Deng & Galinski
[2021] FCCA 843
•30 April 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
Deng & Galinski [2021] FCCA 843
File number(s): SYC 1120 of 2016 Judgment of: CHIEF JUDGE ALSTERGREN Date of judgment: 30 April 2021 Catchwords: FAMILY LAW - Property – undefended proceedings – relationship of approximately seven years duration – small asset pool consisting of former matrimonial home – where the applicant wife is not participating in proceedings – where the wife’s former legal representatives are joined as an intervener seeking payment of wife’s outstanding legal fees – where the respondent husband seeks that the wife’s application under s 79 be dismissed– assessment of contributions and considerations of justice and equity required - order for property division under s 79 made – order for payment to intervener for outstanding legal fees – no order as to costs Legislation: Family Law Act1975 (Cth) ss 75, 79, 81
Legal Profession Uniform Law (NSW) s 180
Federal Circuit Court Rules 2001 (Cth)
Cases cited: Bevan & Bevan [2013] FamCAFC 116
Chapman & Chapman [2014] FamCAFC 91
NHC & RHC [2004] FamCA 633
Farnell & Farnell (1996) FLC 92-681
Ferraro & Ferraro [1992] FamCA 64
Kennon v Kennon [1997] FamCA 27
Mallet v Mallet (1984) 156 CLR 605
AJO & GRO [2005] FamCA 195
Ryland & Ryland and Anor [2018] FamCA 134
Stanford v Stanford (2012) 247 CLR 108
GS & TS [2005] FamCA 40
Zdravkovic & Zdravkovic [1982] FamCA 23
Number of paragraphs: 136 Date of hearing: 14 August 2020, 17 December 2020, 3 March 2021, 26 March 2021 Place: Melbourne Counsel for the Respondent: Mr Apelbaum Solicitor for the Respondent: Stojanovic Solicitors Solicitor for the Intervener: Marsdens Law Group ORDERS
SYC 1120 of 2016 BETWEEN: MS DENG
Applicant
AND: MR GALINSKI
Respondent
AND: MARSDENS LAW GROUP
Intervener
ORDER MADE BY:
CHIEF JUDGE ALSTERGREN
DATE OF ORDER:
30 APRIL 2021
THE COURT ORDERS THAT:
1.There be an alteration of property interests between the wife and the husband pursuant to s 79 of the Family Law Act 1975 (Cth).
2.Within sixty days of the date of these orders the Respondent pay to the Applicant the sum of $90,200 by way of property settlement as follows:
(a)$70,200 directly to the Applicant; and
(b)$20,000 directly to the Intervener on behalf of the Applicant by way of repayment of the Applicant’s outstanding legal fees.
3.The Respondent be declared to have the sole right, title and interest in the former matrimonial home.
4.The Respondent be declared to have the sole right, title and interest in all other real and personal property now in his possession, custody or control.
5.The Applicant be declared to have the sole right, title and interest in all other real and personal property now in her possession, custody or control.
6.In the event that the Respondent fails to comply with order 2 above, the Respondent do all acts and things necessary including executing all documents necessary to cause the former matrimonial home to be sold at the earliest possible date at a price to be agreed upon between the parties and failing such agreement at a price to be determined by the President of the Real Estate Institute of New South Wales or his/her nominee and to disburse the proceeds of sale in the following priority:
(a)Payment of agent’s commission and advertising expenses and legal expenses of the sale;
(b)Payment of costs incurred, if any, in relation to determination of value or selling price by the President of the Real Estate Institute of New South Wales or his/her nominee;
(c)The balance then remaining to be divided as to:
A.A sum of $70,200 to the Applicant;
B.A sum of $20,000 to the Intervener; and
C.The balance remaining to the Respondent.
7.In the event either party refuses or neglects to execute any deed, document or instrument necessary to give effect to these Orders, the Registrar of the Court be appointed pursuant to s 106A of the Family Law Act 1975 (Cth) to execute such deed, document or instrument in the name of the said party and do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of affidavit.
8.All extant applications be otherwise dismissed.
9.There be no order as to costs.
AND THE COURT NOTES THAT:
(A)Pursuant to r 16.05(2)(a) of the Federal Circuit Court Rules 2001 (Cth), the Court may vary or set aside a judgment or order made in the absence of a party.
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment under the pseudonym Deng & Galinski is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CHIEF JUDGE ALSTERGREN:
INTRODUCTION
These proceedings commenced by Initiating Application filed by the applicant wife on 26 February 2016.
The parenting application was finalised by final parenting orders made on an undefended basis by consent of the father and Independent Children’s Lawyer on 22 July 2020.
The property application remains the subject of these proceedings and involves the applicant wife, the respondent husband, and the intervener, who is the former legal representative of the wife. The intervener seeks to recoup unpaid legal fees from the wife in the sum of $30,684.23.
The issues the Court is asked to determine are:
(a)What division, if any, of the asset pool is just and equitable under s 79 of the Family Law Act 1975 (Cth) (‘the Act’); and
(b)What order, if any, should be made for payment to the intervener of the wife’s unpaid legal fees.
It is appropriate to first deal with the application of property division as between the wife and husband, and then address the intervener’s application.
BACKGROUND
History of relationship
The wife and husband were in a seven-year relationship.
They met in 2008, lived together briefly in 2008 when the wife visited the husband in Australia from Country B, and commenced cohabitation in 2009.
The parties married in Australia in 2009 and separated on 4 January 2016 when the wife left the former matrimonial home. They are not yet divorced.
There is one child of the relationship born in 2010 and currently aged ten. The child lives with the husband and spends time with the wife as agreed between the parties, although he has not spent time with the wife often since separation.
There are disputed allegations of family violence by each party. While this evidence cannot be tested, it is evident that there was marital discord between the parties.
Undefended nature of these proceedings
The wife has not participated in these proceedings since 20 March 2020 when she filed an updated Notice of Address for Service to notify the Court that she became self-represented.
The wife has not appeared at the court hearings heard on 16 March 2020, 11 June 2020, 22 July 2020, 14 August 2020, 17 December 2020, 3 March 2021, and 26 March 2021.
On 16 March 2020, the Court ordered that the matter may proceed to final hearing on an undefended basis should the wife not attend on the next occasion. A further order was made that the independent children’s lawyer serve a copy of those orders on the wife.
The matter was next listed on 11 June 2020 for a mention hearing. The wife did not appear although she was emailed the Microsoft Teams invitation link to appear electronically. The email sent to the wife bounced back to the Court. The Court also called the wife by telephone three times during the hearing and there was no response. The Court ordered that the wife attend by electronic means or in person at the next court event, and should she fail to do so, the parenting proceedings may proceed on an undefended basis.
The Court further ordered the husband’s solicitor to file and serve upon the wife a minute of precise orders sought by the husband, any supporting affidavit, and a copy of the orders made that day. The husband complied with these orders and filed an affidavit of service on 16 July 2020 evidencing service by hand at the wife’s last known address.
On 22 July 2020, there was again no appearance by or for the wife, and, after considering the supporting material and having heard submissions from the independent children’s lawyer and Counsel for the father that the proposed orders were in the best interests of the child, final parenting orders were made on an undefended basis by consent of the husband and the independent children’s lawyer.
The property aspect was adjourned and orders were made that the solicitor for the husband personally serve on the wife the orders of that day, a further copy of his Amended Response, and a letter outlining the precise final orders sought and notifying the wife that if she fails to attend on 14 August 2020 those orders may be made in her absence. The intervener was ordered to personally serve on the wife a letter notifying the wife of the next court date, and detailing the amount of outstanding legal fees sought.
The husband and intervener both complied with the orders of 22 July 2020 as evidenced by the affidavit of service filed by the husband on 12 August 2020 and by the intervener on 7 and 13 August 2020.
The matter was listed for undefended hearing on 14 August 2020 and the wife again did not appear. The matter was adjourned for further written submissions to be provided by the husband and intervener.
On 17 December 2020 the matter was mentioned and the wife did not appear despite being provided with the Microsoft Teams hearing details by the Court to her email and last known postal address.
The parties were ordered to each file and serve updated financial statements and further affidavits addressing the issue of contributions under s 79(4) of the Act by 16 February 2021.
The Court orders from that date note that the matter would be adjourned to provide a final opportunity for the wife to engage in these proceedings.
The husband’s solicitor was ordered to serve a copy of the orders of 17 December 2020 on the wife, but was unable to do so. By letter dated 29 March 2021, the husband’s solicitor informed the Court that he attended the last known address of the wife on 14 January 2021 to personally serve her with a copy of the orders, however there was no response. The solicitor then telephoned the last known telephone number of the wife, and there was no answer. He left his business card at the door of the wife’s last known address and wrote a note asking that the wife contact him, however there has been no correspondence from the wife.
The wife did not comply with the orders of 17 December 2020 and she did not appear when the matter was mentioned on 3 March 2021.
The matter was mentioned for the final time on 26 March 2021. The wife was sent the Microsoft Teams hearing details via email and via post, and was also called on her mobile phone number at the commencement of the hearing, and did not attend. I reserved my decision.
I am satisfied that the wife has been afforded procedural fairness and given adequate opportunity to pursue her Initiating Application before the Court. The husband and intervener have diligently pressed their applications and complied with orders. On that basis, I proceeded with the hearing generally as I am entitled to do pursuant to r 13.03C(1)(e) of the Federal Circuit Court Rules2001 (Cth) (‘the Rules’).
ORDERS SOUGHT BY THE PARTIES
There are three competing applications on foot before the Court.
The wife in her Initiating Application sought final orders that the former matrimonial home be sold and the balance of the proceeds be divided 55% to her and 45% to the husband. Given her lack of engagement in these proceedings, it is unclear whether the wife still seeks these orders.
By way of Amended Response filed 10 June 2020, the husband seeks final orders that:
(a)The wife’s property application be dismissed;
(b)The husband be declared to have the sole right, title and interest in the former matrimonial home; and
(c)The husband be declared to have the sole right, title and interest in all other real and personal property now in his possession, custody or control.
At the undefended hearing on 14 August 2020, the intervener sought orders that there be alteration of property interests between the husband and the wife, and that the husband directly pay the intervener the sum of $30,684.23 by way of repayment of the wife’s legal fees.[1]
[1] Affidavit of Service filed by the Intervener on 13 August 2020.
At the hearing on 3 March 2021 the husband and the intervener submitted a joint Minute of consent orders (‘the Minute of consent orders’) seeking that the husband pay the wife the sum of $20,000, that payment be made to the intervener ‘on account for the debt owed by the applicant to the intervener’, that all applications be dismissed, and that there be no order as to costs.
Those orders were not made that day as I was not satisfied they would result in a just and equitable division of assets between the spousal parties.
LEGISLATIVE PRINCIPLES
Section 79 of the Act relevantly provides the principles the Court is required to consider when asked to determine property disputes:
79Alteration of property interests
(1)In property settlement proceedings, the court may make such order as it considers appropriate:
(a)in the case of proceedings with respect to the property of the parties to the marriage or either of them — altering the interests of the parties to the marriage in the property; or
(b)…
including:
(c)…
(d) an order requiring:
(i) either or both of the parties to the marriage; or
(ii) …
to make, for the benefit of either or both of the parties to the marriage … such settlement or transfer of property as the court determines.
…
(2)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.
(4)In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
(a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage … to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage … to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d)the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e)the matters referred to in subsection 75(2) so far as they are relevant; and
(f)any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
As the Full Court has iterated on a number of occasions, this is broadly speaking a four-step process involving:[2]
(a)Identification of the parties’ net assets and liabilities at the date of trial;
(b)Assessment of the financial and non-financial contributions made by the parties pursuant to s 79(4)(a) - (c) of the Act;
(c)Consideration of s 75(2) factors; and
(d)Undertaking a holistic overview in considering whether the proposed orders are just and equitable.
[2] AJO & GRO [2005] FamCA 195 at [46] citing Ferraro & Ferraro (1993) FLC 92-335 at 79,560.
In addition, s 79(2) of the Act provides that the Court must not make any order under s 79 of the Act unless satisfied that, in all the circumstances, it is just and equitable to do so.[3]
[3] Mallet v Mallet (1984) 156 CLR 605, 647.
In Stanford v Stanford (2012) 247 CLR 108 (‘Stanford’) the High Court of Australia made clear that ss 79(2) and 79(4) of the Act impose two distinct statutory requirements which must not be conflated: firstly to determine whether it is just and equitable to make an order for alteration of property interests at all, and secondly to determine what order would be just and equitable in percentage or monetary terms.
Nevertheless, the factors under s 79(4) of the Act may, along with any other relevant matters, inform the Court’s determination under s 79(2), so long as there is separate consideration under the two subsections as required by the Act.[4]
CONSIDERATION
[4] Chapman & Chapman [2014] FamCAFC 91 at [9] per Bryant CJ.
Should an order for alteration of property interests be made?
Following the decision in Stanford, the question under s 79(2) of the Act is generally not an issue in matters where the parties were in a relationship, have jointly owned property and seek orders under s 79.
However, the husband submits that s 79(2) of the Act is not satisfied in this case on the following bases: [5]
(a)The wife has failed to prosecute her application under s 79 of the Act, therefore the Court has no power to make an order for alteration of property interests; and
(b)The main asset of the relationship, the former matrimonial home, was owned unencumbered by the husband prior to the relationship and the wife made no financial contributions.
[5] Case Summary Document of Respondent filed 13 August 2020, paragraph 16.
In respect to the husband’s first argument, the wife’s Initiating Application remains on foot, thereby enlivening the Court’s power to make an order under s 79 of the Act.
I accept that the wife has not attended before the Court since March 2020.
Nevertheless, based on the affidavit material before me, I am not persuaded that I should make an order dismissing the wife’s application and making no allowance in her favour.
When the parties married, the wife had recently migrated to Australia and her employment skills and English skills were little to none. It is evident that she did not have much support around her as her family resided overseas.
The husband’s affidavit material suggests that the wife may suffer from mental health problems, although this is denied by the wife in her affidavit material.[6]
[6] Affidavit sworn by the husband on 17 May 2016, paragraph 73; Affidavit sworn by the wife on 26 September 2017, paragraph 45.
I am unable to make findings on these issues, save to say that they are factors which may explain the wife’s decline in participation in these proceedings and in the child’s life.
Previously in these proceedings, the wife successfully obtained a recovery order for the child and brought an application for interim parenting orders that the child spend time with her. It is open to infer that the wife may wish to seek time with the child in future.
Furthermore, and in respect to the husband’s second argument, the affidavit material filed by both parties indicates that the wife made contributions to the welfare of the family and at least minimal indirect financial contributions to the former matrimonial home.
The parties had a joint bank account into which they deposited their government benefits.[7]
[7] Affidavit sworn by the husband on 11 February 2021, paragraph 18.
The wife deposes that she used her Newstart Allowance to support the family by paying for groceries and living expenses.[8] Although the husband deposes that the wife did not make any financial contribution towards the family home aside from her Newstart Allowance going into the joint account, he also deposes that “[the wife] had regular and unfettered access to our joint account that she often withdrew money from and paid for food and other household expenses.”[9]
[8] Affidavit sworn by the wife on 18 February 2016, paragraph 136.
[9] Affidavit sworn by the husband on 11 February 2021.
I am satisfied that the funds in the joint bank account were used by both parties towards expenses relating to the child and the household.
I am also satisfied that the wife contributed to the care of the child and to household duties, although the extent of those contributions is disputed by the husband.
Whilst not definitive, the husband did concede in his initial Response to Initiating Application filed 18 May 2016 that provision should be made to the wife of $122,500.00. This equated to approximately 14.45% of the net asset pool of $847,543.11 (as it stood in 2016 when these proceedings commenced).[10]
[10] The figure for the net asset pool in 2016 is calculated from the Financial Statement filed by the husband on 18 May 2016, which identified the total value of property owned by the husband (being the former matrimonial home) at $875,003.11, the husband’s superannuation at $55,540, and liabilities at $83,000.
The husband also stated the following in his affidavit sworn 17 May 2016 at [72]:
I have instructed my current Solicitor to give an undertaking that the property will not be placed for sale and have agreed to a Caveat remaining on Title to protect whatever interest [the wife] may have insofar as matrimonial property is concerned.
Although the husband has now changed his position, it is clear that in the past he recognised that the wife may have an interest in the property pool.
To dismiss the wife’s application and make no orders under s 79 of the Act as sought by the husband, would be to ignore all the aforementioned material before the Court. I am not satisfied that doing so would result in a just and equitable outcome between the parties.
Given the circumstances described above, I am satisfied that it is just and equitable to make an order for property division under s 79 of the Act.
I now turn to what orders would be just and equitable under s 79(4) of the Act.
Assets and liabilities
The wife’s financial circumstances at the time of the hearing are unknown as she did not file an updated financial statement as ordered by the Court.
According to her financial statement and affidavit filed on 18 February 2016, at the commencement of these proceedings the wife had no assets or liabilities and her only income consisted of Centrelink benefits of approximately $350 or $450 per week.
No evidence has been presented to suggest that the wife has failed to disclose property of any significant value. In these circumstances, I am not in a position to decide the value of any property of the wife.
According to the husband’s financial statement filed 11 February 2021, the parties’ assets and liabilities at the time of the hearing are as follows:
Description
Owner
Estimated Value
Assets
Former family home situate at C Street (valued by D Valuers 6 August 2020)
Husband
$875,000
Motor Vehicle 1
Husband
$10,000
Household contents
Husband
$3,000
Funds in Commonwealth Bank account
Husband
$14,000
Total:
$902,000
The one significant asset of the parties’ relationship is the former matrimonial home which is valued at $875,000.[11] There is no superannuation and there are no liabilities.
[11] Affidavit of Service filed by the husband on 12 August 2020, Annexure C.
The husband argues that the wife’s debt to the intervener should not form part of the matrimonial asset pool as it was incurred by the wife post-separation. I accept this argument as it is settled principle that outstanding legal fees incurred post-separation are generally not taken into account as a liability reducing the asset pool.[12]
Contributions
[12] NHC & RCH [2004] FamCA 633 at [59] and see also Farnell & Farnell (1996) FLC 92-681 at 83,066, 83,068 and 83,080.
Section 79(4)(a) Financial Contributions
Prior to the commencement of the relationship the husband owned the former matrimonial home and all its contents unencumbered. The husband made all of the financial contributions to the acquisition, maintenance and improvement of this property, prior to the commencement of the relationship. These are significant initial contributions by the husband.
During the relationship, both parties were unemployed and accumulated no assets together.
The husband received Workers Compensation payments between 2009 and 2014 following a workplace injury. The amount of these payments is not specified in the husband’s affidavit material. The parties lived solely off those Workers Compensation payments for approximately three years between 2009 and 2011, as the wife was unable to obtain employment and was not eligible for government benefits as she was not yet a permanent resident.[13]
[13] Affidavit sworn by the husband on 11 February 2021, paragraph 16.
As aforementioned, the husband submits that the wife made no financial contributions and that her property case is “limited to ss 79(4)(c) and 75(2)”.[14] However, the affidavit material indicates otherwise. Moreover, in assessing the relative weight to be given to any particular contribution, it is not necessary to find a causal link between that contribution and particular property. In that respect, the Full Court in Dickons & Dickons [2012] FamCAFC 154 (‘Dickons’) said that the task was to examine “the nature, form and extent of contributions” made by each of the parties, rather than to attempt to identify a causal link to the asserted “value” of a particular item of property.[15] In that regard, the Full Court in Dickons explained its reasoning in the following terms:
17. … A financial contribution can be made indirectly by, for example, the use by parties of income or assets for purpose A freeing up the use of other income or assets for purpose B. Moreover, a particular financial contribution might have been used wholly in discretionary expenditure which, but for that contribution, would not have been available to the parties or would have required borrowings or a diminution of capital. Such a contribution can also, in that way, be seen, for example, as an indirect contribution to the conservation of property….
18. Any and all such contributions, whether or not they sound in, or are directly linked to, the property available for distribution, should be considered and assessed together with the nature, form and extent of all other contributions of all types contemplated otherwise by s 79(4).
[14] Case Outline filed by the husband on 13 August 2020, paragraph 24.
[15] Dickons & Dickons [2012] FamCAFC 154 at [14].
It is clear that the wife, in the present case, did make such indirect contributions.
In 2010 when the child was born, the wife received a $5000.00 baby bonus from Centrelink.[16]At this time the parties opened a joint bank account and the baby bonus was deposited therein.
[16] Affidavit sworn by the husband on 11 February 2021, paragraph 18.
From 2011, the wife received Newstart Allowance from Centrelink of approximately $350.00 or $450.00 per week.[17] The wife’s Newstart Allowance and the husband’s Workers Compensation payments were deposited into the joint bank account.[18]
[17] $350 according to Affidavit sworn by the wife on 18 February 2016; $450 according to Financial Statement sworn by the wife on 18 February 2016.
[18] Affidavit sworn by the husband on 11 February 2021, paragraph 18.
On 24 February 2014 the husband’s entitlement to Worker Compensation payments stopped.[19] He then received Newstart Allowance from Centrelink of $270.00 per week.[20]
[19] Affidavit sworn by the husband on 11 February 2021, paragraphs 19 – 20; Affidavit sworn by the wife on 18 February 2016, paragraph 130.
[20] Financial Statement filed by the husband on 18 May 2016.
The wife deposes that she used her Centrelink benefits to pay for groceries and living expenses, and that the husband’s Workers Compensation would also be used to support the family.[21] The husband similarly deposes that the parties “both lived from” [22] those payments.
[21] Affidavit sworn by the wife on 18 February 2016, paragraph 136.
[22] Affidavit sworn by the husband on 11 February 2021, paragraph 17.
I am satisfied from the affidavit material that the funds in the joint bank account were used by the parties to meet living expenses and support the family.
Section 79(4)(b) Non-Financial Contributions
No submissions were made to the Court on this point, therefore it bears no weight.
Section 79(4)(c) Contributions to the welfare of the family
Each party asserts they were the primary homemaker throughout the relationship.
The wife deposes that she was “treated as a slave in the family, made to cook and clean”, and that the husband would “cut the grass and take the bins out and that was the extent of his contribution to the household tasks”.[23] She also deposes to shopping for groceries and school uniforms for the child.
[23] Affidavit sworn by the wife on 18 February 2016, paragraphs 144, 148.
The husband disputes this evidence and deposes that both he and the wife cooked meals and that he performed “most of the domestic duties, including cleaning and washing” and the wife assisted with household duties “except for gardening and mowing”.[24]
[24] Affidavit sworn by the husband on 11 February 2021, paragraphs 25 – 26.
Doing the best I can on the evidence, I am satisfied that the parties each made contributions as a homemaker in various ways.
There was also competing evidence in respect to parenting contributions.
The wife deposes that she was the primary caregiver for the child during the relationship.[25]
[25] Affidavit sworn by the wife on 18 February 2016, paragraph 59, 65.
The husband disputes the evidence of the wife and asserts that he regularly cared for the child by “changing his nappies, feeding him, putting him to sleep and assisting [the wife] in every respect for the care of [the child]”.[26] The husband contends that he was the primary carer for the child in particular due to the wife’s “abnormal and erratic behaviour arising out of her mental health condition and alcohol abuse”.[27]
[26] Affidavit sworn by the husband on 11 February 2021, paragraph 27.
[27] Affidavit sworn by the husband on 17 May 2016, paragraph 73.
Again, doing the best I can on the competing evidence, I am satisfied that both parties contributed to the care of the child during the relationship.
Post-separation, however, I find that the husband has made greater parenting contributions. This is most evident from the fact that since 16 December 2016, the child has been living solely with the husband.
It is worthy of note that the wife did not have stable accommodation during the period immediately following separation. The wife was living in poor conditions in a converted garage until 30 April 2017, and then in a shared bedroom at a friend’s house until 5 June 2017 when she secured rental accommodation at her current address.[28]
[28] Affidavit sworn by the wife on 26 September 2017.
Given the wife’s living conditions, the parties departed from the consent orders made on 11 August 2016 such that the child lived with the husband instead and spent time with the wife before and after school.[29]
[29] Affidavit sworn by the wife on 26 September 2017, paragraph 18; Affidavit sworn by the husband on 8 November 2017, paragraphs 7 – 10.
The parties agree that during the period where the child was spending time with the wife, the wife would sometimes provide food for the child. The wife deposes to also providing $50 to $100 per fortnight to the husband towards support of the child. The husband disputes this evidence and deposes that up to that point in time, the wife gave him $150 to assist with the care of the child, and $100 to the child to buy a Father’s Day gift.[30]
[30] Affidavit sworn by the husband on 8 November 2017.
The child’s last regular visit with the wife was in June 2017.[31]
[31] Case Summary Document of husband filed 13 August 2020, [10].
Although the competing evidence does not enable me to make a finding as to why the child stopped spending time with the wife, I am able to make a finding that the wife’s post-separation parenting contributions are minimal compared to those of the husband.
Other relevant s 79(4) matters and section 75(2) factors
The Wife
The wife is 46 years old and was unemployed in 2016 when she filed her Initiating Application.
The wife was employed as a public servant when she lived in Country B, and she deposes to not having any skills to be employed in Australia and being unable to obtain employment despite applying for unskilled positions.[32] She further deposes that she sacrificed her career by moving to Australia to live with the husband, and that having full time care of the child prevented her from finding work in Australia.
[32] Affidavit sworn by the wife on 18 February 2016, paragraph 153.
The wife had enrolled in English language classes from July 2009 in order to undertake studies to complete a formal qualification to help secure employment as a public servant in Australia. She deposes to having stopped these classes in January 2016 when the parties separated and she moved out of the former matrimonial home. The husband deposes that the wife has been diagnosed with mental health issues including depression, paranoia and schizophrenia, and provides two doctors’ notes from late 2015 to this effect. [33] The wife denies that she has mental health issues but deposes to attending upon a counsellor. [34] I decline to make any findings on this issue.
[33] Affidavit sworn by the husband on 17 May 2016, paragraph 73.
[34] Affidavit sworn by the wife on 26 September 2017.
The Court has some difficulty in making an accurate assessment of the wife’s future employment prospects in circumstances where she has not filed any updated affidavit material. However the evidence that is available establishes that the wife’s employment prospects in Australia have been limited at least by the fact that English is her second language. It is unclear whether her language skills have improved and the extent of this barrier to her gaining future employment (noting that she deposes to having ceased attending classes).
It is also unclear whether the wife is currently receiving, or will receive in future, any government benefits.
Based on the affidavit material on file, if orders are made as proposed by the husband or as proposed in the Minute of Consent Orders, the wife will be left with a paucity of assets, hindering her ability to undertake any training she requires to secure paid employment.
The wife has not been paying child support, but may be liable to provide child support for the child in the future depending on her employment and whether the child will continue to reside with the father.
The wife made extensive allegations of family violence in her affidavit material including physical violence and financial control, however has made no submissions that this Court should consider a Kennon & Kennon[35] adjustment in its assessment of the parties’ respective contributions. In the absence of such submissions and participation by the wife, the Court cannot make a finding that family violence made the contributions of either party more arduous.
[35] [1997] FamCA 27.
The Husband
The husband is 65 years old. He is currently unemployed and subsists off a disability pension of $400.00 per week. He previously worked as a tradesman but will not be able to obtain employment, in that occupation, in future due to a permanent workplace injury.
The husband has sole parental responsibility for the child of the relationship and the child lives with him. The husband will have to provide for the child for at least the next seven years until the child attains 18 years of age, and there is no indication that the wife will provide any child support payments or other financial assistance.
There is no evidence before the Court that either party has re-partnered or is co-habiting with another person.
Conclusions
The wife’s lack of financial resources and lack of employment skills are a concern to the Court, and her future needs are greater in this respect.
On the other hand, the husband has no future employment capacity, in his chosen occupation, and he will continue to meet all expenses for the child of the relationship for the foreseeable future, with potentially no assistance from the wife. His future needs are therefore greater in this respect.
In these circumstances I do not consider it appropriate to make any adjustment in favour of either party under s 75(2) of the Act.
OVERVIEW - WHAT DIVISION IS JUST AND EQUITABLE?
I am not satisfied that an order dismissing the wife’s application for want of prosecution, as sought by the husband, would be just and equitable, for the reasons stated above.
Likewise, I am not prepared to make orders pursuant to the Minute of Consent Orders submitted by the husband and intervener on 3 March 2020. In a net asset pool of $902,000, the sum awarded to the wife pursuant to those proposed orders equates to just over 2% of the asset pool, and the entirety of that sum would be paid to the intervener.
Based on the material before the Court, this outcome would leave the wife with effectively no assets, and is a significantly smaller proportion of the asset pool being awarded to the wife than originally contemplated in the orders sought by either of the parties in the Initiating Application and Amended Response.
In light of the length of the relationship, the parties’ respective contributions, and the parties’ future needs as canvassed above, I consider that such an order would be fundamentally unfair to the wife.
It is evident that the wife made indirect financial contributions to the former matrimonial home, as well as contributions to the welfare of the family, whilst the husband brought in the one significant asset of the relationship and has made far greater post-separation parenting contributions.
Although the husband has changed his position regarding the property division he seeks, his evidence regarding the parties’ respective contributions remains the same in his most recent affidavit sworn 11 February 2021, as in his affidavit sworn 17 May 2016 at the commencement of these proceedings when he proposed provision of $122,500 (being 14.45% of the then-asset pool) to the wife. The most significant difference between the parties’ contributions now and when these proceedings commenced, are the greater post-separation parenting contributions by the husband in the past six or so years.
Based on the evidence before the Court, in my view it is just and equitable that there be a 10% / 90% division of the property pool in favour of the husband. This equates to a sum of $811,800 to the husband and $90,200 to the wife.
Although an order for 10% or less of the property pool in favour of a spousal party is not common under s 79, this division is supported by case authority where such an order was made where one spousal party made significantly lower contributions than the other party, as in this case.[36]
[36] See for example GS & TS (2005) FLC 93-213; Kennon v Kennon ([1997] FamCA 27.
I now turn to the intervener’s claim.
THE INTERVENER’S CLAIM
As aforementioned, the intervener seeks an order for direct payment by the husband of the wife’s outstanding legal fees as part of an overall adjustment of the parties’ property interests.
The wife instructed the intervener in respect of her family law proceedings between 16 February 2016 and 15 June 2018, and filed a Notice of Withdrawal on 20 July 2018.
The intervener sought to intervene in these proceedings by Application in a Case filed on 15 January 2019, and was joined to the proceedings as a creditor under s 79(10)(a) of the Act by court orders dated 21 January 2019.
The intervener relies on an affidavit affirmed by a solicitor of the intervener’s firm on 14 January 2019, in particular two annexures therein being a covering letter enclosing a Costs Agreement and Standard Terms of Engagement, and 16 itemised invoices to the wife between 26 February 2016 and 22 June 2018 totalling $31,234.23 which the intervener deposes are in taxable form.[37]
[37] Affidavit affirmed by the intervener on 14 January 2019, Annexure B.
The intervener submits that they acted for the wife on a payment-on-settlement basis owing to her inability to meet her legal fees on a pay-as-you-go-basis, and deposes that the wife has paid a sum of $550.00 towards her legal fees thus far.[38]
[38] Affidavit affirmed by the intervener on 14 January 2019.
The final sum sought by the intervener is $20,000.00. This amount was agreed between the husband and intervener pursuant to the Minute of Proposed Orders dated 3 March 2021.
On the evidence of the intervener the wife did not, within time, dispute the claim for costs made by the intervener pursuant to relevant New South Wales legislation governing legal costs. The wife has not filed any material in respect of the intervener’s claim in these proceedings. I am satisfied that the wife has been served with the intervener’s application and is aware of the intervener’s claim, but has not sought to challenge it.
I am therefore entitled to accept the intervener’s evidence. I am satisfied that an order for property adjustment between the spouse parties must account for the wife’s outstanding legal fees in order to be just and equitable.
As I have found that an order for property adjustment should be made it is not necessary to address the issue, as concisely put by Counsel for the husband, of whether the intervener’s application ‘rides on the back’ of a successful application by the wife against the husband for property settlement.[39]
[39] Further Written Submissions filed by the husband on 11 September 2020, paragraph 16.
The issue for consideration is whether it is appropriate as part of orders for property adjustment under s 79 of the Act, to make an order for direct payment by the husband to the intervener of $20,000.00 in satisfaction of the wife’s unpaid legal fees.
I accept the husband’s submissions that the intervener has no contractual relationship with him and has no claim against him personally for payment of the wife’s debt. The outstanding legal fees are a personal debt of the wife incurred post-separation and are her responsibility. There have been no debt recovery proceedings instituted by the intervener, nor a proprietary interest held by the intervener in the parties’ assets.
The intervener’s claim rests solely on s 75(2)(ha) of the Act, which requires the Court in making an order under s 79 to consider “the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant”.
The intervener relies on Zdravkovic and Zdravkovic [1982] FamCA 23 as authority for its argument that s 79 of the Act gives this Court power to direct that a third party creditor be paid in satisfaction of a debt incurred by a spouse, in particular citing the following statements of Pawley, Strauss and Treyyaud JJ at pages 7-8:
We are, however, of opinion that in an appropriate case, as part of the adjustment of the financial rights of the parties, the Court may in proceedings under sec. 79 order the discharge of a debt to a third person, whether such person is an intervener or not. Once it is clear and beyond doubt that a debt is owing to a third person and that all the probabilities are that it will be enforced unless it is discharged by payment, then the Court is not precluded from ordering its discharge by the parties or one of them as a condition or as part of the overall readjustment of the parties' financial rights, if such a course is convenient or just. Situations, where such orders have been appropriate and where they have been made, are numerous. Amongst the almost innumerable examples which come to mind are the discharge of a debt due under some credit facility granted to both or one of the parties, the payment of existing liabilities of one or both of the parties to a store or for medical or like accounts, or for rates or income tax liabilities or motor car registration or insurances.
(Emphasis added).
Counsel for the husband submits that for such an order to be made, the intervener must first prove a debt owed to them by the wife, and then demonstrate an equitable lien over any proceeds that the wife may receive, citing the decision of Berman J in Ryland & Ryland and Anor [2018] FamCA 134 as authority for this proposition.
I am satisfied on the evidence that there is a debt owing to the intervener that will be enforced, the quantum of which has not been disputed by the wife.[40]
[40] Case Outline filed by the intervener on 10 August 2020, [18].
Although the Costs Agreement between the intervener and the wife annexed to the intervener’s affidavit is not signed by the wife,[41] I am satisfied on the evidence that the wife engaged the intervener to act on her behalf, given the court documents filed by the intervener on behalf of the wife throughout the proceedings and the tax invoices sent to the wife. Even if a Costs Agreement was never signed by the wife, it is possible for a costs agreement to consist of a written offer that is accepted by conduct. [42] It can be inferred that the wife accepted the Costs Agreement given her continued instructions to the intervener and payment of $550.00 toward legal fees.
[41] Affidavit filed by the intervener on 15 January 2019.
[42] Legal Profession Uniform Law (NSW) s 180(3).
I am not satisfied, however, that the intervener must necessarily prove the existence of an equitable lien over proceeds of litigation in order to be entitled to an order for discharge of the debt owed by the wife in these circumstances.
In any event, the intervener made no submissions regarding the existence of an equitable lien in its favour, nor sought any declaration to this effect.
Under s 79 of the Act, the Court has broad discretion to make property settlement orders ‘as it considers appropriate’. In addition, s 81 of the Act requires the Court to make orders that will finalise the financial relationship between the parties as far as practicable and avoid further proceedings between them.[43]
[43] Family Law Act 1975 (Cth) s 81.
It is desirable that the intervener’s claim is dealt with to avoid the accumulation of further costs and delay in these proceedings.
In order to assist the wife in circumstances where she is unrepresented and little is known about her current circumstances, and to ensure that the orders made have practical effect and bring finality to these proceedings, I find that it is just and convenient to order that the husband pay the wife $90,200.00 by way of property settlement, less the sum of $20,000 sought by the intervener, which is to be paid by the husband to the intervener directly.
CONCLUSION
The Court has a responsibility to ensure a just and equitable result between the parties and bring finality to this property dispute, notwithstanding the wife’s lack of participation in court proceedings.
Based on the parties’ respective contributions and the circumstances surrounding this case, I find that it is just and equitable to make orders under s 79 of the Act effecting a 10% / 90% division of the asset pool in favour of the husband, and requiring that payment of the wife’s outstanding legal fees fixed in the sum of $20,000.00 be made directly by the husband to the intervener, out of the sum awarded to the wife.
To this effect I make the orders stated above. I note that the wife retains her right under r 16.05 of the Rules to make an application to set aside or vary this judgment and these orders.
COSTS
As neither party sought an order for costs, no order for costs will be made.
I certify that the preceding one hundred and thirty-six (136) numbered paragraphs are a true copy of the Reasons for Judgment of Chief Judge Alstergren. Associate:
Dated: 30 April 2021
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