Sachar and Sachar
[2017] FCCA 3116
•14 December 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| SACHAR & SACHAR | [2017] FCCA 3116 |
| Catchwords: FAMILY LAW – Property settlement proceeding – short marriage – very few assets in Australia – applicant incurs significant legal costs – whether to be allowed in favour of the applicant or to be added back as notional asset in favour of respondent – applicant’s superannuation accumulates significantly post separation – whether to be excluded in part from asset pool – parties to assume personal responsibilities for own liabilities – orders made for lump sum payment so as to adjust property interests in small asset pool. |
| Legislation: Evidence Act 1995 (Cth), ss.140, 144 Family Law Act 1975 (Cth), ss.75, 79, 90MZD, 117 |
| Cases cited: Beklar & Beklar [2013] FamCA 327 Browne v Green (1999) FLC 92-873 C & C [1998] FamCA 143 NHC & RCH [2004] FLC 93-204 Companhia de Mocambique v British South Africa Co [1892] 2 QB 358 British South Africa Co v Companhia de Mocambique [1893] AC 602 Damiani & Damiani [2012] FamCA 535 Moti v The Queen (2011) 245 CLR 456 Norbis v Norbis (1986) 161 CLR 513 Omacini & Omacini(2005) FLC 93-218 Parrott v Public Trustee of NSW(1993) 17 Fam LR 785 Rankin & Rankin [2017] FamCAFC 29 Stanford v Stanford (2012) 247 CLR 108 Talacko v Bennett [2017] HCA 15 Tobey & Rezek [2017] FamCAFC 84 |
| Applicant: | MR SACHAR |
| Respondent: | MS SACHAR |
| File Number: | MLC 2118 of 2015 |
| Judgment of: | Judge A Kelly |
| Hearing date: | 26 May 2017 |
| Date of Last Submission: | 26 May 2017 |
| Delivered at: | Melbourne |
| Delivered on: | 14 December 2017 |
REPRESENTATION
| Applicant: | In person |
| Respondent: | In person |
THE COURT ORDERS THAT
The property settlement proceeding is adjourned for further hearing at 10.00am on 14 February 2018 for the making of orders in accordance with these reasons for judgement.
Direct that a Registrar of the Court cause to be served on the trustee of the (omitted) Super Fund, a copy of the proposed order attached hereto and marked Annexure A in order that procedural fairness may be accorded to that trustee concerning orders respecting the interests of the applicant (member number (omitted)) in that Fund.
Direct that by 4.00pm on 8 February 2018, the parties file and serve an affidavit providing evidence of any response by the trustee whether it consents (or does not object) to orders being made in terms of the proposed order attached hereto and marked Annexure A.
Pending the making of final orders in accordance with paragraph (1) of this Order, or further order, the applicant be and is hereby restrained whether by himself his servant or agents or however otherwise from drawing down any amount from the following accounts where to do so would reduce the balance standing to the credit of any such account:
(a)(omitted) Bank account number (omitted) – to a balance below the sum of $1,000;
(b)(omitted) Bank account number (omitted) – to a balance below the sum of $2,160; and
(c)(omitted) Bank account number (omitted) – to a balance below the sum of $1,000.
Pending the making of final orders in accordance with paragraph (1) of this Order, or further order, the applicant be and is hereby restrained whether by himself, his servants, his agents or howsoever otherwise from executing, and/or giving to the trustee of the (omitted) Super Fund a binding death benefit nomination in favour of any person, or doing any other act or thing, which would render any part of, or payment from, his superannuation interest in that Fund a non-splittable payment within the meaning of regulation 12 or 13 of the Family Law (Superannuation) Regulations 2001.
Annexure A
Proposed order to be made in property settlement proceeding, subject to compliance with s 90MZD of the Family Law Act 1975 (Cth).
THE COURT ORDERS THAT:
The applicant shall retain the following property:
(a)subject to paragraph (3) of this Order, his savings;
(b)his inflatable boat and ancillary equipment;
(c)his chattels and all personal property in his possession; and
(d)subject to paragraph (5) of this Order, his superannuation.
The respondent shall retain the following property:
(a)her savings;
(b)her Ford (omitted) motor vehicle;
(c)her chattels and all person property in her possession;
(d)her superannuation.
Pending compliance with paragraph (5) of this order, or further order, the applicant be and is hereby restrained whether by himself his servant or agents or however otherwise from drawing down any amount from the following accounts where to do so would reduce the balance standing to the credit of any such account:
(a)(omitted) Bank account number (omitted) – to a balance below the sum of $1,000;
(b)(omitted) Bank account number (omitted) – to a balance below the sum of $2,160; and
(c)(omitted) Bank account number (omitted) – to a balance below the sum of $1,000.
Paragraph (3) of this Order shall not operate so as to prevent the applicant from effecting the payments to be made pursuant to paragraph (5) of this Order.
By 4.00pm on Wednesday, 22 February 2018, the applicant transfer to the respondent the sum of:
(a)$1,000 from the monies standing to the credit of his account number (omitted) with the (omitted) Bank;
(b)$2,160 from the monies standing to the credit of his account number (omitted) with the (omitted) Bank;
(c)$1,000 from the monies standing to the credit of his account number (omitted) with the (omitted) Bank.
Having been afforded procedural fairness respecting the making of this Order, paragraphs (7) to (11) of this Order are binding on the trustee (“Trustee”) of the (omitted) Super Fund (“Fund”).
Pursuant to sub-s 90MT(1) of the Family Law Act 1975, whenever a splittable payment becomes payable in respect of the superannuation interest of the applicant (member number (omitted)) in the Fund:
(a)the Trustee shall pay the respondent, her administrators or executors, beneficiaries, heirs or assigns, the entitlement calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001; and
(b)the Trustee shall make a corresponding reduction in the entitlement that the applicant would have had in the Fund but for the operation of this Order.
The base amount allocated to the respondent out of the interest held by the applicant in the Fund is the sum of $16,000.00.
Paragraph (10) of this Order has effect from the operative time within the meaning of s 90MD of the Family Law Act 1975 and that operative time is the fourth business day after which the respondent has served on the trustee:
(a)a sealed copy of this Order; and
(b)a notice under regulation 72 of the Family Law (Superannuation) Regulations 2001.
The Trustee shall do all such acts and things and sign all such documents as may be necessary, such that the Trustee in accordance with the obligations set out in the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001 can calculate the entitlements of, and make payments to, the respondent in accordance with paragraphs (7)-(8) of this Order.
Pending completion of the superannuation split in the favour of the respondent in accordance with this Order, the applicant be and is hereby restrained whether by himself, his servants, his agents or howsoever otherwise from executing, and/or giving to the Trustee a binding death benefit nomination in favour of any person, or doing any other act or thing, which would render any part of, or payment from, his superannuation interest in the Fund not a splittable payment within the meaning of regulation 12 or 13 of the Family Law (Superannuation) Regulations2001.
Save for the purposes of enforcing any orders made above:
(a)each party be solely entitled, to the exclusion of the other, to all and any other property in the possession of such party as at the date of this Order;
(b)subject to paragraph (7) of this Order, each party foregoes any other or further claim that they may have had as to any superannuation, compensation, insurance, employment or any other benefits belonging to, earned or receivable by the other;
(c)all insurance policies remain the sole property of the named owner;
(d)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party may be entitled pursuant to this Order, and in respect of any other liability that may be incurred in their name;
(e)any joint tenancy of the parties in any real or personal property is expressly severed.
AND THE COURT DECLARES THAT pursuant to s 81 of the Family Law Act 1975, these Orders shall as far as is practicable finally determine the financial relations between the parties.
IT IS NOTED that publication of this judgment under the pseudonym Sachar & Sachar is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 2118 of 2015
| MR SACHAR |
Applicant
And
| MS SACHAR |
Respondent
REASONS FOR JUDGMENT
Introduction
These reasons for judgment concern an application for adjustment of property interests as between parties whose marriage dissolved on 12 January 2016. The application arises between parties to a short relationship and concerns very few assets in Australia. Although each party was self-represented, I note that they possess tertiary qualifications and presented as articulate and intelligent persons with an insight as to the matters in issue.
Although the parties were initially in a position of being unable to agree upon any issues in the proceeding, as the course of the hearing progressed, they managed to achieve a substantial level of compromise. In particular, the respondent did not press an application for maintenance. As the hearing progressed, the only application which remained for determination involved the parties’ application whether there should be an adjustment of their Australian property interests.
I have considered and accepted the parties’ submissions that their Australian property should be divided so as to adjust those interests as to $41,000 to the applicant and $36,000 to the respondent.
Background
Each of the parties relied upon extensive affidavit evidence (much of which was unacceptably repetitive), together with their respective case outlines that had been prepared for the purposes of a conciliation conference held in late 2016. In addition, each of the parties had formulated detailed proposals (which became somewhat redundant by reason of their decision made, in the course of trial, to confine their applications to a determination of their Australian property interests).
There was no cross-examination on the parties’ evidence. The following background is based upon an analysis of the parties’ affidavits and the many documentary exhibits to those affidavits. The matters set out below include those that were common ground and my findings of fact upon particular issues. Where issues of dispute arose, I have addressed them separately in a later section of these reasons.
The applicant, who is aged 34 years, has worked as an (occupation omitted) with (employer omitted).
The respondent, who is aged 32 years, has qualifications in (omitted) and has worked as a (occupation omitted) .
The parties were married on (omitted) 2010. They were married at the (omitted), in India. Their marriage was solemnised according to the religious ceremonies of the (omitted). A copy of their marriage certificate confirmed this evidence.
The respondent then moved from her home in (omitted) to live with the applicant in (omitted). The applicant worked at (employer omitted) while the respondent worked at the (employer omitted).
The respondent cared for the home, cooking, washing and cleaning, while, as she said, the applicant had no interest in such matters. The applicant contested this version of events, deposing that he undertook more than 60% of the cleaning and washing. He maintained that the respondent’s only interests were in shopping and cooking.
The parties moved to Australia on (omitted) 2012. In making the decision to migrate to Australia, the respondent gave up her current course of study in (omitted). The applicant deposed that both parties had completed all of their tertiary studies before leaving India and that the decision to move to Australia was to improve ‘their chances’.
The applicant’s earnings, however modest, have always been markedly higher than those of the respondent. The parties pooled their earnings.
In Australia, the respondent continued in casual paid employment.
There are no children of the marriage.
The parties’ relationship was marred by domestic violence. The applicant deposed that the respondent had cut his hand with a knife. Following another incident in August 2014, police became involved. Police issued an intervention order and the applicant was summonsed to a court hearing on 7 August 2014. The applicant left the home. The applicant was given, and has complied with, a diversion order.
The parties separated on 5 August 2014 after a marriage of three years and ten months.
Neither party has any special needs. They are both relatively young and apparently are in good health.
The parties each deposed that, at separation, their savings were meagre and that their post-separation living circumstances were difficult.
Following separation, the respondent continued to live in the parties’ rented accommodation and was reliant on her income from working as a temporary (occupation omitted) with (employer omitted). For a time the respondent was in receipt of a NewStart Allowance. The respondent was unable to maintain health insurance or superannuation.
The respondent contended that she had no relatives in Australia. The applicant countered that her parents had attended court hearings with the respondent. The respondent deposed that her father’s visa had expired and he had returned to India. Her mother has now passed.
The applicant also contended and the respondent agreed that she had qualifications in (qualifications omitted) in (omitted).
By contrast, the applicant has continued in employment as an (occupation omitted) with (employer omitted). He has continued to maintain health insurance or superannuation. The applicant has some family relatives living in Australia and lived with them briefly after separation.
Each of the parties continues to live in rented accommodation.
Procedural history
On 17 March 2015, the applicant filed an initiating application in the Family Court seeking an adjustment of the parties’ property interests. The substantive order sought by the applicant was that there be a settlement of property and superannuation pursuant to s 79 of the Family Law Act 1975 (Cth). The applicant encountered some difficulty in effecting service of process on the respondent.
In due course the respondent filed her response seeking (with respect to the adjustment of property interests) orders in near identical terms to those which had been sought by the applicant. The respondent also claimed spousal maintenance.
As some stage, the respondent instituted proceedings in India. These proceedings concerned a criminal complaint against the applicant. The respondent deposed that the proceeding concerned allegations respecting cruelty and a claim in relation to her dowry.
On 18 May 2015, the court conducted a conciliation conference and on that date, orders were made for limited financial disclosure. The conciliation conference was adjourned to 24 August 2015.
On 25 May 2015, the applicant’s lawyers wrote to the respondent making demand that she discontinue the Indian proceedings. This demand was made on the stated basis that the property settlement proceedings would be permanently stayed unless she did so. Answering this demand, the respondent filed an affidavit deposing that the criminal proceedings instituted in India did not overlap in any way with the property settlement proceedings instituted in Australia.
On 4 August 2015, intervention orders were made as against each of the parties.
Little more than a year after separation, on 13 August 2015, the applicant filed an application for divorce.
On 24 August 2015, the parties attended a further conciliation conference that was conducted by a Registrar of the court and at which it emerged that a major obstacle to resolution arose in relation to the applicant’s interests in a property that had been purchased in (omitted).
By order made on 20 November 2015, the proceeding was transferred to this court.
On 6 January 2016, the applicant filed an affidavit in which he sought that the property settlement proceeding be determined on an urgent basis. The ground on which he sought this urgent relief was that the respondent had completely unrealistic expectations and that the matter was costing a great deal of time and money. At trial the applicant advanced a submission that if he had $20 the respondent wanted $40 and that the case was impossible of resolution by agreement.
On 12 January 2016, a divorce order was made.
On 1 March 2016, orders were made setting the property settlement proceeding down for final hearing.
On 2 November 2016, an order was made that the parties attend a further conciliation conference. This conference was held on 4 April 2017 and once more the matter was not resolved. The matter has not been reached on a number of occasions and has been relisted for trial several times until it was allocated to this docket.
As noted, the parties were self-represented at the final hearing. Neither party required the assistance of an interpreter. They presented as articulate and polite persons who agreed that they ‘just wanted it over.’ The applicant explained that the catalyst for the initiation of the proceeding was that he had been removed from the parties’ home and was prevented from recovering his possessions. He submitted that if the hearing could not be conducted that day, “I want to cancel this because it’s mental pressure and stress for me every time”.
The applicant brought to court a large suitcase containing the documents which he considered might be relevant to the hearing. It was necessary on at least one occasion to adjourn briefly so that the applicant could locate some of the documents on which he relied.
A great deal of the applicant’s evidence was directed to exhibiting voluminous exhibits which he perceived to be consistent with his obligation to make full financial disclosure. He was not to be criticised for doing so. The respondent’s evidence was more circumspect but, like that of the applicant, was highly repetitious of material that had been filed on one or more occasions. The parties appeared to want the ‘last word’ as far as the giving of evidence was concerned.
The respondent abandoned her claim for spousal maintenance. It emerged that the foundation of this application was that the respondent wanted to pursue a further course of tertiary study.
Financial positions
The parties’ circumstances are modest.
The applicant’s two financial statements, made on 16 March 2015 and 23 March 2017, disclose the following:
Item
$ 2015
$ 2017
Average weekly income
2,015
2,118
Personal expenditure
1,598
1,891
Property owned
47,963
30,029
Superannuation
17,745
37,417
Liabilities
29,843
56,804
Financial resources
Nil
Nil
It is convenient to note above the comparative changes respecting the applicant’s property interests, his superannuation and liabilities.
The respondent made financial statements in 2015, 2016 and 2017. Her most recent financial statements were made on 15 October 2016 and 30 March 2017. They disclose the following:
Item
$ 2016
$ 2017
Average weekly income
885
885
Personal expenditure
850
882
Property owned
36,496
36,238
Superannuation
3,916
6,692
Liabilities
34,974
35,956
Financial resources
Nil
Nil
Identification of property
Few issues arose as to the identity or ownership of the parties’ assets. While a primary task of the court is to identify the legal or equitable interests in any property that a party may seek to introduce to, or exclude from, the asset pool, many of those issues were agreed. Instead, the dispute centred upon the value of certain property.
Before setting out my overall conclusions as to the asset pool that is the subject of this proceeding, it is convenient to give my findings upon the items of property where value was disputed and to provide my reasons why any particular item was included or excluded from the pool.
(omitted) property: the parties were agreed that they had purchased ‘off the plan’ a property to be constructed as (omitted), in (omitted). The construction of this building remains incomplete (and for that reason there may not yet be a legal title to the property). The respondent’s financial statement disclosed that AUD$12,085 has been paid in respect of this purchase and that a further AUD$27,629 remains payable upon completion (this outstanding sum is disclosed by each party as a contingent liability). The applicant’s financial statement disclosed that: (a) this purchase can be cancelled; (b) cancellation would result in a zero liability to the parties; (c) the purchase monies paid to date being refundable, and; (d) cancellation will be subject to a $1,000 cancellation fee. Before me the parties were agreed that they wanted to cancel the contract.
Initially the applicant sought an order that the parties should be directed to execute a document that would bring about cancellation of the contract relating to the (omitted) property and then take that document to the Indian Embassy. Ultimately, the parties agreed that this court should make no orders respecting this contingent asset and so the jurisdiction of this court to make orders was not explored: cfCompanhia de Mocambique v British South Africa Co [1892] 2 QB 358 at 364; on appeal, [1893] AC 602; Moti v The Queen (2011) 245 CLR 456, [48]; Talacko v Bennett [2017] HCA 15, [44]. Both the contingent asset and liability are excluded from further consideration.
Savings – applicant: the applicant’s accumulated savings now amount to $6,029. I note that from 2015 to the date of trial the applicant’s savings have been depleted from $22,510 to $6,029. The total sum of the applicant’s savings is spread across several accounts. The depletion in savings may have occurred for several reasons (see below).
Savings – respondent: the respondent’s accumulated savings are $653. The respondent’s savings as disclosed in her 2015 financial statement were only somewhat different, amounting to the sum of ~$1,440.
Investments: neither party has any shares, life insurance policy or other investments.
Motor vehicle – applicant: each party disclosed a Ford (omitted) that was valued by the applicant at $8,000 and by the respondent at $5,000. The respondent’s statement further disclosed that this vehicle had been paid for using cash and credit card payments. The parties were agreed that this vehicle should be transferred to the respondent
Undisclosed motor vehicle – applicant: the respondent’s financial statements and affidavits contended that the respondent had acquired a new vehicle. This was confirmed in part by the applicant’s most recent financial statement which included a liability to (omitted). At the hearing, the applicant confirmed that he has purchased a Jeep (omitted) which had not been disclosed in his financial statement. The applicant explained that this vehicle was purchased following separation. The applicant apparently regarded this asset as having no relevance to an identification of the parties’ existing property interests. I will accept that proposition on the basis that neither the asset value nor the liability in relation to it comprise part of their asset pool. The parties were agreed that the applicant should retain this vehicle.
Boat: each of the parties’ financial statements disclosed a (omitted) inflatable boat with ancillary equipment to which they ascribed a value of $2,000. The respondent’s financial statement confirmed her view that the applicant owned this asset. An invoice exhibited to one of the applicant’s affidavits recorded that the boat had been purchased on 30 January 2014 for the sum of $3,015. The applicant took out a loan to purchase the boat. To the extent that the respondent sought to maintain that the boat was still worth that amount in 2017, I reject that submission as representing a departure from the stance which was adopted by the respondent in each of her financial statements. The parties were agreed that the applicant should retain the boat.
Household contents – applicant: these items of property were valued by the applicant at $6,000. The applicant maintained that having left the matrimonial home with nothing, the chattels in his possession had been purchased following separation. There is some evidence that the applicant is incurring charges for storage at (omitted), however the nature of the contents of that storage was not disclosed.
Household contents – respondent: these items of property were valued by the respondent at $500. While this was disputed by the applicant, the parties did not explore what, if anything, had become of the chattels in the parties former matrimonial home after the date of separation.
Jewellery: each of the parties disclosed the existence of certain jewellery that was given an ascribed value by the applicant of $8,000 and $16,000 by the respondent. The disparity in value was explained by the parties’ competing approaches. Contrastingly, while the applicant’s financial statement claimed an entitlement to 50% of this asset, the respondent’s financial statement claimed an entitlement to 100% of the jewellery. The applicant’s ascribed valuation of the jewellery at $8,000 is explained by the circumstance that he claimed a 50% interest in it. The applicant and respondent each exhibited the same evidence relating to the value of that jewellery. I conclude that the existence and value of the jewellery at $16,000 was not in contest.
There was disagreement with respect to the making of a contribution of this jewellery. The respondent deposed that the respondent’s family (as a dowry) had gifted jewellery, being gold, at the time of the parties’ marriage. The applicant deposed that the applicant’s family had gifted the jewellery as a wedding present to the respondent.
There was further disagreement with respect to the jewellery in that each denied possession of it. The applicant insisted that he had left the matrimonial home with no assets whatsoever. He explained that he had done so in the circumstance of the respondent taking out the intervention order in August 2014 and that he was permitted by the police to leave with his personal effects. The respondent contended that she did not have possession of the dowry deposing that it was in the possession of the applicant’s family. The applicant’s contention that he did not have possession of the dowry did not meet the respondent’s case that that jewellery had been taken by the applicant. The respondent deposed that the applicant had taken the jewellery and taken it to his sister’s home in Australia. Each of the respondent’s financial statements maintained that the jewellery was in the possession of the applicant or her ‘in-laws’. Evidence on this issue was in conflict.
The parties were not in dispute that a dowry was given. I take judicial notice of the circumstance that the family of an intended Indian bride will pay a dowry to the intended applicant: cf sub-s 144(1)(b) Evidence Act 1995 (Cth). This would be capable of verification by, and available from, the Country Information which is retained by the Department of Foreign Affairs and Trade: cf s 144(2). There was no dispute as to its value or that the dowry had been in the parties’ home. Deciding the case on the balance of probabilities, I find that, having regard to those customary traditions, a dowry was provided by the family of the respondent to the applicant as the price of the marriage and that this was a contribution made on behalf of the respondent.
However, where there were inconsistencies in the evidence, the applicant was still required to prove his claim to the requisite standard of proof: sub-s 140(1) Evidence Act 1995 (Cth). Equally, the more serious the allegations, the more inclined I was to take into account the gravity of the allegation in deciding whether the allegation was made out: cf sub-s 140(2) Evidence Act; Johnson v Page (2007) FLC 93-344, [72]; Briginshaw v Briginshaw (1938) 60 CLR 336. Where the evidence does not permit the court to make an affirmative finding either way on a particular issue, the court is not bound to do so and may find that the party which bears the onus of proof has failed to discharge it: Kuglioski v Metrobus (2004) 220 CLR 363.
Although neither party suggested that the jewellery no longer exists, I cannot conclude whether it has been retained by either the applicant or the respondent. And, while I find that this was a contribution made by or on behalf of the respondent at the commencement of the marriage, I must decide what orders are just and equitable in circumstances where I can make no finding as to the present location of that jewellery. Further, each party was content that the jewellery in their respective possession should remain where it is.
Liabilities
The only liabilities disclosed by the applicant comprised the following:
(a)(omitted) property loan: $27,630
(b)Legal costs: $45,000
(c)(omitted) car loan: $24,669
(d)Mastercard: $ 4,505
The only liabilities disclosed by the respondent comprised the following:
(a)(omitted) property loan: $27,630
(b)Loan – Mr S: $ 3,500
(c)Loan – Mr J: $ 2,700
(d)Mastercard: $ 1,347
Each of the respondent’s three financial statements (which were made in 2015, 2016 and 2017), disclosed the quantum of these liabilities for amounts which have not altered significantly over that period.
As a general rule, parties to a marriage share all gains and losses incurred in the course of their marriage, although not necessarily equally: Browne v Green (1999) FLC 92-873 (Lindenmayer, Finn and Holden JJ); Liu & Bai [2017] FamCA 725, [81] (Johns J). That this is stated as a general principle necessarily means that it admits of exceptions. In particular, it does not mean that parties will necessarily share in assets or liabilities in the same proportions.
(omitted) property loan: as concerns the property loan of $27,630 each of the parties included this as a liability. While the applicant claimed ownership as to 100% of this property purchase and assigned the liability to himself as being a personal liability, the respondent regarded herself as being jointly liable with the applicant for this loan.
As the parties were agreed that the court should not proceed to determine any claim for adjustment of property interests respecting the (omitted) property, it is equally appropriate to exclude from consideration the liability respecting that loan. I proceed on the basis that the parties can and will terminate their ‘off the plan’ contract relating to this property and, accordingly, that there is no liability which I need to take into account.
Legal costs: the parties made much of the applicant having expended $45,000 in legal fees. The parties did not dispute that the applicant had incurred in relation to legal costs a liability of ~$45,000 or that that sum had been spent following the parties separation.
However, each of them sought to employ that sum for quite different purposes. The applicant sought to include this as a liability that should be borne by each of the parties and not by him alone. Although self-represented, by one of her affidavits the respondent sought that this be included as an ‘add back’, citing authority (upon which she relied). The respondent also articulated that submission at the hearing.
In deciding whether it is just and equitable that an order should be made adjusting property interests, it is necessary to first identify the parties existing property interests as at the date of trial. The need to identify the existing property interests arises because the power conferred by para 79(1)(a) is to make orders with respect to the ‘property’ of the parties to the marriage or either of them.
Commonly a problem is presented by the fact that one of the parties has unilaterally used or disposed of such assets, with the result that such property no longer exists. A traditional approach to the resolution of such property disposal has been notionally to ‘add back’ the sum so withdrawn by one party. By this means, the court is enabled to assess the parties’ net assets as they would have been but for the unilateral dissipation of the parties’ assets. Both liabilities and assets may be notionally adjusted where the justice of the case warrants such an approach. Adjustment is not made as of course.
Relatedly, it is not uncommon that parties will be driven to expend capital pending determination of a property settlement proceeding. In that context, there is no appropriate basis for notionally adding back moneys that have been spent on meeting reasonable living expenses. So it is said that neither the Act nor case law “require the parties to go into a state of suspended economic animation once their marriage breaks down pending resolution of their financial arrangements. Parties are entitled to continue to provide for their own support. Whether any expenditure so incurred is reasonable or extravagant is a matter that can be determined by the trial Judge”: M & M [1998] FamCA 42, [2.11]; Tuckson & Elsey [2017] FamCAFC 145 [106].
In Vass & Vass [2015] FamCAFC 51, the Full Court considered the resolution of issues presented by the applicant having paid $50,000 purportedly in repayment of a loan to his parents and a further $25,000 in servicing a mortgage and personal living expenses. The Full Court held at [138] that the process of undertaking a calculation of notionally adding back monies to an asset pool did not involve error per se.
The Full Court has recently affirmed that the process of adding back may be an entirely permissible course: Rankin & Rankin [2017] FamCAFC 29, [57]-[58] (May, Thackeray and Aldridge JJ). As the result in that appeal demonstrates, the court retains a discretion as to whether (and for what amount) it is appropriate to add back a notional sum in the circumstances of a particular case: [64]-[66].
In Beklar & Beklar [2013] FamCA 327, Ryan J undertook a detailed examination of authority and identified the following principles:
(a)financial losses should, in general, be shared whether or not they are a joint liability, except where the conduct of the party:
i)entailed a deliberate course of conduct designed to reduce or minimise the effective worth of the parties’ assets;
ii)was reckless, negligent or wanton so as to reduce or minimise the value of the parties’ assets;
[2013] FamCA 327, [131], citing Kowaliw & Kowaliw (1981) FLC 91-092;
(b)such losses need not, however, be shared equally: [132]-[133], citing Kowaliw, supra; Browne& Green (1999) FLC 92-873. In the latter case, the applicant was held solely responsible for losses, despite the absence of any recklessness on his part;
(c)complex and discretionary considerations were involved in resolving issues whether: (i) a loss should be notionally added back; (ii) this constituted a s 75(2) factor, or; (iii) it should be dealt with upon some other basis: [134];
(d)where property has been dissipated by waste (such as being damaged or sold at undervalue), a notional add back is allowable: [134] citing Townsend & Townsend (1995) FLC 92-569;
(e)a notional add back is not confined to waste; it is also allowable where identifiable items of property have been disposed of in a bona fide manner, where no, or no reasonable, explanation has been given for an assertion that the property no longer exists or never existed: [135] citing Bell & Bell [2000] FamCA 1301;
(f)by contrast, the court will in general be more reluctant to notionally add back monies that were expended upon reasonable living expenses: [135] citing M & M [1998] FamCA 42;
(g)rather, monies that are shown to have been reasonably disposed of should not, absent exceptional circumstances be the subject of a notional add back: [137] citing C & C [1998] FamCA 143. A finding of extravagant spending is a fact intensive inquiry in which the needs and income of the party will be relevant: [140];
(h)absent exceptional circumstances, a trial judge should deal with the property existing as at the date of hearing; however, the justice of the case may make it appropriate to add back assets that have been dissipated during the marriage or post separation – such as by gambling or extravagant living: [136] citing M & M [1998] FamCA 42, [2.10];
(i)the treatment of legal fees is a matter falling for discretion: [141] citing NHC & RCH [2004] FLC 93-204. Where the legal fees were funded by the early release of monies to enable a party to prosecute their property claim, they would normally be added back: [143] citing DJM v JLM (1998) FLC 92-816;
(j)an alternative approach can be taken under para’ 75(2)(o) whereby an adjustment is made to require a party to account for monies that have been dissipated – as by gambling losses: [145]-[146] citing De Angelis & De Angelis (2003) FLC 93-133.
Ryan J held that it would be wrong to elevate prior decisions on this topic as representing the normal (i.e presumptive) approach to be taken in such cases: [144].
Questions of notional add back thus present a range of considerations.
I note that by January 2016, the applicant was self-represented.
As concerned the applicant’s legal costs, I also note that his financial statement that was made on 16 March 2015 neither disclosed such legal costs as an existing liability nor as an item of expense. I accept that the issue of those legal costs was squarely raised by his affidavits.
There is no direct evidence that the applicant’s expenditure on legal costs came from a joint account. On the whole of the evidence, I find it is more probable that the applicant paid his legal fees from his own income post separation. By operation of s 117(1) of the Act, parties will generally bear their own legal costs. In this case, legal costs incurred by the applicant would lie with the applicant. The respondent has incurred no legal costs because she cannot afford a lawyer.
I do not accept that the applicant’s expenditure on legal costs should be included as part of the asset pool. The decision to incur those costs was not a joint decision but was the result of a unilateral choice that was made by the applicant post separation. I see no reason in justice why the applicant ought to be allowed to recoup those costs from the respondent, particularly where she has had to be self-represented.
Furthermore, I do not accept the respondent’s submission that a sum equivalent to those costs should be included in the asset pool as a notional add-back. I am not satisfied that the monies spent on legal costs were drawn from a fund that had been accumulated up to the date of separation. The parties’ financial statements filed in 2016 and their affidavits do not provide support for such a conclusion including, in particular, that the applicant had available resources at the date of separation from which he could have paid such costs. Further, this is not a case in which the parties’ equity in property was diminished by the raising borrowings to meet legal expenses: cf Tobey & Rezek [2017] FamCAFC 84, [20], citing NHC & RCH (2004) FLC 93-204; Omacini & Omacini(2005) FLC 93-218.
I decline to find that the applicant’s legal costs were paid from the parties’ accumulated funds. In the result, the sum of $45,000 is not to be included in the asset pool.
I remain concerned by the magnitude of those legal costs. I note that the applicant was self-represented by early 2016 and this consideration magnified my concern as to how the applicant could have incurred such a liability in the period following separation in 2014. The sheer quantum of those costs appears to be entirely disproportionate to the parties’ asset pool. While at present I have only limited information concerning the circumstances in which the applicant came to incur costs of so high an amount, this is a matter that the applicant may well decide to raise for consideration by the Legal Services Commissioner.
(omitted) car loan: as noted, the (omitted) loan relates to the applicant’s new Jeep (omitted), which had been purchased, but which was not disclosed in the applicant’s financial statement. Neither the Jeep (omitted) nor the (omitted) loan should be included in the asset pool.
Superannuation: although the value of these items was not in contest, the parties’ dispute centred upon how it should be treated.
The applicant’s superannuation has increased since separation to trial from ~$17,000 to at least $38,240. In the period following separation, the applicant (or his employer), has continued to make contributions to his superannuation fund, (omitted) Super Fund. For the purposes of sub-s 90MT(2), I consider it is appropriate to determine the value of the applicant’s interests in his superannuation fund by reference to the statement adduced in evidence by the applicant which indicated that, as at 23 March 2017, his interest was $38,240.
There is no basis for excluding from consideration any property in which either party had an existing interest as at the date of trial: Holland & Holland [2017] FamCAFC 166 at [25]-[31]. There, Ainslie-Wallace, Murphy and Aldridge JJ confirmed that regard should be had to the nature, form and characteristics of a capital receipt, not in isolation, but in the context of the contributions of all types across the entirety of the parties’ relationship: Holland at [33]-[36].
Quite apart from the question whether the case is to be considered by taking a global approach to the totality of the parties existing assets or by giving the applicant’s post-separation contributions to his superannuation separate treatment, in my opinion, the court should not be blind to the circumstance in which the applicant accumulated this superannuation post-separation: see Holland at [36] citing Farmer v Bramley (2000) FLC 93-060, [65]-[66] (Kay J), [56]-[57] (Finn J).
I accept that, whether as a result of the compulsory contributions made by his employer or with additional employee contributions, the applicant was able to accumulate superannuation entitlements and that he did so in the period post-separation. The respondent made no contribution to the applicant’s superannuation fund.
For those reasons, the court is entitled to conclude that the applicant’s contribution to his superannuation (and the lack of any contribution by the applicant in respect of it) in the period following separation may properly weigh in the exercise of discretion in assessing the contribution respecting superannuation.
While the court must identify the parties’ existing property interests, to say as much is to begin the process of determining what orders, if any, are just and equitable in the circumstances of a particular case.
In my view, having regard to the brevity of the parties’ marriage, I should take into account that the total of the applicant’s present entitlement to superannuation is now ~$38,240. According to the applicant’s first financial statement made on 16 March 2015 (some seven months after separation on 5 August 2014), the applicant then had accumulated superannuation benefits of $17,745. A natural inference is that from 5 August 2014 the applicant’s superannuation entitlements had progressively increased to $17,745 by 16 March 2015.
I also take into account that the respondent’s superannuation accumulated has also increased in the period post separation. The amount of superannuation as disclosed by the respondent in her first financial statement was the sum of $363. As at the date of trial her superannuation was $6,692.
I note that the respondent deposed that she had advised her superannuation trustee that her accumulated fund may be subject to a splitting order. By her case outline she sought an order for 60% of the applicant’s superannuation. Contrastingly, while the applicant has notified his superannuation trustee as to this possibility there is no evidence of its response. The absence of such evidence poses some complications respecting the orders that are to be made (see at [122]).
Other matters
Several subsidiary issues arose.
Respondent’s earnings: the applicant contended that the respondent had not made full disclosure of her income and stated that she had been earning cash from casual work. To this, no direct answer was given and I decline to draw any inference from the respondent’s silence.
Withdrawal from joint savings: the respondent agreed that, by reason of her being unemployed for a period, she had taken several withdrawals from the parties’ joint bank account amounting in total to ~$3,000.
However, the applicant’s financial statement that was made on 16 March 2015 (being shortly after separation), disclosed accumulated savings of some substance ($22,510). The applicant’s first financial statement indicated that he had savings (in one of his three bank accounts) of $19,961. As at trial the applicant’s savings had been depleted to a sum of $6,029. I take this into consideration.
While I have examined the voluminous series of bank statements exhibited by each of the parties, with two exceptions, the time spent doing so was for the most part, not illuminating. Relevantly, however:
(a)one statement indicated that on 31 July 2014, a sum of $7,000 had been withdrawn from that account. The respondent deposed, and the applicant did not deny, that it had been the applicant who had withdrawn this sum (shortly before separation);
(b)other bank statements indicated that post separation, the respondent had also withdrawn funds from the parties’ accounts. The respondent agreed she had withdrawn monies amounting to ~$3,000. She explained that this was needed so as to provide her with sustenance following the parties’ separation.
On one view, the applicant may be taken to have applied some part of those savings in the acquisition of the new furniture that is disclosed in his current financial statement as having a value of $6,000. To that extent, the depletion in savings is thus now reflected in the value of that furniture. Yet, the depletion in savings of ~$26,000 is not explained by the purchase of that furniture alone. The evidence does not reveal how the remaining monies were expended by the applicant. In all, a sum of $26,961 was taken from the asset pool and was applied to the applicant’s purposes. By contrast, the respondent has taken a comparatively smaller sum of about $3,000 from that pool.
The court’s discretion to add back necessarily extends to circumstances where there has been a premature (although not always a wanton or negligent), distribution of marital assets: Charles & Charles [2017] FamCAFC, [53] citing Omacini & Omacini (2005) FLC 93-218. In the present case, there has been a premature appropriation from the parties’ asset pool in particular, by the applicant. I am more inclined to accept that the respondent’s withdrawal of funds occurred on account of her need to meet ordinary living expenses and so decline to make any add-back on this account. However, it is appropriate to add back a notional sum on account of the depletion of the applicant’s savings. A sum of $10,000 should be added to the asset pool on account of the applicant’s withdrawal from bank accounts in the period immediately post separation. I conclude that it is just and equitable to do so, for to do otherwise would be to ignore that the parties had pooled resources.
Other liabilities: each of the parties has other liabilities. In the case of the applicant there is also a MasterCard debt of $4,505 while the respondent also has a MasterCard debt of $1,347 together with certain loans, each of which was disputed by the applicant. The sum of those loans has not have not changed markedly since the respondent made her first financial statement. There was a paucity of detail surrounding these debts beyond the respondent’s contention that these loans were made by family friends. It is an open question whether any such loan, assuming it to be legally enforceable is likely to be called upon: Damiani & Damiani [2012] FamCA 535, [112]-[114] (Watts J), citing Biltoft & Biltoft (1995) FLC 92-614.
Although I have identified the parties’ existing liabilities, I have concluded that in this case a just and equitable determination of the parties property settlement proceeding is best approached by excluding their respective liabilities from the asset pool on the basis that orders will provide that the parties remain personally liable for their own liabilities. This will avoid the necessity consider further how those liabilities may have an impact upon an adjustment of their net assets.
Asset pool
Based upon the totality of the evidence, I find that the parties’ asset pool comprised their accumulated assets in rounded figures as follows:
Asset Ownership $ Value Savings Applicant 6,000 Savings Respondent 650 Add back – savings removed Applicant 10,000 Ford (omitted) motor vehicle Applicant 8,000 Inflatable boat and ancillary equip’t Applicant 2,000 Chattels Applicant 6,000 Chattels Respondent 500 Jewellery Respondent 16,000 Sub-total $49,150 Superannuation Ownership Value Superannuation Applicant 38,240 Superannuation Respondent 6,690 Sub-total 44,090 Net asset pool $94,080 The question arises whether any, and if so what, orders are appropriate.
Consideration
It is just and equitable that there should be an adjustment of the parties’ property interests because they no longer live together.
By sub-s 79(4) of the Act, the court is required to identify and assess the entirety of the parties’ financial and non-financial contributions, together with the matters addressed by sub-s 75(2).
Although commonly it may be appropriate to express those contributions as a percentage of the net value of the asset pool including by taking account of all of the parties’ contributions, it is not necessary to adopt that course in all cases and may not be essential where the parties’ relationship was of short duration and their asset pool is modest. I do not consider it to be of assistance to assess in detail, and prefer to take a broad assessment of the parties’ respective initial, intra-relationship and post-separation contributions.
Suffice to say that I have identified so far as possible the parties’ initial contributions and their relative earnings and contributions to their joint savings during their relationship. I find that the parties’ contributions at the commencement of their relationship were essentially equal. However, during the term of their relationship the applicant’s financial contributions were markedly greater than those of the respondent. I find that each of the parties made non-financial contributions, and cannot say whether those of either party were greater than those of the other. Apart from their superannuation entitlements which continued to accumulate in a significant way following separation, I consider that neither party made any post-separation contributions. As concerns those post-separation superannuation entitlements, I consider it is appropriate to attach weight to the applicant’s accumulation of superannuation post separation.
As concerns sub-s 75(2) factors, I accept that the parties faced straightened circumstances immediately post-separation and that they continue to live in rented accommodation. I also pay regard to the parties’ relative youth, health and income earning capacities respectively. Further, there are no children of this union.
At the hearing the applicant sought an equal division of the parties’ Australian asset pool while the respondent sought that she should obtain an adjustment of 60% of those property interests in her favour. The parties ultimately submitted and agreed that a just and equitable adjustment of the property interests would be reflected by an allowance as to 45% to the applicant and 55% to the respondent. The principles governing s 79 are not, however, rendered inapplicable by reason that the parties may agree in certain proposed orders: Harris v Caladine (1991) 172 CLR 84, 124 (Dawson J). Accordingly, in giving independent consideration to those submissions I have concluded that a difficulty presented by the parties’ submissions is that each of them contended for a different asset pool. Put another way, the abstract proposition that the parties were agreed to split the asset pool as to 45% and 55% respectively, ignored that in several respects, the parties were not agreed on the quantum of various assets, whether they should be included or excluded from the asset pool or how they should be treated.
In cases where, as here, the net pool is relatively modest it may be preferable to express an adjustment as a lump sum rather than as a percentage: see Kilpatrick & Kilpatrick [2017] FamCA 432, [94] (Austin J) citing Parrott v Public Trustee of NSW(1993) 17 Fam LR 785 at 790-791; see also Quinn & Quinn (1979) FCL 90-677 (Evatt CJ). Upon those principles, I conclude that it is appropriate to make an order for the payment of a lump sum. I approach this assessment doing the best I can on the available evidence.
While I have calculated the asset pool in the sum of $94,080, it must also be recognised that I am unable to make a finding as to who has possession of all or any part of the jewellery to which the parties ascribed a value of $16,000. In that respect, the determination of what orders are just and equitable entails recognition that while the jewellery does exist, I am unable to make orders in relation to it. As I cannot make any effective orders in relation to the jewellery, the question of what orders it is just and equitable to make are more appropriately considered upon an asset pool of $78,080.
Excluding the jewellery (and based upon a total asset pool of $78,080), I conclude it is just and equitable that that sum should adjusted by the parties as to $42,080 to the applicant and $36,000 to the respondent. In doing so I have reflected on the differential between those figures.
In the making of final property orders, it is well recognised that it is desirable to make orders that avoid the sharing of particular assets: Norbis v Norbis (1986) 161 CLR 513, 521 (Mason and Deane JJ). Each of the parties identified particular assets which, they contended or agreed, should be retained by them respectively. I have concluded that their assets should be allocated or transferred as follows:
Applicant $ Value Savings 6,000 Savings – add back 10,000 Inflatable boat and ancillary equipment 2,000 Chattels 6,000 Sub-total $24,000 Superannuation Superannuation 38,240 Sub-total 38,240 Total $62,240
I have also determined that it is just and equitable that the respondent should retain the following assets and liabilities:
Respondent $ Value Savings 650 Ford (omitted) motor vehicle 8,000 Chattels 500 Sub-total $9,150 Superannuation Superannuation 6,690 Sub-total 6,690 Total $15,840 Based upon my findings as to which assets ought to be retained by each of the parties the whole of the asset pool is accounted for, save the jewellery (i.e. $62,240 + $15,840 + $16,000 = $94,080).
It is necessary to make orders which secure a just and equitable result whereby that sum should be adjusted between the parties as to $42,080 to the applicant and $36,000 to the respondent.
In short, the respondent is entitled to an adjustment of property of $36,000 of which she will receive $15,840 by way of the transfer of the items of personal property outlined above. Consequently, orders are required that will transfer a further sum of $20,160 to the respondent.
On settled principles, I cannot make orders for the transfer of property that is non-existent. For example, although the court has power to make an order for the payment of money, the exercise of that power is not open where there are no monies to which that order might attach. Moreover, where it may be just and equitable to require a party to raise monies to be borrowed upon the security of real property, it is not open to make such an order where that party has no real property.
Equally, the court is required to pay regard to the countervailing effect which a proposed order might have upon the party who is obliged to obey it: Stanford v Stanford (2012) 247 CLR 108.
In the present case, the parties have no real property. The applicant has no capacity to borrow monies against the security of any such property. Nor does the applicant have savings sufficient to transfer to the respondent an amount necessary to equalise her adjusted interests in the asset pool up to $36,000. Accordingly, orders of a different form are necessary to transfer a sum of $20,160 to the respondent.
I have determined that a range of orders are necessary to transfer that sum to the respondent. First, orders will be made to transfer in total $4,160 from the applicant’s bank accounts. Secondly, a superannuation splitting order will be made so as to transfer $16,000 of the applicant’s accumulated interest in his superannuation fund. In considering the orders that are proposed to be made in relation to the superannuation interest of the parties, I allocate to the respondent the sum of $16,000 as a base amount for the purposes of sub-s 90MT(4).
In proceedings under s 79, the court may make orders in relation to the superannuation interests of the parties: sub-s 90MS(1). However, the court may only make such orders in accordance with Part VIIIB of the Act. An order made under Part VIIIB may be expressed to bind a trustee of a superannuation fund; however, the trustee is entitled to procedural fairness before any final orders are made: see para 90MZD(1)(a). However, as I have noted, despite the applicant’s request, there is no evidence that the trustee of his superannuation fund has indicated its attitude to such orders being made.
For those reasons, the matter must be adjourned to enable the trustee of the applicant’s superannuation fund to be informed of the proposed orders and to indicate whether or not consent is given (or no objection is taken) to the making of the orders in that form. The Registrar will be directed to provide a copy of these Reasons (which include the proposed orders), to the trustee: s 90MZF. The proposed orders are moulded on those made in Turner & Willis [2017] FamCA 740.
In those circumstances, it is necessary to proceed incrementally and, in the first instance, to make directions which afford procedural fairness to that trustee: see Kawada & Kawada [2012] FamCA 273, [295] (O’Reilly J). Other orders are made to preserve the status quo pending the making of final orders.
The orders to be made will secure the result that the parties’ asset pool will be divided so as to achieve an overall division in the proportions that I have determined should be applied. The orders that are to be made in this proceeding in the exercise of the court’s discretion under s 79 recognise the broad principle that orders made under that section should, so as far as is practicable, finally determine the parties’ financial relations. I am satisfied that those orders are just and equitable: JEL v DDF, supra, [152(i)].
I certify that the preceding one hundred and twenty-five (125) paragraphs are a true copy of the reasons for judgment of Judge A Kelly
Date: 14 December 2017
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