Sweep and Sweep and Anor
[2017] FCWA 102
•9 AUGUST 2017
JURISDICTION : FAMILY COURT OF WESTERN AUSTRALIA
ACT: FAMILY LAW ACT 1975
LOCATION: PERTH
CITATION: SWEEP and SWEEP & ANOR [2017] FCWA 102
CORAM: DUNCANSON J
HEARD: 2, 3, 4 MARCH 2016, 27 MARCH 2017
DELIVERED : 9 AUGUST 2017
FILE NO/S: PTW 5569 of 2011
BETWEEN: MR SWEEP
Applicant
AND
MS SWEEP
First RespondentAND
MS WARREN
Second Respondent
Catchwords:
PROPERTY - Where it is just and equitable to make a property settlement order - Where the husband has wasted assets and failed in his duty of disclosure - Where assets disposed of are notionally added back - Where the wife receives identifiable property in Australia
Legislation:
Family Law Act 1975 (Cth) s 75(2), s 79, s 90C, s 90MT
Family Law (Superannuation) Regulations 2001 (Cth)
Category: Reportable
Representation:
Counsel:
Applicant: Self-Represented Litigant
First Respondent : Self-Represented Litigant
Second Respondent : No Appearance
Solicitors:
Applicant: Self-Represented Litigant
First Respondent : Self-Represented Litigant
Second Respondent : Self-Represented Litigant
Case(s) referred to in judgment(s):
Chang v Su (2002) FLC 93-117
K & K [2002] FamCA 1150
Kowaliw and Kowaliw (1981) FLC 91-092
Stanford v Stanford (2012) 247 CLR 108
WORDS IN SQUARE BRACKETS REPLACE WORDS USED IN THE ORIGINAL JUDGMENT - PARTIES’ NAMES AND IDENTIFYING DETAILS HAVE BEEN CHANGED
1[Mr Sweep], the husband, and [Ms Sweep], the wife, are unable to agree about the division of their property.
SHORT RELEVANT HISTORY OF PROCEEDINGS
2Proceedings between the parties commenced in 2011 when the husband filed an application seeking parenting orders. On 29 January 2014 the wife filed an amended response in which she sought financial orders. On 4 March 2014 the husband filed a reply seeking a dismissal of the wife's amended response.
3The parties subsequently filed further amended applications and responses.
4Between 13 and 19 February 2014 a trial took place before Walters J in relation to parenting matters. Ultimately, comprehensive parenting orders were made by consent on 19 February 2014. Those orders included a finalisation order to the effect that if a party had not relisted the proceedings by 31 December 2014 all extant parent applications be dismissed. The proceedings were part-heard before Walters J.
5The proceedings in relation to parenting orders were subsequently relisted.
6On 7 April 2015 Walters J recused himself.
7The proceedings, then comprising the husband's amended application filed 25 August 2015 and the wife's response filed 30 September 2015, came before the court for trial on 2 to 4 March 2016 in relation to both parenting and financial issues.
8At trial, it was known proceedings had been commenced by [Company A] for the recovery of possession of the former matrimonial home at [Suburb A] ("the [Suburb A] property"). Information in relation to that was otherwise scant.
9On 3 March 2016 the court received correspondence from Lavan, the solicitors acting for Company A, informing the wife that they were unable to discuss the Supreme Court proceedings with her as she was not the registered proprietor of the property or a party to the proceedings.
10On 14 March 2016 I ordered that the husband provide a written authority to the solicitors for Company A to discuss with and provide information to the wife regarding the Supreme Court action and failing which the orders were authority for them to do so.
11On 1 April 2016 Lavan wrote to the court enclosing a copy of correspondence to the wife.
12They acknowledged receipt of the above orders. They informed the wife that the husband had written to them refusing his consent to provide documents requested by her. They advised that their client would seek orders for possession of the Suburb A property on 19 April 2016.
13On 13 May 2016 the Principal Registrar wrote to the parties referring to orders made in the Supreme Court dated 19 April 2016 such that Company A were to take possession of the Suburb A property on 18 May 2016.
14Neither party sought to reopen the evidence. It was clear this was a significant change in the financial circumstances of the parties since the trial, at which the wife sought to acquire the Suburb A property and the husband sought its sale.
15The proceedings were listed for 2 June 2016 on which date judgment in the parenting proceedings was to be handed down, and further directions were to be made in relation to the financial aspects of the proceedings.
16On 2 June 2016 final parenting orders were made and the proceedings insofar as they related to children's issues were dismissed.
17The parties were ordered to file applications and evidence in relation to financial matters.
18On 25 July 2016 it was ordered that the evidence be reopened. It was ordered that [Ms Warren], who was the husband's partner, be joined as a party to the proceedings as the second respondent. The husband and Ms Warren were restrained by injunction from receiving the net proceeds of sale of a property registered in the name of Ms Warren at [Suburb B] ("the [Suburb B] property").
19The husband was restrained by injunction from receiving the net proceeds of sale of the Suburb A property. Orders were made regarding service upon the second respondent, including by way of substituted service upon the husband. Further procedural orders were made on subsequent dates including those for the issue of subpoena and inspection of documents. On 15 December 2016 it was ordered by consent, that from the net proceeds of sale of the Suburb A property there be paid to each party the sum of $10,000. It was ordered the balance of the proceeds be placed in an interest bearing account to be opened with the National Australia Bank in the joint names of the parties.
20Orders were made for the filing of documents and the proceedings were listed for trial on 27 March 2017. The evidence was reopened in relation to:
(a)the seizure and sale of the Suburb A property;
(b)the decision and reasons for decision of the Administrative Appeals Tribunal ("AAT") dated 21 June 2016 and any subsequent decision upon appeal; and
(c)the sale of the Suburb B property and the joinder of Ms Warren.
21The parties were ordered to file up to date financial statements.
22The trial in relation to financial matters took place on 27 March 2017 and the decision was reserved.
23The wife commenced proceedings in relation to the children when she filed an application on 25 July 2016. The husband responded in a reply filed 19 September 2016. The parties are to attend a case assessment conference on 18 August 2017.
24These reasons relate to financial matters.
THE PARTIES AND THE EVIDENCE
25Financial matters occupied the greater part of the trial in March 2016. In this respect the husband was not a truthful witness. He was evasive. He prevaricated. At times when talking about his contributions to the former matrimonial home he was angry and resentful. He strongly resented paying for the outgoings for the home which was occupied by the wife and the children. He subsequently ceased paying the mortgage repayments.
26The wife sought disclosure of the financial circumstances pertaining to the relationship between the husband and his partner Ms Warren. On 10 March 2015 she filed a subpoena to produce documents addressed to Ms Warren. Attempts to serve the subpoena were unsuccessful. On 19 June 2015 it was ordered that personal service of the subpoena upon Ms Warren be dispensed with on condition that the wife serve the documents upon the husband by email. In making that order Magistrate Tyson found:
I am satisfied that [Ms Sweep] has made reasonable attempts to serve [Ms Warren] without success, which has included engaging a professional process server and costs associated with the same. Those unsuccessful attempts have included efforts to serve [Ms Warren] personally at the home which she and [Mr Sweep] shared in Perth. In the absence of [Ms Warren] advising the process server when she would be returning to Australia, or providing alternate means through which to effect personal service on her, or disclosing her current address in [South-East Asia] or a work address or personal email address, I am satisfied that the requirement for personal service should be dispensed with, on the basis that [Ms Sweep] emails the subpoena to [Mr Sweep], with a copy of these orders and that [Mr Sweep] is requested to bring the documents to the attention of [Ms Warren], advising [Ms Warren] of the adjourned date for the return of subpoena. I am satisfied given [Mr Sweep] and [Ms Warren] are in a relationship that this proposed method will ensure that the documents are brought to [Ms Warren's] attention.
27On 28 August 2015 Ms Warren wrote to the wife in the following terms (errors in original):
Dear [Ms Sweep],
In relation to the subpoena issued upon me, as you are aware in accordance with rule 15.24 of the Family Law Rules, conduct monies are required prior to compliance. To date no conduct money has been paid by you.
Conduct money required to complete the subpoena has been estimated at $20,744 AUD. This is a reasonable estimate so as to meet the costs associated with collecting the overwhelmingly large list as issued by you including fees, photocopying and printing. It also includes return travel and compensation for lost wages for the significant amount of time it will take to carry the subpoena.
Please deposit this amount into the CommonWealth Bank Account below:
Name: [Mr Sweep] & [Ms Warren]
Bank: CommonWealth Bank of Australia
BSB: [XXXXX X]
Account number: [XXXXX XXX]
Once transferred, send confirmation to [Mr Sweep] via email. Upon receipt I will make the necessary arrangements so I may commence collecting and compiling to meet the requirements for the return of subpoena.
Note that an objection remains in place regardless of the return of subpoena as not only is it a fishing expedition with no forensic merit, it is too wide, onerous, requires an unreasonable amount of effort and furthermore it is irrelevant in nature and an abuse of process.
Regards,
[Ms Warren]
28The wife could not afford to pay conduct money of $20,744. Ms Warren swore an affidavit filed 11 September 2015 in which she described the subpoena as "a clear abuse of process" and said the documents sought were unrelated or irrelevant to the proceedings.
29On 24 August 2015 Ms Warren was ordered to comply with the subpoena. Ms Warren applied to have the subpoena set aside, but on 17 September 2015 the wife was ordered to pay $50 conduct money by depositing it into the joint account of the husband and Ms Warren.
30Ms Warren produced some documents, but not all.
31The wife issued a subpoena to Ms Warren to attend the trial on 2 March 2016. The husband informed the Court that Ms Warren lived in South-East Asia and as conduct money had not been paid, she had not attended. He estimated the conduct money required to be $2,000. The husband said Ms Warren would not be returning to Australia and after the trial he would be relocating to South-East Asia.
32Accordingly Ms Warren was not available to be questioned about the extent to which her financial circumstances were connected to those of the husband. As a consequence she gave no evidence about the contributions which the husband asserted they had made to each other's property.
33At trial on 27 March 2017, by which time Ms Warren had been joined as a party, the husband's evidence was that he and Ms Warren had ended their relationship. He said Ms Warren had "had enough". The wife does not accept this. She is of the view that the husband remains in a relationship with Ms Warren or will resume that relationship once the proceedings are finally concluded. I am inclined to agree with her view in this respect.
34There was little improvement in the presentation of the case when the evidence was reopened on 27 March 2017. Both parties sought to raise matters which had been the subject of evidence at the trial in March 2016 and were not permitted to do so, being reminded that they were confined to the three issues in respect of which the trial had been reopened, and their updating financial circumstances.
35Facing the difficulties that self-represented litigants frequently do, the presentation of the case by both parties was haphazard. Their cross-examination was ineffective. I have had to do the best I can with the evidence.
36Where the evidence of the husband and the wife conflicts I prefer that of the wife. I find that the husband was not a witness of truth as discussed below. He has deliberately placed funds beyond the reach of the wife. He has failed in his duty of disclosure. I am not satisfied the husband has disclosed in full, the past and present financial circumstances of his relationship with Ms Warren. He asserts his relationship with Ms Warren ended in June 2016, which is in complete contrast with his intention to move to South-East Asia to live with her there. It is more likely than not that the relationship has ended because Ms Warren was joined to the proceedings. The husband’s disclosure to the wife at the time of entering into the binding financial agreement was seriously deficient. When the husband was asked about Ms Warren’s loan in relation to the Suburb B property and whether there was any disclosure about it, the husband’s response was:
The disclosure has been given to you, [Ms Sweep], over and over. It’s in subpoenas; it’s smattered everywhere.
37I accept the wife’s evidence that the husband did not disclose his dealings with the children’s bank accounts.
38I am satisfied the wife has complied with her duty of disclosure and that contrary to the husband’s belief she does not have hidden funds.
THE FINANCIAL ORDERS SOUGHT
39At trial in March 2016, the husband sought orders that the Suburb A property be sold, the net proceeds be paid to him and otherwise the parties keep the assets and liabilities in their respective names.
40The wife sought an order that the husband transfer the Suburb A property to her unencumbered. She sought payment of various sums of money, as set out in her response, which she described as 50% of everything else including money which had been disposed of.
41At the hearing on 27 March 2017 the orders sought by the husband were contained in his said reply filed 19 September 2016. In summary, he sought orders that each party retain what they currently have, all previous financial orders be discharged and there be a stay on financial applications.
42The financial orders sought by the wife were contained in her amended response filed 2 September 2016. She sought an order that the proceeds of the Suburb A property be transferred to her. In relation to the Suburb B property owned by the second respondent, the wife sought to receive the rent in respect of that property. She also sought an order that the second respondent be restrained from selling the property for less than market value and she sought to receive an amount equivalent to 100% of the sale value of the Suburb A property.
43The wife sought reimbursement of the children's bank accounts. She sought 70% of the value of the husband's superannuation to be transferred to her superannuation account.
44The wife sought the payment of a sum equivalent to:
•70% of all monies paid by the husband to Bannerman Solicitors for their services;
•70% of the profit made from the sale of the property at [Suburb C] ("the [Suburb C] property");
•70% of all shares and investments bought by the husband from October 2009 to present date;
•70% of the value of motor vehicles disposed of by the husband.
SHORT FINANCIAL HISTORY
45The parties met in September 2000 and in February 2001 the husband moved to Western Australia. The parties purchased the Suburb A property in December 2001 and they commenced living there on 22 December that year. The Suburb A property was purchased in the name of the husband with a loan from the Commonwealth Bank. The parties married in 2008. In October 2010 the parties commenced living separately under one roof. The husband left the Suburb A property in May 2011. The parties divorced on 3 April 2012. As at November 2010 the mortgage over the Suburb A property was about $124,246.
46On 29 November 2010 the husband purchased a [Ford] motor vehicle for $42,000. He borrowed $40,000 to pay for the vehicle.
47In January 2011 the husband borrowed the sum of $225,000 from Macquarie Bank and secured the loan over the Suburb A property. The mortgagor was Company A. He paid out the Commonwealth Bank loan of $125,000 and the balance of approximately $100,000 was a line of credit with which he acquired shares. The wife said she did not know about the husband's borrowings.
48The parties signed a financial agreement made under s 90C of the Family Law Act 1975 (Cth) ("the Act"). The agreement was dated 19 May 2011. The wife said she signed it on 30 June 2011 consistent with the date of the signed statement of independent legal advice. This financial agreement and a child support agreement signed by the parties in June 2011 were set aside by orders dated 16 October 2014. This order was not consented to, but was not opposed by the husband.
49When cross-examining the husband about the Macquarie borrowings the wife referred to the financial agreement which states at Schedule A that the value of the Suburb A property was $550,000 and the mortgage over the property was $125,000.
50It was put to the husband that the information in Schedule A was incorrect as the loan of $125,000 had been paid out, and that the husband did not disclose that he had borrowed a total of $225,000 from Macquarie Bank secured over the property. The husband's answers in relation to this issue were entirely unsatisfactory. Although he had received legal advice, he said he did not know he had to disclose the liability. He denied it was a loan and said that Schedule A contained the agreed values and therefore it did not matter that they were incorrect. The husband asserted the wife knew of his borrowings from Macquarie Bank. He did not tell her, but said she was aware of it. When asked if he told the wife he had borrowed $225,000 from Macquarie and secured it over the Suburb A property, the husband said he had not "in that black and white terms" told her, but she knew.
51He subsequently said he had not told her of the borrowings.
52I do not accept the husband's evidence in this respect. I accept the wife's evidence that she did not know of the borrowings in January 2011 at the time of the agreement.
53On 30 June 2011 (which was the day the wife said she signed the financial agreement) the husband borrowed a further sum of $205,000 by way of a line of credit from Macquarie Bank. He also secured this loan over the Suburb A property. He did not inform the wife of this.
54As at 30 June 2011 the sum owing to Company A secured over the Suburb A property was $430,000. The husband did not inform the wife of this nor was this information disclosed on the agreement.
55Of the line of credit, the husband "guessed" that about $70,000 to $80,000 was paid as the deposit on the Suburb C property. $40,000 paid out the loans on a Ford motor vehicle which the husband had purchased in November 2010. This vehicle was later traded in, which I refer to below.
56As to the balance of approximately $80,000 the husband could not recall, but thought part of it was applied to paying legal costs.
57The husband purchased the Suburb C property in September 2011 for a price of $365,000. The deposit paid was $76,137 and the husband borrowed the sum of $291,537 from Macquarie Bank secured by mortgage to Company A.
58The husband met Ms Warren in August 2011. She moved into the Suburb C property in early 2012. They became engaged. The husband said Ms Warren bought her own engagement ring for $20,000.
59The parties were divorced in April 2012.
60In about 2005 the parties had opened the children's bank accounts with the Commonwealth Bank. They deposited money into those accounts, including monetary gifts from family. In September 2012 the husband closed the children's bank accounts and rolled the funds into new accounts in the children's names. He did not inform the wife that he had done so.
61At the commencement of the husband's relationship with Ms Warren she owned a motor vehicle and had sold a property at [Suburb D], the net proceeds of which amounted to $30,000. She was an [office manager] earning approximately $120,000 per year.
62The husband asserted Ms Warren made financial and non-financial contributions to the Suburb C property to which I refer below.
63In July 2013 the husband sold the Suburb C property for a price of $470,000. He discharged the mortgage to Company A in the sum of $286,961. The husband received $172,395 at settlement. The husband applied these funds to Ms Warren's purchase of the Suburb B property which coincided with the sale of the Suburb C property. He agreed the price of that property was approximately $695,000. The husband said Ms Warren also had a loan from the ANZ for about $522,000. When asked what rights he had to the Suburb B property, the husband claimed he had "none". He asserted that Ms Warren assisted him in relation to the Suburb C property and in his view she was entitled to half of the profit from the Suburb C property.
64At the trial in March 2016 the husband handed up a document headed "[Ms Warren] Contributions to Relationship" which became Exhibit 8. This was a summary prepared by Ms Warren. At this time she was not a party to the proceedings. The husband did not call Ms Warren as a witness. She was not available to explain her document and the calculations therein. She could not be cross-examined on the content of the document. The source documents referred to were not provided.
65Exhibit 31 was a further document handed up by the husband at trial in March 2017 upon which he sought to rely as evidence of funds provided to him by Ms Warren. The wife described this as "absolute garbage". The husband gave no explanation about the transactions and Ms Warren was not available to do so. The husband's position was that he and Ms Warren were in a "net" position. I find the content of the documents are self-serving and do not establish that position.
66The husband did not explain why he did not call Ms Warren as a witness to support his assertions as to her contributions to the Suburb C property and their relationship. I infer her evidence would not have assisted him. I reject the husband's assertion that Ms Warren is entitled to half of the profit of the Suburb C property. I find the husband paid the entire net proceeds of sale of the Suburb C property to Ms Warren at the time of her purchase of the Suburb B property which was registered in her sole name. I further find that in doing so he sought to place the funds beyond the reach of the wife.
67In August 2014 Ms Warren refinanced the Suburb B property in terms of which her loan, being a line of credit, was $578,367. The husband said she had borrowed a further $100,000 for renovations to the property including a new pool and paving.
68The husband deposed in his financial statement filed 31 December 2014 that he disposed of the Ford motor vehicle in June 2014 for the sum of $23,000. The motor vehicle was traded in for $24,000 against the purchase of a Ford motor vehicle by Ms Warren on 23 April 2014 at a price of $51,023.
69The husband said he suffered from stress in February or March 2015 and that was why he stopped work. At the time he was working full-time and studying part‑time. At the time he was having discussions with the Child Support Agency (the "CSA") by whom he was told he owed $13,000 in arrears of child support. He objected to the assessment. The CSA intercepted his tax refund before the objection process had been completed. The objection was successful but the intercepted tax refund had been paid to the wife.
70The husband said he was unable to function at work. He obtained medical advice and took stress leave. He was prescribed medication for anxiety. He resigned from his employment in June 2015, which he considered to be the moral thing to do. At the time of the trial in March 2016 the husband was studying for a [master's degree]. As to his future employment, the husband said, until these proceedings were completed and he had time to heal, he did not know what he wanted to do. He would be relocating to South-East Asia. He and Ms Warren were trying to have a child. He might be a "stay at home dad" and he may study for his PhD. He said he had paid for the children and the Suburb A property for four years and he had "well surpassed in providing for the children". The husband said the Suburb B property would be rented out when he was overseas.
71The husband asserted the wife had not contributed to the Suburb A property and she took no accountability or responsibility for the upkeep of the house. He said she lived rent free and had not contributed a single cent. He said he could not do this anymore.
72I find the reason the husband stopped work was the interception by the CSA of his tax refund, something about which he was angry. Prior to this he had divested himself of assets into the name of Ms Warren. He decided he had paid enough for the wife and the children. He was of the view that the wife was making no contribution and he deliberately stopped work. As set out below, the husband's actions caused Company A to foreclose on the mortgage over the Suburb A property.
73The husband said he ceased making the mortgage payments in June 2015 when he stopped work. He contacted the lender and informed them that he had ceased work and no payments would be made. He told them he was unable to sell the home as there was an injunction preventing him from doing so. On 8 December 2014 an order had been made as follows:
Until further order, the husband be restrained by injunction from selling, disposing of, transferring, assigning, adversely dealing with, encumbering, further encumbering or dealing in anyway whatsoever with the property at [Suburb A].
74The lender told the husband what would occur in relation to the foreclosure to which he replied "Okay". He said he put the payments on hold, but a payment was made in error from his account. This delayed the process of foreclosure. The lender contacted the husband in about October 2015 regarding repayments, but he reminded them of his conversation with them in June or July that year to the effect that he was not working. He told them he had "no options" with respect to future payments as he needed his savings.
75At the time, the husband had $26,000 in his bank account, most of which comprised a payout he had received from [his former employer]. He said he needed those savings to live on and would have run out of money if he had applied them to the mortgage payments. The husband deposed in his financial statement filed 10 September 2015 that the mortgage balance was $427,433.
76On 20 November 2015 the husband was served with a default notice on behalf of Company A. At that time he was in default in the sum of $7,954. As at 13 November 2015 the amount payable by him to comply with the default notice was $8,504. The default notice provides the husband should contact Macquarie immediately and further provides that they may be able to help him repay the debt by agreeing to vary the contract. The default notice further provides that if the husband did nothing before 29 December 2015 enforcement action would be commenced.
77The husband did not contact Macquarie to arrange repayments and did not comply with the default notice.
78The husband deliberately ceased making payments on the loan. He informed the mortgagor that he would not make future payments and made no effort whatsoever to prevent the foreclosure. Indeed, he cooperated with it. He had funds available to him to meet the repayments, but chose not to do so. He made no effort to minimise the loss. I find his actions were designed to force the sale of the property to prevent the wife retaining it, having already borrowed a significant amount over it. In failing to make the mortgage payments I consider the husband deliberately wasted assets.
79In Kowaliw and Kowaliw (1981) FLC 91-092 Baker J, said at page 76,644:
…
As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a)where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b)where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para (a) and (b) above having economic consequences is clearly in my view relevant under sec. 75(2)(o) to applications for settlement of property instituted under the provisions of sec. 79. …
80I shall take the husband’s conduct into account when considering the relevant matters under s 75(2) of the Act.
81On 19 January 2016 Company A commenced proceedings in the Supreme Court of Western Australia for the recovery of the Suburb A property. At this time the wife was unable to obtain information about the proceedings from the solicitors for Company A because the husband was the borrower and registered proprietor of the property.
82As at 3 March 2016 Company A sought judgment in the amount of $442,795.
83Contrary to the husband's evidence in March 2016 that the Suburb B property was to be rented out, it was listed for sale and a home open took place on 25 June 2016. The Suburb B property had been improved.
84Company A obtained a property (seizure and delivery) order issued from the Supreme Court on 14 June 2016.
85On 12 July 2016 Company A took possession of the Suburb A property.
86[Real estate agents] inspected the Suburb A property and provided a property report and market appraisal opining that a realistic price for the property would be in the range of $520,000 to $550,000. I refer to the condition of the property below.
87On 21 June 2016 the AAT gave its decision and reasons for decision in an application for review as to a departure from the administrative assessment of child support.
88The husband's evidence to the tribunal in relation to his earning capacity and the circumstances of his unemployment was not dissimilar to that given at trial.
89The tribunal found at [33]:
As regards what was a major purpose or motive for stopping work, the tribunal noted that one thing that was consistent in all the reports provided by [Mr Sweep] was that he has a strong sense of being victimised by the Family Court and child support proceedings and this is what has caused him stress. This is consistent with [Mr Sweep's] evidence to the tribunal that action taken by the Department to sequester his tax return to cover arrears of child support was the factor that led to his decision to resign.
90The tribunal found that a major purpose in the husband's decision to resign from his employment was the impact it would have upon his child support assessment.
91The tribunal referred to the husband's disposal of assets with no clear evidence to the tribunal of how most of the funds from the sale of assets have been disposed of. In relation to the Suburb C property, the husband told the tribunal he gave Ms Warren $100,000 from the sale of the property, which she used towards the purchase of the Suburb B property. He further told the tribunal he had no legal interest in the Suburb B property and the payment he gave her was a repayment of a loan she had provided to him to pay for his legal bills.
92At [58] the tribunal stated:
The tribunal found aspects of [Mr Sweep's] evidence problematic. Whilst he stated that he is in a dire financial situation this appears inconsistent with decisions he has made in relation to his expenditure priorities and lifestyle choices. In response to tribunal questions [Mr Sweep] strongly asserted that he is being victimised and that there has been a failure to robustly examine [Ms Sweep's] circumstances.
93At [70] the tribunal recorded it was satisfied that the husband had access to either property or financial resources that should be taken into account for the purposes of the child support assessment.
94Ultimately the tribunal concluded in the special circumstances of the case, it was just and equitable to make a departure from the administrative assessment of child support and set the husband's assessed taxable income ("ATI") at $136,641 for the period 1 February 2016 to 31 October 2017.
95Settlement of the Suburb A property was effected on 24 November 2016. The sale price of the Suburb A property was $592,000. After deductions for legal costs and commissions, adjustments for rates and taxes, and payment of the sum owing on the mortgage to Company A of $485,773, the net proceeds of sale were $68,578.
96Pursuant to the 15 December 2016 orders by consent discussed above, from the net sale proceeds of the Suburb A property each party was paid $10,000. The balance was to be placed in an interest bearing bank account in the joint names of the parties. The balance was held in the trust account of the solicitors for Company A.
97By 27 March 2017 there had been a further deduction for legal fees and the balance held in trust was $43,997.
98The Suburb B property was sold on 24 December 2016 for $645,000. It is not known what the net proceeds were. The husband said he did not receive back the sum of approximately $172,000 which he gave to Ms Warren when she bought the property. When asked why, he stated "it all balanced out" referring to Exhibit 8. The husband asserted he knew nothing about the sale of the Suburb B property.
99It is not clear when the husband's relationship with Ms Warren ended, if in fact it has. The husband said he broke up with Ms Warren in June 2016. He asserted Ms Warren sold a Ford motor vehicle in Perth in June 2016.
100On 9 June 2016 when the husband gave his evidence to the AAT he told the tribunal he relied upon his de facto to meet his self-support needs. He told the tribunal that he lived rent free in the Suburb B property which was owned by his de facto. He also told the tribunal his partner was based in South-East Asia and he regularly travelled to and from that [region]. At that time he and Ms Warren were planning to relocate permanently to South‑East Asia.
101In the husband's notice of address for service filed on 6 July 2016 he stated he had no physical address in Australia and requested his email address be used to serve documents. As at that time there had been no suggestion that the husband intended to live anywhere other than South‑East Asia with Ms Warren.
102The wife’s amended response seeking to join Ms Warren had been filed on 27 June 2016 and came before the court on 25 July 2016 when an order was made joining Ms Warren as a party.
103On 22 July 2016 the husband filed a notice of address for service providing his contact address as [PO Box X, Town Y, New South Wales]. On 19 September 2016 the husband filed a further notice of address for service providing his contact address as Town Y, New South Wales
104The husband was asked about service of documents upon Ms Warren and he said Ms Warren wanted to be left alone and wanted nothing to do with these proceedings. He said he did not have any contact with her.
105The wife put to the husband that he was still together with Ms Warren. He denied this. I am not persuaded by his denial. From his evidence as a whole, I consider it more likely than not that the husband has either not ended his relationship with Ms Warren or will resume it when these proceedings are concluded.
106The husband appealed the AAT child support decision. At the time of trial the outcome of the appeal was not known. The husband remained assessed to pay child support on the assessed income.
107Neither party took steps to open a joint bank account into which to deposit the proceeds of the Suburb A property. The funds either continue to be held by Lavan or they have been deposited with the Supreme Court.
APPROACH TO PROPERTY SETTLEMENT
108These proceedings are governed by s 79 of the Act. Following the High Court decision of Stanford v Stanford (2012) 247 CLR 108, to determine this matter I shall undertake the following steps:
•identify the existing legal and equitable interests of the parties in their property;
•ascertain whether it is just and equitable to make a property settlement order and, if so;
•identify and assess the contributions of the parties;
•consider ss 79(4)(d), (e), (f) and (g) of the Act which include the relevant matters in s 75(2) and determine whether an adjustment should be made;
•make such orders as are just and equitable.
THE EXISTING PROPERTY INTERESTS OF THE PARTIES
109The parties disagreed significantly as to the composition and value of their property. Doing the best I can with the evidence, I make the following findings.
The Suburb A property
110The husband estimated the value of the Suburb A property to be $700,000 in his financial statement filed 10 September 2015. No evidence was provided in support of that value. The wife provided an appraisal of the property from real estate agents dated 15 April 2014 in the sum of $650,000.
111The property sold for $592,000 in November 2016. The net proceeds were $68,578. Each party received $10,000 and after deduction of further fees, the balance is $43,997.
Legal costs
112The husband has paid legal costs to Bannerman's in the sum of $123,168. As to the source of those funds he said the costs were paid partly from the proceeds from the second loan over the Suburb A property (of which $80,000 had not otherwise been accounted for) and he agreed that $55,000 from Ms Warren's account was paid directly to Bannerman's. It is not known if the funds paid by Ms Warren emanated from the proceeds of the Suburb C property. As I intend to add back the sale proceeds of the Suburb C property it could be double counting to also include the $55,000 paid by Ms Warren.
113I intend to include in the schedule below part of the husband's paid legal costs. Deducting the amount paid by Ms Warren, legal costs paid by the husband from his own funds amount to $68,168. Upon his own evidence the source of funds applied to legal costs was the line of credit he secured over the Suburb A property in June 2011.
114The wife paid legal costs of $6,000 funded by loans from family. She repaid loans when she received a bank deposit of $12,000 by way of child support.
Sale proceeds of the Suburb C property
115The wife's case appears to be that the net proceeds of the Suburb C property amounting to $172,395, should be included in the property of the parties as she seeks orders in relation thereto, specifically payment of 70% thereof.
116The husband said he and Ms Warren agreed they were "net" in relation to funds provided by each to the other. It has not been established to me that Ms Warren made contributions to the Suburb C property. The husband provided the sale proceeds of the Suburb C property to her at the time of her purchase of the Suburb B property to place them beyond reach of the wife. In doing so, I consider the husband prematurely distributed funds to himself and I intend to add these funds back as a notional asset of the husband.
117In including these in the schedule below as a notional asset, I am mindful of the wife's belief that once these proceedings are over, the husband and Ms Warren will enjoy the benefit of the sale proceeds of the Suburb B property, which include the proceeds of the Suburb C property. I am not convinced these funds no longer exist. I am not persuaded that the husband has no connection with Ms Warren and that he has walked away from his contribution to the Suburb B property. As it is possible that the husband may receive the benefit of these funds in the future I am reinforced in my view that it would be just and equitable to include these funds in the schedule as a notional asset of the husband.
The wife's savings
118In March 2016, the husband asserted the wife had savings of $175,000. He said the wife had worked cash in hand 15 hours a week at $30 per hour for five years. He said this money did not go into her bank account and it would not surprise him if she had opened a bank account which she had not disclosed and saved these funds. Not only were the husband's calculations incorrect, but he was unable to substantiate his assertion with any evidence. The wife's explanation was far more plausible, namely the funds she earns as a [tutor] she receives cash in hand. She discloses her earnings each fortnight to Centrelink and her Centrelink benefits are adjusted according to her earnings. I have no doubt that the wife's earnings are used for her living expenses and those of the children and she does not have the means to accumulate savings.
Costs associated with the Suburb A property
119The husband deposed the wife has "burdened" him with the cost of the Suburb A property which he asserts should be an add-back to the wife of $810,000. I shall take into account payments made by the husband in relation to the Suburb A property post‑separation when considering the parties' contributions.
120I find the property of the parties to be as follows:
| Asset | Ownership | Value |
| Proceeds of [Suburb A] property | H | $43,997 |
| Motor vehicle – [Holden] | W | $1,000 |
| Household contents | W | $3,000 |
| Proceeds of [Suburb C] property (added back) | H | $172,395 |
| Paid legal costs (added back) | H | $68,168 |
| Total Assets | $288,560 | |
| Liabilities | ||
| Child support debt | H | $12,000 |
| Total Liabilities | $12,000 | |
| Total Net Assets | $276,560 | |
| Superannuation | ||
| Macquarie superannuation | H | $164,946 |
| GESB superannuation – West State Super | W | $30,361 |
| Total Superannuation | $195,307 | |
| TOTAL ASSETS AND SUPERANNUATION | $471,867 |
121I find the property of the parties to amount to $471,867.
IS IT JUST AND EQUITABLE TO MAKE A PROPERTY ORDER?
122The parties are divorced.
123The wife seeks orders altering the parties' interests in their property in that she seeks a payment of a sum of money from the husband. The husband does not seek such an order, proposing that each party retain what they have. It would be unfair for the wife to retain property to a value of $34,361 while the husband retains property, including that added back, of a value of $437,506. Even excluding the amounts added back, the husband on his case would retain the sale proceeds of the Suburb A property and his superannuation, by far the greater part of the parties’ property.
124In these circumstances, I find it is just and equitable to make a property settlement order.
CONTRIBUTIONS
125At the commencement of cohabitation the husband owned a motor vehicle and had savings of approximately $30,000. The wife owned a motor vehicle with a loan of about $5,000. The husband applied his savings to the deposit of the Suburb A property.
126Both parties were in employment.
127During cohabitation the husband continued in employment. When the wife became pregnant with the parties' first child she ceased work and studied for a diploma in [nursing].
128During the parties' relationship the husband's earnings supported the parties financially. The wife was the primary carer for the children. The parties agreed their contributions during cohabitation should be assessed as equal. Having considered the evidence, I agree with that assessment.
129After the parties separated the husband borrowed funds from Company A, secured over the Suburb A property. The debt over the Suburb A property increased from about $125,000 at the time of separation to about $430,000 at the time of the husband's purchase of the Suburb C property in September 2011. The husband's income was applied to loan repayments in respect of the Suburb C property until its sale. The wife made no direct contributions to the Suburb C property although the loan secured over the Suburb A property was applied in part to its purchase.
130The husband remained in employment until early 2015 and paid the mortgage repayments and other expenses in respect of the Suburb A property until mid-2015.
131After separation the wife cared for the children and pursuant to orders dated February 2014 they lived with her for nine nights and with the husband for five in every fortnight. Since about early 2015 the husband has not paid child support except for the interception of funds by the CSA and the wife has solely maintained the children. Since parenting orders were made on 2 June 2016 the children have spent little time with the husband.
132The wife occupied the Suburb A property with the children until she was evicted. She had sought to retain the property. She continued to work part-time and receive Centrelink benefits.
Assessment of contributions
133In assessing contributions I have not taken into account any financial misconduct on the part of either the husband or the wife as that is to be dealt with when considering matters relevant to s 75(2)(o). The assessment of contributions is not a mathematical exercise and I have not approached it as such. The husband made the greater initial contributions. During cohabitation the parties' contributions were equal. Since separation I consider the wife has made the greater contributions primarily by reason of her contributions since early 2015 when she has cared for the children with little financial assistance from the husband. She occupied the Suburb A property and the husband ceased making loan repayments when he gave up his employment.
134The Court must assess contributions holistically. I have therefore considered the parties’ differing contributions in the particular circumstances of their relationship from the commencement of cohabitation to date of trial. I find contributions should be assessed 55% to be wife and 45% to the husband. The effect of this finding is that the husband is entitled to receive property to a value of $212,340 and the wife is entitled to receive property to a value of $259,527.
SECTION 75(2) FACTORS
135The matters to be taken into account are as follows.
136The husband is aged 43 years and the wife is aged 45 years. The husband has high blood pressure. He suffers from anxiety and is prescribed medication.
137The wife suffers from reactive depression. She is in receipt of medication.
138The husband resigned from his employment, and says he is unable to work by reason of ill health. The wife disputes this. The husband provided no reliable evidence of a medical condition which precluded him from working. The high point of the evidence was a short certificate from [a medical practice] which became Exhibit 19 upon which the husband relied. The certificate he produced states he was unfit to attend work since 27 June 2015 to 27 March 2016. In fact, the document looks as if it has been altered. The husband also provided a letter from his General Practitioner dated 23 September 2016 which states the husband does not feel able to return to work. The General Practitioner was not available for cross‑examination. The report is equivocal and does not explain how his condition impacts on his capacity to earn an income.
139The inadequacies in the evidence as to the husband's inability to work lead me to the view that the husband is able to work. I am reinforced in this regard by my findings that he deliberately ceased his employment because his income tax return had been intercepted by the CSA, and because of what he perceived to be the unfairness in his financial contributions to the Suburb A property in comparison to those of the wife. He chooses not to work so as not to provide financial support to the wife and children.
140The wife wishes to take up employment as a nurse. She obtained her diploma in nursing and is hopeful of undertaking that work once these proceedings are concluded. She stated that "ideally" she would be able to increase her hours worked to about 25 hours a week and is hopeful that she will eventually be able to earn at a rate of $80 per hour after several years.
141The parties' ill health is likely to be of short-term duration and both parties are likely to improve their health once the outcome of these proceedings is known.
142The parties' property is as set out in the schedule above.
143The wife has the care of the children, aged 13 and 11 years, who live with her in Perth. The children spend little time with the husband who lives in New South Wales.
144The husband lives at the home of his mother. The wife rents accommodation at a cost of $375 per week.
145Both parties are in receipt of Centrelink benefits. They have the superannuation interests referred to above.
146The standard of living of both parties is modest.
147The wife has contributed to the earning capacity and property of the husband. During the relationship she was the primary caregiver to the children enabling the husband to further his career and accumulate his superannuation interests.
148The relationship endured for nine years during which time the wife, as primary carer for the children was not able to develop her earning capacity. She seeks to continue her role as a parent.
149As at the 2016 trial the wife was in a relationship but did not cohabit with that person. The husband does not currently cohabit with Ms Warren. The wife asserts their financial circumstances remain linked and the husband will benefit from the proceeds of the Suburb B property in the future. I consider this is likely.
150On 21 June 2016 the AAT affirmed the decision of the Department to depart from the administrative assessment of child support setting the husband’s ATI at $136,641 which meant that the husband is liable to pay an annual rate of child support of $17,216. Currently deductions are made from the husband’s Centrelink benefits for child support. He is in arrears of child support in the sum of $12,000.
151I now turn to consider any fact or circumstance which, in the opinion of the Court, the justice of the case requires to be taken into account.
152I take into account the husband’s conduct in failing to make the loan repayments in respect of the Suburb A property and the losses sustained as a consequence. At the time he ceased repayments, the husband had funds at credit of his account. This was a deliberate strategy on the part of the husband to cause Company A to foreclose. As at September 2015 the mortgage balance was $427,433. The amount paid to Company A at settlement of the Suburb A property was $485,773. In about 15 months the debt increased by about $58,340.
153I do not take into account the husband’s disposal of the proceeds of the Suburb C property to Ms Warren here. I have included that amount in the schedule above as a notional asset of the husband.
154I take into account that the husband disposed of a Ford motor vehicle by allowing it to be traded in against a purchase of a further Ford motor vehicle in the name of Ms Warren for the sum of $24,000. Ms Warren owned two Ford motor vehicles. She permitted the husband to use one. The husband’s evidence as to the Ford motor vehicles was confusing, but it was established that Ms Warren sold a Ford motor vehicle in 2016.
155I take into account that the husband expended approximately $100,000 of funds borrowed and secured against the Suburb A property, on shares.
156The husband deposed in his financial statement filed 10 September 2015 that he had disposed of the following:
•Macquarie flexi - matured December 2014 $13,466;
•Commonwealth bank shares – sold May 2014 $18,289;
•Macquarie shares – sold May 2014 $14,369.
157As at March 2016 the wife owned Bank of Queensland shares worth $2,234. Although she was not asked about this, it appears she has disposed of these shares as she deposed to having no investments in her financial statement sworn 27 February 2017.
158The husband asserted the wife was responsible for losses incurred in relation to the Suburb A property.
159He accused the wife of staying in the Suburb A property in "a pseudo-effort to go and punish [Mr Sweep]" and he accused her of taking every last opportunity to try and reduce the asset pool. On the contrary the wife continued to occupy the Suburb A property which she sought to retain by way of property settlement. The Suburb A property was the only home the children had ever known. The husband was not paying child support. The wife was in receipt of Centrelink benefits and she and the children vacated the house one hour before they were evicted.
160The husband put to the wife that she was responsible for the losses incurred upon the sale of the Suburb A property by not agreeing to its sale in 2014 and then remaining there when Company A foreclosed. The wife responded to the effect that the repossession of the property was not her responsibility and that the debt in respect of the property was that of the husband. The husband asserted the wife allowed the condition of the Suburb A property to deteriorate. At settlement the sum of $15,042 was paid to [a property maintenance contractor] for work carried out at the property prior to its sale. It may be that the property was neglected prior to its sale, however I accept that the wife who was on Centrelink benefits did not have the means to maintain or improve it.
161I reject the husband’s assertion that the wife is responsible for losses associated with the Suburb A property.
162The husband has failed in his duty of disclosure. The wife's disclosure was disorganised, but I am satisfied that she has not deliberately failed in her duty to disclose. The husband on the other hand has done so. He has been less than frank with his financial position and he has ensured that the financial circumstances of his cohabitation with Ms Warren were not provided to the Court.
163The husband’s failure to make a full and frank disclosure means I should not be "unduly cautious" about making findings in favour of the wife: Chang v Su (2002) FLC 93-117.
164 In K & K [2002] FamCA 1150 the Full Court said at [51]:
Whether the non-disclosure is wilful or accidental, is a result of misfeasance, or malfeasance or nonfeasance, is beside the point. The duty to disclose is absolute. Where the Court is satisfied the whole truth has not come out it might readily conclude the asset pool is greater than demonstrated. In those circumstances it may be appropriate to err on the side of generosity to the party who might be otherwise be seen to be disadvantaged by the lack of complete candour …
ASSESSMENT OF SECTION 75(2) FACTORS
165I consider the most relevant s 75(2) factors are:
•the husband's earning capacity which he fails to exercise;
•the wife's care and control of the children; and
•the husband's financial misconduct and lack of disclosure which in my opinion the justice of the case requires to be taken into account.
166In my discretion, taking into account the s 75(2) factors as a whole, I consider an adjustment of 25% in favour of the wife is appropriate. The overall distribution of property will be 80% to the wife and 20% to the husband. There is a disparity of 60% or $283,120.
JUST AND EQUITABLE
167I must consider the practical effect of the orders.
168As the husband is entitled to 20% of the parties' property, he is entitled to property to the value of $94,373. As the wife is entitled to 80% of the parties' property she is entitled to property to the value of $377,494.
169If the husband retains the proceeds of the Suburb C property and legal costs paid, less his child support debt, he has notional assets of $228,563. Although in the future he may benefit from the sale proceeds of the Suburb C property by sharing in the proceeds of the Suburb B property with Ms Warren, there are no identifiable funds from which he can pay any sum owing to the wife. The reality is that the application of a percentage division is not of assistance in the circumstances of this case. In circumstances where the parties’ property has been dissipated by the husband it is appropriate that the wife receives what property identifiably exists in Australia which includes the proceeds of the Suburb A property held in trust and the husband’s superannuation benefits.
170The wife will receive or retain the following:
Asset
Value
Proceeds of [Suburb A] property
$43,997
Macquarie superannuation
$164,946
Motor vehicle – [Holden]
$1,000
Household contents
$3,000
GESB superannuation – West State Super
$30,361
Total
$243,304
171It will be necessary for there to be a superannuation splitting order in respect of the husband’s Macquarie superannuation such that the wife receives 100% thereof. This would not exceed the wife's entitlements. In March 2017 the husband said his superannuation was "probably about 180 grand, or something". He called this a “guesstimate” and said he had not made any contributions to it since the last trial. At that time it was $164,000.
172An order will be made that the proceeds of the Suburb A property be paid to the wife. The wife will otherwise retain the property in her name.
173The husband will retain the notional property referred to above. He may benefit from the proceeds of the Suburb C property in the future by sharing in the proceeds of the Suburb B property.
174The wife may be able to access the superannuation benefits once the superannuation split has been given effect. In all the circumstances I am satisfied that orders giving effect to the adjustment of the parties’ property in this way are those which are just and equitable.
THE PROPOSED ORDERS
175I shall order that by way of part property settlement the wife receive the sale proceeds of the Suburb A property. To preserve the husband’s superannuation I intend to make an order restraining him from accessing or dealing with his superannuation in any way. I will make orders for the superannuation split, but it will be necessary for the wife to give the trustee of the superannuation fund procedural fairness as to the superannuation splitting orders. Once I have been advised that she has done so orders 3 to 17 will be made.
176I propose to make the following orders:
1By way of part property settlement the wife is entitled to receive and be paid the sale proceeds of the property at [Suburb A] (“the [Suburb A] property”) and these orders are authority to Lavan to pay said funds to the wife forthwith.
2Pursuant to s 114 of the Family Law Act 1975 (Cth) (“the Act”), the husband, [Mr Sweep], be restrained by injunction from dealing with his superannuation interest with Macquarie Super account number [XXXXX XXXX] (“the Fund”), including a transfer or claim on such funds without leave of the Court.
3These superannuation orders are binding on the Trustee of the Macquarie Super Superannuation Fund (“the Trustee”).
4That in accordance with s 90MT(1)(b) of the Act:
(a)The wife, [Ms Sweep], is entitled to be paid the specified percentage out of the husband’s interest in the Fund;
(b) the interest of the husband in the Fund is correspondingly reduced by force of this order; and
(c) the percentage specified for the purposes of this order is 100%.
5That the Trustee do all such acts and things and sign all such documents as may be necessary to:
(a)calculate, in accordance with the requirements of the Act and the Family Law (Superannuation) Regulations 2001 (Cth) the entitlement awarded to the wife in the preceding Order; and
(b) pay the entitlement whenever the Trustee makes a splittable payment from the husband’s interest in the Fund.
6The wife shall cause a sealed copy of these orders to be served upon the Trustee of the Fund within 7 days.
7These superannuation orders have effect from the operative date.
8The operative date for the purpose of the superannuation orders is the fourth business day after the date of service of a sealed copy of the Orders upon the Trustee.
9The Trustee have liberty to apply in relation to the implementation of these Orders on short notice to the parties.
10Any right title or interest the wife may have in the property of the husband, including the proceeds of the [Suburb C] property, vest in the husband.
11Any right title or interest the husband may have in the following vest in the wife:
(a) the wife’s motor vehicle;
(b) the household contents in the possession of the wife; and
(c) the wife’s superannuation interests with West State Super.
12The parties do all acts and things necessary to give effect to the Orders made herein.
13The parties have liberty to apply with respect to the implementation of the orders made herein.
14The application and response insofar as they relate to financial matters be and is hereby dismissed.
15All documents produced by named persons pursuant to subpoena be returned or destroyed in accordance with the request from the named person on the expiration of 42 days from this order.
16In relation to material tendered as an exhibit into evidence in these proceedings:
(a)all parties must collect the exhibits tendered by them (“their exhibits”), from the chambers of Justice Duncanson, at least 28 days, and no later than 42 days, from today’s date;
(b)all parties must contact the chambers of Justice Duncanson. to arrange the collection of their exhibits;
(c)in default of compliance with subparagraph (a), all material tendered as an exhibit, save and except for material produced pursuant to subpoena, will be destroyed by the court without notice to the parties.
17In the event of an appeal being lodged prior to the expiration period of 42 days, orders 15 and 16 above do not apply.
I certify that the preceding [176] paragraphs are a true copy of the reasons for
judgment delivered by this Honourable Court
Associate
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