Hill and Hill

[2009] FamCA 489

FAMILY COURT OF AUSTRALIA

HILL & HILL [2009] FamCA 489

FAMILY LAW – PROPERTY – Interim

Family Law Act 1975 (Cth)

Colgate-Palmolive Company & Anor v Cussens Pty Ltd (1993) 46 FCR 225
Harris v Harris (1993) FLC 92‑378
Hickey v Attorney-General for the Commonwealth of Australia (2003) FLC 93-143
Kohan (1993) FLC 92-340
Schokke (1996) FLC 92-693

APPLICANT: Mr Hill

RESPONDENT: Ms Hill

FILE NUMBER: DGC 1508 of 2007

DATE DELIVERED: 1 June 2009

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 1 June 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr J. Buchecker

SOLICITOR FOR THE APPLICANT: Susan Snyder

COUNSEL FOR THE RESPONDENT: Mr G.R. Atkinson

SOLICITOR FOR THE RESPONDENT: Henderson & Ball

Orders

1. That the application in a case filed by the husband on 11 May 2009 be dismissed.

2. That the response of the wife filed 20 May 2009 be dismissed.

IT IS CERTIFIED:

1. That pursuant to Order 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel to attend.

2. That the husband pay the wife’s costs of $3000 thrown away this day within one month.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: DGC 1508 of 2007

MR HILL

Applicant

And

MS HILL

Respondent

REASONS FOR JUDGMENT

1. This is an application filed by the husband on 11 May 2009 in which he seeks the payment of two debts which in very rough figures amounts to about $37,000 from a significant sum of money sitting in the husband's solicitor's trust account.  The amount sitting in the trust account is about $248,000 and that seems to be the proceeds of the sale of the property that the parties had.

2. Counsel for the husband described the marriage as a short marriage and on the facts, one might subjectively think that is right.  They were married in November 2000 and separated in December 2004.  The problem is that I am not really sure what the respective contributions of the parties have been during what might otherwise be described as a relatively short marriage.

3. What the husband has said is that the wife has had significant use of funds post the separation period by her access to credit cards.  There have been a number of affidavits that I have read and relied upon.  The wife in her response described the use of the funds as for business purposes.  When one looks at the subsequent affidavit in reply of the husband, to some extent that might necessarily be right, but there are also significant other payments set out in a number of pages of an affidavit in which the husband asks me to conclude that they were personal expenditure of the wife.  It is not a matter that I can draw conclusions upon where the facts are significantly in dispute.

4. The parties have a pool of assets somewhere in the vicinity of $1.1 million.  That is comprised of about $248,000 in the trust account and net equity of about $90,000-odd in a property at L, an $11,000 or thereabouts, boat and the sum of $140,000 said to have been received by the wife as compensation from a business that she purchased but ultimately did not proceed with.

5. What is controversial and about which I can obviously make no finding is the interest of the husband and the wife and/or the husband in 25 per cent of a business called P Business Pty Ltd.  On a conservative view, that interest seems to be somewhere in the vicinity of $600,000, although counsel for the husband indicated that the valuation might show that it is higher.

6. If I add all of those figures together, I end up with a pool of assets of about $1.1 million or thereabouts.  Of that $1.1 million, the husband has about $700,000 under his immediate control. 

7. In an application relating to the payment of debts and/or the distribution of funds of the parties, I am exercising powers of Part VIII of the Family Law Act 1975 (Cth) (“the Act”) and in particular the provisions of s 79. The principles were set out by the Full Court in Schokke (1996) FLC 92-693, where the Full Court highlighted the previous decision of the Full Court in Harris v Harris (1993) FLC 92‑378.

8. In Harris' case, the Full Court warned courts that they had to consider three specific issues.  The first issue was that the exercise of the power had to be confined to cases where the circumstances presented at that time were compelling.  The second is that it is an exercise of the s 79 power and as a result of that, it had to be performed within the parameters of the s 79 provisions.  The third is that the power had to be exercised conservatively and a judge making an order along the lines of those sought by the husband had to be satisfied that the remaining property would be adequate to meet the legitimate expectations of both parties at a final hearing.

9. Dealing with those three specific issues in this case, there is nothing in the material that indicates that the circumstances presented at the moment are compelling.  The husband says that he is spending a large sum of money in interest on the $37,000 that is outstanding on the credit card and that he would like to get his credit rating problem resolved.  There is no evidence as to what his credit rating problem is.  There is no evidence that he is under any pressure by anybody to make the payments.  There is no evidence before me to show that there will be a financial disaster in the event that these payments are not made.  There is no evidence before me to show that he does not have some alternative system of borrowing.  His counsel indicates that he has cash flow problems but that is also not evident from any of the material that I have read.  As such, it is hard for me to say that the circumstances in this case are compelling.

10. The second point is that I am obliged to contemplate the parameters of s 79.  There is a dispute between the parties as to exactly what the pool of assets is.  There is no evidence before me as to what contributions each of them has made to that pool. I have no idea what their future respective financial positions might be because, as Mr Atkinson said, there is no financial statement from the husband.  There is no evidence in the husband's affidavit either as to how he would see any division of the property.   As such, it is hard for me to then follow the four-step process as set out by the Full Court in Hickey v Attorney-General for the Commonwealth of Australia (2003) FLC 93-143.

11. The third point is that the power is to be exercised conservatively and I have to be satisfied that whatever property I leave remaining will be adequate to meet the legitimate expectations of both parties.  If I take the $37,000 out of the $248,000 in the trust, there is still $200,000 or a little more left.

12. The problem I have is that the husband says the reason he needs the payment to be made now is because he has got a cash flow problem.  It would not take much imagination to suggest that he may have that same problem when the ultimate division of the property arises.  On that basis, if he has got $700,000 out of the $1.1 million, it means that the court has to be satisfied that he is going to get at least 70 per cent of the pool of assets or alternatively that he is going to have the capacity to somehow use those assets to pay out whatever he has to pay to the wife.  I could not be satisfied on this evidence that that is the case.

13. It is clearly put by the husband that the debt is a joint liability but ultimately what that should be sheeted home to the wife.  The evidence in this case however is confusing, having regard to the recent affidavit filed by the husband on 27 May 2009 in which, in a very long-winded way, he sets out all of the payments that have been made over the period of time since the parties separated under the one roof.  I have no idea not only whether the payments were in fact made to the wife in a personal sense or whether they were a business expense in the sense of some entitlement for the wife from the business and I have no idea whether they are payments that the husband should be making to the wife on some sort of spousal maintenance basis.

14. Having regard to what the Full Court said in both Schokke and Harris, it is not appropriate for me to guess.  Ultimately the exercise of the s 79 power is one which must be just and equitable to both parties.  In this case, I could not be satisfied that that is the case on this material.  I have already made it clear that when the matter ultimately comes to trial, the parties may be able to argue that some adjustments ought be made because one party adopted an unreasonable position vis-a-vis the other.  However, on this material, it is not something that I can make any determination about today.  In those circumstances, I find that the husband's application does not set out circumstances which are compelling, nor is there evidence upon which I could exercise the Part VIII powers.  Under those circumstances, the application is dismissed.

15. Mr Atkinson on behalf of the wife has made an application for costs. The provisions of s 117 of the Act apply in relation to costs and that is that each party should bear their own costs. The only time the court is to depart from that rule is where it feels that it is justified in so doing and to determine that justification, the court must then look at the provisions of s 117(2A). Those particular provisions set out a number of considerations, including the financial circumstances of each of the parties. In this case, I have very little information about their financial circumstances, other than the fact that there is common ground between them that there is a pool of assets of at least something in the vicinity of a million dollars.

16. I am not told that there is any provision of legal aid affecting either of the parties in this case.  I am obliged to take into account the conduct of the parties and whether the proceedings were necessitated by the failure of the parties to comply with previous orders.  None of those provisions in this case apply. 

17. I am also entitled to have regard to whether or not one of the parties has been wholly unsuccessful in these proceedings and as part of that, I am also entitled to take into account whether an offer in writing has been made to settle the proceedings and the terms of any such offer.  Whilst there has not been an offer in that sense, it has been made very clear by the wife to the husband that she was opposing the husband's application and for the reasons that have been articulated today, it seems to me that this is a circumstance where the court ought to justify departing from the rule.

18. The question then remains as to what the quantum of those costs would be.  For me to make an order along the lines sought by the wife would be tantamount to making an order for indemnity costs and it is difficult to make an order under these circumstances.  (See Kohan (1993) FLC 92-340 and Colgate-Palmolive Company & Anor v Cussens Pty Ltd (1993) 46 FCR 225).

19. The quantum of costs however is a discretionary matter and in the circumstances, I propose to exercise my discretion and make a total order of $3000.

I certify that the preceding Nineteen (19) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin 

Associate: 

Date:  9 June 2009