RABEY & CANAVAN
[2012] FMCAfam 46
•31 January 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| RABEY & CANAVAN | [2012] FMCAfam 46 |
| FAMILY LAW – Property adjustment – marriage of modest length – significant initial financial contributions by wife – gambling debts by husband during the relationship & paid off by wife – just and equitable considerations. |
| Family Law Act 1975, ss.75(2), 79(4)(a), (b), (c), (d) |
| De Angelis & De Angelis (2003) 30 Fam LR 304 P. Parkinson, Australian Family Law in Context: Commentary and Materials (Sydney: Lawbook Co., 2012) |
| Applicant: | MR RABEY |
| Respondent: | MS CANAVAN |
| File Number: | CAC 232 of 2010 |
| Judgment of: | Neville FM |
| Hearing dates: | 5 & 6 September 2011 |
| Date of Last Submission: | 14 September 2011 |
| Delivered at: | Canberra |
| Delivered on: | 31 January 2012 |
REPRESENTATION
| Counsel for the Applicant: | Mr J Millar |
| Solicitors for the Applicant: | Farrar Gesini & Dunn, Canberra |
| Counsel for the Respondent: | Mr J Levy |
| Solicitors for the Respondent: | Phelps Reid, Canberra |
ORDERS
Within 7 days, using the orders as sought by Ms Canavan, the parties are to provide the Court with a certified copy of Orders that reflect the distribution of property 83% in favour of Ms Canavan and 17% in favour of Mr Rabey.
In the absence of an Application within 14 days of the date of these Orders, an Order will be made in Chambers that each party is to pay their own costs of the proceedings.
IT IS NOTED that publication of this judgment under the pseudonym Rabey & Canavan is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT CANBERRA |
CAC 232 of 2010
| MR RABEY |
Applicant
And
| MS CANAVAN |
Respondent
REASONS FOR JUDGMENT
Introduction
These are property proceedings in relation to a relationship of approximately seven (7) years’ duration.[1]
[1] There was some discrepancy in the detail provided as to commencement of the relationship: Mr Rabey contended that the parties commenced cohabitation in February 2003, while Ms Canavan contended that they did not go out for the first time until late March of that year, and that it was not until some six months later that they commenced cohabitation. Among other places, see Transcript (5th September 2011) pp.18-19 & 65. On this and other matters, for reasons noted later, unless otherwise specified, I prefer the account of Ms Canavan to that given by Mr Rabey where-ever there is any relevant conflict or disparity between them. In my view, Mr Rabey’s account of events often lacked an appropriate level of precision and detail which one might have reasonably expected, and which was evident in Ms Canavan’s evidence. I do not suggest by this observation that Mr Rabey was doing anything other than endeavouring to give the best evidence he could.
Hereafter, unless otherwise required, transcript references will simply be as follows: “T followed by the relevant page number.”
The Applicant Husband is aged 51, and the Respondent Wife is aged 60. They are both in permanent employment, although the Wife’s contract position in the (omitted), she said, is due to expire in January 2012. The Husband’s employment in the (omitted) is permanent. He also continues to conduct his (omitted) business, known as (omitted).
Whenever their co-habitation commenced, the parties married in late 2007. The Husband said that the marriage occurred on (omitted) 2007, while the Wife said that it took place on (omitted) 2007. The copy of the Marriage Certificate on the Court file supports Ms Canavan’s contention: the marriage took place at (omitted) in (omitted), Queensland, on (omitted) 2007. Nothing turns on this discrepancy save that it is one of a number of instances in which Ms Canavan’s evidence is, in my view, the more accurate, and therefore the more reliable, of the two parties.
There is little or no dispute that the Wife brought into the relationship very considerably greater assets than did the Husband. Indeed, the experienced and learned Counsel for the Husband confirmed that the assessment of initial contributions would be, in his view, in the order of 75% in the Wife’s favour.[2] No less experienced and learned Counsel for the Wife submitted that the financial contribution by his client should be assessed in the order of 90%. For reasons that appear later, in my view, the percentage assessment should be more towards that proposed by the Wife.
[2] See T pp.13-14. Learned Counsel for the Wife submitted at the outset of the trial that it was more likely that the Court would find the initial financial contributions by his client were in the order of 90%. And, on that basis, Counsel submitted that at the conclusion of the trial, there would not need to be any adjustment. See T 16.
The assets and liabilities pertaining to the relationship have been agreed, in large measure. To the degree that there is any dispute, because of her detailed documentation and my acceptance of her evidence in preference to that of Mr Rabey, these reasons proceed on the basis that Ms Canavan’s table of assets and liabilities most accurately reflects the true position. It is set out in a table later in these reasons.
The way the case was conducted on behalf of the Husband, who seeks a distribution in percentage terms of the asset pool whereby he would receive 30% and the Wife 70%, focussed on contributions during the relationship, as well as the disparity in assets that will ultimately befall the Husband, and (so it was submitted) [unjustly and inequitably] advantage the Wife, and correspondingly, unjustly and inequitably disadvantage the Husband.
A signal part of the case concerned whether the Husband’s gambling debts (a) constituted “waste”, and if so, (b) what impact (if any) his conduct in this regard should have on any property distribution.[3]
[3] Generally in relation to such considerations, see Kowaliw & Kowaliw (1981) FLC ¶91-092; Mead & Mead (1983) FLC ¶91-354, De Angelis & De Angelis (2003) 30 Fam LR 304 and Polonius & York [2010] FamCAFC 228. Mead and De Angelis deal directly with issues concerning gambling debts, while Polonius, at [87] and [88], expressly approved Mead, among other things.
An alternative, and in some ways novel, argument was put on behalf of the Husband to the effect that the Wife married him, in late 2007, knowing full well that he had a propensity to gamble and that, in keeping with the usual or traditional vows of marriage, this constituted part of the “for better or for worse” part of them of which the Wife could not now complain, or have such a matter ‘sound’ in the just and equitable assessment of their property interests.[4] Her agreement to the marriage, in the light of Mr Rabey’s gambling, so it was argued, amounted to acquiescence on Ms Canavan’s part so that she could not now claim some sort of relief in the light of that gambling.
[4] Cf.C & C (2006) FLC ¶93-269.
In broad terms, these reasons proceed as follows: after setting out the respective ‘orders sought’ and the table of [agreed] assets and liabilities, I then deal with the evidence of the parties before considering the remaining steps that deal with contributions, factors under s.75(2) of the Act, and the final step to determine what is just and equitable in all the circumstances of the case.[5]
[5] See the discussion of the usual “four-step process” in, among other places, In the Marriage of Omacini (2005) 33 Fam LR 134 at [46] – [49].
A. Orders Sought
The parties’ respective ‘orders sought’ are as follows.
Orders sought by the Husband
Property
1. That within 42 days:
a) The Wife pay to the Husband the sum of $75,161.88;
b) The Wife do all things necessary to transfer to the Husband all of her interest in the property known as Property H, in the Australian Capital Territory, being the whole of the land contained in Block 10, Section 12, Property H and otherwise described in Certificate of Title Volume 710 Folio 61.
c) The Husband (and insofar as required, the Wife) do all things necessary, including signing all necessary documents, to repay to Perpetual Limited the amount required to discharge mortgage registration number 1479110 and to discharge the Mortgage.
2. That the Wife be, as against the Husband, the sole legal and beneficial owner of the property at Property N.
Indemnities
3. That the Husband indemnify and keep indemnified the Wife against any liability, including taxation liabilities, in the name of:
a)Mr Rabey;
b)The company, (omitted) (“the company”);
c)The Rabey Family Trust.
4. That the Wife release the Husband and the company from any monies owing to her, and indemnify and keep indemnified the Husband the company from liability for any such monies.
5. That the Wife do all things necessary to assign any interest she has in any loan account in either the Rabey Family Trust, or the company, to the Husband or as directed by him.
Superannuation
6. That the base amount of $50,606.80 is allocated, as required by section 90MT(4) of the Family Law Act 1975, to the Husband out of the Wife’s interest in the (omitted) Master Fund (Member Number: L 00023)
7. That in accordance with section 90MT(1)(a) of the Family Law Act 1975;
a)The Husband is entitled to be paid the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001; and
b)The Wife’s entitlements and the entitlement of such other person to whom a splittable payment may be made to out of the Wife’s interest in the (omitted) Master Fund, is correspondently reduced.
8. That the Trustee of the (omitted) Master Fund (“The Trustee”) shall do all such acts and things and sign all such documents as may be necessary to:
a)Calculate, in accordance with the requirements of the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001 the entitlements created by Order 7; and
b)Pay the entitlement whenever the Trustee makes a splittable payment out of the Wife’s interest in the (omitted) Master Fund.
9. That Order 7 has effect from the operative time and the operative time is 1 August 2011.
10. The Trustee of the (omitted) Service Superannuation Fund, having been afforded procedural fairness in these proceedings, is bound by these orders.
Other Property
11. Except as otherwise provided in these Orders, each party is to be, as against the other, the sole legal and beneficial owner of any property in that party’s name or possession at the date of these Orders.
Orders sought by the Wife
1. The Wife shall be, as against the Husband, declared the sole legal and beneficial owner of the following:
1.1 The property known as and situated at Property N in the State of New South Wales (“the Property N property”);
1.2 The property known as and situated at Property H in the Australian Capital Territory (“the Property H property”);
1.3 The (omitted) ACT number plate;
1.4 The contents of the Property N property;
1.5 Contents of the Property H property as follows:
1.5.1 Sunbeam Food Processor – (omitted);
1.5.2 Le Cruesett 26” Casserole;
1.5.3 Le Cruesett 10” Frypan;
1.5.4 Heavy base S/Steel 28cm profiline pot w/lid;
1.5.5 Circulon Stove top wok; and
1.5.6Fisher & Paykel Refrigerator – (omitted)
1.6 Any jewellery in her possession;
1.7 Any shares in her sole name;
1.8 Any monies in any bank account in her sole name; and
1.9 Any credit card debt in her sole name.
2. The Husband shall be, as against the Wife, declared the sole legal and beneficial owner of the following:
2.6 (omitted);
2.7 Any jewellery in his possession;
2.8 Any monies in any bank account in his sole name; and
2.9 Any credit card debt in his sole name.
3. The Husband indemnify and keep indemnified the Wife against any liability, including taxation liabilities, in the name of:
3.6 Mr Rabey;
3.7 (omitted) (“the company”); and
3.8 The Rabey Family Trust.
4. The Wife indemnify the Husband and the company from any monies owing to her, and indemnify and keep indemnified the Husband and the company from liability for such monies.
5. The Wife do all such things necessary to assign any interest she has in any loan account in either the Rabey Family Trust, or the company, to the Husband or as directed by him.
6. The base amount of $20,246.28 is allocated, as required by section 90MT(4) of the Family Law Act 1975, to the Husband out of the Wife’s interest in the (omitted) Master Fund (Member Number: L 00023).
7. In accordance with section 90MT(1)(a) of the Family Law Act 1975:
7.1The Husband is entitled to be paid the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001; and
7.2The Wife’s entitlements and the entitlement of such other person to whom a splittable payment may be made to out of the Wife’s interest in the (omitted) Master Fund, is correspondingly reduced.
8 The Trustee of the (omitted) Master Fund (“the Trustee”) shall do all such acts and things and sign all such documents as may be necessary to:
8.1 Calculate, in accordance with the requirements of the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001 the entitlements created by Order 7; and
8.2 Pay the entitlements whenever the Trustee makes a splittable payment out of the Wife’s interest in the (omitted) Master Fund.
9 Order 7 has effect from the operative time and the operative time is 1 August 2011.
10 The Trustee of the (omitted) Service Superannuation Fund, having been afforded procedural fairness in these proceedings, is bound by these Orders.
11 The parties retain all other assets, liabilities and superannuation entitlements in their respective names, possession or control at the date the Orders are made by the Court and be responsible for and indemnify the other of any debts in their respective names, encumbering or associated with the assets retained by that party.
B. Joint List of Assets & Liabilities
| Assets | Wife’s value | Husband’s value |
| Property N property (Wife’s name) | Agreed | $820,000.00 |
| Property H property (Wife’s name) | Agreed | $495,000.00 |
| Savings (Wife’s name) | Agreed | $1,000.00 |
| Savings (Husband’s name) | Agreed | $0.00 |
| (omitted) | Agreed | $92,500.00 |
| IAG and AMP Shares (Wife’s name) | Agreed | $7,047.66 |
| (omitted) Corolla Motor Vehicle (Wife’s name) | Agreed | $1,000.00 |
| Property N | Agreed | $10,000.00 |
| Property H | Agreed | $5,000.00 |
| Jewellery | Agreed | $2,935.50 |
| (omitted)Number plate | Agreed | $7,500.00 |
| Total Assets: | Agreed | $1,441,983.16 |
| Liabilities | ||
| Mortgage secured against Property H property (Wife’s name) | Agreed | $244,276.35 |
| Tax liability | $0.00 | $36,300.00 |
| Accounting fees | $0.00 | $4,400.00[6] |
| Credit cards (Husband’s name) ANZ | Agreed | $8,110.81 |
| Credit cards (Wife’s name) CBA | Agreed | $11,801.82 |
| Total Liabilities: | $321,349.98 | $362,049.98 |
| Total net Non-Superannuation Asset Pool: | $1,120,633.18 | $1,079,933.18 |
| Superannuation | ||
| (omitted)(Wife’s name) | Agreed | $46,348.45 |
| (omitted) (Wife’s name) | Agreed | $133,149.00 |
| Ausfund (Wife’s name) | Agreed | $9,741.00 |
| MTAA (Wife’s name) | Agreed | $3,829.00 |
| AMP (Wife’s name) | Agreed | $1,590.85 |
| (omitted)(Husband’s name) | Agreed | $7,072.06 |
| Commonwealth Bank Superannuation (Husband’s name) | Agreed | $3,942.00 |
| Total Superannuation: | Agreed | $205,787.49 |
[6] The amounts of $36,300 in relation to a tax liability of Mr Rabey, and accounting fees for his account, of $4400, explain the only difference between the parties and their otherwise agreement in relation to the assets and liabilities of the relationship.
C. Evidence of the Parties
Mr Rabey: At the outset, it is fair to observe (and in no way critically) that the range of issues canvassed with Mr Rabey, and the consequent time he spent in the witness box, was significantly greater than with Ms Canavan.
At the commencement of the relationship with Ms Canavan, Mr Rabey agreed that (a) she owned the Property N property (unencumbered), and (b) she had $470,000 in savings, out of which she purchased a property in the Canberra suburb of L after which she had savings of $93,630; the Property L property was, obviously, unencumbered also. In other words, there was no dispute that Ms Canavan owned two properties and had a sizeable sum of cash in the bank at the commencement of, or very early in, the relationship.[7]
[7] T 23 – 24.
By contrast, at the commencement of the relationship, Mr Rabey owned a property in the Canberra suburb of Property H, but which had an outstanding mortgage of $182,000.[8] He also had credit card debts of $10,000.[9]
[8] At the commencement of the relationship, Ms Canavan swore that the value of the Property H property was approximately $200,000.
[9] T 24.
Initially, Mr Rabey said that all of his credit card debt related to items such as a motor bike and a boat. However, upon further exploration, he confirmed that some of the debt was related to gambling.
Mr Rabey also confirmed that for some years, due to depression, he had been unable to lodge his tax returns. Those returns, he confirmed, were only lodged after Ms Canavan left her then part-time work and turned her energies to getting his business records into some organised shape.[10]
[10] T 25.
Mr Rabey also confirmed that, at the commencement of the relationship, he had an uncrystallised tax liability and that his finances were in a fairly parlous state. He confirmed that his debts were increasing. He also confirmed that, from a financial perspective, but not limited to matters of finance or economics, the relationship with Ms Canavan was financially very beneficial to him.[11]
[11] T 26.
The remainder of his cross-examination may be divided between matters pertaining to contributions, and his gambling, which matters were necessarily intertwined with his relatively modest income.
In relation to the former, summarily stated, he said that he and Ms Canavan went on regular and various holidays together, often-times to watch his son play in various (omitted) tournaments. Apart from these holidays, their recreation time was spent at the Wife’s property at Property N.
Mr Rabey was uncertain about exactly how much board his son paid when he commenced living full-time with the parties for what was the last three years of the relationship. He had lived part-time with them earlier.[12]
[12] See T 28 – 31.
Mr Rabey confirmed that the Property N property was fully landscaped when he met Ms Canavan.[13] In the light of this straight-forward admission, I have some difficulty with the later argument put on his behalf that he had contributed to the upkeep of the property, save that Ms Canavan confirmed that some maintenance of the gardens was performed by Mr Rabey.
[13] T 35.
Mr Rabey’s tax records were, seemingly, only provided during the course of the trial, although some or all of them had been made available for some form of inspection earlier.[14] It is fair to say that his income was relatively modest.[15]
[14] See the discussion at T 36 and later at T 59 ff.
[15] The detail of Mr Rabey’s income is set out at T 36 ff.
Mr Rabey’s cross-examination in relation to his gambling went as follows – again stated summarily.[16] First, he confirmed that he needed cash for gambling. Secondly, he denied that his gambling was out of control between 2003 and 2006. Unfortunately, I consider this statement to be inconsistent with a number of later statements of Mr Rabey. He did concede that in some weeks his expenditure on gambling exceeded his income.[17]
[16] The cross-examination in relation to gambling effectively commences at T 39.
[17] Mr Rabey’s tax records – personal, business and family trust – for the period 2004-2011, became Exhibit E
In her affidavit material, in the light of subpoenaed records (and with copies attached), Ms Canavan had provided a schedule (Annexure Z of the affidavit filed on 15th August 2011) of cash advances made to Mr Rabey. He was surprised (he said) with the suggestion that those records show on some occasion him spending in excess of $5000 per month on gambling.[18]
[18] T 40.
In October 2003, the records show that cash withdrawals by Mr Rabey amounted to $5140. Yet in that year, Mr Rabey said that his taxable income was only $55,000. In November 2003, Mr Rabey confirmed that the majority of cash withdrawals, which totalled $4800, would have been spent on gambling. Likewise in relation to December and cash withdrawals of $5260.[19] Thus, in three months, Mr Rabey confirmed that the bulk of his cash advances of $15,260 would have been spent on gambling. He said that he would have had some winnings during this time. He also accepted, however, later in his cross-examination, that poker machines (which was his acknowledged form of gambling) is a form of gambling where the player must lose more than they win.[20]
[19] T 42.
[20] T 47.
Between October 2003 and September 2004, the entries from his primary place of gambling, a club called the (omitted), showed that cash advances to Mr Rabey totalled $36,240. His response was that he was depressed at the time. According to Counsel for Ms Canavan, this equalled $3020 per month or $697 per week.
Mr Rabey then accepted that for the 12 months from January 2005, his cash advances from the Club totalled $21,820 or $1800 per month.
In the course of the detailed examination of his gambling, Mr Rabey was asked whether gambling was a source of friction between the parties. He said that it was not.[21] However, this statement is inconsistent with a number of others made in the course of cross-examination. For example, he said that he made an agreement with Ms Canavan in 2006 not to gamble. This was at a time when, through a re-financing arrangement that involved Ms Canavan (on which more later), credit card debt was again retired. Indeed, Mr Rabey confirmed, in my view with some reluctance, that his personal and business finances suffered because of his gambling.[22]
[21] T 45.
[22] T 48.
Mr Rabey confirmed that the last of a number of credit card debt pay-outs, which totalled $38,284, came directly from Ms Canavan’s savings.[23]
[23] T 50.
And again with some hair-splitting, to put it as neutrally as possible, Mr Rabey said that the refinancing of the Property H property, to which I have just alluded (in [27] above), was a “mutual agreement.” He denied, contrary to what Ms Canavan asserted, that it was conditional on him to stop gambling.[24]
[24] T 51.
Finally, there are two things to note about Mr Rabey’s evidence. First, whereas Ms Canavan’s affidavit material is replete with documentation, Mr Rabey’s is rather brief. This, in itself, should not be taken to be a criticism. However, where, as here, documentary records could have and should have been provided at the earliest possible time to detail, if not to confirm, the record of, for example, cash advances that form a central part of the case, they were not forthcoming from Mr Rabey. He commented a number of times, by way of explanation, that he (or his lawyers) knew that Ms Canavan would secure them - ‘so why duplicate that process?’
Secondly, on multiple occasions in the course of his cross-examination, Mr Rabey simply said that he could not recall relevant details. I did not, and do not, think that he was trying to be evasive or otherwise not trying to tell the truth. The following are some instances of where, and the frequency of, Mr Rabey’s poor memory: lack of detail about his superannuation (T 26); lack of detail about his son’s (omitted) trips (T 31); lack of detail about his son’s period of grace in living free of the payment of board (T 32-33); lack of detail about landscaping at the Property N property (T 34); lack of detail about Ms Canavan’s commencement and involvement in his business (T 35); lack of detail about payment of legal fees (T53-54); incorrect details about a ‘life insurance policy’ in favour of Ms Canavan (T 55).
There are, of course, few perfect witnesses in any litigation. Accepting that each witness will usually demonstrate a range of human foibles, including forgetfulness, it was most unfortunate that Mr Rabey was not able to summon a greater level of information and accuracy over matters that one would have thought, in a relationship of this duration and in its surrounding circumstances, than he did. By comparison, Ms Canavan had relevant documents to support her version of events and gave her evidence in a clear and concise manner. Contrary to submissions that she was furtive and perhaps even dissembling, I found her evidence to be responsive, detailed and clear. I turn to that evidence now.
Ms Canavan: The focus of Ms Canavan’s evidence was twofold: (a) the degree to which Mr Rabey had made contributions, and (b) Mr Rabey’s gambling and matters related thereto.
As to the former, Ms Canavan said that Mr Rabey’s contributions (both financial and non-financial) to the Property N and Property L properties were limited, or at best, modest.
She confirmed that both parties shared the cost of the holidays to which I have previously referred.[25] She also generally agreed with the contention put on behalf of Mr Rabey that their life-style was generally beyond their means.[26] She also agreed that the credit card balances, also previously referred to, would have included some household expenses, which is also to say that not all credit card expenses related to Mr Rabey’s gambling.[27]
[25] T 71.
[26] T 75.
[27] T 78.
Ms Canavan said that she did not know of Mr Rabey’s depression before they started living together.[28]
[28] See T 74.
Ms Canavan said that Mr Rabey was not open with her about his gambling, that she raised with him her concerns about it, and that despite promising, in 2006, to stop gambling, from time to time, Mr Rabey ‘fell off the wagon’ and gambled.[29]
[29] See T 79-80 & 86-87.
Learned Counsel for Mr Rabey pursued a range of questions to Ms Canavan about her knowledge of and involvement in Mr Rabey’s financial dealings (including those of his (omitted) business), as well as her knowledge of his gambling.[30] For my part, I accept Ms Canavan’s evidence that she raised with Mr Rabey his gambling. I accept that both parties sought to address Mr Rabey’s gambling, that it was a cause of tension within the relationship, and that, from time to time after 2006, despite his best efforts, Mr Rabey still gambled. I do not see that the questions put to Ms Canavan in relation to her knowledge of Mr Rabey’s financial affairs take the matter very far.
[30] Among other places, see T 82 ff.
D. Contributions
There are a number of matters to note about the evidence overall and their relevance to contributions – financial and non-financial.
First, Ms Canavan made, in my view, a compelling case for a very high assessment of financial contributions at the commencement of the relationship. As she set out in her trial affidavit (filed 15th August 2011), at pars.10 and 11, the disparity between the parties, supported by relevant documentation, is stark, if not bordering on startling. In sum, she highlights that at the commencement of the relationship, Mr Rabey had net assets estimated to total $104,729.89, and superannuation estimated to be $2000.
By contrast, at the commencement of the relationship, Ms Canavan had non-superannuation assets that totalled $1,275,567.35, and superannuation of $136,299.
As indicated earlier, in cross-examination Mr Rabey essentially accepted the large disparity in the financial circumstances that each party brought to the relationship.
Accepting that the assessment of contributions (financial and non-financial) is not a matter that necessarily brings with it absolute, mathematical precision,[31] in my view an assessment of financial contribution at the commencement of the relationship must favour Ms Canavan, and to a very significant degree. In my view, the 75% assessment in favour of Ms Canavan submitted on behalf of Mr Rabey is too low and does not reflect the reality. In my view, an initial percentage assessment of financial contributions must favour Ms Canavan to the tune of 88%.
[31] The older authority of Garrett & Garrett (1984) FLC ¶91-539 in this regard was approved by the Full Court in Polonius & York [2010] FamCAFC 228 at [107]. Likewise, see the comments by the Full Court in Clives v Clives (2009) 40 Fam LR 273 at [44]: “We accept that the task to be undertaken by a trial judge in assessing weight to initial contributions, and other contributions, is not always an easy one and not discharged by a strict accounting exercise.”
In making such an assessment, I am conscious of the comments in Pierce & Pierce, at [28], where the Full Court emphasised that it is properly a question of “what weight is to be attached, in all the circumstances, to the initial contribution.”[32]
[32] Pierce & Pierce (1999) FLC ¶92-844 at p.85,881. See also Clives v Clives (2009) 40 Fam LR 273 at [43] & [44].
The second matter to note in the light of the evidence is that I accept Ms Canavan’s evidence, which was not challenged, that she worked in Mr Rabey’s business from January 2005 until December 2009. Both parties confirmed that neither of them received a weekly or monthly wage/salary. Both also accepted that the business paid a percentage of household expenses such as telephone, rates, electricity and motor vehicle expenses. Mr Rabey’s business also paid for the mortgage payments in relation to the Property H property, which Ms Canavan said, often fell into arrears. However, out of her financial resources, Ms Canavan often made up the balance of any household bills, including the arrears in relation to the Property H mortgage.[33]
[33] See Ms Canavan’s trial affidavit, par.14.
In contrast, Mr Rabey stated in his trial affidavit (filed 16th August 2011), at par.17: “During the relationship we used my income to fund our entire joint expenditure.” As already indicated, I do not accept the accuracy of this statement, nor generally Mr Rabey’s evidence, which was significantly lacking in relevant detail.
In addition to the matters already noted concerning which Mr Rabey said he had no relevant recollection or detail, I note that in his trial affidavit, at par.112, Mr Rabey swore that both he and Ms Canavan played poker machines during the early stage of their relationship. During her cross-examination, as well as in her affidavit material, Ms Canavan confirmed that she never played poker machines, and that she hated them.
As with all other aspects of the evidence, in the absence of independent, corroborative evidence from Mr Rabey, I very much prefer the evidence of Ms Canavan, for the reasons previously given. In addition, Mr Rabey’s evidence, particularly in his affidavit material, had a tendency to be over-stated and to present a more glowing or positive account of his involvement in events than the facts properly permit.[34] Indeed, his very modestly drawn account of his gambling, which occupies only seven sparsely detailed paragraphs of his trial affidavit (pars.112-118), is a significantly and, respectfully, bordering on the disingenuously, understated account. In the light of Ms Canavan’s documentary evidence, and Mr Rabey’s cross-examination, regarding the finances of the parties and his gambling, Mr Rabey’s affidavit evidence could almost be characterised as misleading. I do not suggest that there is or was any mala fides on his part in this regard, but rather a most unfortunate tendency to under-play his responsibilities and the consequences thereof.
[34] Other examples where Mr Rabey’s account of events were less than complete and clearly lacking in appropriate detail concern the ‘lack of payment of his legal fees’ (see T 54), and the inaccurate details regarding a life insurance policy (see T 55). In relation to the latter, he seemingly dismissed the clarifications sought by Counsel for Ms Canavan as “semantics.” Respectfully, accuracy in evidence is more than a matter of “semantics.”
Ms Canavan swore that, upon her employment in Mr Rabey’s business, she became aware of significant levels of indebtedness, as well as a very significant level of disarray in the company, and personal records of Mr Rabey. She said that it took her a very significant period of time, which she did not have, to organise the disarrayed records, and that it was only after complete records came into her hands via subpoenaed documents in 2010 that she realised the full extent of the financial troubles involving credit card debts and Mr Rabey.[35]
[35] See T 91-92.
To assist in relation to the indebtedness, in mid-2005, she purchased from Mr Rabey the Property H property at a market value of $350,000. Then in June 2006, she borrowed from Macquarie Bank, with mortgages being secured over the Property H and her Property L properties, the sum of $590,000. From this sum, Ms Canavan paid the purchase price of the Property H property (plus stamp duty), and lent Mr Rabey’s business (which traded as (omitted)) $150,000.
Ms Canavan averred, at par.21 of her trial affidavit, and again which was not formally challenged, that Mr Rabey used the $350,000 to discharge the mortgage secured over the Property H property and to pay his credit card debts. Further, Mr Rabey used the $150,000 to pay outstanding tax for his business for the years 2002, 2003 and 2004. Other, unspecified, business debts, she said, were also paid for out of these funds.
In April 2007, Ms Canavan sold her Property L property for $500,000. From the proceeds of sale, $400,000 was used to reduce the indebtedness to Macquarie Bank in relation to the remaining mortgage over the Property H property. She deposited the balance of $49,226.57 into her CBA account.
Documents to support the matters set out in the previous paragraphs are at Annexures Q, R and S to Ms Canavan’s trial affidavit.
Thirdly, the next matter to consider relates to Mr Rabey’s credit cards and his indebtedness concerning them. At par.23 of her trial affidavit, Ms Canavan details the four occasions when Mr Rabey’s credit cards were paid off – in April 2005, June 2006, June 2007, and June 2008. I have already noted Mr Rabey’s acceptance, during cross-examination, that the third occasion when this occurred (in June 2007) involved Ms Canavan paying, out of her own funds, $38,284. The other three occasions, as detailed in the paragraph to which I have referred, involved various borrowings and re-financing arrangements.
I accept Ms Canavan’s account of these events. They too were not essentially challenged by Mr Rabey. And like other matters, Ms Canavan’s affidavit provides documentary evidence in support of her account of events.
In relation to the contributions contemplated by s.79(4)(b), in my view, the evidence is such that, on balance, they should be assessed as equal.
Concerning s.79(4)(c), the evidence was more clear. It is appropriate, in my view, that in terms of “home-making”, a case can be made by both parties that their contributions were basically equal. The one matter, however, that favours Ms Canavan slightly, relates to the fact that Mr Rabey’s son lived with the parties for a couple of years effectively free of the payment of any board, while her son paid board.[36] As with other evidence, and as I have noted a number of times already, Mr Rabey’s evidence on this matter was opaque and free of much detail, while Ms Canavan’s account was detailed and quite precise. I prefer her account to that of Mr Rabey.
[36] See T 33, where Mr Rabey accepted that Ms Canavan’s son paid board. Generally, see Ms Canavan’s evidence at T 73, although payment of any ‘board’ is not directly mentioned.
Although a small allowance in favour of Ms Canavan might technically be permissible in the circumstances outlined, in the light of the evidence overall, I do not propose to allow any specific amount in her favour under this heading in relation to this very discrete aspect.
E. Section 75(2) Considerations
I have already noted that the parties are aged 51 and 60 respectively. Mr Rabey is now employed, full-time and permanently, in a (omitted) position, which he acknowledges has meant that he now earns more than he has done since 2002.[37] He also said that but for that job he would now be bankrupt.[38] The significance of this statement, if not concession, is self-evident. He retains his (omitted) business, albeit that he contends that it is not what it once was. He also has a boarder at his current residence who pays rent.[39]
[37] See T 54.
[38] T 53.
[39] See T 58 and par.41 of his trial affidavit, in which place Mr Rabey confirmed that he receives $650 per month from the boarder for the single room that is occupied.
I have also noted that Ms Canavan’s current employment is not permanent in the (omitted). Her current employment expires this month, if it has not already done so.
Mr Rabey filed an affidavit from his GP (Dr M.) in relation to his “health.” That GP was not required for cross-examination. In his trial affidavit, at par.33, Mr Rabey stated that he was in “reasonable health.” He referred to taking blood pressure tablets and some anti-inflammatory medication for some back pain. His depression has been noted previously.
In the same affidavit, at pars.37 & 38, he confirmed that he worked full-time with the (omitted) and earned $75,000 per annum. As well, Mr Rabey confirmed that he continues to run his (omitted) business.
For my part, whatever the daily stresses and strains of daily life, Mr Rabey clearly is able to work two jobs and is in secure employment. Those facts speak for themselves. And clearly, his employment is more secure than that of Ms Canavan, as does his age tend in his favour, compared to Ms Canavan.
In short, I do find that there are any relevant health issues (other than the vicissitudes of life) that should specifically be considered, or considered in a manner that is beyond noting the matters I already have.
In addition to the employment situation of the parties, concerning s.75(2)(b) I simply record that Mr Rabey’s business, (omitted), was valued at $105,800 (see Annexure I to Ms Canavan’s trial affidavit). It has now been agreed that it has a value of $92,500. Ms Canavan contended, at par.5 of her trial affidavit, that Mr Rabey earns approximately $44,000 per annum from that business.
There are no children of the relationship, and those from previous relationships who have been mentioned in the course of the current proceeding have all attained their majority.
One of the few other matters under s.75(2) that arises for consideration, formally speaking, is sub-paragraph (g) in relation to ‘standard of living.’ Leaving aside that there were no submissions on this ground, for my part, given the respective circumstances of the parties, I do not see that either party will be unduly affected in this regard.
F. Final Considerations (including ‘just & equitable)
I must attend to three final matters. First, in relation to the argument concerning Mr Rabey’s gambling and whether it constituted “waste.”
The case law is clear in relation to the basic principles. The starting point is the judgment of Baker J in Kowaliw.[40] It is as well to set out the following very recent consideration of his Honour’s comments by the Full Court in Polonius & York.[41] Beginning at [86], the Full Court (Boland, Thackray & O’Ryan JJ) said:
[40] See (1981) FLC ¶91-092 at p.76,644-645.
[41] The Full Court’s instruction in Polonius & York [2010] FamCAFC 228 is at [85] – [89] on these principles and when and how they might be applied.
[86] Marital conduct of parties is not specifically referred to in s 79 of the Act and as a general proposition the marital behaviour of parties is not of itself relevant to applications under s 79: Soblusky and Soblusky (1976) FLC 90-124. However, there may be circumstances in which marital conduct may be relevant and taken into account. If the conduct of a party towards the other had a significant adverse impact upon the other parties’ contributions to the marriage or made the other parties’ contributions more arduous than they ought to have been, then this may be relevant: Kennon v Kennon (1997) FLC 92-757. As well, certain types of behaviour which have a direct connection with financial matters may be relevant. In Sheedy and Sheedy (1979) FLC 90-719 Nygh J said at 78,872 that conduct may be relevant “if it has financial consequences, such as financial misbehaviour resulting in the waste or suspension of family assets”: see also Fisher and Fisher (1990) FLC 92-127 at 77,846.
[87] In Kowaliw Baker J said at 76,644:
As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of the marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a) where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets or
(b) where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para. (a) and (b) above having economic consequences is clearly in my view relevant under sec. 75(2)(o) to applications for settlement of property instituted under the provisions of sec. 79.
Examples of this type of conduct may include circumstances where the drinking and gambling of one party has led to the failure of a business or the dissipation of assets: see Mead and Mead (1983) FLC 91-354 per Asche SJ at 78,369.
[88] In Kowaliw Baker J also said at 76,644-45: “It does seem to me, however, that if a party has either by deliberate act or by economic recklessness reduced the value of assets available for distribution then the economic consequences which flow therefrom including the resultant burden to the other party are directly relevant to a consideration of the respective contributions of the parties contemplated by sec. 79(4)”.
[89] It follows that in certain circumstances financial misconduct or financial misbehaviour may be taken into account in a number of ways. It may be taken into account by the notional inclusion of an amount at step one of the preferred approach to the determination of an application pursuant to s 79 of the Act which was explained in Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 or when assessing the contributions at step two of the preferred approach or perhaps when considering the other factors at step three of the preferred approach: see M and M [1998] FamCA 42 (1 May 1998).
In the light of the Full Court’s comments in Polonius & York, learned commentators have opined that it would appear that, “as a general principle … any conduct of a party towards the other that has had a significant adverse impact upon the other parties’ contributions to the marriage or which has made the other parties’ contributions more arduous, may be considered in property proceedings.”[42]
[42] See P. Parkinson, Australian Family Law in Context: Commentary and Materials (Sydney: Lawbook Co., 2012) p.607 [17.325]. Emphasis added.
The difficulty in every such case where a ‘waste’ argument is raised is to determine whether the facts of the case support such an argument. In many cases, it is a question of degree. On the facts of this case, in my view, there are two observations to be made. First, I do not accept the submission made on behalf of Mr Rabey that Ms Canavan acquiesced in Mr Rabey’s gambling because she knew of his expenditure on it and essentially stood by without doing anything about it. The evidence which I have accepted is that she did raise it with him.
The alternative argument, that the gambling was part and parcel of the vagaries of marriage, the good and the bad, for better or for worse, I also reject. The logic of the argument, carried to an extreme, would be that anyone who knew, for example, of someone’s propensity for violent outbursts, but who nonetheless later married that person, should simply withstand them and could not claim their relevance in any property settlement. As well, the facts of the Full Court decision in C & C, relied upon by Mr Rabey, are significantly removed from the facts of this case as to have, respectfully, no relevance.
The second observation to make in the light of the discussion of the Full Court in Polonius is that, in my view, the appropriate way to consider the gambling issue in this case is under s.75(2)(o). In my view, on the facts of the current matter, I do not consider that the conduct of Mr Rabey amounted to waste in the accepted jurisprudential sense articulated by Baker J in Kowaliw, or the Full Court in Polonius. Nonetheless, and accepting (up to a point, because it was not explored to any great degree, and there was no medical evidence linking the two) that Mr Rabey claimed that he was depressed and gambling alleviated (in some unexplained way) his depression, the gambling is a consideration that must be taken into account under s.75(2)(o) as something to which Ms Canavan attended and did so, on the evidence I have accepted, by ameliorating the debt burden of the parties. As such, it is a contribution in her favour. I also accept that, allowing for the occasional relapse of his gambling, most of these ‘contributions’ regarding gambling took place in the period up to 2006. In such circumstances, in my view, a small allowance of perhaps 2% should be allowed in Ms Canavan’s favour.
The second matter to consider here relates to the argument that, having regard to s.79(4)(d), in any final order made, Mr Rabey will have such a disproportionately small amount of assets that there should be an adjustment in his favour. In my view, although this was resisted by Ms Canavan, there should be a very modest adjustment that takes account of such circumstance. That adjustment should be in the order of 3%.
The third and final matter to consider is the so-called ‘fourth step’, where the Court is required or enjoined, as it were, to stand back from the heat and dust of the litigation and assesses whether the order proposed is “just and equitable” in all the circumstances of the case.[43]
[43] See s.79(2).
In my view, having regard to all the facts and circumstances of the case, and having regard to the Court’s responsibility to make an order that is just and equitable, an order in percentage terms of 83% in Ms Canavan’s favour, and the remaining 17% in Mr Rabey’s favour, should be made. The Court so orders, and more generally makes orders as sought by Ms Canavan.
Neither party sought any order in relation to costs. I would be minded simply to make a further order in the usual terms whereby each party should pay their own costs. However, I will not do so unless and until 14 days have lapsed from the date of the current orders. In the absence of any application being made within that time, such an order will be made in Chambers.
Given the relatively limited scope of the issues in dispute, the limited evidence, and the relatively small difference in the percentage division of property sought, it remains only to remark how very unfortunate it is that the matter was not able to be resolved, even during the trial. I indicated a general view in the course of it. That opportunity was not taken, for whatever reason or reasons. It seems to me that, all too often in family law property disputes in particular, a more pragmatic, commercial approach is not taken. Litigation, by its nature, is always a risk.
In any event, for the reasons I have outlined, in my view, the percentage division of property I have indicated is, in my view, just and equitable. Having regard to the nature of the property involved, within 7 days of the date of these orders, by reference to and using Ms Canavan’s orders sought, I request the parties’ solicitors to provide my chambers with a copy of orders that reflects the percentage distribution I have ordered. I will then make those orders in Chambers.
I certify that the preceding seventy-nine (79) paragraphs are a true copy of the reasons for judgment of Neville FM
Date: 31 January 2012
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