Pardoe & Pardoe
[2023] FedCFamC2F 767
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Pardoe & Pardoe [2023] FedCFamC2F 767
File number: MLC 10688 of 2021 Judgment of: JUDGE BLAKE Date of judgment: 23 May 2023 Catchwords: FAMILY LAW – Property - application to proceed undefended – application granted – just and equitable property orders sought – application granted. Legislation: Family Law Act 1975 (Cth) ss 75(2), 75(2)(o), 79, 79(1), 79(2), 79(4).
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 rr 1.33, 1.34, 1.34(2).
Cases cited: Bevan v Bevan [2013] FamCAFC 116
Deng & Galinski [2021] FCCA 843
Dickons & Dickons [2012] FamCAFC 154
Eufrosin & Eufrosin [2014] FamCAFC 191
Lovine & Connor [2012] FamCAFC 168
Morgan & Valverde [2022] FedCFamC1A 133
Saso & Saso [2023] FedCFamC1A 65
Stanford v Stanford [2012] HCA 52
Division: Division 2 Family Law Number of paragraphs: 39 Date of hearing: 22 & 23 May 2023 Place: Melbourne Counsel for the Applicant: Mr Lovering Solicitor for the Applicant: Heinz Law Advocate for the Respondent: In Person ORDERS
MLC 10688 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR PARDOE
Applicant
AND: MS PARDOE
Respondent
order made by:
JUDGE BLAKE
DATE OF ORDER:
23 MAY 2023
THE COURT ORDERS THAT:
1.The Applicant Husband has permission to pursue his application for property orders on an undefended basis as contemplated under rule 1.33 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (‘Rules’).
2.The matter proceed solely on the basis of the evidence filed by the Applicant Husband for trial.
3.Within 7 days of the date of these Orders, the Applicant Husband do all such acts and things to serve upon the Senior Master of the Victorian Supreme Court, a copy of these Orders.
4.IT IS REQUESTED THAT the Senior Master of the Victorian Supreme Court pay the funds invested in the name of Ms Pardoe, account number … and account number … totalling approximately $300,000 as follows:
(a)The sum of approximately $40,000 to B Accountants;
(b) The sum of approximately $160,000 to the Applicant Husband; and
(c)The sum of approximately $120,000 to the Respondent Wife.
5.The parties have liberty to apply in respect of the payment of funds as outlined in Order 4 above.
6.The Applicant Husband retain in law and in equity to the absolute exclusion of the Respondent Wife, the following:
(a)His share of the funds pursuant to Order 4 above;
(b)His Motor Vehicle 1;
(c)His Motor Vehicle 2;
(d)His Motor Vehicle 3;
(e)His Motor Vehicle 4;
(f)The recreational vehicle;
(g)The funds in all bank accounts in his sole name;
(h)His cash savings;
(i)His personal items and effects;
(j)His superannuation interests (if any);
(k)All liabilities in his sole name and he shall indemnify the Respondent with respect to such liabilities.
7.The Respondent Wife retain in law and in equity to the absolute exclusion of the Applicant Husband, the following:
(a)Her share of the funds pursuant to Order 4 above;
(b)Her Motor Vehicle 5;
(c)The funds in all bank accounts in her sole name;
(d)Her cash savings;
(e)Her personal items and effects;
(f)Her superannuation interests (if any);
(g)Her interests in C Pty Ltd and D Pty Ltd;
(h)All liabilities in his sole name and she shall indemnify the Applicant Husband with respect to such liabilities.
8.Unless otherwise specified in these Orders, and except for the provisions enforcing payment of monies due under these Orders:
(a)each party be solely entitled to the exclusion of the other to all property (including choses in action), in the possession of such party as at the date of these Orders;
(b)monies standing to the credit of the parties in any joint bank account is to be divided equally between the parties;
(c)each party hereby foregoes any claim they may have to any superannuation benefits belonging to, or earned by, the other;
(d)all insurance policies become the sole property of the beneficiary nominated therein;
(e)each party be solely liable for, and indemnify the other against:
(i)any liability encumbering any item of property to which that party is entitled pursuant to these Orders;
(ii)all other liabilities in the other party’s sole name or which they are otherwise responsible for;
(f)any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
AND THE COURT NOTES THAT:
A.The Respondent Wife elected to proceed on the basis of the Applicant Husband’s evidence only, and waived any right to adduce any evidence or cross-examine the Applicant Husband.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Pardoe & Pardoe has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
(delivered ex tempore, revised from transcript)[1]
JUDGE BLAKE:
[1] Settled reasons were prepared upon the request of the Respondent Wife which was received on 13 June 2023.
This is an application by the husband for an alteration of property interests under section 79 of the Family Law Act 1975 (Cth) (‘Act’).
BACKGROUND
The husband filed the Initiating Application in this Court on 29 September 2021. The wife, who has been unrepresented throughout, filed a Response, an affidavit and financial statement on 23 June 2022.
The wife has consistently failed to comply with procedural orders of this Court. The orders not complied with include:
(a)an order to file a notice of address for service by 15 December 2021;
(b)an order to file a response, financial statement, financial questionnaire, E Program certificate and affidavit by 5 January 2022;
(c)a further order on 15 February 2022 that the wife file a notice of address for service by 22 February 2022;
(d)a further order on 15 February 2022 that the wife file her responding material within 35 days from the date of that order; and
(e)a further order made on 26 April 2022 that the wife file responding material by no later than 4.00 pm on 24 May 2022.
On 19 August 2022 Judge Harland made orders at a Compliance and Readiness hearing. Among other things, Judge Harland made the following orders:
(a)the wife have liberty to issue subpoenas for financial records to a range of persons and entities;
(b)the wife complete all accounting activities required to progress these proceedings within 90 days of the date of the orders; and
(c)the wife file a trial affidavit 14 days prior to trial.
The above orders were not complied with by the wife.
This matter was called on for Final Hearing on 22 May 2023 along with two other matters also listed for trial. I was unable to hear this matter on 22 May 2023, and indicated to the parties that I would start the Final Hearing on 23 May 2023. The wife applied for an adjournment of the hearing on 22 May 2023. I refused that adjournment for the reasons given at the time on transcript.
THE APPLICATION TO PROCEED UNDEFENDED
Mr Lovering, Counsel for the husband, made an application for the matter to proceed on an undefended basis, given the wife’s non-compliance with Court orders, in particular her failure to file a trial affidavit. The wife admitted that she had failed to comply with the orders I have noted above.
Given the import of the recent decisions of Austin J in Morgan & Valverde [2022] FedCFamC1A 133 and Aldridge J in Saso & Saso [2023] FedCFamC1A 65 on undefended proceedings, I explained to the wife the options that she had available to her in relation to the conduct of the hearing. Having had those options explained to her, the wife elected to proceed on the basis that I would hear only from Mr Lovering for the husband, and have regard only to the material filed by the husband in determining this matter.
Having regard to the above, the husband has permission to pursue his application for property orders on undefended basis as contemplated by rule 1.33 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (‘Rules’). I will also make an order that the matter proceeds solely on the basis of evidence filed by the husband and place a notation on the orders that the wife elected not to adduce any material or cross-examine the husband. I note that rule 1.34 of the rules says any party may apply for relief from the orders made under rule 1.33, and if such application is made the Court is to consider the range of matters set out in rule 1.34 (2).
THE MATERIAL BEFORE THE COURT
The husband relies on his further Amended Application filed 1 May 2023, his financial statement of 1 May 2023, his trial affidavit filed 2 May 2023, his further affidavit filed 17 May 2023, and the affidavit of Mr F, Certified Practising Valuer, filed 11 May 2023. The Court accepts the unchallenged evidence contained in the affidavits before the Court.
RELEVANT PRINCIPLES
The power of the Court to alter property interests of parties is contained in section 79 of the Act.
Subsection 79(1) of the Act empowers the Court to make such orders as it considers appropriate in altering the interests of the parties to the marriage. The power of the Court under subsection 79(1) of the Act is a power to be exercised having regard to the subsections that follow, and in particular, subsections (2) and (4) and consequently subsection 75(2) of the Act.
The provisions that I have referred to above have been the subject of extensive consideration by the High Court of Australia, and the Full Court of the Family Court of Australia: see Stanford v Stanford [2012] HCA 52 at [35]-[40], [42], and Bevan v Bevan [2013] FamCAFC 116 at [73]-[86], [89]. The Chief Judge of this Court has recently summarised the principles that apply in a matter such as this in Deng & Galinski [2021] FCCA 843 at [34]-[37]. I am required to approach this matter consistently with the principles that I have articulated above.
When it comes to the assessment of contributions and the approach to take, I have had regard to the comments of the Full Court in Dickons & Dickons [2012] FamCAFC 154, especially paragraphs [23] and [24], and Eufrosin & Eufrosin [2014] FamCAFC 191, as well as Lovine & Connor [2012] FamCAFC 168 at [42].
SHOULD AN ORDER FOR THE ALTERATION OF PROPERTY INTEREST BE MADE?
I am satisfied that in this matter it is just and equitable to embark upon an exercise of determining how the assets of these parties are to be split. The parties separated in December 2015. They are not yet divorced. However, it is apparent on the face of the evidence that the parties have moved on. They live separately. The husband has ceased to have any interest in the business run by the parties during their relationship, and does not have any interest or involvement in the business currently run by the wife. Properties owned by the parties have been sold with the proceeds of sale currently held by the Supreme Court of Victoria. It is self‑evident the parties are no longer in a relationship, and there will no longer be any common property available for shared use by the parties. I am satisfied that it is just and equitable to make an order for property division pursuant to section 79 of the Act.
ASSETS AND LIABILITIES OF THE PARTIES
The husband in his trial affidavit sets out the assets and liabilities of the parties. Those assets and liabilities as set out in the affidavit are conveniently summarised in the table the husband submitted prior to trial, entitled ‘Joint Assets and Liabilities Table’. The table is set out below:
Item Ownership H Value W Value J H W Assets Funds held by Victoria Supreme Court X Approx. $330,000 Not known Motor Vehicle 5 X $11,000.00 Not known Motor Vehicle 1 X $5,000.00 Not known Motor Vehicle 2 X $2,000.00 Not known Motor Vehicle 3 X $12,000.00 Not known Motor Vehicle 4 X $10,000.00 Not known Recreational vehicle X $12,000.00 Not known CBA bank account X Nominal Not known ANZ accounts X Nominal Not known Bank Accounts X Nominal Not known Total Assets Approx. $380,000 Not known Liabilities Funds owning to B Accountants X Approx. $40,000 Not known Total Liabilities $40,000 Not known Net Total $340,000 Not known Superannuation Husband’s Superannuation X Nil Not known Wife’s Superannuation X Not known –
presumed nilNot known Total Superannuation Nil Not known Total assets LESS
liabilities PLUS superannuationApprox $340,000 Not known CONTRIBUTIONS
The husband is 78 years of age. The wife is 64 years of age. They married in 1989 and separated in 2015. They are not yet divorced. The marriage was lengthy. It was productive, with the parties raising four children of their own between them, all of whom are now adults, as well as the wife’s son from a previous relationship. The wife was the primary carer of the children and the husband was the primary income earner, though the husband assisted with the children when he could, and the wife ultimately worked in the parties’ business once she was able.
In around 1991 the parties commenced a business called C Pty Ltd. C Pty Ltd manufactured commercial products. At its peak, in around 2013, the business turned over approximately $600,000 per annum and employed a number of employees.
The husband says that the relationship ended when the wife spent money from the business which in turn put the business under pressure and made it unviable. Separation ensued. In late 2015 the husband subsequently ceased being an officer of C Pty Ltd.
In February 2016 the husband and wife entered into an agreement under which the husband agreed to transfer his 50 per cent share in C Pty Ltd to the wife. Under the agreement the husband was to be paid the sum of $100,000 by the business in the event that the business achieved a net value of $200,000 or more. As it transpired, the husband never received such payment, but his interest in the business was nevertheless transferred to the wife. From that point on he had nothing to do with C Pty Ltd.
In about early 2017 the wife and Mr G started a new business called D Pty Ltd. The husband understands the wife and Mr G novated the intellectual property of C Pty Ltd to D Pty Ltd. The husband does not own an interest in D Pty Ltd nor does he hold any formal role in it.
In mid-2017 the wife transferred 50 per cent of the shares in C Pty Ltd to Mr G.
In late 2017, Mr H of B Accountants was appointed as a liquidator for C Pty Ltd.
The wife has not provided any financial disclosure for either C Pty Ltd or D Pty Ltd. I infer there is nothing of value in C Pty Ltd, given a liquidator has been appointed, and there are outstanding liquidators’ fees. The wife clearly owns an interest in D Pty Ltd. What assets that company owns, whether it is profitable or not, are not matters that the Court knows about. But clearly if there are returns to be distributed or asset sales that occur, the wife would, subject to paying off other debts of the business, be entitled to those proceeds given her 50 per cent shareholding in the business.
In his affidavit, the husband outlines the properties that were purchased by the parties during their marriage, including at J Street, K Street and L Street. These properties were owned by the parties at time of separation.
The husband, for a period after separation, continued to pay monthly mortgage payments on K Street while the wife resided there for a time. He says that the mortgage eventually fell into arrears because the wife had been withdrawing funds. The J Street property was transferred into the wife’s sole name in late 2017. Ultimately what happened to these properties is that they were sold. Once the mortgages had been discharged, a total of approximately $300,000 was left remaining. These are the funds currently held by the Supreme Court of Victoria with the liquidator awaiting payment of his fee from these proceeds.
It is relevant to note three other matters. First, the husband received a lump sum from his superannuation account of approximately $40,000 in March 2016. Second, the husband received a lump sum pension payment in the amount of approximately $47,000 into an ANZ bank account in February 2018. Third, the husband received an amount of approximately $70,000 by way of inheritance in 2019. The husband has lived off these payments over the years since separation. All these payments were obtained by the husband post-separation.
Consideration of the contributions
Ultimately, the husband contends that given the length of the marriage, and the parties’ respective contributions to it, the value of the contributions between the husband and wife should be assessed at 50/50. That position is put by him notwithstanding his evidence about the wife’s use or misuse of funds from the business conducted by the parties, and irrespective of the wife’s drawdowns of funds against the mortgage. While the husband referred to various loans that he has made to D Pty Ltd post-separation, Mr Lovering conceded those loans do not factor into the assessment of contributions.
Given the evidence before me, including the length of the marriage, the roles performed by each of the parties, and the fact that they assisted each other with each other’s roles, I would assess contributions as 50/50. Mr Lovering submitted this was a case in which over the course of the marriage each party had done their best. I agree with that assessment.
SECTION 75(2) FACTORS
The husband is 78 years of age, is homeless, and is currently sleeping between two locations. He is reliant on a government pension. He is not in good health, and he has recently had surgery. I am satisfied that because of his age and his declining health, he would be unable to work.
Given the wife did not file trial material or give evidence, little is known about her future needs and her capacity for work. She claimed to also be homeless, and that may be the case, but there is no evidence before me about that. Given her age, it would seem she would have some capacity for work, though I accept that any capacity would be limited, given her age.
There are two other matters that are relevant when assessing the factors under section 75(2) of the Act, and they are as follows.
(a)The repeated non-compliance of the wife has caused the husband to incur costs he might not ordinarily have incurred had there been compliance. That includes not just the costs of the Final hearing but also the costs incurred in repeated attendances before the Court. Those costs, given the costs notice that I have seen, would seem to total at least $26,000; and
(b)The wife’s non-disclosure of her financial position is a matter of concern. She will walk away under the order that is proposed by the husband with the continued ownership of the D Pty Ltd company, whatever assets it may hold, and whatever intellectual property of C Pty Ltd that may be there.
In my view, these failures by the wife need to be taken into account by the Court pursuant to section 75(2)(o) of the Act.
Mr Lovering submitted that I should take account of the wife’s failure to accept a Calderbank offer made last year. I decline to do so. The wife could not reasonably have been expected to know the consequences of her failure to take that offer.
When all of these matters are taken into account, there needs to be an adjustment for future needs in favour of the husband.
Mr Lovering submitted a minute of orders. Those orders provide for, effectively:
(a)The funds held by the Victorian Supreme Court to be split equally between the parties with the debt to B Accountants to be paid, effectively, from the wife’s share. I agree that the wife is responsible for paying B Accountants. The husband ceased to have any ownership, interest or active role in C Pty Ltd well before liquidators were appointed. In short, the appointment of liquidators, and the events leading to it occurred on the watch of the wife. In summary, this will result in the funds from the Victorian Supreme Court being dispersed in the following ways. Approximately $40,000 to B Accountants, approximately $160,000 to the husband and approximately $120,000 to the wife.
(b)The parties to otherwise retain the assets in their possession. This results in the husband retaining a Motor Vehicle 1 valued at $5,000, a Motor Vehicle 2 valued at $2,000, a Motor Vehicle 3 valued at $12,000, a Motor Vehicle 4 valued at $10,000 and a recreational vehicle valued at $12,000, as well as other assets of nominal value. The wife would retain a Motor Vehicle 5 valued at $11,000, as well as other assets of nominal value.
The effect of these orders, once the debt to B Accountants is paid, is that the husband receives approximately $200,000 from a pool of approximately $300,000, and the wife receives the balance. That equates to a percentage split of 60 per cent to the husband and 40 per cent to the wife. That reflects a 10 per cent adjustment in favour of the husband under section 75(2).
I am satisfied that the adjustment above is appropriate, having regard to the factors set out within section 75(2) of the Act.
I am also satisfied, when considered overall, that the orders proposed and to which I have referred to above provide for a just and equitable settlement of the property of the parties. For these reasons, orders will be issued largely in the form as submitted by the husband.
I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the ex tempore Reasons for Judgment of Judge Blake. Associate:
Dated: 23 June 2023
0
8
0