Tizani and Tizani (No.2)
[2016] FCCA 126
•25 January 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| TIZANI & TIZANI (No.2) | [2016] FCCA 126 |
| Catchwords: FAMILY LAW – Application for summary dismissal of Husband’s section 79A application – husband claims property settlements based on false information – in the alternative Wife seeks security for costs – both applications dismissed. |
| Legislation: Family Law Act 1975 (Cth), ss.79A, 117 |
| Adult Guardian & Mother’s Parents & B & Child’s Representative (2002) FLC 93-116 Ferrall & Blyton (2000) FLC 93-054 Zhai & Juan [2014] FamCAFC 234 |
| Applicant: | MR TIZANI |
| Respondent: | MS TIZANI |
| File Number: | SYC 7993 of 2007 |
| Judgment of: | Judge Sexton |
| Hearing date: | 1 October 2015 |
| Date of Last Submission: | 1 October 2015 |
| Delivered at: | Sydney |
| Delivered on: | 25 January 2016 |
REPRESENTATION
| Counsel for the Applicant: | Mr Alexander |
| Solicitors for the Applicant: | Mark Rahme & Associates |
| Solicitors for the Respondent: | Browns The Family Lawyers |
THE COURT ORDERS THAT:
The Wife’s Application in a Case filed on 7 April 2015 be dismissed.
No order for costs.
The matter be listed for mention before me at 9.30 a.m. on 2 February 2016.
IT IS NOTED that publication of this judgment under the pseudonym Tizani & Tizani (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYC 7993 of 2007
| MR TIZANI |
Applicant
And
| MS TIZANI |
Respondent
REASONS FOR JUDGMENT
Introduction
The Husband seeks orders pursuant to s.79A(1)(a) and (b) of the Family Law Act 1975 (Cth) to set aside property orders made on 20 February 2008 and 21 April 2011, and seeks substituted s.79 orders for property adjustment.
These proceedings concern the Wife’s Application in a Case for summary dismissal of the Husband’s Application, or in the alternative, for an order for the Husband to pay $50,000 to the Wife’s solicitor’s trust account by way of security for costs, and a stay of the s.79A proceedings pending the payment sought.
The Husband seeks the dismissal of the Wife’s Application in a Case.
Each party seeks costs.
Background
At the time of hearing, the Wife was 45 years of age, and the Husband 48 years of age. The parties commenced cohabitation at the date of their marriage in (country omitted) in (omitted) 1986. They disagree as to the date of their separation. The Husband says that final separation occurred on approximately 30 April 2013, and that the parties lived separately under the one roof until the Wife changed the locks and excluded him from the home in July 2013. The Wife asserts that separation occurred in June 2007, and that the parties lived separately under the one roof until the Husband moved out in July 2013 after she changed the locks on the Property S home. On 22 August 2013, the Burwood Local Court made a final Apprehended Violence Order against the Husband for the protection of the Wife and two of the parties’ children, for a period of 12 months.
The parties divorced on 17 October 2014. There are five children of the marriage, one of whom is under the age of 18 years.
Issue
It is the Wife’s case that the parties’ consent orders for property settlement made in February 2008, and in April 2011, were intended to finalise the parties’ financial relationship, were bona fide, just and equitable orders and to the extent that she can attest, based on accurate information. The Wife contends that on the basis of the evidence adduced by the Husband, the Husband has no prospects of success in the s.79A and s.79 proceedings, and the application should therefore be summarily dismissed, or if it proceeds, the Wife should be protected by an order to secure her costs which are likely to be significant.
It is the Husband’s case that the consent property orders made in 2008 and 2011 were not intended to determine the parties’ property rights at the time they were made. The Husband contends that the parties were not separated at the time the orders were made. The intention of the parties at the time the orders were made was to protect the assets from the Husband’s gambling losses. It is the Husband’s case that the documentation presented to the Court upon which the 2011 orders were made was false in a number of material respects. The Husband contends that the Local Court at Liverpool could not have been satisfied on the material presented that the consent orders constituted a just and equitable determination of the property settlement rights of the parties. The Husband has applied to set aside the 2008 and 2011 property orders pursuant to s.79A(1)(a) and (b) of the Family Law Act which provide as follows:
Where, on application by a person affected by an order made by a court under section 79 in property settlement proceedings, the court is satisfied that:
(a) there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information), the giving of false evidence or any other circumstance; or
(b) in the circumstances that have arisen since the order was made it is impracticable for the order to be carried out or impracticable for a part of the order to be carried out; …
…
the court may, in its discretion, vary the order or set the order aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside.
Brief litigation history
On 19 November 2007, the Wife instituted property and parenting proceedings in the Federal Magistrates Court. Final Orders were made by consent on 20 February 2008. In relation to property, those Orders provided, in substance, for the Wife to retain the former matrimonial home at Property S, for the Husband to discharge the mortgage and refinance the debt in his sole name, to pay $20,000 to Browns Family Lawyers, and for the Husband to receive a property at Property R, subject to mortgage and a (business omitted) (and car/storage space) at Property P, subject to mortgage. The Husband was declared to have the sole right, title and interest in any property registered in his name in (country omitted). The Husband was responsible for discharging any other debts in the parties’ joint names. The Husband was entitled to funds in a (omitted) Bank joint account when the funds were cleared for release by the Bank.
On 21 April 2011, the final Orders were varied by consent by Liverpool Local Court pursuant to s.79A of the Family Law Act. The April 2011 Orders provided for the Husband to transfer to the Wife his interest in the Property P property (the (business omitted) and storage/car space) and for the Wife to discharge the loan owed to Mr R secured on the property, and to reduce the other amounts owed to Mr R by payment of $200,000. According to the Wife, and the documents presented to the Liverpool Local Court, these orders resulted in the Husband receiving a zero percentage of the assets, and the Wife 100% of the assets.
On 19 July 2013 the Husband commenced proceedings in the Federal Circuit Court seeking to set aside the final Orders made on 20 February 2008 and 21 April 2011 pursuant to s.79A(1)(a) and/or (b). He seeks another order under s.79 in substitution of the orders set aside, that the Wife pay him an unspecified sum.
By Response filed on 26 August 2013, the Wife seeks an order that the Husband’s application be dismissed and the Husband pay her costs.
On 11 September 2013, the Wife filed an Application in a Case seeking security for costs in the sum of $30,000. The Wife sought a stay of the proceedings pending the payment being made.
The Wife’s Application for security for costs was heard by another Judge of this Court on 14 March 2014. When Judgment was delivered on 11 June 2014, His Honour made an order for the Husband to pay $20,000 as security for her costs in the Husband’s s.79A proceedings. After the Husband appealed the decision, the parties agreed the appeal should be allowed. The Wife’s application for security for costs was remitted for rehearing before me.
On 7 April 2015, the Wife filed a further Application in a Case seeking summary dismissal of the Husband’s s.79A application, or in the alternative, that the Husband pay the sum of $50,000 by way of security for costs. The Wife also seeks an Order that the Husband remove the caveat lodged on his behalf over the Property S property and a s.106A order for a Registrar to sign the document, if the Husband refuses to do so. The Wife seeks costs in the sum of $4,000.
The Husband’s evidence
While the Husband acknowledges short periods of separation during the marriage, he deposes to the parties separating on a final basis on or about 30 April 2013 when they moved to separate bedrooms in the former matrimonial home at Property S. He says they attended marriage counselling at (omitted) in late 2012/early 2013.
In 1996, the Husband ceased working as a result of a serious injury to his right leg. He suffered severe pain in his leg from 1996 until 2000, and as a consequence became depressed and was prescribed anti-depressant medication. He was confined to bed and did not engage in paid employment. He says the Wife has also suffered from depression since 2000.
After the accident he started gambling, and in approximately 2002 his gambling became regular. He gambled heavily from late 2006 to late 2007, and from 2007 to 2012 he continued to gamble more frequently, and with larger sums from time to time. Since 2012, the Husband says he has gambled less frequently and in smaller amounts.
The Husband says the parties were not separated when the 2008 consent orders were made. He says the orders were intended to ensure he could not gamble away the Wife’s share (more than half) of the matrimonial property. As already detailed, the 2008 orders provided for the Husband to receive the parties’ commercial premises in Property P, the investment property at Property R subject to mortgage, and for the Wife to receive the Property S property unencumbered. If the parties had separated and the orders intended to finally determine their property rights, the Husband says he would have regarded the division as just.
In later 2008, the Husband left the Property S home for approximately 2 months when the Wife sought police assistance. The Wife then invited the Husband to return to the home.
By 2010, the Property R property was encumbered to the extent of approximately $700,000 to 800,000 and the Husband sold it in August 2010 for $1.42m. After payment of the mortgage debt, a debt to his brothers and a debt over the Property P premises, he received a net amount of approximately $300,000. He spent these funds on living expenses, improvements to the Property S property, the purchase of a car transferred to the Wife and on gambling. The Wife asked him to undertake the renovations/improvements. The Husband says receipts/invoices attached to his Affidavit, dated from approximately September 2010 to August 2012, are copies of some of the receipts/invoices he paid or helped pay towards improvements/ renovations of the Property S property[1].
[1] Annexure C of Husband’s affidavit sworn on 1 September 2015
The Husband borrowed $150,000 from Mr R secured against the Property P property. He applied those funds to gambling and the cost of renovations. He also increased his credit card debt by $50,000.
In early 2011 the Husband was losing money from gambling. In early 2011, the Wife said to him “you should transfer Property P into my name to protect it from your gambling” to which the Husband agreed. The Wife said, “Okay I will organise a transfer of the Property P (business omitted) to my name.” The Husband agreed. A week or so later the Wife gave the Husband two documents to sign, which he did, and asked him to file them at Liverpool Local Court. He was told he needed a witness to his signature which he arranged with a solicitor within the Court complex. The Solicitor did not give him any advice. The Husband was not aware the documents related to a property settlement. He did not read the documents relating to the transfer of the Property P (business omitted) to the Wife. He has limited ability in reading English. He trusted the Wife, believing the intention was to protect the equity in the Property P property.
Prior to the making of the April 2011 orders, the parties attended the (omitted) office of Centrelink. In his presence, the Wife told an employee of Centrelink that the parties were living together.
The Application for the 2011 Consent Orders contained false information[2] - the parties had not finally separated on 5 June 2007; the Husband was not working as a (occupation omitted) because he had not been working since his accident in 1996; he was not earning $1459 as a (occupation omitted), but was receiving $1459 a week from leasing the (business omitted) in Property P; it was not accurate when the document stated that the orders would not affect his earning capacity, because in transferring the (business omitted), he was losing his only source of income; it was not accurate to state that the Wife made the greater financial contributions given the Husband had worked long hours until 1996, paying the initial deposit and mortgage repayments on the parties’ first property at Property R, Property R purchased in 1991 and the initial deposit and mortgage repayments on the parties’ second property at Property R purchased in 1994. The sale proceeds of the Property R property paid off the Property S home and purchased the Wife a $65,000 Toyota Land Cruiser. The Husband contributed $952,418 from his compensation funds received in or around 1999 to purchase the parties’ properties, which generated income, increased in value and underpinned their wealth.
[2] Annexure E of Husband’s affidavit sworn on 1 September 2015
The document relied on by the Local Court at Liverpool to make the 2011 orders stated that those orders would result in the Wife receiving 100% of the parties’ assets, and the Husband 0%. The Husband says it was never the parties’ intention to finally determine their property settlement on such a basis.
The Husband made non-financial contributions to the marriage, particularly domestic tasks including cooking, washing and transporting the children.
In March/April 2012 the Husband paid approximately $150,000 from his father’s estate in (country omitted) to the Wife’s account. The funds were applied to reduce the mortgage by then secured on the Property S property; since the 2008 and 2011 property orders were made, the Husband has spent “an estimated several hundred thousand dollars on either improving or furnishing the Property S property or for household expenses.” [3]
[3] At paragraph 47.6 of Husband’s affidavit sworn on 1 September 2015
The Husband now has no assets and having stayed for a time in one brother’s garage, is now sleeping in his other brother’s basement at (omitted). He relies on a disability support pension of $820 per fortnight for income. He has a 1996 Falcon car valued at approximately $1,000 and no other assets. He has a $25,000 credit card liability, legal costs, a gambling debt of $5,000, debts of $16,000 to his two brothers, phone bill arrears of $200 and a debt to a local store of $500 for cigarettes purchased on credit.
The Husband suffers chronic leg pain from his 1996 car accident. He cannot work. He has been treated for leg infections. Amputation is a possibility. He takes antibiotics for his leg infection, medication for chronic pain, sleeping tablets, Valium and anti-depressant medication.
The Wife owns a home at Property S, the Husband values at an estimated $2.5m, now unencumbered, net proceeds of sale of the Property P (business omitted) of $429,000, two vehicles valued at a total of $29,000 and savings of $10,000. He is unaware of the Wife having other liabilities. The Wife is working as a (occupation omitted).
The Wife’s evidence
The Wife asserts that the parties were separated when the February 2008 orders were made. She says the Husband did not challenge her assertion in her property application filed in November 2007 that the parties separated in mid-2007. While she concedes she was very concerned about the financial damage the Husband was causing the family, and wanted to separate herself financially from him, she says that she regarded the marriage at an end from mid-2007. In support of her contention as to the date of separation, the Wife refers to the Husband’s Application for Divorce filed in October 2008 in which he states the parties separated on 5 June 2007.[4] She refers to the Husband’s brother’s affidavit in which he deposes to the parties sleeping separately and the marriage being over in June 2007.[5] The Wife says she changed the locks on the house on 3 July 2013, but had been asking the Husband to vacate the home for “several years”.[6]
[4] Annexure E to Wife’s affidavit sworn on 23 August 2013
[5] Annexure F to Wife’s affidavit sworn on 23 August 2013
[6] At paragraph 16 of Wife’s affidavit sworn on 23 August 2013
In her Affidavit filed in November 2007[7], the Wife deposes to the parties having separated and reconciled more than once, prior to her decision to finally separate a month before swearing her affidavit. The marriage problems always related to the Husband’s “uncontrollable” gambling activity. In her Affidavit sworn in August 2013, the Wife deposes to separation occurring in June 2007. She says the parties then lived separately and apart in the Property S home for the next 6 years, with the Husband travelling to (country omitted) and living elsewhere from time to time, including two months at the parties’ Property B property. She agrees with the Husband that she changed the locks and he moved out in July 2013.
[7] Annexure A to Husband’s affidavit sworn on 1 September 2015
The Husband had a significant gambling problem involving estimated losses of between $1 million and $2 million from 1996. The Wife engaged in six sessions of counselling from 1998 to 2008 with Mr S to discuss the Husband’s conduct after his accident, including his gambling and alcohol use.[8] The Wife sought advice from family members about the Husband’s gambling and encouraged him to seek professional help. The Husband was removing money from the two (businesses omitted) in Property R and Property P and borrowing and spending the money on gambling. The Wife annexes[9] a bank statement for the one month period from November to December 2006 which discloses the Husband’s numerous withdrawals from clubs over a 4 week period, to support her claim that he was gambling heavily.
[8] Annexure A to Wife’s affidavit sworn on 23 August 2013
[9] Annexure B to Wife’s affidavit sworn on 23 August 2013
Under the 2008 orders, the Wife says the Husband received property with a gross value of $1.635m, or net $1,435 [Property P $600K; Property R $800K; unit (country omitted) later sold $80K; land (country omitted) later sold $155.6K; debt of $200,000 owed on the Property P property].[10] She says that the Husband was receiving approximately $10,000 a month in rent from his two Sydney properties.
[10] Annexure C to Wife’s affidavit sworn on 23 August 2013
On 27 August 2010, the Wife agrees with the Husband that he sold the Property R property for $1.42m.
The Wife claims that the Husband approached her in 2011 to tell her he wanted to transfer the Property P business to her so the equity would not be lost from his gambling. She was to pay his creditor Mr R $200,000 at the time of transfer. The Wife says she arranged for her solicitor to prepare the documents and the orders which followed were intended by both parties to be their final property settlement.
The Wife claims the facts set out in the Application for Consent orders in 2011 were correct. She says “he did not tell me at the time of the Application that he was not a (occupation omitted)”. She contends it was the Husband, not herself, who attested to his occupation and income as set out in that document. The Wife says it was also correct to state that she made the greater financial contributions to the marriage. She worked full time in the parties’ (business omitted) (apart from short periods around the birth of the children) typically from 6.00a.m. until 10.00p.m. 7 days a week from 1987. Further, the Husband’s financial contributions were substantially diminished by his long history of gambling large amounts. The Wife contests the Husband’s assertions about the source of funds for the Property R properties. She says the parties bought their two Property R properties from joint savings, not from the Husband’s income alone as he claims. While the Wife accepts that the Husband’s $1 million in compensation funds were contributed towards the purchase of properties, including Property S and Property P, she says she also contributed financially to those properties by applying the sale proceeds of other real estate.
On 13 May 2011, the Husband deposited $155,627.70 to her account which he said was from the sale of his inherited land in (country omitted). The Wife believes that the Husband sold another unit in (country omitted) to his brother for $80,000 in or about April 2011. The Wife agrees the money she received was the Husband’s money and was initially used to reduce the home loan but she contends over the following months, she gave the money back to the Husband in instalments. The Wife annexes bank statements evidencing withdrawals from the loan account which she says she paid in cash to the Husband between November 2011 and May 2013. She claims to have reimbursed him $162,000.
The Wife complains that the Husband has not explained how the assets he received under the 2008 orders were diminished in value, nor how funds he received after that time have been applied. She says she has received no benefit from his share of the assets. With the exception of the Property P property which she received under the 2011 orders, the Wife believes the Husband has wasted a significant proportion of his assets on gambling.
The Wife denies the receipts adduced in evidence by the Husband prove that he contributed to the cost of renovations of the Property S property. The Wife says she paid for the renovations and suspects the Husband picked up receipts from around the home. If the Husband paid for anything, the Wife says she always reimbursed him.
When she sold the Property P property, the Wife alleges she had to meet the bond payment to the tenants because their bond money of $9,000 had almost certainly been spent by the Husband.
She says in August 2014, the Husband withdrew $10,000 from the parties’ joint (omitted) bank account, and has not adduced evidence as to how those funds were applied.
The Wife says she was the primary caregiver of the children but did much of their caring in the (business omitted). Since separation, the Wife has carried the majority responsibility for the children and their expenses. She lists the myriad of tasks she has undertaken in relation to the children since then without support from the Husband. The Husband has continued to gamble and has minimally contributed to the household either financially or non-financially.
The Wife asserts that the results of the 2011 consent orders were therefore just and equitable.
Summary dismissal
The power of this Court to summarily dismiss an application is found in section 17A of the Federal Circuit Court of Australia Act 1999 and rule 13.10 of the Federal Circuit Court Rules 2001.
Section 17A provides that the Federal Circuit Court may give summary judgment in a matter where it is satisfied that a proceeding or part of a proceeding has no reasonable prospects of success. The proceeding does not have to be hopeless or bound to fail for it to have no reasonable prospect of success[11].
[11] Section 17A(3)
Rule 13.10 provides as follows:
The Court may order that a proceeding be stayed, or dismissed generally or in relation to any claim for relief in the proceeding, if the Court is satisfied that:
a) the party prosecuting the proceeding or claim for relief has no reasonable prospect of successfully prosecuting the proceeding or claim; or
b) the proceeding or claim for relief is frivolous or vexatious; or
c) the proceeding or claim for relief is an abuse of the process of the Court.
Wife’s solicitor’s submissions
Mr Brown, for the Wife, refers the Court to the decision of Ferrall & Blyton[12], where the Full Court said[13]:
Counsel for the respondent, we think correctly, pointed out that while the Court has jurisdiction summarily to dismiss or stay an application, its exercise is reserved for a case in which it can be demonstrated that the substantive application cannot possibly succeed. He pointed out that in a case such as the present, the question is whether, assuming in favour of the husband, the matters of fact on which he relies, nonetheless his case, as a matter of law is so clearly untenable that it cannot possibly succeed.
[12] (2000) FLC 93 - 054
[13] At 98
The Wife’s solicitor submits that on the evidence filed by the Husband, his claim has no merit, is untenable and cannot possibly succeed. It is submitted that the Husband needs to show that there has been a miscarriage of justice in relation to the 2008 and 2011 orders, and that the miscarriage of justice was caused by either fraud, duress, suppression of evidence, the giving of false evidence or any other circumstance pursuant to section 79A(1) of the Act. The Husband must also show why the Court should exercise its discretion to discharge the previous orders, even if such a miscarriage of justice occurred. It is submitted that it will not be possible for the Husband to prove there was a miscarriage of justice, on the basis of the evidence he has adduced.
The Wife’s solicitor contends that the Husband’s case is based almost entirely on the contention that false evidence was given in the prior proceedings which resulted in the orders of 2011. However, he has failed to demonstrate that this is so or that the ‘false’ statements were made by the Wife. It is submitted that it was the Husband’s responsibility to disclose information about himself accurately in the 2011 Application for Consent Orders. If the Husband was incorrectly described as a (occupation omitted) in the Application, if his income was incorrect, if it was not correct to say the orders would not affect his earning capacity, he should have stated as such. It was the Husband who had responsibility for disclosing this information, not the Wife. It is submitted the statements, in any event, could not have resulted in any miscarriage of justice.
The statement in the 2011 joint Application for Consent Orders that the Wife made a greater financial contribution, was also made jointly, and was factually correct. The Husband’s assertion that he made the greater direct financial contributions ignores the issue of his gambling at a “monumental scale” over a long period. The Wife’s claims in this regard are supported by the fact that the Husband deposes to presently having no assets despite the substantial property he received from the parties’ property settlement in 2008. The Wife’s assertion that she made a greater financial contribution was a rational and honest statement, given the extent of the Husband’s losses through gambling.
While the Husband asserts in these proceedings that the separation date was incorrect in both applications resulting in consent orders, the Wife’s solicitor submits the Husband (and the Wife) signed the documents and it was his responsibility to check their contents. It is submitted by the Wife that the Husband’s current assertion about the separation date is inconsistent with a number of statements the Husband has made in Court documents as to that issue: he filed a divorce application on 27 October 2008 alleging the date of separation was 5 June 2007; his brother, Mr A, swore an affidavit on 12 September 2008, deposing to the Husband telling him in June 2007 that their marriage was over. It is submitted that the Husband has not addressed these matters in his affidavit or previous affidavits, nor attempted to explain the inconsistencies in his position as to the separation date. He cannot now proffer a different date of separation without explanation as to the previous inconsistencies. It is submitted for the Wife that the Husband cannot rely on his own malfeasance as a ground for having property orders set aside or varied. The Husband cannot rely on his own false statement (even if it was false as alleged) to undermine the April 2011 orders. Otherwise anyone could overturn orders where they had given false or misleading evidence to the court.
The Wife’s solicitor submits that the Husband’s evidence that he gave the Wife $150,000 from the sale of his (country omitted) property is misleading. The Wife shows that she reimbursed the funds to the Husband, evidence not addressed by the Husband in his material.
In relation to his assertions about expenditure on improvements/ renovations at Property S, it is submitted the receipts annexed to his affidavit do not total the $40,000 expense asserted. There is no evidence to support those expenses being met by the Husband, and not the Wife. Even if the Husband did meet those expenses, it does not affect the veracity of the parties’ joint assertion that the Wife made the greater financial contributions overall.
It is submitted that under the 2008 orders, the Husband received property with a value of $1.4m subject to debts of $320,000. It is submitted that the Husband paid the Wife $120,000 and therefore received a net $960,000 in Australian real estate. He also received an inheritance from his father in the form of two properties in (country omitted), sold for a combined total of $235,000. By the time of the 2011 settlement, the Husband had sold his property at Property R for $1.24m. While he deposes to receiving only $320,000 net after payment of debts, the Wife says that was probably debt related to his gambling. Under the 2011 orders, the Husband received $200,000 which was paid to his creditors.
It is submitted that when the financial history of the parties since the 2008 orders were made is considered, in particular the property and benefits which flowed to the Husband, it is clear that the 2011 orders were just and equitable. Mr Brown argues that if the Husband’s s.79A application proceeds, the Wife will assert that the orders were just and equitable and there should be no further property adjustment.
Husband’s counsel’s submissions
The submissions of counsel for the Husband with respect to his client’s claim, rely on the Husband’s disputed version of many of the facts.
The Husband’s counsel submits that the orders made in both 2008 and 2011 were “protective orders.” He says the parties were trying to stop the Husband using the parties’ assets to gamble. They were not separated when the orders were made in either 2008 or 2011. The Husband and the Wife knowingly made false statements in the documents presented to the two courts in order to protect their assets.
Under the February 2008 orders, the Husband received the properties at Property R and Property P. Counsel submits that if it is assumed, as the Wife says, that the settlement was just and equitable, and separation occurred in June 2007, as asserted by the Wife, then for the next almost 6 years, they lived separated under the one roof. The Wife does not explain why she did not pursue physical separation prior to July 2013 when she changed the locks. Yet opportunities existed. In 2008, the Husband filed a divorce application which he later withdrew. The Husband says the Wife wanted him to return to the marriage. The Wife says she had no control over whether the application proceeded or not. Counsel submits the Husband’s version of the facts seems more probable, especially as on the Wife’s evidence she was seeking counselling about the marriage at that time. Further, it is submitted, that after the 2008 orders were made, the Husband spent a period of time living in the Property R property towards mid-2008. The Husband therefore had alternative accommodation and could have stayed there if the parties were separated. Again, it is submitted the Husband’s contention that the Wife wished to reconcile is consistent with the fact that he withdrew his divorce application and returned to live at the Property S property. It is submitted that it makes no sense that the parties were living separately under the one roof if there were other accommodation options for the Husband, and they were separated. Further, it is submitted the Wife did not choose to initiate divorce proceedings as she could have done.
Counsel submits that on both parties’ version of the events leading to the Application for Consent Orders in 2011, even though each party asserts the other party initiated the proposal for the transfer, it is common ground that the motivation for seeking those orders was to protect against gambling losses.
Even if the orders of 2008 were just and equitable, prior to the orders being made in 2011, the Husband still owned the Property P property with a nett value of $400,000 (after payment to Mr R of $200,000). On the Wife’s case, she wanted the Husband to move out, and the parties were estranged. Counsel submits it is impossible to rationalise the Husband giving the Wife $400,000 in real estate for no consideration, in such circumstances. The transfer deprived the Husband of his only income of $1459 a week, and left him with nothing but debt. It is difficult to accept that the Husband intended these orders to finally resolve the parties’ property rights. There would have been other options available to the Husband to repay Mr R than transferring the property to the Wife, had they been separated at the time. It is submitted that the Husband’s claim that the transfer was effected to protect the family assets, is the only version of events that makes sense. It is submitted the Husband has limited capacity to read English, let alone generate his part of the Application. The Application is generated from the same computer with the same font. The Husband trusted the Wife and signed the documents, to effect the transfer of his remaining property to the Wife, to protect the asset from further borrowings for the purpose of gambling, not to finalise their property settlement.
It is submitted that the Husband’s evidence should be accepted that he first saw the Application for Consent Orders in 2011 for the first time when it was handed to him at Liverpool Local Court. The document was prepared by the Wife, clearly typed by the same computer, using the same font. The Husband has limited capacity to read. He does not have the capacity to generate or complete an Application for Consent Orders.
It is submitted that a number of statements in the Application for Consent Orders were false, and known to the Wife to be false. Counsel argues that the Wife would have been aware of the Husband’s financial circumstances at that time, given they were living together. She knew he was not working at the time. The Wife knew that he was receiving income from the Property P property and that without that property, he would have no income. The statements in the Application to the contrary were clearly false. Her own evidence states that the Property P property and the Property R properties together returned $10,000 per month in income. Further, counsel submits that the parties’ joint statement that the Wife made a greater financial contribution to the assets of the marriage was incorrect. It ignores the fact that the Husband contributed almost $1m by way of personal injuries compensation, which (as acknowledged by the Wife) enabled the purchase of the Property P and Property S properties, the foundation of the assets they accumulated. Counsel for Husband submits the Wife adduces no evidence as to the actual financial contribution she makes. She adduces no evidence of her earnings. It is not credible to suggest she brought in more by way of financial contributions than the Husband. Even if the Husband did gamble, that does not change the fact of the extent of the Husband’s introduction of actual funds.
In addition, by way of financial contributions, the Husband’s counsel submits that the Husband also owned properties in (country omitted), inherited from his father. He sold the properties and the Wife received the sale proceeds of one of them of approximately $155,000. The Husband’s counsel takes issue with the evidence of the Wife that the Wife reimbursed the Husband the whole of those funds deposited to her account from the sale of his inherited property in (country omitted). Counsel submits that the Husband was reimbursed only $40,000 of those funds in various forms.
The Husband’s counsel submits that a court, properly informed, could not conclude that the Husband holding 0% and the Wife 100% of the parties’ assets is a just and equitable property settlement.
Determination – summary dismissal
The onus on the Applicant Wife to satisfy the Court the Husband’s application should be summarily dismissed, is a heavy one. As stated by His Honour Justice Kirby in the High Court decision of Lindon v Commonwealth Bank of Australia(No. 2)[14]:
[14] (1996) 136 ALR 251 (applied in the Full Court judgments of Zhai & Juan [2014] FamCAFC 234 and Ebner & Pappas [2014] FamCAFC 229
1. It is a serious matter to deprive a person of access to the courts of law for it is there that the rule of law is upheld, including against government and other powerful interests. This is why relief, whether under O 26, r 18 or in the inherent jurisdiction of the court, is rarely and sparingly provided.
2. To secure such relief, the party seeking it must show that it is clear, on the face of the opponent’s documents, that the opponent lacks a reasonable cause of action or is advancing a claim that is clearly frivolous or vexatious.
3. An opinion of the court that a case appears weak and such that it is unlikely to succeed is not, alone, sufficient to warrant summary termination. Even a weak case is entitled to the time of a court. Experience teaches that the concentration of attention, elaborated evidence and argument and extended time for reflection will sometimes turn an apparently unpromising cause into a successful judgment.
…
4. … If there is a serious legal question to be determined, it should ordinarily be determined at a trial for the proof of facts may sometimes assist the judicial mind to understand and apply the law that is invoked and to do so in circumstances more conducive to deciding a real case involving actual litigants rather than one determined on imagined or assumed facts.
5. …
6. The guiding principle is, … doing what is just. If it is clear that proceedings within the concept of the pleading under scrutiny are doomed to fail, the court should dismiss the action to protect the defendant from being further troubled, to save the plaintiff from further costs and disappointment and relieve the court of the burden of further wasted time which could be devoted to the determination of claims which have legal merit.
Under s.79A(1)(a) the authorities establish that there is a 4 stage process[15]:
a)Has a ground been established;
b)Does that ground amount to a miscarriage of justice;
c)Should the Court, in its discretion, vary or set aside the order;
d)Should the Court make another order.
[15] At paragraph 130 of Sutton & Sutton & Anor [2012] FamCA 454
On the Husband’s evidence, after a period of cohabitation of approximately 27 years, and property orders made by consent in 2008, varied by consent in 2011, the Wife owns an unencumbered home in Property S in which she lives, and the proceeds of sale of a property at Property P, while the Husband has no assets and no accommodation of his own. The Husband worked long hours until he was seriously injured in a car accident in 1996. According a report from consultant psychiatrist Dr M dated 28 October 1997, the Husband suffered drug induced psychosis, post-traumatic stress disorder and major depression following the accident. He was abusing alcohol, “a well recognised complication of post traumatic stress disorder.”[16] He was compensated in the sum of almost $1m in approximately 1999. Those funds were used to purchase real estate for the parties. He has been unable to work since the accident, has suffered from depression and has had a serious gambling problem resulting in substantial financial waste. Under the 2008 consent orders, the Husband received two properties (together valued at less than the value of the matrimonial home) with at least one of them, perhaps both, subject to mortgage, while the Wife received the former matrimonial home unencumbered, additional assets and no other liabilities. While the Husband denies the Wife’s claim that the parties were separated at the time of the 2008 orders, he says he would not argue that those orders were unjust had they been a final property adjustment between the parties.
[16] Annexure G to Husband’s affidavit sworn on 1 September 2015
The Wife’s solicitor argues that the Husband cannot assert that separation occurred after June 2007, when he has made inconsistent assertions in previous Court documents filed at a Court. There is no doubt that the Husband asserted a separation date of June 2007 in his Application for Divorce in 2008 (later withdrawn) and his brother deposed to a conversation in which the Husband told him the parties had separated in June 2007. The Husband also made an assertion, jointly with the Wife, in the Application resulting in the orders of February 2008, that the parties had separated in June 2007. The Husband now says those assertions were false, given the purpose of the orders in 2008 was to protect the Wife’s share of the parties’ assets from his profligate gambling. If the Husband’s contention is true as to the parties’ intention in having those orders made, it would have been necessary to provide a basis for the Court to make the orders, and therefore to give false evidence about being separated.
I accept the Wife’s evidence that she was concerned about the impact of the Husband’s gambling on the family, and in 2007/8 had a reason to seek orders for the protection of her share of the parties’ assets. I also find that the parties were having marriage difficulties at that time as a result, at least in part, of the Husband’s gambling. It appears that the Husband was absent from the home for different periods, either travelling to (country omitted) or spending weeks elsewhere in Sydney, but it also seems that the parties were trying to make their relationship work. I accept the Wife’s evidence that the Husband would make promises to change his behaviours, and then relapse. It is not surprising in these circumstances that the Wife’s evidence is not consistent as to the actual date of separation. In one affidavit, the Wife says that after a number of the Husband’s relapses, she made a decision to finally separate in October 2007; in another affidavit she says June 2007 which she has asserted in various Court documents. Separation does not necessarily occur on a single date. It can occur over a longer period which may have been the case here. It may also be that the parties were not separated in a legal sense, as the Husband now asserts, or were separated and subsequently reconciled. The fact that the Husband, after the orders of 2008, did not proceed with his divorce application, that the Wife did not insist on the Husband living in alternative accommodation when the opportunity seemed to be there for her to do so, that the Husband deposited inherited funds to the Wife’s account (whether or not she paid them back) and that some of the invoices/receipts for the improvements at Property S were addressed to the Husband, all lend support to the Husband’s contention that the parties were not legally separated from June 2007. I find it arguable that the 2008 consent orders were just and equitable and intended to finalise the parties’ financial relationship, but I also find it arguable that they were intended to protect the Wife’s share of the parties’ assets and not necessarily to finalise the parties’ property rights. If the latter is the position, then both parties may have relied on false statements to obtain the orders. I find it unnecessary to make a finding as to whether, if false statements were made in the documents provided to the Court to achieve the 2008 orders, those statements resulted in a miscarriage of justice, given my conclusion about the 2011 orders.
The Husband’s case is focussed on the process and outcome of the 2011 orders. By the time of those orders, the Husband had sold one of his two properties. He retained the Property P property, which was valued at the time at $600,000. The Husband owed $200,000 to a Mr R, secured by that property. On each party’s case, under the 2011 orders, the Husband transferred the Property P property to the Wife, to meet the debt of $200,000 and to protect that property from further gambling debts. The transfer of this property deprived him of his only source of income, which resulted in the Husband being forced to rely on Centrelink benefits alone. The Wife says that while the 2011 orders did achieve a protection of that asset, the 2011 orders were intended to be a final property settlement between the parties.
I am not satisfied the evidence supports the Wife’s contention. I find the parties’ decision to transfer the Property P property to the Wife likely to have been related to the Husband’s ongoing gambling problem and the parties’ wish to protect their assets from further loss. I am not persuaded the Husband would have agreed to the transfer of his last remaining asset of value to the Wife if the parties were estranged, their relationship acrimonious, and this was to be an end to their financial relationship.
Questions arise as to how the Application for the 2011 Consent Orders were completed. The Wife says she instructed her solicitors to prepare the documents, which the evidence confirms. What is not clear is how the Husband completed his part of the documents. He claims to have had no legal advice from the solicitor who witnesses his signature, and to have signed the documents without carefully reading them. He says he trusted the Wife and understood the documents were designed to achieve what the parties wanted: a transfer of the property to the Wife to protect the equity in the asset from his gambling.
I agree with the Husband’s counsel that the Wife would have known the Husband was not working as a (occupation omitted) and earning an income from that source. I agree that the Wife would have known the orders proposed would affect the Husband’s earning capacity unless she intended to pay him the income from the lease of that property, of which there is no evidence. While I accept the submission for the Wife that it was the Husband’s responsibility to complete the documents accurately for his part, if the Husband’s evidence is accurate that he has limited reading ability in English, that would have been known to the Wife. Given the circumstances, I am not persuaded that the Wife did not bear some responsibility for ensuring the documents were accurate to the extent of her knowledge.
I am not satisfied the evidence supports a finding that the Wife made the greater financial contribution to the assets of the marriage. I am unable to assess and evaluate each party’s contributions on the evidence provided. Neither am I satisfied that the evidence supports all the Wife’s solicitor’s submissions on this issue. For example, on a perusal of the invoices annexed to the Husband’s affidavit, I do not come to the same conclusion. The Husband does not suggest he has annexed all the invoices, only some of them, and I do not calculate the total as $12,000 as put for the Wife. I agree with the submission that invoices are duplicated and that only some of them are addressed to the Husband. I also sighted receipts dated much earlier than the period of the improvements. However, the Wife does not explain why invoices would be addressed to the Husband if he had nothing to do with the renovations/improvements. Her explanation that she always reimbursed the Husband if he paid for an item is vague.
In relation to the Husband’s money from (country omitted), I am not satisfied the evidence supports a finding that the Husband received $155,000 for one property and $80,000 for another. It is clear the sum of $155,627.70 was paid into the Wife’s account in May 2011.[17] However I cannot make a finding as to how much was repaid to the Husband. While the Wife deposes to repayments of $162,000, she relies on letters from the (omitted) Bank confirming various payments from the loan account to her nominated account. She does not show that the nominated account was the Husband’s. The Wife says she paid all these funds in cash to the Husband, but does not explain how this was done, nor why she paid him more than the sum he originally gave her. I am not assisted by the Husband who does not refer to any repayments.
[17] Annexure J to Wife’s affidavit sworn on 23 August 2013
Further, in relation to the Wife’s assertion as to her greater financial contribution, I find the Wife’s evidence as to her income inadequate. She deposes to working full time from 6.00a.m. until 10.00 p.m. 7 days a week from 1987, while she had the primary care of an increasing number of children. She says in her affidavit of November 2007 that she stopped work in 2002/3.[18] It is not clear when she started work again. She does not adduce evidence of tax returns or assessments. The Wife does not explain what funds she used to meet all the expenses to which she says the Husband made no or minimal contribution from June 2007.
[18] At paragraph 33 of Annexure A of Husband’s affidavit sworn on 1 September 2015
I accept the Wife’s solicitor’s submission that the Husband has not adequately explained how he used the assets he received in 2008 and subsequent to 2008, and that it may be that the Husband has understated the extent of his gambling. However, on the evidence available, I am unable to come to a conclusion on each party’s contributions, and on the extent of the Husband’s waste on gambling.
I find it unlikely the 2011 consent orders would have been made by this Court, at least without further inquiry, given the Court must be satisfied that any orders made for property settlement are just and equitable following an evaluation of contributions and s.75(2) factors.
For all these reasons, I am not persuaded that the Husband has so little prospect of success that his application should be summarily dismissed.
Legal principles in relation to security for costs
The Court’s power to make an order for security for costs is found in section 117(2) of the Family Law Act 1975 (Cth), which provides:
If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), [4A] and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
The provisions of s 117(2A) are as follows:
In considering what order (if any) should be made under subsection (2), the court shall have regard to:
(a) the financial circumstances of each of the parties to the proceedings;
(b) whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c) the conduct of the parties to the proceedings…
(d) whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e) whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f) whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
(g) such other matters as the court considers relevant.
In setting out the legal principles in relation to security for costs, the Full Court in Sullivan & Tyler [2015] FamCAFC 167 cited with approval the decision of the Full Court in Sawer & Sawer [2007] FamCA 140 which held that[19]:
[19] The principles enunciated by the Full Court in Sawer were drawn from the earlier Full Court decisions of Luadaka & Luadaka (1998) FLC 92-830,
Jones and Jones (2001) FLC 93-080, and Adult Guardian and Mother's Parents and B and Child's Representative (2002) FLC 93-116.The authorities establish that in exercising the discretion to order security for costs, it may also be relevant for the Court to consider in addition to the financial circumstances of the parties and the other five specific matters mentioned in s 117(2A), the following matters:
a) the prospect of success of the litigation;
b) whether the claim for security is made bona fide;
c) whether or not an order for security would stifle the litigation;
d) whether or not the litigation may involve a matter of public importance;
e) whether or not there has been a delay in bringing the application for security;
f) whether there would be difficulty in enforcing an order for costs.
It is submitted for the Wife that the Husband’s case is weak at best. The Husband has failed to explain how he has used the property he has received since 2008 and funds he has received subsequently, including an amount of $10,000 released to him from the (omitted) Bank in 2014. Mr Brown submits that on the basis of the inadequate evidence provided, the Court could not make a finding that the Husband is impecunious, given his failure to disclose how he has used all these assets. However, even if the Court was satisfied that the Husband was impecunious, the Court can still make an order for security for costs. It is submitted that the Wife would have to meet a case at great expense to herself, and even if wholly unsuccessful, the Husband could not meet any order for costs. The Wife is therefore prejudiced and needs to be protected against the probability of unsuccessful litigation.
The financial circumstances of each of the parties to the proceedings
The Wife’s Financial Statement was sworn over two years ago on 26 August 2013. She deposed to being employed part-time at a (employer omitted) in (omitted) in (employment omitted). She was earning $700 gross per week, or $517 a week after tax and superannuation expenses. She had three of the parties’ children living with her at the time, and all were in receipt of a modest income. Her expenses were in excess of her income. She deposed to owning the Property S property valued at $1.5m and bank proceeds of approximately $370,000 held in the name of her daughter A. She does not refer to any interest she was receiving on that sum. She deposed to owning two cars with a combined value of $30,000 and household contents. Her only liability was $30,000 owed to Mr C. She held $21,000 in superannuation.
I have outlined the Husband’s evidence as to his financial position deposed to in his affidavit sworn 1 September 2015. His Financial Statement was sworn in 2013, though his position has apparently not changed significantly. He deposes to having no assets, with the exception of an old car valued at $1,000. He has substantial liabilities. He depends on Centrelink income. He relies on his brothers’ good will for accommodation. He is unable to work because of health issues. He believes it unlikely any landlord would accept him as a tenant given his financial position.
While the Wife’s solicitor submits that the Court should not rely on the Husband’s evidence as to his financial position, because of his failure to disclose how he has applied the substantial funds he has controlled since 2008, I find merit in the Husband’s counsel’s argument that given the Wife’s evidence of his gambling addiction, it is unlikely the Husband is hiding funds.
It is conceded by the Husband’s counsel, properly in my view, that the Wife could not expect to recover costs from the Husband because he has no assets.
Whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party
Neither party is in receipt of legal aid.
The conduct of the parties to the proceedings
This is not a factor to which I have regard here. Through no fault of the parties, this litigation has a lengthy history.
Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court
This is not a relevant factor.
Whether any party to the proceedings has been wholly unsuccessful in the proceedings
This is not a relevant factor.
Whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer
This is not a relevant factor.
Such other matters as the court considers relevant.
I find that the Wife represented to the Husband that the 2011 orders were necessary to protect the equity in the Property P property from his gambling, not to finalise the parties’ property interests.
The prospect of success of the litigation
While I am satisfied the Husband has reasonable prospects of having at least the 2011 orders set aside, I am unable to assess his prospects of success on a s.79 application if the s.79A application is successful.
Whether the claim for security is made bona fide
I am satisfied that the Wife makes her claim on a bona fide basis. As noted, I find it unlikely the Husband could meet any order for costs made against him if he were unsuccessful.
Whether or not an order for security would stifle the litigation
I find an order for security for costs would be likely to stifle the litigation, given I am not persuaded the Husband has funds with which to make a payment, nor assets against which he can borrow funds.
Whether or not the litigation may involve a matter of public importance
Counsel for the Husband submits that the Court should not favour a person who knowingly made a false representation against a person who joined in that representation in order to make the application to the court. Should the Court make such a finding, I agree with his submission that the public interest is in the integrity of the judicial process and the question of whether this court is appropriately used for collateral purpose.
Whether or not there has been a delay in bringing the application for security
There is no evidence of delay.
Whether there would be difficulty in enforcing an order for costs.
As already noted, I find it unlikely the Husband could meet any order for security for costs.
Determination
I have decided that the Husband’s application under s.79A should be heard and determined. The Wife has therefore been unsuccessful in her application for summary dismissal.
I have earlier referred to unsatisfactory aspects of each party’s evidence. In particular, I accept the submission for the Wife that the Husband has failed to adequately explain how he has used all the funds he has received since the 2008 orders were made. However, I am not satisfied, on the evidence before me, that the Husband has the capacity to meet an order in any sum to secure the Wife’s costs.
While I am satisfied that the Wife may suffer prejudice if the Husband’s application is ultimately unsuccessful and he is unable to meet a costs order against him, I am also satisfied that if any order is made to secure the Wife’s costs, the litigation could not proceed. As this would stop the Husband having the opportunity to prosecute his case, it would negate the effect of my earlier order to dismiss the Wife’s application for summary dismissal. I will therefore dismiss the Wife’s application for security for costs.
Costs
Each party seeks costs of this hearing. On the basis that the Wife has been wholly unsuccessful in these interlocutory proceedings, her Application for costs is dismissed.
In relation to the Husband’s application for costs at this hearing, on a consideration of the s.117(2A) factors, I have decided not to make any order. Even though the Wife was unsuccessful, the Husband’s case is that he knowingly made false statements to the Court a number of times and used the Court for a collateral purpose. This conduct cannot be countenanced.
I have listed the matter for further directions on 2 February 2016 at 9.30a.m.
I certify that the preceding one hundred and seven (107) paragraphs are a true copy of the reasons for judgment of Judge Sexton
Date: 25 January 2016
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