Melville and Dent (No. 4)

FAMILY COURT OF AUSTRALIA

MELVILLE & DENT (NO. 4)

[2009] FamCA 430

FAMILY LAW – CHILDREN & PARENTING ISSUES – Non-disclosure and non-cooperation by husband – Matter proceeded on an undefended basis

Child Support (Assessment) Act 1989 (Cth)
Family Law Act 1975 (Cth)

Black v Kellner (1992) FLC 92-287
Colgate‑Palmolive Co and another v Cussons Pty Ltd (1993) 46 FCR 225
Hickey and the Attorney General for the Commonwealth of Australia (2003) FLC 93-143
Penfold v Penfold (1980) 144 CLR 311
Weir v Weir (1993) FLC 92-338
Yunghanns & Ors v Yunghanns & Ors; Yunghanns (1999) FLC 92-836

APPLICANT:

Ms Melville

RESPONDENT:

Mr Dent

THIRD PARTY:

F Solicitors (a Firm)

FILE NUMBER:

MLF

3157

2006

DATE DELIVERED:

23 April 2009

PLACE DELIVERED:

Melbourne

PLACE HEARD:

Melbourne

JUDGMENT OF:

Cronin J

HEARING DATE:

23 April 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr A.I. Strum

SOLICITOR FOR THE APPLICANT:

Marshalls & Dent

COUNSEL FOR THE RESPONDENT:

Ms C. Farrell

SOLICITOR FOR THE RESPONDENT:

Nevett Ford

COUNSEL FOR THE THIRD PARTY

Mr G.R. Dickson

SOLICITOR FOR THE THIRD PARTY

F Solicitors

Orders

IT IS DECLARED

That the husband is indebted to F SOLICITORS as intervener in these proceedings for outstanding legal fees which, together with interest, total $70,660.87.

IT IS ORDERED:

That the husband pay the intervener’s costs of these proceedings fixed in the sum of $9,339.13.
That the husband pay the wife’s costs and disbursements of and associated with these proceedings fixed in the sum of $270,000.00.
That, in the event the husband fails to execute any documents required to give effect to these Orders, inclusive of but not limited to, the transfer of funds and property and/or to maintain the child’s passports, pursuant to Section 106A of the Family Law Act, a Registrar of the Family Court of Australia at Melbourne execute all such documents in the name of the husband and do all such acts and things necessary to give validity and operation to such documents.
That the child of the marriage … born on … August 1995 live with the wife.
That the wife have the sole parental responsibility for the child.
That the question of when the husband will spend time with the child be reserved.
That the husband forthwith do all things necessary and sign all such documents, as may be requested by the wife from time to time, to apply for and/or maintain the currency of the child’s passports.
That pursuant to Section 123A of the Child Support (Assessment) Act 1989, the husband provide child support to the wife in relation to the child by way of lump sum payment fixed in the sum of $375,000 (noting that such sum shall be paid upon the completion of the obligations of both parties pursuant to paragraph 19 (a) of these orders) and that such sum be credited against 100% of the husband’s liability under any administrative assessment of child support until the conclusion of the academic year in which the child achieves the age of 18 years.
That the wife provide to the Registrar of the Child Support Agency, a copy of this order as soon as practicable.
That the husband forthwith sign all such documents and do all such acts and things as may be require to transfer to the wife, at her expense, all of his right title and interest in the property at E in the State of Victoria (“the home”) being the whole of the land more particularly described in Certificate of Title Volume … Folio ….
That the wife be forthwith responsible for and indemnify the husband in relation to, any liability for the mortgage secured by the home in favour of National Australia Bank (Asia) Ltd being registered mortgage number ….
That the husband forthwith do all things necessary and sign all such documents as are required to forthwith transfer to the wife all of his right title and interest in the property in New York in the United States of America that is the subject of her Complaint and proceedings in the Supreme Court of the State of New York County of … (Index number: …) seeking the partition and sale of the New York property (“the USA Proceedings”), upon trust for sale pursuant to these Orders.
That the wife have the sole conduct of the sale of the New York property and have liberty to apply in relation to the sale on short notice.
That the husband forthwith do all things necessary and sign all such documents as are requested by the wife’s New York Attorney Mr Edward Wiener of Stein, Wiener and Roth LLP, New York, to give full force and effect to paragraph 13 hereof and that Mr Wiener’s costs in relation to the transfer be paid pursuant to paragraph 18(c) hereof.
That the wife have the conduct and responsibility for the sale of the New York property and to give effect to that responsibility, she forthwith do all things necessary as follows:
(a)to execute an Exclusive Sale Authority with Ms … of … Real Estate in … (“the Agent”) with the Authority to commence forthwith and continue until 31 December, 2009 and if the property fails to sell within that time frame that the Exclusive Sale Agreement be extended by the wife until a sale is achieved;
(b)to ensure that the Agent’s commission of the sale be 5% of the total sale price;
(c)to be at liberty to change the locks on the New York property and that the cost of same be deducted from and reimbursed to her from the proceeds of sale of the property prior to any disbursement of same to the parties;
(d)to attend to all reasonable repairs recommended by the selling agent to properly present the property for sale and that the wife be reimbursed for the costs of such repairs from the proceeds of sale prior to any disbursement of same to the parties;
(e)to instruct the Agent to provide each of the parties a copy of each and every written offer to purchase the property received by them, forthwith upon any such offer being received that the wife be at liberty to accept any written offer received in excess of the husband’s valuation report filed in these proceedings of US$1,400,000;
(f)to ensure that all deposit monies and/or proceeds of sale (after the deduction of the reasonable costs of the sale pursuant to the Exclusive Sale Authority with the Agent) be initially held in a trust account established by the wife’s New York Attorneys, Stein Wiener and Roth LLP, New York, in the joint names of the parties pending settlement of the sale; and
(g)to instruct Stein Weiner and Roth as to the conveyance of the property and the issuing of the outstanding certificate relating to the construction of a deck at the property.
That pending the settlement of the sale of the New York property the husband pay or cause to be paid all instalments of the mortgage in favour of Chase Bank secured by the property as and when they fall due and inclusive of any outstanding payments, penalties and fees incurred in relation to same from time to time.
That upon settlement of the sale, the proceeds of sale be disbursed as follows:-
(a)first, by way of reimbursement to the wife and/or payment of all costs pursuant to paragraph 16 (c) and (d) hereof;
(b)secondly, in payment of all costs, commissions and expenses relating to the Sale;
(c)thirdly, in payment of all costs of Stein Wiener and Roth pursuant to paragraph 16(g) and in relation to the conveyance of the property;
(d)fourthly, such sum as may be required to be retained by Stein Wiener Roth, upon trust, prior to the outstanding certificate in relation to the property issuing;
(e)fifthly, in the payment of all outstanding rates and taxes associated with the property;
(f)sixthly, to discharge the mortgage in favour of Chase Bank secured by the property; and
(g)seventhly, to forthwith transfer the balance to Marshalls and Dent Lawyers, of … Melbourne, Australia to establish a trust account in the joint names of the parties (“the balance of the sale proceeds”) for the purposes of the giving effect to these orders.
That after the payments referred to in paragraph 18 hereof the balance of the sale proceeds be held in trust by Marshalls and Dent Lawyers pursuant to paragraph 18(g) and disbursed as follows:-
(a) first, in payment to the wife of:-
(i)50% of the balance; and
(ii)the outstanding arrears of child support as at this date;
(iii)the lump sum payment of future child support for the child referred to in paragraph 9 of these orders;
(iv)the lump sum of $140,000 by way of spousal maintenance;
(v)the sum of $1,775 by way of reimbursement on account of one half of the costs of the joint valuation reports filed in relation to these proceedings;
(vi)the sum of AU$50,000 being a sum equivalent to the debt incurred on the wife’s HSBC Visa card by the family prior to separation and that such sum be paid by the wife to HSBC and to that extent, the wife indemnify the husband against any such liability accordingly;
(vii)by way of reimbursement to the wife or in payment to Chase Bank all such sums pursuant to paragraph 17 hereof (if any);
(viii)the sum of $270,000 by way of costs pursuant to paragraph 3 hereof; and
(ix)any other outstanding costs order;
(b)by way of property settlement to the husband the sum of AU$80,000 such sum to be paid to the Intervener, F Solicitors on account of their outstanding legal fees (including the costs ordered today) and to be applied towards their judgment lien; and
(c)insofar as there is any further funds left:
(i)the sum of US$326,000 by way of reimbursement to the wife in relation to Royal Skandia insurance policy proceeds; and
(ii)the balance thereafter to the husband.
That pending the sale of the New York property the wife be at liberty to do all things necessary and sign all such documents as are required to lease the property and that the net rental monies received be applied to the mortgage secured by the property in favour of Chase Bank.
That the wife retain and the husband relinquish any interest in the contents of the home.
That unless otherwise specified in these Orders:
(a)each party be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the possession of such party as at the date of these Orders (the furniture, personal possessions and like chattels in the home and the New York property being deemed to be in the possession of the wife);
(b)monies standing to the credit of the parties in any joint bank account are to become the property of the wife;
(c)each party forego any claims they may have to any superannuation benefits belonging to or earned by the other;
(d)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders; and
(e)any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
Pursuant to s.65DA(2) and s.62B, the particulars of the obligations these orders create and the particulars of the consequences that may follow if a person contravenes these orders and details of who can assist the parties adjust to and comply with an order are set out in the Fact Sheet attached hereto and these particulars are included in these orders.
In the event that there are insufficient funds to satisfy payments to the Interveners (as the husband’s property settlement) pursuant to paragraph 19(b) hereof, the Intervener be at liberty to sell the painting by … (the wife to deliver up to the Intervener the Certificate of Providence for that purpose) and apply the proceeds of sale towards payment of such of the amount that is still outstanding (as declared and ordered this day) to the Interveners and if there is any amount left over, to pay the excess to the wife.
That upon the Intervener being paid all sums owed pursuant to paragraph 19(b) hereof, the Intervener make available the painting by … for collection by the wife.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLF 3157 of 2006

MS MELVILLE

Applicant

And

MR DENT

Respondent

And

F SOLICITORS

Third Party

REASONS FOR JUDGMENT

This is an ex tempore reasons for judgment in a long running matter, which, on its face, appears not to be terribly difficult, but having regard to what I am about to set out, all is not what it necessarily seems. Because it is being dealt with this way, the reasons are probably not as eloquently set out as I would normally like.
On 17 April 2009 I struck out the husband's response to these proceedings, which was filed on 29 September 2008, and gave the wife leave to proceed with her application for final orders on an undefended basis. I made that order based upon an application in a case filed by the wife, and about which I was satisfied the husband had been served. Separate reasons for that decision have been given.
As a precaution, I ordered the wife to serve the husband with my order so that it could be brought to his attention. In addition, I asked the husband's solicitor, who appeared on the record on that day, to notify the husband of the orders as well as the new return date, particularly as it was indicated that those solicitors would most likely be serving upon the husband a notice of ceasing to act.
This is not an isolated circumstance of lack of disclosure and cooperation with the processes of the court, and the wife has the right to bring this sorry tale to an end. Today the husband has been called and not appeared. His solicitor, Ms Farrell, who also appeared some weeks ago, sought and was given leave to cease acting on the court record forthwith, on the basis of having served notice of ceasing to act on the husband on 21 April.
I am satisfied also on the affidavit evidence of the solicitor for the wife that she too has forwarded the relevant documents under the orders that I provided as well as the notification to the husband about today's hearing. I am satisfied therefore that the husband is aware of the nature of the application and the hearing and has chosen not to participate.
Ironically enough, I also have an application by the husband's former lawyers, F Solicitors, in which they sought that as a creditor of the husband, they be paid from any entitlement he may have from these proceedings. I propose to make orders to facilitate that whilst still being conscious that there may be other creditors who could be disadvantaged because of these orders. I can only take the material as I find it, but equally, so do the former solicitors for the husband.
If there are other disadvantaged creditors, they will have to protect their own interests as I have no information from the husband otherwise to assist me. The application by the wife was initially filed on 13 November 2006. In it, she sought parenting and undefined property orders as well as costs. She did not at that time seek an order for spousal maintenance. On 29 September 2008 the husband filed a formal response. The explanation for the almost two year gap between the filing of the application and the response will be evident in the reasons that follow.
The husband sought parenting orders as well as precise property orders. That was the response that I struck out on 17 April. On 30 May 2008, noting that at that time the husband had still not filed a response, the wife filed an amended application in which she sought specific orders but those have again been varied in matters that I will now address.
Whilst there have been some minor variations to the document that sets out the orders that the wife is seeking today, I am satisfied that there is nothing in the amendments that would put the husband at any disadvantage. I say that on the basis that I am conscious of the fact that he has not been served with the precise document that I have been working on, but having regard to his attitude up until now, it is hard to see that he would have adopted the view that there was no disadvantage for him so he would not come into court. In my view, he has had ample opportunity to understand the nature of the wife's application.
The orders that the wife seeks are as follows. Firstly, that the husband pay any costs and disbursements associated with the proceedings on an indemnity basis. Secondly, that the husband pay costs unpaid from an order that I made on 12 February 2009. It is asserted - and I have no reason to doubt - that there is still outstanding $7743.
The wife also seeks an order under s 106A of the Family Law Act 1975 (Cth) (“the Act”) that a registrar execute all documents in the name of the husband. This is a case in which that is important because of the fact that the husband's attitude up until now has not been cooperative, and there are orders I am about to make, which will require documents be signed.
The orders sought by the wife go on to seek specific parenting orders in relation to the parties’ child. Specifically the wife sought that the child live with her and that she have sole parental responsibility. She sought an order that the question of the husband's time with the child be reserved. There is also an order which makes sense if one contemplates the orders I am about to make in relation to the child, that the husband do anything that is requested by the wife to apply for and maintain the currency of the child’s passports.
In respect of property matters, the wife seeks an order that the home at E, which I will describe as the former matrimonial home, be transferred to her. In turn, she will take over the mortgage encumbering that property. She then seeks an order that the property in New York in the United States continue to be disposed of pursuant to the partition proceedings and sale, which is the current subject of proceedings it the Supreme Court of the state of New York.
She then sought specific orders in relation to the implementation and execution of that sale, and the various consequential costs. In relation to the outcome of that sale and the use of its proceeds, the wife sought orders that first and foremost the necessary costs and expenses be paid, and the mortgage encumbering the property be paid out. She then sought that the balance effectively be transferred to her lawyers to be held on trust for the balance of the orders that she then seeks.
From that trust account, she seeks 50 per cent as a starting point. From the other 50 per cent, she sought orders that any arrears of child support be paid, along with what she described as reimbursement on account of her need for spousal maintenance since separation in the sum of not less than $40,000 per annum. She also sought $1775 by way of reimbursement on account of one half of the costs of the joint valuation. There is also a request that from this other 50 per cent, the sum of $50,000 be paid in relation to an HSBC Visa card, which was run up prior to separation, but which appears not to have been paid, notwithstanding the card appears to have been cancelled.
Thereafter, there are some various adjustments that she seeks in relation to moneys which I will deal with shortly, about which I am satisfied that the husband has retained. She seeks orders for an undefined sum being paid to her for an equitable division, and that the sum of $80,000 be paid to the husband from which the interveners, F Solicitors, be paid not only their outstanding account pursuant to a costs agreement with the husband, but also the costs of having to pursue him in these proceedings.
The orders that she goes on to seek also require payment of future child support and ultimately the costs of these proceedings. Those are matters that I will deal with. There are other orders sought in relation to she and the husband retaining whatever assets each has in their respective possession at this stage. In the outline of case document, which was handed to me this morning, the wife sets out the affidavit material upon which she relies. It is a comprehensive set of documents, as it must have been, having regard to the fact that the husband had indicated that he was not going to participate in one form or another.

The fact that a case is undefended does not mean that the applicant does not have to prove that case. On that basis, the wife relied upon and I have read the affidavit sworn and filed 25 August 2008, that filed and sworn 28 January 2009, her two financial statements sworn in November 2006 and January 2009, her affidavit filed on 2 April and then respectively, the affidavits of Mr R, Dr Y, Ms D, the wife's father, Mr Edward Wiener, who was the solicitor in the United States, dealing with the New York property, an art valuer, Ms K, in relation to some Aboriginal paintings, Mr B, who is the valuer of the E property in Victoria, and in respect of the orders to which I have just referred, the affidavit of Ms S in relation to what was sent to the husband. That is the background of the material upon which I am today relying.
Just by way of background, and for the record, the husband is 49 years of age and the wife 46. They began living together in around July 1992, married in July 1993, and separated 13 years later on 14 August 2006. Their marriage has been dissolved by divorce granted on 17 November 2007. There was only one child of the relationship, who was born in August 1995. The child is therefore 13 years of age. She currently lives with the wife and attends a private school in Melbourne where she is in Year 8. The wife is a qualified teacher in the United States of America, but currently engaged in home duties, and the husband is a current company director.
What I now set out are facts which I say are findings of fact. At the date of cohabitation, neither party had any assets of any significance. The husband had just commenced a business, and the wife was a teacher, earning well in excess of the husband. I accept the wife's evidence that during the early part of the relationship, it was her income that provided the family's form of support. The husband established two corporate entities: N Ltd and L Ltd. The wife had been a director of N Company for part of the marriage, and resigned in about 2003.
The wife asserts - and there is no evidence to the contrary - that the husband holds all of the shares in those two companies. The business conducted by the entities relates to the importation of goods to the United States, Europe and Australia. On the wife's evidence, I accept that their lifestyle during the period of time the parties were together, was affluent. Both parties worked in their respective roles up until 1993, when the child was born. From then on, the wife became the primary carer of the child and manager of the parties' home, whilst the husband conducted the business.
In 2000 the parties acquired a home in Australia, which is the property in E, borrowing substantially from the National Australia Bank Asia Ltd and encumbering the property. The property was purchased by the parties as joint tenants. It was renovated in 2003. In the absence of the husband - he being overseas - the wife managed that renovation. In 2001, the parties acquired a house in New York. That is the property to which I have already referred earlier. Again, the major portion of the purchase price came from a mortgage loan.
That property in New York, is registered to the parties jointly. It was then renovated extensively, using income from the companies conducting the business. I find the wife was integrally involved in those renovations and the husband predominantly attended to the supervision of the builders. That property has become the subject of proceedings for partition in the United States of America, but also because of the current global recession, it has plummeted in value and it may be difficult to sell. That becomes relevant because of the wife's desire to sell it just after separation, and the husband's procrastination at that time. There is evidence before me which I accept of a significant diminution of value. I shall return to that property in a moment.
In 2003, the husband and his mother were arrested, as a result of a business scam. I need not say anything further about this because the outcome in the Hong Kong courts speaks for itself. The husband was initially given a non‑custodial sentence, but that was later overturned by the appellate court. The husband went to jail. The husband's legal costs must have been paid from somewhere or something under his control. On any view, they seemed to have been substantial. The arrest of the husband brought about the wife's resignation as a director of the company and a move to Australia by her and the child.
Despite the impending litigation in Hong Kong, the husband travelled to Australia for various periods. The husband’s nefarious business activities were not the only issues in his life that would enable me to find that he has no scruples. In 2006, the wife discovered that the husband had hidden drugs in the child’s luggage whilst they were travelling overseas. That in turn coincided with the husband's downturn in behaviour, which I might at best and politely describe as aggressive.
In her affidavit, the wife set out the details which I think encapsulate what I am referring to. The wife said that:
The husband frequently exploded and yelled at [the child] and me. He became unpredictable, for example:-
(a)on one occasion in or around April, 2006 I recall we were driving in the car looking at houses. I was having difficulty finding the right street in the Melways. He screamed at me and grabbed the Melways from me. I thought he was going to throw the book at me, then he threw the book into the back of the car. He then proceeded to deliberately drive dangerously. I was very frightened by this behaviour;
(b)in April, 2006, the husband and I were getting ready to attend a party. Without warning the husband starting yelling at me and [the child] became so frightened that she ran and hid from the husband; and
(c)in April, 2006, the husband flew into an unexplained rage whilst my parents were staying with us. [The child] was so frightened by the husband's behaviour she fled into my parents' bedroom in tears, seeking refuge.
All of that becomes relevant when I have to deal with the parenting issues shortly. The wife then sought counselling, psychological and medical treatment herself. At this time, it is to be remembered that the marriage was ongoing. In August 2006, the wife learned of an extra-marital relationship that the husband had commenced. Along with a further incident in which the wife found the husband with drugs, the relationship came to an end. As is now known, the husband became the father of a child in March 2006, to the woman with whom he was having the relationship. That child, X, is now three.
The emails to which I shall refer shortly, suggest that the husband has no compunction about setting up financial support for his partner, as well as acquiring a house for her and the child, X. In September 2006, the husband, through his lawyers, committed himself to maintain his financial obligations to the wife and the parties’ child. Support continued only until early 2007, except in fairness, the husband paid the former matrimonial home mortgage. Even that was spasmodic. It was to her father that the wife turned for financial support. He lent the wife $100,000 to be repaid from her property settlement. That debt, for reasons to which I shall turn, now has climbed to about $450,000.
I am satisfied on the evidence of the wife and her father that it was incurred and is to be repaid. The question of whether there ought to be a joint responsibility of the parties is a different issue. Having regard to the lack of support by the husband during the relevant period, when that loan was made, despite having distractions associated with the Hong Kong civil litigation, I find that the wife necessarily incurred a portion of the total of that sum in living expenses, she having no other means or capacity to support herself. The wife concedes that a substantial portion of that loan and the subsequent moneys lent by her father were applied towards legal fees.
I could not find it just and equitable at this point to say that the husband should contribute towards those costs by way of taking on the joint debt from the pool of assets. That, however, becomes relevant on any future costs application, particularly if the husband has made the wife incur costs because of his lack of cooperation and disclosure. Accordingly, I find that the wife's legal expenses for the proceedings before me have amounted to approximately $290,000. I have already previously ordered the husband to pay $31,000, and he has paid $23,000 of that.
Of the approximately $450,000, to which I earlier referred that the father has provided, about $150,000 of that has gone into living expenses, including support and school fees for the child. I accept that there is a formal loan agreement, dated 13 February 2007, seeking a repayment of the initial loan, but there is no other evidence before me, other than that the money is to be repaid.
In December 2006, the wife discovered that the husband had placed the property in New York on the rental market. Suffice to say she was unaware of all of that. Because of a lack of response from the husband about disclosure, it is unclear what money he has received, and more importantly, what he has done with that money. When the wife sought to sell the New York property, the husband objected, and that led to a situation where the unpaid mortgagee gave notice of foreclosure. That occurred on more than one occasion.
I have also had the opportunity to read the documents filed in the Supreme Court of New York, in which the husband raised some very strange defences to the partition proceedings. They certainly seemed to me to be inconsistent with his obligations to this court. I am satisfied on the balance of probabilities that the husband took steps to avoid the wife knowing about things such as the foreclosures to which I have just referred, by representing to the mortgagee that the wife's address for service was in the United States of America, full well knowing that she was in Australia.
In 2007, the mortgagee proceeded to foreclose and then pulled back because they received some funds. Where those funds came from is not a matter about which I should make any finding, nor should I speculate. But during that period, the husband was not supporting the wife adequately. Because of the dispute over the New York property, in January 2008, the wife turned to lawyers in the United States of America and issued proceedings for a partition of the joint tenancy and a consequent sale. Those proceedings too became contested and protracted, as I have indicated. That issue is now resolved, and the partition is being implemented.
Due to the husband's lack of disclosure, particularly in relation to the lead-up in 2008 to these proceedings being dealt with on a final basis, the wife turned to Mr R, as an expert to provide some assistance as to the valuation of the husband's interests overseas. Mr R in turn could not do much, because he could not get access to documents to give advice.
In respect of the question of disclosure, generally, I accept the wife's evidence, and in particular, the following matters. At paragraph 104 of her affidavit, she says:
On 30 January, 2007 orders were made for the husband to provide specific discovery. He had ample opportunity to fully comply with the orders prior to June, 2008. He has continued in his failure to fully comply with the Orders for specific discovery, thereby preventing me from seeking the appropriate professional advice to value our business interests overseas.
At paragraph 106, she said:
Further by way of example of the husband's attitude towards litigation, the husband has failed to comply with my request for discovery in relation to the New York proceedings and failed to properly engage in the proceedings until after the matter was listed for Default Judgment.
Both of those paragraphs are consistent with what I have observed in the time that I have been managing this case. The wife's evidence also shows that the parties had an investment in a company called O Company. The bank statement of its value at the end of 2008 showed the sum of $A53,827. Further, during the marriage, the parties had established superannuation-like policies, and the wife estimated their values at $617,000 for hers and $698,000 for the husband, at the time that the parties separated. According to the wife, all of those have been liquidated and/or taken by the husband. They need to be taken into account in these proceedings.
There are other investments held by the company, but as the details of those values cannot be comprehensively undertaken, I cannot make any finding about their current worth. The husband presumably has access to them and uses them at his will on the basis that he is now in complete control of this business. The parties also had artwork, jewellery and contents, much of which has disappeared under the control of the husband. The artwork in itself is interesting. There were four paintings, and only three were valued because the fourth was missing.
It transpires, as will be evident from the orders that I propose to make, that the husband brought a painting from Hong Kong to Australia and proffered it to his then-solicitors, the intervening third parties, as security for his future costs, asserting to them that it was worth $100,000. The valuation now shows that it is worth $8000. Whether that was the husband big-noting his own self, I am not sure, but it certainly makes me wonder just exactly what he had in mind.
This court has consistently had to deal with cases where parties who have failed to comply with its orders, and more importantly, failed to make adequate disclosure. In Black v Kellner (1992) FLC 92-287, which is the decision of the Full Court, that was the case. The circumstances of Black v Kellner do not matter much for the purposes of my reasons. But what the Full Court there found was that the assets of the parties could not be ascertained in full because of the non‑disclosure. In addition to creating the difficulty of ascertaining the pool, it also meant that the court was hamstrung in relation to the question of contribution. But in relation to the third step under s 75(2), to which I will soon turn, the Full Court said:
Finally, another part of a judge's obligation in cases of this nature in considering s75(2) factors is to consider the respective incomes of the parties. Again, through the behaviour of the husband, this was something which the learned trial judge could not do.
The judgment in Black v Kellner was actually written by the learned Chief Justice at that time, although it was a judgment of all three judges. But it is quite clear what the Chief Justice meant when he said:
I might perhaps add that speaking for myself, although I note that there is no cross-appeal, I would have been disposed to find that the appellant was entitled to nothing, and certainly would not have interfered with a decision by his Honour dismissing the husband's claim entirely. Indeed it may well be that he was fortunate to get the award that he did.
There is certain rings of reality about this case and Black v Kellner. Black v Kellner was followed up by another case which is well known to this jurisdiction of Weir v Weir (1993) FLC 92-338. That was handed down in November 1992, and, again, although the court was differently constituted, the Chief Justice sat. Their Honours in the Full Court said:
This Court has pointed out in a line of cases leading up to the recent decision of the Full Court in Black and Kellner (1992) FLC 92-287, that it is the duty of a party involved in property proceedings in this jurisdiction to make a full disclosure of their financial affairs.
Their Honours then went on to say:
It is obvious that in most cases of this nature it is difficult enough for the other party to establish that fact let alone establish the quantum of what has been taken.
Their Honours then said:
It seems to us that once it has been established that there has been a deliberate non disclosure, which follows from his Honour's findings in this case, then the Court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature.
All of the authorities in this Court have made it clear that where a party fails to fulfil their obligations of disclosure, a court can do the best it can with the materials available to it, including adopting a robust approach to the decision. Decisions in property cases are very subjective judgments, based on facts that are either agreed or found to have been what occurred during the relationship. Those findings are made on the balance of probabilities. That is, what probably happened. In cases such as here, where a party fails to provide the necessary information to enable comprehensive findings to be made, a court should draw the most favourable inference as possible for the person who has exhaustedly – (and to emphasize the words of the Full Court) – innocently put before the court that information to enable the discretion to be properly exercised.
In this case, based on the assertions of the wife which I accept to be true, as to the existence of assets at separation, and the absence of any explanation from the husband as to what happened to them, I should infer that the husband has either retained them or prematurely disposed of them to his own use, without consultation with the wife. Thus, where I am able to draw such an inference, it is still only possible to know what is available for division with some certainty in relation to the assets that are before me today, and to conclude that the husband otherwise has significant assets at his own disposal.
Here I am able to say that the husband has retained the business conducted by the two corporate entities, the funds equivalent to what we would understand as superannuation-like and insurance policies that seem to have been liquidated. If I presumed that the husband had the original Royal Skandia and Royal and SunAlliance policies, he has had access to something in the vicinity of $1.3 million. Similarly, he has had control of the entities, investments of something in the vicinity of four hundred and seventy eight and a half thousand dollars. He has also managed to acquire property in the Philippines.
On a view, which I think is open, he has had something like $1.8 million. That ignores the income that he may have retained and otherwise spent, and he has also had artwork and furniture. The Full Court in Hickey and the Attorney General for the Commonwealth of Australia (2003) FLC 93-143 set out very clearly that in determining a property settlement, the court follows a four-step process. The first step is to define and set out what the assets are for division. The second is to assess and give weight to the various contributions made by each party. The third is to factor in all of the matters set out in s 75(2) of the Act, which are effectively determinants of the future economic circumstances of each party. The fourth and the final step is to ultimately make a decision which is just and equitable. In circumstances like this, it is very difficult to follow any of those four steps, having regard to the non-disclosure and non‑cooperation of the husband.
Doing the best I can, therefore, I look firstly at the pool of assets. The assets acknowledged by the wife to exist are the former matrimonial home at E, which has a net of $2.6 million, the New York property, which has a net of $2.2 million, the O Company investment of about $53,000, some artwork worth $21,000 and various household contents in both New York and E, which the wife, as an admission against interest, puts in at $55,000. Leaving aside bank accounts, because each party has one account with balances, although not necessarily current balances, and they are not entirely dissimilar, in any event, it seems to me that the pool of assets is something in the vicinity of $5 million.

The wife claims that the liability of her father, of $450,000, should be offset against that, but much of that, as I have said, relates to her costs. I propose to ignore the $450,000 for the purposes of the division. As I have already indicated, I will bring that back into account in a different way. I am satisfied however that over and above the $5 million to which I have referred, it seems to me that the husband has an absolute minimum of $1.8 million worth of assets somewhere.
There are also other liabilities, including the cancelled HSBC Visa card of $50,000, which the wife says is still outstanding, some legal fees for the New York property work, and some other small debts that I will propose to take into account. That is the pool of the assets as I perceive it. In respect of the second step of contribution, I find on what I have set out above, that there was no distinction between the parties until separation. Each fulfilled their role in the way that the other expected. I find the husband was the predominant financial provider, and the wife was the predominant homemaker and parent. Taking into account all of the evidence, I could not distinguish the parties to the point of separation.
Subsequent to separation, the husband has not contributed appropriately towards the support of the wife and the child, nor towards the preservation of assets. Importantly, the wife has undertaken the parenting task alone. The husband's conduct has led to a diminution of the pool of assets available, either because he has not disgorged assets for division or has used them for his own purposes in a way that I have earlier mentioned. Further, the husband has wasted the value of the New York property significantly by not selling it at a time when the market was buoyant and certainly much better than it is now.
Based on those principles, the wife's contribution must be seen to have been greater than the husband. For reasons as I outlined, it is not necessary for me to be precise about the amount in percentage terms of that contribution. I therefore simply say that the wife's contribution has been greater than that of the husband.
The third step requires me to examine all of the s 75(2) factors. In relation to that, the evidence upon which I have relied is set out in the wife's affidavit. What she there says is that she is a qualified teacher in the United States, but save for some emergency teaching in Hong Kong approximately five years ago, she has been engaged in home duties since the child’s birth. She has undertaken volunteer work at the school as a teacher's assistant. In addition to that, she has some health problems, which are set out in the affidavit of Dr Y, in which the doctor has indicated that the wife is not yet well enough to take on the responsibility of a formal teaching position.
Some evidence was led today before me that even if she did decide to return to teaching, there would have to be a formal step first, under which she was to be retrained. Just exactly how that would occur is not at all clear. On the other hand, the husband has well-developed business skills. According to the wife:
During the marriage, he expressed an ability to relocate, even to another country, and continue running his business interests. He has an excellent knowledge of trade and the mechanisms for importing and exporting goods. He has many business connections and has always held a strong desire to be successful.
In respect of the wife's financial position, she has been reliant upon her family's assistance, as I have already indicated, and the fact that the taxpayers of Australia have provided the Family Tax A and B benefits. Those benefits have been provided for the support of both the wife and the child. The wife has not had access to the investments, nor has she gained any assistance in respect of the sale of the New York property.
There is no doubt in my mind that there is a disparity of earning capacity between the parties. The husband's capacity is enormously greater than the wife, and even if the wife returns to the workforce, it is not suggested that she could earn anywhere near what the husband apparently does, albeit that I still don't know with any precision exactly what he is earning. I therefore say for the purposes of s 75(2) I have taken into account the ages of the parties, the medical problems to which I have referred, the fact that the wife has the full‑time responsibility of the child, the fact that the wife does not receive reliable child support. To some extent I say that that will be ameliorated by the payment of the lump sum that I propose to make. There is a disparity of earning capacity, and finally, there is a disparity of capital, possibly, although by no means certainly, favouring the wife.
All of these factors mean that the husband has a much stronger economic future than the wife. In my view, the wife is entitled to a further adjustment. In a case where the pool was clear and identifiable comprehensively, a percentage adjustment in her favour would be expected. In a case where I knew exactly what the assets were, what I am now told were all the assets, one could expect something in the vicinity of 10, 15 per cent. I cannot do that here. If I rounded all of those concepts off and tried to achieve a just and equitable outcome, it would not be unusual to see a division of something in the vicinity of 70 to 75 per cent of the asset pool to which I have just referred as an outcome. As a general principle, that would seem to me to be fair. However, that is not the end of the matter.
The fourth step is the one that is critical in a case such as this. It is important to look at the underlying value of the discrete assets sought and/or obtained. If the wife retains the former matrimonial home and the other minor assets, the question remains as to what she should receive from the New York property. Before looking at that, I indicate that I am proposing to order that the wife can have control of that property's sale, having regard to all of the problems that have been encountered to date. I have been told that the United States courts respect the comity principle, as we certainly would respect their orders.
If the New York property sells for the figure that has been suggested to me, there will still be expenses and legal fees on the sale in addition to the discharge of the mortgage. The balance should therefore be divided as to 50 per cent initially to the wife and out of the other 50 per cent, the arrears of child support should be paid the $1775 by way of reimbursement of the half of the joint valuation report costs, $50,000 to the wife to be paid for the HSBC Visa card, to discharge that liability, and any moneys paid by the wife or which have been paid by her from the proceeds of sale of the New York property respective mortgage of the payments from today onwards, whether they are arrears of mortgage or otherwise.
I intend also to make an order for a lump sum payment of future child support, pursuant to s 123A of the Child Support (Assessment) Act 1989 (Cth), and a lump sum order for $140,000 for spousal maintenance for reasons to which I shall return in a moment. I also propose, subject to the application that has been foreshadowed, to make an order for the wife's costs, for reasons which will become apparent. There is also the payment of the $80,000 to which I have already referred, which should be paid to the husband, and I will order that that be redirected to be paid to F Solicitors, to satisfy the matters that I have earlier mentioned.
If I then turn to the question of the child support issue, before I deal with the finality of the property matters, because I propose, as I said, to take into account, a lump sum. Section 3 of the Child Support (Assessment) Act 1989 sets out that it is the obligation of parents to maintain a child and that obligation is of no lower priority than the duty of the parent to maintain any other child or another person.
In this case, that becomes relevant when I find that the husband has been supporting a new partner in the Philippines and a child of that relationship. In addition, the priority of that duty to maintain, in this case, the subject child, overrides all other commitments of the husband, other than those necessary to enable him to support himself and X, if that duty can be established. In this case, I have no idea what commitments he has because he has not participated in the proceedings. Priority duty to maintain a child is also not affected by the duty to maintain the other child. In other words, they have to be met side by side. The husband certainly does not seem to be terribly worried about any of those matters.
In s 4 of the same Act in 1989 the principal objects of the Act were set out. It is clear that the legislation intended that children receive a proper level of financial support from their parents. To some extent, the underpinning philosophy behind the legislation was that like parents and like children receive the like amounts of financial support. But the object of the Act overrides that by saying that children are to receive a proper level of financial support from their parents. In this case, I am conscious of the fact that both parties had lived an affluent lifestyle, and more importantly, in respect of the child, had put her into a private school, where they expected to spend a significant sum of money. Those are matters that I am entitled to take into account.
The objects of the Act also oblige a court to consider the level of financial support that is to be provided, having regard to the costs of maintaining children. That becomes relevant when I factor in the school fees and the lifestyle to which the child has become accustomed. There are a number of other matters, including the standard of living, which I will take into account. Division 5 of Part 7 of the Child Support (Assessment) Act deals with powers of the court to make orders for child support, other than in the form or periodic amounts. No-one has been able to tell me exactly how the Child Support Agency is approaching the husband and the collection of those funds, and no doubt they are having some difficulty because of the fact that he is overseas.
Section 121 of the Child Support (Assessment) Act says that it is important to take into account that children have their proper needs met from reasonable and adequate shares of the income, earning capacity, property and financial resources of both their parents and that parents share equitably in the support of their children.
Those are not just hollow words. Whilst many people might think that child support is simply payable from income, the words I have just referred to make it clear that that is not right. It is also important that both parents share equitably in the support of the children, and that does not necessarily mean equally.
Section 123(1)(b) sets out that a court having jurisdiction under the act, can make an order for a liable parent to provide child support in the form of a lump sum to be credited against the liability under the relevant administrative assessment in relation to amounts payable under the liability.
Section 123(2) has a similar provision, which says that the application, if made, may only be made if an administrative assessment is in force in relation to the child, the carer entitled to child support, and the liable parent, and may be made by the carer.
That is exactly what has happened here. Section 123(3) refers to the fact that before hearing this application for the lump sum, the court must hear and determine any pending application made under Division 3 or Division 4, relating to departure orders and administrative assessments more than 18 months old.
None of those matters are pending before me so I do not have to worry about them. Section 23(4) says that subject to s 145 (which is the provision relating to the registrar intervening in the proceedings) the parties to the application are the carer entitled to child support and the liable parent.
In this particular case, I directed that the solicitors for the wife serve notice on the registrar during the luncheon adjournment, that if the registrar wanted to participate in the proceedings by way of intervention or otherwise, the registrar could do so. Having regard to the fact that that has been a relatively short period of notice, I propose to give the registrar the opportunity to intervene further if the registrar feels that he or she has been denied natural justice.
Section 123A sets out the matters that a court is obliged to take into account when making an order for a lump sum. A court must first and foremost consider whether the application satisfies the test of it being just and equitable as regards the child, the carer entitled child support and the liable parent, and is otherwise proper to make the order. It must also take into account the amount of the lump sum if it equals or exceeds the annual rate of child support payable under the administrative assessment.
That is certainly what I am going to be doing here. In my view, this is an order which is just and equitable in relation to the child, as well as to the wife and the husband. The husband always had had the obligations. It is just that he has not fulfilled them. Section 123A(2) enables a court to make a lump sum by way of a transfer of settlement or settlement of property. In this case, I do not think that will be necessary, having regard to the fact that I propose that the payment of the lump sum be paid to the wife from the proceeds of the sale of the New York property.
Section 123A(4) says that if I make an order, I must specify the amount of the lump sum payment and specify that that lump sum is to be credited against 100 per cent or some other percentage of the amounts payable under the liability of the husband. I propose to make those orders in this case. Again, s 123A(4) permits the court in determining the application to have regard to the administrative assessment, the determination, if any, that is enforced under the Part 6A, which is the departure determinations, any departure orders and whether the carer entitled to child support is in receipt of an income tested pension allowance or benefit. Apart from the Family Tax A and B provisions, the wife is not being supported by the taxpayers of Australia.
In addition, s 123A(4) requires a court to have regard to if the carer entitled to child support and is not in receipt of a pension, allowance or benefit, whether the circumstances of the carer are such that, taking into account the effect of the order proposed to be made by the court, the carer would be unable to support himself or herself without an income tested pension allowance or benefit.
I have thought about that, and I am satisfied that this is not a case where after these proceedings were over, having regard to the sort of order I have in mind, the wife would then be in a position to go and apply for a pension in the usual way. Finally, s 123A(5) says in determining whether it would be just and equitable as regards the child, the carer or the liable parent to make an order, the court must have regard to all of the matters set out in s 117(4), (6), (7), (7A) and (8).
I can say for the purposes of my judgment that I have given serious contemplation to all of those matters. Having regard to the financial support needed for the child, including in relation to her schooling and her five years or thereabouts of need for support ahead of her, it is just and equitable regarding the child for an order to be made. Because the wife is responsible for the financial support of the child and the husband has an unreliable approach to that support, it is just and equitable to make an order in relation to both the wife and the husband.
It is just and equitable in relation to the husband because I am satisfied that he has a prosperous business in Hong Kong. Child support, as I have already indicated, is not determined on the basis of income alone, and on any view, the husband could use his capital resources if he so wished, to provide child support for the child. A clear example of that is the fact that he has decided to buy a house in the Philippines, albeit, by way of borrowed funds. But he does not seem to have concerns about the responsibilities in Australia.
I find it also proper to make an order on the basis that it is not currently the taxpayers of Australia who are providing the major form of financial support for the child, other than through the family benefits, as I have indicated. The lump sum I propose will cover living expenses, including a notional housing allowance. I accept the wife's financial statement, particularly part N, which sets out a reasonable living and educational expense list to which the child has become accustomed certainly throughout her life. I have therefore fixed the sum of $2000 per week as the amount including a notional housing allowance.
It is foreseeable that that will continue until the child’s 18th birthday. Staggeringly, that is about half a million dollars. Each parent should contribute to that cost according to their capacity. I do not know what the husband's income, or for that matter, what his financial position is generally, but as I have said, he does have access to capital resources, as will the wife in future. I see no reason why both parties should not contribute towards the future support of the child, but certainly not equally. Because of the husband's greater earning capacity and the fact that he has decided not to tell the court the entirety of his asset position, I have fixed the sum of 75 per cent as the appropriate sum to be contributed by him as a lump sum, and that is to be payable out of the proceeds of the sale of the New York property.
Seventy five per cent of half a million dollars is $375,000, and that is to be credited against 100 per cent of the husband's child support obligations. In making that order, I have taken into account, as I said, all of the matters in s 123A(4) and s 117. The other application that I have to deal with relates to parenting orders. Normally I would deal with parenting issues first. But in this case, they seem to have slipped quietly out of the radar because of the behaviour of the husband. Sadly, in this case, the child, who is 13 years of age, has no contact with her father. There are no signs of that position abating.
The wife gave evidence to me this morning that the husband has not provided a timely presence that might perhaps be the key to opening the door. He certainly brought presents when he was in Australia, and it is rather odd when it was not either her birthday or Christmas. It is clear on the evidence that it is the chil’ds choice not to speak to her father or have anything to do with him, and that is a matter of some significance when I turn in a moment to s 60CC. Sad as all of that may be, things may very well change in the future.
Section 60B of the Family Law Act sets out the principles under which the court is to operate. I will not set them out in any detail here, other than the whole object of the legislation is to ensure that the best interests of children are met by ensuring that children have the benefit of both of their parents having a meaning involvement in their lives to the maximum extent consistent with the best interests of the children. It is also an object of the legislation that children receive adequate and proper parenting from both parents to achieve their full potential, and to ensure that parents fulfil their duties and meet their responsibilities. Sadly in the case of the child, her father has not fulfilled his responsibilities, as far as I can determine.
Section 60CA of the Family Law Act sets out that any decision in relation to a parenting matter must have as its paramount consideration the best interests of the child. The provisions of s 60CC guide the court in determining what is in a child's best interests. That particular provision is divided into primary considerations and additional considerations. Of the primary considerations, the legislature made clear that the court is to take into account the benefit of a child having a meaningful relationship with both parents. For whatever reason, the husband has not participated in the process today. It has also become clear that he has not made any effort to try and bridge the gap with the child. It is also clear that he does not have a meaningful relationship with the child. For whatever reason that may be, it is still important for the husband to recognise that it is his responsibility, not the child’s, to create that environment.

There is no suggestion in this material that the child is likely to be subjected to physical or psychological harm from abuse, neglect or family violence. However, in relation to additional considerations, I am obliged to take into account the views expressed by the child and any factors, such as the child's maturity or level of understanding that I think are relevant to the weight that should be given to those views. I have a case here where I have a 13‑year‑old child who has made her views abundantly clear. I propose to follow those views at this stage.
I have contemplated the nature of the relationship of the child with each of the child's parents, and have to sadly say that there is no relationship between the father and daughter. It is not sufficient for a parent to put the blame for that problem at the other parent's feet or on the shoulders of the child. I am also obliged to take into account the willingness and ability of each parent to facilitate and encourage a close and continuing relationship between the child and the other parent. I do not have any evidence here, other than I am told that the wife has endeavoured to encourage the child to acknowledge the presence of her father in his own life - he not having been in hers, but the child rebuffs the wife when that occurs. I could not criticise the wife for the efforts that she has made.
It is not relevant for me to consider any likely changes in the child's circumstances on the basis that, as I understand the wife's position, she intends to remain in Australia and for the child to continue in the education stream that she is currently enjoying. There are certainly practical difficulties and expenses associated with the husband spending time with or communicating with child, but he certainly has not shown, to me anyway, that he really is serious about wanting that communication channel to remain open.
I am obliged to take into account the capacity of each parent in terms of the provision of the needs of the child, including emotional and intellectual needs. I have read all of the material about how the child is progressing, and it indicates very clearly that her mother is focussed on the child’s welfare. I cannot say the same for the husband. I have taken into account the question of the attitude to the child and the responsibilities of parenthood demonstrated by each of the parents, and I think I have already said enough about that.
There are no family violence or family violence issues in this case of which I am aware. One of the provisions that s 60CC highlights is that if it is preferable, an order should be made which at least brings to the end any proceedings involving the child. Notwithstanding the husband is not here today and may decide in the future to participate in some sort of proceedings to endeavour to have a relationship with the child, he will have to factor in that I am making orders today on the basis that he has chosen not to participate. If he chooses to issue proceedings in the future, he will have a significant hurdle to jump before a court will take him seriously.
I am also obliged to take into account the matters set out in s 60CC(4) and (4)(a). I have considered both of those, and in this case, I am satisfied that the wife cannot be criticised in any way for the endeavours that she has made. Finally, in any parenting case, s 61DA of the Act requires as a starting point that the court operate on a presumption that each of the parents should have equal shared parental responsibility. That particular provision is referring to decision-making and has nothing to do with the time that parents spend with children. The presumption, however, can be rebutted by a number of things, one of which is the question of violence, and I have already found that there is nothing here that would be justified in taking into account.
Section 61DA(4) however, says:
The presumption may be rebutted by evidence that satisfies the court that it would not be in the best interests of the child for the child's parents to have equal shared parental responsibility for the child.
One of the significant features about that, of course, is that if a parent has not participated up until now, one is entitled to conclude that it is unlikely to change in the future. There is no relationship between the child and her father at the moment, and in my view, I can be easily satisfied that it is not in her best interests for her parents to have equal shared parental responsibility. On that basis, I am satisfied that it is appropriate to make an order that the child live with her mother, that the time between the child and her father be a matter between the husband and the wife, and thirdly, that the question of the decision-making processes and parental responsibility be entirely those of the wife.
The final issues to which I turn relate to spousal maintenance. It is difficult to contemplate spousal maintenance in any property proceedings until the determination of the property proceedings has been made. In her application filed 13 November 2006, the wife did not seek spousal maintenance. However, in her subsequent amended application, she sought to be compensated for the loss of spousal maintenance retrospectively. That position has been repeated in the orders that have been sought today. The husband has therefore been on notice for a considerable period of time that the wife has been intending to retrospectively seek support from him from the time that the parties separated.
Again, like child support, spousal maintenance is not just payable from income. It is payable from all of the resources of the parties. In this case, as I have already indicated, I am satisfied that the wife has been supported by her father. However, s 72 of the Family Law Act provides that there are circumstances under which the court must contemplate whether or not an order should be made. Effectively, there is a threshold that the wife must be able to show that she cannot adequately support herself without maintenance. Then if that threshold can be satisfied, the court has to be satisfied that the husband has the capacity to pay.
On the evidence that I have, I am satisfied that the wife has the responsibility of the child, who, although a teenager, has had health problems requiring her mother's attention. In addition, the wife has no current Australian qualifications which she could use to obtain a position in what was her chosen field in the United States. During the relationship, the parties were content for the wife to fulfil the role of homemaker and parent in affluent circumstances. That must have contributed to the incapacity of the wife now to obtain employment. I am also satisfied that from the date of separation until at least now, the wife could not have supported herself because of the reasons to which I have just referred.
In addition, I have the evidence of her doctor indicating that it was not appropriate for her to pursue employment. Effectively, therefore, the wife has managed to support herself because of the assistance from her family. But that in turn has given rise to a debt, which I have found is to be repaid. The husband's position, as I have already said, is not clear. Having regard to the fact that the husband pursued litigation in New York and paid lawyers in relation to his criminal proceedings, he incurred legal costs in Australia, which is evident from the intervener's application, I must find that he has reasonably had the capacity to support the wife. On the basis, therefore, that the wife has established the threshold need and the husband's capacity, it is appropriate that there be an order made in her favour.
The question then remains as to what the order should be. Normally, a court should only make an order for spousal maintenance on a periodic basis if it is going to establish the opportunity for the wife to support herself until she is able to look after herself without that support. In this case, however, I am looking at it retrospectively, having regard to the debt to which I have referred, it seems to me that the wife's claim for $40,000 per annum since separation is an entirely appropriate one, having regard to the matters that she set out in her financial statement.
It is also clear that she will not have the opportunity to support herself for the ensuing year or thereabouts because of the probability that the house in New York will not sell immediately, and even if it does, there will be certainly some time lag before she gets the opportunity to have access to the money. In those circumstances, I propose to allow a $40,000 payment from the time of separation up until a year from now, but I quantify that at $140,000. That sum is to be paid out of the New York sale proceeds.
Finally, I have already indicated that I have no confidence in the husband's involvement, and for that reason, I propose to make the order under s 106A of the Act, and the usual order I will make will apply; namely, that on the presentation of an affidavit by the solicitor for the wife indicating that the husband has not cooperated. The registrar can sign the necessary document in the name of the husband.
In relation, finally, to the intervener, I am satisfied that, having been joined to the proceedings on their own application and having set out very clearly what their position was, I am able to say that I am satisfied that there is a debt due to F Solicitors by the husband. I, for that purpose, rely on the affidavits of Ms T and Ms C as to the quantum of the debt.
In addition to the debt claimed, which is calculated pursuant to a cost agreement, all of which is set out attached to the affidavit of Ms T, there is a further application made to me today under s 117 of the Family Law Act for an order for costs. The provisions of the Family Law Act say that each party should pay their own costs, unless there are circumstances where a court is justified from departing from that rule. Having regard to the fact that the husband at all times knew that he had incurred significant costs with his lawyers, and they had to issue proceedings at this particular point in time to try and recover their costs, I am satisfied that the court is justified in departing from the rule in this case.
I propose to deal with the matters set out in s 117(2A) in relation to the proceedings involving the wife. So that extent, I will refer to those matters later in these reasons. At this stage, however, I am satisfied that the amount of $80,000 which I have earlier ordered will be paid from the New York proceeds to the husband, is to be assigned pursuant to the lien of the third parties over that amount of money.
I now have before me an application for costs arising out of the orders I have just pronounced. Section 117 of the Family Law Act is the relevant statutory provision. It provides each party should bear his or her own costs. Subsection (2) of s 117 provides that a court may make such order as to costs as it considers just, if it is of the opinion that there are circumstances to justify it so doing. In considering what order, if any, should be made, the court is required, amongst other things, to regard the matters set out in s 117(2A). Those are the financial circumstances of each of the parties to the proceedings, whether any party to the proceedings is in receipt of assistance by way of legal aid, and if so, what the terms of that are, the conduct of the parties to the proceedings in relation to the proceedings, including the conduct in relation to things such as pleadings, particularly as to discovery, inspection, directions to answer questions, admissions of fact, production of documents and similar matters, whether the proceedings are necessitated by the failure a party to the proceedings to comply with orders of the court, whether the party to the proceedings has been wholly unsuccessful, and whether there are offers of settlement. Finally, and as an enormous catch all, "such other matters as the court considers relevant".
In the High Court decision of Penfold v Penfold (1980) 144 CLR 311, their Honours said that the general rule expressed by s 117(1) was not paramount to s 117(2). That is when a court finds there are circumstances justifying an order for costs, the principle that each party should bear their own costs should give way.
Thus, the first step in the process is to determine whether or not there are circumstances here justifying the departure from the rule. For reasons I have already indicated, it is abundantly clear that this is one of those cases. I am satisfied for the purposes of (2A) that each party has the necessary financial circumstances to pay something towards costs, but in this case, the husband has a stronger financial position than does the wife, and certainly at the moment. I am not told of any legal aid issues involved, and nor could there be. In relation to the conduct of the parties, I could not make a stronger finding than in this case that the husband has failed miserably in respect of the production of documents, has failed to comply with court orders, has failed in respect of cooperation generally. Nothing could be so clear as in this case where the husband did not participate for a long period of time, albeit that he had some problems associated with being in prison.
In this case, to make matters more difficult, the husband has not attended today and has not participated in the proceedings, and to that extent, I am satisfied that he has been wholly unsuccessful. In this case, it is obvious, therefore, that I should make an order for costs. That is not where the matter ends, however. This is a case in which not only is the quantum of costs an issue, but also the question of whether or not I should make an order for indemnity costs. It is clear on all of the authorities that costs on an indemnity basis is an exception in this court, as in many others, rather than the rule. Cases such as Colgate‑Palmolive Co and another v Cussons Pty Ltd (1993) 46 FCR 225 are all cases that are well-known in all jurisdictions and are adopted by this court.
Chapter 19 of the Family Law Rules makes clear that costs to be paid by parties to their lawyers should normally be within the range set out by the schedules, unless the parties knowingly contract out of the rules. Where a party applies for an order for costs on an indemnity basis, the court must be informed of the cost agreement by which the party is bound, and it is so the terms of that agreement. Very sensibly I have been provided with that cost agreement and its terms.
In Yunghanns & Ors v Yunghanns & Ors; Yunghanns (1999) FLC 92-836 the Full Court said that the categories of circumstances that might give rise to an indemnity order are not closed. In that case, what the court said was that if a court was satisfied that a party to the proceedings knowingly made a false allegation or a statement in the proceedings, the court could order that some or all of the costs could be paid. In this particular case, I could not say that the husband has specifically lied to the court, because I don't know what his position is. However, having regard to the matters that I have earlier set out in my judgment, it is quite clear that he has been less than candid. This is one of those cases where the husband has not only failed to disclose documents, but has failed to disclose material that would have enabled the whole issue to be resolved in a much more simple fashion.
To that extent, the wife has had to go to extraordinary lengths to try and prepare her own case, and ultimately had to concede that the Weir v Weir and Black v Kellner type situations should apply. This is one case where the appropriate order ought to be an indemnity costs order. The question of the quantum of those costs is always a difficult one. In this case, the amount sought by the wife is just over $300,000, factoring in the amount that the husband has already been ordered to pay. This is one of those cases where it is almost impossible to decipher, what, if anything, the wife would have incurred even had the husband contributed towards the proceedings in some way.
It looks to me, on the face of what I have heard and read, this case would have been relatively straightforward and simple had the husband come forth and done all of the things that he should have done much earlier in 2006. On that basis, I see no reason why the wife should not have virtually all of her costs. In those circumstances, I propose to make an order for costs and that they be paid out of the sum that will be paid to the parties, into the wife's trust account, from the New York sale.

I certify that the preceding One Hundred and Twelve (112) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin

Associate:

Date: 21 May 2009

[2009] FamCA 430

23 April 2009

Key Legal Topics

Areas of Law

Family Law

Civil Procedure

Equity & Trusts

Legal Concepts

Costs

Jurisdiction

Remedies

Statutory Construction

Injunction