HMJ v PES[2012] QSC 119

HER HONOUR:  This matter comes before the Court for the hearing of an originating application for property adjustment orders pursuant to Part 19 of the Property Law Act 1994.

The applicant appeared represented by a solicitor and counsel. The respondent did not appear.  I am satisfied that the respondent was served with notice of today's hearing and that his appearance has not been excused.  I am so satisfied because an order was made on 24 January 2012 dispensing with the requirement for his signature on the Request For Trial Date and ordering that he be given notification of the trial dates at his last known residential and postal address.

An affidavit from the solicitors for the applicant shows that he was served in accordance with that notice in ample time for him to be present at this hearing.  His nonappearance unfortunately is consistent with his behaviour throughout these proceedings.

The proceeding commenced a very long time ago with the filing of the originating application on 14 July 2008 to which I have already referred.  It was accompanied by an affidavit of the applicant setting out the circumstances which give rise to the jurisdiction of this Court under Part 19 of the Property Law Act and setting out what she knew of the contributions made by the parties and the asset pool of the parties.  She also filed a Statement of Financial Circumstances.

An order was made by consent by the Deputy Registrar on 15 August 2008 which provided inter alia that the respondent file and serve his statement and affidavit material in accordance with paragraph 12 of District Court Practice Direction 5 of 2004, and made other orders including an order for mediation.

As I have said, those orders were made by consent.Nevertheless, the respondent has failed absolutely to comply with all of those orders.  He has not provided any material as to his financial affairs, he has not allowed a valuation to take place, he has not partaken in the mediation that was agreed, and, as I have already said, he did not sign a request for trial date.

An order was made by Justice Mullins in 2009 for valuations to take place but, for reasons which included the valuer's fear of assault, no valuation of the respondent's business has been conducted.

The applicant has filed affidavit material setting out to the best of her knowledge all of the matters which this Court is required to consider.  To the extent that the Court has not been provided with sufficient information, that is entirely at the hands of the respondent.  He has not had solicitors acting for him for some years as they could not get instructions.

It is with that background in mind that I look at the matters that the Court is required to consider in making an order under Part 9 of the Property Law Act.

I am satisfied from the material before me that the parties were in a de facto relationship for some 19 years and that the jurisdiction of the Court is attracted.

The de facto relationship commenced in 1987.  It ended on 12 December 2006.  There was one child born of the relationship on 15 January 1998.

The proper approach to a determination of the Court under Part 19 for property adjustment was set out by Keane JA, as his Honour then was, in FO v HAF [2006] QCA 555 at [51]-[52] where his Honour observed:

"It has frequently been emphasised that the judicial discretion conferred by s 286(1) of the PLA and its analogues in other statutes should not be constrained by pre-determined guidelines. It is essential, however, that the matters referred to in the provisions set out above be taken into account, and that they are ‘seen, in the reasons for judgment, to have been taken into account’. To this end, the four step approach explained by the Full Court of the Family Court in Hickey v Hickey [2003] FLC 93-143 at 78,386 provides a useful discipline to ensure clarity of thought and transparency of judicial reasons.

The Full Court of the Family Court explained in Hickey v Hickey, in relation to the Family Law Act analogue of Part 19 of the PLA, that the first step in making a property adjustment order is the identification and valuation of the property, resources and liabilities of the parties. The second step is the identification and assessment of the contributions of the parties to their pool of assets and the determination of their contribution-based entitlements in accordance with s 291 to s 295 of the PLA. The third step is the identification and assessment of the factors in s 297 to s 309 of the PLA to determine the adjustment to the contribution-based entitlement. The fourth step in the process is consideration of the result of these earlier steps to determine whether that result is just and equitable in accordance with s 286 of the PLA.."

I intend to follow that four step process.

That takes me, then, to the question of the identification and valuation of the property resources and liabilities of the parties.  As has previously been set out, difficulty has arisen in this case because of the failure of the respondent to comply with any of the orders made by this Court, even those orders made by consent, and his obligations under the Property Law Act, Part 19.

It is important to recognise that s 289 of the Property Law Act requires a party to a proceeding for a property adjustment order to disclose the party's financial circumstances in a way prescribed by the rules or a practice direction of the relevant Court.  That has not happened in this case with the regard to the respondent.

Section 289(2) then provides that a Court may make a property adjustment order in favour of a party only if the party has complied with subsection (1).  Therefore, the only party in whose favour the Court may make a property adjustment order in this case is the applicant.

The second consequence of his failure to comply with the practice direction and orders of the Court is the difficulty in dentifying the value of the pool of assets.  However, that cannot operate to the disadvantage of the party who has complied with the orders of the Court and the practice direction.

This case is similar to that considered by the Full Court of the Family Court in In the Marriage of Black and Kellner (1992) 15 Fam LR 343, a case in which the assets of the parties could not be ascertained in full because of obvious nondisclosures.

In that case, a very minor property adjustment in favour of the husband of some six per cent was upheld.  Indeed, the Chief Justice observed that, speaking for himself, although there was no cross appeal, he would have been disposed to find that the appellant was entitled to nothing and certainly would not have interfered with the decision by the trial Judge dismissing the husband's claim altogether.  That was said, of course, in the absence of an equivalent to the Property Law Act provision, to which I have already referred, which makes it clear that a property adjustment order cannot be made in favour of a party who does not comply with the rules and Practice Direction in making financial disclosure. 

As the Full Court of the Family Court said in In the Marriage of Weir (1992) 16 Fam LR 154 at 160, the Court, of necessity, has to take a broad‑brush approach, but where there is clear evidence of non‑disclosure, as there is in this case, the Court should not be unduly cautious about making findings in favour of the other party.  I therefore turn to look at the assets, as disclosed. 

The first asset is a townhouse situated at 57A Oxford Terrace, Taringa.  That townhouse is registered in the joint names of the applicant and the respondent.  Since separation, the respondent has been the sole occupant and has not paid any rent.  There is currently a mortgage over the property to the National Australia Bank.  To the knowledge of the applicant, that mortgage was taken out to cover business loans to deal with the respondent's business.  There is still apparently some $128,048.41 owing on the loan covered by the mortgage.  A valuer has conducted a valuation of the property, that property, the townhouse, for the applicant, and has valued it as being worth $590,000.  The net value of the equity in the townhouse is therefore $461,951.59.  I have no reason to doubt the efficacy of that valuation, which I accept. 

The second major asset of the applicant and respondent is a business owned and conducted by the respondent.  The business is conducted by Western Suburbs Towing Pty Ltd.  That company has one shareholder, who is the respondent, and one director, again the respondent.  It is not subject to any charge over any of the assets.  It appears, on the evidence before me, to be a substantial business. 

There is no current valuation of that business because of the failure of the respondent.  Some bank accounts of the business have been able to be obtained; although, of necessity, the information able to be obtained by the applicant is extremely limited.  It appears from those bank statements, that, as at 7 January 2008, the business was $241,343.44 in credit in its bank account.  By the following year, the capital had been withdrawn by the respondent, so I must assume that those moneys are with the respondent in the absence of any evidence to the contrary. 

The evidence also shows that the business owns extensive equipment, consistent with it being a large and successful business.  At separation, to the knowledge of the applicant, the business consisted of goodwill, four to five tow trucks, a tractor, a fork‑lift, a large volume of tools and other miscellaneous vehicles, including a Subaru motor vehicle and a Patrol utility.  It is not possible to do more than a broad‑brush approach to the value of the business, but it clearly has a substantial value.  In addition, the respondent retained possession of all of the vehicles, contents, tools and chattels that were at the townhouse, which was the residence of the applicant and respondent and their child prior to separation. 

Applying the principle in Challen v Challen, [2007] FamCA 1292 at [72]–[81], referred to by Applegarth J in TJ v SV [2010] QSC 403 at [49], it is appropriate to add back to the pool of assets any moneys disposed of or spent by the respondent, which should properly be considered as assets of the relationship, as they existed at the date of separation.  Unless some reason were given not to do so, it appears to me that that must be how it is considered in this case. 

Accordingly, it appears to me that the assets include the net equity in the townhouse of known value, and the property resources and liabilities under the control of the respondent to which I have referred, which must be considered, on the evidence before me as, of at least equivalent value.

The second step is the identification and assessment of the contribution of the parties to their pool of assets and, therefore, a determination of their contribution-based entitlements, in accordance with ss 291 to 295 of the Property Law Act.  It is clear from the affidavit of the applicant, filed on 14 July 2008, that the parties have made more or less an equal contribution to accumulation of the assets prior to separation.  As the applicant deposes, at the commencement of the relationship, neither she nor the respondent had anything of substance and it is through the contribution, financial and non‑financial, of each of them, that the assets, which are referred to, have been accumulated.

The third step is then to consider those factors found in ss 297 to 309, which would suggest an adjustment of a contribution-based entitlement.  At the time of separation and at the time, therefore, of filing the original affidavits in this matter, the applicant was in a parlous financial state.  The respondent continued to run his business and live in the matrimonial property and had the use of all of the assets.  The applicant, on the other hand, was responsible for the care and all of the expenditure for the child, with no child support being made by the respondent, and she was dependent upon social security.  However, time has passed since then, and now she has repartnered and has obtained a job, earning $43,000 a year gross.  The respondent, of course, retains whatever income it is that he makes from his apparently successful business.  There does not seem to be any reason to change the contribution basis, when one looks at the needs basis. 

The fourth step is to consider whether the result is just and equitable in accordance with s 286 of the Property Law Act.  The result in this case, that is sought by the applicant, is not a percentage-based entitlement, and that is entirely appropriate, given the difficulty that would ensue if that were to happen and the lack of entitlement of the respondent to any percentage based order, given his failure to comply, as referred to earlier.  What is sought by the applicant is the transfer of the respondent's interest in the townhouse to her.  That appears to be entirely just and equitable and, if anything, favours the respondent.  I am certainly prepared to make that order in the circumstances. 

I have been provided with a draft order to give effect to that, so that the respondent is required to execute documents required to transfer his right, a half loan interest, in the townhouse located at 57A Oxford Terrace, Taringa in the State of Queensland, and more particularly described as Lot 9 on survey Plan 107789, title reference 50265316, to the applicant.  There needs to be, and will be, in the order, mechanisms for ensuring that, if he fails to execute the documents, that the orders can nevertheless be given effect. 

The last question to be determined is the question of costs.  The applicant has sought her costs and sought them on an indemnity basis.  Section 341 of the Property Law Act provides that each party ordinarily bears its own costs, so the order sought is different from the order made in the ordinary course.  What should be considered by the Court, in making any different order, is set out in Grace v Jeneca [2002] QCA 335.  I will have regard to the circumstances set out in subsection (4) which sets out the circumstances which the Court should consider in determining whether any other order for costs is appropriate. 

The first is the income, property and financial resources of each of the parties.  The respondent has been in receipt of all of the income from the assets of the parties, has enjoyed the whole of the property and apparently has financial resources.  The applicant, on the other hand, has enjoyed, since separation, none of the income from the assets of the parties, none of the property, and, although she now has a job, had to survive on social security and support the child of the relationship.  She has not been in receipt of legal aid and has had to fund her own legal representation.  That legal representation has not involved any unnecessary expense, but, nevertheless, for a party with so few financial resources, would have been a real drain on the resources of the applicant. 

The third matter for the Court to consider is the conduct of each of the parties.  The conduct of the respondent in this litigation has already been referred to.  It has included non‑compliance, commencing with non‑compliance with a consent order.  The conduct of the respondent in failing to give disclosure, provide affidavits, or attend a mediation, has necessitated today's hearing and all of the expenses that the applicant has had to undertake with regard to that.  Of necessity, the respondent has been wholly unsuccessful in the proceedings. 

In the circumstances, it appears to me appropriate that the respondent pay the applicant's costs of and incidental to the litigation and, because of his misconduct of this litigation, he be required to pay those on an indemnity basis. 

Accordingly, I shall make the order as per the draft.