Vaile and Labrum and Ors
[2019] FCCA 2867
•23 October 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| VAILE & LABRUM & ORS | [2019] FCCA 2867 |
| Catchwords: FAMILY LAW – Practice and procedure – application for adjournment – appointment of litigation guardian – application for joinder – application by counsel to withdraw – application to proceed on undefended basis – failure to comply with directions regulating conduct of trial – failure to file trial affidavit, current financial statement, outline of case or engage at trial as to asset pool – applicable principles – where first respondent husband participates in trial, cross-examines, consents to joinder and makes submissions – where scope of undefended hearing is limited – proceeding conducted on an undefended basis. |
| Legislation: Administration and Probate Act 1958 (Vic), ss.70K(1), 70ZG(1), 90A Evidence Act 1995 (Cth), s.140 Family Law Act 1975 (Cth), ss.80, 81, 106A Family Law Rules2004 (Cth), rr 11.01, 11.02 |
| Cases cited: A and Z [2006] FamCA 179 Zane & Allan[2008] FamCAFC 115 |
| Applicant: | MR VAILE |
| First Respondent: | MR LABRUM |
| Second Respondent: | MR F LABRUM |
| Third Respondent: | MR H LABRUM |
| Fourth Respondent: | MS G LABRUM |
| Fifth Respondent: | C PTY LTD |
| File Number: | MLC 6854 of 2018 |
| Judgment of: | Judge A Kelly |
| Hearing dates: | 19, 20 August 2019, 2 October 2019 |
| Date of Last Submission: | 2 October 2019 |
| Delivered at: | Melbourne |
| Delivered on: | 23 October 2019 |
REPRESENTATION
| Counsel for the Applicant: | Mr C. Dunlop |
| Solicitors for the Applicant: | Hassel's Litigation Services |
| Counsel for the First Respondent: | Mr G. Thexton (19-20 August 2019) |
| Counsel for the First Respondent: | Mr J. Hall (2 October 2019) |
| Solicitors for the First Respondent: | Thexton Lawyers | |
| Counsel for the Second to Fifth Respondents: | Ms M. Smallwood (2 October 2019) | |
| Solicitors for the Second to Fifth Respondents: | Tisher Liner FC Law |
THE COURT ORDERS THAT:
The applicant (wife) retain for her sole use and benefit the property comprised in J Street, Suburb K, in the State of Victoria.
By 4.00pm on 31 December 2019, the 1st respondent (husband) pay to the wife the sum of $120,000.
By consent of the applicant and 2nd respondent, the said sum of $120,000 may be paid in the first instance to the applicant by the 2nd respondent.
If the said sum of $120,000 is paid by the 2nd respondent to the applicant, the 2nd respondent is at liberty to recoup that sum from the net proceeds of sale of the known as and situate at L Street, Suburb M, in the State of Victoria (L Street, Suburb M property) in accordance with paragraphs (5)-(6) of this Order.
The 1st respondent husband forthwith do all things and sign all documents necessary so as to authorise the 2nd, 3rd, 4th and 5th respondents to:
(a)complete construction of the 2 dwellings on the L Street, Suburb M property;
(b)complete the subdivision of the L Street, Suburb M property; and
(c)sell the land and dwellings comprised in the L Street, Suburb M property;
on such terms and conditions as the respondents may reasonably decide (and at the expense of the 2nd, 3rd 4th and 5th respondents), save that in default of agreement, such terms and conditions of sale be determined by the President for the time being of the Real Estate Institute of Victoria.
Upon completion of the sale of the rear dwelling comprised in the L Street, Suburb M property and proposed subdivision, the proceeds of that sale be applied as to:
(a)payment of all costs and commissions of sale;
(b)payment of the debt secured by caveat … lodged by National Australia Bank in relation to its unregistered mortgage;
(c)reimbursement to the 2nd respondent of the said sum of $120,000 paid on behalf of the 1st respondent husband;
(d)payment of the residue to the 2nd respondent.
Upon completion of the sale of the front dwelling comprised in the L Street, Suburb M property and proposed subdivision, the proceeds of that sale be applied as to:
(a)payment of all costs and commissions of sale;
(b)payment of $661,000 to the 4th respondent in discharge of the mortgage registered in her name over the L Street, Suburb M property; and
(c)payment of the residue to the 3rd respondent.
Upon payment or recovery of the said sum of $120,000 and completion of the settlements of the sale of the L Street, Suburb M property, paragraph (4) of the interim Order made on 20 August 2019 be discharged.
Declare that the distributions referred to in paragraphs (6) and (7) of this Order herein are made in complete satisfaction and extinguishment of any debt or alleged debt owing by the applicant wife and/or 1st respondent husband to the 2nd, 3rd, 4th and 5th respondents or any of them.
If within 7 days of any written request to do so the 1st respondent husband fails to execute any document and/or do anything as may reasonably be required of him pursuant to paragraph (5) of this Order, pursuant to section 106A of the Family Law Act 1975 (Cth), Aaron van der Heyden, solicitor of Tisher Liner FC Law, 333 Queen Street, Melbourne, is appointed to execute all such documents in the name of Mr Labrum and do all things as may be required so as to give validity and operation to this Order.
Contemporaneously with receipt of the said sum of $120,000 pursuant to paragraphs (2)-(4) of this Order, the applicant wife shall remove any caveat which has been registered by or on her behalf over any property registered in the name of the 1st respondent husband.
As between the applicant wife and 1st respondent husband, unless otherwise specified in this Order and save for the purposes of enforcing any monies due under this or any subsequent Order:
(a)each party be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the possession of such party as at the date of this Order;
(b)each party be liable for and indemnify the other in relation to any personal debt and credit card in their names;
(c)each party forgo any claims they may have to any superannuation benefits belonging to or earned by the other;
(d)insurance policies remain the sole property of the owner named thereon;
(e)each party be solely liable for and indemnify the other against any liability encumbering any item of property, any claim, suit or debt in relation to or arising from any item of property to which that party is entitled pursuant to this Order; and
(f)any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
By 4.00pm on 31 October 2019, the applicant file and serve any submission respecting the costs of this proceeding (not more than 3 pages).
By 4.00pm on 28 November 2019, the respondents file and serve any submission respecting the costs of this proceeding (not more than 3 pages).
Any application for costs be decided on the papers.
All extant applications, including the 4th respondent’s application for parenting orders concerning X born … 2014, be otherwise dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Vaile & Labrum & Ors is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC6854 of 2018
| MS VAILE |
Applicant
And
| MR LABRUM |
First Respondent
And
| MR F LABRUM |
Second Respondent
And
| MR H LABRUM |
Third Respondent
And
| MS G LABRUM |
Fourth Respondent
And
| C PTY LTD |
Fifth Respondent
REASONS FOR JUDGMENT
Introduction
These reasons for judgement explain orders that are made upon an application for a final adjustment of property interests.
By way of overview, the applicant mother sought both parenting and property orders. The parenting application was resolved on the first day of trial. As described below, there has been a near complete failure by the 1st respondent to properly engage in the proceeding. While the parties were agreed that it was just and equitable for there to be an adjustment of property interests, it proved difficult to identify precisely what relief was submitted by the 1st respondent to be appropriate.
Although the matter was further complicated by the husband’s property and financial dealings with his siblings and mother, consent orders were made for the joinder of those parties who submitted a proposed minute of order which was said to provide a means by which the applicant wife could extract herself from her financial relations with the husband. The applicant wife consented in the proposed orders while the husband submitted that the orders were well within the range of what represented a just and equitable adjustment of property interests.
Subject to some minor refinement, I am satisfied that orders should be made substantially in the terms of the proposed orders.
Background
The applicant wife is aged 37 years and holds part-time employment as a professional. She has the full time care of the child of the parties’ relationship, X, who is now aged five years. The 1st respondent father spends no time with, and provides no financial support for, X. It may safely be assumed that he will not do so in the future and accordingly the applicant is entirely self-reliant.
The 1st respondent is aged 39 years and presently lives with his mother in Suburb N. He resides with his mother as a condition of his bail. The 1st respondent had previously held employment as a tradesman. The history of the matter confirms him to have used and abused various substances including ice, marijuana, steroids, cocaine and sleeping pills. He has been incarcerated for various offences. As the applicant deposed, the 1st respondent has been incarcerated on a number of occasions.
Although the parties initially met in around 2006 when they were both in their mid-20s, they did not form a relationship until mid-2012 when the 1st respondent contacted the applicant via Facebook. At that point the applicant was aware that the 1st respondent had been incarcerated but she formed the view, naively, that he had matured.
The 1st respondent then owned a property in L Street, Suburb M ( L Street, Suburb M property). When the existing tenants vacated the property in … 2012, the parties moved into this residence. Soon afterward, the applicant discovered, contrary to her initial impression, that the 1st respondent had not changed his lifestyle. Instead she found him to being very violent, dangerous and abusive.
On 8 August 2016, the parties vacated the L Street, Suburb M property in order that it could be redeveloped. The redevelopment was effectively undertaken by the 1st respondent’s siblings. It is remains unfinished.
The parties were married … 2015 and separated on 4 February 2017. The case was conducted on the basis that they had had a relationship of about five years.
On 4 November 2017, an intervention order, operative for two-years, was made against the 1st respondent. An application to extend the operation of that order has been made.
Procedural history
The procedural history of the proceeding has been most unsatisfactory.
On 20 June 2018, the applicant filed an initiating application, notice of risk, affidavit and financial statement. The notice of risk detailed the scale of the 1st respondent’s abuse and violence and the physical injuries that the applicant alleged she had sustained at his hands.
On 24 July 2018, the 1st respondent filed a response, notice of risk, financial statement and affidavit. By his notice of risk the 1st respondent made allegations of abuse against the applicant and that the applicant suffered from suicidal ideation. The 1st respondent’s notice of risk stated that he had engaged in a Men’s Behavioural Change Program.
On 25 July 2018, orders were made fixing the application for final hearing on 19 August 2019. Orders were made regulating the procedural steps which were required to be undertaken in order that the matter could be made ready for trial. A number of consent orders were made in relation to parenting and property including that they would obtain various expert reports. A further order was made by consent that unless by 1 August 2018, the parties had confirmed in writing an agreement upon the market value of certain properties, then they would forthwith do all acts and things necessary to obtain a joint sworn valuation. In the event, the 1st respondent obstructed the preparation of valuations.
At a mention on 24 October 2018, orders were made that a psychiatrist, Dr A, be permitted to inspect certain material. On 13 December 2018, orders were made, by consent, permitting inspection of material which had been produced on subpoena by certain health professionals, Victoria police and the Department of Health and Human Services.
Contrary to the orders made on 25 July 2018, the 1st respondent did not file an outline of case, financial statement or trial affidavit. In response to a compliance check undertaken in the week prior to the appointed hearing date, a solicitor who had assumed the conduct of the 1st respondent’s case stated that there had not been sufficient time to draft a trial affidavit or outline and that an adjournment would be sought. By contrast, the applicant wife complied with all procedural orders and prepared a detailed outline of case in which the precise relief being sought was identified.
The trial of the proceeding advanced in stages for the reasons below.
Application for adjournment
At the hearing, each party was legally represented by counsel or a solicitor advocate having specialist experience in family law. On the first day of the hearing, an application for an adjournment was made. It was refused. As stated at the hearing, I advised that reasons for the refusal of the adjournment would be provided. Those reasons follow.
An application for an adjournment is not automatic but calls for the exercise of judicial discretion: cf Gallo v Dawson.[1] Indeed, inherent in the grant of a discretionary power, is an assumption that such applications will sometimes be refused: Jackamarra v Krakouer.[2] More recently, in DKX17 v Federal Circuit Court of Australia, Rangiah J, with whom Reeves and Bromich JJ agreed, stated:[3]
An adjournment is not granted merely for the asking. Wider issues are in play, even if they were not expressly referred to by the trial judge. As Toohey and Gaudron JJ observed in Sali v SPC Ltd [1993] HCA 47; (1993) 67 ALJR 841 at 636:
The contemporary approach to court administration has introduced another element into the equation or, more accurately, has put another consideration onto the scales.The view that the conduct of litigation is not merely a matter for the parties but is also one for the court and the need to avoid disruptions in the court's lists with consequent inconvenience to the court and prejudice to the interests of other litigants waiting to be heard are pressing concerns to which a court may have regard.
See also, CDV17 v Minister for Immigration and Border Protection.[4]
[1] (1990) 93 ALR 479, 480 (McHugh J).
[2] (1998) 195 CLR 516, 540 (Kirby J), see also at 519-521 (Brennan CJ and McHugh J).
[3] [2019] FCAFC 10, [83].
[4] [2019] FCA 726, [32] (Snaden J).
I accept the submission of counsel for the applicant that the 1st respondent had been legally represented from at least July 2018 and was so represented when orders were made setting the proceeding down for hearing. It follows that the 1st respondent has had in excess of 12 months to prepare for the trial. No application in a case was filed and no evidence was adduced explaining the basis on which an adjournment was justified. I do not accept that the recent appointment of a new firm of solicitors is a proper basis for the adjournment of the proceeding. It is certainly not the basis for an adjournment as a matter of right. I further accept the submission of counsel for the applicant that although the 1st respondent’s solicitor had been on record for at least three weeks before the appointed trial date, there had been no intimation, whether to the court or the applicant, at any stage until immediately prior to the hearing date that an adjournment would be sought.
Principles of case management also intervene. As stated in the course of the hearing, the circumstance that the hearing date is granted to the parties in this proceeding has the necessary consequence that that hearing date has been denied to others. It is notorious that there is a high volume of family law proceedings awaiting determination in this court. The grant of an adjournment would operate to deny other parties their hearing at an adjourned date. The denial of such opportunity would apply on both the fixed date for hearing and on any proposed adjourned date. No persuasive reason was advanced as to why an adjournment should be granted.
A faint attempt was made to justify the adjournment on the basis that the applicant had served an expert report as to value of certain property and that the 1st respondent, so it was said, had had no opportunity to provide an answering report. The submission made as to this was opportunistic. It ignored that consent orders had been made for valuation. I was taken in the court book to a letter of joint instructions transmitted on 2 October 2018 and later correspondence in which a valuer had cancelled his retainer on account of the difficulty in obtaining instructions, information and in particular, access to properties. It was in those circumstances that the applicant’s solicitors, commendably, took steps to secure evidence as to value which was then served on the 1st respondent. It did not line in the mouth of the 1st respondent to oppose the tender of those expert opinions as to value. Indeed no such objection was raised. To the contrary, only one valuer was required for cross-examination. All valuation evidence was tendered by the applicant in circumstances where the 1st respondent had failed to act co-operatively and in disregard of consent orders for joint valuations.
The 1st respondent has had more than adequate opportunity to prepare for and present submissions for the hearing. As long ago as July 2018, orders were made listing the matter for final hearing. For the foregoing reasons, I was not satisfied that there was any sufficient merit in the request for an adjournment of the hearing and it was refused.
First application for undefended hearing
Upon refusal of the adjournment, the applicant then sought that the hearing proceed undefended. At that point, I refused the application. Counsel for the applicant accepted that even if the matter would proceed undefended, the court retained a discretion as to the extent that it might permit the 1st respondent to participate in the hearing.
I determined that it would be in the parties’ best interests for the 1st respondent to exercise a choice whether to participate in the hearing. However, as the 1st respondent had failed to file an outline of case, financial statement and trial affidavit, a direction was made that he file and serve such a case outline and financial statement by 9:30am on the morning of the second day of trial. In the event, the 1st respondent did not comply with those directions.
The matter was then stood down to afford the parties an opportunity to explore the prospect of resolution of any part of their proceeding. Ultimately, the parties agreed in final parenting orders, the substantive effect of which included that, by consent: the applicant should have sole parental responsibility for their child; the child should live with the applicant; the child should spend no time with the 1st respondent and that other orders be made in relation to birth certificates and passports.
Final parenting orders were made in the terms sought by consent. Relevantly, the parties were agreed in a notation that reflected the expert opinion of a clinical psychologist, Ms B, who opined that any resumption of spend time under supervision should occur if, and only if “the husband has demonstrated without doubt, that he has been drug-free for the two-year period and that he has not been involved in any family violence and has not offended or been involved with the police.” Ms B also considered that the 1st respondent “needs to be fully drug-free for at least two years, longer than the period specified for sustained remission because of the combined behavioural and attitudinal probable problems associated with the combination of the two disorders.”
Evidence was then given by the applicant and one valuer. The only other valuer was not required for cross examination. I address the evidence adduced at the hearing in greater detail below. For present purposes, I record that the applicant closed her case on the first day of trial.
With a view to facilitating that the 1st respondent might have a further opportunity to confer with his solicitor advocate, I deferred the commencement of his evidence until the second day of the hearing.
Appointment of litigation guardian
Contrary to the direction which was made on the first day of hearing, the 1st respondent did not file a current financial statement. Nor did he file any document recording his position in relation to the parties’ asset pool.
When the hearing re-commenced on day two, the 1st respondent’s solicitor advocate asserted that he had been unable to obtain instructions and that the 1st respondent was now being supported at the hearing by his two brothers, each of whom was in attendance on that day.
Despite repeated requests, it was difficult to identify precisely what course or application was being advanced on behalf of the 1st respondent. Ultimately, the 1st respondent’s solicitor advocate appeared to rely upon a suggested inability to obtain instructions together with the need to secure a litigation guardian in order that the matter might proceed. Again, and without evidence or other adequate explanation, it was suggested that neither of the 1st respondent’s brothers was a suitable candidate to act as a litigation guardian in circumstances where they held property interests in common with the respondent and so, as the argument ran, would be ‘affected’ by any orders that were made. Pressed to identify the precise relief being sought against either those brothers or any other member of the respondent’s family, the reply was non-responsive.
The matter was stood down to allow the parties’ representatives to confer.
After some further time, of the court’s own motion, but with the consent of the 1st respondent, the proceeding was adjourned part heard to the earliest available date. A direction was made affording the 1st respondent an opportunity to file and serve an affidavit to which was exhibited a medical certificate indicating his current condition and prognosis. The respondent was also afforded a further opportunity to file an outline of case (which included a complete statement as to the asset pool) and a current financial statement. An interlocutory injunction was granted restraining 1st respondent from further encumbering his interest in either the L Street, Suburb M or Suburb O properties until further order.
For the avoidance of doubt, counsel for the applicant confirmed that, if an application was made for the appointment of a litigation guardian, no objection would be taken to either of the 1st respondent’s brothers acting in that capacity. It was also made clear that if no application was made for the appointment of a litigation guardian, the court would entertain an application for the matter to proceed undefended on 2 October 2019.
Pursuant to the direction given on the second day of trial, an affidavit was filed exhibiting a medical certificate which confirmed that on that day, the 1st respondent had attended a medical practitioner with certain of his family members who had expressed concern about recent behavioural changes. The certificate included a history of the ingestion of ice in 2017. In terms of case management, the certificate suggested that the 1st respondent was reassured and advised of the need to obtain specialist opinion and a referral was made. Despite the suggestion that an application may be made for the appointment of a litigation guardian, no such application was made and no further evidence was adduced in relation to the respondent’s medical condition to support any conclusion that such an appointment was appropriate in the circumstances.
On the adjourned date of the hearing, the 1st respondent was represented by counsel with his solicitor being present during the hearing. By this date, no application or supporting affidavit had been made by or on behalf of the 1st respondent for the appointment of a litigation guardian. Contextually, the same solicitor had continued to act throughout the intervening period on behalf of the 1st respondent and no suggestion was made that any difficulty had been encountered in obtaining instructions.
Application for joinder
On 26 September 2019, an application in a case was filed on behalf of the 1st respondent’s brothers Mr F Labrum and Mr H Labrum, and his mother, Ms G Labrum . Relevantly, application was made for the joinder of those parties, together with orders for the payment of certain monies by the applicant ($186,182 to Mr F Labrum) and the 1st respondent (as to $670,688 to Mr H Labrum and $1,327,890 to Ms G Labrum) (collectively, the Debts). Further orders were sought that would require the 1st respondent to do all things and sign all documents necessary to furnish instructions for completion of the works necessary to achieve issue of certificates of occupancy for two townhouses, the works for which had been only partially completed, for the L Street, Suburb M property to be placed on the market for sale, for payment of the Debts with the application of the residue as between the applicant and the 1st respondent in such proportions as were considered just and equitable for any property adjustment.
Ms Smallwood of counsel, who appeared on the third day of trial on behalf of the proposed added respondent’s made careful submissions in support of joinder. Before doing so, however, all parties were agreed that the matter be stood down in order that a further attempt could be made to achieve an overall resolution of the matter. Ultimately, that was not possible. Instead, a detailed minute of order was provided which was said to represent a consent order at least as between the applicant and the proposed added respondents. Counsel for the 1st respondent consented to the joinder of those parties but did not consent to the balance of the orders that were being proposed.
I was satisfied that it was expedient and in the interests of justice for such joinder. Having regard to the extensive evidence filed on behalf of each of Mr F Labrum, Mr H Labrum and Ms G Labrum (each of whom was present but none of whom was required for cross examination), it was clear beyond argument that the application for an adjustment of property interests as between the applicant and 1st respondent was inextricably affected by the extent to which the 1st respondent’s financial affairs were bound up with the affairs of the Labrum family members who, as noted above, claimed that the applicant and/or 1st respondent were indebted to one or other of the Labrum family for a substantial sum.
As described in further detail below, the proposed added respondents were clear in their resolve that they should be part of a solution rather than part of a problem. While the 1st respondent did not agree in the minute of consent orders (save as to joinder), he ultimately submitted that the orders comprehended by that minute were well within the range of what was just and equitable and otherwise appropriate. Further, it was not submitted that the court lacked power to make the proposed orders. To the contrary all parties were agreed that the court had power to make the orders as contemplated by the proposed minute.
Application to withdraw
Once the question of joinder had been addressed, counsel for the 1st respondent, without notice, made application to withdraw from the proceeding. The basis for the application was said to be that the 1st respondent was “difficult, obstinate and refusing to engage.” When asked to identify the source of any entitlement to withdraw, counsel made reference to the Victorian Bar Practice Rules, in particular, “rules 15 or 16”. I refused the application and stated that my reasons would follow.
The Victorian Bar Practice Rules (Rules) regulate the rules of conduct of Victorian counsel whether practising in Victoria or elsewhere. The object of those Rules is to ensure that counsel act in accordance with the general principles of professional conduct, act independently and to discharge their obligations for the due administration of justice: rule 2.
Part II of those Rules, Advocacy Rules, comprise rules 10 – 85. Within Part II, the rules address a barristers duty to his or her client and relevantly provide that a barrister who has accepted a brief to appear at a hearing and has not returned the brief is obliged to be present in court ready to represent the client on each occasion on which the hearing proceeds: rule 15. Further, within Part II, those rules address a barrister’s duty to the court and provide by r. 16 that a barrister must not act as the mere mouthpiece for the client or for the instructing solicitor and must exercise the forensic judgement called for during the case independently, after appropriate consideration of the client’s and the solicitor’s instructions where practicable. While I do not consider that either rules 15 or 16 provide a proper basis upon which counsel was entitled to withdraw from the hearing, I record that counsel for the 1st respondent conducted himself in accordance with r. 16.
Part III of the Rules, which concerns the subjects, Briefs and Retainers, comprises rules 86 – 112. Rule 98 regulates the circumstances in which a barrister may return a brief. None of the circumstances prescribed by that rule was enlivened in the present case. Further, the application of those rules operate subject to any exceptional circumstances: rule 103. There was no evidence and no basis suggested why any exceptional circumstances existed in this case as to support counsel’s application to withdraw. For those reasons I concluded that counsel was not entitled to withdraw and that he remained obliged to perform and discharge his duty to his client and the court conformably with rr. 15-16. For completeness, no application was made that the 1st respondent’s solicitor should have leave to cease to act in the proceeding.
The matter was again stood down in order that the 1st respondent could provide instructions as to whether he wished to cross-examine any of the 2nd to 4th respondents upon their affidavits by which they sought to prove the series of debts which they alleged to be owed by one or other of the applicant and 1st respondent. Counsel for the 1st respondent submitted that no cross-examination of those deponents was required. Nor was such cross-examination required by the applicant.
Undefended hearing
Having regard to the foregoing events, counsel for the applicant renewed the foreshadowed application to proceed undefended. I acceded to that application and said that I would provide reasons. I did so given the 1st respondent’s failure to file or serve a trial affidavit, financial statement or outline of case and otherwise to comply with the orders and directions which afforded him extended opportunities to do so.
Non-participation in a proceeding may represent another means of impeding the determination of an application. When one party fails to appear in a proceeding the court may order an undefended hearing.
Provided a party has acknowledged service, the court may proceed with the hearing of an application as if it were undefended.[5] In determining what orders, to make, the court will ensure that the absent party is allowed procedural fairness.[6] As such, the attending party must ascertain whether the absent party was properly put on notice that the hearing was listed and may be heard in their absence.[7]
[5] Federal Circuit Court Rules 2001 (Cth), r. 25.12(b).
[6] F and S [2005] FamCA 44; (2005) FLC 93-208 (Bryant CJ, Kay and Holden JJ).
[7] See also rr 11.01 and 1.02 of the Family Law Rules2004 (Cth).
In McMahon and McMahon,[8] the Full Court held that the court is not precluded from hearing proceedings in the absence of a party where adequate notice has been given. Evatt CJ, Pawley SJ and Ellis J stated[9] that where a court proceeds to deal with a matter on an undefended basis, it remains bound by the same general requirements as to proof as in a defended matter; however, “[t]his does not mean that a court necessarily has to insist on detailed evidence, make elaborate findings and give reasoned decisions in undefended matters. This would cast too onerous a burden on the court, and clog up already crowded lists. Nevertheless it must be satisfied that the evidence supports its findings and orders.”[10] A proceeding will be treated as undefended when the respondent does not challenge or put in issue any of the components of the cause of action in question. The fact that the respondent is opposed to the court making the order and/or wishes to defend the granting of the order which is sought does not make the proceeding defended if the issues raised by the respondent are irrelevant to the issues constituting the cause of action.[11] However, in A and Z,[12] the Full Court noted the settled principle that once it appears there is a real question to be determined (whether of fact or law) and that the parties’ rights depend upon it, then it is not competent for the court to dismiss the action as frivolous, vexatious or as an abuse of process.[13] Those principles constrain the approach to be taken on an undefended hearing. It follows that where a proceeding is listed as an undefended hearing, it does not follow that the orders sought by the participating party will be made by the court. Consequently, if an applicant in an undefended hearing advances an untenable claim or submission, it must be rejected.
[8] (1976) FLC 90-128.
[9] (1976) FLC 90-128 at 75, 607.
[10]McMahon and McMahon (1976) FLC 90-128; See also Zane & Allan[2008] FamCAFC 115, at [205] (May J).
[11]A and Z [2006] FamCA 179, [64] (Faulks DCJ, Warnick and Boland JJ) citing Abbott and Abbott [1995] FamCA 5; (1995) FLC 92-582.
[12] [2006] FamCA 179, at [22].
[13] Dey v Victorian Railways Commissioners(1949) 78 CLR 62 at 91 (Dixon J).
The nature of an undefended hearing was also dealt with in Tate v Tate.[14] There, Nicholson CJ, Kay and Waddy JJ held[15] that in exercising the discretion to order an undefended hearing, the court may in an exceptional case, proceed with a hearing as being undefended. Their Honours observed that “no litigant, whether legally represented or not, should harbour any doubt that manipulation of court processes . . . through disregard of and deliberate non-compliance with its order and directions will attract other than the strongest measures from the Court”: see also Zane & Allen.
[14] [2000] FamCA 1040; (2000) FLC 93-047.
[15] [2000] FamCA 1040, [107]-[108].
A similar result may obtain where a respondent chooses not to participate in a proceeding. In Lanceley and Lanceley,[16] a respondent took no active part in the proceedings. The Full Court held that:[17]
A respondent who merely wishes to ask the court to dismiss the appellant’s application (and seeks no other order) and who wishes to place no evidence before the court, but who wishes to submit that the application should be dismissed even on the applicant’s evidence, is certainly not obliged by the Rules to file any answer or affidavit, but only a Notice of Address for Service. However, if such a respondent then attends the hearing and in fact makes no submissions against the application (as the husband did in this case) then, in anyone’s language, the application is ‘undefended’ or ‘unopposed’.
Those observations have been endorsed repeatedly.[18]
[16] [1994] FamCA 94; (1994) FLC 92-491.
[17] (1994) FLC 92-491,104.
[18] See, eg, A and Z at [66] and Zane & Allen at [210] citing Abbot and Abbott.
In Zane & Allen,[19] May J approved certain principles that had been stated by the trial judge in relation to the conduct of an undefended hearing as follows:
[19] [2008] FamCAFC 115, [212].
a)the Response then becomes a nullity;
b)where an application has been struck out due to the default of a party to make full, frank and prompt disclosure of their financial affairs, the party ought have no further right to be heard without order of the court (Tate);
c)the applicant has a duty to the court to make full disclosure and deal with the court in good faith (In the marriage of Krebs[20]);
d)the applicant must establish the case with admissible evidence (Tate);
e)the court has the discretion to have regard only to the evidence of the party before the court and not the affidavit evidence of the excluded party (Tate). Conversely, the court retains a discretion to have regard to part or all of the affidavit evidence filed by the excluded party;
f)the court may exercise a discretion to have regard to agreements reached between the parties prior to the hearing as to such matters as value of property where such agreements have been noted on the court record or where there is admissible evidence establishing such agreement (Tate);
g)the court remains bound by the same general requirements as to proof as apply in a defended matter. This does not mean that a court necessarily has to insist on detailed evidence, make elaborate findings or give reasoned decisions in undefended matters. Nevertheless, it must be satisfied that the evidence supports its findings and its orders (McMahon);
h)subject to procedural fairness the court may allow the remaining party in an undefended hearing to rely on affidavit material filed and served on the excluding party together with oral evidence and the tendering of documents to establish a case: (F and S);
i)there is a wide discretion as to the extent of the involvement to be permitted to a defaulting party in the undefended hearing. This discretion must be tempered with regard to procedural fairness, natural justice and the requirement to do justice to all of the parties. Each case will demand an individual assessment by the court as to the appropriate procedure to be adopted. The reasons giving rise to the determination that the case should proceed undefended will no doubt have an impact upon decisions then made regulating the procedures to be adopted at the hearing;
j)in appropriate cases the court may have regard to the evidence of the remaining party only.
[20] (1976) FLC 90-117).
Applying those principles, May J recorded[21] that the trial judge had held that the husband had forfeited a right to have his affidavits read upon the hearing. His Honour concluded[22] that appropriate sanctions were essential to secure obedience to its orders and directions in pursuit of the paramount objective that the attainment of justice was achieved in the particular case.
[21] [2008] Fam CAFC 115, [213].
[22] [2008] Fam CAFC 115, [238] (reiterating the Full Court’s observations in Tate).
A distinction is to be drawn between the approach taken in civil litigation and that appropriate to property proceedings under the Act. In part, this is because the court is not infrequently confronted with litigants who fail in their duties of full, frank and prompt disclosure of their financial affairs. Such a party may have no further right to be heard without an order of the court and it may be appropriate not to permit that material be tested by cross-examination.[23] As noted, the trial judge also has the discretion to exclude affidavits from witnesses who are unavailable for cross-examination.[24] I apply these principles in the present case.
[23] A and Z, at [68]-[69] citing Tate, 87,712.
[24]See e.g. Atkinson and Atkinson (1997) FLC 92-728 (Baker, Lindenmayer & Smithers JJ); Chang and Su.
Having regard to the continuing failure of the 1st respondent to engage in the proceeding, the applicant was entitled to an order that the matter proceed on an undefended basis. Absent compliance with a series of orders and directions, the 1st respondent had forfeited a right to defend the applicant’s claims. No outline of case, trial affidavit or current financial statement had been filed. Opportunities to rectify those failures were not taken. The 1st respondent had actively impeded the consent orders for joint valuations of the subject property. Viewed collectively, those matters supported the renewed application that the matter proceed undefended. Further, in light of the manner in which the matter had proceeded, the scope of the undefended hearing was not unduly narrow. In particular, the applicant had exercised the right to cross-examine the applicant and one of her valuers. He chose not to cross-examine other witnesses, including experts. He was afforded and took an opportunity to make submissions on the proposed joinder of other parties. He was also afforded and took an opportunity in deciding not to cross-examine the added respondents. Finally, he was afforded and took an opportunity to make closing submissions. For completeness and the avoidance of doubt, I have taken into account his affidavit and financial statement that were affirmed on 24 July 2018.
In the result, the scope of the ‘undefended’ hearing was limited to declining to allow the 1st respondent to give any further evidence at the hearing or to be cross-examined. He was otherwise allowed to participate fully at the hearing and did so.
The evidence
It is convenient to provide my findings upon the evidence. Although the hearing proceeded undefended from the afternoon of the third day of the hearing, it is consistent with the exercise of power to adjust property interests that regard may be had to the material filed by an absent party: A and Z.[25] By extension, the same may be said in cases where the matter proceeds undefended. The matters set out below include both matters that were common ground and my findings of fact upon particular issues. Where it has been necessary to decide disputed issues of fact I have applied the civil standard of proof to the resolution of that issue.[26]
[25] [2006] FamCA 179, [72] citing Chang and Su (2002) FLC 93-117.
[26] s 140, Evidence Act 1995 (Cth).
The applicant who gave evidence and was cross-examined upon a trial affidavit, gave her evidence in a frank and forthright manner. She was quite prepared to make admissions against her interest as the occasion arose. However, although the applicant was cross-examined, she was not challenged upon much of her evidence and for that reason I am more easily persuaded to accept it. The absence of challenge upon the evidence is also to be explained in part as indicating that there was no real challenge to the applicant’s evidence as to the items comprising the asset pool. In doing so I have taken account of the 1st respondent’s affidavit insofar as it sheds light on particular issues. It is therefore possible to state the findings on material issues of fact relatively briefly. From the whole of the evidence, the following findings may be made. Those findings are, of course, made in addition to the background to the proceeding which has been set out above.
As concerns the parties property pool, counsel for the applicant said on more than one occasion that the ‘trajectory’ of his client’s case was pitched in the context that there had been a singular lack of financial disclosure by the 1st respondent and that the difficulties in establishing the applicant’s case had been compounded by his obstructive manner in relation to the securing of joint valuations pursuant to consent orders. Having regard to the applicant’s conduct in this regard, the court is entitled to be more robust in making findings relating to the asset pool.
In Elkhouri v Amatullah,[27] Gill J reviewed the authorities and recognised that, as the proceedings between parties for an adjustment of property interests are not strictly inter partes, the failure of a party to comply with their obligation to make proper disclosure provided the juridical foundation upon which the court may properly “fall back” on the basal requirement for a final order to be just and equitable. His Honour held[28] that the court was then entitled to make orders in relation to unidentified property, or identified property, the value of which was unknown, in order to reach a just and equitable outcome and was able to be not unduly cautious in the absence of proper disclosure by the party in default.
[27] [2017] FamCA 688.
[28] [2017] FamCA 688, [118]-[126].
As I consider that these principles are applicable to the present case, it is convenient to address the assets comprised in the asset pool so far as that has been possible. However, given the course of the three-day hearing, much of the controversy concerning the asset pool had fallen away. In this respect the 1st applicant’s financial statement prepared in July 2018 identified each of the assets the subject of the proceeding together with certain other funds (which were not the subject of any direct evidence). Equally, the applicant’s affidavit prepared in July 2018 identified these properties as comprising “the assets, liabilities and financial resources of the marriage.” To this extent the case proceeded on the basis that the existence and ownership of the relevant properties was not an issue. Instead, the central issues were focused upon the current value of those properties and the issue of contributions. Concerning valuation, the only evidence was that led by the applicant. Concerning contributions, I have had regard to the evidence of both the applicant and 1st respondent. I address the relevant items in turn.
J Street, Suburb K property: The evidence indicates that this property was originally owned by the 1st respondent’s brothers who, for reasons unexplained, agreed to sell it to the applicant at an undervalue. The property was transferred to the applicant in about October 2016 and she has been in receipt of the rent from the property since that date. It is not necessary to investigate the reasons for the transfer of that property. It was agreed that this property was now registered solely in the applicant’s name and that she derived the rent paid by the tenants of this Business. It was also agreed that the applicant had not made any financial contribution to the purchase of this property.
There was some evidence that the applicant had acknowledged a debt to Mr F Labrum in the sum of $140,000 in respect of this property. There is further evidence that the 1st respondent agreed to assume liability to repay this sum from the sale of the L Street, Suburb M properties. There is no suggestion that this debt is statute barred. There was no challenge to this evidence. For the reasons below, it is unnecessary, in all the circumstances, to make affirmative findings whether the debt of $140,000 is owed by the applicant and/or 1st respondent.
As noted above, the applicant has extended her mortgage secured over this property to the extent of at least $120,000 so as to meet her legal fees of this proceeding. The value of this property is $375,000.
L Street, Suburb M property: The 1st respondent is the registered proprietor of this property. The 1st respondent was registered as proprietor of the property in 2004 and when his relationship with the applicant began it was unencumbered. It is now security for several debts.
An unregistered mortgage over this property secures a sum of $720,000 as at February 2018 to National Australia Bank. Direct evidence as to the current level of this debt was not provided by the 1st respondent. The property is also encumbered by a mortgage in favour of the 1st respondent’s mother. The latter mortgage was registered in 2004. On the applicant’s evidence, it was in contest whether the mortgage granted in favour of the mother secured any debt or had been registered to protect the property from seizure under proceeds of crime legislation. The applicant deposed she was unaware of any loan owed to the mother and had never seen any agreement between those parties evidencing such loan. She also deposed to having never seen any demand made by the mother upon her son for repayment of any such loan. Further, the applicant deposed that the usual practice of the Labrum family was to pool their resources including their respective borrowing capacities in order to raise funds for building developments undertaken by the family company, C Pty Ltd.
The value of the L Street, Suburb M property is $2,375,000.
L Street, Suburb M property redevelopment: The applicant and 1st respondent vacated the L Street, Suburb M property in mid-2016. The dwelling on that property was demolished and the respondents engaged in a project for the construction of two townhouses. The project entails a subdivision of the original block into two plots and the work necessary to secure a certificate of occupancy for each townhouse remains incomplete. Despite that fact, one of the townhouses is now occupied by tenants. It appears that the works necessary to finish construction of the townhouses is about 90% complete and that, as the subdivision is also not finished, certificates of title for the two plots have not yet issued.
The unregistered mortgage held by National Australia Bank is security for an advance of the funds required for construction of the works involved in the subdivision. The evidence indicates the 1st respondent borrowed a sum of ~700,000 to undertake the works. As was submitted in the course of the hearing, completion of the subdivision has stalled as the 1st respondent has been either unwilling, unable or determined not to complete the works at this stage. The 1st respondent’s affidavit deposes that while he undertook some of the works himself, he also engaged the family company C Pty Ltd, to undertake those works which, following a variation to the original contract, involved total costs of $1.26m plus GST. The 1st respondent’s affidavit also deposed to funds being advanced by his brother Mr F Labrum to achieve completion of the necessary works. This evidence was also proved, in part, by the affidavits of the 2nd and 3rd respondents who were not cross-examined on their evidence. The 1st respondent’s financial statement confirms that, as at 2018, $595,500 is owed to C Pty Ltd.
In particular, the 3rd respondent provided cogent evidence as to his retainer as project manager on the redevelopment of the L Street, Suburb M property and that substantial sums have been incurred in the redevelopment of the properties. His evidence is that the work required for the redevelopment has stalled on account of non-payment of invoices and that the sum of $515,500 remains presently due and payable by the 1st respondent. Further, he deposed that a further sum of $50,000 was estimated as being required to complete these works. It follows that no less than $565,500 will be required to achieve completion of this redevelopment. I accept that it will not be completed without the active assistance of all respondents.
While the potential improved value of the L Street, Suburb M properties upon completion of the subdivision is less certain, no evidence was adduced or cross- examination undertaken so as to persuade me that the properties will have a lesser value than that ascribed to them by the valuer in their uncompleted state. Accepting the evidence that the properties redevelopment is about 90% complete, on one view the assessed value may represent 90% of the value of those properties upon completion of the requisite works. However, as the valuer’s evidence of the subdivision was given on the basis of an “on completion” valuation, and notwithstanding that it was a curbside valuation (as the 1st respondent allowed no better inspection to the valuer), I proceed on the basis of that valuation. For completeness, I reject the implicit suggestion that the costs of completing the subdivision would have a 10% to 20% impact on value having regard to the costs of the outstanding works. Any such suggestion was squarely rejected by the only valuer who was called to give evidence.
Suburb O property: the 1st respondent has a 2/12th interest in this property by way of beneficial entitlement from his late father’s estate. Each of his brothers also has a 2/12th interest while his mother has a 6/12th interest in that property. The property has been occupied by relatives or tenants from time to time. The 1st respondent deposed that while he still held a 2/12th interest in the property it was now subject to a mortgage of $1.6m owed by his brother Mr F Labrum and himself. What this money had been expended upon and whether it was now represented by a new asset was not explained. Further, while he was not sure how the balance of his liability for the mortgage (of $800,000) had been applied, the 1st respondent proposed to, but did not, seek further clarification of this. The value of the 1st respondent’s interest in this property is at least $705,000.
Suburb P property: In her capacity as personal representative of her late husband’s estate, the 1st respondent’s mother is registered as proprietor of this commercial property which was purchased by her husband in 1988. Again, the evidence indicates that the 1st respondent was “making enquiries” as to his interest in this property, however, the results of those enquiries were not revealed by the evidence. The 1st respondent acknowledged that his mother continued to be registered as proprietor of this property in her capacity as personal representative but deposed that he had received no benefit from this property. The 1st respondent’s mother deposed to the circumstances in which she denied that any of her sons held any beneficial interest in this property arising from the fact, as she claimed, that she had undertaken substantial maintenance of the property. The true legal basis for her denial of any such interest is considered below. She also deposed to having advanced substantial sums toward the L Street, Suburb M property ($662,000 and $80,000 respectively) and for payment of the 1st respondent’s legal fees on account of his various criminal charges from 2017-2018 ($115,685). While other legal fees paid between 2006-2007 ($360,000) may be statute barred, there is no evidence that the 1st respondent would raise a Limitation of Actions Act defence in response to any claim by his mother for the recovery of those fees. For present purposes, the 1st respondent may be taken to be indebted to his mother for at least ~$858,000.
The Suburb P property was valued at $3.8 million. Despite the 4th respondent’s evidence to the contrary, allowing the 1st respondent a rateable share in the Suburb P property comparable to that which devolved to him in the Suburb O property (i.e. a 2/12ths share), would equate to an equitable interest of ~$630,000. However, this is doubtful and need not be considered further for the reasons addressed below.
Motor vehicles: The applicant’s evidence addressed the husband’s ownership of a Motor Vehicle Q and a motor cycle to which she attached a stated value of ~$45,000, however there was no other evidence as to this. There was no challenge to this evidence. The 1st respondent’s financial statement made in July 2018 gave a value of $40,000 to his vehicle. Nor was there any challenge to her evidence that she has a Motor Vehicle R which is of negligible value.
As concerned liabilities, these have been identified above in relation to both the applicant’s liability secured over the J Street, Suburb K property and the 1st respondent’s liability secured over the L Street, Suburb M property. By contrast, the 1st respondent’s affidavit listed an extensive number of liabilities but adduced no further evidence including by way of discovery.
In addition, the applicant adduced evidence as to liabilities of the 1st respondent held by him alone or with one of his brothers.
a)the first liability, which took the form of a home loan, appears to be a joint liability of the 1st respondent with his brother Mr F Labrum for a sum of ~$1.6m. This liability has been noted above in relation to the Suburb O property;
b)the second liability, which also took the form of a home loan, appears to be a sole liability of the 1st respondent and is for a sum of ~$720,000 to National Australia Bank and which appears to relate to the redevelopment of the L Street, Suburb M property;
The 1st respondent’s affidavit prepared in July 2018 listed more extensive liabilities which he alleged were owed by him and/or the applicant but otherwise provided little detail as to each of them.
The 2nd, 3rd and 4th respondents’ affidavits detailed a series of liabilities which, they claimed, were owed by the applicant and/or 1st respondent. As noted above, the parties were agreed that none of those deponents were required for cross-examination.
However, a complication that arose having regard to the course of this trial is that the affidavits of those deponents were not sworn or served until after the applicant had closed her case. In those circumstances, none of the matters contained in those affidavits were put to the applicant in the course of her cross-examination. Viewed as a whole, the evidence was left in an unsatisfactory state as the most direct evidence as to liabilities alleged by the newly added respondent’s had not been put before the applicant in the course of her case, while at the same time none of those respondents were cross-examined upon their evidence. Contextually, I cannot ignore that the decision not to cross-examine them occurred in the context that it was both agreed that those respondents should be joined to the proceeding. And at least as concerned the applicant, the agreement with those parties included agreement in consent orders so as to achieve what was submitted to be a just and equitable adjustment of the property interests of the parties to the marriage. For those reasons, it is possible to make findings about the liabilities alleged by the added respondents conscious of the context in which it occurred. On this basis, I accept that the 1st respondent has further liabilities to the 2nd respondent in the sum of ~$140,000; the 3rd respondent in the sum of ~$63,000 and to his mother in the sum of at least ~$1.218m. To this must be added the further substantial liabilities (past and potentially future) to the 5th respondent for completion of the subdivisional and construction works that are required in relation to the L Street, Suburb M Property amounting to ~$565,000.
During cross-examination, the applicant gave evidence as follows:
a)she continues to work part-time and receives, per fortnight, a sum of between $1,000 and $1,100;
b)the applicant receives rental income from a property in J Street, Suburb K of about $400 per week (or $19,000 per annum);
c)although the J Street, Suburb K property is registered in the applicant’s name, she accepted that she made no financial contribution toward the purchase but that the 1st respondent with his brothers made the arrangements for the transfer of that property into her name;
d)the applicant has expended $134,000 of legal fees to this point as to which $120,000 is secured by way of registered mortgage on the J Street, Suburb K property;
e)the applicant made no financial contribution toward the purchase of the J Street, Suburb K or L Street, Suburb M properties respectively;
f)as to the L Street, Suburb M property, the applicant agreed that the 1st respondent asserted that he owed a debt of $320,000 to his mother which was secured by a registered mortgage over that property. The applicant also agreed that the 1st respondent further asserted that the total indebtedness to his mother on this line, with interest, amounted to $633,000;
g)the applicant maintained, and I accept, that despite repeated request no detail had been furnished by the 1st respondent or his solicitors, whether by way of discovery, affidavit or other evidence to substantiate the asserted loan from the 1st respondent’s mother. The applicant further deposed that she was wholly unaware of the mother having ever made demand for repayment of any sum;
h)the applicant also deposed to the basis for her belief that the 1st respondent was not indebted to his mother for any sum and that the mortgage over the L Street, Suburb M property had been registered as a means of protection against the possibility of an application to realise that property under applicable proceeds of crime legislation;
i)contrary to the cross-examination, the applicant pointed to her trial affidavit at [132], that she knew one of the residences which have been constructed on the L Street, Suburb M property is now tenanted. She maintained that, to her knowledge, that property had been tenanted since November 2018;
j)again, contrary to the cross examination, there is no evidence that an occupancy certificate has not issued in relation to the redevelopment of the L Street, Suburb M property. The absence of that evidence is to be considered in the context that repeated requests have been made for discovery and production of documents relating to such redevelopment and any certificate.
The applicant eschewed any claim against any member of the 1st respondent’s family. Despite her disavowing any such claim, during the first day of the hearing, the solicitor advocate for the 1st respondent continued to press this issue. When asked for an explanation as to why this issue was being continuously raised, no explanation was provided.
Finally, there is the parties’ superannuation. As to this, the applicant’s accrued superannuation entitlement as at July 2019 was ~$50,000. However, the applicant’s superannuation has reduced by $10,000 on account of her need to pay her legal fees. The 1st respondent’s accrued superannuation entitlement as at September 2018 was $41,000. The current entitlement is unknown but I infer it is no less than that sum.
Valuation evidence
The valuer, Mr D, gave opinion evidence as to the value of:
a)the L Street, Suburb M property, as: $2.375m.
b)the Suburb P property, as: $3.8m.
While Mr D was cross-examined upon his expert report, very little was said as to why his opinion evidence as to the value of the properties should not be accepted. He too, gave evidence in a candid manner. The evidence given by Mr D in cross-examination included that:
a)it had only been possible to conduct ‘curbside’ valuations as inspection of the properties had not been possible. However, the valuer had driven to the properties and conducted physical inspections;
b)it was a normal and accepted method of valuation to express an opinion as to the ‘on completion’ value of a redevelopment and he had undertaken such a valuation of the L Street, Suburb M property and the two residences which have been constructed upon it on this basis;
c)although unaware of the progress of any proposed subdivision of the L Street, Suburb M property, it was entirely open to sell the land as a single title upon which the two residences have been constructed leaving the purchaser to proceed with the subdivision;
d)the absence of an occupancy permit could ‘possibly’ affect value, however, the quantum of any such affect would be dictated by the amount of outstanding works, if any, and as to which there was no evidence;
e)likewise, the valuer assumed that there was compulsory builders warranty insurance in place and had no evidence to suggest there was not;
f)the valuer strenuously contested the suggestion that the absence of any occupancy permit or the costs of securing completion of the plan of subdivision would have a 10% – 20% impact upon the opinion as to value. To the contrary, the valuer noted that, on the basis of his valuation a 5% increment on the value of the L Street, Suburb M property represented a sum of $115,000. The valuer’s evidence was that based upon his experience, he thought the possible range in decrease in value on account of these considerations was in the range of zero – 5%. The impression I gained from the valuer’s evidence was that he tended to the lower end of that range when making concessions as to the impact on value by reason of the issues being put to him.
Mr D was not pressed as to the opinion evidence he gave in relation to the value of the properties. I accept his evidence.
While the applicant was put to the not inconsiderable expense of securing expert evidence as to the value of properties, the cross-examination on valuations was superficial.
By contrast, no cross-examination was made of the other expert, Mr E, whose expert opinion in relation to the Suburb O property placed a value on that property of $4.0M to $4.5M.
Assets
Based upon the foregoing, including the expert evidence, the value of the assets which were made the subject of the proceeding were:
a)J Street, Suburb K property: $ 375,000
b)L Street, Suburb M property: $2,375,000
c)Suburb O property (2/12ths): $ 705,000
d)Suburb P property: $ 630,000
e)Motor vehicles: $ 45,000
Total: $4,130,000
In terms of liabilities, the position is less clear. However, the following liabilities may be extracted from the evidence of the applicant and the 2nd to 4th respondent’s. I consider that this should be employed as a more reliable statement of liabilities having regard to the combined effect of the following: (a) those parties were not required for cross-examination; (b) the 1st respondent did not furnish: (i) a trial affidavit; (ii) a current financial statement; (iii) a list of the items comprising the asset pool; (iv) an Outline of Case as he was directed to do; (v) discovery. On that basis, the potential liabilities that have been introduced are as follows:
a)J Street, Suburb K property mortgage: $ 120,000
b)J Street, Suburb K (debt to 2nd respondent): $ 140,000
c)L Street, Suburb M property mortgage NAB: $ 720,000
d)L Street, Suburb M property (redevelopment): $ 565,500
e)Suburb O property – bank loan: $ 800,000
f)Personal debts (to 2nd respondent): $ 1,500
g)Personal debts (to 3rd respondent): $ 63,000
h)Personal debts (to 4th respondent): $ 858,000
Total: $3,265,000
Considered in this way, the parties net asset position would be the sum of $995,000 (i.e. $4.130m - $3.265m = $995,000)
However, on the first day of trial, it was submitted on behalf of the 1st respondent that any interest in the Suburb O and Suburb P properties should be left out of account altogether. The substantive submission that those assets should be excluded from the asset pool was made on the basis that those interests had been acquired before the formation of the parties’ relationship. This position was adhered to, without objection, during closing submissions.[29] Both counsel for the applicant and 1st respondent made closing submissions in relation to the question of how a just and equitable adjustment of property interests was to be arrived at on the basis that the court should focus on the parties’ interests in the J Street, Suburb K and L Street, Suburb M properties and related debts, leaving all other matters to one side. While that issue was not developed further, it is clear that the interests acquired by the 1st respondent (if any, in the case of Suburb P), and the Suburb O property derived solely from the intestate estate of his late father who died many years prior to the formation of the parties’ relationship. Equally, it was clear that the applicant had made no contribution of any kind to those properties during the parties’ relationship. To my mind, it is more realistic to exclude those inherited assets from the pool and to assess the question of property adjustment by reference to a base asset figure of $2.795m.
[29]In the course of those submissions, the parties did not seek that account be taken of their interests in motor vehicles or accrued superannuation.
On this basis, counsel submitted that the parties’ assets comprised:
a)J Street, Suburb K property: $ 375,000
b)L Street, Suburb M property: $2,375,000
Total: $2,750,000
In closing submissions, it was said that the aggregate value of those assets was $2.575m however, this was not explained further.
By extension, a corollary of the submission that a separate asset pool approach was appropriate in this case would require that the mortgage debt of $800,000 secured over the Suburb O property also be excluded. For reasons which were not explained, the parties also quarantined significant parts of the other debts as liabilities that should be excluded from consideration. No party submitted that this was in any way inappropriate. In the manner in which the (relevant) liabilities were addressed in closing submissions by counsel for the applicant and 1st respondent, the court was asked to focus upon the following:
a)J Street, Suburb K (debt to 2nd respondent): $ 140,000
b)L Street, Suburb M property mortgage NAB: $ 800,000
c)Personal debts (to 4th respondent): $ 320,000
Total: $1,260,000
Those submissions must be taken to have involved a conscious choice to leave out of account a range of other liabilities upon which evidence had been given. It also involved increasing the debt owed to National Australia Bank to $800,000 for reasons that were also not explained.
Contributions
The applicant accepted that, at the commencement of the parties’ relationship, she did not have any assets or resources of significant value. The 1st respondent’s affidavit agreed in that evidence. As was readily apparent in the course of her cross-examination, the applicant made no attempt to embroider this aspect of her claim.
However, in the course of the relationship, the applicant had been in constant paid employment save for a period of maternity leave. Her unchallenged evidence was that she also took responsibility for all household work including washing clothes, house cleaning, cooking and, on some occasions, when she would try to mow the lawns. To her observation, the 1st respondent made no contributions of these kinds. The applicant gave evidence of the 1st respondent’s laziness including that, on some occasions he had telephoned her from the bedroom and requested that she bring him a drink or snack. The applicant’s evidence was replete with examples of the 1st respondent maintaining a reclusive existence either high on drugs or coming down from drug abuse, including that: “He spent the majority of his time in our bedroom.”
The 1st respondent’s affidavit acknowledged that the parties had lived rent-free with the applicant’s mother at the commencement of co-habitation and before moving into the L Street, Suburb M property. He deposed that he too had worked full-time during the relationship. His affidavit touched very slightly upon his involvement in the care of their child.
The child is in the sole care of the applicant who, together, have moved in with the applicant’s mother.
The 1st respondent pays no child support and otherwise contributes nothing for her care. In the result, the applicant meets all of the child’s needs from her limited employment and the rental income from the J Street, Suburb K property (being ~$20,000 net per annum).
From his financial statement made in July 2018, the 1st respondent deposed to an average weekly income of $1,200. The financial statement indicated that he derives his income as a tradesman. While he claimed an average weekly expenditure of $1,440 he lives with his mother. The 1st respondent also discloses superannuation of $40,000.
While the issue was not explored in the evidence or submissions, the suggestion that the 1st respondent has no enforceable interest in the Suburb P property appears correct. By reason that his mother survived her husband who died intestate, the 1st respondent and his brothers would have no entitlement to any share in his late father’s estate unless a claim had been made and established.[30] No such claim has been made. By contrast, on the basis of the expert evidence, and allowing the 1st respondent a rateable share in the Suburb P property (comparable to that which devolved to him in the Suburb O property of a 2/12ths share), he may have had a claim to a contingent equitable interest of ~$630,000. On the basis that no such claim was made and given the time for such a claim has long since passed, I disregard that asset.
[30] Administration and Probate Act (Vic). ss 70K(1), 70ZG(1), 90A.
Psychiatric report
Pursuant to interlocutory orders, a psychiatric assessment was made of each of the parties. The assessment was undertaken by Dr A, psychiatrist whose expertise was proved by his affidavit. The expert was not required for cross examination. Each party relied upon his evidence.
I have considered the report of Dr A in detail. Dr A prepared two reports, one for the applicant and 1st respondent respectively.
Concerning the applicant, the expert opinion, which I accept, was that she suffers an adjustment disorder with depressed and anxious mood in the context of the former relationship with the 1st respondent and ongoing difficulties. He considered that her comments in relation to killing herself and the child appeared ill-considered and impulsive and designed for the most part two get the 1st respondent to modify his behaviour toward her. He did not find that the applicant posed a current evidence a risk to the child or herself. He did not consider the applicant suffered any substance abuse disorder or psychotic disorder or that she required any form of psychotropic medication. The expert expressed the opinion that the applicant was not, at the time of assessment, suffering from significant anxiety or depression or that any mental impediments were presented as concerning her capacity to care for the child.
Contrastingly, as concerned the 1st respondent, Dr A considered that he suffered from significant methamphetamine, cannabis and alcohol use disorders. He noted that there was no reported amphetamine use since 2017. Dr A considered that the documentation, including medical reports, as to the 1st respondent’s depression was likely to be situational. He could not find any underlying significant depressive or anxiety disorder. For that reason, Dr A believed that the most appropriate characterisation of the 1st respondent’s state was one of adjustment disorder. Dr A also accepted that the medical evidence supported earlier findings of methamphetamine induced paranoia. However, the expert did not see the presence of a significant psychotic disorder at the time of interview. Rather, the expert formed the opinion that the 1st respondent displayed antisocial personality traits, including, a degree of impulsivity, aggression, poor judgement and anger. Dr A noted the history of criminal proceeding and convictions and the fact that no less than three prior partners have had intervention orders made against him. He considered that the 1st respondent’s pattern of behaviour was concerning.
Dr A did not consider that the 1st respondent had a personality disorder. He noted that the 1st respondent’s history of offending did not begin until he was aged 26 and that, thereafter he had some nine years without reoffending from 2008 – 2017. Against that background, Dr A identified substance abuse, particularly amphetamines, as having significantly impacted upon his behaviour. He considered there was likely to be an element of substance abuse associated with avoiding his underlying psychological issues. Dr A also considered the 1st respondent did not require psychotropic medication but instead needed ongoing specialist drug and alcohol monitoring to reduce the risk of relapse. Whether this has occurred is unknown.
The 1st respondent deposed that he was in good health.
Other matters
The applicant had been the subject of a serious assault by the 1st respondent when she was some 34 weeks pregnant. The applicant had sought the assistance of her sister and brother in law to be taken to hospital when the 1st respondent refused to do so. She recounted the 1st respondent’s continuous abuse of drugs during their relationship, including during the applicant’s pregnancy with their child. The applicant gave detailed evidence by her trial affidavit as to the state of violence to which she had been subjected. This violence extended to her mother and perhaps other members of her family.
The applicant also identified the large number of occasions on which the 1st respondent had been found guilty of breaching intervention orders and the occasions on which he had been incarcerated. This history indicates that the 1st respondent has been imprisoned on several occasions since at least 2007, including for convictions for trafficking and possessing drugs, dealing with the proceeds of crime and breaching intervention orders. Affidavits filed by the other respondents indicate the substantial sums in which his family has paid out to brief pre-eminent senior counsel to act on his behalf in various criminal proceedings. The 1st respondent’s affidavit made in July 2018 acknowledged his difficulties with substance abuse in the period 2002 until 2006. He also admitted to periods of incarceration including an eight month period of imprisonment for breach of an intervention order which resulted in his release in June 2018. Exhibited to his affidavit was a psychologists report addressed to the County Court of Victoria concerning his appeal in May 2017 against a sentence for charges of “threats to kill.” His affidavit detailed the attempts he had made to rehabilitate himself and that he had granted a power of attorney for his affairs in favour of his mother. The 1st respondent acknowledged that he had reacted poorly and inappropriately toward the applicant but accused her of similar conduct. The applicant was not cross-examined as to any allegations of abuse toward the 1st respondent.
The scale of the violence to which the applicant was subjected by the 1st respondent is not irrelevant to an assessment of what order is appropriate to be made in a just and equitable adjustment of the parties’ property interests.
The materials comprised in the court book, including the expert opinion of Ms B and the applicant’s trial affidavit spoke loudly to the scale of the domestic violence which has been meted out to her by the 1st respondent. The photos portray the extent of her injuries which were striking. Although the 1st respondent was arrested and charged in relation to these offences against the applicant, he appealed. Although he did so, it is apparent that the appeal against sentence was abandoned.
As to other matters, the applicant was cross-examined as to the superannuation and stated that she had also reduced the amount of her superannuation in the preceding 12 months by about $10,000 on account of legal fees.
Evidence was tendered proving the making of detailed requests for financial disclosure and that there had been no response to such requests. I accept that there has been a failure to make financial disclosure by the 1st respondent. I find that he has been given ample opportunity in which to make financial disclosure. He has not done so.
Consideration
As noted in submissions, the applicant and 1st respondent were agreed that there should be a just and equitable adjustment of property interests. As the parties’ relationship is at an end and they no longer intend to share the assets to which they made either direct or indirect, and financial and non-financial, contributions it is clearly appropriate that such an adjustment should occur: Stanford v Stanford.[31] The parties were not in any disagreement as to the applicable principles.
[31] (2012) 247 CLR 108.
The 1st respondent’s response to the initiating application combined with his failure to state a position at trial, meant that the court was not assisted at any time by an understanding of what he considered to be a just and equitable adjustment of property interests. Contrastingly, by her outline of case, the applicant sought orders including for:
a)payment by the 1st respondent to her of the sum of $1.173m;
b)the applicant to retain to the exclusion of the 1st respondent all of her right title and interest in the J Street, Suburb K property;
c)the 1st respondent to retain, to the exclusion of the applicant, all of his interests in the L Street, Suburb M, Suburb O and Suburb P properties, together with his interest in the estate of his late father.
The applicant originally pitched her claim on the basis that that there should be an adjustment of property interests as to 55% in favour of the 1st respondent and 45% in her favour, then adjusted for future needs. However, by the end of the hearing she advanced a claim for the following:
a)retaining the J Street, Suburb K property (and mortgage): $255,000
b)payment of the sum of: $120,000
c)retaining her other assets and superannuation;
d)being released from any other debts and liabilities.
In closing submissions the applicant joined with, and consented in orders proposed by the 2nd to 5th respondents, the substantive effect of which achieved the foregoing result for the applicant (putting aside the effect of those orders on other parties as to which, see below).
As to contributions, I accept the applicant’s submission that while the applicant had no assets of any significance at the commencement of the relationship, she made real contributions, both financial and non-financial, in the manner described above. The applicant also properly conceded that the 1st respondent acquired his interest in the Suburb O property and the Suburb P property (if any) by inheritance.
It was also properly conceded by the applicant that the 1st respondent owned the L Street, Suburb M property at the commencement of the relationship. Her uncontradicted evidence was that the property was unencumbered at that time.
In my view, it is also significant in this case that the applicant’s financial and non-financial contributions gained added value by reason of the violence and abuse to which she was subjected during and after the relationship. At all times, the applicant has had the care of the child and will continue to do so for over 12 years. As was common ground, the 1st respondent has had virtually no contact with, and provided no financial support for the care of, the child. The proper inference to draw in all the circumstances is that he will provide no such support at any stage in the future.
While the 1st respondent has been plagued by drug addiction, he deposed to being in good health. The applicant’s evidence demonstrated that the 1st respondent is a qualified tradesman who has held employment where he has earned more than $180,000 in previous years. In addition, the 1st respondent clearly has the support of his extended family who have assisted him over many years. This is demonstrated in a number of ways, including that: the 1st respondent continues to reside with his mother; his brothers attended on the second day of the hearing to support him at that time; his family have advanced substantial sums on his behalf. In addition, it is clear that the respondent’s extended family have together carried on a construction business which, to all appearances, has been successful. I am prepared to infer that they are likely to continue to do so in the future and that they will include the 1st respondent in their ventures. Furthermore, it is apparent that the 1st respondent has the financial resources represented by, at least, the Suburb O property which is of substantial value.
Counsel for the 1st respondent submitted that an adjustment in favour of the applicant as reflected by the proposed minute of orders was well within the range of a just and equitable adjustment of property interests. Counsel for the 1st respondent further submitted that although he had no instructions to consent to the proposed orders, those orders would achieve a result where an adjustment of property interests in favour of the applicant fell squarely within that range. It was further submitted by counsel for the applicant and the 1st respondent respectively that the proposed orders represented a pragmatic and appropriate adjustment of property interests which was just and equitable in all the circumstances.
In general terms the proposed minute comprehends a number of steps.
First is that the applicant should retain for her sole use and benefit her interest in the J Street, Suburb K property. This has been valued at $375,000. The property remains subject to a registered mortgage with the result that the applicant will remain liable for that secured debt of $120,000.
Secondly, as noted above, it was evident that the 2nd to 5th respondents have sought to involve themselves in the proceeding in a proactive way which would provide a solution to the present impasse rather than to become an added series of complications to it. To this end, the 2nd respondent has consented to an order that he may make a payment to the applicant of $120,000 on behalf of the 1st respondent, conditioned on an entitlement to recoup that sum from the net proceeds of sale of the L Street, Suburb M properties once the subdivisional and construction works have been completed and the properties sold.
Thirdly, the 2nd to 5th respondents consent in orders that will facilitate the completion of those subdivisional and construction works and the sale of the L Street, Suburb M properties. That they agree to do so may be understood in the context that a substantial sum is presently outstanding from the 1st respondent in relation to those works and that a further sum will be required to complete them. The further context to the agreement of those parties to be bound by such orders is that they should recoup a large part – but by no means all – of the 1st respondent’s indebtedness to them.
Again, to give context to that proposal, it is necessary to recognise that, upon their uncontradicted evidence, the secured debt together with indebtedness of the applicant and/or 1st respondent to those parties amount in aggregate to $2.465m. Accordingly, it can be recognised that this total indebtedness is for a sum in excess of the “on completion” current value of the L Street, Suburb M property of $2.375m.
To give added context to the proposal of the 2nd to 5th respondents, it should also be recognised that a further consent order stating that upon completion of these sales and payment of the monies stipulated by the proposed minute, the whole of the indebtedness of the applicant and 1st respondent will be released and extinguished. On the basis of the evidence adduced at the hearing, those parties (and in particular, the 1st respondent) will be released from a substantial indebtedness.
Fourthly, for the most part, all that is required of the 1st respondent is that he should co-operate in an orderly process for the construction, subdivision and sale of the L Street, Suburb M properties.
Fifthly, in default in the co-operation of achieving the construction, subdivision and sale of the L Street, Suburb M properties, and order is sought pursuant to s 106A of the Act so as to appoint a person with authority to execute documents or doing other things to achieve those ends. While it was sought that a registrar of the court be appointed, the Act permits that ‘a person’ might also be appointed and it is preferable in a case of this kind to appoint the solicitor for the 2nd to 5th respondents in that role.
Ms Smallwood of counsel for the 2nd to 5th respondents made useful submissions as to the question of power to make the orders sought. Attention was drawn to ss 80 – 81 of the Act. It was correctly recognised that the Parliament has conferred on the court powers including to make an order for: the payment of money; the transfer or settlement of property; the execution of any necessary deed or instrument; orders imposing terms and conditions; orders by consent and any other order which it thinks is necessary to do justice in a particular case. Ms Smallwood submitted, correctly, that those powers should be construed in the context of Part VIII of the Act as a whole and in particular having regard to the duty of the court, imposed in imperative terms by s 81 of the Act, to make orders which, will finally determine the financial relationships between the parties to the marriage and avoid further proceedings between them.
To those submissions, it may be added that where the Parliament confers powers on a court, they are not to be hedged about by limitations which do not appear from the express text of the relevant provision.[32] Nothing in the text of s 80 of the Act, viewed in the context of s 81 or Pt VIII as a whole, indicates that the court lacks power to make the orders sought.
[32]Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304, [178].
Counsel for the 2nd to 5th respondents further submitted that the form of orders proposed achieved the added object of saving the parties significant expense inasmuch as the court might have adopted the alternative course of appointing trustees.[33]
[33]Act, s 80(1)(e).
Ms Smallwood further submitted that, without making submissions on the question as to just and equitable considerations, it was necessary to recognise that, had full account been taken of all of the debts that were raised in the proceeding, this would have considerably reduced the size of the asset pool and the amount otherwise available for distribution. There was considerable force in those submissions, particularly given the decisions made not to cross-examine the 2nd, 3rd or 4th respondents.
The submissions above were supported by counsel for the applicant and no submission to the contrary was advanced by the 1st respondent. While I have modified the proposed minute, I am satisfied that the court has power to make the orders sought and that those orders are appropriate.
The authorities make two further propositions clear. First is that the court is not required in all circumstances to determine the appropriate adjustment of property interests on a percentage basis but may adopt a global assessment of what it considers to be just and equitable in all the circumstances. Secondly, the court must always stand back and assess the proposed relief in its totality and form a holistic assessment of whether it is just and equitable in the particular case.
I have reflected on the adoption of a global adjustment of property interests in this case and concluded that it is appropriate. I have reached this conclusion having regard to the overall desirability of achieving a final adjustment of property interests at a level which I considered to be just and equitable. Adopting a holistic assessment as is required, I consider that the orders as contemplated by the proposed minute achieve a just and equitable resolution of the present application.
Conclusion
For the foregoing reasons, orders were made as pronounced at the commencement of these reasons for judgment. Further, having regard to the procedural history of the matter, including the failure to make discovery, file a trial affidavit, financial statement or case outline (coupled with the need to secure valuation evidence), the necessity for an adjournment and consequential extension in the amount of time which was required in order for the matter to be heard and determined. I will make directions affording the parties an opportunity to file and serve submissions as to costs. The question of costs will be decided on the papers. Not all of the parties may consider it necessary to make such submissions.
I certify that the preceding one hundred and forty (140) paragraphs are a true copy of the reasons for judgment of Judge A Kelly.
Date: 23 October 2019
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