Duffy & Duffy
[2022] FedCFamC1F 635
Federal Circuit and Family Court of Australia
(DIVISION 1)
Duffy & Duffy [2022] FedCFamC1F 635
File number(s): BRC 10327 of 2019 Judgment of: BAUMANN J Date of judgment: 29 August 2022 Catchwords: FAMILY LAW – PROPERTY – Assessment of contributions – Addback of legal fees expended by husband – Adjustment in wife’s favour for s 75(2) factors – final property adjustment orders made Legislation: Family Law Act 1975 (Cth) ss 79, 75, 117 Cases cited: Chorn & Hopkins (2004) FLC 93-204
Coghlan & Coghlan (2005) FLC 93-220
Dulton& Dulton (2020) FLC 93-984
Hickey & Hickey (2003) FLC 93-143
Mallett v Mallett (1984) 156 CLR 605
Oamra & Williams (2021) FLC 94-035
Stanford & Stanford [2012] HCA 52
Trevi & Trevi (2018) FLC 93-858
Division: Division 1 First Instance Number of paragraphs: 92 Date of hearing: 2 August 2022 Place: Brisbane Counsel for the Applicant: Mr Moxon Solicitor for the Applicant: HopgoodGanim The Respondent: Litigant in person ORDERS
BRC 10327 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS DUFFY
Applicant
AND: MS DUFFY
Respondent
order made by:
BAUMANN J
DATE OF ORDER:
29 August 2022
THE COURT ORDERS:
1.That in these Orders:
(a)the Suburb C Property means the property located at B Street, Suburb C in the State of Queensland, more particularly described as Lot … on …, registered in the names of the husband and wife as joint tenants and encumbered by the Suburb C Property mortgage;
(b)the Suburb C Property mortgage means mortgage number … secured over the Suburb C Property registered in favour of ANZ;
(c)the Suburb D Property means the property located at Suburb D, Country E [State Lease Vol … Folio …], registered in the names of the husband and wife as joint tenants;
(d)the Suburb F Property means the property located at Suburb F, Country E [State Lease Vol … Folio …], registered in the name of the wife;
(e)the husband’s bank accounts mean his interest in any bank account in his name, including but not limited to the following:
(i)G Bank account number …33;
(ii)ANZ Access Advantage account number …14; and
(iii)ANZ Online Saver account number …33.
(f)the wife’s bank accounts mean her interest in any bank account in her name;
(g)the joint bank account means the ANZ One account number …59 in the joint names of the parties;
(h)the husband’s investments mean his interest in any investment account in his name, including but not limited to H Bank … account …;
(i)the husband’s motor vehicles means the following vehicles registered in his name:
(i)Motor Vehicle 1 which the husband jointly owns with his daughter, Ms J;
(ii)Motor Vehicle 2; and
(iii)Motor Vehicle 3.
(j)the outstanding Suburb D Property liabilities means the outstanding property rates and charges relating to the Suburb D Property;
(k)the outstanding Suburb F Property liabilities means the outstanding property rates and charges relating to the Suburb F Property;
(l)the wife’s superannuation entitlements mean any superannuation entitlements held by the wife;
(m)the husband’s superannuation entitlements mean the husband’s member entitlements in any superannuation fund, including but not limited to:
(i)H Bank … account number …61; and
(ii)H Bank … account number …83.
(n)settlement date means the date of fourteen (14) days from the date of this Order.
Retention of assets/liabilities
2.That as part of the husband’s entitlement to property settlement, the husband shall be solely entitled to and the wife shall relinquish all rights, title and interest in and to the following:
(a)The Suburb C Property;
(b)His personal possessions including the house contents of the Suburb C Property;
(c)The husband’s bank accounts;
(d)The joint bank account;
(e)The husband’s investments;
(f)The husband’s motor vehicles;
(g)The husband’s superannuation entitlements; and
(h)All other interests in property and financial resources of whatsoever nature that the husband has at the date of these Orders.
3.That except as provided to the contrary in these Orders, the husband be solely liable for and indemnify the wife and keep the wife indemnified against any liability encumbering any item of property to which the husband is entitled pursuant to these Orders, including but not limited to:
(a)the Suburb C Property mortgage;
(b)his ANZ credit card account number …79; and
(c)any personal tax liabilities in his name.
4.That as part of the wife’s entitlement to property settlement, the wife shall be solely entitled to and the husband shall relinquish all rights, title and interest in and to the following:
(a)The Suburb D Property;
(b)The Suburb F Property;
(c)Her personal possessions including the house contents of the Suburb D Property and the Suburb F Property;
(d)The wife’s bank accounts;
(e)The wife’s superannuation entitlements; and
(f)All other interests in property and financial resources of whatsoever nature that the wife has at the date of these Orders.
5.That except as provided to the contrary in these Orders, the wife be solely liable for and indemnify the husband and keep the husband indemnified against any liability encumbering any item of property to which the wife is entitled pursuant to these Orders, including but not limited to:
(a)any credit card or loan accounts in the wife’s name;
(b)the outstanding Suburb D Property liabilities;
(c)the outstanding Suburb F Property liabilities; and
(d)any personal tax liabilities in her name.
Transfer of the Suburb C Property
6.That by the settlement date and contemporaneously with compliance of Orders 7, 8 and 10, the husband will pay the wife $115,500 (being property adjustment and lump sum spouse maintenance).
7.That by the settlement date the husband and wife do all acts and sign all documents necessary to transfer to the husband all of the wife’s right, title and interest in the Suburb C Property at the husband’s sole expense.
8.That the husband and wife do all acts necessary to discharge the Suburb C Property mortgage, including the wife signing and returning the authority to release the Suburb C Property mortgage within seven days of her receipt of that authority, with the wife to be immediately released and indemnified by the husband in respect of any loan that she is a joint borrower or guarantor for in this regard.
9.That pending the settlement date:
(a)the wife shall be restrained from drawing down upon any loan account secured by the Suburb C Property mortgage; and
(b)the husband indemnifies the wife with respect to all outgoings, including the land tax, if any, assessed or assessable with respect to the Suburb C Property.
Transfer of the Suburb D Property
10.That by the settlement date the husband and wife do all acts and sign all documents necessary to transfer to the wife all right, title and interest in the Suburb D Property at the wife’s sole expense.
11.That pending the settlement date the wife indemnifies the husband with respect to all outgoings of the Suburb D Property, and any liabilities in his name arising from the ownership of the Suburb D Property.
Joint bank account
12.That by the settlement date the husband and wife do all acts and sign all documents necessary to close the joint bank account and transfer the balance to the husband.
Miscellaneous
13.That each party shall do all acts and things necessary including signing all necessary documents so as to give full force and effect to the provisions of these Orders and in the event that either party refuses or neglects to comply with any provision of these Orders within fourteen (14) days of a written request to do so by the other party, then a Registrar of the Federal Circuit and Family Court of Australia be hereby appointed pursuant to s 106A of the Family Law Act 1975 (Cth) to execute all documents in the name of that party and to do all acts and things necessary to give validity and operation to these Orders.
14.That except as provided to the contrary, the transferee spouse prepare the documentation necessary to give effect to the terms of these Orders at their cost and in the case that where duty or registration costs is payable upon the transfer or assignment of property, the transferee in each case shall pay any duty or registration costs (if any) in full except where otherwise provided in these Orders.
Spouse maintenance
15.That the husband pay to the wife, by way of lump sum spouse maintenance, the sum of $20,800 (which amount is incorporated in the sum payable under Order 6).
Costs
16.That should either party wish to pursue an application for costs, then:
(a)any application be made by written submissions, filed and served within fourteen (14) days of the date of this Order (with such submissions including a quantification of costs sought); and
(b)any written submissions in response shall be filed and served within twenty eight (28) days of the date of this Order; and
(c)unless otherwise ordered, any costs application shall be determined on the written submissions filed, in chambers.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
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 by this Court under the pseudonym Duffy & Duffy has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BAUMANN J:
Introduction
The Applicant, Mr Duffy (who I will call “the husband”) and the Respondent, Ms Duffy (who I will call “the wife”) commenced cohabitation in Country E in approximately early 2006, were married in late 2008, and I am satisfied separated finally in May 2018.
The characteristics of the relationship is a question of dispute between the parties insofar as it relates to the contributions made by the wife during the course of the relationship of a non-financial character. As the reasons which follow seek to explain, particularly, to the unrepresented wife, the pathway to determining what is just and equitable to both the parties of the marriage (a marriage which was ultimately dissolved by order of the Court) is not an easy thing to explain.
Principles
Shortly stated, but more concisely and elaborately described in the Full Court decision in Hickey & Hickey (2003) FLC 93-143, in a property settlement case, the Court must adopt a well-known four-step process, essentially:
(a)to identify the pool of assets and liabilities generally, and usually at the time of hearing;
(b)to assess the relative contributions of both the financial, non-financial, direct and indirect nature as specified by s 79(4) of the Family Law Act 1975 (Cth) (“the Act”);
(c)to consider the factors as are relevant contained in s 75(2) of the Act; and
(d)finally, consider the ultimate analysis to determine whether the order the Court proposes to make is just and equitable to both parties.
As the High Court in Stanford & Stanford [2012] HCA 52 made clear, the Court must be satisfied it is just and equitable, within the meaning of s 79(2) of the Family Law Act 1975 (Cth) (“the Act”) to make an order. One of the difficulties in this case, but it is accepted by the husband, is that during the course of the relationship and, particularly, as the husband approached likely retirement, the parties had discussed a move back to Australia for the husband and, in fact, some purchases of property prior to his ultimate retirement reflected that intention. It was also intended to buy a motor vehicle, which occurred.
In a Stanford sense, there were stated and unstated assumptions about the marital relationship which came to an end with separation. After the parties separated, the husband formed a new relationship (with Ms L) and the wife has not.
There are many paragraphs in the wife’s self-prepared affidavit which reflected the difficulty she has had in coming to terms with the ending of her relationship and ultimate decision by the husband to form a new relationship. Without laboriously going through many paragraphs of the at times emotional affidavit relied upon by the wife and forming part of Exhibit 1, in many ways it can be summarised by the “contribution summary” also forming part of Exhibit 1, by the wife where she says:
[Ms L] is a liability to my marriage. I am not separated and I am not divorced and I will not sign a divorce between [Mr Duffy] and I. [Mr Duffy] and [Ms L] are breaching the marriage covenant between [Mr Duffy] and me. Both have also allowed themselves to be liabilities to me, rightful, legal inheritance of current assets (finances, investments) and real properties ([City M, B Street] home & proceeds from Brisbane, [Suburb N], home) in Australia.
I am being deprived by [Ms L] the protection, safety, and security from my husband, [Mr Duffy]. Both are liabilities to my mental, social and physical health. To be deprived of living allowances has caused so much emotional instability further hurting and destroying my inner well-being.
As, hopefully, these Reasons will reflect, where statements of fact are to be construed as findings of fact, I have done my best to describe the findings in a manner which the unrepresented wife can at least interpret even if she does not agree with the statement. I am not certain I will achieve that.
Credit
Although Mr Moxon of Counsel for the husband said I should prefer in all areas of dispute the evidence of the husband to that of the wife, I do not make a general credit finding in this matter.
In my view, understanding the emotional prism through which the wife ran her case as an unrepresented litigant and prepared her trial documents, such as they were, I would not form the view that she was dishonest or that she unfairly exaggerated her contributions or minimised the husband’s contribution any more than to some degree the husband did of the wife.
This was not a complex case in terms of the history and after being directed to do so and noting that the husband had previously, he says, and I accept, made substantial discovery to the wife, on 29 July 2022 he filed and served an affidavit providing a range of supporting documents for many of the major events of a financial nature in the relationship. As will be seen, the major dispute arises as to what the contribution was made by the wife of a non-financial nature and what weight it should be given in this case.
Chronology
The husband is now 63 years of age and has three adult children from an earlier relationship. The wife is 58 years of age and has five adult children from an earlier relationship. Since the early 1980s the husband was employed in Country E where it appears he had expertise in botany.
Sometime in September 1999, the husband commenced a relationship with the wife. From the time the relationship was commenced I am satisfied, as the husband says and I accept, he was being supportive of the wife, including assisting her and encouraging her to complete tertiary studies (including paying the fees associated with the course). At times he paid a modest amount for one of the wife’s children’s school fees.
Notwithstanding what seemed to be a supportive relationship from early on, they did not cohabitate, I am satisfied, until early 2006. By the time of cohabitation I am satisfied that certain property transactions had taken place. The wife had acquired in her name a property in the suburb of City K which will be referred to as the Suburb F Property. It was purchased for approximately … Country E Currency (for the purposes of these Reasons it is appropriate to acknowledge that an exchange of approximately … Country E Currency to AUD$1 will be used when converting current values to Australian dollars).
Furthermore, towards the end of 2005 I am satisfied that the husband purchased a property in O Street, Suburb N for $325,000 with the benefit of a mortgage of approximately $300,000. The wife had resigned from her employment in P Region in late 2005. The result of these issues are that by the time of the cohabitation, the husband was the registered proprietor of the Suburb N Property. Although he gives a lay opinion that its value was $350,000 at the time, there is no explanation as to why, having purchased the property for $325,000, some months earlier, I should regard the property as having swelled in value by 10 per cent in a matter of months. Nonetheless, nothing major turns on that point. I find that at the commencement of the cohabitation his equity in the property was approximately $25,000.
The husband says at paragraph 68 of his affidavit filed on 18 July 2022 that he had other assets at the time, most particularly, a car, boat and savings. Whilst that may have been the case, there is no corroborative evidence of the value of those assets at that time. I took the husband’s Counsel to the claim the husband made that his superannuation was worth $250,000 at the time of cohabitation. Despite requests from the Bench earlier to do their best to produce documentation to support the husband’s assertion that his superannuation at cohabitation in 2006 was $250,000, no documents had been capable of production.
Considering that after a further almost 13 years of employment the superannuation that the husband had in Country E (which he transferred to Australia in approximately mid-2019) was only worth $406,000, I am somewhat uncertain whether the level of superannuation that he brought into the relationship was as high as the $250,000 he claims. I accept he had some entitlement to superannuation at cohabitation.
Apart from the Suburb F Property that the wife owned, she had some modest superannuation due to her from the P Region government but the amount of those funds is uncertain. Importantly, between December 2006 and June 2007 the husband did receive, I am satisfied on the evidence, an inheritance from the estate of his late mother, Ms Q, totalling approximately $259,437.
The husband says, and I accept, that he contributed approximately $250,000 of his inheritance towards the mortgage over the Suburb N home such that with other payments from his employment he was able to reduce and, ultimately, discharge by mid-2007 the mortgage over that property.
Thereafter, I am satisfied the home was tenanted and the income from that property was a benefit to the relationship post-cohabitation.
In 2008, the parties married in Country E. At around this time the husband moved from working for a different company to the R Company (“the company”). The company apparently had as its directors and ownership situated in Country T. The husband was a manager. As a result of being a manager he was provided with accommodation in a compound that allowed him to live what I am satisfied was a very reasonable standard of living in Country E, assisted with domestic help that was available, of course, to the wife and at times extended members of the wife’s family.
In 2011 the parties purchased jointly a property in rural Country E in a town called Suburb D. That property was funded from the funds available to the parties including those contributed to by the husband’s employment. I say that because I am satisfied that the wife continued to work until 2012 and although in modest employment I infer that her income was also contributed into the joint needs of the parties. The level of her income was, however, substantially less than that of the husband. In that regard, during the course of the hearing it was put to the wife, and she seemed to accept, that the husband has produced taxation returns showing that his income during his employment ranged between the equivalent of $120,000 and $300,000 per annum. Additionally, the husband received bonuses.
Where the wife accepted the level of that remuneration by the husband there was no need for the husband to tender copies of his income tax returns. However, I must say on reflection he having received income (and no evidence as to the tax on that income was produced) of up to AUD$300,000 per annum, it is hard to see how the parties would not have had more money or assets when they were living in company accommodation and in modest circumstances, then the pool now reflects.
There is no real evidence of waste or exuberant spending. It is a mystery to me, therefore, why many of the assets are as limited as they are now.
I am satisfied that with the intention ultimately of returning to Australia as a couple, in late 2012 the parties jointly purchased a property at B Street, Suburb C (“the Suburb C Property”), for $570,000 borrowing $355,000 to complete the purchase.
It could not be said that it was a wonderful investment because it has been valued for the purposes of this trial, nearly 10 years after its acquisition, at less than it was purchased for. Nonetheless, that property currently occupied by the husband was regarded by the wife as joint property to which she is entitled to share.
In 2016 the husband became a manager of the S Bank in Country E for which he receives fees. I am satisfied that this year his term on the board has been extended for a further and final three year term. He receives modest fees for his role.
By mid-2018 the relationship between the parties had become somewhat estranged. There was an event on or about mid-2018 of physical violence where a knife in the hands of the wife came into contact with the husband. I use these terms generally because the wife strongly objected to any suggestion that she had stabbed the husband. I am not required in the circumstances of this case to make an absolute finding about that event save to say that it caused the husband, I am satisfied, to separate from the wife. The husband left the company home, ultimately obtained a family violence order without any opposition by the wife from a Country E court for a period of six months and included, it seems, some form of ouster order that required the wife to, ultimately, move from the company home that had been the family home. That occurred by mid-2018. The wife regarded herself as being forced out unfairly from her home although she did move then to her property in Suburb D (“the Suburb D Property”).
After separation, the husband continued to support the wife by voluntary payments initially at $200 per week increasing to $240 per week for the six months up until June 2019. In mid-2019 the husband retired from his employment. He says, and I accept, that he had been hopeful that some consultancy or further offer of employment may have arisen from his former employers but to date that has not occurred and my impression is he is not particularly worried if it occurs at all now as he is quite enjoying his retirement in Australia.
His evidence is that upon his retirement, he received $406,000 from his Country E superannuation which he had to take and then reinvest in Australia which, on financial advice, he did. With the funds available to him he paid out the balance of the Suburb C Property mortgage and purchased Motor Vehicle 2. The wife, again, says with some emotion that the vehicle purchased was meant to be a joint purchase for their joint benefit and she wants half the value of the vehicle.
In late 2019 the husband sold the property at Suburb N for $545,000 and with the net proceeds of that sale of the property $528,348 he made further investments with H Bank. These were all based on his financial advice.
Shortly after the sale of the Suburb N Property the husband commenced proceedings in the Federal Circuit Court of Australia (as it was then known) for property settlement. Those proceedings were transferred to Division 1 of the Federal Circuit and Family Court in April 2022 and the trial commenced in August 2022.
Before moving to a consideration of the pool, most of which was ultimately agreed, it is appropriate to say something about the case management of this matter. The husband in his affidavit points to the fact that there were some 14 appearances before different judicial officers in both Division 1 and Division 2 of the Court (or its predecessors) and that he says on at least six of those occasions the wife did not appear.
I was at pains to explain, in my view, to Counsel for the husband that whilst, ultimately, there may be an application pursued by the husband for costs, the wife’s behaviour during the course of the case management may find its proper reflection in s 117(2A) of the Act when considering the question of costs, which I am not doing in these Reasons.
The husband says that it was the wife’s failure to comply with directions to appear and to cooperate that caused his legal costs to swell to $119,000. That cost, which he paid from his H Bank investments, were the subject of debate as to whether they should be “added back”, in part or the whole.
I can, to some degree, understand the frustration of the husband, and no doubt his lawyers, in the difficulty in getting momentum in this case. It is not, of course, appropriate for me to make any observations about earlier case management. However, from when the came into my docket it was apparent to me that communication issues between Australia and Country E with the wife who is unrepresented were problematic. I can recall on one occasion the wife’s connection with the Court ceased when she ran out of credit on her mobile phone. It was resumed when she was able to somehow get more credit on her phone.
I was impressed, however (as difficult as the emotional status of the case was for her), by the articulate and courteous way in which the wife engaged with the Court.
It was my view that this case could not be properly determined by trying to use a mixture of audio and/or Microsoft Teams platforms with the uncertain connection to Country E. The difficulty that was presented to the Court early in my case management was that there were some difficulties in the wife being able to enter Australia under a visa (she having no permanent residential application or rights in Australia) because the domestic violence order in Country E was, it seems to some degree, an impediment to visas being granted.
Ultimately, and, again, I acknowledge at my direction but with the support of the husband not only was the wife able to come to Australia to run the trial personally before me (with the appropriate tourist visa for a period of three months), the wife indicates she wishes to remain in Australia, and the husband did offer and the wife did accept a contribution by him of $1,000 to her accommodation whilst she is in Australia.
I am absolutely satisfied from conducting the trial on 1 August 2022 that it would be much more difficult for me to have gained a true understanding of the wife and her case if she had not been able to come to Australia and present her case personally before me.
Thankfully, with the cooperation of Counsel for the husband who conducted himself most admirably, the case that had been listed for three days was completed in a day saving costs and inconvenience to everybody.
The pool
Whilst there was no particular disagreement about whether there should be one or two pools, any suggestion that, by reason of decisions such as Coghlan & Coghlan (2005) FLC 93-220, the husband’s superannuation (described as H Bank pension accounts) should be in a separate pool was not a contention by Counsel for the husband. In my view, one pool is appropriate, at the very least because the superannuation is in its payment phase (described as pension funds) and the characteristics of those entitlements at this stage are not much different than available cash. This is because the husband is retired and of an age such that he can access funds tax free. The husband has acknowledged that he can (subject to advice from his financial advisor) access any of the funds currently in his H Bank portfolio or the two H Bank pension funds.
I find the pool of assets to be as follows:
POOL
Assets
Ownership
Property
Value
Joint
B Street, Suburb C
$525,000
Joint
Contents of B Street, Suburb C
$10,000
Husband
Motor Vehicle 2
$64,100
Husband
50% of Motor Vehicle 1
$4,075
Husband
Motor Vehicle 3
$15,000
Husband
H Bank Portfolio
$352,777
H Bank Pension – Account …61
$710,425
Husband
H Bank Pension –Account …83
$267,995
Joint
Suburb D property, Country E
$279,397
Wife
Suburb F property, Country E
$186,284
Addback
Husband
Legal costs
$119,000
$2,534,053
Liabilities
Joint
Outstanding Suburb D property rates
$11,000
Wife
Outstanding Suburb F property rates
$10,000
$21,000
NET POOL
$2,513,053
There was no real dispute about any of the items in the pool other than my decision to addback to the pool $119,000 for the legal fees expended by the husband. In that regard, Mr Moxon of Counsel sought to persuade me that I should not exercise my discretion to “addback” the legal expenses of $119,000 paid by the husband from the funds available to him (but not the wife) at separation or shortly thereafter, including funds he contributed voluntarily to his H Bank pension accounts ($300,000) from the sale of the Suburb N home as noted earlier.
In the case of the wife, she did not bring an application for litigation funding and acted without representation throughout. I muse that if she had had legal representation such an application would mostly likely have been brought. Nonetheless, the husband having access to around $1.3 million used his resources to pay the costs incurred. The funds in these accounts reflected:
(a)at least superannuation accumulated substantially during the marriage (as I will discuss further below) which the husband “rolled over” into the Australian superannuation at a level of $406,000 initially; and
(b)proceeds of sale of the husband’s property at Suburb N owned from the time of cohabitation (with a modest equity but significantly swelled by the husband contributing his inheritance to discharge the mortgage in 2007).
In Chorn & Hopkins (2004) FLC 93-204 the Full Court in the well-known guidelines said at [56]–[58] that:
56.In summary, we consider that the above mentioned decisions of the Full Court establish that, while the treatment of funds used to pay legal costs remains ultimately a matter for the discretion of the trial Judge, in determining how to exercise that discretion, regard should be had to the source of the funds.
57.If the funds used existed at separation, and are such that both parties can be seen as having an interest in them (on account, for example, of contributions), then such funds should be added back as a notional asset of the party, who has had the benefit of them.
58.If funds used to pay legal fees have been generated by a party post-separation from his or her own endeavours or received in his or her own right (for example, by way of gift or inheritance), they would generally not be added back as a notional asset; nor would any borrowing undertaken by a party post-separation to pay legal fees be taken into account as a liability in the calculation of the net property of the parties. Funds generated from assets or businesses to which the other party had made a significant contribution or has an actual legal entitlement may need to be looked at differently from other post-separation income or acquisitions.
Later in Trevi & Trevi (2018) FLC 93-858, the Full Court at [41]–[42] referring to Chorn & Hopkins said as follows:
41.The passages from Chorn, quoted above, draw a distinction between legal costs met from property that would otherwise be available at trial and legal costs met from funds “generated by a party post-separation from his or her own endeavours or received in his or her own right (for example, by way of gift or inheritance)”. The proposition there advanced, that such expenditure “would generally not be added back”, also needs to be seen as a guideline informing the relevant discretion rather than determining it. A further distinction is suggested in Chorn between funds generated in that manner and “[f]unds generated from assets or businesses to which the other party had made a significant contribution or has an actual legal entitlement”.
42.The latter suggestion recognises the discretion inherent in the task and also, perhaps, that in the particular circumstances of a case, adding back sums generated post-separation in the different manners suggested might create injustice as much as it might cure it.
(Footnote omitted)
Whilst authorities establish that adding back assets to an asset pool for legal costs is discretionary, it is not, as are many other alleged addbacks, as exceptional to do so where the funds used from assets would have been otherwise available for adjustment between the parties and they have been used by one party for legal costs.
The difference, in part, lies in the initial position prescribed by s 117(1) of the Act that each party should bear their own costs subject to the Court determining (after a proper consideration of factors in s 117(2A) of the Act) that the circumstances justify departure from the usual rule.
The husband retired from employment in mid-2019 just 12 months before he commenced these proceedings. In managing his retirement capital, as he was perfectly entitled to do, he accessed that capital for living expenses and to buy Motor Vehicle 2. No argument those reasonable living expenses should be added back is available, in my view.
I am satisfied that justice and equity between the parties is better achieved by adding back the sums the husband has elected to pay to his chosen lawyers rather than for the wife to not only be required to represent herself but to, effectively, make a contribution of the husband’s costs by his use of the funds that would otherwise have remained in the pool.
Mr Moxon, to his credit, valiantly contended that the discretion should not be exercised relying on two authorities of the Full Court where the Full Court found the primary judge was not in error in those cases in not adding back for legal expenses (see Oamra & Williams (2021) FLC 94-035; Dulton& Dulton (2020) FLC 93-984). In my view, those authorities are of little assistance (and are distinguishable on their individual facts) and can be offset by numerous Full Court authorities where a primary judge did addback legal expenses and no error was found to exist. This is, essentially, the nature of a discretion.
A further, alternate proposition advanced by the husband that less than 60 per cent of the costs should be “added back” reveals, in my view, a confusion about the extent to which the court may in the future decide a question of costs because of the wife’s behaviour with the essential pathway under s 79 of the Act to be followed by the Court. To give any recognition to a reduction in the addback is to begin the examination prematurely of any available arguments pursuant to s 117 of the Act.
For these reasons, I have exercised my discretion to addback the entirety of the $119,000 the husband withdrew from the capital/investments otherwise available and acknowledged by the husband as forming part of the one pool of interests.
Contributions
I find, and it is not seriously in contest, that the husband did have more significant initial contributions at the time of cohabitation than did the wife. I referred to those contributions earlier in the chronology.
It would also be appropriate to indicate that he also brought into the relationship a significant earning capacity created from his involvement in agricultural industries in Country E since the 1980s. That earning capacity, again, was superior to that of the wife who at the time was a civil servant working for the P Region government.
I have already indicated that, in my view, the husband’s claim that he had $250,000 in superannuation at cohabitation is not sustained by the evidence. He already had only a very modest equity in the Suburb N home at its commencement although I accept the home retained throughout the relationship has (after the inheritance was contributed – a significant direct financial contribution) helped to create the retirement capital that he had hoped to achieve.
I have already made comment about the fact that his direct financial contributions from his employment and his wages and bonuses, after tax, including a company home available to him (another contribution) has not manifested in greater assets than currently exists. Nonetheless, his income was always superior to the wife and from at least 2012 (after the wife ceased outside employment), the husband’s wages and the rent from the Suburb N home was essentially the income stream for the parties’ use.
I acknowledge the post separation support the husband voluntarily made to the wife until mid-2019 and the fact that the wife has had the use of the joint Suburb D property since separation without payment of rent.
In terms of the wife’s direct financial contributions, I am not able to ascertain from the evidence what the level of that contribution from her wages was between 2006 and 2012, but would accept it was modest. I find it probably found its way into the matrimonial pool of available income or was used to pay expenses of the wife as would be reasonable.
Post separation the husband has had the use of the jointly owned Suburb C Property which must be seen, in my view, as a modest contribution by the wife to him.
It became apparent in the case that the significant dispute between the parties was the non-financial contribution made by the wife. In his submissions Mr Moxon takes me to the leading high court authority of Mallett v Mallett (1984) 156 CLR 605. I do not, of course, in any way, dispute the quotes from Mallett that he has presented in his submissions.
This is a case where there were no children of the relationship. The husband says that at different times and paid by different persons (sometimes the company and sometimes himself) in addition to the use of the company property occupied by the couple during their marriage they had the benefit of domestic help in the form of a maid and gardener.
However, I do accept the evidence of the wife that even though these persons may have been employed and engaged the husband’s fulltime employment at a high level of responsibility meant that she at times did do domestic chores. She did have an interest in gardening and attending to some of the gardening.
I am satisfied that as an indigenous Country E person, she assisted, as she claims, the husband in understanding things such as the local culture; supported his business activities including, particularly, at annual celebrations run by the company, including preparing meals, I infer, that were traditional dishes. In helping to entertain directors of the Country T company when they made visits on three or four times a year for a few days, she made a further contribution.
I am satisfied that the wife, on her evidence, which I accept, was wholly committed to the success of the husband’s role as a manager but as the husband in his affidavit identified, at times her commitment to the success of his employment meant that, from his perspective, she interfered with the business and at times created conflict with other persons employed by him, particularly some women who worked for him.
However, I believe, overall, the husband minimised the wife’s non-financial contributions as a homemaker and career supporter of him. It is fair, however, to say that in the absence of children of the relationship and notwithstanding the significant generosity the husband showed towards members of the wife’s family from her earlier relationship including supporting their education and the like, that the husband’s direct financial contributions were significantly superior.
Doing the best I can on the evidence I find that the contribution based entitlements to the pool of assets as identified by me to be 82.5 per cent to the husband and 17.5 per cent to the wife.
Section 75(2) factors
Mr Moxon on behalf of the husband says that there should be no adjustment to the contribution based entitlements for s 75(2) factors. In my view, there should be. Notwithstanding that the husband is retired, I take into account the share of the property he will have and the access to the income from his pension/superannuation in payment phase and investments.
He has, in my view, control of a significant income and accessible capital compared to that of the wife. In his Financial Statement he sets out his estimate of expenses for himself alone of about $900 per week. Those funds can only come from the income on his investments and/or withdrawal of capital.
The Bench, because of the lack of capacity of the wife to actually cross-examine the husband effectively, inquired as to the terms of cohabitation with his current partner Ms L. He indicated that she earns approximately $25,000 per annum for part-time work and that they share expenses in some way, although my impression is the majority of expenses are met by the husband.
There was a bit of confusion as to exactly what the position was because his Financial Statement made less disclosure than was required although there was a disclosure in his affidavit about his partner.
It is not proper to use the s 75(2) factors which have their relevance under s 79(4)(d) of the Act as a way of “social engineering” the contribution based entitlements. However, the wife has not worked for 10 years and whilst she may have a diploma and a past career as a civil servant, there is no evidence about when she will be obtaining work if she seeks to do so. I return to this issue later in these reasons when discussing spousal maintenance factors.
Neither party has any legal obligation to any other person and there is no evidence of any substantial health issues. Considering these factors, I am satisfied that a modest adjustment to the wife of 5 per cent (or a differential of 10 per cent) in the pool is appropriate. A 4 per cent adjustment to the wife quantifies as a payment by the husband to the wife of approximately $100,000.
What orders achieve justice and equity?
In this case the husband accepts that the wife should retain the F property and should also retain and have a transfer to her of the Suburb D property. The values of these properties total $465,681 and after allowance for outstanding rates on the properties of $21,000 this means that the wife has $444,681 in her control.
If the wife is to receive 21.5 per cent of the pool of $2,513,053 this amounts to a figure of $540,306 and would require a payment to the wife by the husband from whichever source he chooses of approximately $95,625.
By comparison, if the husband retains 78.5 per cent of the said pool (which would amount to $1,972,747) he would retain under the orders I propose to make, the Suburb C Property, the motor vehicle, and other contents and the balance of his H Bank portfolio and pension accounts less the payment to the wife.
I regard an order which, effectively, distributes the assets in this way as doing justice and equity to both of the parties.
Spouse maintenance
Where there is a claim for spouse maintenance associated with the property settlement proceedings, it is appropriate that the application be considered after a determination of the property proceedings. The wife seeks, somewhat emotionally, that the husband pay her $1,000 a week until she reaches the age of 100 which is in 2064. The wife, when challenged by the Bench, accepted that her claim was really emotional and a nonsense. Nevertheless, she says she has not worked for some years; has not applied for employment in Country E because she is going through a process of emotional “healing” after the loss of her marriage and wishes, in any event, to live in Australia where, I infer from her perspective, the costs of living would be much higher.
The wife’s Financial Statement (sworn on 16 April 2021) which forms part of Exhibit 1 is of little real assistance. Mr Moxon, Counsel for the husband, tried to clarify some of the entries. However, it quickly became apparent to me that Ms Duffy did not understand the form; confused weekly sums with annual expenditure and, as earlier noted, seemed to base her estimates on the hope of living in Australia.
By the time of the hearing, I am satisfied the wife has no real income and although she has the potential of renting the Suburb F Property at a rate of around … Country E Currency per month (approximately AUD$800 per month) once her son repairs the home which he is currently doing at the moment. That rental will not sustain her reasonable living expenses.
As a result, I am satisfied that the wife is currently unable to adequately support herself within the meaning of s 72 of the Act.
The difficulty in assessing her reasonable needs arises from a lack of probative and reliable evidence available. Although as Mr Moxon was prepared to concede if the Court was to make any order for spouse maintenance, and the husband says the Court should not, then a guide to her needs might be the husband’s voluntary payment of $240 a week (an increase over the original post-separation payment of $200 per week) which continued being paid by the husband until mid-2019. That, of course, itself is over two years ago.
Since that time, I find that the wife has relied on family support. I accept nothing like social security payments (a feature of Australian support for at least unemployed, disabled or aged residents) is available in Country E. In my view, with these proceedings at an end and where on my orders the wife receive a net payment of approximately $165,000 (after payment of outstanding rates on the two Country E properties), that fund could be used to derive income – at 2 per cent around $3,300 per annum.
In the current difficult economic situation and without any knowledge of how those funds could be invested in Country E.
She is not required, of course, to use all her capital to sustain her lifestyle and living. Where there is a duty, she being unable to adequately support herself, the husband, who I believe has the capacity, to support her for a period, should be ordered to do so.
I am satisfied the husband has the capacity to pay the sum of $200 per week. He can probably pay more but when I take into account the income the wife can obtain from the Suburb F Property, I believe her needs based at $200 per week is reasonable.
I find it would be appropriate that the husband’s liability extend for a period of two years to allow the wife to regain some form of employment in Country E. I accept that such a period may appear somewhat arbitrary but I accept that the parties having separated now some four years ago, and the wife being able to have six years from separation to find employment is not unreasonable.
I note that the wife is currently employed in some community arrangement with a local church for a modest period of about an hour a week. I have no idea whether she is receiving any money from the church.
My assessment is not based on an anticipation, which the wife firmly holds, that she will be successful in gaining permanent residency in Australia. In my view, for the foreseeable future she will continue to reside in Country E.
With a view to creating finality in these proceedings (see s 81 of the Act) I have decided that the two years spouse maintenance liability in a lump sum of $20,800 (total) should be paid.
I do not ignore and take into account in a small way the generous offer by the husband to pay the wife $1,000 towards her accommodation. This means that the payment the husband should pay to the wife is calculated as follows:
Property adjustment
$95,625
Spouse maintenance
$20,800
$116,425
Less contribution by the husband to the wife’s accommodation for the Hearing
$1,000
$115,425
which I would “round up” to a figure of $115,500.
For the reasons I give the orders which appear at the commencement of these reasons are, in my view, on the evidence at this time just and equitable to both parties.
I certify that the preceding ninety-two (92) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Baumann. Associate:
Dated: 29 August 2022
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