WERNER & WERNER

[2013] FamCA 341

FAMILY COURT OF AUSTRALIA

WERNER & WERNER

[2013] FamCA 341

FAMILY LAW – PROPERTY – Property interest adjustment pursuant to s 79 – Whether a transfer to the wife by the wife’s parents was actually a gift where there was an agreement for them to receive something in return – Where consent orders have been made in relation to parenting matters – Add backs – Where the father has health issues – Where an order for a superannuation split is considered

FAMILY LAW – COSTS – Wholly unsuccessful application – Financial circumstances of the parties.

Family Law Act 1975 (Cth) s 79, s 79(4), s 75(2), s 117(1), s 117(2), s 117(2A)

APPLICANT: Mr Werner

RESPONDENT: Ms Werner

FILE NUMBER: BRC 7081 of 2011

DATE DELIVERED: 3 May 2013

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Forrest J

HEARING DATE: 6 & 7 December 2012 and 23, 24 & 25 January 2013

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Frizelle

SOLICITOR FOR THE APPLICANT: Freeman Lawyers

COUNSEL FOR THE RESPONDENT: Ms Merkin

SOLICITOR FOR THE RESPONDENT: George Lawyers

ORDERS

PROPERTY ADJUSTMENT

1. That within one calendar month of these orders the wife shall pay to the husband the sum of $60,000 (sixty thousand dollars) in return for a release of the caveat the husband has registered on the title to the real property situated at … B Street, Town C, in the State of Queensland described as Lot … on Registered Plan … in the county of …, parish of … (“the Town C property”).

2. Upon payment to the husband of the said sum of $60,000 pursuant to paragraph 1 of these orders the wife shall retain as her sole property the Town C property and she shall cause the husband to be released and discharged from any liability secured by mortgage registered over that property, indemnifying him against any liability in respect of such debt.

3. In default of payment to the husband of the said sum pursuant to paragraph 1 of these orders the Town C property shall be sold by private treaty or at public auction within six calendar months of the date of these orders, with the husband to be paid the sum owing to him pursuant to these orders plus interest pursuant to the Family Law Rules 2004 from the net proceeds of sale of the said property.

4. The husband shall retain as his sole property the Holden … motor car in his possession and the wife shall forthwith do all things necessary to cause the registration of the said motor car to be transferred into the husband’s sole name.

5. The wife shall within 14 (fourteen) days of these orders provide the husband with two lists of the furniture and other chattels that she retains at the Town C property with each list to contain, as good as the wife can determine by her own best efforts, half of the total, by value, of all of those items and the husband shall within a further 14 (fourteen) days after receipt of those 2 lists inform the wife in writing as to which one of the 2 lists of items he chooses to retain and he shall, by agreement with the wife as to date and time of collection, cause the items on the list he has chosen to be collected from the Town C property at his expense, whereafter he shall retain all of those items collected as his sole property.

6. The wife shall retain as her sole property all other items of furniture and other chattels that remain on the Town C property after the husband has collected his items pursuant to paragraph 5 of these orders.

7. The wife shall also retain as her sole property the Mazda motor car in her possession. 

8. The husband shall also retain as his solely his interest in the Ausfund Superannuation fund.

9. That pursuant to section 90MT of the Family Law Act 1975 (Cth) whenever a splittable payment is payable in respect of the superannuation interest of Ms Werner in the E Super Fund, Mr Werner is entitled to be paid an amount calculated in accordance with the Family Law (Superannuation) Regulations 2001,using a base amount in the sum of $164, 841 (one hundred and sixty four thousand eight hundred and forty one dollars) at the operative time, which shall be the day that is four days after the making of these orders, and there is a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made but for this order and this order binds the trustees from time to time of the superannuation fund.

10. The wife shall retain the balance of her superannuation interest, after the splitting order is given effect to, in the E Super Fund.

11. Save as otherwise provided for herein, the husband indemnifies the wife against any liability for all debts in his name, including any debt to his late mother’s estate or any other member of his family.

12. The wife indemnifies the husband against any liability for all debts in her name, including any debt to her mother or any other member of her family.

COSTS

1. That the wife pay the husband’s costs of and incidental to the application in a case for the appointment of a single expert filed on 23 November 2012 on a party/party basis as agreed or in default of agreement as assessed under the Family Law Rules 2004.

2. It is certified that it was reasonable for the husband to have retained counsel to appear and respond to the wife’s application in a case for the appointment of a single expert filed on 23 November 2012.

3. The wife may, if she is so disposed, within 4 (four) weeks of the date of these orders, file and serve an application for an order that the costs she has been ordered to pay pursuant to paragraph 13 of these orders be paid by the solicitor and barrister who represented her in respect of the application in a case for the appointment of a single expert filed on 23 November 2012.

4. That the wife also pay the husband’s costs thrown away by the need to have a second compliance hearing in the lead up to the trial in these proceedings, such costs fixed in the sum of $327.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Werner & Werner 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

FILE NUMBER: BRC 7081 of 2011

Mr Werner

Applicant

And

Ms Werner

Respondent

Reasons for Judgment

1. At the end of a five-day trial of competing parenting orders and property adjustment applications, the parties to these proceedings resolved their parenting dispute.  The Court made parenting orders with their consent in accordance with the terms of their agreement. By those orders, the couple’s two little girls are to live with their mother and to spend time with their father for three nights and days each fortnight and half of their school holidays for the next year, with school term time with their father to increase to four nights and days each fortnight from 2014.

2. The parties and their legal representatives were, however, unable to resolve their differences as to property adjustment and the Court is required to determine this part of the proceedings.

Background facts

1. The husband and the wife began living together in mid 1984 in a town in north-west Queensland. They were each about 28 years of age.

2. The wife was employed in the education field and the husband was a skilled tradesman. Neither had very much in the way of assets when they began their relationship.

3. They married in January 1985 and separated on a final basis on the 20^th August 2010 after 26 years of being together.

4. Relatively late in their relationship, after years of trying to have children, they travelled to Hong Kong where they lived and worked for about 7 years. They were able to lawfully adopt children there and now have two little girls who are 8 years old and 5 years old respectively. 

5. Soon after they married, the couple jointly purchased a block of land in the Gold Coast hinterland together with the wife’s parents, and they were all registered as joint owners on the title. It was bought for $37,500 with a relatively small deposit, the balance being borrowed from a bank, secured by mortgage. Each couple contributed to the mortgage repayments for a relatively short period of time before the wife’s parents stopped doing so and the husband and wife took over making all of the repayments.

6. In or around 1987-1988 a manufacturing business was purchased by the parties in the town where they lived and the husband began to operate it through a partnership. It was purchased with borrowings from the husband’s family and a friend, as well as the use of vendor finance.

7. In 1995, the block of land in the Gold Coast hinterland was transferred into the wife’s name alone and the couple set about borrowing more money and having a house built on the block. Registering the ownership of the land in the wife’s sole name was part of an asset protection strategy having regard to the ownership of the manufacturing business.  

8. When the house was constructed, the wife’s parents took up occupation there. They did not pay rent to the couple or contribute to the mortgage payments, but they did pay the rates, take care of and maintain the property and pay other costs associated with their ongoing occupancy of it.

9. Within a few years, the manufacturing business began to experience difficulty and around the turn-of-the-century the husband’s interest in the business was transferred to a third party in return for that person taking over the husband’s share of the business debts. It was soon thereafter that the couple moved to Hong Kong.

10. The wife obtained employment in the education field in Hong Kong. The husband was not permitted to work full-time on the visa he obtained. The wife asserted that she would have liked the husband to get a job, on a fly in-fly out basis, in the mining industry in a foreign country. The husband asserted that they agreed that he would be the “home maker” in Hong Kong, commensurate with their plans to adopt children there.

11. The first child they adopted, a little boy, tragically died of SIDS at only a few months of age, before they were able to adopt their two daughters, who they brought back to settle in south-east Queensland in 2009. 

12. In Hong Kong, the wife worked in the education field the entire time they were there and the husband did work part-time as a tutor for a relatively short period of months.  Otherwise, he was the stay-at-home parent, assisted by the paid domestic staff the couple hired on a full-time basis in their household.

13. When the wife’s parents moved into the home the couple had constructed on the block of land in the Gold Coast hinterland, they moved out of their own property situated in a south-east Brisbane suburb. They agreed to transfer that property into the wife’s sole name and she agreed to take over the mortgage debt on that property.

14. That property was rented out to tenants when the wife’s parents vacated it, and the rent received was used to pay the existing mortgage. It was actually only in or around 2001 that the registered ownership of the property was transferred into the wife’s sole name.

15. The wife put into evidence a copy of the Queensland Land Title Act 1994 Form 1 Transfer. It shows the Brisbane property transferred to her in later 2001 with the consideration recorded as “the natural love and affection borne by the Transferors to the transferee”. It also records that stamp duty of $3,325 was paid on a valuation of the property of $130,000. There is also evidence that the mortgage liability in respect of the property that the wife took over at that time was approximately $45,000.

16. The property continued to be rented out by the wife in the years after she obtained ownership of it. It was eventually sold, not long before the husband and the wife separated, for $415,000 with the mortgage liability being around $35,000 at that time. The husband and the wife had done some work and spent a relatively small amount of money improving the property during the period of the wife’s ownership of the property.

17. From the net sale proceeds, the husband and the wife agreed to pay the wife’s mother the sum of $60,000. That was asserted to have been gifted to her in recognition of the fact that the property had been gifted to the wife in the first instance.

18. The balance of the proceeds of sale of that property were deposited to an account in the wife’s name and spent, in a relatively short period of months, prior to the parties’ separation. There is no dispute that most of it was spent discharging overdraft and credit card debts, purchasing some motor vehicles, a tractor and paying for improvements to the Gold Coast hinterland property. The evidence supports a finding that the balance was spent on the living expenses of the family at the time.

19. After the parties returned to Australia from Hong Kong, the debt secured by mortgage on the Gold Coast hinterland property was approximately $93,351. By the time of separation, it had increased, through drawings also used to meet various expenses, to around $105,000. By August 2011, a year after separation, it had increased, by drawings made solely by the wife, to around $229,000. By the time of the trial, that debt had increased further, by drawings made solely by the wife, to around $315,000.

20. The parties agree that $57,000 of that was to meet a Capital Gains Tax liability of the wife arising out of the sale of the Brisbane property. During the trial, the Court was informed that they have also agreed that an amount of $139,223 of those funds drawn down is to be considered as an “add back”. I understand that to mean that it should be considered as part of the parties’ capital unilaterally used by the wife since separation that must be considered as partial property settlement already received by her and taken into account in determining any just and equitable property adjustment orders to be made.

21. After living separately and apart from each other at the Gold Coast hinterland property for some time, the husband eventually moved off the property. The wife has continued to live there ever since.

22. Soon after he left the property, the husband withdrew the balance of his relatively modest superannuation interest of about $19,800 from his National Mutual fund and spent it on living expenses, purchasing some furniture and repaying some loans. In the schedule handed to the Court by his counsel at the trial, $10,000 of this was included as an amount said to be agreed by the husband to be notionally treated as an “add back”. I understand that to mean that it should be treated in the same way as the agreed “add back” of the $139,000 used by the wife that has already been referred to, and considered as part of the parties’ capital unilaterally used by the husband since separation that must be considered as partial property settlement already received by him.

23. The wife has continued to be employed in the education field, recently reducing the amount of work that she does so as to be able to spend more time with her young daughters.

24. The husband is unemployed and in receipt of a Commonwealth Pension. His health is not good. Over the course of the latter half of the parties’ relationship, the husband suffered two heart attacks and had heart surgery to insert stents into the arteries around his heart. It seems he acknowledges that his poor health is likely to be attributable to lifestyle factors such as smoking up to three packets of cigarettes each day over many years, overuse of alcohol over a long time and failure to reduce his body weight over a similarly long period. In any event, he is currently on a fairly severe medication regime, taking several different types of prescribed medication to keep his heart problems under control. He still smokes heavily but says he has reduced his intake of alcohol.

25. I accept that at the age of 57, having been out of the workforce for over a decade and having the significant health problems that he does, the prospects of the husband gaining employment in the future, particularly given the field of endeavour within which he has experience and trade qualifications, are far from good.

26. The mother, having been employed in the education field for many years, has a significant superannuation interest built up in an E Super Fund Defined Benefit account. By leave granted on 23 January, 2013, the wife put into evidence an affidavit that attached two E Super Fund family law valuations of her superannuation interest as of 17 August 2010 and 30 August 2011. They were the amounts of $411,794 and $446,074 respectively. In her updated Financial Statement sworn 18 September 2012 and filed 19 September 2012, the wife updated the value. She deposed to her defined benefit interest in E Super Fund to be $489,901. Although she did not put a family law valuation into evidence done at around that time that supported that figure, I can only presume that she must have obtained one upon which she based the figure that she deposed to in the updated Financial Statement.

27. Counsel for the husband, in her written submissions, provided a figure of $486,186 as the value of the wife’s interest in E Super Fund. She referenced that figure to a valuation said to be dated 21 November 2012. There is no such valuation in evidence. However, as the figure asserted on behalf of those submissions is a little less than the last figure deposed to by the wife, I will take that lower figure of $486,186 as being the latest available value of the wife’s superannuation interest at the time of the trial.

The property of the parties or either of them at the time of the trial

1. The parties agreed at the trial that the wife is the sole registered proprietor of the Gold Coast hinterland property and that it has a value of $400,000 with a mortgage debt of approximately $315,000. Accordingly, the wife’s equity in that property is worth $85,000.

2. They also agreed that the wife owns and possesses a Mazda motor car valued at $5,000.

3. There was agreement that the husband possessed a Holden motor car that is registered in the wife’s sole name. Although in her written submissions, counsel for the husband asserted that this car has a value of $11,750, she referenced that to a Redbook valuation not in evidence. At the trial on 23 January 2013, counsel for the husband handed up a schedule of what was said to be the “Pool of Assets & Liabilities”. In that document, the Holden was listed and each of the husband and the wife was said to agree that it had a value of $15,600. There being no explanation for the husband’s change in position in his written submissions, and no evidence of valuation of that vehicle before me, I will ascribe the figure of $15,600 to the value of the Holden.

4. The Court was informed at the trial that the parties had agreed that the wife would write out two lists that she says represents all of the household furniture and contents at the Gold Coast hinterland property divided equally. She is to present the two lists to the husband and he is to select one list of items being those he is to collect and retain. The orders I make will reflect that.

5. The Court was also informed that orders were made in 2011 by consent of the parties for a container full of chattels and a tractor located on the property to be sold and the proceeds divided equally between the parties. The tractor has been sold and the proceeds divided already. The container of things has also been sold with the wife yet to pay the husband his half being $1,150.  As an order providing for that has already been made, I will not address that in the orders I make.

Do justice and equity require property adjustment orders to be made?

1. After 25 years of marriage, in circumstances where the wife has $85,000 worth of equity in a real property bought by the parties during the marriage, has a superannuation interest worth $486,186 that was principally accumulated throughout those years of the marriage, has had the unilateral benefit of another $139,223 worth of the equity in the real property since separation and the husband has no property of significance, not even being the registered owner of the car that is in his possession, and negligible remaining superannuation, I consider that justice and equity certainly demands property adjustment orders to be made after appropriate weight is given to the matters set out in s 79(4) of the Family Law Act.

What orders should be made?

The pool

1. I am satisfied that the non-superannuation property and the superannuation should be all included in the one notional pool at this stage of the process of determination. The wife’s superannuation interest began in 1983, a year before the parties began living together, and has accumulated over almost 30 years which included over 26 years during which the husband and the wife lived together. In my view, it is not necessary that the superannuation be considered as part of a separate pool from the non-superannuation assets for justice and equity to be done in this case.

2. Accordingly, I consider the pool of property that is to be considered in order to determine just and equitable property adjustment orders to be as follows:-

   The wife’s equity in the Gold Coast hinterland property              $85,000

   The Mazda motor car in the wife’s possession  $5,000

   The Holden motor car in the husband’s possession  $15,600

   The money received by the wife already  $139,223

   The money received by the husband already  $10,000

   The wife’s superannuation interest  $486,186

   The husband’s Ausfund superannuation interest   $700

Total $731,709

1. I have notionally included in this pool the sum of $10,000, representing that much of the husband’s superannuation that he drew on and spent post-separation that I understood his counsel represented during the trial he was prepared to concede as appropriate to include in the pool.

2. However, in her written submissions, counsel for the husband did not include any amount as an “add back” for money spent by the husband from his superannuation interest draw down. That was explained by a simple written assertion that he had spent it all since separation. Counsel for the wife, in her written submissions, argues that the entire amount of $19,800 drawn by the husband and spent by him should be notionally ‘added back’. She submits that the husband “provided no evidence to show that he spent $19,800 of his superannuation on living expenses or anything else.”

3. With respect to counsel for the wife, in his updated Financial Statement filed 25 July 2012, the husband deposed to having spent the total of his drawings from his superannuation fund on “living expenses  & to set up new accommodation”. Counsel for the wife did not cross examine the husband about his use of this money at all. Against the general principle that ‘add backs’ are the exception as opposed to the rule, with parties being entitled to get on with their lives after separation, it is, in my view, for the party contending for the ‘add back’ of funds to make out the case that justice and equity requires the “add back” to be considered when determining what property adjustment orders are appropriate.

4. Where the husband was not cross-examined about his expenditure of the amount, I am left in a position of not being able to determine that he has used that money other than in a reasonable manner and that is why I have determined not to ‘add back’ the total of $19,800. However, I consider it appropriate because of the apparent concession made during the trial that at least $10,000 of that amount be reasonably treated as an ‘add back’, that the husband be held to that concession in the absence of any explanation as to why he has apparently changed his position on that during the latter part of the trial.

5. Further, I have included the value of the wife’s E Super Fund interest at the sum representing what I have determined to be the most recent valuation of that interest as earlier discussed. Counsel for the wife submitted that the value of the wife’s superannuation interest at the date of separation should be included not the more recent valuation. Her submission is that after separation the wife’s superannuation interest “ceased to be the property of the parties to the marriage and importantly, [the husband] made no contributions in any way after that date.”

6. Again, with respect to counsel for the wife, I do not accept that submission. It is well established that the Court must consider the property of the parties or either of them as at the date of the trial. Superannuation interests are generally treated no differently to other property in this respect. The submission demonstrates, on its face, a fundamental misunderstanding of what is “property of the parties or either of them” that can be subject to orders made pursuant to s 79 of the FLA.  In addition, just because there might be a difference between contributions made by the non-superannuated spouse before and after separation is not a matter that mandates consideration of the superannuation interest at its separation date value. Of course, that is not to say that in considering any difference in contributions, particularly in respect to a party’s superannuation interest, both before and after separation, evidence as to the value of the superannuation interest at separation is not relevant. That is a different matter though from the argument that the superannuation interest should be included at its value as of the date of separation.

Contributions

1. As the parties each came into the marriage with relatively little property, it is their contributions during their 26 years of living together and in the few years since separation that will determine the notional percentage division of the pool of $731,709 worth of property, ‘add backs’ and superannuation interests at this stage of the process.

2. For the wife, it was submitted that findings should be made that the husband’s gambling and drinking during the years that he was operating the manufacturing business directly led to the loss of the business as an asset of the parties and that such conduct was reckless, negligent or wanton to the extent that the husband’s “claim” should be reduced in the order of 2% to 5%.

3. Whilst the evidence satisfies me that the husband did enjoy drinking alcohol, and playing the poker machines at licensed venues, and that he did have a significant cigarette smoking habit during the years the parties lived in the north-west Queensland town, I cannot determine with any degree of certainty the significance of the financial impact of that on the economic viability of the manufacturing business or, more generally, on the couple’s accumulation of property during their marriage.

4. Indeed, the husband gave evidence that the economic viability of the business was significantly detrimentally affected when a long term lease it held on its premises came to an end and alternative premises had to be located. His evidence was that he then entered into an agreement to build premises on another party’s land that unexpectedly diverted his attention and efforts from income generating work over nearly a year. He said that was an integral factor in the change in circumstances that forced him to transfer his interest in the business to that third party in return for that party taking over the husband’s share of debt. He was not challenged by counsel for the mother in any telling way in respect of that evidence. I saw no reason not to accept that as truthful evidence.

5. I simply cannot make any more particular findings about the level of the husband’s gambling and alcohol use that would lead me to conclude that those matters should attract significant weight in the contributions assessment process.

6. I am satisfied that the husband worked, earning income, from the commencement of cohabitation until they left the country town and went to Hong Kong and that the income he generated was contributed towards the couple’s collective financial needs. I am equally satisfied that the wife did the same.

7. I am satisfied that both the husband and the wife also contributed in a non-financial way to the welfare of their relationship during that same period.

8. All of the evidence causes me to consider that the actual contributions of the husband and the wife during that first 17 years of their “coupledom” across all spheres of contribution should be treated as equal on a qualitative basis.

9. However, the evidence is that the parties purchased the Gold Coast hinterland property jointly with the wife’s parents early in the couple’s relationship and that the wife’s parents also contributed to the mortgage payments in respect of that property for a relatively short period of time after it was purchased. The wife’s parents then transferred their interest in the property to the wife and the husband and wife took over full responsibility for the mortgage debt repayments. There is little detail about this in evidence, but I am satisfied that the wife’s parents’ mortgage repayments and subsequent transfer of their interest in the property to the wife amounted to a direct financial contribution on behalf of the wife in the proceedings that attracts some weight at this  contributions assessment stage of the process.

10. A number of things happened in or around 2001. The couple left the Queensland country town and went to Hong Kong where the husband was not able to engage in full-time employment whilst the wife did. In addition, the wife’s parents transferred their Brisbane property to the wife.

11. That property was, as noted already, apparently worth $130,000 at the time of transfer and secured a mortgage debt of $45,000. The wife paid nothing for the property but took over the mortgage debt. As such she received $85,000 worth of equity, about 65% of the value of the property at the time. Both the wife and the wife’s mother gave evidence that in return for the transfer, came an obligation on the part of the wife and the husband to allow the wife’s parents to live rent-free at the Gold Coast hinterland property until their deaths, if they so chose. The wife’s mother went so far as saying that she also had an expectation of being paid money by her daughter on the subsequent sale of that property. As already observed, that occurred, with the wife paying her mother $60,000 from the sale proceeds of that property in late 2009, with the husband’s agreement.

12. There is no dispute that the wife’s parents lived at the Gold Coast hinterland property from 1996 and that the wife’s sole surviving parent, her mother, still lives there. No rent has ever been paid by them, although they did pay the rates on the property, and, in addition, did pay for the construction of some fences on the property. They also generally maintained the property over the years of occupation, at some cost to them.

13. In the circumstances, I do not consider that it is open for me to find that the Brisbane property was simply gifted outright to the wife. For something to be truly gifted, it is transferred without consideration, as that term is understood in contract law. If there is, in the minds of the parties who are privy to the transaction, an obligation created on the part of the transferee to provide something to the transferor in return, it is hardly a true gift. However, to the extent that the value of the obligation created in return for the transfer might not equal the value of the property transferred, of course, to some degree, some value has been gifted. The difficulty in this case lies in determining that point of difference, if there is one.

14. In this case, there has been no attempt to put into evidence any expert opinion about the value of the obligation that was created on the part of the wife by the transfer of the property to her. The wife’s parents conveyed the Brisbane property to the wife in 2001. There was evidence that they had agreed to do this in 1996, when they moved on to the Gold Coast hinterland property, yet the formal transfer was delayed for almost 5 years for some unexplained reason. 16 years of free accommodation is clearly quite valuable, though value was also received by the husband and wife in having the rates paid and other maintenance and occupation costs paid by the wife’s parents.  In addition, the wife’s mother received a cash payment of $60,000 back from the wife when the property was sold.

15. Ultimately, having regard to what the wife (and the husband) gave to the wife’s parents in return, I am not persuaded that the transfer of the property to the wife in 2001 is a matter that attracts as much weight as might at first glance be thought appropriate when considering it as a direct financial contribution on the part of the wife. I do note, however, that counsel for the husband did concede in her written submissions that the transfer to the wife of the property does result in the financial contributions being “tipped towards the Wife” and I will, accordingly, take that concession into account when weighing up the contributions of the parties.

16. Counsel for the wife also submitted that the husband’s contributions during the period that the parties were living in Hong Kong should not be given as much weight as the wife’s contributions. The wife worked in full-time employment in the education field and contributed her income to the financial needs of the family. On the other hand, the husband stayed at home caring for the children as they came along, working part-time as a tutor for only a very short period of months during that Hong Kong period. The husband was assisted in caring for the home and the children by employed assistance for most of the time that the couple lived in Hong Kong.

17. Counsel for the wife submitted that the husband’s contributions attract less weight during this period because he did not obtain employment outside Hong Kong on a fly in-fly out basis as discussed between the parties at some point in time and because the husband had the assistance of domestic staff, paid for by the wife, in managing the home and caring for the children whilst the wife worked.

18. As to the latter of those issues, the husband denied that the women who were paid to help in the home were hired as “nannies” and said they were house maids. However, there was an affidavit filed by the wife sworn by one of the woman who worked for the couple whilst they were in Hong Kong. In her evidence, that went completely unchallenged by the husband, the woman deposed to being “a nanny” to the children, as well as cooking, cleaning, washing and ironing for the family.

19. I accept that unchallenged evidence and find that the other women, employed at different times to that witness, did the same work.

20. On balance, for the period of time that the parties were in Hong Kong, I am satisfied that the wife’s contributions across all spheres of the relationship exceeded those of the husband.

21. In the period after the family returned to Australia and before they separated, I am satisfied that the husband’s contributions equalled the wife’s contributions. There was no evidence that they had employed “nannies” or house help during this time and whilst the wife went back to work in the education field, the husband was engaged in parenting and household duties to the best of his abilities.

22. After separation, particularly after the husband left the Gold Coast hinterland property, the children spent very little time with the husband and that which they did spend with him was supervised. The wife and her extended family provided almost all of the day to day care for the children during that two year period. Additionally, the husband was only contributing minimal amounts of financial assistance to the wife for the children through child support payments because he was only in receipt of a Commonwealth pension and his assessed liability was, therefore, very low. The wife, however, had the use of the Gold Coast hinterland property to the exclusion of the husband during most of that time.

23. For the period between separation and trial, again, I consider the wife’s contributions exceeded the husband’s contributions.

24. I am also satisfied that because the wife commenced her superannuation interest about one year before she commenced living with the husband and has had contributions made towards it by her employer for the two years since separation, those contributions, unmatched, in my view, in those periods by indirect contributions of the husband, attract some extra weight at this stage.

25. Ultimately, after having regard to all of the contributions of the parties, I consider that the pool of property, ‘add backs” and superannuation interests should be notionally divided as to 60% to the wife and as to 40% to the husband.

Should there be further adjustment having regard to the matters set out in s 79(4)(d)-(g) and s 75(2) of the FLA?

1. Currently, the wife is employed in the education field on a part-time basis but she does not have many years of employment ahead of her at her age.  The husband does not work and is in receipt of a pension but gets accommodation in return for providing maintenance on the property on which he lives.

2. The wife is in good health.  The husband, however, has a heart condition. He has had heart surgery in the past. His evidence is that this condition prevents him working in his trade.  The husband also gave evidence that because of his heart problems he is required to moderate his activities. I am satisfied that his future earning capacity is very limited.

3. The orders I made with the consent of the parties on 25 January 2013 provide that the children live with the wife and spend three days and nights with the husband every fortnight during school term, moving to four days and nights in 2014. In addition, they provide for the children to spend half of their school holidays with the father.  Accordingly, the wife will still be providing the majority of the day to day care for the children, as well as bearing most of the financial responsibility of providing for the children, for quite a few years to come.

4. The wife will also be accommodating her own mother, an obligation agreed to by the wife when the couple were still together. The husband now, of course, is himself relieved of any such obligation. I am satisfied that along with accommodating her mother, the wife will also be providing some care for her. However, there was evidence that the wife’s mother also receives a pension income of her own, which, I am satisfied, will limit the extent to which the wife will be financially supporting her.   

5. The notional division attributable to the contributions of the parties already sees the wife receiving 60% of the pool and the husband only 40% but, ultimately, my consideration and weighing of these relevant factual matters causes me to determine that a further adjustment in favour of the wife is nevertheless appropriate to do justice and equity between the parties. I consider that another 6% adjustment in the wife’s favour is appropriate.

6. Accordingly, I conclude, having regard to the parties’ contributions and the relevant adjustment factors, that the pool of net property, “add backs” and superannuation interests should notionally be divided as to 66% to the wife and as to 34% to the husband.

What orders should be made?

1. The husband should keep the Holden motor car in his possession, his Ausfund superannuation interest and the $10,000 he accessed from his superannuation fund that I have “added back” to the pool. Excluding the $700 in Ausfund Superannuation, that equals $25,600, which is approximately 10% of the $254,823 non-superannuation part of the total pool of $731,709.

2. The husband would require a cash payment from the wife of $61,000 to take him to approximately 34% of this non-superannuation part of the pool. At first glance, having regard to the fact that there is only $85,000 in equity in the Gold Coast hinterland property, a requirement for the wife to pay that sum to the husband appears to be rather onerous, giving the wife little room to be able to secure any further borrowing of such an amount. However, at the start of the trial, counsel for the wife clearly submitted that the wife would “buy the husband out” and retain the Gold Coast hinterland property.

3. Relying on that submission, I shall make an order that the wife pay the husband $60,340 within sixty days of the date that I make the orders. My orders will provide for sale of the property in default of such payment, with the husband to be paid that sum out of the net sale proceeds.

1. The superannuation interests in the pool equal $486,886. The husband’s own superannuation interest is only $700 of that amount. He would require a further $164,841 of superannuation to have 34% of the total superannuation. That can be achieved by a superannuation splitting order requiring that amount to be ‘split’ from the wife’s superannuation interest.

2. Counsel for the husband submitted that the husband should be provided with a cash payment by the wife, rather than a superannuation split. Her submission was, essentially, that he needs money now.

3. I do not consider that the circumstances require the husband be paid cash in order for justice and equity to be done as between these parties. The single largest component of the pool being considered in the case is the wife’s superannuation interest. There is absolutely nothing unjust and inequitable in this case about the husband receiving his percentage share of the non-superannuation pool by a further cash payment and receiving his percentage share of the superannuation interests in the pool by way of a splitting order. That way he is in no significantly different position in respect to the distribution of that pool than is the wife.

4. I am also mindful of the fact that the husband is already 56 years of age, being born in October 1956. Accordingly, he has already reached his preservation age in so far as any superannuation interest is concerned. Once split in his favour from the wife’s superannuation interest, the superannuation interest created is his in all respects. The husband will be able to access all of his superannuation, albeit with some taxation consequences upon which he would need to seek his own advice, if he determines to permanently retire from the workforce before he turns 60. Alternatively, if he chooses not to retire permanently from the workforce he can access some of his superannuation on a regular basis by way of a ‘transition to retirement’ pension. I am satisfied that the husband will not have to wait 10 years to receive the benefits of the superannuation ‘split’ in his favour by order of this Court as was submitted on his behalf.   

5. I am satisfied that orders allowing the husband to keep the Holden car in his possession, allowing him to retain his Ausfund superannuation interest, causing him to receive a superannuation ‘split’ of $164,841 from the wife’s E Super Fund interest, and to receive a cash payment rounded down to $60,000 from the wife within sixty days and to obtain half of the household furniture and contents from the Gold Coast property will be just and equitable.  I intend to make them.

6. However, there is no evidence that procedural fairness has been given to the E Super Fund trustees at this point in time. I will not be making the orders in this case until I am satisfied that those trustees have been given that procedural fairness. I will adjourn the matter to another day upon which the foreshadowed orders will be made subject to the trustees of the E Super Fund having the right to be heard in respect of the proposed splitting of $164,841 from the wife’s E Super Fund interest in favour of the husband. I will direct the husband’s solicitors to give the trustees notice of same and to provide evidence to the Court of having done so before any such orders are made.

Costs

1. The husband also seeks orders that the wife pay his costs in respect of three specific Court events that occurred in the months leading up to the trial.

2. One of those events was the hearing, two days before the trial was listed to commence, of an application brought by the wife only ten days before the date upon which the trial was listed to commence, for the appointment of a “single expert” to assist the Court in respect of child sex abuse allegations and a consequential adjournment of the trial pending the preparation of a report by such “single expert”.

3. I heard and determined that application by dismissing it. I reserved the issue of the husband’s costs on that application to the trial.

4. I dismissed the application because I was not satisfied that the Family Consultant, who had already provided a report in which the allegations of sexual abuse of the children were considered, did not have expertise to provide relevant opinion evidence and also because of the timing of the wife’s application relative to the commencement of the trial. Accordingly, the wife was wholly unsuccessful in that application.

5. Two days later, at the commencement of the trial, counsel for the wife made application for the proceedings to be stayed pending the hearing and determination of an appeal against my decision to dismiss the wife’s application. I dismissed that application as well.

6. As the parenting orders proceedings were settled at the end of the trial and orders made with the consent of the parties, the wife has since withdrawn her appeal against that earlier determination of mine.

7. The application of the husband is clearly based on the complete lack of success of the application that was made by the wife just prior to the trial. Counsel for the husband has particularised the husband’s costs of responding to the wholly unsuccessful application in a case as $9,108 in solicitor’s costs, $2,500 for counsel’s fees and $110 in outlays.

8. Counsel for the wife submits a costs order should not be made because “there are strong grounds that [the discontinued appeal against the dismissal of the application] may have been successful”. Counsel further submits that the costs should remain reserved until the determination of an appeal in another matter that is currently pending which counsel expects will resolve what she says is “the confusion surrounding the application of section 69ZT(1)” of the FLA.

9. I was satisfied at the time I dismissed the wife’s application in a case that it was wholly unmeritorious. I reserved the question of the husband’s costs to the trial so that it could then be determined against the whole of the evidence in the case. Having completed the trial, I am not persuaded that my decision to dismiss the application two days before the trial commenced was wrong.  I heard the Family Consultant cross-examined, particularly by counsel for the wife, and was satisfied that the parenting orders I made at the end of the trial with the consent of the parties, including the ICL, were quite appropriate, including, in particular, having regard to the allegations of sexual abuse that had been made against the husband by the wife.

10. The application in a case was unmeritorious and should not have been brought when it was, particularly given that the Magellan Registrar had dismissed a previous oral application made on behalf of the wife for a second expert to be appointed, to provide a report in the matter, as far back as 28 March 2012. The husband was put to expense, inconvenience and additional stress in having to respond to this application immediately prior to the trial which had been set down for hearing for some time.  

11. In proceedings under the FLA, the general rule is that each party bears his or her own costs.[1]  That general rule is subject to the exception that the

    
    

    Court has the discretion to make a costs order it considers just where it is of the opinion that there are circumstances that justify it in doing so[2]. There are a number of factors to which the Court must have regard when considering whether a costs order is justified. Those are all set out in s 117(2A). They include, but are not limited to, the financial circumstances of each of the parties and whether any party has been wholly unsuccessful in the proceedings. Any other matter the Court considers relevant is also able to be considered.

    [1] Family Law Act 1975 (Cth) s 117(1).

    [2] S 117(2)

12. The matters I consider most relevant to my determination on this point, are the fact that the application was unmeritorious and should not have been brought and the fact that the husband’s financial circumstances are not good at all.

13. The wife’s financial circumstances are better than the husband’s, although it cannot be said they are significantly better.  

14. With respect, I do not accept that just because counsel considers that an appeal against the decision “may have been successful” that costs should not be awarded. Further, I am not persuaded to continue to reserve the question of the husband’s costs until some date in the future when an appeal that I am told is pending that is said to raise similar issues to those that were raised on the application in a case is determined.

15. I consider a costs order in favour of the husband just in the circumstances and will make one.  I consider that he should have his costs of and incidental to responding to the unsuccessful application in a case.

16. Counsel for the wife submits that the costs sought by the husband are excessive. In such circumstances, I will make an order that the costs be paid on a party and party basis to be agreed or assessed. I will certify that it was appropriate for counsel to be briefed to appear on the application.

17. That said, I am nevertheless left with concerns about the role that the wife’s legal representatives might have played in the making of this unmeritorious application. I am, at this point, troubled by the thought that the wife could be left financially worse off, having to pay the husband’s costs, because of decisions taken by her legal representatives. Consequently, I will give the wife time within which she can obtain independent legal advice if she so wishes and within which she can file an application for an order that the costs that she is to pay the husband pursuant to my order be paid by her solicitor and/or barrister if she is so advised. She will have four weeks from the date that my orders are made within which to do so. In the absence of such application, the wife will have to meet the costs order I intend to make.

18. The second court event in respect of which the husband seeks a costs order in his favour was a compliance hearing that was listed before the Magellan Registrar on 19 September 2012.

19. That compliance hearing had been set as far back as 28 March 2012 by the Registrar when she had made trial directions, including for the filing of affidavits of evidence in chief by each of the parties. It is apparent from the directions made by the Registrar at the compliance hearing on 19 September 2012 that the wife had not complied with all of the directions made in March for readying the matter for trial. As a consequence, the further directions were made and another compliance hearing was set for a subsequent date. The Registrar reserved the parties’ costs of appearing that day on the compliance hearing.

20. Counsel for the husband submits that the husband should have his costs of the appearance at the compliance hearing on 19 September, 2012 as it was a “waste of time” due to the wife’s failure to comply with the March 2012 directions. Counsel submits that the husband was therefore financially penalised by having to appear, through legal representatives, at a second compliance hearing.

21. Counsel for the wife submits that as the wife’s failure to comply with the March 2012 directions did not result in a delay of the trial that costs should not be ordered.

22. With respect, that submission of counsel for the wife misses the point. It is the fact that the husband was put to additional legal costs as a result of non-compliance by the wife with trial preparation directions that he would not have otherwise had to incur that is relevant to the determination, not simply whether non-compliance caused delay or not.

23. The sealed order of 19 September 2012 records that counsel appeared that day for the husband and his counsel’s submissions record counsel’s fees incurred that day were $770. Briefing counsel to appear at a compliance hearing where all directions had been complied with would be unnecessary. The submissions of counsel for the husband observe that counsel was instructed to appear “on the 10^th October 2012 as the Wife had indicted [sic] her intention to request a new report writer.”  There is no record on 10 October of counsel appearing for the husband. As such, I consider that counsel is mistaken and meant to write “19 September, 2012”, the day that the orders do record counsel as having appeared for the husband.

24. There is no evidence before me in an affidavit (or any other form) of the fact that counsel was briefed to appear on 19 September 2012 for the reason that the wife had indicated an intention to make another application for a new report writer to be appointed. I cannot make such a finding in the absence of evidence.

25. In the absence of any evidence about it, I am not satisfied that it was necessary to brief counsel at all to appear at the compliance hearing on 19 September 2012. In the absence of any evidence to the contrary, I am satisfied that a solicitor alone could have done the compliance hearing even where matters of non-compliance with previous directions had to be dealt with.  What I am also satisfied of, though, is that a second compliance hearing would not have been necessary if the wife had complied with the earlier directions. I consider it just that the husband have his costs thrown away by the need to have a second compliance hearing, paid for by the wife. I consider an amount of $327 representing an hour and a half of solicitor’s time at the hourly rate allowed on the applicable scale of costs, namely $218 per hour, is an amount that it is just to order the wife to pay the husband for his costs in this instance. I will make such an order.

26. The third court event for which the husband seeks costs is a subpoena hearing that was heard on 28 November 2012, just eight days prior to the commencement of the trial. In the submissions of counsel for the husband in respect of this matter, again, counsel makes assertions of fact in respect of which there is no evidence in affidavit or other form before me which I can consider in order to make a determination. Counsel for the wife makes that point in her submissions in response.

27. Absent any evidence about the matter, I will make no order in respect of the husband’s costs of the subpoena hearing of 28 November, 2012.

28. The matter will be listed on a date to be fixed for the making of the orders that I have indicated in these reasons for judgment that I will make, subject to the trustees of the E Super Fund having a right to be heard should they consider it necessary.  

I certify that the preceding one hundred and eleven (111) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Forrest delivered on 3 May 2013.

Associate: 

Date:  3 May 2013