Adcock & Sealy (No 2)
[2024] FedCFamC1F 123
•6 March 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Adcock & Sealy (No 2) [2024] FedCFamC1F 123
File number(s): MLC 6991 of 2022 Judgment of: MCNAB J Date of judgment: 6 March 2024 Catchwords: FAMILY LAW – PROPERTY - De facto relationship - where the relationship is of short duration -where credit findings are made against the applicant -where the quantum of the asset pool is substantial -where the applicant has not made any substantial financial contribution - where the standard of living that has been enjoyed by the applicant during and after the relationship is by her own admission irresponsible and problematic -where it would not be reasonable to factor into orders the continuation of that lifestyle – where the contributions made by the respondent to the applicant and her children largely satisfy any claim that the applicant has- where property has been purchased in joint names but where the funds have been wholly supplied by the respondent- where an order is made transferring the applicant’s interest in the property upon a payment being made by the respondent. Legislation: Family Law Act 1975 (Cth) ss 75(2), 79, 90SE, 90SF, 90SM, 121
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) 10.13, 10.14
Cases cited: Aroney and Aroney (1979) FLC 90-709
Carmel-Fevia & Fevia [2010] FamCA 502
Carmel-Fevia & Fevia (No 3) [2012] FamCA 631
Guthrie & Ruston [2009] FamCA 1144
Hickey and Hickey and the Attorney-General for the Commonwealth of Australia (Intervenor) (2003) FLC 93-143
VAK and AK [2005] FamCA 803
W& W (1980) FLC 90-872
Division: Division 1 First Instance Number of paragraphs: 95 Date of last submission/s: 1 November 2023 Date of hearing: 30 – 31 October 2023, 1 November 2023 Place: Melbourne Counsel for the Applicant: Mr A Berger KC Solicitor for the Applicant: Farrar Gesini Dunn Counsel for the Respondent: Mr G Dickson KC with Mr K Ryan Solicitor for the Respondent: Westminster Lawyers Pty Ltd ORDERS
MLC 6991 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS ADCOCK
Applicant
AND: MR SEALY
Respondent
ORDER MADE BY:
MCNAB J
DATE OF ORDER:
6 MARCH 2024
THE COURT ORDERS THAT:
1.The Amended Initiating Application of the applicant filed 12 October 2023 be dismissed.
2.The applicant forthwith do all acts and things necessary to transfer (“the transfer") to the respondent, at his expense, all of her right, title and interest in the real property situate at and known as N Street, Suburb B ("N Street").
3.Within 60 days from the date of this order, being 5 May 2024, the applicant vacate N Street.
4.Contemporaneously with the transfer the respondent indemnify the applicant with respect to all liabilities encumbering N Street as and when they fall due.
5.Within 60 days from the date of this order, being 5 May 2024, the respondent pay the applicant the sum of $750,000.
6.The respondent cause Motor Vehicle 1 to be transferred to the applicant and that the applicant retain Motor Vehicle 1 vehicle which she is currently in possession of.
7.Unless otherwise specified in these orders and except for the purposes of enforcing the payment of any money under these or any subsequent orders:
(a)each party shall be solely entitled to the exclusion of the other to all property (including choses-in-action) in the possession of such party as at this date;
(b)monies standing to the credit of the parties in any bank accounts to be the property of the party in whose name such bank account is held save for any joint account in which funds are to be divided equally and the parties do all acts and things to close such joint accounts;
(c)each party hereby foregoes any claims they may have to any superannuation benefit to or owned by the other;
(d)insurance policies remain the sole property of the beneficiary named thereon;
(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 orders made; and
(f)any joint tenancy is expressly severed.
8.Each party otherwise retain all assets and liabilities in their respective names and/or possession.
9.Any application for costs be made in accordance with the Rules of the Court.
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).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish 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 s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
McNab J
INTRODUCTION
The applicant in this matter is 56 years of age and the respondent is 67 years of age. The respondent has significant financial interests in a commercial industry. The applicant is not employed and has not been engaged in paid work since the 1990s when she ran a business in the United Kingdom.
The applicant alleges that she and the respondent commenced co-habitation in a de facto relationship in about April 2016 and separated in October 2021. The respondent contends that the relationship did not commence until 2019 and that from 2016 – 2019 the parties were in a relationship of boyfriend and girlfriend. Both parties agree that the relationship concluded in October 2021. Neither party contends that they were not in a de facto relationship and that the Court does not have jurisdiction to deal with the matter.
The parties met whilst in Europe in 2015 whilst they were in relationships with other people. The applicant’s partner at that time was Mr O (who was also involved in a commercial industry).
The parties started seeing one another in about early 2016. At that time, each of the parties were still in relationships and the applicant was residing in a house in Sydney that she had shared with Mr O. The respondent resided in a property in Melbourne.
In early 2016, the respondent concluded his relationship with his then partner. An intimate relationship commenced with the applicant in early 2016 and the applicant attended the respondent's birthday celebrations in Victoria as his new girlfriend. In mid-2016 the parties travelled to Europe together and the relationship continued.
In late 2016, Mr O became aware of the relationship between the parties and required the applicant to vacate the property where the applicant had been living. The applicant says that she was engaged in negotiations regarding property settlement with Mr O and she also says that during those negotiations "big burly men showed up at the [Suburb R] property at unsociable hours that caused me to feel intimidated.”[1] The respondent gives evidence that the applicant told him that she had moved out of the house after a "violent and threatening eviction" involving people who had been sent to intimidate her and that she had no funds as she was involved in a court case with Mr O. She asked the respondent to help her.
[1]Applicant, Trial Affidavit at [26].
The applicant says that the respondent encouraged her to resolve matters with Mr O and that he would look after her and her two daughters who were then in Grade 5 and 7 at school. The respondent denies having any role in encouraging any financial settlement with Mr O.
In late 2016, the applicant received $700,000 as a first instalment of a marriage settlement from her former husband Mr O. This payment was not disclosed to the respondent.
In early 2017, the applicant received $200,000 as an instalment of a settlement payment from Mr O. This payment was not disclosed to the respondent. A short time later, a further instalment of a settlement payment in the sum of $200,000 was paid to the applicant by Mr O. This payment was not disclosed to the respondent.
In early 2017 the respondent rented a house in Suburb M, Sydney with the applicant paying the initial deposit and the respondent paying the ongoing rental costs of $3,500 per week which were paid in advance for 18 months. The lease was in the applicant’s name. When that lease expired in mid-2019, he paid for a further 12 months in advance at $3,000 per week.
From early 2017 until early 2020 the applicant lived in Sydney with her daughters at the Suburb M accommodation and the respondent visited to stay with them. In 2017 – 2018 the respondent visited the applicant about once every 2 - 4 weeks for three days at a time and occasionally the applicant would travel to stay with the respondent in Melbourne.
During this time, they enjoyed holidays together with the respondent paying for the majority of travel and the applicant paying for a number of holidays including overseas in mid-2017 and early 2018.
The parties enjoyed luxurious travel together, staying in first-class accommodation and with business and the occasional first-class air travel. The applicant was staying in a beautifully furnished rental accommodation, which furnishings and accommodation had been paid for by the respondent.
In late 2018 the parties purchased a property in Suburb P, Sydney for the sum of over $8,000,000. The funds were contributed wholly by the respondent. The property was purchased in both parties’ names. The respondent says that he did so because the applicant insisted that it be bought in both names as joint tenants – he claims that the applicant "flipped out” when he discussed buying the property in his name as an investment property. She denies this. Whatever the case may be, the property was bought in both their names.
The purchase of that property settled in early 2019 and the property was tenanted until early 2020. A month later, the applicant moved into the Suburb P house. Melbourne was the subject of Covid lockdowns from 31 March 2020 to 12 May 2020 and from 9 July 2020 to 27 October 2020. In April 2021 the parties decided to sell the Suburb P property and settlement of the sale took place in mid-2021. The sale price was $16 million.
Following the sale of the Suburb P property, the applicant moved to live in the respondent's property in Suburb C. A decision was made to purchase a substantial house in Suburb B in Victoria for the sum of $13,500,000. The proceeds of the sale of the Suburb P property were applied to the purchase price of the Suburb B property plus purchase costs which totalled just under $16,000,000. The respondent paid all rates, mortgage and utility costs for the Suburb P and Suburb B properties. After the applicant moved from Sydney to Melbourne in mid-2021 the parties lived together for about three months and separated finally on 10 October 2021. That separation occurred prior to the settlement of the Suburb B property.
The respondent gave unchallenged evidence that included holidays and as a percentage of time over the course of the years, the respondent estimated parties spent time together as follows:
(a)2016 - 14%;
(b)2017 - 25%;
(c)2018 - 30%;
(d)2019 - 23%;
(e)2020 - 15%;
(f)2021 - 17%.
The respondent also gave evidence that prior to the last three months of the relationship, outside of holidays, the most time that the parties had spent together was five consecutive nights. This evidence was not challenged.
Since separation the applicant has resided in the Suburb B property and the respondent has covered all mortgage and utilities and outgoings on the property save for some relatively minor expenses paid by the applicant.
EVIDENCE
The applicant relied on:
(1)Amended Initiating Application filed 12 October 2023;
(2)Applicant’s trial affidavit filed 13 October 2023;
(3)Affidavit Ms Q filed 23 October 2023;
(4)Applicant’s affidavit in reply filed 24 October 2023;
(5)Applicant’s Summary of Argument filed 26 October 2023;
(6)Financial Statement filed 26 October 2023.
The respondent relied on:
(1)Amended Response to Initiating Application;
(2)Respondent’s trial affidavit filed 9 October 2023;
(3)Financial Statement filed 9 October 2023;
(4)Respondent’s affidavit in reply filed 23 October 2023;
(5)Respondent’s Outline of Case filed 26 October 2023.
PROPOSALS OF THE PARTIES
The applicant seeks substantially:
(1)To retain the Suburb B property at N Street, Suburb B (“the Suburb B property”) in specie.
In the alternative the applicant seeks:
(1)Sole occupancy of the Suburb B property.
Payment
(2)That within 60 days of these orders and contemporaneously:
(i)the applicant pay to the respondent the sum of $2,000,000 as a settlement sum;
(ii)the respondent transfer to the applicant all of his interest in the Suburb B property;
(iii)the applicant repay to ANZ the full amount owing against loan account numbered …39 (“the Suburb B loan”);
(iv)the parties do all acts and things necessary to discharge ANZ mortgage against the Suburb B property;
(v)the respondent cause Motor Vehicle 1 to be transferred to the applicant.
(3)That until the due date (property is with applicant) the respondent meet all outgoings on the Suburb B property including:
(i)all loan repayments;
(ii)rates, insurance and utilities;
(iii)reasonable gardening, lawn mowing and general maintenance including of the pool and tennis court.
The applicant also seeks a number of chattels including recreational equipment, artwork and greeting cards and letters.
The respondent seeks:
(1)That the Initiating Application of the applicant be dismissed.
(2)The applicant forthwith do all acts and things necessary to transfer (‘the transfer”) to the Respondent, at his expense, all of her right title and interest in the real property situate at and known as N Street, Suburb B (“N Street”).
(3)That contemporaneously with the transfer the respondent indemnify the applicant with respect to all liability encumbering N Street as and when they fall due.
(4)The applicant forthwith make available for collection Motor Vehicle 1.
(5)That unless otherwise specified in these orders and except for the purposes of enforcing the payment of any money under these or any subsequent orders:
(a)each party shall be solely entitled to the exclusion of the other to all property (including choses-in-action) in the possession of such party as at this date;
(b) monies standing to the credit of the parties in any bank accounts to be the property of the party in whose name such bank account is held save for any joint account in which funds are to be divided equally and the parties do all acts and things to close such joint accounts;
(c) each party hereby foregoes any claims they may have to any superannuation benefit to or owned by the other;
(d) insurance policies remain the sole property of the beneficiary named thereon;
(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 orders made;
(f) any joint tenancy is expressly severed.
CREDIT FINDINGS
Whilst I am loath to make findings about the credit of parties or witnesses unless necessary, this is a case where credit is an issue. Parts of the evidence of the parties diverged significantly and require determination and that involves an assessment of the witnesses’ evidence and their demeanour. The applicant was unimpressive as a witness. I do accept that at times she was nervous and like most litigants was experiencing stress. However, the applicant was extremely scattered in her responses, was often unable to answer simple questions and would spend much of the time trying to justify or equivocate rather than answering questions in a direct way.
At times the applicant blamed her inability to answer questions on the effects of alcohol or as a result of mental health conditions, in particular ADHD.
No medical evidence was tendered at trial in relation to the applicant which might explain:
(a)her apparent lack of capacity to remember events;
(b)her inability to explain her conduct, in particular pawning jewellery to obtain funds when she was apparently low on funds;
(c)her failure to disclose documents and the receipt of significant funds from Mr O until shortly before the hearing; and
(d)her compulsive and extravagant spending.
The respondent gave measured and considered responses in cross-examination and made concessions where appropriate.
Where there is a conflict between the evidence of the applicant and the respondent, I prefer the evidence of the respondent, both in relation to evidence given at trial and in relation to the evidence given by affidavit.
Another aspect of the applicant's conduct which raises issues in relation to her credit is the fact that, at a very late stage in the proceeding, at the time of filing her trial affidavit, she raised allegations of drug abuse by the respondent, mental health issues allegedly experienced by the respondent and what she perceived as an unhealthy relationship between the respondent and his daughters.
I gained the strong impression that these were matters raised to try and embarrass the respondent and to gain some advantage in this litigation. That conduct was unwarranted.
The Approach to Property Proceedings
In the leading case of Hickey and Hickey and the Attorney-General for the Commonwealth of Australia (Intervenor) (2003) FLC 93-143, the Full Court held at [39] that, in considering the matters set out in section 79(4) of the Act and by analogy section 90SM(3) and (4) of the Family Law Act 1975 (Cth) (“The Act”) the preferred approach was to adhere to the following four steps:
(a)Identify and determine the value of the asset pool of the parties as at the date of the hearing (this necessarily involves identifying both the assets and liabilities);
(b)Identify and assess each of the parties’ financial and other contributions up until the date of the hearing (this can include the financial contributions made before, during and after the marriage);
(c)Assess how future and other events may have a financial impact on either of the parties, such as their age and state of health and their income and property or financial resources (known as the s 75(2) factors); and
(d)Step back and examine this formula-based reasoning against the history of the marriage, intangible considerations and other contingencies so as to consider whether the outcome represents a just and equitable result.
Whilst the assessment and contributions and how they are apportioned usually should be expressed in percentage terms, see VAK and AK [2005] FamCA 803 (cited in Guthrie & Ruston [2009] FamCA 1144 per Murphy J at [123]), there is nothing in the Act or in any authority that mandates that approach.
At [41] of Carmel-Fevia & Fevia [2010] FamCA 502 Cronin J said, after referring to [123] of Guthrie & Rushton:
Whilst the preferred approach may be one of using percentages, it does not follow that in every case, it will lead to a just and equitable outcome. The focus must really be upon the value to be received. That does not mean that proportionality is irrelevant. It may be that in many if not most cases, proportionality in its various forms is a way of stepping back and deciding that the outcome is just and equitable.
In high wealth cases the precision of the evaluation becomes less of a requirement both in terms of identification and quantification of the asset pool and the allocation of a percentage of the asset pool when assessing contributions. As was noted in Carmel-Fevia & Fevia (No 3) [2012] FamCA 631 at [46]:
It must be noted that the approach is not a statutory requirement. In this case, one percentage point amounts to $4.34 million. The use of percentages obscures what the Court is really asked to do which is to evaluate and give a dollar figure to what is an award or acknowledgement for the things done (rather than the things achieved) by the contribution. Trying to apportion contributions on a percentage basis still requires the Court to look at the underlying value.
QUANTUM OF THE ASSET POOL
The husband estimates the asset pool at $76,972,099 being assets of $111,325,395 and liabilities of $34,353,296. The applicant's summary of argument[2] contends that the value of the asset pool is $96,410,710. This was said to include the value of the respondent's entitlement under the estate of his late mother in the sum of $7,492,304.
[2]Court Book (“CB”) 1465 – 1468.
In closing oral submissions, senior counsel for the applicant stated:
I will say very little about the value of the asset pool, it's somewhere between $70 – $90 million.
Shortly later senior counsel stated that the court did not have to make a precise finding about the extent of the asset pool but urged that it was at the higher end (of the $70 – $90 million range). Senior counsel did state (after making reference to the evidence of Ms Q whose evidence was admitted but was to the effect that she could not determine exactly the value of the respondent's business interests):
now, whether it's $78 [or] $82 million, we say ultimately does not make a huge difference, but it does remind Your Honour of the significant size of the property pool and, we say, should remind Your Honour not to assess contributions and section 75(2) factors in a way that having regard to that size and the financial position and the extremely secure financial position of the respondent in the future, is inadequate in light of that.
I find the business and real estate assets to be roughly in line with the amounts contended for by the respondent and they are about $80 million net.
CONTRIBUTIONS
The applicant submits that her contributions are as follows.
(1)Financial Contributions
(a)the applicant received lump sum payments from third parties between December 2016 – December 2017 in the total sum of $2,792,130;
(b)these monies were spent on living expenses during the relationship. The respondent benefited from that both directly and by needing to provide less financial support to the applicant than he otherwise would have.
(2)Non-financial Contributions
(a)the applicant made substantial non-financial contributions with respect to the development of the parties’ jointly owned property in Suburb P;
(b)the applicant also took care of problems arising from the tenancy of the Suburb P property;
(c)the applicant contributed to yielding the sale price of the Suburb P property via direct contact with the purchasers;
(d)the applicant's non-financial contributions with respect to the Suburb P property facilitated the realisation of a profit of $7,625,000 on that sale and enabled the respondent to focus on his business pursuits.
(3)Contributions to Welfare of Family
(a)the applicant put considerable effort into domestic duties to the benefit of the respondent's welfare;
(b)the applicant provided the respondent with emotional and personal support by:
(i)encouraging the respondent to cease consumption of illicit drugs;
(ii)alleviating adverse health symptoms suffered by the respondent while under the influence of illicit drugs; and
(iii)counselling the respondent in relation to the personal and business issues that troubled him.
The respondent has established by evidence comprising financial records which were the subject of concessions that the applicant has received the benefit funds in the sum of about $2,377,300 from the respondent during the course of the relationship (see Exhibit R3 and the documentation supporting those summaries). I excluded the sum of $75,000 which was said to be buyers’ advocate fees on the purchase of the Suburb B property, as they are not a benefit received by the applicant.
It is notable that between late 2018 and mid-2021 the respondent paid the applicant's daughters’ school fees or otherwise provided funds to the applicant's daughters in the sum of $327,386.50. This is in circumstances where the applicant's children had a father who stepped in to pay school fees once the relationship ended and where the applicant had received cash payments of about $2.8 million during 2016 and 2017 from the father of her children and her former partner Mr O. The respondent gave evidence (which I accept) that he was unaware of those payments until June 2022 when he became aware of them in the course of these proceedings. The payment of these very substantial school fees were made in circumstances where the respondent has adult daughters and grandchildren.
The respondent paid health expenses for the applicant to attend a health clinic in Country S which expenses were in the sum of $125,000.
Whilst some of the $2.8 million that she received from third parties was spent on travel, and the applicant gives evidence that she spent about $300,000 of her money on travel, it was also the case the respondent paid money to the applicant's account to cover her travel expenses. He gives evidence of transferring $250,000 between October 2017 and November 2018 for this purpose.[3] Further, it is not clear the extent to which that expenditure by the applicant was enjoyed by the respondent. The respondent gives evidence that whilst the applicant paid for some holidays for her and her daughters and parents, he often paid his own way. She did pay for a number of the holidays they enjoyed.
[3]CB 1505 at [46] – [47].
In the period between April 2021 and October 2021, the applicant withdrew $480,000 from a joint offset account which included $80,000 withdrawn in October 2021. Those funds were all supplied by the respondent and were withdrawn without his knowledge or consent.
The vast bulk of the funds received by the applicant in 2017 and 2018 were wasted. The evidence showed that after the applicant had received $1 million in May 2017 paid by Mr O, by June 2017 that sum was reduced to $639,000 showing that she spent $337,000 in a month. By July 2017 that sum had reduced to $309,000 and by August 2017 to $71,000. In the midst of this period when she was spending money at that rate, she was also pawning jewellery and paying exorbitant rates of interest to redeem the jewellery pawned. In 2018 within 10 days of receiving $790,000 from her former husband, that sum had reduced to $330,000 and by mid‑2018 her account was overdrawn. In reasonably short periods of time the applicant spent funds of about $98,000 on practitioners on telephone calls. The applicant in her evidence said that she regarded this as a form of counselling.
In November 2021 the applicant received $200,000 from the respondent and by the end of December 2021 her bank balance stood at $28,000 showing that she had spent $200,000 in a month. In cross-examination the applicant accepted that she, in addition to receiving payments of about $2,377,300 from the respondent, had access to a credit card on which she had spent $280,000 through the course of the relationship. She had also received rent from the Suburb P property when it was rented in the sum of $70,000. It was put and not disputed by the applicant that she had received the benefit of $3,703,387 in the course of the relationship (see Transcript of Proceedings, 30 October 2023, page 85 line 35). She has continued to live in the Suburb B property rent free since separation with the respondent paying the interest on the approximately $4.8 million mortgage and outgoings.
I do not accept that the funds received by the applicant from third parties can be viewed as a contribution on the basis that if she had not received those funds the respondent would have had to paid more to support the applicant. Had the respondent been aware of the receipt of the payments the applicant had received and been aware of her spending habits, I assume that he would have stepped in to bring either the spending or the relationship to an end at an earlier point. Much of the applicant’s spending was irrational and she was incapable of explaining much of it during the course of her giving evidence before the Court. For instance, there is evidence that shortly after the conclusion of the relationship the applicant paid $80,000 to a real estate agent in Suburb R, Sydney for the purposes of renting premises to accommodate her daughters. This was done at a time when her daughters were living in Melbourne. The applicant was incapable of explaining how and why that was a sensible and necessary expenditure. When asked to comment on that transaction, senior counsel for the applicant was unable to advance any rationale that might explain the expenditure.
In addition to paying rent for a property in Sydney whilst her daughters were residing in Melbourne, the applicant was also paying a nanny what appears to be regular payments of $5,000, and again there is no explanation as to whether that person has ever done any work as a nanny for the children and why it was necessary to spend what in ordinary terms are quite substantial sums of money.
In the applicant’s sworn financial statement dated 26 October 2023 the applicant estimated her personal weekly expenditure at that date at $18,000 per week. The financial statement shows that she does not have any expenditure on the cost of housing, rates, insurance, motor vehicle registration or loan repayments so this is entirely personal expenditure.
In relation to the non-financial contributions to the development of the Suburb P property, senior counsel for the applicant in closing submissions submitted the following:
My learned friend has accepted there was clearly some work done on it in light of the extensive correspondence we have tendered to Your Honour, and I don't intend to take Your Honour through each and every email, but Your Honour might spend five minutes, in preparing a judgement flipping through it, and one will see it's not the applicant being a pain in the ‘you know what’ and annoying all these people.
It is making significant contributions to the plans to develop and landscape the house and attending meetings with architects, meetings with consultants and other experts, providing information discussing concepts, choosing products discussing pros and cons and all these sorts of things which the respondent might wave his hand at but, if the applicant hadn't done it, one of two consequences would arise: either he would have had to have done it… he would have had to have paid someone else a significant amount of money to have done that – and yes, there were paid consultants, paid architects, paid landscapers etcetera, but somebody still had to make the decisions and decide what's going to happen and do other things to facilitate that.[4]
[4]Applicant’s Closing Submissions, 1 November 2023, page 17, lines 30 – 46.
In deference to the fact that the parties have spent a combined total of $862,666 on legal fees to bring this matter to trial, I have spent more than five minutes reading the documents tendered in relation to the emails between the applicant and various architects and contractors. The applicant did liaise with architects who were pitching for work to renovate the Suburb P property and she did have communications with landscapers and tradespeople who did work on a retaining wall and on associated landscaping works. In much of the correspondence the respondent is also copied in, it is apparent that he had involvement in works that were performed which were ancillary to the landscaping works. No expert evidence has been placed before the Court as to the value of any contribution made by the applicant in relation to the Suburb P property. It is noted that a building approval was obtained, however I was not taken to it in any detail as to the scope of works for which approval was obtained and I received no detailed submissions about the scope of the applicant's work in obtaining planning approval (in circumstances where professionals were engaged to obtain the approval) or the increase in value to the property obtained as a result of the grant of the building approval.
It is accepted by the respondent that the applicant did meet with the purchasers of the property but that does not sound as a contribution of any significance.
As to the applicant's contribution to taking care of problems arising from the tenancy of the Suburb P property, no submissions were made in relation to that, in particular the extent of the problems and how that sounded as a contribution. Professional agents were engaged to manage the property.
I do not accept that the applicant’s non-financial contributions in relation to the Suburb P property facilitated the realisation of a profit of $7,625,000 or that the respondent was able to spend substantially more time on his business interests because of any of those contributions.
As to the contributions to the welfare of family, the applicant did furnish the rental property where she lived in Sydney luxuriously and she cooked excellent healthy meals for the respondent and his daughters when they visited (although I do not get any sense from the evidence that she engaged in any corporate entertainment in that property or in any property). The applicant did not meet the respondent’s business partners. The parties spent much of the time during the period either on holidays or living apart and whilst a contribution was made, it is not of the order as contended for by the applicant.
As to the submission that the applicant provided the respondent with emotional and personal support by encouraging him to cease consumption of illicit drugs, I note that this is an allegation raised for the first time in these proceedings by the applicant's trial affidavit sworn 11 October 2023. No reference is made to it in two previous affidavits filed by the applicant in these proceedings. I accept the respondent's evidence that he used illicit drugs socially on occasion and including on occasion with the applicant. I do not accept that the applicant spent significant time providing emotional or personal support to the respondent to deal with alleged drug problems.
Further, I do not accept that the applicant engaged in counselling in relation to personal or business issues that troubled him, and I accept his evidence that he was not a person with major psychological distress as a result of events in his childhood or youth. It is noteworthy given the quantum of the claim made by the applicant there has been no request done for hair follicle testing or subpoenaing of health records which might reveal issues associated with drug abuse or mental health issues raised by the applicant. The respondent described in his evidence a happy relationship with his children and grandchildren and family.
The applicant gave evidence of her issues with alcohol and the problems that had caused her in the relationship with the respondent. She described the effects of drinking as ongoing and that it had caused her to behave in an abusive way towards the respondent at times in the course of the relationship. Her realisation of that is set out in correspondence annexed to her affidavit.
The applicant also claimed as a financial contribution assistance that she gave to the respondent in improving his wardrobe. There is no substance to this claim. Photographs of the parties when they commenced their relationship show the respondent as well dressed. He does not present as a rough diamond who was subject to improvements urged by the applicant and amongst the many photographs referred to, there were no “before” and “after” photographs that showed an improvement in appearance. I was not referred to evidence that the applicant spent her funds (or the respondent’s) on clothes and accessories for the respondent.
Since separation the applicant has continued to reside in the Suburb B property with the costs of the mortgage repayment and the running of the house (which costs are substantial) of that being met by the respondent. The most substantial outgoing cost which the respondent is meeting is the interest only mortgage on the property.[5]
[5]Respondent’s closing submissions, 1 November 2023, page 3, lines 18 -40.
Running costs of the Suburb B property from the time of separation in October 2021 to the time of trial in October 2023 are in excess of $200,000. Council rates are noted to be at least $30,175.10,[6] the gas bills some $4,638.21,[7] water rates $6,003,[8] and electricity $23,990.91[9] When asked about the costs of electricity given that the applicant’s daughter had been at boarding school since March 2023, leaving the applicant living alone (apart from when her daughter comes home on weekends) the applicant responded:
I live there officially on my own, but I have [many] blood relatives in the area, and I’m often looking after my husband’s children, and I have a – a cousin in Melbourne, – she comes and stays once a week to play tennis, and so I – our house is often – I have guests, and my parents visit.[10]
(Emphasis added)
[6]Respondent’s Tender Bundle (“RTB”), page 1425 showing council rates for February 2023 and Transcript of Proceedings, 31 October 2023 (“Transcript”), page 6 lines 26 – 33 noting these are part-paid council rates.
[7]RTB page 1423 shows gas bill for 19 months at $3,671.92, so 24 months $4,638.21.
[8]RTB page 1424 and Transcript, page 5, lines 27 – 43, page 6, lines 15 – 24
[9]RTB page 1426 – 1427 at 19 months to be $18,992.81 so 24 months $23,990.91.
[10]Transcript, page 6, lines 42 – 45.
Counsel for the respondent put to her that the electricity figures were “pretty scary, aren’t they” and the applicant agreed.[11]
[11]Transcript, page 8, line 20.
Maintenance of the property is estimated at some $172,000 based on the respondent’s costings of around $86,000 over a year[12] with general maintenance around $48,886.39[13] and pool maintenance $7,910.30 annually.[14]
[12]RTB, page 1428 and Transcript page 9 lines 44 – 45.
[13]RTB, page 1428.
[14]RTB, page 1428.
During this time period the applicant’s contribution to the upkeep of the place has been $9,000 to get some trees cut, [15] for which she asked the respondent to pay half and she said he “ignored” her request.[16] It is plain that the applicant has enjoyed substantial benefits by being able to remain in the property.
[15]Transcript, page 32, line 23; see also page 9 lines 33 – 34.
[16]Transcript, page 11, lines 1 – 2.
The applicant did make contributions to the relationship between the parties and that is evident in the support and comfort that she gave the respondent in holidaying with him and being in a relationship with him. Such was the respondent’s affection for her, he purchased successive expensive properties in joint names without her contributing any funds towards their purchase. If he placed the properties in joint names because the applicant demanded that he do so, he was prepared to do this for the sake of the continuation of the relationship which he plainly valued.
The applicant did take an interest in the works at the Suburb P property and its proposed development and did liaise with architects and designers. However those contributions were not of the order claimed by the applicant. I do not accept that the applicant has made any substantial contribution either financially or non-financially to the acquisition of assets during this short relationship.
Section 90SF Factors
The applicant gives evidence that she has not re-partnered, that she is not engaged in paid employment and that she has the sole care of a daughter S who is currently in Year 12. She does not have any formal qualifications and has not engaged in paid employment since about 2000.
The applicant gives evidence that she had at one time had successful businesses in the United Kingdom. In terms of her health, she states that she has been diagnosed with ADHD and experiences anxiety as a result of "experiencing a near-death experience when I was undergoing […] treatment in 2018".[17] She says the anxiety has been exacerbated as a result of the breakdown of a relationship with the respondent. She says that she is prescribed medication to assist with that anxiety although it dulls her mental acuity to the point of being unable to drive or perform ordinary daily tasks. No medical evidence was produced to support those claims in her evidence however it was not challenged.
[17]Applicant’s trial affidavit at [211], CB 55.
The applicant says that she wishes to retain the Suburb B property so that she can open a business to be operated at it. She says the Suburb B property is large enough to accommodate three or four guests at a time for residential programs and that she intends to hold events for those interested in shorter experiences. She states:
I still have contacts from my time in business in [the United Kingdom] who I intend to call upon to spread the word to attract clients and staff and assist with obtaining finance for the business. I expect it would take approximately two years to get it up and running from when I get my anxiety under control. I hope to get my anxiety under control following the conclusion of these proceedings.
She says that the Suburb B property is proximate to a number of family members whom she has developed a good relationship with.
As to her capacity to take on the Suburb B property she says that she has had discussions with a mortgage broker regarding her borrowing capacity, that it will take a couple of years for a business idea to get off the ground and that she will need money to invest into it and that it will need money to support itself until it becomes profitable. She has been told by a mortgage broker that if she became the sole proprietor of the Suburb B property and could offer it as security for a loan then she should be able to borrow several million dollars with no periodic repayments "i.e. the principal and interest would be payable as one lump sum at the end of the term of the loan.” No evidence was called to verify these assertions.
The applicant’s evidence in relation to this proposed venture involving the Suburb B property was confusing. In the course of cross-examination the applicant was asked whether the Suburb B property would remain as a home or whether she had other plans including whether she was going to turn it into some commercial operation and her response was: “no, I can’t turn it into a commercial operation no not a commercial operation I’ll be doing […] there.” When asked whether she had investigated whether planning approval was required to run the business […] again there was no conclusive answer given as to what planning permit was required if any. The overall impression of the applicant’s evidence regarding this scheme was that the ideas are almost entirely undeveloped.
Since separation the applicant has had access to funds from her sister. The applicant alleges that the monies from her sister which are in the sum of about $340,000 paid since separation until about February 2023 and are in the nature of a loan however, there was no evidence from the sister as to the terms of the loan or when it is repayable.
The applicant in her latest financial statement states under Part O of that document (at CB 1480) that:
a friend has paid me the total sum of $420,000 between 19 May 2023 and 16 October 2023 to assist with my and my daughters’ living expenses pending the resolution of these proceedings. This is an ad hoc, informal arrangement as a stop-gap measure with no expectation of continuity.
It was revealed in evidence that the source of those funds was Mr O. The bank records produced by the applicant show that since the receipt of funds from Mr O the applicant’s spending at extravagant levels has continued unabated. Those funds were largely depleted at the time of hearing.
Submissions were made by the applicant that in assessing future needs I should take into account the standard of living enjoyed by the applicant and the respondent during the course of their relationship and that it was against those standards that I should determine the future needs of the applicant.
I find the standard of living that has been enjoyed by the applicant over the very short relationship is entirely artificial and her expenditure by her own admission is irresponsible and problematic. It would not be reasonable to factor into orders consideration of the continuation of a lifestyle which includes the reckless and compulsive spending engaged in by the applicant. The respondent gave evidence by his financial statement that his personal expenditure was about $2,500 per week.
In Carmel-Fevia & Fevia (No 3) [2012] FamCA 631 (“Carmel-Fevia”) the net assets of the parties were approximately $435 million. Their relationship lasted approximately 6.5 years. The applicant submitted that the following matters may be taken from that judgment as regards 90SF factors:
(a)in a high wealth case s 75(2)(g) is an important aspect of the adjustment process, providing that in determining a just and equitable outcome, the Court must take into account the parties' past lifestyle for the purposes of endeavouring to achieve a standard of living for both of them that in all of their particular circumstances, is reasonable; [157]
(b)what is reasonable for this purpose 'is a relevant concept that must be judged in the light of the standard of living to which the parties were accustomed during marriage': [157], citing Nygh J in Aroney and Aroney (1979) FLC 90-709;
(c)if, as part of an agreed relationship, a certain lifestyle is the norm, then subject to financial capacity to continue it, there is no reason to terminate it as 'the commitment was made to the relationship and the lifestyle came with it. The use of the word "reasonable" is intended to make clear that if the continuation of that lifestyle can no longer be afforded, it is only reasonable to make an adjustment;' [161]
(d)it was not appropriate for the Court to descend into minute detail but rather to take a broad-brush approach guided by the way in which the parties lived together in the circumstances; [178]
(e)there was no reason why the wife should not have the benefit of a standard of living judged by the benchmarks set by the husband during the marriage and this created an entitlement to a continued affluent life; [179]
(f)the case could not be judged by reference to community standards, having regard to the lifestyle to which the parties were and are accustomed; [180]
(g)what the wife did with her money was a matter for her; [180]
(h)what s 75(2)(g) is intended to do is ensure that a fair outcome is achieved having regard to the commitment that the parties made together when they commenced their relationship; [182]
(i)the wife should be able to re-establish her financial security in the future with some confidence [182].
That submission accurately records Cronin J’s views in relation to that case but I do not regard the applicant’s case as analogous. In that case the parties had been together for about 6.5 years. The parties had two children. The husband had three children from his previous marriage who were young and had health issues which were very challenging. The wife in that case provided significant care to all the children.
I do not accept that the applicant’s lifestyle was reasonable even when viewed against the assets and financial capacity of the respondent and she accepted that this was the case when cross examined. The applicant has not given estimate as to the funds necessary to satisfy her future spending to maintain what she regards as a reasonable lifestyle.
Given the applicant’s proposal of a payment of $2,000,000 to the respondent and to pay out the mortgage on the Suburb B property, currently standing in the sum of about $4.8 million, it does raise questions as to what support she does have in order to put a proposal to pay out those liabilities and pay the respondent. The effect of the proposal is that the applicant would keep about $6.5 million worth of equity in the property. When considering the length of the relationship, the contributions made by each party and their respective reasonable future needs, that is not a just and equitable result.
An order which is based on the applicant maintaining the profligate lifestyle that she enjoyed during the course of this short relationship would not be just and equitable. It is said that the parties enjoyed that lifestyle. However, the evidence is to the effect that they enjoyed luxury holidays but that the respondent’s day to day expenditure was not extravagant. I accept that he was unaware of the extent or the detail of the applicant’s expenditure.
The respondent gave evidence in relation to s 90SF factors that he is 67 years of age, earns a salary of $200,000 a month in addition to trusts and investment income (which is substantial) and that he is in good health. He gives evidence that since separation he has paid to the applicant an additional $750,000 in addition to various expenses that he has paid for her benefit.
CONCLUSION
I appreciate the submission that the respondent is a wealthy person who was able to spend the money that he knew he was paying to the applicant and that he was happy to spend that money as part of the relationship with the applicant. He was not happy that his bank accounts had been accessed without his knowledge and that money had been wasted in pursuit by the applicant of what she has now repeatedly acknowledged was an unrealistic and profligate lifestyle. That lifestyle was pursued by the applicant and not the respondent.
I also appreciate that, although it was not expressly put as a submission, it can be very difficult for a person who has a relationship with a person who is vastly wealthier than they are, to demonstrate that they have made a financial or non-financial contribution to financial assets, particularly where the relationship is relatively short. That circumstance should not disentitle a person from the benefit of orders in their favour when that relationship comes to an end if it is just and equitable for orders to be made having regard to the relevant statutory provisions and the particular circumstances of the case. Due recognition must be given to the contribution made to the welfare of the family (being in this case the parties to the de facto relationship) pursuant to s 90SM(4)(c).
Having regard to the evidence and submissions made, the just and equitable outcome in this proceeding is for the applicant to do all things necessary to sign over her interest in the Suburb B property to the respondent, for her to retain Motor Vehicle 1 vehicle (valued at $30,000) which she is currently in possession of and for the respondent to pay her the sum of $750,000 within 60 days. Otherwise the Court will make orders in accordance with the orders sought by the respondent.
There is considerable force to the submissions made by the respondent that the applicant has received, both in the course of the relationship and following, more from the respondent than sufficient to satisfy any claim that she has to retain any share of the Suburb B property. However, the payment of a further sum of $750,000 is just and equitable.
I make the order not to afford “palm tree justice” as that expression was used in W& W (1980) FLC 90-872 or to provide a solatium to the applicant but in recognition of the s 90SF(3)(b) factors being the income, property and financial resources of each of the parties and the physical and mental capacity of each of the parties for appropriate gainful employment. The orders also give proper recognition to the non-financial contributions made by the applicant to the welfare of the parties: s 90SM(4)(c).
The respondent has been generous throughout the relationship in financially supporting the applicant and her daughters and the payment of $750,000 since separation was reasonable. The payment of this further sum should, if spent prudently, provide the applicant the opportunity to obtain accommodation and provide for reasonable living expenses for a number of years. The applicant gave evidence that she had obtained assistance from an accountant to help manage her spending.
I assume that if the applicant has the capacity to manage a business as she proposed at the Suburb B property, she has the capacity to obtain appropriate employment in that sphere or in the retail sector where she has previously worked with success, albeit in the 1990s.
The orders for the transfer of the property from joint names into the name of the respondent recognises the contributions that he has made to the acquisition of property of the parties.
I will not make the orders sought by the applicant in relation to particular chattels. I accept the respondent’s evidence in relation to particular paintings sought by the applicant that he paid for them to be hung at his holiday house where they are currently. In relation to letters and cards, he says that they have been disposed of. As to the recreational equipment that the applicant seeks, the evidence is that has been sold. Otherwise, each party should retain chattels currently in their possession.
These orders take into account the orders made on 30 November 2022 pursuant to which there was a payment of $500,000 from the respondent to the applicant with $350,000 as a partial property settlement pursuant to orders made and a payment of $150,000 to be characterised at trial; as well as the payment pursuant to orders on 4 August 2022 in the amount of $150,000 with that sum to be characterised at trial. I accept the submission made on behalf of the applicant that a figure of $162,500 based on personal expenditure of $2,500 per week (which roughly equates to what the respondent spends on living expenses) should be characterised as maintenance pursuant to s 90SE of the Act and the balance of $137,500 be treated as part property settlement.
I certify that the preceding ninety-five (95) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice McNab. Associate:
Dated: 6 March 2024
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