CORDELL & CORDELL
[2015] FCCA 1391
•29 April 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| CORDELL & CORDELL | [2015] FCCA 1391 |
| Catchwords: COSTS – Application for costs – whether solicitor-client costs appropriate – where respondent given 21 days to show cause why he should not pay the applicant’s costs. |
| Legislation: Family Law Act 1975 (Cth), ss.75, 79, 106A, 117 Federal Circuit Court Rules 2001, rr.13.03C, 22.01 |
| Cases cited: Colgate Palmolive Co. v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225; 118 ALR 248 Hickey & Hickey [2003] FamCA 395; (2003) 30 Fam LR 35; FLC 93-143 In the Marriage of Kohan (1992) 16 Fam LR 245; (1993) FLC 92-340 Munday & Bowman (1997) 22 Fam LR 321; FLC 92-784 Prantage & Prantage [2013] FamCAFC 105; (2013) 49 Fam LR 197; FLC 93-544 Stanford v Stanford [2012] HCA 52; (20120 47 Fam LR 481; FLC 93-518 |
| Applicant: | MS CORDELL |
| Respondent: | MR CORDELL |
| File Number: | SYC 1580 of 2014 |
| Judgment of: | Judge Scarlett |
| Hearing date: | 29 April 2015 |
| Date of Last Submission: | 29 April 2015 |
| Delivered at: | Sydney |
| Delivered on: | 29 April 2015 |
REPRESENTATION
| Counsel for the Applicant: | Ms Sproston |
| Solicitors for the Applicant: | Sharon Moss Legal |
| Respondent: | No appearance |
ORDERS
Forthwith from the date of these Orders the Applicant Wife must do all acts and things necessary to list the property situate at and known as Property M in the State of New South Wales (hereinafter referred to as “the former matrimonial home”) for sale and in order for this to occur the Wife is to have sole control in making decisions pertaining to the sale of the former matrimonial home which shall include but not limited to:
(a)appointing a real estate agent to act upon the sale, deciding the marketing of the property, the method of sale, the sale/reserve price, negotiating with any prospective purchaser and accepting any offer made;
(b)appointing a solicitor/conveyancer to act on the sale and providing the necessary instructions in respect of the preparation of a contract for sale, instructions pertaining to any questions raised by any prospective purchaser in relation to the Contract for Sale and instructions pertaining to settlement figures and directions to pay provided that they are in accordance with any Order of the Court relating to payments to be made from the proceeds of sale.
To give effect to the sale of the former matrimonial home the Respondent Husband and the Applicant wife must sign all documents required including but not limited to:
(a)Sale Agency Agreement;
(b)Contract for the Sale of Land;
(c)Discharge Request Form in order to cause the release of the mortgage with (omitted) Bank of Australia which is secured over the title of the former matrimonial home;
(d)Cost Agreement from a solicitor or conveyancer appointed to act on the sale;
(e)Transfer; and
(f)Any other document required for the sale of the former matrimonial home.
If the real estate agent appointed by the Wife to act on the sale of the former matrimonial home recommends certain works to be completed on the said property in order for the property to be ready for sale or to maximise the sale price, then the Wife is to have the sole discretion to make the decision whether to adhere to the agent’s recommendation or not. In the event that the Wife proceeds with the recommendation then she is to obtain three (3) quotes from respective tradesmen to complete the recommended works and provide those quotes to the Husband. The Husband shall have seven (7) days to select a quote. If the Husband does not provide a response within seven (7) days then the Wife can elect the tradesman appointed. The parties will be equally liable for all works completed on the former matrimonial home and in the event that a party does not pay their share of the cost of the works and the other party pays for those costs then that party shall be reimbursed from the other party’s share of the proceeds of sale at the time of settlement of the sale of the former matrimonial home.
In the event that the Husband does not assist the Wife in preparing the former matrimonial home for sale, such as cleaning, gardening and removing rubbish and other items to make the former matrimonial home presentable, then the Wife may at her discretion hire a third party to clean and garden, and she may remove items and rubbish at her discretion, and any cost incurred attending to this shall be borne equally by the parties. If the Husband does not pay for his share of the costs incurred, then the wife shall be reimbursed from the Husband’s share of the sale proceeds of the former matrimonial home at settlement, provided that the Wife submits a receipt for payment of any invoice for such removal, gardening or cleaning of the premises.
Upon the sale of the former matrimonial home the Wife is to direct the solicitor or conveyancer acting on the sale to distribute the proceeds of sale as follows:
(a)in payment of agents’ commission, legal costs associated with the sale, council and water rates associated with the former matrimonial home;
(b)in payment of the amount required to discharge the mortgage secured over the former matrimonial home;
(c)in payment to the wife of 79% of the amount remaining; and
(d)the balance to the Husband, less the following:
(i)the sum of $500.00 being the amount owed by the Husband to the Wife for her costs as a result of Order 1 made by this Court on 16 June 2014 together with interest at the rate provided by Rule 22.01 from 15 July 2014 to the date of payment; and
(ii)any sums owed by the Husband to the Wife for costs incurred in accordance with Orders (3), (4), (7) and (13).
Within twenty one (21) days from the date of these Orders the wife must sign all such documents provided to her by the Husband to transfer all her right, title and interest to the Husband in the following jointly held shares and the Husband is to be responsible for the lodgement of those documents and must indemnify the Wife in respect of any tax payable on the transfer of the shares:
(a)(omitted)
(b)(omitted); and
(c)(omitted).
Within seven (7) days prior to the settlement of the sale of the former matrimonial home or unless otherwise agreed the parties are to divide the furniture and furnishings as agreed between them PROVIDED THAT if there is no agreement then the parties shall divide by way of pick pile method. In the event that at the time of settlement of the sale of the former matrimonial home the Husband has not removed the items he is to retain under this Order then the wife seven (7) days prior to the date of settlement of the sale will be entitled to remove all items of the Husband from the former matrimonial home and dispose of them at her discretion and any cost incurred by the wife in removing such items is to be borne by the Husband and is to be deducted from his share of the proceeds of sale of the former matrimonial home.
Except as otherwise provided in these Orders the Wife to the exclusion of the Husband is to be the sole legal and beneficial owner of the following items:
(a)all bank accounts held in her name;
(b)all superannuation entitlements held in her name;
(c)all motor vehicles registered in her name;
(d)all shares held in her name; and
(e)all items of personalty in her possession.
Except as otherwise provided in these Orders the Husband to the exclusion of the Wife is to be the sole legal and beneficial owner of the following items:
(a)all bank accounts held in his name;
(b)all superannuation entitlements held in his name;
(c)all motor vehicles held in his name;
(d)all shares held in his name;
(e)all businesses registered in his name; and
(f)all items of personalty in his possession.
Except as otherwise provided for in these Orders each party is to be solely liable for all debts and liabilities held in their individual name and must indemnify the other party in respect of those debts and liabilities at all times.
In the event that either party refuses or otherwise fails to sign or execute any deed or instrument within seven (7) days after the written request delivered to the party’s last known address the Registrar or a Deputy Registrar of the Court is to be appointed in accordance with section 106A of the Family Law Act 1975 to sign such deed or instrument in the name of the party and to do all acts and things necessary to give validity to the operation of the deed or instrument required to bring these Orders into effect.
Each party shall have leave to apply in respect of the implementation of these Orders on seven (7) days’ notice to the other party.
The Husband has leave to file and serve within twenty one (21) days a Written Submission to show cause why an Order should not be made that he pay the costs of the Wife in these proceedings in the sum of $20,984.95.
IT IS NOTED that publication of this judgment under the pseudonym Cordell & Cordell is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYC 1580 of 2014
| MS CORDELL |
Applicant
And
| MR CORDELL |
Respondent
REASONS FOR JUDGMENT
Application
This is an Application by the wife for orders for settlement of the parties’ property. The application has been heard on an undefended basis due to the almost total failure by the husband to participate in the proceedings in any way, apart from an appearance in person on the first return date, where he acknowledged that he had been served with the Application and supporting documents but said that he had not read them. He was ordered to pay the wife’s costs of the day in the sum of $500.00.
The Application first came before the Court on 16 June 2014, and since that date the husband has neither filed any documents nor attended Court again. On 12 March 2015 the Application was listed for final hearing on an undefended basis and the Respondent was advised that if he did not attend court on the next occasion that orders may be made in his absence. The Applicant’s costs were reserved.
The Respondent did not attend Court on the date set for hearing. The Applicant attended with her solicitor and Counsel, and gave oral evidence. The matter needed to be stood down as there had emerged evidence suggesting that the husband was an undischarged bankrupt, but, after inquiries had been made by the Applicant’s solicitor, evidence was produced that the bankruptcy had been annulled.
Background
The husband was born on (omitted) 1964.
The wife was born on (omitted) 1969.
The parties commenced living together in (omitted) 1988 and were married on (omitted) 1990. They separated under the one roof in November 2012.
There are three children of the marriage, a daughter aged 22, a son aged 19 and another daughter aged 17 years. The younger daughter remains living in the former matrimonial home.
The husband is a self-employed (occupation omitted) with a business called (business omitted). The wife works part-time as a (occupation omitted) at a (employer omitted).
Throughout the marriage, the husband was the primary income earner and the wife was the primary carer for the children and homemaker. The wife returned to work outside the home in 2004.
Evidence and Submissions
The wife relied on the following documents:
a)Her amended Application filed 23 April 2015;
b)Her affidavit sworn 17 March 2014;
c)Her affidavit sworn 22 April 2015;
d)Her Financial Statement filed on 19 March 2014; and
e)A Balance Sheet filed on 23 April 2015.
The wife gave oral evidence.
Counsel for the wife tendered a print-out of an extract from the National Personal Insolvency Index showing that a sequestration order was made against the husband in September 2012 on the petition of (omitted) Finance. The bankruptcy was annulled on 5 August 2013 when the amount owing was paid in full.
A title search of the property was also admitted into evidence, showing that the title to the property is held in both names as joint tenants.
The husband did not file any material at all and did not attend Court.
Counsel for the wife, Ms Sproston, submitted that the requirement of s.79(2) of the Family Law Act 1975 (Cth) that it should be just and equitable that orders be made adjusting the parties’ property interests is plainly satisfied on the facts of this case, in accordance with the principle in Stanford v Stanford[1]. Although the husband’s position is unclear, he has been given every opportunity to file documents and participate in the proceedings.
[1] [2012] HCA 52; (2012) 47 Fam LR 481; FLC 93-518
It was also submitted that the parties have been living separately under the same roof in the former matrimonial home, a situation which the wife described in her affidavit of 22 April 2015 as “horrible”[2].
[2] Affidavit of Ms Cordell 22.4.2015 at paragraph [13]
In regard to the balance sheet, Ms Sproston submitted that the husband had failed to make any financial disclosure and there are few documents that evidence the parties’ assets, in circumstances where the wife indicated in her affidavits of 17 March 2014 at [12] and 22 April 2015 at [8].
It was further submitted that the parties had had a round table conference on 23 October 2014 at which the husband showed to the wife and her solicitor documents evidencing Items 1 to 6, 8, 10, 11, 12, 14 and 16 of the balance sheet, or else, the values were agreed. Ms Sproston submitted that the wife’s evidence about the value of the balance sheet items should be accepted. The remaining items in the balance sheet are Items 7, 13 and 15, being the wife’s:
a)(omitted) Bank account;
b)Nissan (omitted) vehicle; and
c)Superannuation.
Ms Sproston submitted that the wife’s values should be accepted.
Item 9 on the balance sheet is land owned by the husband at Property T. The wife had estimated a value of $8,000.00 in the balance sheet but a recently obtained valuation shows a value of $11,000.00.
On the subject of the parties’ financial contributions, it was submitted that the wife had minimal assets at the commencement of the relationship but the husband owned land at Property T and Property A. The land at Property T would presumably have been of minimal value when the parties commenced their relationship 27 years ago when it has only now been valued at $11,000.00.
It is the wife’s evidence that the parties built a house on the land at Property A which was subsequently sold. It is her contention that the parties did not make much money from the sale of the property.
The parties later purchased the former matrimonial home at Property M for $275,000.00, although the wife was not aware as to how the purchase was funded. However, in about 2004 the wife received an inheritance of $95,455.00 from her grandmother’s estate and this inheritance was applied towards payment of the mortgage on the property.[3]
[3] Affidavit of Ms Cordell 22.4.2015 at [10]
Ms Sproston submitted that it is unclear how the current level of the mortgage on the property, now standing at $707,232.46, accrued, but in light of the financial difficulties the husband experienced at the end of the relationship, which led to his being declared bankrupt, it could be inferred on the balance of probabilities that it was through the husband’s mismanagement of the parties’ finances. Therefore, it is submitted, the husband’s financial contributions were more limited than they would otherwise be deemed.
During the term of the marriage, the parties also purchased two investment properties at (omitted) and (omitted)[4], but they were both sold by the mortgagee in 2013.
[4] Affidavit of Ms Cordell 17.3.2014 at [15]
On the subject non-financial contributions, the wife was the primary carer of the children and undertook the duties of homemaker.[5]
[5] Ibid at [14], affidavit of Ms Cordell 22.4.2015 at [12]
It is further submitted on behalf of the wife that since the date of the parties’ separation up to the date of hearing the husband had generally continued to pay the mortgage over the former matrimonial home.[6]
[6] Affidavit of Ms Cordell 17.3.2014 at [7]
However, at the beginning of 2013 the wife became aware that the mortgage was in arrears. A writ of possession was issued on 8 May 2013, which was followed by an eviction notice in August of that year.[7] It is the wife’s evidence that the arrears of approximately $10,000.00 were paid by a loan from the parties’ son.
[7] Affidavits of Ms Cordell 17.3.2014 at [16] and 22.4.2015 at [11]
Ms Sproston submitted that since the parties separated the wife has continued to be responsible for the care and expenses of the parties’ 17 year old daughter.
It is submitted that the contributions favour the wife as to 55%-60% to 45%-40%.
The wife further submits that she receive an adjustment for factors under s.75(2) of the Family Law Act 1975 for the following reasons:
a)the husband’s greater income;
b)the fact that she has the care of the parties’ younger daughter; and
c)a standard of living that is reasonable in all of the circumstances.
The wife’s Financial Statement of 17 March 2014 shows her weekly income as $580.00 and her weekly expenditure as $586.00, not including rent or mortgage payments. Since then, the wife has taken on additional employment as a (occupation omitted) for (employer omitted) at a (omitted).[8] Her current income is $47,000.00 per annum before tax.[9] By contrast, the husband’s income is $80,000.00 per annum. He has continued to pay the mortgage and outgoings on the former matrimonial home.
[8] Affidavit of Ms Cordell 22.4.2015 at [6]
[9] Ibid at [17]
Upon the sale of the home, the wife will have to find alternate accommodation for herself and the parties’ daughter. It is likely that she will have to obtain rental accommodation as she will not be in a position to purchase another property.
The wife has the primary care of the parties’ younger daughter, who has had eating issues and requires a special diet. She has been estranged from her father since April 2013 and has not spoken to him since that date.[10]
[10] Affidavit of Ms Cordell 17.3.2014 at [17]
Counsel for the wife submits that there should be an adjustment in the wife’s favour in the order of 5% to 10%.
In all the circumstances, it is submitted that justice and equity favour the wife receiving 65% of the asset pool and the husband 35%.
The proper approach to determination of a property application
The way a Court approaches a property application under s.79 of the Family Law Act is, first of all, to follow the principles set out by the High Court of Australia in Stanford v Stanford[11]. First, the court must consider the requirement in subsection 79(2) of the Act that prescribes:
The Court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
[11] [2012] HCA 52; (2012) 47 Fam LR 481; FLC 93-518
The High Court held in Stanford at [37] that the court must identify the existing legal and equitable interests of the parties in the property. Although s. 79 confers a broad power on a court to make a property settlement order, “it is not a power that is to be exercised according to an unguided judicial discretion” (at [38]).
The third principle, and perhaps the most important, is:
…whether making a property settlement order is “just and equitable” is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property, which is fixed by reference to the various matters (including financial contributions) set out in s.79(4).[12]
[12] [2012] HCA 52 AT [40]
Thus, the decision in Stanford means that the Court must consider the requirements of s.79(2) before embarking on the four-step process set out in Hickey & Hickey.[13]
[13] [2003] FamCA 395; (2003) 30 Fam LR 35; FLC 93-143
In Hickey, the Full Court of the Family Court set out a process of four inter-related steps that must be taken by a court when determining a property application:
Firstly, the Court should make findings as to 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 ss. 79(4)(a),(b) and (c) 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 identify and assess the relevant matters…(“the other factors” including…the matters referred to in s.75(2) so far as they are relevant…Fourthly, the Court should …resolve what order is just and equitable in all the circumstances of the case.[14]
[14] [2003] FamCA 395; (2003) 30 Fam LR 35; FLC 93-143 at [39] per Nicholson CJ, Ellis & O’Ryan JJ
It is neither contrary nor redundant to consider again whether a proposed order is just and equitable under s.79(2), because the Court is considering the matter after having undertaken the three previous steps referred to in the Hickey decision.
Just and Equitable
The parties have been separated under the one roof since November 2012 and that state of affairs cannot continue indefinitely. It is clearly in the interests of both parties to resolve the issues between them so that they both move on with their lives. The title to the former matrimonial home stands in both names and there is no issue that the property will need to be sold and the proceeds divided between the parties.
I am satisfied that it is just and equitable in all the circumstances to make orders for the settlement of the parties’ property.
The property and liabilities of the parties
A very helpful balance sheet has been provided to the Court. It has been used to identify and assess the value of the property, liabilities and financial resources of the parties. The evidence is somewhat one-sided, because the husband has made no financial disclosure at all, and I accept the values put forward by the wife.
I find the asset pool to be as set out in the balance sheet.
Non superannuation asset pool
I find the total of the non-superannuation assets, including the former matrimonial home, to be $1,190,940.63. There are no amounts to be added back.
Liabilities
I find the total of the parties’ liabilities to be comprised solely of the amount owing under the mortgage to the (omitted) Bank, namely $707,232.46.
By deducting the total liabilities of $707,232.46 from the total of the non-superannuation asset pool, being $1,190,940.63, I arrive at a net total of $483,708.14.
I find the net total of the non-superannuation asset pool to be $483,708.14.
Superannuation
I find the parties’ superannuation assets to be:
a)Wife’s interest in (omitted) superannuation $32,031.26
b)Husband’s interest in (omitted) superannuation $38,362.36
Total superannuation $70,393.62
By adding the total of the parties’ superannuation entitlements, namely $70,393.62, to the total of the non-superannuation asset pool, being $483,708.14, I arrive at a total of $554, 101.76.
Accordingly, I find the total net asset pool to be $554,101.76.
The Parties’ contributions
In the absence of any contrary evidence from the husband, I am satisfied that the wife’s evidence should be accepted. It is clear that the wife’s contribution over the term of the marriage, including after separation, in financial and non-financial terms, should be regarded as slightly greater than that of the husband.
I am satisfied that the contributions of the parties should be regarded as 55% to the wife and 45% to the husband.
The effect of any proposed property order upon the earning capacity of either party
Subsection 79(4) requires at paragraph (d) that the Court consider the effect of any proposed order upon the earning capacity of either party to the marriage. In my view the proposed orders will not have any effect upon either party’s earning capacity.
Relevant matters referred to in subsection 75(2)
Again, in the absence of any contrary evidence from the husband, I am satisfied that the wife’s submission that the subsection 75(2) factors favour her, especially as she has the care and control of the parties’ 17 year old daughter, who not only has particular needs but has had no speech with her father since April 2013. The husband clearly has a greater earning capacity.
In my view, an adjustment of 10% in favour of the wife is called for.
Just and equitable
Again, the Court must consider wither the proposed orders are just and equitable under s.79(2) of the Act. The wife will receive 65% of the net asset pool and the husband will receive 35%. Neither party will be able to afford to retain the former matrimonial home. It will clearly need to be sold and both parties are likely to be moving into rental accommodation.
The husband will retain his business and so his earning capacity will be unaffected.
I am satisfied that the proposed orders are just and equitable.
Orders to be made
I am satisfied that the orders sought by the wife in Annexure ‘A’ to her Case Outline are appropriate. The former matrimonial home is to be sold. It seems clear that, due to the almost total lack of action by the husband, the wife will need to have sole control of the sale process. The history of the husband’s failure to take any positive action engenders no confidence that he will take any steps to appoint an agent or a solicitor to act on the sale of the property. This is clearly a matter where an order should be made under s.106A of the Act appointing a Registrar to sign any relevant documents in order that the sale may proceed.
Costs
This is a matter where the wife seeks an order for costs in her favour. I am of the opinion that there are circumstances that justify the making of an order for costs in her favour.
In considering the matters to which the Court must have regard under s.117(2A) of the Act, I note that:
a)There is evidence of the wife’s financial circumstances but the husband has made no financial disclosure at all, requiring the Court to rely on the wife’s evidence as to his circumstances;
b)There is no evidence that either party is in receipt of assistance by way of a grant of Legal Aid;
c)The conduct of the parties is highly relevant, in that the wife has done everything required to bring this matter to finality whilst the husband has failed to appear on all but one occasion and has filed no documents whatsoever, making it doubly hard for the wife to provide the necessary evidence to the Court;
d)Apart from the fact that the husband has failed to pay the costs ordered on 16 June 2014, the proceedings have not otherwise have been necessitated by the failure of a party to comply with previous orders of the Court;
e)The husband has been wholly unsuccessful in the proceedings and the wife has been wholly successful;
f)There is no evidence of any offer in writing by either party to settle the proceedings; and
g)The failure by the husband to participate has, to my mind, justified the wife’s solicitor in briefing Counsel at the final hearing in order to bring this matter to finality, especially as the husband appears to have made an erroneous statement to the wife about the state of his bankruptcy,[15] thereby necessitating further inquiries to be made at the hearing.
[15] Affidavit of Ms Cordell 22.4.2015 at [19]
The wife has estimated that her costs for both solicitors and Counsel will amount to $20,984.95. In my view, the circumstances of this case are sufficiently exceptional and unusual as to raise a strong case for costs not only to be awarded in favour of the wife, but that they should be assessed on a solicitor-client basis (see Colgate Palmolive Co, v Cussons Pty Ltd[16]; In the Marriage of Kohan[17]; Munday & Bowman[18] and Prantage & Prantage[19]).
[16] [1993] FCA 536; (1993) 46 FCR 225; 118 ALR 248
[17] (1992) 16 Fam LR 245; (1993) FLC 92-340
[18] (1997) 22 Fam LR 321; FLC 92-784
[19] [2013] FamCAFC 105; (2013) 49 Fam LR 197; FLC 93-544
Accordingly, the husband will be given 21 days in which to file and serve a written submission as to why he should not pay the wife’s costs in the sum of $20,984.95.
I certify that the preceding sixty-six (66) paragraphs are a true copy of the reasons for judgment of Judge Scarlett
Associate:
Date: 25 May 2015
Key Legal Topics
Areas of Law
-
Family Law
-
Civil Procedure
Legal Concepts
-
Costs
-
Remedies
-
Jurisdiction
-
Statutory Construction
0
5
3