SPARKE & BERNARD - [2013] FCCA 866

FEDERAL CIRCUIT COURT OF AUSTRALIA

SPARKE & BERNARD

[2014] FCCA 866

Catchwords:
FAMILY LAW – Property – Property Orders – Consent orders – application to set aside property orders made by consent – where applicant did not obtain independent legal advice – where parties reconciled shortly after consent orders were made – whether miscarriage of justice – resumption of cohabitation after final property orders – intermingling of assets and income – whether by inference parties no longer bound by previous orders – whether implied consent to set aside orders – aggregation of periods of relationship – appropriate division of property – assets added back into asset pool – just and equitable – whether a superannuation splitting order should be made.

Legislation:

Family Law Act 1975 (Cth), ss.75, 79, 79A, 90RD, 90SB, 90SF, 90SK, 90SM, 90SN

Cases cited:
Aguilar & Aguilar [2009] FamCA 1343 distinguished
NHC & RCH [2004] FamCA 633; (2004) 32 Fam LR 518; FLC 93-204
Dahl & Hamblin [2011] FamCAFC 202; (2011) 46 Fam LR 229; FLC 93-480
Gebert & Gebert (1990) 14 Fam LR 62; FLC 92-137 followed
Gitane & Velacruz [2008] FamCAFC 86; (2008) 39 Fam LR 460; FLC 93-371
Hamblin & Dahl [2010] FMCAfam 514 followed
Hickey & Hickey [2003] FamCA 395; (2003) 30 Fam LR 35; FLC 93-143 followed
McCabe & McCabe (1995) 19 Fam LR 579; FLC 92-634 followed
AJO & GRO [2005] FamCA 195; (2005) 33 Fam LR 134; FLC 93-218
Ozick & Ozick [2012] FMCAfam 310 followed
Sommerville & Sommerville [1999] FamCA 958; (2000) FLC 042; (2001) 27 Fam LR 233 followed
Stanford v Stanford [2012] HC 52; (2012) 47 Fam LR 481; FLC 93-518 followed

Applicant:

MR SPARKE

Respondent:

MS BERNARD

File Number:

SYC 2856 of 2012

Judgment of:

Judge Scarlett

Hearing dates:

13-14 June 2013

Date of Last Submission:

14 June 2013

Delivered at:

Sydney

Delivered on:

30 April 2014

REPRESENTATION

Solicitor for the Applicant:

Ms Jamieson

Solicitors for the Applicant:

Gibson Howlin Lawyers

The Respondent:

The Respondent appeared in person

ORDERS

Orders 1 to 8 inclusive made by the Local Court of New South Wales at Picton on 25 March 2010 are set aside under the provisions of subsection 90SN(2) of the Family Law Act 1975.
In accordance with s.90RD(1) of the Family Law Act 1975, it is declared that a de facto relationship of two (2) years and eleven (11) months existed between the Applicant and the Respondent, for the following periods:
(a)from February 2008 to 23 January 2010;
(b)from 1 April 2010 to 25 August 2010; and
(c)from October 2010 to May 2011.
As provided by section 90SM of the Family Law Act 1975 the Respondent is to pay to the Applicant the sum of $162,555.00 within three (3) months from the date of this Order.
The Applicant is to retain to the exclusion of the Respondent, all of his superannuation entitlement.
The Applicant and the Respondent are to retain, to the exclusion of each other, all assets in their sole name, possession or control, including cash at bank, real property, business interests and motor vehicles.
The Applicant and the Respondent are to be solely liable for any debt or liability in their name and indemnify the other party and keep the other party indemnified in respect of any liability in their name.
Any party who seeks an Order for Costs must file and serve an Application in a Case and an affidavit setting out the amount of costs sought and how such an amount is calculated within one (1) month from the date of this Order.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYC 2856 of 2012

MR SPARKE

Applicant

And

MS BERNARD

Respondent

REASONS FOR JUDGMENT

Application

This is an Application under s.90SN of the Family Law Act 1975 (Cth) to set aside property orders that were made by consent in the Local Court of New South Wales at Picton on 25^th March 2010.
By his Further Amended Initiating Application filed on 12 June 2013, the Applicant seeks the following orders:
1. That the Orders 1-8 made by Picton Local Court on 25 March 2010 be set aside pursuant to Section 90SN(1)(a) and Section 90SN(2) of the Family Law Act 1975 (Cth).
2. A Declaration that the two periods of cohabitation from February 2008 to February 2010 and April 2010 to May 2011 are aggregated together and the total period of the de facto relationship between the parties is three (3) years and one month.
3. That pursuant to Section 90SM, the Respondent pay to the Applicant an amount of $165,006[1] representing 50% of the current non-superannuation asset pool of the parties less the assets the Applicant retains and plus the liabilities he retains.
4. That each party retain, to the exclusion of the other, all assets in their possession or control, including cash monies, superannuation entitlements, real property, business interests and motor vehicles.
5. That each party shall be solely liable for and indemnify the other against any liability owed by them.
6. In the alternative to Order 1, 2 & 3, if the Orders are not set aside by this Court, an Order that a de facto relationship existed between the parties between 1 April 2010 and May 2011 in accordance with Section 90SB(c) and that pursuant to Section 90SM, the Respondent pay to the Applicant an amount of $165,006, representing 50% of the current asset pool of the parties less the assets the Applicant retains and plus the liabilities he retains.
[1] However, in the Applicant’s Case Outline, also dated 12 June 2013, the amount of $174,160.00 is sought in Orders 3 and 6
7. Costs
The Respondent, by her Response filed on 20^th August 2012, asks the Court to make the following orders:
1. That the Application filed 18 May 2012 be dismissed.
2. In the alternative to Order 1, that each party retain all assets, liabilities and financial resources currently in their name possession and control.
3. That the Applicant pay the Respondent’s costs of these proceedings.

Background

The parties have each provided a chronology in their Case Outline Documents.
The Respondent was born on (omitted) 1954.
The Applicant was born on (omitted) 1962.
The parties commenced to live together in February 2008.
The Respondent had inherited various amounts of money from the estates of her late mother, who died on (omitted) 2006, and her late husband, who died on (omitted) 2006.
In March 2007 the Respondent commenced proceedings against the (omitted) Hotel seeking damages arising from her involvement in an armed hold-up at the (omitted) Hotel in October 2004. She received various amounts as a result, over a period up to 24^th April 2008.
The parties initially lived with the Applicant’s parents but in late 2008 or early 2009 they moved into a property at Property K.
The parties separated on 23^rd January 2010.[2] The Respondent remained living in the property at Property K and the Applicant moved back in with his parents.
[2] Affidavit of Ms Bernard 24.1.203 at paragraph [15]
On 23^rd March 2010 the parties signed Terms of Settlement containing proposed consent orders resolving property matters between them. The Terms of Settlement were filed at the Local Court of New South Wales at Picton, New South Wales on 24^th March and the Orders were made the following day, 25^th March 2010.
The Consent Orders provided:
Pursuant to the provisions of Rule 10.15 the following Orders, Declarations and Notations are made:
1. That the Respondent shall do all such acts and things and shall execute all deeds, documents and instruments as may be necessary to list for sale and sell the home situate at and known as Property K in the State of New South Wales (being the whole of the land comprised in Certificate of Title Folio Identifier (omitted)) for a list price and sale price and with an agent to be agreed upon between the parties or, in default of such agreement as to the list price and selling price or agent for more than 14 days, at a list price and with an agent appointed by the President of the Australian Property Institute Inc. (NSW Division) whose decision shall be final and binding upon both parties.
2. That in the event that the home has not been sold within eight weeks of the date of these Orders in accordance with Order 1 above, the Respondent shall do all such acts and things and sign all such deeds, documents and instruments as may be necessary to cause the property to be sold by the same agent by way of public auction on the following terms:
(a)that such auction shall take place within six weeks from the date of placing the property for sale by public auction;
(b)that the reserve price for such auction shall be as agreed between the parties or, failing agreement for more than seven days, as determined by the selling agent;
(c)that the parties shall pay all auction expenses as requested by the selling agent as and when they fall due;
(d)that the Respondent shall do all such acts and things as may be necessary or recommended by the selling agent to properly present the property for sale and to make it available for inspection by prospective purchasers;
(e)that either party shall be at liberty to bid for the property at auction; and
(f)that the Respondent shall attend the auction and, if necessary, negotiate with the highest bidder at auction if the reserve price is not reached.
3.That, upon completion of the sale of the home in accordance with either Orders 1 or 2 above, the Respondent shall distribute the proceeds of sale in the following order and priority:
(a)in discharge of the mortgage secured over the home to the (omitted) Bank;
(b)in payment of legal costs, real estate agent’s commission, auction expenses and GST upon the sale;
(c)     in payment of municipal council and water rates;
(d)    in payment of the sum of $275,000.00 to the Applicant;
(e)     in payment of the balance to the Respondent.
4.That, from the date hereof, the Respondent shall solely pay and bear as and when they fall due all repayments of principal and interest including arrears, if any, in relation to the following:
(a)    any mortgage secured over the home;
(b)all rates, taxes and outgoings associated with the home;
AND the Respondent shall and does hereby indemnify the Applicant against any liability for a contribution to these expenses.
5.That the Applicant shall be declared to be the sole legal and beneficial owner of all her right, title and interest in and to:
(a)all cash at bank and moneys invested by her in her sole name;
(b)    all furniture and personal effects in her possession;
(c)the Mitsubishi (omitted) motor vehicle registration n. (omitted) in her possession;
(d)any superannuation entitlements received by the Applicant and invested by her or on her behalf.
6.That the Respondent shall be declared to be the sole legal and beneficial owner of all his right, title and interest in and to:
(a)all cash at bank, shares and moneys invested by him in his sole name;
(b)    all furniture and personal effects in his possession;
(c)the Holden Commodore (omitted) utility motor vehicle registration no. (omitted) in his possession;
(e)any superannuation entitlements received by the Respondent and invested by him or on his behalf.
7.That, unless otherwise specified in these Orders, and except for the purpose of enforcing the payment of any money due under these or any subsequent Orders, each party shall be solely entitled to the exclusion of the other in both law and equity to:
(a)all property (including choses-in-action) in the possession of such party as at the date of this agreement;
(b)all insurance policies in relation to which they are the Life Insured.
8.That each party shall be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders.
9.
(a)The parties hereby declare that they are not aware of any liability which either of them has which is a joint or several liability with the other including, but without limiting the generality of the foregoing, in respect of or pursuant to bank, credit or charge accounts, guarantees or as a result of any of the parties’ previous business (if any) or other dealings;
(b)If it is subsequently found that any such liability as is described in sub clause (a) of this clause exists or arises, the party pursuant to whose business or other dealings such liability arose, shall indemnify the other against any liability to contribute towards any claims, costs, demands, suits, actions, proceedings, orders or judgments whenever arising which may be made, brought against or incurred by the other party in respect thereof.
10.That in the event that either party fails to sign any necessary documents or instruments or to do any acts required or contemplated by these Orders to be done, with such failure continuing for 14 days, then the Registrar of the Family Court of Australia shall pursuant to section 106A of the Family Law Act 1975, have the power to execute any documents or instruments in the name of the person who has refused or neglected to sign any necessary document or instrument or to do any act required or contemplated by these Orders.
NOTATIONS
A.
(a)The parties each agree to give up and release any claim or right she or he may have to make application for financial provision from the Estate of the other after the death of the other, under the Succession Act 2006 (NSW).
(b)Should either party, or her or his legal personal representative, request the other party, or her or his legal personal representative, to join in an application to the Supreme Court of NSW for the approval of this agreement to relinquish all claims under the Succession act 2006 (NSW) pursuant to Section 95 of that Act, then the other party, or her or his legal personal representative, shall do all acts and things as may be necessary to do so.
(c)If paragraphs (a) and (b) above are not approved by the Supreme Court of NSW pursuant to section 95, then the rest of the Orders herein are to remain valid and enforceable.
B.The parties have had regard to Section 81 of the Family Law Act 1975 and desire this to be a full and final settlement of all financial matters between them.
The Terms of Settlement were signed by both parties. The Applicant is the Respondent to this Application. Her signature was witnessed by her solicitor. The Respondent is the current Applicant. He was not represented by a solicitor and his signature was witnessed by a Justice of the Peace.
Attached to the Terms of Settlement was a Statutory Declaration by the Respondent dated 20^th March 2010, in which he declared:
1.I am the Respondent in an Application for Consent Orders relating to property matters involving my former partner, Ms Bernard.
2.The Applicant and I have reached agreement that I will pay to her a lump sum payment of $275,000 from the proceeds of sale of the property at Property K. I am to retain the balance of the sale funds.
3.We are each to retain the items otherwise in our possession or control, including furniture and personal effects, motor vehicles, shares and superannuation.
4.I am aware that I am entitled to obtain independent legal advice in relation to this settlement so that I can be made aware of my entitlements and obligations under the Family Law Act.
5.I have decided not to obtain independent legal advice and instead had my signature witnessed on the Terms of Settlement and application for Consent Orders by a Justice of the Peace.
On 1^st April 2010 the parties resumed cohabitation. They moved into rental accommodation at (omitted).
That same day, the sale of the property at Property K, was settled. The net proceeds of sale amounted to $356,051.00. The proceeds of sale were distributed according to the terms of the Consent Orders. The Applicant received the sum of $84,027.98, which was placed into a joint bank account. The Respondent received the sum of $272,024.50, which was placed into a bank account in her sole name.
The parties travelled to (country omitted) together for a holiday in March 2010.
Again, on 1^st April, the Respondent entered into a contract to purchase land at Property S.
On 9^th April the Respondent withdrew the sum of $76,000.00 from the parties’ joint account and $270,000.00 from the account in her sole name and placed the total amount of $346,000.00 into another account at the (omitted) Bank in her sole name.
The Respondent then, on 10^th May 2010, withdrew the amount of $250,000.00 and applied it towards the purchase of the land at Property S.
The title to the land was transferred into the names of the Respondent’s son X and Ms K as joint tenants as to a one-third share and the Respondent as to the other two-thirds.
The Applicant and the Respondent separated on 25^th August 2010 and remained apart until late October 2010.
The Applicant and the Respondent attended the land at Property S in January 2011.
In February 2011 the Respondent’s son X transferred the sum of $102,573.00 in payment for his share of the land.
The land at Property S was subdivided into three lots in April 2011. Lot 2 was transferred into the sole name of X on 21^st April 2011 for a consideration of $120,834.00.
The Applicant and the Respondent separated for the final time in May 2011.
Lot 3 in the Property S subdivision was transferred into the sole name of the Respondent in May 2011 for a consideration of $46,667.00.
Lot 1 in the Property S subdivision was transferred into the sole name of X in October 2011 for a consideration of $86,666.67. The land was later sold for $395,000.00 in August 2012 and the Respondent received the amount of $80,108.44 from the proceeds of sale.

Evidence

The Applicant relied on the following:
a)his Further Amended Initiating Application filed on 12^th June 2013;
b)his Financial Statement filed on 11^th June 2013;
c)his affidavit of 14^th January 2013; and
d)his affidavit of 11^th June 2013.
The Applicant gave oral evidence and was cross-examined by the Respondent, who appeared for herself.
The Respondent relied on the following:
a)her Response filed on 22^nd August 2012;
b)her Financial Statement filed on 20^th August 2012;
c)her affidavit of 24^th January 2013; and
d)her further Financial Statement of 5^th February 2013.
The Respondent gave oral evidence and was cross-examined by Ms Jamieson, solicitor, for the Applicant.
The Applicant conceded that he did not receive independent legal advice when he and the Respondent entered into the Consent Orders in March 2010. He had moved out of the property at Property K and had resumed living with his parents.
Shortly afterwards, the Applicant and the Respondent reconciled and together moved into rental accommodation at (omitted). They rented the property in joint names. He deposed that they continued their de facto relationship, including a sexual relationship. In March 2011 they holidayed together in (country omitted).
The parties separated finally in May 2011.
The Applicant claimed in his affidavit of 14^th January 2013 that he believed that:
a)the Respondent suffered from a mental illness during their relationship;[3]
b)the Respondent subjected him to violence and emotional abuse;[4]
c)the Respondent suffered from a gambling problem.[5]
[3] Affidavit of Mr Sparke 14.1.2013 at paragraph [28]
[4] Ibid
[5] Ibid at [29]-[30]
The Applicant stated that the Respondent left him on or about 16^th or 18^th August 2010.
The Applicant said in his affidavit of 14^th January 2013 that:
…Ms Bernard[6] and I did not intend to continue to be bound by the Orders and had intermingled our finances upon reconciliation that occurred shortly after the Orders were made.[7]
[6] i.e. the Respondent
[7] Affidavit of Mr Sparke 14.1.2013 at [37]

In his later affidavit of 11^th June 2013, the Applicant deposed that:
a)at the time that he and the Respondent commenced cohabitation his assets amounted to a total of between $358,000.00 and $383,000.00;
b)he made a substantial contribution during the relationship as the sole income earner as the Respondent did not work, although she obtained some regular funds from a (employer omitted) where she had worked;
c)he is self-employed as a (occupation omitted) with an estimated income of $1,700.00 net per week; and
d)he continues to hold a tax debt, of which he has paid a significant portion.
It is the Respondent’s evidence that at the time of the commencement of her relationship with the Applicant she had no liabilities and she had assets to the estimated value of $35,000.00. She deposes that she made financial contributions towards the purchase of furniture, appliances, other household appliances and new kitchen cupboards to an estimated value of between $8,000.00 and $10,000.00.
On 3^rd November 2008, the Respondent borrowed the sum of $50,000.00 from her sister in law to assist the Applicant to pay out an amount of $100,000.00 to his former partner by way of property settlement. She also paid his outstanding legal costs.[8]
[8] Affidavit of Ms Bernard 24.1.2013 at paragraph [11]
The Respondent deposed that the parties separated on 23^rd January 2010 and entered into the consent Orders on 25^th March 2010. Contrary to the Applicant’s evidence, the respondent denied that the parties reconciled their relationship. She deposed that they went on the holiday to (country omitted) together because they had previously booked the holiday and their relationship was still on amicable terms.
However, they moved in to the property at (omitted) together in April 2010 and a sexual relationship of sorts recommenced:
After moving into the (omitted) property Mr Sparke and I fought a lot and I estimate that I slept in the spare room 60% of the time. I say that we had minimal sexual relations.[9]
[9] Ibid at [22]
The Respondent states that she moved out of the (omitted) property on 25^th August 2010 and returned there “in or about late October 2010”.[10] She concedes that they reconciled in late October but states that she moved out of the (omitted) property on a final basis in May 2011.
[10] Ibid at [23]
The Respondent disagreed that she and the Applicant had intermingled their finances when they resumed cohabitation.

Submissions

The Applicant relies on the following authorities:
a)Hamblin & Dahl [2010] FMCAfam 514;
b)Ozick & Ozick [2012] FMCAfam 310;
c)Aguilar & Aguilar [2009] FamCA 1343;
d)Sommerville & Sommerville [1999] FamCA 958; (2000) FLC 93-042; (2001) 27 Fam LR 233;
e)McCabe & McCabe (1995) 19 Fam LR 579; FLC 92-634;
f)Gitane & Velacruz [2008] FamCAFC 86; (2008) 39 Fam LR 460; FLC 93-371.
It is submitted on behalf of the Applicant that there was a resumption of cohabitation by the parties straight after the Orders were made by consent in the Picton Local Court on 25^th March 2010. The parties remained cohabiting until separation in May 2011.
It is further submitted that the parties subsequently intermingled their financial affairs after the orders were made, and the parties, by their conduct, did not intend to be bound by the Orders. The parties’ conduct gives rise to an inference that amounts to implied consent to set aside the Orders so that the Court should consider making fresh orders in accordance with s. 90SM of the Family Law Act 1975 (Cth).
The Applicant submits that, at the time of entering into the Orders, the Respondent provided inaccurate evidence to identify the value of her initial direct financial contribution at the time of entering into the Consent Orders. This, it is submitted, amounts to a miscarriage of justice, as the split between the parties was not just and equitable, because the Respondent received 68% of the joint assets. Thus, the Applicant submits that the Orders should be set aside under subsection 90SN(1)(a).
The Respondent submits that it is the Applicant who must satisfy the Court that there was such conduct between March 2010 and May 2011 to warrant a finding that there was an implied consent to the setting aside of the Orders of the Local Court and that it would be just and equitable to do so.

The law to be applied

The law to be applied to financial matters relating to de facto relationships can be found in Part VIIIAB of the Family Law Act 1975.
Section 90SB of the Act provides that a court may make an order under ss.90SE, 90SG or 90SM, or a declaration under s. 90SL only if the court is satisfied that:
a)the parties have been in a de facto relationship for at least 2 years;
b)there is a child of the relationship; or
c)a party made substantial contributions and a failure to make an order would result in serious injustice; or
d)the relationship is or was registered.

Whether the Consent Orders should be set aside

The Applicant is seeking an order setting aside the Consent Orders made by the Local Court under the provisions of s.90SN(1)(a) and s.90SN(2) of the Act.
Subsection 90SN(1) provides at paragraph (a):
(1)If, on application by a person affected by an order made by a court under section 90SM 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 circumstance; or
…
the court may, in its discretion, vary the order or set the order aside and, if it considers appropriate, make another order under section 90SM in substitution for the order so set aside.
Subsection 90SN(2) provides:
(2)A court may, on application by a person affected by an order made by a court under section 90SM in property settlement proceedings, and with the consent of all the parties to the proceedings in which the order was made, vary the order or set the order aside and, if it considers appropriate, make another order under section 90SM in substitution for the order so set aside.
The Applicant’s claim to set aside the Consent Orders is made on two bases:
a)That there has been a miscarriage of justice because a division of property between the parties was not just and equitable (s.90SN(1)(a)); and
b)That there was an implied consent to the setting aside of the Orders by their reconciliation and resumption of cohabitation (s.90SN(2)).
The Applicant’s submission as to the first ground, a miscarriage of justice under s.90SN(1)(a), is based on the claim that the Respondent provided inaccurate to the Local court in identifying the value of her initial direct financial contribution at the time the parties entered into the Orders. The Application for Consent Orders stated that the Respondent had made a substantially greater injection of cash into the parties’ home. This, it is submitted, “is not accurate and amounts to a miscarriage of justice as the split contained within the Application of 68% to the Respondent is not just and equitable.”
It is submitted on behalf of the Applicant that the parties’ initial direct financial contributions and financial contributions throughout the relationship were equal.
Even if this were so, I am not persuaded that there has been a miscarriage of justice. When the Applicant entered into the Consent Orders, he elected not to obtain legal advice and signed a statutory declaration to that effect.
In his statutory declaration, the Applicant stated, at paragraphs 2 to 5:
2. The Applicant[11] and I have reached agreement that I will pay to her a lump sum payment of $275,000 from the proceeds of sale of the property at Property K. I am to retain the balance of the sale funds.
3. We are each to retain the items otherwise in our possession or control, including furniture and personal effects, motor vehicles, shares and superannuation.
4. I am aware that I am entitled to obtain independent legal advice in relation to this settlement so that I can be made aware of my entitlements and obligations under the Family Law Act.
5. I have decided not to obtain independent legal advice and instead had my signature witnessed on the Terms of Settlement and applications for Consent Orders by a Justice of the Peace.
[11] i.e. the Respondent in this case
In my view, the fact that the Applicant in this matter chose not to obtain legal advice in full knowledge of the effect of the orders to which he was consenting, does not amount to a miscarriage of justice that would lead to the Orders being set aside under s.90SN(1)(a).
Such a situation was considered by the Full Court of the Family Court of Australia in Gebert & Gebert[12], which dealt with a case where a party elected not to obtain legal advice and consented to an order whereby he accepted an amount less than 10% of the matrimonial property against a probable entitlement of 40%. In that case, the subsection in question was s.79A(1) of the Act, which is in similar terms to s.90SN(1). The Full Court found that this did not amount to a miscarriage of justice in the circumstances, saying of the party:
He was given an opportunity to seek legal advice which he deliberately chose not to do…the husband was subjected to no pressure of any kind from the wife who not only acted entirely properly, but went out of her way to suggest to the husband that he should get legal advice as did her solicitors.[13]
[12] (1990) 14 Fam LR 62; FLC 92-137
[13] (1990) 14 Fam LR 62 at 67 per Nicholson CJ, Baker and Burton JJ
Their Honours further held at 68:
the very expression “miscarriage of justice” used in s.79A(1)(a) does 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 had deliberately decided not to seek legal advice, although urged to do so.
The Applicant has not established a miscarriage of justice under s.90SN(1)(a).
However, the Applicant appears to be on stronger ground in the second leg of his claim, namely that there was an implied consent to the setting aside of the Orders under s.90SN(2).
It has been established by the decision of the Full Court of the Family Court in McCabe & McCabe[14], which was followed in Sommerville & Sommerville[15], both of which dealt with s.79A of the Act, that parties to a marriage can expressly by their conduct consent to the discharge of prior orders so as to enable the court to make a fresh property order. The same situation can apply to parties to a de facto relationship under s.90SN(2).
[14] (1995) 19 Fam LR 579; FLC 92-634
[15] [1999] FamCA 958; (2000) FLC 93-042; (2001) 27 Fam LR 233
In Ozick & Ozick[16], Coakes FM[17] set out the issues for determination in a case of this nature which, with respect, I consider to be a correct statement of the law and which I propose to follow. His Honour stated at [15]:
It seems to me the issues are these:
(a)Was there a resumption of cohabitation after the present property orders were made?
(b)If so, was there a subsequent intermingling of the party’s (sic) financial affairs and what was the nature of their relationship?
(c)If so, do the circumstances of the resumed relationship and their conduct give rise to an inference that amounts to an implied consent to set aside the existing orders so as to enable the court to make fresh property orders or at the very least an intention no longer to be bound by the previous property orders and if so, the consequence?
[16] [2012] FMCAfam 310
[17] As his Honour then was
(d) If so:
(i)What are the contributions made by each of the parties from cohabitation to the date of final separation and the weight to be attached to such contributions.
(ii)What are the contributions from the date of final separation until the time of hearing and the weight to be attached to such contributions?
(iii)What are the relevant section 75(2) factors and what adjustments are required, if any, in favour of either party?
(iv)What is a just and equitable division of the whole of the property?
(e)If not, is the court empowered to make any further order altering the property interests of the parties.[18]
[18] [2012] FMCAfam 310
The decision of Stevenson J in Aguilar & Aguilar[19] has also been referred to by the solicitor for the Applicant. However, she submits that it should be distinguished. In my view, on reading paragraphs [58] to [60] of her Honour’s judgment, the decision in Aguilar should be distinguished on its facts.
[19] [2009] FamCA 1343
It appears to be clear in this case that the parties reconciled and resumed cohabitation soon after the consent Orders were made on 25^th March 2010, certainly by 1^st April.
The evidence in support of the contention that the parties reconciled and resumed cohabitation appears to be:
a)The parties proceeded on their previously-booked holiday to (country omitted) together in March 2010; although the Respondent deposed that they did not reconciled their relationship, they did sleep in the same bed, although she denies that they resumed a sexual relationship or relied on each other for financial assistance;[20]
b)They moved in to rented accommodation at (omitted) in April 2010, where the Respondent did all of the cooking, purchasing of food and cleaning for the parties;[21]
c)The parties maintained a joint bank account, into which the Applicant’s share of the proceeds of sale of the Property K property was paid;[22]
d)The parties resumed sexual relations, albeit on a “minimal” basis;[23]
e)The parties used the Applicant’s $84,000.00 in the joint account for living expenses;[24]
f)The parties intermingled their finances throughout this period, as witness the letter from the Respondent’s then solicitors dated 14 November 2011 forming annexure “S” to the Respondent’s affidavit;
g)The parties deposited wages and other monies into the joint account;
h)The Respondent moved various sums of money into high interest-bearing accounts for the financial benefit of both parties;
i)The Respondent had access to the Applicant’s credit cards and bank accounts; and
j)The Respondent continued to transfer money from her own accounts into the joint account to pay for joint expenses.
[20] Affidavit of Ms Bernard 24.1.2013 at [16]
[21] Ibid at [17]
[22] Ibid at [18]
[23] Ibid at [22]
[24] Respondent’s evidence in cross-examination on 13.6.2013
It appears clear that the parties had resumed their relationship by the beginning of April 2010. They continued in this relationship until the Respondent left on 25^th August 2010, but she resumed cohabitation in October of that year. In her affidavit the Respondent deposes:
I returned to the property in or about late October 2010. When I left the property I transferred to Mr Sparke[25] the sum of $12,000.00 into his account….When we reconciled in late October, I recall Mr Sparke saying to me words to the effect of “I’ve spent all of that money on gambling”.[26]
[25] i.e. the Applicant
[26] Affidavit of Ms Bernard 24.1.2013 at [23]
I am satisfied that the Applicant has established that the parties, by their conduct in reconciling and resuming cohabitation in April 2010, can be taken to have impliedly consented to an order that the Consent Orders of 25^th March 2010 should be set aside under s.90SN(2).
I propose to set aside the Consent Orders made by the Local Court at Picton on 25^th March 2010 under the provisions of subsection 90SN(2) of the Act.

Whether it is appropriate to make another Order

Where a court sets aside an order under subsection 90SN(2) it must then consider whether it is appropriate to make another Order under s.90SM. The Respondent submits that it is not appropriate to do so. The submission is that, if the Court does not dismiss the Application, that an order should be made that each party retain all assets, liabilities and financial resources currently in their name, possession and control.
It is a significant factor in this case that the parties reconciled and resumed cohabitation from April 2010 until May 2011, a further period of thirteen months. The Applicant seeks that the parties’ two periods of cohabitation, being February 2008 to February 2010 and April 2010 to May 2011 should be aggregated into one combined period, a total of some three years and one month.

Whether the two periods of cohabitation should be combined

The law appears clear that it is possible and may well be appropriate to aggregate two periods of time when the parties were in a relationship. In Hamblin & Dahl[27], Demack FM[28] considered the situation where the parties had been in a de facto relationship for two periods of time, the first from March 1994 to December 1998, and the second from April 2008 to October 2009. The issue was whether the jurisdiction of the Court was enlivened under s.90SB of the Family Law Act 1975.
[27] [2010] FMCAfam 514
[28] As her Honour then was
There were two complicating factors.
The first was that the earlier period of time, from March 1994 to December 1998, predated the Court’s jurisdiction to deal with financial matters relating to de facto relationships and the claim under the relevant state legislation was statute barred. The second period of time, from April 2008 to October 2009, extended for only 18 months, and the Applicant would need to have recourse to the specific provisions of s.90SB(c) in order for the Court to have jurisdiction under the Family Law Act 1975.
The second complicating factor was that between the first period and the second period, not only was there a gap of some 10 years, but the Applicant was in a de facto relationship with another person.
However, her Honour held that the provision in s.90SB was intended to be beneficial and held at [65] and [66]:
65.I cannot see that either the gap between periods of cohabitation, or the intervening de facto relationship between the applicant and Ms M have any extraordinary features which would draw me to the conclusion that these were two separate relationships.
66.I am satisfied that a plain reading of the provisions should be preferred. The total periods of the relationship exceeded two years. This Court has jurisdiction to determine the matter. Pursuant to s.90RD(1) of the Family Law Act, it is declared that a de facto relationship existed between the Applicant and the Respondent of at least 2 years.
The Respondent challenged this decision on appeal. However, on 13^th October 2011 the Full Court of the Family Court (Finn, Coleman and Austin JJ) dismissed the Appeal (Dahl & Hamblin[29]).
[29] [2011] FamCAFC 202; (2011) 46 Fam LR 229; FLC 93-480
By comparison, there appear to have been three periods of cohabitation in this case:
a)from February 2008 to 23^rd January 2010;
b)from 1^st April 2010 to 25^th August 2010; and
c)from October 2010 to May 2011.
The three periods of cohabitation are separated from each other by two months or less in each case.
In my view, it is appropriate to declare that the three periods of cohabitation (although the Applicant claims that there were only two) should be aggregated and that the total period of the parties’ de facto relationship should be declared to be two years and eleven months.

Property Adjustment between the parties

The Court must now embark on the process of considering whether it is just and equitable to make orders for a property adjustment between the parties. The relevant section of the Family Law Act 1975 is s.90SM, which is expressed in similar, but not identical, terms to s.79.
The first matter that needs to be addressed is that the Court should be satisfied that the geographical requirement in s.90SK has been met. I am satisfied that throughout the aggregated period of the de facto relationship, the parties were ordinarily resident in New South Wales, which is a participating jurisdiction.

When considering whether to make an order under s.90SM, the Court must undertake the same process as it must do with an application under s.79, which is to follow the principles set out by the High Court in Stanford v Stanford[30].
[30] [2012] HCA 52; (2012) 47 Fam LR 481; FLC 93-518
The decision in Stanford requires a court, when faced with an application for determination of de facto property matters under s.90SM of the Act, to consider first of all the requirement in subsection in s.90SM(3) that:
The court must 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.
In my view, this decision requires the Court to consider whether it is just and equitable to make an order under s.90SM at all, before embarking on the four-step process set out by the Full Court of the Family Court in Hickey & Hickey.[31]
[31] [2003] FamCA 395; (2003) 30 Fam LR 35; FLC 93-143
The four-step process in Hickey can be found at paragraph [39] of the decision:
Firstly, the Court should make findings as to the identity and values of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties…and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess …the matters referred to in s.75(2)[32] so far as they are relevant…Fourthly, the Court should…resolve what order is just and equitable in all the circumstances of the case.[33]
[32] Or, in this case, s.90SF(3)
[33] Hickey & Hickey (supra) at [39] per Nicholson CJ, Ellis and O’Ryan JJ
It can be seen that the Court must consider whether it is just and equitable to make an order under s.90SM before undertaking the process set out in Hickey and again as a fourth step in that process. This is not unnecessary repetition because different considerations are involved.

Whether it is just and equitable to make an order at all

In my view, it is just and equitable to consider making a property order under s.90SM. The parties have finally separated after a total period of cohabitation of just under three years. In that time, however, there was a considerable of their finances. The relationship finally came to an end in May 2011 and the Respondent deposed in her affidavit at [26] that she has had “minimal contact” with the Applicant since then.

The Parties’ Property and Liabilities

There is no agreement between the parties as to the value of the net asset pool. The Applicant’s figures are more up to date, having been compiled just before the hearing date. The Applicant’s solicitor has submitted a balance sheet.
The parties disagree about the value of the Respondent’s property at Property S. The Respondent claims that it has a value of $360,000.00, but the Applicant has submitted a market appraisal dated 12^th June 2013 from (omitted) Real Estate, a real estate agent, giving an estimate of $390,000 to $410,000.
The Applicant submits that the property should be assigned a value of $390,000.00, being the lower figure in the range given in the market appraisal. The Applicant disputes the Respondent’s figure of $360,000.00, saying, in a note on the Balance Sheet:
Applicant states that Respondent has served a market appraisal only dated 17 October 2012 and in the amount of $370-$380,000. The Respondent has not responded to requests for a single expert to be appointed or to requests to allow access to a valuer appointed by the Applicant.
I am satisfied that the property should be assigned a value of $390,000, based on the market appraisal of 12^th June 2013.
It is the Applicant’s case that certain property should be added back to the asset pool. It is submitted on behalf of the Applicant that the Respondent has paid $31,720.00 in legal fees to her former lawyers from monies she has held since separation. The fees have not been paid from monies earned by the Respondent since the parties separated (see NHC & RCH[34]). Against this, the Applicant’s paid legal fees were lent to him or have been paid from funds that he earned since separation and they should not be added back into the asset pool.
[34] [2004] FamCA 633; (2004) 32 Fam LR 518; FLC 93-204
Further, the Applicant submits that from the proceeds of sale received by the Respondent in August 2012 in relation to property at Property R, amounting to $80,108.00, the Respondent has made unexplained cash withdrawals of $56,108.00 from her (omitted) Bank account with no evidence as to that expenditure. The Applicant submits that this should be regarded as a premature distribution of an asset in which he holds an interest and, as that expenditure was not reasonable, the amount of $56,108.00 should be added back into the asset pool (see AJO & GRO[35]). This appears to me to be correct.
[35] [2005] FamCA 195; (2005) 33 Fam LR 134; FLC 93-218

Non-superannuation asset pool

I find the value of the non-superannuation asset pool to be:
a)Property S (Respondent)   $390,000.00
b)Respondent's Nissan (omitted) motor car         $ 10,000.00
c)Respondent's (omitted) Bank accounts             $      138.00
d)Respondent’s house contents  $ 10,000.00
e)Loan to Respondent’s daughter Ms N              $100,000.00
f)Applicant’s business account  $ 1,219.00
g)Applicant’s Holden motor vehicle  $ 20,000.00
h)Applicant’s (omitted) business  $ 5,000.00
i)Applicant's (omitted) shares  $ 1,297.00

j)Applicant’s house contents $ 5,000.00

Total $542,654.00
Amounts added back
k)Amount paid by Respondent for legal fees $ 31,270.00

l)Proceeds of sale of Property R $ 56,108.00

Total amount added back $ 87,378.00
Total non-superannuation assets $630,032.00
Liabilities

I find the parties’ liabilities to be:
a)Respondent's (omitted) Bank home loan                   $199,000.00
b)Respondent's (omitted) Bank debt  $   18,000.00
c)Respondent’s Visa Card debt           $   8,300.00
d)Applicant’s personal loan        $   18,000.00
e)Applicant’s MasterCard debt   $   15,685.00

f)Applicant’s tax debt $ 5,869.00

Total liabilities $264,854.00

By subtracting the parties’ total liabilities of $264,854.00 from the total non-superannuation assets of $630,032.00 I arrive at a total net non-superannuation asset pool of $365,178.00.

Superannuation

The Applicant’s interest in (omitted) Superannuation amounts to $48,619.00. The Respondent does not disclose any superannuation interest.

Total Asset Pool

When the value of the Applicant’s superannuation interest is added to the total non-superannuation asset pool of $365,178.00, the total value of the asset pool comes to $413,797.00.
Accordingly, I find the value of the asset pool to be $413,797.00.

The Parties’ Contributions

The Applicant’s solicitor has submitted, with some force, that the applicant disputes the Respondent’s contention that she initially asserted that she contributed an amount of $355,000.00 against the Applicant’s contribution of $130,000.00. Rather, he asserts that his contribution towards the acquisition, conservation or improvement of the property of the parties was:
a)The value of the Property K property in the range of $455,000.00 to $480,000.00;
b)Less, the amount of $107,000.00 owing under the mortgage;
c)Less the interest of Ms D, the Applicant’s former partner, amounting to $100,000.00.
Taking a conservative view, this would amount to a contribution of $248,000.00.
The Applicant claims that the Respondent’s initial financial contribution towards the acquisition, conservation or improvement of the property of the parties should be assessed at $214,498.00, made up as follows:
a)Savings - $8,724.00
b)Compensation payment - $137,024.00
c)Property A property $220,000.00
d)Less loan to the Respondent’s daughter of $121,250.00;
e)Less the amount owing to (omitted) Bank of $30,000.00.
It appears that the evidence supports this finding.
It is clear that the Applicant was the primary income earner during the duration of the relationship whilst the Respondent did not work in paid employment. However, the Respondent attended to the financial and domestic side the parties’ relationship.
I find that the parties’ contributions should be assessed as equal.

Relevant Matters under subsection 90SF(3)

Subsection 90SM(4) of the Family Law Act 1975 provides at paragraph (e) that in considering what order (if any) should be made under this section in property proceedings, the court must take into account:
the matters referred to in subsection 90SF(3) so far as they are relevant.
The Applicant was born on (omitted) 1962. He is now 51 years of age. He is in good health.
The Respondent was born on (omitted) 1954. She is about to attain the age of 60 years. She has not worked in paid employment for some years and has received a compensation payment from her former employer.
The Applicant works as a (omitted) and his solicitor expresses doubt about his ability to work in a manual occupation after he attains the age of 55. He has not provided any evidence to support this contention. The Respondent does not work but is financially comfortable.
Neither party has the care or control of a child of the de facto relationship who has not attained the age of 18 years. There were no children of the relationship.
Neither party has a duty to maintain a child or another person. Neither party is cohabiting with another person.
The Applicant submits that the Respondent’s standard of living is higher than his. She is financially comfortable but the Applicant lives in rented accommodation.
Neither party has any liability to pay child support under the Child Support (Assessment) Act 1989 (Cth).
There are no other circumstances which, in the opinion of the Court, the justice of the case require to be taken into account.
I am not satisfied that any adjustment in favour of either party is called for in respect of the s.90SF(3) factors.

Just and Equitable

Subsection 90SM(3) provides:
The court must 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.
It would appear that the question of the Applicant’s superannuation interest is a matter where the Court should consider whether the orders to be made are just and equitable. On the one hand, the superannuation interest is relatively modest, being an amount of $48,619.00. If it is the case that the Applicant’s working life in the (omitted) industry will be limited after he attains the age of 55, as he submits, the amount of superannuation that he holds will not provide him with a great amount of funds for his support during his retirement. Splitting that amount with the Respondent will deplete his superannuation even further.
Against this, the Respondent has no superannuation. She is almost 60 years of age and is not currently in employment. Taking into account the relatively short duration of the parties’ cohabitation, two years and eleven months, the amount of money put into the Applicant’s superannuation was not a great sum. It is the Applicant’s case that the value of his superannuation at the commencement of cohabitation was $38,946.00. Thus, the increase in the value of the Applicant’s superannuation at the date of hearing was $9,673.00. There were gaps of a couple of months between each of the parties’ three periods of cohabitation.
It is submitted on behalf of the Applicant that either he should retain his superannuation interest in its entirety or there should be a split of $5,000.00 to the Respondent.
Neither of those two proposed options seems to be entirely just and equitable, and a superannuation splitting order for an amount as small as $5,000.00 does not appear to be particularly efficient. In my view, it would be better and fairer for there to be a small financial adjustment in favour of the Respondent so that the Applicant should retain his superannuation untouched. To that end, I consider that there should be an adjustment of $4,000.00 in favour of the Respondent.

Orders to be made

The Orders made by the Local Court will be set aside and a declaration will be made that the parties were in a de facto relationship for a total period of two years and eleven months. This relationship represents an aggregation of three periods, being:
a)From February 2008 to 23^rd January 2010;
b)From 1^st April to 25^th August 2010; and
c)From October 2010 to May 2011.
The Applicant is to retain his superannuation interest.
The Respondent is to pay to the Applicant an amount of $162,555.00 made up as follows:
a)50% of net non-superannuation asset pool               $182,589.00
b)LESS the value of the assets retained by Applicant $   32,516.00
c)PLUS 50% of joint debts retained by Respondent    $   16,482.50

d)LESS allowance for superannuation $4,000.00

Total $162,555.50.

Rounding this sum down to the nearest dollar, the Respondent will pay to the Applicant the amount of $162,555.00.
The parties will retain all other assets in their own names or their possession or control.
The parties will be liable for all debts in their name and indemnify the other party against any liability.

I certify that the preceding one hundred and thirty-two (132) paragraphs are a true copy of the reasons for judgment of Judge Scarlett

Associate:

Date: 29 April 2014