Rose and Rose
[2012] FamCA 236
•27 March 2012
FAMILY COURT OF AUSTRALIA
| ROSE & ROSE | [2012] FamCA 236 |
| FAMILY LAW – PROPERTY – where there is no property to be divided between the parties – where each party has significant liabilities – where the only order that accords with justice and equity is an order that permits each of the parties to retain all such property as they each might have and to be responsible for all such debts as they each may have. |
| Family Law Act 1975 (Cth) |
| Af Petersens & Af Petersens (1981) FLC 91-095 Kowaliw & Kowaliw (1981) FLC 91-092 |
| APPLICANT: | Mr Rose |
| RESPONDENT: | Ms Rose |
| FILE NUMBER: | TVC | 933 | of | 2009 |
| DATE DELIVERED: | 27 March 2012 |
| PLACE DELIVERED: | Townsville |
| PLACE HEARD: | Townsville |
| JUDGMENT OF: | Murphy J |
| HEARING DATE: | 27 March 2012 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr M Fellows |
| SOLICITOR FOR THE APPLICANT: | MacDonnells Lawyers Townsville |
| THE RESPONDENT: | In person |
Orders
IT IS ORDERED
That the Husband be solely entitled to the exclusion of the Wife to all interests in realty, chattels, cash at bank, financial resources, shares, superannuation and liabilities presently in the name, possession or control of the Husband or any entity in the control of the Husband to the exclusion of the Wife.
That the Wife be solely entitled to the exclusion of the Husband to all interests in realty, chattels, cash at bank, financial resources, shares, superannuation and liabilities presently in the name, possession or control of the Wife to the exclusion of the Husband.
That all subpoenaed documents be returned to the persons or institutions from which they emanated and all exhibits are returned to the person or persons who tendered the same.
That the matter be removed from the pending cases list.
That there be no Order as to costs.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Rose & Rose has been approved by the Chief Justice pursuant to s 121(9)(g) of the Act.
| FAMILY COURT OF AUSTRALIA AT TOWNSVILLE |
FILE NUMBER: TVC 933 of 2009
| Mr Rose |
Applicant
And
| Ms Rose |
Respondent
EX TEMPORE
REASONS FOR JUDGMENT
The parties to these proceedings for settlement of property, commenced cohabitation December 1997, were married in November 1998, separated under the one roof in mid 2006 and finally separated in November 2008. There are two children of the relationship, B born in May 1998 and L born in February 2002.
In August of 2010, the parties were involved in a lengthy and difficult trial in respect of parenting issues conducted before Monteith J. That trial proceeded over 14 days commencing 10 August and concluding 27 August. On 20 October 2010, Monteith J delivered reasons and made orders. The effect of which was to place the children into the care of their father and for there to be a number of specific interventions designed to facilitate that occurring with the least possible disruption to the children.
The proceedings in respect of settlement of property were, understandably enough, effectively put on hold until such time as the proceedings to which I have just referred were concluded. The effective reinstitution of the proceedings, if I may put it like that, occurred upon the filing of the Further Amended Initiating Application by the husband in circumstances where a callover of matters awaiting trial in the Townsville Registry was to occur before me on 7 February 2012. The intention was to bring this matter to a conclusion given that since October 2010, little appears to have been done so as to effect that result.
The Further Amended Initiating Application filed by the father seeks orders, in effect, that each of the parties be entitled to retain all such property that they each have to the exclusion of the other and that each of them be responsible for liabilities attaching to each of them.
An Outline of Case document was filed on behalf of the husband on 21 March 2012. That document lists the assets and liabilities of each of the husband and the wife. The proceedings initially came on before Cronin J last week but, due to the floods which occurred in the N area, difficulties were encountered by the wife in participating in those proceedings and the matter was adjourned to today before me.
The wife represents herself. She was directed by Cronin J to provide a document outlining the orders that she seeks by way of settlement of property by today so that the husband and the Court might be informed of the orders that she seeks. She has failed to do so.
The last document outlining any orders sought by the wife is a further amended response filed 26 August 2010. That application relates solely to parenting orders.
I enquired of the self represented wife whether any other document filed by her contained any orders for settlement of property sought by her as the file revealed no such document. The wife confirmed that there was no such document.
Given the circumstances to which I have just referred, I permitted, with the consent of Mr Fellows, counsel for the husband, the wife to outline orally the orders sought by her in these proceedings.
The mother indicated that, in broad terms, she wanted $200,000 and half of the husband’s shareholding and bank accounts.
Set out below is the property pool as set out in the Outline of Case document filed by the husband on 21 March 2012.
The Property Pool
The Husband
| Item | Ownership | Value of his share |
| Permit to occupy Lot […] on Crown Plan […] | The applicant, his sister: [Ms JJ] and his father: [Mr RR] | $833.00 - $2,500.00 |
| Registered Lease on Lot […] Crown Plan […] | The applicant, his sister: [Ms JJ] and his father: [Mr RR] | $7,660.00 |
| Husband’s furniture | Husband | Considered minimal |
| Husband’s shareholding at 20/3/12 Total | Husband | $11,285.00 $67,613.00 |
| Husband’s bank accounts at 20/3/12 Total | Husband | $ 1,523.00 $103,343.00 |
| Interest in grandmother’s estate | Husband | About $12,000.00 |
| Interest as a discretionary and residual beneficiary of [KK] Investment Pty Ltd (atf The [KK] Family Investment Trust) | [KK] Investments Pty Ltd | Considered minimal |
| [Super Fund 1] at 30/6/11 | Husband | $94,488.00 |
| Debt to parents for legal fees | Husband | ($458,413.00) |
The Wife
| Item | Ownership | Value of her share |
| Wife’s furniture | Wife | Considered minimal |
| Wife’s motor vehicle | Wife | Unknown |
| Superannuation | Wife | Unknown |
| Debt for legal fees | Wife | ($130,000.00) |
| Debt to Centrelink | Wife | ($106,000.00) |
The property pool was the subject of discussion at the commencement of these proceedings. The wife accepts that the list just referred to accurately sets out the property of the parties or either of them within the meaning of section 79 of the Act.
I should say, as is evident, that there are some items about which there is commentary. For example, in respect of the husband’s furniture it is said, that its value is “considered minimal”. In respect of the “interest as a discretionary and residual beneficiary of KK Investment Pty Ltd (atf The KK Family Investment Trust)” the value of the husband’s interest is also recorded as “considered minimal”. So, too, in respect of the wife’s furniture. In respect of the wife’s motor vehicle and superannuation interests, each is recorded as having an “unknown” value.
The total of the property of the husband recorded in that document, including superannuation interests, is about $295,000. Of great significance, however it is there recorded that a debt is owed by the husband to his parents for legal fees in the sum of $458,413.
The property of the wife also shows a significant liability. There are, in fact, no assets of significance in her hands to which a value is attributed but the wife too has debts comprising $130,000 as a debt for legal fees and $106,000 as a “debt to Centrelink”.
It is of considerable significance to note that the wife accepts that the debt to Centrelink (although she says the quantum may reduce as a result of what occurs in these proceedings) arises as a result of a fraud perpetrated by her; the wife claimed a benefit in circumstances where there was no entitlement to do so.
The wife would appear to accept that she is indeed fortunate that she has not been the subject of criminal sanction, which may have resulted in her imprisonment.
In discussions with the self represented wife, she does not identify any foundation for the entitlement for which she contends. Further discussion between the bench and Ms Rose appeared to confirm that her essential proposition is that, after a 10 plus year cohabitation which produced two children and which occurred on a somewhat remote property with all of the difficulties inherent in that, it is grossly unfair that she should leave the relationship with, effectively, nothing.
During the course of those discussions, however, the wife did not raise any issue from which it could be concluded that the property of the parties, or either of them, was other than that which is outlined in the document to which I have just referred. Accordingly, the wife accepts that there is in fact no net property capable of division between the parties (see Milankov & Milankov (2002) FLC 93-095).
The wife initially raised no issues with respect to the liability said to be owing by the husband to his parents of $458,000, except to say that she questioned how it was that in circumstances where she had seen an account for about $300,000 in about September last year, the account could have increased to the figure which it is now.
No evidence before the Court suggests the foundation for the calculation of the figure, but the husband confirmed in the witness box that the figure represents monies actually paid to his solicitors as distinct from monies said to be owing.
In fairness to the self represented wife, notwithstanding the “pool” earlier disclosed, I considered it my duty to take up with counsel for the husband two issues, which might see the wife receiving at least some entitlement.
Reference is made in Mr Fellows’ outline to the decision of the Full Court in Kowaliw & Kowaliw (1981) FLC 91-092. In addition, I took up with Mr Fellows the principles deriving from decisions of the Full Court such as Biltoft & Biltoft (1995) FLC 92-614 and Af Petersens & Af Petersens (1981) FLC 91-095.
As I explained to the wife, those Full Court authorities permit, in certain limited circumstances, the Court to ignore in whole or in part, liabilities said to be owing in circumstances where the nature and circumstances of the liability give rise to the possibility that the alleged debt would not be paid or called in. Those issues can, of course, be seen to arise most commonly in circumstances where a party is said to owe money, particularly a significant sum of money, to their parents or other close family members. Here, the sole source of the funds comprising the husband’s $458,000 debt is the husband’s parents.
As I explained to the wife, the foundation for the decisions earlier referred to is justice and equity; both parties should not have to share in a debt in circumstances where the person who bears the debt as a result of the orders will, in all likelihood, not have to pay it.
That issue was taken up with the husband in the witness box. The evidence is that he has commenced repaying his parents at the sum of $200 per week. Plainly, that will make little dent in a debt of that size. The husband goes on to say, however, that when these proceedings are concluded and the total amount owing to his solicitors can be finally arrived at, he proposes to approach banks or other financial institutions with a view to borrowing such sum as he is able, so as to pay back to his parents a lump sum or lump sums.
He concedes that in light of the fact that he has “little collateral” that it is highly likely that any such sum as he is able to borrow may not meet the whole of the debt owing to his parents.
It should be pointed out that, while the debt is predominantly comprised of legal fees, it also includes fees relating to the employment of a social worker, required as a consequence of the orders made by Monteith J at the conclusion of the parenting trial to which I have earlier referred.
There may be some doubt attending the repayment of the totality of the sum by the husband to his parents. However, on any view of the evidence, commerciality has attended the erstwhile arrangements between the husband and his parents. I note, for example, that the husband has been employed at what can only be seen to be a modest commercial wage as a station manager on what I gather is part of the properties owned by the corporate trust vehicles which run them, and which have association broadly described with the husband’s family.
Secondly, I accept the evidence of the husband that he has an intention to repay as much of the sum as he can. It seems to me entirely consistent with the nature, generally speaking, of the relationship that exists between he and his parents insofar as that intersects with the financial and working arrangements between them.
Further, I accept the submission by Mr Fellows that, in any event, the husband exhausted the vast majority of his then assets so as to contribute himself to the legal fees in the sum of approximately $58,000. When that sum was spent, Mr Fellows contends, it would have been necessary for the husband to approach such lender as he was able to approach in order to obtain funds for the litigation to which I have earlier referred. I agree that, on the evidence before me, the husband has “little collateral” and a modest income, which could sustain commercial borrowings so as to fund legal representation, other than through his parents. I accept that the borrowings from his parents were undertaken, as it were, as a last resort in circumstances where the prospects of being able to obtain funding for that litigation were otherwise extensively somewhat bleak.
Further, and in any event, it is accepted by both parties that the wife herself has a debt for legal fees of $130,000. The significant disparity between her legal fees and the fees of the husband is explained in part, Mr Fellows submits, by reference to the fact that the wife had, at least for some time, access to legal aid.
It also seems to me to be explained by the nature of the case which the husband had to meet in the parenting proceedings and the complexities involved in meeting that case. If nothing else, the length of the parenting trial is evidence of that complexity and the work involved as a result.
Even if, generously to the wife, $150,000 of the $458,000 ought not be taken into account as part of the total amount owing to the solicitors, there is still a significant deficit involved in the payment of a debt owing to the parents of $300,000. (Although I was prepared to countenance that possibility as part of the discussions with the self represented wife, I hasten to add that there is no evidence at all to suggest that $150,000 has not been spent by the husband on his legal advisors since the bill from them to which the wife refers, which I gather was rendered last year).
Furthermore, even if the wife was able to sustain a case (about which there is no evidence) to suggest that $458,000 was not an appropriate amount in some way to pay his solicitors, it is nevertheless accepted by her as an amount owed by the husband to his parents (with the reservation to which I have earlier referred).
Even if I was minded, which I am not, consistent with the principles enunciated in Biltoft and Af Petersens, I would not be prepared to find that the whole of the amount owing to the parents would be either ignored or not paid back by the husband. In those circumstances, there would still be on any view, a very significant sum of money owing by the father to his parents that would leave little, if any, in the way of assets.
Even if there was little, if any, in the way of assets to be divided between the parties, nothing said by the wife persuades me that I would attribute to the husband any responsibility at all for the debt of approximately $106,000 owing to Centrelink by reason of the wife’s fraudulent conduct. The wife advances no argument, nor do I consider it in any event just and equitable, for the husband to share in a debt accrued solely through fraudulent conduct of the wife.
That being the case, even if there were some net assets to be divided between the parties, they would need to amount, in the wife’s case, to an entitlement of more than $106,000 before any net entitlement would flow to her. On no view of the evidence can I see that that is the case.
In all of the circumstances then, I consider that there is, as a matter of practical reality and on the evidence before me, no property which can be divided between each of the parties to this relationship.
It seems to me the only order that accords with justice and equity is an order that permits each of the parties to retain all such property as they each might have and to be responsible for all such debts as they each may have.
Although the further amended initiating application seeks, at paragraph 3, an order for costs, Mr Fellows, properly as it seems to me, concedes that there is no basis upon which the provisions of section 117 (2A) of the Act could be invoked so as to order the wife to pay costs.
The reasons for that concession, and the findings which would in any event have been made in that respect, lie in the financial circumstances to which I have made extensive reference otherwise in these reasons.
I certify that the preceding forty-two (42) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Murphy delivered on 27 March 2012.
Associate:
Date:18 April 2012
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