February 2019 Family Law Case Watch

Our February 2019 Family Law case, Wakeley & Wakeley [2018] FCCA 3707 explores  two(2) common themes and issues that often arise in Family Law matters including the:

1. Approach taken by the Family Court in determining property proceedings; and
2. Admissibility of affidavit evidence of a witness.

Background

In this case, the husband was born in 1951 and was 67 years of age at the time of the making of the Orders.

The wife was born in 1958 and was 60 years of age at the time of the making of this Judgement.

The parties married in 1987 and at the time of the Hearing had adult children.

At the beginning of the parties’ relationship and during the course of their marriage, each party made significant contributions to the marriage. The husband owned a number of properties and businesses and the wife held a half interest in her mother’s property and received a loan from her brother. Upon the passing of the wife’s mother, the remaining half of that property was transferred to the wife. The husband and wife also commenced a business together.

The parties initially separated in the late 1990s and Consent Orders were made on 30 January 1998. The parties sought fresh property adjustment orders and Judge Harper subsequently set aside the 1998 Orders by consent.

The wife proposed that the total net asset pool of the marriage, as asserted by her, be divided as between the parties, 80% to herself and 20% to the husband.

The husband, on the other hand, sought that the total net asset pool of the marriage, as asserted by him, be divided as between the parties, 47% to himself and 53% to the wife.

Judge Harper noted that on the asset pool, as found by him, if no adjustment was made, the wife would retain 97% of the assets and the husband would retain 3%.

Law – Property Orders

Part VIII of the Family Law Act 1975 (Cth) contains the provisions in relation to property orders. Section 79 gives the Court power to make orders for the alteration of property interests as it considers appropriate. The Court may only make an order in respect of property proceedings if it is satisfied that it would be just and equitable in all of the circumstances (s79(2)). Various factors are taken into account in considering what order should be made. These factors are set out in sections 79(4) and 75(2) of the Family Law Act.

In deciding this case, Judge Harper considered the well-established line of Family Law authorities that provide the relevant considerations for the determination of property proceedings.

The case of Hickey & Hickey & Attorney General for the Commonwealth of Australia [2003] FamCA 395 initially set out the “4 step process” in the determination of an application under section 79. This process is as follows:

1. Identify and value, the parties’ property, liabilities and financial resources at the date of the hearing;
2. Identify and assess the contributions of the parties as referred to in section 79 of the Act and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties, whether examined on a global approach or an asset by asset approach;
3. Identify and assess the other factors relevant including, the matters referred to in section 75 of the Act and determine the adjustment (if any) to be made to the contribution entitlements at step two; and
4. Consider the effect of the above and resolve what order is just and equitable in all the circumstances of the case.

The High Court in Stanford & Stanford [2012] HCA 52 subsequently highlighted that the just and equitable requirement set out in section 79(2) should not be a discretionary determination by the Court. Rather, the Court must:

1. Consider the current existing legal and equitable interests of the parties to the relationship;

2. Ask whether those rights and interests should be altered pursuant to section 79(4) considerations and not assume that the parties’ rights to or interests in marital property are or should be different from those that then exist; and

3. Determine whether an order adjusting property interests would be just and equitable in all of the circumstances of the particular case.

Further cases including Bevan & Bevan [2013] FamCAFC 116 and Chapman & Chapman [2014] FamCAFC 91 support the approach outlined above and solidify the process to be adopted by Family Law Courts in property proceedings.

Application

By the end of the Hearing, the parties in Wakeley & Wakeley, were not in dispute about what assets existed nor were they in dispute about the value of any asset.  The contention for determination was with regard to the parties’ liabilities.

In terms of initial contributions, the parties each entered the marriage with $30,000 in savings and jointly owned a property. The husband however owned another property, had a half interest share in a business and a motor vehicle.

With respect to financial contributions during the marriage, amongst other things, the:

1. Parties were both employed;
2. The husband sold a property and contributed the money to the joint use of the parties;
3. The parties bought two properties by using a combination of savings;
4. The parties lived with the wife’s parents which allowed them to save money, the wife’s family contributed to renovations for one of the properties;
5. The wife contributed a significant sum of money to the business including a gift received from her aunt of $35,000;
6. The husband paid over $735,000 into the bank of the wife; and
7. The wife made the greater contribution as parent and homemaker.

In considering the above factors, Harper J assessed the wife’s contribution entitlement at 65% and the husband’s at 35%.

Judge Harper then went on to consider section 75(2), which sets out matters to be taken into account in making an order for property adjustment, and found both parties were of good health generally, both parties worked and had capacity for gainful employment. However the husband’s employment was inconsistent and he had a modest earning capacity, and whilst the wife was making mortgage repayments, the husband was renting.

Judge Harper determined that the husband should receive an adjustment of 3% in his favour for considerations under section 75(2) as set out above. Therefore, the assets of the parties would be divided as to 62% to the wife and 38% to the husband.

Judge Harper determined that leaving the assets as to 97% to the wife and 3% to the husband would not be just and equitable having regard to the above. His Honour noted the force of the husband’s submission that “any outcome, after 27 years of marriage and both parties close to or at retirement age, which left either greatly impoverished would not be just and equitable”.

(See paragraph 271 for an outline of the precise distribution of the various assets and liabilities of the marriage.)

Issue – Affidavits of witnesses

The evidence of two of the wife’s witnesses in the present case caused the judge concern. In many parts, their evidence was identical. Furthermore, one of the witnesses in cross examination conceded that her Affidavit was prepared by the wife’s solicitor and she had not told the solicitor what to write. The witness agreed that the wife arranged for the Affidavit to be prepared by her solicitor and for her to then sign it. Judge Harper stated that these considerations revealed deficiencies in the preparation of the evidence of the two witnesses.

Law – Affidavits of witnesses

Judge Palmer in the Macquarie Developments Pty Ltd and Anor v Forrester and Anor [2005] NSWSC 67 has indicated that such circumstances devalue the evidence of witnesses, even if it may not render it worthless. Judge Palmer stated in that case that:

“…affidavit evidence of a witness which is in the same words as affidavit evidence of another witness is highly suggestive either of collusion between the witnesses or that the person drafting the affidavit has not used the actual words of one or both of the deponents. Both possibilities seriously prejudice the value of the evidence and Counsel usually attacks the credit of such witnesses, with good reason.”

This reasoning was reiterated by Judge Ward in Celermajer Holdings Pty Ltd v Kopas [2011] NSWSC 40 and Judge Black in In the matter of Colorado Products Pty Ltd (in prov liq) [2014] NSWSC 789. Judge Black relevantly expressed the view that it does not matter if identical paragraphs in Affidavit evidence is the result of collusion between the witnesses themselves or of one adopting evidence that had been copied from the other, “each substantially devalues” both witnesses’ Affidavit evidence where no explanation has been given of what occurred. Judge Black commented that the Court could not be satisfied that the witness’ evidence in such cases reflects a genuine recollection of events.

Application

Judge Harper approached the evidence of the witnesses in the present case with caution and was weary in placing weight on particular aspects of the evidence.

Conclusion

Issue 1 –

The approach taken by the Family Court in determining property proceedings is clear and well established requiring a consideration of a number of factors to accommodate for the endless range of circumstances that can arise in Family Law matters. When making a property settlement order and considering what is just and equitable in a matter, the Court should not begin with an assumption that a property adjustment should occur but the Court’s power is exercised by following legal principles solidified by legislation and subsequent case law.

Issue 2 –

The importance of witness evidence being independent and confidential is often underestimated. Affidavit evidence of witnesses can be crucial to the determination of a case and this should not be risked being “thrown out”. Collusion between witnesses and/or a party, even if undertaken with benevolent intention, may be the undoing of a case.

We hope that our February 2019 Case Watch has provided you with some clarity about these two (2) common themes and issues that often arise in Family Law matters.

If you have recently separated or have a Family Law enquiry, please contact us on (02) 9437 0010 or enquiries@familylawyersdw.com.au to discuss your matter in complete confidence. We are conveniently situated in St Leonards on Sydney’s Lower North Shore and have a team of experienced and caring professional family lawyers available to help you.

These posts are only intended as an overview or comment on current issues that may interest you and are not legal advice. If there are any matters that you would like us to advise you on, then please contact us.