Holloway & Reilly
[2024] FedCFamC2F 1888
•16 December 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Holloway & Reilly [2024] FedCFamC2F 1888
File number(s): MLC 6250 of 2024 Judgment of: JUDGE O'SHANNESSY Date of judgment: 16 December 2024 Catchwords: FAMILY LAW – Property – where leave was granted to file an application out of time – where the applicant seeks the sale of the property – undefended hearing – where the court is satisfied the respondent was notified of proceedings – final property orders. Legislation: Family Law Act 1975 (Cth) ss 90SF, 90SM and 117 Cases cited: Hickey and Hickey and the Attorney-General [2003] FamCA 395; (2003) FLC 93-143
Keskin & Keskin and Anor [2019] FamCAFC 236; (2019) FLC 93-932
Stanford v Stanford [2012] HCA 52; (2012) FLC 93-518
Division: Division 2 Family Law Number of paragraphs: 55 Date of hearing: 16 December 2024 Place: Melbourne Counsel for the Applicant: Ms Crotty Solicitor for the Applicant: Leslie Family Law The Respondent: No Appearance ORDERS
MLC 6250 of 2024 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR HOLLOWAY
Applicant
AND: MS REILLY
Respondent
ORDER MADE BY:
JUDGE O'SHANNESSY
DATE OF ORDER:
16 DECEMBER 2024
THE COURT ORDERS THAT:
1.Pursuant to section 44(6) of the Family Law Act 1975 (Cth), the Applicant, Mr Holloway (“the Applicant”), be and is granted leave to prosecute this Application out of time nunc pro tunc.
2.Within 42 days of the date of these orders, the parties do all things and sign all documents necessary to place the property situate at and known as B Street, Town C (“the property”) on the market for sale (“the sale”).
3.For the purposes of the sale:
(a)The Applicant is to send to the Respondent, Ms Reilly (“the Respondent”) via her email address of …@..., a list of three proposed sale agents from which the Respondent is to select one via return email;
(b)In the event the Respondent fails to select one of the sale agents nominated by the Applicant in accordance with the preceding subparagraph within 28 days of receiving the Applicant’s nominations, the Applicant proceed to select a sales agent;
(c)The Applicant follow all directions and recommendations of the sales agent including but not limited to the sale price and readying the property for sale;
(d)The Applicant is to keep the Respondent apprised in relation to the progress of the sale; and
(e)The Respondent arrange a third party to undertake the removal of an outbuilding located at the back yard of the property at a mutually agreed time and date, and in the event the Respondent fails to do so within 42 days of the date of these orders, the Applicant be authorised to do all things necessary to remove the outbuilding.
4.Pending settlement of the sale:
(a)The Applicant is to have sole right to occupy the property to the exclusion of the Respondent;
(b)The Applicant will pay all mortgage instalments and other outgoings in relation to the property as and when they fall due;
(c)Each party holds their interest in the property on trust pursuant to these orders;
(d)The parties have liberty to apply in relation to the sale.
5.Upon settlement of the sale of the property, the proceeds of sale be applied as follows:
(a)Firstly, to pay all costs and commissions in relation to the sale;
(b)Secondly, to discharge the mortgage secured over the property;
(c)Thirdly, 50% of the balance to be paid to the Applicant divided;
(d)Fourthly, a payment be made to the Applicant for legal costs in the sum of $17,400;
(e)Fifthly, the balance to be paid to the Respondent.
6.Within 28 days of the date of these orders, the Respondent provide to the Applicant (via solicitors) a list of items that she wishes to retain from the property, with such list not to include any of the Applicant’s belongings listed at Annexure “A” to these orders.
7.Upon the Applicant’s receipt of the list provided by the Respondent in accordance with the preceding order, the parties arrange (via solicitors if possible) a time and date within 21 days at which the Respondent is to arrange a third-party removalist to attend the property to collect the items in the list.
8.In the event the Respondent fails to comply with paragraphs 6 and/or 7 herein, the Applicant do all things necessary to arrange for any items that belong to the Respondent to be returned to the Respondent and in the event he is unable to do so, he is to dispose of those items as he deems appropriate.
9.The Applicant retain to the exclusion of the Respondent:
(a)His Motor Vehicle 1;
(b)His Motor Vehicle 2;
(c)His Motor Vehicle 3; and
(d)The items listed at Annexure “A” to these orders.
10.The Respondent retain to the exclusion of the Applicant:
(a)Her Motor Vehicle 4;
(b)Her Motor Vehicle 5; and
(c)Her interest in the Reilly Family Trust.
11.Unless otherwise specified in these orders and save for the purposes of enforcing monies due under these or subsequent orders:
(a)Each party be solely entitled to the exclusion of the other party to all property in their names (including superannuation and choses in action);
(b)Money standing to the credit of the parties in any joint bank account shall be divided equally between the parties and the account thereafter closed;
(c)Insurance policies remain the sole property of the beneficiary named thereon;
(d)Each party be solely responsible for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders;
(e)Any joint tenancy of the parties in any real or personal estate is hereby expressly severed; and
(f)Each party hereby foregoes any claim they may have to any superannuation benefit and / or interest in any trust or deceased estate that is payable to or belonging to or owned by the other, save as provided for in these Orders.
“Annexure A”
(i)Computer equipment (including old laptop and desktop);
(ii)Musical instrument;
(iii)Tools;
(iv)Game console / stereo / sound bar;
(v)Camping equipment;
(vi)Firearms;
(vii)Vehicle;
(viii)Helmet;
(ix)Safety equipment.
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).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of 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 has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
EX TEMPORE REASONS FOR JUDGMENT
Judge O’Shannessy:
These are the settled reasons of a judgment delivered ex tempore. These reasons were delivered orally. These settled reasons have been corrected from the transcript where appropriate to correct grammatical errors, to add citations, passages of authorities and evidence, and to attempt to make the orally delivered reasons easier to read. The substance is unchanged.
In the matter of Holloway & Reilly, the matter comes before me where only the applicant, Mr Holloway, appears with solicitor and counsel. The respondent to the application, Mr Holloway’s former de facto partner and mother of his children, Ms Reilly, has not appeared. The application seeks final property alteration, or property division, orders and leave to make those orders roughly 12 months out of time.
To determine the substantive case between the parties, it is necessary that I follow sections 90SF and 90SM of the Family Law Act 1975 (Cth) (‘the Act’), which include the following:
Section 90SF Matters to be taken into consideration in relation to maintenance
(1)In exercising jurisdiction under section 90SE (after being satisfied of the matters in subsections 44(5) and (6) and sections 90SB and 90SD), the court must apply the principle that a party to a de facto relationship must maintain the other party to the de facto relationship:
(a)only to the extent that the first - mentioned party is reasonably able to do so; and
(b)only if the second - mentioned party is unable to support himself or herself adequately whether:
(i)by reason of having the care and control of a child of the de facto relationship who has not attained the age of 18 years; or
(ii)by reason of age or physical or mental incapacity for appropriate gainful employment; or
(iii)for any other adequate reason.
…
(2) In applying this principle, the court must take into account only the matters referred to in subsection (3).
(3) The matters to be so taken into account are:
(a)the age and state of health of each of the parties to the de facto relationship (the subject de facto relationship); and
(b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c)whether either party has the care or control of a child of the de facto relationship who has not attained the age of 18 years; and
(d)commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii)a child or another person that the party has a duty to maintain; and
(e) the responsibilities of either party to support any other person; and
(f)subject to subsection (4), the eligibility of either party for a pension, allowance or benefit under:
(i)any law of the Commonwealth, of a State or Territory or of another country; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party; and
(g) a standard of living that in all the circumstances is reasonable; and
(h)the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
(i)the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant; and
(j)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k)the duration of the de facto relationship and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l)the need to protect a party who wishes to continue that party’s role as a parent; and
(m)if either party is cohabiting with another person--the financial circumstances relating to the cohabitation; and
(n)the terms of any order made or proposed to be made under section 90SM in relation to:
(i) the property of the parties; or
(ii) vested bankruptcy property in relation to a bankrupt party; and
…
…
Section 90SM Alteration of property interests
(1)In property settlement proceedings after the breakdown of a de facto relationship, the court may make such order as it considers appropriate:
(a)in the case of proceedings with respect to the property of the parties to the de facto relationship or either of them--altering the interests of the parties to the de facto relationship in the property; or
…
…
(3)The court must not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
(4)In considering what order (if any) should be made under this section in property settlement proceedings, the court must take into account:
(a)the financial contribution made directly or indirectly by or on behalf of a party to the de facto relationship, or a child of the de facto relationship:
(i)to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them; or
(ii) otherwise in relation to any of that last - mentioned property;
whether or not that last - mentioned property has, since the making of the contribution, ceased to be the property of the parties to the de facto relationship or either of them; and
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the de facto relationship, or a child of the de facto relationship:
(i)to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them; or
(ii) otherwise in relation to any of that last - mentioned property;
whether or not that last - mentioned property has, since the making of the contribution, ceased to be the property of the parties to the de facto relationship or either of them; and
(c)the contribution made by a party to the de facto relationship to the welfare of the family constituted by the parties to the de facto relationship and any children of the de facto relationship, including any contribution made in the capacity of homemaker or parent; and
(d)the effect of any proposed order upon the earning capacity of either party to the de facto relationship; and
(e)the matters referred to in subsection 90SF(3) so far as they are relevant; and
(f)any other order made under this Act affecting a party to the de facto relationship or a child of the de facto relationship; and
(g)any child support under the Child Support (Assessment) Act 1989 that a party to the de facto relationship has provided, is to provide, or might be liable to provide in the future, for a child of the de facto relationship.
Decision to proceed in the absence of respondent
The first matter that I must determine is whether it is appropriate to proceed in the absence of Ms Reilly today. I am satisfied that it is appropriate to proceed in the absence of Ms Reilly because, unusually and sadly, Ms Reilly has been aware of the proceedings but has chosen an alternative, or unorthodox, means of attempting to advance her interests. There may be a degree of self-sabotage in that attempt.
Between 9 September 2024 and 18 November 2024 – these proceedings having been issued on 27 May 2024 – just in that period alone, Ms Reilly sent Mr Holloway’s solicitor, a family law specialist in Melbourne, some 390 emails in total. Those emails could not be said to directly relate to the proceedings, but I am told, and accept, that some of them demonstrated an awareness of the proceedings. This is a matter where an order for substituted service was made because of the difficulty in serving Ms Reilly. The evidence before me is that a relative of Ms Reilly’s told Mr Holloway that the documents had been passed over to her. That is consistent with the receipt of the emails.
Ms Reilly was also emailed a copy of the court orders of 7 October 2024. Those orders included as follows:
1.The matter is adjourned for a possible undefended final hearing before a Judge of the Federal Circuit and Family Court of Australia (Division 2) on 10 December 2024 before His Honour Judge O’Shannessy at 10:00am, for determination of:
(a) The Applicant’s application for leave to proceed out of time, pursuant to section 44(6) of the Family Law Act 1975 (Cth); and
(b)If leave is granted, the Applicant’s application for final property orders.
2.The Respondent de facto Wife appear and/or be legally represented at Court in person at the Melbourne Registry of this Honourable Court or, with the prior leave of the Court, by telephone or videoconference on the adjourned hearing date.
3.By no later than 4:00pm on 14 October 2024, Applicant serve the Respondent with a copy of these orders by email to […]@[…].
…
5.Service on the Respondent of the documents to be filed by the Applicant pursuant to the preceding paragraph be effected by email to […]@[…].
AND THE COURT NOTES THAT:
A.The primary asset of the parties consists of a real Property at [Town C] in Victoria (near [City D]) occupied by the Applicant of which the Applicant proposes to be sold.
B.The Respondent has communicated to the Applicant’s solicitor and to the Court via email that:
(a)She has received documents that have been served on her on behalf of the Applicant in these proceedings in accordance with previous orders; and
(b) She does not intend to attend any further court hearings.
C.NOTICE TO THE RESPONDENT: An undefended hearing is a hearing where the court considers the evidence and makes orders (including potentially, but not limited to, orders sought by the Applicant) in the Respondent’s absence based solely on the uncontested evidence of the Applicant. Those orders may include orders that the Respondent pay some or all of the legal costs of the Applicant of bringing the application.
D.I[n] the event of the Respondent appearing at the possible undefended hearing, it will be at the discretion of the presiding Judge as to whether a Final Hearing of the matter can proceed and the level of participation of the Respondent.
It is likely, had Ms Reilly appeared – or attempted to appear – that I would have listened to whatever she had to say.
The communications were topped off by Thursday, 12 December 2024 at 11.59 am, when Ms Reilly sent an email to Mr Holloway’s solicitor and to the General Inquiries email address of the Federal Circuit and Family Court of Australia. The subject stated as follows:
Urgent: I cannot attend any court until accountability happens. And this is known -
Then the email went on to complain about receiving emails from Mr Holloway’s solicitor, and a request to “get him away”.
In all those circumstances, I am satisfied of two things. Firstly, it is appropriate to proceed today in the absence of Ms Reilly, and secondly, it is appropriate to proceed to a final hearing on only the evidence of Mr Holloway.
Background
The matter was carefully and concisely prepared with a helpful outline of case. What the evidence demonstrates is that the parties commenced to live together in a defacto relationship in 1999, and they separated in around March 2021. They had some communication thereafter, up until early 2022, as Ms Reilly moved in and out of the former matrimonial home.
The parties have two children, one born in 2002 and one born in 2006. During the relationship, it is clear that each party worked hard, and applied themselves diligently to either homemaking and parenting, or study, or working and earning an income. Along the way, Ms Reilly was able to obtain qualifications which assisted her employment. Mr Holloway now works in an industry that requires considerable training and skill but does not require formal qualifications.
In the circumstances of the emails that I have been informed of – that is, the 390 over that period, together with the tone of the 12 December 2024 email – I have some circumspection as to the state of Ms Reilly’s mental health. I am unable to find positively, but I cannot dismiss that she has had some sort of mental health breakdown, and consequently may not be able to keep or obtain employment. However, that is partly speculation and partly circumspection.
There is a heavy burden on parties to a property proceeding to provide to the other person and to the Court all relevant documents and information relevant to the issues in dispute. Hence, whether or not Ms Reilly was in employment, what that employment was, what her rate of pay was, what her prospect of future employment was, are all matters that, as a matter of law, she is required to disclose to the Court. She has chosen not to. There is also a suggestion that she may or may not have an interest in a trust known as the ‘Reilly Trust’. Mr Holloway does not attribute any value to that trust, notwithstanding that there might – and it is a “big might” – be some interest in it for Ms Reilly.
Leave to proceed out of time
The first matter it is necessary for me to deal with, having determined that I can proceed in the absence of Ms Reilly, is whether the defacto husband, Mr Holloway, should have leave pursuant to section 44(6) of the Act, which provides:
Section 44 Institution of proceedings
…
(6)The court may grant the party leave to apply after the end of the standard application period if the court is satisfied that:
(a)hardship would be caused to the party or a child if leave were not granted; or
(b)in the case of an application for an order for the maintenance of the party--the party's circumstances were, at the end of the standard application period, such that he or she would have been unable to support himself or herself without an income tested pension, allowance or benefit.
This is an application that has been filed out of time. The burden is on Mr Holloway to demonstrate that he should be granted time, or an extension of that time, to file the proceedings. I am satisfied that he has a reasonable explanation for the delay and that the delay is not inordinate in any event in the circumstances of a relationship of some 22 or 23 years and where the parties’ major asset remains in existence and occupied by Mr Holloway.
The explanation for the delay is that Mr Holloway was pretty busy with work and responding to applications of Ms Reilly in the Magistrates’ Court pursuant to Crimes (Family Violence) legislation. That kept him pretty busy, he says, and I accept that explanation. Further, Mr Holloway had retained a solicitor, and that ultimately cost him $1700, to act on his behalf in these proceedings. But, as a result of the conduct of Ms Reilly, that solicitor felt obligated to herself obtain an anti-stalking violence order against Ms Reilly. That solicitor then opined and, I infer, felt that there was the potential for a conflict of interest in the sense of the obligation of a lawyer in the Commonwealth of Australia to bring an independent and impartial mind to acting for a party in litigation. Once that solicitor has moved past impartiality and has “joined in the fray”, so to speak, that independence is no longer obvious.
By the time Mr Holloway obtained a referral to another solicitor, got to the other solicitor, sorted all that out, and proceedings were issued, the matter was out of time. I am not satisfied that there is any prejudice to Ms Reilly and, in fact, in the circumstances where the major asset of Mr Holloway and Ms Reilly is the home in which Mr Holloway lives and which at the moment is of no benefit to Ms Reilly, these proceedings are actually for the benefit of Ms Reilly. In all of those circumstances, I am satisfied that there would be hardship to both parties if leave were not granted and it is in the interests of justice that there be an extension of time pursuant to section 44(6) of the Act.
Property division
The law requires in a section 90SM application or section 79 application that there be a four-step analysis of circumstances. I use the word ‘requires’ to say that that is the ordinary process, and there may be circumstances where that is not required. The following authorities assist me in dealing with that four-step process.
Stanford v Stanford
In the High Court of Australia case of Stanford v Stanford [2012] HCA 52; (2012) FLC 93-518 (‘Stanford’) the majority stated some fundamental propositions about section 79 proceedings. Section 90SM(3) mirrors section 79(2) and so Stanford is applicable in this case.
In Stanford the essential issue was whether it was just and equitable to make any property order at all, in circumstances where the consortium vitae or marriage relationship had not broken down by way of a separation. The parties had become physically separated due to the ill-health of one of them and that party being in residential care and the other remaining in the matrimonial home. The proceedings for the party in ill-health were conducted by a case guardian who was also the beneficiary under the will of that party.
The High Court varied the order of the Full Court and found that in the circumstances it was not just and equitable that a property settlement or property alteration order be made at all (and also that section 79(8) had not been complied with). This was so despite 37 years of marriage and contribution by the wife. Section 79(4) contribution, even 37 years of it, was not to be conflated with the section 79(2) “just and equitable” requirement but should be considered separately and first. The result of the High Court’s order was that the property settlement order as originally made was dismissed with costs.
Apart from the general observations about section 79, the High Court also observed that community of ownership arising from marriage has no place in the common law and that it should not be concluded that the making of an order is just and equitable only because of, or by reference to, the matters in section 79 without a separate consideration of section 79(2).
The majority observed at [37]:
[37] First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property... The question posed by s 79(2) (and/or section 90SM(3)) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order.
The majority continued at [41-42]:
[41] ...The fundamental propositions that have been identified require a court have a principled reason for interfering with the existing legal and equitable interests of the parties to the marriage and whatever may have been their stated or unstated assumptions and agreements about property interest during the continuance of the marriage.
[42] In many cases where an application is made for property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice by made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and the wife. No less importantly, the express implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship... And the assumption that any adjustment of those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4) (and/or section 90SM(3)).
In this case it is common ground that the parties no longer have, and will not have in the future, the common use of the major asset of the parties, the jointly owned former relationship home.
In addition to those considerations Mr Holloway contends that it is just and equitable that I make section 90SM(4) property alteration orders. Because of those matters I find that it is just and equitable to make property alteration orders in this case.
In Stanford the High Court did not go on to comment upon how section 79(4) should be applied where it was just and equitable that a property alteration or settlement order be made. Stanford was not concerned with the nuts and bolts of how section 79(4), or section 90SM(4), was to be applied in the ordinary run of cases, to the extent there is such a thing.
The preferred approach
In Keskin & Keskin and Anor [2019] FamCAFC 236; (2019) FLC 93-932 (‘Keskin’) the Full Court, Strickland, Kent & Austin JJ, at [44] approved what was the age old and pre-Stanford “preferred approach” as to the how the nuts and bolts of section 79(4), and hence section 90SM, fitted together:
[20] In Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener) [2003] FamCA 395; (2003) FLC 93-143 at [39] the Full Court, in setting out what the case law revealed as the “preferred approach” to the determination of an application under s 79 of the Act, referred to four inter-related steps…
That preferred approach set out at [39] of Hickey and Hickey and the Attorney-General [2003] FamCA 395; (2003) FLC 93-143 (‘Hickey’) is as follows (citations omitted):
[39] The case law reveals that there is a preferred approach to the determination of an application pursuant to the provisions of section 79. That approach involves four interrelated steps. Firstly, the court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of hearing. Secondly the court should identify and assess the contributions of the parties within the meaning of section 79(4)(a), (b) & (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly the court should identify and assess the relevant matters referred to in section 79(4) (d), (e), (f) & (g) (“the other factors”) including, because of section 79(4), the matters referred to in section 75(2) so far as they are relevant and determine the adjustment study (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case.
(emphasis added)
Lest it be said there is a conflict between the High Court’s disavowal of “entitlement” to an order by mere separation and/or section 79(4) or section 90SM(4) contribution on the one hand, and the use of the word “entitlements” in the Hickey passage cited above, I regard the use of that word in the above context as synonymous with “assessment.” I will have regard to what I find to be the contribution-based assessment rather than “entitlement”.
The preferred approach assists me in making a principled and orderly determination of the parties’ property dispute.
Mr Holloway’s affidavit material helpfully set out the history of the matter, and the only available contention on that evidence is that, up until the date of separation, contribution between the parties should be regarded as about equal. There is an argument because of the gift of $10,000 towards the water tanks that it is marginally in favour of Mr Holloway, but I note that whilst reciting those facts, Mr Holloway did not seek an adjustment in his favour on account of that contribution. Had he done so, I would not have made it in any event. That contribution is not insignificant but is overwhelmed by the contributions of both of the parties over 22 years of raising a family, building a home and going to work, day in, day out.
In regard to the pool of assets, or the step 1 of the orthodox approach, I refer to the table of the pool of assets set out in Mr Holloway’s affidavit:
Assets
Owner
Value
B Street, Town C
Joint
E $550,000
Motor Vehicle 1
Mr Holloway
E $25,000
Motor Vehicle 4
Ms Reilly
E $11,000
Motor Vehicle 5
Ms Reilly
E $5,000
Motor Vehicle 2
Mr Holloway
E $2,800
Motor Vehicle 3 (gifted by my father)
Mr Holloway
E $1,800
Vehicle
Mr Holloway
E $800
Firearms
Mr Holloway
E $5,000
Interest in Reilly Family Trust
Ms Reilly
Unknown
Total assets
$601,400
Liabilities
Owner
Value
Home loan to CBA
Joint
$195,350
Total liabilities
$195,350
Net non-superannuation pool
$406,050
Superannuation
Super Fund 1
Mr Holloway
$95,100
Super Fund 2
Ms Reilly
$88,858
That is almost the pool of assets that I am satisfied of, save that I was properly informed that the Motor Vehicle 4 in the possession of Ms Reilly was valued at $7,500, not $11,000 as that table asserts. I adopt that value of $7,500. It was also posited that Ms Reilly had a Motor Vehicle 5 that had a value of $5,000. I am not satisfied that it is appropriate, proper, or a fact that Ms Reilly still has that car to use or sell as her own. It is not registered in her name, and even if it was, I am not satisfied it is necessarily worth $5,000, though a considerable piece of engineering in its own right.
Hence, in terms of the asset pool, it comes down to five items. Ms Reilly’s ‘keep’, or what she will otherwise have, is $7,500, being the Motor Vehicle 4. Mr Holloway’s keep, being Motor Vehicle 1, some firearms, Motor Vehicle 2, bits and pieces, are worth $35,400, according to his estimate. It has not been contested by Ms Reilly. I accept that estimate.
The next major asset is the former matrimonial home, which Mr Holloway estimates has a value of $550,000, and it has owing on it a mortgage liability of just under $196,000. I am satisfied that I should treat the value of that property as having an equity of about $350,000. It may be a little more or a little less, depending upon the actual sale price achieved and the extent of agents’ commissions and advertising expenses. Mr Holloway has superannuation of about $95,000, and Ms Reilly has superannuation of about $89,000. Hence, at the first step of the orthodox four-step process, I have a total asset pool of non-superannuation assets of $392,900 plus total superannuation of $184,000.
Turning to step 2, and that is contribution: indirect, direct, financial and non-financial, including the contribution by way of homemaking and parenting. The facts of this case demonstrate an overwhelming argument for a contribution position of equality, or roughly fifty-fifty. That is not a presumption but an assessment by way of looking at the facts.
I now turn to step 3, which is the section 90SF factors, which can be described as standing on the door of the Court and looking forward, the prospective factors. Ms Reilly has chosen not to assist the Court with information about her employment or her health. She remains highly educated, and even if she has had some temporary decompensation of her mental health at the moment, is likely to be able to again return to employment similar to what she has had in the past.
The other matter that I take into account at this point is that Ms Reilly has chosen not to put all that information that I referred to earlier before the Court. The law is that where you do not comply with your duty of disclosure, the Court can be more generous to the person who did disclose all of the information, or more harsh in regard to the division of assets in regard to what is called the ‘non-disclosing party’. Mr Holloway seeks that the home be sold, and the proceeds be divided fifty-fifty. Because he has a little bit more keep than Ms Reilly, that could be described as him having about 53 per cent rather than 50 per cent. In some cases, it would be appropriate to make a further adjustment, taking account of that disparity in keep.
Were it to be an overall fifty-fifty case, that would have required, from Mr Holloway’s part of the pool, a further payment to Ms Reilly of something in the order of $13,950, that being the amount of money necessary to bring that up to half. In this case, I am not satisfied that is appropriate, because Ms Reilly has chosen not to participate in the proceedings and not disclose all relevant information. Hence, I am satisfied that an overall adjustment of about 53 per cent to Mr Holloway and 47 per cent of the non-superannuation assets to Ms Reilly is just and equitable.
In regard to the superannuation, I take that into account. No party before me seeks any superannuation split or adjustment, and Mr Holloway has the modest sum of $6,000 more than Ms Reilly. I am not satisfied that that difference justifies an adjustment on the non-superannuation assets. Whether it is Mr Holloway’s retirement or Ms Reilly’s, it is going to be many years before either of them gets to spend their superannuation as their own money. Hence, I am satisfied that the orders sought by Mr Holloway are just and equitable.
Decision as to costs
I now turn to deal with the question of costs. It is quite clear to me that Ms Reilly has unnecessarily driven up Mr Holloway’s costs. He earns about $1,900 per week after tax and does not have a substantial nest egg of funds behind him. Hence, providing for any legal fees is a significant and substantial matter.
The first return of the matter to court was on 15 July 2024. There were two subsequent returns to court to deal with the circumstance of Ms Reilly refusing to participate in the proceedings. On each of those occasions, 4 September and 7 October 2024, Mr Holloway’s costs were reserved in the modest – for lawyers – sum of $1,200. I am satisfied that it is appropriate that Ms Reilly pays those sums reserved.
In dealing with the issue of costs, I take into account section 117 of the Act, which provides:
Section 117 Costs
(1)Subject to subsection (2), subsection 102QAB(6) and sections 117AA and 117AC, each party to proceedings under this Act must bear the party's 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), (4A), (5) and (6) 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.
…
I acknowledge the starting position of section 117(1), which is that each party to the proceedings shall bear his or her own costs. That provision is subject to section 117(2A):
(2A)In considering what order (if any) should be made under subsection (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 terms of any such offer; and
(g) such other matters as the court considers relevant.
The financial circumstances of the parties are clear enough. Ms Reilly will end up with a motor car and half of the proceeds of the house. Mr Holloway will end up with two vehicles and some other bits and pieces that are worth a bit more than what Ms Reilly’s car is. But the major item that each of them will retain will be a cash payment of something in the order of $170,000 or so, being the proceeds of sale, plus their superannuation, being a bit more or a bit less than $90,000.
I am satisfied that Ms Reilly’s attitude to Mr Holloway’s lawyers, both the former one and the current ones, who have stayed the course, has driven up his costs. That is a relevant matter as to 117(2A)(c) recited above. That covers harassing the lawyers for the other side with emails, and irrelevant emails. Mr Holloway’s total costs are likely to be in the order of $23,500. As discussed with his counsel, I am not satisfied that all of those costs should be paid by Ms Reilly.
I am not satisfied of that for several reasons. Firstly, the presumption is that each party pay their own costs, and that is only moved away from according to 117(2A). Next, to award the figure of $23,000 is the equivalent of awarding indemnity costs against Ms Reilly, and those costs are only awarded in exceptional circumstances. Thirdly, I have some circumspection about Ms Reilly’s mental health and capacity for employment at the moment. And fourthly, some costs would have been necessary to finalise financial relationships between these parties, including some preparation of evidence for the first return or appearance in Court.
The other matter that is relevant to costs triggers section 117(2A)(f) – that is, where there has been an offer in writing. After I determined what the division would be, Ms Crotty, counsel for Mr Holloway, tendered the document which became ‘F3’, which was an offer in writing from Mr Holloway’s current solicitors back on 6 March 2024. It is unnecessary to recite the detailed history, but what that document said included the following:
Our client's proposal for a final property settlement is therefore as follows:
1. You and our client do all things necessary and sign all necessary documents to place the property at [B Street, Town C] on the market for sale.
2. To facilitate the sale:
(a) Our client will nominate three proposed sale agents from which you are to select one.
(b) You and our client are required to follow all directions and recommendations of the sales agent including as to the sale price and readying the property for sale.
(c) You will cause the removal of the [outbuilding] located in the back yard of the property at a mutually agreed time and date.
3. Upon the sale of the property, the proceeds of sale be applied as follows:
(a) Firstly, to pay all costs and commissions in relation to the sale.
(b) Secondly, to discharge the mortgage.
(c) Thirdly, the balance be divided:
(i) 50% to you
(ii) 50% to our client.
Unusually in this matter, Mr Holloway’s costs are greater because of the conduct of Ms Reilly, and Mr Holloway’s offer at the start of the proceedings was entirely reasonable and should have been either accepted without hesitation, or with some negotiation around the edges.
It is possible that there might have been some minor adjustment to the fifty-fifty position on the proceeds of sale, taking into account the disparity of keep – that is, the $7,500 motor car against the $35,400 keep. But, overall, the position was that the circumstances of this family cried out for a sale of the former matrimonial home with a division round about fifty-fifty. In all of those circumstances, I am satisfied that there should be a costs order against Ms Reilly, and I have determined that it is appropriate to fix costs. I am satisfied that the costs calculations of Mr Holloway’s solicitor in arriving at the $23,504 figure did not include the costs of the appearance on 4 September 2024 and the costs of 7 October 2024.
I am satisfied that those appearances were wasted time and effort, being the second and third return of the matter, and I am satisfied that each of those costs should be paid by Ms Reilly from the proceeds of sale. In regard to the remaining claim of $23,500, I am satisfied that some costs and substantial costs should be paid, but not all of the costs. The reality is Mr Holloway will still be considerably out of pocket and to something in the order of $8,000.
The actual total costs – excluding the $2,400 of the two hearings, being 4 September and 7 October 2024 – are $21,104.80. In all of those circumstances, I am satisfied that the total order for costs should be in the sum of $17,400 and that that should come from Ms Reilly’s part of the proceeds of sale of the property. I also take into account that from only her perspective, when it is expected that she will get something like $170,000 or so from the house, that that costs order is something like 10 per cent of the proceeds of sale she would otherwise receive.
Otherwise, I will make the orders as requested.
I certify that the preceding fifty-five (55) numbered paragraphs are a true copy of the Reasons for ex tempore Judgment of Judge O'Shannessy. Associate:
Dated: 15 January 2025
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