Nga and Liang (No 2)

[2012] FamCA 1098

FAMILY COURT OF AUSTRALIA

NGA & LIANG (NO 2) [2012] FamCA 1098

FAMILY LAW – PROPERTY – undefended.

Family Law Act 1975 (Cth)

APPLICANT: Ms Nga

RESPONDENT: Mr Liang

FILE NUMBER: MLC 1581 of 2012

DATE DELIVERED: 16 August 2012

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 16 August 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Kieran

SOLICITOR FOR THE APPLICANT: Berry Family Law

THE RESPONDENT: No appearance

Orders

1. Forthwith and upon the presentation by the solicitor for the wife to the husband of a transfer of land in registrable form, the husband transfer to the wife all of his interest in the property at B Street, Suburb C.

2. That upon the presentation by the solicitor for the wife to the husband of a transfer of land in registrable form, the husband transfer to the wife as a trustee for sale, all of his interest in the property at S Street, Suburb S.

3. That the wife have the conduct of the sale of the Suburb S property and it occur as soon as practicable.

4. That the husband vacate the Suburb S property by 4.00pm on 28 September 2012 and thereafter provide exclusive occupancy to the wife and the husband is by injunction, restrained from attending thereafter upon the property without the written consent of the wife.

5. That upon the settlement of the sale of the Suburb S property, the proceeds be applied to pay all costs, commissions and expenses of the sale.  The balance thereafter shall be added to the sum of $390,000 (being the value of the former matrimonial home at B Street) and the total of those sums be divided:

   (a)as to the wife 70 per cent; and

   (b)30 per cent to the husband

   and an adjustment of the proceeds of sale be made accordingly, taking into account that the wife shall retain the B Street property at $390,000.

6. From the husband’s entitlement to the 30 per cent as set out above, the sum of $18,516 shall be paid to the wife by way of costs including the costs of the order made on 23 April 2012.

7. If the husband fails to sign any document required for the purposes of these orders, pursuant to s 106A of the Family Law Act 1975 (Cth), a registrar may sign such document in the name of the husband and the registrar shall be satisfied of the necessity for such signing upon receipt of an affidavit by the solicitor for the wife pointing to the default of the husband.

8. That each party otherwise retain and the other party relinquish any interest in, all other property in the possession of such party as at the date of these orders.

9. That the husband pay the wife’s costs of these proceedings fixed in the sum of $18,516 and such sum be paid as set out above.

IT IS CERTIFIED:

1. That pursuant to Order 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel to attend.

2. That any document produced under subpoena be produced to the recipient of the subpoena.

3. That the application of the wife filed 7 August 2012 be otherwise dismissed.

4. That as soon as practicable, a copy of this order be served by ordinary pre-paid post to the husband at S Street, Suburb S.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 1581 of 2012

Ms Nga

Applicant

And

Mr Liang

Respondent

REASONS FOR JUDGMENT

1. These are undefended property proceedings between Ms Nga, to whom I shall refer in these reasons as the wife, and Mr Liang, to whom I shall refer as the husband.  They are undefended because the husband has not participated from the very beginning.  He has had a number of opportunities to be heard and has been ordered to file documents but has failed to respond.  It is time to consider the interests of the wife, who cannot otherwise finalise her financial arrangements.

2. The background of this case may be simply stated.  The husband is 44 years of age and seems to run a hospitality business.  Just exactly what it is, I am uncertain but his financial position would seem to be reasonably comfortable because he has managed to pay off at least the house mortgage and supported the family over a number of years.  In addition, there seems to be some suggestion that he is driving around in a recent model car. 

3. The wife is a 41 year old self employed person.  She also has the responsibilities of children.  The parties were married in 1995 and separated in November 2010.  There are three children, all of whom are living with the wife, and they are aged 16, 9 and 8 respectively.

4. In her application filed on 23 February this year, the wife sought undefined property orders.  Application was returnable as a case assessment conference on 23 April and the affidavit of service shows that the husband was served on 2 March.  In the orders of the registrar on 23 April, it was noted that there was no appearance of the husband.  The case was then transferred to the judicial duty list on 29 May 2012 because it seemed that nothing further was going to be done by the husband.  The registrar ordered the husband to file and serve a response and a financial statement.  The husband did not comply, nor did he attend this Court on 29 May.

5. On 29 May 2012, I ordered the wife to file and serve an amended application with precise orders because the initial application had not set out what was required under the rules.  Otherwise, I made an order that, subject to anything the husband might have to say today, the wife could proceed on an undefended basis.  That order was served on the husband on 26 June, along with my reasons for judgment.  The order seems to have also been served again on 8 August.  I am not sure why that happened but what it does point to is that the husband has had a number of opportunities to attend and has failed to do so.

6. The power to hear a case on what is often described as an undefended hearing is set out in chapter 11 of the rules.  Rule 11.02(2)(c) provides if a party does not comply with these rules, the regulations, or a procedural order, the Court may, amongst other things, determine the case as if it were undefended.  An undefended hearing means literally that the respondent does not participate at all.  In effect, from the Court’s perspective, there is no live issue between the applicant and the respondent.

7. What is very clear from not only the rules but also the authorities of this Court is that it is fundamental to the whole process that orders must be obeyed.  In my view, the Court ought not be reticent about exercising the power in rule 11.02 in cases such as this.  It is not necessary that I should trouble myself about trying to protect the interests of the husband.  On the other hand, it is also clear that the wife has to prove her case.  In this case, I am satisfied the wife has done all that she can.  The husband has had the opportunity to be heard and has failed to comply with orders.  The principles of natural justice have therefore been satisfied.

8. In her amended application and reinforced by an outline of case document, which I accept has been served upon the husband, the wife sought the sale of the commercial property in Suburb S, from which the husband operates his business, and that the proceeds be paid to her.  In addition, she sought that the former matrimonial home be transferred by the husband to her.  There are also orders sought for the splitting of a superannuation fund, but in discussions with counsel for the wife, it is clear that it is unnecessary for those orders to be pursued, because there will be sufficient moneys available to satisfy the award that I propose to make.

9. The wife otherwise sought that everybody keep what they have, and that includes motor vehicles and chattels.  For the purposes of this hearing, the wife relied upon an affidavit of evidence-in-chief that she filed on 7 August, along with a financial statement.  That evidence has not been challenged.  Thus, in terms of the evidence, what I now turn to are facts which I declare are findings of fact. 

10. The parties separated about March 2011, when the husband left the home upon the making of an intervention order.  The three children to whom I have referred remained living with the wife.

11. The oldest child attends a public school, where he is in year 11, and the other two children are in the local primary school.  The wife pays the various expenses for the two younger children, and it is said that the husband pays the school fees and expenses for the older child.  I am not entirely clear how much that is, bearing in mind the school is a public school, but, in any event, the oldest child is in year 11, so there are not too many years to go.

12. The husband sees the children at the home of the wife, and that seems to be at a time when the wife is conducting her business.  The husband provides no child support.  The wife conceded that she had never applied for child support, and she did so on the basis that the husband was paying the oldest child’s school fees.  He buys some bits and pieces from time to time.  The curious part about that, as I indicated in discussion with counsel, is that the wife’s income is largely derived from Centrelink benefits, but it would seem also that the husband has never filed tax returns.  That is a matter that the relevant government department probably needs to re-examine.

13. The evidence shows that the property at Suburb C was acquired prior to the marriage.  The valuation has a title attached to it.  The husband purchased the property without the benefit of borrowings.  Just prior to the marriage, a mortgage was registered on the property, and the evidence of the wife does not indicate what that money was for, and no one seems to know.  In any event, shortly thereafter again, the mortgage was discharged.  I have inferred, therefore, that the husband had cash to buy the property shortly prior to the marriage, and to the extent that money was needed and borrowed, it was soon paid off.

14. A retrospective valuation has been undertaken by a sworn valuer and shows $112,000.  In 2001, the parties were living together, and the husband bought a property in Suburb S, from which his business now seems to be conducted.  The title again gives some insight as to what occurred, because there is a mortgage registered to the National Australia Bank on the same day as the registration of the transfer.  The wife’s evidence was that the mortgage was paid off within five years.

15. It was suggested by counsel that evidence would indicate that the husband has a reasonable source of income.  On the other hand, it also indicated no tax was being paid.  Around the end of 2001, having purchased the Suburb S property, the husband commenced the business, which includes undertaking repairs.  The wife worked in the business on a part-time basis, as well as fulfilling her responsibilities for the care of the children.  Just prior to the separation, the wife commenced her own business, which is conducted from rented premises.

16. There is no evidence before me as to the valuation of either of those businesses.  Sensibly, to save costs, the wife concedes that the two businesses can be offset against each other.  That might be a very generous concession to the husband, because the wife’s evidence is that half or thereabouts of her income on a weekly basis is provided by Centrelink.  I can therefore infer that Centrelink is satisfied that her income is very small and therefore on a valuation basis, the business would have to have minimal value.  On the other hand, I have no idea what the husband’s earning capacity is.

17. Throughout the entire period of the marriage, the wife looked after the household and the children.  Her evidence is that she undertook all of the cooking and domestic tasks, as well as the activities associated with a growing family.  The husband did not contribute much because he worked in his business for very long hours, and did not come home until late, including on weekends. 

18. When the parties started their relationship, the wife had virtually no assets.  On that basis, one could conclude that the husband had a flying start, and that affects the assessment that I make in respect of contribution.

19. Is it clear on the evidence that the properties that the parties or either of them have is the home, the rental premises, the two businesses, some vehicles, and the husband has some superannuation.  The wife has gone to the trouble of having the superannuation valued at $27,343.  Having regard to what I have earlier said about not making a splitting order, I take into account, having regard to the husband’s age, that he has a long way to go before the superannuation will be of much value to him.

20. All of the title searches attached to the valuations indicate that none of the properties is now encumbered.  Therefore, I can conclude that the assets of the parties are as set out in the outline of argument, and including the superannuation and the wife’s motor car, which she put in at $20,000 as an admission against interest, there is, at best, a pool of somewhere around $1,027,000.  That value obviously excludes the two businesses.

21. The evidence also shows that there were no unusual contributions, and what seems to have occurred over the years of this marriage is that each party worked very hard at what they did to gain what they now have.  The wife says that she is healthy and continues to work in her own business, and she has no idea about the husband’s health other than the fact that he is obviously still running a business.  Neither party appears to have any other person supporting them or being supported, and there are obviously the three children.  I can and should take into account that the family is being supported by the tax payers of Australia.

22. The approach to the settlement of property was set out by the Full Court in Hickey & Hickey & The Attorney-General for the Commonwealth of Australia (2003) FCA 395.  That authority set out what has been described as the four-step approach. 

23. Section 79 of the Act requires the court only to make an order if it is satisfied that it is just and equitable to do so. In making an assessment as to what is just and equitable, the court is obliged to take into account the various contributions made by the parties. Those contributions are the financial contributions made, both directly and indirectly; the non-financial contributions, again, directly and indirectly; and importantly, the contribution made by a party to the marriage to the welfare of the family through that role as homemaker and parent.

24. Section 79 also requires the court to take into account any of the matters set out in section 75(2), so far as they are relevant. But there are other issues as well to be taken into account in the assessment of the contributions. Those include the effect of any proposed order on the earning capacity of either party, and also the child support assessment, if any. As I have said, in this case there is no child support assessment.

25. Looking at the history of this marriage, there is little doubt that the initial contribution by the husband enabled the parties to have the benefit of unencumbered properties, probably much earlier than they might otherwise have had.  I therefore take into account that the retrospective valuation of the husband’s acquisition of the home of $112,000 must be given some significant weight.  On the other hand, at the opposite end of the relationship, the wife has laboured on for 18 months now without any support from the husband.

26. In my view, the payment towards the school fees of the oldest child and some bits and pieces of clothing ought to be ignored on the basis that it is hard to quantify it, and it is dangerous to simply look at the contribution in money terms.  The wife has made a very significant contribution subsequent to separation in physical terms in looking after children, running a household whilst working full time.  In my view, having regard to the long period of time that has expired since the initial contribution of the husband, the post-separation contribution must be given significant weight.  I assess the parties’ contributions as equal.  I have already indicated what the economic future of each party seems to be.

27. Section 75(2) of the Act requires the Court to take into account a whole raft of matters that effectively have an impact upon the economic circumstances of each of the parties. Amongst those matters – and I take all of them into account – are the responsibilities for children, the fact that parties have a superannuation entitlement, the fact that there are pension or other benefits being paid to a party. Importantly, a consideration is where the parties have separated, a standard of living that in all of the circumstances is reasonable.

28. One of the matters that I am also obliged to take into account is the nature and extent of the orders being made.  In other words, the disparity in capital terms of what each party will have after the orders are executed.  Because of what I propose to do, I can take into account the husband will have a relatively small amount of capital, but by the same token, he may also lose his business because the order I propose to make requires the sale of the Suburb S property.

29. I am also concerned that he may not have paid tax for a number of years, and if that is the case, he may end up losing whatever he has from this settlement as well.  Having regard to the lack of child support, the fact that the tax payers of Australia are supporting these children and the wife, and hopefully by the orders I propose to make that may be ameliorated, the fact that the pool of assets is still modest, the fact that the husband seems to have a reasonable amount of income, subject to what I have said about him losing that business, I assess the adjustment needs to be about 20 per cent.

30. Combined with the contribution, the entitlement of the wife is 70 per cent.  I see it as unreasonable and unjust to include her car, which she admits is worth $20,000, and to ignore the husband’s car.  Similarly, it seems unfair to include the wife’s business, albeit it is her source of income, and ignore the husband’s business.  What I propose to do, therefore, is to look simply at the pool of assets on the basis that it is the two properties, and to divide that on the basis of 70 per cent to the wife and 30 per cent to the husband, and the wife can keep her car and her business, and the husband can keep his superannuation.

31. Section 79(2) requires that I am satisfied that it is a just and equitable outcome. In my view, in this case, it is.

32. On that basis, the husband would need to transfer to the wife the B Street property, and the husband would need to transfer to the wife the property at Suburb S on a trust the sale, the wife have the conduct of the sale

33. I now have an application for costs by the wife. I will not repeat what reasons I have for making the orders but it is quite clear that the absence of the husband has meant additional costs have been incurred. Not only by virtue of a process server and also a valuer, but also various searches of titles and the obtaining of documents that would normally have bee provided in the form of discovery through subpoenae. Section 117 of the Family Law Act 1975 (Cth) (“the Act”) provides that in proceedings in this Court each party shall bear their own costs. Circumstances under which that principle can be departed from are where there are things that justify a Court finding that the principle should not apply.

34. The husband in this case has not contributed anything to the resolution of the matter. On any view of the evidence presented to me today, this is a very simple and straight forward case. I would have expected that had both parties had legal representation it, presumably, may have resolved. In those circumstances there are justifiable reasons to depart from the principle that each party pays their own costs. Before determining that an order should be made for costs however, the Court is obliged by s 117(2A) to take into account a number of factors. Those include the financial circumstances of the parties.

1. The parties in this case have the luxury of two properties, one of which is a business premises and the other is a home.  Even though one of those properties will be sold and the other retained by the wife, the husband has a business and on that basis I can presume that he is not impecunious. I am obliged to take into account whether or not there are legal aid considerations here, and all of the indications from the wife’s perspective are that there are not.

2. A significant feature of section 117(2A) is that relating to the conduct of the parties to the proceedings. Apart from the fact that the husband has not complied with orders for the Court, he has done nothing in the way of discovery so that the wife had to pursue the proofs that she was required to present. I therefore conclude that the husband has not assisted in the proceedings. As part of that, s 117(2A) entitles the Court to look at whether or not the proceedings were necessitated by the failure of the failure of a party to comply with previous orders. That is clearly what has happened here.

3. The wife has been wholly successful, so to that extent the husband has been wholly unsuccessful.  I am not aware of any other negotiations and there certainly would not appear to have been any in recent times.  On that basis there have been justifiable circumstances and no reason why an order for costs should not be made.  I propose to make one. 

4. The application for costs was for the sum of approximately $17,000 plus some new disbursements that have not yet arrived.  It is clear that an order for indemnity costs should only be made in unusual circumstances.

5. I do not think, in this case, that I could justify an order for indemnity costs.  Normally what would happen in a costs situation is that the scale would be applied and then the parties would negotiate and failing agreement, there would be an assessment.  Having regard to the husband’s position until now, it would seem a complete waste of time for me to put the wife through that expense.  In those circumstances I think it is appropriate that I exercise my discretion and fix the costs. 

6. The wife’s bill clearly gives me an indication of what sort of things she has incurred and I have the benefit of the third schedule to the rules to give me a guide as to what sort of costs might have been applied had the scale been used.  I start from the premise that an order for costs is not intended as a punishment.  It is made to compensate a person who has had no choice but to litigate.

7. I have looked carefully at the costs incurred by the wife and they do not seem to me to be unusual, save that I propose to delete some items because they are luxuries outside of the scale.  I propose to fix the costs in this case, including the costs of the preparation for trial, at $10,000.

8. I propose to fix counsel’s fees at $2500, being the top of the scale for other hearings, notwithstanding the wife will have to bear a little extra, and I propose to make an order for disbursements of $1556 plus the valuation fee.  Thus far it is a total of $14,056, plus I will also make the order for the valuation and the costs of $500 of 23 April, which were fixed but have not yet been paid.  So $14,556 plus the valuation fee – that will be included in the formal order.

I certify that the preceding forty two (42) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 16 August 2012.

Associate: 

Date:  13 December 2012