the financial and IT area between 1998, post initial graduation, until, it seems, that in or about 2003, before the parties commenced cohabitation, the parties formed an entity called The Adlam Newett Group Pty Ltd, that was destined to be involved in property development.
The wife says, but gives few details, that in 2002, she had bought a beach penthouse at Suburb YY in Region AD, and thereafter, an apartment in Suburb AF in Sydney. Whilst the wife says at the time of marriage in 2008, she brought in “equity of $1.3 million”, there is little probative evidence as to the actual value of assets at that time and the debt at that time.
The husband says, and I accept, that attempts to secure better discovery from the wife so as to justify her assertions proved unsuccessful.
In any event, if there was to be a starting point to what the parties brought into the relationship, it would not be the date of marriage in 2008 but the date of cohabitation in April 2005.
The wife says, and I am prepared to accept, that she formed the company, the “AB Pty Ltd”. I find she was the sole director and that she generated a good revenue in that business, said to be $260,000 in year one and $365,000 in year two. What is unclear is if that was the gross revenue, what were the profits and how were they used? I am prepared to accept that the wife’s initial income was superior to that of the husband’s. I cannot accept the bold assertion by the wife that the husband “owes significant funds to Ms Newett for her AB Pty Ltd underwriting of his business investment in The Adlam Newett Pty Ltd.”. It seems pretty clear from all the evidence that the parties’ financial endeavours as property developers did not materialise in any substantial ultimate capital that could be used to build their financial future. I anticipate that the wife may have wished to blame the husband for this and, most likely, the husband may have wished to blame the wife but, nonetheless, although these parties brought some skills to their relationship, the assets were quite modest where they ultimately decided in August 2014 to buy the former family home at R Street, Suburb JJ.
Of course, between 2008 (the date of the marriage) and the purchase of the home in 2014, the parties were blessed with three children: X born in 2011, Y born in 2013 and Z born in 2014.
The wife says on or about 21 January 2014 she registered the entity SS Pty Ltd “after pressure from the [f]ather to go back to work to pay a $180,000 deposit on the [m]arital [h]ome or face a forced abortion of her third baby due in 2014”. In respect of the deposit on the home, the father’s evidence is, and he supports it with documentation, that the deposit of $180,000 arose from gifts made to him by his parents (see paragraph 359 of his affidavit). I accept that evidence. Although there is a dispute as to the reasons why this occurred, it is not in dispute that the wife did return to work shortly after the birth of Z and that the father remained at home to care for the three children whilst the mother continued to work for a period of some 10 months. I accept that X and Y will have had some time in day care during that period. The purchase of the home at R Street, Suburb JJ in August 2014 was, I am satisfied, acquired with the benefit of the $180,000 funds gifted to the husband by his parents and with further borrowings. The wife says that the husband placed the property in his sole name, which is correct. She asserts that he did so “using [the wife’s] credit rating as an excuse to do so”. She then says that her credit rating was affected “due to the [husband’s] loss and refusal to take responsibility in the failure of The Adlam Newett Pty Ltd”. This evidence supports the evidence of the husband that when they purchased the R Street, Suburb JJ property they did have few other assets, although I could not discount the profitability and income that the wife had generated in her entity called SS Pty Ltd may have been also contributed to the purchase.
In mid-2015, the husband was diagnosed with cancer and the family finances were used to pay for his operation and follow-up care. Sadly, the wife sees this as a fact which means that the husband is indebted to her for some $25,000 because, she claims, she paid for it. It was, of course, at the time, part of their marital income that met the expenses of the husband’s cancer treatment.
In or about November 2015, the wife finished contract work and, she says, it was agreed between her and the husband that she would stay at home to work on the creation of her business, “AG Business”. The wife makes an assertion that the husband in some way utilised funds under her control in SS Pty Ltd for an inappropriate purpose. No evidence to sustain that allegation has been offered to the Court.
In October 2017, the husband commenced working from home as an IT contractor. It seems apparent from the evidence that it was seen as appropriate that the income he received as a sub-contractor be funnelled through a corporate entity. At that stage, the only corporate entity that seemed to be available to the parties was SS Pty Ltd, which was the entity earlier created by the wife in which she was the sole director and shareholder. SS Pty Ltd provided communication services to TT Pty Ltd. What is clear is that, although these funds were paid to SS Pty Ltd, it was the husband’s personal exertion as a sub-contractor doing the actual work with TT Pty Ltd that generated the flow of cash.
Sadly, by November 2017, the relationship between the parties was deteriorating and the wife says that on 19 November 2017 the first physical domestic violence incident (strangulation) was perpetrated against the mother by the father. This is denied by the father and is obviously a very relevant factor in the parenting issues yet to be determined. The relationship deteriorated to an extent that, on 5 February 2018, the father left the family home.
It seems clear that he was conscious of the likelihood that separation would occur because, on or about 2 February 2018, he commenced under his own and sole control, the entity VV Pty Ltd. VV Pty Ltd then became the essential sub-contractor to TT Pty Ltd and remains as such, the husband continuing to do the work under the contract. This has been a matter of significant concern to the wife and she characterised it as the husband taking “her business”, that the husband took the steps that he did. Her concerns in this regard were clearly one of the initial issues dealt with by a Court. After the husband commenced proceedings in the Federal Circuit Court of Australia on 1 March 2018, the matter came before Judge Cassidy on 17 April 2018 when Orders were made as follows:
1.That the Husband and Wife sign all documents and do all things necessary to direct TT Pty Ltd to pay to the Damien Greer Lawyers Trust Account all outstanding moneys for services provided by Mr Newett, whether earned by him personally or via a corporate entity, from 5 February 2018 to date.
2.That forthwith upon receipt of the payment from TT Pty Ltd pursuant to Order 1 above, the Husband shall do all things necessary to cause the distribution of those funds in the following order of priority:
(i)Payment to ANZ Bank in the sum of $8500 for outstanding mortgage arrears;
(ii)Payment to Q School, Suburb NN in the sum of $5510.77 for outstanding fees;
(iii)Hold the sum of $5,500 for payment to the Single Expert Witness upon receipt of an invoice for payment in respect to his report; and
(iv)The balance then remaining to be split equally between the Husband and Wife.
3.That the Husband and Wife sign all documents and do all things necessary to direct TT Pty Ltd to pay to Damien Greer Lawyers Trust Account all moneys payable for services rendered by Mr Newett, whether earned by him personally or via a corporate entity, from the date of these Orders until 30 June 2018.
4.That upon receipt of each payment from TT Pty Ltd, pursuant to Order 3 above, the Husband shall do all things necessary to cause the distribution of those funds in the following order of priority:
(i)Payment of the ANZ mortgage each and every month;
(ii)Payment of the school fees for the Children at the Q School each and every month; and
(iii)The balance then remaining to be split equally between the Husband and the Wife.
5.The payments made to the parties, pursuant to Orders 2 and 4 is be to characterised as partial property settlement.
The effect of the Orders were that the husband used funds that had been in some way held by TT Pty Ltd (I infer, as a result of actions taken by the mother, not unreasonably, that those funds be held pending determination of their use) and that, thereafter, payments by TT Pty Ltd to 30 June 2018 would be distributed as set out in the Orders.
It does not appear as if the wife was thereafter receiving any income through personal exertion although, of course, she had the primary care of the children. The Orders of Judge Cassidy made 18 April 2018 provided for the children to spend approximately five nights a fortnight with the father whilst living primarily with the mother. In these Reasons I do not propose to set out any specific facts in the parenting dispute, of which there are many. Suffice it to say that the proceedings have been strenuously and vigorously contested and have involved many issues, some of which can be gleaned from the earlier Reasons delivered. I am satisfied, however, on the evidence that the husband’s income, which I have indicated was going into his entity VV Pty Ltd, was, save for the mother’s entitlement to some form of disability payment, the sole source of income to enable the family to be supported. In this regard, the father says, and I accept, that after the Orders of Judge Cassidy expired on 30 June 2018, he continued to make house payments or the like until August 2019 (see paragraph 373 of his affidavit). This included mortgage payments and school fees at an expensive City T private girls school, Q School’s. The financial statements of VV Pty Ltd, relevantly for the years ending 30 June 2019 and 30 June 2020, reveal that the husband was paying “director’s fees” of approximately $180,000 per year and that otherwise the profit from the ordinary activities of the enterprise were very modest.
The tax return of the husband, which was produced to the Court in a draft form by the accountant for the husband, shows an income tax estimate of approximately $53,691.11. To the extent that it is asserted that the husband owes money to the Australian Taxation Office, the evidence does not satisfy me what the foundation of that outstanding debt is, if it in fact exists, and I, as a result, ignore it as a liability when I come to consider the balance sheet. It follows from this analysis, however, that after tax, the husband’s net income is in the region of $130,000. This corresponds with the financial statements sworn by the husband and filed on 16 November 2020. In that financial statement, he identifies average weekly income of $3,471 (all from VV Pty Ltd) and claims expenses of $4,178; a deficit of approximately $700 a week.
Although the husband says that the wife has an earning capacity, the wife’s most recent financial statement identifies that her sole income source is a benefit paid to her, identified at item 15 as “income protection insurance (PTSD)” payable by ZZ Limited of $1,135 a week. The wife asserts that her weekly expenses total $1,550 a week although it is noted that those expenses include $800 a week for her own education (which is currently deferred at XX University) and $800 a week for the children (which she is not paying). It is not clear, and Counsel for the husband says the wife failed to make adequate disclosure of this entitlement, when the wife began receiving the benefit from ZZ Limited or the terms of that benefit. It is noted in the financial statement filed by the wife on 10 April 2018 that at that stage her sources of income were said to be a parenting payment and child support (totalling $2,321 per week) with no mention of an income support benefit being received. The Court infers, therefore, that whatever benefit the wife is receiving, it arose after April 2018. There is no evidence as to how long it is payable or if there is any capacity for it to be paid in any other form other than a weekly sum.
POOL OF ASSETS
Before turning to the husband’s suggested pool at page 586 of his affidavit, it is necessary to deal with the financial statement that the wife relies upon and, in particular, references made to Item 35 (where the wife says that the husband owes her $660,000), Item 41 where the wife asserts without any foundation that the business VV Pty Ltd (formerly SS Pty Ltd) has a value of $250,000 and the financial resources totalling $4,885,500 set out at Item 57 of the financial statement as follows:
(a)It seems to be the wife’s position that notwithstanding the parties having been married since 2008 and cohabitating since 2005, that in some way the Court ought do some sort of accounting exercise of the alleged “debts” asserted by the wife as against the husband. This is totally inconsistent with authority and common sense. As indicated, it seems that the wife sees the business that the husband actually works in as, in some way, her asset because up until the time of separation the parties agreed, it seems, for the funds the husband was earning from his IT activities to be paid into SS Pty Ltd, the wife’s company. I disagree with her assertion;
(b)Furthermore, the wife without any foundation asserts the husband’s business has a value of $250,000. The net maintainable earnings of the business, demonstrated by the financial statements before the Court, show that it has less than $10,000 net maintainable earnings after allowance for director’s fees. That could not on any basis account for any valuation, in my view, for the business which is, in all respects, nothing more than the husband working under contract for a company and choosing to have the funds paid into a corporate entity;
(c)The Court is at a loss to understand what the alleged debt of $660,000 referred to at item 35 might be, although if that was to refer to the current level of secured debt to the ANZ Bank it is much less than the secured debt currently is; and
(d)Item 57 simply is flawed in methodology and inconsistent with principle. In particular:
(i)if the wife is making a Kowaliw & Kowaliw (1981) FLC 91-092 type claim that assets that were lost during the parties’ failed business endeavours should somehow be added back now (being related to a City T property development that took place now over 13 years ago), then she has not made good her claim that this should be seen as a wanton, reckless or negligent action by the husband. To add to the $2,000,000 a “loss of property income over 13 years” was from the wife’s perspective perhaps logical, has no foundation in law. Sadly, it seems to me that the hopes by both parties to create a property empire failed;
(ii)if the wife asserts that income going into SS Pty Ltd was used towards the acquisition of R Street, Suburb JJ, then that is merely application of income generating during the course of the relationship and a contribution by the wife. It is not the basis for an alleged debt owed by the husband;
(iii)the wife makes a claim of $50,000 as a debt outstanding, because of “household bills from 2018 to 2020, pertaining to the Suburb JJ property he [t]ax [d]educts as expense and claims ownership”. There is no evidence that he has claimed a tax deduction improperly and, even if he had, which does not appear apparent on the evidence, it could not be a debt owed to the wife;
(iv)the wife claims $25,500 as the “value of vehicle stolen” from the wife at separation. There are two vehicles. They still exist and, as my Reasons will demonstrate, they will each retain one of them;
(v)the wife asserts there is a debt outstanding being “$750,000 value of [b]usiness [e]arning [c]apacity 2018-2020 (3 years)”. If it is suggested that in some way the husband, who has been working (while the wife has not) owes some money to the wife from money he has earnt, that is a matter that can be taken into account on contributions, but such claim as a debt is without foundation at all; and
(vi)finally, I have already indicated that it is not appropriate to suggest that now that the relationship is over, in some way, during the course of the relationship, when the husband suffered cancer, that he now owes the wife some money for the cost of his treatment.
The transcript will reveal that I discussed, by interjections with Mr McGregor of Counsel, the balance sheet set out at page 586 of the husband’s affidavit. In my view, I would ignore the following items in the balance sheet:
(a)Any bank accounts or credit card accounts the parties currently have, bearing in mind how long they have been separated and any such accounts or credit cards which reflects their personal discretionary choices as to the use of any income or credit card usage;
(b)There is no evidence that the parties have offered as to the value of the two Motor vehicle, a Motor vehicle 1 in the possession of the wife and a Motor vehicle 2 in the possession of the husband. Earlier in these proceedings, the Court was required to make Orders in relation to the Motor vehicle 1 (which I accept the wife did not want), but which the Court ordered she take on an interim basis. At the time the Court Orders were made, the vehicle was in for repair. The husband paid the excess and claimed on insurance and had the vehicle repaired. The vehicle was arranged to be left outside the property at Suburb JJ for the wife’s use. She refused to use it, and the best evidence from the bar table now is that the council may have collected the vehicle as an abandoned vehicle. I do not propose to bring into account, where to the absence of any evidence of value, the vehicles, in the circumstances;
(c)the husband asserted at item 7 of his balance sheet a debt of $43,938. No foundation for this debt has been established, in any event. Considering the way that VV Pty Ltd operates, it is hard to see how this debt could have been created. It is ignored; and
(d)I am satisfied the parties did receive interim property adjustments and they should be included. At items 14 to 17 of the husband’s asserted balance sheet, he improperly brings into account what I think he would ask the Court to require the wife to contribute in respect of expenses for various experts during the course of the matter. It is not a balance sheet item.
The two ANZ loans will be incorporated in the balance sheet. However, the loan from the husband’s parents said to be $271,623, being a major contribution to the legal costs the husband has incurred to date exceeding $350,000, cannot constitute a marital debt. Similarly, at item 23, to incorporate in the balance sheet an alleged debt to the husband’s solicitors of $104,525 is contrary to principle, but all debts can be taken into account under s 75(2)(o).
In terms of superannuation, the husband, as Exhibit 8 identifies, has a current balance of $156,826.26 (as at 8 October 2020) with AL Bank. That balance is after two withdrawals under the recent government allowances were made of $10,000 each; one on 28 July 2020 and one on 10 June 2020. I will take into account the fact that the husband has reduced his superannuation by $20,000. The wife claims she has superannuation of $20,000 but also acknowledges that she has taken one payment of $10,000, which I infer was available when one considers that the wife asserted the level of her superannuation in the financial statement filed 10 April 2018 was, at that time, $30,246.
For the Reasons given, I find the pool of assets and liabilities as follows:
Ownership
Assets
Amount
Husband
R Street, Suburb JJ
$960,000
Wife
Interim property distributions
$15,665
Husband
Interim property distributions
$15,665
Husband
Superannuation
$156,826
Wife
Superannuation estimated
$20,000
Total
$1,168,156
Liabilities
Husband
ANZ residential investment loan – …46
$126,744
Husband
ANZ residential investment loan – …11
$651,552
Total debt
$778,296
COMBINED NETT POOL
$389,860
The Court is required by authority such as Stanford & Stanford [2012] HCA 52, when both legal and equitable interests of the parties have been determined as the pool above sets out, to consider, pursuant to s 79(2) of the Act, whether it is just and equitable to make an order. Both parties urge an adjustment to this modest pool (although the wife would say the pool is significantly higher). In the circumstances of this case and considering how the parties’ relationship came to an end and each have moved on in their own individual way, I am satisfied it is just and equitable to make an order.
CONTRIBUTIONS
Counsel for the husband asserts that I would find:
(a)that the initial contributions were similar. In this regard, on balance, I am satisfied that the wife most likely contributed slightly more to the relationship at its commencement, but that it is impossible, on the evidence, to be satisfied that the equity the wife had was anything like $1.3 million. In any event, whatever contributions were brought in at the commencement of cohabitation in 2005, the parties’ contributions thereafter from both a financial and non-financial nature would have reduced the weight that should be applied to the initial contributions, in my view (see Pierce & Pierce (1998) FLC 92-844); and
(b)Mr McGregor submits that, save for the benefit received by the husband of $180,000 from his parents, which I am satisfied occurred, coming as it did from the Estate of his grandmother via his parents, that contributions of both a financial and non-financial character thereafter at the time of separation should be regarded as equal. It is not possible to make a determination as to any particular year if one parent earnt more than the other. The evidence suggests that any funds they received were pooled and used for the joint benefit of the parties, including to develop a property portfolio, which proved unsuccessful. There is no evidence as to how much money was lost in that property development activity.
I am satisfied that both parties contributed to the care and welfare of the children in different ways, as the history sets out, including the time where the husband was the primary carer and the wife went back to work post separation and before the change of residence had occurred by reason of the Orders of the Court made March 2019, where the children came into the primary care of the father and with the children only spending supervised time with the mother.
The father’s non-financial contribution to the care and welfare of the children is superior to that of the wife from March 2019. The wife would say that that was not of her doing and I accept that is the case. In fact, she has strenuously and consistently objected to the way in which change of residence occurred and the effect on her and the children. Nonetheless, it is the husband’s income generated post-separation that enabled the children’s school fees at Q School (until they commenced at DD School at the beginning of the 2020 school year) to be met. For a time, the repayments of the house occupied by the wife until he was able to make some arrangement with the bank and withhold further payments pending determination of property issues, were also met by the husband.
The wife has had the benefit of living rent-free in the Suburb JJ home, whilst the husband has been required to pay rent. His most recent financial statement in the case stated that his current rental cost is $670 per week. In my view, it is appropriate that there be a slight adjustment in respect of contributions of both the financial and non-financial nature during the course of this relationship from 2005 until trial in the husband’s favour because of the payment received from his parents of 180,000. These funds enabled the R Street, Suburb JJ property to be acquired and, although he is now heavily indebted (it seems as a result of lifestyle choices by the parties) further debt was created. It would be just and equitable that that be taken into account.
I regard the contribution-based entitlements in a very modest pool as set out above to be in the range of five to 10 per cent to the husband. Although authority might suggest that the superannuation entitlements be placed in a separate pool, in my view, it is appropriate to deal with the one pool of assets. I do not have any evidence that enables me to make any estimations as to how much of the husband’s current superannuation entitlement may have amassed in the period from him becoming a member in 2005 until separation in 2018. However, it is reasonable to suspect, in my view, that a significant part of the superannuation did accumulate during the course of the marriage by some form of salary sacrifice or salary diversion to the superannuation in accordance with government regulation. I say this because there is no evidence in the financials of VV Pty Ltd or the husband’s taxation return that he is making any further superannuation contributions at this stage and the documents from AL Bank that set out changes in his superannuation entitlement do not show any contributions between 29 February 2020 and 30 September 2020 (save for a tax rebate and a modest contribution of $128.62 in August 2020). It is appropriate that the wife’s contribution to the husband’s superannuation during the course of the relationship be taken into account.
SECTION 75(2) FACTORS
By reference to s 79(4)(d), the Court is required to take into account any relevant factors under s 75(2). Again, the Court is restricted and impeded in many ways by the lack of evidence offered to the Court by the wife. However, doing the best I can on the evidence available, I make these findings:
(a)The parties are of similar health. There is no probative evidence before me that the parties’ health is affecting their long-term earning capacity. I say that cautiously because I note, as earlier indicated, that the wife is receiving an income protection benefit allegedly for post-traumatic stress disorder. The wife has consistently asserted that the husband suffers, yet the husband denies, the effects of an earlier brain injury and/or his medical condition. There is no evidence it is affecting his earning capacity at this stage;
(b)The husband has maintained his income since separation, as set out in the financial figures referred to above. In my view, he is therefore, at this stage, in possession of a higher income and, I infer, earning capacity, than the wife. The difficulty is there is no evidence as to any attempts the wife has made to secure employment. She has, of course, as an unrepresented litigant, been consumed by prosecuting a number of the areas of litigation in various forums as set out earlier. To the extent that this has made her unavailable to earn income, that really is a matter for her. She has not had the primary care of the children since at least February 2019. Although I would make an adjustment for the wife for this factor, it needs to be seen within the context of the actions taken by the wife, in my view;
(c)The current Orders of the Court provide for the children to be in the primary care of the father. The wife, of course, contests that and when the parenting trial is ultimately determined, hopefully sometime next year, the wife would hope that change of residence will mean that the children are in her care. If that is the case, of course, the wife would become the parent entitled to child support, and there is no reason that I would take, on the evidence, that the husband would not pay child support as assessed. He did so initially on separation. There is current evidence that the wife has been assessed to pay child support but is not paying so and is in arrears;
(d)Because of the modest property pool involved, an adjustment either way for the s 75(2)(c) factor will be modest. It is inevitable that the home will need to be sold and, as a result, the equity in the home, whatever it might be after all sales proceeds had been distributed to other things such as legal expenses, agents commission, marketing expenses and the secured mortgage could well be less than $150,000. The entitlements of the parties, therefore, under my property adjustment Orders will not significantly affect any adjustment of s 75(2);
(e)While s 75(2)(g) requires the Court to consider “where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable”, I accept that both parties are under financial stress, although the wife significantly more so. The extent to which she is able, whether the children are in her primary care or whether she is spending time with them, affects her standard of living will very much depend on her willingness to re-engage in employment and to use the numerous skills that she has. In that regard, the wife has chosen to undertake a law degree, which is yet to be completed;
(f)I do not believe the duration of the marriage has an effect upon the capacity of the parties to earn an income. Although the husband has a girlfriend, they are not cohabitating and so s 75(2)(m) does not apply. There are no financial agreements binding upon the parties in this case. On balance, if there was to be any adjustment for the s 75(2) factors, it would be modest indeed and most likely favour the wife modestly because of her lack of current earning capacity. Against that will be the fact that the husband might remain as the primary carer of the children until parenting orders on an interim or final basis alter that position; and
(g)I accept that the husband in particular has incurred significant legal expenses to date in these proceedings and says that his available income has been insufficient (after living expenses for himself and the children are paid) to meet his legal costs. The wife has mostly (but not at all times) represented herself or has had the benefit of legal aid funded lawyers. I did not bring into the balance sheet the debt he claims he owes to his parents for legal expenses, but I take into consideration as a factor under s 75(2)(o), the debt. There is little evidence about whether, or in what timeframe, any debt is to be repaid.
WHAT ORDERS DO JUSTICE AND EQUITY?
This is not an easy case to apply a strict mathematical formula to the net balance of the pool estimated to be $389,860. I say that because even that figure is uncertain, depending as it must on what the property sells for and the nett result. Whilst the wife says that it would be just and equitable for her to retain the home and for the husband to pay off the mortgage, I am comfortably satisfied that any such order would not be just and equitable.
The husband’s view is that it would be just and equitable that the house be sold, that he retain the net proceeds of sale and that he also retain his superannuation, effectively leaving the wife, after a lengthy relationship in which she has made significant contributions (as has the husband), with a modest superannuation entitlement of $20,000, perhaps the car and some furnishings. I do not regard such an outcome as just and equitable.
For these reasons, it is my view, on the findings made that the Court should consider making a splitting order, in favour of the wife, from the husband’s superannuation entitlement in addition to making an order as to the sale of the Suburb JJ home and distribution of the nett proceeds.
For these reasons, the matter will be listed before me at 12 noon on 10 May 2021, for further submissions as to the form of order consistent with these Reasons.
CHILD MAINTENANCE
The wife, who again I record is unrepresented, seeks relief by way of orders for “child maintenance”. The child support jurisdiction of this Court has not been properly enlivened in this matter and, as a result, no relief in the form of “child maintenance” is founded. Of course, depending on the outcome of the parenting proceedings, the child support administrative process may need to be applied, however that is a matter for the future.
SPOUSE MAINTENANCE
The wife brings an application for periodic spouse maintenance articulated in her case outline filed Saturday 28 November 2020 as follows:
55.That the Father pay ongoing Child and Spousal Maintenance to the Children and the Mother in line with the Father’s business revenue and earning capacity, at no less than 30% of gross business revenue payable within 24 hours of receipt of such revenue, and at no less than $1500 per week; and be determined by the Court.
and at 57:
57.That in the event the Suburb JJ property is sold and Order 55 above is not granted; the Husband pay the cost of the Wife’s rental accommodation (or replacement mortgage) for a period of no less than three calendar years, at a fixed price of $1000 per week, with monies placed in a Trust as defined by the Wife, and is to be paid one month in advance of each month.
The orders sought are, without further explanation from the wife, difficult to understand where:
(a)In the wife’s financial statement sworn 27 November 2020, she affirms that her total estimated living expenses (at Part N) are $4,050 broken up as to:
(i)$1,555 per week for herself; and
(ii)$2,495 per week for the children.
(b)Whilst I accept the wife is not living in the Suburb JJ home at present and will have rent to pay, there is no evidence of where she might live after, as is inevitable, the Suburb JJ home will be sold and what rental expenses she may incur; and
(c)The nature of her rented property will possibly depend on whether the children live primarily with her (as her parenting application seeks) or not.
The wife must meet the “threshold” of satisfying the Court that she is unable to adequately support herself (s 72 of the Act). In that regard, I accept the evidence is that the wife wishes to pursue her law degree at XX University. It may well be relevant what the costs of that University are compared to other institutions.
Nonetheless, in circumstances where the wife, at Item 15 (Part D) affirms her income from ZZ Limited is $1,135 per week (noting again the lack of detail of some particulars of this benefit), and her expenses are $1,555 a week which includes items like:
-
Home repairs
$150
-
Education
$800
$950
even on the wife’s current material the husband submits the wife is able to adequately support herself.
Rather than dismiss the application for spouse maintenance at this stage, I propose to allow further submissions by the wife limited to her claim for spouse maintenance (and the form of order, both property division and maintenance) to be made on 10 May 2021 at 12 noon.
The wife should be aware that if she is able to demonstrate she is unable to adequately support herself, then the Court is required to assess the husband’s capacity to pay.
It is the husband’s case that his gross income of $3,471 per week is exceeded by his total expenses of $4,178 per week. However those expenses may also alter when property orders are put into effect.
For those reasons, and where any claims for spouse maintenance are to be assessed when the Court’s final property alteration orders are known, I will also hear any further submissions from the husband, if he wishes to make them, in response to the wife’s submissions on 10 May 2021.
COSTS
Both parties seek costs orders, however at this time it is premature to determine whether s 117(1) should apply or whether, in the bifurcated nature of the proceedings, circumstances justify an order for costs at this time.
I certify that the preceding sixty-seven (67) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Baumann. Associate:
Dated: 8 April 2021
5
2
1