Rocchi & Dietrich
[2021] FedCFamC1F 147
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Rocchi & Dietrich [2021] FedCFamC1F 147
File number(s): HBC 391 of 2021 Judgment of: MCGUIRE J Date of judgment: 27 October 2021 Catchwords: FAMILY LAW – PROPERTY – application by the wife for a property settlement – final hearing proceeded undefended in the absence of the husband – assessment of contributions – waste - adjustment made in wife’s favour – orders that the husband and the wife to receive a share in the property of 39 and 40 per cent respectively Legislation: Family Law Act 1975 (Cth) s 79(2) Cases cited: Stanford & Stanford (2012) 247 CLR 108 Division: Division 1 First Instance Number of paragraphs: 55 Date of hearing: 13 October 2021 Place: Hobart Counsel for the Applicant: Ms Behrens Solicitor for the Applicant: Wallace Wilkinson & Webster Counsel for the Respondent: No Appearance ORDERS
HBC 391 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS ROCCHI
Applicant
AND: MR DIETRICH
Respondent
ORDER MADE BY:
MCGUIRE J
DATE OF ORDER:
27 OCTOBER 2021
THE COURT ORDERS THAT:
1.THAT the Applicant Wife, MS ROCCHI (‘the wife’) be granted leave to proceed by way of undefended hearing.
2.THAT on or before thirty (30) days from the date of this Order the Respondent Husband, MR DIETRICH (‘the husband’) shall transfer to the wife all his right, title and interest in the property situated at B Street, Suburb C in Tasmania being all that property comprised in Certificate of Title Volume … Folio … (‘B Street’).
3.THAT in the event the husband does not comply with paragraph 2 above, the Registrar of the Federal Circuit and Family Court of Australia at Tasmania is hereby appointed pursuant to s 106A of the Family Law Act 1975 (Cth) to execute all documents and/or instruments in the name of the husband and do all acts and/or things necessary to transfer to wife all the husband’s right, title and interest in B Street.
4.THAT pursuant to paragraphs 2 and 3 above, the wife will:
(a)pay all instalments of principal and interest due and payable pursuant to Mortgage number … owing to the National Australia Bank, Account Number ending in - …16 (‘the B Street Mortgage’) until the whole of the monies owing pursuant to the B Street Mortgage shall have been repaid and the wife shall indemnify the husband and keep him indemnified in respect of such payments; and
(b)the wife will do all acts and sign all such documents necessary to cause the National Australia Bank to discharge and release the husband from any liabilities he may have or previously have had pursuant to the B Street Mortgage and to register a new mortgage in the sole name of the wife.
5.THAT the wife shall relinquish in favour of the husband and where necessary transfer to him any claim or interest which she may have to or in:
(a)any savings held in the name of the husband or under his control;
(b)all cash sums already provided to the husband by way of partial property settlement;
(c)the Motor Vehicle 1, motor vehicle registration number … in the husband’s possession;
(d)the Motor Vehicle 2 registration number … in the husband’s possession:
(e)any superannuation entitlements accruing in the name of the husband; and
(f)the furniture and chattels currently in the possession of the husband.
6.THAT the husband shall relinquish in favour of the wife and where necessary transfer to her any claim or interest which he may have to or in:
(a)any savings held in the name of the wife or under her control;
(b)all right, title and interest in B Street;
(c)all right, title and interest in D Pty Ltd (ABN …);
(d)any superannuation entitlements accruing in the name of the wife; and
(e)the furniture and chattels in the wife’s possession.
7.THAT save as it is otherwise provided for herein;
(a)each party relinquish to the other and where necessary transfer to the other any interest they may otherwise have to any monies at banks, savings, shares, investments, motor vehicles, and/or real estate or personal property presently registered in the name of or in the possession of the other party inclusive of any superannuation and/or life insurance entitlements and/or choses in action and release the other party from any debt damages or other sums due or alleged to be due by the other party to that party;
(b)each party shall be solely responsible for all debts and liabilities held in their sole name;
(c)neither party shall incur in the name of the other any account, debt or other liability and at all times keep the other indemnified therefrom and from all claims, actions, costs and other expenses in connection therewith’; and
(d)all insurance policies shall remain the sole property of the owner name therein.
8.THAT pursuant to s 81 of the Family Law Act 1975 (Cth) the parties intend that these Orders shall as far as practicable finally determine the financial relationship between them and avoid further proceedings between them.
9.THAT the wife cause a sealed copy of these Orders to be served on the husband as soon as practicable and then file documents evidencing service with this Court.
10.THAT all extant property and financial applications be dismissed except costs applications between the parties, if any, which are to be dealt with in accordance with the Family Law Rules 2021 (Cth).
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 Rocchi & Dietrich has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
McGuire J
APPLICATIONS
The application before me is by the wife seeking orders for a property settlement. I determine to proceed undefended the husband given his lack of participation in the proceedings.
The matter was commenced by the wife's initiating application filed 23 April 2021. I have evidence of service on the husband. The husband has filed no responsive documents. Nevertheless, the matter was listed for a Conciliation Conference on 13 September 2021. The husband did not attend. The husband has not complied with orders for disclosure. The husband was served with notice of this hearing and its potential to proceed undefended. The matter was called he did not attend and was not represented.
The wife seeks orders which would give her approximately 69 per cent of the property pool on a one – pool basis inclusive of superannuation entitlements.
THE EVIDENCE
The wife relies upon the following documents:
(a)her initiating application filed 23 April 2021;
(b)her affidavit filed 23 April 2021;
(c)her affidavit filed 1 October 2021; and
(d)her affidavit (second affidavit) filed 1 October 2021.
THE LAW
Matters of property settlement are provided for at s 79 of the Family Law Act 1975 (Cth) (‘the Act’) where at subsection (1) the Court is accorded a broad discretion within the statutory parameters.
Section 79(2) provides:
The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
The High Court in Stanford & Stanford[1] confirmed the requirement for trial judges to establish firstly, that it is just and equitable in the particular circumstances of the case to make any order altering the property interests of the parties. Their Honours stated:
[1] (2012) 247 CLR 108.
[37]First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property. So much follows from the text of s 79(1)(a) itself, which refers to "altering the interests of the parties to the marriage in the property" (emphasis added). The question posed by s 79(2) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order.
[38]Second, although s 79 confers a broad power on a court exercising jurisdiction under the Act to make a property settlement order, it is not a power that is to be exercised according to an unguided judicial discretion. In Wirth v Wirth, Dixon CJ observed that a power to make such order with respect to property and costs "as [the judge] thinks fit", in any question between husband and wife as to the title to or possession of property, is a power which "rests upon the law and not upon judicial discretion". And as four members of this Court observed about proceedings for maintenance and property settlement orders in R v Watson; Ex parte Armstrong:
"The judge called upon to decide proceedings of that kind is not entitled to do what has been described as 'palm tree justice'. No doubt he is given a wide discretion, but he must exercise it in accordance with legal principles, including the principles which the Act itself lays down".
[39]Because the power to make a property settlement order is not to be exercised in an unprincipled fashion, whether it is "just and equitable" to make the order is not to be answered by assuming that the parties' rights to or interests in marital property are or should be different from those that then exist. All the more is that so when it is recognised that s 79 of the Act must be applied keeping in mind that "[c]ommunity of ownership arising from marriage has no place in the common law". Questions between husband and wife about the ownership of property that may be then, or may have been in the past, enjoyed in common are to be "decided according to the same scheme of legal titles and equitable principles as govern the rights of any two persons who are not spouses". The question presented by s 79 is whether those rights and interests should be altered.
[40]Third, whether making a property settlement order is "just and equitable" is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s 79(4). The power to make a property settlement order must be exercised "in accordance with legal principles, including the principles which the Act itself lays down". To conclude that making an order is "just and equitable" only because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act.
…
[42]In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4).[2]
[2] Emphasis added and footnotes omitted.
The wife's unchallenged position is that she seeks an alteration of the parties’ property interests. The parties separated as long ago as April 2019. There have been family violence orders protecting and the wife. The parties have a child now age 12 years. The husband has no contact with that child. The wife alleges that the husband has acted unilaterally since separation in respect of the parties’ assets. The parties are the joint registered proprietors of the former matrimonial home. In all of those circumstances I am easily satisfied that it is just and equitable to enter into a consideration, alteration and settlement of the parties’ legal and equitable interests in property.
The process for the Court is to establish the contents of the property pool and attribute value to those elements and hence to the pool itself. It is generally accepted that the time for establishing the nature and value of the property pool is as at the date of the trial. 'Property' includes the assets, liabilities and financial resources of the parties or either of them. Superannuation is to be 'treated as property' although, not strictly being so in that it is often not capable of crystallisation.
The Court can consider the property pool on either a one – pool or two – pool basis of tangible assets and superannuation considered separately. In the matter now before me it is entirely appropriate to proceed on a 'one – pool' basis where the superannuation interests of the parties are minimal.
After establishing the property pool, the Court is to consider the contributions by or on behalf of each of the parties to the acquisition, improvement and maintenance of the property. Contributions may be of a direct or indirect financial type or non - financial contributions including home maker and parent.
After considering and giving weight to the contributions of the parties then the Court turns to consider whether there should be any further adjustments to either of the parties by reason of the matters set out in s 79(4)(d) – (g) of the Act including any relevant factors under s 75(2).
BACKGROUND
The wife is 41 years of age. The husband is also 41 years.
The parties commenced a relationship in August 1997 whereupon they lived, rent free, with the wife's parents for approximately five years.
In July 2005 the parties together started a business 'F Company'. The business later, in 2016, became incorporated.
The parties’ son, X, was born in 2009 (now aged 12 years).
The wife asserts that in about 2014 the husband commenced using methamphetamine recreationally with a consequent reduction in his work for the business.
The wife asserts that on 14 June 2018 the husband demanded $50,000 in cash which the wife believes he used to pay off a drug debt.
On 17 August 2018 the husband resigned as a director of the Business and the wife became a director with the husband's consent.
From mid 2018 the husband stopped work in the business due to increasing use of and issues with crystal methamphetamine.
On 26 April 2019 the parties separated. The wife was granted a Family Violence Order (‘FVO’) protecting her against the husband after a violent incident. At around separation the husband caused damage to the Suburb C property incurring costs of $4,000 for the wife.
Following separation, the child X remained in the full-time care of the wife. The husband has no contact with X. The husband has not contributed financially towards X's support.
On 30 May 2019 the husband unilaterally transferred $7,000 from the business account into his own personal account.
In July 2019 land owned by the parties at E Street, Suburb G was sold with balance proceeds of $66,073 from which the husband received $40,000 and the wife received $26,073. The wife put these monies into current business debts and for the child's living expenses.
The wife continued to run the business with the assistance of employees. In late 2019 the business owed $70,000 to the Australian Taxation Office (‘ATO’) and $70,000 to suppliers. The wife obtained a loan from her mother of $60,000 which was put to the debts. Since separation the wife has repaid approximately $40,000 of the debt to the ATO.
In February 2020 the child X was added to the wife's FVO.
The wife brought these proceedings by an application initiating proceedings filed 23 April 2021. The husband has not participated.
THE PROPERTY POOL
The wife asserts the property pool to contain the following at value and supported by documents annexed to her affidavit:
Assets B Street, Suburb C (joint names)
$565,000
Wife’s CBA bank account
$553
Husband’s Motor Vehicle 1
$63,000
Husband’s Motor Vehicle 2
$45,000
House contents (joint)
$5,000
Funds paid to the husband from the sale of E Street property (partial property settlement) (noting wife’s $26,000 was put towards business debts and reasonable living expenses)
$40,000
The Business D Pty Ltd (wife)
$50,000
Further partial property settlement (husband)
$7,000
Total Assets $775,553.00
Liabilities Mortgage secured by B Street, Suburb C
$183,382
ATO Debt
$32,000
Total liabilities $215,382.00
Superannuation Wife’s superannuation – Super Fund 1
$115,838
Husband’s superannuation (estimate because of non-disclosure)
E $72,350
Total superannuation $188,188.00
Total Net Property Pool Total Assets
$775,553.00
Total Superannuation
$188,188.00
Total Liabilities
(-$215,382.00)
Total Net Assets $748,359.00 Contributions
The wife was in full-time employment throughout the relationship excepting time for maternity leave. Since separation she has taken on a greater role for the management of the parties' business.
From the commencement of the relationship the parties lived rent free for five years with the wife's parents.
The wife's parents guaranteed the loan on the party's first property purchased in 2002.
The wife's parents gifted the parties $10,000 towards their wedding in 2003 and a motor vehicle valued at $10,000 for the business in 2005.
In April 2019 the wife received a medical compensation payment of $30,000 which was applied to business debts.
The husband was employed in the business, but from 2014 his contributions were compromised by increased use of and expenditure on drugs. The husband resigned as director of the Business in August 2018 and the wife became the Director. The husband ceased all work in the business as from mid 2018
The husband's expenditure on drugs has been considerable.
In mid - 2018 the parties received an insurance payment of $58,000. The husband took $50,000 of these monies and without benefit to the wife, family or business with the assumption that the money was put towards drugs.
At separation there was a violent incident in which the husband caused $4,000 damage to the Suburb C property. The husband was charged with assault, the wife has a FVO against the husband.
The wife has made considerable financial and non – financial contribution since separation. She has been the primary carer of X with no contact between child and father and the father not contributing to the child's financial support.
The wife has met all payments on the mortgage and other outgoings on the Suburb C property since separation.
When the E Street land was sold in 2019 the wife's share was $26,073. She put those monies towards business debts.
Since separation the wife's mother has loaned the wife $60,000 to assist with payment of business debts. The wife is entered into a payment plan with the ATO and paid approximately $30,000 from that matrimonial debt.
In 2020 the wife withdrew $10,000 from her own superannuation to pay towards debts of the home and the business and school fees for the child.
The wife sold her Motor Vehicle 3 in 2021 for $5,000 and put those monies towards business debt and reasonable living expenses.
The wife has improved the Suburb C property since separation spending some $15,000 and also through her own labours.
Since separation the wife has turned the profitability of the business to a stage where it now has a valuation of $50,000 with the there being no valuation attributed at separation. Previous debts totalling $200,000 have been reduced to $32,000.
The wife has repaired and further established relationships with clients and companies and hence the goodwill of the business.
The wife's contributions to this relationship have been many and varied. The husband has also made some contributions, but has been neglectful in this respect for some years. The asset pool of the parties as it now sits can be attributed in a large part to the wife's contributions including significant post – separation contributions. The wife seeks a loading to her on account of the contributions of 10 per cent of the property pool where such a proposal is, in my view, conservative but I will make an adjustment of 10 per cent to the wife on account of the superior contributions.
Section 75(2) factors
The wife continues to have the sole care and sole financial support of X. She is likely to have this responsibility continuing for some years.
The wife works full-time in the business and draws an income of $60,000 per annum plus superannuation.
The wife is in good health.
The husband has not participated in these proceedings and his current employment situation is not known.
The husband has had considerable financial benefit from the business and assets of the parties since separation not included in this property pool.
The husband does, however, have qualifications as a tradesperson with considerable experience.
The wife proposes a further adjustment to her from the property pool of 9 per cent. Again, I think such an adjustment to be very much on the conservative side, but understand that from the allocation of the property pool set out above, it is unlikely that the wife would receive the benefit of any further cash adjustment.
CONCLUSION
I am satisfied that an overall division of the property pool as to 69 per cent to the wife and 31 per cent to the husband is just and equitable’
I certify that the preceding fifty-five (55) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice McGuire. Associate:
Dated: 27 October 2021