Schofield and Schofield
[2016] FCCA 523
•15 March 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| SCHOFIELD & SCHOFIELD | [2016] FCCA 523 |
| Catchwords: FAMILY LAW – Parenting issues settled first day of final hearing – property issues proceeded as an undefended hearing – proceedings have a long history – history of husband not complying with court orders and failing to meaningfully participate in proceedings. |
| Legislation: Family Law Act 1975 (Cth), ss.79, 75 |
| Tate and Tate (2000) FLC 93-047 Tate v Tate (2000) FLC 93-047 |
| Applicant: | MS SCHOFIELD |
| Respondent: | MR SCHOFIELD |
| File Number: | MLC 3578 of 2013 |
| Judgment of: | Judge Harland |
| Hearing date: | 15 February 2016 |
| Date of Last Submission: | 15 February 2016 |
| Delivered at: | Melbourne |
| Delivered on: | 15 March 2016 |
REPRESENTATION
| Counsel for the Applicant: | Mr Marchetti |
| Solicitors for the Applicant: | Collards |
| Counsel for the Respondent: | Ms Gordon |
| Solicitors for the Respondent: | Mark Halse Barrister and Solicitor |
| Counsel for the Independent Children’s Lawyer: | Ms McNamee |
| Solicitors for the Independent Children’s Lawyer: | Perry Weston Lawyers |
ORDERS
The wife do all acts and things to instruct her solicitors Collards to release the funds held in trust resulting from the sale of the Property M and Property L properties plus interest, be forthwith paid to the wife less the amounts needed to pay the invoice of (omitted) Accountants and the capital gains tax owing on the Property L property.
That the wife as soon as practicable, in her capacity as Director of (omitted) Pty Ltd (operating the (business omitted) business) do all acts and things to wind up the business and the company and for such purpose the wife be at liberty to utilise such funds earned or received by the business and company to discharge any debts owing or arising with respect to the operation and winding up of the business or company.
That contemporaneously with the winding up of the business and company the wife do all acts and things to vest the Schofield Family Trust.
That pursuant to s.78 Family Law Act1975 (Cth) that each of the husband and the wife shall be and hereby are declared to be the sole and absolute owners at law and in equity of:
(a)all items of furniture, furnishings, personalty, chattels and jewellery;
(b)all monies (whether held in cash or in deposit with any financial institution);
(c)any motor vehicle;
(d)all contributions to or benefits or entitlements arising from membership of any fund of insurance or superannuation whether such interest be present, contingent or expectant;
in the possession, custody or control or each or in which either has an interest which are not otherwise dealt with in these orders.
That in the event that either party should fail, neglect or refuse to sign or execute any deed, document or instrument required by or to give effect to these Orders then pursuant to s.106A Family Law Act that the Registrar of the Family Court of Australia, Melbourne Registry shall be and is hereby authorised, empowered and directed to sign and execute such deed, document or instrument in the place and instead of such party and to thereafter do all things and acts as are necessary to give validity and operation to same.
BY CONSENT IT IS ORDERED:
That all previous Parenting Orders with respect to the children:
X, born (omitted) 2001;
Y, born (omitted) 2004; and
Z, born (omitted) 2009 ("the children") be dismissed.
That the mother have sole parental responsibility for the children of the marriage.
That the father spend no time or communicate with the children of the marriage, save and except as follows:
(a)In the event the children or any of them request that they be able to communicate or spend time with the father, the mother will facilitate such time or communication, on the basis that any time spent would be on a supervised basis initially.
(b)That the father be permitted to communicate with the children by way of letters, cards and gifts and the mother ensure that such items are passed on to the children, after first ensuring that the contents are not contrary to the children's best interests.
Each school any of the children attend be authorised to provide the father at the father's expense, copies of school reports generated after this date in relation to the children.
The preceding paragraph does not allow the father or his agent to:
(a)Contact the school(s);
(b)Contact any of the school(s) staff;
(c)Attend at the school(s); or
(d)Attend any school(s) extra-curricular and/or school(s) activities.
The mother shall provide a copy of these Orders to the children's current school(s) and any future school(s) they attend.
That the appointment of the ICL be discharged as of 29 February 2016.
Section 65DA(2) and Section 62B apply.
AND IT IS NOTED:
(A)That the ICL intends to meet with the children to explain these Orders and such meeting shall be facilitated by the mother.
IT IS NOTED that publication of this judgment under the pseudonym Schofield & Schofield is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 3578 of 2013
| MS SCHOFIELD |
Applicant
And
| MR SCHOFIELD |
Respondent
REASONS FOR JUDGMENT
This matter was listed for a five day final hearing with respect to the parenting and property issues. The case has a long history. The parties resolved the parenting issues on the morning of the first day of hearing. The property aspect of the hearing proceeded on an undefended basis.
It is necessary to refer to the lengthy history of this matter to explain why the hearing proceeded in that way.
History of proceedings
The wife commenced proceedings on 7 May 2013 seeking property and parenting orders.
Judge Riethmuller made orders on the first return date on 24 June 2013. Both parties were represented by counsel. The husband was ordered to pay the mortgages on two properties and lease payments. Further, the husband was ordered to file responding material within 21 days and that if he failed to do so; the wife was given leave to proceed on an undefended basis. Interim parenting orders were also made.
The matter was next in court before Judge Riethmuller on 29 and 30 July 2013. There was no appearance by the respondent. The matter was listed for an interim hearing and again, the husband was ordered to file material. The wife was ordered to serve a copy of the orders on the husband who was at that time incarcerated at the (omitted) Prison. The husband and wife were also ordered to do all acts and things necessary to reappoint the wife to her previous position as director of (omitted) Pty Ltd.
The husband filed his responding material on 3 September 2013, the day before the matter was next listed before Judge Riethmuller. Both parties were represented by counsel. The parties were ordered to sell the property known as Property L (the Property L property) and the matter was listed for final hearing for three days commencing on 2 April 2014.
The husband filed an application in a case on 13 November 2013. He sought parenting and property orders which included an order seeking to retain the Property L property which had been ordered to be sold on the last occasion. The matter was listed before Judge Riethmuller two days later and he made further orders that the Property L property be sold by auction in February 2014. Judge Riethmuller also ordered that the husband pay the wife’s costs fixed in the sum of $3,156 at the time of the settlement of the property pursuant to final orders.
The matter was in court again on 4 February 2014 before Judge Riethmuller who made orders appointing the wife trustee for sale of both the Property L property and the property at Property M (the Property M property). He made orders for writs of possession of the properties and that the husband pay the costs of the mediation and the wife’s costs thrown away at the mediation in the sum of $5,100 as well as the wife’s costs of that day in the sum of $4,900.
The wife filed an application in a case on 24 March 2014 seeking a warrant issue for the husband’s arrest, that the final hearing be adjourned and that a warrant of possession issue to recover possession with respect to the two properties. The wife also sought recovery of sheriff’s fees and her costs.
On 26 March 2014 Judge Riethmuller made orders vacating the hearing. The case was next in court before Judge Riethmuller for mention on 2 April 2014. He listed the matter for final hearing for two days commencing 24 July 2014 and made further trial directions and various costs of the wife with respect to the properties to be reimbursed. The husband filed a response to the application in a case seeking that it be adjourned for mention.
On 24 July 2014 Judge Riethmuller made orders appointing an Independent Children’s Lawyer, for the preparation of a family report and orders that the father see the children at a contact centre. He ordered that the property proceedings be adjourned for hearing on a date to be fixed and dismissed all outstanding applications in a case
The husband filed an application in a case on 15 August 2014 which sought orders including discharging some of the previous orders and seeking the right of the husband to have sole occupation of the Property M property as well as disclosure orders.
On 11 September 2014 Judge Riethmuller dismissed all outstanding applications with respect to the Property M property and reserved the parties’ costs.
On 3 November 2014 the wife filed an urgent application in case seeking orders that the husband and his former lawyers do all acts and things to remove caveats lodged on the properties.
On 7 November 2014 the husband was ordered to remove the caveat, he had lodged on both properties and further orders were made with respect to the application of the sale proceeds of the properties.
The matter was listed before Judge Riethmuller on 20 November 2014 and on that occasion the matter was adjourned and a further mention date of 2 March 2015 was given and the two day final hearing was scheduled to commence on 4 May 2015.
On 2 March 2015 Judge Riethmuller made orders suspending the previous order for the father to have supervised time with the children at the contact centre and ordered the parents to attend a psychiatrist as nominated by the Independent Children’s Lawyer as well as the parties and children to attend reportable child inclusive family therapy for the purpose of trying to re-establish the children’s relationship with the father. Judge Riethmuller listed the matter for final hearing before me for four days commencing on 3 August 2015. He vacated the final hearing set down for 4 May 2015.
The husband filed an application in a case on 3 March 2015 seeking an order that the previous orders with respect to the Property L property be discharged and that the husband be entitled to occupy the Property L property.
It was due to be listed for mention before me on 24 June 2015 but the parties requested an adjournment as the valuation and lease information was not available.
The case was listed for mention before me on 16 July 2015. The final hearing had to be vacated as it was necessary to obtain more assessments and an updated family report. The court noted that the husband had advised the court on 2 March 2015 that he had received a sum of approximately $70,000 by way of inheritance. The court further noted that the husband advised the court on that day that he transferred the sum of approximately $20,000 into his (omitted) bank account. The husband was ordered to provide details and disclosure of all funds held by him in any overseas account from 1 July 2013 to date including providing information as to how the funds were sourced and dealt with by no later than 31 August 2015.
On 6 November 2015 the wife filed an application in a case seeking orders to proceed with the final hearing on an undefended basis. That application was returnable at the final hearing.
On 16 November 2015 I made orders in Chambers releasing the updated family report prepared by Dr K.
The wife filed an application for divorce on 1 October 2015. Her divorce application was listed for hearing before Registrar Moser on 17 December 2015. The wife’s solicitor appeared on that occasion and the husband appeared in person. Registrar Moser noted that the husband wanted to file for divorce and told the court that he thought his lawyers had done so. The wife’s lawyer said that the husband’s lawyer had told him that he did not receive any material for a response to the divorce and did not have instructions for divorce. Registrar Moser adjourned the divorce application to 4 February 2016 and ordered that both parties and their lawyers attend court on that date.
The husband filed a response to the application for divorce on 27 January 2016. The application was prepared by his lawyer and was signed by the husband. The husband sought that the divorce be dismissed because there were not proper arrangements in place for the children and he referred to the upcoming hearing commencing on 15 February 2016.
Both parties were represented on 4 February 2016 when Registrar Moser granted the divorce.
The husband was represented by counsel and his solicitor was instructing counsel on the first day of the final hearing on 15 February 2016.
The husband filed an affidavit by his treating psychiatrist on 11 February 2016, well outside the timeframe for filing affidavits.
The parties negotiated during the morning and resolved the parenting issues. Given the material that had been filed, I am satisfied that these orders are in the children’s best interests.
The husband did not file a trial affidavit. He sought to hand up a trial affidavit in court. The wife’s counsel objected to that affidavit and sought that the property hearing proceed on an undefended basis. As will be apparent from the history above, the matter has had a long history in this court with several listings for final hearings. There have been times when the husband has not participated in the proceedings and has not complied with orders. The wife has several outstanding costs orders in her favour.
As the wife’s counsel pointed out, the husband was on notice since November 2015 that the wife was seeking to proceed with the final hearing on an undefended basis. The husband’s counsel opposed the matter proceeding on an undefended basis. The husband’s counsel submitted that the husband has had several difficulties throughout these proceedings. There is no doubt that at times the husband’s meaningful participation in the proceedings has been hampered by his mental health. Indeed that has contributed to some of the adjournments and the necessity to appoint an Independent Children’s Lawyer and obtain psychiatric assessments. This is not a criticism of the husband.
However it is also clear that there have been times when the husband has failed to comply with orders which are not limited to periods where he has been incarcerated. He has been represented by lawyers throughout the process (he has changed lawyers twice during the course of proceedings). For example the husband did not comply with my order to provide disclosure with respect to his overseas bank accounts by 31 August 2015. It would be utterly unfair to the wife to allow the husband to rely on an affidavit that the wife has not had the opportunity to obtain legal advice with respect to and to respond to. There is no a meaningful opportunity to do that if an affidavit is provided shortly before a final hearing.
It is not an answer to refer to the husband’s difficulties as an explanation for his non-compliance with filing a trial affidavit. The husband instructed his lawyers to file an affidavit by his treating psychiatrist and a response to the wife’s application for divorce. Both these documents were prepared in January. He gives no explanation as to why he had not filed his trial affidavit. I refused the husband leave to file and rely on that affidavit. The wife’s counsel referred to Palmer & Rhodes [2015] FCCA 2853 where I discussed the problem of non-compliance with the rules and late filing of documents.
I also made it clear to the husband’s counsel that I would not entertain the case being adjourned because of the lengthy history of the matter with several aborted hearings. The husband was on notice that the wife would seek to proceed on an undefended basis. The proceedings need to be brought to an end. A costs order would not cure or prejudice the wife if the proceedings were adjourned. She already has outstanding costs orders which will only be paid when these proceedings are finalised. The longer it is delayed, the longer she is denied her property entitlements. The husband was on notice of the wife’s contention if he did not comply with the orders and he was represented by his solicitor who was his third solicitor, but had been representing him for several months including when the case was mentioned before me in July 2015.
The wife’s counsel relied on the decision of Tate and Tate [2000] FamCA 1040. In that case the husband appealed against orders of the trial judge, refusing his application to reinstate his response to the wife’s application for final orders and the refusal to allow him to cross-examine the wife and make submissions at the undefended hearing. In that case there had been a long, unsatisfactory history of non-compliance by the husband and consequential delays to finalising the matter. The Full Court dismissed the husband’s appeal, finding that it was within the trial judge’s discretion to deal with the case in the manner she did. I am comfortably satisfied that the husband has had the opportunity to participate.
The wife also relies on Tate v Tate (2000) FLC 93-047. In that case, the Full Court held that it was within the trial judge’s discretion to refuse to allow a party to cross-examine the other. That case is not dissimilar to this case. In that case, there were multiple court appearances and repeated non-compliance with court orders. In that case, the husband appealed the trial judge’s refusal to allow him to cross-examine at the undefended hearing.
The Full Court states in Tate at [75]:
“It is not for litigants, appearing in person or otherwise, to pick and choose which orders they will or will not obey, or when they may condescend to comply with them. Such an attitude, amply evidenced in this matter, if adopted, brings its own nemesis. That is not only because it is contemptuous of the Court’s orders. It is also because it works injustice to the parties who do comply, and unfairness to that myriad of litigants waiting to have their matters despatched as soon as the Court can hear them. The luxury of procrastination – let alone deliberate disobedience – is a luxury of the past if it ever existed.”
The Full Court also noted at paragraph 101 ‘[t]he aphorism ‘justice delayed is justice denied’ is all too manifestly true in this jurisdiction’.
The comments of the Full court are applicable to this case. I have set out the history of the husband’s non-compliance and obstruction of the court process. He has been selective in the manner in which and with respect to which issues he chooses to engage. A costs order cannot cure the prejudice to the wife.
The husband did not seek to cross-examine once I determined that the hearing should proceed undefended as has been previously foreshadowed.
I granted leave to the wife to proceed with property matters on an undefended basis. The husband and his legal representatives remained in court for the duration of hearing.
The parties relationship
The wife says that the husband’s behaviour changed during their relationship. She says he became increasingly violent and aggressive. His behaviour was erratic. The wife says that the husband started taking drugs and his behaviour led her to leave the house with the children.
The wife is 39 years old the husband is 41 years old. They started living together when they got married on (omitted) 1996. They separated on a final basis on 31 December 2012. Their relationship lasted 16 years.
The parties have four children, W aged 18, X aged 15, Y aged 12 and Z aged seven.
The wife’s trial affidavit provides little information about the parties’ contributions during their relationship. What can be gleaned from her material is that both parties were involved in the business. The wife has made significant post-separation contributions caring for the children and maintaining the business without any assistance from the husband.
Post separation
The wife says that after the parties separated she discovered that the husband had unilaterally removed her as a director of the company controlling the business. She says that the husband failed to renew the lease for the business premises in June 2014. It has been operating on a month to month tenancy since then which has had a dramatic effect on the value of the business. The husband denies the allegations and says that he was negotiating a lease but nothing has come of that. Through his solicitor, the husband said that he signed a lease, however, despite numerous requests he has not produced it.
Pursuant to interim orders the wife has been collecting the business income which is the rental income from the tenant and has been paying outgoings being the rent to the landlord. She has used some of these funds for the children’s therapy. The wife says she has formed the view that it is unlikely that she will be able to secure a lease for the premises and that as a consequence of that will not be possible to obtain a formal valuation of the business. The wife says in her trial affidavit that her solicitors received a letter from the husband’s solicitors indicating that the husband had signed a new lease and that a copy would be provided shortly. Despite numerous requests, the lease has not been produced. If a lease had been signed, the husband would have produced it.
The wife was proposing that a figure of $160,000 be adopted as the value for the lease and she says she is content for either the husband or herself to retain the business. By the time of the hearing, her position had changed. This means that the business is obliged to pay rent to the landlord without receiving rental income. As the tenant has now defaulted, the best course of action is to give notice on the month to month tenancy and wind up the business.
The wife has access to funds held in the business account of $41,309.71. She says that those funds will be needed to pay the rent, the costs of winding up the business and paying any outstanding expenses of the business.
The parties’ known legal and equitable interests
The parties’ legal and equitable interests, so far as they are known are as follows:
PROPERTY
Sale proceeds from sale of the Property L and Property M properties (held in trust by solicitors for the wife)
$888,728.54
Mr J, (country omitted)
(as disclosed in the husband’s financial statement)
$50,000.00
(omitted) Pty Ltd
NIL
Schofield Trust (operating the business – (business omitted))
NIL
Part property settlement ($200,000)
(each party received the sum of $100,000)
$200,000
Total gross assets for adjustment
$1,138,728.54
LIABILITIES FOR ADJUSTMENT
CGT liability (sale of Property L property)
$37, 325.00
(omitted) Accountants invoice
$12,036.50
Total liabilities for adjustment
$49,361.50
TOTAL NET PROPERTY FOR ADJUSTMENT
$1,089,367.04
Mr Marchetti submitted that the husband had received 12% of the known property pool as both parties had received $100,000 by way of partial property settlement and the husband has land in (country omitted) on which he disclosed a value of $50,000 in his financial statements. In addition, the wife has costs orders in her favour totalling $13,206 with further costs fixed and reserved with respect to an amount of $3,156. These costs are anticipated to be paid from the money held in trust. As the business now has a nil value, the percentage the husband has of the known pool is 15%.
The husband’s nondisclosure
The wife submits that the husband has failed in his obligations to make full and frank disclosure.
The husband has long been on notice that the wife alleges that the husband has failed to comply with his obligations to provide full and frank disclosure. She addresses this in her trial affidavit at paragraphs 55 to 67. She has previously raised these allegations particularly with respect to the $70,000 that the husband claimed to have received as an inheritance and significant funds which were transferred from an account in (country omitted) to the husband’s (omitted) bank account in 2014. This is why the wife sought a specific order on 16 July 2015 requiring the husband to provide full details and disclosure of all funds held by him in any overseas account from 1 July 2013. I made that order on 16 July 2015. The wife annexes some correspondence received from the husband’s solicitor enclosing some financial documents and indicating that further documents were to be provided. It falls well short of the disclosure the wife has been seeking for some time. The wife also identified two transfers to the husband in 2015 which were revealed in the limited disclosure documents the husband has provided. The wife identifies monies the husband has failed to account for totalling hundreds of thousands of dollars. The husband has had ample opportunity to explain where the sums of monies have come from and how they have been disbursed. The husband has also been on notice since November 2015 that the wife was seeking that the matter proceed on an undefended basis and that she would be raising the issue of the husband’s nondisclosure in support of the orders that she is seeking the court makes. The wife’s trial affidavit filed on 22 January 2016 also makes this clear, and, as I indicated earlier these not issues being raised to the first time.
The wife also raises the issue of the insurance claim with respect to a fire at the former matrimonial home. She says as the property in the insurance policy was in his name any payments would be made to him.
Finally, the wife points out that the husband has recently revealed that he is living in the former matrimonial home as a tenant of the new owner. The wife complains that this is deeply aggravating when she had to leave the home with the children and move into her parents’ home in cramped conditions. She says the husband has not made any contributions towards the children’s expenses post separation and that she has incurred additional costs because of his conduct.
The husband has also at times obstructed the court process. This is apart from the history of the litigation set out above. The wife relies on the authority of Chang & Su (2002) FLC 93-117. The comments of the Full Court in that decision have been often repeated. The Full Court stated that once non-disclosure has been established “the court should not be unduly cautious about making findings in favour of the innocent party”.
The wife also referred to Weir and Weir (1993) FLC 92-338 and the more recent decision of Macmillan J in Turner & Turner and Anor [2015] FamCA 483.
Section 75(2) factors
The wife relies on family benefits. She is not in paid employment. She is not entitled to other Centrelink benefits because of her interest in the business. Once she winds up the business, which is an order she seeks, she will not receive any income from it. That income has recently stopped because of the tenant’s default.
The Court does not have information about the husband’s current employment status. The husband does not pay child support.
The parties’ oldest child is not 18. The wife has had the sole care of the children since separation and will continue to have their sole care.
There are significant s.75(2) factors in the wife’s favour.
Legal principles
Until the High Court decision in Stanford & Stanford (2012) 247 CLR 108, the position in respect of the process to be applied to the resolution of matrimonial property cases was said to be well settled with a preferred approach as set out by the Full Court in Hickey & Hickey & Attorney-General (Intervener) (2003) FLC 93-143 at 78,386 [39].
The High Court considered the operation of s.79 of the Act in the matter of Stanford. In this case, the majority stated at [35]-[36] that:
“It will be recalled that s 79(2) provides that "[t]he 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. Section 79(4) prescribes matters that must be taken into account in considering what order (if any) should be made under the section. The requirements of the two sub-sections are not to be conflated. In every case in which a property settlement order under s 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order.”
The expression “just and equitable” is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its metes and bounds.” [Footnotes omitted]
The High Court found three fundamental propositions with respect to the application of s.79, which can be summarised as follows:
1.Firstly, in order to ascertain whether it is just and equitable to make a property settlement order, it is necessary to identify the existing legal and equitable interests of the parties in the property. The High Court emphasised the word ‘existing’.
2.Secondly, although s.79 gives the court a broad power to make property settlement orders it may not be exercised in an unprincipled fashion. There must be no assumption that the parties’ interests are or should be different to their existing interests.
3.Thirdly, when considering whether making a property settlement order is just and equitable the court must not assume that one or the other party has the right to a property adjustment order. The court must give separate consideration to s.79(2) in addition to the matters referred to in s.79(4).
In Stanford the High Court indicated that, in the vast majority of matrimonial property cases, the requirements of s.79(2) will be readily satisfied, largely as a result of a consideration of the circumstances of the parties concerned, particularly the nature of their separation.
The High Court also pointed out that what is just and equitable is different in every case.
Conclusion
The wife’s counsel submitted that the wife receive the remaining known property pool because of her contributions, 75(2) factors and the husband’s failure to disclose. She should receive the whole of the proceeds of sale from the two properties. She will need to wind up the business and pay for the expenses that were not covered by the $41,309.71 in the business account. If there are any funds left over she will be entitled to keep them.
The husband will keep his property in (country omitted) and the assets he has failed to disclose, which may well be significant. In the circumstances of this case it would be futile to apply percentages. I am satisfied that it is just and equitable to make final property orders and to end the financial relationship between them. So far as I can be, I am satisfied the orders are just and equitable.
I certify that the preceding sixty-seven (67) paragraphs are a true copy of the reasons for judgment of Judge Harland
Date: 15 March 2016
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