Nutley & Nutley

[2007] FamCA 77

FAMILY COURT OF AUSTRALIA

NUTLEY& NUTLEY [2007] FamCA 77

APPEALS – Undefended hearing – Property settlement – property pool of $949,172 including $647,172 in superannuation – was found to be contributed slightly more 50 per cent in favour of the wife – adjustment of about 16 per cent to the wife for s 75(2) factors, primarily care of two children and disparities in earning capacity – wife received all non-superannuation assets, her superannuation and 50 per cent of the husband’s superannuation – husband failed to participate in proceedings despite orders for substituted service being made – husband appealed on the grounds that he was not present or represented, he was denied natural justice and procedural fairness, and that the orders made were not just and equitable – the trial Judge properly proceeded in the hearing because the husband knew or ought to have known the orders sought by the wife despite his not having seen the Further Amended Application of the wife nor her primary affidavit filed properly with leave by the trial Judge on the day of the hearing – an award of 16 per cent for s 75(2) factors could not be maintained – appeal upheld in part and discretion re-exercised giving wife all non-superannuation assets and her superannuation and 37.5 per cent of husband’s superannuation.

Costs Certificates – husband sought certificate and was denied one despite the trial Judge erring, because a litigant cannot choose not to participate in proceedings and comply with Court orders and then assert an error was made because of his failure to participate and then be entitled to a certificate

Family Law Act 1975 (Cth) s 79 and 75(2)
Federal Proceedings (Costs) Act 1981

APPELLANT: Mr Nutley

RESPONDENT: Ms Nutley

FILE NUMBER: MLF3315 of 2005

APPEAL NUMBER: SA40 of 2006

DATE DELIVERED: 29 January 2007

PLACE DELIVERED: Melbourne

JUDGMENT OF: Faulks DCJ, Kay and Coleman JJ

HEARING DATE: 29 January 2007

REPRESENTATION

COUNSEL FOR THE APPELLANT: Ms Smallwood

SOLICITOR FOR THE APPELLANT: David Gibbs Lawyers

COUNSEL FOR THE RESPONDENT: Mr Wraith

SOLICITOR FOR THE RESPONDENT: Middletons Lawyers

IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Full Court delivered this day will for all publication and reporting purposes be referred to as Nutley v Nutley.

Orders

1. That the appeal be allowed in part.

2. The orders 6 and 13 made by the Honourable Justice Carter on 31 May 2006 be varied by substituting the figure 37.5 per cent for the figure 50 per cent therein appearing.

3. The respondent wife be granted a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent wife in respect of the costs incurred by the respondent wife in relation to the appeal.

4. The appeal otherwise be dismissed.

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER:      MLF 3315 of 2005
APPEAL NUMBER: SA 40 of 2006

Mr Nutley

Appellant

And

Ms Nutley

Respondent

REASONS FOR JUDGMENT

FAULKS DCJ:

Background

1. This matter comes before the court on a Notice of Appeal filed on 26 June 2006. The proceedings began on 9 November 2005 when the wife filed applications for interim and final orders. She filed an affidavit and a financial statement in support. 

2. In that application the wife sought that the husband transfer the matrimonial home to her and that she take over the mortgage repayments and “that there be a superannuation splitting order so as to provide for the wife to receive 70 per cent of the net assets of the marriage”. In her financial statement the wife asserted the former matrimonial home was worth $430,000, the household contents were worth $20,000 and there was $4,000 attributed to the value of a 1996 Ford Falcon. By way of interim order, the wife also sought discovery, the production of documents and costs against the husband.

3. Attempts at service on the husband were unsuccessful and on 7 December 2005 after the husband failed to appear an order was made by Ramsden JR adjourning the hearing of the wife’s application to 16 January 2006 and ordering substituted service on a responsible person on [a naval ship]. 

4. On 16 January 2006 his Honour Mushin J heard the wife’s application for interim orders, in the absence of the husband, without his having filed any documents, and his Honour made orders restraining the husband from dealing with his superannuation entitlements but otherwise dismissed the wife’s interim application. His Honour also set the matter down for a Conciliation Conference on 27 March 2006 and directed the husband file a response and a financial statement and that substituted service continue. 

5. The matter was set down for a Mediation Conference on 27 March 2006 before Registrar Sikiotis and on that day the husband failed to attend or to communicate with the Court or to file any documents. The Registrar’s bench sheet which was before the Court recorded the following, that the matter was adjourned to 31 May 2006,

   “for further case management, if the husband attends and has filed his documents, to be listed to a further conciliation conference.  If the husband fails to attend and subject to the wife failing her documents in support, a registrar to consider listing the wife's application for property settlement with judge's duty list to be heard and determined on an undefended basis.” 

   Other orders were made about costs and substituted service of those orders.

6. On 17 May 2006 the wife filed an Amended Application for Final Orders seeking more specific orders, particularly about the superannuation division and that the house be transferred to her in the same terms as previously sought and that each party keep the chattels in his or her possession and that there be a splittable payment “in an amount equal to 50 per cent of the entitlements of the husband” in the Defence Force Retirement and Death Benefits Scheme (“the DFRDB fund”) be allocated to her and that notice be given to the Trustees and that the husband pay her costs.

7. On 31 May 2006 when the matter was next before the Court, with her Honour Carter J presiding, the wife filed, with leave, a further amended application for final orders, seeking an entitlement similar to that sought in the DFRDB fund but referring specifically to the productivity fund - which resulted, as I will mention in due course, from a letter received from the Trustee. 

8. The wife also, again with leave, filed an additional affidavit on that date and an affidavit from Samuel Burrell, her solicitor, explaining why the application had changed and setting out correspondence from the Trustee of the superannuation fund which pointed out that there were in fact two separate funds available.

Grounds of Appeal

1. The grounds of appeal (and I think made, in fairness to those drafting them, before her Honour's reasons for judgment were available to them) are as follows:

   1.The Orders were made in the absence of the Appellant or any Legal Representative.

   2.The Appellant has been denied natural justice.

   3.The appellant has been denied procedural fairness.

   4.The orders made are not just and equitable.

2. The orders sought in substitution for those made by her Honour are that:

   (c)That the Orders made on 31 May, 2006 be discharged.

   (d)That the Amended Application of the Wife filed the 17^th May, 2006 be referred to a Trial Judge for determination;

   (e)That this Honourable Court make such Orders as are appropriate leading to the Trial of this matter;

   (f)Such further or order Orders as the Court deems fit.

3. Those grounds of appeal were amplified in a much more eloquent way by the written submissions on behalf of the appellant which identified a number of factors as contributing to what the appellant claimed was a denial of natural justice to him in the matters’ proceeding in his absence.  There were a number of factors, which I will endeavour to summarise and deal with. 

4. The first of these was that the final hearing occurred in the absence of the appellant generally. This, in my opinion, has no substance as a ground of appeal in this matter. The husband knew, or ought to have known, that the consequences of his failure to attend Court on 31 May 2006, whether on referral by a Registrar to a Judge or otherwise, may have resulted in an undefended hearing; and the fact that the undefended hearing occurred is, in my opinion, simply the automatic consequence of the husband’s inaction and failure to comply with Court orders.

5. Second, it was asserted and submitted that that the wife was improperly allowed to file and to rely upon a further Amended Application which was not brought to the attention of the appellant and that she was also permitted to file an affidavit which constituted the primary evidence before her Honour - again without this being served upon the appellant and without his having an opportunity to consider whether in those circumstances he wished to either participate in the proceedings, to file documents in reply or to seek an adjournment.

6. It was further submitted that her Honour’s discretion miscarried generally, even if both of those matters were to be determined against the appellant, and that in addition her Honour’s order about costs resulted from a misapplication of her Honour’s discretion in accordance with the principles of the Family Law Act 1975.

7. As a subset of part of the evidence that was before her Honour, it was asserted to constitute a denial of natural justice, that her Honour relied upon a valuation of the real estate, the former family home, which was not otherwise in evidence nor had been in any way served upon the husband. 

8. It was common ground, at least by the time the appeal was argued, that the Further Amended Application to which I have referred above was brought about by the requirements of the Trustee of the superannuation funds, as set out in the letter from that Trustee to the wife's solicitors. 

The Effect of the Further Amended Application

1. In effect, the Trustee pointed out that the husband had the benefit of two funds under the broad umbrella of superannuation resulting from or association with his service in the Australian Defence Force. The Trustee drew attention to a fund called the Productivity Benefit Scheme, and it was reasonable to infer from his communication that he would be happier if there were two splitting orders rather than the one that was contemplated by the wife's Amended Application. 

2. Her Honour commented in her judgment at paragraph 8 that she was satisfied that the overall effect of the Further Amended Application was not to change the amount of property or the superannuation sought by the wife in her favour. There is no evidence to the contrary of this assertion. In my opinion, the husband had notice of the wife’s claim and there is no injustice or unfairness because he did not see the specific further amended application.

3. There must come a point when litigants, respondents who fail to take any part in proceedings, cannot complain if matters proceed in their absence. That point was reached by the appellant. There is something quite perverse in a litigant refusing to take any part in proceedings, declining to comply with orders about filing documents, failing to attend Court ordered conciliation procedures, refusing to comply with his or her duty to make a full and frank disclosure of assets and financial circumstances, and then complaining that a matter proceeded in his or her absence. Justice to a non‑participating litigant must be balanced with justice to the litigant who cooperates in the processes of the Court.

The Affidavits

1. It might be appropriate to hold that it would be unjust to allow radical departure by an applicant from an application filed and served on the respondent without notice to the respondent; but that was not the case in this matter. The fact that the respondent did not have an opportunity to see the affidavit of the applicant before it was relied on may in appropriate circumstances constitute a denial of nature justice. This is in part reflected in rule 15.06 of the Family Law Rules 2004, which was referred to during the course of discussion with counsel.

2. However, in this case, even if the order made by Registrar Sikiotis did not expressly provide for the wife to file and, without service, rely on an affidavit of evidence, her Honour gave leave for the wife to do so; paragraph 6 of her Honour's Judgment refers in passing to the fact that the orders of Registrar Sikiotis on 27 June 2006 were not the subject of any review by the present appellant. 

3. The fact that a respondent may not have seen an affidavit is a factor properly to be taken into account by a trial Judge in considering whether or not to give permission for an affidavit to be relied upon. In this case her Honour, in my opinion, properly took account of the husband’s failure or refusal to participate in the proceedings and determined that justice would be served by allowing the matter to proceed on the basis of such evidence.

4. No application was made for further evidence to be adduced in this appeal to contradict any of that affidavit. No contest was flagged about any of the matters in the wife's financial statement with which the husband had been served; this included her assertion of the value of the former family home at $430,000. It would be a little strange if the husband, having failed to challenge in any way the wife’s assertion of the value of $430,000 could be heard to complain that the trial Judge admitted and relied upon evidence of value of the same property at $420,000, some $10,000 less. In my opinion, there was therefore no denial of natural justice or procedural unfairness in her Honour’s proceeding as she did.

The Discretion of the Trial Judge Generally

1. However, the appellant goes further and submits that, even if there was no injustice in her Honour proceeding as she did, her discretion in determining that the wife should receive the house, the car, the furniture, her own superannuation and half of the husband’s superannuation was outside the range of her Honour’s reasonable exercise of discretion. 

2. I do not believe that her Honour’s determination about contributions and property should be upset. 

3. Her Honour found, in paragraph 23, that the contributions between the parties meant that the wife’s contributions should be assessed as probably a little more than 50 per cent. Reading her Honour’s judgment, it would appear that she probably put that figure at about 51 per cent - although it is a little difficult to determine, because the figures, on my calculations, suggest that the final determination of her Honour would have produced a division of property of 65 per cent, not the 66 per cent that she said she achieved. 

4. Notwithstanding her Honour’s failure, overtly at least, to take account of the husband's additional six years of contributions to superannuation before the relationship began, I do not think, on the basis of Pierce v Pierce (1999) FLC ¶92-844, and the overall nature and value of the contributions of the parties, that this conclusion was unjustified - that is, that the contributions of the parties were for all reasonable purposes to be regarded as equal.

5. However, when it comes to an evaluation of s 75(2) factors, her Honour, it seems, gave significant weight to the wife’s continuing obligation for the children when the husband is conceded to be making and paying assessed but reasonably significant child support. In addition, the children are at a relevantly advanced age and the period during which the wife will have financial responsibility for them with her husband has been reduced.

6. Her Honour also placed reliance, on somewhat flimsy evidence, on the disparity in income of the parties. No criticism can be legitimately directed either at her Honour or the wife in this regard, because of the husband’s failure to honour his obligation to make the relevant disclosure. However, relying upon these two matters, and it appears only upon these two matters (in paragraph 26 of her judgment), her Honour made what amounted to an adjustment of 16 per cent, she said - 15 per cent in actuality, on my calculations - to the wife, as appears in paragraph 28 of her Honour's judgment. This constituted a differential between the parties of somewhere between 30 and 32 per cent. 

7. In making that observation, I accept that her Honour found, as I suggested above, that the wife’s contributions were slightly more than 50 per cent. Because the evidence of the disparity of incomes was somewhat tenuous and mainly because such an allowance fails properly to take account of the fact that the husband at a comparatively young age would only receive the intangible benefit of his presently inaccessible superannuation, in my opinion, her Honour’s discretion in this area miscarried.

8. Mr Wraith, on behalf of the wife, argued that, in circumstances where an applicant has failed to participate, as this appellant did, this in itself was a proper basis for raising the threshold for appellate intervention in a judicial discretion. This submission has its attractions, but in the end it comes down to punishing a litigant for his or her failure, and that is not the appropriate function of the provisions of s 75(2), in my opinion.

9. Mr Wraith also argued that the wife’s share included a substantial component of intangible assets in its own right; constituted by her own superannuation as well as the share that she was to receive of the husband’s superannuation, or some $328,000 - nearly $329,000 - out of a total share, under her Honour’s orders, of about $620,000. This submission again, in my opinion, has some force; but not, in my opinion, sufficient to carry her Honour’s determination back within appropriate discretionary limits. 

10. We were invited by both counsel to re‑exercise our discretion if we reached that conclusion.

11. Counsel for the husband argued that the appropriate conclusion that we should reach is that the wife should receive the house, the car, the contents, her own superannuation and 20 per cent of the husband’s superannuation funds.  Counsel for the wife argued that the wife should receive the things that I previously indicated and should receive thereafter so much of the 50 per cent that her Honour had ordered as would be appropriate or as we should determine.

12. Neither counsel sought to put before this Court any further evidence as to any matter that had been in dispute, or may have been dispute.

13. In my opinion, it would be reasonable for the known property of the parties to be divided so that the wife received, as indicated and agreed between the parties, the house, the contents and the car and her own superannuation and she should receive in addition some 37½ per cent of the superannuation of the husband.  This would produce an overall benefit which will provide a substantial benefit to the wife initially, recognise the differences between the parties as a result of the disparity in their income, recognise the wife’s continuing obligation to look after the children and, properly, in my opinion, reflect the fact that the superannuation is and for all practical purposes will remain an intangible benefit for many years to come.

Costs

1. I turn to the question of the further appeal that was made in relation to the order of costs made by her Honour. Her Honour stipulated, having correctly instructed herself as to the law relating to the matter under s 117 of the Family Law Act, that there were two matters to be taken into account in determining that there should be an order for costs made against the husband.  These were his conduct in the proceedings - or, perhaps more correctly, his lack of conduct in the proceedings - and the discrepancy in the parties’ financial circumstances. 

1. Questions of costs are a substantially broad discretion within the determination of a trial judge. Under s 117, the primary prescription of the Act is that each party to a proceeding shall bear his or her own costs. However, s 117(2) relevantly provides:

   “If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4) and (5) in the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.”

2. Among the matters to be taken into account under s 117(2A) are

   (a)the financial circumstances of each of the parties to the proceedings;

   and

   (c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to the pleadings, particulars, discovery, inspection, directions to answer questions, admissions of fact, production of documents and similar matters. 

3. It might reasonably be argued in this matter that the husband’s conduct in failing to participate in the proceedings may not have constituted a significant increase in the burden placed upon the wife in putting before a Court or a Judge the facts and circumstances which allowed the court to make its determination. Nevertheless, her Honour having identified appropriate matters for the exercise of her discretion, in my opinion, was entitled to make an order for costs in accordance with s 117(2). Her Honour's determination that those costs should be in the sum of $4,000, in my opinion, represents a reasonable construction of the ambit of the section and the responsibility of the husband to contribute to the wife’s costs in this matter.

4. Accordingly, in this matter I would allow the appeal and on re‑exercise of the discretion make orders for the Reasons that I have just set out.  The formal orders I will draft in a short time.

KAY J:

1. I agree with the outcome proposed by the Deputy Chief Justice and basically with the reasons for judgment he has delivered.  I am a little bit more hesitant in relation to the assessment of contribution in that it appears to me that her Honour has not mentioned, and must therefore, I assume, be taken to have overlooked, the six years of service of the husband in the Australian Defence Force prior to the marriage of the parties, which marriage lasted a further 16 years until the time that her Honour heard the case.  So that for six of the 22 years, in excess of one‑quarter of the time that the husband was contributing towards his superannuation, the wife could not to be seen as a contributor, and therefore that contribution of itself ought to have led to a finding of something less than equality of contribution. 

2. An intermediate finding along those lines would not necessarily alter the ultimate outcome, because the less that is provided for contributions the more scope there may well be for providing for other factors, such as inequality in capital as well as income and responsibilities towards the children, factors that need to be given appropriate weight under the provisions of s 79(4)(e). In those circumstances, I would concur that the outcome as outlined by the Deputy Chief Justice is appropriate.

3. I am also uncomfortable about interfering with the discretion when we still have no disclosure from the husband as to his present financial circumstances.  This matter was canvassed with counsel for the wife, as to whether or not the proceedings should be adjourned to require the provision of such material, but Mr Wraith, for understandable reasons, indicated that he did not seek such an adjournment and that his client was anxious to bring the matter to an end today.

4. In these circumstances and within the confines of the material that was available to us, it is my conclusion that an outcome of the wife receiving what can be described as the tangible assets and 37½ per cent of the intangible assets, namely the superannuation, is an appropriate outcome.

COLEMAN J:

1. I agree with the outcome proposed by the Deputy Chief Justice. In essence, I agree with the reasons for that outcome as advanced by the Deputy Chief Justice and supplemented by the observations of Kay J. I otherwise have nothing to add.

FAULKS DCJ:

1. There is an application for costs certifications under the relevant provisions of the Federal Proceedings (Costs) Act 1981. In this regard, in my opinion, there should be no certificate granted to the husband in these proceedings, he comes to this Court essentially having not complied with any directions or in any of the proceedings relating to the court. The fact that he has succeeded in part is not attributable to anything on his part but rather to the contrary; I do not think he is either entitled to nor deserves such a certificate. The same is not properly to be said in relation to the wife and, in my opinion, she should obtain a certificate and will be granted one in accordance with section 6 of the Federal Proceedings (Costs) Act.

2. I will now give the formal orders of the court. 

I certify that the preceding forty-eight (48) paragraphs are a true copy of the reasons for judgment of the Full Court

Associate: 

Date:  15 February 2007