FUA and FR - [2003] FMCAfam 548

FEDERAL MAGISTRATES COURT OF AUSTRALIA

FUA & FR

[2003] FMCAfam 548

FAMILY LAW – Property settlement – lack of full and frank disclosure of assets – distinction between property settlement and spousal maintenance proceedings – significance of husband’s substantive initial financial contribution – costs – husband wholly unsuccessful (even if wife not “wholly successful”) – relevance of unreasonable nature of husband’s initiating application.

Family Law Act 1975

Pastrikos (1980) FLC 90-897
Lee-Steere (1985) FLC 91-626
Ferraro (1993) FLC 92-335
Davut v Raif (1994) FLC 92-503
Clauson (1995) FLC 92-595
Whitely (1996) FLC 92‑684
Norbis (1986) FLC 91-712
Russell (1999) 25 FamLR 629
JEL v DDF (2000) 28 FamLR 1
Phillips (2002) 23 FamLR 128
Anast v Anastopoulos (1982) FLC 91-201

Mitchell (1995) FLC 92-601)
Vautin (1998) FLC 92-827
Bevan (1995) FLC 92-600

Chang v Su (2002) FLC 93-117
Mezzacappa (1987) FLC 91-853
Monte (1986) FLC 91-757
Giunti (1986) FLC 91-759
Black v Kellner (1992) FLC 92-287
Stein (1986) FLC 91-779
Weir (1993) FLC 92-338
Briese (1986) FLC 91-713
Livesey v Jenkins (1985) All ER 106
Stay (1997) FLC 92-751
Bremner (1995) FLC 92-560
Way (1996) FLC 92-702
Money (1994) FLC 92-485
Piarce (1998) 24 FamLR 377
Waters v Jurek (1995) FLC 92-635
Figgins (2002) 29 FamLR 544
Kelly v Kelly (No 2) (1981) FLC 91-108
Hogan (1986) FLC 91-704
I v I (No 2) (1996) FLC 92-625
Penfold (1980) FLC 90-800

Applicant:

FUA

Respondent:

File No:

MLM 1142 of 2003

Delivered on:

10 December 2003

Delivered at:

Melbourne

Hearing Dates:

8 & 9 December 2003

Judgment of:

Walters FM

REPRESENTATION

Counsel for the Applicant:

Ms M.L. Smallwood

Solicitors for the Applicant:

Pearsons

Counsel for the Respondent:

Mr T. Serra

Solicitors for the Respondent:

Dimitra Iatrou & Associates

ORDERS

The wife do pay to the husband the sum of $65,197.00 (“the Payment”) on or before 9 March 2004 (“the Date”), together with interest at the rate of 7.5% — such interest to commence and be calculated from
8 February 2004 (“the Interest Commencement Date”) if the Payment has not been made by then.
Contemporaneously with the Payment (together with any interest due pursuant to paragraph 1 above) the husband sign all documents and do all such acts and things to transfer to the wife, at her expense, all his right, title and interest in the property at 5 Latimer Place, Gladstone Park, Victoria, Volume 8707, Folio 351 (“the Real Property”).
In the event of default on payment (including interest, if any) by the Date, then the Real Property be forthwith sold altogether out of court (“the Sale”), — with the wife to be appointed trustee for sale — and the proceeds be applied as follows:
(a)firstly, to pay costs, commissions and expenses of the Sale;
(b)secondly, to discharge the registered mortgage and any other encumbrance on the Real Property; and
(c)thirdly, the balance remaining as to 30% to the husband and 70% to the wife.
The husband pay the wife’s costs of and incidental to these proceedings fixed in the sum of $4,000.00 ¾ such sum to be paid by way of offset against the Payment or the proceeds of the Sale (as the case may be).
The husband retain the motor vehicle in his possession for his sole use and benefit.
With effect from the date upon which the wife becomes the registered proprietor of the Real Property, the wife do indemnify the husband against all payments and liability pursuant to the ANZ Mortgage registered against the Real Property (“the Mortgage”) and all apportionable rates, taxes and outgoings (“the Rates”) with respect to the Real Property; and until that time, or until the Sale is completed pursuant to paragraph 3 above, the husband do pay as and when they shall fall due, and be otherwise responsible for, all payments and liability pursuant to the Mortgage and the Rates, (and do indemnify the wife and keep her indemnified from all debts, liabilities and obligations relating to or arising out of the Mortgage and the Rates).
Each party be entitled to retain for his/her sole use and benefit all goods and chattels currently in his/her respective possession, with the furniture, chattels and effects in the Real Property being deemed to be in the possession of the wife.
The wife indemnify the husband and keep him indemnified from all debts, liabilities and obligations relating to or arising out of the AGC Hire Purchase liability, and from all actions, proceedings, costs, claims and expenses in respect thereof.
Each party have liberty to apply in relation to mechanical and procedural aspects of the Sale referred to in paragraph 3 above (including such matters as the appropriate sale price).
Until further Order, the husband be restrained by injunction from encumbering or further encumbering the Real Property, and from increasing the amount owing pursuant to the Mortgage in any way whatsoever.
Each party be solely entitled, to the exclusion of the other, to all superannuation entitlements presently owned by such party.
The husband indemnify the wife and keep her indemnified from all debts, liabilities and obligations relating to or arising out of:
(a)all claims (of any nature whatsoever) by the husband’s father FA and brother FE, or either of them, regarding the Real Property (including, but not limited to, any claim that they or either of them may have pursuant to or arising out of the unstamped agreement dated 15 April 1991, a copy of which is attached to the husband’s affidavit sworn 4 December 2003);
(b)all debts allegedly owing by the husband to the husband’s said father and brother, or either of them; and
(c)the ANZ credit card,
and from all actions, proceedings, costs, claims and expenses in respect thereof.
Within 14 days, the husband do sign all such documents and do all such acts and things as shall be necessary to cause and permit his father FA and brother FE to provide a release to the wife in the usual form relating to all their alleged claims as equitable owners or part owners of the Real Property, or otherwise in relation to the Real Property (“the Release”).
Subject to paragraph 15 below, if:
(a)the husband fails or refuses to provide the Release within the said period of 14 days; and
(b)the wife has not received the Release by the Date,
then:
(c)the Date and the Interest Commencement Date (as referred to in paragraph 1 above) be extended until such time as the Release has been provided to the wife, and the default provisions (as referred to in paragraph 3 above) be suspended accordingly; and
(d)the wife have liberty to apply for further or other orders relating to the effective implementation of the orders made on this day (and, in particular, further or other orders for the purpose of causing or enabling the wife to become the registered proprietor of the Real Property upon the making of the Payment [together with interest, if appropriate]).
Notwithstanding the provisions of paragraph 14 above, if:
(a)the husband fails or refuses to provide the Release within the said period of 14 days; and
(b)notwithstanding the fact that she has not received the Release, the wife advises the husband’s solicitors, in writing, that she does not wish to delay the implementation of paragraphs 1 and 2 above and that she wishes to make the Payment (together with interest, if appropriate) in accordance with paragraph 1 above,
then:
(c)the provisions of the orders made on this day shall apply, and shall be given full force and effect, as if paragraph 14 above did not exist.
The wife have exclusive occupation of the Real Property until either:
(a)she becomes the registered proprietor of the Real Property (at which time she will be entitled to exclusive occupation in any event) ; or
(b)the completion of the sale of the Real Property pursuant to paragraph 3 above.
Pursuant to Rule 21.15 of the Federal Magistrates Court Rules2001, the Court certifies that it was reasonable for the parties to employ an advocate.
The parties’ competing applications for property settlement otherwise be dismissed.
The proceedings be removed from the list of cases awaiting final determination.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
MELBOURNE

MLM 1142 of 2003

FUA

Applicant

and

Respondent

REASONS FOR JUDGMENT

(Ex Tempore)

Before the court are the parties’ competing applications for property settlement. There were also before the court proceedings in relation to children’s issues. Those proceedings settled prior to the commencement of the trial, and I made final orders at that time.
The Reasons that I am now delivering are provided on an ex tempore basis after fairly limited time was made available to me to review the file and the evidence, and to consider my determination. Given that the Reasons are being delivered on such a basis, I reserve the right to amend them as I see fit and to expand upon or add to them (where addition is necessary for the purpose of clarification).
The documents relied upon by the parties were as follows:
a)The husband relied upon his application filed on 25 February 2003, his financial statement filed on 25 February 2003 and his trial affidavit filed on 4 December 2003. At an earlier stage in the proceedings the husband also relied upon affidavits sworn by his father and his brother, but during the course of the proceedings I was advised by his counsel that those affidavits were no longer relied upon (because the husband no longer sought the orders that were set out in his application and his affidavit), and that the husband no longer sought to rely upon the provisions of the agreement which is annexed to his trial affidavit.
b)The wife relied upon her outline of case document (which was handed up to the court or otherwise filed on 8 December 2003), her amended response dated 11 June 2003, her financial statement filed on 9 April 2003 and her trial affidavit handed up or otherwise filed on 8 December 2003.
The background to this matter is not complicated. The husband was born in April 1965. The wife was born in January 1966. They married in April 1991. They did not cohabit prior to the marriage. There are two children of the marriage, J, born in January 1992, and Z, born in April 1994. The parties separated in August 2002. J and Z have lived with the wife, in the former matrimonial home, since the date of separation.
The husband was employed by the same employer throughout the vast majority of the period of these parties’ cohabitation. Indeed, he was employed by the same employer until September 2000, when he was retrenched. The evidence reveals that, at that time, he received approximately $29,000.00. He then remained unemployed until the parties separated in August 2002, and continued to be unemployed until he was able to obtain employment in February 2003.
Between the date of separation and February 2003, the husband worked on a casual basis as a pizza maker. I shall refer later to the evidence as to his income during that period. It may be that he also worked in that capacity after his retrenchment and prior to the date of separation. The husband’s employment history is set out in paragraph 25 of his affidavit. In paragraph 25.4, the husband deposes to the fact that he currently works as an import airfreight clerk for Pacific Network (also known as Global Logistics).
The husband conceded during the course of the proceedings that, when regard is had to his normal working hours and available overtime, his approximate annual income is $40,000.00.
In paragraph 25.5 of his affidavit, the husband states that the wife had two jobs in or about 1989 or 1990. He says that she was working as a waitress in a pizza shop, and was also working as a shop assistant on a full-time basis at Fossey’s. He deposes to the fact that, shortly after he met her and before the marriage, she ceased working and did not return to work.
The wife denies the husband’s description of her work history. In paragraph 19 of her affidavit, the wife deposes to the fact that after leaving year 10 at high school she was employed as a cash register assistant for two years. She says that she then left that job and commenced employment on a full-time basis with Fossey’s. She was later promoted within that employment to the role of assistant manager. She worked at Fossey’s for approximately seven years and ceased working shortly prior to the marriage.
The wife also deposes to having worked as a waitress in a pizza shop on a part‑time basis for approximately two years prior to marriage, and states that, after the marriage, she worked at a supermarket in Niddrie on a part‑time basis — and continued to work on that part‑time basis until two weeks before the birth of the parties’ first child. Since that time the wife has not returned to work. She says that she did not return to work because of the husband’s insistence that he wanted her to remain at home and raise the children. That assertion is denied by the husband.
I find that the wife’s version of events as described in paragraph 19 of her affidavit is correct, and is to be preferred to the description provided by the husband. I shall return to the husband’s credibility later in these Reasons. Suffice it to say at this stage, however, that my finding is that the wife did work on a part‑time basis between the date of the marriage and a short time prior to the birth of their first child. For whatever reason, the wife has not been employed outside the home since that time and her contributions have, therefore, been principally in the role of homemaker and parent.
After the date of separation in August 2002, the wife and the children continued to reside in the former matrimonial home. The husband moved elsewhere. The husband continued to pay the mortgage instalments in respect of the mortgage encumbering the former matrimonial home, and he also continued to pay the rates in respect of the home. The husband could have arranged to pay less than the full amount of the rates (due to the fact that the wife was receiving social security benefits and was therefore entitled to a discount), but, for reasons that are not clear, the husband was not willing to avail himself of that arrangement. He continued to pay the rates in a higher amount than might otherwise have been necessary.
From the date of separation until the husband commenced employment in February 2003, he paid minimal child support (amounting to some $6.00 per week). After he obtained employment, the rate of child support increased, but the evidence reveals that the husband took steps to reduce the quantum of child support that he would otherwise be obliged to pay by drawing to the attention of the Child Support Agency the non-agency payments that he was making — being the mortgage instalments and rates relating to the former matrimonial home, and perhaps other figures as well. I do not suggest that the husband was not entitled to take the steps that he did. If the Child Support Agency properly assessed the matter, then that is not a process that I am minded to review in any way, and I am not invited to do so by the parties.
The reality is, however, that since the date of separation the husband has contributed a very modest amount indeed towards the maintenance of his children. The burden of feeding and clothing them, and otherwise financially supporting them, has fallen on the taxpayer.
The general approach that should be adopted by the court in relation to a property settlement application has been described in a large number of cases (see, for example, Pastrikos (1980) FLC 90-897, Lee-Steere (1985) FLC 91-626, Ferraro (1993) FLC 92-335, Davut v Raif (1994) FLC 92-503, Clauson (1995) FLC 92-595 and Whitely (1996) FLC 92‑684). The court must first identify the assets of the parties. It must then attribute a value to each of those assets — usually as at the date of the hearing. Thereafter, it must assess the extent of each party’s contributions under the various subheadings described in section 79(4) of the Family Law Act. Finally, the court must consider the financial resources, means and the needs of the parties, and the other matters set out in section 75(2) so far as they are relevant.
An adjustment of the amount due to each party by way of contribution is then made by reference to section 75(2) factors. It is not essential, however, that such an adjustment take place. Generally speaking, an adjustment is made because one party has greater needs and the other has stronger means.
In relation to the contribution of the parties under section 79(4) generally, it has been held that a global approach will usually be more convenient than an asset by asset approach, although the application of an asset by asset approach does not of itself amount to an error of law (see Norbis (1986) FLC 91-712).
Section 75(2) is concerned with the process of arriving at a just and equitable result. It follows that there may be circumstances in which the justice and equity of the case, and the specific provisions of section 75(2), support an adjustment in a party’s favour for matters which cannot comfortably be described as being of economic or financial significance.
Under section 79(2) the court is required to be satisfied that the order to be made is just and equitable, and not simply that the underlying percentage division of the net value of the parties’ assets is appropriate.
In other words, in the consideration of whether the overall result of property settlement proceedings is just and equitable, it is the justice and equity of the actual orders and not the percentage distribution which must be considered (see in this regard Russell (1999) 25 FamLR 629 at 644, JEL v DDF (2000) 28 FamLR 1 at 31 and Phillips (2002) 23 FamLR 128 at 141). There are other cases that say the same thing.
The distinction between property settlement and spousal maintenance orders was drawn in Anast v Anastopoulos (1982) FLC 91-201. Relevantly, the Full Court distinguished a party’s entitlement to a property settlement based on contributions and the general factors arising under section 75(2), on the one hand, and a party’s entitlement to be maintained within the meaning of section 72, on the other. It held that an entitlement to an order under section 79, including the section 75(2) factors, should be assessed before the question of entitlement to maintenance within the meaning of section 72 is considered.
In some cases, a party’s property settlement entitlement under section 79 will exhaust that party’s claim for spousal maintenance. In other cases, a maintenance entitlement under section 72 may remain even after property entitlements under section 79 have been determined.
In Clauson, the Full Court was at pains to clarify the distinction between a claim for spousal maintenance properly so called and the component of a section 79 property settlement order which attracts the terms of section 75(2). After describing the general approach which should be adopted in property settlement applications, the Full Court went on to say (at page 81,907):
The result of the section 79 order may be such that the applicant for maintenance can no longer be described as “being unable to support himself or herself adequately” because he or she may have sufficient assets which, with or without income arising from the investment or use of those assets, will provide an adequate level of support. It also defines the other party’s capacity to meet any orders.
The court has broad powers in considering what may be a proper or appropriate order for spousal maintenance. Although periodic maintenance is the most common form of spousal maintenance, section 80 makes it clear that, in exercising the powers under Part VIII of the Family Law Act, an order may take a variety of different forms. It follows that the court may make an order for periodic spousal maintenance, lump sum spousal maintenance or a combination of both. In making such an order, it is to be borne in mind that maintenance is not confined to a subsistence level of support. It is intended to provide such assistance as is reasonable in the circumstances of the particular case (see Mitchell (1995) FLC 92-601).

In Vautin (1998) FLC 92-827 the Full Court said:
In the exercise of the power to order lump sum maintenance caution is usually appropriate because of the apparent finality of lump sum orders and the difficulties in making predictions into the future. However, it is a power, the exercise of which may be appropriate in particular cases. It may be ordered, amongst other reasons, to meet non-periodic expenditure for the maintenance of that person where there is an established need and a capacity to pay. It is not confined to cases of the capitalisation of periodic maintenance and/or where periodic maintenance is unlikely to be paid because of concerns about the capacity or willingness of the liable parent to pay.
The requirements of an award of spousal maintenance are set out in a number of cases that have been summarised in Bevan (1995) FLC 92-600.
I do not propose to deal further with the issue of spousal maintenance in these Reasons. I am not dealing with that subject further because, although the wife’s application suggests that she seeks orders for lump sum spousal maintenance and property settlement, the reality is that the wife’s case was not presented to me as one which included a claim for either lump sum or periodic spousal maintenance in the strict sense. Quite why that approach was taken by the wife, I do not know. But the reality is, as Ms Smallwood (for the husband) argued before me, that if the court were to now open the door to a claim for spousal maintenance, then — having regard to the manner in which the case was conducted before it — some form of injustice may result to the husband. He could fairly argue, in my view, that he had been taken by ambush.
In those circumstances, I do not propose to deal with any application for lump sum or periodic spousal maintenance. That said, it is clear that the application before me is an application for property settlement only. Clearly, the orders that I propose to make will deal with that subject only and will leave open the question of spousal maintenance. The wife will have the right to pursue any claim that she may be minded to pursue in that regard at some later time.
I turn now to consider the property of the parties at trial. During the course of the trial the identity and value of most of the items of property were agreed. There are, however, in my view, certain difficulties associated with identifying the value of the asset pool. Suffice it to say that it was agreed that the principal asset of these parties is the former matrimonial home, and that its present value is $250,000.00. That property is subject to a mortgage in respect of which $30,000.00 is owing. The parties’ net equity in the home, therefore, is $220,000.00. I am conscious, however, that if the orders sought by the husband were to be made, then the house would have to be sold and selling costs would necessarily follow. Clearly, in such a scenario the pool of assets would be smaller than would otherwise be the case. Nevertheless, for the purposes of these proceedings, and as invited by the parties, I have treated the net equity in the property as being worth $220,000.00.
The next item of property is the husband’s superannuation. Strictly speaking, superannuation, and particularly the superannuation entitlements of a person of the age of the husband and the wife in these proceedings, is not property. Nevertheless, the parties have agreed that superannuation entitlements are to be treated in this case as if they were property, and that is what I propose to do. The value of the husband’s superannuation entitlements is $27,000.00. The next item is the Subaru motor vehicle in the possession of the husband. That has a value of $14,000.00. The next item is the wife’s superannuation entitlements. They have a value of $2,000.00, and I propose to deal with them in the same way as I have dealt with the husband’s superannuation entitlements.
The husband has moneys in an ANZ account. The current balance, according to the evidence before me, is $2,337.00. I have heard nothing which could persuade me not to take these funds into account. They are moneys available to the husband, and hence they should form part of the pool of assets available for distribution between the parties. In any event, these funds apparently derive from an amount of approximately $10,000.00 held by the husband at the time of separation.
I take into account, as well, the liabilities that appear in the parties’ financial statements, and which appear to have been agreed by the parties. Although I have some discomfort as to why the husband has not paid out the credit card debt of some $4,500.00 that currently exists, the reality is that the court must take the parties’ assets and liabilities as it finds them to be. Thus, I take into account the fact that the husband has a credit card debt of $4,500.00, and that the wife has a liability to AGC of some $750.00 according to her financial statement.
Accordingly the asset pool is as follows: the house, with a net equity of $220,000.00; husband’s superannuation $27,000.00; husband’s car $14,000.00; wife’s superannuation $2,000.00; husband’s savings $2,337.00; husband’s credit card liability $4,500.00; and wife’s AGC liability $750.00. When I add those assets and liabilities together, it is clear that the total net value of the assets presently available for distribution between these parties is $260,087.00.
There is, however, a caveat to be placed on that finding. I am concerned about the husband’s credibility for a number of reasons. Firstly, I paid careful attention to him and to his demeanour as he gave his evidence, and in my view, he is not a witness of truth. But there are other factors that are also of concern to me. In the husband’s original, initiating application — being his application filed on 25 February 2003 — the husband sought certain property orders. He sought that the former matrimonial home be transferred to him. He also sought that he indemnify the wife against certain liabilities, the first being the mortgage over the home, and the second being an alleged debt to the husband’s father and brother, totalling approximately $184,000.00.
The husband sought that he retain for his own use and benefit the motor vehicle worth $14,000.00. He also sought that the parties be equally responsible for the credit card debt. I have found that debt to be $4,500.00. Finally, the husband sought that he pay the wife 20 per cent of the net value of the real property after deduction of the mortgage and the debts that he referred to. On that basis, the net equity in the former matrimonial home would have been $36,000.00. If the husband had been successful in the orders that he then sought, he would have been obliged to pay the wife $7,200.00, less one half of the debt in respect of the credit card; in other words, just under $5,000.00 by way of property settlement. And he would have retained the former matrimonial home.
True it is that one of the orders sought by the husband was that there be a splitting order in relation to his superannuation. I do not know whether the husband intended that order to be a fifty-fifty split, or some other percentage split. But even if it were to be a fifty-fifty split, the result could have been that the wife would have received another $13,500.00 at the time that she retired, or, if she was fortunate, perhaps at some time earlier than that.
The factual background to the alleged debt to the husband’s father and brother, although dealt with in the husband’s affidavit (and the affidavits of his father and brother), was later not relied upon. The alleged debt, and their alleged interest in the former matrimonial home, did not (in the end) require consideration in the proceedings before me.
In my view, when regard is had to the orders originally sought by the husband, it can be seen that his approach was unreasonable in the extreme.
In support of that initial application, the husband sought to rely upon the unstamped agreement which is attached to his affidavit. At the end of the day, and to his credit, he did not rely or seek to rely upon that agreement. But there can be no doubt that there were serious problems regarding the admissibility, validity and enforceability of that agreement. It was unclear and uncertain in the extreme, and the husband’s own evidence during the course of his cross‑examination demonstrated that he had an incomplete and inadequate understanding of the precise terms of the alleged arrangement with his father and brother. The husband’s reliance upon the agreement, however, was not abandoned until the second day of the trial. At that time, not only did he abandon his reliance upon the agreement, but he instructed his counsel to acknowledge that there was no debt to his father or his brother.
I advised Ms Smallwood at the commencement of the trial that, in my opinion, this court (being a court of law and equity with similar power to exercise accrued jurisdiction as other Federal Courts) had power to make orders or declarations relating to the legal and equitable ownership of the former matrimonial home, and the existence, validity and enforceability of the alleged debts to the husband’s father and brother — which orders and declarations would be binding on the father and brother (who were well aware of the proceedings and had sworn affidavits in support of the husband’s case). The father and brother were in the precincts of the court, and I invited Ms Smallwood to obtain their instructions as to whether they were minded to intervene in the proceedings. Ms Smallwood availed herself of that opportunity and, after a short adjournment, advised the court that the husband’s father and brother were aware that any orders that the court may be minded to make regarding the validity and enforcement of the written agreement and alleged debts would be binding on them — but that they nevertheless chose not to intervene. According to Ms Smallwood, they were content for their case to be presented through the husband, and to be involved in the proceedings as witnesses only.
In my view, the purported reliance by the husband on the alleged agreement was nothing more than, to use the colloquial expression, a ‘try on’. I find that the husband’s father and brother have no valid or enforceable legal or equitable interest in the former matrimonial home.
I also take into account, in relation to the husband’s credibility and approach to these proceedings, the fact that at the commencement of the proceedings he saw fit to agree to comprehensive parenting orders. He then proceeded to press for orders which would have the effect of compelling the sale of the former matrimonial home and, with little emotion, told the court that if the house has to be sold, then the children can live with him so that he can exercise what I think he described as his “parental rights”.
Procedural orders were made in this matter approximately six months ago. One of the procedural orders was to the effect that the husband file an affidavit of discovery. Whether the wife was also required to file such an affidavit makes little difference — having regard to the fact that her financial position was not seriously in issue in the proceedings. The husband did not comply with the order to file an affidavit of discovery until shortly before the trial.
The evidence reveals that at the time of separation the husband had something in the order of $10,000.00 in an ANZ account. That account appears to have been reduced from $10,000.00 down to the figure that I have referred to earlier, being $2,337.00. It may well be that the husband has had to rely upon the funds in that account to support himself since the date of separation, or to pay the mortgage, or to pay rates. But on the first day of the trial the husband was given an opportunity by counsel for the wife to locate and bring into court all documents in his possession relating to that account. On the second day of the trial he advised the court that he had been unable to find any documents relating to that account. The only document that he produced was a printed transaction slip available from an automatic teller machine.
I do not believe for one moment that the husband was unable to find any documents relating to that account. The husband’s evidence in his form 17 was to the effect that his average weekly income from casual employment was $250.00. During the course of his oral evidence the husband varied that, and eventually suggested that his average weekly income from casual employment was $50.00 only. I do not believe him. I do not know what the husband’s income was during that period. It may well be that the ANZ documents would have shed light on that subject.
I find, therefore, that the husband has not been open and frank in relation to his financial position. He may have undisclosed assets. They may be of modest dimension only, but I do not know. I do not know whether he has moneys available to him from the funds in his possession at the time of separation, or moneys available to him from his earnings since that time. But it is clear in my mind, and I find, that the husband has not made a full and frank disclosure of his financial position, and that the likelihood is that there are other assets in his possession which have not been disclosed in these proceedings.
The manner in which the court can deal with a finding such as the one that I have just made was dealt with by the Full Court of the Family Court of Australia in Chang v Su (2002) FLC 93-117 — and, relevantly, at pages 89,195 through to 89,199. I do not propose to read out all the passages on those pages, but it is important to record that the court made mention of earlier cases such as Mezzacappa (1987) FLC 91-853, Monte (1986) FLC 91-757, Giunti (1986) FLC 91-759, Black v Kellner (1992) FLC 92-287, Stein (1986) FLC 91-779, Weir (1993) FLC 92-338, Briese (1986) FLC 91-713, Livesey v Jenkins (1985) All ER 106. I refer, as well, to the Full Court’s decision in Stay (1997) FLC 92-751, and in particular at page 84,130 where the Full Court said:
There is a positive obligation on a party in proceedings for property settlement to make a full and frank disclosure of all relevant financial affairs. Once it is clear that there has been a nondisclosure the court should not be unduly cautious in making findings in favour of the innocent party.
I have already found that the husband, in my view, is not to be believed on his oath, and that he has failed to make a full and frank disclosure in relation to his financial position. It follows that I need not be unduly cautious in making findings in favour of the innocent party. Clearly, the innocent party in this regard is the wife.
The question arises, however, as to how I deal with this matter. There are a number of options that are available to me. One option is to treat the asset pool as somewhat larger than I have described it earlier in these reasons. Another option, and the one that I consider is most appropriate, is to deal with this matter as a factor under section 75(2) of the Family Law Act — relevantly, under section 75(2)(b) or section 75(2)(o).
Again, I do not suggest that the husband has a vast amount of undisclosed assets, but I have considerable discomfort in concluding that the only assets available to the husband (and thereby, indirectly to the wife), are those that I have referred to earlier in these Reasons.
I turn now to consider the contribution issues. There was no period of cohabitation between these parties prior to marriage. At the date of marriage the husband owned the former matrimonial home. He had acquired it for something in the order of $83,000.00 or $86,000.00. Whether or not he received financial assistance from his brother or father is irrelevant. The fact of the matter is that he brought into this marriage an unencumbered home — and it was the home in which the parties, and later their children, resided during the whole of their relationship.
That was not all that the husband owned. His evidence is to the effect that he also owned a motor vehicle, and the wife does not deny that fact in her affidavit. There can be no doubt, therefore, that the husband’s initial financial contribution was very significant indeed. It was most certainly not matched by the wife in any sense at that time, and it would appear that she brought no assets of any value into the relationship.
During the course of the marriage the wife worked on a part-time basis for the short period to which I have already referred. Beyond that, she made no direct financial contributions. The husband was the breadwinner in the family and he worked on a full-time basis throughout the whole of the marriage until he was retrenched in September 2000. At the time of his retrenchment he received the moneys to which I have referred earlier, which moneys were used for the benefit of the family until the date of separation in August 2002.
There can be no doubt that the husband’s direct and indirect financial contribution to the acquisition, conservation and improvement of the assets vastly outweighed that of the wife. He brought the house into the marriage, and he brought his income into the marriage as well. After separation the situation is that the wife continued to be homemaker and parent and was unemployed outside the home. I have already referred to the very modest contribution made by the husband in the form of child support, but he did make a financial contribution after the date of separation by paying the mortgage and by paying the rates. I am conscious, however, that the mortgage was taken out for some $40,000.00, and that it had two purposes:
a)The first was to enable renovations to be undertaken in respect of the kitchen in the former matrimonial home. Funds utilised for that purpose have obviously been reflected in the current value of the home.
b)The second purpose of the loan was to enable the husband to purchase the car which he now drives, and which he will be retaining.
To the extent that the husband has continued to meet the mortgage repayments after the date of separation, it needs to be borne in mind that certain of the benefits from payments of that nature were derived directly by him, and that he was the party who retained the car and had the use of it.
In a non-financial sense (or, perhaps, an indirect financial sense) the husband has clearly made a contribution in that he has permitted the wife and children to continue to reside in the former matrimonial home since the date of separation. That is a factor which I take into account in these proceedings.
Insofar as contribution under section 79(4)(c) is concerned (being contribution to the welfare of the family) —I find that the wife was the principal caregiver for the children, and the principal homemaker as well. I reject the husband’s implied criticisms of the wife as contained in his affidavit and I prefer the evidence of the wife in that regard where it conflicts with that of the husband. I note, as well, that she was not cross examined in relation to this subject.
Nevertheless, it is important to record under this heading that the wife did not and does not have a driver’s licence, and accordingly it fell to the husband to do the driving, and to take the children to places that the wife would not have been able to take them. In that regard, the husband has made an important contribution to the welfare of the family — beyond what may be regarded as a “usual” contribution where both parties are able to transport the children in their own vehicles.
The husband’s contribution to the family was not criticised by the wife in any form and I find that he made an appropriate contribution by assisting her within the home where appropriate. Nevertheless, I find that the wife’s contributions as homemaker and parent considerably outweighed those of the husband during the course of the cohabitation. After the cessation of cohabitation, it is clear that the wife’s contributions in this regard have outweighed those of the husband by an even greater degree. That is so because the wife has had the day-to-day care of the children.

I do not seek to minimise the husband’s contributions to the welfare of the family. Nevertheless, the reality is that the court must not give “token weight” to a factor of this nature as it relates to the wife’s efforts. Such contributions must be recognised in a substantial way. No presumptions should be applied, and I apply none. I take into account all the evidence that has been presented to me, including the evidence of the contributions made by the parties after the date of separation.
The question of how to deal with the totality of the contribution factors is always a difficult one. The court is obliged to compare like with unlike. I am conscious that the husband’s initial contributions (being, in effect, the former matrimonial home and his car) were substantial. In Bremner (1995) FLC 92-560 and Way (1996) FLC 92-702, the Full Court cited with approval a passage from the Judgment of Fogarty J in Money (1994) FLC 92-485 as follows:
greater or lesser extent by the later contributions of the other party even though those later contributions do not necessarily at any particular point outstrip those of the other party.
In Piarce (1998) 24 FamLR 377 (at 385), the Full Court sought to put Fogarty J’s quotation “in its correct context”. After referring to an expanded passage from Fogarty J’s Judgment in Money — in which His Honour said that “…the respective contributions of the parties over a long period of marriage “offset” the significance which might otherwise be attached to a greater initial contribution by one party” — the Full Court said:
In our opinion, it is not so much a matter of erosion of contribution but a question what weight is to be attached, in all the circumstances to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution…regard must be had to the use made by the parties of that contribution.
In the present case, the period of cohabitation was over 11 years, and a further year has passed since the separation occurred. At the date of the marriage the husband already owned the former matrimonial home, and it was unencumbered. The present asset pool includes the former matrimonial home, which now has a value of $250,000.00 (but is subject to a mortgage in which $30,000.00 is owing). I am conscious that I must have regard to “the use made by the parties of the husband’s greater initial contribution,”[1] and I do take into account and weigh in the balance the fact that the husband’s “greater initial contribution” comprised, in essence, an unencumbered home in which the parties resided until separation, and in which the wife and the children have resided since separation. I take into account the fact that the husband was continuously engaged in paid employment from the date of the marriage until he was retrenched in 2000, and that he utilised his earnings for the benefit of the family. In addition, he made a contribution as a parent (and, perhaps, as a homemaker as well) — although his contribution in this regard was minor when compared to that of the wife.
[1] See Piarce (1998) 24 FamLR 377 at 386
The wife’s financial contribution was minimal compared to that of the husband. She was engaged in part time paid employment from the date of the marriage until shortly before the birth of the parties’ first child. She was primarily engaged in attending to domestic tasks and the care of the children. Her contribution in this area was greater that that of the husband, and I take it into account in a real and substantial way.
It is fair to conclude that the parties’ contributions during the period of cohabitation were approximately equal. There remains, however, the husband’s greater initial financial contribution and the wife’s greater contribution in caring for and supervising the children since the date of separation (in the context of the husband having made a very minor financial contribution in the form of child support, but having paid the mortgage instalments and rates in respect of the former matrimonial home whilst the wife and children occupied the property).
In my opinion, the husband’s initial financial contributions favour his case significantly. The wife’s post separation contributions outweigh those of the husband and favour her case. Overall, and doing the best that I can with the evidence available to me, I conclude that an appropriate division of the parties’ assets available for distribution between them on the basis of contribution alone is something between 35 per cent and 40 per cent to the wife, and the balance to the husband. It would be intellectually dishonest of me to conclude that one of those figures is more appropriate than the other. Accordingly, I conclude that, on the basis of contribution alone, the split should be 37.5 per cent to the wife and the balance to the husband.
So far in considering the question of property settlement I have addressed the question of contribution only. Clearly the court is entitled to make an adjustment to a party’s property settlement entitlement on the basis, amongst other things, of both parties’ respective means and needs. The Family Court has been critical of shorthand terms being used to describe this last step in the property settlement exercise, preferring to refer to it simply as “the section 75(2) factors” (see Clauson (1995) FLC 92-595). In essence, section 75(2) is concerned with the process of arriving at a just and equitable result (see Waters v Jurek (1995) FLC 92-635).
I do not propose to restate all the evidence in this case as it may relate to the section 75(2) factors. Suffice it to say, however, that the more important aspects of that evidence are these:
a)There appears to be no doubt that the husband is in good health and that he has the capacity to earn an income in the order of $40,000.00 per annum. The evidence is that the wife is in good health. The husband asserted that she was not, but there was no real testing of this evidence, and as I have found that the wife is the more credible witness, I accept her evidence that she is in good health and that she has some capacity to earn an income. The difficulty from the wife’s point of view is that she has not engaged in paid employment since shortly prior to the birth of her first child. She appears to have no work skills.
b)Having seen and heard the wife in the witness box, I have little doubt that she will have difficulty finding employment. In particular, she will have difficulty finding employment that will pay anything more than a very modest wage. I am not confident that the wife will be able to obtain employment in the near future or that she will be able to maintain employment even if she finds a job. The wife presented as withdrawn, uncertain and lacking in confidence, she does not appear to have any specific work skills and she does not drive. The wife has the care of the two children of the parties. That, in itself, will limit her opportunity to find suitable paid employment.
c)
I have already referred to the child support paid by the husband to date. It would appear that the husband has availed himself of entitlements that he has under the Child Support legislation.

I have already found that I have considerable discomfort with the husband’s credibility and his lack of disclosure regarding his financial position. Having seen and heard the husband, I am confident that he will pay no more than the absolute minimum of child support that he is obliged to pay. I find that he is likely to utilise any provisions of the child support legislation that may be available to him to minimise his obligation to pay child support. That is something that the husband may be perfectly entitled to do, but I can and do make a finding that the husband is never likely to be generous insofar as child support is concerned. There can be no doubt that the wife is likely to have to endure a relatively lengthy period of financial hardship following the making of these orders.
d)The wife, through her counsel, pressed upon me the need to remain living in the former matrimonial home. She argued that the home is close by the children’s school, and that her support base, as it were, is in that area. The wife does not drive, and hence it is important, in my view, for the children to continue to live near their present school — if that can be achieved having regard to the requirements of justice and equity. Nevertheless, the law is clear in this regard and the court cannot award the wife assets such as a former matrimonial home simply because it considers that she has a need for such an award. Many cases make that clear, but it has been emphasised most recently in the Full Court decision in Figgins (2002) 29 FamLR 544. Property settlement proceedings are not needs based. If in order to do justice to both parties the award requires the sale of a home or a farm (or any other asset), then, if that result cannot be avoided, then it must occur[2].
e)I reiterate what I said earlier regarding the fact that no spousal maintenance application is properly before the court.
f)The wife has the responsibility for the care and control of the two children of the marriage who are under the age of 18 years. She is obliged to support herself as best she can and, of course, to support the children. The husband also has an obligation to support himself and the children.
g)Each of the parties has superannuation entitlements. I have referred to them earlier. They have, however, been taken into account as assets in this case, by agreement. Nevertheless, having regard to the ages of the parties it will be a long time before they gain access to those funds.
h)I take into account the need to ensure a standard of living that is reasonable in all the circumstances for these parties. This factor is related, of course, to the wife’s strong desire to retain the former matrimonial home. If the former matrimonial home is sold, and it may have to be pursuant to these orders, then the wife will, it seems to me, necessarily have to endure a reduced standard of living. Of course, the husband may also have to endure a reduced standard of living — because in a case such as this there are simply not enough assets to go around.
i)It would appear that neither party is cohabiting with any other person.
j)The only other fact or circumstance which, in my opinion, the justice of the case requires me to take into account is the matter to which I referred earlier — being the possibility (indeed, I find, the probability) of the husband having undisclosed assets. I have concluded that, taking all the evidence into account, the most appropriate way of dealing with this factor is to modestly increase what would otherwise have been the section 75(2) adjustment to take account of that unknown or uncertain factor.
[2] see, for example, Guthrie (1995) 19 FamLR 781 at 794-5
On the basis of the evidence before me and having regard to the fact that the purpose of the section 75(2) adjustment is to assist the court with the process of arriving at a just and equitable result, I conclude that an adjustment should be made to the wife’s entitlement, that is, her entitlement on the basis of contribution alone, by increasing that entitlement from the percentage that I indicated earlier (being 37.5 per cent) by a further 20 or 25 per cent. Once again, I find that it would be intellectually dishonest of me to choose one of those two percentages in preference to the other and, accordingly, I select 22.5 per cent as being the appropriate adjustment to take account of the section 75(2) factors.
It follows that, in my opinion, the wife is entitled to 60 per cent of the net assets available to these parties. The net asset pool is $260,087.00. 60 per cent of that figure is $156,052.20. If the wife is to retain the former matrimonial home, her superannuation and the debt of $750.00, then it is clear that she will be retaining assets to the value of $221,250.00. If that is to be the case, then it is clear that the wife will be obliged to pay to the husband the amount of $65,197.80.
One of the more difficult aspects of the present case is the modest size of the asset pool. The Full Court has cautioned against assessing the section 75(2) factors in percentage terms only, without considering the real impact of any proposed adjustment; in other words, the real impact in money terms is the critical issue (see Clauson). In the present case, the section 75(2) adjustment equates to an additional $59,519.00 to the wife. I am satisfied, for the reasons that I have expressed earlier, that that adjustment is proper — even taking into account, as I do, the differential between the value of the assets to be retained by the wife and the moneys to be received by the husband if the wife is able to pay out his interest in the former matrimonial home.
I am satisfied that the property settlement orders that I propose to make are just and equitable to both parties in all the circumstances.

Costs

The question of costs in family law proceedings is dealt with in section 117 of the Family Law Act. A trial judge, or in this case federal magistrate, has a broad discretion in costs matters, and the Full Court has said that it will not intervene unless the order is plainly unreasonable. Indeed the court has an almost unlimited jurisdiction in relation to costs, although any costs order must be just (see Kelly v Kelly (No 2) (1981) FLC 91-108, Hogan (1986) FLC 91-704 and I v I (No 2) (1996) FLC 92-625).
It is not the law that a costs order can only be made in a clear case. Thus, although a finding of justifying circumstances is an essential preliminary to the making of a costs order, there is no additional or special onus on an applicant for an order for costs. Although the general rule is that each party shall bear his or her own costs, that general rule is expressed to be subject to section 117(2), and must yield whenever the trial judge, or in this case federal magistrate, finds that there are circumstances justifying the making of a costs order (see Penfold (1980) FLC 90-800).
I turn now to consider the factors referred to in section 117(2A) of the Family Law Act — which are the matters to which I must have regard in considering what order, if any, should be made under subsection (2) of section 117.
The first matter is the financial circumstances of each of the parties to the proceedings. I have made findings regarding this subject in the matter before me. The reality is that the husband has an earning capacity of some $40,000.00 per annum and that the wife has a very limited earning capacity, if any earning capacity at all. True it is, however, that the effect of the orders that I have made is that the wife will receive 60 per cent of the asset pool as I have described it, and that the husband will receive 40 per cent. Nevertheless, I made certain findings regarding the husband’s credibility, and the possibility (or probability) of there being other assets which have not been disclosed. I cannot be certain as to the precise nature of the husband’s financial circumstances.
Legal aid would appear to be an irrelevant consideration in this case.
Section 117(2A)(c) requires the court to have regard to the conduct of the parties in the proceedings in relation to the proceedings. The effect of this provision is that the court must have regard to the parties’ conduct as litigants. I have already made reference to the manner in which the husband conducted the proceedings, to his failure to file the affidavit of discovery in accordance with previous orders, his failure to provide documents which, in my view, were in his possession, and his failure to make full and frank disclosure of his financial position.
I take into account, as well, the unreasonable nature of the orders which the husband sought in his initial application. I also have regard to the fact that, until the second day of the trial, the husband purported to rely upon the unstamped agreement attached to his affidavit, notwithstanding the problems associated with that course of action. Whether that is directly relevant under section 117(2A)(c), or perhaps relevant under section 117 (2A)(g), makes little difference. The reality is that the nature of the case changed radically between the first and the second days of the hearing.
In my view, there is much to be said for Mr Serra’s submission that the husband’s approach as reflected in his application, and his reliance upon the agreement and the alleged arrangements that he had with his father and brother, would have made the negotiation of this matter to resolution much more difficult than it should otherwise have been.
Section 117(2A)(d) is not a relevant consideration.
Section 117(2A)(e) requires the court to consider whether any party to the proceedings has been wholly unsuccessful in the proceedings. In relation to this consideration, it is clear that the court is not limited to situations in which it can be demonstrated that one party was 100 per cent unsuccessful in obtaining the orders that they seek. The court can have regard, for example, to the fact that one of the parties was wholly unsuccessful in pursuing certain issues. Nevertheless, it is my view that the husband has been as close to being wholly unsuccessful in the proceedings as it is possible to come. The wife does not have to be “wholly successful” in the orders that she seeks for the husband to be “wholly unsuccessful” in his claim. In my view, this is a very relevant factor in these proceedings.
Further, if one has regard not necessarily to the proceedings in toto but to the question of the issues presented to the court, then it is clear that, insofar as the primary issue contained in the husband’s initiating application is concerned (namely, the financial arrangements between the husband, his father and his brother) the husband’s abandoning of that approach — including any assertion of a debt — means that he was, in my view, wholly unsuccessful in relation to that issue.
Section 117(2A)(f) would not appear to be a relevant consideration in this case. No offers have been brought to my attention.
Under section 117(2A)(g) I have already made reference to the husband’s credibility, and the manner in which he conducted these proceedings in the broadest sense.
In my view, and taking into account all these matters as I am obliged to do, it is appropriate that a costs order be made. I have heard what each counsel has had to say regarding the quantum of the costs order. I am not satisfied that the amount sought by the wife is an appropriate amount. I am conscious that the trial itself occupied approximately one day of the court’s time. I am also conscious that the affidavit material prepared on behalf of the wife was not voluminous and that in relation to the specific issue to which I have referred, being the effect of the purported agreement that the husband had with his father and brother, the wife said little more than that she did not know anything about the arrangement.
Nevertheless, I have formed the view that an appropriate quantum of costs in this case, having regard to the scale in this court, is $4,000.00. I propose to order that the husband pay the wife’s costs of and incidental to these proceedings fixed in the sum of $4,000.00, such sum to be paid by way of offset against the amount that the wife would otherwise have to pay the husband pursuant to these orders.

I, Paul O'Halloran, certify that the preceding eighty seven (87) paragraphs are a true copy of the Reasons for Judgment of Walters FM

Associate:

Date: 15 December 2003