sutton & sutton and anor
[2012] FamCA 454
•8 June 2012
FAMILY COURT OF AUSTRALIA
| sutton & sutton and anor | [2012] FamCA 454 |
| FAMILY LAW ─ PROPERTY SETTLEMENT ─ Whether, if undisturbed, the orders of the Local Court made in 1997 preclude the making of orders for settlement of property pursuant to s 79 of the Act ─ Whether, if in order to enliven jurisdiction pursuant to s 79 of the Act, the orders of the Local Court made in 1997 must first be set aside, such orders should be set aside pursuant to s 79A of the Act ─ Whether, if the orders of the Local Court made in 1997 are not set aside, the wife should be granted an extension of time to appeal against the 1997 orders pursuant to s 96 of the Act, and, if such leave be granted, whether the wife’s appeal should succeed ─ Whether, if jurisdiction pursuant to s 79 of the Act is enlivened, the transfer by the husband to the second respondent of a one half interest in the property at Suburb A if undisturbed, would defeat the wife’s claim pursuant to s 79 of the Act and should thus be set aside pursuant to s106B of the Act ─ Whether if jurisdiction pursuant to s 79 is enlivened, the orders for settlement of the property of the parties which are just and equitable |
| Acts Interpretation Act 1901 (Cth) s 15AA Evidence Act 1995 (Cth) s 140 Family Law Act 1975 (Cth) ss 4(ca), 8(1)(a), 75(2), 79, 79A, 93A, 106B |
| Allesch v Maunz (2000) 203 CLR 172 Bevan v Bevan (1995) FLC 92-600 Brett-Hall v Brett-Hall (2006) FLC 93-276 Briginshaw v Briginshaw (1938) 60 CLR 336 Browne v Dunn (1893) 6 R 67 CDJ v VAJ (1998) 197 CLR 172 Clauson and Clauson (1995) FLC 92-595 Coghlan & Coghlan (2005) FLC 93-220 Gabel and Yardley (2008) FLC 93-386 Gallo v Dawson (1990) 93 ALR 479 Gollings v Scott (2007) FLC 93-319 Harris v Caladine (1991) 172 CLR 84 Hickey and Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 Housing Commission of NSW v Tatmar PastoralCo Pty Ltd (1983) 3 NSWLR 378 Jarrott & Jarrott [2012] FamCAFC 29 Jones v Dunkel (1959) 101 CLR 298 Kwon & Lee (2006) FLC 93-287 Lindon v Commonwealth of Australia (No 2) (1996) 136 ALR 251 Mallett v Mallett (1984) 156 CLR 605 Mullane v Mullane (1983) 158 CLR 436 Norbis v Norbis (1986) 161 CLR 513 Pettitt v Dunkley (1971) 1 NSWLR 376 Pflugradt & Pflugradt (1981) FLC 91-052 Rosati v Rosati (1998) FLC 85-043 SCVG & KLD [2011] FamCAFC 100 Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 Spencer v The Commonwealth of Australia (2010) 241 CLR 118 State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in liq) and Others (1999) 160 ALR 588 The Commissioner of Taxation of the Commonwealth of Australia vSt Helen’s Farm (ACT) Pty Ltd (1981) 146 CLR 336 Waters & Waters (1981) FLC 91-019 WJ Munro v Commissioner of Land Tax; Rymill v Commissioner of Taxation, Valuer 1/10/1930 |
| APPLICANT: | Ms J Sutton |
| FIRST RESPONDENT: | Mr D Sutton |
| SECOND RESPONDENT: | Ms Dixon |
| FILE NUMBER: | SYC | 1584 | of | 2010 |
| DATE DELIVERED: | 8 June 2012 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Coleman J |
| HEARING DATE: | 19, 20, 21 & 23 March 2012 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr John Lloyd SC |
| SOLICITOR FOR THE APPLICANT: | E.H. Tebbutt & Sons |
| COUNSEL FOR THE FIRST RESPONDENT: | Mr Robert Lethbridge SC |
| SOLICiTOR FOR THE FIRST RESPONDENT: | Barkus Doolan Kelly |
| COUNSEL FOR THE second RESPONDENT: | Mr David Dura |
| SOLICiTOR FOR THE second RESPONDENT: | Meyer Partners Family Lawyers |
Orders
That to the extent necessary to enliven the jurisdiction of the Court pursuant to Part VIII of the Family Law Act 1975 (Cth), the orders of the Local Court at … made on 20 March 1997 and engrossed on 24 March 1997 be set aside pursuant to s 79A.
That, to the extent necessary to enliven the jurisdiction of the Court pursuant to Part VIII of the Family Law Act 1975 (Cth), and in the alternative to order 1 hereof, the wife be granted an extension of time to appeal against the orders of the Local Court at … made on 20 March 1997 and engrossed on 24 March 1997 pursuant to s 96 of the said Act, and such appeal be allowed, and the said orders be set aside or discharged.
That the Husband do all acts and things and execute all documents necessary to cause the property known as and situate at Property 1, C Street, Suburb N for the best price reasonably obtainable at or above the sum of $1,500,000, or such other price as the parties agree, and upon sale cause the proceeds to be applied as follows:
(i)costs of sale including agent’s commission and costs of the conveyance;
(ii)water and council rates adjustments;
(iii)to discharge the mortgage over Property 1, C Street, Suburb N in the approximate sum of $660,425;
(iv)to pay the balance of the proceeds of sale to the wife as to 94% and the husband as to 6%.
That pending completion of the sale of Property 1, C Street, Suburb N, the husband pay all mortgage instalments, council, and water rates with respect to the said property.
That pending completion of the sale of Property 1, C Street, Suburb N, the husband pay all mortgage instalments, council, and water rates with respect to the property at Property 2, C Street, Suburb N.
That the husband be solely liable for and indemnify the wife in respect of the following:
(i)the loan from Mr P to the husband;
(ii)the loan from Ms K Sutton and Mr H Sutton to the husband;
(iii)any loan from the second respondent to the husband; and
(iv)the husband’s credit card debts.
That the husband forthwith do all acts and things and sign all documents necessary to list the Type D Boat for sale by public auction with such auctioneer as agreed within 14 days of these Orders between husband and wife and failing agreement with an auctioneer nominated in writing by Mr M (valuer) on the following terms:
(i)the auction shall take place on the date nominated by the auctioneer;
(ii)the reserve price for the auction shall be $405,000;
(iii)each party shall be at liberty to bid at any auction;
(iv)in the event any bid at or above $405,000 is received at or after the auction, the husband shall accept the offer;
(v)if the vessel does not sell at the first auction or within 21 days thereafter, it shall be listed for sale by further public auction on a date nominated by the same auctioneer and at that subsequent auction there shall be no reserve price; and
(vi)on sale, the proceeds be applied as follows:
a.auction expenses (including advertising) and commission on sale;
b.reimburse the husband for any mooring costs incurred from 23 March 2012 to date of transfer of ownership of the boat;
c.reimburse the husband for any cleaning and maintenance costs incurred for the boat from 23 March 2012 to date of transfer of ownership of the boat;
d.the balance thereafter as to:
i.60% to the wife; and
ii.40% to the husband.
That in respect of the husband’s entitlements as at 31 December 2011 in the Company E Profit Share (“pre-2012 PS”) as described in paragraph C.1 of the report dated 14 March 2012 of Mr S (it being NOTED any further PS allocations to the husband subsequent to 31 December 2011 are to be retained solely by him):
(i)the husband shall retain the pre-2012 PS on the terms and conditions set out herein and not otherwise deal with it;
(ii)in the event that the husband becomes entitled to and does in fact receive any amount or amounts referrable to his pre-2012 PS allocation, then he shall upon receipt of same (or any part thereof) after payment of all relevant tax by him pay in each case 50% of same to the wife and shall retain 50% of same for himself; and
(iii)in the event that the husband receives notice that he will receive any part of his pre-2012 PS entitlement, he shall forthwith provide the wife notice in writing of same together with copies of all documents in respect of such matters and any calculations done of the amount received by the husband and/or the taxation applicable to same.
That in respect of the husband’s entitlements as at 31 December 2011 in the Company E Share Plan (“pre-2012 SP”) as described in paragraph D.1 of the report dated 14 March 2012 of Mr S (it being NOTED any further SP allocations to the husband subsequent to 31 December 2011 are to be retained solely by him):
(i)the husband shall retain the pre-2012 SP allocation on the terms and conditions set out herein and not otherwise deal with it;
(ii)in the event that the husband becomes entitled to and does in fact receive any amount or amounts referrable to his pre-2012 SP allocation, then he shall upon receipt of same (or any part thereof) after payment of all relevant tax by him pay in each case 50% of same to the wife and shall retain 50% of same for himself; and
(iii)in the event that the husband receives notice that he will receive any part of his pre-2012 SP entitlement, he shall forthwith provide the wife notice in writing of same together with copies of all documents in respect of such matters and any calculations done of the amount received by the husband and/or the taxation applicable to same.
That the husband pay the wife the sum of $3,000 per calendar month by way of interim spousal maintenance until:
(i)the 30 June 2013, or
(ii)the receipt by the wife of her entitlement pursuant to order 7 hereof, whichever shall first occur.
That the wife’s application for orders pursuant to the Child Support (Assessment) Act 1989 (Cth) be dismissed.
That all prior existing financial orders be discharged.
That, save in relation to costs, all outstanding applications and cross applications be dismissed.
That costs be reserved.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Sutton & Sutton and Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| Family Court of Australia at Sydney |
FILE NUMBER: SYC 1584 of 2010
| Ms J Sutton |
Applicant
And
| Mr D Sutton |
First Respondent
And
| Ms Dixon |
Second Respondent
REASONS FOR JUDGMENT
introduction
By further Amended Initiating Application filed 5 August 2011, Ms J Sutton (“the wife”) sought orders for settlement of property pursuant to Part VIII of the Family Law Act 1975 (Cth) (“the Act”) against Mr D Sutton (“the husband”) and Ms Dixon (“the second respondent”) in the following terms:
1. That pursuant to s.79(1A) of the Family Law Act, the orders made in the Local Court at […] on 24 March 1997 be set aside.
2. That in the alternative to Order 1 herein, pursuant to s.79(1)(a) of the Family Law Act, the Orders made in the Local Court at […] on 24 March 1997 be set aside.
3. That the wife be granted leave to extend the time for the filing of an Appeal made from the Orders made in the Local Court at […] on 24 March 1997 to a time contemporaneously with the making of this Order, such Notice of Appeal in draft form being annexed to these Orders and Marked “A”.
4. That pursuant to s.106B of the Family Law Act, the transfer by the husband of a one half interest in the property situate and known as [B Street, Suburb A] on 30 June 2010 be set aside.
5. That by way of implementation of Order 4, [Ms Dixon] forthwith do all such things and sign all such documents as are necessary to reconvey to the husband her one half interest in the said [Suburb A] property.
6. That the husband forthwith do all things as are necessary to execute all documents so as to assign and transfer to the wife free of encumbrances the adjoining Lot to the home being the whole of the land contained in Folio Identifier […] (“the tennis court”).
7. That the husband pay within 28 days to the wife, by way of s.79 of the Family Law Act, the sum of $1,000,000.
8. That the husband pay within 28 days, by way of lump sum maintenance for the wife, the sum of $1,000,000.
9. That in the alternative to Order 8, the husband pay, by way of periodic maintenance for the wife, direct to the wife or to the credit of such account with such financial institution as she may direct by way of spousal maintenance for the wife the sum of $1,600.00 per week, the first of such payments to be made on the first day of each month. The order be retrospective from 17 May 2010.
10. That pending the husband complying with Orders 6, 7 and 8, the husband be restrained from further transferring, assigning, mortgaging or adversely affecting or dealing with the property situate and known as [B Street, Suburb A] save and except to comply with these orders, and shall otherwise pay as and when they fall due instalments in respect to any mortgage secured upon the said property, rates, taxes and other outgoings in respect to the said property.
11. That in the event the husband fails to comply with Orders 6, 7 and 8 hereof, or any of them, then forthwith upon such failure the wife be appointed Trustee, on behalf of the husband, for the purposes of forthwith selling the [Suburb A] property and shall apply the proceeds of sale of the [Suburb A] property as follows:-
(a)in payment of any mortgage secured upon the property;
(b)in payment of any costs incurred in relation to the said sale or the wife’s conduct as the Trustee;
(c)in payment of an amount sufficient to discharge any mortgage secured upon the [C Street, Suburb N] and ‘tennis court’ property, and
(d)in payment to the wife of any sum due pursuant to Orders 7 and 8 herein together with any interest accruing on same, and
(e)in payment of the balance to the husband
12. An order by way of non-periodic child support departure, in addition to any administrative assessment of periodic support payable by the husband to the wife for the benefit of the child [L] born on […] October 1994, that the husband pay all dental, medical and education expenses of the child as and when they fall due including but not limited to school and tuition fees, school uniforms, text books, stationery, levies, building fund contributions, other books, such order to continue until the happening of a child support terminating event.
13. That [Ms Dixon] pay the wife’s costs of these proceedings in the event she opposes the relief pursuant to s.106B of the Act.
14. That the husband pay the wife’s costs of and incidental to these proceedings on an indemnity basis.
The husband opposed the relief sought by the wife and, by his Amended Response filed on 17 November 2010 sought orders in the following terms:
1. That the wife’s Application Initiating Proceedings filed 17 May 2010 be dismissed.
2. That the wife pay the husband’s costs of these proceedings.
The husband in his response to the further Amended Initiating Application filed by the wife on 5 August 2011 sought orders in the following terms:
1. That the orders sought in paragraph 4, 5, 7, 8, 9, 10, 11 and 13 be dismissed.
2. That the applicant wife pay the second respondent’s costs.
[Response to Further Amended Initiating Application filed on 30 September 2011].
The second respondent supported the husband’s case and sought orders substantially in the same terms as the husband sought.
The issues emerging from the pleadings can be articulated as: -
(i)whether, if undisturbed, the orders of the Local Court made on 20 March 1997 and engrossed on 24 March 1997 preclude the making of orders for settlement of property pursuant to s 79 of the Act.
(ii)whether, if in order to enliven jurisdiction pursuant to s 79 of the Act, the orders of the Local Court made on 20 March 1997 and engrossed on 24 March 1997 must first be set aside, such orders should be set aside pursuant to s 79A of the Act,
(iii)whether, if not set aside, the wife should be granted an extension of time to appeal against the March 1997 orders pursuant to s 96 of the Act, and, if such leave be granted, whether the wife’s appeal should succeed
(iv)whether, if jurisdiction pursuant to s 79 of the Act is enlivened, the transfer by the husband to the second respondent of a one half interest in the property [B Street, Suburb A] if undisturbed, would defeat the wife’s claim pursuant to s 79 of the Act and should thus be set aside pursuant to s106B of the Act.
(v)If jurisdiction pursuant to s 79 is enlivened, the orders for settlement of the property of the parties which are just and equitable.
material facts
Some material facts provide background to the proceedings. The material facts recorded below reflect the Court’s preference for the evidence of the wife to that of the husband where the two are in conflict, and documentary or other circumstantial evidence does not impact upon the probabilities.
The husband was born in October 1958. He is accordingly 53 years of age.
The wife was born in 1959. She is accordingly 52 years of age.
The parties married in 1984.
The husband asserts that, albeit under the one roof, the parties separated in 1997. The wife asserts that the parties cohabited until late 2007.
The cohabitation is accordingly of 23 or 13 years duration, depending upon which party’s version of events is preferred.
There are two children of the marriage, T born in February 1988 and L born in October 1994. The children are respectively aged 24 and 17 years.
T is self-supporting. L will complete the HSC at the end of this year.
The second respondent was born in 1972. She is accordingly 40 years of age. The husband commenced a de facto relationship with the second respondent in about October 2007. There is one child of that relationship, F, who was born in July 2009. F is 2 years and 10 months old.
At the date of marriage, the wife was a qualified teacher in full time employment. The wife has not had full time employment since the birth of the parties’ first child, T, in 1988. Since 1994 the wife has not had any employment.
At the date of marriage, the husband was a self-employed legal professional, which he had been since approximately 1983.
The evidence does not reveal, and no party asserts, that at the date of marriage either party had materially greater assets than the other. What the parties currently have is what their efforts subsequent to their marriage have produced. The wife may have had assets worth slightly more than those of the husband at the date of marriage, but, on any view of it, their combined assets at that time were modest.
The parties lived in rented accommodation until 1987, at which time the first matrimonial home was acquired at I Street, Suburb G. The purchase price of the property was $131,000, the bulk of which was borrowed. A modest amount was provided by the parties from the savings they had by then accumulated.
In 1989, the I Street property was sold for $180,000. A property at W Street, Suburb O was purchased for $225,000. The net proceeds of sale of the I Street property were applied towards the purchase of the W Street property. A mortgage advance of approximately $130,000 was obtained from the Commonwealth Bank of Australia (“CBA”) to complete the purchase.
In 1990, the W Street property was sold for $240,000. A property at V Street, Suburb Q was then purchased for $320,000. The net proceeds of sale of the W Street property were applied towards the purchase of V Street, together with a mortgage advance of approximately $195,000. The wife applied an inheritance of $10,000 towards the mortgage secured over the V Street property.
In 1993-1994, the husband left his employment as a legal professional at Company R. The husband had commenced such employment in 1985. After a brief period of time with Company U, the husband commenced to be a salaried partner at Company X.
On 24 March 1997, consent orders made on 20 March 1997 were engrossed in the Local Court. The wife’s case is that the orders were made to insulate the matrimonial assets from any potential liability of the husband resulting from the husband, or another member of the professional business in which he was then a partner being successfully sued for professional negligence. The husband’s case is that the orders were intended to be a final settlement of property as between the parties. For reasons which will be detailed later, the Court finds that consent orders were entered into for the reasons asserted by the wife.
Subsequent to the making of the orders, and until late 2007, the parties continued, with their two children, to occupy the same premises, subject to the husband’s absences from time to time after 2000 in the course of his employment by entities controlled by or associated with Company E.
In 1998 the parties and their children inspected the premises Property 1 and 2, C Street, Suburb N. There was a dwelling house on Property 2, (“the matrimonial home”). A tennis court stood on Property 1, (“the tennis court”). The parties purchased the two properties for a total consideration of $1,650,000. The parties attributed a consideration of $825,000 to each property. The matrimonial home was acquired in the wife’s name. The tennis court was acquired in the husband’s name.
The wife’s father advanced the 10 per cent deposit payable on the exchange of contracts for the acquisition of the two properties. That sum was subsequently reimbursed by the parties when they completed the sale of their Suburb Q property for $578,000.
The parties borrowed $1.1M from the National Australia Bank (“NAB”) to complete the acquisition of the two properties in C Street. Mortgages were taken over both properties by the NAB, the consideration expressed in the mortgage over the tennis court (which was registered in the husband’s name) being $885,000. The sum of $215,000 was secured over the matrimonial home (which was registered in the wife’s name). The husband and wife each guaranteed his or her borrowing, and the borrowings of his or her spouse. The matrimonial home became, and remained, the residence of the parties and their children until 2007. The wife, and at least the younger child of the marriage, have continued to occupy the premises since that time.
In 2000, the husband ceased to practice as a legal professional in partnership with others at Company X, and joined Company E as a corporate advisor.
In August 2001 the husband acquired the property at Lot 1, Y Street, Suburb Z for $705,000 and a property at Lot 2, Y Street, Suburb Z for $145,000. The husband applied a combination of savings and funds drawn against the tennis court to complete the purchases.
In September 2006 the husband purchased for the wife a new BMW motor vehicle at a cost of $76,915.
In December 2006 the husband accepted a transfer to Europe with company E. In his absence, the wife managed the rental of the Suburb Z properties.
In about September 2007, the husband was transferred to European Country AA by Company E. In October 2007 the husband commenced living in a de facto relationship in Europe with the second respondent.
In about November 2007, the husband and wife informed their children T and L that they were separating.
In 2007 the husband placed an order for a Type D boat to be custom built in Europe. The purchase price of the Type D boat was $720,000. In late 2007/early 2008, the Type D boat was available for delivery. The boat which the husband had previously acquired was sold for approximately $290,000. The husband re-drew against the matrimonial home approximately $280,000. These funds were applied to complete the purchase of the European custom built Type D boat.
Subsequent to the commencement of his de facto relationship with her, the husband supplied the second respondent with capital sums on a number of occasions. On 12 November 2007 the husband provided the second respondent with €20,000, on 17 June 2008 with €18,000, on 30 January 2009 with €8,000, 28 April 2009 with €11,000, in June 2009 with €98,000 to complete the purchase of a home unit in Germany. On 8 August 2009 the husband further provided €28,000, on 17 October 2009 €21,000, on 28 October 2009 €28,000, on 1 December 2009 €15,000, on 7 April 2010 €10,000, on 19 May 2010 €10,000, and on 3 August 2010 €19,000. These funds total €188,000, a sum in excess of A$400,000.
In January 2010 the husband sold the Suburb Z properties for $815,000 and $175,000 respectively. The proceeds of such sales were probably applied towards the purchase of property at B Street, Suburb A (“B Street”) for $3,550,000. The husband borrowed $1.7M from the NAB to complete the purchase. The balance of the purchase price was provided by the husband from capital or other funds which were, or became available to him.
On 15 April 2010 the husband forwarded to his parents in Australia $214,565 for the payment of Stamp Duty, which approximated $189,108, and other expenses referrable to the B Street acquisition. That sum was subsequently repaid.
On 6 May 2010 the husband received approximately $242,281 from the proceeds of sale of shares in Company E which he applied in part reduction of the $1.7M advance to him from the NAB secured over the B Street property. On 12 May 2010 the husband further reduced his indebtedness to the NAB by paying to it $167,490.
The husband expeditiously caused the mortgage over the B Street property to be discharged, in order that he could transfer a one half interest in it to the second respondent. This he did in mid 2010, for no consideration, at a time when, to his knowledge, the wife had applied for a settlement of property.
On 15 August 2010 the husband borrowed $250,000 from his sister Ms HH. The same day the husband borrowed $100,000 from H & K Sutton Pty Ltd, a corporation owned or controlled by the husband’s parents. $48,000 of that sum was repaid to the company on 14 January 2011, $52,000 being repaid on 17 January 2011.
During 2011 and 2012, the husband and the second respondent have borrowed against the B Street property. The husband has borrowed approximately $140,000 from H & K Sutton Pty Ltd. The receipt of funds and their utilisation by the husband during 2011 and in the months of 2012 preceding the trial have received considerable scrutiny at trial.
credibility
As recorded earlier, where the evidence of the husband and the wife is in conflict, and there is no documentary or other circumstantial evidence impacting upon the probabilities, the Court prefers the evidence of the wife to that of the husband.
Although not resiling from the substance of her major allegations of fact, in cross-examination the wife revealed herself to be responsive to questions, and willing to make concessions where concessions were appropriate. The wife was not contradicted in any material respect in relation to her version of events surrounding the March 1997 consent orders or the parties’ relationship in the decade which followed. The Court regards the wife as a witness of truth.
The authorities’ caution that in exercising its fact finding function, the Court should avoid undue reliance upon the demeanour of witnesses whose credibility falls for consideration. In State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in liq) and Others (1999) 160 ALR 588 Kirby J said, at pages 617-618, that:
88. ...
4. There is a growing understanding, both by trial judges and appellate courts, of the fallibility of judicial evaluation of credibility from the appearance and demeanour of witnesses in the somewhat artificial and sometimes stressful circumstances of the courtroom. …
The Court does not understand however that the component of “the trial judge’s advantage” over appeal courts which is represented by the opportunity to hear and observe witnesses give evidence has been entirely denied to trial Judge’s. Where the evidence involves a conflict of oaths in relation to an issue about which only two people really know the truth, demeanour remains a matter to which the Court can properly have some regard. The evidence given by the wife, and her demeanour whilst giving that evidence was redolent of the truth.
Ultimately, as will be seen, the Court’s findings do not require significant reliance upon the wife’s demeanour, but the reality remains that the wife’s demeanour when giving evidence, particularly when contrasted with that of the husband, reinforces the Court’s comfortable satisfaction that her version of disputed events is entitled to be preferred to that of the husband where the two are in conflict, and no documentary or other circumstantial evidence impacts upon the probabilities.
The husband was evasive in cross-examination, frequently seeking to rationalise the answers which he was obliged to give. Notwithstanding that, quite appropriately, his learned Senior Counsel directed no questions to the wife with respect to her contributions as homemaker and parent, and they had in fact been largely conceded in the husband’s affidavit of evidence-in-chief, the husband gratuitously and non-responsively, criticised the wife’s parenting in numerous respects during the course of his cross-examination.
Some of the husband’s assertions in cross-examination were inherently improbable, and the husband must have known that to have been the case. Despite the submissions of his learned Senior Counsel, perhaps the most graphic example in this regard was the evidence of the husband whereby an external joint and several borrowing by himself and the second respondent of $500,000 became, as a result of an agreement asserted by him between himself and the second respondent, a liability of the husband of $750,000.
Notwithstanding that he has been a qualified legal professional for almost three decades, the temptation to give non-responsive answers and make advocate’s speeches frequently proved irresistible to the husband. Although not indicative of mendacity, the husband’s failure to more adequately reveal the details of movements of substantial amounts of money which passed through his hands after late 2007 renders caution appropriate in relation to his evidence with respect to controversial issues.
The second respondent was not cross-examined in relation to the affidavit evidence given by her. Ultimately, with respect to her, no relevant finding of fact turns upon any evidence given by the second respondent. Her evidence can be accepted.
The wife’s father, Mr TT, impressed as a witness of truth. At times, his recollection of events was vague in ways which, having regard to the antiquity of the events in question, and Mr TT’s age were understandable, and not inconsistent with his evidence being truthful.
There is a significant matter however, which does not rely upon acceptance of Mr TT’s evidence. The husband did not dispute that he and the wife had been at Mr TT’s home at the time when Mr TT witnessed the signatures of the husband and wife on documents relevant to the March 1997 consent orders. The husband clearly denied the substance of the wife’s and Mr TT’s version of events at that time. However, no alternate explanation for the execution of the documents was ever suggested to Mr TT, or otherwise advanced by the Husband. That is particularly significant given the husband’s assertion, which was robustly agitated by his learned Senior Counsel during cross-examination of the wife, that the documentation had been pursuant signed to orders for settlement of property, and the breakup of the marriage of the husband and Mr TT’s daughter.
There is accordingly, apart from the absence of anything intrinsic to Mr TT’s evidence which provides a basis for rejecting it, no reason having regard to the terms of the cross-examination of him, for not accepting his evidence. Although not necessary to do so, the decision in Browne v Dunn (1893) 6 R 67 could be relied upon to support acceptance of Mr TT’s version of the circumstances of the signing of the documents.
A number of witnesses whose affidavit evidence was not challenged are entitled to have such evidence accepted. That evidence will later be referred to, principally in the consideration of the husband’s earning capacity in the context of s 75(2) of the Act.
the 1997 consent orders
Pivotal to the determination of the proceedings is the Court’s conclusion with respect to the 1997 Local Court orders. It is convenient to record the terms of those orders. They provided:
1. That within 28 days of the date of the making of these orders, or such other date as the parties agree in writing the husband shall do all necessary acts and things and sign all necessary documents to transfer to the wife the whole of his right title and interest in the property known as [V Street, Suburb Q] and described as folio identifier […] (“the property”).
2. Upon the transfer, the wife shall attend to the payment of all mortgage payments, rates, taxes and statutory charges in relation to ownership of the property and its transfer pursuant to these orders.
3. Otherwise than is provided in these orders each party is declared to be the sole and absolute owner of all other items or real and personal property in their respective possessions or under their respective controls including any superannuation entitlements standing in their respective names as at the date of these orders, for the purposes of Part VIII Family Law Act, 1975.
As noted earlier, the court prefers the wife’s version of the circumstances in which the 1997 consent orders were made to that of the husband. Such conclusion is partly reliant upon the Court’s preference for the version of events of the wife, corroborated by her father, to that of the largely uncorroborated version of the husband. The preponderance of other uncontroverted evidence is more consistent with the wife’s version of the events surrounding the making of the 1997 orders than with that of the husband.
The application for consent orders, which the husband was responsible for the preparation of, did not suggest that the parties were separated. That was a significant omission. Also omitted from the original document were pages 4, 5 and 6. Having regard to the terms of those documents, such omission was significant. Nor did any statement of financial circumstances or anything in substance constituting such a statement appear at any time in the document, notwithstanding that the document contended the contrary. Those omissions were significant.
The wife’s evidence, which was not challenged, was that she conferred with a solicitor, who is now deceased, for a period well short of 30 minutes on one occasion only, at which time she signed the application for consent orders. The wife’s evidence, which there is no reason to reject, and which is corroborated in numerous respects, was that she informed the solicitor that she needed the document signed for the purpose she has consistently asserted.
Inaccuracies, inadequacies and omissions in the document, which are not in dispute, the reality that only the briefest of consultations occurred with the solicitor, and that no charge was rendered for such consultation, are all consistent with the wife’s assertion that she did not receive any legal advice in relation to the nature and effect of the terms which she executed. There is no reason to reject the wife’s assertions in that regard in any event.
In the course of cross-examination, the husband conceded that he had not made any attempt to locate the solicitor who allegedly advised him in relation to the consent orders. The identity of the solicitor was not in doubt. It could be argued that Mr Barham, the husband’s solicitor at the time of the consent orders was not called to give evidence because any evidence he gave would not have been helpful to the husband’s case (see Jones v Dunkel (1959) 101 CLR 298).
In essence, Senior Counsel for the husband submitted that there was no reason to go behind the certificate which the husband had given as he did not assert the absence of the advice referred to in it. That submission overlooks the reality that the issue of fact in relation to the making of the orders made relevant the advice which the parties had received, or not received, not in relation to the accuracy or otherwise of such advice, but whether it had been given, or not given. Rather than draw a Jones v Dunkel (supra) inference, the husband’s allegation that he knew the nature and effect of the orders, and had been so advised remains uncorroborated by a person who could have done so.
The witness to the husband’s signature on the 1997 documentation, his then partner in professional business, Mr SS, swore an affidavit in the proceedings. In that affidavit, all that Mr SS asserted was that the husband had said: “I’ve been having some marital problems. I’m doing a financial settlement with my wife. Would you mind witnessing my signature on a document?”. Sensibly, having regard to his evidence in chief, Mr SS was not required for cross-examination. What Mr SS recorded the husband as saying is more significant for what was not than for what was said. Given what the Court finds to have been the husband’s motivation to enter into consent orders, it is perhaps unsurprising that the husband would say what Mr SS says he did. Finding, as there is no reason not to, that the representation recorded by Mr SS was made, does not establish the truth of what was represented by the husband. The preponderance of evidence in support of finding that the terms were not intended to be a financial settlement between the parties precludes finding that they were so intended.
The circumstances surrounding the execution of the Transfer of the then matrimonial home from the parties’ joint names into the name of the wife are significant. The wife and her father gave evidence of a conversation at a time when it was not in dispute that the husband, wife and the wife’s father were all present in the wife’s father’s home. On that occasion the wife’s father witnessed the signatures of the husband and wife on the relevant Memorandum of Transfer.
In cross-examination, Senior Counsel for the husband suggested to the wife and her father that the husband had not heard the conversation which they asserted. Unsurprisingly in those circumstances, Senior Counsel for the husband could not assert that the conversation did not occur. There is no rational basis for rejecting the assertion of the wife and her father that the conversation occurred in the terms which each allege.
Whilst the husband adhered to his assertion that he had not heard a conversation between his wife and her father at the time the transfers were signed, he offered no evidence whatsoever as to how the parties came to have the wife’s father witness their signatures.
The husband’s evidence suggests that the Transfer was signed in a vacuum. It is inconceivable that someone would not have told the wife’s father, however briefly and simply, why the Transfer was being signed, or, advanced a previously agreed pretext for doing so if wishing to spare Mr TT the hurt of learning, as the husband alleges, that the marriage of his daughter was over. Whether the husband heard the conversation between the wife and her father or not, the reality is the husband’s evidence is completely silent as to what Mr TT was told were the reasons for signing the documents. That silence is significant.
Three matters of significance are revealed by the evidence in relation to the acquisition of the C Street properties. The first is that, although the husband was then a practising legal professional and a partner in a business of legal professionals, and notwithstanding his assertion that he and the wife were at that time separated under the one roof, there is no evidence that the husband suggested to the wife that she obtain independent legal advice in relation to the acquisition of the C Street properties. Nor is there any suggestion that the solicitor who acted for the parties on the purchase was informed that the parties were asserted, at least by one of them, to have been separated. That is consistent with the wife’s assertion that the parties were still living together.
The second matter of significance in relation to the transactions is that the tennis court block, which was acquired in the husband’s name, was encumbered in favour of the bank so as to leave no equity in that property whilst the equity in the property registered in the wife’s name was maximised. That was consistent with the wife’s contention that, pursuant to the husband’s earlier suggestion, he be as insulated as possible from potential negligence actions arising out of his being a partner in a business of legal professionals. To the extent that the husband offered any explanation as to how this came about, nothing suggested by him raises an alternate or credible explanation in that regard.
The third, and least significant matter, is that in 1998 the parties borrowed the deposit for the C Street properties from Mr TT. The improbability of that having occurred if the parties were separated is readily apparent. Mr TT was not cross-examined to suggest that he then knew, or ought to have known, that his daughter and her husband were separated. The husband did not proffer an explanation for how this event occurred. The husband’s contentions as to the state of the marriage at that time render the absence of such an explanation significant. The wife’s contentions in that respect render the advance unsurprising.
It is significant that the 1997 orders were silent in relation to children, notwithstanding that the husband asserted that the wife had demanded the transfer of the matrimonial home into her sole name on the basis that he could see the children, in effect, whenever he wished to. Given that the parties were going to, and did continue to live in the same premises, why the wife would have insisted upon that is unclear, and not explained by any evidence adduced by the husband. The absence of reference to children in the orders is consistent with the parties not having separated. Moreover, given what the husband asserts to have been the wife’s threats to him, and what he asserts to have been the final nature of the separation, it is surprising that the terms contain no provision whatsoever in relation to his ability to see the children. That is particularly so as the husband caused the terms to be created. On the husband’s own evidence, the terms should have contained provisions to the effect he asserted. They did not. That is difficult to reconcile with the husband’s explanation for the making of the 1997 orders, but consistent with the wife’s assertions in that regard.
The conduct of the parties after the making of the 1997 orders is significant. The evidence does not reveal that, after the making of the consent orders, the husband advised anyone that he had separated and entered into orders for a settlement of property. There was no evidence corroborative of the husband’s assertion that the parties had, albeit under the same roof, separated in 1997. On the contrary, the husband made numerous representations that he and the wife were not separated.
The husband conceded in cross-examination that he had not informed any financial institution with whom he subsequently dealt that he and the wife had separated in 1997, or that they had entered into orders for settlement of property. Given the husband’s evidence in relation to their circumstances, the failure to call either of his parents in support of his allegations as to the state of his marriage with the wife after 1997 enables the Court to infer that, such evidence would not have assisted the husband’s case (see Jones v Dunkel (supra)). As Senior Counsel for the husband submitted, the husband’s failure to notify a number of entities to whom he referred in his submissions may not have been significant, but to have not notified anyone that his circumstances had allegedly so significantly changed is more consistent with the parties having continued to cohabit than having separated. Commonsense and the ordinary experience of life suggest the impossibility of the husband having told no one that he and his wife were separated, if in fact they were.
The husband’s application for dissolution of marriage in 2010 revealed two matters of significance. The first was that the husband on his oath or affirmation asserted that the parties had separated in 2007. The husband’s attempts to explain why he did not show 1997 in his application were unconvincing.
The husband faces a dilemma in relation to the dissolution application. The Court cannot accept that the inclusion of 2007 as the date of separation was inadvertent. That being so, the husband must accept that his evidence is that he swore or affirmed an untruth in his dissolution application. If the husband was willing to advance an untruth to the Court in 2009, why, it might be asked, would he value the truth any more highly when giving evidence on oath or affirmation in the current proceedings. The Court does not believe that the husband told an untruth in his dissolution application in 2010. It is not difficult to imagine why the husband has sought to re-write history in the current proceedings.
It is not insignificant, should the husband seek to explain his alleged error in the dissolution application as an innocent oversight, that in the form, the husband expressly referred to two occasions in February 2008 when he said that the parties had lived in the same premises.
It is also significant that, in the application for dissolution of marriage filed by the husband on 15 March 2010, in the portion of the petition relating to existing orders, which is Part E, “are there any existing orders, binding agreements, parenting plans or undertakings to a court about family law, child support, family violence or child welfare involving the parties and/or children listed in this application?”, the husband indicated “No”. The Court cannot accept that to have been inadvertent. The reality was that neither party regarded the 1997 consent orders as being other than a device to give effect to the husband’s suggestion that the matrimonial assets be placed out of the reach of potentially successful negligence claims.
When the wife commenced the present proceedings in May 2010, the husband in his Response filed 26 August 2010 did not raise the asserted Local Court orders as a bar to the wife’s claim. Under Part E of that Response, below the heading “Other court cases and orders”, the husband ticked “No”. It was not until approximately five months after the wife commenced her proceedings that the husband sought, in his Amended Response filed 17 November 2010, to raise, and rely upon the 1997 orders. Under Part E of the Amended Response, below the heading “Other court cases and orders”, the husband then ticked “Yes” and recorded “section 79 Orders made between husband and wife on 24 March 1997 in the Local Court at […].”
The Court is satisfied, by virtue of the evidence of the parties in relation to the topic, and the circumstantial evidence to which reference has been made, that the parties did not intend in 1997 to enter into consent orders pursuant to a termination of the marital relationship, but rather as a device to give effect to the husband’s suggestion that so doing would insulate the matrimonial assets from potentially successful negligence claimants.
The husband asserted that the wife owed him $280,000 upon completion of the acquisition of the C Street properties, and asserted in his affidavit that, particularly after separation, he “consistently” informed the wife that he required the loan to be repaid. Notwithstanding that evidence, in cross-examination the husband said he had “no idea” how much the wife owed him with respect to the loan. The husband’s evidence in relation to the purported extinguishment of $280,000 of the loan by redraw on the NAB facility was unconvincing, and not corroborated in any material respect. The husband’s own evidence in relation to what did not occur is inconsistent with the asserted “loan”, and consistent with the parties’ cohabitation having continued. The Court has not been referred to any documentation supportive of the husband’s claims in relation to the payments with respect to the former matrimonial home at C Street. On his version of the post 1997 period, such omission is significant.
Order 2 of the 1997 consent orders provided that the wife was to be responsible for the mortgage over the property which was to be transferred to her pursuant to order 1 of the orders and all outgoings with respect to it. It is not in doubt that the husband paid the mortgage over that property and all outgoings with respect to it, and, after its acquisition, the former matrimonial home at C Street and all outgoings with respect to it. So doing was inconsistent with the husband’s assertions in relation to the effect of the consent orders, but entirely consistent with the wife’s contention that the parties did not separate in 1997.
The husband gave evidence that Land Tax had never been payable on the tennis court property, effectively, and logically so, because it was treated as part of the matrimonial home premises in which he and the wife were living until 2007, and thereby exempt from the payment of Land Tax. Albeit of minor significance, that too is more consistent with the wife’s version of the state of the marriage after 1997 than the husband’s.
A number of other circumstances revealed by the evidence subsequent to 1997 are more consistent with the parties continuing to cohabit than to have separated. In isolation, none is conclusive of the issue or even necessarily entitled to significant weight. Their cumulative effect, particularly given the absence of evidence of contrary circumstances is however substantial.
The acquisition in 2001 by the husband of a diamond ring for the wife was sought to be dismissed by the husband in the following terms in his affidavit sworn 20 February 2012:
79. In respect of the matters raised in paragraphs 46 – 51 and 54 - 63 of the wife’s Affidavit filed 31 October 2011, I say as follows:
…
49. My sister, [Ms CC], had purchased a dress ring from [DD] Jewellers in or about 1999 or 2000. [The wife] saw the ring being worn by [Ms CC] on several occasions. On about half a dozens occasions thereafter, she said to me:
“I want a ring like [Ms CC] has.”
I agree that in January 2001, the wife and myself went with the children to [DD] Jewellers and I purchased a dress ring (not an eternity ring) for [the wife], in accordance with her previous insistence. In terms of meeting the request, it was simply to ‘keep the peace’ as she had made so many demands about it and I was tired of it.
…
Although not a matter of major significance, the evidence in relation to the acquisition is less consistent with the parties being separated than with their continuing to cohabit.
As is not in contest, the parties lived in the same house, and occupied the same bed, for at least another decade after the 1997 orders were made during this period, the husband said in evidence that he had not worn night attire. It is not in contest that, it was not until 2007, on the husband’s own evidence, that he first told the children that he and the wife were separating.
As late as 2009, on his own evidence, the husband provided money to the second respondent in Germany through his friend, Mr P, to avoid the wife finding out that he was in another relationship. That is difficult to reconcile with the husband’s contention that by then, he and the wife had been separated for twelve years. Again, this is not a matter of major significance, but it does support the Court’s conclusion that the parties did not separate until late 2007.
Subsequent to the consent orders, the parties travelled and holidayed together, often with their children, clearly, in terms of the children and the world at large, as a family. Included in those holidays was a three-month family holiday visiting the South Pacific. Photographs tendered in evidence are consistent with the wife’s assertion that the parties were then happily cohabiting.
Other circumstantial evidence supports the wife’s version of events subsequent to 1997, including the operation of a joint NAB bank account until after separation in 2007, cards on birthdays, Valentine’s Days and other occasions when the husband wrote affectionately to the wife and family photographs.
The level of support, and manner in which it was provided by him to the wife after 1997 was consistent with the husband not being separated from the wife. So was the surprise 40th birthday party for the wife in 1999, and the party held by the wife for the husband at the matrimonial home on his leaving Company X in 2000.
The circumstantial evidence in support of finding that the parties did not separate until late 2007 is substantial. The weight to which it is entitled is enhanced by the absence of anything, other than the husband’s assertion that it was so, supportive of finding that the parties were separated from 1997. The evidence reveals that the life of the parties, and their family, continued essentially unchanged after 1997 in terms of their daily lives, how they represented themselves to their children, relevant third parties and the world at large. The ample opportunities which the husband had, but did not take up, to evidence the separation which he asserted had commenced in, and continued from 1997, and unchanged domestic circumstances in that period, are matters to which the Court attaches considerable weight.
The Court is not unmindful of the evidence of the wife’s proposed applications for dissolution of marriage in 2003 and 2005. The wife’s oral evidence in relation to them, and descriptions of them as “wake-up calls”, are able to be accepted, particularly in the light of the circumstantial evidence to which the Court has referred. It is to be remembered that the wife did not suggest that there was no tension or discord in the marriage in that period.
The Court is also mindful of the apparent inconsistency in the evidence of the wife in relation to the nature and extent of the sexual relations, or their absence, subsequent to 1997. As is not in doubt, the existence, or absence, of sexual relations is but one indicia of the existence of marital cohabitation. At the risk of descending to the prurient, there is no evidence that the absence of sexual relations between the parties was other than consensual, or that at least until the husband and the second respondent commenced a sexual relationship, either party had sexual relationships with any other person or persons. Nor, thankfully, is there any evidence of the level of the parties’ pre 1997 sexual interactions.
There were clearly tensions in the marriage from time to time, prior to late 2007, but the Court is not satisfied that the parties had ceased to cohabit prior to that time.
By reference to the Court’s findings, it is convenient, and probably necessary, to first consider such of the first three issues identified earlier in these reasons (pars 66-68) as requires determination. The determination of those issues may be decisive of the fate of the wife’s application for property settlement. Unless the wife can enliven the Court’s jurisdiction, her claims must fail.
If undisturbed do the 1997 Local Court orders deny the Court jurisdiction to entertain the wife’s application?
The submissions of Senior Counsel for the husband in support of his contention, that, if undisturbed, the 1997 Local Court orders ousted the jurisdiction to entertain the wife’s application for relief under Part VIII of the Act were succinctly articulated in the following terms:
4.5... The orders in issue were regularly made by Local Court at […] on 20 March 1997. Both parties were legally represented in relation to the orders and appropriately advised as certified by each of their solicitors, respectively. It is not open to the Wife to now go behind her then solicitor’s certificate to debate to her advantage the nature and extent of that advice or indeed whether it was given at all. As a matter of natural justice and equity, she must be estopped from so doing. Such an estoppel is consistent with the authorities. Even if it were the case that notwithstanding the receipt of advice, the Wife misunderstood the consequences of the transaction, that misunderstanding would not be able to be pleaded against the husband. [Footnotes omitted].
Although not necessarily so expressed, the balance of Senior Counsel for the husband’s submissions addressed the wife’s claim in the alternative pursuant to s 79A of the Act.
Senior Counsel for the wife did not engage with this issue in detail in his written submissions although he contended during the course of the trial, that, if undisturbed, the 1997 Local Court orders did not oust the Court’s jurisdiction to entertain the wife’s claim.
In the light of the submissions of Senior Counsel for the husband, it is necessary to have regard to the certificates to which Senior Counsel referred. Part K, Affidavit of the respondent, contained in the application for consent orders, provided:
1 I am the respondent
2 I have read this application and the proposed orders
3 The orders are agreed upon by all parties
4 I am aware of my right to obtain independent legal advice
5I have had independent legal advice on my relevant rights under the Family Law Act and the effect and consequences of orders being made in the terms proposed
6Apart from column 1 of Part G (if included) the matters stated in this application that are within my personal knowledge are true and all other matters are true to the best of my knowledge, information and belief
7 I have signed each page of the attached proposed orders
8For financial orders – I have no interest in property or financial resource which is not described in column 2 of Part G
9For financial orders – Where I give any estimate in this application it is based on knowledge, information and belief and is given in good faith
10For property orders – I have read and considered section 79 and subsection 75(2) of the Family Law Act and the matters set out there
11For orders concerning children – I have read and considered sections 65E and 68F of the Family Law Act and the matter set out there
The wife had “ticked” the boxes with respect to paragraphs 1-10 inclusive as set out above. Apart from paragraph 1, and perhaps paragraphs 3, and 7, none of the matters thus referred has been established. Some, such as paragraphs 4 and 5 were plainly incorrect. So were paragraphs 8 and 9. There is no evidence that paragraphs 10 or 11 were true. The wife’s evidence, which the Court accepts, suggests that they were not.
As Senior Counsel for the husband submitted, the certificates are prima facie evidence of the matters to which they refer. Nothing to which the Court has been referred establishes that the certificates are conclusive of the matters to which they refer. Their contents are in the nature of rebuttable presumptions.
The Court has earlier recorded its acceptance of the wife’s evidence that she received no advice in relation to the matters referred to in the certificates. Whilst, as his Senior Counsel has correctly submitted, the husband has not sought to resile from or “go behind” the certificate completed by his solicitor, there is no evidence of what the husband was in fact told by such solicitor. The Court has earlier suggested the significance of that.
In the circumstances where the documentation was so deficient, particularly with respect to financial disclosures, how a legal practitioner could have given advice of the kind described in the certificates is difficult to imagine. That reality poses no problems for the wife’s version of the circumstances in which the orders were made. The same cannot be said for the husband’s version of those circumstances.
As the Court has identified earlier, the documentation which the solicitors for the husband caused to be prepared, which was presented to the Local Court, in reliance upon which that Court undoubtedly made its orders, was deficient in numerous significant respects, as earlier identified in some detail.
This issue involves a consideration of the effect of orders made for settlement of property in 1997 on the power to make subsequent orders with respect to property.
In Hickey and Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 the Full Court accepted that:
66.Although there may be partial or interim orders (section 79(6) of the Act) ultimately there is only one exercise of power under section 79 in respect of the property of the parties, even though that single exercise of power may be reflected in a complex order of many paragraphs or clauses, each dealing with a different item of property and some dealing with questions of implementation.
The evidence reveals not only the sums which the husband has been able to earn in the post separation period, but how much he has been able to alienate in favour of the second respondent, or devote to the lifestyle he has developed with her. The husband’s ability to accumulate assets by utilising his earning capacity in the post separation period attests to the real impact of that capacity. The decline in value of B Street of more than $500,000 since the husband purchased it masks the real value of the husband’s capacity to convert income to capital, or equity. Any s 75(2) adjustment in the wife’s favour is likely to be overtaken by the husband from his vastly greater earning capacity within a few years.
It is also relevant to recall that the wife’s earning capacity has been adversely impacted by the years she has been out of the work force caring for the husband and the parties’ children, and that the husband earns what he does from the employment he had at the date of separation, which dated from 2000. There are thus relevant connections between the disparity of the parties’ earning capacities and the duration of the marriage.
On balance, an adjustment of 10 per cent in the wife’s favour, which translates as a disparity of approximately $760,000 would, in the Court’s view, be a reasonable, and realistic reflection of the matters to which reference has been made. Whilst it could be suggested that the husband will “recoup” the s 75(2) adjustment from his net earnings in less than two years, it should be remembered that the husband has a substantial, and long term obligation to support the child of his relationship with the second respondent, and possibly the second respondent herself. As the unchallenged evidence referred to earlier reveals, the husband’s ability to continue to earn at his current level is not assured. The s 75(2) adjustment in the wife’s favour represents immediate recognition of an ability to earn in the future. The adjustment is necessarily less than empirically based. The proposed adjustment is very substantial in “real money terms” (see Clauson and Clauson (1995) FLC 92-595), but the husband’s earning capacity, even at the reduced level revealed by the evidence enables him to acquire and conserve assets in a way the wife cannot expect to.
It remains to consider whether the proposed division of the property of the parties of 60 per cent to the wife and 40 per cent to the husband is just and equitable. The husband will receive $1,520,000. The wife will receive $2,280,000. The husband will have the benefit of the property he has provided for, or alienated in favour of the second respondent worth approximately $1.5M net, and his far greater earning ability. The husband will also have the ability to boost the value of his superannuation interests, in ways which the wife will not have. He will also have the obligations referred to above, and the measure of uncertainty in relation to his earning capacity discussed earlier. The Court is satisfied that the proposed division of the parties’ property is just and equitable.
The following calculations reveal how the wife’s entitlement will be satisfied:
Property 2, C Street
$1,625,000
Household contents
$1,625
BMW car
$35,000
Paid legal fees
$10,690
$1,672,315
Less mortgage
$195,461
$1,476,854 net
Entitlement of wife
$2,280,000
Less received
$1,476,854
Balance due
$803,146
Equity in Property 1, C Street
$1,500,000
Less mortgage
$660,425
$839,575
Payable to wife
$803,146
Payable to husband
$36,429
Wife’s share of proceeds of sale of Property 1, C Street
96%
Husband’s share of proceeds of sale of Property 1, C Street
4%
The wife has consistently sought to retain the tennis court block, albeit on an unencumbered basis. The evidence does not reveal any basis on which the wife could retain the property, and the former matrimonial home, subject to the mortgages currently secured over them. A sale order is appropriate, if not inevitable. An order for a percentage division of the proceeds of such sale will preserve the integrity of the overall division of property which the Court considers to be just and equitable.
the Company E interests
The Court concludes that the husband’s Company E interests should be shared equally between the parties when they vest, at least insofar as the entitlement thereto has accrued prior to the making of these orders. If those interests were able to be vested at present, the Court would order that they be shared equally. The wife should not obtain the benefit of increases in value of the interests referrable to future contributions to them by the husband, whether that be by way of further service with the Company E Group of corporations, or contributions, direct or indirect, actual or deemed.
Conversely, the wife should not be limited to the current value of the interest, and not share in capital appreciation referrable to the husband’s current entitlements, and unrelated to the anything done by the husband in relation to the interests. Nor should the wife be insulated against falls in the value of the interest unrelated to anything done, or not done by the husband in relation to them. A formulaic division which addresses these concerns is appropriate. The orders proposed by Senior Counsel for the husband appear to do so.
It will be apparent that the orders with respect to the Company E interests of the husband reflect the Court’s conclusions with respect to the parties’ contributions, and have not been increased by reference to s 75(2) of the Act. This is not inadvertent. The uncertainty surrounding when that interest will materialise, and whether it will in the sum currently suggested militate against making any adjustment by reference to s 75(2). That is particularly so having regard to the realities of the s 75(2) adjustment which has been made with respect to the other property of the parties. Dividing the sum equally by reference to its current valuation would slightly alter the parties overall entitlements from the 60 per cent – 40 per cent division which will be ordered with respect to the other property of the parties. The wife’s entitlement would become 59 per cent, and the husband’s 41 per cent.
section 106B
It being apparent that, as the wife’s just and equitable entitlement can be satisfied out of the property of the husband, it is unnecessary to uphold the wife’s s 106B application. Lest it have consequences in relation to costs however, it can be recorded that, substantially for the reasons asserted by Senior Counsel for the wife, commencing and prosecuting such application was and remained reasonable in the circumstances. The lack of clarity of the husband’s evidence in relation to his dealings with the B Street property at trial reinforce that impression.
Were it necessary to have done so, in order to satisfy the wife’s entitlement, the Court would have made a s 106B order in the wife’s favour. Irrespective of the husband’s intentions, about which the Court is sceptical, the transaction could have had the necessary effect to enliven s 106B of the Act (see Pflugradt & Pflugradt (1981) FLC 91-052). Such effect ought to have been known to, or anticipated by, the husband in the circumstances. The disposition of a half interest in B Street by the husband to the second respondent occurred at a time when he was on notice of the wife’s claim.
spousal maintenance claim
The evidence before the Court establishes that the wife is presently unable to support herself adequately without the benefit of a maintenance order. The threshold created by s 72 of the Act is thus satisfied. The husband currently pays, and has paid for some time, $3,000 per calendar month for the wife’s support on a without prejudice basis.
The evidence before the Court establishes, as Senior Counsel for the husband submitted, that the wife will not, at least after the end of this year, be impeded in her ability to pursue appropriate gainful employment by having the care of the parties’ child of school age. It is also correct that the wife has not attempted in the past to either obtain employment or to re-train. The Court does not criticise the wife in relation to those matters, it having been entirely appropriate that the wife be available as a full time homemaker and parent, and continue to be so until the end of this year. To his credit, the Court is unable to recall any evidence of the husband having previously pressed the wife to attempt to secure employment.
In determining the wife’s entitlement to a maintenance order, the Court must have regard to the capital she will receive by virtue of the orders for settlement of property which will be made. So doing does not materially alter the position.
The husband and the second respondent occupy premises worth $3M. The receipt of the further matrimonial home free of encumbrance plus capital of probably no more than $500,000, after the discharge of the mortgage over the former matrimonial home, and payment of her legal fees, ought not in the circumstances preclude the wife from successfully seeking an order for spousal maintenance, at least on an interim basis.
To the extent that the husband asserts (par 6.9) that he has no capacity to meet payments of spousal maintenance, the husband’s own evidence in relation to his discretionary spending, combined with the reality that, once the orders for settlement of property are implemented, his financial position will materially improve in terms of outgoings, preclude acceptance of that proposition.
On balance, and accepting that the exercise is necessarily artificial and arbitrary to some extent, the Court concludes that, potentially for a period of 12 months, the wife should continue to receive the $3,000 per month by way of spousal maintenance which the husband is currently paying. The wife’s evidence raises the prospect that she may require 12 months in order to re-train, or otherwise revive her teaching qualifications, and be able to secure employment. At the end of 12 months, if the wife seeks to extend the payment of spousal maintenance, she will need to make and prosecute an application for such relief, and satisfy the requirements of s 75(2) of the Act if she is able to obtain further relief.
The orders of the Court in relation to the parties’ Type D boat could result in the wife receiving approximately $240,000 upon completion of its sale. Once those funds are received, the wife could no longer satisfy the threshold requirements of s 72 of the Act. The order for interim spousal maintenance in her favour should then be discharged.
the child support application
As noted at the outset of these reasons, the wife sought relief pursuant to the child support legislation with respect to the parties’ second child, who will turn 18 in four months time. The husband opposed the granting of such relief. As usually, and sensibly occurs, the child support aspects of the proceedings were overshadowed by the property settlement and spousal maintenance contests. The comprehensive written submissions of Senior Counsel for the parties do not engage with the issue.
To the extent that the wife’s child support claim may remain live, it can be disposed of without the necessity of attempting to traverse the legislative labyrinth created by the legislation.
The circumstances of both parties will change as a result of the Court’s determination of the property settlement and spousal maintenance applications. Exactly how and when the parties circumstances will change cannot be suggested with precision. The relative capacities of the parties to support the child of the marriage who has not attained eighteen years of age once the orders the Court will make are implemented cannot be suggested.
What can be suggested is that the child will be adequately provided for but, to the extent that either party suggests otherwise, that is a matter in respect of which each has rights under the child support legislation. The Court will make no order under that legislation having regard to the matters to which reference has been made.
I certify that the preceding two hundred and fifty three (253) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Coleman delivered on 8 June 2012.
Associate:
Date: 08.06.2012