Scully and Scully

[2017] FCCA 42

FEDERAL CIRCUIT COURT OF AUSTRALIA

SCULLY & SCULLY [2017] FCCA 42

Catchwords:
FAMILY LAW – Property – setting aside property consent orders made in the local court in 2002 – husband unrepresented – not satisfied parties were separated at time orders made – wife did not communicate to husband she regarded the marriage had broken down at time orders made – finding that husband unaware wife formed view marriage had broken down in 2002 – wife’s conduct postdate the orders inconsistent with breakdown of the marriage – orders set aside on ground of a miscarriage of justice by the giving of false evidence and for any other reason.

Legislation:

Family Law Act 1975, s.79A

Cases cited:

Gebert & Gebert (1990) 14 Fam LR 62

Mckenna (1971) 18 FLR 15 at 18

Applicant: MS SCULLY

Respondent: MR SCULLY

File Number: SYC 2215 of 2016

Judgment of: Judge Henderson

Hearing date: 23 November 2016

Date of Last Submission: 23 November 2016

Delivered at: Sydney

Delivered on: 18 January 2017

REPRESENTATION

Counsel for the Applicant: Ms Mathias

Solicitors for the Applicant: Manning Lawyers

Counsel for the Respondent: Ms Snelling

Solicitors for the Respondent: Suzanne Wyman & Associates

ORDERS

1. The consent orders entered into on 4 October 2002 to be set aside.

2. The wife is to file and serve an amended application in answer to the husbands’ response setting out, with particularity, the orders she seeks the Court to make now that the consent orders entered into in the (omitted) Local Court have been set aside within 28 days of the reasons being delivered. I do not require a further updating financial statement or an affidavit in support.

3. The matter is listed on 26 April 2017 at 9:30am for further directions.

IT IS NOTED that publication of this judgment under the pseudonym Scully & Scully is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYC 2215 of 2016

MS SCULLY

Applicant

And

MR SCULLY

Respondent

REASONS FOR JUDGMENT

1. This is an application by the applicant husband by way of a response filed 11 October 2016 seeking the setting aside of consent orders entered into between the parties on 4 October 2002. The wife seeks dismissal of that application. The material read for the parties is as follows:

   a)For the wife:

   i)Initiating Application filed 28 June 2016;

   ii)Trial affidavit of 8 November 2016;

   iii)Affidavits of Ms A filed 9 November 2016;

   iv)Affidavit of Ms K dated 16 November 2016;

   v)Case outline prepared by her counsel;

   vi)Wife’s exhibit 1: letter dated 23 September 2002 to the husband from the wife’s then lawyers, Henshaws; and

   vii)Wife’s exhibit 2: a copy of the actual application for consent orders, which was filed with the (omitted) local court where the orders were made.

   b)For the husband:

   i)His Response filed 11 October 2016;

   ii)Trial affidavit of 7 October 2016;

   iii)Case outline by Ms Snelling of counsel; and

   iv)Husband’s exhibit 1, a letter from his wife’s then solicitors, Henshaws, to her dated 2 September 2002 concerning the consent orders the parties entered into.

2. I also received into evidence a balance sheet of the parties’ assets and liabilities in 2002 and as at today. The assets the parties had in 2002 consisted of superannuation, liquid assets, cars, furniture and the like. The husband was at that time unemployed and had been for some time, having been retired with post-traumatic stress syndrome. He was receiving an income of $1300-odd per week income from his retirement benefits together with other valuable benefits. At separation he received his car worth $8,000, some furniture worth $15,000 and his superannuation of $300,000. He had debts of $35,000 in credit cards.

3. The wife received the former matrimonial home worth $500,000, her car worth $8,000, cash of $12,000, furniture of $15,000 and her superannuation of $60, 000.

4. The wife’s debts were the mortgage of $72,000 and an overdraft of $30,000 totalling $100,000. In addition the wife had had personal debts amounting to some $9000.

5. The percentage division effected by the consent orders was that the wife received some 62 per cent of the net proceeds and the husband 38 per cent of their then assets.

6. The husband although not employed was being supported by a substantial pension of some $1717 gross per week and net around $1300 weekly. The wife was working and earning income and was receiving gross income of $1309.

7. The orders provided that the wife was to receive all the liquid assets, which is 62 per cent, together with a spouse maintenance order of $200 per week from the husband. This gave them an equality of income.

8. Today the asset picture is very different. The husband still has his entitlement to his pension and the substantial benefits that bestows. He has superannuation of $665,000, home contents of $2,000, car worth $6,000 a total of $673,000 in assets. He has significant credit card debts of $115,000 and thus his nett liquid position is $558,000.

9. The wife has the home, which she says is worth $750,000. I dispute that figure. This would be the only home in Sydney that has not increased significantly in value in 14 years. It was valued at $500,000 in 2002. I prefer the husband’s assessment of the value of the home at $1.1 million, car $11,000; contents of $8,000. The wife is now retired and has superannuation benefit of $1,000,000 providing her with an income stream of around $45,000 per annum.

10. The wife on her own figures has assets of some $1.854 million. If, the home is worth, as I assess it to be, some $1.1 million, her assets are $2.2 million which includes her superannuation income stream.

11. The husband has $673,000 together with his significant life time income stream of $103,000 per annum and other health benefits which are superior to the wife both in monetary value and unlike the wife’s income stream is guaranteed with CPI indexing and is not subject to the vagaries of a fluctuating financial market.

12. The asset position of the parties today is not alone determinative of the decision I am tasked to make under 79A of the Act[1], but it may be a factor that I take into account in my decision.

    [1] Family Law Act 1975 (Cth).

13. Section 79A of the Family Law Act 1975 sets out 4 categories of factors relevant to the setting aside of orders for property settlement interests:

    Where an application by a person affected by an order made by a court under 79 in property settlement proceedings, the court is satisfied that:

    (a) there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence, including failure to disclose relevant information, the giving of false evidence or any other circumstances, or

    (b) circumstances have arisen making the orders incapable of being carried out.

    (c) a person has defaulted in carrying out an obligation imposed on the person by the order and, in the circumstances that have arisen as a result of that default, it is just and equitable to vary the order or to set the order aside and make another order in substitution for the order; or

    (d) in the circumstances that have arisen since the making of the order, being circumstances of an exceptional nature relating to the care, welfare and development of a child of the marriage, the child or, where the applicant has caring responsibility for the child (as defined in subsection (1AA)), the applicant, will suffer hardship if the court does not vary the order or set the order aside and make another order in substitution for the order; or

    (e) a proceeds of crime order has been made covering property of the parties to the marriage or either of them, or a proceeds of crime order has been made against a party to the marriage;

    the court may, in its discretion, vary the order or set the order aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside.

14. These orders have been carried out, there has been no default. There are no issues affecting children nor any issue relating to the proceeds of crime.

15. Thus the only part of 79A that is relevant to these proceedings is 79A(1)(a) namely that there has been:

    A miscarriage of justice by reason of fraud, duress, the suppression of evidence, including the failure to disclose relevant information, the giving of false evidence or any other circumstance.

16. The husband entered into the consent orders in the absence of legal advice despite the wife’s solicitors exhorting him to obtain such advice. The wife’s lawyers sent him a letter dated 23 September 2002 which stated in part:

    I refer to the above matter and our letter to you of 12 September 2002 enclosing the Family Law documents formalising the agreement reached between the parties regarding the division of matrimonial property.

    We are instructed you do not intend to seek independent legal advice from a solicitor of your choice regarding these documents despite strong recommendations to do so. Therefore please attend a Justice of the Peace to sign the documents.

17. The husband was properly advised by the wife’s lawyers to seek independent legal advice before signing the consent orders and he chose not to do so.

18. The husband’s case is this. He was, at that time, and continues to suffer from post-traumatic stress syndrome. There is a medical certificate attached to his affidavit dated 27 July 1999, which states in part:

    I hereby declare that on 27 July 1999 I carefully examined the above. I find he’s suffering from post-traumatic stress disorder. I’m of the opinion in consequence he’s unable to discharge the duties of his office and that his disability will in all likelihood prove permanent. I have no reason to suspect it’s due to anything to do with him.

19. The husband was retired from the Juvenile Justice system and fortunately obtained a healthy pension to support himself and his then wife. The husband says he was still suffering from this condition at the time he signed the orders in 2002 which is consistent with the medical certificate issued in 1999. He believed the orders were created and signed to regularise the parties’ financial arrangement. He believed he and his wife regarded themselves as a married couple and the fact that they lived together in the same house until physical separation for 10 years until the wife left in 2012 he says supports his case. The husband remains in the home.

20. He believed the agreement was that would have a life interest in the property at a minimum and that if his wife predeceased him she would make sure that the property reverted to him in her will. He says his remaining in the home and the wife leaving the home in 2012 supports his belief. He says that, from his point of view, the marriage did not end until she told him the marriage was over in about 2011.

21. He says that his wife was very unhappy with him in 2002 due in part to his expenditure of money to feed a gambling addiction and his general behaviour. That he wanted his marriage to continue and in order to appease her he simply signed the documents his wife asked him to sign.

22. The husband had served in Vietnam and, no doubt was traumatised by that war. The parties were married on (omitted) 1970 and physically separated in 2012. This is a marriage of some 42 years. The parties had three children who are all over the age of 18 years. Both the husband and wife agree that the husband was the primary income earner during the marriage, that the wife was the primary parent and homemaker when the children were young. When the children were older the wife obtained a position as a (omitted) and earnt income and also used her income to support the family.

23. The husband says throughout their marriage all their monies were paid into a joint account from which bills and accounts were paid. When he retired he became the house husband, doing the cooking, cleaning and the like. The wife became concerned in about 2001 that he had taken $30,000 out of the joint account and was using the poker machines. The husband said he was not concerned because they had more than sufficient monies to support themselves. In 2002 the husband said the wife told him that they needed to have separate bank accounts and he agreed to this request.

24. The husband said he did not want his marriage to end. Importantly he said that his wife never discussed with him a permanent separation or a divorce or even a change in their relationship. He recalls receiving letters from a solicitor proposing a settlement. He said he was shocked and asked his wife about it. The wife said to him, and this is consistent with her evidence in her affidavit, “I’m scared we will incur excessive debt. We will lose the house and the debtors could make a claim on the house”. Understandably the wife was concerned about his gambling problem which may well continue given he still has a significant credit card debt today despite his significant income and continued living in the home rent free.

25. The husband said the wife told him that to avoid this happening the house should be transferred into her name. The husband said he agreed to this, but that their relationship did not change. They continued to have sex. They slept in separate bedrooms because he suffered from sleep apnoea and given the husband’s size and weight and evidenced before me in court that, no doubt, would be the case. The husband believed nothing would change and wanting to assure his wife and protect his marriage agreed with her proposal and thus the consent orders were signed.

26. The husband said that his wife said to him that she had made provision for him in her will that he could stay in the property for the rest of his life and if she pre deceased him he would have a life interest in the home. The husband said they continued to live in the home with the wife paying the outgoings. He gave her money each week, paid for new white goods at times, carried out repairs and re-painting and the like and continued to perform homemaker duties. He says their life went on as it had in the past.

27. In 2011 he discovered his wife was having an affair with a friend and the wife left the matrimonial home in 2012 to live with her friend. The husband said these events came as a complete shock to him as did her request to him in 2015 that she wanted to sell the home and he would have to move out.

28. The husband was served with the divorce papers and the application for property settlement in 2016 and he responded.

29. Interestingly, in the husband’s affidavit at paragraph 36 he says he is unable to recall exact dates because of his PTSD. However he recalled that after his father-in-law died in about 2004/2005 he took care of all the financial arrangements for his mother-in-law. That when she suffered a fall he cared for her in the home for two or three weeks before she went to an aged retirement village at (omitted) and that he took her to swimming lessons and the like. He can clearly recall some events.

30. The wife’s evidence is as follows. In 2012 she received a lump sum superannuation payment of $800,000 and she invested that money, giving her the substantial super she has today and providing her with an income stream.

31. The husband informed her in 1999 he had been diagnosed with PTSD and would soon be made redundant from work, medically retired and receive a pension for his life. This came as a shock to the wife as she said he had never discussed his diagnosis with her previously as he was a secretive man. The wife says he receives extensive benefits with his pension and an income of over $103,000 per annum.

32. The wife said she had discovered frequent and significant withdrawals from their joint account from around late 1999 from bowling clubs and the like and that this caused her concern. They had many arguments about money. The husband was incurring significant levels of debt due to gambling. This understandable concern of the wife’s is clearly reflected in the husband’s affidavit. I accept that the wife made it clear to the husband from this time in 1999 that she was concerned about accruing debt. This is conceded by the husband.

33. The wife said she discussed with the husband that he needed to seek help with his gambling from 1999 to 2002. The wife was clear she did not want her husband to spend her money on gambling and advised him she was opening her own account. That they would continue to pay outgoings jointly but that her income was not to be at risk. This evidence is consistent with the husband’s evidence. Around 2000 they opened separate accounts.

34. The conversations with her friends, Ms A and Ms K, do not assist the wife in her case. What the wife told these women was not made known to the husband. They were not cross-examined and their evidence does not assist me.

35. I accept the wife told these women that she wanted to separate from her husband or even that she had separated as I accept she was upset. However, these conversations are not determinative of this matter it is the wife’s conduct and conversations with the husband that are.

36. The wife said she realised by 2002 that her husband would not change and she said she told him she could not do it anymore, was going to see a lawyer to draw up some property orders. These orders were drawn up and the husband received a letter dated 23 September 2002 enclosing the agreement regarding the division of the parties matrimonial assets and confirming he did not intend to seek legal advice despite a strong recommendation he do so.

37. The wife said she and her husband were no longer in a sexual relationship and were sleeping in separate bedrooms. The wife said she knew the husband was not in a good financial position and would not be able to live anywhere else and she wanted to help him because he was unable to help himself. Consent orders were entered into and made at (omitted) Local Court.

38. The wife says at paragraph 51:

    The effect of the consent orders resulted in the respondent’s $30,000 overdraft gambling debt being paid in full by me.

39. That is not correct as the consent orders say:

    That within 28 days of the orders, the wife pay to the husband $30,000 which she is to use to pay off the gambling debt.

40. Thus this $30,000 was part of his property settlement and the wife’s take on that issue is incorrect.

41. Neither the husband or wife told family, friends nor, more importantly, their children, they had separated. The wife makes no disclosure in her material of having told her husband that their marriage was over. There are no words in her affidavit spoken to him by her that would lead me to the conclusion that she told him in 2002 that their marriage was over. Indeed the thrust of her affidavit evidence is that he should have realised the marriage was over. The husband’s evidence is that he did not believe the marriage was over in 2002 and did not so realise until about 2011.

42. The wife says at paragraph 38:

    “The marriage was over and I wanted a property settlement.”

43. The wife says at paragraph 45:

    “I can’t do this anymore. I’ve gone to see a solicitor and I am drafting up property orders to separate myself financially from you.”

44. The wife says at paragraphs 53, 54 and 55:

    The respondent has always been a proud man. He said to me after separation, when I asked when he was going to tell his family of our separation, words to the effect, “I want to tell them when I am ready.”

45. Fifty-four:

    I agreed with the respondent’s request and continue to attend family functions, the [Scully] Christmases every year and monthly family gatherings. It was important for the respondent to continue the façade. It became apparent to others we were no longer in a relationship when I would frequently travel on holidays without him. Eventually, his sister-in-law was asking me when I was going and who I was with. At one point, I told the sister-in-law words to the effect, “[Mr Scully] and I have been separated for a long time now.”

1. There is no date or time recorded for this conversation and I do not accept that evidence.

2. Paragraph 55 is most telling:

   I had never told the children anything as I did not want to involve them until or around 2011.

3. In 2011, the parties’ son Mr A was 37, Mr U was 36 and Mr E 33.

4. The wife said in 2011 she and the husband argued. The husband said to her:

   “I got advice I can take half the house from you.” I was very distressed and I told the children, who confronted their father. I continued to attend the yearly Christmas functions with the [Scully] family until recently. I continued to attend the monthly functions with the [Scully] family.

5. Nowhere in the wife’s material does she disclose telling her husband that she regarded their marriage as over at the time the orders were signed. The wife informed the husband she wished to financially separate from him however that is not conveying necessarily an intention to end the marriage. The reality is that up until 2011 these parties presented to the world as married couple including to their 3 children.

6. It is difficult to understand why the wife did not tell her children of their parent’s separation under the one roof in 2002 when they were then aged 26, 23 and 22. I can accept that when the husband told her he could take half the house off her in 2011 she most certainly told her children otherwise I see no cogent reason why the wife waited until 2011 to tell her children she and their father had separated in 2002.

7. The wife says that in 2005 she discovered the husband had used an unsigned cheque from her cheque account and cashed in $3,000. He agreed to pay her back and he paid an additional $150 a fortnight to his regular $200 a week he was paying by way of the spouse maintenance under the consent orders.

8. The parties rented out the downstairs part of the property in about 1999. The rental income was received solely by the wife.

9. The wife sets out in detail in her affidavit the expenses she paid. I accept the expenses she paid which included gifts for the children, paid rates and water rates, the mortgage, etcetera. However, the husband was paying her weekly payments and she was receiving rent from tenants of their property.

10. Husband’s exhibit 1 is a letter dated 2 September 2002 to the wife. It is as follows:

    We are providing advice to you in a family law matter and in particular note your further instructions on the agreement reached between you and your former husband. The agreement, according to your instructions, is conditional upon a provision that your testamentary will shall state in the event you predecease your former spouse, the matrimonial property will be bequeathed to him.

11. This letter continues with advice to the wife of what she should and should not do, strongly advising her to ensure her husband seeks independent legal advice, admissions that the husband was the principal financial contributor through the marriage, that her current income is not insignificant and her significant contribution parent and homemaker throughout the marriage.

    But should you accept the current agreement with your spouse, excluding the testamentary condition, you will be accepting approximately 58 per cent of the asset pool and a weekly spousal maintenance order.

12. There is now no such testamentary conditions in the wife’s will or even a life interest in the home for the husband.

13. Looking at the application for consent orders. Paragraph 9 says:

    Date of final separation, 30 June 2002.

14. I do not accept that is the date of final separation. It is clear from the wife’s own evidence that until 2011 the parties’ three children did not know she and their father had separated. None of the husband’s family knew that she and the husband had separated. The husband and wife maintained to the world that their marriage was intact and that they were living together as husband and wife. Conversations the wife had with her girlfriends do not assist me in this regard. It is clear that the wife and husband, for the purposes of a public face and front, indicated their marriage was intact and that they were still married and the husband believed they were still a married couple. This is consistent with the husband’s position that the wife never communicated to him their marriage was over in 2002, only that she wished to change the ownership of the property into her name, separate from him financially as she was concerned about his gambling and that they could lose their home. The husband’s gambling and it consequences is clearly something the wife was concerned about from her own affidavit evidence.

15. I find that the parties gave false evidence regarding the date of separation on the application for consent orders. However, I accept both parties signed the application and thus each gave false evidence.

16. The wife’s conduct and the way the parties live their life is consistent with the husband’s version of events and inconsistent with the wife’s version of events. The wife asks I accept that she permitted the husband to live in her property for 10 years, without making any contribution to the maintenance conservation of that property or paying down the mortgage and that she took no action to eject him. That is inconsistent with her position and consistent with the husband’s position the marriage was on foot, nothing had changed and he and the wife were continuing in their relationship, albeit a somewhat different relationship than it had been. However, they were, for the purposes of the Family Law Act, a husband and wife until 2011 when she told her children of the separation.

17. I accept that since 2011 and while the husband continues to reside in the home alone the wife has paid without contribution from the husband all costs associated with maintaining the home.

18. Has the giving of this false evidence resulted in a miscarriage of justice and /or has there been a miscarriage of justice for any other reason as set out in section 79A(1)(a) of the Act[2]?

    [2] Family Law Act 1975 (Cth).

19. In the matter of Gebert[3] a husband sought to set aside consent orders under section 79A as he had received only 9% of the parties’ assets. At trial the Judge found that had the matter been contested he may have received around 40%. The husband was unrepresented and chose to be unrepresented. The trial Judge found that the husband’s motive in agreeing to the consent orders was to confirm to the wife that the marriage was over. That the husband was well aware of the effect of the orders and although under some emotional pressure his consent was not rendered invalid and the application to set the consent orders aside was aside was dismissed. The husband appealed this decision.

    [3] Gebert & Gebert (1990) 14 Fam LR 62.

20. On appeal the trial Judge’s decision was confirmed. Their Honours held that that the husband took conscious decisions knowing their effect. He had had the opportunity to seek legal advice and chose not to do so. Their Honours say:

    The very expression miscarriage of Justice used in section 79A(1)(a) did not fit happily with the concept of a party of full age and with full knowledge of the circumstances entering into an agreement of this nature in circumstances where he deliberately decided not to seek legal advice.”

21. Their Honours additionally found that the words, “any other circumstance”, while not to be read ejusdem generis with fraud, duress, suppression of evidence or the giving of false evidence are intended to cover other situations where for one reason or another a miscarriage of justice has occurred, see Mckenna[4].

    [4] Mckenna (1971) 18 FLR 15 at 18.

22. Further their Honours found that the law fortunately still allows persons to form their own views as to the arrangement of their affairs and to set the orders aside would be a considerable miscarriage of justice from the wife’s point of view if the husbands conscious decision entered into free of duress was now to be interfered with on a paternalistic view of what might have been or not been in his best interests.

23. There are some significant factual differences in this matter to Gebert[5]. In this matter the parties continued to live together and present as a married couple. The parties do not tell their adult children or families they had separated. The orders were made by a Registrar of the Family Court.

    [5] Gebert & Gebert (1990) 14 Fam LR 62.

24. I find the following. The husband was not aware his wife regarded the marriage as over at the time of entering into the consent orders rather that they were separating their financial affairs to protect the home and wife’s income due the wife’s concerns of his gambling. This belief was supported by the wife’s conduct and actions up to 2011.

25. Secondly the husband although aware the home was now to be in the wife’s name believed he could live in the home during his life and if the wife pre deceased he would remain in the home and he read a will where the wife had made that very provision. The wife agrees she initially signed a will providing for this exigency but has since made a new will with no such provision.

26. That the parties continued to present to the world and their children that their marriage was on foot after the orders were made and this presentation continued for 10 years or so and the wife did not act upon her intention to end the marriage for some 10 years.

27. That the husband and wife continued to live their life in a similar manner after the consent order were made as they had prior the orders being made up until 2011.

28. On the basis of these findings I find there has been a miscarriage of justice for the following. The parties giving false evidence that their marriage was over in 2002 when they continued to co-habit for another decade as husband and wife, the husbands belief at the time of signing the consent orders that the parties were merely separating their finances and that he would have a life interest in the home if the wife pre- deceased him, the wife’s failure to tell her husband she regarded their marriage over prior to signing the consent orders in 2002 and the resulting actions of the husband due to that failure namely his signing of the orders in the belief the marriage was still on foot.

29. For these reason I find favour with the husband’s application and the consent orders entered into on 2002 at the (omitted) Local Court are set aside.

30. I note that the husband was unrepresented by his choice. However, the wife took a significant risk in having the consent orders executed at a local court rather than the Federal Circuit Court or, as it then was, the Federal Magistrates Court or the Family Court in circumstances where the husband was unrepresented and where greater safeguards, checks and balances are in place to protect the interests of self-represented parties such as having the parties appear in Court and having a Judge or registrar explain the consequences of the orders to the unrepresented litigant.

31. The entering into and giving away substantial property rights in the absence of cogent legal advice or a party coming to a court such as this Court and having the orders explained to them by a judge and having that consent recorded on the Court record is a risk parties take.

32. I direct the wife to file an amended application in answer to the husbands’ response setting out, with particularity, the orders she seeks the Court to make now that the consent orders entered into in the (omitted) Local Court have been set aside within 28 days of the reasons being delivered. I do not require a further updating financial statement or an affidavit in support.

33. The matter is listed for a directions hearing on April 2017.

I certify that the preceding seventy-eight (78) paragraphs are a true copy of the reasons for judgment of Judge Henderson

Associate:  

Date:  13 January 2017