Somerset and Somerset
[2008] FMCAfam 25
•15 February 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| SOMERSET & SOMERSET | [2008] FMCAfam 25 |
| FAMILY LAW – Alteration of property interests – spousal maintenance – s77A order – when husband fails and refuses to disclose his financial position orders not unduly cautions – husband able to increase his savings – wife makes non-financial contributions. |
| Family Law Act 1975, s.79; s72; s77A |
| Gollings & Scott [2007] 93-319 Gould & Gould [2007] FamCA 609 Whiterod & Taylor (2006) FLC 93-266 Mallett & Mallett [1984] HCA 21; (1984) 156 CLR 605 Pierce and Pierce [1984] FamCA 74 Weir and Weir (1992) FLC 92-287 |
| Applicant: | MS SOMERSET |
| Respondent: | MR SOMERSET |
| File Number: | BRC2533 of 2007 |
| Judgment of: | Coates FM |
| Hearing date: | 14 November 2007 |
| Date of Last Submission: | 14 November 2007 |
| Delivered at: | Cairns |
| Delivered on: | 15 February 2008 |
REPRESENTATION
| Counsel for the Applicant: | Mr Page SC |
| Solicitors for the Applicant: | Barbeler & Cooke |
| Counsel for the Respondent: | Mr Moore |
| Solicitors for the Respondent: | Plass Lawyers |
ORDERS
The Husband shall within thirty (30) days of the date hereof pay to the Wife the sum of ONE HUNDRED AND FOUR THOUSAND SEVEN HUNDRED AND NINETY-NINE DOLLARS AND SIXTY-TWO CENTS ($104,799.62)
Payment of the sum referred to in paragraph 1 hereof shall be charge on the following assets of the Husband, namely:
(a)The investment in the name of the Husband numbered Mxxx in the BT;
(b)The interest of the Husband in property at Property H.
Upon default of the Husband in payment in accordance with paragraph 1 hereof, such investment and property shall be sold and the Wife shall receive such part of the sum of $104,799.62 then outstanding together with interest thereon calculated from the date of default from the proceeds of such sales.
The Husband shall indemnify the Wife and hold her indemnified in relation to any liability of the Wife to the F Trust.
The Wife shall indemnify the Husband and hold him indemnified in relation to any liability of the Husband relating to Property O.
Each of the parties shall forthwith do all such things and execute all such documents necessary to cause there to be paid to the Wife the entire sum held by Messrs Barbeler & Cooke, Solicitors, on trust for the parties, together with any accretions thereto.
The Wife shall use her best endeavours to cause Suncorp Metway to release the Husband from any guarantee given by him to the Bank relating to Property O, within a period of one year from the date hereof.
The Wife shall forthwith transfer to the Husband any share or interest held by her in W Pty Ltd and shall resign as a director of that company
The Husband shall indemnify the Wife and hold the Wife indemnified in relation to any liability of the Wife arising by reason of her having held shares in W Pty Ltd or having held office as director of that company.
The Wife shall forthwith execute all documents and do all such things required by the Husband to effect her retirement as a trustee of the F Trust and the Wife shall assign to the Husband any interest held by her in the said Trust.
Save as is otherwise provided for in this order, each of the parties shall be the sole owner of the personalty presently in the possession of that party, including any interests in superannuation funds.
This is an order to which the provisions of s.77A of the Family Law Act applies and the portion of the sum of $104,799.62 that is attributable to the maintenance of the Wife is the sum of $40,000.00
The application by the Wife for spousal maintenance is dismissed.
Each party shall have liberty to apply in relation to the working out of this Order upon the giving of seven (7) days’ notice in writing to the other.
IT IS NOTED that publication of this judgment under the pseudonym Somerset & Somerset is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRC2533 of 2007
| MS SOMERSET |
Applicant
And
| MR SOMERSET |
Respondent
REASONS FOR JUDGMENT
Full and frank disclosure is a fundamental requirement in court proceedings. When there is a lack of disclosure in family law property proceedings the authorities give wide latitude for decision making on the basis that a person who is not being full and frank may be defrauding the other party.
In Weir and Weir (1992) FLC 92-287 the Full Court of the Family Court stated:
“32 “This Court has pointed out in a line of cases…that it is the duty of a party involved in property proceedings…to make full disclosure of their financial affairs…
33 It seems to us that once it has been established that there has been deliberate non-disclosure…the Court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature”.
In Whiterod & Taylor (2006) FLC 93-266, paragraph 42, it was said
“the Court can be generous in drawing adverse conclusions as to the size of the pool of assets available…where there has been less than full and frank disclosure”
The husband in this matter is a high income earner. He did not give full and frank disclosure and orders will be made accordingly.
ANTECEDENTS
The wife was born on in 1971 and was 36 years of age at the time of trial.
The husband was born in 1963 and was 44 years of age at the time of trial.
The parties commenced cohabitation in October 1999.
They married in 2000.
They separated on or about 15 December 2005.
Together the parties had two children, T, born in 2001 and H, born in 2003. Each party also had a child from a previous relationship. The wife had a son, L (aged 12 at the time of trial) and the husband had a son, K (aged 16 at time of trial).
Orders were made by consent on 16 October 2007 whereby T and H live with the wife and spend time with the husband. L and K, not being involved in the proceedings, stayed with the wife and husband respectively.
INITIAL CONTRIBUTIONS
The wife bought to the marriage a motor vehicle worth about $12,000.00.
The husband had beneficial ownership of a block of land in a trust at the time of cohabitation. This was at Property A.
The land was owned by the husband as trustee for and beneficiary of the F Family Trust. There was no application from other trust beneficiaries, members of the husband’s family, to be made parties because of any interest they asserted in the land or trust. On the evidence I conclude the land was part of the marital property, as was other property which came under the umbrella of a trust.
The wife was made a trustee of the F Family Trust, but said she only ever acted at the husband’s behest, for example, in signing documents.
The wife claimed the land when purchased or at the time of cohabitation was worth $39,000.00.
The husband’s evidence-in-chief was presented in such a manner that I could not determine the value he put on the land as his initial contribution to the marriage.
The husband filed his trial affidavit only two days before the trial, stating he had purchased the land with the assistance of a loan from his brother of $123,055.61. He said he borrowed $60,000.00 from the Wide Bay Capricornia Building Society to build a house.
The evidence which is agreed is that the couple built a house on the land and that $60,000.00 was borrowed from the Wide Bay Building Society.
Property A was sold in about mid-2000 for $180,000.00 and after payment of the mortgage debt $103,000.00 was left over.
A block of land was purchased at Property T in late 2000, in the husband’s name as trustee for the F Trust, for $112,000.00.
On the wife’s evidence the money from the Property A sale was used as well as extra money earnt by the couple.
In about October 2002 the couple purchased a house at Property B for about $250,000.00. The couple put up a deposit of about $30,000.00 and borrowed the rest. I use the term about because there are differences in the amounts stated by each party but they are not of such a nature to affect the final outcome of this proceeding.
In September 2003 the couple bought a property at Property O for $610,000.00. This on the wife’s unchallenged evidence was put into the wife’s name “because of some issue the respondent had regarding medical indemnity. I cannot recall details”. The husband did not explain his position.
The wife remains in that property with the two children of the marriage.
In late 2003 the Property T land was sold for about $300,000.00.
In about April 2004 the couple purchased a block of land at Property C for about $320,000.00.
For this period the husband did not state his earnings and did not challenge the wife’s allegations that he was earning between $3,000.00 and $5,000.00 per week.
OVERSEAS INTERLUDE
In August 2001 the couple travelled to the United Kingdom where the husband worked as a doctor for 50,000.00 English pounds per annum. When the wife and the children L, T and H returned to Australia in May 2002, the husband and K stayed in the United Kingdom until December 2002 where he completed his contract.
During that time he sent money back to the wife who, using the funds, attended to the organisation of the deposit on the house at Property B.
ISSUES
The issue was to consider the husband’s monetary contributions as against the wife’s non-financial contributions, in light of the husband’s lack of disclosure. In stating that I do not discount that there were non-financial contributions by the husband, such as some house painting.
The husband is a doctor by profession, a general practitioner. The wife was a dental assistant but stoped work in March 2000, in order to look after the couple’s children as well as undertaking the parenting and primary care role of L and K.
The husband worked long hours according to the wife’s undisputed evidence. In that time she contributed by looking after the house inside and out (cleaning, cooking, lawn mowing pool cleaning, yard cleaning etc…), attended to the raising of the four children and prepared the trust books for the accountant.
CONTENTIOUS LIABILITIES
It was the husband’s case that he owed money to his brother in England, stated to be a loan of $123,055.61, for assistance in buying the original block of land at Property A. His evidence was that the money had never been repaid.
His counsel submitted that the loan was proven because of:
a)Production of a deed in relation to the loan;
b)A letter of demand for repayment by the brother; and
c)The profit and loss statements of the F Trust disclosed money owed to the brother.
The husband, despite obtaining adjournments for trial previously, refused to file an admissible affidavit from his brother and produce him for cross-examination about the alleged loan.
The wife deposed that in the year 2000 the husband typed a sham letter of demand purporting to be from the brother in England requiring the money to be repaid. She had sent the letter by facsimile to the brother in England and it was received back by facsimile – the demand – from the brother in England.
Exhibit MLS-3 to the wife’s affidavit filed 18 May 2007 was a faded but legible facsimile letter. The letter was on heat-paper, which fades with time and was legible at the time of the hearing. It showed an outgoing Sunshine Coast telephone number +61xxx dated
21 May 2000which, on the evidence, I held to be the origin of the facsimile going out of Australia. It also showed a number,
0xxx dated 27 May 2000, which I held to be the English origin of the document incoming to Australia.
The wife stated that the letter was written in order to reduce the husband’s English child support liabilities, but he had told her that there was no such loan between himself and his brother.
The liability for this loan, as it emerged in cross-examination, was never referred to by the husband when he sought and was granted a loan from the National Australia Bank. Exhibit 5, an NAB loan application form, has no reference to this loan.
The husband did not deny the wife’s assertion that the letter was a sham and that she had faxed the letter at his direction as she stated at paragraphs 118 and 119 of her affidavit filed 2 May 2007. Not only did he not deny the claim but no useful questions eliciting answers from the wife disputed her allegations.
The husband produced a deed relating to the alleged loan but refused to call his brother for cross-examination. The deed merely states what the husband says is the case but is not conclusive of the loan.
On the evidence I find that the letter was a sham document produced by the husband and there is no evidence of such a liability relating to the marriage.
As to liabilities to the husband’s parents, there was no evidence to corroborate the alleged liabilities listed in the profit and loss statements of the F Trust, amounting to about $30,000.00, either by witnesses being called or from some other documentation to show that the money was truly a liability. His parents should have given evidence.
As the husband did not prosecute his case, I accept the submission from counsel for the wife, that if these liabilities exist, then the husband should bear them. He was expected to fully inform the Court of his financial position and where contentious liabilities were asserted, to prove the facts.
In exhibit 5, the National Australia Bank Loan document, the husband stated he had furniture worth about $30,000.00. In his updated financial statement for trial, filed on 12 November (two days before the hearing) and in exhibits 6 and 7, he stated he had furniture worth about $15,000.00. His reason, when confronted with the inconsistency was that
“I duped NAB because I thought if I told them of these debts I wouldn’t get the loan.”
It is a very poor reason to state in evidence that he “duped” a party in a business transaction. When confronted with the inconsistency, he could hardly say he could not remember what he had stated for these proceedings. He has now stated a falsehood in either the bank document or the family law documents. I draw the inference he was seeking an advantage as to the value of his assets rather than being frank with the Court.
There was other behaviour which I have considered in relation to the husband’s character which has led to adverse findings.
He valued his property at Property H at $505,000.00 in one financial statement and $525,000.00 in another.
In exhibit 6, a financial statement filed 14 May 2007, the husband stated his income was $1500.00 per week. On 15 October 2007, just one month before this hearing, he disclosed a weekly income of $4230.00 per week. He said the differences could be explained because some money, as at May, had been going to his company H Pty Ltd and he did not know he had to disclose money being directed into this entity as income.
The existence of H Pty Ltd was another issue relating to failure to disclose. Its existence was not known until the 15 October 2007 financial statement was filed, although he created H Pty Ltd in early January 2006.
I do not accept that he did not know his duty to disclose because he was, at times, self-represented. Self-representation does not does not excuse lack of disclosure and in this case he has had lawyers at times. He was being dishonest in not disclosing the existence of H Pty Ltd and in not disclosing that a big part of his income was going to
H Pty Ltd.
Further, it was his choice to be self-represented. He is a high income earner and not in the same position as many litigants who simply cannot afford representation and do not qualify for legal aid assistance.
His new solicitors, employed about one month before trial, did as well as they could to file an affidavit on his updated instructions two days before the trial began. Mr Page SC, for the wife, at the outset did not want that to be the basis of a further adjournment.
I find that the husband has an income which may be as low as $4230.00 per week but could be at least $1500.00 higher, because of the differences in his statements.
And while H Pty Ltd was taking the greater amount of his wages the husband has made very sporadic child support payments - about $2,000.00 since June of this year - and no spousal maintenance payments to the wife. At paragraph 28 I referred to the wife’s allegation that the husband was earning between $3000.00 and $5000.00 per week in about 2003. I would be wary of making a finding that he was earning that money, but since he did not challenge the assertion and since he did not disclose his income going into H Pty Ltd, I conclude that his evidence is unreliable and that he has always had a high income and has the capacity to earn a high income. This has relevance to both the alteration of property interests and spousal maintenance.
While the mortgage remained unpaid and it was submitted just two or three months off foreclosure, the husband increased his personal investments in a BT investment fund, which he called superannuation, by $769.00 per week according to item 20 in his financial statement of 12 November 2007. The fund is healthy, with $93,217.00, according to item 45. The total amount seems to be from a transfer of other superannuation monies but the point was not pursued.
The important issue as Mr Page submitted was that the husband’s capability for such investment was because:
a)He left the wife and children without adequate support and maintenance;
b)He refused to pay the mortgage; and
c)He disputed his taxation liabilities because he wanted the wife to subsidise tax liabilities.
CREDIT CARD AND ATO DEBTS
The husband also wanted the wife to bear some or all of an NAB Visa credit card debt in the sum of $15,000.00, stated in the financial statement filed 12 November 2007. This amount differed from the financial statement filed 14 May 2007 where he stated $7500.00 was owed to Westpac Visa and $14,000.00 to an NAB Visa card. It was put to the husband that in February 2006 only the Westpac Visa debt of $7000.00 existed. I find the husband gave no credible evidence the debt should be classified as a debt of the marriage as it appeared to be debt incurred after the separation and bore no relation to the marriage.
He also claimed that the wife should bear some of an estimated $87,000.00 owed to the Australian Taxation Office. There was no evidence as to what the taxation debt was and what were penalties imposed for late payments, although the amount was incurred over the 2006 – 2007 financial year.
The husband came to Court prepared to limit his disclosure to make it impossible for the wife’s solicitors to track his real financial position and how he came to be in that position. I am not satisfied that the ATO debt does belong to the marriage liabilities.
SUBMISSIONS
Counsel for the husband, Mr Moore, stated that I should begin with the initial contribution of the parties which on his calculation was about 76 percent from the husband and make orders from there.
He said any adverse finding involving the husband’s disclosure should have no effect on the property distribution.
As to his submission on any adverse finding because of lack of disclosure, the submission was incorrect based on the authorities referred to earlier.
On starting at the point suggested by the husband, counsel for the wife said such a position would be absolutely inconsistent with the findings in Mallett & Mallett [1984] HCA 21; (1984) 156 CLR 605, which did away with presumptions and starting points to consider the contributions over the length of the marriage, in detail, to assess the relative contributions.
Apart from correctly stating the authority, it is also a statement of logic.
Mr Page submitted that the original property at Property A was in a trust but then developed by the parties, as to work done with the property and the borrowings to do that work. He said there were considerable contributions by the wife.
The wife was made a trustee of the holder of this property and assisted the husband. Her initial financial contribution was of very little significance but she then enabled the husband to:
a)Develop his earning capacity as a doctor; by
b)Keeping house inside and out; and
c)Contributing to the welfare of the family by raising not only their two children but also their other two children which each of them brought to the marriage.
The submission was also to the effect that I was to consider the little time the husband spent with his children since the separation and the minimal child support he has paid.
On the issue of child support an allegation was put to the wife that the Child Support Agency had begun deducting child support from the husband’s wages in June of this year. No documents were produced for the husband.
The wife knew nothing of that but produced, as exhibit 2, a print out from the Child Support Agency website showing that the husband owed $9,221.48 as at 7 November 2007, seven days before the trial.
To reinforce that evidence she produced as exhibit 1 her ANZ bank account from 23 May 2007 to 18 September 2007 which lists Child Support Agency payments and that exhibit shows very little, or in the wife’s words, sporadic payments by the husband.
She gave evidence that she had $100.00 in the bank and was having trouble feeding her family.
In short she was dependant on Social Security payments which is in sharp contrast with the husband’s earning capacity, his future earning capacity and history of creating a healthy investment “nest egg” for himself at her expense.
As to the wife’s employability, she expects to finish a psychology degree soon and she has a very positive attitude that she will obtain an internship at about $35,000.00 per year for two years however, despite her attitude, that is only her hope. There is no evidence that she has any earning capacity as a psychologist.
She did work as a dental technician but gave that work up seven years ago to raise the children.
She was not questioned as to her ability and capacity to work in that field now and so it is not an issue which I have to consider in relation to spousal maintenance.
While the husband opposes any spousal maintenance, in the manner in which he had the wife questioned about her capacity to work, he has not shown that he cannot support the wife or that she can support herself, having regard to:
a)Her care and control of two children of the marriage;
b)His age (44 years) and capacity to earn a high income as a doctor and that he is purchasing a property and accumulating savings in BT;
c)That she has not worked since having the children because he expected her to raise the children; and
d)His commitments in supporting his son K.
THE POOL
I find the pool to be as follows, based on the figures given by the parties and findings as to the contentious issues above.
Property O (occupied by wife)
$655,000.00
Sale proceeds Property C
$102,811.00 in solicitors trust account
Property H (owned by husband)
$525,000.00
Husband’s Bendigo bank account
$2,000.00
Proceeds sale Toyota vehicle
$19,000.00
Mitsubishi vehicle (husband)
$5,000.00
Nissan vehicle (wife)
$25,000.00
Monies taken from W Pty Ltd Bank Account (wife)
$15,000.00
Monies taken from W Pty Ltd Bank Account (husband)
$33,000.00
F Trust
$6,380.60
Husband’s furniture
$15,000.00
Wife’s furniture
$11,000.00
Husband’s UK bank account
$8,000.00
Wife’s superannuation Macquarie
$11,307.00
Husband’s superannuation – MAP
$106,134.79
Husband’s BT account
$93,217.39
Wife’s bank account
$100.00
TOTAL ASSETS
$1,632,950.78
LIABILITIES
Mortgage – Property H
$480,000.00
Mortgage Suncorp O
$537,000.00
TOTAL LIABILITIES
$1,017,000.00
NET ASSETS
$595,450.18
SUBMISSIONS ON DIVISION
The husband maintained a starting point for a division of the property was 76 percent to the husband and 46 percent to the wife, based on the greater financial contributions of the husband and the trust liabilities. He said there should be a five percent adjustment for the disparity in earning capacity and another five percent for the children, to the wife, giving the husband 65 percent of property.
Counsel for the wife made the submission that it was extraordinary that a member of the medical profession would put aside the payment of his own debts to enhance his own position and expect the wife to subsidise those debts when she is in a very poor, in fact poverty stricken position.
He submitted that the contributions of the party’s should be treated equally but on the s.75(2) grounds I should consider a 15 percent adjustment to the wife on the grounds of:
a)The disparity of earning capacity;
b)Failure to pay proper and timely child support for the purposes it was needed;
c)The husband’s limited responsibility for the children and the wife’s major responsibility for them; and
d)The chicanery of the husband in building his nest egg “superannuation” while denying the wife money.
This would be achieved by orders ensuring she retains Property O for herself and the children.
It was submitted that the husband pay the wife $104,799.62, which would include $40,000.00 for spousal maintenance under s.77A of the Family Law Act 1975, plus an order that money held in the trust funds of her solicitors, $102,811.00, plus interests accrued, be paid to her.
He submitted that other orders followed if I ordered in accordance with his submissions and draft orders.
Given the manner in which the husband conducted himself and the trial I do not think any other orders are open on the evidence and the findings.
Further, the wife did not seek a splitting order for superannuation. Her counsel’s submission was that the orders sought were just and equitable and there was no proof that the BT fund was a regulated superannuation fund. It is certainly a large amount of money the husband has accumulated for his sole benefit and could be utilised to ensure any order for property division in the wife’s favour could be implemented.
I accept the submissions from counsel for the wife as to what orders I should make as being just and equitable. Given the husband’s lack of disclosure it is difficult to know the real extent of the property. Referring to the list of assets and liabilities, I have taken into account that the house is already in the wife name, the retention by the parties of vehicles, the use of monies from the W Pty Ltd account, their household contents, their superannuation resources, their earning capacities and the liabilities. In this case I am satisfied that granting the orders as sought by the wife is just and equitable in all the circumstances and will allow her to re-establish herself financially and care for the children.
I note the wife’s application did not seek costs. The Rules of this Court allow her to make an application within 28 days or be leave after that time.
I certify that the preceding eighty-eight (88) paragraphs are a true copy of the reasons for judgment of Coates FM
Associate: Erin Firns
Date: 14 February 2008
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