Peng and Cao - [2016] FamCA 259

FAMILY COURT OF AUSTRALIA

PENG & CAO

[2016] FamCA 259

FAMILY LAW – CHILDREN – undefended proceedings – husband makes no contribution to the proceeding – children have long been in the mother’s care without physical assistance from the husband – no basis to make an order for equal shared parental responsibility as the husband has not exercised it and has indicated no desire to do so – order made for the children to live with the wife.
FAMILY LAW – PROPERTY – wife seeks transfer of husband’s interest in home to her – modest interest of equal contribution to property to separation but no financial details provided by the husband – subsequent to separation, wife has had a major role.
FAMILY LAW – PROPERTY – husband’s parents make joint payment used by the parties to acquire matrimonial home – evidence indicates intention to make joint gift – no adjustment in favour of the husband for contribution.

Family Law Act 1975 (Cth)

Elgin & Elgin [2014] FamCA 10)
Gosper & Gosper (1987) FLC 91-818)
Kessey & Kessey (1984) FLC 92-495
Mistle & Mistle [2010] FamCA 29

APPLICANT:

Ms Peng

RESPONDENT:

Mr Cao

FILE NUMBER:

DGC

2268

2014

DATE DELIVERED:

22 April 2016

PLACE DELIVERED:

Melbourne

PLACE HEARD:

Melbourne

JUDGMENT OF:

Cronin J

HEARING DATE:

6, 20 April 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Sala

SOLICITOR FOR THE APPLICANT:

Solomons Lawyers

COUNSEL FOR THE RESPONDENT:

No appearance

SOLICITOR FOR THE RESPONDENT:

Orders

That the wife have leave to proceed in the absence of the husband on an undefended basis.
That the wife have sole parental responsibility for the major long-term decisions concerning the children B born … 2002 and C born … 2004.
That the children live with the mother.
That the husband forthwith do all things necessary to transfer to the wife his interest in the property at D Street, Suburb E.
That the wife forthwith indemnify the husband and pay all payments due to the Westpac Bank in respect of the mortgage encumbering the property at Suburb E and as soon as practicable hereafter, obtain a discharge for the obligations of the husband pursuant to the mortgage.
That each party otherwise retain the interests in any property in their respective names to the exclusion of the other.
If the husband fails to sign any document required for the purposes of thee orders, then pursuant to s 106A of the Family Law Act 1975 (Cth), a registrar may sign such document in the name of the husband and the registrar shall be satisfied of the necessity of such signing upon receipt of an affidavit by the solicitor for the wife, pointing to the default of the husband.
That the application of the wife filed 1 October 2015 is otherwise dismissed.
That if the husband is so advised, he has 30 days from the day of the service upon him of these orders, to seek to set them aside; such application shall be supported by evidence as to his non-participation to date.
That as soon as practicable, a copy of these orders and the reasons for judgment this day be served by the wife upon the husband by electronic means as set out in previous orders.
That pursuant to s.65DA(2) and s.62B, the particulars of the obligations these orders create and the particulars of the consequences that may follow if a person contravenes these orders and details of who can assist parties adjust to and comply with an order are set out in the Fact Sheet attached hereto and these particulars are included in these orders.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Peng & Cao has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: DGC 2268 of 2014

Ms Peng

Applicant

And

Mr Cao

Respondent

REASONS FOR JUDGMENT

By an application filed 1 October 2015, Ms Peng sought parenting orders and an alteration of property interests arising from her marriage to Mr Cao.
For my convenience, I shall refer to the applicant as “the wife” and the respondent as “the husband” notwithstanding they are now divorced.
The difficulty in this case has been the absence of any contribution to the proceedings by the husband. The wife has sought to proceed on an undefended basis.
The application mentioned above was amended on the same day as the original one. The wife sought orders in language that required some interpretation but I have discerned that she sought the following:
(a)That the wife have sole parental responsibility for the two children of the marriage;
(b)That the children live with the wife;
(c)That contact between the children and the father be by negotiation;
In respect of property interests’ alteration:
(a)That the husband transfer to the wife his interest in the real property at Suburb E;
(b)That the wife take over the encumbrance on the title to the Suburb E property; and
(c)That each party otherwise retain what they have.
On the wife’s application, the Court fixed a hearing date for 14 December 2015. On 12 November 2015, the husband was served personally in Country F. There is an affidavit of service on the Court’s file in which the person said that he or she knew who the husband was.
On 14 December 2015, Registrar Field adjourned the matter to 17 February 2016 and directed that the husband attend or be represented.
The Registrar’s order was directed to be served by post and electronically. That appears to have been undertaken.
On 17 February 2016, the Registrar adjourned the application to the Judicial Duty List as the husband had not attended. Directions were made for the filing of material by the husband. The Registrar gave the wife the opportunity to seek to apply to proceed on an undefended basis, if no response was filed. That was no doubt done to ensure that the husband knew that he could not ignore the issue. He did anyway.
The matter came before me on 6 April 2016 and the husband did not appear. It was a busy duty list and therefore I adjourned the matter until 20 April. Again, the husband did not attend but on this occasion, the wife tendered into evidence a variety of documents which she argued corroborated her assertions. She also gave viva voce evidence as to what she knew of the husband and his financial position. It was then that it became apparent that the husband provides little or no support for the children.
The power to proceed to hear a case on what is often described as an undefended hearing is set out in rule 11.02 (2)(c) of the Family Law Rules 2004, which provides that if a party does not comply with the Rules, the regulations, or a procedural order, the Court may, amongst other things, determine the case as if it was undefended. An undefended hearing means literally that the respondent has not participated at all. In Tate & Tate (2000) FLC 93 047, the Full Court discussed the subject only briefly, pointing out that as the appellant’s response in that case had been struck out, from the Court’s perspective, there was no live issue between the applicant and the respondent.
This Court does not have jurisdiction to simply enter judgment against an absent party on a default basis. Section 79(2), to which I shall return, requires that an order shall only be made if it is just and equitable to do so. That means that an applicant in an undefended proceedings, so called, still has to prove his or her case according to law.
In this case, the husband has not chosen to participate in the proceedings. He has not filed any documents in compliance with the rules of the Court, nor has he complied with any of the orders that I am satisfied have been served upon him. He has had the opportunity to participate and as there have been several documents separately served upon him, I can only conclude that he does not dispute the power of the Court to make orders and that he does not dispute the evidence presented by the wife upon which the Court is asked to make the orders set out earlier.
In those circumstances, the Court can take a robust approach and not be particularly concerned about issues to protect the interests of the husband. There is the additional difficulty for the Court (and also for the wife) that nothing is known about the financial circumstances of the husband in which case, the Court can also take a robust approach to the assertions about his financial position in Country F. In case there has been some unforeseeable injustice to the husband, I shall give him 30 days to seek to set aside the orders upon establishing that there has been a miscarriage of justice.
Both husband and wife were born in Country F. The husband is aged 40 years and the wife 36 years. He is an IT project manager and she is a social worker. They married in 2002 and separated in September 2010. Their divorce was granted on 3 September 2014 and an examination of the divorce order indicates that the current proceedings were issued just in time before the statutory limitation expired.
The two children of the parties live with the wife. They are aged 13 and 12 respectively. They have limited contact with their father and are not regularly supported financially by him. They apparently had a trip to see him late last year for which he paid but an accident occurred and one of the children was injured and thus returned to the wife.
When the relationship began, it would seem that neither party had any assets. Both were studying for tertiary qualifications and both were working in modest positions.
In 2007, a discussion took place about buying a house. The husband’s parents agreed to fund the purchase of what the parties wanted. The price was approximately $499,000. The husband’s parents made a gift to the husband and wife of $450,000 and that sum was paid into the bank account of the wife. She then transferred that money to the parties’ joint account. That was not enough money to purchase the house with the additional expenses and taxes so the parties borrowed from Westpac Bank. A home loan of $150,000 was created and the husband and wife were jointly and severally liable.
Notwithstanding the gift by the husband’s parents, no written document was raised to confirm that it was a loan. No money has ever been asked of the parties by the parents. No caveat was ever lodged by the parents on the parties’ title asserting some entitlement or trust. Although the circumstances looked remarkably like some form of resulting trust, that was never an issue raised by anyone at the time, or since then.
As this was a significant amount of money provided to the parties in circumstances where they would not otherwise have had any interest in property, the basis of the contribution must be considered (Gosper & Gosper (1987) FLC 91-818). In Kessey & Kessey (1984) FLC 92-495, the Full Court said that a contribution by a parent will be taken to be a contribution by the party who is the child of the parent unless there is evidence which establishes that it was not the intention to benefit that child.
There are many authorities that have looked at this issue which include the principles mentioned above but there is also the timing of the donation (see Elgin & Elgin [2014] FamCA 10). There are also questions of quarantining assets (Mistle & Mistle [2010] FamCA 29)
Two significant things stand out here. First, the husband has taken no active part in these proceedings and at all times, has been aware of the nature of the wife’s assertions about the gift. Secondly, the objective evidence points to the fact that the money was a gift to at least both parties if not to the wife. In the circumstances where the parties had a joint account, why would the husband’s parents send the capital sum to the wife’s personal bank account?
The husband and the wife borrowed jointly and the records produced by the wife showed no sign in the mortgagee bank being concerned that it was lending to someone who had a financial obligation to the husband’s parents of a greater amount than the bank was lending. The obvious inference is that the bank was aware of the parties’ saving records because it had them and would have seen the large and recent deposit from the parents.
All of the indicia point to the conclusion that this was a gift to both parties.
In 2010, the parties’ relationship ended and the husband left the home. Between 2010 and 2014, he returned 3 times for short periods. During those times, the wife said that there was no personal relationship and the husband did not socialise with her. He contributed little by way of finance. She allowed him into the home because she did not understand that she could exclude him as it was their house.
Because the wife was a low income recipient after separation, she applied for, and obtained, a pension but she was required to seek child support. The agency assessed the husband as obligated to pay over $400 per month and on the evidence of the wife, those payments have not been at all regular. There is no record of arrears because the husband’s absence in Australia meant that he was deemed to be a party to a self-management arrangement. The wife was unable to quantify how much he had contributed but said it was not much. She said she was earning a good income and did not chase the husband. In the meantime, the arrears mounted but the wife took no steps to enforce the obligation. She wishes that to be taken into account now.
The only finding I can make on the evidence is that the husband shows little interest in the children and their communication is irregular. The vast bulk of the financial support for these children comes from the wife.
In addition, the wife had the obligation to provide not just schooling and food for the children but also a roof over their heads. That required her to pay the mortgage payments to ensure the mortgage was kept up to date. She has done that. She detailed the various maintenance and renovations she has paid for since the separation.
The income of the wife is not large by community standards. Despite what I have said above, she deposed to the fact that she was receiving child support but clarified that it was not regular.
The evidence also showed that the husband has accommodation with his wealthy family in Country F. They own land and shops from which they draw income. The husband appears, from what the wife knows, to be working in his chosen profession and he also teaches at a tertiary institution.
In respect of the parenting issues, nothing in the evidence suggested that the wife was doing anything other than adequately supporting and caring for the children. The husband sought no orders and has spasmodic time with them which is usually by telephone.
Thus, the wife seeks sole parental responsibility.
Part VII of the Family Law Act 1975 (Cth) (“the Act”) dictates out how a parenting dispute should be determined with its emphasis on “best interests” principles.
The provision sets out what is intended as a guide by reference to objects and principles. These are set out in s 60B.
Section 61DA requires the court to apply a presumption of equal shared parental responsibility when making a parenting order. That presumption is not applicable where the Court is satisfied that there has been family violence. The evidence here does not support such a conclusion. The presumption may be rebutted if the Court is satisfied that it would not be in the best interests of the children for the parents to have equal shared parental responsibility. Here, the husband has no involvement in the lives of the children other than his occasional telephone calls. The wife does not communicate with him about the children and he has no involvement in the decision making.
The parties have had parental responsibility since separation yet the husband has not exercised it. The absence of the husband and he being aware of the issue before the Court, enables the conclusion to be made that he is content for the wife to make decisions about the future interests of the children without his input.
The best indicator of effective joint or shared parenting in respect of major long-term decisions lies in s 65DAC of the Act. It provides that if an equal shared parental responsibility order is made, it is taken to require the decision to be made jointly by those persons. The order is taken to require each of those persons:
(a)to consult the other person in relation to the decision to be made about that issue; and
(b)to make a genuine effort to come to a joint decision about that issue.
There is no prospect of any genuine effort to come to a joint decision in circumstances here.
The s 61DA presumption therefore does not apply and s 65DAA (the consideration of time) is not applicable.
Section 65D provides that the Court may make such parenting order as it thinks proper. That means that that the order is discretionary but, like all judicial discretion, is not untrammelled. The decision must be guided by the parameters of the other provisions of Part VII of the Act and in particular, s 60B, S 60CA and S 60CC.
Section 60CA provides that in deciding whether to make a particular parenting order, a court must regard the best interests of the children as the paramount consideration. Section 60CC mandates the court to determine the best interests of the children by reference to s 60CC.
The relevant factors here were poorly presented but again, the husband has not taken any steps to dispute the unchallenged position of the wife. After considering all of the relevant s 60CC factors, one can safely conclude that no parenting orders here are required in respect of time between the children and the husband. The parties appear to accept that they can work out matters themselves.
The first two orders sought by the wife should therefore be made.
Returning then to property matters.
Section 79(2) says that a court shall only make an order under Part VIII relating to property division if it is satisfied it is just and equitable.
Section 79(4) requires a court to consider, if it is making an order, insofar as they are relevant, the financial and non-financial contributions of the parties, the contributions made to the welfare of the family, the effect of any proposed order on the earning capacity of either party, and the matters set out in s 75(2).
Section 79 requires a consideration of a number of matters. It is a subjective judgment about the nature, form, substance, and origin of the contribution of the parties to their assets. It takes into account the non-financial contribution because of the nature and origin of the asset, that is, how the parties got what they have and what they did to retain to those assets.
Because the house is jointly owned and the husband is not exercising his rights to his property, I consider that he has no objection to an order being made to alter that interest. He does not contribute towards the mortgage. In my view, it would be just and equitable here to make an order.
The parties contributed equally up until their separation. Since then, and it is a long time, the wife has taken the major responsibility for the financial support of the family. Child support has not been regularly paid. The wife has maintained and conserved the property. There is no evidence from the husband disputing the efforts of the wife.
The equity that is being divided here is modest having regard to the mortgage commitment which the wife has said she will take. That equity is about $350,000. Whilst the contributions to separation were equal, the contributions of the wife subsequent to the ending of the relationship have been much greater than those of the husband in every sense. She has been the main financial provider. She has had the sole responsibility for the day to day care of the children whilst continuing to work and support them.
The period since separation is almost 5 years and the husband’s lack of child support indicates that the burden on the wife has been greater than it should have been.

In my view, the adjustment must favour the wife significantly. To the extent that it needs to be more specifically addressed in percentage terms, I would adjust in favour of the wife as to 80 per cent bearing in mind the modest amount involved.
The third step in the process is to make an assessment having regard to the matters set out in s 75(2) of the Act, and that requires a consideration of a number of factors. In this case, the evidence about age, health, income, and earning capacity is limited, but I also have no understanding of what assets, if any, the husband has. The relevant factors to be considered here are that the children are still teenagers and the wife has a number of years of not just physical care but also financial support without the entitlement to rely upon the husband for child support. The wife’s income is not large. The husband has not provided any financial material and the wife is unable to say what he is currently doing financially.
In my view, the years of child rearing without support and her modest income justify a further 20 per cent adjustment in her favour.
It is the underlying value of the entitlement rather than the percentage value that must be just and equitable. What the wife is obtaining in addition to her own interest in the property is modest.
In my view, the transfer of the house with the wife taking over the mortgage is a just and equitable outcome.

I certify that the preceding Fifty Five (55) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 22 April 2016.

Associate:

Date: 22 April 2016