HILTON & LONGHURST

[2013] FamCA 511

FAMILY COURT OF AUSTRALIA

HILTON & LONGHURST [2013] FamCA 511

FAMILY LAW – PROPERTY – Settlement in relation to marriage – Determination of the property of the parties or either of them – Whether it is just and equitable to make an order altering the parties’ interests in property – Assessment of the parties’ respective contributions – Assessment of factors relevant to section 75(2) of the Family Law Act 1975 (Cth) – Where the Court determined that it was just and equitable for the wife to receive 80 per centum of the parties’ net asset pool
FAMILY LAW – PRACTICE AND PROCEDURE – EX PARTE HEARING – Where the husband failed to file a response and failed to appear in the proceedings – Where orders had previously been made for substituted service – Where the wife’s evidence and submissions were uncontested
FAMILY LAW – COSTS – Where the Court determined that it was just in the circumstances to make an order for costs against the husband – Where an order was made for costs on an indemnity basis with respect to the wife’s application for substituted service – Where the Court otherwise made an order for costs in favour of the wife on a party-party basis

Family Law Act 1975 (Cth)

Cases considered:
Hitch & Hitch [2012] FamCAFC 124

APPLICANT: Ms Hilton

RESPONDENT: Mr Longhurst

FILE NUMBER: SYC 4615 of 2011

DATE DELIVERED: 8 July 2013

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Fowler J

HEARING DATE: 14 June 2013 and written submissions

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Ms Jervis

RESPONDENT: No appearance

Orders

1. The husband shall forthwith pay to the wife the sum of $699,455.

2. Upon payment by the husband to the wife of the sum referred to in Order (1), the wife is to transfer to the husband all of her right, title and interest in and to the property owned by the parties and situated at Town B in District C, Thailand and described by the wife as “The Compound [District C] (Interest in 3 Rai (4500sqm) of Development Land in [Distict C], Thailand” (hereafter referred to as “the Thai property”).

3. Simultaneously with the transfer of the Thai property in accordance with Order (2), the husband is to pay all such monies as are necessary to discharge the debt due to the wife’s parents of $8,607 and any interest accruing thereon. If such debt is in the meantime paid by the wife to her parents, then the sum stipulated herein as being payable to the wife’s parents shall be paid by the husband to the wife instead.

4. Except as otherwise provided for in these Orders, the husband and the wife shall retain the right, title and interest in all property including superannuation presently in their name, possession or control.

5. Except as otherwise provided for in these Orders, the husband and the wife shall remain liable for and indemnify the other party against any liabilities presently in their name.

6. The Court notes that the wife’s application with respect to spouse maintenance was not pressed.

7. With respect to the wife’s applications to the Court for orders for substituted service (namely the wife’s Application in a Case dated 12 June 2012 and her Amended Application in a Case dated 13 August 2012), the husband is to pay the wife’s costs of and incidental to those applications on an indemnity basis.

8. Except as otherwise provided for in Order (6), the husband is to pay the wife’s costs of and incidental to the proceedings on a party-party basis.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Hilton & Longhurst has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 4615 of 2011

Ms Hilton

Applicant

And

Mr Longhurst

Respondent

REASONS FOR JUDGMENT

Introduction

1. The proceedings before the Court are proceedings in which the applicant wife seeks by application filed on 28 March 2012 orders altering the parties’ interests in property and a settlement of property.

2. The proceedings were heard in the absence of the respondent husband, who did not appear and who has filed no pleadings or evidence in the proceedings.

Background Facts

1. Where in this judgment I make statements of fact they are, unless otherwise specified, my findings of fact.

2. The wife was born in 1987. She is currently 26 years old.

3. The husband was born in 1975. He is currently 37 years old.

4. The parties met in Thailand in December 2006, they commenced cohabitation in January 2007, and married in March 2007 before moving to Australia. The wife was at the time aged 19 years.

5. The parties separated in June 2010 and were divorced in October 2011. The divorce was granted on a joint application of the parties.

6. There are no children of the relationship.

1. The current proceedings were initiated by the wife by an Initiating Application filed on 28 March 2012. By that application the wife sought final orders to the following effect:

   a)that the matrimonial property be divided as to 80% to the wife and as to 20% to the husband

   b)that the husband pay to the wife spouse maintenance of $500 per week for a period of three years from the date of these orders

   c)that the husband pay the wife’s costs on an indemnity basis.

2. The Court notes that in the written submissions tendered by the wife at the hearing of this matter, the wife did not address the issue of spouse maintenance.

3. The wife asserts that the husband disappeared on 4 April 2012. She gave evidence of her attempts to find him in an affidavit sworn by her and filed on 13 August 2012.

4. The wife has made interlocutory applications for orders restraining the husband from leaving Australia and she has also sought orders for substituted service.

5. On 13 August 2012, orders were made directing service of documents on the respondent husband by delivery to his last known email address, his last known residential address and his last known place of employment. In addition, the Court made an order for the husband to be alerted to the existence of the proceedings via private message to his profile on the social media website “Linkedin”. Under the relevant order, the message to the husband’s Linkedin profile was to read as follows:

   On 28 March 2012, [Ms Hilton] commenced proceedings against you in the Family Court of Australia at Sydney seeking distribution of marital property pursuant to the Family Law Act 1975.

   In addition, the Court has ordered that you do not leave Australia and upon sending of this message you must deliver and deposit any passport in your possession or power issued to you by both the Australian Government and the United States of America Government and your name will be placed on a ‘no fly list’ by the Court order upon notification of your presence in Australia.

   By order of the Court you are deemed to have been served by the sending of this message by your Linkedin page.

   Full details and copies of all relevant documents can be obtained by contacting Neville & Hourn Legal…(contact details omitted).

   If you do not file a Response to these proceedings the Court may make a determination on an undefended basis without further notice.

6. The orders of 13 August 2012 were complied with by the wife, however, notwithstanding this, the husband failed to file a response or appear in the proceedings.

7. In the circumstances, the Court has proceeded to determine the matter on an undefended basis and notes that there was no contradictor to the facts as alleged by the wife or to the submissions made on her behalf.

The Issues

1. The questions which the Court must consider in its determination of the wife’s application are as follows:

   a)what is the property of the parties or either of them available for distribution between them?

   b)is it just and equitable to alter the interests of the parties in their property, having regard to the fundamental propositions enunciated by the High Court of Australia in Stanford v Stanford [2012] HCA 52?

   c)if so, what is a just and equitable division of that property having regard to the contributions made by each of the parties as described in s 79(4) of the Act?

   d)

   what, if any, is an appropriate alteration to the parties’ property interests, having regard to the matters required to be taken into account under

   
   

   s 75(2) of the Act?

   e)taking the above matters into account, is the result of the Court’s determination a just and equitable result?

The Balance Sheet

1. The first step I must undertake is to identify the property of the parties or either of them available for division between them.

2. The Court was provided with a balance sheet set out in the wife’s written submissions.

3. It is asserted by the wife that the primary assets of the parties during the marriage comprised the following:

   a)a property at Suburb D

   b)shares in E Pty Ltd in which the husband was the CFO

   c)a property in Thailand (“the Thai property”).

4. The wife asserts that each of the above properties was acquired with joint funds, or funds gifted to the wife, and she claims that she made a greater contribution.

5. Following separation, the parties agreed that they would defer the division of their property for a period of one year so that the wife could focus on her immediate health needs. The wife was in constant pain and suffered from loss of sleep.

6. The wife, who had been overseas, returned to Australia in 2011 to find that the parties’ property at Suburb D had been sold without her consent or knowledge and notwithstanding that she had lodged a caveat on the title to the property and had made an agreement with the husband as to the sale and division of the property. The Court is told that the husband had lodged a lapsing notice in respect of the caveat.

7. Notwithstanding the husband's conduct, the wife continued to attempt to negotiate a settlement of her claims with the husband through solicitors.

8. In April 2012, the wife was informed by the husband’s former solicitors that they were not instructed to accept service in the matter. The wife’s solicitors then attempted to serve the husband through making enquiries of the husband’s former employer. The wife’s solicitors understand that the husband sold his shares in E Pty Ltd and tendered his resignation as an employee of that company in March 2012. Since that time, he has not worked for E Pty Ltd.

9. The property held by the parties in Thailand is registered in the name of a Thai resident and the wife has been unable to contact that person.

10. The wife says that she is now destitute and that the husband remains in possession of almost all of the marital assets which, it is asserted, are those set out below and which the Court finds to be the property of the parties or either of them:

Assets	($)
The proceeds of the sale of the property at [Suburb D] net of mortgage repayments (h)	240,000
A U bank account (NAB) with a credit balance as at 11 December 2011 (h)	2,040
A Vespa motor scooter (h)	7,300
An interest in Development Land in [District C], Thailand (j)	356,102
Proceeds of sale of 20,094,463 shares in [E Pty Ltd] which shares were previously valued by the husband at 259,874.25 (h)	117,000
200,000 Consultant Options in [Business F] (h)	33,580
200,000 Staff and Directors Options in [Business F] (h)	23,040
Watches (h)	8,000
Brick-a-Brac (h)	10,000
Total assets	$797,062
Superannuation
MLC (NAB) (h)	25,459
Total assets (incl. superannuation)	$822,521

Liabilities	($)
Debt owing to the wife’s parents in relation to the purchase of the Thai Property (w and h)	8,607
Counselling fees and personal loan (w)	26,620
Rehabilitation Costs Outstanding (w)	10,000
Debt owed to the wife's sister (w)	10,000
Taxation Debt of the wife (w)	45,000
Total liabilities	$100,227
Net assets (incl. superannuation)	$722,294

1. The wife claimed that there should be notionally added back into the pool of assets a number of items totalling an amount of $67,141.95 and representing monies which, she says, have been expended by the husband from joint funds allegedly to his own benefit.

2. This Court does not consider on the state of the evidence that it is appropriate to add back these items as notional assets as it appears that the money has been expended and the law does not provide for the division of non-existing assets. Notwithstanding that approach, however, the Court will take the sum into account in its consideration of matters under section 75(2)(o).

Is it just and equitable to alter the parties' interests in property?

1. Given that the parties are divorced, the fiscal unity and cooperation which was attendant upon their marriage no longer exists.

2. The parties have no agreement as to how, in these changed circumstances, their property and financial circumstances, which are held in a manner no longer suitable to their current position, might be adjusted and, accordingly, it is just and equitable for an order to be made.

3. The Court must turn now to a consideration of what order, in the circumstances of this case, might be just and equitable as between these parties.

Section 79(4) contributions

Contributions at the commencement of cohabitation

1. The wife set out information as to the parties’ pre-cohabitation contributions in her affidavit filed on 28 March 2012.

2. The wife asserts that the husband co-owned a “pub” with an Englishman in Thailand at around the time that they met and married. The wife gives no evidence as to the value of the husband’s interest in the “pub”.

3. According to the wife, she had savings at around the time the parties met and married. She says that she had saved these funds for “university and property developing.” The wife does not provide a figure for the amount of savings which she had, however, she asserts that about two months after the marriage she transferred her savings “for university” to the husband’s bank account, at the husband’s suggestion. The wife says that those funds, which were in Great Britain Pounds (GBP), amounted to around GBP15,000.

Contributions to date of separation

1. The wife asserts that she made greater direct financial contributions by virtue of her earnings contributed to the marriage.

2. The wife borrowed money from her parents to enable the purchase of the Thai property.

3. After the parties moved to Australia, the wife commenced working in the entertainment industry in Sydney. Initially she worked five nights per week. She was paid in cash and the cash she earned she entrusted to the husband.

4. The wife deposes to preparation of an income tax return for the year ending

   
   

   30 June 2008 showing taxable income in the sum of approximately $85,061.

5. The wife had befriended a man who, from time to time, gave her gifts in cash. The wife says that she passed these gifts to the husband. In 2007, the friend gave to the wife the sum of $150,000 with a request that she stop what she was doing in the entertainment industry and apply the money to help her family out.

6. The money, however, was applied by the husband to the purchase of shares in the business operated by his employer, Company G.

7. The wife asserts that the husband spent significant amounts on the promotion of his ego. He spent the money earned by the wife and the cash which had been given to her by her friend.

8. From time to time, the wife discovered evidence of the husband spending money without her prior knowledge or consent.

9. In October 2008, the wife was involved in a motor vehicle accident and sustained injuries. Those injuries caused the wife significant back pain, which she still experiences on occasion. The wife received physiotherapy which failed to alleviate her pain, but she nevertheless returned to work in the entertainment industry. Thereafter, the wife was obliged to take time off from work from time to time because of her pain.

10. The wife made greater indirect contributions than the husband by virtue of improvements made to the property at Suburb D and referred to in her evidence, which improvements the evidence suggests added value to the property.

11. The wife was the primary contributor as a homemaker.

12. The conduct of the husband has been such as to make the contributions of the wife more arduous than they ought to have been. The wife has relied on evidence of one Ms H as to the emotional and psychological impact of the husband's conduct on her wellbeing. It is asserted by the wife that the husband's insistence of her continuing in work, notwithstanding the injuries she had sustained, caused her further injury which has affected her earning capacity.

13. The wife asserts that the husband has been guilty of waste in that he has realised property of the parties or either of them without the consent of the wife and at prices less than otherwise might reasonably have been expected for the property. In particular, she points to the sale of the E Pty Ltd shares, albeit at arms length, at a price less by more than $100,000 of their asserted value.

14. The Court finds that the husband has spent recklessly and that the value of the pool of assets available for distribution between the parties has thereby been diminished.

Post separation contributions

1. The wife does not address post separation contributions in her submissions, however, she asserts the following in her affidavit filed on 28 March 2012.

2. Since separation, the wife has only worked briefly. She says that she ceased working as a result of the pain that she was experiencing.

3. The wife concedes that she has spent some money on the parties’ joint credit card, however she says that she believed she was “entitled to do so” as the husband had been left with all the assets of the marriage. The wife states that since separation, she has spent between $20,000 and $30,000 of marital funds but that she has otherwise borrowed money and has substantial debts.

Conclusion based on contribution

1. All in all, I assess the contributions of the parties to the acquisition, conservation and improvement of the property of the parties to the marriage or either of them, including such property which is no longer the property of the parties to the marriage or either of them, to be in the order of 50% to the wife and 50% to the husband to the date of their separation.

Section 75(2) considerations

1. The wife is 26 years old and the husband is 37 years old. There is a differential of almost ten years in terms of their age, however, it can be presumed that they will both be in the workforce for at least the next 15 years.

2. The wife has been injured and has limited earning capacity when compared to that of the husband. It appears that she will have ongoing health difficulties arising from the circumstances of the marriage.

3. The wife deposed that the husband has an ongoing earning capacity in the order of $100,000 per annum, which was demonstrated during the marriage.

4. The husband has had the use of the parties' joint funds, referred to earlier, and the Court will take that into account here. The Court noted earlier that it would not add back to the pool of assets the amount in the sum of over $67,000 which the wife sought to be added back, however, the submissions of the wife in respect to those funds are a factor which the Court considers relevant under section 75(2)(o).

5. The current health position of the wife and its causes gives rise to the necessity of the Court to consider, having regard to the justice of the case, a significant adjustment in her favour, as does the husband's utilisation of funds since the marriage.

6. The waste of the husband likewise demands an adjustment to do justice in this case.

Conclusion on section 75(2)

1. For all the reasons referred to above and in all the circumstances adumbrated in the evidence, the Court concludes that there should be an adjustment in favour of the wife of 30%.

Overall division of assets

1. The above determination will see the wife receive 80% of the parties’ assets as found and the husband will receive 20%.

Just and equitable

1. The division of assets would see the wife receive $577,835 of the parties’ net assets and the husband receive the balance of $144,459.

2. In the circumstances of this case, I determine that result to be just and equitable.

Orders which should be made

1. I propose orders which will transfer the Thai property to the husband with an obligation on his part to repay to the wife’s parents (or in the event that the wife has earlier reimbursed her parents, to the wife) the sum of $8,607 owing under the loan made for the purchase of the Thai property.

2. All the other assets in the found asset pool are with the husband and the Court does not intend to transfer the title of any such assets to the wife.

3. The liabilities in the found asset pool are predominantly with the wife, save for the amount owing to the wife’s parents referred to above. The Court has determined that the liabilities in the wife’s name at present will remain in the wife’s name.

4. In order to give effect to the 80:20 division of the parties’ net assets which the Court has determined to be just and equitable, the Court will make an order requiring the husband to pay to the wife the sum of $699,455 in cash.

5. The wife will receive:

Assets	($)
Payment from the husband to effect an 80:20 division of net assets	669,455
Total assets	$669,455
Liabilities
Counselling fees and personal loan	26,620
Rehabilitation costs outstanding	10,000
Debt owed to the wife's sister	10,000
Taxation debt of the wife	45,000
Total liabilities	$91,620
Net assets	$577,835

1. The husband will receive:

Assets	($)
The proceeds of the sale of the property at Suburb D net of mortgage repayments	240,000
A U bank account (NAB) with a credit balance as at 11 December 2011	2,040
A Vespa motor scooter	7,300
An interest in Development Land in District C, Thailand	356,102
Proceeds of sale of 20,094,463 shares in E Pty Ltd which shares were previously valued by the husband at 259,874.25	117,000
200,000 Consultant Options in Business F	33,580
200,000 Staff and Directors Options in Business F	23,040
Watches	8,000
Brick-a-Brac	10,000
Total assets	$797,062
Superannuation
MLC (NAB)	25,459
Total assets (incl. superannuation)	$822,521

Liabilities	($)
Debt owing to the wife’s parents in relation to the purchase of the Thai Property	8,607
Payment to the wife to effect an 80:20 division of net assets	669,455
Total liabilities	$678,062
Net assets (incl. superannuation)	$144,459

Costs

1. The wife has sought an order for costs of and incidental to her amended application for final orders on an indemnity basis, asserting that the conduct of the husband has increased her costs in the proceedings. In the alternative, the wife seeks orders for costs on a lawyer-client basis.

2. In relation to the issue of costs, it is clear that section 117(1) of the Act provides that, subject to section 117(2), each party to proceedings shall bear his or her own costs. Section 117(2) of the Act reposes a wide discretion in the Court to make such orders for costs as the Court considers just.

3. Section 117(2A) of the Act sets out the matters which the Court must take into account in determining whether or not to depart from the rule in section 117(1) and make an order for costs under section 117(2).

4. In its consideration of the operation of subsection 117(2A) and the authorities which guide this Court in the application of that provision, the Court notes that the Full Court in Hitch & Hitch [2012] FamCAFC 124 stated as follows:

   53.In Penfold and Penfold (1980) 144 CLR 311, the High Court described the application and purpose of this section. It was said at 315:

   Sub-section (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs. Consequently, with respect to their Honours in the Family Court, we do not agree with the suggestion made in the judgment under appeal that an order can only be made under s. 117(2) in "a clear case".

   54.As a discretionary decision, the weight to be given to a particular consideration under s 117(2A) is a matter for the judge. However, in I and I (No 2) (1995) FLC 92-625 it was held that the relevant matters in s 117(2A) “must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs”.

   55.That is not to say that one single matter may not ultimately be determinative, as was confirmed in Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Another (2005) 33 FamLR 123 at paragraph 41…

   56.It is as well to recall previous decisions of this Court that a disparity in financial resources between the parties may justify an order for costs in favour of the party with fewer financial resources (Marinko v Marinko (1983) FLC 91-307, Mallet v Mallet (1984) 156 CLR 605). Also relevantly, the apparent inability of a party to pay costs is not a bar to a costs order being made in circumstances where that party’s conduct is determined to warrant an order (Cross v Beaumont (2008) 39 Fam LR 389).

5. Having considered the above principles, the Court now turns to the matters which it must consider under section 117(2A).

a)      The financial circumstances of each of the parties to the proceedings

1. The husband has liquidated assets of the marriage and retained the proceeds.

2. The financial position of the wife is significantly worse than the financial position of the husband.

3. Even if it were the case that the husband were unable to pay the wife’s costs – and the Court has no evidence that that is the case – the authorities cited above indicate that this would not be a bar to a costs order being made if the circumstances of the husband’s conduct otherwise warranted such an order.

b)      Whether either party to the proceedings is legally aided

1. Neither party is or was legally aided.

c)      The conduct of the parties to the proceedings in relation to the various matters set out in section 117(2A)(c)

1. Under this subsection of the Act, the Court must consider the conduct of the parties in relation to the proceedings and specifically, without limiting the generality of such conduct, it must consider their conduct in relation to “pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters”.

2. In this case, the husband has not involved himself in the proceedings and as such it is not possible to consider his conduct in relation to much of the above, apart from observing that he has not engaged in those processes at all with the exception of involvement in some unfruitful discussions.

3. The wife submits that she was “effectively forced” to bring several applications before the Court for interim orders dealing with service issues by reason of the failure of the husband to engage in the proceedings or to cooperate in the resolution of issues between the parties. She claims that she was obliged to issue requests to the Australian Federal Police in an attempt to ascertain the whereabouts of the husband and the location of the parties’ assets.

4. On this issue the wife submits as follows:

   32. The Wife’s costs were inflated as a result of the failure of the Husband to comply fully and properly with previous orders of the Court and this is a matter relevant both to costs and the basis of any award.

   33. The Husband ought not benefit from his behaviour, and the Wife ought not suffer detriment as a result of same.

5. The Court finds that the husband departed Australia without resolving matters in proceedings of which the Court finds he was aware. Further, he failed to appear in these proceedings despite being served with notice of them. His conduct in this regard did inflate the wife’s costs in the proceedings and the Court is of the view that the wife should not suffer detriment as a result.

d)      Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the Court

1. No proceedings were necessitated by the failure of a party to comply with previous orders of the Court. The proceedings were necessitated by the failure of the parties to reach an agreement with respect to property settlement following the breakdown of their marriage.

e)      Whether any party to the proceedings has been wholly unsuccessful in the proceedings

1. The wife submits that the husband cannot be successful in the proceedings because he has “‘dodged’ the Court system (and indeed the country)”.

2. Notwithstanding that the husband has not engaged in the proceedings and has left Australia, the Court cannot find that he was “wholly unsuccessful” in the proceedings, given that he did not defend the proceedings and, in accordance with the Orders made above, will retain 20% of the parties’ net assets.

f)       Whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer

1. In her affidavit sworn on 28 March 2012, the wife set out evidence of the initial discussions that the parties had in relation to effecting a settlement.

2. The wife says that the parties came to an agreement and she annexed to her affidavit an email from the husband to the wife dated 26 April 2011 which purports to set out what was agreed between them. Despite this agreement being in place, and despite the wife lodging a caveat over the property at

   
   

   Suburb D, the husband sold that property without the wife’s knowledge or consent in breach of the agreement which they had previously reached.

3. Apart from this “agreement”, there is no evidence before the Court that any offer in writing has been made by either party to settle the proceedings.

g)      Such other matters as the Court considers relevant

1. There are no other matters in addition to the matters discussed above which the Court considers relevant to its determination as to the issue of costs.

Determination as to costs

1. The Court has considered the wife’s submissions but declines in the exercise of its discretion to make the order that the wife seeks for general indemnity costs. Whilst the Court has a general discretion to make costs orders, it does not accept that this is a proper case for making an order as to general indemnity costs.

2. Notwithstanding the above, and having regard to the conduct of the husband in necessitating applications to the Court for orders for substituted service by failing to enable the wife to provide him with documents, the Court accepts that in relation to the orders made for substituted service there should be an order for costs on an indemnity basis. In addition to making that order, the Court finds that it is just in the circumstances of this case to otherwise make an order for costs of and incidental to the proceedings on a party-party basis.

I certify that the preceding ninety-one (91) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Fowler delivered on 8 July 2013.

Associate: 

Date:  8 July 2013