Szabo & Szabo

[2007] FamCA 249

FAMILY COURT OF AUSTRALIA

SZABO & SZABO [2007] FamCA 249

FAMILY LAW - PROPERTY SETTLEMENT – Long marriage – Parties agreed contributions equal – Issues as to size of asset pool – Husband claimed pool amounted to $576,000, wife that it was substantially more – Disagreement as to value of husband’s business – Husband and his witnesses lacking in credit – Value of business found to be higher than that claimed by husband – Net asset pool calculated at $973,500 – Husband retains far greater earning capacity than wife – 10% adjustment in wife’s favour for s75(2) factors.

FAMILY LAW - SPOUSAL MAINTENANCE – Agreed that wife should receive $300 per week – Husband sought that this be for 12 months only while wife sought it continue indefinitely – Preferable for there to be an end to litigation between the parties – Spousal maintenance to continue for three years, at the end of which wife can seek a continuation if necessary.

FAMILY LAW - COSTS – Application by the wife that the husband pay her costs – Complexity of the case means it would be inappropriate to try and fix the amount of the order – Wife retains more the visible property than the husband, but he retains the greater earning capacity – Wife has had to proceed through to trial to obtain a result better than anything offered by the husband – Pool of assets found to be much greater than as asserted by the husband – However wife was also seeking a much higher figure at trial than she ultimately received – Wife should receive some contribution towards her costs from the husband – Husband to pay half of wife’s costs as agreed, or failing agreement, as assessed on a party-party basis.

Family Law Act 1975 (Cth)

Farnell (1996) FLC 92-681

APPLICANT: MRS SZABO

RESPONDENT: MR SZABO

FILE NUMBER: MLF 5799 of 2003

DATE DELIVERED: 9 March 2007

PLACE DELIVERED: Melbourne

JUDGMENT OF: Kay J

HEARING DATE: 6, 7, 8 and 9 March 2007

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Stoikovska

SOLICITOR FOR THE APPLICANT: Grice & Grice

COUNSEL FOR THE RESPONDENT: Mr Davis

SOLICITOR FOR THE RESPONDENT: Maria Barbayannis

Orders

1. That the husband pay half of the wife’s costs of and incidental to the proceedings as agreed or failing agreement as assessed on a party-party basis save for any costs associated with interlocutory proceedings in which costs orders have already been made.

2. That on or before 8 June 2007 (“the transfer”) the husband:

   (a)       Do all things necessary and sign all documents to transfer to the wife at the expense of the wife, all his right title and interest in the property situate at and known as L in the State of Victoria (“the property”);

   (b)       Discharge the first mortgage number … and the second mortgage number … (“the business loan”) to St George Bank encumbering the property.

3. That pending the transfer

   (a)       The wife continue to have the sole right to occupy the property and during such right of occupation the husband pay all rates and like apportionable outgoings including the mortgage payments in relation to the property as they fall due;

   (b)       The parties hold their respective interests in the property pursuant to the these orders

   (c)       Neither party encumber the property without the consent in writing of the other.

4. The husband pay to the wife the sum of $164,000.00 (“the payment”) as follows:

   (a) $82,000.00 on or before 30 November 2007 together with interest at 7% per annum with monthly rest on any sum as is outstanding from the date of these Orders until 30 November 2007 and thereafter interest (calculated with monthly rests) on any sum as is outstanding in accordance with the Regulation pursuant to the Family Law Act;

   (b) The balance on or before 30 June 2008 together with interest at 7% per annum with monthly rests on any sum as is outstanding from the date of these orders until 30 November 2007 and thereafter, interest (calculated with monthly rests) on any sum as is outstanding in accordance with the Regulations pursuant to the Family Law Act.

5. That contemporaneously with the transfer:

   (a)       The wife do all acts and things and sign all such documents to remove her name from the M & C Family Trust and any other entity to which she is a party, shareholder or officeholder with the husband;

   (b)       The husband shall indemnify and keep the wife indemnified at all times in relation to any debts, liabilities (including the company or trust tax liability, if any, and the husband’s personal tax liability) and release the wife from any guarantee(s) executed by her on behalf of the husband or any entity over which he has control.

6. The husband pay to the wife into a bank account nominated by her the sum of $300.00 per week spousal maintenance for a period of three years from the date of these orders and thereafter the wife have liberty to apply for further spousal maintenance.

7. That the wife retain her 1989 Mercedes motor vehicle for her own use.

8. That unless specified in these orders and except for the purposes of enforcing the payment of any money due under these or any subsequent orders:

   (a)       Each party be solely entitled to the exclusion of the other to all other property (including choses in action), furniture, shares, cash and other funds in the possession of the other party as at the date of these orders, save otherwise agreed in writing.

   (b)       Each party retain any superannuation benefits, long service leave, sickness payments or other entitlements belonging to or earned by them;

   (c)       Insurance policies are the sole property of the owner named therein.

   (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;

   (e)       Any joint tenancy of the parties in any real or personal estate is hereby expressly severed.

9. The wife’s Application filed 24 September 2003 and the husband’s Response filed 21 November be and is otherwise dismissed and removed from the Pending Cases List.

10. Certify for Counsel.

IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Honourable Justice Kay delivered this day will for all publication and reporting purposes be referred to as SZABO AND SZABO.

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLF 5799 of 2003

MRS SZABO

Applicant

And

MR SZABO

Respondent

REASONS FOR JUDGMENT

The issues

1. These are property proceedings arising out of the breakdown of the marriage of the parties to the proceedings, the husband and wife.  The parties are both now in their early 50s.  They married in 1973 were together some 30 years until separating in 2003. 

2. There were two children born of the marriage, both are now adults. 

3. During the course of the marriage the parties acquired some property, and there has been a lot of evidence about the husband's property dealings since the marriage. 

4. Fortunately for the parties, and for myself, notwithstanding the matters that were canvassed in the evidence‑in‑chief of the parties in their affidavits, the parties have reached agreement that at the end of their 30 years of marriage and up to the present time I should allow for an equality of contributions by the parties in the various roles that they played in the acquisition of their assets. 

5. The issues that are left for me to determine are really issues related to the size of the pool of assets to be divided and what extra adjustments should be made away from an equal division to pay account mainly to issues relating to the husband's earning capacity as compared to that of the wife's.  There is also a suggestion that the visible pool of assets does not necessarily reflect the reality of the husband's financial position. 

6. The parties have reached agreement in relation to much of the visible pool of assets and its valuation and I shall endeavour to outline where there is agreement and then try to deal with the issues and the pool of assets that remain apart. 

The approach to be taken

1. There is a well defined four‑step path that the cases suggest that I am required to follow in a property case. 

   ·The first is to define what is being divided up. 

   ·The second is to work out how it should be divided according to contributions. 

   ·The third is to look to other adjustments for matters that are contained in the balance of s 79(4) of the Family Law Act 1975 (Cth) (“the Act”) other than 79(4)(a), (b) and (c), which are dealt with under step 2.

   ·The fourth step is to stand back and look at the calculations under steps 2 and 3 and determine whether or not they create a just and equitable outcome, which is the obligation under s 79(2).

Pool issues

1. There is agreement that the former matrimonial home currently occupied by the wife has a value of $400,000 and is subject to an encumbrance of $102,000. 

2. There is further agreement that the home at B registered in the name of the husband's current partner Ms J, has been contributed to by the husband and that his equitable interest in those premises should be given a value of $90,000. 

Valuing the business

1. There is agreement that the husband's business is owned by a discretionary trust, the S Family Trust, and that the husband has control of that trust and is the beneficiary of the trust and that I can for the purposes of these proceedings, it has been conceded by his counsel, treat the assets of the trust as the assets of the husband.  The evidence relating to the value of the assets of the trust is to be determined by reference to a report prepared by Mr M, a chartered and forensic accountant, who has also given viva voce evidence before me today.  The trust owns the real estate business which is the source of the husband's income. 

2. The value of the business itself, or the saleable asset part of the business, is a rent roll which has been assessed at $463,452. 

3. The evidence of the expert witness was that one starts with the balance sheet of the business, which showed a net asset position of $50, and then makes adjustments to the balance sheet according to the value of assets that are included in it and according to any change in relation to the liabilities that are in the balance sheet. 

4. Mr M began the exercise by suggesting that the net value of the business to the husband, once that exercise had been undertaken, was $300,000, but it has now been conceded that there should be some further adjustments in relation to the balance sheet of the family trust that would make that figure no longer a viable one. 

5. The dispute was narrowed in the course of final addresses to a submission by Mr Davis on behalf of the husband that the value of Mr N should now be $484,384, which I will round off for general purposes to $485,000, versus the wife's counsel, who suggested $519,300, which I will round down to $519,000 just for general purposes, a $34,000 difference in the value that I should put on that asset.

6. The changes from Mr M's initial position are calculated, to get to Mr Davis' figure, by Mr Davis' concession that one of the liabilities of the trust is a very doubtful liability indeed, and that is a loan to a Mr V of $102,300.  Mr V has sworn no evidence in the case.  No documents have been presented relating to the loan.  Mr V has apparently left the country and has made no serious endeavours to collect these moneys for a period of a couple of years or so.  It is my view that I ought not be persuaded on the balance of probabilities that the loan is a real debt of the family trust. 

7. I should say here that there are serious credit issues involved in the evidence that was before me.  I have heard from the husband extensively, I have heard from witnesses upon whom he sought to rely.  In most of their cases I would not be confident in saying that I am persuaded that I am getting anything like the real story that is happening, having regard to the manner in which they have answered the questions and to contradictions within their testimony and conflict in it.  That being said, ultimately I am not sure that finding takes us very far. 

8. Commencing from the starting point of Mr M at $300,000 and adding $102,000 for Mr V, the next area in which it was conceded there should be an adjustment is in relation to an item appearing in the balance sheets of the trust as a loan to F Company Pty Ltd.  This relates to a highly contested area of the interest, if any, that the husband and/or Ms J have in a development at S, a six‑unit development that has been conducted by F Company Pty Ltd, a company owned by a solicitor known as Mr A, who has also been absent from these proceedings, the wife complaining she cannot find him to serve him with serving a subpoena and the husband not seeking to produce him as a witness and not explaining why he is not a witness.

9. There is evidence from the husband that he lent Mr A $100,000 for the purposes of the six‑unit development of which he says he has got back $20,000 and he therefore says, "I am owed $80,000 by [Mr A]".  There is no evidence that has been produced to me that I am content to accept that demonstrates where the moneys allegedly lent came from; when they were paid over; and where and when they have been repaid.  So I do not know whether the extent of the debt is $80,000 or $100,000.  I can only rely upon the husband’s admission against interest that he lent the $100,000, I cannot be satisfied that he has ever received $20,000 back. 

10. There is a letter written by the husband's solicitor, Mr F that throws a little light on the situation but is not exactly totally illuminating.  Mr F when writing to the solicitors for F Company Pty Ltd said:

    An amount of approximately $100,000 has been lent by [Mr N] Real Estate to the project and paid to [F Company] Pty Ltd, [Mr A], tradespeople and to the bank for interest payment.  This money and the profit share due to [Mr N] of approximately $50,000 (being 50 per cent of net profit of project) must be taken into account in determining the balance of the purchase price.

11. That is a reference to the completion of the purchase of one unit in the development in the name of Ms J, who had signed a contract to buy off the plan one of the units off the plan.  The contract was due to be performed.  The evidence of the husband was that he had expected to recover moneys he had lent to Mr A and to get a $50,000 profit out of the development.  This letter represented an attempt by the husband to recover the moneys he had put in by way of a discount on the unit that Ms J had nominally contracted to acquire.  That dispute seems to be ongoing at this time. 

12. Doing the best I can with the evidence and having regard to the unsatisfactory nature of the husband's evidence, I conclude that the debt that is owed to the family trust is at least $100,000 and not the $30,000 that currently sits in the balance sheet relied upon by Mr M.  I shall add another $70,000 to the value of the assets of the business. 

13. It is conceded that the motor vehicle presently in the husband's possession and the debts attached to it should be ignored, one offsetting the other.  In the balance sheet of the family trust the vehicle in at $72,000 and the liability attached to it at $102,000.  The liability exceeds the asset by $30,000.  By removing it from the balance sheet entirely, I have to add another $30,000 to the value of the business. 

14. The matters identified increase the business value to $502,000. 

15. Then, it is submitted, I should also ignore an internal loan said to be a liability to H (Victoria) Pty Ltd, a company of the husband which has been not trading now for some time and is said to be effectively valueless. 

16. There are no tax returns or audited statements relating to that company.  Whether or not there is in fact a liability in relation to H (Victoria) Pty Ltd remains a contentious issue.  The accountant who has prepared the books of accounts has not been called in these proceedings.  I do not know that I can, where there is a contentious issue absent any positive evidence relating to it, simply accept the figure because it appears on a draft balance sheet prepared on behalf of the company.  So I propose to discount that debt as well, which brings us up to the $519,000 figure that Ms Stoikovska on behalf of the wife says is the appropriate value of the family trust.

17. In the course of that exercise I think, in fairness to the husband, I should also discount out the loan to Ms J which appears as an asset of the company.  I do not believe that the financial relationship between Ms J and the husband is such that there is likely ever to be an accounting between them in relation to their financial affairs, at least while their relationship continues, and I doubt that there is any commercial reality in the loan.  That is showing as an asset of the trust of $15,000, and, consistently, I would take that off, to bring me down to $504,000 as the value of the business to go into the asset pool.

Other pool issues

1. So let me continue with this exercise.  It is agreed that $28,000 should be added into the pool in relation to moneys already paid by the husband for his legal expenses, in accordance with the authority of Farnell (1996) FLC 92-681. There are horses and a float owned by the husband with an agreed value of $9800. The wife's furniture has an agreed value of $10,000. There is the husband's superannuation. The husband's statement of financial circumstances most recently has his superannuation in at $44,980 so I will put it in and round it off to $45,000.

2. It has been suggested that the husband has an interest in three other pieces of real estate and an aeroplane.  Dealing firstly with the aeroplane, the evidence is that the husband certainly contributed as a half‑owner to a Piper Warrior aeroplane but that he stopped contributing in 2003.  He said he was paid out $4000 for his interest in the plane.  The suggestion is he might have been paid out as much as $19,000.  I have no documents whatsoever about the Piper Warrior.  I have no idea of what it was that the husband ever received in relation to it, but, whatever it was, whether it be $4000 or $19,000, I am confident that in the last four years, since the payment out, the moneys have been absorbed in the general living expenses of the parties or in the acquisition of other assets or the conservation of other assets and it would be double‑accounting to bring it back in now. 

Property N

1. In relation to a hotly‑disputed area of the case relating to a property at N, there was an acquisition, originally by a company R Pty Ltd, which was a vehicle owned by Mr and Mrs B.  Mr B is the husband’s friendly local bank manager who has been a confidante and a companion of the husband for several years and who gave evidence in these proceedings.  It was also not evidence in which I have a great degree of faith in accepting that everything he said was entirely accurate, having regard to his inability to produce any documents that assisted in corroborating his evidence and the general vague nature of his evidence and some contradictory aspects of it. 

2. The general story that was being put was that in about November 2003 Mr B came across a corner block in W which he thought would be a good development project and he went to see the husband about a joint development exercise.  Ms J, who was by then well‑ensconced in a relationship with the husband and who had been his office manager for some time, was in on the conversation and a plan was developed whereby there would be a construction of the property of two units, one would belong to, loosely, either Ms J or the husband or their interests and the other would belong to Mr B.  It was to be financed, it would appear, by some borrowings, as to at least 80 per cent, and there is some confusion as to where the rest of the money was to come from.  It was purchased on a nominee clause. 

3. The property was eventually registered in the name of Ms J.  She was able to borrow some 80 per cent of its value through the good offices of the bank where Mr B was the loans manager.  $78,000 went in and out of her bank account in a short period in December 2003 during the period in which the loan was approved; the evidence being that Mr B needed to persuade his bank that Ms J had assets sufficient to pay 20 per cent of the value of the purchase and, in order to do that, he simply lent her the money after borrowing it himself.  Mr B lent her the money and it stayed in her account long enough to satisfy the bank that she was a person of substance; when she got her approval it was then repaid to him. 

1. Her contract still needed to be completed however, and there is some confusion in the evidence as to where the moneys necessary to complete the contract came from.  Ms J had borrowed 80 per cent of the purchase price, a mortgage of $246,000, but in order to complete there was immediately required a further $64,000 plus the costs attributable to the stamp duty and the like.  Nobody has shown me the account that money had come from, neither Mr B nor Ms J nor the husband.  It is Mr B's story that he continued to meet that shortfall by advancing $78,000 to pay the shortfall and the necessary expenses of sale and that he has been content, without any documentation at all, to sit on his investment in this property for the last three or four years. 

2. Ms J has said that she has been financing the property.  It has a tenant in it and there is a significant shortfall each year of income over expenditure.  That could be as much as $10,000 in any one year.  She asserted that she has been meeting that with some assistance from the husband but they could not sell the property at the moment because the market is not strong enough to meet everything it owes to everybody.  It clearly is strong enough, I would have thought, to meet the bank's mortgage, but there is not enough money around to meet the investment they have already made in the property so they are just sitting on it.  The whole thing smacks of a great uncommercial exercise. 

3. I cannot imagine that these parties do not know more about this exercise than they are prepared to disclose.  I just do not know what the arrangement is between any of them as to what interest they would ultimately have in the property once it was realised.  The evidence however is that it is only worth now what they paid for it, some three or four years after it was acquired and that it has negative holding costs.  There are serious questions to be answered somewhere over whether Mr B has an interest in the property, whether the husband has an interest in the property and whether Ms J has an interest in the property and the extent of their various interests.

4. The net result of it is that at the end of having heard a lot of evidence about this issue I cannot be satisfied that the husband actually has any interest in the property, not sufficiently so for me to add it back into the pool of assets.  It may be that he has some claim, moral or legal or otherwise, in relation to it.  I am not discounting that as an absolute impossibility, but the matter remains equally confused at the end of the evidence as it was no doubt at the commencement of the case.  So I am not prepared to add that back in to the pool of assets.

P Property

1. There was then evidence relating to a development at P.  Mr B features again.  It was a three‑unit development commenced in the middle of 2003.  It still exists, in the sense that the units have been constructed, two have been sold off and one remains.  The evidence was again somewhat confused, but it was that initially the husband was an interested contributor to this exercise but quickly withdrew from it in terms of any equity and he was replaced by Mr G from whom I have not heard in these proceedings.

2. Mr B's evidence is that it was a joint venture and not documented in any sense as to the interests of the venture partners but that he held one‑third interest, his nephew and brother held another one‑third interest, and finally Mr G, who had replaced the husband in the exercise, held a one‑third interest.  Mr B swore that ultimately what is left in the investment is the one remaining unit, which has a mortgage of some $240,000 and it will, if it is ever sold, return to the investors $15,000 each. 

3. There is certainly enough documentation around to raise severe doubts about the husband's protested innocence in saying that he had no particular interest in the property other than that he had acted as the building manager in relation to the property in anticipation of commissions on sale.  There is documentary evidence that contradicts that position, but again I cannot reach any conclusion sufficient for me to confidently say that the husband has an interest in P Property that should be added back into the exercise. 

4. I think in the course of discussion there was some mention about what, if any, interest the husband has in the S unit that is left around.  Clearly his moneys have found their way into that unit.  It is sufficient at this stage that I am treating it as the $100,000 that is owing in relation to it.  Of course he has the potential, if his claims are right, to claim in the profits arising from the development, but that is subject to him pursuing some other litigation. 

5. The value of the gross pool of assets that I have identified so far comes to $984,800. 

Liabilities

1. There are then two liabilities effectively claimed by the husband in relation to the pool of assets.  His counsel suggests I should allow $20,000 for credit card debts and $100,000 for a potential tax liability.  There is unreliable evidence in relation to both of these issues, particularly the tax debt.  At its highest, the evidence relating to the tax debt is a letter annexed to the husband's affidavit from an accountant, who says that:

   We have been requested to review trust distributions from the M and C Family Trust for the years ended 30 June 2002 to 2005 on the assumption that all distributions from the trust will be made to the husband.  The following is an estimate of trust distributions by the trustee and tax payable by the husband based on the information supplied to us by the trustee.

2. The accountant calculates $60,122, the vast majority of which relates to the year ending 30 June 2004. 

3. The difficulty with this is, firstly, it is not sworn evidence; secondly, the evidence of the husband is that there are no tax returns in relation to the trusts that have yet been submitted to the department.  So there is no assessment yet.  There is no proper basis demonstrated for calculating the likelihood of what the assessment will be.  These figures are based on a number of assumptions, all of which may never be met.  In any event, they relate mainly to taxation that has accumulated post‑separation, much of which would relate to moneys that have been expended by the husband in relation to his own personal affairs. 

4. I am not prepared at this stage to bring into account, in balance as between the husband and the wife, the tax liabilities, albeit that there was a strong submission made that I should, insofar as I should make some allowance for the fact that moneys have been utilised post‑separation to reduce business debts that existed at the date of separation and that tax is likely to be payable in relation to the moneys so utilised.  That may be right, but I have no proper evidentiary basis on which I could commence to hazard a guess as to what that proper tax liability would be.

5. Finally, in relation to credit cards, there is no real evidence of what the credit card debt was at the date of separation that would relate properly to the debts of the parties.  There is a concession, however, by counsel for the wife that there is a figure of some $11,000 in the husband's statement of financial circumstances sworn on November 2003 that she would be content to accept as a debt that ought be property taken into account.  Given that concession, I shall make that adjustment accordingly, $11,312, which I shall call $11,300 for the ease of calculation.  That leaves a net asset pool of $973,500 for division between the parties.

Section 75(2) adjustments

1. Mr Davis submits that an appropriate division, making an allowance for the relevant s 75(2) factor, which is really the husband's earning capacity and the wife's lack thereof, ought see a further adjustment of this pool by some 10 per cent in favour of the wife.  That of course means that she would receive the first 20 per cent of the pool before the balance is divided, and that of itself is a very substantial adjustment.  It means she would receive one and a half times the capital of the parties, one and a half times the amount the husband would get.  The husband would receive 40 per cent of the capital, much of which is tied up in his business and is not readily available to him; it represents the goose that is laying the golden egg, namely his income-earning capacity, and one cannot sell off the goose and keep the golden eggs at the same time.

2. The wife, through her counsel, suggests 75 per cent would be an appropriate adjustment.  That would give her three‑quarters of the pool, three times as much as the husband, in my view a grossly inappropriate division of the asset pool that has been accumulated by these parties through 30 years of hard work together. 

3. I think, on balance, that the appropriate outcome is that there be a further adjustment in favour of the wife in line with the submissions made by Mr Davis, that is that the division of 60‑40 in favour of the wife adequately represents a fair capital payment, bearing in mind two things.

4. First, that even that capital payment will not adequately provide the wife with a sufficient source of income and that a maintenance order needs to be made in this case.  Secondly, the retention by the husband, as I have already indicated, of the pool of assets that he has represents basically the source of income that he will be required to utilise to (a) provide for payment out to the wife of a discharge of mortgage so that she can retain the matrimonial home absolutely and for the payment of a balancing sum. 

5. On a net pool of $973,500, if I give the wife 60 per cent, her entitlement is $584,100.  She is to have the home unencumbered at $400,000 and to keep her chattels and her car, they are worth $20,000.  There is a balancing sum to be paid to her of $164,100. 

Maintenance

1. In addition, it is agreed that the wife should receive maintenance in the sum of $300 per week.  The issue remains as to how long that maintenance should last.  The husband says it should be a sunset clause of one year.  The wife says it should be open‑ended. 

2. The trouble with an open‑ended order is that it will require these parties to maintain some involvement in each other's affairs for the foreseeable future, in that the husband would be entitled to know when the wife's financial position changed for the better so as to no longer necessitate the making of maintenance payments.  The husband would also be entitled to bring some proceedings if his situation deteriorates.  It is not desirable to keep the parties financially enmeshed for too long.

3. The wife has indicated that, optimistically, she would like to re‑enter the workforce.  She has been out of it effectively for much of the last 30 years, other than assisting the husband in his business.  She has hairdressing qualifications that are outdated.  There do not appear to be any other issues that are precluding her from re‑joining the workforce, but I cannot imagine that she is ever going to be able to earn anything that will other than keep her pretty close to a basic survival point.  She is unlikely to enjoy any of the luxuries of life that the husband has managed to continue to enjoy in his new relationship with Ms J.

4. Weighing up those two issues, I would propose I think that the fairest way is to leave the maintenance order running for three years, with the ability of the wife at the end of that period of time, when the order is to expire to justify its continuation by bringing proceedings if she so desires.  Otherwise, I think it is rational that there be some end to the relationship, but that is on the assumption that she is able to re‑enter the workforce to the extent that she was optimistic about in her evidence.  If it turns out that she is unable to do so, then she has the capacity to ask a court to extend the maintenance order. 

Time to pay and interest

1. The only other issue is the terms upon which the $164,100 should be payable and the interest, presumably, that would need to be carried.  The husband suggests that he should be entitled to discharge the mortgage within 90 days, and that seems to me to be not an unreasonable proposition.  He further asks for 12 months to pay half of what he submitted should be a lesser sum and the further 50 per cent in 18 months time.  I think that it is not unreasonable to expect some time to pay these moneys out. 

2. I am however not convinced that it is beyond his capacity to arrange his financial affairs so as to rid himself of this obligation rapidly and assist the parties in bringing their relationship to some financial conclusion.  I think that, all told, I would expect the balance of the moneys to be paid within a year, or certainly by the end of the financial year 2008.  So what I would propose is that 50 per cent of the moneys be payable in nine months time, by 30 November 2007, and the balance to be payable by no later than 30 June 2008.  The amount outstanding would carry interest according to statute from the due date of each portion thereof.

3. I think it is also fair that if the wife is to be otherwise kept out of her capital some commercial rate of interest be paid in the meantime.  So that would be expressed as, let us say, interest at 7 per cent on so much of the sum of $164,100 as is outstanding from time to time until 30 November 2007, when the first instalment is due; then interest on the first instalment in accordance with the rates prescribed in the regulations; and interest on the balance until 30 June 2008 with interest thereafter in accordance with the regulations.

Costs

1. I have an application in the proceedings the husband pay the wife's costs, presumably on the basis of an agreed figure, or failing agreement, to be assessed in accordance with the party/party scale of the regulations. The costs issues fall to be determined by reference to the provisions of s 117 of the Act.

2. Sub-section 1 provides that each party to proceedings under the Act bears his or her own costs - subject to sub-s 2 which provides that the Court may make an order for costs if it is of the opinion that there are circumstances that justify it so doing. Section 117(2A) provides a list matters that the Court should consider or should have regard to in determining whether to make any, and if so what order should be made for costs.

3. What that effectively means is that costs do not automatically follow the event in family law proceedings, but the Court retains a broad discretion as to whether it should make the costs order. 

4. The complexities of this case are such that it would be inappropriate for me to try to fix the amount of that order, and that is a matter that will ultimately have to be determined by agreement between the solicitors or by an assessment in accordance with the procedures set out to in the regulations.

5. Of the matters that I am obliged to give consideration to under s 117(2A), the property orders see the wife receive more of the available divisible capital of the parties than the husband. The husband retains a vastly superior earning capacity to that of the wife. The main aspects that the addresses of counsel have drawn to my attention concern the conduct of the parties in relation to the proceedings and to a lesser extent any offers that have been made to settle the proceedings. I commence in determining the outcome to say that it is clear that the wife has had to proceed through trial to achieve an outcome that has been much better than anything that on the face of it has been proffered to her by the husband at any stage in the proceedings.

6. In his response to her application to receive the home unencumbered, and an unspecified capital sum, he responded by suggesting that the home should be sold and after the payment of the mortgage the wife would receive the net proceeds of sale.  In a subsequent offer to settle, that I am told made late in 2005, there was an increase from that position by about $10,000.  That is that the home would be sold, the home mortgage be paid out, although the husband would take responsibility for the business mortgage and the wife could have $10,000 and $300 per week for 12 months.

7. In his documents prepared for the trial in these proceedings, the husband urged me to make a finding in his case summary document that there was a pool of assets of $576,000.  Ultimately, I have made a finding that the pool of assets was $973,000 so that to the extent that there was a resistance to the size of the pool the husband has been singularly unsuccessful.

8. In his opening remarks counsel for the husband indicated that his client thought an appropriate outcome to the proceedings was the wife should receive the home unencumbered, and $300 a week for one year.  The result of the orders that are ultimately made, she gets the $300 a week for three years, and she receives a cash adjustment of $164,000.

9. On the other side of the coin of course, her counsel was opening the case before me at trial with a much higher number than she ultimately received, and she opened the case on the basis that the wife should receive $234,000 and no maintenance component.  That is about $190,000 and the maintenance component that I have ordered.  So the wife's opening position at the commencement of the trial was greater than the result she achieved.  By the end of the trial her position had increased, and in closing addresses she wanted 75 per cent of a larger pool of assets that I ultimately determined - not greatly larger but a little larger.

10. The husband has been in the position throughout the proceedings of having a better understanding of his financial position than the wife. He has been in possession of facts or figures that would enable him to make appropriate offers to the wife, the offers that he has put forward in terms of the ones that have been referred to in accordance with versions of s 117 - offers in writing at least - do not reflect anything like the reality of the outcome and the wife has been advised to litigate.

11. I am not absolutely able to determine the other major issue that is being urged that I should give consideration to, namely, the conduct of the parties in the proceedings.  There is certainly a flavour of the necessity for the wife to have to make her own inquiries and conduct her own researches for the lack of cooperation from the husband, but there is also a flavour that she is being somewhat overzealous, or those advising her have been somewhat overzealous in the manner in which those issues have been undertaken.  My overall impression is that the wife should receive some contribution towards her costs as a result of the issues that I have identified and I think that justice is best achieved that she receive an order that the husband pay one half of her costs as agreed or failing agreement as assessed on a party/party basis save for costs relating to interlocutory applications where costs orders have otherwise been made.

I certify that the preceding sixty seven (67) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Kay

Associate: 

Date: 23 March 2007