Pender & Pender
[2022] FedCFamC2F 1716
Federal Circuit and Family Court of Australia
(DIVISION 2)
Pender & Pender [2022] FedCFamC2F 1716
File number(s): ADC 1559 of 2022 Judgment of: JUDGE BROWN Date of judgment: 15 December 2022 Catchwords: FAMILY LAW – Property settlement – undefended hearing – marriage of 26 years – two adult children of the marriage – where the Court is satisfied the respondent is aware of the proceedings – where respondent has not filed any material before the court– where the respondent is in receipt of a pension in the United States – the need for the financial relationship between the parties to be concluded – nature of undefended hearing – assessment of future needs – assessment of contributions – just and equitable Legislation: Family Law Act 1975 (Cth) Pts VIII, VIIIB, ss 75(2), 79, 79(1), 79(4), 90XC
Federal Circuit and Family Court of Australia (Division 2) (Family Law) Rules2021 (Cth) Pt 10.6, rr 10.26, 10.27(3)
Cases cited: Bevan & Bevan [2013] FamCAFC 116
Biltoft & Biltoft (1995) 19 Fam LR 82
Clauson v Clauson (1995) 18 Fam LR 693
C & C (2005) 33 Fam LR 414
Ferguson & Ferguson (1978) 4 Fam LR 312
Ferraro v Ferraro (1992) 16 Fam LR 1
Hickey & Hickey (2003) 30 Fam LR 355
Laskari & Laskari and Ors [2014] FamCA 1183
Russell & Russell (1999) 25 Fam LR 629
Stanford v Stanford (2012) 247 CLR 108
Taylor v Taylor (1979) 143 CLR 1
Trevi & Trevi [2018] FamCAFC 173
Waters & Jurek (1995) 20 Fam LR 190
Watson & Ling [2013] FamCA 57
Division: Division 2 Family Law Number of paragraphs: 149 Date of hearing: 8 December 2022 Place: Adelaide Counsel for the Applicant: Ms Miller Solicitor for the Applicant: Newman Lawyers Respondent: No appearance ORDERS
ADC 1559 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS PENDER
Applicant
AND: MR PENDER
Respondent
order made by:
JUDGE BROWN
DATE OF ORDER:
15 december 2022
THE COURT ORDERS THAT:
1.That the applicant wife shall retain the property as her own free from any right, title or claim by the respondent, the following:
(a)The Motor Vehicle 1 (registration: …);
(b)Clothing, jewellery and personal effects in the applicant’s possession;
(c)The furniture, furnishings and effects currently in the applicant’s possession;
(d)All amounts standing to her credit in any bank, building society or credit union account in the applicant’s name;
(e)Any benefits arising from the applicant’s employment including long service leave, annual leave, and other leave entitlements;
(f)All superannuation entitlements in the applicant’s name;
(g)Any inheritance as to which the applicant may become entitled;
(h)All life insurance entitlements in the applicant’s name; and
(i)Any other property (as defined in the Family Law Act 1975 (Cth) (“the Act”)) in the possession of the applicant whether registered in her name or not and not otherwise specified herein.
2.That respondent husband shall retain as his own free from any right, title or claim by the applicant, the following:
(a)Clothing, jewellery and personal effects in the respondent’s possession;
(b)The furniture, furnishings and effects currently in the respondent’s possession;
(c)All amounts standing to his credit in any bank, building society or credit union account in the respondent’s name;
(d)Any benefits arising from the respondent’s employment including long service leave, annual leave, and other leave entitlements;
(e)All pension entitlements in the respondent’s name;
(f)All superannuation entitlements, including his entitlement pursuant to the B Retirement Plan in the respondent’s name;
(g)All life insurance entitlements in the respondent’s name; and
(h)Any other property (as defined in the Act) in the possession of the respondent’s whether registered in his name or not and not otherwise specified herein.
3.Subject to these Orders, each party release the other party from any liability for any claim that either one may have against the other and the parties do discharge their several debts and liabilities without calling upon the other to contribute and the parties hereby agree that neither of them will pledge the credit of the other.
4.That within 28 days the respondent do all acts and sign all documents necessary to provide the applicant with all documentation regarding her Company C insurance policy and to facilitate the applicant liaising direct with Company C.
5.That this Order stands as authority for the applicant to obtain any and all information from Company C, D Street, City E, USA and/or Mr F with respect to any life insurance policy or policies held in her name.
6.A copy of these Reasons for Judgment be served by electronic means on the respondent at his last known email address by the solicitors for the applicant.
7.All extant applications be dismissed.
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 Pender & Pender has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).REASONS FOR JUDGMENT
JUDGE BROWN:
INTRODUCTION
These reasons for judgment relate to matrimonial property proceedings, which have been listed for final hearing on an undefended basis. The parties to the proceedings are Ms Pender (“the wife”) and Mr Pender (“the husband”). They met in the United States in 1992 and married in City G, in the Country H, in 1994.
They are the parents of two children – Ms J, who was born in the United States in 2000 and Mr K, who was born in Australia in 2002. The husband was born in City L, in the United States, in 1967. The wife was born in South Australia in 1969.
During their marriage, the parties lived in both the United States and Australia. The husband was a professional sportsman in the M Sports Team. On his retirement, from his profession, the family moved to Adelaide, in 2000.
In early-2020, the husband moved from Adelaide to City E, USA, to take up a sales role for a Company N. The wife remained in Adelaide. From her perspective, it became clear that the marriage between the parties came to an end in November of 2020 and there was no prospect of them resuming a married life together.
The parties have lived separately and apart since the husband left Australia. In these circumstances, on 15 September 2022, the wife commenced divorce proceedings, with a divorce order being granted by the court on 17 November 2022.
The wife commenced the current proceedings, seeking a divisions of the parties’ assets and liabilities in a proportion of 60/40% in her favour, on 11 April 2022. The case first came before the court on 11 May 2022. This followed the husband instructing a firm of solicitors in Adelaide to act on his behalf. A Notice of Address for Service was filed on 20 April 2022.
On 11 May 2022, the husband was directed to file and serve documents in response to the wife’s application no later than 8 June 2022. These documents required were a formal response, in which the husband could set out the final property orders, which he sought, supported by an affidavit of the evidence on which he relied and a formal statement of his financial circumstances.
The husband has not complied with that order. More recently, on 17 August 2022, the solicitors retained by him, in Adelaide, filed a Notice of Ceasing to Act. He has not filed any documents in the period since, nor taken any active role in the proceedings. For reasons on which I will elaborate in due course, I am satisfied that he is aware of the proceedings and what are the likely consequences if he does not take a proactive role in them.
The solicitors previously appointed by the husband withdrew from the case approximately a week prior to a date appointed, by the Judicial Registrar, for a conciliation conference. This is a type of mediation, overseen by the Judicial Registrar, which is directed towards to assisting the parties, in matrimonial property proceedings, reach a negotiated settlement.
The major benefits of any such negotiated settlement is a saving of legal costs and a reduction in the emotional stressors, which inevitably arise in all court proceedings, particularly those involving separated spouses.
In my view, this was a case, which was, ostensibly at least, likely to be amenable to such a settlement. The major reason being that the parties had earlier sold their major asset, which was their former family home located at O Street, Suburb P.[1] As a consequence, a significant sum of money, arising from the proceeds of sale, was held in a bank account.
[1] Hereinafter referred to as “the former matrimonial home” or “the O Street, Suburb P property”.
One factor complicated what would otherwise have been a comparatively simple matter. Due to his time as a professional sportsman, between around 1990 and 2000, the husband has an entitlement to a pension of approximately US$5,440.81 per month for the remainder of his life.
The wife concedes that this pension is not amenable to being split pursuant to the provisions of Part VIIIB of the Family Law Act 1975 (Cth).[2] However, for self-apparent reasons, the entitlement to the pension must be considered a significant financial resource, which currently benefits the husband alone.
[2] Hereinafter referred to as “the Act”.
The conciliation conference scheduled for 24 August 2022 did not take place. There can be no doubt that the husband knew of the conciliation conference as he forwarded a number of disturbing text messages, to the wife, shortly prior to the conference being scheduled to take place via a video conference facility. The wife was understandably frightened and distressed by these messages and it was inappropriate for the conference to go ahead.
From the wife’s perspective, this incident followed a long series of similar incidents, both before and after the parties’ final separation, which demonstrates to her that the husband was becoming increasingly emotionally unstable and was unable to engage with her or the court process in any meaningful way. Mr Pender refused to disclose to her his residential address and indicated to her he was of no fixed address.
In these circumstances, on 13 September 2022, the Judicial Registrar referred the matter to me and, on 26 September 2022, I made an order fixing Ms Pender’s application, for an undefended final hearing on 8 December 2022.
At an earlier stage of proceedings, those advising Ms Pender believed that the husband was living at an address in City Q, USA. Due to his recent conduct, there can now no longer be any certainty that this address remains current. In these circumstances, the most reliable way of contacting Mr Pender appears to be through one of two email addresses.
On 15 November 2022 and 1 December 2022, Julia Newman, the wife’s solicitor, forwarded the documents on which her client relies upon in these proceedings to Mr Pender at his various electronic addresses.[3]
[3] See affidavit of Julia Newman filed 1 December 2022.
It seems overwhelmingly probable that Mr Pender received these documents and is therefore aware of these proceedings. This is because, once again, the court event has precipitated Mr Pender to send further distressing electronic correspondence to his former wife.
To her credit, as a consequence of this correspondence, Ms Pender has attempted to ensure that Mr Pender receives appropriate assistance, for his mental health, in the United States. She has done so by contacting the Director of the Sports Authority.[4]
[4] See affidavit of Ms Pender filed 8 December 2022.
Whilst I acknowledge the emotional distress has precipitated for the husband that, of itself, cannot be a ground for deferring its finalisation of these proceedings. Indeed, one of the primary purposes of the Act is to provide mechanisms for separated spouses to end their financial relationship with one another.
The chief difficulty arising in the case is obvious. There is limited evidence from one of the parties, as to what occurred, in financial and parenting terms, during the parties’ significant relationship. This makes it extremely difficult to gauge what his contributions have been and what his future needs will be and particularly, what overall is a fair outcome for the case.
As such, the case throws up a dilemma. On the one hand, it would be unfair to the party, who is agitating for the case to be finalised and who has demonstrated a pressing need for settlement, if the case is unduly prolonged or postponed indefinitely, in the nebulous and possibly forlorn hope that the other party would engage in the adjudication process in future, after having already been given such an opportunity.
On the other hand, it is invariably disturbing, when the court is called upon to make orders in respect of issues of great significance to the parties concerned, in the absence of a proper articulated case from one of them. For obvious reasons, such an outcome has the potential to be criticised later for having the appearance of unfairness.
It is a trite proposition, but not without a level of truth, that there are always two sides to every story, and a counter argument available to every proposition, both in fact in law, put forward in any court case.
For axiomatic reasons, the court must be careful about finalising property proceedings, in the absence of a response from one of the parties concerned. However, from time to time, it is necessary to do so, most often when one party simply refuses to engage or is unable to do so because his or her life is in a state of disarray.
BACKGROUND
The wife’s case has been thoroughly and professionally prepared. She relies on the following formal documents:
·Wife’s proposed Minutes of Order filed 14 November 2022, as amended 1 December 2022;
·Two Affidavits of herself filed on 14 November and 1 December 2022 respectively;
·A Statement of her financial circumstances filed on 14 November 2022.
In practical terms, the wife seeks to retain all items of property, in her control and possession, in Australia. The major items concerned, being a Motor Vehicle 1 and three bank accounts, with the Westpac Bank, in her name, which hold a total amount of $689,930.00.[5] The major component of this sum being the proceeds of sale of the former matrimonial home.
[5] See Exhibit A.
However, in this context, it needs to be noted that, following the sale of the property, the parties engaged in an informal property settlement, pursuant to which, a sum of $500,000.00[6] was transferred to the husband, on 1 February 2021, which followed an earlier payment, in November 2020, which saw each of the parties receiving a sum of $100,000.00.
[6] Unless otherwise stated, all financial figures are in Australian dollars.
It is also the wife’s evidence that, when the O Street, Suburb P property was sold, notwithstanding her understanding that it was mortgage free, she in fact discovered it was subject to a mortgage of around $750,000.00, which she understands to have been unilaterally obtained by the husband alone, without her knowledge. In these circumstances, she can only infer that the husband has utilised the sum in question for his own purposes.
Accordingly, Ms Pender proposes that the husband retain all items of property, currently in his possession and control in the United States. This would include his sports pension, which she has had valued, according to actuarial principles, in an amount of $1,375,000.00.
It is her contention that the court should, in determining what is a just and equitable outcome in the case, take into account the premature distribution of the sum of $750,000.00 in Mr Pender’s favour, together his retention of his sports pension, as facts and circumstances, which the justice of the case requires to be taken into account, pursuant to the provisions of s 75(2)(o) of the Act.
On her calculations, if the orders, which she wishes to be made are put into effect, this will result in an approximately 60/40% adjustment of the non-superannuation assets being made in her favour, which she contends is a just and equitable outcome. If the court approaches the husband’s pension on the basis of the value attributed for it on actuarial terms, it will result in the husband receiving 65/35% of the total non-superannuation assets and the financial assets available.
THE WIFE’S EVIDENCE
The wife holds a Bachelor of Business degree, which she obtained in 1989. In 1990, she left Adelaide and embarked on a working overseas holiday. She met the husband in 1992, whilst she was in the United States working. She worked for a modest wage, augmented by tips.
Mr Pender began playing professional Sports in 1990. He has no formal tertiary qualifications. When the parties met, he owned a condominium in City Q, USA, which was subject to a mortgage. He was earning US$160,000.00 per annum. The wife’s income was modest and she had no assets of any significant worth.
The parties began to live together, in 1993 in City E, USA. At this stage, he was playing professional sports for a team based in City E, USA. Accordingly, given the date of the parties’ separation, the relationship and subsequent marriage was one of around 27 years in duration.
Shortly prior to the parties’ marriage, Mr Pender sold his condominium in City Q, USA and the parties purchased a property elsewhere in City Q, USA for approximately US$450,000.00. The purchase was funded by a mortgage and the proceeds of sale of the City Q, USA condominium.
The professional sports season runs for several months each year. During this period, the parties lived in rental accommodation in City E, USA, returning to City Q, USA, for the off-season. Mr Pender’s sports career flourished. From 1993, until his retirement from the sport in 2000, he earned between US$500,000.00 and US$1,100,000.00 per annum.
The wife did not work in this period but it is her evidence that she provided significant emotional and administrative support to Mr Pender to enable his sports career to flourish. She accompanied him on away games and attended to the requirements of their joint household.
In 1995, the parties met with a financial advisor in the United States, who advised each of them to take out a pre-paid life insurance policy on each of their individual lives, naming the other as their beneficiary, in respect of either of their deaths. The value of the wife’s policy is US$500,0000.00; the value of the husband’s policy is US$1,000,000.00. The relevant insurer is Company C. The premium in question was paid from joint matrimonial assets.
In 2000 the parties decided to move to South Australia. As a consequence, the City Q, USA property was sold recouping US$630,000.00. On his arrival, the husband was offered a position as a professional for the Company R, earning between US$50,000.00 and US$60,000.00 per annum.
The parties purchased a residential property, in suburban Adelaide in 2000, for $375,000.00. Later, they purchased a holiday home at Town S for approximately $350,000.00.
The parties’ first child Ms J was born in the United States. The parties’ second child Mr K was born in Australia in 2002. During the parties’ marriage, the wife was the primary homemaker and parenting. She also was engaged in some small business ventures. She describes these activities as a hobby business.
Mr K was diagnosed with a medical condition in 2010. As a consequence, his schooling was interrupted and he needed regular medical intervention. It is the wife’s evidence that she was primarily responsible for ensuring that Mr K attended appointments with psychologists and neurologists.
It is the effect of the wife’s evidence that Mr Pender struggled, from time to time, with living in Australia. In 2013, the family lived in City T, USA for approximately 1 year. However, it is the wife’s perspective that City T did not suit Mr K.
The wife concedes that the husband was the family’s primary financial provider. As well as his job as a professional, he worked as the general manager of a sports club based in Adelaide.
However, Mr Pender’s role as a sports professional, for a number teams in the United States, required a significant degree of travel. It is her evidence that Mr Pender utilised significant monies to fund these trips and it is her impression that the parties very often lived beyond their means.
In this context, she asserts that the parties sought financial support, from her parents, which included the payment of Ms J and Mr K’s private school fees between 2014 and 2020. The wife’s father, Mr U, has calculated that he and his wife contributed approximately $106,000.00 towards the children’s school fees; whilst gifting the parties the sum of approximately $295,000.00 between 2007 and 2019.
It is the wife’s contention that these significant contributions, which allowed the family to function financially, are to be regarded as a significant financial contribution, which should be attributed to her, in the context of these proceedings. I accept that this is so.
The former matrimonial home was purchased in 2003 for $1,130,000.00. It was funded by the sale of the parties’ former home and their Town S holiday property. It is the effect of the wife’s evidence that she understood that the O Street, Suburb P property was initially subject to a small mortgage, which was quickly paid off.
As indicated above, this did not remain the case. It is her evidence that, unbeknownst to her, the husband extended the mortgage, on the property, to a significant degree, utilising funds secured most probably to fund travel to the United States, which he visited frequently. In this context, the wife deposes as follows:
I now know that [Mr Pender] was living well beyond his means, spending a lot of money on overseas travel, both for work and also for pleasure, visiting family and friends in the USA. I did not know how much he was spending as he was managing all of our accounts at the time.[7]
[7] See affidavit of Ms Pender filed on 14 November 2022 at [33].
In 2018, Mr Pender’s health deteriorated and he was diagnosed with Type 1 diabetes. He had also become the subject of a media controversy, in the United States, due to his behaviour there. It is Ms Pender’s evidence that Mr Pender became increasingly depressed and angry and depressive towards her. He lost his position in Adelaide and his contract with the Company R was not renewed.
As a consequence of these factors, the parties were facing significant financial difficulties. In these circumstances, the wife obtained casual employment, in a managerial role, at a company called Company V. Ms Pender began work on a part time basis, with the firm, but became full time, in early 2000. She earns approximately $70,000.00 gross per annum.
When Mr Pender left Australia, in early 2020, the wife deposes he took more than his normal luggage, including many valuable items of sports memorabilia, which related to his career. At this stage, she suspected that it was his intention to move to the United States permanently.
It is the wife’s evidence that she had left the administration of the parties’ financial affairs, to Mr Pender, during their marriage. In the context of Mr Pender leaving Australia, she sought out the parties’ accountant, who explained to her that the parties were not in a particularly strong financial position, particularly given the significant mortgage, on the O Street, Suburb P property, of around $750,000.00.
In these circumstances, it became obvious to her that the O Street, Suburb P property would have to be sold. The property was sold in November 2020 for $2,600,000.00, netting an amount of approximately $1,800,000.00. On the sale of the property, the wife and the two children concerned moved into a property owned by her father.
As previously indicated, by joint agreement, each party received the sum of $100,000.00, from these proceeds. On financial advice, the wife put her $100,000.00 into superannuation. It being the position that due to her limited formal employment history, she had only a small amount of superannuation. Currently, her balance stands at approximately $123,500.00.
In addition, Ms Pender paid other joint debts, including a $100,000.00 loan to her father; $75,000.00 to a family friend; and unpaid school fees of approximately $16,000.00.
On my calculations, after the payment of these sums, the proceeds of sale stand at approximately $1,400,000.00. From this sum, on 1 February 2021, with Mr Pender’s agreement, the wife transferred to him a further sum of $500,000.00 and paid his 2020 Australia tax debt, in an amount of $54,425.00.
THE WIFE’S CURRENT SITUATION
After the parties’ separation, Ms J and Mr K have continued to live predominantly with their mother. Ms J is a tertiary student; whilst Mr K is currently undertaking a gap year, which has involved a challenging trip to the United States to spend some time with his father and full time work.
It is Ms Pender’s evidence that both children have suffered significant emotional trauma as a consequence of their father’s behaviour and she has been called upon to provide a great deal of support for them. Neither child provides her with any board and she does not envisage that either will do so in the foreseeable future.
As previously indicated, she and the children live in a property owned by her father. However, her mother is elderly and frail and she (Ms Pender) provides constant support to her parents in lieu of rent.
In addition, it is the effect of Ms Pender’s evidence that she herself has found these proceedings and the conduct of the husband in respect of them particularly challenging. It is her case that he has been emotionally abusive towards her and has not made any effort to resolve the proceedings on a rational basis. As a consequence, she has incurred significant legal costs in excess of $30,000.00 in order to finalise them.
Ms Pender continues to pay for the storage of the various items of personal property, which Mr Pender left behind in Australia, when he returned to the United States. She has attempted to negotiate their shipping to Mr Pender but he has been singularly uncooperative in this regard. This, of itself, is a source of emotional distress to her and she fears his reaction if she is compelled to dispose of the property in question, which she does not want.
In all these circumstances, it is Ms Pender’s evidence that she feels constantly stressed and suffers from insomnia. She finds Mr Pender’s communication with her, particularly in the context of these proceedings, to be particularly distressing. However, I also accept her evidence that she has to be available to support her children.
As indicated above, one significant aspect of this case is Mr Pender’s entitlement to a pension pursuant to the Sports Player’s Benefits Plan. At present, only Mr Pender is benefiting from this pension, to which he became entitled, in large part, during the period of his marriage to the wife. This will remain the situation for the foreseeable future.
In these circumstances, those advising Ms Pender have attempted to place a value on the pension. This value has been provided by Mr U, who is an actuary by profession and a fellow of the Actuaries Institute of Australia. Mr U has been provided payment slips provided to Mr Pender and has examined documents, germane to the scheme, on the internet. In this context, Mr U reports as follows:
For the purpose of determining a current lump sum value of the payments under the pension plan, I have treated the payments as if they were pension payments being made from an Australian superannuation fund and valued them under the relevant factors and approach on that basis.
This means that I am applying the economic and mortality assumptions that are used in the Australian Family Law system. I regard this approach as providing an objective estimate of the present day value of the pension payments.
I have interpreted the information from the payment slip that the total monthly pension payment of US $5,440.81 is comprised of:
•US $4,685.00 Fixed Monthly Retirement Benefit, and
•US $755.81 Variable Monthly Retirement Benefit.[8]
[8] See Annexure -10 of the affidavit of Ms Pender filed on 14 November 2022.
Clearly, the value of the pension, in Australia dollar terms, will change with exchange rate variations. In this context, Mr U has valued the pension, as US$872,983.00, which at current exchange rates translates to $1,375,210.00.[9]
[9] See Annexure -10 of the affidavit of Ms Pender filed on 14 November 2022.
At separation, the wife retained a Motor Vehicle 2 which has been subsequently sold for a sum of $10,000.00. At the husband’s insistence, items of jewellery, which she retains and some furniture, were also valued. These amount to a figure of approximately $38,000.00. As previously indicated, the husband’s property, which includes some potentially valuable sports memorabilia, has not been valued.
Due to the end of the marriage between the parties, the wife wishes to change the beneficiary of her pre-paid Company C policy from the husband to the children. She has experienced difficulty doing so due to the close relationship between the financial advisor, who recommended the policies, and Mr Pender. In these circumstances, she seeks an order from this court requiring the advisor to provide information to her regarding the policy. I will make such an order.
THE NATURE OF AN UNDEFENDED HEARING
It is a significant thing for proceedings to be determined in the absence of evidence from one of the parties concerned. The court has an obligation to ensure that the parties to proceedings before it have an opportunity to participate in those proceedings. However, there must be limits on such an obligation, which cannot be indefinitely prolonged.
Before a person can be adversely affected by a judicial order, they must be afforded an adequate opportunity to be heard.[10] I am satisfied that Mr Pender has been given an adequate opportunity to appear in these proceedings and put his position before the court.
[10] See Taylor v Taylor (1979) 143 CLR 1, 20 (Murphy J).
In addition, and of significant weight in the current matter, Ms Pender is entitled to have her application, for settlement of property matters, determined within a reasonable period of time, pursuant to the applicable principles of law. This is important given the significant delays which have arisen in the conduct of the case, none of which are attributable to any act or omission attributable to Ms Pender.
As such, she needs neither Mr Pender’s formal imprimatur nor his cooperation to have her application determined. Rather, there is an obligation, on Mr Pender’s part, if he wishes to be involved in the proceedings, for him to attend at court as required and pursue any application put by him or on his behalf with due diligence.
The Federal Circuit Court and Family Court is a court of private law. It determines disputes, between parties, according to law. In this case, according to the provisions of Part VIII of the Family Law Act 1975 (Cth), which relate to the division of property following the breakdown of a marriage relationship.
The court cannot compel a party to engage with litigation. It is however obliged to give each party the opportunity to put evidence before the court and, if he or she wishes to do so, contest any evidence relied upon by the opposing party.
However, a party, whether by intransigence, disinterest or manipulation cannot succeed in denying an applicant a just resolution, according to law, to his or her application, by choosing not to take part in proceedings because they do not proceed in the manner of his or her preference. That would be fundamentally unfair to the opposing party and an affront to the proper administration of justice, which requires that a properly instituted application be finalised within a reasonable period of time relative to the complexity and issues raised in such an application.
Part 10.6 of the Federal Circuit and Family Court of Australia (Division 2) (Family Law) Rules2021 (Cth) deals with the court’s authority to enter judgment against a respondent if that respondent defaults in complying with a court order, or fails to prosecute any proceedings with due diligence.
Pursuant to rule 10.26 a party is in default if, among other things, he or she has failed to:
·Comply with an order of the court in the proceedings; or
·Produce a document as required; or
·Do any act required to be done by these Rules; or
·Prosecute the proceedings with due diligence.
I am satisfied that Mr Pender has not prosecuted the proceedings with due diligence and has failed to comply with numerous orders of the court. In these circumstances, pursuant to the provisions of rule 10.27(3), the court may, if it considers it just, enter judgment and make orders in favour of Ms Pender against Mr Pender on an undefended basis. In my assessment, Mr Pender has been given adequate notice of these proceedings; has failed to prosecute his application diligently and given the idiosyncratic circumstances of the case, it is just that the case be finalised at this juncture.
However, Ms Pender is not entitled, as of right, to the orders which she seeks only on account of the omissions in the prosecution of his case by Mr Pender. Rather, the onus remains on her to establish to the court that the orders which she seeks, are just and equitable, according to law.
Essentially, Ms Pender must lead sufficient evidence to establish her case to the court and persuade it that the result she proposes is a just and equitable one. Otherwise, the court should impose the result, in the case, it considers fair according to the law and the evidence available to it.
The court’s pre-eminent responsibility is to ensure a just result between the parties, notwithstanding the failure of Mr Pender to participate properly in the proceedings. However, in the absence of satisfactory rebutting evidence, Ms Pender’s affidavit material is to be accepted by the court, unless it appears inherently unreliable or otherwise unsatisfactory.
THE LEGAL PRINCIPLES APPLICABLE
Part VIII of the Act deals with financial matters relating to parties who are or have been married to one another. In particular, section 79(1) authorises the court to alter the property interests of the parties to a marriage. In addition, Part VIIIB provides specific provisions enabling the splitting of superannuation between spouses.
Pursuant to section 90XC of the Act, superannuation interests are to be treated as property. As such, they attract the provisions of section 79(4) of the Act. In C & C (“C & C”),[11] the Full Court of the Family Court described superannuation as a different “species of asset” from other forms of property.
[11] C & C (2005) 33 Fam LR 414, 424 [40] (Bryant CJ, Finn and Coleman JJ).
The process to be followed for the division of the parties’ property is well-established by law.[12] The relevant legal principles are primarily contained in sections 79 and 75(2) of the Act. I am required to follow a number of specific steps.
[12] See Ferraro v Ferraro (1992) 16 Fam LR 1; Clauson v Clauson (1995) 18 Fam LR 693; Hickey & Hickey (2003) 30 Fam LR 355.
In the first step, I must ascertain what are the parties’ assets and liabilities available to be divided between them. The general rule is that those assets are to be determined as at the date of trial.[13]
[13] See Biltoft & Biltoft (1995) 19 Fam LR 82.
In the second step, I must ascertain the contributions, which each party has made towards the matrimonial pool of assets, as I find them, following the first step. Contributions fall into two broad categories.
The first kind is contributions to the property: financial contributions and non-financial contributions, made directly or indirectly, by or on behalf of a party to the marriage to the acquisition, conservation or improvement of any of the property.
The second kind is contributions to the welfare of the family: in the words of the section, the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent.[14]
[14] See Family Law Act1975 (Cth) s 79(4)(c).
It is clear from the authorities that this second kind of contribution must be given appropriate weight and is not to be treated as a token matter or as a contribution which is inherently less valuable or important than a financial contribution to property.
At this second stage, the task set for me requires the balance and comparison of a multiplicity of contributions, many of which are necessarily different in nature, within the framework of a marriage.
Many contributions in a marriage, such as being a homemaker, do not result in the direct acquisition of assets. They are also difficult to value in absolute dollar terms. In contrast, the monies contributed by a wage earner are easier to quantify. However these difficulties do not absolve the court of its obligation to undertake the required assessment of contributions.
The court’s discretion is a wide one but must be exercised judicially. The task conferred is to weigh and assess contributions, which are necessarily disparate in nature. In summary, contributions, within the framework of a marriage, which are different in quality and nature must be compared, in order to achieve a just and equitable division of property. It has been referred to as a holistic exercise.[15] Certainly, it is not to be approached as a simple accounting or arithmetical exercise.
[15] See Watson & Ling [2013] FamCA 57 at [13] (Murphy J).
The third step involves the assessment of the parties’ prospective needs, by reference to the factors set out in section 75(2) of the Act. Pursuant to section 75(2)(o), the court is entitled to take into account “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account”.
In the context of the current matter, the wife asserts that the fact that the husband has had the benefit of the sums secured by the mortgage secured against the O Street, Suburb P property and what Mr U has provided as the capitalised value of the husband’s sports pension are relevant factors falling within the court’s wide ranging discretion.
If the mortgage is added back, along with the capitalised value of the pension, it is her position that such a calculation will indicate that Mr Pender has retained substantial more assets and financial resources than she has done, particularly if it is borne in mind that he has received the sum of $600,000.00 from the proceeds of sale and other of the debts, which he incurred during the marriage and of which he had the substantial benefit have also been paid.
Finally in determining what order the court should make under section 79, the court must be satisfied that in all the circumstances, it is just and equitable to make the relevant orders. Overall, it is the justice and equity of the actual orders that the court must consider.[16]
[16] See Russell & Russell (1999) 25 Fam LR 629, 644 [80] (Ellis, Finn and Mushin JJ).
The “overriding requirement” of section 79 is that considerations of justice and equity should inform each step of the process. The exercise I must undertake is not a process of social engineering,[17] nor is it one of equalisation of assets or financial resources between former spouses.
[17] See Waters & Jurek (1995) 20 Fam LR 190, 196 (Baker J).
In addition, it is to be noted that although the court is conferred with a wide discretion as to how it exercises its power to alter matrimonial property interests under section 79(2) it is not one to be exercised in an unprincipled fashion or pursuant to an unguided judicial discretion.[18]
[18] See Laskari & Laskari and Ors [2014] FamCA 1183 (La Poer Trench J).
It is clear that this orthodox stepped approach remains current, notwithstanding the High Court’s decision in Stanford v Stanford (“Stanford”).[19] In Stanford the High Court placed significant emphasis on section 79(2), which actively prevents the court from making an order, in respect of property, unless it is satisfied that it is just and equitable to do so in all the circumstances prevailing. This follows from the use of the prohibitive words “shall not” in the relevant section.
[19] Stanford v Stanford (2012) 247 CLR 108.
In Stanford, the High Court warned of the potential danger of a court conflating its responsibilities arising under sections 79(2) and 79(4). The court’s fundamental responsibility is to make a just and equitable order. The High Court said as follows:
The expression ‘just and equitable’ is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its metes and bounds.[20]
[20] Stanford v Stanford (2012) 247 CLR 108 120 [36] (French CJ, Hayne, Kiefel and Bell JJ).
Accordingly, considerations of what is just and equitable flavour all applications pertaining to property settlement. What is fair is impossible to define with certitude and must depend on the prevailing circumstances. However, care must be taken to avoid conflating the stipulation contained in section 79(2) with the discretionary exercise contained in section 79(4).
Although the multi-step process envisaged by Hickey & Hickey remains relevant, it is less prescribed as a consequence of what was said by the High Court in Stanford. In this context, I respectfully adopted what was said by Murphy J in Watson & Ling namely:
As a result of those matters, the Court’s approach to s 79/s90SM may be less compartmentalised than what a strict or unthinking adherence to four (or three) “steps” might otherwise reveal. The task is essentially holistic; is it just and equitable in the particular circumstances of the particular relationship or marriage under consideration to make an order and, if so, its terms must similarly meet that criteria. Of course, holistic though the approach is, it must be referenced to what the Act requires and care must be taken to ensure that the Court’s reasons make that clear.[21]
[21] Watson & Ling [2013] FamCA 57 at [13] (Murphy J).
Ms Miller, counsel for the wife, submits that such a holistic approach is appropriate in the current matter. She concedes that it is not appropriate for a strict dollar for dollar add back to occur in respect of the concealed mortgage on the former matrimonial home nor that the court should attempt some accurate accounting of monies asserted to have been wasted by the husband. However, these are factors which need to be taken into account to ensure a just division of property.
As was discussed by the Full Court in Bevan & Bevan,[22] whether it is just and equitable to make any particular property order is interwoven with questions of contribution arising under s 79(4) and the parties’ financial and relationship history with one another.
[22] Bevan & Bevan [2013] FamCAFC 116 at [73] (Bryant CJ, Finn and Thackray JJ).
In Bevan, the Full Court summarised three fundamental propositions relating to the interaction between section 79(2) and section 79(4), which can be summarised as follows:
·Determination of what is just and equitable begins with an identification of existing property interests;
·The discretion provided by section 79 must not proceed on any assumption that any settlement of property should be different from those existing property interests, as determined by principles of common law and equity;
·However, a determination that a person has an entitlement to a division of property by reference only to section 79(4) would be wrong as it would ignore the express statutory requirement of section 79(2) or conflate the two considerations.
Although the court must be careful not to combine issues arising under section 79(2) with the exercise arising under section 79(4), it is artificial to divorce them from each other. Section 79(2) does not, however, as I take it, represent a formal threshold to be crossed prior to the undertaking of the section 79(4) exercise.
The task, which I am required to undertake pursuant to section 79 of the Act, is not analogous to an audit or some other accounting exercise. As such, care needs to be taken in respect of assets which exist only in a notional or theoretical sense.
In Stanford, the High Court indicated that, in determining whether it was just and equitable to make any particular property order, it was necessary to identify the existing legal and equitable interests of the parties in the property. The High Court itself emphasised the word existing.
It was pointed out by Murphy J in Watson & Ling, that the court generally eschews the notion of negative contributions. As such, the direct dollar for dollar adjustment for alleged dissipation of funds, should be the exception rather than the rule.[23]
[23] Watson & Ling [2013] FamCA 57 at [33]-[34] (Murphy J).
That is not to say that, in cases involving dissipation of funds, considerations relating to the assessed superior contributions of the non-dissipating party cannot be engaged at the second stage of the process or more generally as an applicable section 75(2)(o) factor.
In Watson & Ling, Murphy J said as follows:
Where the Court has determined that it is just and equitable to make an order pursuant to s 79(2) or s 90SM(3) and there is clear evidence that one party has engaged in conduct and, but for that conduct, the legal and equitable interests of a party or the parties (or the value of those interests) would have be significantly greater, justice and equity may require recognition of the unfairness inherent in those circumstances in the terms of the orders to be made.
How might that be recognised? First, consistent with existing authority, it can be recognised pursuant to s 75(2)(o) (cf s 90SF(3)(r)) (see, for example, Omacini & Omacini (2005) FLC 93-218, Browne & Green (1999) FLC 92-873 and Cerini). Secondly, it might be contended that it might be recognised within the assessment of contributions. This Court has long eschewed the notion of “negative contributions” (see, for example, Antmann & Antmann (1980) FLC 90-908). Nevertheless, it might be argued that the “non-dissipating party” can be seen to have made a disproportionally greater indirect contribution to the existing legal and equitable interests (for example to their preservation) if it is established that, but for the other party’s unilateral dissipation, those existing legal and equitable interests would have been greater or had a greater value.
The assessment of the circumstance under discussion is, ultimately, a matter of discretion (see, for example, Cerini at [46] and Townsend at 81,654). Equally, however, authority dictates that it will be “the exception rather than the rule” (Cerini at [46]) that a direct dollar adjustment equivalent to the amount of the alleged dissipation of the pool is made to the otherwise entitlement of a party. It may be that aspects of the erstwhile treatment of legal fees pre-Stanford (see, for example, Chorn & Hopkins (2004) FLC 93-204) will require further consideration in an appropriate case.
Importantly, of course, as has been emphasised in many authorities including those cited above, not every dissipation by a party can be seen to involve an affront to justice and equity; again the circumstances of the individual relationship must be assessed.[24]
[24] Watson & Ling [2013] FamCA 57 at [32]-[35].
Recently, in Trevi & Trevi,[25] the Full Court has reiterated that the court’s authority to add back is both discretionary and exceptional in nature. It is to be informed by what is just and equitable in the particular circumstances of the case concerned. The Full Court said as follows:
Two fundamental premises emerge from Omacini and the authorities preceding it. First, ‘adding back’ is a discretionary exercise. When the discretion is exercised in favour of adding back, it reflects a decision that, exceptionally, in the particular circumstances of a case, justice and equity requires it. The second premise is its corollary: in cases that are not ‘exceptional’ justice and equity can be achieved, not by adding back, but by the exercise of a different discretion – usually by taking up the same as a relevant s 75(2) factor. Indeed, it has been said that the latter is ‘a course which is, perhaps, technically more correct’ than adding back to the list of existing interests in property.
[25] Trevi & Trevi [2018] FamCAFC 173 at [30] (Alstergren DCJ, Murphy and Kent JJ).
In my view, the evidence available to me indicates unequivocally that, if not for the conduct of Mr Pender, the parties in the current matter, are likely to have been in a significantly stronger financial position. It is impossible to calculate any exact figure to be attributed to Mr Pender for this material deterioration in the parties’ financial circumstances. However, in my view, clearly, this is a factor which must be taken into account in determining what is a just and equitable outcome in the current matter.
Axiomatically, it is a factor which favours Ms Pender to a significant degree, as does the fact that Mr Pender has the security of a lifetime pension. These are factors which must be taken into account, in a holistic or aggregate and comprehensive sense, in the third stage of the court’s deliberation, either pursuant to section 75(2)(o); or section 75(2)(b), which directs the court to consider the financial resources of the parties; section 75(2)(f) which relates to pension entitlements, including those derived overseas; and section 75(2)(g) what is a reasonable standard of living for the parties.
DISCUSSION
Step One – The pool of property
In my view, the best way to approach the calculation of the parties’ pool of property and financial resources is to utilise the net proceeds of sale of the O Street, Suburb P property, after the payment of the mortgage related to it. However, as I am at pains to point out, the fact that Mr Pender utilised this sum for his exclusive benefit, is a factor which must be taken into account.
In addition, various debts paid by the wife from this sum, which she acknowledges must be regarded as joint liabilities, must also be included. However, once again, it is Ms Pender’s position that although some of these monies went to joint family purposes, much of the monies were utilised to fund the husband’s expenditure.
I propose to include the capitalised value of Mr Pender’s Sports Player’s Pension as a financial resource. Ms Pender’s superannuation, at separation, was a modest sum of $23,512.53.
I appreciate that she has augmented this sum by way of a payment of $100,000.00, from the proceeds of sale of the matrimonial home. This sum must be taken into account, as does the sum of $600,000.00, advanced to Mr Pender.
On this basis, I find that the parties’ assets are as follows:
Assets Dollars ($AUD) Proceeds of sale of the O Street, Suburb P Property $1,802,304.07 Wife’s Motor Vehicle 2 $10,000.00 Wife’s jewellery and personal effects $38,000.00 Total Assets $1,850,304.07 Liabilities (Discharged since separation) Husband’s tax debt $54,425.00. Loan from wife’s father $100,000.00 Loan from friend $75,000.00 School fees $16,000.00 Total liabilities $245,425.00 Net non-superannuation assets $1,604,879.07 Superannuation of financial resources Wife’s superannuation $23,512.53 Husband’s pension as capitalised $1,375,000.00 Total net assets/superannuation & financial resources $3,003,391.60
From the wife’s perspective, this sum does not include the husband’s sports memorabilia and other items of personal property, particularly his jewellery. It is her view that these items are potentially quite valuable but the logistic issue of having them valued are close to insuperable.
From this sum, in the form of the monies advanced to him from the proceeds of sale ($600,000.00) and his capitalised pension ($1,375,000.00); the husband has retained assets and financial resources worth $1,975,000.00, which equates to 65% of the net assets/financial resources.
On the other hand, in the form of her car ($10,000.00); her jewellery and effects ($38,000.00); her superannuation ($23,512.53) and the remainder of the proceeds of sale; less liabilities discharged ($956,879.07); the wife has retained assets and superannuation to a value of $1,028,391.60, or approximately 35% of the pool.
If one deals only with the non-superannuation assets ($1,604,879.07), the wife has retained 62.6% of the tangible realisable assets; whilst the husband has received 37.4%.
The central issue arising from this dichotomy of calculations is whether the orders proposed by the wife, which essentially represent the status quo, represent a just and equitable outcome, when the other steps of the process are considered. For the reasons that follow, I am satisfied that it does.
Step Two – Assessment of Contributions
The marriage between the parties was a lengthy one, which produced two children, now adults. I accept that in the first decade or so of the parties’ relationship, the husband made very significant financial contributions as a professional sports player – a career in which he excelled, leading him to earn a very large salary, during his playing career.
At the same time, I also accept that the wife provided significant support, for the husband, in all manner of roles, which enabled him to excel as a professional sportsperson. Clearly, these contributions are intrinsically very different, but in my view augment each other.
I also accept that the husband, in the form of his condominium in City Q, USA, provided a significant initial injection of capital, into the parties’ marriage, which was translated into their City Q, USA home and then there subsequent homes in South Australia.
When the family moved to Australia, the husband remained the family’s main bread winner. However, due to his change of role, he was not able to generate the same level of income as previously. With the birth of the parties’ children, the quality of the wife’s contribution to the overall stability of the family increased, as she discharged a significant level of responsibility for parenting the parties’ children, particularly Mr K, because of his special needs.
In all the circumstances of the case, given the ups and downs of the parties’ financial circumstances, I would assess their various contributions as being very different but essentially equal in nature. In this regard, I note the assistance, which was provided to the family, by the wife’s family.
In the period since the parties separated, it is also apparent to me that the wife has made very significant contributions towards the welfare of the family. I appreciate that Ms J and Mr K are now adults. However, in very difficult circumstances, Ms Pender has had to provide a great deal of emotional support to the children. In addition, and significantly, Ms Pender has had to deal with the ramification of Mr Pender’s derelict financial conduct. This has been challenging for her.
Step Three – The prospective needs of the parties (Section 75(2))
Due to the lack of participation, in these proceedings, by the husband, the court is presented with significant difficulties in respect of assessing the parties’ prospective needs. However, in my view, this factor cannot preclude the court from its responsibility to finalise the case.
Mr Pender is 55 years of age. The evidence available to me indicates that he does not enjoy good health. He suffers from diabetes and, like the wife, I am concerned that his mental health is currently compromised.
Mr Pender has extensive experience as a professional sportsperson and since his retirement from sports has transitioned into administration, both for organisations in the United States and this country. Whether his current circumstances make him an attractive employment proposition, in the United States, is not known to me.
However, the evidence indicates that he has the resource of his sports pension to provide him with an economic safety net for the remainder of his life. Again, what standard of living this pension provides him, in an American context, is not known to me. However, on any view, it is an extremely valuable resource, which is not available to Ms Pender.
Ms Pender is 53 years of age. She presents as a pleasant and capable person. However, she has no professional qualifications on which to fall back on. As a consequence, she earns a modest income of approximately $70,000.00 per annum.
At the present time, the wife has superannuation of approximately $123,000.00, which is unlikely to provide her with a significant level of financial security in retirement. As a consequence, in contrast to the husband, it will be necessary for her to work for the foreseeable future.
For reasons already provided, considerations relating to section 75(2)(o) loom large in this case. In Ferguson & Ferguson,[26] the Full Court of the Family Court held that section 75(2)(o) was to be read ejusdem generis with the other matters listed in the section 75(2) which enabled the court to bring into account conduct which has an economic significance in the parties’ dealing with each other or the property in dispute.
[26] See Ferguson & Ferguson (1978) 4 Fam LR 312, 330 (Watson and Wood SJJ).
The main factors, with economic significance in respect of the parties’ prospective needs, can be summarised as follows. Firstly, as previously indicated, the husband has available to him his sports pension, which provides him with a significant financial safety net for the remainder of his life.
Secondly, the evidence indicates that Mr Pender was able to receive a premature distribution of assets, in his favour, in the form of the clandestinely obtained mortgage, which was secured on the parties’ former matrimonial home, unbeknownst to the wife. The sum involved was significant and, in my view, has clearly resulted in a deterioration of the parties’ financial circumstances.
In my view, these are factors which greatly favour the wife and call for a significant adjustment in her favour. In purely theoretical terms, I would assess this as being somewhere in the vicinity of between 15 and 20%. The challenge arising in the case being how such an outcome can be achieved in practical terms, given that the husband’s pension is based in the USA and is not amenable to division pursuant to Australian legislation.
Step Four – Considerations of Justice and Equity
As previously indicated, Ms Miller, the wife’s experienced counsel, urges the court to take a holistic view in respect of the division of the parties’ assets and financial resources. Her client is anxious, for obvious reasons, to finalise these proceedings and so move on with the next aspect of her life. This is an important consideration from her perspective.
I appreciate that superannuation, although having many attributes which distinguish it from other assets, which can be readily sold and translated into cash, is to be recognised as a different species of asset. In this context, the wife recognises that the husband’s sports pension cannot be rendered directly amenable to these proceedings. However, considerations of what is just and equitable direct that regard be had to it.
Consequently, it is apparent that the maintenance of the current proprietorial status quo ante creates an outcome which is materially advantageous to the husband. He has received a significant sum of cash ($600,000.00) along with his pension. Thus, in my view, he leave these proceedings with a significant level of financial security.
The wife is not so well-placed. She has a larger sum of money but little security for her later years in the form of a large store of superannuation. Rather, she remains reliant on her family for accommodation and is likely to have to work for the foreseeable future. Whether she chooses to allocate her cash to providing some form of accommodation for herself or to allocate to it superannuation, is a matter for her and those advising her.
Accordingly, at the end of the process, I am satisfied that the outcome proposed by the wife is both a proper and a fair one in the idiosyncratic circumstances of the case. It will enable each party to move on and provides each of them with some measure of financial security for the future.
Significantly, in my view, it cannot be said that Ms Pender has sought to take advantage of the husband’s absence from Australia to advance her position over him. In my assessment, she has acted with transparency and fairness throughout this difficult process for her.
For these reasons, I will make the orders, which Ms Pender proposes, as set out at the commencement of these reasons for judgment.
I certify that the preceding one hundred and forty-nine (149) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Brown. Associate:
Dated: 15 December 2022
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