By Elizabeth Pathmaraj – Senior Associate
The case of Farrah & Cisek [2024] FedCFamCA1A 38 is an excellent illustration of the crucial importance of a party’s credibility in family law proceedings. In this case, the Court refused to make an adjustment in the Husband’s favour as a result of his of his lack of credibility. This case involved significant and deliberate non-disclosure by the Husband. At trial, the primary judge was unable to identify or quantify the assets available for adjustment between the three parties to the proceedings.
The 3 parties were as follows:
- The de facto husband (Husband), aged 56 at the time of trial.
- The de facto wife (Wife), aged 42 at the time of trial.
- A de facto partner of the husband overlapping and following his relationship with the Wife (Second Respondent). The Second Respondent was aged 81 at the time of trial, had been diagnosed with dementia and was living in a nursing home. The Second Respondent was represented by a litigation guardian.
Background
The Husband and Wife had 2 children, born in 2000 and 2002. The Husband and Wife commenced their relationship in 1998 and separated on a final basis in August 2015.
The Husband was incarcerated for 99 days following separation for family violence committed against the Wife.
The Husband commenced a relationship with the Second Respondent while the relationship with the Wife was still intact. The Second Respondent separated from her former partner of 40 years and began living with the Husband by October 2016. They continued living together until the Second Respondent’s home was sold in February 2017. The Second Respondent transferred most of her estate to the Husband during their relationship.
The Second Respondent alleged approximately $2,257,291 was received by the Husband from the Second Respondent and that the Husband had failed to disclose how these funds were applied. It was clear that the Second Respondent had applied at least $625,711 to pay off the outstanding home loan of the Husband.
The Second Respondent was admitted to a secure dementia unit as a permanent resident by the Husband in late 2017. The Husband ceased making payments for the care of the Second Respondent in the months following her admission to the dementia unit. As a result of the Second Respondent’s inability to manage her financial affairs, New South Wales Civil and Administrative Tribunal appointed the New South Wales Trustee and Guardian to manage her financial affairs, which had been the case since November 2017.
The trial judge’s decision
The court ordered for the Wife to receive 100% of the Husband’s superannuation and 100% of the proceeds of sale of the property (the only significant asset of the parties) after a payment of $625,711 to the Second Respondent. The Husband appealed the decision and the appeal was dismissed with a costs order made against him.
Having regard to the evidence of the parties, and the credibility issues associated with the Husband’s evidence, coupled with the Husband’s incarceration following serious acts of family violence, the primary judge made a significant adjustment in favour of the Wife because of the arduous circumstances in which the Wife made her contributions to the relationship, relying on the principles established in the case of Kennon & Kennon (1997) FLC 92-757.
The appeal
On appeal of the decision, the Husband contended that “[i]t is rare to see an outcome where a party to a relationship is ordered to receive nothing from a pool of property, and for that to be found to be just and equitable” (emphasis added). The Husband also argued that there should have been no adjustment on the basis of the family violence committed against the Wife (Kennon adjustment).
The Husband argued 2 Grounds:
- Ground 1 of the husband’s appeal was that it was necessary to identify the extent of the deemed Kennon element separately from the other contributions. Further, the Husband contended that the findings were not sufficient to justify a Kennon adjustment as the violence occurred at the end of the relationship, not during it, so the Wife could not have satisfied the principle that the conduct made the Wife’s contributions during the relationship more arduous.
- Ground 2 of the appeal was that the trial judge should not have conflated the non-disclosure by the Husband in respect of his financial relationship with the Second Respondent and the Wife’s future needs.
The husband was unsuccessful on both grounds. On appeal, the Court found that:
- The Husband’s contentions were without merit.
- The trial judge appropriately placed weight on the family violence committed against the Wife by the Husband (including emotional, physical and financial abuse). In particular, on this issue specifically, the Court found the Husband was an unreliable witness and the Wife was a reliable witness.
- The Husband’s Counsel was unable to challenge the findings made about the Husband’s credibility, which clearly shaped the trial judge’s findings about the allegations of family violence.
- The findings of credibility made by the trial judge were reasonably open to her, as the Husband attempted to “cherry-pick” parts of the [Wife’s] evidence to support a submission that the [Wife] was not a reliable witness. The primary judge not only had the forensic advantage of observing both the [Husband] and the [Wife] in the witness box, the reasons for judgment demonstrate why the findings of credibility her Honour made were reasonably open to her.”
- The trial judge was not “plainly wrong” to consider the contributions as a whole.
- The trial judge was not wrong in her treatment of the non-disclosure by the Husband in respect of his financial relationship with the Second Respondent and the Wife’s future needs. The trial judge rather found that the Husband had not credibly accounted for his application of more than $1,300,000 of the Second Respondent’s funds and had engaged in multiple deliberate non-disclosures. The trial judge found that the Husband had control of substantial undisclosed funds and the available pool was divided between the Wife and the Second Respondent. Further, the Husband is a beneficiary under the Second Respondent’s will (and the Second Respondent no longer had capacity to change her will), so this financial resource will be available to the Husband at a future date.
This case is an important reminder to parties of the importance credibility plays in family law litigation. The obligation of full and frank disclosure is to be treated seriously and failure to do so can have significant consequences.
If you would like advice about your property matter or any other family law issues, please contact Blackwood Family Lawyers on (03) 8672 5222 to arrange an appointment with one of our experienced lawyers.
