Horst & Horst
[2022] FedCFamC2F 591
•13 May 2022
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Horst & Horst [2022] FedCFamC2F 591
File number(s): DGC 4329 of 2020 Judgment of: JUDGE BURCHARDT Date of judgment: 13 May 2022 Catchwords: FAMILY LAW – Property dispute after 14 year marriage – wife owning property at start of relationship but parties otherwise having no meaningful assets – parties contributions generally equal until husband ceased work in 2017 – wife’s inheritance of $236,000 enabling family (including 4 children) to subsist between 2017 and 2020 and to retain sole remaining property in the UK – wife having predominant care and expense of children for many years to come – contributions assessed 65/35 in wife’s favour – additional 15% for wife’s future needs – 80/20 division just and equitable in the circumstances. Legislation: Family Law Act 1975 (Cth) Cases cited: Standford & Standford [2012] HCA 52 Division: Division 2 Family Law Date of hearing: 2 May 2022 Place: Dandenong Number of paragraphs: 55 Counsel for the Applicant: Ms Dwyer Solicitor for the Applicant: Lawyers By The Bay The Respondent: The Respondent is self-represented ORDERS
DGC 4329 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS HORST
Applicant
AND: MR HORST
Respondent
ORDER MADE BY:
JUDGE BURCHARDT
DATE OF ORDER:
13 MAY 2022
THE COURT ORDERS THAT:
1.The net proceeds of the parties United Kingdom property be held in a trust account nominated by the solicitors for the wife and dealt with as follows:
(a)First, $5000 is to be paid to the wife in respect of costs;
(b)Second, the remaining amount is to have added to it the parties’ superannuation as found by the judgment;
(c)Third, the total arrived at in (b) is to be divided to achieve an 80/20 distribution with each party retaining their superannuation.
2.There be liberty to apply in respect of the implementation of these orders to the chambers of Judge O’Sullivan.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Horst & Horst has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE BURCHARDT
This is the property component of a dispute which previously included parenting issues, but the latter were resolved by consent. I made final parenting orders on 9 March 2022. The four children of the relationship live with the mother, and will spend relatively limited time with the father, although that may increase over time if the father addresses a number of issues.
The applicant mother seeks an 85/15 division of the property pool. The respondent husband has declined to articulate any position. In oral submissions before the court, he effectively said that he would wish the court to determine the matter. Additionally, the wife has sought that her costs of the proceeding be paid out of the husband’s share of the property pool.
There is not a lot of factual disputation in the case, and it is clear for the reasons that follow, that the wife’s contribution has greatly exceeded that of the husband, and that the wife’s future needs are also far greater. I think that a just and equitable resolution of this matter is that the wife receive 80 per cent of the property pool as I will find it. Additionally, because of the husband’s failure to comply with orders, and to provide any meaningful discovery, I propose to order him to pay $5,000 of the wife’s costs.
AGREED OR UNCONTROVERSIAL MATTERS
As I have said, in the ultimate, there is little factual disputation between the parties. The husband was born in 1977 in Country B. He holds Country C and British citizenship, and as I understand the matter, his parents and closer family now live in United Kingdom. The wife was born in Australia in 1981, in Australia, and remains a citizen of this country.
The parties met and commenced a relationship in either 2002 or 2003, but married in 2006 in the United Kingdom. Their children W born in 2007, X born in 2009, Y born in 2012 and Z born in 2016 followed in due course. While the parties lived in the United Kingdom, the husband worked six days per week, and long hours, working as a sales professional, generating considerable earnings which he himself estimates in his affidavit material as being $125,000 per annum.
The parties appeared to have returned to live in Australia in early 2011 (following a three month holiday in Country C), and the husband earned approximately $80,000 a year as a sales professional until he ceased work in March 2017. He has not worked since.
Prior to the commencement of the relationship, the wife owned a property at Suburb D in Victoria, which was sold in 2009, with net proceeds of $56,000.
Prior to that, in 2007, the parties had bought a property in City E which remains, as things now stand, their only meaningful realisable asset. Because of a lack of discovery, the precise value of the property is not known. It has been tenanted since the parties moved out. It has been the subject at one point of an offer of £405,000, but that has been withdrawn, and the sale price is not certain. The wife’s best estimate is that they are likely to achieve something of the order of $200,000 upon its sale and following discharging a number of different mortgages. The wife has conduct of the sale pursuant to court order.
The wife won $50,000 on a television program in 2017, and also inherited $238,000 in two tranches in 2017 and 2018.
The wife worked during the currency of the relationship until the birth of the first child, and then again following the birth of the third child. She is presently employed as an administrative assistant with a salary of about $1250 per week. She pays $500 in rent. The husband receives an estimated $434 per week which he has described as being on a disability pension and pays $240 a week rent. Self-evidently, he provides nothing in child support.
Both the parents of both the parties have been generous in advancing funds to the parties over the year, but it is common cause that there are no enforceable debts arising from this.
THE PARTIES’ AFFIDAVIT MATERIAL
The wife’s affidavit material was concentrated on parenting issues at the commencement of the proceeding. She referred to an injury to the husband’s back and his resultant overdependence on drugs and alcohol to control pain, together with significant dangerous driving on his part, at least on two occasions when the children were in his care. In her first affidavit, she deposed in some detail to the incident which gave rise to separation on 20 October 2020, when the police attended and found the husband sitting on her car, preventing her from leaving. This gave rise to an intervention order on 28 October 2020.
The husband’s responding affidavit filed 18 January 2021, in effect, conceded that through a mixture of wine and painkillers, the incident on 20 October 2020 did indeed take place. He deposed at some detail in paragraph 19 and following to his health problems, which include significant ongoing back pain, for which he, inter alia, takes epidurals every three to four months. He deposed to appearing in F Clinic in 2020, and to seeing a psychologist. He appended a number of reports from surgeons that do appear to be consistent with his assertion that he has a very bad back.
The wife’s affidavit material goes on at times to traverse her fear of the husband’s propensity to violence and difficult personality. The husband’s affidavit material annexes documents purporting to show transfers of $17,784 made by him to the wife, but this is a matter to which I will return when I deal with the evidence. The wife’s affidavit response is that these were simply distributions of joint funds in equal shares from both a Bank G account in Britain, and NAB account in Australia (the latter payments were said to be presents from the paternal grandparents).
THE REPORT OF DR H
Dr H’s report is annexed to her affidavit sworn 22 June 2021. I have regard to the whole of that report. I note that paragraph 7 of the report observed:
Mr Horst reported that he worked in the sales industry in the UK for eight years before moving to Australia with Ms Horst and working in the same field. He indicated that he had not been employed in the past three years due to a back injury. He acknowledged that he was capable of working, but needed to seek out employment that was flexible.
At paragraphs 28-29, the report noted:
Psychological evaluation did not identify a formal disorder, although Mr Horst presented with personality problems related to impulsivity and aggression, which has manifested in family violence and substance abuse/misuse. While Mr Horst's substance use appeared to have reduced since December 2020, he demonstrated limited insight into his risk of relapse and/or how to manage these risks. His decision to drink alcohol while his children were in his care in May 2021 reflected ongoing difficulties.
Parenting risk factors included Mr Horst having difficulty gaining control over his back pain; ongoing substance use/misuse; instability in/appropriateness of accommodation; difficulty understanding the impact of his behaviour on his children; and maintaining an unhealthy relationship with Ms Horst.
THE SUBMISSIONS MADE AND EVIDENCE GIVEN IN THE COURT
What follows is taken from my notes.
Counsel for the applicant wife was content to rely upon her case outline. She indicated the inheritance received from the wife’s Aunt Ms J in 2017 to 2018 amounted to $238,125.
The wife was called and adopted her affidavits and financial statement as true and correct, save that she made some minor corrections to her financial statement. She spends $500 a week on rent and $570 on all other matters. She said that the household contents were probably worth $30,000 (and confirmed that this was simply soft goods and furniture and the like). Her credit card debt is $8000.
The husband indicated that he did not wish to cross-examine and it emerged that there was a final intervention order in place, in any event. Self-evidently, there was no re-examination.
The Evidence and Opening of the Husband
The husband said he would leave the matter of the property adjustment to the court. He is unemployed at present, but has worked in sales. He has a chronic back condition which has existed for over a decade. He has been informed by more than one surgeon that he is too young to have spinal fusion. He has quarterly epidurals and has been out of work for four years. He said, nonetheless, that he can work. He adopted his affidavits and financial statement as true and correct.
Under cross-examination, counsel put it that there was no recent medical material, and he agreed that there was no medical reports from this year or last year. He said that there were three different issues. He has a prolapsed disc. There is a fracture between L5 and S1. He will be able to return to work. He did earn a very good income when he was in sales, but when asked if he was very good at it, he said he was not good at it at all. In the United Kingdom, he worked 8 am until 8 pm for six days a week, but cannot do this now.
If I understood him correctly, he says he can return to work at a Company K. He emphasised that sales work is commission based. The length of the days stop him from working. He told counsel, “If you had a back problem, you would understand.” It was put to him that he was highly intelligent, and he denied this. He said he was concentrating on his health. He confirmed that his rent is $240 a week. He agreed that there had been no formal child support assessment. He agreed that he had not provided any documentation about his income, but said he was on a disability pension.
When it was put that he had provided no documents about his rent, he said he was living somewhere, so he pays rent. Counsel put it to the husband that he had not complied with his obligations in respect of discovery. The husband appeared to me to admit this, but blamed his prior lawyer. He said that the $34,000 he had indicated of superannuation was his current figure. He had provided a statement to the wife’s lawyer, but when challenged was not certain that this had occurred.
He agreed being a director of a company. He is a director of the Body Corporate of the property in the United Kingdom. He would agree that he had not provided full and frank disclosure and had provided no bank statements. When it was put he had not provided any tax returns, he said he had not worked and was not required to provide tax returns. He had not provided any documents since he had sacked his lawyer. He did not know, either, if that solicitor had provided documents to the other side.
He agreed that the property in City E was on the market for £450,000, but they had had offers of £405,000 or £410,000. The property is listed with two agents and he said there had been valuations sent to him via email. The agents are previous colleagues of his. He was not aware that a sale had fallen through.
Counsel put it that his failure to disclose and comply with Court orders had cost the wife additional legal expenses and, once again, he appeared to agree. He agreed he had been ordered to do things, but had not done them.
He agreed it was a short relationship before the marriage in 2006. The wife owned a property in Suburb D already, but he had no property. He agreed that they had no meaningful assets otherwise at the start of the relationship. They bought the property in City E in 2007. The deposit was not paid jointly, because there was no deposit. They took an interest only mortgage of £214,000 and some additional loans. They both worked till the first child was born in 2007. He was earning $125,000 a year in City E, but less in Australia. The money lent by his parents was in Australia. He agreed that this had changed from a loan to a gift and that there was no funds to be repaid.
He agreed that the wife had a good job in England with Employer L. When it was put that the wife went back to work part-time in 2011 he said that sounded right. She worked until 2012 when she was pregnant. She was thereafter at home until 2019. He disagreed that the wife had taken work in 2019. He said he had sent plenty of money to her, but it had been more difficult since the intervention order. He denied that the wife had always been the primary carer of the children and said that she worked part-time. He conceded she had been the primary carer since separation.
He had not worked since March 2017. He has only had the pension and loans after that. His pension is $434 a week. He was aware that the wife pays rent. It was put that the $1250 a week before tax she earned was not much. He said things can always be improved. He has not been privy to her situation since separation. He agreed that the Suburb D property had been sold for $53,000 in 2009, of which $6000 was repaid to her mother. The difference was used to subsidise the immigration to Australia.
He agreed that the $50,000 won by the wife in 2017 had been used for the family, as had her inheritance in 2017 and 2018. When it was put that the children had been living entirely with the mother since separation the husband, who was patently reluctant to give the wife any undue credit for anything, did not fully accept that this was the case. He had said he was not told anything. He agreed that the wife is financially responsible for the children.
He then said he had sent $17,834 since separation. He agreed, however, as I understood it, albeit not immediately, that the funds sent from Bank G were from a joint account and represented her half share. He also agreed that the moneys from NAB were presents from his parents. He agreed that both sets of grandparents had been generous.
He is paying rent of $240 a week and is optimistic he will get work sooner rather than later. He agreed that the wife was entitled to a greater portion of the pool.
There Was No Re-examination
It should be noted that the husband’s answers, which were at times in my view somewhat glib and slightly smug (something also shown in some of his correspondence, for example, to the police), nonetheless did present as being in discomfort. He had an observable limp. His assertion that he suffered from back pain was in my view entirely consistent with his demeanour, notwithstanding the absence of any recent formal medical reports.
Final Submissions by the Parties
Counsel for the wife said that the husband conceded the wife’s contributions towards the end of the relationship. The wife has greater financial needs and will not receive child support. She has four children to bring up on a modest wage and her earning capacity has been affected by her giving up her giving up her career to have the children. The husband’s return to work was unclear. He had mental health problems. It was a very small pool.
The husband did not elect to make any submissions at all.
THE COURT’S FIRST TASK – Standford & Standford [2012] HCA 52
The Court’s first task is to ascertain the legal and equitable interests of the parties and determine whether a property adjustment is indeed just and equitable. In this case, however, as in so many and, indeed, as was foreshadowed in Stanford, the parties both seek a property adjustment and on any view of the matter the basis upon which they conducted their financial affairs has radically altered. It is plainly just and equitable that there be a property adjustment.
The Pool
The only real property the parties presently own is the property in City E, which is in the process, hopefully at least, of being sold. It seems likely to generate net funds, depending upon the state of the market and the rates of exchange, of either side of $200,000. The parties each have a car, but these are merely means of locomotion. Neither car is worth any gigantic amount of money and, indeed, they are not that different even on the estimates that the parties have provided. It is inappropriate to include them in the pool.
Likewise, both parties have deposed to chattels and, indeed, plainly have some (the husband’s apparently are in storage). There are no valuations of these sort of chattels and it is notorious in my view that they are virtually no resale value. Furthermore, both of these parties will need all these white goods and possessions to re-establish themselves. They should not be included as a monetary amount in the pool.
The wife has a credit card debt of $8000, but given that separation took place so long ago, it is entirely unclear how much of it was engendered during the relationship. That will have to lie where it stands.
Otherwise, the only assets the parties have are superannuation. The wife’s superannuation is apparently $28,000 and that of the husband is $34,000. I appreciate that consistently with his practice of not complying with his obligations for discovery, there is no current printout to prove that that is the amount of superannuation he has, but the Court will have to do the best that it can.
Contribution
The wife owned the property at Suburb D when they first met, and this was sold in 2009. Why it would have cost $56,000 to move from the United Kingdom to Britain is not immediately apparent, although if they spent three months on holiday in Country C, that may explain where some of that money was dissipated.
It seems clear that during the relationship in the main the husband was the primary earner and the wife was the person who looked after the home and the children, although, clearly, she worked as best she was able from time to time. Up until 2017 it might be felt that the parties’ contributions were relatively equal. Thereafter, however, things changed radically. The husband simply ceased to work. He became dependent upon drugs and alcohol and his conduct degenerated to the point of the final incident, which gave rise to separation.
The wife has gone back to work in 2019 to support the family. From 2017 onwards the family was solely supported by her own input, being the $50,000 won on the television program and the $238,000 which she inherited. I accept without reservation her evidence that this was used, at least in part, to maintain the mortgage on the City E property which would otherwise have to have been sold, and otherwise to support the family in a general sense.
It is difficult to avoid the impression that the parties were living beyond their means. It is not clear to me when the husband commenced to receive the disability pension he says he has. There is nothing in his affidavits as to this, but if he was receiving about $22,000 a year in a pension, the net further expenditure of over $60,000 a year is a little surprising.
Given the wife’s far greater contribution for almost four years of the relationship (March 2017 until October 2020) and her sole care and support of the children, together with the fact that it was her inheritances that enabled the parties to subsist between 2017 and 2020 and the City E property to be retained, the contributions of the parties should be assessed 65 to 35 in the wife’s favour.
Future Needs
The wife has the care of the four children, the oldest of whom is only 14. The youngest is only six. She will have the predominant cost of the care and upbringing of these children for many years to come. The husband will pay no child support for the foreseeable future, and if he obtains the sort of low-paid work that I understood him to suggest was likely, then the prognosis for any further child support must be extremely limited. As I have indicated, the moneys he advanced to the wife post-separation were either her share of joint funds or gifts from his parents. The wife is employed in only modestly paid employment and the prognosis for her obtaining anything much more remunerative seems to be extremely limited. The husband says he cannot work in sales. I confess I am not so certain that this might not be possible, but since I know he has not worked for over five years, and bearing in mind that our assessment of the future is informed by our experience of the past, his future earning capacity must be assessed as extremely limited. He also has the problems associated with his undoubted back condition, which must significantly limit his future earnings. Nonetheless, the wife is the one who has to bring up the children and bears all the expense. The husband has, in effect, only himself to provide for (although this may change over time if the parenting orders move as, on one view, they may).
In the circumstances in my view a further loading of 15 per cent to the wife in respect of future needs is indeed just and equitable in the circumstances.
One of the difficulties in this case, of course, is that the size of the pool will not be known until the property in City E is sold. Whether or not there has been a formal valuation is essentially, as the husband correctly pointed out, irrelevant. The property will sell for what it can achieve.
In the context of this case, I am going to order the parties to retain their own superannuation (the amounts are not enormously disparate), but will direct that the distribution of the net amounts received on the City E property be calculated by including the parties’ superannuation at their present values.
The Wife’s Costs
The husband himself conceded that the way he has conducted this proceeding has cost the wife additional funds. The first Court appearance on 28 January 2021 was unremarkable. Orders were made to progress the parenting dispute (as it then was) and nothing turns on that. Similarly, the second return on 6 May 2021 progressed the parenting issue in an unremarkable fashion. The same can be said of the orders made on 13 August 2021 when the matter was, relevantly, set down for a conciliation conference with standard ancillary orders.
The conciliation conference did not take place because the husband did not comply with those orders and, indeed, he did not attend Court on 15 December 2021. Relevantly, leave was granted to the mother to proceed on an undefended basis if the father failed to attend Court on the adjourned date of 23 March 2022. In my view, the costs associated with the hearing on 15 December 2021 should be paid by the husband.
The husband had already been ordered to file his materials, but it was necessary to repeat that order by the orders made on 23 March 2022 and in my view the husband should pay the costs of that day, as well.
It is self-evidently not possible to disaggregate the wife’s costs thrown away by virtue of the husband’s non-disclosure. Doubtless, there is correspondence passing between the solicitors that should not have otherwise been necessary, but in my view in the particular circumstances of this case, the wife should have her costs of the two dates of hearing that were occasioned by the husband’s failure to attend. I appreciate that the husband’s income is extremely low, but his admitted failure to disclose in my view should give rise to consequences in this instance. In my view an appropriate figure (having regard to but not applying directly the Court’s schedule of fees) for each of those two instances should be $2500. $5000, therefore, should be taken out of the husband’s share of the final proceeds of the sale of the property in City E.
Just and Equitable
This is a small pool and, on one view, it would be appropriate to give the wife all of it, bearing in mind the responsibilities she has in respect of the children. Nonetheless, this was a relationship that lasted for some 14 years. The husband provided the bulk of the earnings at least until 2017. To give him nothing would not be appropriate. I think that a 80-20 division of the property pool, with the husband paying $5000 of the wife’s legal costs, together with him retaining his superannuation as part of his share, is indeed a just and equitable outcome.
I certify that the preceding fifty-five (55) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Burchardt. Associate:
Dated: 13 May 2022
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