Galagher and Galagher
[2010] FMCAfam 780
•28 July 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| GALAGHER & GALAGHER | [2010] FMCAfam 780 |
| FAMILY LAW – Property – undefended proceedings – whether appropriate to proceed in the absence of the husband who is overseas but has had formal notice of proceedings – applicant is of advanced years – prejudice to her if proceedings delayed – calculation of property pool given husband’s non disclosure – long relationship – assessment of contributions – just and equitable – costs. |
| Family Law Act 1975, ss.75(2); 79; 117 Federal Magistrates Court Rules, r.24.03 |
| Taylor v Taylor (1979) 143 CLR 1 Lee Steere v Lee Steere (1998) FLC 91-626 Ferraro v Ferraro (1993) FLC 92-355 Clauson v Clauson (1995) FLC 92-595 Hickey v Hickey &Attorney-General of the Commonwealth of Australia (Intervenor) (2003) FLC 93-143 Biltoft & Biltoft (1995) FLC 92-614 Russell v Russell (1999) FamCA 187 Waters & Jurek (1995) FLC 92-635 Briese & Briese (1986) FLC 91-713 Black & Kellner (1992) FLC 92-287 Weir & Weir (1993) FLC 92-338 Browne v Green 29 Fam LR 428 |
| Applicant: | MS GALAGHER |
| Respondent: | MR GALAGHER |
| File Number: | ADC 496 of 2010 |
| Judgment of: | Brown FM |
| Hearing date: | 21 July 2010 |
| Date of Last Submission: | 21 July 2010 |
| Delivered at: | Adelaide |
| Delivered on: | 28 July 2010 |
REPRESENTATION
| Counsel for the Applicant: | Mr Noble |
| Solicitors for the Applicant: | Jaak Oks Lawyers |
| Counsel for the Respondent: | Not represented |
ORDERS
That henceforth the wife do have the sole use and occupation of the former matrimonial home situated at Property H being the whole of the property contained and described in Certificate of Title Register Book Volume [omitted] (hereinafter referred to as “the former matrimonial home”).
That the husband be restrained and an injunction is hereby granted restraining the husband from entering the former matrimonial home save and except with the written consent of the wife and for the purpose of the husband collecting his personal possessions therefrom at an agreed date and time.
That the husband’s interest in the former matrimonial home do forthwith vest in the wife.
That a Registrar of this Court do execute in registerable form a transfer of the husband’s interest in the former matrimonial home to the wife upon the same being produced to the Court by the wife’s solicitors for that purpose.
That the wife do within 12 months of this date pay to the husband the sum of $53,874.00 and in default of the same the former matrimonial home be sold at a price and in a manner as the parties may agree and that from the net proceeds of sale the husband be paid the sum of $53,874.00 plus interest pursuant to the Family Law Rules and the balance to the Trust Account of the wife’s solicitors on behalf of the wife.
That the parties do otherwise retain the property now in their respective possessions and power.
The husband pay the wife’s costs of these proceedings fixed in the sum of $3,195.00.
All applications are dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Galagher & Galagher is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ADELAIDE |
ADC 496 of 2010
| MS GALAGHER |
Applicant
And
| MR GALAGHER |
Respondent
REASONS FOR JUDGMENT
Introduction
These reasons for judgment relate to the settlement of matrimonial property. The applicant in the proceedings is Ms Galagher “the wife”. The respondent is Mr Galagher “the husband”.
The wife commenced these proceedings on 11 February 2010. At that stage, she sought the transfer of the parties’ matrimonial home, located at Property H, into her sole name.
The Property H property is currently registered in the parties’ joint names. Concurrently with the transfer of this property to her, the wife proposed that the husband retain a number of cash assets and financial resources, which he currently controls. This essentially remains the wife’s position.
The husband’s attitude to this application is unknown, as he has taken no active part in the proceedings to date. In these circumstances, the wife seeks that her application be dealt with on an undefended basis, without any further opportunity being given to the husband to take part in the proceedings.
The wife is 80 years of age. It is her case that the parties finally separated in March of 2008. Since that date, she has continued to live in the Property H property, which she regards as her home.
In 2008, the husband spent nine months in the Czech Republic. In 2009, he again returned to the Czech Republic, where he resided for a further period of nine months. In late March of 2010, he again travelled to the Czech Republic and has indicated he will return to Australia at some time in November of this year.
When Mr Galagher has not been in the Czech Republic, he has been in Australia and lived at the Property H property, although he has also holidayed away from the property in a campervan, which he owns. The wife’s position is that it is intolerable that the husband should use the property, when it suits him and without prior reference to her, now that the marriage between the parties has come to an end.
In these circumstances, she wishes to sever her financial relationship with the husband and, given her occupation of the Property H property and the fact that the husband seems intent on living overseas for extended periods of time, considerations of justice and equity should dictate that she should retain the Property H property, where she wishes to live for the remainder of her life.
It is, of course, uncertain what is the husband’s attitude to the wife’s position, as he has not formally responded to her application. Accordingly, the first issue for the court is whether it is appropriate for the wife’s application to be determined in his absence.
Should the proceedings be determined in the husband’s absence?
The court has an obligation to ensure that parties to proceedings before it have an opportunity to participate in those proceedings. Before a person can be adversely affected by judicial order, he or she must be afforded an adequate opportunity to be heard.[1]
[1] See Taylor v Taylor (1979) 143 CLR 1
The wife’s case is that the parties began to live together in September of 1974. They married [in] 1981.
The wife has deposed that the husband told her in 1998 he did not love her anymore and would provide no further financial support to her. As a consequence, she applied for a single aged pension, although she and Mr Galagher continued to live under the same roof, at Property H.
In 2000, Centrelink investigated the parties’ circumstances and concluded that they remained a couple and, as a consequence, neither was entitled to receive a single pension.
It is the wife’s case that the parties were fined $10,000.00 each, by Centrelink, as a result of claiming individual pension entitlements. The husband apparently paid the sum required from his financial resources.
The wife asserts that the parties finally separated on 15 March 2008. As she had no alternative source of accommodation, other than the Property H property, once again she applied to Centrelink for a single persons aged pension, although the husband had not vacated the property. I have been provided with a declaration she provided to Centrelink, at this time, which sets out her personal circumstances.[2]
[2] See annexure A to the wife’s affidavit filed 6 July 2010. It should be noted that the document is incorrectly indicated as being dated 1988 in the wife’s affidavit.
In this declaration, the wife provided the following information. She said she lived exclusively in a bedroom and spare room. In response to the question “what were the reasons for your separation” she wrote as follows:
“It was his decision to leave me and give me no more assistance whatsoever. This shatters me intensely. To make life even harder our intimate life has become non-existent since a long time because of his drinking problems.”
When given the opportunity to provide further information about her situation, the wife declared as follows:
“We live under the same roof when he is here but we are like two strangers not even single ‘friends’ or ‘flatmates’. He keeps telling me ‘who stays, pays!’ Shows no emotions, feelings or empathy.”
The form also inquired as to how long the person seeking a single aged pension, whilst sharing accommodation with a former partner, intended to remain in such a situation. To this question, the wife responded by saying: “It depends on when (or if?) he comes back to what decision to pursue.”
As previously indicated, during much of 2008, 2009 and 2010,
Mr Galagher has been living overseas, in the Czech Republic, with his first former wife. I accept that he has returned to live at the Property H property, from time to time, without prior reference to the applicant. Given what she has declared to Centrelink, I can understand why she finds this situation to be intolerable. This is the background to her institution of the current proceedings.
The wife commenced the proceedings on 11 February 2010. At her request, her application was given an early return date, being 25 February 2010, provided Mr Galagher was served with the application on or before 17 February 2010.
The reason for the expedition, from the wife’s point of view, was that she understood that the husband was leaving Australia for the Czech Republic on 3 March 2010. She was concerned that if the husband “returns to the Czech Republic it will make the matter very difficult for me to finalise my property settlement.”[3]
[3] See wife’s affidavit filed 11 February 2010 at paragraph 15
The wife further deposed that she was in poor health. She indicated that she suffered from chronic kidney problems; a heart condition; and arthritis. She also deposed that she had undergone hip and knee replacement surgery.
In addition, the wife complained that the husband was concealing information regarding his financial circumstances, particularly his pension entitlements, from her. She deposed as follows:
“On many occasions I have tried to discuss the finalisation of property settlement with the husband but he tells me that I am only entitled to get half of the house and nothing else. The husband will not allow me to know anything about his other financial interests.
I am very concerned that the husband will deal with any financial resource he has in his possession. I seek an urgent order for an injunction to prevent the husband dealing with any of his financial assets as set out in my initiating interim application.”[4]
[4] Ibid at paragraph 17 and 18
The husband was served with the wife’s application and an affidavit in support, at the Property H property, at 6:45pm on 15 February 2010. Somewhat unusually, the application was personally served on him by the wife’s solicitor, Ms Hamilton. Mr Galagher signed an acknowledgement of service.[5]
[5] See affidavit of service filed 18 February 2010
The husband did not appear in court on 25 February 2010. He did not attempt to contact the court or provide any explanation for his non-appearance. He did not instruct any legal representative to appear on his behalf on 25 February 2010.
On 25 February 2010 I was satisfied that the husband had been properly served with the wife’s initiating application and he had, for reasons unknown to me, elected to ignore them. In those circumstances, I thought it incumbent on me to point out formally to Mr Galagher that, if he continued to chose not to take part in the proceedings, it was nonetheless open to the court to proceed with the wife’s application without further input from him.
On 25 February 2010, I made the following orders:
“UPON NOTING there is no appearance of the husband who was served on 15 February 2010
THE COURT ORDERS THAT:
1. The respondent file and serve a Response and Affidavit in support and a statement of his financial circusmstances within 28 days of today’s date.
2. Further consideration of the matter is adjourned to 1 April 2010 at 9:30am.
3. In the event the husband fails to comply with order 1 or appear on the adjourned date either in person or by counsel the wife has leave to proceed on an undefended basis in the absence of the husband.
4. A copy of the orders be personally served on the husband.
UNTIL FURTHER OR OTHER ORDER THE COURT ORDERS THAT:
5. The husband be restrained and an injunction be granted restraining the husband from dissipating, transferring or in any way dealing with his Colonial First choice Wholesale Pension Policy No. [omitted] and his term deposit at the National Bank account number [omitted].”
Once again, Ms Hamilton elected to personally serve the relevant orders, on Mr Galagher, on her client’s behalf. No doubt she wished to ensure that the document in question, given its significance, got through to the husband. No doubt it was her apprehension that it would be easier to finalise the proceedings, from her client’s point of view, if the husband took an active part in them.
Ms Hamilton personally served the orders of 25 February 2010, on the husband, at the Property H property on the day on which the orders were made. She urged Mr Galagher to read the orders carefully and seek legal advice.
In these circumstances, I am satisfied that the wife’s application has been brought directly to Mr Galagher’s attention. I am also satisfied that he understands the nature of the wife’s application. More importantly, I have no reason to consider anything other than that he has read the order of 25 February 2010, the intention of which was to put him on notice that he was required to take formal action in respect of the wife’s application, within 28 days, or otherwise the proceedings would continue undefended by him.
The proceedings were further adjourned until 1 April 2010. Again,
Mr Galagher did not attend. On this date, the proceedings were fixed for final hearing on 21 July 2010 at 2.15 pm. These reasons for judgment arise as a result of the wife wishing to pursue her application and the husband having failed to either appear on 21 July or to file any responding material.
Division 13.1A of the Federal Magistrates Court Rules authorises the court to conclude proceedings if a respondent fails to file a response; comply with any order of the court; or defend the proceedings with due diligence. In such circumstances the court may give judgment or make any other order it deems appropriate, against the respondent.
Rule 12.13 of the Family Law Rules is perhaps more apposite. Rule 12.13(2) provides that if a respondent has failed to attend any procedural hearing and has not filed a response the court may make any order sought in the application or list the case for hearing on an undefended basis.
I am satisfied that all the necessary regulatory preconditions have been met for the wife’s application to be dealt with on an undefended basis. Firstly, I am satisfied that the husband has been properly served with the application. Secondly, I am satisfied that he has failed to file a response and has failed to appear at a number of procedural hearings. As such, I am satisfied that he has failed to defend the proceedings, in any way whatsoever, certainly without any diligence.
The other question which arises is whether it would be just and proper for the court to proceed on an undefended basis. This is a more complicated question. In her initiating affidavit, the wife concedes that the husband has a return ticket to Australia booked for November 2010.
If the husband does return to Australia in late 2010, this will follow his practice in 2008 and 2009, when he has been in the Czech Republic for eight or nine months and in Australia for three or four months of each year.
In these circumstances, the question which arises is, is it appropriate to tailor the court proceedings to suit Mr Galagher’s convenience and in the hope that he will choose to involve himself in the proceedings, if and when he returns to Australia.
The problem with this proposal is that Mr Galagher has not formally put it to the court and accordingly, in my view, it must remain conjectural. It was open to Mr Galagher to attend court prior to his departure from Australia and advise the court of his situation. He chose not to do so.
In addition, it was open to Mr Galagher to instruct counsel to appear on his behalf and safeguard his interests, whether he was in or outside of Australia. Again, he has chosen not to do so, notwithstanding the fact that he has been formally advised of the prospect of the wife’s application being regarded as undefended and so proceeding in his absence.
The wife is 80 years of age. I accept that she is in poor health. I also accept that it is difficult for her, in a psychological sense, for the proceedings to remain unresolved, particularly if the husband feels entitled to come and go between his address in [omitted], in the Czech Republic and the address in Property H, as he feels fit. Given these factors, there is a significant level of urgency, in the case, from the wife’s perspective.
It should also be pointed out that, prior to the institution of these proceedings, the wife’s solicitor wrote to the husband inviting him to negotiate an appropriate settlement of matrimonial property. This letter went unanswered.
Given the parties’ current circumstances, it is likely to suit the husband to keep the proceedings on foot for as long as possible and so avoid the issue of whether it will be necessary to transfer the joint ownership of the Property H property to one or other of the parties.
In all these circumstances, I can understand why the wife would be somewhat resentful if the proceedings are adjourned and a further invitation is offered to the husband to take part in the proceedings. She would understandably perceive that both she and the court are beholden to Mr Galagher, who has ignored properly instituted proceedings and her legitimate claims because it suits him.
I share those concerns. I am not prepared to adjourn the proceedings to a date, which may be convenient to Mr Galagher. In addition, I can have no guarantee that, at some date in the future, Mr Galagher will play a proactive role in the case at such a stage.
Finally, I am concerned that it would constitute a potential injustice to the wife, given her age and state of health, if her legitimate and properly instituted claim was delayed.
For all of those reasons, I am satisfied that it is both proper and just to proceed with the wife’s application for property settlement on an undefended basis.
The application of legal principles
The process to be followed, for the division of the parties’ property, is well established by law.[6] The relevant legal principles are primarily contained in sections 79 and 75(2) of the Family Law Act 1975. I am required to follow a four step process.
[6] See Lee Steere v Lee Steere (1998) FLC 91-626; Ferraro v Ferraro (1993) FLC 92-355; Clauson v Clauson (1995) FLC 92-595; Hickey v Hickey &Attorney-General of the Commonwealth of Australia (Intervenor) (2003) FLC 93-143;
In the first step, I must ascertain what are the parties’ assets and liabilities as at the date of trial.[7]
[7] See Biltoft & Biltoft (1995) FLC 92-614
The second step involves the court ascertaining the contributions which each party has made towards those assets. Contributions fall into two broad categories.
The first kind is contributions to the property: financial contributions and non-financial contributions, made directly or indirectly, by or on behalf of a party to the marriage to the acquisition, conservation or improvement of any of the property.
The second kind is contributions to the welfare of the family: in the words of the section, “the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage, including any contribution made in the capacity of home maker or parent.”[8]
[8] See Family Law Act s.79(4)(c)
It is clear from the authorities that this second kind of contribution must be given appropriate weight and is not to be treated as a token matter or as a contribution which is inherently less valuable or important than a financial contribution to property.
The third step involves the assessment of the parties’ prospective needs, by reference to the factors set out in section 75(2) of the Family Law Act 1975. Pursuant to section 75(2)(o), the Court is entitled to take into account “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account”.
Finally in determining what order the court should make under section 79, the court must be satisfied that in all the circumstances, it is just and equitable to make the relevant orders. Overall, it is the justice and equity of the actual orders that the court must consider.[9] Accordingly, the fourth step is for the court to take a step back and examine whether the orders it proposes are just and equitable.
[9] See Russell v Russell (1999) FamCA 187
The “overriding requirement” of section 79 is that considerations of justice and equity should inform each step of the process. The exercise I must undertake is not a “process of social engineering”[10] or of equalisation of assets or financial resources.
[10] See Waters & Jurek (1995) FLC 92-635
The parties to property proceedings, brought under the Family Law Act 1975, in this court, are under a duty to make a “full and frank disclosure” of their financial circumstances.[11] This duty has been described as being “fundamental to the whole operation of the Family Law Act in financial cases…”.[12]
[11] See Federal Magistrates Court Rules at Rule 24.03
[12] Per Smither J in Briese & Briese (1986) FLC 91-713 cited with approval by the Full Court in Black & Kellner (1992) FLC 92-287 at 79,133
In Weir & Weir the Full Court of the Family Court said as follows:
“…the failure to disclose undermines the whole process of adjudication of proceedings for a settlement of property in that the court is unable to identify the property of the parties, to properly assess contributions, or to properly assess section 75(2) factors.”[13]
[13] Weir & Weir (1993) FLC 92-338
Accordingly, the duty to make a full and frank disclosure, in financial matters brought under the Family Law Act 1975, does not arise merely by virtue of the rules or practice of the court but rather is a fundamental rule of law, which arises because of the necessity for the court in each property proceeding to consider all aspects of the financial circumstances of the parties concerned.[14]
[14] See Luciano & Luciano (unreported) Family Court (O’Ryan J delivered 8 May 2000) at paragraph 373
In appropriate cases, there may be adverse consequences for a party, if it can be shown that he or she has deliberately failed to make a proper disclosure of some material financial fact. Such a non-disclosure may result in the court drawing an adverse inference against the party, who has not made a proper disclosure.
In Weir & Weir[15] the Full Court said as follows:
“It seems to us that once it has been established that there has been a deliberate non-disclosure…then the court should not be unduly cautious about making findings in the favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature…We should have thought that the courts jurisdiction to make an order going beyond the identified property arises once there is sufficient evidence to support a finding that the party has not made a full disclosure of his or her assets.”
[15] See Weir & Weir (supra) at 79,593
In the present case, the husband has made no formal disclosure whatsoever. This has been because he has not elected to take part in the proceedings and so has not formally disclosed his asset position to either the court or the wife. Accordingly, it is likely to be difficult for the court to be able to accurately assess what is the full extent of the parties’ matrimonial assets, particularly those which are controlled by the husband.
However, as this situation has come about as a result of the husband’s default, I am not inclined to be “unduly cautious” about finalising the proceedings, in the absence of such material, given my view that it would be unfair to the wife to allow the husband to dictate how the proceedings are to be managed through his passive disavowal of them.
The wife’s application
The wife seeks the following orders, at trial:
1. That henceforth the wife do have the sole use and occupation of the former matrimonial home situated at Property H being the whole of the property contained and described in Certificate of Title Register Book Volume [omitted] (hereinafter referred to as “the former matrimonial home”).
2. That the husband be restrained and an injunction is hereby granted restraining the husband from entering the former matrimonial home save and except with the written consent of the wife and for the purpose of the husband collecting his personal possessions therefrom at an agreed date and time.
3. That the husband’s interest in the former matrimonial home do forthwith vest in the wife.
4. That a Registrar of this Court do execute in registerable form a transfer of the husband’s interest in the former matrimonial home to the wife upon the same being produced to the Court by the wife’s solicitors for that purpose.
In the event that the Court orders the wife to pay a sum of money to the husband then:
5. That the wife do within 12 months of this date pay to the husband the sum of $X and in default of the same the former matrimonial home be sold at a price and in a manner as the parties may agree and that from the net proceeds of sale the husband be paid the sum of $X plus interest pursuant to the Family Law Rules and the balance to the Trust Account of the wife’s solicitors on behalf of the wife.
6. That the parties do otherwise retain the property now in their respective possessions and power.
7. That the husband do pay the wife’s costs of these proceedings as agreed or taxed.”
The main plank of the wife’s case is that she should retain the
Property H property. Her application has two aspects. Firstly that she should have the sole occupancy of the property, ancillary to which the husband should be restrained from entering it, without her consent. Such an outcome would be provisional, in the sense that it could be theoretically reversed or discharged.
The second aspect of the wife’s case is that there should be a permanent transfer of the property from joint ownership into her sole ownership. Such an outcome would mean that, upon her death, the property would form part of the wife’s estate. Accordingly, it would be open to the wife to bequeath the property, as she saw fit. The property would no longer be subject to the operation of the rule of survivorship.
Through her counsel, the wife has made it clear that she prefers the court to adopt the second approach. As her orders sought indicate, she realises this may result in the court assessing her to have to pay a sum of money to the husband, depending on how the court assesses the parties’ pool of assets and how each party has contributed to the acquisition and preservation of those assets.
Background
In support of her position, the wife relies on an affidavit of herself filed on 6 July 2010. In addition, her solicitor has directed a number of subpoenae to various financial institutions with which the wife believes the husband may have dealings. The subpoenae have been directed to ascertaining what assets, other than the Property H property, can be included in the parties’ pool of assets.
I acknowledge that the wife’s evidence is uncontradicted and unchallenged. However, I have no reason to disbelieve her basic chronology and history of the parties’ relationship.
The wife was born [in] 1930. The husband was born [in] 1940. He is a retired [omitted]. The parties began to live together on 1 September 1974 and married [in] 1981.
When the parties began to live together, the husband moved into accommodation rented by the wife. Neither seems to have had significant assets. The Property H property was purchased in 1980 for the sum of $26,000.00. The wife paid a deposit of $3,000.00. The property is currently unencumbered.
As a consequence of these proceedings, the wife has arranged for the Property H property to be valued by an expert valuer. The valuer concerned, Mr B values the property at $273,000.00. I accept this value.
The husband worked as a [omitted] until his retirement in 1996. He worked for [omitted] for a period of time. The wife worked for the first six years of the marriage. Thereafter, I accept that she was primarily responsible for providing domestic support and homemaking duties.
The husband migrated to Australia in 1971. At the time he was married. However, his first wife and two children remained in the Czech Republic. His first wife divorced him, after the husband had settled in Australia.
It is the wife’s understanding that the husband has resumed his relationship with his first wife and lives with her in the Czech Republic for significant periods of time each year. It is the wife’s case that she did not know of the husband’s previous marriage until 1992. Since 1992, the husband has regularly returned to the Czech Republic.
I accept the wife’s evidence that the husband has been secretive about his financial affairs. Much of the information the wife has obtained, about the husband’s financial position, has come about because of the issue of subpoenae on her behalf.
The husband had an allocated pension administered by Colonial First State. In July of 2005 the pension was valued at $140,000.00. In January of 2009, the husband withdrew $124,055.91 from this fund.
The husband also has accounts with the National Australia Bank. He had a term deposit of $90,000.00, which was due to mature on 13 June 2010. The Colonial First State allocated pension amount of $124,055.91 was deposited into a bank account with the National Australia Bank on 20 January 2009. Thereafter, regular withdrawals have been made. The wife has not been able to ascertain where the funds have gone.
The wife calculates that, at or around the time of separation, the husband had access to a sum in excess of $75,000.00 in this account. On the balance of probabilities, I am satisfied that the husband is likely to have access to cash sums in the vicinity of around $165,000.00 and probably far more.
In addition, the husband is entitled to receive a pension from the Czech authorities. The pension provides him with an amount of around $30.00 per week. He is also entitled to a single person’s pension from Centrelink in an amount of $670.00 per fortnight.
The husband owns a campervan, which is kept at the Property H property. The husband utilises this vehicle, when he is in Australia. He apparently spends several weeks holidaying in the campervan each year, when he is in Australia. The wife does not accompany him.
The first step – the pool of property
I am prepared to accept the wife’s calculation as to what assets are available to be divided between the parties. I appreciate that this is an imprecise exercise. However, in my view, the extent of the assets, currently in the control of the husband, is likely to be more rather than less than the wife has calculated.
As previously indicated, the reason why there is significant imprecision, in the calculation of the pool of assets, is that the husband has declined to cooperate with the wife and those advising her.
My impression is that the husband has been content to obfuscate his financial position. In these circumstances, the court should not adopt an unduly cautious position in assessing the pool of assets.
Accordingly, I find that the following assets are available to be divided between the parties:
Assets
$
Property H
273,000.00
Wife’s savings
6,000.00
Husband’s National Bank investment
90,000.00
Wife’s motor vehicle
1,000.00
Husband’s motor vehicle
7,000.00
Furniture & effects (wife)
1,000.00
Husband’s tools
1,000.00
Husband’s National Bank account
75,252.00
Total Assets
$454,252.00
The second step – assessment of contributions
The relationship and subsequent marriage between the parties was one of around thirty-five years in duration. I am satisfied that both parties contributed equally, during that relationship, albeit in different ways. The husband was the main breadwinner, although the wife did work from time to time. The wife was the main homemaker.
The third step – section 75(2) factors
The wife is eighty years of age. She is in poor health. Her most pressing need is to finalise these proceedings and ensure that she has secure accommodation for herself for the remainder of her life.
The husband is approaching his 70th birthday. He enjoys good health. He seems to have created a comfortable lifestyle for himself, in retirement, which involves him being able to live in the Czech Republic for most of each year and return to Australia for regular holidays.
It seems to be the case that he is able to fund this lifestyle through his Australian and Czech pension entitlements, as well as through the utilisation of the sums of capital, which he alone controls and which he largely has concealed from the wife.
The wife’s life expectancy is less than the husband’s is. As such, her financial needs in retirement are not likely to be as great as his are. However the husband seems to have adequate financial resources to lead the life of his preference in the Czech Republic.
In my view, there are no specific section 75(2) factors, which favour one party more than the other. Accordingly, I do not propose to make any further allowance by reason of any factor arising from section 75(2).
The fourth step – justice and equity
For the reasons already provided, I am satisfied that it is appropriate for these proceedings to be brought to a conclusion, notwithstanding the husband has not taken part in them. The orders, which I envisage, will see the wife retaining the parties’ most significant asset, the Property H property.
To a very large extent, the husband has abrogated responsibility for this property. For the last three years or so, he has been content to leave the wife in the property, whilst he has travelled. The wife has maintained the property in his absence.
Given her advanced age and vulnerability, the wife has a pressing need to ensure that she is in secure accommodation. I can also understand why she would want to finalise these proceedings, so that she can bequeath her property, as she sees fit.
In all the circumstances of this case, I am satisfied that an equal division of the parties’ assets, with the wife retaining the Property H property, represents a just and equitable outcome.
On the pool of property, as calculated, this will mean that the wife will have to pay the husband a sum of around $50,000.00. I am told that she will be able to access such a sum from relatives.
Given his lifestyle, the husband does not seem to have a pressing need for accommodation in Australia. It seems more likely than not that he will continue to spend most of the year in the Czech Republic. Accordingly, it seems appropriate that he should retain the vast majority of the parties’ liquid assets.
Costs
The wife seeks an order for costs in her favour. The making of a costs order is governed by section 117 of the Family Law Act which provides as follows:
Costs
(1)Subject to sub-section (2) and subsection 70NFB(1) and sections 117AA, 117AB, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.
(2)If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
(2A)In considering what order (if any) should be made under sub-section (2), the court shall have regard to:
(a)the financial circumstances of each of the parties to the proceedings;
(b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f)whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the term of any such offer; and
(g) such other matters as the court considers relevant.”
Section 117 (1) abolishes, for the purposes of Family Law Act proceedings, the general rule that in civil proceedings costs follow the event. Section 117(2) then provides the court with a general discretion to make costs orders, if it is of the opinion that there are circumstances that justify it in so doing. Section 117(2A) sets out the matters that the court shall have regard to.[16]
[16] See Browne v Green 29 Fam LR 428 at 432
I have extensive knowledge of the wife’s financial circumstances. She is an aged pensioner, whose sole source of income is her pension. Her weekly expenses are modest. Her major expenditure being food for herself ($150.00); health insurance ($38.00) and car running expenses.
At the present time, she estimates that her weekly recurrent expenses are almost equal to her weekly pension. Given her circumstances, this must be so. She has little room for any financial miscalculation. Accordingly, the current legal proceedings represent a significant financial commitment for her.
The wife has deposed that she has modest savings of around $6,000.00. Her statement of financial circumstances also indicates that she estimates the costs of these proceedings as being somewhere in the vicinity of $10,000.00.
The property orders, which I envisage being made, will require the wife to pay the husband a significant sum of money so that his interest in the Property H property can be transferred to her. I have been told that relatives of the wife will make the necessary sum available. It is difficult to see how the wife will be able to repay such a sum, during her lifetime.
In these circumstances, the cost of these proceedings to the wife is a very significant one indeed, particularly bearing in mind the parties’ modest pool of assets. In an ideal world, this is the sort of case which one would hope would have been compromised, by the parties concerned, without the issue of legal proceedings.
This has not been possible. The husband has been unwilling to enter into any negotiations with the wife. He has ignored her, perhaps in the hope she will be dissuaded from attempting to resolve the issue of the joint ownership of the Property H property, which, up to this stage, remains subject to the principal of survivorship. A circumstance which favours the husband, given the ten year age gap between the parties.
Given this state of affairs, in my assessment, the wife has had no alternative other than to bring these proceedings. In my view, if she had not commenced the proceedings, she faced the prospect of being deprived of her entitlement to receive a proper share of the parties’ matrimonial assets, notwithstanding the fact that she has continued to occupy the Property H property.
In all these circumstances, I am satisfied that the conduct of the husband, in respect of these proceedings, has put the wife to a greater degree of legal expense than is proper. She has been forced to subpoena documents because of the husband’s lack of candour and has been unable to negotiate an appropriate settlement with him. In these circumstances, in my view, it is appropriate that the husband should contribute towards the wife’s costs.
The more difficult aspect of this case is assessing the quantum of those costs. The Court has a wide discretion as to the calculation of costs. Pursuant to Rule 21.02(2) of the Federal Magistrates Court Rules:
In making an order for costs in a proceeding, the Court may:
a) set the amount in costs; or
b) set the method by which the costs are to be calculated; or
c) refer the costs for taxation under order 62 of the Federal Court Rules or under order 38 of the Family Law Rules; or
d) set a time for payment of costs, which maybe before the proceeding is concluded.
However, pursuant to Rule 21.10:
Unless the Court otherwise orders, a party entitled to costs in a proceeding (other than a proceeding to which the Bankruptcy Act applies) is entitled to:
a) Costs in accordance to schedule 1; and
b) Disbursements properly incurred.
Pursuant to Rule 21.15:
The Court or a Registrar may certify that it was reasonable to employ an advocate, or more than 1 advocate, to appear for a party in a proceeding.
In this case, I am satisfied that it was appropriate that the wife should be represented by counsel. Accordingly, I certify that it was appropriate for wife to employ counsel in the proceedings.
Rule 21.10 creates a scale of costs by reference to the occurrence of fixed events. In my view, the creation of this fixed events scale was intended to enable the Federal Magistrates Court to use streamlined and simple procedures.[17]
[17] See Federal Magistrates Act at section 3(2)
Utilising schedule 1, the following costs are provided:
Stage 5
Preparation for half day final hearing
$1,875.00
Stage 6
Final hearing costs for half day hearing plus advocacy loading of 50%
$1,320.00
Total
$3,195.00
In all the circumstances, I believe that this sum represents a just award of costs, in all the circumstances of this case.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding one hundred and fourteen (114) paragraphs are a true copy of the reasons for judgment of Brown FM
Date: 28 July 2010
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