Darcy and Darcy (No. 3)

[2008] FamCA 599

FAMILY COURT OF AUSTRALIA

DARCY & DARCY (NO. 3) [2008] FamCA 599

FAMILY LAW – PROPERTY SETTLEMENT – division of property based upon contribution and s 75(2) factors – Problems associated with husband not filing material – Subsequent to adjournment of hearing, third parties filed caveats in respect of claims associated with a property included in the asset pool – Determination on the basis of the evidence.

Family Law Act 1975 (Cth)

Australian Securities and Investments Commission and Rich (2003) FLC 93-171
Biltoft and Biltoft (1995) FLC 92-614
Black v Kellner (1992) FLC 92-287; 15 FamLR 343
Browne v Green (1999) FLC 92-873; 25 Fam LR 482
C & C (2005) FLC 93-220; 33 Fam LR 414
Hickey & Hickey & Attorney-General for the Commonwealth of Australia (2003) FLC 93-143; 30 Fam LR 355
Re F: Guidelines for Litigants in Person (2001) FLC 93-072; 27 Fam LR 517
Weir (1993) FLC 92-338; 16 FamLR 154

APPLICANT: MR DARCY

RESPONDENT: MS DARCY

FILE NUMBER: MLF 3110 of 2005

DATE DELIVERED: 1 AUGUST 2008

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: THE HONOURABLE JUSTICE CRONIN

HEARING DATE: 10 & 11 JANUARY 2008; 21 MAY 2008; 15 JULY 2008

REPRESENTATION

COUNSEL FOR THE APPLICANT: MR NICHOLSON

SOLICITOR FOR THE APPLICANT: ALDERUCCIO SOLICITORS

COUNSEL FOR THE RESPONDENT: MR PINNER

SOLICITOR FOR THE RESPONDENT: MOORES LEGAL

Orders

1. That upon the wife submitting to the husband a transfer of land in registrable form, the husband do all acts and things required and sign any necessary document to transfer to the wife at the expense of the wife all of his interest in the property at B being the land described in Certificate of Title Volume … Folio ….

2. That by 1 December 2008, the wife do all acts and things required to produce to the husband evidence of having discharged his liability under mortgage W… to the Commonwealth Bank of Australia encumbering the B property.  That forthwith, the wife indemnify the husband in respect of all liability arising out of the said mortgage W… to the Commonwealth Bank of Australia.

3. If the wife does not provide evidence of a discharge of the husband’s liability under that said mortgage by 1 December 2008, the husband and wife thereafter do all acts and things necessary and sign any necessary document to sell the said property by auction on terms and conditions to be agreed and failing agreement, pursuant to an order of this court, and the net proceeds of sale be used as follows:

   (a)       first, to pay all costs, commissions and expenses of the said sale;

   (b)secondly, to discharge the mortgage to the Commonwealth Bank W…; and

   (c)       thirdly, to pay the balance to the wife.

4. That the proceeds of the sale of the T property in the name of the husband be disbursed as follows:

   (a)       to pay Mr F the sum of $2090;

   (b)       to pay L Services $1300;

   (c)       to pay M Conveyancers $1154.82;

   (d)to set aside in an interest bearing account the sum of $86,496 to cover the capital gains tax liability arising out of the sale of the read properties in P and T; and

   (e)to pay the balance thereafter to the husband subject to the following paragraph.

5. That until further order, the husband be restrained from accessing the money to which he is entitled pursuant to paragraph (4) of these orders until after the determination of any application described in paragraphs 12-14 of these orders.

6. That the sum referred to in paragraph (4) relating to the liability for capital gains tax be held in an interest bearing account in the name of the husband, he being responsible for any taxation on any interest so earned on the said invested sum until the payment of the said capital gains tax liability.

7. That the husband keep the wife informed at all times reasonably requested by her as to the progress of the assessment for capital gains tax and produce all necessary documents showing the assessment and payment of the said capital gains tax.

8. That the husband be restrained from accessing the said interest bearing account until after the payment of the capital gains tax liability referred to in these orders.

9. That in the event that the capital gains tax liability is ultimately assessed as less than $86,496 then the balance left over after payment of the said liability be divided between the husband and the wife as to 70 per cent to the wife and 30 per cent to the husband.

10. That the husband and the wife forthwith give all necessary directions to the practitioners holding the funds from the sale of the T property to pay them out in accordance with these orders.

11. That each party otherwise retain and the other relinquish any interest in, all of the property including superannuation, in the name of the party as at the date of these orders.

12. That should any parties seek costs arising out of these orders, that application be by way of written submission.  Any such written submission shall be filed by 4.00pm on 15 August 2008 by email transmission to my Associate.

13. That by 4.00pm on 25 August 2008, any response to the written submission referred to in paragraph (12) be filed with my Associate.

14. That the determination of any application for costs be made in chambers.

15. That subject to the applications referred to for costs, all applications be otherwise dismissed and all proceedings be removed from the list of cases awaiting a hearing.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLF 3110  of 2005

MR DARCY

Applicant

And

MS DARCY

Respondent

REASONS FOR JUDGMENT

1. These are proceedings between the husband and the wife.

2. I heard the matter on 10 and 11 January 2008 but because of the nature of the assets, had to adjourn it after hearing submissions from all parties about how I should divide the ultimate pool. 

3. On 11 January 2008, the adjournment was to a date to be fixed.  At that time however, I made orders.  It would now appear that at least one of those orders cannot be implemented for reasons that I shall endeavour to set out.

4. The orders provided that from the sale proceeds of property in P and in T, $30,000 was to be drawn to be paid to the husband and wife.  I ordered that the husband lodge his taxation returns for the years 2005/2006 and 2006/2007 for the purposes of enabling the income position to be known so that capital gains tax could be calculated.  I had not anticipated at that time that my judgment would not be able to be delivered until into the commencement of the next financial year.  The reasons why that is so are included in this judgment. 

5. In relation to the capital gains tax issue arising from the sale of the properties, I had ordered that the wife nominate an accountant to calculate the liability.

6. There can be little doubt that as at the close of the hearing on 11 January 2008, all of the matters upon which the determination was to be made about the case were finalised.  In paragraph 6 of the orders that I made, the parties were directed to file final details of all monies available for distribution arising out of the sale of the real properties. 

7. Anticipating that the monies would come in from the sale, I ordered that outstanding school fees be paid directly from the sale.  That unpaid liability had been the cause of some angst for the parties.

8. In my orders, I provided that in the event that a particular firm of solicitors were not to be the conveyancers, their fees were to be paid from the ultimate proceeds.  The parties had to reach agreement about who was to undertake the conveyancing of the sale of the T property. 

9. The parties also consented to the sum of $36,000 being paid to the wife from the husband’s entitlement as future security for the payment of child support.  For reasons which will become apparent when I deal with the division of property, there is not $36,000 left for that to occur. 

10. No sooner had the parties left the litigation in January, there were problems.  Those problems stemmed from a dispute between the parties about the conduct of the sale of real properties.  Nothing was simple in its implementation.  However, the major drama that caused the delay in the finalisation of this case was the lodging of two caveats on the titles to the T property.  The caveators were the husband’s parents on the one hand and the husband’s grandmother on the other. 

11. Copies of both caveats were attached to an affidavit by the wife supporting an application for interim orders to which I shall turn in a moment.  Curiously, the caveats were handwritten and dated 22 June 2007 but they were not lodged until 25 January 2008.  The husband concedes that he assisted in respect of the preparation of the caveats but not in respect of their lodging.  That issue does not affect my judgment.

12. Each of the caveats set out as its ground that the interest claimed in the T property by the caveator was as a result of a charge pursuant to a loan agreement dated 2 June 1997 between, on the one hand, the husband and his grandmother, and on the other hand, the husband and his parents.

13. Obviously, the caveats came to light during the conveyancing process concerning the sale of the T property.  The wife was provided with the loan agreements and they too were annexed to her affidavit.

14. On 12 May 2008, the wife filed an application in a case seeking a variety of orders under ss 90AF, 113 and 114 of the Family Law Act 1975 (Cth) (“the Act”) against M Darcy and Ms A.

15. The matter was listed before me on 21 May 2008 at which time, the wife was represented by counsel who appeared for her at the hearing in January, the husband was represented before me for the first time by counsel and Mr McGowan of Counsel appeared on behalf of the caveators. 

16. At the hearing, discussion ensued about a number of matters including jurisdiction having regard to the fact that the evidence had closed and the question of whether or not the debt claimed by the husband’s extended family members was enforceable because of the statute of limitations.  The case had been listed for mention and after discussion with counsel, I indicated that I would allocate some time in July for a proper determination of all issues.  It was clear however, that the debt position claimed by the parents and grandmother could really only be put before the Court in respect of the property dispute between the husband and the wife on the basis that an application was made to reopen the evidence.

17. One difficulty on 21 May 2008 arose because the husband’s family members had tragically lost a relative and the funeral was to take place that day.  That became important for matters that subsequently transpired.  What it meant however was that minutes of an agreed position were put before me for the making of orders and I did so.

18. The orders made on 21 May 2008 by consent of all parties gave the caveators leave to intervene in the proceedings.  This was on the basis that the caveators would withdraw their caveats to enable the settlement of the sale of the T property to be completed.  It was imminent.  Injunctions were drawn by the parties and agreed to.

19. The parties agreed to an order that the matter generally was adjourned for listing before me on 15 July 2008 limited to issues that the Court “considered to be appropriate” and also to the issue of what entitlements, if any, the caveators had in the cash from the sale of the T property.  Fundamentally, the orders provided for the interveners to file within 14 days, that is by 4 June 2008, whatever it was that enabled them to assert an entitlement to money.  However, as the evidence had been closed and judgment reserved, it was in reality, a question of whether or not the case could be reopened by either the husband or the caveators.

20. It is important to point out that the minute that became the orders was signed personally by the mother and the father of the husband and counsel for the grandmother.  I also listed the matter for mention before me on 10 July 2008 at 9.00am just to ensure that all of the issues that had been discussed were in fact on track so that the hearing on 15 July 2008 could proceed efficiently.

21. Whilst there may have been some uncertainty about exactly what could happen on 15 July 2008, there could be no doubt as to the procedure that the parties were to follow leading up to that hearing.

22. The interveners did not file material by 4 June.

23. On 10 June 2008, the solicitor who had acted for the interveners filed a Notice of Ceasing to Act. 

24. On 20 June 2008, the wife issued a subpoena to the Commonwealth Bank seeking information about a liability claimed by the Commonwealth Bank arising out of credit card facilities provided to the husband.  The importance of that claim was that, as I understand it, the Commonwealth Bank was not prepared to discharge its mortgage over the T property at the settlement without all liability of the husband to it being discharged.  The conveyancing documents in respect of the sale of the T property show that the debt was in fact paid.  The subpoena issued by the wife was to presumably ascertain the details surrounding the liability.

25. 8 July 2008 was the return date of the subpoena to the Commonwealth Bank.  By letter, the parties agreed that as an objection had been made by the husband to the release of the information provided by the bank (but not by the bank itself), that objection should be referred to be heard by me on 15 July 2008.

26. At 9.00am on 10 July 2008, I was sitting in Albury and arrangements were made for a telephone link-up for the mention to which I have just referred.  Sensibly, counsel for the husband and wife attended upon one of their chambers for the purposes of that hearing.  Each however indicated that the interveners had not filed any material as required by the order and they were no longer represented.  They could see no necessity for their involvement on 15 July.  Unfortunately, as it now transpires, the mother of the husband but not his father or grandmother, had telephoned the Court at 9.00am and not been linked into the conversation with counsel for the husband and wife.  As I later indicated to the husband’s mother, it would not have made any difference having regard to the fact that no material had been filed.

27. In the telephone mention between counsel, each agreed that the issue claimed by the interveners was no longer one to be concerned about, they not having filed any material, and each was seeking that their claim if any be dismissed.  It must be remembered however that there was no claim by the interveners.  Effectively therefore, I was being asked on 15 July 2008 to deliver judgment based upon the material that I had heard in January.

28. On 17 June 2008, the wife filed a comprehensive affidavit for the hearing on 15 July 2008.  Because the hearing did not proceed as was anticipated on 15 July as I have set out above, it would not be appropriate for me to use that material to determine the property dispute.  The exception to that is in relation to the matters to which I referred when the proceedings were adjourned in January.  The parties were ordered to provide me with a balance sheet or at least details from which I could draw one.

29. The affidavit of the wife filed 17 June 2008 refers to the fact that her Notice of Address for Service is the firm of solicitors Moores Legal and in particular, she nominates Mr Peter Szabo.  However, I note that the affidavit was not drawn by or settled by Mr Szabo. 

30. Having regard to the discussions that took place with both counsel on 15 July 2008, I have not taken the matters in the affidavit into account save for clarifying figures.

31. The same must be said of the affidavit of the husband filed on 9 July 2008.  That was also prepared for the purposes of the dispute involving his parents.  Apart from clarifying some of the figures for the purposes of the balance sheet, I have not taken that affidavit into account.

32. On 15 July 2008, Mr Pinner of Counsel for the wife gave me a summary of assets and liabilities as at that date.  That document has been placed on the court file.  Mr Nicholson of Counsel for the husband did not necessarily agree with all of the figures but did not demur from the important ones.  Those that were in dispute are matters to which I shall turn below.

33. Whilst I have not taken into account the whole of the husband’s affidavit, there are clearly matters referred to in the balance sheet which are comprehensively addressed in his affidavit.  For example, there is a significant concession that he received by way of partial property settlement the sum that was used to pay out his credit cards from the sale of the T property.  That has been added back to the pool.

34. The balance sheet also contains some figures relating to motor cars.  Those figures were also not agreed between the parties in January and I have used the evidence rather than the assertion in the balance sheet as the appropriate figure to add to the pool.

35. The other item on the balance sheet of some importance relates to the superannuation.  I shall deal with that below.  That was a sum also not agreed between the parties.  In the summary of assets and liabilities presented to me by Mr Pinner, the figure is shown with the qualification that it is “subject to confirmation”.  The confirmation of that figure has been drawn from the affidavit of the husband and the annexures to that affidavit.

36. On 15 July 2008, the husband and wife appeared represented by counsel.  They told me that the caveators were at the Court although not in the courtroom.  Counsel told me that they anticipated that there was a good chance that the dispute between the husband and the wife in relation to the property matters could be sorted out and that I may not be expected to deliver judgment.  That was an optimistic hope.

37. Not long before 12 noon, I was called to court and told that settlement had not been reached.  By this time, the husband’s mother was seated at the Bar table indicating she wanted to be heard.  She told me that documentation of the type anticipated in the orders that I made on 21 May 2008 had been drawn by her lawyers and she wanted it to be read on the basis that there was a debt owed to she, her husband and the husband’s grandmother.  She told me that she had also an application.  The document she handed to me was not an application for orders but rather a submission.  She blamed the lawyers for not having filed the material.  She said that she and her husband had not wanted to intervene and that what had occurred on 21 May 2008 was overshadowed by the funeral of the relative that day.

38. Counsel for the wife opposed any extension of time for the interveners to have the indulgence of the Court and file their material.  Interestingly, counsel for the husband said exactly the same.  Each sought that I move to deliver judgment in respect of the substantive issue.

39. I indicated that I was not prepared to do that having regard to what I had been told by the mother.  I said that I was prepared to grant the indulgence of an adjournment but it would be on the basis of an order for costs.  Clearly, significant costs had been thrown away.  The mother then declined to pursue her application for an adjournment.  There was no other course other than an adjournment for the husband’s mother having regard to the fact that the material had not been served on either of the parties. 

40. Having declined to pursue her application for the adjournment, I then turned to the parties.  Counsel for the husband said that he was not seeking costs for the hearing on 21 May 2008 which had directly arisen as a result of the caveats being lodged.  He said that was on the basis that his client was obviously a relative of the caveators.  Counsel for the wife took a different position and said that he wanted an order for costs in respect of 21 May but also the costs of 15 July.

1. I pointed out to Mr Pinner of Counsel for the wife that he had also adjourned before me the dispute about the subpoena to the Commonwealth Bank.  Initially he said that the wife was proceeding with that but then declined and said that the subpoena issue would not be pursued.  I pointed out to him that there could be therefore little justification for costs of his brief fee for that particular day.

2. The mother was the only person purporting to pursue anything as an intervener.  No mention was made of her husband and although I was told that the husband’s grandmother was present, she was not apparently a participant in what could only be described as a debacle.

3. It was only after it came to light about exactly what was left over from the proceeds of the sale of the P and T properties that the absurdity of the caveators’ position became obvious.  The caveats were based upon loans apparently made in 1997 and if the documents attached to the wife’s affidavit in the interim proceedings were correct, the agreement was between the husband but made no mention of the wife.  The purported charge related only to the T property.  At best therefore, any civil action brought by the husband’s extended family members could only be with the husband.

4. In Australian Securities and Investments Commission and Rich (2003) FLC 93-171 O’Ryan J said:

   The first step in determining a s 79 application is to make findings as to the extent and value of the financial circumstances of the parties to the marriage…The first step also involves identifying and if necessary valuing the liabilities of the parties in order to arrive at the net property.

5. O’Ryan J went on to say:

   The court will deduct the amount owed to unsecured creditors in order to arrive at the net property of the parties.

6. The Full Court in Biltoft and Biltoft (1995) FLC 92-614 acknowledged that the practice to which O’Ryan J was referring might not necessarily always be followed:

   Because of the circumstances surrounding the incurring of the liability it ought in justice and equity be wholly or partly disregarded in determining the appropriate order under s 79 as between the parties to the marriage.  Such a result could be reached where a spouse has incurred a liability in deliberate or reckless disregard of the other parties potential entitlement under s 79.

7. However the Full Court in Biltoft also said that there was no requirement that the rights of an unsecured creditor had to be considered and dealt with prior to the Court making an order under s 79.  Importantly, the Full Court said that there was no rule of priority as between creditor and spouse.  The Court acknowledged that the rights of the third party could not be ignored but they had to be balanced against the rights of the spouse.

8. The first point to make here is that the interveners, given leave, have not participated by seeking orders.  In my view, they have had ample opportunity to do so.

9. The second point to be made is that I have been provided with evidence which has not been challenged by either the husband nor when I read the affidavit was it challenged by counsel for the interveners that the agreement for the loan related specifically to the T property.  On 15 July 2008, the husband’s mother told me that the reason that they had not taken any part in the proceedings over the years prior to January 2008 was that they only became concerned when they heard that the property was to be sold.  That was not evidence.  However, it beggars belief for two reasons.  The first is that the caveat which was prepared by the husband on his evidence, was signed in June 2007 and not lodged until after the adjournment in January 2008.  The second is that the husband is an experienced lawyer and the interveners had the benefit of legal advice outside of their son’s own views in the hearing in May 2008.

10. It should also be pointed out for reasons to which I shall refer shortly that the evidence about these loans was not a matter of substance before me in January.  It certainly appeared in a financial statement of the husband that but he did not challenge the wife about the fact that the money was still owed.

11. Accordingly, in the exercise of my discretion, I see no injustice to the husband’s parents or grandmother by them being excluded from participating in the proceedings nor from having their evidence considered in the substantive judgment of the proceedings between the husband and the wife.  Significantly, the husband, in material to which I shall turn in a moment, acknowledges that he will be responsible for those liabilities.

12. The husband filed an affidavit on 20 May 2008 supporting an application in a case.  He sought that his parents and grandmother withdraw their caveats but then indicated that he wanted the entitlement of his relatives determined in the proceedings.

13. I have already mentioned that the husband’s mother said that the caveats were lodged when they found out that the T house was going to be sold.  The other reason why that position is completely untenable is that Brown J ordered the sale of the T property in March 2007 and the husband appealed against that decision.  He subsequently abandoned his appeal.  The information about the sale of the T property was in the husband’s possession well before January 2008.

14. The husband said in his affidavit that he considered the claims of the caveators were “legitimate liabilities” of he and the wife.  For reasons to which I have already referred, I reject that. 

15. Turning then to the question of the costs sought by the wife.  This was an order sought specifically against the husband’s mother, father and grandmother.  Whilst each of those persons was not specifically heard on the question of an order for costs, the mother’s position as I understand it was that she simply opposed the order being made.  There is no question that this Court has the power to make an order for costs against a person who is not a party to the proceedings.  Each must have contemplated the inconvenience that they had caused by lodging the caveats requiring the wife subsequent to the closure of the evidence, to seek to have the orders that were clearly intended not only by me but also by Brown J in March 2007 implemented.

16. Section 117 of the Act says that each party in proceedings shall bear their own costs unless the circumstances justify a court departing from the principle. If the court determines that it is just to depart from the principle then the question of the matters set out in s 117(2A) must be considered.

17. I do not know the financial circumstances of the husband’s extended family members in any detail.  It is important to note however that they were the purchasers of the P properties.  I have presumed that they are financially comfortable.

18. The husband’s extended family members had the benefit of legal advice for some days in May when the matter was listed before me so I am entitled to conclude that they have some level of affluence and understand the costs involved in litigation.

19. The wife on the other hand having gone through a trial in January was entitled to expect that there would be no impediment to the orderly conduct of the sale set out in the orders of March 2007 and my orders in January 2008.  She has incurred significant legal costs unnecessarily as a result of the conduct of the husband’s parents and grandmother.

20. Costs are not intended as a punishment.  Costs are intended to ameliorate the loss incurred as a result of a party being brought into litigation unnecessarily.  That is exactly what has occurred here.  In the circumstances, and in the exercise of discretion, it is appropriate that at least the costs of the wife in briefing counsel on the return date in May should be covered.  Accordingly I propose to make an order for $2200 and that it be jointly and severely the liability of the husband’s mother, father and grandmother.

21. In respect of the costs thrown away in July, the husband and the wife were involved in significant negotiations to resolve all of their matters and there was the issue of the subpoena to the Commonwealth Bank.  The wife accordingly would have incurred significant legal costs for that occasion in any event.  In those circumstances, it is not appropriate to make an order for costs other than that to which I have just referred.

22. In all of those circumstances, I now turn to the substantive proceedings which can be concluded based upon the evidence that I heard in January together with the subsequent evidence provided to me by the parties arising out of the sale of the various properties.

23. There were two significant properties to be sold out of which mortgages were paid and capital gains tax is payable.  Each party under my orders of 11 January 2008 was required to file written submissions as to effectively what was left for division between the parties. 

24. The issues in this case are:

    (a)what values should be applied to what assets and liabilities in the pool for division;

    (b)what assessment and weight should be given to the respective contributions of the parties; and

    (c)what (if any) adjustment should be made because of the factors set out in s 75(2) of the Family Law Act 1975 (Cth) (“the Act”).

25. There is another issue relating to child support and in particular the question of private school fees but the parties were able to compromise their position and on 11 January, I made orders.  I also gave reasons for making the orders having regard to the fact that the wife was the recipient of an income-tested pension and therefore the provisions of s 118 of the child support legislation applied.

26. The unusual feature of this case is that the husband is a legal practitioner who had chosen to represent himself.  He did not comply with my directions for trial.  In many ways, the more recent intervention in which he was represented indicated the benefit of lawyers retaining their objectivity.

27. The wife asserted all variety of non-compliance by the husband with orders and non-disclosure of his financial position.  For the purposes of the hearing, however, the wife did not want me to adjourn the proceedings but rather, proceed on the information and evidence available.  I shall return to that topic in a moment.

28. I listed this case initially at a call-over and made specific orders for the filing of material.  The wife was ordered to file her material by 14 December 2007.  The husband was ordered to file his material by 21 December.  At the call-over, I warned the parties that failure to comply would entitle the complying party to seek to proceed to the exclusion of the other.  I further warned the parties that issues about readiness for trial could be dealt with by the Registrar.

29. The wife complained that not only did the husband not comply but he positively hampered her efforts to fulfil not only the orders that I made but also earlier orders in March 2007 of Brown J to which I have already referred.  For the purposes of the determination of the division of property, I am satisfied that apart from the problem raised because of the caveats, the conduct of the husband did not disadvantage the wife.  For the record, notwithstanding the fact that I ordered the wife to file her material on 14 December, she was late.  I am told that the husband received her documents on Christmas Day.  She was also to file a summary of argument and list of assets and that appears to have been done on time.

30. In the wife’s summary of argument document relating to the orders she sought, she said she wanted:

    ·An adjustment in her favour of 25% above her 65% initial contribution, namely 90% wife – 10% husband.

    ·Of the marriage property, that the matrimonial property be transferred to her unencumbered.

    ·An order that the husband pay the school fees of the children or alternatively, and more practically, that an additional sum be reserved and provided to the wife which she would undertake to invest for the purposes of providing for the children’s education.

    ·That the Court refer the file to the legal Services Commissioner or a similar body in relation to the husband’s conduct as a legal practitioner throughout these proceedings as evidence by the wife’s affidavit filed 21 December 2007 and the affidavit of Mr B as filed.

31. In discussion with Mr Pinner for the wife it was agreed that I should not do what was sought by the wife notwithstanding the wife might have felt appropriately aggrieved by the husband’s behaviour.  The Court’s file is a confidential file.  In so far as the husband in his professional life has acted inappropriately in the blurred boundary relating to his personal life, if I felt that he had acted contrary to the administration of justice, I might have drawn to the attention of the Legal Services Commissioner, a copy of my judgment but no more.  In this case however, I am satisfied that it is not appropriate to take that course of action.  Again, I point out however that I am relying upon the evidence and not on supposition or opinion. 

32. In her affidavit, the wife said (at paragraph 90):

    [The husband] is a legal practitioner.  As a legal practitioner his first duty is to the Court.  This affidavit evidences that throughout this proceeding [the husband] has consistently failed to fully disclose his property interest or to comply with Court Orders.”

33. The wife went on to detail a number of issues upon which she relied as the basis for me to take some action against the husband.  She pointed to the fact that she had to leave her first lawyers after spending $5000 in costs with them on the basis that there was a “conflict of interest” because those lawyers had worked for the husband’s parents some five or so years earlier.  There was a dispute by those solicitors that there was any conflict of interest but they apparently advised the wife that it might be in her interest to get someone else.  I see no reason to criticise the husband for that situation.  The lawyers themselves were obviously uncomfortable about continuing to act even if it was in relation to the running up of costs about the argument.

34. A second issue relates to the question of the husband “threatening to sue” the wife’s lawyer for “defamation” and to report her to the Legal Ombudsman.  The husband’s email dated 30 April 2006 does not give the full picture of what occurred but he was clearly unhappy about a statement made by the solicitor which he perceived to be of her own volition rather than based on instructions.  He saw it as a direct attack on his character.  I see nothing in the email that would suggest that the husband was acting in some perverted way.

35. A third issue related to the complaint that the husband sent long rambling emails to the wife’s solicitor on a daily basis requiring her to respond in unreasonable time frame.  The wife’s assertion was that this was done deliberately to run up costs.  Even if that were so, the solicitor for the wife had the perfect response by indicating that she would not take the course of action that the husband wanted her to follow.  I see nothing about which I could criticise the husband in respect of that issue. 

36. A fourth issue related to the fact that the husband threatened to sue the Child Support Agency and had bullied Agency officers.  I have read the annexed determination by the Agency.  The child support officer reports that the husband had threatened to take action against staff but that did not seem to be the basis upon which she declined to make a departure order.  Her decision was that the matter was complex and warranted the matter being determined by the Court.  Accordingly, it is hard to criticise the husband for that and I am sure that the Child Support Agency has these sorts of complaints about disaffected payers on a regular basis. 

37. A fifth issue related to an incident in November 2006 when the wife was assisted before Registrar Sikiotis by her brother something akin to a “McKenzie friend”.  Subsequent to that hearing, according to the wife, the husband filed a complaint with the Inspector-General in Bankruptcy accusing her brother of lying in court.  The husband produced the letter that he wrote to the relevant body and it does not make that assertion at all.  There is nothing in that complaint that I could discern that would warrant criticism of the husband.

38. A sixth complaint relates to an incident in January 2007 and May 2007 when the wife was represented by a barrister Ms Emily Pender.  According to the affidavit, the husband accused Ms Pender of gross misconduct as a barrister alleging that she was in breach of the Bar rules.  I am not at all clear on what that is about save that attached to the wife’s affidavit is a copy of a letter by Ms Pender to a senior member of counsel of the NSW Bar.  I have gleaned from the material that Ms Pender is a member of the NSW Bar.  The essence of the problem seems to be that Ms Pender was acting on a direct brief which apparently is not a problem in NSW.  During the hearing before me, my attention was drawn to the fact that when the hearing was before Justice Brown, her Honour made comment that Ms Pender could appear in any court and I would agree.  The issue is whether or not there is some problem associated with her professional body and certainly my understanding is that if she was a member of the Victorian Bar, she would not be entitled to appear in a family law matter without an instructing solicitor.  However, that is not a matter about which I have any concern as it is a matter for the professional bodies involved.  Again, whilst the husband may be pedantic if not mischievous, I do not see that that is an issue about which the wife could require me to take any action against him professionally. 

39. The wife’s complaint also says that the husband threatened to report her solicitor and Melbourne counsel to the Legal Services Commissioner.  I was left with no evidence as to what that was about and even if it was so, it is a matter obviously for the professional body.  The office of the Legal Services Commission can speak for itself.

40. Similar complaints were then made in the affidavit about the legal representative for the children and I am not at all clear on what that is about.  I propose to take no further steps about that. 

41. Finally, the wife referred to a scathing letter by the solicitor who was then representing the wife in September 2007.  The letter is dated 5 December 2007 and strictly speaking, has no probative value.  However, the letter is of little value without reading the full chain of correspondence.  The husband tendered the letter that he wrote and I am quite satisfied that there was some professional issue between the husband and the wife’s then solicitor but nothing that would cause me to believe that he has acted irresponsibly or unprofessionally.  Again, should the wife feel that that was his deliberate course of action to the extent that he was blurring the boundaries between his personal life and his professional life, she can take the matter up with the Legal Services Commission.

42. In summary therefore, I propose to take no steps as suggested by the wife.  Furthermore, I do not see this as a matter on the evidence that I have heard in which I could send to the Legal Services Commissioner a copy of my judgment.  An extension of that would be to say also that it would be inappropriate for the Legal Services Commissioner to be perusing the court file.

43. The wife filed her affidavit material and financial statement on 21 December 2007.  She prepared these documents herself.  She apparently also prepared a summary of argument and list of assets and liabilities which were filed on 9 January 2008.  I did not read the summary documents because they were not handed to me until the morning of the court but at the end of the first day, I did so and unfortunately, they do no more than repeat many of the complaints by the wife about the husband in the wife’s affidavit of evidence.  That is not to say that those complaints are not necessarily justified.  What it means is that the material is not a summary as I had ordered but rather, a repetition of what was already filed.

1. I had begun to read the wife’s affidavit material the night prior to the commencement of the case but very quickly came across inadmissible and inappropriate material and read no further.  What was clear was that the matter was not ready to proceed. 

2. The wife made strong assertions that the husband had not disclosed his material and that she did not know what had happened to a lot of money.  Mr Pinner of Counsel appeared for the wife and said that the matter could and should proceed. 

3. Before that could happen there were issues that needed to be overcome.  The first of those issues related to the objectionable material in the affidavit.  Mr Pinner took to that affidavit with a black texta colour and subsequent readers of those affidavits will see that he has significantly cut out material that quite frankly should have never been there in the first place notwithstanding the wife was unrepresented.

4. The husband filed nothing.  He appeared on 10 January 2008.  He said he was served on Christmas Day and needed a few more days.  I refused to adjourn the proceedings presuming that that was what he wanted having regard to the warnings to which I have already referred.  The husband had had plenty of time after 9 November to prepare for the case.  Seventeen days subsequent to receipt of the wife’s material was sufficient.  I said that he would have right of cross-examination.  During the proceedings, it was brought to my attention that the husband during that same period post-9 November 2007, had filed an application for contravention against the wife.  On the basis that the contravention related to children’s issues, it is hard to see how he could say that he had not had sufficient time to get material together.  More importantly, when I entered into discussions with the husband during the running of the case, it became abundantly clear that he had not organised any witnesses who might have been able to shed some light on the liability issue to which I have already referred.  However it is important to note that the husband did not at any time assert that the liabilities were as I have recently heard.

5. Accordingly, I indicated that the husband would have a limited right to participate in the proceedings by way of cross-examination and to his credit, he not only acknowledged that he had done that but that there was not much other evidence he was in a position to call anyway. 

6. Mr Pinner said that the wife wanted the husband’s legal practice included in the pool but she had no evidence of its value.  She asserted that the husband had not provided documents that were required to a single expert witness Mr F.  Therein lay the problem about the matter being ready to proceed from the wife’s perspective.

7. Ironically, after giving the parties some time, in conjunction with Mr Pinner, the husband was able to agree that after discussion with Mr F, the legal practice had no value.  Both parties asked me to treat it in that way in the pool accordingly.

8. I was asked by Mr Pinner what preliminary views I had about the overall outcome on the basis that the wife’s case was at its highest point without any evidence from the husband. I indicated that it seemed to me that the issue of contribution was not significantly in dispute and there could be little argument about the fact that the wife was entitled to some form of loading under s 75(2) because of her earning capacity and the obligations she had for the support of the children.

9. I have already mentioned the fact that the material as presented to me contained not only controversial but also inadmissible material.  I embarked upon a course of ruling what was inadmissible and indicating that there were certain paragraphs that I would leave in because I was uncertain as to exactly what weight they should be given.  In my view, none of that material has prejudiced the husband in any way.

10. I told the husband that notwithstanding he was a legal practitioner, I would treat him as an unrepresented litigant.  I explained to him my role and the matters set out in Re F: Guidelines for Litigants in Person (2001) FLC 93-072; 27 Fam LR 517. Specifically, I explained each of the four steps involved in a property case. I provided the husband with the Full Court’s decision in C & C (2005) FLC 93-220; 33 Fam LR 414 because there was a superannuation issue in this case. I gave him the references to s 79 and s 75 of the Act.

11. That is the background to the proceeding before it commenced.

12. The wife was born in 1971 and the husband in 1972.  They are both 36 years of age.  The wife said that the husband was a legal practitioner of 10 years experience running his own practice.  In cross-examination, she conceded that that may not necessarily be right and that he had less than 10 years experience.

13. There are two children of the marriage, A born in February 2000 who is therefore now eight years of age and T who was born in January 2004 and is therefore now four years of age.

14. On 20 August 2007, the parties agreed on orders relating to parenting issues.  Despite that, even at the conclusion of the case before me, there were unresolved issues about equal shared parental responsibility matters.  It is to be noted in the orders in August 2007 that the parties had agreed that they would have equal shared parental responsibility but they were unable to work out when the school holidays should be divided, what telephone arrangements were to be made between them, how education and health issues would be sorted out and whether there should be injunctions now made preventing interstate travel.  I gave the parties an opportunity to sort out many of things with suggestions that I had made and the orders will reflect what the parties have agreed to.  It is a sad fact that the parties were unable to reach agreement about those issues because they do not communicate with one another.  Hopefully, some of these orders and the conclusion of the property proceedings will make them focus more on their responsibilities as parents.

15. Despite the consent arrangements to the child support issue that I have referred to, the wife asserted that the husband was in arrears at this stage notwithstanding that he had only a limited amount of child support to pay. I brought to the attention of the husband that a significant s 75(2) factor was not so much what the assessment of child support was but rather what contribution he was making towards the support of the children. The departure order clarified the quantum but as I have already said, there was not enough to provide security. In the husband’s recent affidavit, he says it is no longer necessary. I agree.

16. When the proceedings began, I asked specifically what it was that the wife was seeking.  Mr Pinner told me that his client would be looking for “at least” 60 per cent of the pool of assets notwithstanding that she sought a significantly higher proportion in her documents.

17. In final address, Mr Pinner said that the appropriate determination across the board of both the tangible assets and the superannuation assets should be 70 per cent to the wife.

18. The husband’s case was hard to initially follow.  I was told that he had sent a letter by fax setting out what orders he sought but he asked me not to read that because it was not the way he was intending to conduct the case.  In final submissions, he told me that he accepted a “60/40” division of the assets.  It was clear therefore that the parties were not significantly far apart.  Even as late as July 2008, the parties were optimistic (at least through their lawyers) that they could settle.  That did not happen.

19. I advised the parties and in particular the husband, that I intended to follow the four step process set out in Hickey & Hickey & Attorney-General for the Commonwealth of Australia (2003) FLC 93-143; 30 Fam LR 355 where the Full Court said:

    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 referred to in ss.79(4)(d), (e), (f) and (g), (“the other factors”) including, because of s.79(4)(e), the matters referred to in s.75(2) so far as they are relevant and 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 those findings and determination and resolve what order is just and equitable in all the circumstances of the case.

20. The first step in the process therefore is to determine the assets to be divided. 

21. The parties have an interest in the home at B.  W Valuers valued the property at $350,000 as at 19 April 2007.  The title to the property is in the joint names of the parties and was encumbered by a mortgage to the Commonwealth Bank.  That mortgage has been sitting on the title since September 1999.  The parties acquired the property jointly at that same time.  Notwithstanding the sworn valuation as at April 2007, the husband told me that a registrar had indicated that the valuation should be updated.  The parties had the opportunity to discuss that issue with a valuer and by agreement, they had consensus on a figure of $365,000.  Accordingly that is the figure that I have included in the pool of assets.  In a written submission recently filed, the wife’s lawyers put the value at $360,000 on the simple basis that the value had gone down.  No evidence was tendered of that.  The inclusion of the house at that reduced figure was unhelpful.  I have already referred to the Commonwealth Bank mortgage and it was agreed that it is approximately $80,000.  In a recent letter from the husband’s solicitor, the amount is shown as $77,185.91.  That sum remains outstanding.  Accordingly, for the purposes of the pool, the equity in the home is $287,814.  It is common ground that the wife will take over and be responsible for the mortgage as I understand she has been for a significant number of months now.

22. The legal practice about which there was considerable angst and debate was agreed between the parties, after a discussion with Mr F, as having no value. 

23. The property at P was sold subsequent to my January 2008 orders.  No money was left over after paying out the costs, expenses and mortgage.  It sold for $332,000. The Commonwealth Bank was paid initially $280,362.80.  Adjustments, rates, costs and expenses totalled $19,083.30.  The estate agent took about $12,000.  From the deposit money left after paying the agent’s commission, the modest balance went to the Commonwealth Bank.  The shortfall thereafter came from the T property sale.  According to the wife, the husband purchased the P property in 2001 with mortgage monies from the Commonwealth Bank.  The purchase price was $430,000.  Brown J in March 2007, in what appears to have been a contested proceeding, ordered the sale of the property.  In preliminary discussions, Mr Pinner said that the wife’s argument was that the P property purchase was a “frolic” of the husband’s and as such, the wife should not be saddled with any shortfall having regard to the drop in values.  Clearly that has been a significant loss.  I queried with Mr Pinner whether he would be putting the same argument if the reverse had been true and the husband’s frolic had turned into a substantial profit and he candidly conceded that his client would be standing with her hand out seeking a portion.  I pointed out to him the Full Court decision in Browne v Green (1999) FLC 92-873; 25 Fam LR 482 and he agreed that he could take the matter no further. It seems to me that this is a classic example of a situation in which the parties have to take the bad with the good. Accordingly, the shortfall reduced the cash proceeds of the sale of the T property.

24. The other property was two investment units at T.  The husband purchased these units as an investment property in February 1997 for $282,000 with a mortgage of approximately $253,000.  The parties had commenced their relationship around this time and there was some argument about exactly when cohabitation commenced.  Whatever was the situation, the equity at the time of the acquisition was modest.  In his cross-examination of the wife, the husband put that the deposit and some expenses had been provided to him by his grandmother.  This presumably gave rise to the recent argument about his grandmother’s caveat.  This property was the subject of the orders of Brown J in March 2007.  It is not hard to glean from the material of the wife that she asserts that the husband has been not only recalcitrant but quite destructive in relation to the operation of the Court’s orders and the completion of the sale.  The issue became a problem in the call-over before me on 9 November 2007 when the problem of Brown J’s orders was brought to my attention.  At that time, I requested the husband to nominate who he would agree to as an agent and made orders about the implementation of Justice Brown’s orders.  Despite that, the wife still asserted that the husband had done everything within his power to prevent the sale proceedings.  No specific argument was put to me about wastage and I have no evidence that the husband’s conduct has created an exacerbated loss and as a consequence, I propose to proceed to determine the matter on the basis of the evidence before me. 

25. The other asset in the pool is a bank account with Lloyds of London.  It transpires that the wife received correspondence from Lloyds about an account with a modest amount of savings in it.  This came out in cross-examination by the husband of the wife.  The husband’s main complaint was that the wife had opened his mail.  Whatever the rights and the wrongs of that were, the asset is now out in the open.  The husband put to the wife and she did not disagree, that this was money that had been there for many years when the parties had lived in England.  The parties however did not include the account in their balance sheet.  Accordingly, I have not put it in the pool for division and the husband will retain the account.  It was a modest sum anyway.

26. From the assets to which I have referred, there are some other liabilities to pay including capital gains tax.  I was unable initially to make that determination because the husband had not filed his taxation return and accordingly I made the orders that he do so to enable an accountant to prepare that figure.  Accordingly, that problem has been resolved.  That amount of money will be set aside for the purposes of the payment of the capital gains tax is set out in the husband’s affidavit as determined by the single expert.  It is $86,496.  I have allowed that in the balance sheet.

27. Whilst the evidence in the affidavit material filed subsequent to January and the various arguments I have heard cloud the question of the indebtedness of the husband to his family members, it could not seriously be suggested that there is any evidence which makes a significant impact on the determination that I have to make about those debts.  Leaving aside questions of the debts being statute barred and never having been recalled, there is no evidence to confirm that the wife was aware of the indebtedness during the marriage. 

28. In passing, I note that in his financial statements filed on 7 March 2007, the husband referred to the fact that he owed his parents $53,000 and his grandmother $112,128. 

29. The husband raised the subject of the liability.  Ironically, the evidence initially came from the wife.  The wife asserted that there were no monies owing but if there were to the husband’s family, she knew nothing about them.  The only evidence of any substance on this issue came again from the wife in cross-examination by the husband.  She responded to him that at the time he refinanced the T property in 2001, he told her that he was borrowing $20,000 to pay out his grandmother for something associated with her cemetery plot at Springvale.  The husband put to the wife using her own document that the borrowed funds related to the purchase of her motor car.  The evidence on this subject was entirely unsatisfactory but in my view, it matters little.  I accept the wife’s version.  Either way, the parties borrowed funds in 2001 as part of the restructured refinancing and the money was all used for some debt purpose.  The husband was provided with a copy of the Full Court’s decision in Biltoft (1995) FLC 92-614; 19 Fam LR 39. As I pointed out, even if there were other liabilities to family, there was no evidence of that money being repaid or now being sought to be repaid. There was nothing in the evidence of the wife that would indicate that she knew anything about monies provided during the relationship. Accordingly, I propose not to take any of the alleged family liabilities that might be in existence into account.

30. The husband also said to me from the Bar table in final address that he had credit card liabilities of $100,000.  The sale of the real property solved that because the debt crystallised.  In his July affidavit, the husband conceded that the money paid to satisfy that debt should be treated as a partial distribution to him.  I have added it back into the pool accordingly.

31. The parties raised some brief argument about some unresolved liabilities which are shown in the balance sheet.  I shall deal with them now.  The first relates to the professional fees of Mr F totally $2090.  I have examined the detail and it seems to relate to the valuation of the husband’s legal practice.  As I have earlier mentioned, the parties stood the case down on the first day to discuss with Mr F the unresolved question of that value.  Ultimately, agreement was reached that it had no value.  That had apparently been the husband’s view all along.  Notwithstanding there may be some inference to be drawn that he was uncooperative in respect of that valuation, I see no reason in this case why that should not be a liability paid from the pool jointly.

32. The next liability is a sum of $858.88 in an invoice drawn by Rhodens Solicitors addressed to the husband.  My understanding of the husband’s position was that that should be paid jointly.  Rhodens ultimately did not do the conveyancing in respect of the sale of the property.  The wife complained that they were inappropriately dragged into the dispute and ultimately declined to be involved.  They did however require the payment of the bill for work done.

33. An examination of the invoice however shows that the work was more than just conveyancing.  Various telephone attendances were involved and the inference I have drawn is that much of that related to the disputed liability relating to the husband’s parents.  In the circumstances, it does not seem to me to be a liability that ought to be included in the pool because it was not directly related to the conveyancing arising out of the sale of the T property.

34. The firm of M Conveyancing delivered an invoice for $1154.82.  In the balance sheet document handed to me by Mr Pinner, there is an expected sum of $2000 shown.  This firm apparently completed the conveyancing of the T property which was not without its anguish.  It was not something that was seriously in dispute and I have included the sum of $1154.82 in the pool.

35. There is a liability of the parties to L Services for the calculation of the capital gains tax estimated liability.  That is shown as $1300 and having regard to the circumstances of the importance of that liability in the ultimate determination of the matter, I have included that sum as a joint liability.

36. In the July affidavit of the husband, he wanted four particular items included as liabilities. The first related to an overdraft to the Commonwealth Bank of $6252.21. He said that these liabilities to which I shall now refer were outstanding when I adjourned the matter in January.  I pause to note that the overdraft liability of this sum was not mentioned in the husband’s financial statement as filed.  I do not know what it was used for and it may very well have something to do with his business.  On the evidence that I was presented, it is not appropriate for me to include that in the list of liabilities.  It is not a debt that belongs to the wife and I see no reason to include it accordingly.

1. The second relates to a Citibank credit card of $10,436.15.  The husband’s financial statement in 2007 showed it as $5673.  This was clearly not a liability linked to the encumbrance as the Commonwealth Bank credit card was.  The husband treated that credit card as a partial distribution of property to him.  There is no evidence as to what that liability was used for and in the circumstances, I do not see it as appropriate to include it as a joint liability.

2. The husband also referred to an American Express card of $15,437.75 which in his financial statement was shown as $11,500.  For the same reasons as I have just set out in relation to the Citibank debt, I do not intend to include the American Express account.

3. I pause here to say that the inclusion of a liability such as those to which I have just referred is a discretionary issue. However, when a court is declining to include such liabilities as joint liabilities, it is permissible to take them into account as a liability of the husband anyway for the purposes of the general adjustment of Part VIII of the Act. That is what I would normally do in a case like this. However, when I come to the precise calculations below, it will be evident that there is nowhere near sufficient funds for those liabilities to be repaid out of the cash available. I do not see it as appropriate to put the wife in a position where she needs to borrow funds having regard to the way in which this litigation has been conducted to discharge those liabilities. In addition, when I take into account the position that the husband urged me to adopt in respect of the division, there was no argument raised at that stage about the repayment of those liabilities.

4. The final liability claimed by the husband is the sum of $1969.54 to K Firm.  This was apparently associated with the sale of the Queensland property.  The P property was, according to the written submission of the wife, purchased by the husband’s mother as trustee for the Darcy family trust.  The invoice shows considerably more than just conveyancing.  I am not at all clear on the extent to which the liability is associated with the sale or with other attendances associated with the family trust matters.  In those circumstances, the evidence does not justify me including it as a liability.

5. Accordingly, the net division of the available assets is as follows:

   B Home  $365,000

   Less mortgage  77,186  287,814

   Husband’s legal practice  nil

   Cash from T property sale           108,737

   Less estimate for

   capital gains tax  86,496  22,241

   Cars

   Husband  10,000

   Wife  7,000  17,000

   Add-backs

   Wife received  30,000

   Husband’s credit cards          70,305  100,305

   Sub-total  $427,360

   Less liabilities

   Mr F  2,090

   L Services  1,300

   M Conveyancers  1,154.82

   Sub-total  4,544.82

   An equity in total   $422,815.18

1. In the summary of assets and liabilities or the balance sheet as I have been calling it dated July 2008, Mr Pinner included the wife’s Chrysler Neon as having an estimated value of $6,500 and the husband’s Alpha Romeo as having an estimated value of $12,000.

2. However, at the commencement of the case, Mr Pinner conceded that there had been no valuation undertaken.  Unsatisfactory as that was, I still have to put the assets in the pool for division between the husband and the wife.  I am not prepared to simply use the balance sheet tendered in July on the basis that I am not confident that the parties actually have an agreement in respect of those items.  Doing the best I can however, I note that on 7 March 2007, the husband swore in his financial statement that the Alpha Romeo was worth $10,000.  In her financial statement filed 14 December 2007, the wife said that the Chrysler Neon was worth $7,000.  Accordingly, I propose to use the total figure of $17,000 for the value of the motor cars.

3. I have left out of this equation the question of superannuation.  The husband conceded and the wife accepted that he now has $44,214 in his superannuation funds which are held with Public Company Trustees.  He initially told me that he intended to use the superannuation funds to pay private school fees and although I indicated that I would be surprised about that, he acknowledged that he was in ignorance of the position relating to superannuation law.  In my view, the use of those funds for that purpose would be inappropriate but even so, I propose to deal with the superannuation of the husband as $44,214.  The wife also had superannuation of $6000 but apparently using hardship provisions, managed to convince the Commissioner to allow her to cash in all but $1000.  At the time it was cashed in, there was about $6000.  Ironically, she used those funds to pay her legal fees.  In my view for the same reasons I have articulated above about the husband’s legal fees, the superannuation of the wife as at $6000 should be added back.

4. This is a case in which I determined that the superannuation should be separated from the pool.  As I have pointed out above, I gave the husband a copy of C & C and drew Mr Pinner’s attention to the problem that I was facing. 

5. I asked each party how they wanted me to treat the superannuation.  Mr Pinner for the wife said that he did not want the superannuation split and as I pointed out to the husband who originally sought that, there was no service on the trustee and no indication as to what it would cost.  Ultimately, the husband indicated to me that he had thought about that situation and decided that he wanted to keep the superannuation intact and pay his wife a portion of the cash in substitute therefore.  He asked for me to apply a discount because of the difference between the superannuation in its notional sense and the fact that it is not likely to turn into a tangible asset for at least 20 years.  In this case, I do not propose to treat the superannuation as a separate form of asset but rather, to add it into the pool along with the other tangible assets.  I do so because notwithstanding my expressed reservations, each party seems to have treated it as if it were cash and in the case of the husband’s he still intends to do so.

6. Accordingly I shall add to the pool the rounded-down figures of $44,000 for the husband’s superannuation and $6000 for the wife’s superannuation adding a total of $50,000 to the pool.

7. Accordingly, the net equity for division between the parties is $472,815.18.

8. One of the issues raised by the wife ostensibly about the question of the husband’s disclosure related to a number of companies in which she seemed to assert that he had an interest.  She named a number of companies and annexed an ASIC search dated 6 March 2007.  That search showed that in respect of some of the companies, he had ceased to have any directorship or shareholding in 2006.  The search showed that these were previous historical details but there was no evidence beyond that.  I queried whether subpoenae had been issued to these companies and was told that there had not.  The husband purported to produce to the wife a letter from each of the apparent owners of these companies indicating that the husband had been the solicitor and acquired them in the capacity of a shelf company.  Regardless of what the exact situation was, there was no evidence before me upon which I could rely to say that those assets now existed under the control of the husband nor that the assets were held by others on his behalf.  This latter point is important because the wife had searched the ASIC records in March 2007 and would therefore have been aware of who the directors and shareholders of these entities were.  Apparently no inquiry was made about them and as such, I find there is no evidence to suggest that the husband had such an interest.  It was also argued by the wife that the husband had failed to disclose assets and as such I was entitled to do the best I could with what was available.  Even on that basis, I could not be satisfied that the husband had any interest in those companies that were worth something. 

9. A more difficult problem related to a company called B Tours Pty Ltd.  The wife asserted that the husband not only had an interest in this company but produced an email from the registered shareholder and director of B Tours Pty Ltd to the husband suggesting that he become involved in it.  Some days later there followed a responding email from the husband saying that a cheque had been placed under the door of Mr I.  The email does not suggest how much was in the cheque under the door nor does it say that the husband wanted to acquire the interest in his own name.

10. The mysterious nature of this set of transactions was compounded when the husband produced to the wife a share transfer between his mother and Mr I.  Attached to that document was the minutes of the meeting removing him as a director immediately after injunctive orders were made by Brown J.  The wife’s assertion was that the husband had breached the orders of Brown J by disposing of an asset.  The document produced by the husband certainly did not show that there had been any disposal of an asset by him because he had no asset in the first place.  When I asked the wife about that, she simply said that he had disposed of his directorship. 

11. Whilst I have significant misgivings about just exactly what the email with the cheque under the door means, no evidence was put to me by the wife indicating what course of action she had taken to pursue B Tours Pty Ltd such as for example, third party discovery.  The husband put to the wife that the other entity referred to in the share transfer was in fact the company belonging to his parents and the wife agreed.  The wife volunteered that she just wanted to know what his role was.

12. As I said, misgivings or otherwise, there was no evidence that either party pointed to to suggest that the husband had an interest now or in 2005 to 2007 that he had disposed of.  The very email upon which the wife relied indicated that this was a fledgling investment.  If the money under the door came from the husband, it is hard to see how he has reflected it in any liability that is relevant to the pool of assets because I have not taken into account any of the personal expenditure of the husband.  Accordingly, even using the cases such as Black v Kellner (1992) FLC 92-287; 15 FamLR 343 and Weir (1993) FLC 92-338; 16 FamLR 154, I am not satisfied that there was anything about which I should be concerned and I do not find that the husband has or has had any interest in B Tours Pty Ltd.

13. Finally, the wife in her affidavit of evidence in chief also asserted that the husband had an interest in a racehorse and was the beneficiary of a family trust.  It must be borne in mind again that this affidavit was prepared by the wife herself.  Her counsel quite properly conceded that she was satisfied that there was no such interest of any significance to my determination and that the family trust issue was irrelevant.

14. Accordingly, there are no further adjustments to be made to the pool of the assets to be divided between the parties as set out above.

15. Turning to the second step and the contribution of the parties, it is clear that at the start of the relationship, if the husband did not have a debt to his grandmother, he came in to the relationship with more than did the wife.  That was in fact the evidence of the wife.  She had some savings.  The parties were originally living together prior to their marriage in England where they married.  It was the husband who put to the wife that his grandmother had “provided” the money to him but he clarified that by saying that it had been a loan.  He denied the wife’s assertion that he made any suggestion that the $20,000 should be paid out in 2001 in the refinancing as was the case put by the wife albeit not in her trial affidavit.  Having regard to the fact that I am not going to take into account the debt of the grandmother or any other member of the husband’s family for the reasons set out above, it is important to recognise the equity brought into the relationship as a contribution by the husband.  Having regard to the fact that there is little between the parties, in my view, that initial contribution has been eroded or become distinguishable over time because of the contributions of the wife. 

16. Contributions during the marriage were the subject of some evidentiary dispute.  The wife asserted that she and her father undertook significant gardening work and the husband cross-examined her about the fact that he had assisted.  Her response was that there was minimal assistance but she did acknowledge that the sleepers that the husband provided through his family had been put into the garden beds by her father.  There is little doubt in this case that the husband worked long hours and obtained whatever professional qualifications he had and commenced his business as a result of the assistance of the wife.  She contributed financially where she could but otherwise fulfilled the major role of homemaker and parent.  Assessing all of those, it is hard to see how the contributions up until separation could be deemed to have been anything other than equal between the parties even allowing for the marginal difference at the commencement of the marriage.

17. In relation to contributions subsequent to the separation, the wife’s case was that she had supported the children and herself with minimal assistance from the husband.  He produced in cross-examination evidence that he did pay mortgage payments but then so did the wife subsequent to the start of 2007.  At the same time, each party seemed to be paying whatever liabilities there were associated with the asset when they were living in that property.  It is hard to see that anything turns on that issue.  One significant criticism of the husband by the wife was that he failed to pay child support.  That problem seems to have been overcome by the Child Support Agency review.  I understand and it was not a subject that was canvassed in any detail, that the husband had limited contact with the children but that was a result of allegations that had been made all of which, seemed to be clarified by the orders in August 2007. 

18. On the basis of the evidence, I am not prepared to find that there was any significantly greater contribution by the wife subsequent to separation than the husband.

19. Accordingly, I find that in respect of contributions to both the tangible assets and the superannuation assets, the parties have contributed equally. 

20. I then turn to the matters under s 75(2) of the Act. The parties still have many years of potential work life ahead of them and there was no evidence from either party about any health issues.

21. There is some confusion about the husband’s current income position but as I have found in respect of the child support issue, his income is at least to the extent of $56,000 or $63,000 per annum.  He is a sole practitioner and the comprehensive details of his practice are not known.  On the evidence, on any view, his income as well as his earning capacity is greater than that of the wife.

22. A significant fact in this case is that the wife has the care and control of the children of the marriage.  T is only four years of age and A eight.  There is a significant number of parenting years ahead.  Leaving aside any financial issue associated with child support, the wife will have a substantial responsibility of the care of the children for many years to come.  In my view, that will affect her capacity although she does have qualifications that can be used in the foreseeable future.

23. I have taken into account as I have already mentioned the commitments of each of the parties that are necessary to enable the parties to support themselves.  To this extent, I refer back to my comments about the husband and his credit card obligations.  Whilst he may very well have incurred those for whatever purpose, his capacity to support himself, as a lawyer, should enable him to make those payments now that other financial issues are resolved.  The husband also has the capacity of reverting to what he had previously been, namely an employee solicitor where he may probably earn more than what he is currently earning as a self-employed practitioner.

24. As I understand the evidence, there are no other persons in the life of either party and certainly none for whom they have a responsibility to support.

25. It is important that I recognise that the wife has limited opportunities to work because of the ages of the children but also as a consequence, she is eligible for Commonwealth benefits.

26. In addition to the pension issue, the husband will have the opportunity to extend his retirement package over the next 20 years by building on the superannuation fund and also have the benefit of seeking taxation deductions.

27. Section 75(2) requires that I also take into account the standard of living in all the circumstances that is reasonable. The wife to some extent has found it very difficult as she pointed out in evidence. The absence of money upon which to live no doubt creates an enormous problem but that also depends upon the capacity of the other person to pay. There was no evidence before me of an affluent lifestyle by the husband.

28. It is important also to acknowledge that there has been no indication to me that any creditor of the husband whether it be a commercial one or a member of family would be prejudiced by these orders. As I pointed out, I gave the husband an opportunity to read s 75(2) of the Act. In his submission, he said that there should be an adjustment in favour of the wife as to 60 per cent by which I am entitled to assume that he acknowledged that there were factors in favour of the wife that justified some form of loading. However, having read s 75(2) of the Act, he had every opportunity to indicate to me that there might be some creditor being prejudiced by the orders that I have proposed and he raised no such concern. I am satisfied therefore that there is no creditor who has been prejudiced by these orders.

29. I am also obliged to take into account the child support that is being paid by the husband. Had it not been for the orders that I made arising out of the agreement of the parties, I would be significantly more critical of the husband. The absurdity of the position could not be lost on anyone. The parties had an 8 year old child in a private school at B and yet were unable to pay on a regular basis the full sum of school fees sought by that school. That was at a time when the husband was asserting to the Child Support Agency a level of income that is totally inconsistent with a capacity to have a child at private school in primary years. Having said that, the issue was ultimately resolved by the parties themselves indicating that the child would only continue at the private school for so long as the husband could afford to pay it on the basis that it would not be the obligation of the wife to make any such payments in the future. The problem has also been ameliorated by the husband’s agreement to pay $1000 per month. The wife in her evidence claimed that the husband was still a recalcitrant payer and to the credit of the husband his recent affidavit seems to show the opposite. The parties agreed to orders on 10 January to quarantine $36,000. That sum is no longer available. Having regard to the ages of the children and the fact that the child support orders I have made will only last for three years, I do not propose to make any significant adjustment for s 75(2) factors as a result of the child support issue. As time will tell, in three years time, the husband’s financial situation will be scrutinised more carefully by the Child Support Agency if the matter is otherwise not resolved between the parties themselves.

30. Another significant issue relates to the disparity of the financial positions of the parties as a result of the orders that are being made. This is a small pool of assets on any observation. In discussions on the first day whilst endeavouring to explain to the husband what the approach should be in relation to s 75(2) adjustments, I made the point that the Full Court had previously mentioned that 10 per cent adjustment was not unusual or unacceptable. That is obviously what the husband picked up by asserting that the adjustment should be 60 per cent in the wife’s favour. However, the important issue associated with the disparity of capital is to look at what the underlying value of the ultimate result is for each party rather than the percentages themselves. As I said, this is a very small pool and 10 per cent is quite modest. In this case, even on the husband’s proposal, the wife is getting substantially more than what he is. However, because of the fact that it is such a modest pool, it still justifies some adjustment in favour of the wife. With his skills and capacity as a lawyer and in particular his past earning record as an employee, I am quite satisfied that whatever the husband loses now he will make up in the fullness of time properly exercising his professional attributes. The wife does not have the same opportunity or the qualifications or skills and to some extent, is handicapped by her responsibilities for the care of the children.

1. In summary, the important issues for me are the fact that the wife has limited income, is pension-dependent, has the responsibilities for the care of the children on a long-term basis whilst the husband has the opportunity and the freedom to improve his financial lot in life.  To a very large degree, the parties themselves have set the parameters.  In my view, the position urged by the wife rather than the husband is correct.  In my view, an appropriate adjustment is 20 per cent making an overall division in favour of the wife of 70 per cent and the husband 30 per cent. 

2. As I pointed out above, the equity to be divided is a total of $472,815.18.  Seventy per cent of that sum is $330,970.  That is the entitlement of the wife to the net pool.  The wife is retaining the equity in the home at B, her motor car, her superannuation and the add-back sum of $30,000.  Those four items total $330,814.  That is almost identical to the sum of 70 per cent.  In my view, using the fourth step in the process to which I have referred, that is an appropriate outcome.

3. For his part, the husband will receive his motor car, the added-back payment of the credit cards of $70,305 and his superannuation.  However, it is important to note that he retains his legal practice which is in reality his earning capacity to which I have referred.  There will also be a small amount of cash left from the sale of the T property.  However, in the discussions in July at the hearing, Mr Pinner of Counsel indicated that his client might be making an application for costs.  Accordingly, I propose to order that the three liabilities to which I have referred above be paid but the sum of cash to which the husband is otherwise entitled be held pending written submissions on the question of costs.  I propose to hear from the parties by written submissions and to make a determination of whether the injunction in respect of the disposal of those funds should be lifted after I have read those submissions.

4. Finally, it is important to point out that it is not the percentage division that is important but rather the underlying value of the various assets that the parties receive in respect of the division of property.  Looking at what each party is entitled to or may notionally receive, it seems to me that the outcome that I have ordered at the commencement of these reasons is a just and equitable outcome.

I certify that the preceding One Hundred and Fifty Eight (158) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin

Associate:

Date:  1 August 2008