Fumic & Fumic
[2022] FedCFamC2F 654
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fumic & Fumic [2022] FedCFamC2F 654
File number(s): NCC 240 of 2019 Judgment of: JUDGE KEARNEY Date of judgment: 23 May 2022 Catchwords: FAMILY LAW – enforcement of financial orders – failure to comply with obligations in final property adjustment orders - varying those orders pursuant to s 79A - undefended hearing – indemnity costs order appropriate – just and equitable Legislation: Family Law Act 1975 (Cth)
Federal Circuit and Family Court of Australia Act 2021 (Cth)
Federal Circuit and Family Court (Family Law) Rules 2021 (Cth)
Cases cited: Black & Kellner [1992] FamCA 2
Colgate-Palmolive Company v Cussons Pty Limited [1993] FCA 536
Cross & Beaumont [2008] FamCAFC 68
Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania v Fish) [2005] FamCA 158
Medlon & Medlon (No. 6) (Indemnity Costs) [2015] FamCAFC 157
Munday v Bowman (1997) FLC 92-784
Nada and Nettle (Costs) [2014] FamCAFC 207
Division: Division 2 Family Law Number of paragraphs: 71 Date of hearing: 18 May 2022 Place: Newcastle Counsel for the Applicant: Ms L Ticehurst Solicitor for the Applicant: Kilpatrick Hatton Solicitor for the Respondent: No appearance ORDERS
NCC 240 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS FUMIC
Applicant
AND: MR FUMIC
Respondent
ORDER MADE BY:
JUDGE KEARNEY
DATE OF ORDER:
23 MAY 2022
THE COURT ORDERS THAT:
1.Pursuant to r 1.31 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (‘the Rules’), service of the Initiating Application filed 22 April 2022, the affidavit of Ms Fumic filed 22 April 2022 and the financial statement of Ms Fumic filed 22 April 2022 are dispensed with.
2.Pursuant to section 79A(1)(b) and 79A(1)(c) of the Family Law Act 1975 (Cth), Orders 8 to 11 inclusive of the orders pronounced on 16 December 2021 (as amended on 24 January 2022) (‘the Final Orders’) be set aside (noting such orders provided for a superannuation split from the Respondent Husband to the Applicant Wife) and in lieu thereof, the Husband shall pay to the Wife an additional sum of $15,000, such sum to be paid out of an adjustment from the proceeds of the sale of the B Street, Suburb C property, as set out below.
3.Order 5 of the Final Orders be set aside.
4.Effective immediately, the Applicant Wife has the right to occupy the property located at B Street, Suburb C in the State of New Sought Wales (‘the B Street, Suburb C property’), to the exclusion of the Respondent Husband, however, if, after seven (7) days, the wife has been unable to exercise exclusive occupation of the B Street, Suburb C property, the wife shall notify the court of same and pursuant to rule 11.56 of the Rules, a Warrant of Possession shall issue forthwith in the following form:
(a)To the Marshal of the Court, to all officers of the Australian Federal Police and to all officers of the police force in the State of New South Wales for the purpose of giving effect to the Order of this Court requiring MR FUMIC to vacate the property situate at and known as B Street, Suburb C, in the State of New South Wales, being the whole of the land more particularly described in Certificate of Title Folio Identified … are directed with such assistance as they may require and if necessary by force to enter upon the property and cause MR FUMIC to vacate the property and vacant possession of the land to be given to MS FUMIC.
5.The Wife, MS FUMIC ('the Wife') is appointed sole trustee ('the Trustee') for the sale of the property situated at B Street, Suburb C, in the State of New South Wales being the whole of the land contained in Certificate of Title Folio Identifier … ('the B Street, Suburb C property').
6.The Trustee shall do all acts and things necessary and sign all documents (on her behalf and on behalf of MR FUMIC ('the Husband') as may be necessary to cause the B Street, Suburb C property to be listed for sale by private treaty, subject to the following provisions:
(a)The Trustee list the property for sale by private treaty with D Real Estate, Suburb E.
(b)The list price of the property shall be as determined by the Trustee.
(c)The sale price shall be as determined by the Trustee.
(d)The Trustee may incur advertising expenses in respect of the proposed sale up to an amount of $5,000.
(e)The Trustee may incur costs for cleaning, repair, or maintenance for the presentation of the property for the purposes of sale to such amount as may be advised by the agents acting on the sale but not exceeding $5,000
(f)The Trustee shall appoint Kilpatrick Hatton Solicitors to act for the vendor on the sale.
(g)The Trustee is authorised to enter into a contract for sale in such terms as advised by the solicitors acting upon the sale.
7.Upon completion of the sale of the property the proceeds of sale shall be distributed as follows:
(a)In full payment to discharge the mortgage/s secured over the B Street, Suburb C property and the Suburb F property (pursuant to Order 3 of the Final Orders) by the Commonwealth Bank of Australia.
(b)To pay the expenses of the sale including agent's commission and legal costs and disbursements.
(c)To pay rate and other applicable adjustments noting that any such payments shall be reimbursed 100% to the Wife in accordance with Order 9.
(d)In reimbursement of the Trustee for costs of advertising, if any.
(e)In reimbursement of the Trustee for the costs of cleaning, repair and maintenance incurred pursuant to these Orders, and costs charged by the Sheriff to remove the Husband from the B Street, Suburb C property (as applicable).
(f)To pay in division of the balance of the sale proceeds between the parties, in such a manner that:
(i)The Wife receives 71% of the matrimonial asset pool (not including superannuation) with such funds to be paid to Kilpatrick Hatton Solicitors on behalf of the Wife.
(ii)The Wife receives reimbursement for any adjustment or amounts owed to the Trustee/Wife pursuant to Orders 7(c), 7(d) and/or 7(e), with such sum to be paid to Kilpatrick Hatton Solicitors on behalf of the Wife.
(iii)The Wife receives the sum of $15,000 to be paid to Kilpatrick Hatton Solicitors on behalf of the Wife pursuant to Order 2.
(iv)The Wife receives the sum of $20,000 pursuant to Order 1 of the Federal Circuit Court of Australia Orders dated 2 July 2020 and to facilitate this payment, such sum to be paid to Kilpatrick Hatton Solicitors on behalf of the Wife.
(v)The Wife receives the sum of $21,102.38 pursuant to Order 13.
(vi)The Husband receives the balance less any reimbursement to the Wife for any adjustments that were the Husband's responsibility pursuant to Order 9 and to facilitate this payment, such sum shall be paid as the Husband directs in writing.
8.To calculate each party's entitlement identified at Order 7(f) above, the matrimonial asset pool (not including superannuation) consists of:
(a)The Wife retaining property assessed as being valued at $425,282
(b)The Husband retaining property assessed as being valued at $26,169; and
(c)The balance of the sale proceeds remaining after the deductions identified at Orders 7(b) to 7(e) herein.
9.Until completion of the sale of the B Street, Suburb C property, the Husband must do all acts and things necessary and make all the following repayments as they fall due and indemnify and keep indemnified, the Wife in respect of any liability to make such payment:
(a)Council and water rate instalments
(b)Household building and contents insurance
(c)The payments in respect of the mortgage in favour of the Commonwealth Bank secured over the B Street, Suburb C property
10.Pending compliance with Order 4 and thereafter, the Husband is hereby restrained from damaging the property by demolition, fire or by any other deliberate act or omission or otherwise interfering, disrupting, or impeding the sale of the B Street, Suburb C property.
11.Forthwith following compliance with Order 4, the Husband is hereby restrained from accessing or entering the B Street, Suburb C property or causing any third party to access or enter the property on his behalf.
12.Pursuant to Section 106A of the Family Law Act 1975 (Cth), a Judicial Registrar of the Federal Circuit and Family Court of Australia is authorised and permitted to sign a Discharge of Mortgage Authority and all such documents as may be necessary to comply with Order 1 of the Final Orders upon such documents being produced to the Court by the Wife/Trustee or her legal representative.
13.The Respondent Husband pay the Wife's costs of and incidental to this Application on an indemnity basis fixed in the sum of $21,102.38.
THE COURT CERTIFIES THAT
14.Pursuant to r 12.28 of the Rules, this matter reasonably required the attendance of Counsel.
THE COURT NOTES THAT:
A.Rule 11.56 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) provides that:
(a)an order for the possession of real property may be enforced by a Warrant for Possession only if the respondent has had at least seven (7) days’ notice of the order to be enforced before the Warrant is issued.
(b)a court may issue a Warrant for Possession authorising an enforcement officer to enter the real property described in the Warrant and give possession of the real property to the person entitled to possession.
(c)if a person other than the respondent occupies land under a lease or written tenancy agreement, a Warrant for Possession may be issued only if the court gives permission.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Fumic & Fumic has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE KEARNEY
INTRODUCTION
These proceedings invite me to make orders pursuant to Parts VIII and XIII of the Family Law Act 1975 (Cth).[1]
[1] Unless otherwise specified a legislative reference shall be to the Family Law Act 1975 (Cth).
The applicant is MS FUMIC (‘the wife’) and the respondent is MR FUMIC (‘the husband’).
There were three issues for consideration –
(a)Whether the final property adjustment orders made by the Court on an undefended basis on 16 December 2021 (as amended on 24 January 2022) (‘the Final Orders’) should be varied pursuant to s 79A (‘the s 79A proceedings’);
(b)Whether orders should be made to enforce the Final Orders to (in effect) permit the sale of the B Street, Suburb C (‘the B Street, Suburb C property’);
(c)Whether the husband should pay the wife’s costs on an indemnity basis.
A preliminary issue was whether the hearing should proceed undefended.
The genesis for the proceedings was the failure (some might call it contempt) of the husband to comply with the Final Orders for the sale of the B Street, Suburb C property and the transfer of part of his interest in superannuation to the wife.
For the reasons that follow, I intend to grant the relief sought by the wife in her two substantive applications and to make an indemnity costs order payable by the husband to the wife out of his share of the sale proceeds of the B Street, Suburb C property (‘the Husband’s share of the sale proceeds’).
THE EVIDENCE
The wife read/relied on the following documents:-
(a)Application-Enforcement filed 16 March 2022
(b)Affidavit of Ms Fumic filed 16 March 2022
(c)Affidavit of Ms G filed 16 March 2022
(d)Initiating Application filed 22 April 2022
(e)Affidavit of Ms Fumic filed 22 April 2022
(f)Financial Statement of Ms Fumic filed 22 April 2022
(g)Affidavit of Attempted Service of Mr H filed 3 May 2022
(h)Exhibit “A” – Superannuation Information document dated 2 May 2022
(i)Exhibit “W1” – the wife’s Case Outline dated 18 May 2022
(j)Exhibit “W2” - Minute of consolidated orders sought
(k)Exhibit “W3” – Kilpatrick Hatton Enforcement Proceedings Costs Agreement dated 9 February 2022
(l)Exhibit “W4” – Lauren Ticehurst Costs Agreement dated 8 February 2022
(m)Exhibit “W5” – various tax invoices of Kilpatrick Hatton’s fees
(n)Exhibit “W6” – various tax invoices of costs of Counsel’s fees
It was submitted to me that the husband had not been served with any of the documents filed on 22 April 2022, being the initiating application, the wife’s affidavit and her financial statement. In those circumstances, I have not read the wife’s affidavit nor her financial statement. I have had limited regard to the initiating application insofar as I have noted that, relevant to the dispute, the husband has been served with a minute of order which substantively reflects the relief contained within the initiating application.
Whilst the exhibits were not served on the husband, in the context of his non-compliance with court orders (including his failure to appear) and the wife having foreshadowed to him what her relief would be (including costs in the order of $20,000), I am satisfied that he has not been prejudiced by not having seen the exhibits.
In order to consider the various applications, it is necessary for me to set out a short chronology of the parties’ circumstances.
CHRONOLOGY
On 2 July 2020, with the consent of the parties, the Court ordered that –
1. The respondent, Mr Fumic, pay the applicant’s costs of the Application in a Case filed on 31 March 2020 in the amount of $20,000.00 NOTING that the costs are to be paid out of the respondent, Mr Fumic’s portion of any property settlement between the parties.
Relevant to these proceedings, the Final Orders included the following orders:-
1. Within five (5) business days from the date of these Orders, MR FUMIC (‘the husband’) must take all necessary steps to lodge with the Registrar-General in New South Wales a Lapsing Notice for the removal of Caveat number … from the title of B Street, Suburb C in the state of New South Wales and more particularly described by folio identifier … (‘the B Street, Suburb C property’), at his expense, and for that purpose:
(a) The husband must do all acts and things necessary to direct Salerno Law Pty Ltd to remove Caveat number … and notify the wife’s solicitors in writing that he has done so.
(b) In the event Salerno Law Pty Ltd do not withdraw the caveat within three (3) business days of the husband’s request pursuant to Order 1(a), then within a further seven (7) days the husband must appoint a Conveyancer/Solicitor to act on his behalf for the purposes of lodging a lapsing notice for the removal of Caveat number … and the husband must do all things and sign all other documents necessary to effect the removal of the Caveat.
(c) The husband must in writing notify the wife’s solicitors of the Conveyancer/Solicitor he appoints pursuant to Order 1(b) within three (3) business days of their engagement.
2. In the event the husband refuses or neglects to comply with Order 1(a) and/or Order 1(b) above (within the time frames required in those orders for him to do so), THEN a Judicial Registrar of the Newcastle Registry of the Federal Circuit and Family Court of Australia is hereby appointed pursuant to s106A of the Family Law Act 1975 (Cth) (‘the Act’) to sign or execute such document on behalf of the husband upon lodgement of such document and the filing of an affidavit of a solicitor on behalf of the requesting party as to the said neglect or refusal.
……
5. That within 42 days of the date of these Orders, the wife and husband must do all acts and things and sign all necessary documents to effect the sale of B Street, Suburb C in the state of New South Wales and more particularly described by folio identifier … (‘the B Street, Suburb C property’) and for that purpose, the following shall apply:
(a) D Real Estate, Suburb E shall be appointed as the real estate agents for the sale.
(b) Kilpatrick Hatton Solicitors shall have conduct of the sale of the B Street, Suburb C property, the costs of and incidental to their appointment to be borne in equal shares by the parties as and when they fall due.
(c) The list price shall be as agreed between the parties within 28 days of the date of these Orders or failing agreement, by the real estate agent following a request to make such a nomination by either party.
(d) The sale price shall be as agreed in writing by the parties or failing agreement they are to accept any offer to buy the property that is at least 95% of the list price and within seven (7) days they are to sign all necessary documents and do all acts to give effect to this agreement/acceptance.
(e) The parties must:
(i)Execute all documents requested by the real estate agent for the sale of the B Street, Suburb C property;
(ii)Execute the Contract for Sale;
(iii)Execute all other documents necessary to complete the sale;
(iv)Execute all documents necessary to complete the discharge of the mortgage in favour of the Commonwealth Bank of Australia being mortgage no. …;
(v)Co-operate in every way with the real estate agent in relation to the sale of the B Street, Suburb C property;
(vi)Do all things necessary to achieve the highest possible price for the B Street, Suburb C property; and
(vii)Provide vacant possession of the B Street, Suburb C property no less than two (2) business days prior to settlement.
(f) That until completion of the sale of the B Street, Suburb C property, the husband must do all acts and things necessary and make all the following payments as they fall due and indemnify and keep indemnified, the wife in respect of any liability to make such payments:
(i)Council and water rate instalments;
(ii)Household building and contents insurance;
(iii)The payments in respect of the mortgage in favour of the Commonwealth Bank secured over the B Street, Suburb C property;
(iv)Keep the B Street, Suburb C property in a neat condition and in good repair (having regard to its present condition);
(v)Ensure that he does everything necessary to achieve the highest possible price for the B Street, Suburb C property;
(vi)Make a key available and permit inspection of the B Street, Suburb C property by agents and prospective purchasers at all reasonable times.
(g) Subject to the husband complying with Order 5(f), he shall have the exclusive right to occupy the B Street, Suburb C property to the exclusion of the wife, with the husband to vacate the property no less than two (2) business days prior to settlement pursuant to Order 5(e)(vii).
(h) Pending compliance with these Orders, the parties are restrained and an injunction shall issue prohibiting them from taking any steps to sell, transfer, lease, mortgage, or in any way encumber, partition, subdivide, or otherwise deal with the B Street, Suburb C property without the prior consent of the other party in writing
(i) Upon the B Street, Suburb C property being sold pursuant to these Orders, the parties must do all acts and execute all documents to cause the proceeds of sale of the B Street, Suburb C property to be disbursed in the following manner and order of priority:
(i)In full payment to discharge the mortgage/s secured over the B Street, Suburb C property and the Suburb F property by the Commonwealth Bank of Australia.
(ii)To pay the expenses of the sale including agent’s commissions and legal costs and disbursements.
(iii)To pay rate and other applicable adjustments including those sums for which the husband is responsible to pay pursuant to Orders 5(f)(i), 5(f)(ii) and 5(f)(iii), noting that any such payments that are otherwise the husband’s sole responsibility, shall be reimbursed 100% to the wife in accordance with Orders 5(i)(iv)A. and 5(i)(iv)C.
(iv)To pay in division of the balance of the sale proceeds between the parties, in such a manner that:-
A.the wife receives 71% of the matrimonial asset pool (not including superannuation) plus reimbursement for any adjustments owed to the wife pursuant to Order 5(i)(iii) and to facilitate this payment, such sum shall be paid to Kilpatrick Hatton Solicitors on behalf of the Wife; and
B.the wife receives the sum of $20,000 pursuant to Order 1 of the Federal Circuit Court of Australia orders made 2 July 2020 and to facilitate this payment, such sum shall be paid to Kilpatrick Hatton Solicitors on behalf of the Wife;
C.the husband receives the balance less any reimbursement made to the wife for any adjustments that were the husband’s responsibility pursuant to Order 5(i)(iii) and to facilitate this payment, such sum shall be paid as the husband directs in writing;
NOTING that to calculate each party’s entitlement identified at Order 5(i)(iv) above, the matrimonial asset pool (not including superannuation) consists of:-
A.the wife retaining property assessed as being valued at $425,282;
B.the husband retaining property assessed as being valued at $26,169; and
C.the balance sale proceeds remaining after the deductions identified at Orders 5(i)(i) to 5(i)(iii).
…
8. In accordance with section 90XT(1)(a) of the Family Law Act 1975 (Cth) (“the Act”) whenever a splittable payment within the meaning of section 90XE of the Act becomes payable to or on behalf of the husband, MR FUMIC, from his interest in Super Fund J:
(a) MS FUMIC is entitled to be paid the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001(Cth) using a base amount of $15,000; and
(b) MR FUMIC’s entitlement to payment out of his interest in Super Fund J and the entitlement of such other person to whom a splittable payment may be payable, is correspondingly reduced by force of this Order.
9. The Trustee of Super Fund J (“the Trustee”) shall do all acts and things and sign all such documents as may be necessary to:
(a) Calculate, in accordance with the requirements of the Family Law Act 1975 (Cth) and the Family Law (Superannuation) Regulations 2001 (Cth), the entitlement created for MS FUMIC by Order 8 of these orders; and
(b) Pay the entitlement whenever the Trustee makes a splittable payment out of MR FUMIC’s interest in Super Fund J.
10.Orders 8 to 11 inclusive have effect from the operative time and the operative time is four (4) business days after the service of a certified copy of the Orders on the Trustee.
11.That Orders 8 to 11 bind the Trustee of Super Fund J
For ease of reference –
·Orders 8 to 11 made 16 December 2021 (as amended on 24 January 2022) are referred to as the ‘super splitting orders’; and
·Order 1 made 16 December 2021 (as amended on 24 January 2022) is referred to as ‘the Salerno caveat’.
As part of the judgment pronounced on 16 December 2021 I recorded the parties’ respective financial circumstances as follows –
107.The wife says she is good health and continues to work as a self-employed allied health worker, earning a taxable income of $43,264 for the year ended 30 June 2020 and $26,300 for the year ended 30 June 2021. She says the reduction in her income was due to the effects of the COVID-19 pandemic.
108. The husband injured his wrist in 2019 and in late 2020, he disclosed to the wife an Company K Remittance Advice identifying that he was receiving net payments of $1,856 per week. Due to the husband’s failure to make ongoing disclosure and participate in these proceedings, his current situation is unclear however it would seem that historically he has largely been able to secure regular employment.
…
111.The husband's current circumstances are largely unknown. He may, in fact, have cash resources of which the court has no knowledge. The husband is co-habiting with his partner. The financial circumstances relating to their co-habitation are unknown.
112.Given his history, it is not likely that the husband will be paying any significant child support to the wife, and certainly not voluntarily.
On 11 January 2022, the wife served the husband with the Final Orders and correspondence setting out a timetable of what his obligations were as a result.
On 25 January 2022, the wife attempted to give effect to the super splitting orders but the relevant superannuation trustee responded by advising that the trustee no longer held any interest on behalf of the husband.
On 27 January 2022, the wife complied with her obligations to give effect to the sale of the B Street, Suburb C property.
On 9 February 2022, the husband was served with the Final Orders and correspondence from the wife which demanded he vacate the B Street, Suburb C property because he was in default of the Final Orders and foreshadowed that if the wife had to apply to enforce or vary the Final Orders then she would be seeking costs of in the vicinity of $20,000.
On 16 March 2022, the wife filed an application-enforcement seeking various orders including an order for the wife to immediately have exclusive occupation of the B Street, Suburb C property, the wife to become sole trustee for the sale of the B Street, Suburb C property, the sum of $15,000 to be deducted from the Husband’s share of the sale proceeds in lieu of the failed super splitting orders and indemnity costs. In support of that application, wife filed an affidavit. In tandem, the documents highlighted the proposed manner of sale and touched upon issues regarding the potential need for works to be carried out on the B Street, Suburb C property in order for it to be ready for sale.
Between 19 March 2022 and 24 March 2022, a commercial process server attempted to personally serve the husband and was, on the last occasion, informed by NSW Police who were also at the B Street, Suburb C property that the husband was in some legal trouble.
On 31 March 2022, orders and notations were made by the Court (‘the March orders’) including -
(a)The husband being restrained from dealing with his superannuation interest/s;
(b)A stay on Order 5(g) of the Final Orders which related to the husband having exclusive occupation of the B Street, Suburb C property in certain conditions;
(c)The listing of the enforcement hearing before me on 18 May 2022 including a requirement for the husband to appear personally;
(d)Orders permitting the wife to give the husband procedural fairness of the proceedings by way of serving him electronically with various documents (be email) and notice of the orders made (via text message).
(e)A notation that the applicant sought the registrar exercise their power pursuant to s106A and in accordance with order 2 forming part of the final orders to have the Salerno caveat removed from title.
On 1 April 2022, the wife served the husband with the various documents identified within the March orders. Again this was done via the wife’s solicitors.
On 22 April 2022, the wife filed an initiating application which was in essence an anticipatory application in the event that the super splitting orders made by me within the Final Orders was no longer practical.
As at 28 April 2022, the husband’s superannuation interests consisted of $64.80 held by ATO Held Super (see exhibit “A”).
In submissions, I was informed that on 16 May 2022 a minute of order setting out the relief sought within the wife’s initiating application was sent via email to the husband. In submissions I was told the only difference (relevant to the actual relief now being prosecuted pursuant to the initiating application as opposed to the application-enforcement) was that the wife now relied upon s 79A for the receipt of $15,000 in lieu of a superannuation split with such sum to be deducted out of the Husband’s share of the sale proceeds.
In submissions, I was informed that in accordance with the notation recorded earlier in this judgment, the wife was awaiting execution of documents by a registrar (on behalf of the husband) to remove the Salerno caveat.
Currently, the husband has failed to comply with his obligations to ensure –
(a)the removal of the Salerno caveat;
(b)the listing and sale of the B Street, Suburb C property including not engaging with the real estate agent to have the property listed for sale, not vacating the premises and not making any mortgage payments over the mortgage secured thereon causing the mortgage to be in default and the mortgagee demanding payment; and
(c)the balance of his superannuation interest was sufficient to enable the super splitting orders to take effect.
Insofar as the effect of the husband’s non-compliance about paying the mortgage, the wife says that between 21 December 2021 and 10 March 2022, $2,843 was overdue. In one of the communications from the mortgagee to the wife, it states that late payments on the home loan can affect her ability to borrow in the future.
Currently, the financial circumstances of the husband are not known because he failed to attend the enforcement hearing.
Currently, the wife has been unable to sell the B Street, Suburb C property or receive $15,000 by way of super splitting orders.
Currently, the wife is employed as an allied health worker and she has the primary care of the parties’ children, X (aged 12 years) and Y (aged 10 years). At paragraph 27 of her affidavit filed 16 March 2022, the wife deposes that her financial circumstances as at the date of the Final Orders has not changed other than her having to incur further fees due to engaging a process server and legal fees to enforce the Final Orders.
Exhibit “W5” consists of four tax invoices generated by the wife’s lawyer totalling $16,702.38. Exhibit “W6” consists of two tax invoices generated by the wife’s counsel totalling $4,400. In total, the wife’s legal costs for these proceedings amounts to $21,102.38.
There has been no appeal filed in relation to the Final Orders.
On 18 May 2022, I conducted an enforcement hearing and the husband did not participate. Just like she has in the past, the wife participated in the court hearing.
UNDEFENDED HEARING
I am satisfied that the husband is aware of the Final Orders and is aware of these enforcement and in a more limited sense, the s 79A proceedings.
This is because I have accepted the evidence of the wife’s solicitors sending electronic copies of the enforcement application documents to the husband and otherwise giving him notice of the proceedings via text message.
I accept that the husband has not received copies of all the documents relied upon by the wife to prosecute her s 79A application and costs application. Insofar as the s 79A proceedings are concerned, I have not read the wife’s evidence in circumstances where –
(a)I had the benefit of earlier filed material which had been electronically served on the husband; and
(b)I had the benefit of my judgment pronounced on 16 December 2021 which addressed the parties’ financial circumstances.
I also note that the husband has flagrantly disregarded orders of this court which has left the wife unable to enjoy the fruits of the Final Orders and that any delay will only increase the pressure upon her in circumstances where the mortgage secured over the B Street, Suburb C property remains unpaid and in default. He has been given notice of the enforcement hearing and he failed to participate. He has failed to make financial disclosure as ordered and this is a factor that enables me to act less cautiously when making findings (see for example Black & Kellner [1992] FamCA 2).
Weighing the parties’ competing interests up and noting that the husband is in default pursuant to r 10.26 of the Federal Circuit and Family Court (Family Law) Rules 2021 (Cth), I am satisfied that it is appropriate and in the interests of justice that I conduct this hearing on an undefended basis.
ENFORCEMENT APPLICATION
Final orders were made five months ago. As a result, and at the very least the B Street, Suburb C property should have been marketed for sale. It has not.
I accept that the wife has sought that the husband vacate the property and has been endeavouring to have the B Street, Suburb C property listed for sale and sold, noting that she has had to request a Registrar execute documents (on behalf of the husband) to remove the Salerno caveat from the title.
Order 5 of the Final Orders envisages the parties working jointly. This has failed due to the husband’s failure to engage in the process. The enforcement orders are ancillary to the enforcement of the substance of those the Final Orders, that is, the sale of the B Street, Suburb C property.
I accept that there may be some works to be carried out to ensure the B Street, Suburb C property is ready for sale and that the wife will not be extravagant or excessive in the expenditure of money to do so. This is because there is no evidence of her acting maliciously and no evidence of her not complying with orders of the court. I am satisfied that she will exercise the role of sole trustee with honesty and diligence.
The wife is entitled to exclusive occupation in circumstances where the husband has ignored orders of this court and she needs to assess what needs to be done to get the B Street, Suburb C property ready for sale. I intend to make that order effective immediately.
In the event that the wife is unable to prosecute that order, I will prepare, issue but then stay a warrant in possession for a period seven days. The other enforcement orders sought by the wife largely reflect Order 5 save for the addition of the wife to be reimbursed for the costs of ensuring the B Street, Suburb C property is ready for sale and ensuring vacant possession by the husband. On that basis, I am content to make those orders. In addition, the wife seeks further disbursements from the Husband’s share of the sale proceeds related to costs and s 79A and I will consider those issues shortly.
Subject to my determination of those issues, the enforcement orders do not substantially change the ultimate property interests to be received by the parties and where they do, it is because of the husband’s failure to comply with the Final Orders.
SECTION 79A PROCEEDINGS
I have already recorded Orders 8 to 11 of the Final Orders.
The wife says that these orders are no longer practical pursuant to s 79A(1)(b).
I accept the wife’s evidence and submissions that through no fault of her own and for reasons not entirely clear, the husband now does not have sufficient superannuation to satisfy the super splitting orders of $15,000. The court would not have made the super splitting orders without evidence of procedural fairness being afforded to the relevant superannuation trustee. In effect, the giving of procedural fairness enables the superannuation trustee to consent only if could give effect to the proposed order which would include there being sufficient funds held to make the payment.
For the reasons above, I find that Orders 8 to 11 of the Final Orders are impracticable.
Although not strictly submitted, it is also open to me to find that s 79A(1)(c) may apply because a person (namely the husband) has defaulted in the carrying out of an obligation imposed on the person by the order and in the circumstances arising as a result of the default, it may be just and equitable to vary the order to set aside an order and make another order in substitution for the order.
Here, the husband has not made financial disclosure which hampers the court in the enquiry about why his superannuation interests have depleted to $64.80. I have had regard to the absence of an explanation about this circumstance as well as to the husband’s conduct, insofar as his failure to appear and to comply with other final orders to-date (see for example Orders 1 and 5 of the Final Orders). For these reasons, I am satisfied that it is appropriate for me to make an adverse inference that the husband has surreptitiously caused the depletion of his superannuation interests in order to defeat the super splitting orders.
For the reasons above, the husband has defaulted in the carrying out of his obligation to ensure there were sufficient funds retained in his superannuation interest to cause the super splitting orders to be effected.
Having made the above findings it is open to me to exercise my discretion pursuant to s 79A.
The orders sought by the wife do not require a re-exercise of the court’s discretion under s 79 but rather are in the nature of a variation, with the goal of restoring herself to the financial position that she would have achieved had the husband not defaulted.
I have already made a finding pursuant to s 79A(1)(b). In addition I am satisfied that another ground upon which I can exercise my discretion is s 79A(1)(c). This view is supported by the husband’s failure to come to the enforcement hearing to explain what happened to his superannuation interest so as to cause the balance to diminish to less than $100. In circumstances where the husband has failed to make disclosure, it is my view that the husband should not be given the benefit of his own lack of disclosure by failing not to try and redress the current impasse in the execution of these orders: Black & Kellner.
For the reasons above, the wife’s proposal to supplant the $15,000 super splitting orders with a further $15,000 adjustment to her out of the Husband’s share of the sale proceeds is just and equitable as it permits the same outcome as envisaged within the overall property adjustment orders previously made by the court.
COSTS APPLICATION
The wife asked me to make an indemnity costs order. I note that the wife’s costs are contained with Exhibits “W5” and “W6”.
In exercising my discretion, I must have regard to s 117 which sets out the Court’s jurisdiction insofar as costs are concerned including a rebuttable principle that each party should bear their own costs. I say rebuttable, because if the Court is satisfied that in the circumstances of the case it would be just to do so, then a costs order against a party may be made. In the exercise of this broad discretion, the Court must take into account various considerations as set out at s 117(2A).
Turning to those considerations:
(a)The wife is an allied health worker with the primary care of two children. It is unlikely she will receive regularised child support payments from the husband. The wife earns a modest income and has had to contend with ongoing default notices from the mortgagee arising from the husband’s default of the Final Orders. Within the Final Orders, I recorded that as part of the property adjustment proceedings, the wife would retain nett property of $425,282 (consisting largely of real estate) plus further adjustments from the sale of the B Street, Suburb C property to allow an overall adjustment in her favour. Arising from these proceedings, she has incurred legal costs of over $20,000 which is likely to cause her financial hardship when compared to her annual paid employment of $26,300.
(b)The husband’s financial circumstances are unknown because he has failed to comply with orders and participate at the enforcement hearing. Within the Final Orders, I recorded that as part of the property adjustment proceedings, the husband would retain nett property of $26,169 plus the Husband’s share of the sale proceeds (as adjusted).
(c)The husband has flagrantly acted in a way to stop the wife from having the benefit of the Final Orders insofar as receiving her share of the sale proceeds from the sale of the B Street, Suburb C property and receiving an additional $15,000 by way of super splitting orders. I have already made adverse findings about the way in which the husband has conducted himself. In addition, he has failed to make disclosure and arising from the express obligations contained within the Rules and by way of actual orders which included him bringing to the enforcement hearing various documents. Conversely there was no evidence of misconduct on the part of the wife.
(d)The enforcement and s 79A proceedings were successfully prosecuted.
(e)On 7 February 2022, the husband was put on notice about the wife’s intention to commence proceedings to enforce or vary the Final Orders if he failed to comply. In that correspondence, the issue of costs was squarely raised insofar as the wife informed the husband that she would be seeking that he pay her, indemnity costs in the vicinity of $20,000.
No one consideration under s 117(2A) prevails over any other and the weight to be accorded to each of the relevant factors is at my discretion: Medlon & Medlon (No. 6) (Indemnity Costs) [2015] FamCAFC 157 at [24]. There is nothing to prevent just one consideration as set out in s 117(2A) being the sole foundation for an order for costs: Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania v Fish) [2005] FamCA 158.
Although there is no evidence before the court, it is appropriate that I record that a party’s impecuniosity is not a bar to a costs order being made against him: Cross & Beaumont [2008] FamCAFC 68 at [60] and Nada and Nettle (Costs) [2014] FamCAFC 207 at [11].
It is not usual for the Court to make an indemnity costs order and the circumstances of the case must be such as to warrant a departure: Colgate-Palmolive Company v Cussons Pty Limited [1993] FCA 536 at [256].
The husband’s misconduct in not complying with the Final Orders has caused a delay in the finalisation of the proceedings between the parties: Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (unreported, Federal Court, 3 May 1991) and Munday v Bowman (1997) FLC 92-784 at 84,660.
The husband’s decisions have caused a loss of time to the court and to the parties in circumstances where, by this time, the wife would have had the benefit of an administrative process that increased her superannuation interest by $15,000, and if not sold, then at least the commencement of proper marketing for sale of the B Street, Suburb C property. None of this has happened as a result of the action/inaction of the husband.
In my view, the circumstances of this case reach a standard as to enable the court to make an indemnity costs order.
Taking into account all the circumstances of this case it is just that I make a costs order against the husband because:-
(a)I have found that the husband has flagrantly failed to comply with the Final Orders so as to ensure the removal of the Salerno caveat without the need for Court intervention and to enable the sale of the B Street, Suburb C property, causing the wife to engage with the Court (including commencing enforcement proceedings);
(b)I have found that the husband has surreptitiously taken steps to deplete his superannuation interests to $64.80 so as to defeat the super splitting orders which would have caused a transfer of $15,000 to the wife’s superannuation;
(c)I am satisfied that the wife has very limited means to fund legal representation and she has the primary care of the children without financial support from the husband;
(d)The wife has been completely successful;
(e)The institution of the enforcement and the s 79A proceedings arose from the husband failing to comply with the Final Orders;
(f)Prior to the events giving rise to the commencement of proceedings, the wife asked the husband to comply with the Final Orders and foreshadowed the issues of costs.
The total of exhibits “W5” and “W6” is $21,102.38. I have considered those exhibits and am satisfied that the costs relate to these proceedings.
Using my broad discretion in making costs orders, I consider that it is just to fix the sum at $21,102.38. I have no evidence of the husband’s financial circumstances but self-evidently from the Final Orders, he will be entitled to a sum of money arising from the sale of the B Street, Suburb C property.
These proceedings have gone on long enough and in the interests of justice and in light of the court’s overarching purpose to resolve disputes as quickly, inexpensively and efficiently as possible[2] I intend to order that the sum of $21,102.38 be deducted out of the Husband’s share of the sale proceeds.
[2] See section 190 of the Federal Circuit and Family Court of Australia Act 2021 (Cth)
CONCLUSION
In all the circumstances of this case I am satisfied that that Orders I have made are just and equitable, appropriate and otherwise in the interests of giving justice to the parties.
I certify that the preceding seventy-one (71) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Kearney. Associate:
Dated: 23 May 2022
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