Kalla & Kalla
[2021] FedCFamC1F 146
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Kalla & Kalla [2021] FedCFamC1F 146
File number(s): SYC 2434 of 2019 Judgment of: MCGUIRE J Date of judgment: 27 October 2021 Catchwords: FAMILY LAW – PROPERTY – application by the wife for a property settlement – final hearing proceeded undefended in absence of the husband – assessment of contributions – disposal of property by the husband without the wife’s knowledge or consent - adjustment made in wife’s favour – orders that the husband and wife to receive a share in the property of 40 and 60 per cent respectively
FAMILY LAW – COSTS – application by the wife for indemnity costs on a fixed basis against the husband – application granted
Legislation: Family Law Act 1975 (Cth) ss 75(2), (79)(2) and 117 Cases cited: Colgate-Palmolive and Co v Cussons Pty Ltd (1993) 46 FCR 225
Kohan & Kohan (1993) FLC 92-340
Munday v Bowman (1997) FLC 92-784)
Stanford & Stanford (2012) 247 CLR 108
Weir & Weir (1993) FLC 92-338
Division: Division 1 First Instance Number of paragraphs: 105 Date of hearing: 12 October 2021 Place: Hobart Counsel for the Applicant: Ms Dart Solicitor for the Applicant: Newnhams Solicitors Solicitor for the Respondent: No appearance ORDERS
SYC 2434 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1
BETWEEN: MS KALLA
Applicant
AND: MR KALLA
Respondent
ORDER MADE BY:
MCGUIRE J
DATE OF ORDER:
27 OCTOBER 2021
THE COURT ORDERS THAT:
1.That this application proceed to final hearing undefended the husband.
2.That within two (2) months of the date of these Orders and contemporaneously:
(a)The Respondent husband pay to the wife or as she shall direct in writing the sum of $773,000;
(b)The husband shall do all acts and things and sign all documents necessary as submitted by the wife to effect a transfer to the wife of all of his right, title and interest in the property situate at and known as N Street, Suburb O in the State of New South Wales being the whole of the land contained in Folio Identifier … (‘the N Street Property’);
(c)The parties shall do all acts and things and sign all documents necessary to discharge the mortgage to Westpac Bank secured over the title of the N Street Property and the wife shall refinance the mortgage into her sole name and shall indemnify and keep indemnified the husband in respect of all liabilities and payments arising in relation to the N Street Property; and
(d)The husband shall do all acts and things and sign all documents necessary as submitted by the wife to effect a transfer to the wife of all of his right, title and interest in the property situate at and known as P Street, City Q, India.
3.That pending the transfer referred to in Order 2.(b), the wife shall pay all outgoings in relation to the N Street Property including but not limited to mortgage repayments, council rates, water rates, home and contents insurance, electricity, gas, maintenance and repairs.
4.That within twenty eight (28) days of the date of these Orders, the parties shall do all acts and things and sign all documents necessary to close the joint Westpac Bank account ending in 3261 and distribute any balance remaining to the wife.
5.That the Husband’s superannuation interest in the Super Fund 2, Member Number … (‘the Super Fund 2’) be dealt with as follows:
(a)That whenever a splittable payment becomes payable to the husband from his interest in the Super Fund 2, the wife is entitled to be paid 100 per cent, being the specified percentage in accordance with s 90XT(1)(b) of the Family Law Act 1975 (Cth), of the splittable payment and there is a corresponding reduction in the entitlement the husband would have had but for this Order;
(b)That having been accorded procedural fairness in relation to the making of this Order, this Order binds the Trustee of the Super Fund 2; and
(c)That the operative time for this Order is four (4) business days from the date of service of this Order on the Trustee.
6.In accordance with s 90XT(1)(b) of the Family Law Act 1975 (Cth) that the husband’s superannuation interest in the Super Fund 3, Member Number … (‘the Super Fund 3’) be dealt with as follows:
(a)That whenever a splittable payment becomes payable to the husband from his interest in the Super Fund 3, the wife is entitled to be paid the entitlement calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 (Cth), being 100 per cent of the interest of the husband in the Super Fund 3, as at the operative time and there is a corresponding reduction in the entitlement the husband would have had but for this Order;
(b)That having been accorded procedural fairness in relation to the making of this Order, this Order binds the Trustee of the Super Fund 3; and
(c)That the operative time for this Order is four (4) business days from the date of service of a certified copy of the sealed Orders on the Trustee.
7.That in respect of the husband’s superannuation interest in the Super Fund 4 (‘the Fund’):
(a)Pursuant to a 90XT (1)(b) of the Family Law Act 1975 (Cth) as amended whenever a splittable payment becomes payable in respect of the husband’s interest in the Fund:
(i)the wife is entitled to be paid 100 per cent of the splittable payment; and
(ii)there is a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made but for the Order.
(b)Paragraph 7.(a) of the Order has effect from the operative time, which is four (4) business days after the date of a certified copy of the sealed Orders is served on the Trustee of the Fund;
(c)Payments from the Husband’s superannuation interest made after the Trustee of the Fund has rolled over or transferred the transferrable benefits to a fund of the wife’s choosing are not splittable payments;
(d)Within fourteen (14) days of the Orders being made the wife shall:
(i)serve a certified copy of the sealed Order upon the Trustee of the Fund; and
(ii)give notice in writing to the Trustee of the Fund pursuant to Regulation 72 of the Family Law (Superannuation) Regulations 2001 (Cth); and
(e)That there be liberty to apply in relation to the implementation of Paragraphs 7.(a) to 7.(d) of the Order by the parties or the Trustee of the Fund.
8.That the husband’s superannuation interest in the Super Fund 5, Member Number … (‘Super Fund 5’) be dealt with as follows:
(a)That pursuant to s 90XT(1)(b) of the Family Law Act 1975 (Cth), whenever a splittable payment becomes payable from the superannuation interest held by the husband in Super Fund 5, the Trustee shall pay to the wife 100 per cent of each splittable payment and there be a corresponding reduction in the entitlement the husband would have had but for this Order;
(b)That having been accorded procedural fairness in relation to the making of this Order, this Order binds the Trustee of Super Fund 5;
(c)That the operative time for this Order is four (4) business days from the date of service of this Order on the Trustee; and
(d)That each party and the Trustee has liberty to apply on not less than three (3) business days’ notice, in respect to the implementation of the super splitting Orders.
9.That other than as specifically dealt with herein, the wife be the sole owner of all property, both real and personal, and superannuation in her name, possession, custody or control as at the date of these Orders.
10.That other than as specifically dealt with herein, the husband be the sole owner of all property, both real and personal, and superannuation in his name, possession, custody or control as at the date of these Orders.
11.That other than as specifically dealt with herein, the wife is solely responsible for and indemnifies the husband and will keep the husband indemnified with respect to any debt, liability or claim in her sole name or any liability that may arise in relation to items of property vesting in her pursuant to these Orders.
12.That other than as specifically dealt with herein, the husband is solely responsible for and indemnifies the wife and will keep the wife indemnified with respect to any debt, liability or claim in his sole name or any liability that may arise in relation to items of property vesting in him pursuant to these Orders.
Spouse Maintenance
13.That the husband pay to the wife or as she shall direct in writing the sum of $13,671, by way of arrears of spouse maintenance for the period from 10 May 2021 to 17 September 2021.
Procedural
14.That upon the making of these Orders, all previous Orders are discharged and all outstanding applications are dismissed.
15.That in default of the parties or either of them doing all acts and things and signing all such documents as are necessary to give effect to these Orders, a Registrar or Deputy Registrar of the Family Court of Australia at Sydney be appointed pursuant to s 106A of the Family Law Act 1975 (Cth) to execute all such documents in the name of the party in default and to do all such acts and things necessary to give validity and operation to these Orders.
16.That pursuant to s 81 of the Family Law Act 1975 (Cth) the parties intend that these Orders shall as far as practicable finally determine the financial relationship between them and avoid further proceedings between them.
Costs
17.That within forty two (42) days the husband pay the wife's costs of and incidental to these proceedings on an indemnity basis set in a quantum of $26,080.37.
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 the pseudonym of Kalla & Kalla has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
McGuire J
APPLICATION
The application before me is by way of an Amended Initiating Application of the wife, Ms Kalla, filed 21 September 2021 seeking final orders as to property settlement pursuant to s 79 of the Family Law Act 1975 (Cth) ('the Act'). The Application in its original form was filed 16 April 2019.
I am asked to proceed to the hearing undefended the husband where the matter was listed for trial by order of 10 August 2021 when it came before me in the winter-call over of Sydney matters in the trial pool. The husband did not appear on that day. He has not filed trial material. He did not appear at this hearing. The husband had, however, filed a Response as long ago as 22 July 2019 and apparently appeared at some early interim, interlocutory or procedural listings. I have before me an affidavit of Ms R sworn 30 September 2021 who is the wife's solicitor. She deposes as to effecting service on the husband via two separate email addresses consistent with his address for service and noting that the husband has previously communicated with both the wife's solicitors and with the Court from one such email address. I am, therefore, satisfied that the husband has been made aware of these proceedings having being served with the wife's trial material and my orders of 10 August 2021.
The wife seeks orders that would alter the property of the parties, inclusive of superannuation entitlements, approximately 60 per cent to the wife and 40 per cent to the husband. On the material before me, the husband has not made close to adequate disclosure in circumstances where he has or has had and disposed of assets of significant value. It is well-established that the Court may be less cautious in making findings of fact where a party has not participated or where such participation has been limited, where their Honours, in Weir & Weir[1] say:
It seems to us that once it has been established that there has been a deliberate non-disclosure, which follows from his Honours findings in this case, then the Court should not be unduly cautious about making findings in favour of the innocent party. To do so otherwise might be thought to provide a charter for fraud in proceedings of this nature.
[1] (1993) FLC 92-338 at 79,593.
BACKGROUND
The wife is 59 years of age being born in 1962. The husband's is 58 years of age. He was born in 1963.
The parties were married and commenced cohabitation in India in 1986. The husband was then employed as a professional. The wife was also employed full-time as a professional.
The parties have three adult children being Mr X (age 33 years), Mr Y (aged 30 years) and Ms Z (aged 24 years).
In February 1991 the parties emigrated from India to the United Kingdom for the husband to take up a position as a professional. The wife continued in employment.
In May 1997 the parties emigrated to Australia taking up residence in Sydney and where the husband was offered employment at S Company.
In January 2000 the husband commenced employment with T Company in Adelaide. The wife and children remained in residence at the matrimonial home in Suburb O with the husband returning from Adelaide every four to six weeks.
In 2001 the husband established a company 'U Pty Ltd'.
In May 2002 the husband accepted a position as Manager with V Company.
In 2008 the husband took up a position as Director of a large V Company project.
In 2012 the wife was diagnosed with a sleeping disorder.
In 2014 the husband received an employment termination payment from V Company in the sum of $329,637 and commenced a full-time position as senior manager for W Company in Asia.
In February 2015 the husband returned to employment in Adelaide and co-founded the company 'L Pty Ltd’.
The wife says that the parties separated on 28 May 2015. She accepts that a joint application for a divorce was filed, but prepared by the husband, in late 2018 noting the separation date as 15 June 2005. The wife did not receive legal advice. She deposes that contemporaneously the husband provided her with a document titled ‘Divorce Settlement Agreement’ which she signed. There is no evidence to suggest that this document achieved the status of a Financial Agreement or a Binding Financial Agreement.
In September 1997 the parties jointly purchased the now former matrimonial home at N Street, Suburb O. Subsequently numerous other properties were purchased by the husband and generally registered in his sole name.
In July 2015, and following separation, the husband unilaterally sold a property at D Street, Suburb E for $595,000. In November 2015 the husband unilaterally sold the property at 1/2 F Street, Adelaide for $540,000.
In November 2016 the husband unilaterally sold a property at G Street, H Town for $240,000.
In September 2017 the husband transferred the shareholdings from CommSec to BB Online and then on to RR Online.
In September 2017 the wife, having instructed solicitors towards a property settlement, sought disclosure from the husband so as to enter into settlement negotiations. The husband disclosed a statement with Super Fund 1. Repeated requests for disclosure were made of the husband but with unsatisfactory response.
On 8 December 2017 the husband completed a document with the Commonwealth Bank disclosing personal net assets of $3,098,517. In 2018 the wife was diagnosed with a chronic illness.
On 8 June 2018 the husband unilaterally withdrew a lump sum of $656,326 from his entitlement with Super Fund 1 at which time the husband had not provided satisfactory discovery/disclosure to the wife's solicitors.
In September 2018 the husband completed another document with the Commonwealth Bank now declaring his personal net financial position to be $1,546,164.
A final divorce order was made 4 January 2019 whereupon the wife deposes to becoming aware of the factual errors in the Application for a Divorce prepared and filed by the husband.
On 17 January 2019 a property owned by L Pty Ltd at J Street, Adelaide was sold.
The wife filed an application seeking final property orders in this Court on 16 April 2019. The husband was served on 7 May 2019 and requested an adjournment of the first return date as he was to be shortly married.
Procedural orders were made for the husband to file responsive documents by a Registrar on 14 May 2019.
On 11 June 2019 the husband requested a further four week adjournment of the directions hearing to be held on 25 June 2020 on account of him being 'bedridden due to a back injury'. The wife deposes that subpoenaed documents indicate the husband attending a Westpac branch on 11 June 2019 seeking to remove her access to a joint account 'on the advice of his lawyer'.
On 20 June 2019 a further property at J Street, Adelaide was unilaterally sold by the husband.
On 20 June 2019 the wife's solicitor’s formally requested the husband to file and serve his Response and Financial Statement pursuant to the Registrar's orders.
In June 2019 L Pty Ltd was deregistered, although the wife deposes that the business operated by the Company continues to operate after this date as 'AA Company’ of which the husband is the Managing Director.
In June 2019 the husband commenced employment with M Group.
On 24 June 2019 the husband indicated to the wife's solicitors that he had instructed solicitors to prepare a Response and supporting material and required a further six weeks indulgence.
The matter came before a Registrar for a directions hearing on 25 June 2019. The husband appeared and was self-represented. The Court again ordered the filing of responsive documents and made an order for specific disclosure.
On 22 July 2019 husband filed his Response and sworn Financial Statement deposing to net assets of $882,433 and financial resources with an estimated value of $81,596.
On 7 August 2019 the wife's solicitors repeated their requests for specific disclosure pursuant to the Registrar's orders of 25 June.
On 8 August 2019 the husband unilaterally sold a property at K Street, Adelaide for $620,000.
The matter came back before the Registrar on 17 September 2019. The husband was self-represented. The husband was ordered to comply with previous orders including for specific disclosure. A costs order was made against the husband.
In October 2019 the husband's interest in the property at 3/2 F Street, Adelaide was transferred by way of a 'change of name' to a Mr DD and unilaterally sold in November 2019 by the husband for $500,000.
The matter came before the Registrar yet again on 20 November 2019. Further orders were made for the husband to comply with previous orders as to disclosure. A further costs order was made against the husband.
In January 2020 the wife became aware from online searches that the husband had unilaterally sold properties at F Street and listed a property in B Street, Adelaide for sale without her consent. The wife's solicitors sought specific disclosure as to these transactions but without response from the husband.
On 6 February 2020 the husband unilaterally entered into a Contract for sale of the B Street property for $1,005,000. The contract was not disclosed to the wife's solicitors.
On 12 February 2020 the wife filed an Application the Case seeking the preservation of the proceeds of sale of the B Street property together with an interim property settlement and interim spousal maintenance claim. The husband asserted that he was in Asia, was ill, and suffering Covid-19 symptoms and unable to respond to correspondence.
The matter came before the Registrar again on 25 February 2020. The husband did not attend. The requirement for a Conciliation Conference was dispensed with. The husband was again ordered to comply with previous orders for disclosure and to file his Response and responsive Affidavit in respect of the wife's Application in a Case. A further costs order was made in the wife's favour.
The wife's Application in a Case proceeded before Rees J on 6 April 2020. Her Honour delivered judgment on 9 April 2020 ordering inter-alia that the husband be restrained from dealing with the proceeds of sale of the B Street property, that the wife receive $100,000 by way of interim property settlement, and that the husband pay interim spousal maintenance at $720 per week.
On 6 May 2020 the wife registered a caveat over the B Street title pursuant to her Honour's orders of 9 April 2020.
On 12 May 2020 the matter was listed again before the Registrar and placed in the pool awaiting allocation of a final hearing date.
On 9 June 2020, one day prior to the scheduled settlement of the B Street sale, the wife's solicitors became aware that 12.5 per cent of the purchase price ($125,624) was to be withheld and paid directly to the ATO as the husband had failed to provide a Foreign Resident Capital Gains Withholding Clearance Certificate to the purchasers. This withholding impacted on the wife's entitlement pursuant to the 9 April 2020 order where no funds would be preserved and the wife would not receive the totality of your interim property settlement.
In June 2020 the husband refused the request of the wife's solicitors that he obtain a Clearance Certificate. Consequently, on 15 June 2020 the wife filed an Application in a Case seeking an order that the husband complete the necessary Clearance Certificate from the ATO or an order under s 106A of the Act and enforcement of outstanding costs orders and interim spousal maintenance. The matter was listed before a Senior Registrar and then transferred to the Duty Judge, but was not reached in the list of 7 July 2020.
On 3 July 2020 the husband filed a further Affidavit and sworn Financial Statement deposing net assets in deficit of $2,100,396.
The wife's interim application proceeded to hearing before Henderson J on 7 July 2020. The husband refused to sign the Clearance Certificate. An order was made pursuant to s 106A for a registrar to sign the appropriate documents. An order was made for the husband to pay arrears of interim spousal maintenance of $8,640 as well as outstanding costs orders. An order was made that the wife's costs of the interim application in a sum of $6,400 on an indemnity basis be deducted from the controlled monies account.
The Registrar signed the Clearance Certificate documents and these were lodged with the ATO on or about 8 July 2020.
On 10 July 2020 communications between the wife's solicitors and the ATO disclosed that the husband had, in fact, been previously provided with a Clearance Certificate which was issued on 6 February 2020.
On 17 July 2020 the settlement of the sale of the B Street property was scheduled but the Commonwealth Bank noted that they required an additional 'loan payout' of $32,877.49 in respect of the husband's credit cards such been made 'on the husband's instructions'. The husband refused the request by the wife's solicitors to withdraw his instructions to the Commonwealth Bank for payment of his personal credit cards. Consequently, the wife filed a further Application in a Case on 27 July 2020.
On the 28 July 2020 Loughnan J ordered compliance by the husband with previous orders and for arrears of spousal maintenance to be paid from the controlled monies account as well as ongoing spousal maintenance.
On 29 July 2020 the Registrar signed documents pursuant to s 106A removing the husband's credit card payments from the settlement amount with the Commonwealth Bank. Settlement of the sale of the B Street property ultimately took place on 31 July 2020 with net proceeds of sale reduced by $7,859.30 because of penalty interest and fees associated with the husband breach of contract. The net proceeds of sale were ultimately $150,216.83.
On 17 February 2021 the wife filed a further Application in a Case seeking injunctive orders to preserve the husband's superannuation entitlements given concerns that he would withdraw those amounts upon reaching his preservation age on 2 May 2021. That Application proceeded ex parte before Harper J on 29 March 2021 and interim injunctive orders were made. The matter was returnable before Harper J on 20 April 2021. The husband did not appear.
The substantive application was listed in the winter call-over before myself on 10 August 2021. The husband did not appear. The matter was set down for trial on notice of an undefended hearing should the husband not attend and/or not to comply with procedural orders.
The wife remains in employment as a professional with CC University. She has an income of $89,440 per annum.
The wife deposes that the husband may have lived in Asia and have assets there. The husband's current wife is Ms EE.
The wife further deposes that the husband may now be living and working in Country FF as a Manager for HH Company.
The wife has not re-partnered.
THE EVIDENCE
The wife relies upon the following documents the contents of which were read into evidence: Amended Application – 21.9.2021, Affidavit of Ms Kalla – 21.9.2021, Financial Statement – Ms Kalla – 21.9.2021, and an Affidavit Ms R – 30.9.2021.
THE LAW
The Act provides for settlement or alteration of property interests at s 79 where at subsection (1) the Court has a broad discretion within the statutory parameters to make such orders as it considers appropriate.
Section 79(2) provides as follows:
The court shall 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.
If the Court is satisfied that pursuant to s 79(2), having established the 'property’ of the parties and attributed value then the Court is to consider the contributions by or on behalf of each of the parties to the acquisition, improvement, and maintenance of the elements of the property pool. After determinations of the contributions then the Court considers whether there should be any further adjustment to either of the parties by reason of the matters set out in s 79(4)(d) – (g) including any of the relevant factors under s 75(2) of the Act.
'Property' is to include the assets, liabilities and financial resources of the parties or either of them. Amendments to the Act stipulate that superannuation is to be 'treated as property', although often not capable of crystallisation in the sense of an asset. The relevant time for determining the contents of the property pool and the valuations of those contents is usually seen as being the date of the trial.
The High Court in Stanford v Stanford[2] revisited the process of trial judges under s 79 at a time when it was considered that there was a relatively strict 'staged' course of consideration. Their Honours emphasised at s 79(2) the requirement for the Court to establish that it is just and equitable in the particular circumstances of that case to make any orders altering property interests. Importantly, this consideration is to be made independently and not conflated with the considerations of contributions under s 79(4). The matters that may be taken into account are broad and as the Court said:
[36]… "just and equitable" is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its metes and bounds. And while the power given by s 79 is not "to be exercised in accordance with fixed rules", nevertheless, three fundamental propositions must not be obscured.
[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. So much follows from the text of s 79(1)(a) itself, which refers to "altering the interests of the parties to the marriage in the property" … The question posed by s 79(2) 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. (Emphasis added)
[38]Second, although s 79 confers a broad power on a court exercising jurisdiction under the Act to make a property settlement order, it is not a power that is to be exercised according to an unguided judicial discretion. In Wirth v Wirth, Dixon CJ observed that a power to make such order with respect to property and costs "as [the judge] thinks fit", in any question between husband and wife as to the title to or possession of property, is a power which "rests upon the law and not upon judicial discretion". …(Emphasis added)
[39]Because the power to make a property settlement order is not to be exercised in an unprincipled fashion, whether it is "just and equitable" to make the order is not to be answered by assuming that the parties' rights to or interests in marital property are or should be different from those that then exist. All the more is that so when it is recognised that s 79 of the Act must be applied keeping in mind that "[c]ommunity of ownership arising from marriage has no place in the common law". Questions between husband and wife about the ownership of property that may be then, or may have been in the past, enjoyed in common are to be "decided according to the same scheme of legal titles and equitable principles as govern the rights of any two persons who are not spouses". The question presented by s 79 is whether those rights and interests should be altered.
[40]Third, whether making a property settlement order is "just and equitable" is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s 79(4). The power to make a property settlement order must be exercised "in accordance with legal principles, including the principles which the Act itself lays down". To conclude that making an order is "just and equitable" only because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act.[3]
[2] (2012) 247 CLR 108.
[3] Footnotes omitted.
In this matter the parties cohabited for approximately 29 years. There are three now adult children of the marriage. The parties bought and sold many parcels of real property a number of which were purchased and sold in the name of the husband only but where the wife claims contributions, both direct and indirect. The former matrimonial home remains registered in the joint names of the parties. The husband has had the benefit of considerable vested superannuation accrued during the relationship. The parties have been separated since 2015, are divorced, and the evidence suggests that the husband has remarried. In all of those circumstances, it is just and equitable to enter into a consideration of altering and settling the parties’ property interests.
THE PROPERTY POOL
The wife has provided a balance sheet of her understanding as to the contents of the property pool. The husband has not provided disclosure or sufficient disclosure. The husband has not actively participated in these proceedings and has not filed trial material. I generally accept the wife's unchallenged evidence as to the property pool and the valuations attributed accordingly:
Assets Wife’s value N Street, Suburb O – joint $760,000 P Street, City Q, India – joint $130,000 Westpac account ending …61- joint $8 Westpac account ending …99 - wife $348 Westpac account ending …65 – wife $0 Westpac account ending …57 –wife $0 Westpac account ending …98 – wife $0 Commonwealth Bank account ending …77 – husband $2,993 ANZ account ending …68 – husband Not known GG Bank account ending …87 – husband Not known ATO tax account credit balance - husband $97,787 LL Company program credits – wife $94,500 Shares held with CommSec/RR Online/BB Online – husband 0 Motor Vehicle 1 – wife $8,500 Motor Vehicle 2 – husband $15,450 Motor Vehicle 3 – husband Not known Household contents – wife $4,000 Household contents - husband $16,000 Total Assets $1,129,586.00
Notional Property L Pty Ltd - husband $113,868 Net proceeds of sale from JJ Street, Suburb KK – husband $265,353 Net proceeds of sale from D Street, Suburb E – husband $208,119 Net proceeds of sale from 1/2 F Street, Adelaide – husband $248,895 Net proceeds of sale from G Street, H Town –husband $110,029 Net proceeds of sale from J Street, Adelaide –husband $113,355 Net proceeds of sale from K Street, Adelaide – husband $197,161 Net proceeds of sale from 3/2 F Street, Adelaide – husband $61,104 Net proceeds of sale from 5/2 F Street, Adelaide – husband $148,676 Penalty interest and fees deducted from proceeds of sale of B Street, Adelaide – husband $7,859 Wife's interim property settlement from proceeds of sale of B Street, Adelaide – wife $100,000 Tax refunds received from ATO – husband $62,174 Employment termination payment from V Company – husband $329,637 Lump sum superannuation payment from Super Fund 1 – husband $656,326 Total Notional Property $2,622,556.00
Liabilities Mortgage secured over N Street, Suburb O (Westpac loan account ending …99) - joint $13,473 Westpac loan account ending …16 – wife $7,747 Westpac loan account ending …68 – wife $18,285 SS Bank loan account ending …97 – wife $0 Loan to LL Company – wife $16,443 Loan from Mr MM - wife $32,000 Loan from Mr Y – wife $10,000 NN Bank loan account …71/…00 - husband Not known Loans from family and friends (not particularised) – husband Not known Westpac credit card ending …59 – wife $21,575 PP Finance credit card ending …90 – wife $10,485 NN Bank credit card ending …00 – wife $7,745 QQ Finance credit card ending …45 – wife $15,039 Commonwealth Bank credit card ending …99 – husband Not known Commonwealth Bank credit card ending …74/…77 – husband Not known Westpac credit card ending …30 – husband Not known Capital Gains Tax liability on sale of B Street, Adelaide – husband $67,712 Total Liabilities $220,504.00
Superannuation Super Fund 5 – wife $650,275 Super Fund 2 – husband $8,600 Super Fund 3 - husband $53,544 Super Fund 4 – husband $109,143 Super Fund 5 – husband $207,220 Super Fund 6 – husband $4,542 Total superannuation $1,033,324.00
Total net assets (Assets – Liabilities + Superannuation) Total $4,564,962.00
Where available the wife has provided market appraisals in respect of real property. She has the benefit of the husband's own two Financial Statements filed some time ago in these proceedings. She has an income tax statement of account of the husband as of 20 February 2020 and information as to the proceeds of sale of properties unilaterally sold by the husband.
Contributions
Neither party had any significant assets, liabilities or superannuation as at the date of commencement of cohabitation in 1986.
The husband has been employed throughout the relationship and since separation. The parties moved between India, the United Kingdom, and Australia primarily for the benefit of the husband's employment.
The wife has been substantially employed during the relationship excepting for relatively short periods around the times of the births of the three children. She has assumed a greater responsibility as home maker and parent for the children noting that the husband resided away from the former matrimonial home for a considerable part of the marriage.
In September 1997 the parties jointly purchased the former matrimonial home at Suburb O for $224,000. The wife remains in residence of that property.
The wife deposes at [28] of her Trial Affidavit that during the course of the relationship the husband acquired an interest in 11 properties. The wife's name was not included on the titles. The husband has since disposed of the majority of those properties and retained the proceeds of sale to the exclusion of the wife. At times the husband drew down on the mortgage secured by the Suburb O property in order to make these investments.
During a part of the marriage the parties each deposited their respective salaries into a joint account to meet expenses. However, from 1997 the husband directed the wife to make payments of approximately $250 – $350 per week from the joint account into a rental account held for properties in the husband's name.
Following separation in May 2015 the husband continued to make contributions towards the outgoings of the former matrimonial home until August 2019. Nevertheless the wife was required to take personal loans and utilise high interest credit cards to meet the living expenses of her herself, the three children and the upkeep of the former matrimonial home. In October 2017 she was required to enter into a formal personal loan evidenced by a loan agreement with her brother in the sum of $31,850. That loan remains unpaid, but payment is required upon the making of these orders.
From August 2019 the husband ceased making contributions towards the family living expenses and the outgoing for the Suburb O property. The wife assumed a greater responsibility for the financial support of the children.
In January 2020 the wife was required to enter into a further loan agreement with her adult son for $10,000. The parties jointly own a property at City Q, India with an estimated value of $130,000. The property is vacant after the passing of the husband's mother.
The wife deposes, and I accept, that the husband has unilaterally disposed of the majority of the assets held in his sole name and without the consent of the wife. The husband has not made proper disclosure or accounted for the funds received from the disposal of those assets. The husband now lives offshore in Country FF. The wife says, and I accept, that the husband is likely to have moved assets or the proceeds thereof to Asia where his current wife resides.
This relationship was of some 29 years duration. Neither party owned assets of any value as at the date of marriage. Both parties have contributed in various ways including by their employment and as home maker and parent with the wife assuming a greater role in respect of the latter and thereby enabling the husband to pursue more remunerative employment.
Save and except for some superior contributions by the wife towards the family and the upkeep of the former matrimonial home following separation, I find the contributions of these parties to this lengthy marriage to generally be equal.
Section 75(2) factors
The wife remains in employment as a professional and her financial statement discloses a salary of $1,720 per week or approximately $89,000 per annum. The best evidence is that the husband has a far superior current and potential earning capacity than the wife. Her Affidavit suggests that the husband has had employment bringing him some $300,000 per annum. He works in Country FF and may have taxation advantages not available to the wife.
The wife has not re-partnered. She is 59 years of age. She has been diagnosed a chronic illness and a sleeping disorder.
In all of these circumstances, I am easily satisfied that a further adjustment to the wife of at least 10 per cent of the property pool would be just and equitable.
CONCLUSION – PROPERTY
The wife seeks a distribution of the property of the parties which would give her approximately 60 per cent of the net pool inclusive of superannuation and on a one – pool basis. Given the length of the marriage, the contributions, and the weight to be accorded to the relevant s 75(2) factors, such a distribution would be just and equitable.
The wife proposes a distribution as indicated in the above balance sheet noting, of course, that the husband has unilaterally retained either assets or more likely the proceeds of sale thereof including the crystallisation of considerable superannuation entitlements. Accordingly, the wife proposes, and I calculate, a cash adjustment from the husband of $773,000 to accommodate the 60/40 settlement in her favour. Realistically, however, given the husband's lack of participation in these proceedings and failure to comply with the interim and interlocutory orders together with his apparent residence in Country FF, it is highly unlikely that the wife will achieve this cash adjustment without which the distribution of property would give her only approximately 40 per cent of the net property pool which, of course, would not provide justice and equity.
Spousal maintenance arrears
There have been orders on foot for some time for the husband to make interim spousal maintenance payments to the wife. I am told, and I accept, that he is in arrears of the $13,671 as of 17 September 2021. I make an order enforcing payment thereof and will do so albeit with the same reservations as to whether or not to the order will ultimately be executed.
There will be an order generally under s 106A to allow the Registrar to sign any documents required to give effect to these orders noting again the non – compliance by the husband with previous orders and his tendency to act unilaterally and mischievously in respect of the asset pool.
COSTS
At the conclusion of submissions by counsel on behalf of the wife, an application was made, as indicated in the Amending Initiating Application, for the husband to pay the wife's costs of and incidental to the proceedings. Those costs are sought on an indemnity basis and in a quantum of $26,080.37 inclusive of disbursements and GST.
Matters of costs are provided for in s 117 of the Act where at subsection (1) there is a general provision for each party to litigation in these Courts is to be responsible for his or her own legal costs. That general provision is, however, subject to a discretion available to the Court at subsection (2) to make an award for costs if there are 'justifying circumstances'. It is long established that the term justifying circumstances is not to be read as synonymous with extraordinary circumstances. In determining whether there are such justifying circumstances and what order to make the Court is mandated to consider the factors set out at subsection (2A) as follows:
Section 117(2A)(a) the financial circumstances of each of the parties to the proceedings
The evidence easily satisfies me that the husband is in a far superior financial position than the wife and quite capable of meeting any order for costs.
Section 117(2A)(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
These are property proceedings and neither party is entitled to legal aid.
Section 117(2A)(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
The husband is culpable in respect of this factor. He has not complied with procedural, interim and interlocutory orders. He has not complied with requests for discovery. It follows that the wife has been put to cost and expense.
Section 117(2A)(d) whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court
This matter has been lengthened and with the need for more than necessary listings due to the husband's failure to comply with court orders and his obligations for disclosure.
Section 117(2A)(e) whether any party to the proceedings has been wholly unsuccessful in the proceedings
The wife has outlined her position since her initiating application. She has achieved the orders consistent with her application in the sense that she has been wholly successful.
Section 117(2A)(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
This is not a relevant consideration in these proceedings.
Section 117(2A)(g) such other matters as the court considers relevant
These proceedings were commenced as long ago as April 2019. The wife had instructed solicitors at least from September 2017 to negotiate a settlement. The husband has been consistently uncooperative and mischievous in his dealings with assets of the marriage, but which were solely in his name. He has caused considerable delay to a final resolution of a matter which was not overly complex and where the wife was ultimately required to take the matter to trial undefended the husband. She has been successful in her application. In all of those circumstances an award of costs to the wife is justified.
Indemnity Costs
As a matter of general principle costs payable pursuant to a court order will be on a party and party basis and the Court should not depart lightly from the ordinary rule. Circumstances justifying a departure should be of an exceptional kind[4] or there need be 'some special or unusual feature in the case to justify the court in departing from the ordinary practice'.[5]
[4] Kohan & Kohan (1993) FLC 92-340, at 79,614.
[5] Colgate-Palmolive and Co v Cussons Pty Ltd (1993) 46 FCR 225 at 233.
Such special, unusual, or exceptional circumstances were considered by Holden CJ in Munday v Bowman[6] where his Honour cited the examples set out by Sheppard J in Colgate Palmolive Company and Co v Cussons Pty Ltd (supra) as follows:
(a)Where it appears that an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts (see Fountain Selected Meats (Sales) Pty. Ltd. v. International Produce Merchants Pty. Ltd. [1988] 81 ALR 397.
(b)Making allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud (see Fountain Selected Meats (Sales) Pty. Ltd. (supra).
(c)Evidence of particular misconduct causing loss of time to the court and to other parties (see Tetijo Holdings Pty. Ltd. v. Keeprite Australia Pty. Ltd (unreported, Federal Court, 3 May 1991)).
(d)The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (see Ragatta Developments Pty. Ltd. v. Westpac Banking Corporation (unreported, Federal Court, 5 March 1993)).
(e)An imprudent refusal of an offer to compromise.
[6] (1997) FLC 92 – 784.
Whilst the above examples are broad in their compass, they are not exhaustive of the considerations towards an order for indemnity costs.
Whilst the making of an award for costs and for indemnity costs is an exercise of judicial discretion, the Full Court in Kohan (supra) put perspective on the exercise of that discretion as follows:
… However, it is fundamental to the exercise of that discretion in the Family Court that the Judge should not only understand that such an order is a very great departure from the normal standard, but also that the Judge should know what the terms of the agreement are, to what extent it exceeds the parameters set by the scale, and what its likely impact will be on the financial position of each of the parties.
This impact was a relevant matter to which the trial Judge should have had regard, when considering the financial circumstances of each of the parties to the proceedings under sec 117(2A)(a), or perhaps even more as a relevant matter under para (g). The degree to which a costs agreement departs from the established norm and the actual financial significance of such a departure may itself be a reason for not ordering costs on an indemnity basis.
Mindful of the caution urged by the Full Court in Kohan, I am persuaded, in any event, to exercise my discretion in this matter towards an order for indemnity costs in favour of the wife. The husband’s conduct in this matter has been both dilatory and mischievous. The issues and considerations raised on the wife's initial application were not complex relative to many of those coming before these Courts. The husband has lengthened the proceedings considerably by way of non-compliance with interlocutory and procedural orders. The husband's participation in the proceedings has been limited and not at all in recent times necessitating the wife taking this matter to its logical conclusion of the trial albeit undefended. Notably, the wife's solicitors attempted to enter into negotiations with the husband towards a settlement for a long period prior to any application being filed. The husband is in a far superior financial position than the wife and the impact of the costs incurred by the wife the in these proceedings on a solicitor/client basis have been considerable and given her age and financial circumstances will have an ongoing impact. In all of those circumstances, I am persuaded that the wife should have her costs on an indemnity basis and I am satisfied as to the quantum particularised in a document provided to the Court dated 12 October 2021 in a total of $26,080.30 which by way of comment may even be considered conservative given the length of these proceedings and the need for so many court appearances.
I certify that the preceding one hundred and five (105) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice McGuire. Associate:
Dated: 27 October 2021
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