Egbert and Egbert

FAMILY COURT OF AUSTRALIA

EGBERT & EGBERT

[2010] FamCA 8

FAMILY LAW – PROPERTY SETTLEMENT – Adjustments for incomplete work taking into account the state of the house; small pool of assets – Significant disparity in relation to s 75(2) factors favouring the wife
FAMILY LAW – COSTS – Husband conducts trial for five days and then consents to orders basically consistent with what wife’s position always was – Appropriate to make an order that the husband contribute towards the wife’s costs and that those costs be deducted from the entitlement of the husband from the payment by the wife

Family Law Act 1975 (Cth)

Hickey & Hickey & Attorney-General for the Commonwealth of Australia (2003) FLC 93-143
Robb and Robb (1995) FLC 92-555

APPLICANT:

Ms Egbert

RESPONDENT:

Mr Egbert

FILE NUMBER:

MLC

2964

2008

DATE DELIVERED:

19 January 2010

PLACE DELIVERED:

Melbourne

PLACE HEARD:

Melbourne

JUDGMENT OF:

THE HONOURABLE JUSTICE CRONIN

HEARING DATE:

8,11,12,13,14 JANUARY 2010

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Pavone

SOLICITOR FOR THE APPLICANT:

SCHETZER CONSTANTINOU

COUNSEL FOR THE RESPONDENT:

Ms Jardine

SOLICITOR FOR THE RESPONDENT:

KELLY & ASSOCIATES FAMILY LAWYERS

Orders

That the wife pay to the husband the sum of $50,000, such payment to be made as set out hereafter.
That the payment referred to in paragraph (1) hereof be stayed pending either agreement as to costs or an assessment as to those costs as set out hereafter.
That the husband pay to the wife towards her costs determined according to Schedule 3 of the Family Law Rules 2004 in respect of the proceedings for both parenting and property matters as follows:
(a)for counsel’s fees for five days at the top rate for junior counsel pursuant to Schedule 3 together with one-half of any conference fee conducted by counsel prior to the commencement of the hearing;
(b)for the instructing solicitor’s fees determined according to Item 108 of the Third Schedule for attendances to instruct counsel during the trial and if not a full attendance then on a pro-rata basis accordingly.
(c)one-half of the solicitor’s costs of the preparation of the affidavit of the wife and the child O; and
(d)one-half of the solicitor’s costs for perusing the affidavit material of the husband being his affidavit, the affidavit of his father and the affidavit of his sister.
That upon agreement being reached as to the costs referred to in paragraph (3) hereof or the assessment referred to, the wife pay to the husband the amount referred to in paragraph (1) less any amount due to the wife for the costs referred to in paragraph (3) and any other outstanding costs made pursuant to orders as yet unpaid.

IT IS CERTIFIED:

That pursuant to Order 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel to attend.
That all outstanding proceedings be otherwise dismissed and proceedings be removed from the list of cases awaiting a hearing.
That all material be returned to the persons who provided it pursuant to any subpoena and the exhibits be returned to the parties one month from the date hereof subject to any notification relating to any appeal.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 2964 of 2008

MS EGBERT

Applicant

And

MR EGBERT

Respondent

REASONS FOR JUDGMENT

This dispute between Mr Egbert to whom I shall refer as the husband and Ms Egbert to whom I shall refer as the wife which relates only to property.
There was a significant dispute between the parties about parenting issues and it was resolved on the fifth day of the trial.
Sadly, the property in question is very modest. The size of the pool makes its division very difficult when there are so many factors to be taken into account to achieve a just and equitable outcome.
There is no question that the wife is to retain the home. The question is what amount she is to pay to the husband.

Background

The husband is a 47 year old administrator who earns $769 per week gross. He occasionally conducts a small business providing photographic pictures in the form of a picture show at family events. This business is conducted in association with event directors.
The wife is aged 47 years and a recruitment assistant who earns $784 per week gross which is supplemented by child support from the husband of $75 per week and a modest Centrelink parenting payment.
The wife has two children from a former marriage. They are O aged 20 and R aged 18. Their father died in 2005. The father’s death was associated with an illness and each of the children is potentially affected by it to the extent that they have a choice as to whether they have surgery or not. If they do not have the surgery, the prospects of hastened death are much higher.
The parties began living together in 1996. According to both, their relationship continued until separation in March 2008.
On the final day of the six day hearing, the husband was asked to explain some receipts for “board” in the Year 2000 found by the wife. He said he then lived away from the wife. In the same period, there were applications for New Start allowance payments addressed to the husband at the home of his parents. No evidence had been led by either party about that separation if in fact it occurred. The husband insisted upon calling his father in relation to some matters to which I shall refer and he indicated that for the duration of the relationship as he understood it, there was one period of two to three days where his son did live with him. The evidence of the husband about the separation, the board and the NewStart allowance was unsatisfactory and I do not accept it. Accordingly, I find that the relationship commenced in 1996 and the separation occurred on 12 March 2008.
The parties married in February 2001.
In 1996 when the relationship commenced, the two children of the wife were aged seven and five respectively.
The proceedings were predominantly about parenting issues for the child of the parties, K, born in December 2002. On the afternoon of 13 January 2010, I made orders by consent of the parties finalising all outstanding issues of a parenting nature. Those orders become relevant for a number of purposes. I shall return to them.
In respect of property, the parties agreed that the only property for division was the former matrimonial home in the western suburbs. The agreed valuation was $400,000. The other property was two motor cars totalling $7000. Little time was spent on motor cars and neither party sought to have them valued. I have concluded from the financial statement of the husband that both cars are in his possession and control. Even if I am wrong about that, I would make no further adjustment in relation to motor cars.
The only other asset that the parties have is superannuation. The evidence produced by the wife showed that her superannuation entitlement as at 30 June 2009 was $52,100 approximately. The only evidence produced by the husband was his financial statement in which it was said that he had superannuation of $26,700 approximately.
Each party was content to have the superannuation added into the pool and as such, for the one pool of assets to be divided. I was not at all comfortable about that and for reasons of equity and fairness, I propose not to treat the pool that way. Both parties have a long period of time until retirement and each has superannuation which is of little value to them at the moment other than as an investment in their futures. I shall approach the superannuation in the same way as I determine the division of the home but as will be evident, because of the vague nature of the superannuation and the absence of any significant evidence as to the parties’ respective contributions towards it in a direct way, the disparity between the parties seems to me to be reasonable and accordingly, I propose not to make any alteration.
Thus, the concentration of the parties in respect of the division of their wealth related to the home. The husband sought a payment of approximately $165,000 from the wife if she retained the home. The wife’s position was that she wanted to pay the husband $40,000 and retain the home. The respective positions come from their percentage determinations. The wife was seeking a determination of approximately 90 per cent of the value of the home and the husband was seeking a 40 per cent division of the total pool as he saw it.
This was an unusual case because of the focus upon the parenting issues. As such, I had the advantage of observing both parties over a number of days including the stress for them of cross-examination.
Until the first day of the hearing, the husband had represented himself largely throughout the process until trial. On the very first day of the hearing, the husband appeared by counsel Ms Jardine. She filed a Notice of Address for Service nominating her instructing solicitors that morning. That was perhaps unfortunate timing because it did not give the respective lawyers any opportunity to try and truncate the hearing and abridge the respective positions of the parties. That too becomes relevant below in respect of issues of costs.
The wife was represented by the same solicitors throughout and appeared during the trial by her counsel Mr Pavone.
I observed the wife to be calm and confident. Albeit keen to explain her own views about things, she answered all questions responsively. In each of the matters in which she was challenged, she provided cogent explanations for what occurred. Some of those explanations where necessary, were corroborated by her daughter O who also gave evidence. It was clear from her evidence that the wife was very focussed as a working parent on the needs of her child. She impressed as being a caring, attentive and responsive parent. On a number of occasions, it was put to the wife by counsel for the husband that she had either lied or embellished her evidence. I was not left with the impression that she was exaggerating or fabricating anything. I found the wife a truthful witness.
The husband was not in the witness box for the same length of time as the wife. His cross-examination was distinctly truncated because the parties asked for time to negotiate on the fifth day. When the parenting issues were resolved, the trial resumed and the husband returned to the witness box to be cross-examined in relation to property matters. Although the husband has clearly been affected as a result of a breakdown some years ago and has had some form of disability arising out of what he described as a stroke, I found him to be an intelligent and very focussed person. He drafted his own affidavit. His language in the affidavit was consistent with his speech in court. I conclude therefore that what he wrote was what he meant. There are a number of areas where his evidence was unsatisfactory. When cornered, he equivocated and avoided answering questions. He was defensive and at times not at all responsive. He is a litigious person. The history will show that the husband was involved in significant litigation that he personally drove. He bought the same fundamentalism to these proceedings. Whatever went wrong in the personal relationship of the parties and particularly the relationship between the husband and his two step-children, it is clear that he was not only angry with those people but very keen for the Court to know how he perceived their flaws. It was the little things that I found untruthful about the husband that convinced me that his evidence was generally tainted.
Accordingly, wherever there is a dispute between the parties about facts, I accept the version of the wife.
The standard of proof is the balance of probabilities. As such, where there is a dispute about any issue, I have determined the outcome on the basis of that standard.

The evidence relating to the property matter

When the parties commenced cohabitation, the wife owned the former matrimonial home property. Although the wife gave evidence of valuations which had no formal foundation and to which no objection was taken, it seemed clear that the equity was about $15,000. The wife was not challenged about that equity. In 1996, the property was encumbered by a mortgage to the National Australia Bank. On 25 October 1999, orders were made in this Court resolving the property dispute between the wife and her former husband. The orders included parenting issues and were comprehensive. Both the wife and her late former husband were represented by practitioners. Under the property orders, the former husband was to transfer his interest in the former matrimonial home to the wife and there was no payment to the wife by him. However, the wife was to indemnify him in relation to the mortgage encumbering the property.
It was put by counsel for the husband based upon the evidence of the husband, the wife had strategically taken advantage of her former late husband such that he had walked away from any entitlement to a property settlement. Having heard the evidence of the wife, I reject that. Apart from anything else, the equity was modest. Importantly however, the Court made the orders by consent of the parties and in the circumstances must have been satisfied that they were just and equitable.
In 2002, to enable the wife to remove her late former husband’s name from the mortgage, the mortgage was refinanced with the National Bank to the tune of $123,000. That debt was refinanced again in 2004 when the wife borrowed $200,000 by way of a line of credit. Some of that was used to discharge the mortgage. Just exactly what happened to the balance remains a mystery.
When the parties began living together in 1996, the wife was a designer. The husband was living at the home of his parents and working on a casual basis as an instructor. Just prior to moving in with the wife, the husband was retrenched by his employer.
The husband was embroiled in litigation against a Bank arising out of a dispute over a lease. He owned three real properties all of which were mortgaged. During 1997, a judgment was entered against the husband in the Supreme Court of Victoria for just over $207,000. The flow-on effect of the husband’s litigation, the mortgages on his properties and the judgment culminated in him losing all three properties. In March 2000, his debtor’s petition was accepted by the Insolvency and Trustee Service Australia. It is fair to conclude therefore that at the time shortly after the relationship began, the husband had little or no assets.
In 2003, the husband was discharged from his bankruptcy and he then began an action against the Westpac Bank. In 2006, he settled his claim with the bank for the sum of $100,000 but ultimately received $70,000 after the payment of costs to his lawyers. That sum was used to discharge the mortgage on the home.
The payment of the litigation money would have been a significant contribution by or on behalf of the husband but for the fact that fees totalling $22,642 were paid for the husband by the wife from her earnings. The evidence was unclear as to whether the husband made any contribution to those payments but the wife was not challenged in cross-examination about any of the amounts that she alleged were contributed by her. That is important because during the ten year period of the relationship and in particular, the early part, the husband’s income was negligible. As the years went by, the wife’s financial contribution was always significantly greater than that of the husband. I conclude therefore that the wife was by far the greater financial contributor in the marriage. I make that finding notwithstanding the contribution by the husband of the money that he received from the Westpac Bank.
In respect of the money received by the husband from the Westpac Bank settlement, it is clear on the evidence that the husband was embroiled in litigation and it had a significant impact on the household of he and the wife.
There is little evidence to assist me in relation to the non-financial contributions in the early years of the relationship but the evidence of the wife that I accept was that the husband was distracted by the litigation in which he was involved. It was not just the litigation relating to the Westpac Bank that the husband conducted. The wife produced a schedule of all of the matters that involved him. The wife was not challenged about that list at all. The litigation involved Work Cover claims and a variety of complaints which involved correspondence with the Banking Ombudsman, doctors, the lawyers who ultimately acted for the wife in her first marriage dispute and then Victoria Legal Aid. The list also included disputes in the Magistrates Court of Victoria in relation to a local council, the Commonwealth Bank, a body corporate and the National Australia Bank. The husband was involved in unfair dismissal litigation. The husband became embroiled in disputes with his medical practitioners over what he saw as breaches of the Privacy Act and the like. All of this information enables me to infer that the husband was distracted leaving the wife with the greater burden of managing the non-financial responsibilities within the parties’ relationship.
Counsel for the husband obliquely referred to the role that the husband played in the life of his two step-children. In Robb and Robb (1995) FLC 92-555 the Full Court (Lindenmayer, Finn and Joske JJ) held that where there was no legal duty to maintain step-children but there were clearly a parenting and financial role played, the step-parent was entitled to an allowance for his contribution. The logic of that is that the step-parent’s role alleviates the pressure and obligations upon the biological parent. In this case however, the evidence on the point was in significant conflict. In the early part of the relationship, the husband was not working to the same extent as the wife and was able to take the step-children to school, sporting events and assist in their educational needs. There was a dispute about that and having regard to the matters I earlier mentioned about credit, I find that the husband has embellished his evidence about his contribution significantly. Certainly shortly prior to the husband’s medical breakdown and thereafter, he was involved in conflict with the step-children to the extent, as he now concedes, he hates them. The husband had the opportunity to call evidence directed to his contribution with those children and how it alleviated the pressure upon the wife but at best, I find it was a nominal role. I conclude in that nominal role, he was embroiled in the various litigation and complaints to which I have just referred indicating that he had little time to be doing the matters that he asserted he did.
In or around 2002, work was commenced and undertaken to renovate the former matrimonial home. Over a period of the ensuing six years, on most Sundays, the husband and his father worked on the home. The wife paid for all materials. According to the wife and I accept, the works included the construction of a rear veranda, the enclosure of a work shed, the enclosure of a pergola, the installation of a desk in a child’s bedroom, the installation of air-conditioning, changes to cupboards and associated plastering work, conversion of a veranda into a rumpus room, a new kitchen and the conversion of a pergola into a storage ironing room.
There was considerable angst between the parties about the purpose of this evidence. Counsel for the husband thought that the wife was arguing that the husband and his father had made a “negative contribution” by the work that they did having regard to the fact that it was unfinished and remains so almost two years after separation. Counsel for the wife thought that the husband was conducting his case on the basis that the wife had deliberately sabotaged the work done to the extent that the value of the property had been diminished. It would appear that neither was the case.

The wife said that by the time of separation, the works remained incomplete. She described the works as being of a poor standard. The husband’s evidence was that at the time of separation, the renovation works were “considered ongoing” requiring “some attention”.
Both parties not only conceded the value of the property but also had no objections to me treating as evidence the report and valuation of V Property Valuers of Melbourne. The valuer wrote that the property had undergone recent extension, comprising a rumpus room and pergola and a new kitchen and a storeroom. Enquiries made show that no building permits had been issued to the property since it was built. The valuer assumed that the property did not comply with the prevailing building regulations and had not received the relevant inspection certificates or certificates of completion as provided under various guarantees and/or warranties. The building valuer wrote that those problems created a very significant detriment in terms of the marketability and market value of the property. Despite that, the valuer said that he valued it on an “as is” basis. Importantly, the valuer referred to a variety of repairs or renovations that were needed. The valuer had a registerer builder’s quote or report indicating that $43,750 worth of work plus GST needed to be done to rectify the work to comply with Australian Building Standards. That building report was prepared by N Pty Ltd.
The wife attached to her affidavit a copy of the report of N Pty Ltd and no objection was taken to that evidence being admitted. Mr D who described himself as a registered building practitioner wrote in August 2009 that he had not seen such poor workmanship in 28 years and was “very disturbed” with what he inspected. He said the works carried out were of sub-zero standard and not acceptable whatsoever. He had great concerns with all the electrical works being carried out by a non-registered electrical contractor and the same applied to the plumbing.
Counsel for the husband argued that the sum of $400,000 had been added to the pool because that was the value of the asset. There was no evidence presented to indicate that if the wife spent the sum required for the repairs that there would be an increased value. The obvious and only inference that could be drawn from the material was that the experts had concluded that the condition of the house was not appropriate and leaving aside questions of marketability, the wife had to spend that sort of money to live in the property particularly having regard to the state of the plumbing and the electrical work.
The husband called his father to indicate what work he had done and he seemed to scoff at the pictures that he was shown indicating the state of the property now as against when he left it. Whatever view he may have taken about the deterioration, there was no evidence that the wife had done anything to sabotage the work or deliberately orchestrate the pictures as what the two experts above described. The father’s evidence in respect of the building works therefore was largely irrelevant to the issue.
It was the husband’s evidence by affidavit that it was the wife who was responsible for the deterioration in the work that had been done under the renovations. This is what he said:
The applicant (the wife), over an approximately two year period, has demonstrated conclusively and decisively that of which (sic) is a desire and determination to devalue the matrimonial home and to place the said blame for its demise on my father and myself who worked tirelessly to construct, maintain and improve the premises.
The particular quote to which I have referred was preceded by a statement that the wife had had the financial capacity, savings, facilities and security for additional loans to take action to secure the premises from that which he was concerned about in the quote above. The husband was asked a number of times what he meant and whether he was accusing the wife of failing to fix the problem. He consistently evaded the question.
There is no evidence that the wife has undertaken any course deliberate or otherwise, to be destructive in devaluing the home as the husband would have me believe. There is no evidence to suggest that the wife had the financial capacity to fix the problem having regard to what I find to have been her financial status.
The husband’s evidence was that his renovation work should be seen as a contribution and to a very large extent that was so. However, I take into account that during the period of time that the work was undertaken, the wife was responsible for the management of the home and particularly the child K, as must have been the case, because the husband was working on the property.
In 2005, the relationship of the parties was in turmoil. In August 2005 the husband required medical treatment. In early 2006, he was hospitalised as an inpatient with a serious psychiatric illness. The husband’s father in evidence said that it was for depression but I find it was much more serious than that. Whatever the problem was, it placed a significant burden upon the wife because she had to care for K to a much greater extent.
During the period from the husband’s illness until separation, the wife was predominantly responsible for not only the financial but also the non-financial support of the family.
On 13 March 2008, immediately following separation, the husband withdrew from the National Australia Bank the sum of $10,200. All of that money went back to his father. Other monies were taken but they were not significant in quantum.
No argument was put that there should be an adjustment by an add-back to the pool. Rather, to the extent that the husband made a financial contribution through his $70,000 from the Westpac Bank claim, I find that he has adjusted in his own favour various sums unilaterally. For example, the payment back to his father may very well have been owed but it is clear that the wife was not consulted. Just what the payment was about was not the subject of any investigation.
In his affidavit, the husband referred to the assets at separation being the home worth $500,000, household furniture and effects at $74,000 and three motor cars. He then referred to superannuation. He annexed a list of household assets and external property assessment. In the end, counsel for the husband conceded that the only assets were those to which I have earlier referred. It becomes a relevant issue on the question of the application for costs by the wife that much of this exercise was unnecessary.
The husband said that in 2008, the wife had $14,000 in savings held by way of a trust fund for the children’s future medical expenses having regard to the “hereditary” medical condition to which I have earlier referred. The husband pointed to the subsequent statement in August 2009 indicating that the money was no longer there. The wife conceded that the money had been used to pay her lawyers. Having regard to the uncertainty of where the money came from other than perhaps the inference that it was from the wife’s income, I am unsure as to whether there could be any suggestion of that money being connected with the efforts of the parties jointly. Importantly, at no stage was it suggested by counsel for the husband that that money should be added back into the pool as a premature distribution. Nor, was it suggested by counsel for the husband that I should treat it as pre-paid legal expenses to which the husband was making a contribution.
It is important to also make the observation that in his affidavit, the husband referred to the fact that as late as December 2009, the wife had not disclosed her bank accounts. No questions about that were put to the wife. To my knowledge, no application was made prior to the trial for further discovery. Further, in cross-examination, whenever an assertion was made by the wife about monies she had spent, the husband’s refusal to accept those sums was based upon the fact that he had not seen “receipts”. No suggestion was made at any time that he had requested them and the wife was certainly not cross-examined about any of those matters.
The husband also gave evidence in his affidavit of a variety of transactions conducted by the wife but again, none of those matters were pursued in the proceedings. For example, the husband described the fact that the wife “never gave an explanation” about transfers of funds and he had now become “aware that the Applicant was using Creative Accountancy”. There is no evidence to give any foundation for such an assertion and it seems consistent with the husband’s approach to the litigation in which he blames other persons for his own ineptitude.
What was common ground was that I should follow the four step process. I propose to do that.
That is the process set out by the Full Court in Hickey & Hickey & Attorney-General for the Commonwealth of Australia (2003) FLC 93-143 at 78,386 where the Full Court said:
Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss.79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss.79(4)(d), (e), (f) and (g), (“the other factors”) including, because of s.79(4)(e), the matters referred to in s.75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case.
The first step therefore is to determine the pool of assets.

The pool

As I have earlier indicated, the financial position of the parties seems agreed. I do however propose to proceed on the basis of two separate pools. The first pool relates to the home and the two motor cars and as such totals $407,000. The second pool relates to the superannuation of the parties and totals $78,800.

Contribution

In respect of the superannuation pool, I find that the contributions are reflected in the balances in the funds. Each party made their respective financial contributions having regard to their respective earnings. The husband obviously earned much less than the wife as a result of which his superannuation fund balance was smaller. There would be a justification for an adjustment in his favour if his non-financial contributions generally within the marriage could be said to have been reflected in the fact that he freed up the wife to earn the income that she did and therefore create her significantly greater superannuation balance. In this case however, the evidence does not enable me to do that. In the early part of the relationship prior to K’s birth, the husband’s role was very much focussed on his litigation and his non-financial role within the household and the family was modest. In the period after the birth of K, the husband certainly spent a significant time fulfilling the role of a parent but so did the wife. When K was six months old or thereabouts, the parties jointly decided that the wife would return to work and K went to crèche for much of the waking hours of the day. The wife gave evidence about the fact that she prepared the evening meal the night before and the husband’s role was to complete its readiness. I accept that evidence.
Accordingly, I find that the wife’s contribution in so far as it affects the superannuation balances was much greater than that of the husband. Having regard to the future of each of the parties, the financial prospects of both parties are much the same. The wife will have the responsibility for K and carry a much greater burden for reasons to which I shall refer below.
As will be seen from the quantum, the husband has about one-half of the superannuation entitlement of the wife. More importantly, a division based upon the respective current entitlements amounts to two-thirds to the wife and one-third to the husband. In all of the circumstances, having regard to what I have just said, that amounts to a just and equitable division of that pool.
I turn then to the remaining assets which are the cars and the home.
At the start of the marriage as I have indicated, the wife had about $15,000 in equity in the home and it was effectively the seed capital that enabled the parties to have the home that there is today. Throughout the relationship, the wife’s income was greater than the husband and she supported him. The husband put in the $70,000 from his litigation but the wife also contributed to the costs along the way and the husband unilaterally decided to repay his father offsetting that contribution. The husband made a contribution by way of his role as a step-parent but having regard to the overall relationship, it was one that did him little credit.
Subsequent to the parties’ separation, the wife has had the sole responsibility for the care of K. Whether that is as a result of court orders or otherwise is irrelevant. It is a fact of life that the wife has since separation, been the primary caregiver for K and the husband’s role was minimal. That situation will be ongoing into the future having regard to the orders that I made on 13 January 2010. Whilst the husband has paid child support, the amount paid is a modest portion of the costs of maintaining K having regard to the activities in which she is involved which the husband said he would not discourage. Counsel for the wife put to the husband that it would cost the wife about $350 per week to care for K and the husband was unable to comment because he had not seen “the receipts”.
In my view, the overwhelming contribution favours the wife. I assess all of the contributions of the parties as two-thirds to the wife and one-third to the husband.

Section 75(2) factors

There is little difference between the earnings of the parties at this stage of their lives. Each earns a modest income. Counsel for the husband said that the wife had an earning capacity in excess of $130,000. That submission was unrealistic in the circumstances having regard to the state of the evidence. Bearing in mind the burden that the wife has particularly with K, I find it unlikely that the wife would ever earn that sort of money into the foreseeable future.
With the parties having similar earning capacities, one would expect them to be equitably bearing the costs of maintaining K. Such is not the case. The husband maintained that he had consistently paid what he was obliged to pay. To his credit, the wife agreed. What is important however is that during the period of some 20 months subsequent to separation, the husband managed to save over $20,000. On an income to which I have referred, he obviously lived frugally. The husband could not have done that without the agreement of his parents with whom he lives. The husband’s father said that in those months, the husband had paid board of about $80 per week on two occasions. When questioned about his personal situation, the husband said that he had been very careful with his money and saved very hard but having been told that it costs something like $350 per week for K’s living costs including activities that he encouraged, his contribution of $75 must be seen as modest by comparison to the burden borne by the wife. Because of the fact that the husband will not earn much more than what he now earns, it is clear that well into the future, the wife will bear the burden substantially of K’s care in a financial sense.
Further, on 13 January 2010, I made final orders by consent of the parties. The thrust of those parenting orders relating to K is that the husband will have limited time on an alternate weekend basis under supervision. On any view therefore, the wife will be carrying the responsibility for the time management for K for years to come. The husband said that in the future he would like to change that and have more time with K but on the basis of the evidence that I heard, it is not feasible to suggest that that might happen in the foreseeable future. As such, the wife will be carrying the non-financial responsibility for K for years to come.
Both parties agreed that the wife’s two older children suffer from an hereditary disease. The wife gave evidence that soon after the 21^st birthday of such a child, an operation of some significance needs to take place. A failure to undertake the operation is potentially fatal. The operation is of some significance requiring ongoing care for approximately six months. What the wife said was that she would take time out to look after those children. The husband was at best ambivalent about whether the child would undertake the operation acknowledging however that the failure to do so was potentially fatal. I think deep down he acknowledged the commonsense of the operation being undertaken but he did acknowledge also that the wife would be the person responsible for their care. That time out from work will be a financial drain on the wife. That is particularly important having regard to her modest income. It is most likely in my assessment that the taxpayers of Australia will be carrying a considerable portion of that expense.

Section 75(2) factors: the third step

I am obliged to take into account a number of matters in s 75(2) of the Family Law Act 1975 (Cth) (“the Act”). The following in addition to what I have just set out are my findings.
Both parties enjoy good health notwithstanding the husband’s assertion of his past medical problems. He presented no evidence to indicate that he currently suffers from any illness.
It is clear that the income of each party enables them to meet their respective commitments. As I have pointed out, the husband has the unusual benefit of very generous parents. The husband gave evidence that he is renovating a property owned by his father. For reasons which elude me, he and his father have signed a lease on that property and the husband is undertaking its renovation. Counsel for the wife did not cross-examine the husband about the logic behind that but presumably it means that the husband into the future has either a very comfortable rental property or at least some equitable interest as a result of what he has done. One way or the other, it is clear on his income that he has sufficient to enable himself to meet his commitments. I take into account that his income enables him to pay child support and still more than adequately support himself thereafter.
Neither party has responsibilities to support any other person and I make that comment notwithstanding the matters I have earlier raised in relation to the two children.
The wife is currently eligible for Commonwealth benefits having regard to her limited income but they do not affect the outcome of these proceedings.
It is important to take into account the standard of living in all of the circumstances that is reasonable having regard to the way the parties lived. However, it would appear that little has changed for each party. The wife remains in the home. Whilst the husband genuinely complained that he left the home with nothing but some clothing, he does have the benefit of a comfortable lifestyle having regard to the generosity of his parents.
There are no issues here as to the duration of the marriage affecting the earning capacity of either party. The wife’s case is and always was that she desired to maintain her role as the primary carer of K and in this case, that is the most significant factor in determining what adjustment to make.

Neither party has any other means of support from persons with whom they may be cohabiting.
It is important to take into account the terms of the order. As I pointed out earlier, in a very small pool, the division is very difficult. Having regard to the litigation and the costs of it, the significant portion of the equity of both parties in their entitlements is going to be eaten away with legal fees. There is little I can do about that. However, in a small pool, to achieve a just and equitable outcome, it is important to remember that it is not the percentage that is relevant but the underlying value.
For the purposes of s 75(2)(n) and (o) I take into account that the wife will be required to undertake the repairs to the home. I do not intend to mathematically factor in the quote for those repairs on a dollar basis but rather to take into account the need for the work to be done because of the unsatisfactory state of the house in which both the wife and K are going to live. It would not be just and equitable in the circumstances to simply say that the wife is getting an asset “as is” where on the evidence of both parties, the work was being undertaken and is incomplete.
For the purposes of s 75(2)(na), I have taken into account that the husband has been assessed for child support purposes and is diligently paying that sum which he is required to pay.
On any view of the facts, there is a significant need for an adjustment because of the size of the pool of assets and the respective obligations of the parties. It is interesting to note the husband’s acknowledgement of the justification for an adjustment. He said it should be 10 per cent. That would not be meaningful in this pool of assets. I find there is a justification for a further adjustment of 20 per cent in favour of the wife.

The fourth step

The fourth step in the process relates to whether or not the overall outcome of these proceedings may be said to be just and equitable to both parties.
The husband will be left with his superannuation as will the wife. The husband will be able to retain those assets in his possession of which he has control.
In respect of the financial adjustment having regard to the fact that the wife is retaining the home, an adjustment of the equity in the home as to 86 per cent to the wife and 14 per cent to the husband means that the wife has to pay the husband $56,000. The 86 per cent of the house in favour of the wife means that she receives an equity of $344,000. However, from that, she faces significant costs arising out of these proceedings. Whilst it is correct to say that it was her choice to be represented whilst the husband chose not to be, it is a liability that I am entitled to take into account having regard to the fact that I have found that the husband has adopted a very litigious approach both in respect of the parenting issues and property. It was therefore not unreasonable for the wife to have experienced lawyers acting for her having regard to all of the other obligations she had as a parent. Under those circumstances, whilst $344,000 worth of equity in the house sounds like a significant sum, I take into account that she has to pay to the husband the portion of his entitlement to which I have just referred, pay for the repairs to make the house habitable for building regulation purposes and also her own legal costs. If those matters are factored in, her net equity is modest in the extreme and not substantially different from that which the husband may have.
In the circumstances, I find that the outcome to which I have just referred is just and equitable in the circumstances.

Costs

In final address, counsel for the wife also sought an order that the husband contribute to the costs of the wife. No precise amount was suggested but rather that in default of agreement, an assessment should be made pursuant to the Third Schedule to the Family Law Rules 2004. Counsel for the husband in resisting an order indicated that the husband had always complied with orders and because of his “psychiatric condition” it was reasonable for him to conduct the proceedings the way he did.
Section 117 of the Act reads as follows:
(1) Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AB, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.
(2) If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
(2A) In considering what order (if any) should be made under subsection (2), the court shall have regard to:
(a)the financial circumstances of each of the parties to the proceedings;
(b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f)whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
(g)such other matters as the court considers relevant.
The section is clear. Each party should pay their own costs save in circumstances where the Court feels that there are circumstances justifying a departure from that principle. If the Court decides to depart from that principle, the factors set out in s 117(2A) must be taken into account.
The fundamental dispute in this case when the proceedings began related to the husband’s time with K. At all times, the wife’s position was that whatever time the husband was to have with K, it was to be supervised. Her proposal was that the orders be made in line with the recommendations of psychologist Mr L. The position adopted by the wife has been consistent from the time that the proceedings began. The position of the husband has never waivered. In his opening of the case, the husband was aware of the report of Mr L and indicated that he was still seeking not only unsupervised time but also in due course, a number of days at a time which would be completely inconsistent with what had occurred up until then.
The evidence in this case in the parenting dispute was voluminous. Because of the settlement of the matter, findings were not necessary. However, in circumstances where the hearing proceeded over five days predominantly on the parenting issue and the husband consented to an arrangement consistent with the position that the wife had adopted all along supported by Mr L, I find there are circumstances that justify an order for costs.
In respect of s 117(2A) I have already set out the financial circumstances of the parties. Neither party is in a strong financial position. There is little difference between their financial circumstances when I factor in their respective responsibilities. There is little difference between their capital positions having regard to those responsibilities and more importantly, the fact that the wife has substantial costs already and repairs of the house to be undertaken. As such, there is little distinction between the parties.
I have not been made aware of any Legal Aid entitlements of either party.
Section 117(2A)(c) refers to the conduct of the parties to the proceedings in relation to the proceedings including, without limiting matters, various issues associated with the preparation for trial. The husband’s affidavit material was voluminous as may have been expected in a case where a person was representing himself. However, in the preliminary hearing, I urged parties to contemplate the admissibility of evidence. Much of the husband’s evidence was vague and opinionated and considerable portions of it were struck out as being objectionable on the first day of the hearing. As such, albeit that he was represented, the husband has put the wife to considerable expense by having the first day of the hearing consider arguments about admissibility. The absence of legal representation even in a children’s matter does not necessarily obviate the necessity to ensure that the evidence is relevant.
The provision also obliges the Court to take into account whether a party has been wholly unsuccessful in the proceedings. Whilst it is clear that the husband now has the advantage of final orders where there is the possibility of alternate supervisors and a little more time with K, it is clear that he has been wholly unsuccessful by virtue of the fact that he still can only have time with K under supervision. I find in the circumstances that he has been wholly unsuccessful in the proceedings for that purpose. In addition, in the property proceedings, the outcome is very close to what the wife pursued. The husband’s initial position prior to trial was unrealistic.
I have not been made aware of any offer in writing to settle the property proceedings and the wife’s material as filed on 26 August 2009 indicated that the property settlement should be on terms as the Court saw fit. It was not until the summary of argument or outline of case was filed on the first morning of the trial that it became clear to the Court as to exactly what the wife was seeking. That approach by the wife’s lawyers was unhelpful but did not affect the ultimate outcome.
The husband’s position in relation to the property proceedings was clear from the outset. He sought a payment of $250,000 in his documentation but presumably that was on the basis that in his affidavit he referred to the value of the property as $500,000. That too was unrealistic having regard to the fact that there was agreement between the parties as to the valuation of the property at $400,000. It was only when I questioned the husband’s counsel at the commencement of the case that it became clear that he was not seeking that sum but rather a percentage which converted to a sum much less. In those circumstances, the husband has spent an enormous amount of time unnecessarily chasing an unrealistic figure.
It would be inappropriate in the circumstances however to simply say that the husband should pay the wife’s costs. Costs are not intended as a punishment but rather as a form of compensation to the party who has no choice but to continue to litigate in response. That is exactly what has occurred here. The wife has endured five days of hearing to achieve the same parenting result that she otherwise agitated for. It is very significant that the outcome was one to which the husband consented. As such, the only real dispute in this case that required determination by the Court was the property proceedings. That was done in half a day.
Notwithstanding that, costs are a discretionary matter. I do not propose that the matter simply be left to an assessment because that will place the Registrar in an invidious position if the parties do not reach agreement. Having regard to the history of the parties, it is unlikely that agreement will be reached.
Accordingly, I find that as a matter of discretion, the appropriate order for costs is that the husband contribute counsel’s fees for the wife for five days and half of any fee that counsel charges for a conference prior to the commencement of the proceedings. In addition, I find that it is just and equitable that the husband pay the wife’s instructing solicitor’s fees for attendances at the hearing (and if he did not attend on the full day then on a pro-rata basis for that day) for five days. It is also appropriate that the husband pay one-half of the solicitor’s costs of perusing the affidavit material of the husband, his father and his sister.
I also direct that the husband’s position did not waiver, the husband pay one-half of the solicitor’s costs for the wife in the preparation of her affidavit and the affidavit of the child O.
I intend to direct that the orders provide that the parties can reach agreement about what those sums mean and in the event that they are not able to be agreed, then as assessed. The assessment will be determined according to Schedule 3 to the Family Law Rules. The instructing solicitor’s fees for instructing at the hearing will be determined in accordance with Item 108 of the Scale. I further direct that the counsels’ appearances be certified as appropriate and that they be at the top of the range for junior counsel under the Rules.

I certify that the preceding Ninety Nine (99) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin

Associate:

Date: 19 January 2010

[2010] FamCA 8

19 January 2010

Key Legal Topics

Areas of Law

Family Law

Civil Procedure

Legal Concepts

Costs

Stay of Proceedings

Appeal

Remedies