Argyle and Argyle (No 2)

[2011] FamCA 852

FAMILY COURT OF AUSTRALIA

ARGYLE & ARGYLE (NO 2) [2011] FamCA 852

FAMILY LAW – PROPERTY – Undefended proceedings – Applications made by interveners – Where the Court is satisfied that the husband’s liabilities do not involve the wife – Where the husband’s liability toward interveners has been satisfied – Where the parties overall contributions favour the wife – Adjustment in consideration of s 75(2) factors in favour of the wife – Proceedings adjourned to enable further matters to be attended to in relation to interveners. 

Family Law Act 1975 (Cth) – s 75(2), s 79

Clauson and Clauson (1995) FLC 92-595; 18 Fam LR 693
Coghlan and Coghlan (2005) FLC 93-220; 32 Fam LR 414
Ferraro and Ferraro (1993) FLC 92-335
Hickey and Hickey (2003) FLC 93-143; 30 Fam LR 355
Kennon v Kennon (1997) FLC 92-757
Lee Steere and Lee Steere (1985) FLC 91-626

APPLICANT: Ms Argyle

RESPONDENT: Mr Argyle

INTERVENERS: Mr B & Mr C &
Ms D & E Legal

FILE NUMBER: PAC 811 of 2007

DATE DELIVERED: 3 November 2011

PLACE DELIVERED: Sydney

PLACE HEARD: Parramatta

JUDGMENT OF: Johnston J

HEARING DATE: 17 May 2011

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Kenny

SOLICITOR FOR THE APPLICANT: Rowlandson & Co

FOR THE RESPONDENT: Mr Argyle

SOLICITORS FOR THE INTERVENERS: Mr Gilchrist of Antwan Lawyers &
Ms Davis of Medcalf Grant Lawyers &
Mr E of E Legal

Orders

1. That the wife be paid forthwith from the trust account of Rowlandson and Company, solicitors representing the net proceeds of sale of the former matrimonial home at F Street, Suburb G, the sum of $442 336.

2. That otherwise these proceedings be adjourned for mention at 10:00 am on 24 November 2011 at Parramatta.

3. That within 7 days each of the interveners serve a sealed copy of their application, together with a copy of the Reasons for Judgment in these proceedings and these orders, on Mr H.

4. That Ms D file and serve any further material including a certificate of judgment under seal of the Supreme Court of New South Wales not later than 18 November 2011.

IT IS NOTED that publication of this judgment under the pseudonym ARGYLE & ARGYLE is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: PAC 811 of 2007

Ms Argyle

Applicant

And

Mr Argyle

Respondent

And

Mr B

Intervener

And

Mr C

Intervener

And

Ms D

Intervener

And

E Legal

Intervener

REASONS FOR JUDGMENT

Introduction and Applications

1. These are undefended property proceedings.  There are several interveners in the proceedings.  The previously married parties in the proceedings are Ms Argyle and Mr Argyle.  For convenience I shall refer to them as “the wife” and “the husband”.  The interveners are various secured and unsecured creditors of the parties.

2. At the trial the husband sought an adjournment.  My reasons for refusing an adjournment and for giving leave for the wife to have her application heard as an undefended proceedings were given ex tempore on 17 May 2011.

3. The wife seeks orders to the effect that:

   ·she receive the entirety of the proceeds of sale of the former matrimonial home at F Street, Suburb G;

   ·each of the parties is declared the sole owner of all other property in their possession and/or control respectively;

   ·each party indemnify the other against all liability encumbering all items of such property;

   ·the husband pay the wife’s costs of these proceedings on an indemnity basis; and

   ·a (specified)  enforcement order be made.

4. The first intervener is Mr B.  Mr B seeks an order to the effect that the husband pay to him the sum of $95 051 from the trust account of Rowlandson & Company Solicitors prior to any payment being made to the husband. 

5. The second intervener is Mr C who seeks an order to the effect that the husband pay to him the sum of $68 058 from the trust account of Rowlandson & Company Solicitors prior to any payment being made to the husband.

6. The third intervener is Ms D who seeks an order to the effect that a sum of money be paid to her from the said trust account in satisfaction of part of a judgment debt in proceedings in the New South Wales Supreme Court owed by the husband which was the subject of a charge over the former matrimonial home together with interest as well as the balance of her judgment debt.

7. The fourth intervener is Mr E, solicitor who seeks an order to the effect that from the proceeds of sale of the home held in the said trust account the amount of $11 555 be paid to E Legal together with costs. 

8. The husband filed a response on 27 April 2010.  But the orders sought have been overtaken by events and the husband has filed no material in the substantive proceedings.  It is clear, however, that he opposes the orders sought by all other parties. 

Background

1. The wife was born in 1958 and she is therefore 52 years of age.  The husband was born in 1962 and he is therefore 49 years of age.  The parties married in 1988 but they did not commence cohabitating until 1992.  They separated in approximately 2003/2004 under the same roof and their divorce became final on 24 September 2004. 

2. There are two children of the marriage, namely Ms I who was born in 1989 and J who was born in 1994.  They are 22 years of age and 16 years of age, respectively.

3. In 1986, the wife arrived in Australia from the Country K.  She lived in rented accommodation in Suburb L and Suburb M.

4. As indicated above, in 1992 the parties commenced cohabitation.  This was at rented premises at Arthur Street, Suburb L.  After approximately one year the parties and Ms I moved and commenced living in a rented home at N Street, Suburb O.  They continued living in this home until approximately 2000.

5. In 1993, the parties purchased a property at F Street, Suburb G (“the Suburb G Property”).  The husband’s brother lived at this property.

6. In 1996, the parties purchased a half share in a property at P Street, Suburb Q as joint tenants.  The husband’s brother and his wife held the other half share in the property. 

7. In 1998, the house situated on the Suburb G property was demolished and construction commenced on the current house on the property.

8. In 2000, the parties moved into the newly constructed home on the Suburb G property.

9. In 2002, the husband purchased a property in his sole name at Suburb S Road, Suburb S (“the Suburb S property”) for $520 000.  This purchase was wholly funded by way of mortgage. 

10. In 2003, the property at Suburb S burnt down.  The police found a quantity of cannabis and equipment to harvest cannabis at the property.  At that time, the property was tenanted and the tenant was charged with drug offences. 

11. The husband lodged an insurance claim with respect to the Suburb S property, after it had burnt down.  It is not clear to me whether or not the husband received a payout from the insurance company.

12. In May 2003, police commenced an investigation into the fire at the Suburb S property.

13. In October 2003, the New South Wales Crime Commission and New South Wales Police obtained a search warrant for the Suburb G home.  Shortly thereafter, the husband was charged with offences. 

14. In October 2003, the New South Wales Crime Commission applied to the Supreme Court of New South Wales in relation to the forfeiture of assets by the husband.  Because the wife had a joint interest in the property she was joined as second defendant.

15. On 18 November 2003, the parties, together with the husband’s brother and his wife, sold their property at P Street, Suburb Q for $540 000.  The parties’ mortgage of $203 000 was repaid, $210 000 was paid to the husband’s brother, $70 000 was paid the New South Wales Crime Commission, $9700 was paid to the parties and the balance was paid to the husband’s brother.

16. In late 2003 or 2004, the parties separated under the same roof.

17. In May 2005, the husband was acquitted of the charges.

18. In 2007, the husband left the matrimonial home.

19. In April 2008, the parties entered into consent orders with the New South Wales Crime Commission to the effect that they would pay $350 000 to the New South Wales Treasurer. 

20. On 30 July 2007, the parties’ elder daughter moved out of the family home.

21. Upon leaving the home the husband stopped paying the mortgage repayments on the former matrimonial home.  The wife did not have the funds to pay these. 

22. The mortgage fell into default.  On 12 February 2009, the mortgagee’s solicitors filed a statement of claim in the Supreme Court of New South Wales seeking a writ of possession and thereafter a mortgagee sale.

23. On 14 August 2009, the mortgagee obtained a writ of possession in respect of the home.

24. The wife filed an application in this Court seeking an order that she be permitted to sell the former matrimonial home.

25. On 5 February 2010, Collier J made orders for sale of the home by the parties.  Included were orders requiring the parties to pay the New South Wales Crime Commission the $350 000, for each of them to be paid $100 000 as a preliminary distribution of their property and the balance to be paid to a controlled money account operated by Rowlandson and Company, solicitors as trustees for the parties.

26. On 23 April 2010, the husband filed an application for leave to appeal.  The appeal application was dismissed on 25 May 2010.

27. On 11 June 2010, Collier J made various orders including that the husband pay the wife’s costs in the amount of $14 300.

28. On 23 November 2010, Collier J made various orders including an order to the effect that Ms D, who had become an intervener in the proceedings, remove a caveat over the home to enable a settlement of the sale of the property to take place.  His Honour also ordered that upon settlement the vendor was to pay the sum of $45 000 to Ms D. 

29. His Honour also adjusted the amount payable to the husband from $100 000 to $40 700 to take account of the payment to Ms D and the costs payment in favour of the wife.

30. On 29 November 2010, the Suburb G property was sold.

The Applicable Law

1. Sub-section 79(1) of the Act provides that in property settlement proceedings, the Court may make such order as it considers appropriate.

2. Sub-section 79(2) provides that the Court shall not make an order under the above sub-section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.

3. There is a long-standing preferred approach to the determination of property applications.  This involves four inter-related steps.  Firstly, the Court should make findings about the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing.  Secondly, the Court should identify and assess the contributions of the parties within the meaning of s 79(4) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties.  Thirdly, the Court should consider the effect of any proposed order upon the earning capacity of either party, the relevant matters in s.75(2), any other order made under the Act affecting a party or child and any child support that a party has provided or for which a party might be liable. The Court is to determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two.  Fourthly, the Court should consider the effect of its findings and determination and resolve what order is just and equitable in all the circumstances of the case. 

4. This approach has been confirmed in numerous cases in this Court including for example Lee Steere and Lee Steere (1985) FLC 91-626; Ferraro and Ferraro (1993) FLC 92-335; Hickey and Hickey (2003) FLC 93-143; 30 Fam LR 355; Coghlan and Coghlan (2005) FLC 93-220; 32 Fam LR 414 and Clauson and Clauson (1995) FLC 92-595; 18 Fam LR 693.

Property available for division

1. The property available for division between the parties consists of the following:-

$
1.         Proceeds of sale of former matrimonial home in Rowlandson & Co trust account	640,550
2.         Wife’s household contents	5,000
3.         Wife’s interim property distribution from proceeds of sale of former matrimonial home (add back)	100,000
4.         Wife’s motor vehicle	3,000
5.         Husband’s interim property distribution from proceeds of sale of former matrimonial home (add back)	100,000
6.         Husband’s proceeds of sale of SUV motor vehicle (add back)	25,000
___________
$873,550

1. The wife has no liabilities.

2. The husband has various liabilities to which I shall refer below.

3. It would also appear that the husband has an outstanding liability of more than $50 000 to Mr H, the executor of his late father’s estate, pursuant to orders of the Supreme Court of New South Wales. 

4. Although the husband has not filed any evidence to put any of the above property in issue, clearly he has a perception that he did not receive the $100 000 interim property distribution. 

5. It is true that he has not received the whole of the $100 000 personally.  But $45 000 was paid on his behalf from the proceeds of sale of the former matrimonial home to Ms D in part satisfaction of his judgment debt to her.  Out of the proceeds of sale was also paid $14 300 to the wife’s solicitors to satisfy the costs order made against the husband in this amount by Collier J dated 11 June 2010 as referred to above.  The balance of the $100 000 namely $40 700 was received by the husband, this being paid to him by the real estate agent who sold the former matrimonial home the source of the funds being part of the deposit which they were holding paid to them by the purchaser of the former matrimonial home.

6. Accordingly, while the husband only received $40 700 of the $100 000 to which he was entitled, the balance was paid towards his debts in this manner.  In these circumstances I am satisfied that he has had the benefit of the $100 000 and that no part of this remains owing to him. 

The B Liability

1. In 2003, after the fire at the Suburb S property, the husband approached Mr B and informed him that he had been charged with cultivating a commercial quantity of marihuana at that property. A couple of weeks later the husband informed Mr B that the Crime Commission had frozen all his assets and that he needed money. Mr B loaned the husband $1000.

2. The husband subsequently undertook some renovation work at Mr B’s home for which he was paid by Mr B. Mr B also loaned the husband further money to pay towards the husband’s living expenses.

3. In October 2004 Mr B borrowed funds secured against his home and loaned $65 000 to the husband to assist payment of his legal costs.

4. Mr B has subsequently loaned the husband a further $21 000 to assist the husband to pay his legal costs and living expenses.

5. As indicated above, Mr B is seeking an order to the effect that the husband pay to him the sum of $95 051 from the money in the trust account of Rowlandson & Company solicitors prior to any payment to the husband.

6. I am satisfied that Mr B has proved this liability.

The C Liability

1. Mr C was involved with the husband in proposals to redevelop the property at Suburb S on which the house had burnt down.  The husband sought loans from him to assist in the payment of the husband’s legal costs of the criminal proceedings.  In May 2005 he loaned the husband $30 000 at an interest rate of 10 percent.  On 26 May 2005 Mr C loaned the husband a further $5000 again at an interest rate of 10 percent.  On 31 May 2005 Mr C loaned the husband a further $5000 on the same basis.  On 16 June 2005 Mr C loaned the husband a further $2000.  On 1 July 2005 Mr C loaned the husband a further $2000.  On 20 July 2005 Mr C loaned the husband another $500 and some days later a further $300.  This is a total of $44 800. 

2. Of these borrowings only $2000 has been repaid.  The total of the sums borrowed was $42 800.  With interest it is submitted that the amount owing to Mr C is $68 058.70.  As indicated above, Mr C is seeking an order to the effect that the husband pay him the sum of $68 058 from the trust account of Rowlandson & Company solicitors prior to any payment being made to the husband.

3. The husband has not provided any evidence about this matter. In all the circumstances I am satisfied that Mr C has proved this liability.

The E Liability

1. Mr E is a solicitor who has undertaken legal work for the husband in various matters including these proceedings.  Mr E has costed all legal work undertaken as having a total cost of $16 728.  Notwithstanding this amount, Mr E is seeking an order to the effect that the husband pay to him the sum of $11 555 from the trust account of Rowlandson & Company solicitors. 

The D Liability

1. Ms D has a judgment from the Supreme Court of New South Wales dated 15 September 2010 against the husband in the sum of $128 996 (comprising principal of $109 000 and interest of $19 996 calculated from 2 September 2007 to 15 September 2010 at 9 percent per annum on a daily basis).  The terms of the judgment included that Ms D was entitled to a charge against the husband’s interest in the property at F Street, Suburb G to an amount of $80 361.90 (representing a 54/109^th share of the judgment debt and costs fixed at $16 455.50).  The judgment also required the husband to pay Ms D’s legal costs. 

2. As indicated above, Collier J ordered on 5 February 2010 that the property at Suburb G be sold.  As also indicated above, on 23 November 2010 Collier J ordered that Ms D remove the caveat securing her charge over the Suburb G property to enable the sale to take place.  His Honour also ordered that upon settlement the vendor was to direct payment of $45 000 to Ms D.

3. It was submitted on behalf of Ms D that she ought to have the benefit of the secured part of her judgment debt.  As indicated above this was $80 361.90.  As also indicated above she has been paid $45 000 by way of reduction of this secured liability.  In my view, in circumstances where it was essential for Ms D’s charge to be removed from the property in order to enable completion of the sale it is only reasonable that she be paid the outstanding amount of her secured liability.  This is the amount of $35 361.90.  It was submitted on behalf of Ms D that so far as the balance of her liability is concerned this ought to be treated by the Court in the same way as the unsecured liabilities of the other interveners.  This is to the effect that the unsecured creditors share proportionally in that part of the husband’s assets which would remain after payment out of the secured liabilities.  But I have a difficulty in that the quantum of the remaining liability is not clear to me.  I propose to give Ms D an opportunity to present further evidence about this. 

4. I shall give further consideration to the cases of the interveners below.

Contributions

1. At the time of their marriage neither party had assets of significant value.

2. The husband has made the financial contributions.  He was the breadwinner for the family.  The wife did not work in income-producing activity.

3. It was conceded on behalf of the wife that the husband worked hard over the years they lived together and that he was primarily responsible for construction of the former matrimonial home.

4. But the wife was the children’s primary parent and the primary homemaker.  She undertook the cooking, cleaning and other domestic tasks in the home.  The husband undertook the gardening, mowing of lawns and the outdoors maintenance.  In my view, to the time up to separation, the major contributions as homemaker and parent were made by the wife.  This is not to suggest that the husband did not make contributions in these areas, because obviously he did.  But his major focus and efforts were in respect of earning the family’s income and in constructing the former matrimonial home.

5. It was submitted on behalf of the wife that the Court should find that the parties’ contributions overall were 60 percent by the wife and 40 percent by the husband.  There were a number of threads to this submission.

1. Firstly, it was submitted that such has been the level of violence, verbal abuse and insulting behaviour by the husband towards the wife that the Court should find that the contributions she made have been made more onerous by the husband’s behaviour.

2. In relation to these matters the wife said in her affidavit that she did not suffer any physical violence during the early part of the marriage although the husband verbally abused her.  The wife said that in approximately 1997 the husband punched her in the face.  The wife said that at approximately this time the husband started to bring women home and sometimes they stayed the night.  The wife also said that from this time the husband would physically attack her once or twice per week.

3. On 30 October 2009 an interim Apprehended Violence Order issued against the husband for the protection of the wife and the child J.  This was made final in May 2010.

4. I accept that it is more probable than not that there has been some level of domestic violence perpetrated by the husband against the wife including some physical violence.  But I am not persuaded that the degree of violence has been such as to bring the situation within the principles enunciated by the Full Court of this Court in the case of Kennon v Kennon (1997) FLC 92-757. At pages 84,294 and 84,295 Fogarty and Lindemayer JJ said as follows:

   Put shortly, our view is that where there is a course of violent conduct by one party towards the other during the marriage which is demonstrated to have had a significant adverse impact upon that party's contributions to the marriage, or, put the other way, to have made his or her contributions significantly more arduous than they ought to have been, that is a fact which a trial judge is entitled to take into account in assessing the parties' respective contributions within s.79. We prefer this approach to the concept of ''negative contributions’’ which is sometimes referred to in this discussion.

   …

   However, it is important to consider the ‘‘floodgates’’ argument. That is, these principles, which should only apply to exceptional cases, may become common coinage in property cases and be used inappropriately as tactical weapons or for personal attacks and so return this Court to fault and misconduct in property matters – a circumstance which proved so debilitating in the past. In addition, there is the risk of substantial additional time and cost.  

   However, in our view, s.79 should encompass the exceptional cases which we described above. It would not be appropriate to exclude them as a matter of policy because of this risk. It is a matter of commonsense for the lawyers involved and, where that may not be sufficient, it is a matter for a firm hand by the Court at an early stage when a case appears to raise those issues.  

   It is essential to bear in mind the relatively narrow band of cases to which these considerations apply. To be relevant, it would be necessary to show that the conduct occurred during the course of the marriage and had a discernible impact upon the contributions of the other party. It is not directed to conduct which does not have that effect …

5. As I say I am not persuaded that the circumstances of the present case are such as to bring it within the band of cases to which these principles apply.

6. It was also submitted that the contributions by the wife since separation have been such that it would be only fair to find an imbalance of contributions overall in her favour.  I accept this submission.  The wife said that since separation she has undertaken the entirety of the effort involved in parenting the children.  I must say I find this hard to accept in circumstances where both parties were residing under the same roof until 2007.  But I am inclined to believe the wife when she said that since the husband left the home in 2007 he has had nothing to do with the children.  And I accept the wife’s evidence that the relationship between the parties’ elder child Ms I and her father broke down completely some years ago.  In my view this lends weight to the wife’s assertions that she has had to support the children in more recent years without assistance from the husband.

7. In all the circumstances I am persuaded that the finding about the parties’ contributions overall should favour the wife, but only by a modest amount.  In my view the parties’ contributions overall have been 53 percent by the wife and 47 percent by the husband.

s 75(2) matters

1. The wife is almost 53 years of age and she is in good health.  But, as indicated above, she did not work in the paid workforce during the course of the parties marriage.  She works part time in a coffee shop and earns $370 per week as a waitress.  She has no formal qualifications or training. 

2. The wife also has the full time care of the parties’ child J.  J has some particular medical needs and, amongst other professionals, has attended upon a cardiologist.  The mother understands that J suffers from severe psoriasis and has some difficulty with depression.  J takes medication daily.

3. On the other hand the husband is 49 years of age and he is in good health.  He worked as a builder during the marriage and, so far as the wife understands, there is no reason why he could not continue working in that occupation.

4. The husband has never paid child support.  Nor does he assist the wife in the care of J. 

5. Because the husband failed to file any evidence in the proceedings there are no details of his current financial circumstances before the Court.  There was a very strong submission on behalf of the wife to the effect that because the husband has failed to make a full and frank disclosure to the Court, the Court should not be “overly cautious” in making a significant s 75(2) adjustment in the wife’s favour. 

6. This Court and other family courts have observed on numerous occasions the fundamental importance in family law proceedings of each party making a full and frank disclosure of their financial circumstances.  The importance of that in enabling the Court to make a just and equitable order is self-evident.  But the Court must also consider the likely effect of the husband’s non-disclosure and its relevance to the broader aspects of the proceedings.  Stepping back for a moment and considering the likelihood or otherwise of the husband having assets of significant value which he has not disclosed, it would seem to be more probable than not that the husband is unlikely to have assets of significant value.  Just looking broadly at the history of the matter, and particularly the fact that the husband is now being pursued by numerous creditors, does not give me a sense that the husband would be likely to have built up assets which would have significant value.  In any event, in considering the non-disclosure, the Court cannot lose sight of the fact that it still must ultimately arrive at an order which is a just and equitable order as required pursuant to s 79(2) of the Act. 

7. In my view, the consideration of the relevant s 75(2) matters must result in some set off of the available property in favour of the wife.  This is particularly because I am satisfied that her income earning position is far inferior to that of the husband and on all present indications, she is likely to have the entire responsibility for not only caring for the parties’ younger child J but also in providing most of the financial support for the child. 

8. In all the circumstances, in my view, the appropriate set off of property in favour of the wife to take account of these matters is 10 percent.  This also takes into account the fact that the wife would enjoy a little more of the property than the husband, based on contributions. 

9. Ultimately the wife would enjoy 63 percent of the available property and the husband would have 37 percent thereof.  This is a differential of 26 percent of the property which would be property with a value of approximately $227 123. 

10. On this basis the wife would have property from the pool of available property with a value of $550 336.  On the other hand the husband would have property from the pool with a value of $323 214. 

Conclusion About the Interests of the Married Parties

1. The wife is to have property with a value of $550 336.  She has the following property:

$
1.         Household contents	5,000
2.         Interim property distribution (add back)	100,000
3.         Motor vehicle	3,000
___________
$108,000

1. In order to have property with a value of $550 336 the wife would need a payment from the proceeds of sale of the former matrimonial home of $442 336 ($550 336 - $108 000 = $442 336). 

2. On the other hand the husband would have $323 214.  He has the following:

$
1.         Interim property distribution (add back)	100,000
2.         Proceeds of sale of SUV motor vehicle (add back)	25,000
$125,000

1. In order for the husband to have property with a value of $323 214 the husband would require a payment from the proceeds of sale of the former matrimonial home of $198 214 ($323 214 - $125 000 = $198 214). 

The Interveners

1. But unfortunately the proceedings are more complicated than this.  The Court must also deal with the applications by the interveners. 

2. There is no evidence of any connection between any of the interveners and the wife.  I have referred above to the circumstances of the husband’s indebtedness to each of them.  In the case of Ms D, she is a judgment creditor, part of the husband’s debt to her being a secured debt and part being unsecured.

3. In the case of the husband’s liabilities to Mr B and Mr C, I am satisfied that the monies were made available from each of them to the husband to assist him in paying his legal costs in relation to the criminal proceedings which had been brought against him.  That had nothing to do with the wife. 

4. In the case of Mr E the husband’s indebtedness to him arises out of their relationship of solicitor and client.  Again, this has nothing to do with the wife. 

5. Accordingly, in these circumstances, in my view, whatever the liabilities are to these creditors, such liability is entirely that of the husband. 

6. Each of the creditors is asking the Court to make a finding about the husband’s indebtedness to each of them and to make orders in effect permitting them to share pari passu in whatever amount the husband would otherwise be paid from the proceeds of sale of the former matrimonial home held in the relevant trust account. 

7. So far as the husband’s indebtedness to Ms D is concerned, I am unclear about the quantum.  This is because, despite some evidence being before the Court of an outstanding amount, it would appear that interest would be payable and no evidence was presented of a particular amount of the liability. 

8. In the case of Mr B, I am satisfied that the quantum of the husband’s liability to him is $95 051 and in the case of Mr C that the husband’s liability to him is $68 058. 

9. So far as the husband’s alleged liability to Mr E is concerned, this appears to me to be rather different from the other liabilities.  I am not aware of any judgment in Mr E’s favour for the amount sought, nor that the usual processes under either the State or Federal laws have been used by Mr E in pursuit of recovery of his costs which he said have been incurred in providing legal services to the husband. 

10. It might be that if Mr E is able to obtain a judgment in respect of his costs an appropriate order might ultimately be made.  In any event, I shall provide him with further opportunity to address the Court about this matter.

11. In my view, there is an additional complication about the applications by the interveners.  This is because, as I have observed above, it would appear that the husband also has an outstanding liability of more than $50 000 to Mr H, the executor of his late father’s estate.  Unless I have overlooked something, it is not clear to me that Mr H is aware of these proceedings and particularly the applications by the interveners.  One would have thought that Mr H, as the executor, would have an interest in these proceedings. 

12. Returning to the liabilities in respect of Ms D, Mr B and Mr C, the husband has not filed any evidence to refute their claims.  In any event, in the case of Ms D, she is a judgment creditor.  In these circumstances, I can find no reason why these creditors should not be paid.  So far as the unsecured liabilities are concerned, whilst it might be thought to be somewhat perverse for a marriage breakdown to have had the consequence of in effect converting unsecured creditors to secured creditors, in my view, they are entitled to be paid. 

The Way Forward

1. Because I am satisfied that the husband’s liabilities have nothing to do with the wife, in my view it would be a just and equitable result for the wife to be paid forthwith from the monies in the trust account the amount which I have determined as being appropriate. 

2. So far as the cases of the husband and the interveners are concerned I do not propose to make orders for immediate payment.  Rather, in my view, there are still some matters which need to be attended to.  Firstly, Mr H should be served.

3. Secondly, Ms D ought to put before the Court evidence of the quantum of her secured and unsecured liabilities.  The appropriate course would be for Ms D to obtain a certificate of judgment under seal of the Registrar of the Supreme Court of New South Wales setting out the appropriate amounts. 

4. So far as the applications by Messrs B and C are concerned, I am satisfied about the quantum of the husband’s liabilities to them as indicated above. 

5. In the case of Mr E, if he wishes to put some further material before the Court in respect of his case, that will be a matter for him. 

6. In the circumstances, I propose to adjourn this aspect of the proceedings to enable these matters to be attended to. 

The Fourth Step

1. The wife would be paid $442 336 from the trust money.  But she still owes her solicitors a substantial amount of her legal costs.  From the balance she might be able to purchase a modest home.  On the other hand the husband’s entitlement will almost certainly be exhausted in paying his liabilities.  In the event that the Court did not order payment of the husband’s creditors from the trust fund I would have little confidence that they would be paid any amount.  But I am still unclear about the exact level of indebtedness as I have said.  Clearly this affects the position of the husband and his creditors.

2. But it does not affect the wife’s position.  In my view, she should be paid her entitlement without delay.  She is in need and she has J to support.  In these circumstances, to further delay payment to her would, in my view, be unfair because her position is not going to change.

I certify that the preceding one hundred and nine (109) paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Johnston delivered on 3 November 2011.

Associate: 

Date:  3 November 2011