Paret and Paret and Ors
[2016] FCCA 3271
•20 December 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| PARET & PARET & ORS | [2016] FCCA 3271 |
| Catchwords: FAMILY LAW – Summary dismissal – application for orders pursuant to s.106B and s.79 of the Family Law Act – applicant’s case not disclosing evidence of sufficient quality and weight to enable him to succeed at trial – no reasonable prospects of success – husband’s Initiating Application dismissed. |
| Legislation: Family Law Act 1975 (Cth), ss.79, 79(2) & 106B Federal Circuit Court of Australia Act 1999 (Cth), ss.17A & 17A(2) |
| Cases cited: Stanford & Stanford (2012) 247 CLR 108 Bevan & Bevan (2014) 51 Fam LR 363 |
| Applicant: | MR PARET |
| First Respondent: | MS PARET |
| Second Respondent: | MR MACOLD |
| Third Respondent: | MS MACOLD |
| File Number: | ADC 827 of 2016 |
| Judgment of: | Judge Heffernan |
| Hearing date: | 6 September 2016 |
| Date of Last Submission: | 6 September 2016 |
| Delivered at: | Adelaide |
| Delivered on: | 20 December 2016 |
REPRESENTATION
| Counsel for the Applicant: | In person |
| Counsel for the First Respondent: | Ms P Kari |
| Solicitors for the First Respondent: | Rosey Batt & Associates |
| Counsel for the Second & Third Respondents: | Ms M Ross |
| Solicitors for the Second & Third Respondents: | Mildwaters Lawyers |
ORDERS
The applicant’s Initiating Application dated 11 March 2016 is dismissed.
The first, second and third respondents have liberty to apply with respect to costs within 60 days.
All earlier orders in this matter, with the exception of the order that the husband pay the costs of the respondents for the attendance on 27 July 2016, are discharged.
IT IS NOTED that publication of this judgment under the pseudonym Paret & Paret & Ors is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT ADELAIDE |
ADC 827 of 2016
| MR PARET |
Applicant
And
| MS PARET |
First Respondent
| MR MACOLD |
Second Respondent
| MS MACOLD |
Third Respondent
REASONS FOR JUDGMENT
This is an application by the first respondent wife that the applicant husband’s application for orders pursuant to ss.106B and 79 of the Family Law Act 1975 (Cth) (‘the Act’) be summarily dismissed. The second and third respondents make the same application. In the event that I do not make those orders, all three respondents seek to have the s.106B aspect bifurcated and an order made for security for costs.
The first respondent is the wife of the applicant husband. The second respondent is the wife’s son by her first marriage. The third respondent is married to the second respondent.
The Initiating Application filed by the husband seeks orders that the transfer of the property situated at Property A be set aside, pursuant to s.106B of the Act. He seeks final orders that there be an alteration of property interests between him and the first respondent that would have the effect of dividing the property of the relationship on a 50/50 basis.
The applicant husband relies on a single affidavit sworn by him dated 9 March 2016, his Financial Statement dated 9 March 2016, and a written outline of submissions dated 15 July 2016, as well as some exhibits tendered during the course of the interim hearing and his oral evidence given on 27 July and 6 September 2016.
The first respondent wife relies on her affidavits of 22 April and 20 May 2016 and her Amended Financial Statement dated 20 May 2016.
The second and third respondents rely on the affidavits of Mr Macold dated 21 April, 23 May and 1 September 2016; Mr Macold dated 21 April 2016; Ms K dated 21 April 2016; and the affidavits of the first respondent.
I have read and considered all of the affidavit material.
Legislative framework
This Court has power to give judgment to a party against another in relation to the whole or part of proceedings if the other party has no reasonable prospect of successfully prosecuting the proceeding.[1] Rule 13.10 of the Federal Circuit Court of Australia Rules 2001 (Cth) (‘the FCCA Rules’) provides that the Court may summarily dismiss a matter if satisfied that the party prosecuting it has no reasonable prospect of doing so successfully.
[1] Section 17A(2) Federal Circuit Court of Australia Act1999 (Cth) (‘the FCCA Act’).
Pursuant to s.79 of the Act, the Court has power to make such orders as it considers appropriate, inter alia, altering the interests of the parties to the marriage in the property. Pursuant to s.79(2) of the Act, the Court shall not make an order altering the interests of the parties to the marriage unless it is satisfied, in all the circumstances, it is just and equitable to do so.
The power to set aside the transfer of the property in question is to be found in s.106B of the Act. That section states as follows:
“106B Transactions to defeat claims
(1)In proceedings under this Act, the court may set aside or restrain the making of an instrument or disposition by or on behalf of, or by direction or in the interest of, a party, which is made or proposed to be made to defeat an existing or anticipated order in those proceedings or which, irrespective of intention, is likely to defeat any such order.
…
(2)The court may order that any money or real or personal property dealt with by any instrument or disposition referred to in subsection (1), (1A) or (1B) may be taken in execution or charged with the payment of such sums for costs or maintenance as the court directs, or that the proceeds of a sale must be paid into court to abide its order.
(3)The court must have regard to the interests of, and shall make any order proper for the protection of, a bona fide purchaser or other person interested.
(4)A party or a person acting in collusion with a party may be ordered to pay the costs of any other party or of a bona fide purchaser or other person interested of and incidental to any such instrument or disposition and the setting aside or restraining of the instrument or disposition.
…
(5) In this section:
disposition includes:
(a) a sale or gift; and
(b) the issue, grant, creation, transfer or cancellation of, or a variation of the rights attaching to, an interest in a company or a trust.
…”
(emphasis added)
Background
The property in question is a farming property. The applicant and the first respondent have been separated since mid 2007. The property was transferred to the second and third respondents in May 2010. It is necessary to set out in some detail the chronology in this matter. A useful summary of the salient events appears in the written submissions of the first respondent. They reflect the matters contained in the wife’s affidavit. Many aspects of that are not in dispute between the parties, indeed during the course of his submissions, the applicant described the summary as “one of the more useful” chronologies subject to some corrections and alterations he suggested. I have accordingly paraphrased parts of what appears below from that outline. I have also incorporated matters from the husband’s evidence given on 27 July 2016 and his affidavit.
The husband is 69 years of age and the wife is 68 years of age. In September of 1969, the wife married Mr I, a (occupation omitted). The applicant knew both the first respondent and her new husband. He was in fact, best man at the wedding. At that time Mr I owned Property B. This property had apparently been in Mr I's family for four or five generations.[2] The wife’s first child, Ms Y, was born (omitted)1971 and was followed 3 years later by a boy, Mr Macold, who is the second respondent. Mr I died tragically in November 1975. At the time of his death, the total land holdings for Property C was 510 hectares.[3] Up to that point, the wife says they had run a successful and profitable farming enterprise.[4]
[2] Affidavit of Mr Macold dated 21 April 2016 at p 10.
[3] Ibid at p 6.
[4] Affidavit of Ms Paret dated 21 April 2016 at p 3.
At some time in 1976, Mr I’s father transferred a 50% interest in Property A to the wife. The other 50% interest was held by the wife’s brother-in-law, Mr M. The wife and her brother-in-law commenced a share farming agreement on the property which was known as Property C. That agreement continued until 1992. In 1978, the wife returned to work as a (occupation omitted) in (omitted). The wife became the registered owner of Property B on the finalisation of Mr I’s estate. She says there was a mortgage on Property B at that time of $65,000. The applicant says the mortgage at that time was approximately $150,000.
The parties commenced their relationship at some time in 1991. The eldest child, Ms Y, had left home by that stage[5], and the second respondent was in his final year at school in (town omitted). The husband says that he assisted with the care of both children and that Ms Y initially lived with them. The husband’s divorce from his first wife was finalised in 1992, and at some time in that year, the applicant husband and first respondent wife commenced cohabitation. At the time cohabitation commenced, the husband had no significant assets to speak of. The wife states that the husband had credit card debts at the time they started living together, and the husband states that he had no such liabilities. The wife herself had equity in the farming property, Property C. At the time of the marriage, the wife says she had assets of $377,000 and liabilities of $103,800.[6] The share farming agreement between the wife and her former brother-in-law came to an end in March 1992. The wife says that this was at the instigation of the husband. It seems that at about this time, there was an agreement between the applicant and the first respondent to expand the operations of Property C. In April 1992, the wife purchased section Property D for $76,000, and this was financed by borrowings. At some time in 1993, the wife stopped working at (town omitted) in order to concentrate on full time farming with the husband. The parties married on 3 July 1993.
[5] Affidavit of Ms Y dated 21 April 2016.
[6] Affidavit of Ms Paret dated 22 April 2016 at p 4.
Over the next 6 years, there was an attempt by the parties to expand the business of the farm. This was ultimately unsuccessful and added to the debt burden. Part of the strategy employed was to lease parcels of land. They did so as follows:
·1993 lease of land from Mr D;
·1994 lease of land from (omitted);
·1996 lease of land at (location omitted); and
·1998 lease of land at (omitted) and (omitted)
In 1994, the wife inherited $28,000 from her mother’s estate. She claims that she applied those monies towards the purchase of a John Deere header. The husband claims that only $10,000 from the inheritance was applied to the purchase of the header. The second respondent, Mr Macold, finished his tertiary studies during the course of this year and it was anticipated that he would be involved in farming with the parties. In particular, the land in (location omitted) was earmarked for him to live on and farm. The applicant says that this property was 14,000 acres and was leased from 2001.[7] The wife says in her affidavit that the husband signed the lease unilaterally and against her misgivings about whether they could afford to do so.
[7] Affidavit of Mr Paret dated 11 March 2016 at p 6.
In 1996, the parties established the Trust A and Company A as the trustee company.
In 1997, the wife sold section Property D for $145,000 and used the proceeds to purchase her brother-in-law’s 50% interest in Property A for $133,000. The husband points out that it was Company A that purchased the 50% interest in Property A.
At some time in 1998, a company by the name of (company omitted) was engaged by the parties to perform repair work on the header. The wife asserts that the husband refused to pay the invoice for that work. The invoice was in the amount of $18,846. As a result, (company omitted) took out a bill of sale over the header.
By 1999, the total borrowings of the parties in relation to Company A, was either $700,000 (on the husband’s version) or $750,000 (on the wife’s version). The monies were owed to (omitted mortagee). The parties defaulted on the loan and as a consequence the wife says that he sold Property B (324 of the pre-relationship 510 hectares of Property C)[8] for $630,000. The husband points out that it was Company A that sold sections 120-121. On the wife’s account, this left a debt of approximately $120,000 (or $70,000 on the husband’s version). The parties continued to farm Property A and the land leased at (omitted), but were financially unable to renew the lease at (location omitted).
[8] Affidavit of Mr Macold dated 21 April 2016 at p 11.
During the course of 1999, the parties refinanced the (omitted mortagee) debt and increased their borrowings to $270,000. A (omitted vehicle) was purchased in that year for $33,456 using borrowings from (omitted) of $27,000.
In early 2000, it is agreed that the husband made a decision to relocate to Adelaide. The wife remained at the farm and managed both the farming operations and the farming debts. The wife asserts that about this time, she discovered that the husband had, without her knowledge, used money from the Property C accounts in the amount of $8,000 to purchase shares. That investment was unsuccessful and the money was lost.
In about August 2000, the wife says that she relocated to Adelaide, residing with the husband at a rental property at (location omitted). She asserts that the husband incorporated Company B (‘Company B’) at about this time, using the Property C assets as security for a loan from the (bank omitted) in the amount of $42,000. The husband made a point in his evidence of stating that both he and the wife incorporated Company B. At about this time, the wife asserts that she sold shares in her name in order to repay debt in the amount of $80,000.
During 2001, the parties leased out Property A. The wife asserts that she commenced paid employment as a (occupation omitted). The Property C borrowings were again refinanced, this time with (bank omitted). There were two separate loans totalling $300,000 and $35,000.
The wife asserts that at some time in 2002, the Company B loan in the amount of $42,000 was called on by the bank. At about this time, the wife asserts that her daughter Ms Y assisted the parties by refinancing her home mortgage in order to provide them with $37,000. In 2002, the wife asserts that the second and third respondents also assisted the parties by repaying an amount of $35,000 to the (bank omitted) on their behalf. During the course of this year, the wife asserts that the husband unilaterally sold a tractor that she had inherited from her husband, and that he retained the proceeds of sale.
The wife asserts that during the course of 2003, the husband purchased a 1/6th interest in a company, Company C, which failed soon after purchase, and that he established a (omitted) business in (location omitted), which also failed. The husband disputes this and says that Company B purchased the share in Company C, in other words, it was a business decision of both he and the wife. He submits that this is a pivotal consideration. In 2004, the second and third respondents began living at Property A paying a rent of $1,000 per annum, contributing to the mortgage from their own funds, and undertaking improvements to the homestead.
The husband was made a bankrupt in about September 2005. Prior to his bankruptcy, he resigned as a director of Company A and transferred all of his shares to the wife. The event that gave rise to his bankruptcy was his failure to pay his former accountant an amount of $8,000 in fees. At about the same time, the wife resigned as secretary from Company B.
In 2006, the parties once again refinanced Company A, borrowing with (omitted) for an amount of $275,000 and with (omitted) for two amounts of $65,000 and $15,000 respectively. In mid-2007, the husband moved to Victoria and started working in (location omitted), returning to Adelaide every two or three weeks. The wife asserts that at about this time, the husband told her that he would no longer contribute to the (location omitted) rent. This was at about the same time that the parties separated.
After separation, the wife asserts that she became aware for the first time that the husband had previously failed to pay rent on the (location omitted) property, and an amount of $15,000 in rental arrears had accrued. The wife asserts that the parties had little or no assets at about this time, and the Company A debt secured over Property A totalled approximately $528,000. The husband does not accept that figure but did not give evidence of what he says the correct figure was.
The husband asserts that when he moved to (location omitted), his income was approximately $60,000 per annum. The wife asserts that he retained these monies entirely and did not assist her in paying either rent or with managing the Company A debt. The husband says from this income he had to cover business expenses. He did not quantify that. The husband disputes that he made no financial contribution after he left for (location omitted) and this was the subject of some evidence before me. I will refer to that later in these reasons.
At the beginning of December 2007, the wife asserts that she moved into a new rental premises at (location omitted). From about this time, the husband did not return to Adelaide and communication between the parties ceased. The wife asserts that the husband relocated to Queensland in January of 2008, and that once he did so, she communicated with him on one occasion only, over the telephone. The husband agrees that he moved to Queensland at about that time and says that he commenced a de facto relationship with a Ms V at some time in 2009.
On 29 May 2010, the wife transferred Property A to the second and third respondents for an amount of $395,000. The wife asserts that she applied the proceeds of the sale to paying off the (omitted) loans in full, legal fees, rates and taxes, accountancy fees, and the repayment of other small loans and expenses.
The husband says that he retired during the course of 2011 and commenced to receive the aged pension. He said in his evidence that he only found out about the sale of Property A when he met with the wife in a coffee shop.[9] He later conducted a property search on or about 16 June 2014. On the husband’s version, this does not appear to have prompted him to contact the wife. The wife states that she made contact with the husband in July or August of 2014 to tell him that his mother was in hospital. He returned to South Australia and the parties met for a cup of coffee at about this time. On the wife’s version, which I do not understand to be disputed by the husband, this was the first time they had seen each other in about 7 years. Approximately 15 months later, on 16 November 2015, the husband instructed solicitors to represent him with respect to a property application. He lodged a caveat over Property A on 13 December 2015. This caveat was removed on about 10 March 2016. On 11 March 2016, the husband filed his Initiating Application in this matter.
[9] This is contrary to his affidavit at page 11 where he says he first discovered the sale at the time of his property search.
The wife says that she always envisaged that the farm would be kept and passed on to the second respondent when he was old enough.[10] She says that intention did not change after her marriage to the applicant. The applicant disputes this.
[10] Affidavit of Ms Paret dated 22 April 2016 at p 4.
Except where indicated, the husband has not disputed those above matters asserted by the wife.
Financial Statements
The Financial Statement of the applicant husband dated 11 March 2016 discloses the following:
| TOTAL | ||
| Total average weekly income | Centrelink Aged Pension | $433 |
| Total personal expenditure | $406 | |
| Total property owned | (omitted vehicle) $6,000 | |
| Household contents $1,000 | $7,000 | |
| Total gross value of superannuation | (omitted superannuation) | $169 |
| Total value of liabilities | $0.00 | |
| Total value of financial resources | $0.00 |
The applicant’s de facto partner apparently earns about $300 per week. Of the $406 expenses identified per week, $6.00 relates to maintenance on the (omitted vehicle) and the rest is taken up by living expenses.
The wife’s Amended Financial Statement dated 20 May 2016 discloses the following:
| TOTAL | ||
| Total average weekly income | $510 | |
| Total personal expenditure | Income tax $10 | |
| (omitted superannuation) $40 | ||
| Rent $295 | ||
| Private Health Insurance $40 | ||
| (bank omitted) Credit Card payment plan $25 | ||
| Credit Card $15 | ||
| Other expenditure $140 | $565 | |
| Total property owned | (omitted) Savings Account | $4,500 |
| Total gross value of superannuation | (omitted superannuation) | $66,374 |
| Total value of liabilities | (bank omitted) Payment Plan $12,000 | |
| Tax penalties $10,000 | ||
| (bank omitted) Credit Card $1,500 | ||
| Loan to Ms Y & Mr D $12,000 | ||
| Debt owing to (company omitted) $18,846 | ||
| Debt owing to (omitted) $15,000 | $46,423 | |
| Total value of financial resources | $0.00 |
In her capacity as a contract trainer, the wife states that she is a sole trader. The amount owed to the (bank omitted) under the payment plan is said by the wife to be remnant of debts incurred during the marriage by both parties, but using an account in her name. The wife states that the tax penalties identified above are owed by Company A with respect to disposal of property in the 12 months before separation. Since separation the wife identified an amount of $19,067 from an (omitted) Insurance policy held in her name which has been defrayed in paying marital debts and meeting living expenses. She also identifies an (omitted) Insurance policy in her name in the amount of $25,000 which was transferred to her solicitor’s trust account.
Affidavit material of the second and third respondents
In his affidavit of 21 April 2016, the second respondent estimates that the family expenses for him, the third respondent and their four daughters are approximately $190,520 per annum.[11] The family income for both he and the third respondent varies somewhat from year to year, but is approximately $198,500 per annum. Of this amount, $45,000 is derived from the income of the third respondent who works part-time as a registered nurse. $40,000 is derived from income from the lease of Property A and $85,000 is derived from the first respondent’s work as an (occupation omitted). $5,000 is derived from running sheep on Property A. It is clear from that affidavit that the financial circumstances of the second and third respondents are extremely tight and his affidavit provides details of this.
[11] Affidavit of Mr Macold dated 21 April 2016 at p 2.
As far as the total joint assets of the second and third respondents, the second respondent estimates these to be $1,236,500 inclusive of superannuation. This figure includes the value of Property A at approximately $790,000 and a house in (location omitted) worth approximately $175,000, which has been owned by the third respondent since before the marriage.
The liabilities of the second and third respondent are $814,000 including a mortgage of $590,000 on Property A and $110,000 on the (location omitted) House.
The second respondent details the very significant effect that these proceedings have had on him and the third respondent both financially and emotionally. Of particular concern to the second respondent is the prospect that he may lose the farm that he understands his late father promised to him. He says that he grew up with the expectation that he would inherit the farm and that he has directed his life’s ambition, labour and study to that end. He relied on his mother’s promise of inheriting the farm and worked on it part-time during his studies. In effect, he says that he was paid only small amounts of cash and some expenses in return for what must have been thousands of hours of work on the Property C property across its various land holdings from time to time.[12]
[12] Ibid p 7.
The second and third respondent currently reside in the house situated on Property A. With respect to the (location omitted) property that was leased by the applicant and the first respondent, he says that it was his understanding he was encouraged to sign a lease on that property by them when he was still young and had recently completed his studies. He says that the applicant’s plans for that property were totally misconceived and made very significant losses because of the applicant’s lack of farming knowledge and his poor business decisions. The land was apparently unsuitable for the sort of cropping the applicant had in mind.
The second respondent says that Property C was profitable prior to the arrival of the applicant. He attributed the problems that beset the property to the applicant’s poor financial decision making and management practices.
After the failed (location omitted) farm lease, the second respondent was told by the applicant that he had leased a property called ‘(omitted)’ at (location omitted). The second respondent was encouraged to move into the farm house on that property so that he could manage and run the land. After he moved in, he discovered that rent on the farm house had not been part of the lease which had been signed by the applicant. The second respondent paid for the rent on that property with money that he earnt by (omitted) in his spare time. As far as the work on (omitted) was concerned, he provided his labour for a small amount of money.
The second respondent says that it was at about this time the applicant informed him that he had leased more land in the area, a farm known as ‘(omitted)’ which was comprised of rough and rocky terrain. It was at about this time that his arguments with the applicant about farm management practices started.
The second respondent says that he worked full time on (omitted) from April 1999 for little more than pocket money. His employment relationship (if it can be called that) with the applicant and the first respondent stopped in about October 2000, and he spent some time in Victoria. The second and third respondents married in March 2001. After the applicant had left the farm to move to Adelaide in order to work, the second respondent says that he assisted his mother in seeding the property in May 2001 because she had been left to her own devices by the applicant.
The second respondent says that when a debt crisis arose in 2002, which threatened the sale of Property A, he arranged to sell and load (omitted) from a silo on the property on behalf of the applicant and the first respondent to help with keeping the bank at bay.
The second respondent says that in 2003, the third respondent mortgaged her house at (location omitted) for $35,000 and that money was transferred to the applicant and the first respondent in order to pay off the second mortgage on the farm. This was apparently at the request of the first respondent. The second respondent states that he put in the work that he did on the farm because he had been led to believe through his entire life that he would one day own “the home farm” and because he wanted to help his mother. He says that in 2004 it was left to him to renegotiate the lease of Property A with Mr O on behalf of the applicant and the first respondent. He and the third respondent moved into the farm house on Property A at that time. On his description, the house was uninhabitable when they did so. Some photographs annexed to his affidavit of 23 May 2016 depict the poor condition of the farm house.
The second respondent says that in 2004, he discovered that the $35,000 loaned to the applicant and the first respondent by him and his wife had not been used to pay off the second mortgage on Property A. When challenged, he says that the applicant told him “you gave us the money so we could do what we liked with it”. He says that the applicant and the first respondent refused to repay the loan. In his first affidavit, the second respondent details an amount of $53,436.36 in money paid by him and his wife toward the applicant and first respondent’s mortgage on Property A and their associated debts over the years. This is in addition to the “hundreds of hours” labour they put into making the property liveable and serviceable when they began to lease part of Property A from the applicant and first respondent and moved in to the farm house. It was at about this time that the applicant invested money in his failed real estate venture.
After the applicant and the first respondent separated, the second and third respondents helped her with food and the purchase of furniture.
As to the value of Property A, the second respondent deposes that he understood the valuer general’s valuation at the time of sale to be in the vicinity of $580,000. A family meeting was held to discuss the first respondent’s dire financial circumstances and it was agreed in 2010 that if the second respondent paid $395,000 and all associated legal fees, together with some other bills owed by the first respondent, in addition to waiving the debt of the applicant and first respondent for $35,000, and taking into account the costs of the improvements made by the second and third respondents, that this would be fair and appropriate consideration for the transfer of Property A to the second and third respondents. The applicant was not party to these discussions.
Since the property was transferred into the names of the second and third respondents, the second respondent deposes in some detail to the fact that they have made significant improvements to it. His affidavits refute most of the contentions of the applicant’s affidavit. His affidavit of 1 September 2016 refutes suggestions of the farm being sold as part of a conspiracy against the applicant and asserts in detail why he says the leases on the ‘home farm’ were not financially sustainable in the 8 years prior to the transfer. His affidavit sworn 18 May 2016 provides a closer consideration of the financial contributions which he says he and the third respondent made towards the applicant and the first respondent’s debts and on the farm between 2003 and 2010 prior to the transfer. The figure is approximately $177,000. That this figure does not incorporate any contribution he made by way of unpaid labour or labour for which he was paid a derisory amount prior to that time.
The affidavit of the third respondent confirms much of the detail of her husband’s affidavit.
The affidavit of Ms Y dated 21 April 2016 confirms that she and her husband lent $37,000 to the applicant and the first respondent in December 2002, and confirms that these monies have not been repaid in full. She disputes that the applicant ever worked 7 days per week on the farm, or that the applicant used $18,000, as he asserts, from money that he inherited, to pay for her wedding. She denies that she ever lived in the same house as the applicant, or that the applicant ever assisted in bringing her up.
Procedural background
It is necessary to summarise briefly some aspects of the procedural history of this matter. This matter first came before me on 21 March 2016. The applicant was represented by counsel. An injunction was granted by me preventing the second and third respondents from selling, mortgaging, charging or disposing of Property A without consent of the husband. At that stage, none of the respondents had filed any answering documents. On 26 April 2016, the matter came before me for the second time. The respondents had by that time filed the necessary documents. The second and third respondents were impecunious and the applicant consented to them using Property A as security to borrow $10,000 for legal fees.
The matter was listed on 27 July 2016 for the respondents’ applications to summarily dismiss the husband’s application. I ordered the parties to file and serve further affidavits by no later than 20 May 2016. The parties were ordered to file and serve written submissions by 18 July 2016. In the interim, the wife filed an Amended Response, Amended Financial Statement and a further affidavit. An outline of submissions was filed by the wife. A further affidavit of the second respondent was filed, as was his outline of submissions. The husband did not file a further affidavit by the day of the hearing on 27 July 2016. He filed written submissions on 15 July 2016. From the content of that document, he clearly sought to introduce new evidence and documentary exhibits. His outline of submissions was clearly not intended simply to be an outline. It was intended as a way of introducing further evidence. It had not been sworn or affirmed. By this stage, the husband was unrepresented and indicated that he would represent himself. He did not at first seek an adjournment on 27 July 2016.
Counsel for the first respondent wife objected to the husband’s outline of submissions document being relied on by the Court on the basis that it had clearly been put on file by the husband for a testamentary purpose. She was supported in that submission by counsel for the second and third respondents. The husband acknowledged this and said that he had been prevented from filing an affidavit because of costs. After some deliberation, the husband sought an adjournment. I refused that application. I concluded that the most expedient solution was to have the husband sworn on that day for the purpose of giving evidence as to any new matters in his outline that he wished to put before the Court in evidence. As will be seen, because of the manner in which it was given, the husband’s evidence on 27 July, served the dual purpose of being both evidence and partial submissions to support his application that the property transaction should be set aside.
The husband’s evidence on 27 July 2016
The husband said that the existence of Company B was pivotal to his submissions. He tendered four documents which I marked as exhibits. Those documents were as follows:
a)(omitted)-1, which was an application for registration as an Australian Company by Company B signed by the applicant husband and the first respondent wife. The document identifies the husband as the Director and the wife as the Secretary.
b)(omitted)-2, Change to Company Details Form 484 for Company B signed on an unspecified date in April 2005 bearing the stamp of the Australian Securities and Investment Commission dated 9 September 2005, and indicating that the wife was ceasing to be a company office holder.
c)(omitted)-3, Department of Planning, Transport and Infrastructure Land Services Group search for Property A. The purpose of tendering this document was to establish that the second and third respondents became registered proprietors of that property on 19 May 2010 for a sale price of $395,000. It also identifies the current capital valuation as at 1 January 2013 was $760,000.
d)(omitted)-4, a two page print out of (bank omitted) internet banking records covering the periods 27 April 2006 to 8 November 2007 (page 1) and 27 April 2006 to 28 August 2008 (page 2). Both pages have the heading ‘Funds Transfer List’.
The husband said that Company B was started in the year 2000. It had a contract to (omitted). For that purpose the parties purchased a truck and started the company together. He said that the company lasted until there was a bankruptcy problem. He said that Company B purchased a 1/6th share in Company C which failed as a business. For that reason, to save the farm, he says that he agreed with the wife to resign from Company A and she agreed to resign from Company B. The husband says that this was pivotal because that is the reason why he resigned from Company A and handed over the shares to the wife. The parties were, he said, separating out their affairs in order to save the farm which by this stage was comprised only of Property A. He said that there was an agreement that because he had no shares in Company A, he would ride the storm of bankruptcy as a result of the problem with Company B. He then became bankrupt in 2005. He said that between 2005 and 2007, the parties struggled in their marriage and it was for this reason that he went looking for work elsewhere and ultimately found a job in (location omitted), Victoria. He said that he did not regard himself as separated at that time. Both he and the wife went in different directions looking for work and trying to keep afloat. Throughout this period, he says that he always understood that the ‘farm’ was their combined superannuation. He said that the farm had been saved three times for the purposes of their combined superannuation, once from (omitted mortagee), once from (omitted), and a third time from the financial problems that beset Company B following the purchase of the 1/6th share in Company C.
The husband says that he looked forward to sharing “that super” with Ms Paret “down the line”. He said that there was not a lot of money in the kitty but their superannuation was the farm, and the farm was self-sufficient in terms of income versus repayments. He said that he did not expect the farm sale in 2010. He states that he only found out about it in 2014.
The husband states that he and the wife were in contact for the first year that he was in (location omitted) between 2007 and 2008. He says that this is where the (bank omitted) account of which (omitted)-4 provides some limited evidence, becomes relevant. The account was set up for his failed (business omitted). He said that he stayed for the short term in (location omitted) but he made payments in 2007 and 2008 back to the wife. They were personal payments made from that account, which he described as the (bank omitted) business account for the (business omitted). He said that those payments were discussed with the wife by telephone. He stated that he only has two pages of the bank statements. He says that he has identified the payments to Ms Paret (the wife) as indicated on the exhibit. He then referred to the exhibit to demonstrate this.
The applicant said that the entries in (omitted)-4 for transfers to the payee (omitted) Trust AC were relevant. His evidence was that he thought, or understood, that they were farm payments for the mortgage on the farm. He conceded that he was not sure what (omitted) was and suggested that the wife might know, but that he “thinks” they were farm payments, but he is not certain. The husband then indicated that he had never known anyone who worked for (omitted) and he was happy to ignore those transactions.
He said that any payments to the payee (omitted company) were certainly farm payments for the mortgage and he identified (omitted company) as a lender that Company A had been introduced to by a finance broker.
On the first page of (omitted)-4 there are a number of payments to (omitted). The husband clarified these by saying that those payments were for a car he was purchasing from a friend and accordingly irrelevant.
With respect to the payments made to the payee (omitted), the husband stated that these were payments for rental at the (location omitted) property.
On the second page of (omitted)-4, Mr Paret said that all of the payments to (omitted company) were payments that he made towards the farm. With respect to the payment of $800 made to (omitted) on 6 August 2006, the husband noted that he was still together with the wife at that time and that they were living at the (location omitted) property up until mid-2007, and accordingly this was a payment he had made with respect to rent. I note that that transaction does not assist him in his argument that he continued to make payments to both the wife and with respect to the farm after separation.
The second page of (omitted)-4 includes numerous payments made to the (omitted) Trust Account. The husband invited me to ignore those payments. There were also a number of payments made to a Ms V and I was invited to ignore those amounts as well. This of course, is the name of his then new partner.
The husband told the Court that Company B was the owner of (business omitted), his failed real estate business.
At this point in his evidence, the husband made the rhetorical submission, “why did she not ring if she was considering selling the farm or if she was in major trouble?”
Given the level of debt at the time that the husband effectively ceased contact with the wife, one might have thought that the husband would have been aware that the wife was in considerable financial trouble at that time. It was exactly because of their financial difficulties that the husband says he relocated to Victoria.
The nub of the husband’s submission was that the wife had sold the farm for half price whilst paying $295 per week in rent. He told the Court that after he went to Victoria, he was always concerned about the farm and that he had had conversations with the wife about it. He did not identify how many conversations, what was discussed, or whether he was involved in any decisions with respect to the farm as a result of those conversations. He said that he was always concerned about the lease for the farm and that it had always been necessary for it to cover the mortgage repayments for the farm. In this regard, he said that he had had a conversation with the wife in 2014 about how the farm was and although he could not recall the details of that, he repeated in submissions that he had always been concerned about lease payments covering repayments on the farm.
The husband made submissions that there are a number of problems with the case advanced by the wife in her affidavit. Firstly, she had not properly disclosed the fact that she had cashed in an (omitted) policy since the date of separation. Secondly, the wife denies being a ‘partner’ in Company B. Thirdly, their respective resignations from Company A and Company B were simply designed to save the farm, and Company A was self-sufficient and the income from that property did cover the mortgage. He said that this was apparent on the affidavit of the second respondent. He disputed that adequate discovery had been made by the wife but did not respond to the submission from Ms Kari, for the wife, saying that he had been provided with a list of documents but had not made a request to inspect any documents.
The husband made the submission that (business omitted) was owned by Company B and gave evidence that he had started it with $20,000 from an inheritance. He submitted that the bank accounts demonstrated that they were in contact and they did have “some payments coming back”. He submitted that, “the phone was always available”, but in answer to a proposition I put to him, he conceded that it was not used by either party for a number of years, but emphasised there was “no major aggro” (between the parties). He told the Court that he had not been present at the family conference in 2005 with respect to the ultimate disposition of the farm. This was unfair because he had an interest in Company A and it was part of his superannuation. That fact, together with the ultimate sale of the farm was, he submitted, a clear indication that there had been deceit on the part of the respondents that had been maintained until the ultimate sale of the property in 2010.
He submitted that the sale of the farm should be set aside and the property divided between him and the wife on a 50:50 basis because he still had to help to pay the substantial bills that are outstanding, including to Mr Macold, Ms Macold, Ms Y and Mr D, and “maybe then we can continue on”.
After the completion of the husband’s evidence and partial submissions, the matter was adjourned to enable the respondents to obtain instructions on new matters raised in his evidence. I ordered costs against the husband. All of the matters raised in his evidence could and should have been reduced to an affidavit well prior to the hearing date.
The parties were given leave to file further affidavits prior to the adjourned date. The husband did not file any further affidavit prior to 6 September 2016.
Cross-examination of the husband on 6 September 2016
The matter resumed on 6 September 2016 for cross-examination of the husband and further submissions.
The husband was cross-examined by Ms Kari for the wife. He was shown a copy of the second respondent’s affidavit of 1 September 2016. He was shown Exhibit (omitted)-1 and confirmed that it was his signature on the document. This document was a copy of a lease of Property A between Company A and the second respondent, leasing 10 hectares of arable land, together with non-arable land, improvements, equipment and a house. The lease notes that it excludes a portion of a section amounting to approximately 400 acres which was leased by Company A to (omitted). The period of the lease was 1 April 2004 to 28 March 2008 for a rent of $1,000 per year. The lease is dated 25 May 2004.
He was then shown Exhibit (omitted)-4. Under cross-examination he stated that he was not sure if this account was in his sole name. He was not sure if the wife had ever been a signatory to it. He confirmed that it was his view that that document showed his financial support for her. He confirmed that the payments to Ms Paret on page 1 of (omitted)-4 were payments to the wife.
With respect to the payments made to the payee (omitted company) in (omitted)-4, the husband repeated that he understood those to be payments on the second mortgage on the farm and pointed out again that he made payments in 2006 and 2007.
Ms Kari then questioned the applicant about the payments in (omitted)-4 that had been made to (omitted Solicitors), (omitted) Trust Account, and (omitted) Trust Account. The applicant conceded that all of those payments were made to various solicitors to cover legal fees incurred by his daughter, Ms N, who had sought legal advice with respect to marital issues.
The applicant conceded that during the period between separation and the time he started to consider proceedings in this matter, he had not obtained any legal advice about his own marriage. He stated that he did not think he was getting divorced.
The second and third respondents elected not to cross-examine the applicant.
Submissions
In the alternative to her application that the proceedings be dismissed in their entirety, Ms Kari submitted that the s.106B claim could be bifurcated and that the applicant should be required to pay security for costs. She sought an order discharging the injunction with respect to the applicant’s (omitted) policy.
Ms Kari emphasised the very significant delay on the part of the applicant husband. There was no dispute, she submitted, that the parties separated in July 2007 and accordingly there had been a nine year hiatus before the husband brought proceedings. As the husband had acknowledged in paragraph 50 of his own affidavit, he found out about the sale of the farm in 2014, and yet he did nothing about it until he lodged a caveat 18 months later. Ms Kari submitted that at the time the parties separated, the husband was a bankrupt and from 2005 he had no standing to bring a claim for property settlement. The earliest opportunity he could have brought a claim was in 2008 after his bankruptcy had been discharged.
Ms Kari reminded the Court that the appropriate test for summary dismissal is whether there is a reasonable prospect of success. Ms Kari submitted that the Court was not able to go beyond the matters contained in the affidavits. Ms Kari submitted that the purpose of the affidavit materials of the parties was to give colour, context and detail. In that regard, the wife’s evidence provided far more detail and context than the affidavit and evidence of the husband.
Ms Kari reminded the Court that the husband had said in his affidavit that it would not have been any benefit to him or the first respondent to have a property settlement at about the time of separation. This was, she submitted, an acknowledgement that they were in huge debt and it spoke of the husband being acutely aware of the potential for a claim, and that if he did make a claim there would be nothing to divide. At that point in time, the husband would not have met the Stanford[13] test.
[13] Stanford & Stanford (2012) 247 CLR 108.
Ms Kari submitted that it was not in dispute that the first respondent had come into the relationship with a large farming property and the husband brought no significant assets. It was also not in dispute that during the course of the marriage, they nearly lost the farm and when they separated there was significant debt. The first respondent was left with the responsibility for paying those debts without any assistance from the husband, except for a brief period.
Ms Kari asked rhetorically that bearing all of those things in mind, how and why should there ever be an order for property settlement in favour of the husband? With respect to the husband’s allegation of a conspiracy to divest the first respondent of property so that there was nothing left to claim against, Ms Kari pointed out that the lease arrangement for the portion of Property A was signed by both the husband and the wife in May 2004, at a time prior to separation and before his bankruptcy. It was always anticipated that the first respondent would one day take over what was left of Company A. This would have been clear to the husband. Why else was the lease to the second respondent for an uncommercial rate of rent? For that reason, there was nothing of substance in the husband’s conspiracy theory. Ms Kari submitted that it would be open to the Court to infer that there was no intention to defeat a claim for property settlement. Further, at the time that the transfer of the farm took place, there were no anticipated proceedings. At the time that the lease agreement was entered into, the parties were married and the husband was still a Co-Director of Company A.
In the immediate post separation period, the husband knew about lawyers and he paid $28,000 worth of matrimonial advice for his daughter. He did nothing to advise himself. The idea of legal advice was clearly not foreign to the applicant. Further, he had access to $28,000 in the post separation period and made no effort to enquire of the wife whether any of those funds could be usefully applied towards the debt on the farm. The implications of that are clear, Ms Kari submitted, the wife solely bore the burden of the debts and continues to do so and yet the husband was spending significant sums on legal advice for his daughter.
Ms Kari submitted that the husband’s claims to have saved the farm are ridiculous. It was not saved. It was subdivided and sold. Property B had to be sold and the final part, Property A, was sold to the son to release the wife from her debts.
With respect to the husband’s submission and evidence that he considered the farm as superannuation for him and his wife, Ms Kari submitted the property was never in a superannuation fund and it was never put into any form of superannuation scheme.
With respect to the husband’s evidence about the ‘coffee meeting’ with the wife, Ms Kari submitted that it did not appear in his affidavit and one would have thought that if it was his position that he had had that conversation with the first respondent, he would be putting it front and centre in his original affidavit, because that was a significant part of his case. Ms Kari submitted that the husband was making his case up as he went along in order to advance his cause, and that it would not ultimately be open for a Court to accept his evidence about that meeting.
Ms Kari submitted that when the parties separated, the husband wiped his hands of the debts and went on with his life and must have had the expectation that the wife would do the same.
With respect to the s.79 claim, it was submitted that the Court must look at the prospects for success and the merit of the application on its face. It was submitted that that claim fails at the first hurdle of whether there should be an order for property settlement. Once the process of considering the assets and both the financial and non-financial contributions of the parties, and then taking into account the relevant s.75(2) factors, and the fact that the wife is in a parlous financial state, as opposed to the husband who has re-partnered and is at least comfortable, those factors point to it not being just and equitable for an order to be made. The wife still has debts from the marriage and these proceedings and has had to keep working to get herself out of her debt and still has no significant assets. She has kidney disease and depends upon the charity of her family.
Ms Kari referred me to the decision in Bevan’s[14] case and conceded that it has been said of that case that it turned on unusual and specific circumstances. In Ms Kari’s submission, if ever there was a case that was comparable to the Bevan’s case, then this is it. One of the significant factors in that matter was the question of delay. The delay in this matter has of course been significant.
[14] Bevan & Bevan (2014) 51 FamLR 363.
Ms Kari submitted that if the transaction for the farm was set aside, the Court could not simply discount the debts that the wife paid and the disposition of money she received for the sale. The husband’s success in this matter entirely depends upon that property transaction being set aside. Even if the wife failed in her application to dismiss the s.106B claim, that still does not mean that there will be a sufficient pool of property available for any meaningful division.
It was submitted that if the sale of the farm was satisfied, the first respondent still needs funds to finance the litigation that will ensue and for that reason, the injunction with respect to the (omitted) policy should be lifted. An order for security for costs would be appropriate in this matter, because the husband has provided no reasonable explanation for the very significant delay.
For the second and third respondents, Ms Ross joined with the submissions of Ms Kari with respect to the question of delay. The effect of counsel’s submissions was with respect to exhibit (omitted)-4, that the husband identified numerous payments which he said he believed were related to the farm, but that on closer scrutiny, were legal funds for his daughter. This pointed to his evidence being inherently unreliable and the evidentiary value of (omitted)-4 being nugatory.
Ms Ross submitted that the husband’s material and evidence involved an implied admission that he had left his wife with substantial debts to pay at the time of separation. It was submitted that he appeared to be conceding that there is only a small amount of property likely to be dividable between them, because he was submitting that one of the reasons to set aside the sale of the farm was in order to pay residual debts. This has to be balanced against the severe consequences for the second and third respondents in reversing that transaction. Counsel pointed to the fact that there is a clear discretion as to whether or not to set aside a transfer of property under s.106B. She submitted that at the very least, the husband knew that the second respondent desired ultimately to take over his father’s farm and that this should have motivated him to put all of the respondents on notice that he expected to have a share of that property, or to get some legal advice and take some action with respect to it. The fact that he did not do so, was confirmation that he had simply walked away and left the debts behind him.
Ms Ross submitted that I needed to take into account that the second and third respondents had taken out a mortgage with respect to the farm and had paid interest for a period of over six years. The property was run down when the second and third respondents took it up, a matter not disputed by the applicant, and the second and third respondents have worked on the property as if it was their own for 12 years. There is a significant component of unpaid labour that they have put into it and this is a matter relevant to the exercise of the discretion.
Ms Ross joined in the application for security for costs.
She pointed to the fact that the husband has not provided any adequate disclosure of his assets, but that he did not dispute that he would be in a position to pay the order for costs made on the last occasion. It would be difficult to recover costs from the applicant in the event that the proceedings were ultimately determined against him.
In addition to the matters submitted by the husband on the 27 July 2016, he made further submissions about the applications advanced by the respondents.
He submitted that the third affidavit of the second respondent was simply an attempt to justify the 2005 meeting that was held in his absence. He submitted that those parts of the affidavit which dealt with the financial situation for the farm demonstrates that it is viable. He submitted that the exhibit annexed to that affidavit as Annexure 2 should not be accepted.
The husband submitted that the second mortgage for $35,000 referred to in paragraph 24 of these reasons was “Ms Paret’s mortgage”. The figures put forward by the second respondent were unreliable and in his submission, the farm was self-sufficient.
The husband said that a distinction should be drawn between his circumstances and that in the case of Bevan. The timeframe in Bevan was 18 years, but for him it was a mere 18 months between finding out that the farm had been sold and lodging his caveat. He submitted that they had saved the farm three times. His situation could be further distinguished from the Bevan’s case because he thought the farm was self-sufficient and going along fine and that the parties had simply gone off and done their own things. Mr Bevan did not have an active second company. He submitted that Mr Bevan had also made promises to his wife that she could have all of the property but that he had never made such promises. He submitted that he believed that all of the debts were covered at the time that he left. It was a significant matter, he submitted, that he and the first respondent had not divorced. She could have divorced him but she did not.
The husband submitted that one of the reasons his application had merit, was that he and the wife still had unfinished business between them and the debts that were outstanding from the farm have yet to be dealt with. I regard that submission as disingenuous.
The husband opposed any order for security for costs. He submitted that if the wife had sold the farm at a proper market rate, all of the debts would have been expunged with some money left over for both of them. He submitted that he had left with “zero” thinking that the farm was under the wife’s control.
As far as the house being in a dilapidated state at the time the second and third respondents commenced the lease, the husband submitted that he and the wife had previously made the house liveable.
The husband submitted that he would like to make a case for a 50:50 division of the property after the parties had paid the bills. This would be a worthwhile process even if they jointly paid the bills and only got one dollar each out of a property division. I repeat, I regard the submission of the applicant that these proceedings are in part motivated by a desire to settle debts that, on his own case, he walked away from almost a decade ago, to be disingenuous. He submitted that it was not relevant that the second and third respondents might be prejudiced in having the transactions for the sale of the property set aside. It was implicit in that submission, that he also asked the Court to disregard the fact that they had paid interest payments on their mortgage for the farm for six years, and the value of any unpaid labour and improvements they had put into the property.
Consideration
It has been said that the power to summarily dismiss proceedings must be exercised sparingly.[15] The onus to establish that the applicant’s claim should be so dismissed, rests with the respondents. The present test on an application for summary dismissal is whether the Court is satisfied that the applicant has no reasonable prospect of successfully prosecuting the claim or proceedings. This is clearly a different and lower standard for the striking out of a claim to that which applied before the introduction of r.13.10 of the Federal Circuit Court Rules 2001 (Cth) (‘the Rules’).[16]
[15] Lindon v Commonwealth (No 2) (1996) 70 ALJR 541.
[16] See for example Pelerman, A S & Pelerman, R (2000) FLC 93-037, where the former test was enunciated.
As Lindsay FM (as he then was) stated in Wadsworth & Wadsworth [2008] FMCAfam 140 at [16] paraphrasing the wording of s.17A of the Federal Circuit Court of Australia Act 1999 (Cth):
“So the application will only be summarily dismissed if the Court is satisfied that the applicant has no reasonable prospect of successfully prosecuting the claim but, in considering such an application, I do not have to be satisfied that the claim is hopeless or bound to fail for it to have no reasonable prospect of success.”
It is necessary to exercise caution in assessing the question of whether there are reasonable prospects of success, to avoid causing an injustice to the applicant husband. It has been observed that there will be reasonable prospects of success if there is evidence reasonably capable of belief to enable the husband to succeed at a final hearing.[17] The test has also been expressed in terms of the Court deciding whether the party prosecuting the claim has evidence of sufficient quality and weight to enable them to succeed at trial.[18]
[17] Jacobs & Vale [2008] FMCAfam 641 at 14.
[18] Jefferson Ford Pty Ltd v Ford Motor Company of Australia Limited [2008] FCAFC 60 at [23].
With respect, the most useful guidance on the practical aspects of determining whether to grant an application seeking summary dismissal pursuant to s.17A of the FCCA Act and r.13.10 of the Rules is to be found in the judgment of Gordon J in Jefferson Ford Pty Ltd v Ford Motor Company of Australia:[19]
[19] Ibid at [125]-[132]. It should be noted that this case dealt with s.31A of the Federal Court Act which is in identical terms to s.17A of the FCC Act.
“[125]… In modern litigation, cost and delay are two prominent features of the legal landscape: Gleeson CJ (1998) Commentary on Paper by Lord Browne-Wilkinson (Supreme Court of New South Wales Judges’ Conference) http:// speeches/cj/ cj_cj2.htm (viewed 26 November 2007) (stating that “civil litigation is far too expensive” and “there should be an increased emphasis on summary disposal of proceedings which are amenable to such treatment”). Section 31A is a provision which permits, and assists, the court to manage proceedings and therefore assists in controlling the cost of, and delays in, resolving proceedings by summarily dismissing claims which have no reasonable prospect of success. At the same time, it is a provision that ensures that no injustice is done to a party. The mechanism adopted to achieve these objectives is that before judgment is entered, the claim or part of the claim must have “no reasonable prospect of success”.
[126]Second, assessment of whether a proceeding or a part of a proceeding has no reasonable prospects of success will necessarily require:
(1)identification of the cause of action pleaded;
(2)identification of the pleaded facts said to give rise to that cause of action;
(3)a review of the evidence (if any) tendered in support of the claim for judgment;
(4)identification of the defence pleaded;
(5)identification of any facts pleaded which are said to give rise to the defence; and
(6)a review of the evidence (if any) tendered in defence of the claim.
The method by which such a claim or part of a claim will be assessed will vary depending on the nature of the cause of action, the identity of the parties, the pleaded facts and the evidence, if any, tendered.
[127]Third, each case must be considered separately. No particular hard and fast rules can be set down, only general principles. One principle is that the moving party bears the onus of persuading the court that the opponent has no reasonable prospect of success: see Crayford Freight Services Ltd v Coral Seatel Navigation Co (1998) 82 FCR 328 at 333; 162 ALR 119 at 123–4. As noted earlier, however, s 31A has lessened the standard that must be met. In that regard, it must be emphasised that once a moving party has established a prima facie case that the opponent has no reasonable prospect of success, the opposing party must respond by pointing to specific factual or evidentiary disputes that make a trial necessary; general or non-particularised denials will be insufficient to defeat the motion: see Fortron Automotive Treatments Pty Ltd v Jones; [2006] FCA 1401 at [22]. In other words, it is inappropriate in defence of a claim for judgment under s 31A of the Federal Court Act to seek to defend by merely putting a claimant to formal proof: Vans, Inc v Offprice.Com.Au Pty Ltd [2006] FCA 137 at [12]. This is not a new concept. It finds earlier reflection in ss 190(4) and 191 of the Evidence Act 1995 (Cth) and Os 33, 34 and 34B of the Federal Court Rules.
[128]Another, fourth principle, is that the trial court’s decision to grant summary judgment is to be made as a question of law and reviewed as such by the appellate court. Although s 31A(1)–(2) states that the court “may” give summary judgment, the word “may” is used here in its empowering sense, not in a discretionary sense: Leach v R (2007) 230 CLR 1 ; 232 ALR 325 ; [2007] HCA 3 at [38] ; Finance Facilities Pty Ltd v FCT (1971) 127 CLR 106 at 134–5 and Automotive, Food, Metals Engineering, Printing and Kindred Industries Union v Mechanical Engineering Services Pty Ltd [2007] FCA 1736 at [21] (collecting cases where the use of “may” in a statute was “to confer a power and not a discretion”). As the High Court explained in Mitchell v R (1996) 184 CLR 333 at 345–6; 134 ALR 449 at 457; [1995] HCA 59 (footnotes omitted):
It is true that [the statute] states that the court “may” order that the prisoner in question is not to be eligible for parole. The power thus reposed in the court is conditioned upon a determination by the court that it considers that the making of the order “is appropriate”.
But it does not follow that, if the court has concluded that such an order is appropriate, the court then has a discretion in the matter. The point may be illustrated by reference to the following passage from the judgment of Windeyer J in Finance Facilities Pty Ltd v Federal Commissioner of Taxation (1971) 127 CLR 106 at 134–35 . His Honour said of the question of whether a permitted power must be exercised if the stipulated conditions be fulfilled:
This does not depend on the abstract meaning of the word “may” but [on] whether the particular context of words and circumstance make it not only an empowering word but indicate circumstances in which the power is to be exercised — so that in those events the “may” becomes a ‘must’. Illustrative cases go back to 16[93] … But I select one … reference out of a multitude: MacDougall v Paterson (1851) 11 CB 755 [138 ER 672]. There Jervis CJ said in the course of the argument. “The word ‘may’ is merely used to confer the authority: and the authority must be exercised, if the circumstances are such as to call for its exercise”. And, giving judgment, he said: We are of opinion that the word “may” is not used to give a discretion, but to confer a power upon the court and judges; and that the exercise of such power depends, not upon the discretion of the court or judge, but upon the proof of the particular case out of which such power arises.
In MacDougall v Paterson, the Court of Common Pleas held that the word “may” as used in The County Courts Act 1850 (UK), which provided that in certain cases the court or a judge might by rule or order direct that the plaintiff recover costs, was used not to give a discretion but to confer a power, the exercise of which depended upon the proof of the particular case out of which the power arose.
See also Leach v R at [38] and following.
[129]As in the cases cited, s 31A must be read as conferring a power while indicating the circumstances in which it is to be used, that is, when there is “no reasonable prospect of success”. To construe the statute otherwise would give judges discretion to allow even hopeless cases to proceed, which could not have been within the contemplation of a legislature that intended to make summary judgment easier to obtain. Therefore, to the extent that previous decisions of the Federal Court may be understood as suggesting that s 31A confers a general discretion (for example, Boston Commercial Services at [45] ), such a construction of the statutory language is rejected.
[130]A fifth principle is that where there is a real issue of fact relevant to a pleaded cause of action, it is unlikely that that part of the proceeding has no prospect of success: see Boston Commercial Services at [44] . So, for example, if the pleadings, affidavits, and other materials considered in connection with the summary judgment motion, reveal a factual dispute and that factual dispute must be resolved to determine whether or not the claim succeeds, it cannot be said that the claim has “no reasonable prospect of success”: see Fortron Automotive Treatments at [20] (stating that summary judgment should be made by reference to the pleadings, affidavits, and other evidence as appropriate under the circumstances) and (bank omitted) of Australia v ACN 000 247 601 Pty Ltd (in liq) [2006] FCA 1416 at [32] . On the other hand, if the factual contest is unnecessary to the resolution of the cause of action pleaded, then in the absence of other relevant material, there is nothing to prevent the court entering judgment on that claim.
[131]By contrast, the existence of a real issue of law does not necessarily preclude summary judgment. This is so because, assuming that there is no relevant factual dispute (or if the relevance of the factual dispute depends, as in the instant case, on the resolution of the legal dispute), the court can generally hear and decide a disputed point of law without the need for a trial or evidentiary hearing. In such cases, the proper course for the court would be to accept submissions and hear argument from the parties in connection with the notice of motion hearing. Even under the earlier, different and more stringent test, “argument, perhaps even of an extensive kind” was permitted “to demonstrate that the case of [a party] is so clearly untenable that it cannot possible succeed”: General Steel Industries at CLR 130; ALR 638–9. Once the court resolves the issue or issues of law, it will then be clear whether the opposing party has reasonable prospects of success and summary judgment can be granted or refused accordingly.
[132]I now come to a final, sixth principle, which is that in determining whether a real issue of fact exists such as to preclude summary judgment, the court must draw all reasonable inferences — but only reasonable inferences — in favour of the non-moving party: (bank omitted) of Australia at [30] ; Boston Commercial Services at [45] . I emphasise “reasonable” because it is on this point that the lowering of the bar effected by s 31A becomes clear. By distinguishing between “hopeless” cases and those without reasonable prospects for success, the statute makes clear that the court need not (indeed, must not) refuse summary judgment on the basis of a factual dispute said to arise only from a plausible, as opposed to a reasonable, inference.”
(emphasis added)
I respectfully agree with Gordon J that an assessment of reasonable prospects of success requires a consideration not merely of the evidence tendered in support of the claim for judgment, but also the evidence tendered by the respondents in defence of the claim. I have undertaken that process.
With those principles in mind, I consider first whether there are reasonable prospects of success in the husband’s application to set aside the sale of Property A pursuant to s.106B of the Act. In order for the husband to succeed, it would be necessary for him to establish that the transfer of Property A by the wife to the second and third respondents was made to defeat an existing or anticipated order in these proceedings, or irrespective of the intention of the wife, that the transaction nonetheless has had the effect of defeating any orders which might be made in property proceedings. A consideration of whether the husband has reasonable prospects of success in relation to the s.106B application, is an aspect of the consideration as to whether or not he has any reasonable prospects of success in relation to his application that there be an alteration of property interests pursuant to s.79 of the Act.
In considering the merits of the husband’s application the following matters are relevant:
a)Whether there is evidence reasonably capable of belief (and from which reasonable inferences favourable to the applicant can be drawn) that the transfer of Property A to the second and third respondents was not bone fide (was it made to defeat an existing or anticipated order in property proceedings?);
b)If there is not evidence reasonably capable of belief (and from which reasonable inferences favourable to the applicant can be drawn) that the transfer was not bone fide, the interests of the second and third respondents;
c)If there is not evidence reasonably capable of belief (and from which reasonable inferences favourable to the applicant can be drawn) that the transfer was not bone fide, the need to protect the interests of the second and third respondents;
d)If there is not evidence reasonably capable of belief (and from which reasonable inferences favourable to the applicant can be drawn) that the transfer was not bone fide, the capacity of the applicant and or the first respondent to indemnify the second and third respondents for any loss sustained in setting aside the transaction, if I am satisfied that it is necessary to do so;
e)If there is not evidence reasonably capable of belief (and from which reasonable inferences favourable to the applicant can be drawn) that the transaction was not bone fide, would the transaction if undisturbed, nonetheless be likely to defeat any property orders I might reasonably be likely to make;
f)If there is not evidence reasonably capable of belief (and from which reasonable inferences favourable to the applicant can be drawn) that the transaction was not bone fide, whether protection of the interests of the second and third respondents requires the s.106B application to be dismissed;
g)The significance of any delay on the part of the applicant in bringing property proceedings; and
h)Whether there is evidence reasonably capable of belief (and from which reasonable inferences favourable to the applicant can be drawn) that supports a conclusion that it would be just and equitable to make an order pursuant to s.79.
I am not satisfied that there is evidence reasonably capable of belief (and from which reasonable inferences favourable to the applicant can be drawn) that the transfer of Property A to the second and third respondents was not made bone fide. At the time of the transaction, it is undisputed that the parties had been separated for about 3 years. The wife was the sole director of Company A and the husband was living in Queensland with a new de facto partner. There is no evidence reasonably capable of belief (and from which reasonable inferences favourable to the applicant can be drawn) that the applicant husband did anything other than walk away from the farm, the marriage and the debts. There is no evidence reasonably capable of belief (and from which reasonable inferences favourable to the applicant can be drawn) that the husband genuinely believed that Property A would somehow be preserved to be shared equally as a form of superannuation by him and the wife. There is no evidence reasonably capable of belief (and from which reasonable inferences favourable to the applicant can be drawn) that the husband believed during the period of separation that the farm was financially self-sufficient and that the wife was managing tolerably well in the absence of any significant financial contribution from him. There is no evidence reasonably capable of belief (and from which reasonable inferences favourable to the applicant can be drawn) that the husband made, as he asserted in his affidavit and oral evidence, significant financial contributions to the marriage after separation. In that regard, I note that “(omitted)-4” tendered by the husband establishes that after separation, he paid a total of $800 directly to the wife. He also paid the amount of $1,700 to (omitted company), who held one of the mortgages over Property A, with the last payment being on 14 August 2008. Conversely, post separation, the husband paid an amount of about $28,000 to solicitors on behalf of his daughter, between September 2007 and August 2008. He also paid an amount of $9,600 to Ms V, who I understand to be his de facto partner, between June 2008 and August 2008 for reasons not disclosed on the materials.
The husband stated in his evidence, with respect to the wife’s financial position during the long period of separation, that “the phone was always available”. There is no evidence reasonably capable of belief that the husband would have been prepared to, or been capable of, making any significant financial contribution towards the residual debts after he made his final payment to (omitted company) and prior to the transfer of Property A, or at any later time, had the wife sought his assistance.
A reasonable inference would be open, on the basis of the husband’s admitted conduct and the acknowledgement in his affidavit that he did not seek a property division at an earlier stage because (inter alia) it would not have been in his interests to do so, that he had washed his hands of the assets and liabilities of the marriage, and had gone on with his life at least until he was satisfied that the financial situation had been substantially improved by the wife alone.
In my view, the husband has provided no adequate explanation for the very lengthy delay in instituting proceedings in this matter. He has provided no explanation for his delay after conducting the property search in 2014. If his oral evidence as to the “coffee shop meeting” is accepted, the lack of explanation for delay is even more egregious because the delay is significantly longer. In the period since separation, the evidence suggests that the wife had moved on with her life and made pragmatic decisions in an attempt to deal with her difficult financial circumstances, including the transfer of Property A in order to clear the majority of the debts of the marriage. On the husband’s own case, that debt was also his. He has accordingly derived a benefit from the wife’s decision. It is remarkable that the husband should now criticise the wife in his submissions for having sold Property A at less than what he regards as a proper market value. I am satisfied that there is evidence reasonably capable of belief that the first, second and third respondents conducted themselves bone fide with respect to the sale of Property A and that the wife in effect had no other realistic option open to her but to sell the property on the basis she did.
Having considered the husband’s affidavit material, oral evidence and submissions, I am not satisfied that there is evidence of sufficient quality and weight to enable him to succeed at trial.
As the Full Court of the Family Court observed in Bevan’s case[20]:
“The basis upon which it can be concluded in many cases that it is just and equitable to make orders interfering with existing interests in property following the breakdown of marriage is because it is no longer appropriate to proceed on the basis of the stated and unstated assumptions between the parties to the marriage in circumstances where they have not expressly considered whether, or to what extent, there should be some different arrangement of their property interests (Stanford at [41] ). In the present matter, however, over a long period of time after the end of their marriage, the parties did give express consideration to what should become of their property. In such circumstances we consider the husband must do more than point to the end of the relationship in order to persuade us that there is some principled basis upon which we should interfere with an existing state of affairs created by the consent, or at the very least, acquiescence of the parties.
The present state of affairs between the parties did not arise as a result of any duress or even agitation by the wife, but rather by the voluntary act of the husband. We do not consider it useful to engage in any detailed speculation about why the husband considered it appropriate to allow the wife to retain all of the assets that had been built up over many years. It is the case, however, that the husband elected to leave Australia, initially travelling the world by boat, at a time of severe financial crisis in the family. Given the matters referred to in paras 58 and 59 of the wife’s trial affidavit, there is at least some basis for the submission made by senior counsel for the wife at trial (Transcript, 4 December 2012, p 9 and following) to the effect that it was the husband’s unilateral action which brought on, or at least exacerbated, the financial crisis. In the ensuing years, the wife was largely left to deal alone with what her evidence suggests was debilitating, protracted litigation involving financial dealings with the husband’s brother in law.”
(emphasis added)
[20] Op cit at [82]-[83].
I regard those observations as apposite to an assessment of the merits of the husband’s application in this matter.
I am not satisfied that there is evidence of sufficient quality and weight on the husband’s case to establish a proper basis to set aside the transfer of Property A. I am satisfied that if I were to do so, it would occasion significant financial hardship and loss to the second and third respondents. I am not satisfied that there is a reasonable prospect of the applicant establishing that the transfer of Property A is likely to have defeated any orders I might otherwise have made in property proceedings.
I am not satisfied that there is a reasonable prospect of the husband demonstrating at a final hearing that in all of the circumstances it would be just and equitable[21] for there to be an alteration of property interests pursuant to s.79 of the Act. In reaching this conclusion, I have given consideration and weight to the matters identified in s.79(4) of the Act.
[21] Section 79(2).
I dismiss the applicant’s Initiating Application filed 11 March 2016 in its entirety. All earlier orders in this matter, with the exception of the order that the husband pay the costs of the respondents for the attendance on 27 July 2016, are discharged.
I make the orders to be found at the beginning of these reasons.
I certify that the preceding one hundred and thirty-one (131) paragraphs are a true copy of the reasons for judgment of Judge Heffernan
Date: 20 December 2016
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