Stewart and Stewart
[2014] FCCA 2539
•6 November 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| STEWART & STEWART | [2014] FCCA 2539 |
| Catchwords: FAMILY LAW – Property – failure by respondent to file material – application for adjournment refused – application proceeded with upon information available – limited particulars as to available assets and intervention by mortgagee – consideration of principles for distribution of superannuation entitlements – orders for property distribution. |
| Legislation: Family Law Act 1975 (Cth), ss.79, 79(24), 75(2), 81, 90MT(4), 117 |
| AB & GB (No.2) [2005] FMCAfam 402 Pastrikos and Pastrikos (1980) FLC 91-897 |
| Applicant: | MS STEWART |
| Respondent: | MR STEWART |
| File Number: | TVC 377 of 2014 |
| Judgment of: | Judge Coker |
| Hearing date: | 29 July 2014 |
| Date of Last Submission: | 29 July 2014 |
| Delivered at: | Townsville |
| Delivered on: | 6 November 2014 |
REPRESENTATION
| Solicitors for the Applicant: | Ms P Krarup of SR Wallace & Wallace |
| Respondent: | In person |
ORDERS
That each party retain all items or property in their possession as and for their own property absolutely and that each party indemnify and keep indemnified the other party in relation to any liability attaching to property retained by them.
That pursuant to Section 90MT(4) of the Family Law Act 1975 the Court allocates a base amount fixed in the sum of $147,525.00 of the superannuation account to the Wife out of the Husband’s interest in the (omitted) Superannuation Fund.
That in accordance with Section 90MT(1)(a) of the Family Law Act 1975 the Court:
(a)creates an entitlement on the part of the Wife to be paid the amount calculated in accordance with Paragraph 6 of the Family Law (Superannuation) Regulations 2001; and
(b)makes a corresponding reduction in the entitlement the Husband, or such other person to whom a splittable payment may be made, would have had in the (omitted) Superannuation Fund but for these orders.
That whenever the trustee of the (omitted) Superannuation Fund makes a splittable payment out of the Husband’s interest in the (omitted) Superannuation Fund, the trustee shall do all such acts and things and sign all such documents as may be necessary to pay the entitlement created in paragraph 2 of this Order in accordance with the requirements of the Family Law Act1975 and Family Law (Superannuation) Regulations 2001.
The operative time for the payment split under these Orders shall be seven (7) days from the date of the Orders.
That in the event that either party fails, refuses or neglects to execute (within ten (10) days of a request to do so) any documents or do anything necessary to give effect to the terms of these orders, then pursuant to section 106A of the Family Law Act 1975 as amended:-
(a)the Registrar of the Federal Circuit Court of Australia at Townsville shall be and is hereby appointed to execute any deed or instrument in the name of the defaulting party and to do all such acts and things necessary to give validity to the operation of the deed or instrument and to give validity and operation to these orders; and
(b)the affidavit of the solicitor for the party seeking to give effect to these orders shall be sufficient proof of the default of the other party.
That the Husband pay the Wife’s costs of and incidental to these proceedings, with such sum included in the amount to be split from the Husband’s superannuation entitlement.
IT IS NOTED that publication of this judgment under the pseudonym Stewart & Stewart is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT AT TOWNSVILLE |
TVC 377 of 2014
| MS STEWART |
Applicant
And
| MR STEWART |
Respondent
REASONS FOR JUDGMENT
INTRODUCTION
On 11 April 2014 Ms Stewart, whom I shall refer to as “the wife”, filed an initiating application in this court seeking orders with regard to both an interim and final property settlement to be effected between her and her former husband, Mr Stewart. The initiating application was returnable on 14 May 2014. The application was, in fact, served upon the respondent on 23 April 2014 and an affidavit of service under the hand of a sheriff’s officer in New South Wales, Ms L, has been filed confirming service. Annexed to it is a copy of an Acknowledgement of Service signed by the husband.
The matter when first mentioned before the court on the original return date, 14 May 2014, noted that there had been no material filed by the husband, but there was agreement to allowing him the opportunity to file material. Therefore on that day orders were made with regard to protecting any funds from the sale of the matrimonial home, if the property was sold prior to the matter coming back before the court, by being paid into the trust account of SR Wallace & Wallace, the solicitors acting on behalf of the wife.
Thereafter the direction was simply made that the husband file and serve a response, an affidavit or affidavits and financial statement by 4pm on 13 June 2014. The matter was adjourned to 9.30am on 23 June for further mention. On 23 June 2014 the wife and her legal representatives again attended and the husband attended by telephone link. He indicated that he had been unable to arrange legal representation and sought a further adjournment and an extension of directions with regard to the filing of his response, affidavit or affidavits and financial statement.
Notwithstanding some concern in respect of that further delay, the legal representatives for the wife consented to such an extension and further directions were given in relation to the filing of material by 18 July 2014 and the matter was adjourned for further mention to 29 July 2014. It was specifically noted in the orders however, that in the event of the respondent not complying with the extended directions, in relation to the filing of material, then leave was granted to the applicant wife to proceed by way of an undefended hearing.
THE APPLICATION FOR ADJOURNMENT:
The matter came before the court on 29 July 2014. The husband had not filed any material in relation to the matter but did forward to the court an email. The email dated 12.18pm on 25 July 2014 noted that a further adjournment was being sought. It commenced:
I am guessing that you will be getting annoyed and p… off at me now sir. But as it stands right now I haven’t been able to get legal aid representation or even an appointment until next week either on or after 29th July 2014. I myself also want this to be finalised and over as well and I am doing what I can with the limited resources that I have at the moment.
The email then goes on to explain that the husband is also in serious financial need, as the wife says is her situation, and indicates that if an adjournment is not possible, then he requested the opportunity to attend by telephone link as he was not in a financial position to attend.
The husband was telephoned and formally proceeded with an application for adjournment which was refused. I gave brief reasons in relation to the refusal in relation to that matter and noted, in particular, that the affidavit material of the wife, which was extensive and was filed in support of the application of 11 April 2014, noted that as early as November 2013, so some nine months ago, there was communication between the legal representatives for the wife and the husband, requesting information.
Interestingly, after a number of letters were sent and there was no response, a text message was apparently sent to the mobile telephone number for the husband on 17 December 2013, again, as it was indicated, attempting to gain a response. Following the forwarding of that text message, which is in these terms:
Please provide your (or your solicitor’s) response to our letter, dated 20 November 2013 as soon as possible. Regards, Peta Krarup, Solicitor, SR Wallace & Wallace Lawyers.
That text was sent at 12.55pm. It is noted in the affidavit, and it does not obviously appear contested, that some four minutes later at 12.59pm the following text was forwarded:
I’ll reply after I have finished filling the fraud evidence for the first several years that we lived together and she claimed single pension. Then I’ll have my solicitor reply to your letter and my advice to my solicitor will be to give her nothing as she has all ready taken the lot and sold it off.
Following the receipt of that text, further communications by text were sent to the husband on the same number by the solicitors for the wife. There was, however, no further response.
However, on 21 January a letter was sent indicating that if there was no engagement by the husband in the process, then it was the wife’s intention to file an application in the court. Again, it is noted in the affidavit and not challenged as follows:
On 29 January 2014, after no response had been received by Mr Stewart, my solicitor text messaged Mr Stewart. Annexed hereto and marked with the letters “S10” is a copy of that text message.
The text message S10 is in these terms:
Please respond (or have your solicitor respond) to our correspondence dated 21 January 2014. In the event no response is received then we have instructions to file an urgent Court Application on our client’s behalf seeking property settlement orders.
The paragraph previously referred to then goes on:
Mr Stewart then replied to my solicitor advising “Ok I am going bankrupt ok start to file for it in the morning.”
I made reference to those particular exchanges in the decision not to grant an adjournment in relation to these matters for two reasons, the first of those was to emphasise that a considerable period of time had passed where the wife had been seeking the cooperation of the husband, in relation to effecting a property settlement in relation to this matter, noting of course that the email forwarded by the husband to the court indicated that he also wished to settle the proceedings when that, with respect, was clearly not the case, but also to note specifically that as early as December of 2013, the husband noted that he would be having his solicitors reply to a correspondence forwarded, in relation to the matter.
Quite simply the husband has failed to engage in the proceedings. He has had months to enter into negotiations and, if genuine, to reach a resolution in relation to this matter. He has failed entirely to do so and, as I again emphasised when refusing the adjournment, has been given a number of opportunities to file material and has not filed any.
I further noted that the proceedings were between he and the wife, not between Legal Aid if they were able to provide assistance to him, or a private solicitor, or a community legal service, but rather proceedings between he and the wife. I emphasised that the obligation remained upon him to provide information in relation to this matter. None was forthcoming and, as I determined, it was inappropriate for there to be an adjournment, indicating that the application would proceed, but rather than being what might be considered entirely undefended, I advised that the husband would have the opportunity to be involved in the proceedings and to at least address me, in relation to the application before the court.
THE APPLICATION:
The application of 14 April 2014 sought interim and final orders. As I have indicated, noting that no material had been filed, I determined that the appropriate course to follow in relation to the matter, was to proceed with final orders sought. The final orders sought by the wife in relation to the proceedings were those detailed in the initiating application of 11 April 2014, orders 1 through 14, of the annexure A to the initiating application. They were in these terms:
1. That the property pool be divided between the parties with such percentages to be determined upon disclosure.
2. That pursuant to Section 90MT(4) of the Family Law Act 19075 the Court allocates a base amount equivalent to 80% of the value of the superannuation account to the wife out of the husband’s interest in the (omitted) Superannuation Fund.
3. That in accordance with Section 90MT(1)(a) of the Family Law Act 1975 the Court:
(a)creates an entitlement of the part of the Wife to be paid the amount calculated in accordance 2with Par 6 of the Family Law (Superannuation) Regulations 2001; and
(b)makes a corresponding reduction in the entitlement of the Husband, or such other person to whom a splittable payment may be made, would have had in the (omitted) Superannuation Fund but for these orders.
4. That whenever the trustee of the (omitted) Superannuation Fund makes a splittable payment out of the Husband’s interest in the (omitted) Superannuation Fund, the trustee shall do all such acts and things and sign all such documents as may be necessary to pay the entitlement created in paragraph 3 of this Order in accordance with the requirements of the Family Law Act and Family Law (Superannuation) Regulations 2001.
5. The operative time for the payment split under these Orders shall be seven (7) days from the date of the Orders.
6. That the Husband remain responsible for and indemnify and keep indemnified the Wife against:-
(a)(omitted) Bank Loan secured by the Holden (omitted);
(b)Unpaid tax debt;
(c)Unpaid (omitted) fines;
(d)Overdue Telstra account;
(e)(omitted) outstanding account; and
(f)(omitted) Energy overdue account.
7. That the Husband retain and the Wife relinquish any claim to the following:-
(a)Holden (omitted);
(b)Furniture, whitegoods and personal effects currently in his possession;
(c)The balance of any bank account/s in his sole name; and
(d)The balance of his (omitted) superannuation entitlement after the super splitting order has been effected.
8. That the wife retain and the husband relinquish any claim over the following:-
(a)Furniture, whitegoods and personal effects currently in her possession;
(b) The balance of bank account/s held in her sole name; and
(c)The balance of any superannuation accounts held I the Wife’s sole name.
9. That unless otherwise specified in these orders and except for the purpose of forcing the payment of any monies due under these orders:-
(a)each party be solely entitled to the exclusion of the other to all property in the possession of such party as at the date of these orders;
(b)monies standing to the credit of either party in any separate bank account is to remain their own separate property;
(c)each party hereby forgoes any claim they may have to any superannuation benefits belonging to or earned by the other;
(d)all insurance policies to become the sole property of the beneficiary named thereunder; and
(e)each party 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.
10. That these orders are binding on the parties’ heirs, executors and assigns.
11. That each party have liberty to apply back to the court in relation to the terms of these orders upon the giving of seven days notice to the other party.
12. In the event that either party fails, refuses or neglects to execute (within ten (10) days of a request to do so) any documents or do anything necessary to give effect to the terms of these orders, then pursuant to section 106A of the Family Law Act 1975 as amended:-
(a)the Registrar of the Family Court of Australia at Townsville shall be and is hereby appointed to execute any deed or instrument in the name of the defaulting party and to do all such acts and things necessary to give validity to the operation of the deed or instrument and to give validity and operation to these orders; and
(b)the affidavit of the solicitor for the party seeking to give effect to these orders shall be sufficient proof of the default of the other party.
13. The husband shall pay the wife’s costs of and incidental to these property settlement proceedings.
14. Any other Order the Court deems necessary.
Circumstances had however moved on in relation to the proceedings since the filing of that original application. It was first important to note that the concerns that the wife had expressed with regard to the possible sale of the property by the husband were a little astray of what was actually the situation. Gadens Solicitors, acting on behalf of the mortgagee, had taken steps to list the property for sale. It was also indicated that the property, whilst previously listed for a more significant amount, was now listed for an amount of $330,000 by the mortgagee in possession and indications given by Gadens to the legal representatives for the wife, were that it was expected that there would be a shortfall in relation to the liabilities attaching to the property, including both mortgage and mortgage arrears, as well as unpaid rates.
Additionally, it was indicated that whilst the wife had, in the original application, sought orders with regard to the division of any moneys that might be received in relation to the sale of the property, it was also sought that there should be orders made with regard to each party’s retention of property in their possession and the consequential responsibility for any liability attaching to such property. However, the evidence would appear to indicate that, again because of shortfalls in respect of assets over liabilities, it was anticipated that apart from a few items of property of a chattel nature in the possession of each party, there was not expected to be any assets for distribution between the parties.
What was suggested therefore as being appropriate, at least in relation to any physical assets that might remain, was to order that there should be retention by each of the parties of the entirety of assets in their possession and, further, that there be responsibility for any liability attaching to such assets and indemnity provided by the party retaining such assets, in respect of the other party.
What was specifically sought therefore was simply an order for the splitting of any interest in superannuation held by the husband. The best evidence available in relation to superannuation was that which was able to be obtained from the husband’s superannuation provider, (omitted). Correspondence from (omitted) of 17 June 2014, forwarded to the wife’s solicitors, indicated that the husband’s superannuation entitlements as at 17 June 2014, was $240,066.70.
The wife continued to seek an order for the payment of 80 per cent of that amount, by way of a splitting order into her name. The husband opposed that indicating, that his involvement in the (omitted) Superannuation Fund predated by some considerable time the actual commencement of the relationship between he and the wife.
As best I could understand from the information provided by (omitted), it was a situation where the date of the commencement of the member’s eligible service period was 29 April 1996. It does not appear as if there were any initial contributions made in relation to the fund at the commencement and that is relevant because, the relationship between the parties commenced in 1987 and ended, the wife says, on a date in July of 2013. The suggestion by the husband therefore that there was any prior existing superannuation fund which was, either rolled over into (omitted) or was otherwise contributed by him, is without corroborative or documentary evidence.
THE EVIDENCE:
It was a recurring theme in relation to these proceedings, and I emphasised to the husband as he addressed me that it was all well and good for him to make wide ranging statements in relation to what might or might not have been the situation in respect of the relationship, but in fact it was the case that he had filed nothing and there was no documentation, notwithstanding repeated requests by the legal representatives for the wife for such information to be provided.
It was also acknowledged on the part of the wife that she did have some superannuation of her own. In her financial statement, filed on 11 April 2014, indications were given that her superannuation entitlements totalled approximately $38,000 with (omitted). In her affidavit, filed in support of the application for property settlement, she indicated that the amount held by her in (omitted) was in fact an amount that had been accumulated as a result of the consolidation of a number of smaller policies that she had had up until recent times. There was nothing more specific than the indication in the affidavit of 11 April 2014 that the value of (omitted) was $38,652.31.
The submission made from the bar table in relation to that particular amount was that it was the most accurate figure available in relation to superannuation held by the wife and should be utilised for the purposes of any calculation to be made in relation to the proceedings.
The great difficulty that always arises in relation to proceedings where one party, for whatever reason, fails to participate or disengages is that there is simply a lack of information available. For example, in this matter the wife indicates that her information is very limited as to what might or might not have been the situation with regard to finances within the household and, certainly, what might have been the situation subsequent to separation in July of 2013. The wife says in paragraph 18 of her affidavit of 11 April 2014, for example, the following:
In addition to this, Mr Stewart has unilaterally sold a number of items since we have separated, namely:-
a. Mazda (omitted)– I believe that Mr Stewart sold the vehicle on or around 18 July 2013 for $23,000.00. Annexed hereto and marked with the letters S12 is a screen shot of his (omitted) Bank account statement showing a deposit of $23,000.00 from (omitted) in (omitted) on 18 July 2013.
b. Boat and trailer – Mr Stewart sold these items on or around 12 July 2013. I believe that both the boat and trailer would have been worth around $16,000.00 however, Mr Stewart went ahead and sold same for $8,600.00.
c. Harley Davidson motor bike – I believe that Mr Stewart sold the bike for $18,000.00 on or around December 2013. Annexed hereto and marked with the letters S13 is a screen shot of Mr Stewart timeline where he has listed the bike for sale on 13 December 2013.
What the wife goes on to suggest then is that the husband had received the totality of those moneys at best guess somewhere in the vicinity of $50,000 for his own purposes. The husband says that that was not the case. From the bar table he submitted that the moneys were utilised by him for continued payments in relation to mortgage obligations and responsibilities attaching to the property. However, it is difficult to specifically accept that that would be the case when action has been taken some time ago to exercise powers as a mortgagee in possession with regard to the property of the parties situated at Property S.
It appears clear that the husband has received those moneys, whether they have been utilised as he says or as suggested by the wife, for his own purposes is unknown. But again it falls upon the husband to be the one who provides disclosure in relation to such matters and of course here no such disclosure has been made. The wife says therefore that it is relevant that there be a recognition of the fact that the husband has received those moneys and has retained them for his own purposes, specifically in relation to the determination of what property settlement should be effected.
It is further emphasised that it is that retention by the husband which gives rise to a basis upon which the wife says that it is proper that she should receive 80 per cent of the husband’s entitlements in relation to superannuation. In fact it is noteworthy that what is sought is the transfer or split of superannuation to an amount equivalent to 80 per cent of the value of the superannuation account in (omitted) superannuation fund to the wife as well as, it would appear, the retention by the wife of those moneys held in her (omitted) super account, an amount as I indicated, in the vicinity of $38,600.
If, as is apparently the case, the only assets available in relation to the matter are those amounts indicated in the material, $240,066.70 and $38,000, then the best estimate of the totality of the assets available for distribution, other than as I say limited chattel items of limited value, then the wife is in fact seeking the distribution of more than 80 per cent. That is the case if she receives 80 per cent of $240,000 as it is an amount in the vicinity of $192,000, as well as the retention of a further $38,000, taking the retention by her to $230,000 out of approximately $280,000. In that case, it is a retention closer to 85 per cent than 80 per cent of the totality, in relation to the proceedings. I shall come to that particular aspect a little later in these reasons.
It is important however that I note the difficulties that arise in relation to this matter more completely. The wife indicates contributions made by she and the husband to the relationship. She says at paragraph 39 of her first affidavit:
Neither of us had many assets in our respective names when we got together. I already had three children from my previous relationship, namely X, Y and Z. My three children lived primarily with their respective fathers and would stay with Mr Stewart and I on a weekly basis. I fell pregnant with our son W on or around (omitted) 1987. W was born on (omitted) 1988.
She goes on:
My relationship with Mr Stewart was quite traditional in that I did all of the housework, cooking, cleaning, washing and ironing. I was also the primary carer for our son W.
She then notes that there were situations after they commenced to reside together, noting that the husband was only 21 years of age at the time that they commenced the relationship, which meant that the husband worked in various (occupations omitted) throughout New South Wales and Queensland, but the move was made to Queensland in 1996. From 1996 to 2011 there was work in various (omitted), all of which led to contributions being made to the (omitted) superannuation fund. As I say it is unclear as to exactly what might have been any initial contribution to the (omitted) fund.
That it is the only policy that the wife is able to point the court to, in relation to funds held on behalf of the husband. That is not to say however that there may not be other funds which hold superannuation benefits which are available for the husband, but which are not known to the wife. That appears a clear possibility when one is mindful of the fact that the parties commenced residing together in 1987 and that the (omitted) fund commenced contributions in 1996. It is not at all surprising therefore that there may be other superannuation funds held on the part of the husband.
Whether that is or is not the case, it is the Husband who has failed to provide any information and therefore, being mindful of direction provided by the Full Court and the High Court in relation to such matters, there needs to be a more generous assessment of the position with regard to the wife, when there has been a failure to make disclosure and of course therefore correspondingly, difficulties in assessing what might be the circumstances of the parties. I am satisfied that the information provided by the wife in this matter is the best that she is able to provide with regard to the property entitlements of she and the husband.
It is open to suggest that there may have been other funds held by the husband, as well as, in his favour, contributions made subsequent to separation, particularly from the sale of those items to which I have made previous reference. But the fact is that there is no information provided in that regard and it makes the determination of this matter more difficult, but at the same time also gives rise to a need to ensure that, as best the court can do, there is some finality provided in relation to the financial circumstances of the parties.
I am satisfied that, particularly when the evidence of the wife is unchallenged in relation to this matter, that her statements can generally be properly taken at face value as being an accurate reflection of the circumstances that existed and currently exist, in relation to the parties’ financial situation.
THE LAW:
There are two issues to be considered in relation to the determination of this matter. I need, obviously, to look at the law in respect of financial determinations between husband and wife and, in that regard, the relevant law is as follows. Section 79 of the Family Law Act defines the court’s powers in determining applications for property settlement. Subsection (2) of section 79 provides that:
The court shall not make an order under this section unless it is satisfied that in all the circumstances, it is just and equitable to make the order.
In respect of that immediate consideration I need in this case to say no more than, the marriage is over, the assets for distribution are minimal and it could not be more appropriate to bring to an end the financial intertwining of the parties. In the circumstances that I have so far described, and will continue to comment upon in these reasons, it is without doubt just and equitable that a property settlement be effected, which includes, at least in part as best it can, a split of superannuation entitlements of the parties. To not do so following the obvious end of the relationship between the parties would be most unjust and inequitable on the evidence that is before the court.
The husband may, as he indicated in his submissions to me, have a view that the wife has already retained and received more than enough in relation to a proper and just distribution between the two parties. But the fact is that he has not provided information in relation to this matter and the evidence that is available clearly points to an irreconcilable breakdown in the marriage and, more specifically, a clear need to facilitate a severing of the financial relations between the parties, so that each can then move forward in relation to their respective lives.
To that end, of course, I note particularly the provisions of section 81 of the Family Law Act, which is in these terms:
If proceedings under this Part, other than proceedings under section 78 or proceedings with respect to maintenance payable during the subsistence of a marriage, the court shall, as far as practicable, make such orders as will finally determine the financial relationships between the parties to the marriage and avoid further proceedings between them.
Section 79(4) sets out the matters the court must take into account when considering what orders should be made for the alteration of the interest of the parties in property. Those matters include:
(a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c) the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d)the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e)the matters referred to in subsection 75(2) so far as they are relevant; and
(f)any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
The approach to the determination of an application under section 79 is well established by authority (see, for example Pastrikos and Pastrikos (1980) FLC 91-987; In the Marriage ofLee Steere and Lee Steere (1985) FLC 91-626; In the Marriage of Ferraro (1993) FLC 92-335; In the Marriage ofClauson (1995) FLC 92-595 and In the marriage of Whitely and Whitely (1996) FLC 92-684). The process ordinarily involves a multiple part procedure.
The court must first identify the assets, liabilities and financial resources of the parties and attribute a value to all assets, usually at the time of the hearing. Thereafter it must evaluate the contributions made by each of the parties as defined in section 79(4)(a) to (c). Finally, the court must consider the financial resources, means and needs of the parties, and other matters set out in section 75(2) in so far as they are relevant. An adjustment of the amount due to each party by way of contribution is then made by reference to the section 75(2) factors. It is not essential, however, that such an adjustment be made. Generally speaking, an adjustment is made because one party has greater needs and the other has stronger means. Section 75(2) is concerned with the process of arriving at a just and equitable result.
In determining what order the court should make under section 79, the court must be satisfied, in all the circumstances of the case, that the order to be made is just and equitable – not simply that the underlying percentage division of the net value of the parties is appropriate. In other words, in consideration of whether the overall result of the order in the property settlement proceedings, is just and equitable (see section 79(2)). It is the justice and equity of the actual orders that the court must consider, Russell v Russell (1999) FLC 92-877.
Section 75(2) of the Family Law Act sets out the matters which must be taken into account by the court when determining applications with respect to maintenance. This is the prospective element of the determination of the application for property settlement. The assessment of contributions during the marriage is the retrospective element.
In the Marriage of Ferraro, the Full Court said:
A now well established line of authority in this Court indicates the approach normally to be taken in the exercise of the discretion in s79 proceedings. That approach is firstly to ascertain the property of the parties at the time of the hearing, then to consider “contributions” of the parties within paras (a) to (c) of s79(4), and then to consider the matters in paras (d) to (g), more especially para (e) which takes up by reference the provisions of s75(2) and which are generally referred to as the “section 75(2) factors”.
DISCUSSION:
It is clear therefore that following the determination pursuant to section 79(2), that there is a four-step process required to be considered in relation to the proceedings. The first, of course, involves an assessment of what might be the assets available for distribution between the parties.
It is, as I have indicated, just and equitable for orders to be made. It is therefore necessary to, as best one can, assess what the property of the parties might be for distribution between them. In this matter, again, the only evidence available is that which has been provided by the wife in relation to the matter, as detailed in her affidavit at paragraph 34. However, it needs to be considered in light of the following matters.
The first is that the home at Property S, is subject to action being taken on behalf of the mortgagee. Further, it is anticipated, as best one can understand from the material that has been filed in relation to the proceedings, that the equity in the property is negligible, if existing at all, and what is more likely is the expectation that the parties will have a continuing liability following the exercise of the power of sale and that the bank will be taking steps in relation to that.
Further, it is clear that a Holden (omitted), which appears to remain located at the Property S property, but which is unroadworthy, unregistered and uninsured is in fact subject to an (omitted) Bank loan which far outstrips any equity that might be held in the Holden (omitted).
Additionally, as noted previously, it would appear that the Mazda (omitted), the boat and trailer and the Harley Davidson have been sold, and whilst there is dispute, certainly as to what might have occurred with the moneys, the fact is that, however it may have been expended, nothing remains or at least nothing is able to be specifically pointed to as being as a result of the proceeds of those sales.
Thereafter the only information that appears to be provided is of a very limited nature in respect of small bank accounts held by the parties, again as best the wife is able to assess. In fact there are apparently significant further liabilities, including a (omitted) Finance loan, a fixed rate personal loan in the sum of approximately $2000 and a further fixed rate personal loan in the sum of $9700, which are not being serviced by either of the parties.
There are also taxation office liabilities, credit card liabilities, Telstra accounts, fines and other store accounts, all of which remain unpaid and unfortunately all of which would appear to have no likelihood of being paid by either of the parties.
What remains therefore is exactly what I have indicated earlier in these reasons, entitlements in relation to superannuation held by the husband and the wife. As I have further noted however, there is every possibility that, in fact, the husband’s superannuation entitlements go further than the entitlements in the (omitted) Super fund, but they are unknown and, undisclosed. The best assessment that can be made therefore in relation to the assets of these parties as available for distribution is only two entitlements, the (omitted) Superannuation fund in the husband’s name with a value, as at 17 June 2014, of $240,000.00, and, the wife’s entitlement in relation to superannuation, again with the best figure available being that referred to by the wife in her own material of $38,500.00
The totality of the parties’ assets therefore is $278,500.00.
The second step to be then followed through in relation to any distribution is to consider the contributions of the parties during the relationship. The husband in fact made submissions to me that the wife had been in employment for the entirety of the relationship, except for a period of a year or two prior to final separation. The wife’s evidence of course is entirely different to that, indicating as she did in her material that the relationship between the two was of what she would describe as a traditional nature and therefore one in which she performed the household tasks, including the care for children, and the husband was the primary income earner in the relationship.
Whatever might have been the case during this quite lengthy relationship and marriage, I am satisfied that each of the parties would have properly contributed in both a financial and a non-financial way as best they were able. No doubt the contributions were different and, as suggested by the husband, it may have been the case that the wife had some funds exclusively available to her. But just as clearly, the suggestions contained within the material filed by the wife are to the effect that the husband has had funds available to him and, more particularly, has been in a situation where, post separation, he has received significant funds which, as the wife suggests, have been retained solely by him.
To that end therefore I am satisfied that with such a lengthy relationship, the appropriate starting point of contributions, at least during the relationship, is an equal or 50/50 distribution to be effected between the parties. Of course there is thereafter required to be consideration of what might have been the situation post separation and to that end there is conflicting evidence available in relation to the proceedings.
The wife says that she has been left destitute, that the husband has retained the vast bulk of any assets of an immediately re-saleable and transportable nature, and that she has been left with little else.
The husband’s submission in relation to the matter is that the wife was the one who had many items, including items of property of his which he said included his toolbox and tools and a television which had been a gift and that they had all been sold. The wife says that is not the case and that if such items remain they are held at the parties’ son’s residence and that there has been, unfortunately it would appear, a deterioration in the relationship between both of the parents and the son such that he is retaining such items.
Of course the fact is that if the items are the property of persons other than the person in whose possession they currently are, then they need to be returned and I would in that instance simply suggest, that if items of property of one or other of the parties is held by their son or by any other, that they should take appropriate steps in relation to civil recovery of such items.
In any event there is a direct conflict between the evidence of the husband and the evidence of the wife as to what might have been post separation contributions. The fact is however, as I have emphasised repeatedly, that the wife has filed material and has sworn to what she says are the circumstances with regard to the retention by the husband of assets, at least having a value of somewhere in the vicinity of $50,000, and the retention entirely by him of all of the proceeds of the sale of those items.
I am satisfied that if that is the case, and in particular that neither party has made any real contributions to the payment of liabilities or obligations, that there does need to be some adjustment made, to be mindful of the fact that the husband has retained items of significant value that had been subsequently disposed of, and the only sworn evidence in relation to the proceeds of sale of those items, is that they have been retained by the husband.
I am satisfied that, whilst it is an almost impossible task to quantify what that might be, in the circumstances I am satisfied that an adjustment should be made of, say, 10 per cent to reflect that retention by the husband of the proceeds of sale of the more substantial immediately saleable assets of the relationship.
Accordingly, at least upon the basis of consideration of contribution, I am satisfied that it is appropriate that there should be an adjustment such that the final figure in relation to contribution reflects a 60 /40 distribution to be effected between the wife and the husband.
Thereafter, the third step required to be considered in relation to such proceedings is the matters that are detailed in section 75(2). In particular such circumstances were emphasised to me by the legal representatives for the wife, including particularly two points, the disparity in ages and future income earning capacities of the parties, as well as particular consideration being suggested as being necessary, with regard to the medical circumstances or health of the parties.
Section 75(2) requires that there be consideration given to the age and state of health of each of the parties. Here the wife was born in (omitted) of 1960 and therefore within a few days of hearing was to turn 54 years of age. The husband was born on (omitted) 1968 and therefore in October of the year of hearing will turn 46. There is obviously a difference therefore in ages and it does have, by inference an effect in relation to this matter because the husband, not only is younger, but also has skills which, to some extent at least, are transferable and able to be utilised by him with regard to the earning of income.
The wife, through her legal representatives, emphasised that the husband had certain qualifications which provided him with the opportunity to earn income. The husband’s response in respect of that was to say that he only had tickets with regard to operation of (omitted) and did not have other diplomas or qualifications which might make him a more employable person in the greater workforce. That might be the case, but it is certainly also necessary to consider that the husband has had a lengthy history of employment within the (omitted) industry and that past experience is something that carries some weight, in relation to future employment.
The consideration of the fact that the husband has various qualifications or tickets, which are not in any way held by the wife, is in my view a factor to be considered in relation to this matter and one which falls in favour of the wife.
There is then a need to consider issues with regard to the income property and financial resources of each of the parties. The information is sparse, but what is known, as best it can be assessed, is that neither of the parties are in receipt, at least at the present time, of income and both are in receipt, it is suggested, of benefits. Neither has any assets of any real nature available for them for the purposes of distribution and, in fact, it is a situation therefore where neither is in a place where they are able, as a result of their assets, to move their lives forward.
It is however noteworthy, that pursuant to the provisions of section 75(2)(b), there is a requirement to consider the physical and mental capacity of each of them for appropriate gainful employment and certainly the wife’s legal representatives emphasised that she had a number of health concerns which affected her capacity to earn.
Unfortunately, I commented upon this during submissions, there is no information whatsoever provided in relation to the wife’s circumstances, at least with regard to matters as to her health, and therefore correspondingly the effects that that might have upon her capacity for employment. Whilst I note that the wife therefore swears to a number of physical difficulties arising as a result of her health, it can only be in passing that consideration is given to those particular aspects of the matter, there being no specific information available of a corroborative or expert nature.
The best that is available is that which is indicated in paragraph 47 of the first affidavit filed by the wife, which is in the these terms:
I have been unable to work since 2011 as a result of ongoing affects for treatment for Hepatitis C has had on my health. I was also diagnosed with severe rheumatoid arthritis in my late 30’s which has gotten progressively worse. I also suffer from low haemoglobin, anaemia. I had been deemed permanently disabled by my treating medical practitioners. I currently take a number of medications to manage my conditions as well as attending hospital regularly for blood transfusions. I have no capacity or ability to generate an income and I am solely reliant on Centrelink payments.
I accept those statements in relation to the matter, but of course the more pressing issue is the fact that there is not that independent or corroborative evidence in relation to the matter. It makes the evidence less appealing in relation to any adjustment that might arise pursuant to the provisions of section 75(2)(b), but again it is of course a matter which is unchallenged by the husband.
Thereafter there are a number of other considerations, all of which need to be at least passingly commented upon in relation to these proceedings. In particular neither party, as best I understand it, has responsibility for the care or control of a child under the age of 18 years, nor do any of them have commitments that are necessary to enable the party to support himself, or herself, or a child, or another party that there is a duty to maintain.
There is also a need to consider the right of parties to a relationship to maintain, as best it can be hoped, a standard of living that in all the circumstances is reasonable. There is no information by the husband in relation to his circumstances, though he certainly made submissions that he was not in employment, that he was performing odd jobs for friends and family in the locality in which he was residing and that he was also dependent upon government benefits.
Whether that is the case is of course not clear in relation to this matter, but it is clear that the wife is receiving government benefits and that her situation is in fact so dire that she is residing with one of her sons and his partner, so as to not have the expense associated with attempting to accommodate herself. To that end she notes that her son and his partner each have income, but that there is no direct other assistance provided, except for the accommodation that is made available.
Suffice it to say, there are obvious concerns in relation to the future needs of each the of parties and the disparity, both in the future income earning capacity of the parties and the expectations of what life might hold for each of the parties. It is, as I have indicated, difficult to make any other assessment in relation to what might be appropriate in relation to a distribution to be effected between the parties, but in this matter I am satisfied that at least some small adjustment should properly be made in relation to the entitlements of the wife.
To that end, I intend to effect a further five per cent adjustment in relation to the wife, such that the final distribution of the limited assets available for distribution primarily, if not exclusively, superannuation entitlements, is 65/35 in favour of the wife. Such a distribution can easily be effected in relation to this matter pursuant to the making of a splitting order which actually makes reference to a specific figure to be effected as a distribution between the husband and the wife. 65 per cent of the total superannuation sum available in relation to this matter is $181,025.00.
The wife retains, as she indicates in her affidavit, $38,500.00 and to effect a 65/35 split in favour of the wife of the superannuation entitlements of both the husband and the wife, it will be necessary to effect a splitting order in accordance with the provisions of section 90MT(4) of the Family Law Act, in the following sum $142,525.00.
I am satisfied that that effects a just and equitable distribution and conclusion of the financial circumstances between the parties, being mindful of the fact that there has been limited, if any, information disclosed by the husband, in relation to the proceedings and of course therefore needing to consider what is appropriate in all the circumstances with regard to this matter.
Otherwise I am satisfied that the appropriate and proper orders are simply that each party otherwise retain all items of property in their possession as and for their own property absolutely and that each party indemnify and keep indemnified the other party in relation to any liability attaching to property retained by them.
I intend also to make the normal section 106A order in relation to the appointment of the registry manager of the Federal Circuit Court of Australia in Townsville as being empowered to execute any deed or instrument as is required to be executed, to bring into effect the terms of these orders when there has not been compliance by one or other of the parties in relation to the proceedings.
Finally, it should be noted that the wife seeks an order that the husband pay the wife’s costs of and incidental to these proceedings. Of course there is, with respect, little likelihood that the husband will make such a payment in relation to this matter, but whether or not the husband will make the payment or whether or not the husband has the capacity to make the payment is entirely different to whether it is appropriate to make a costs order, in relation to proceedings.
Here there are considerations that must be looked at pursuant to the provisions of section 117 of the Family Law Act. In that regard I am mindful of course of the provisions of subsection (1) and of the general presumption that each party to proceedings should bear his or her own costs. However, as is the situation in life, for every rule there is an exception, and subsection (2) recognises, in circumstances where it is appropriate and the court is of the opinion that there are circumstances that justify it in doing so, the court may make such order as to costs and security for costs, whether by way of interlocutory order or otherwise as the court considers just.
If it is considered that an order for costs should properly be at least looked at, then the court is required to have regard to those matters that are set out in section 117(2A) of the Family Law Act. Section 117(2A) is in these terms:
117(2A) In considering what order (if any) should be made under subsection (2), the court shall have regard to:
(a)the financial circumstances of each of the parties to the proceedings;
(b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f)whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the term of any such offer; and
(g)such other matters as the court considers relevant.
Relevant here in particular is subsection (c). The husband was approached repeatedly in terms of attempting to resolve in the issues in dispute between he and the wife. He failed completely to cooperate in relation to negotiations and it is simply insufficient and falls far short of what would properly be expected, to suggest that because no legal assistance was apparently able to be found by the husband, that there should not be any requirement for him to comply with orders.
The conduct of the husband from November of 2013 until April of 2014, when the proceedings were finally filed by the wife, are clearly an indicator of the fact that there was no alternative open to the wife, in relation to the bringing of the proceedings in this matter. That factor, of its very nature, is most significant in relation to the proceedings.
Additionally the court is required to give consideration to whether a party to the proceedings has been wholly unsuccessful or, correspondingly wholly successful in proceedings. It could not be suggested that the wife has been wholly successful in relation to these proceedings, but by the same token she has at least met with some significant measure of success, in relation to the proceedings and, as I of course noted, there was no alternative open to her in relation to this matter when the husband simply refused to properly enter into negotiation or to properly engage after the commencement of proceedings, in the negotiations that were necessary to lead to a resolution.
Those two factors loom large in relation to this matter and I am satisfied that in the circumstances therefore, it is appropriate that an order should be made with regard to the payment of costs in relation to the proceedings.
To that end, I am mindful of the circumstances that exist with regard to costs and of course the event based considerations that arise with regard to proceedings in this court, particularly with regard to family law proceedings. Here the wife has been required to initiate proceedings, including the institution of proceedings seeking interim orders, though they never came to fruition, again as a result of the failure of the husband to engage in the proceedings. Additionally, there have been a number of appearances required in relation to the matter and, finally, the preparation, albeit of a limited nature, in relation to the undefended hearing and the attendance before the court on the final hearing of the matter.
It is an imprecise science that needs to be considered, in relation to determination of costs and the exercise of discretion by the court is, in my view, an appropriate basis upon which it can be determined that a payment should be made, rather than put the parties to further expense, particularly when, as I have indicated, there are real suspicions that the husband will not cooperate, with regard to making any payment.
I am of the view that an order should be made for the husband to make a payment towards the wife’s costs fixed in the sum of $5000. Upon the basis that such sum will in all likelihood not be paid, then that the wife have the addition of a further sum of $5000.00, to the amount to be split from the husband’s superannuation entitlements.
I am satisfied that that again reflects a just and equitable resolution of issues, both in relation to property and costs, and most particularly provides the wife with the greatest opportunity of at least at some stage in the future recovering some amount in relation to the expenses which she has been forced to incur, as a result of the husband’s reluctance to engage in any proper way in relation to the proceedings.
The orders of the court will therefore be as I have indicated in relation to this matter and noted at the commencement of these reasons.
I certify that the preceding ninety-five (95) paragraphs are a true copy of the reasons for judgment of Judge Coker
Associate:
Date: 6 November 2014
Key Legal Topics
Areas of Law
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Family Law
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Statutory Interpretation
Legal Concepts
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Costs
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Remedies
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Statutory Construction
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