Woolly & Woolly (No 2)
[2024] FedCFamC2F 952
•25 July 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Woolly & Woolly (No 2) [2024] FedCFamC2F 952
File number(s): MLC 12173 of 2018 Judgment of: JUDGE HARLAND Date of judgment: 25 July 2024 Catchwords: FAMILY LAW – property – no appearance by the husband – matter proceeding on an undefended basis – where the matter has been on foot since 2021 – where there have been significant delays in the finalisation of the property proceedings due to the conduct of the husband
FAMILY LAW -practice and procedure– leave to proceed out of time – costs – considerations of indemnity costs – ordered to pay costs
Legislation: Family Law Act 1975 (Cth) ss. 44, 44(6), 75(2), 79(1), 79(2), 79(4), 117(1), 117(2A)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 r.12.17, Schedule 1
Cases cited: Aleksovski v Aleksovski [1996] FamCAFC 111
Buckley & Buckley [2013] FamCAFC 150
Chang & Su [2002] FamCA 156
Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225
Dickons & Dickons [2012] FamCAFC 154.
Gallo & Dawson (1990) 93 ALR 479
Hickey & Hickey & Attorney-General (Intervener) (2003) FLC 93-143
Kohan & Kohan (1993) FLC 92-340
Woolly & Woolly [2022] FedCFamC2F 620
Woolly & Woolly [2023] FedCFamC1F 632
Prantage & Prantage (2013) FLC 93-544.
Sharp & Sharp [2011] FamCAFC 150
Stanford v Stanford (2012) 247 CLR 108
Whitford & Whitford (1979) FLC 90-612
Yunghanns & Yunghanns [2000] FamCA 681
Division: Division 2 Family Law Number of paragraphs: 81 Date of hearing: 28 June 2024 Place: Melbourne Counsel for the Applicant Mr Tesoriero Solicitor for the Applicant Sayer Jones The Respondent No appearance by the Respondent ORDERS
MLC 12173 of 2018 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS WOOLLY
ApplicantAND: MR WOOLLY
Respondent
ORDER MADE BY:
JUDGE HARLAND
DATE OF ORDER:
25 JULY 2024
THE COURT ORDERS THAT:
1.The Response to Application for Final Orders filed 22 November 2021 be struck out.
2.Leave is granted to the wife to proceed on an undefended basis.
3.Pursuant to section 44 of the Family Law Act 1975, leave is granted to the wife to proceed out of time.
4.Within 28 days, the husband do all acts and things to pay the sum of $200,000 to the wife by way of direct deposit into the wife’s solicitors’ trust account (BSB: …03; account number: …27).
5.In accordance with Order 3 of the Orders made by Justice Carter on 1 August 2023, within 14 days, the husband do all acts and things to pay the sum of $20,000 to wife by way of direct deposit into the wife’s solicitors’ trust account (BSB: …03; account number: …27).
6.Save as otherwise provided herein, the wife retain for her sole use and benefit, to the exclusion of the husband:
(a)the real property;
(b)her personal savings and bank accounts;
(c)her superannuation entitlements; and
(d)all personal property currently in her possession.
7.Save as otherwise provided herein, the husband retain for his sole use and benefit, to the exclusion of the wife:
(a)his part property settlement, in the sum of $40,000;
(b)his motor vehicle;
(c)his personal savings and bank accounts;
(d)his superannuation entitlements; and
(e)all personal property currently in his possession.
8.As a separate and ongoing obligation, the wife do all necessary acts and things and sign all such documents as may be required to pay and indemnify and keep the husband indemnified, in relation to all debts, liabilities, interests, costs or outgoings in relation to:
(a)any and all creditors of the wife, and/or her related entities;
(b)any and all borrowings of the wife, and/or her related entities;
(c)any and all of the wife’s taxation liabilities, and/or those of her related entities in any jurisdiction and any interests, costs (including accounting costs) or penalties applicable thereto;
(d)any and all hire purchase and/or liabilities in respect of any assets owned by the wife, and /or her related entities;
(e)any and all other debt and/or liability of whatever nature in respect of the wife, and/or her related entities; and
(f)any personal guarantees given by the Husband in respect of the debts of the wife, and/or her related entities.
9.As a separate and ongoing obligation, the husband do all necessary acts and things and sign all such documents as may be required to pay and indemnify and keep the wife indemnified, in relation to all debts, liabilities, interests, costs or outgoings in relation to:
(a)any and all creditors of the husband, and/or his related entities;
(b)any and all borrowings of the husband, and/or his related entities;
(c)any and all of the husband’s taxation liabilities, and/or those of his related entities in any jurisdiction and any interests, costs (including accounting costs) or penalties applicable thereto;
(d)any and all hire purchase and/or liabilities in respect of any assets owned by the husband, and/or his related entities;
(e)any and all other debt and/or liability of whatever nature in respect of the husband, and/or his related entities; and
(f)any personal guarantees given by the wife in respect of the debts of the husband, and/or his related entities.
10.Unless otherwise specified in these Orders and save for the purpose of enforcing any monies 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) in the possession of such party as at the date of these Orders;
(b)money standing to the credit of the parties in any bank account is to become the property of the party in whose name the account is in;
(c)each party to forego any claims that they may have to Superannuation Benefits belonging to or earned by the other;
(d)insurance policies remain the sole property of the owner named therein;
(e)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders; and
(f)any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
11.The husband pay the wife’s costs of and incidental to these proceedings of $50,000.
12.All extant applications are dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE HARLAND
This matter has a long and unfortunate history which is primarily due to the husband’s recalcitrance, breaches of Court Orders and failure to appear before the Court on numerous occasions. I will not detail all those breaches and failures to appear as they are detailed in the wife’s case outline filed 24 June 2024 and in previous Reasons. For this detailed history, I also refer to the two previous Reasons in these proceedings, Woolly & Woolly [2022] FedCFamC2F 620 before myself and Woolly & Woolly [2023] FedCFamC1F 620 before Carter J which should be read together with these Reasons.
I am satisfied that the husband was on notice of the final hearing. The Orders listing this matter for trial were made on 28 February 2024 and the husband was present at that hearing and was represented by Counsel. He has not complied with the trial directions. The husband has failed to respond to various correspondence from Chambers until the latest possible moment. The husband contacted my Chambers on 20 June 2024, after ignoring previous correspondence from Chambers, and had the audacity to seek an adjournment of the final hearing claiming to be in New South Wales and needing a month to get his paperwork together. Chambers responded on 20 June 2024 and sent a further email on 25 June 2024 informing him that the final hearing would proceed in person and orders may be made in his absence and the matter may proceed on an undefended basis. I will strike out the husband’s response filed 22 November 2021 and I will grant leave for the wife to proceed on an undefended basis.
DOCUMENTS RELIED UPON
The wife relied on the following documents:
(a)Further Amended initiating Application filed 12 January 2023;
(b)Trial Affidavit filed 17 May 2024;
(c)Financial statement filed 17 May 2024;
(d)Outline of Case filed 24 June 2024; and
(e)Multiple documents tendered and marked as Exhibits.
The husband did not file any material in support for the final hearing.
ISSUES IN DISPUTE
The issues in dispute I must address in these proceedings are:
(a)whether the wife has leave to proceed out of time;
(b)whether the WorkCover settlement funds received by the husband should be added back to the asset pool and if so in what amount?;
(c)whether the amount of $200,000 should be paid to the Wife;
(d)should costs be awarded in the proceedings?; and
(e)if costs are awarded should they be on an indemnity basis?
BACKGROUND AND LEAVE TO PROCEED OUT OF TIME
The parties started dating in 2011 and married in 2013. They started living together in mid‑2013 when the parties moved into a property at E Street, Suburb F which the wife retained from a previous relationship. The parties have two children, X, aged nine and Y, aged seven. The parties separated in September 2017.
The wife seeks leave to proceed with her application for property adjustment orders out of time pursuant to s.44(6) of the Family Law Act 1975 (Cth) (“the Act").
When the parties separated, the husband was in the process of making a WorkCover claim arising out of a workplace accident in 2012 which left him with permanent injuries. The parties at the time were negotiating a property settlement. The wife says the parties agreed to pause those negotiations whilst the husband’s WorkCover claim went through the Courts. In late 2018, the wife paid the husband $40,000 by way of an informal part-property settlement to indicate they were keeping the property negotiations on foot. I detail the parties’ financial circumstances later on in these reasons, however I am satisfied that unless and until the husband received a financial settlement for his WorkCover claim, there was little point in the wife incurring the expense of bringing a property application as there were no other assets in joint names.
The wife filed an application for divorce in late 2018. The divorce became final in early 2019. The wife had 12 months from this date to bring a property application. The wife is six months out of time.
The wife filed an application for final parenting orders on 9 April 2020. The husband did not participate in the parenting proceedings, and they were finalised on 3 December 2020 on an undefended basis, granting the wife sole parental responsibility for X and Y, with the children to live with the mother. No orders were made for the husband to spend time with the children. The husband did not file any material in those proceedings.
The wife filed an initiating application for financial orders and child support on 28 September 2021. She sought a child support departure order for the husband to pay her $50,000 by way of lump sum child support and sought that the husband pay her $200,000 by way of a property settlement and that the parties otherwise retained what they owned. The wife brought the application after becoming aware that the husband had settled his WorkCover claim. The husband received a gross sum of $800,000. After his costs were paid, he received a net amount totalling $520,294.70 in mid-2021. Exhibit 4 is a bundle of the husband’s bank statements which show these two deposits which the description “Direct Credit [G Lawyers] File”.
The husband filed a response to the wife’s application on 22 November 2021 wherein he sought to pay the wife $40,000 from his WorkCover settlement, and $50,000 by way of lump sum child support. He did not object to the jurisdiction on the basis of the wife’s application being out of time. He filed supporting documents with his response but has not filed any documents since that date other than a notice of objection to a subpoena the wife caused to be issued to the Commonwealth Bank which he failed to prosecute.
At the interim hearing before me on 3 May 2022, the husband for the first time raised the fact that the wife’s property application was out of time. As I noted in my previous reasons, it is important to refer to the chronology of this matter to put it into context. It was opportunistic and disingenuous for the husband to raise the out of time argument at that stage, particularly as he benefited from the parties’ agreement to pause their settlement discussions, receiving $40,000 from the wife as an informal part-property settlement in October 2018.
A party has 12 months from the date a divorce order becomes final to bring financial proceedings. The Court may exercise its discretion to grant a party leave to proceed out of time if it is satisfied that hardship would be caused to the applicant and or the children if leave is not granted. It is necessary to consider the circumstances of each case. Several authorities have discussed the applicable principles when considering these issues.[1]
[1] See Gallo & Dawson (1990) 93 ALR 479; Whitford & Whitford (1979) FLC 90-612; Sharp & Sharp [2011] FamCAFC 150.
I am satisfied that the wife has explained the reason for delay adequately. Ultimately, the Court must consider what is in the interests of justice between the parties. I am satisfied that the wife and children will suffer hardship if she is not able to bring the proceedings. As will become clear in these reasons, the fact that the wife may face real difficulties in enforcing the orders should not be a bar to her application, given that these real difficulties are due to the husband’s breaches of orders and failure to provide full and frank financial disclosure.
PREVIOUS ORDERS AND REASONS
The context of the proceedings is important, and I will provide a short timeline below.
The wife brought an interim application seeking that the husband preserve $200,000 from his WorkCover settlement as she was concerned he would dissipate funds. On 26 October 2021 Alstergren CJ made orders restraining the husband from dealing with $200,000 of his WorkCover settlement pending further order and made an order for $50,000 to be paid to the wife for lump sum child support. The husband provided an oral undertaking to the Court that day that he would preserve the $200,000 into an interest-bearing account in his name. The husband paid the lump sum child support but did not comply with the Orders with respect to the $200,000.
The wife on 21 February 2022 brought an interim application seeking that the husband pay the $200,000 into her solicitors’ trust account. The husband opposed this application but did not file any documents in response. He unsuccessfully sought an adjournment of the hearing claiming that he had material ready to be filed. I refused his application for an adjournment in circumstances where the order had been made originally six months prior. On 3 May 2022, I made orders that the husband within 48 hours deposit the $200,000 into the wife’s solicitors’ trust account and dismissed the husband’s subpoena objection. The husband breached those orders. At this stage, the matter remained listed for trial before me on 9 February 2023.
The wife brought a contravention application on 24 May 2022 which was heard by Carter J. The contravention proceedings were drawn out as the husband again failed to appear on multiple occasions and sought adjournments. The contravention proceedings were part delayed by the fact that the parties were having negotiations which did not result in a resolution. This in turn prolonged the property proceedings.
Carter J determined that by the time the wife filed her initiating application for financial orders on 29 September 2021, the husband had already reduced the funds from the Workcover settlement to approximately $400,000. Her Honour noted that it was an agreed fact that on 26 October 2021, orders were made for the husband to preserve the $200,000 from his WorkCover settlement and that as of 22 November 2021, the husband removed funds from his account, and that his accounts have not exceeded $200,000, since that time. The bank accounts showed that the husband in a six-month period from approximately August 2021 to February 2022, disposed of approximately $416,000. This included the husband transferring his partner $99,000 who was not joined to the proceedings. Her Honour observed that the husband’s evidence was now that he had disposed of the entire amount.
Her Honour found that the husband understood his obligations under the Orders and made no attempt to comply with them and that he contravened the Orders deliberately and intentionally as he considered that the wife was not entitled to any part of those funds as he considered them “his” as it was “his accident”.
Her Honour further noted that the husband had already failed to pay a costs order of $4,100. Her Honour thought there was a prospect that the husband may find a way to comply with Court Orders by the imposition of a serious penalty, and if he did not comply with the Orders, then it was appropriate to impose a sanction as punishment. Carter J found him guilty without reasonable excuse of contravening the Order to preserve the $200,000. The Orders made by Carter J provided the husband with an opportunity to produce the $200,000 and avoid a sentence of imprisonment, such a sanction being appropriate given the husband’s wilful disobedience of Court Orders. Her Honour also ordered the husband pay costs fixed at $20,000 with respect to the contravention, to be paid at the settlement of the substantive property proceedings. The husband did not comply with these Orders and Orders after multiple further hearings. Orders were made in late 2023 for a warrant for the husband’s arrest and he spent three months in prison.
LEGAL PRINCIPLES APPLYING TO PROPERTY PROCEEDINGS
Part VIII of the Act governs property, spousal maintenance and maintenance agreement between married couples. The major provisions relating to marital property division are contained in ss.79(1); 79(2); 79(4); & 75(2) of the Act.
Until the High Court decision in Stanford v Stanford (2012) 247 CLR 108, the position in respect of the process to be applied to the resolution of matrimonial property cases was said to be well settled with a preferred approach as set out by the Full Court in Hickey & Hickey & Attorney-General (Intervener) (2003) FLC 93-143 at 78,386 [39].
The High Court considered the operation of s.79 of the Act (which has almost identical terms to s.90SM) in the matter of Stanford. In this case, the majority stated at [35]-[36] that:
It will be recalled that s 79(2) provides that "[t]he court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order. Section 79(4) prescribes matters that must be taken into account in considering what order (if any) should be made under the section. The requirements of the two sub-sections are not to be conflated. In every case in which a property settlement order under s 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order.”
The expression “just and equitable” is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its metes and bounds.” [Footnotes omitted]
The High Court found three fundamental propositions with respect to the application of s.79, which can be summarised as follows:
Firstly, in order to ascertain whether it is just and equitable to make a property settlement order, it is necessary to identify the existing legal and equitable interests of the parties in the property. The High Court emphasised the word ‘existing’.
Secondly, although s.79 gives the court a broad power to make property settlement orders it may not be exercised in an unprincipled fashion. There must be no assumption that the parties’ interests are or should be different to their existing interests.
Thirdly, when considering whether making a property settlement order is just and equitable the court must not assume that one or the other party has the right to a property adjustment order. The court must give separate consideration to s.79(2) in addition to the matters referred to in s.79(4).
In Stanford the High Court indicated that, in the vast majority of matrimonial property cases, the requirements of s.79(2) will be readily satisfied, largely as a result of a consideration of the circumstances of the parties concerned, particularly the nature of their separation. Both parties seek property adjustment orders.
The High Court also pointed out that what is just and equitable is different in every case.
It is important to have regard to the myriad of contributions the parties have made over the whole of their long relationship and take a holistic approach to the assessment of the parties’ contributions.
CONTRIBUTIONS AND INCOME DURING THE RELATIONSHIP
Before meeting the husband, the wife had an interest in at the properties E Street, Suburb F (“the Suburb F property”) with her former partner. The wife’s father Mr H purchased her former partner’s interest in the Suburb F property for $400,000. The title was registered in the wife’s and her sister Ms J’s name at the time the parties met. The mother’s father is a property developer. Mr H, Ms J and the wife agreed to subdivide the property with one property in Ms J’s name and the other in the Wife’s. It was a joint project for them. The parties moved into the lot owned by the wife after the subdivision was completed in 2013.
Mr H finished a property development at K Street, Suburb L and suggested to the husband that he purchase one of the units. The husband purchased a unit in 2011 for approximately $360,000. The wife believes the husband funded this with savings and a mortgage with Westpac. The husband sold this property in 2014 for $376,000. Taking into account selling costs, the husband did not make a profit from this. The wife says any proceeds were not applied for the benefit of their relationship.
The parties lived in the Suburb F property throughout their relationship. The wife says the husband did not make significant contributions to the Suburb F property as he claims.
When they met both parties were working full time. The wife worked full time up until shortly before she gave birth to Y in 2016.
The wife says that the husband was present and involved with the family prior to being injured at work in 2012. After that he became withdrawn and often left the house. The husband spent two weeks in hospital. He required ongoing physical therapy and saw a psychiatrist. The wife was with the husband at an appointment in 2014 when he was diagnosed with chronic depression and post-traumatic stress disorder (“PTSD”). The wife says she was responsible for the vast majority of housework and homemaking duties.
The husband had difficulty finding employment after his accident. To assist them, the wife’s father bought a small business in 2014 and appointed the husband as the manager of that business. The husband worked in that business until they separated.
The wife claims she was also primarily responsible for the children’s care as she says the husband mostly avoided the children. The wife says the husband’s behaviour worsened over time and she became concerned that the husband was taking drugs. She was concerned for the children’s and her own safety and commenced spending more time at her parents’ home.
The husband filed a WorkCover claim a few weeks after his injury. The wife says she assisted the husband preparing for his solicitors and taking him to various appointments and obtaining reports. She swore an affidavit in support of his case after separation at his solicitors’ request.
After a debt collector’s letter was delivered to the home just after Y’s birth in 2016, the wife discovered the husband had $150,000 in unpaid tolls and fines.
The husband was declared bankrupt in 2017. The wife says that at times during the relationship, she struggled to pay household expenses as she did not know what the husband did with his income.
In mid-2017, the husband filed an application in Court with respect to the injuries he received, arising out of his workplace injury.
The wife deposes that when the parties separated in September 2017, the husband went into a rage and caused significant damage to the Suburb F property including smashed tiles, smashed windows, and damage to the doors and floors. The wife’s father paid $76,000 to repair the property before it was sold, and also paid the husband $13,500 to meet his rent and bond payments.
The wife sold the Suburb F property in 2018. After the mortgage was discharged and the wife’s father was repaid his investment of $400,000, the wife received $92,841.21.
In mid-2018, the wife and her father purchased a property at Suburb D (“Suburb D property”) with funds provided by her father and a mortgage that was in her name and M Pty Ltd which her parents are co-directors. The wife says she did not provide any personal funds and that herself and her father developed that property and then subdivided it. In early 2021, one lot was sold and the net proceeds were used to reduce the mortgage and the children and the wife moved into another lot. The title is in the wife’s sole name but her father has a 50% equitable interest.
The wife is solely responsible for the mortgage on the property as that is how she funded her share. The wife gave brief oral evidence at the hearing as she made an error in her financial statement giving a figure for 50% of the mortgage not 100%. The wife tendered market appraisals for the Suburb D property, the most recent mortgage account statement which was transferred into her sole name taken out in 2018, and transactions for the mortgage account. I am satisfied that the wife’s share of the Suburb D property is $645,830, less the mortgage of $416,739 which results in the wife having equity in the property of $229,091.
ASSET POOL
Based on the evidence, as best as can be determined, the property pool is as follows:
Asset Ownership Wife’s Value Suburb D Wife 100% legal: 50% equitable
Mr H – 50% equitableE$645,830 Business Husband $11,200 Part Property settlement Husband $40,000 Husband’s motor vehicle Husband $38,395 TOTAL E$735,425 Liabilities Ownership Wife’s Value N Bank home loan Wife 100% $416,739 TOTAL $416,739 NET ASSET POOL MINUS LIABILITIES (EXCLUDING SUPER) $318,686 Superannuation Ownership Wife’s Value Super Fund 1 Wife $54,921 Super Husband Unknown TOTAL $54,921 NET ASSET POOL MINUS LIABILITIES PLUS SUPER E$373,607
The wife refers to the husband having at least $11,200 worth of tools and equipment for his business which she says he referred to having in the contravention proceedings. Carter J refers to this in her Reasons and marked as Exhibit R1 was a financial statement the husband adopted that day referring to him having a small business and tools.
The wife does not know the husband’s current financial circumstances. She caused a subpoena to issue to the Commonwealth Bank in 2022. Those records show that the husband purchased a car for $38,000 in early 2022. He has also had the benefit of the $40,000 part-property settlement.
The wife has superannuation entitlements of approximately $54,921. Apart from nominal sums in her bank accounts and household contents, the wife does not have any other assets or liabilities. The Wife drives a motor vehicle registered in the name of M Pty Ltd, being Motor Vehicle 1. The wife’s parents are co-directors of this company and pay for the registration. The wife has made enquiries with respect to the husband’s superannuation which indicate he has no superannuation in the funds identified. She seeks to notionally add back $19,000 of the husband’s superannuation. The basis for this is not referred to in any of the material. I will not add this amount back.
She also seeks to notionally add back the $200,000 from the WorkCover settlement that the husband should have preserved. At paragraph 117 of her trial affidavit, the wife outlines the withdrawals and payments the husband made between August 2021 and February 2022 and then goes on to say at paragraph 118, that the husband either has at least $200,000 of the WorkCover funds available to him or has embarked on a pattern of behaviour and dispersed these funds and seeks that the $200,000 be added back to the pool. She does not seek to add back the whole amount he received from the WorkCover claim as she acknowledges he needed to support himself.
As I explained in my Interim Reasons referred to earlier, the preservation of the $200,000 pending the trial does not mean that the wife would be successful in her claim as that would be determined on its merits. The purpose of the orders preserving $200,000 from the husband’s WorkCover claim was to avoid the wife’s property claim being defeated. It was not a predetermination that the wife is entitled to that sum on the basis after the s.79(4) and s.75(2) factors have been considered.
If the asset pool is as it is set out above less addbacks, the wife has 72% of the pool and the husband 28%. If the $200,000 is added back and that sum is paid to the wife, the wife receives 83% of the pool and the husband receives 17%.
It would not be appropriate to addback the whole of the $515,295 back into the pool as the husband had living expenses. Another way of looking at it is to notionally add back $410,000 which is what remained in September 2021 when the wife’s application was filed. In adding this back, $210,000 would be put on the husband’s side and $200,000 on the wife’s side. The car would now form part of the $210,000 in add backs received to the husband. The percentages are the wife would receive 62% of the asset pool and the husband would receive 38%.
S.75(2) factors
The parties are aged 39. Both have re-partnered. Little is known about the husband’s current circumstances given his failure to file evidence. With respect to the s.75(2) factors, it is impossible to know what the husband’s current financial circumstances are. The husband and his partner had a child in 2023. The wife does not know the circumstances of the husband’s and his partner’s relationship and their finances.
The wife remarried in 2024. She and her partner have lived together since mid-2019. Her husband earns about $78,000 a year. The wife earns about $50,000 a year working in property development with her father.
The husband has not spent any time or spoken with the children since 27 November 2018. The wife’s post separation contributions to the parenting of the children are significant. X was diagnosed with autism spectrum disorder in late 2017 shortly after the parties separated. He requires various supports, and the wife takes him to his regular specialist appointments. X started attending O School in 2020. He is in year four and recently transitioned to a mainstream school. Y is in year two and is progressing well. He is in good health and is meeting his developmental milestones.
The husband paid the wife $50,000 by way of lump sum child support. That will not cover all of their expenses. It is well recognised that under the s.75(2) of the Act, child support does not compensate for all of the obligation sand sacrifices that a residential parent has with respect to the care of the children.
The wife will continue to have sole responsibility for the long-term decision making for the children’s care for many years to come without receiving any further financial support from the husband. The husband’s failure to provide disclosure and comply with Court orders, means it is impossible to know what his true financial position is. The wife’s income is relatively modest although she now has the support of her current husband.
DISCUSSION
The wife seeks that the husband pay her $200,000 and the parties otherwise keep what they have. I expressed concern that the husband had spent 90 days in gaol after not paying the $200,000. The wife’s Counsel relied on Chang & Su [2002] FamCA 156. In that case the husband had received a lump sum nine years earlier. The husband did not comply with his disclosure obligations. The wife’s Counsel drew particular attention to paragraph 70 which I will set out:
In Weir v Weir (1993) FLC 92-338;16 Fam LR 154 the Full Court (Nicholson CJ, Strauss and Nygh JJ) dealt with an appeal against the refusal by the trial Judge to make orders in respect of unascertained property because he could not quantify it. The Court said at 79-593:
"This Court has pointed out in a line of cases leading up to the recent decision of the Full Court in Black and Kellner (1992) FLC 92-287, that it is the duty of a party involved in property proceedings in this jurisdiction to make a full disclosure of their financial affairs. See also Giunti and Giunti (1986) FLC 91-759 , and Mezzacappa and Mezzacappa (1987) FLC 91-853 . It is clear enough from his Honour's findings in the present case that the husband had not done so and had in fact pocketed the proceeds of a substantial number of cash sales. It is obvious that in most cases of this nature it is difficult enough for the other party to establish that fact let alone establish the quantum of what has been taken.
It seems to us that once it has been established that there has been a deliberate non-disclosure, which follows from his Honour's findings in this case, then the Court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature.
It is true that in the case of Monte and Monte (1986) FLC 91-757, the Full Court said that to found jurisdiction under s. 79 in relation to property other than that which had been identified, the trial judge was obliged to make a finding as to the existence and value of other undisclosed property, even though the unsatisfactory nature of the evidence made it necessary to express that finding in the most general terms both as to identify and value.
We confess to some difficulty with this proposition. We should have thought that the Court's jurisdiction to make an order going beyond the identified property arises once there is sufficient evidence to support a finding that the party has not made a full disclosure of his or her assets.
The difficulty then arises as to what order should be made. However, we are troubled by the proposition which seems to arise from Monte and Monte that if a party is either cunning enough or vague enough to cover his or her tracks sufficiently to prevent a Court making a finding as to the amount that has not been disclosed, then the other party fails. We do not believe this to be the law and in so far as the decision in Monte and Monte supports such a proposition, we do not believe that it should be followed."
The wife’s Counsel submitted that the situation is similar here. There is clear evidence that the husband received the lump sum. He has failed to comply with his disclosure obligations and his bank account statements tendered and marked as Exhibits 4 and 5 at trial show him making various transactions including transferring funds to his partner. Counsel further submitted that the Court cannot be satisfied the money no longer exists taking into account the husband’s non‑disclosure and failure to explain what he allegedly did with the funds he received.
Carter J found that the husband had disposed of about $416,000 in six months and that the husband’s evidence as to how he spent the WorkCover monies was “evasive, inconsistent and unbelievable”. Carter J made the following observations at paragraphs 34 to 36:
34 Ordinarily the purpose of contravention proceedings is to coerce a respondent to comply with orders. However, if there is no prospect of compliance it could not be the case that the respondent’s breaches should be without consequence.
35 In this case, the respondent says he has expended all the funds and has no way of securing the sum of $200,000 from other sources to be paid into the applicant’s solicitors trust account. If he is correct, compliance may not be achievable. However, significant funds were transferred to the respondent’s partner. Whilst she was not joined to these proceedings by the applicant, it may be that by imposing a serious penalty on the respondent he may find a way to comply with the orders.
If I am wrong about that, and there is no possibility of compliance, I am still of the view that it is appropriate to impose a sanction as a punishment. His breaches are serious and significant such that whilst the application before me is brought pursuant to s 112AD, it could have been brought pursuant to s 112AP. The respondent’s contravention of the orders could be characterised as a flagrant challenge to the authority of the Court.
Her Honour further observed at paragraph 70:
The respondent did plead guilty. However, he only did that eight months after the application was issued, part way through the hearing, after the evidence had closed.
The wife’s Counsel also referred to the transcript of the special leave application in Chang & Su. The High Court refused special leave rejecting the appellant’s argument that the fact that the trial Judge ordered the appellant to pay a fixed sum from an unascertained pool as this was as a result of the appellant’s failure to adequately explain what he had done with the $4,500,000 he had received. Callinan J observed it cannot be right that a litigant can hide assets then limit the amount of the settlement. I accept the submissions of the wife’s Counsel that the authority Chang & Su applies. I am satisfied that the true asset pool cannot be ascertained.
The wife made significant contributions during the relationship including her initial financial contributions and undertaking the majority of the parenting and homemaking role. Her father also provided financial and non-financial assistance. Whilst the husband received his WorkCover settlement after the relationship broke down, his accident happened early in the relationship. It is incorrect to see the wife as making no contribution to his compensation payment.
There is a real possibility that the husband will not pay any funds to the wife. Her Counsel acknowledged this during submissions but urged the Court to make the orders sought by the wife. This is in recognition of her significant contributions during the relationship including providing the husband with emotional and practical support after his accident. It is not necessary for a party to establish to a specific asset.[2] Whilst the husband received his WorkCover settlement after separation, he was injured early in the relationship. Ordinarily a damages claim is treated as a contribution on behalf of the person injured early in the relationship. If damages awards include an element for care provided by the other party, that may be considered a contribution by them. Damages awards are quarantined or excluded from the pool.[3] I refer to paragraphs 51 and 52 of these Reasons where I referred to various percentages depending on whether I notionally added back $200,000 or $410,000. Considering the significant contributions made by the Wife during and after the relationship, where she has had sole responsibility for caring for the boys as well as the s.75(2) factors discussed above, I find that it is just and equitable to make the orders as sought by the wife that the husband pay her $200,000 and the parties otherwise keep the assets in their possession and control.
[2] See Dickons & Dickons [2012] FamCAFC 154.
[3] See Aleksovski v Aleksovski [1996] FamCAFC 111.
COSTS
The wife seeks the husband pay her costs of and incidental to these proceedings on an indemnity basis.
The Court has discretion as to whether or not to order costs. Section 117(1) of the Act provides that each party in family law proceedings shall bear their own costs. However, the Court retains a discretion to make an order as to costs as it considers just if there are circumstances that justify it doing so, having regard to the matters prescribed by s.117(2A) of the Act. Costs orders are not punitive in nature. In considering whether a costs order should be made under s.117(2A) the Court is to have regard to:
(a)the financial circumstances of each of the parties;
(b)whether any party to the proceedings is in receipt of legal aid;
(c)the conduct of the parties to the proceedings in relation to the proceedings;
(d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f)whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
(g)such other matters as the court considers relevant.
Not all of the factors listed will be relevant in each case. I will discuss the relevant factors below.
Financial circumstances of the parties
In regards to the wife’s financial circumstances, I refer to my Reasons above. The wife is currently employed as a full-time property developer. In accordance with her most recent financial statement filed 17 May 2024, the wife’s total weekly income is $1,215 which includes her salary of $962 and family tax benefit of $253. Her expenses exceed her income. The wife has re-partnered and receives financial assistance from her partner. The wife is privately funded by Sayer Jones.
As noted earlier in my Reasons, the husband’s financial circumstances are unclear. He has not filed material in the property proceedings since 2021. Vague statements that he makes in correspondence is not evidence. He has had the benefit of the $40,000 part-property settlement and funds received from his WorkCover settlement. I do not know whether or not the husband is working or the financial circumstances of his partner.
Even if the husband’s financial position is as he has claimed in the contravention proceedings, and I do not find that it is, the Full Court in Buckley & Buckley [2013] FamCAFC 150 reiterated the longstanding authorities that the impecuniosity of a party is not a bar to an order for costs being made where it is warranted. The husband has failed to adequately explain his financial circumstances.
Conduct of the parties in relation to the proceedings
I have referred to aspects of the husband’s poor conduct in the property proceedings. I am mindful that the contravention proceedings were separate to the property proceedings, and it is important not to penalise him further for his conduct in those proceedings as he has an outstanding costs order and was imprisoned. He has spent several months in prison and has a costs order made against him. The property proceedings were on hold for several months whilst the contravention proceedings were dealt with.
The continuation of these substantive proceedings has been necessitated purely by the husband’s inaction as a litigant. Compliance with orders is not optional. Counsel for the wife submitted that the husband has wasted the Court’s time and the husband’s actions show a blatant disregard and wilful disobedience to the Court process. He has breached multiple orders of the Court in the property proceedings including orders made by consent which he has failed to comply with including providing the oral undertaking to the Court on 21 October 2021.
The husband has been on notice of the final hearing date since he appeared in person before me at the directions hearing on 28 February 2024 where trial directions were made. He did not comply with these orders. His emails to my Chambers received a week prior to the final hearing are further examples of the husband attempting to intentionally delay proceedings and show his blatant disregard for the Court process.
Whether any party to the proceedings has been wholly unsuccessful in the proceedings
There are no further orders sought from the husband other than the orders outlined in his Response filed 22 November 2021. He sought to pay the wife $50,000 by way of Child Support which he has done and pay the wife $40,000 from the WorkCover settlement received. Whilst he has paid the child support payment, he has not paid any other sum to the wife. The husband has been unsuccessful in his application. The wife has been successful in her application to retain the property and receive the payment of $200,000 from the husband.
Do the circumstances justify the making of a costs order?
Unlike other civil proceedings, in family law the parties pay their own costs unless the Court is satisfied that there are justifying circumstances to depart from the position. I am satisfied that there are such circumstances given the husband’s conduct which has lengthened the proceedings. In considering the relevant factors and evidence before me, as detailed in these Reasons, I am satisfied that a cost order should be made in favour of the wife.
The next issue is the quantum of costs. Schedule 1 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021, sets out the scale of costs for family law matters. I have not been provided with the wife’s costs at scale. The scale is an events-based scale and does not always adequately reflect the costs incurred.
Indemnity Costs
The wife seeks indemnity costs for the property proceedings. Pursuant to Sheppard J in Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 the “category for indemnity costs are not rigid”. However, it has been stressed in many authorities that indemnity costs are a very great departure from the usual standard, noting that ordering costs at all is a departure from the norm. Indemnity costs should only be imposed in exceptional circumstances.[4] The circumstances are not closed.[5] Sheppard J outlined some examples which might justify awarding indemnity costs including:
(a)Where it appears that an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts;
(b)Evidence of misconduct that results in loss of time to the Court and to other parties; and
(c)Undue prolongation of a case by groundless contentions.
[4] See Kohan & Kohan (1993) FLC 92-340; Prantage & Prantage (2013) FLC 93-544.
[5] See Yunghanns & Yunghanns [2000] FamCA 681.
Indemnity costs are the entire amount of costs incurred provided they are not unreasonably incurred and not excessive. Her Honour, Carter J determined in the contravention proceedings that the matter did not warrant her discretion to order indemnity costs and instead ordered costs in the fixed sum of $20,000. At paragraph 81 of her Reasons, Carter J refers to the wife having equity of about $650,000. This is not correct. It is impossible to know if this influenced her decision regarding costs. She referred to the wife’s costs on scale as $16,946.05 plus Counsel fees of $9,981.90 and indemnity costs calculated at $32,471.59 for solicitors’ fees and $22,750 for Counsel’s fees.
The wife has incurred significant costs at the husband’s expense. The wife’s cost notice filed 28 June 2024 was tendered and marked as Exhibit 9. Since June 2021, the wife has incurred to date $146,101.29 in legal fees with a further estimated $27,200 unbilled for work in progress. This is a combination of the contravention proceedings and the property proceedings as recorded in Exhibit 9. Counsel for the wife submitted that the breakdown of the costs incurred for the property proceedings being $95,205 being $68,455 for solicitors’ fees and $28,750 on Counsel’s fees including the cost of Counsel to appear at the final hearing. The wife’s costs agreement was also tendered and marked as Exhibit 8. I did not receive any other information about the wife’s costs. I do not know what the figure is on scale.
The wife’s Counsel encouraged me to award indemnity costs referring to the contravention proceedings stating it was difficult to see what would justify indemnity costs if the husband’s conduct in the contravention proceedings did not. It is important to remember that the purpose of indemnity costs is not to punish but to compensate. The husband also spent several months in prison. There is a real possibility that the costs orders as well as the property orders will be difficult for the wife to enforce.
Conclusion on costs
It would not be justified to require the wife to have her costs assessed or taxed to calculate costs at scale which would involve further expenses for her. In the circumstances I do not think it appropriate to award indemnity costs. I can order a fixed sum. I am mindful of double counting. I do think costs should be awarded in a fixed sum of $50,000.
I certify that the preceding eighty-one (81) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Harland. Dated: 25 July 2024
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