Aldam and Cesari (No 2)
[2020] FamCA 732
•4 September 2020
FAMILY COURT OF AUSTRALIA
| ALDAM & CESARI (NO. 2) | [2020] FamCA 732 |
| FAMILY LAW – PROPERTY ADJUSTMENT – de facto relationship of 12 years’ duration – seven parcels of real property acquired – applicant contending he made superior contributions throughout, especially post-separation – property alteration orders made reflecting 70% of non-superannuation assets to the applicant and 30% to the respondent. FAMILY LAW – DISCLOSURE – defective disclosure by the respondent – consequences of such defective disclosure – application of the rule in Bacall & Zagar. FAMILY LAW – SUPERANNUATION – applicant proposing unduly complicated regime for altering superannuation entitlements – respondents proposal involving sale of property and equal division. |
| Biosecurity Act 2015 (Cth) Family Law Act 1975 (Cth) ss 79, 90SF(3), 90SM, 90SM(4) Family Law Rules 2004 (Cth) ch 13 Transfer of Land Act 1958 (Vic) s 42 |
| Abalos v Australian Postal Commission (1990) 171 CLR 167 Aldam & Cesari [2020] FamCA 54 Allied Pastoral Holdings Pty Ltd v Federal Commissioner of Taxation (1983) 1 NSWLR 1 Bacall & Zagar [2020] FamCA 350 Baumgartner v Baumgartner (1987) 164 CLR 137 Blomley v Ryan (1956) 99 CLR 362 Breskvar v Wall (1971) 126 CLR 376 Brunskill v Sovereign Marine & General Insurance Co Ltd (1985) 59 ALJR 842 Chancellor & McCoy [2016] FamCAFC 256 Christmas v Nicol Bros Pty Ltd (1941) 41 SR (NSW) 317 Coghlan v B Street [1898] 1 Ch 704 The Commonwealth v Introvigne (1982) 150 CLR 258 CSR Ltd v Della Maddalena (2006) 80 ALJR 458 Dawson v Westpac Banking Corporation (1991) 66 ALJR 94 Dearman v Dearman (1908) 7 CLR 549 Devries v Australian National Railways Commission (1993) 177 CLR 472 Doney v The Queen (1990) 171 CLR 207 Dublin Wicklow and Wexford Rly Co v Slattery (1878) 3 App Cas 1155 Ellis v Wallsend District Hospital (1989) 17 NSWLR 553 Fox v Percy (2003) 214 CLR 118 Galea v Galea (1990) 19 NSWLR 263 GH v The Catholic Child Welfare Society (Diocese of Middlesbrough) [2016] EWHC 3337 (QB) Husain v O & S Holdings (Vic) Pty Ltd [2005] VSCA 269 In the Marriage of Ahmad (1994) 18 Fam LR 514 In the Marriage of Gill (1984) 9 Fam LR 969 In the Marriage of McMahon (1995) 19 Fam LR 99 In the Marriage of Scott (1994) 17 Fam LR 420 Jadwan Pty Ltd v Rae & Partners (A Firm) [2020] FCAFC 62 Jones v Hyde (1989) 63 ALJR 349 Kowaliw & Kowaliw [1981] FamCA 70 Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361 Lee v Lee (2019) 93 ALJR 993 Levinge v Director of Custodial Services (1987) 9 NSWLR 546 Louth v Diprose (1992) 175 CLR 621 Lovell v Lovell (1950) 81 CLR 513 Macquarie Bank Ltd v Sixty-Fourth Throne Pty Ltd [1998] 3 VR 133 McLaughlin v Daily Telegraph Newspaper Co Ltd (No 2) (1904) 1 CLR 243 Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357 Minister for Immigration and Border Protection v SZVFW (2018) 264 CLR 541 Owners of SS Hontestroom v Owners of SS Sagaporack; SS Hontestroom v SS Durham Castle [1927] AC 37 Paterson v Paterson (1953) 89 CLR 212 Pell v R [2019] VSCA 186 Pell v R (2020) 94 ALJR 394 Precision Plastics Pty Ltd v Demir (1975) 132 CLR 362 Re F: Litigants in Person Guidelines (2001) 27 Fam LR 517 Rosenberg v Percival (2001) 205 CLR 434 Russo v Bendigo Bank Ltd [1999] 3 VR 376 Scott v Pauly (1917) 24 CLR 274 South Australia v Johnson (1982) 42 ALR 161 Stanford v Stanford (2012) 247 CLR 108 State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (1999) 73 ALJR 306 Tate v Tate (2000) 26 Fam LR 731 Taylor v Johnson (1983) 151 CLR 422 Voulis v Kozary (1975) 180 CLR 177 Walker v Wilson (1991) 172 CLR 195 Walsh v Law Society of New South Wales (1999) 198 CLR 73 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 Warren v Coombes (1979) 142 CLR 531 Weir v Weir (1993) 16 Fam LR 154 Wilton v Farnworth (1948) 76 CLR 646 Zagari & Habib [2010] FamCAFC 159 Zaruba & Zaruba [2017] FamCAFC 91 |
| Thomas Bingham, The Judge as Juror: the Judicial Determination of Factual Issues (1985) 38(1) Current Legal Problems 1 J. H. Wigmore, Wigmore on Evidence, vol. IA (Tillers ed, 1983) |
| APPLICANT: | Mr Aldam |
| RESPONDENT: | Mr Cesari |
| FILE NUMBER: | MLC | 9029 | of | 2018 |
| DATE DELIVERED: | 4 September 2020 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Wilson J |
| HEARING DATE: | 11 June 2020 |
| DATE OF LAST SUBMISSION: | 20 August 2020 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms C. Conlan |
| SOLICITOR FOR THE APPLICANT: | Blackwood Family Lawyers |
| COUNSEL FOR THE RESPONDENT: | Not applicable |
| SOLICITOR FOR THE RESPONDENT: | Not applicable |
Orders
Amended pursuant to r 17.02 of the Family Law Rules 2004 (Cth) on 11 December 2020
N Street Property means the property situated at and known as N Street, Suburb R, Victoria registered in the name of the Applicant and the Respondent.
Q Street Property means the property situated at and known as Q Street, D Town, Tasmania registered in the name of the Applicant and the Respondent.
B Street Property means the property situated at and known as Unit 1 B Street, Suburb R, Victoria registered in the name of the Respondent.
T Street Property means the property situated at and known as T Street, Suburb G, Victoria registered in the name of the Respondent.
V Street Property means the property situated at and known as V Street, Suburb F, Victoria registered in the name of the Applicant.
DD Super Fund means the parties' self-managed superannuation fund.
date means within 60 days of the date of final orders.
Cash payment from the Respondent to the Applicant and transfer of N Street property
On the date the following take place contemporaneously (settlement) –
(a)the respondent pay the applicant $40,959 as directed by the applicant (payment);
(b)the respondent transfer to the applicant at the applicant’s expense all his right title and interest in the N Street Property;
(c)the applicant discharge the registered Westpac mortgage in respect of the N Street Property;
(d)the applicant remove the caveat registered against the B Street Property;
(e)the applicant remove the caveat registered against the T Street Property; and
(f)in relation to the transfer and discharge –
(i)each party will pay their own conveyancing/legal costs and PEXA service fees relating to the Transfer and Discharge;
(ii)the applicant will pay the transfer lodgement fee for the transfer;
(iii)the applicant will pay all discharge fees.
If the respondent has not made the whole of the payment or the applicant has not discharged the N Street mortgage by the date (default), settlement will not proceed on the date and –
(a) if the respondent is responsible for the default –
(i)the respondent will pay the applicant interest on the outstanding balance of the payment at the rate set by the Family Law Rules calculated weekly from the date (interest);
(ii)if the respondent is not able to complete settlement within 28 days of the date, the T Street and B Street Properties will be listed for sale forthwith (sale) with the parties to have the joint conduct of the sale of those properties and liberty to apply in relation to the sale process;
(iii)upon settlement of the sale of each of the T Street or B Street Properties, the proceeds of sale will be applied –
A.first, to pay all costs, commissions and expenses of the sale;
B.second, to discharge the mortgage and any other encumbrance registered against the property;
C.third, to pay the applicant the balance of the payment then outstanding together with any interest;
D.fourth, to pay the balance to the respondent;
(iv)upon the whole of the payment being made to the applicant, if either of the T Street or B Street properties remain unsold, that property may be removed from sale;
(v)the remaining matters for settlement pursuant to paragraph 1 will take place contemporaneously upon the final payment to the Applicant.
(b) if the applicant is responsible for the default –
(i)if the applicant is not able to complete settlement within 28 days of the date, the N Street Property will be listed for sale forthwith (sale) with the parties to have the joint conduct of the sale and liberty to apply in relation to the sale process;
(ii)upon settlement of the sale of each of the N Street Property, the proceeds of sale will be applied –
A.first, to pay all costs, commissions and expenses of the sale;
B.second, to discharge the mortgage and any other encumbrance registered against the property;
C.third, to pay the balance to the applicant;
(iii)upon the applicant discharging the N Street mortgage, the N Street property may be removed from sale;
(iv)the remaining matters for Settlement pursuant to paragraph 1 will take place contemporaneously upon the applicant discharging the N Street mortgage.
Pending the completion of Settlement pursuant to paragraphs 1 or 2 –
(a)the applicant will be entitled to all rental proceeds for the N Street Property;
(b)the respondent will be entitled to all rental proceeds for the T Street and the B Street Properties;
(c)the applicant will be solely liable for all mortgage instalments and other outgoings for the N Street Property and will maintain building insurance for the N Street property;
(d)the respondent will be solely liable for all mortgage instalments and other outgoings for the T Street and the B Street Properties and will maintain building insurance for the T Street and the B Street Properties;
(e)neither party will encumber the N Street, T Street and/or B Street Property without the written consent of the other party;
(f)each party will hold their interest in the N Street, T Street and/or B Street Property on trust pursuant to these orders.
Q Street property
Forthwith, the balance sale proceeds from the sale of the Q Street property held in the trust account of Blackwood Family Lawyers be paid to the applicant as directed by the applicant.
Superannuation
Applicant’s W Superannuation
In relation to the applicant’s superannuation interest in the W Superannuation Plan:(a)there will be an allocation for the purposes of s 90XT(4) of the Family Law Act of a base amount of $52,000 to the respondent from the applicant’s interest in the W Superannuation Plan;(b)pursuant to s 90XT(1)(a) of the Family Law Act whenever a splittable payment becomes payable in respect of the applicant’s entitlements in the W Superannuation Plan the respondent will be paid an amount calculated in accordance with pt 6 of the Family Law (Superannuation) Regulations using the base amount specified at paragraph 5(a), and there will be a corresponding reduction in the entitlement the applicant would have had in the W Superannuation Plan but for this order;(c)paragraph 5(a) will take effect from the operative time being four business days after the day a sealed copy of this order is served upon the trustee of the W Superannuation Plan;(d)having been afforded procedural fairness the trustee of the W Superannuation Plan will be bound to observe the provisions in paragraph 5(a) and the requirements pursuant to the Family Law Act and the Family Law (Superannuation) Regulations;(e) by 4pm on 17 September 2020–(i)the respondent will serve a sealed copy of this order upon the trustee of the W Superannuation Plan; and(ii)the respondent will give notice in writing to the trustee of the W Superannuation Plan pursuant to reg 72 of the Family Law (Superannuation) Regulations.
DD Super Fund
The parties forthwith do all acts and things necessary to enable the accountant for X Pty Ltd ATF DD Super Fund to complete and lodge all tax returns and financial statements for the DD Super Fund within seven days of receiving a request from the other party.
(6.1)The parties, in their capacity as Trustees of the Aldam and Cesari Super Fund (SMSF) will forthwith sell the real property situated at Unit 2 B Street, Suburb R Vic (SMSF property) and in relation to the sale of SMSF Property –
(a) on or before 4pm on 24 December 2020, the parties do all acts necessary to appoint a real estate agent agreed in writing to sell the SMSF Property and failing agreement, the respondent put a panel of 3 real estate agents to the applicant on or before 4pm on 31 December 2020 and the parties do all acts and things to forthwith appoint the real estate agent selected by the applicant from that panel;
(b) the parties, in their capacities as Trustees of the SMSF will have the joint conduct of the sale of the SMSF Property;
(c) the SMSF Property will be sold by public auction on a date to be agreed after consultation with the real estate agent, provided that the date will be no later than 28 February 2021;
(d) the reserve price for the SMSF Property will be as recommended by the real estate agent;
(e) either party, by written notice to the other party has liberty to elect to retain the SMSF Property within the SMSF fund at the reserve price recommended pursuant to paragraph 6.1(d) above;
(f) if the SMSF Property passes in at auction, either party by written notice to the other party be at liberty to elect to retain the SMSF Property within the Fund at the value the property passed in at;
(g) if neither party makes an election pursuant to paragraph 6.1(f) above, the SMSF property be listed for private sale with a reserve price set at the value the property passed in at, with that reserve price to reduce by 5% every 2 months until the property is sold and either party be at liberty to elect to retain the SMSF Property at the relevant reserve price at the conclusion of the 2 month period if the property has not sold;
(h) the parties will cooperate with the real estate agent in relation to the sale including making the keys for the SMSF Property available to the real estate agent, allowing inspection of the SMSF Property at times reasonably requested by the real estate agent and ensuring that the SMSF Property is in a neat and clean condition at the time of inspection by prospective purchasers; and
(i) each party will have liberty to apply in relation to the terms and conditions of the sale of the SMSF Property.
(6.2) Within 28 days of settlement of the sale of the SMSF property and/or of an election by either party pursuant to paragraph 6.1(d), (e) or (f) above –
(a) the parties forthwith do all acts and things necessary to enable the accountant for X Pty Ltd ATF The Aldam Cesari Super Fund to calculate each parties’ member balance taking into account the value of the SMSF property determined pursuant to paragraph 6.1 above and all costs associated with listing the SMSF property for sale including but not limited to real estate commission, auction costs and estimated capital gains tax arising from the sale of the SMSF property; and
(b) in relation to the respondent’s superannuation interest in Aldam Cesari Super Fund –
(i) the respondent will request the trustees of the Fund to transfer the whole of the respondent’s entitlements in the Fund (being the respondent’s member entitlements following the auction and taking into account costs of sale paid by the Fund) to a complying superannuation Fund of the respondent’s choice; and
(ii) contemporaneously with the transfer of the whole of the respondent’s entitlements in the Aldam Cesari Super Fund the respondent will –
A. close his member account in the Aldam Cesari Super Fund;
B. resign as a trustee of the Aldam Cesari Super Fund;
C. resign as a trustee of the Aldam Cesari Trust;
D. resign as a director of X Pty Ltd;
E. resign as a director of FF Pty Ltd;
F. transfer to the Applicant or his nominee his shareholding in X Pty Ltd; and
G. transfer to the Applicant or his nominee his shareholding in FF Pty Ltd.
In relation to the respondent’s superannuation interest in DD Super Fund –(a)there will be an allocation for the purposes of s 90XT(4) of the Family Law Act a base amount of $44,662 to the applicant from the respondent’s interest in the fund;(b)pursuant to s 90XT(1)(a) of the Family Law Act whenever a splittable payment becomes payable in respect of the respondent’s entitlements in the Fund the applicant will be paid an amount calculated in accordance with pt 6 of the Family Law (Superannuation) Regulations using the base amount specified at paragraph 7(a) and there will be a corresponding reduction in the entitlement the Respondent would have had in the Fund but for this order;(c)paragraph 7(a) will take effect from the operative time being seven days from the date of these orders;(d)having been afforded procedural fairness the trustees of the Fund will be bound to observe the provisions in paragraph 7(a) and the requirements pursuant to the Family Law Act and the Family Law (Superannuation) Regulations;(e)the respondent will request the trustees of the Fund to transfer the balance remaining of the respondent’s entitlements in the Fund (being the respondent’s member entitlements less the base amount allocated to the applicant pursuant to paragraph 7(a)) by way of a cash payment to a complying superannuation Fund of the respondent’s choice;(f)contemporaneously with the transfer of the whole of the respondent’s entitlements in the DD Super Fund the respondent will –(i)close his member account in the DD Super Fund;(ii)resign as a trustee of the DD Super Fund;(iii)resign as a trustee of the DD Trust;(iv)resign as a director of X Pty Ltd;(v)resign as a director of P Pty Ltd;(vi)transfer to the applicant or his nominee his shareholding in X Pty Ltd; and(vii)transfer to the applicant or his nominee his shareholding in P Pty Ltd.
General orders
Save as otherwise provided in these orders and save for the purposes of enforcing the payment of any monies due under these or any subsequent orders –
(a)the parties will close any joint bank accounts and the balance will is to be divided equally between the parties;
(b)the applicant will retain for his sole use and benefit all property (including choses-in-action) in his possession as at the date of these orders including but not limited to –
(i)the V Street property;
(ii)the cars in his possession;
(iii)bank and like accounts in the applicant’s name;
(iv)the applicant’s superannuation entitlements;
(v)the personal effects, furniture and contents in the applicant’s possession including all of the furniture and contents at the properties he is to retain pursuant to these orders;
(c)the respondent will retain for his sole use and benefit all property (including choses-in-action) in his possession as at the date of these orders including but not limited to –
(i)the B Street property;
(ii)the T Street property;
(iii)the 2 dogs namely “AA” and “BB”;
(iv)bank and like accounts in the Respondent’s name;
(v)the respondent’s superannuation entitlements with CC Superannuation;
(vi)the personal effects, furniture and contents in the respondent’s possession including all of the furniture and contents at the properties he is to retain pursuant to these orders;
(d)any joint tenancy of the parties is hereby expressly severed;
(e)all insurance policies will remain the property of the named owner;
(f)each party will be solely liable for and indemnify the other in relation to –
(i)any liability encumbering any item of property to which they are entitled pursuant to these orders; and
(ii)any and all other liabilities their sole name.
The parties will sign all documents and do all things necessary to give effect to these orders.
In the event that either party (“defaulting party”) refuses or neglects within 14 days to comply with the provisions of the paragraphs 1, 2 or 7 of the orders, the other party is hereby appointed as attorney to execute all deeds and documents in the name of the defaulting party and to all acts and things necessary to give validity and operation to this order.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Aldam & Cesari has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLC 9029 of 2018
| Mr Aldam |
Applicant
And
| Mr Cesari |
Respondent
REASONS FOR JUDGMENT
Introduction
After 12 years of cohabitation, the applicant and respondent finally separated on 10 August 2016 leading to the applicant commencing this proceeding in August 2018. During their relationship seven parcels of real property were acquired, five of which were in Melbourne’s northern suburbs and two were in Tasmania. The parties maintained a self-managed superannuation fund. They also had cars and a dog. They seek orders in this proceeding altering their property interests pursuant to s 90SM of the Family Law Act.
Synopsis
For the reasons that follow I have made the orders that are set out in the earlier pages of these reasons.
The path to trial
Before descending to the factual setting of this case, it is utile to record events since January 2020 when this litigation first came before me when sitting in the Judicial Duty List. The case had been referred to the Judicial Duty List by a registrar by orders made on 25 November 2019. On that mention a solicitor represented the respondent by telephone yet the respondent did not participate in that telephone link. On 19 December 2019 a firm of solicitors known as H Solicitors filed a notice ceasing to act for the respondent. In the registrar’s orders made on 25 November 2019 the registrar adjourned the proceeding making orders for the case to go forward on an undefended basis, inferring (I presume) that the registrar believed that this case could be tried in the Judicial Duty List. That was ambitious. As it happened, on 14 January 2020 the applicant appeared, represented by Mr J. Schmidt of counsel, who did his best to persuade me to proceed on an undefended basis yet that submissions was advanced in the presence of the respondent who attended court in person. The respondent assured me he would retain a new solicitor. He said he intended to participate in the trial of this proceeding. On that basis I granted the respondent until 4 February 2020 to retain new representation and reserved costs.
On 4 February 2020 the respondent appeared in person and Mr Schmidt again represented the applicant. The respondent did not have legal representation. He was not ready to proceed on that day. I made a costs order against the respondent on an indemnity basis[1] delivering reasons ex tempore. I also made directions for the trial of the proceeding. Pursuant to those orders, the trial of this proceeding was listed for 3 August 2020. The respondent filed an appeal against the costs order I made against him. However, that appeal was deemed abandoned as the respondent took no step to prosecute the appeal.
[1]Aldam & Cesari [2020] FamCA 54.
On 25 February 2020 the Deputy Chief Justice directed the parties to negotiate. Very sensibly, if I may say with the utmost respect, the Deputy Chief Justice saw the wisdom of requiring the parties to explore an out-of-court resolution having regard to the factual complexities of this case and the relatively small net equity positions of the parties. His Honour ordered the parties to report back concerning the progress of negotiations by 10 June 2020.
On 21 April 2020, during a call over of the entirety of the cases in my judicial docket this case was mentioned by telephone, face-to-face trials and face-to-face mentions having been put on embargo pursuant to the COVID-19 protocols developed by Chief Justice Alstergren in pursuance of the state of emergency declared under the Biosecurity Act 2015.
On 21 April 2020 the applicant’s solicitor, Ms Sturgeon and the respondent, both by telephone, told me they were keen to proceed to trial earlier than the date previously fixed on 3 August 2020. Certain adjustments were made to dates by which the parties were required to file documents. The respondent was not represented. I ordered the trial to be conducted electronically on 11 June 2020.
On 11 June 2020 Ms Conlan of counsel appeared for the applicant. The respondent was not represented. He conducted the case for himself. As a result, I took some little time to explain the manner in which the case would unfold in accordance with the decision of the Full Court in Re F: Litigants in Person Guidelines.[2] The respondent told me at each stage of the explanation I gave that he understood what was being explained to him.
[2] (2001) 27 Fam LR 517.
Relevant factual background
Certain factual background matters were agreed while others were not. They were derived from the applicant’s trial affidavit made 15 May 2020. Relevantly paraphrased, those uncontroversial details were that the parties commenced cohabitation in April 2004, they did not marry and they separated on a final basis in August 2016. There are no children involved in this case.
This was a 12 year relationship.
The applicant’s approach to narrating the matters relevant under s 90SM(4) and s 90SF(3) of the Family Law Act was to launch into a discourse of the respondent’s uncooperative approach in the conduct of this litigation. The applicant cited the respondent’s disclosure deficiencies and the respondent’s approach towards the conciliation conference well prior to narrating any aspect of the property alteration orders he sought. As was readily apparent, the applicant was angry with the respondent’s approach to this litigation. The applicant stated that the respondent had not complied with directions for disclosure and that the respondent had engaged in wastage. The applicant asserted that the respondent was deliberately exhausting the applicant’s financial resources by causing the applicant to expend sums on legal representation. There may well have been justification for adopting that course but by so doing, the applicant took the narrating of the factual background of this case down a path of accusations, even before the facts of the case had been set out.
It became apparent that the dispute in this case was not so much one of identifying and ascertaining the legal and equitable interests each held in property but rather the case involved an assessment of the parties’ contributions to ascertained property. Five parcels of real property were relevant to this case, each having a particular factual story. According to the applicant, those parcels of real estate were –
a)N Street, Suburb R, Victoria (“the N Street property”);
b)Q Street, D Town, Tasmania (“the Q Street property”);
c)Unit 1 B Street, Suburb R, Victoria (“the B Street property”);
d)T Street, Suburb G, Victoria (“the T Street property”); and
e)V Street, Suburb F, Victoria (“the V Street property”).
The applicant said in essence that certain parcels of real estate were purchased jointly by the applicant and the respondent whereas other property was purchased solely by the applicant. Those parcels of land were –
a)the N Street property of which both the applicant and the respondent are registered proprietors;
b)the Q Street property of which both the applicant and the respondent are registered proprietors;
c)the B Street property of which the respondent was the sole registered proprietor yet the applicant said it was jointly acquired; and
d)the T Street property of which the respondent was the sole registered proprietor yet the applicant said it was jointly acquired; and
The applicant said the applicant purchased two properties in the applicant’s sole name from funds provided by the applicant’s mother. They were –
a)GG Street, D Town, Tasmania; and
b)the V Street property, where the applicant lives.
The applicant said the respondent had no involvement in the purchase of either. In respect of the V Street property, the applicant said it was acquired two years after separation. That seemed consistent with paragraph 1(e) of section 2 of the applicant’s amended initiating application where the V Street property was recorded as having been registered in the applicant’s name only.
The property at Unit 2 B Street Suburb R was said to be owned by the trustee of the parties’ self-managed superannuation fund.
The applicant was emphatic that the respondent made no contributions to the GG Street property or to the V Street property.
The applicant devoted considerable effort in his affidavit to describing the circumstances that supported his assertion that he was the driving force behind the acquisition and enhancement of the couples’ property portfolio. The applicant identified each property and described the contributions the applicant made to each.
The applicant focused on the N Street property. Distilling the matters alleged, the applicant stated –
a)the property was registered in the names of the applicant and the respondent;
b)the property was purchased in 2007 by the application of joint funds for the deposit and a construction loan to finance building works;
c)the respondent and the applicant lived at the property until July 2016, that is to say, soon prior to the couple’s separation; and
d)the applicant has alone has met the shortfall between the income derived from the rental of the property since July 2016, that is to say, since separation.
So far as the Q Street property was concerned, the applicant stated that it was registered in joint names. The applicant stated –
a)the purchase of that land was effected in 2010 by the payment of a modest deposit from the couples’ joint savings;
b)they borrowed for the construction by way of construction loan refinanced in 2014 from the N Street property;
c)the property was converted into a holiday rental; and
d)the applicant met the shortfall between the property’s income and outgoings since separation.
The first of the two B Street properties was the subject of the applicant’s evidence in paragraph 77 of the applicant’s trial affidavit. There, the applicant recorded various aspects of that property including –
a)the applicant and respondent purchased the property off-the-plan paying from joint savings the sum of $33,000;
b)the property was registered in the name of the respondent;
c)since separation the respondent has had sole control over the property;
d)the property continues to generate rental income that the respondent receives;
e)the respondent applied the rental income received to his sole use and benefit; and
f)the mortgage over the property “is significantly in arrears” (the applicant’s words).
So far as the T Street property was concerned, the applicant stated that the contract for its purchase was in the joint names of the applicant and respondent, the purchase price being $390,000, settlement occurring after separation. The applicant stated in relation to the T Street property that –
a)the sum of $18,700 from the couples’ joint funds was applied by way of deposit;
b)the sum of $73,200 was paid by the applicant;
c)the sum of $33,800 was paid by the respondent;
d)the applicant made the greater financial contribution to its acquisition;
e)the respondent has not disclosed the income he received from the T Street property since separation; and
f)the respondent had not serviced the mortgage since separation resulting in the mortgage falling into arrears.
The applicant’s documentary proofs in this case were not particularly detailed. The applicant verified certain of his assertions about the flow of funds by bank documentation. However, the applicant provided very little by way of conveyancing documentation to verify the applicant’s contentions about the details of each property’s acquisition, especially as to date and amount.
The contract for the respondent’s 2014 purchase of the B Street property was exhibited to the applicant’s affidavit. The purchase price was shown as $330,000, payable by a deposit of $33,000.
The applicant’s evidence consisted of his affidavit made 15 May 2020 (being exhibit A1), the applicant’s financial statement sealed 15 May 2020 (being exhibit A2) as well as the documents marked as exhibit A3. Counsel for the applicant did not indicate in opening or in the applicant’s case outline that the applicant’s affidavit made 9 January 2020 or the exhibits to that affidavit formed part of the applicant’s proofs in the trial of this proceeding. That was curious as the applicant exhibited a large amount of relevant documentary exhibits to that 9 January 2020 affidavit including –
a)valuations conducted by WBP Group for the N Street property, the B Street property and the T Street property; and
b)the 2018 tax return for the self-managed superannuation fund.
In his trial affidavit the applicant responded to allegations made by the respondent. The more significant issues that arose from the applicant’s responses were the following –
a)the respondent held three jobs between the commencement of separation and 2017;
b)the respondent maintained full time employment during the relationship;
c)the respondent provided no medical evidence in support of the respondent’s contention of his suffering a transient ischaemic attack;
d)the applicant believed (although the basis of that belief was not given) that the respondent’s employment was terminated as a result of drug abuse issues, that the respondent faced one or more criminal charges for a theft-related offence, that the respondent breached bail conditions and that the respondent was facing (or had faced) criminal charges for driving under the influence (although the applicant did not say whether that was under the influence of alcohol or drugs);
e)the respondent works as a manager in the property industry;
f)after separation, by agreement the applicant and the respondent divided the funds then standing to the credit of the parties in their joint Westpac account;
g)between 2014 and 2016 the net income of both varied such that during 2014 each fortnight the applicant earned more than the respondent ($1,699 and $1,075 respectively) whereas during 2016 the respondent earned more than the applicant ($2,200 and $1,985 respectively);
h)the applicant admitted that both the applicant and the respondent accessed the Westpac joint account during the relationship yet, as the entries on exhibit J to the applicant’s affidavit demonstrated, larger withdrawals were referrable to the respondent (such as $16,719 on 10 October 2014 being the payout for the respondent’s car);
i)the applicant agreed that in 2014 the N Street property was refinanced in such manner that the balance of the Westpac joint account prior to refinance standing at $40,506 increased to $84,114;
j)the parties applied $102,883.60 from the Westpac joint account for joint purposes including flights, a transfer to the parties’ joint investment loan account, expenses associated with construction activity in relation to the Q Street property, the payment of the deposit on the B Street property and the reduction of credit card debt;
k)the applicant denied the respondent’s assertion that the applicant’s mother advanced loans or monetary gifts to the respondent during the relationship; and
l)the applicant stated that based on superior pre-separation contributions, and contributions made following separation, the applicant should receive a more favourable property adjustment than should the respondent.
The applicant advanced his case of superior contributions toward the acquisition, conservation and improvements of the properties jointly purchased. The applicant developed his contentions in the following ways –
a)the applicant said he paid $73,200 towards the purchase of the T Street property;
b)the applicant said the respondent receives $600 per fortnight by way of rental income for the B Street property yet the respondent applies that sum to his own use and benefit;
c)the applicant said he paid holding costs in relation to the GG Street property from his personal ANZ account rather than from the Westpac joint funds or from funds received from the Q Street property;
d)the applicant said he purchased a Saab motor vehicle in 2008 and sold it in 2014 after meeting a balloon payment of between $16,000 and $17,000; and
e)the applicant denied having furniture valued at $25,000.
So far as future needs were concerned, the applicant deposed to several. In no special order they included the following –
a)ill-health on account of anxiety;
b)muscle tension dysphonia (he offered no medical evidence to verify the assertion);
c)his indebtedness of $74,576 in relation to his mother’s aged care facility expenses; and
d)conversely, so the applicant said, the respondent is living rent free with his new partner in respect of whom no financial statement had been filed.
The applicant sought orders for a division of jointly acquired non-superannuation assets and liabilities of 70% in his favour and 30% in the respondent’s favour. He asked for funds in the parties’ self-managed superannuation fund to be divided. However, the applicant’s proposal in relation to superannuation was complicated as the applicant proposed that the land owned by the fund not be sold and instead that a cash amount be paid less 30%. Applying the arithmetic and value derived from the WBP valuation of unit 2 B Street, the market value was $375,000 so 30% of that was $112,500. The applicant proposed that he and the respondent otherwise retained assets and superannuation in their possession and that they meet liabilities that corresponded to those retained assets. More as a submission than as a statement of fact, in paragraph 106 of his 15 May 2020 affidavit the applicant said his proposed orders were maintainable on the basis of the differing contributions each made. With errors included, he said the following –
The orders I seek reflect that:
(a)I have made a greater contribution during the relationship by way of:
(i)The additional contributions I have made by way of applying funds I received from mother to the acquisition of property in joint names and Mr Cesari’s sole name.
(ii)I also applied funds from my mother towards living expenses and property holding expenses during the relationship.
(iii)I did the majority of the management of our property portfolio and managing those properties.
(b)Mr Cesari admits that significant funds were received from my mother, paid to our accounts and applied to our properties and living expenses during the relationship.
(c)Since separation, I have made greater contributions:
(i)I have managed and maintained the N Street and Q Street properties to ensure they remain income producing properties.
(ii)I have met the shortfall between the income and expenses for the N Street and Q Street properties alone.
(iii)Mr Cesari has not made mortgage repayments for the T Street and B Street properties causing those mortgages to increase and bank penalties to be applied, even during periods Mr Cesari was employed post separation.
(iv)Mr Cesari has retained rental income for those properties for his own sole use and benefit (and not applied it towards the expenses for those properties).
The respondent made an endeavour to cross examine the applicant. Nothing of significance emerged from that exchange.
Before addressing the respondent’s evidence it is utile to make various observations about the state of the documentary evidence adduced by the applicant. In no particular order of significance –
a)save for the B Street property, very little in the way of documents was adduced such as contracts for the purchase of the parcels of real estate in issue in this case so as to verify actual purchase outlays;
b)no documents from conveyancers were adduced showing the actual breakdown of purchase expenses, for example, by adducing settlement statements ;
c)no mortgage documentation was adduced;
d)no certificates of title were put in evidence;
e)selective bank statements were put into evidence;
f)no correspondence from lenders was adduced; and
g)no demands from lenders were put in evidence especially when, as the applicant said, various loans were not being serviced.
However, the applicant did produce the copy contract for his and his brother’s purchase of GG Street, D Town in Tasmania. That contract was marked as exhibit A3.1. The purchase price was $195,000 of which a deposit of $19,100 was paid and $171,900 was to be financed.
The applicant’s case in relation to superannuation was unnecessarily complicated. It seemed plain enough – indeed, it was agreed – that the applicant and the respondent operated a self-managed superannuation fund. Documents about that fund were difficult to find among the exhibits in this litigation. According to the orders proposed by the applicant, the trustee of the fund, was at all relevant times X Pty Ltd as trustee for DD Super Fund. No corporate details were given about the trustee such as its date of incorporation, its shareholders or its directors, although one may fairly infer that the applicant and respondent were likely to be both shareholders as well as directors of X Pty Ltd. That assumption was not proved, however.
Another company emerged from the orders proposed by the applicant, namely FF Pty Ltd. No company records in relation to it were provided. As with X Pty Ltd, details of its date of incorporation were not given nor of its directors and shareholders, although (as with X Pty Ltd) it is reasonable to infer that the applicant and respondent owned or controlled that company or otherwise had some association with it.
The relevant trust deed in respect of which X Pty Ltd was trustee was not exhibited or otherwise put in evidence in this case. That was curious as the property known and described as unit 2 B Street, Suburb R was said by the applicant to have been somehow acquired by X Pty Ltd for DD Super Fund. No title details were given to verify that assertion.
Enough has been said by way of overview of the various items of property and the parties’ interests in them which fall for alteration in this case. Little attention was given to the parties’ financial circumstances upon the commencement of their cohabitation. The applicant said he and the respondent had very little in the way of property at the commencement of their relationship.
Before going to a detailed examination of each item of real property, at least for a recital of the evidence concerning each, it is utile to recite the respondent’s version of events. He made three affidavits. The first was dated 20 January 2020. It is desirable to synthesise his main factual contentions in that affidavit in the following manner –
a)he and the applicant met in 2004 thereafter becoming involved in an intimate relationship that lasted for 12 years;[3]
[3] That corresponded with the applicant’s version of events on the same issue.
b)throughout the relationship the applicant worked in finance and the respondent worked in the property industry;[4]
[4] Ibid.
c)throughout the relationship the income of the two was largely the same;[5]
[5] Ibid.
d)subsequent to separation the respondent suffered from a transient ischaemic attack;[6]
e)the respondent was subsequently diagnosed with an adjustment disorder with depressed mood for which his employment was terminated;
f)the respondent had been in receipt of a government allowance earning up to $600 per fortnight;
g)on separation the respondent had access to no more than $3,200;
h)during the relationship the applicant and respondent maintained a joint account with Westpac Banking Corporation the number of which was …84;
i)each week the whole of the respondent’s salary was paid into that joint account, on average amounting to between $1,150 and $1,300;
j)each week the whole of the applicant’s salary was paid into that joint account, on average amounting to between $1,750 and $1,800;[7]
k)the respondent’s superannuation was paid into the applicant’s superannuation account;
l)the applicant transferred a total amount of $144,133.30 from the joint Westpac account to the applicant’s accounts styled “personal choice” and “altitude” accounts; and
m)the N Street property was refinanced on several occasions with the consequence that on 10 July 2014 the sum of $45,061 was deposited into the joint account and on 7 August 2014 the sum of $39,083 was deposited into the joint account.
[6] Ibid.
[7] Curiously, despite those figures the respondent contended “my contribution to the joint account were (sic) significantly higher” than the applicant’s.
The respondent raised a contentious point concerning the source of funds for the deposit of GG Street in Tasmania. As has already been recorded, the applicant denied that the respondent had any involvement in or claim to the GG Street property, contending that the applicant alone acquired that property using funds provided by the applicant’s mother. Conversely, the respondent asserted that the sums derived from the refinance of the N Street property generated funds ($45,061 on 10 July 2014 and $39,083 on 7 August 2014) that were applied by way of deposit for the purchase of GG Street in Tasmania. That was an important assertion from the respondent’s point of view. To make good the point, one might have expected the respondent to demonstrate the flow of funds into and out of bank accounts ultimately leading to the payment of the deposit for GG Street. The respondent did not produce any bank statements or other documents to verify his assertions in that regard. Instead, he relied on the following statement –
These funds were funds unused from a refinance of a mortgage that was in both our joint names, then some or all of these funds were used to pay the deposit of GG Street.
While he did not say as much in terms, I took him to mean that “these funds” were the total of $45,061 and $39,083. I also took the respondent to mean that the total amount was not used following a refinance such that the total therefore available to be applied from the joint account was in fact applied in paying the deposit to purchase GG Street. I further took the respondent to contend that as those funds were joint funds, any application of them in the acquisition of GG Street raised an equitable interest in his favour in his capacity as one of the persons jointly entitled to the proceeds of the money in the joint account.
In the passages below I have examined the competing contentions leading to my factual findings in relation to GG Street.
The respondent stated in paragraph 10 of his 20 January 2020 affidavit that soon after he and the applicant separated in August 2016 the applicant made payments in 12 transactions to various persons including to his brother and members of the LL family. The respondent said those 12 transactions took place over 14 days and totalled to $9,166.67. He said that in April (presumably of 2014, although the respondent did not say) all or most of those “transactions were sent back to (the applicant’s) Westpac choice account…marked “gift””.
So far as the applicant’s contentions about the funds for the acquisition of GG Street were concerned, the respondent said the applicant depleted between $150,000 and $180,000 of the applicant’s mother’s funds in the purchase of a new car, rent, an overseas trip, deposits for real estate and items of clothing. The respondent challenged the applicant’s contention that the applicant’s mother had conferred a gift solely in favour of the applicant. The respondent stated that the applicant’s mother told the applicant and the respondent that both the applicant and the respondent “could access her funds if we needed to use them” (the respondent’s words, paraphrasing the alleged arrangement between the applicant, the applicant’s mother and the respondent). It was common ground that the applicant’s mother has been diagnosed with dementia and that she lives in a nursing home, incurring significant indebtedness. She did not give evidence.
The respondent agreed that the applicant and the respondent purchased several properties together during their relationship. The narration concerning the flow of funds for the acquisition of each property was to some extent contentious. It became necessary to examine each item of property so as to determine the legal and equitable interests of the parties in the property according to ordinary common law and equitable principles. That is the first of what the High Court described as “three fundamental propositions which must not be obscured”.[8] Each property called for separate consideration. In the passages below I have addressed each in strict chronological sequence.
[8]Stanford v Stanford (2012) 247 CLR 108, 120 (at [37]) (French CJ, Hayne, Kiefel and Bell JJ).
The N Street property
As so often happens in property cases in this court, basic evidentiary issues are overlooked, this case falling squarely into that category. For the purposes of the Torrens system of land registration, the register records pivotal information about ownership of interests in land. Cases concerning indefeasibility of interests in land under s 42 of the Transfer of Land Act[9] emphasise how the Torrens system is one involving title by registration and not registration of title. That said, under s 79 and s 90SM of the Family Law Act the court reposes power to alter interests in property irrespective of the identity or expressed nature of the registered interest.
[9] Cases in this category include Breskvar v Wall (1971) 126 CLR 376, Macquarie Bank Ltd v Sixty-Fourth Throne Pty Ltd [1998] 3 VR 133, Russo v Bendigo Bank Ltd [1999] 3 VR 376.
Very little in the way of details was adduced in evidence in relation to title information concerning the N Street property. Both parties accepted that each was registered as a joint proprietor of that parcel of land. The date of their registration was not identified, however. The contract pursuant to which they purchased that parcel of land was not put into evidence so it was not possible to verify the price that was paid for that parcel of land. The applicant did not put into evidence bank statements showing how much money and from what source were the funds to settle the purchase. As a result, only sparse information existed establishing the details in respect of the N Street property at the commencement of the parties’ ownership.
At paragraph 50 of his trial affidavit the applicant said that pursuant to the WBP Valuation the amount placed on the N Street property as at the date of the trial of this proceeding was $715,000. He said Westpac was owed $292,000 as at the date of separation and currently Westpac is owed $282,000. The applicant said the net equity in the N Street property was $284,000. He arrived at the net equity amount by including as liabilities sums owed to and secured by Westpac over that parcel of land including the sum of $26,600 on accounts (ending) 0464 and $122,000 on account (ending) …72.
Expressed arithmetically, according to the applicant, the positon was as follows –
current value $715,000
less
Westpac #...82 $282,000
Westpac #...64 $26,600
Westpac #...72 $122,000 $430,600
net equity $284,400
The respondent’s version of the value and net equity of the N Street property was put in a manner that was not easy to distil. I make no criticism of the respondent in saying that. After all, to the lay person the complexities of family law litigation can be daunting.
In his case outline the respondent put forward his contentions about the N Street property, intertwined with GG Street. He said the following, with errors in the original –
N Street - I seek 100% due to funds lost from the sale of GG Street. Should this not be awarded then I seek orders for a share of the proceeds in GG Street. If possible as the applicant has affirmed he has exhausted these proceeds. Should this order not be made as previously approved by the applicant I retain the outdoor spa and outdoor table which I purchased.
He did not undertake an analysis of the N Street property by reference to its purchase price, its value at trial, the net equity of it and how much he actually put into it in monetary terms as did the applicant. Instead, the respondent argued that he was entitled to the whole of the sum “lost from the sale of GG Street”. Alternatively, he said that if such an order was not made, he sought orders “for a share of the proceeds in GG Street”. Expressed in those terms I confess to having encountered enormous trouble understanding precisely what the respondent was seeking.
Bearing in mind the applicant argued that the respondent “made no contribution to the GG Street property at all”[10], it became relevant to make factual findings about the connection, if any, between the GG Street property in Tasmania and the N Street property in Victoria. The applicant said no connection existed. The respondent maintained the opposite, contending that the applicant’s mother allegedly told the applicant and the respondent that each could use her funds to acquire GG Street.
[10] T8 L24 in the applicant’s opening.
It became necessary to assess the version of evidence given by each on this issue and in doing so, to assess the extent to which any inroads were made by the cross examination of each party in the version the other gave.
The respondent cross-examined the applicant. He extracted from the applicant an admission that the applicant applied funds from the joint account towards the purchase of the GG Street property. However, the applicant added that those funds were immediately returned to the joint account. The respondent’s point was not thereafter developed and the evidence rested on the basis that whatever amount from the joint account may have been used (no details of which were given) towards the deposit of the GG Street property, those funds were immediately returned.
On the applicant’s version of the evidence, the respondent did not demonstrate that joint funds were used to acquire the GG Street property.
Ms Conlan cross-examined the respondent on point. The respondent gave evidence that $10,000 from the joint account was used. He denied that the sum of $10,000 was repaid.[11] Ms Conlan put to the respondent that the applicant used funds in the parties’ joint account because he was unable to withdraw more than $5,000 in any single transaction from the applicant’s mother’s account. The exchange revealed the respondent’s lack of memory on point. His evidence was as follows –
[11] T55 L25.
MS CONLAN: Okay. So in tender exhibit 4 he emailed you on 8 April 2015 and he said to you:
Just to let you know I’ve taken some money out of the Tassie and N Street account –
which is the joint account –
to pay the deposit, as I can only transfer $5000 out of mum’s account each day, so I’ve transferred 5000 today and I will transfer 55,000 over the next 11 days.
Do you remember him sending you that email?---I don’t. I don’t recall that email, no.
And what he was telling you there was he was going to be taking the money out of the joint account because he couldn’t transfer it directly from his mother’s account because she had a $5000 limit----?---Okay.
and that he was going to replace that 60,000 over 11 days with all this, meaning he would replace $5000 of the money into the account, and he was going to replace the $55,000 that was owing to the joint account over the next 11 days because he could only take $5000 a day out of his mother’s account. Do you remember him sending that email to you?---I don’t recall. I don’t recall it 100 per cent, but I vaguely recall him inviting anyone to buy the property and that he won’t buy it with his brother, but
Okay. I’m just asking you about the email at the moment, so just answer the question.
Mr Cesari: No, I don’t recall, but that is more.
MS CONLAN: Do you recall him sending that email? No, not the whole thing. No.
And do you recall your response to him a minute later was:
I don’t care any more and stop emailing me.
Do you remember saying that to him? Mr Cesari, I’m asking you a question.
HIS HONOUR: Mr Cesari, you
Mr Cesari: What – I’m talking
HIS HONOUR: Just a moment.
Mr Cesari: ..... to his mum.
HIS HONOUR: Mr Cesari, I see you looking to the side and, obviously, talking to someone.---No, I’m not talking to anyone, your Honour.
Well, why are you turning your head and your lips are moving?---Yes, I’m trying to actually – I’m trying to recall, recall what actually really is the thing happening. I can’t. I actually can’t remember these emails. I don’t know why Mr Aldam wouldn’t have given me, like, these emails earlier so it would have shut this conversation down. Like, I can’t remember everything off the top of my head like it was yesterday. Like, I just can’t. It has been years.
Well, you are not permitted? So I keep saying
You are not permitted to speak to someone during the course of your cross-examination. If I learn that you have there will be severe consequences?---I understand, your Honour. I’m just trying to get my head around it. Like, I’m just trying to – I just don’t understand why, even if he was..... even if he did pay the money back to our account, all the money has not been returned to what has actually been taken out, regardless, but, like I said, I will admit that I originally didn’t want this property, and that’s why I was saying I don’t really care about it any more, but I’m just flabbergasted by all this information that’s now coming out when, at the end of the day, Mr Aldam could have actually just said to me, like, two years ago, well, this is what you said here and that’s the end, sorry. Right. It’s not – like, there was, as I mentioned before, there was joint funds being paid for, like, furniture, electricians, and I don’t understand, mainly, why did Mr Aldam actually put on his affidavit that he didn’t use joint funds. That’s why it’s really playing with my head. He said that countless times.
MS CONLAN: Now, Mr Cesari, at tender exhibit 3 the summary of funds actually demonstrates that not only was all the money returned to the joint account, in fact, the joint account ended up $1000 in the black from Mr Aldam’s mother’s account, and you can see that right at the bottom. There is a balance that’s highlighted in yellow at $1000. So, in fact, the joint account after the GG Street transactions occurred and were settled actually ended up with $1000 it never had prior to the GG Street production – the GG Street purchase?---Yes, well, the point is I can’t really comment on that because I haven’t been supplied with all the statements that I’ve requested on multiple occasions.
So I’m putting to you that there was actually no contribution from you for the GG Street purchase, and there was no actual contribution to the joint fund. It was simply used as a vehicle to move money from the mother’s joint – from Mr Aldam’s mother’s joint account to the purchase of GG Street. Do you agree with that?---No. No, I don’t agree with that at all. No, I don’t agree. I believe that’s completely not correct.
That exchange revealed two things. The first was that the respondent had no real recollection of the matters about which he was being cross-examined. The second, and to my way of thinking the more odious, was the prospect that another person was present with the respondent when the respondent was giving his evidence. I had to warn the respondent twice about permitting anyone else who may have been present with him influencing his evidence. This was an electronic trial.
Ms Conlan put to the respondent the entries on exhibit 3 being a summary of the manner in which funds were applied from the joint account. The respondent rejected those entries. However, he did not offer a more credible contradictory evidentiary position.
It seemed to me that any assessment of the factual situation in relation to the N Street property involved returning to first principles. It was common ground that when the applicant and respondent first cohabited each had very little in the way of funds from his own resources. In this case no evidence existed of a significant capital injection by either party. The applicant and respondent appeared on the evidence to have put in an amount that represented the deposit on the N Street property and they jointly undertook borrowings secured by mortgage over that property, each being a co-mortgagor. The amounts each paid from his salary varied yet each contributed consistently, although not in an amount that precisely corresponded one to the other. I was unable to detect such a discrepancy in the parties’ respective contributions so as to warrant the treatment of the contributions of each as being other than equal.
So far as the chronological evolution of real estate subsequently acquired was concerned, the property information set out below emerged.
N Street Suburb R
As at 5 April 2019 it was valued at $715,000. No challenge was made to that evidence.
Its title particulars were volume … folio ….
On 3 May 2007 the applicant and respondent were registered as tenants in common in equal shares.
On 27 October 2009 Westpac Banking Group became the registered proprietor of mortgage …4X.
Q Street, D Town, Tasmania
The documentation among the material exhibited was sparse in relation to this parcel of real estate. No valuation of it was among the documentary exhibits in the case. A few pages of the contract dated 1 June 2010 was among the documentation exhibits in this case showing that a vendor called Mr MM sold the land to both the applicant and the respondent for a purchase price of $420,000.
Unit 1 B Street, Suburb R
As at 1 April 2019 that parcel of real estate was valued at $370,000. No challenge was made to that evidence. The land was more particularly described in certificate of title volume … folio ….
The respondent was the sole registered proprietor. The title was encumbered by mortgage …4T given in favour of Australia and New Zealand Banking Group Limited, registered on 25 June 2016. The applicant registered caveat …1M claiming an “implied, resulting or constructive trust”. The respondent acquired that parcel of land for a purchase price of $330,000 pursuant to which a deposit was paid of $33,000 on 19 June 2014.
Who paid the deposit was a matter in contention in this case. Who paid amounts due in reduction of the mortgage was also a fact in issue.
Unit 2 B Street, Suburb R
The registered proprietor of that parcel of land was P Pty Ltd, the date of registration being 27 June 2014. The valuation given was $375,000. The land, more particularly described in certificate of title volume … folio …, was encumbered by mortgage …3E, registered on 27 June 2016.
T Street, Suburb G
That parcel of real estate was valued as at 8 August 2019 in the sum of $390,000. The land was more particularly described in certificate of title volume … folio ….
On 27 December 2017 the respondent became the sole registered proprietor of that land pursuant to instrument of transfer …5J. The land is encumbered by mortgage …6G in favour of J Ltd registered on 27 December 2017. The applicant registered a caveat on 7 June 2018, although the nature of the interest claimed was not given.
Of course, the registered proprietor of land is not conclusive as to the manner in which legal and equitable interests in that property may be altered for the purposes of s 79 or s 90SM of the Family Law Act.
Set out below is a summary of the registered proprietorship of the various parcels of land in issue in this case.
Joint proprietorship
i)N Street, Suburb R South;
ii)Q Street, D Town, Tasmania.
Sole proprietorship – respondent
i)Unit 1 B Street, Suburb R;
ii)T Street, Suburb G.
Sole proprietorship – other
i)Unit 2 B Street, Suburb R – P Pty Ltd;
ii)GG Street, D Town, Tasmania – applicant.
The fact of two parcels of real property standing solely in the name of the respondent does not mean that the respondent has some superior entitlement to those parcels of land ahead of the applicant. It may be that by arrangement between the two, an agreement was reached for those two parcels to be so registered. And even though those two parcels of land were registered solely in the name of the respondent, that fact told nothing of the direct and indirect financial and non-financial contributions each party may have made in respect of each parcel of land.
A great deal of time and effort in this case was directed by each party to demonstrating entries on bank statements and the significance of each. Naturally, entries on bank statements are useful evidence so long as direct evidence is given by a party capable of speaking about those entries and, for the purposes of this case under s 90SM of the Family Law Act, capable of linking the entries on the relevant bank statements to one or more properties in issue in this case.
Before going to the entries on the bank statements that were adduced in evidence in this case, it can be stated neutrally that a large number of bank statements were put in evidence from or concerning five accounts. Those accounts were as set out immediately below.
In summary, the applicant and respondent operated five accounts, four of which were in their personal names and one, a superannuation account, was in the name of X Pty Ltd as trustee for the DD Super Fund. The accounts were all maintained with Westpac. They were –
a)a fixed home loan account opened on 22 October 2013 the end digits being …82, the initial loan sum being $315,000, described by the applicant’s solicitors as being referrable to the N Street mortgage;
b)an investment loan account opened on 9 July 2014 the end digits being …300 and …472, the initial loan amount being $122,335, described by the applicant’s solicitors as being the N Street mortgage and offset account;
c)a deposit account opened on 10 July 2014 the end digits being …64 and …84, the initial loan amount being $30,000;
d)a fixed rate investment property loan account opened on 7 August 2014, the initial loan amount being $44,808, described by the applicant’s solicitors as being referrable to the Q Street mortgage, this loan being a construction loan; and
e)a do-it-yourself working account in the name of X Pty Ltd as trustee for the DD Super Fund the relevant digits being …48, the opening date being unstated but the closing balance as at 29 May 2020 being $39,772.86.
In most instances, the bank statements from those accounts were presented especially by the respondent, chaotically, out of sequence, with statements of one account interspersed with statements of other accounts. I spent one full day of a weekend re-arranging the statements that were produced in this case into an orderly, chronological and non-duplicated manner so as to gain a proper understanding of the respective contentions of the parties about who paid what and for what from what account.
A complication arose from the respondent’s production of most of the bank statements on which he sought to rely in his final written submissions, those documents not forming any part of his evidence in the trial. Understandably, the applicant’s legal representatives complained about that course, notwithstanding that the respondent had no legal representation in this case. On 8 July 2020 orders were made by consent allowing the respondent to rely on certain bank statements that he had not put forward as part of his evidence-in-chief. However, I required the respondent to produce clean copies of those statements with all annotations removed. He duly complied. That left the respondent’s evidence consisting of the information in and exhibits to his trial affidavit, admissions gained in cross-examination and the clean versions of the bank statements without his annotations.
By no means could it be said that the entries on all bank statements spoke for themselves. Had this case been prepared along orthodox lines, a party should have given evidence in his trial affidavit that he paid a particular amount on a particular day and that the evidence of such a payment was found on a particular bank statement of one of the five accounts produced in this case. Very little evidence along those lines was given in this case.
In any event, all accounts in this case were joint.
It is possible to make certain observations from an examination of the entries on the accounts themselves. The comments below are by no means exhaustive yet they arise from no more than a summary examination of the statements. Chronologically, the first account was …82. From it –
a)evidence about account …82, described as the N Street mortgage, was made up of 16 statements from 22 October 2013 to 20 March 2020;
b)for the most part, the debit entries recorded on the bank statements for that amount show amounts of interest being charged to that account;
c)for the most part the credit entries recorded on the bank statements for that account show regular amounts of $850 transferred fortnightly from account …84; and
d)the closing balance as at December 2016 was a debit sum of $290,386.82. In real terms, over three years the debit balance of that account had reduced by no more than $25,000.
Next chronologically was account …472 with account …300. Of those accounts the following may be said –
a)those accounts were used to pay an assortment of payees ranging from an energy provider, to a flyscreen vendor and Foxtel;
b)interest of varying amounts was charged to those accounts over the period covered by the statements produced in respect of those accounts, namely 10 July 2014 to 8 January 2020;
c)transfers were regularly made from account …84 in order to meet interest sums due;
d)over the life of that loan regular deposits of varying sums were made by Y Pty Ltd;
e)certain transfers were effected from this account to the account ending …65 (the Q Street account); and
f)a large number (possibly the majority in number) of transactions recorded on that account related to activities in Tasmania ranging from payments to K Town Council, to payments to HH Business, airfares, and linen purchases.
Account …64, also known as account …84 originated on 10 July 2014 and on 26 February 2020 had a debit closing balance of $26,452.25. In real terms only $4000 or thereabouts was paid in reduction of the overall debt principal. A close examination of the entries on statements relevant to that account reveals the following –
a)regular deposits were made to that account from salary transfers in the name of JJ Group of fluctuating amounts (some of $1082.23 with others of $1106.31);
b)regular deposits were made to that account from salary transfers in the name of KK Pty Ltd of fluctuating amounts (some of $1834.25 with others of $5945.47); and
c)neither party gave evidence in his affidavit that he had added the total amounts deposited into that account by one party or the other.
The bank statements in relation to the fixed rate investment property loan (account …65) revealed transactions mostly in the nature of advances concerned with construction activities. Other observations may be expressed, including the following –
a)the final drawdown of $13,682.50 was made on 11 March 2015;
b)at its peak, that account recorded its highest debit entry of $213,273.73 on 7 April 2015;
c)interest payments thereafter were met from transfers from account …300;
d)during 2015 and 2016, for the most part only the amount of monthly interest being accumulated to account …65 was being paid from funds transferred from account …300;
e)the debit balance on account …300 remained at between $212,416 and $213,290 for a sustained period of time, despite regular interest payments having been made;
f)by 2017, even with interest being paid, this account retained a debit balance of $212,410.91; and
g)on 7 May 2020 the closing debit balance of the account was $211,999.55.
So far as the superannuation account was concerned, that stood at $39,772.86.
Applicant’s contentions about bank statements
In written submissions received by my associates on 11 August 2020, the applicant made a collection of submissions concerning the bank accounts maintained by the parties in this case. Those submissions were helpfully divided into propositions in relation to each discrete account.
Westpac account …84
The applicant made submissions in relation to account …84. Those submissions were based partly on the entries in the bank statements for that account as well as on evidence obtained in cross-examination. The following is a synthesis of those contentions –
a)that account was a joint account;
b)no evidence was adduced in relation to separate spending on that account when the account was used as a credit card account;
c)consequently, it was not possible to attribute to either party the identity of the person who actually spent an identifiable sum when the account was used as a credit card during the parties’ relationship;
d)once an examination was conducted into the parties’ respective salaries deposited into that account,[12] the respondent’s total was $58,178.94 and the applicant’s was $53,207.56, yet once sums applied for the respondent’s car were deducted (they totalled $18,551.07) the parties’ salaries deposited into that account were $39,627.87 for the respondent and $53,207.56 for the applicant; and
e)in real terms, so submitted the applicant, there was no significant disparity in incomes earned by the parties during their relationship.
[12] Exhibit A3.6.
I agree.
When examining the debit entries to account …84 it was not possible to say for whose benefit any particular payment was made. The entries on the many pages of bank statements did not indicate the answer to that enquiry. In those circumstances I take the view that the expenditure on account …84 is to be regarded as being joint for which the liability is to be jointly shared.
Westpac account …65
The parties agreed that this loan was an interest only loan relating to the Q Street property.
On behalf of the applicant it was contended the applicant had given evidence about tax losses in relation to that property. In paragraph 76(g) of his trial affidavit the applicant gave evidence, none of which was challenged during the applicant’s cross-examination, that –
a)the property sustained tax losses for the financial years ended 30 June 2016, 2017 and 2018; and
b)the applicant alone met the shortfall between income and outgoings in relation to that property since separation.
On behalf of the applicant it was put that the respondent did not adduce any evidence in relation to his contributions to the shortfall between income and expense concerning Q Street.
It seemed to me that the applicant was correct in his contentions that he made the whole of the post-separation contributions. They amounted to –
·$7,830 (2016);
·1,827 (2017);
·$6,282 (2018)
$15,939
Westpac accounts …82, …72 and …300
On behalf of the applicant several contentions were urged in relation to the N Street mortgages. They included the following –
a)account …82 was a principal and interest loan, an agreed position with the respondent;
b)account …72 was an interest only loan, an agreed position with the respondent;
c)account …300 was an offset account, as agreed with the respondent;
d)since separation, the principal on the N Street mortgages has been reduced by the applicant; and
e)the respondent did not give evidence that he had contributed to addressing the shortfall in the income and expenses of the N Street mortgages.
Respondent’s submissions
The respondent relied on his written submissions he prepared which were filed on 27 June 2020. In those submissions he advanced arguments directed to six parcels of real estate, namely –
a)N Street, Suburb R;
b)Q Street, D Town;
c)Unit 1 B Street, Suburb R;
d)Unit 2 B Street, Suburb R;
e)GG Street, D Town; and
f)T Street, Suburb G.
He made specific submissions about each property.
So far as N Street, Suburb R was concerned, he relied on information in his own affidavit. He said of that property –
a)he solely managed negotiations, sourced the builder, obtained quotations, managed the construction process and undertook landscaping and maintenance;
b)he arranged tenants although the applicant managed rental;
c)the applicant has managed this property since separation;
d)rental income is now paid to the applicant directly rather than into the parties’ joint account; and
e)arithmetically, since separation, so the respondent contended, the applicant has received monthly rental income on this property of $2,303 while meeting mortgage instalments of $1,712 per month thereby receiving to his own use and benefit the balance, namely $591 per month, there being no accounting to the respondent for any of that sum, aggregating $28,368. That was the respondent’s argument, at least.
The respondent addressed Q Street, D Town. He supported his contentions purporting to rely on documents that were not put in evidence and instead were put forward as, what he described in a lay person’s terms, “exhibits” to his submissions. The status of those documents was in doubt because they were not formally proved. That said, on behalf of the applicant the most vocal protest emerged about annotations made by the respondent to bank statements and not to documents concerning the Q Street property. It seemed to me that the documents on which the respondent wished to rely relating to the Q Street property were useful and completed blanks that otherwise existed in the evidence adduced by both parties. So far as the details of the Q Street property were concerned, the respondent submitted as follows –
a)it was purchased in joint names;
b)the purchase price was $42,000;
c)the combined purchase price and construction cost was $237,419;
d)repayments of the construction loan were paid from the parties’ joint account;
e)funds to purchase the Q Street property and to fund the construction on it were derived in part from a refinance of the N Street property; and
f)the respondent said the Q Street property sat vacant for eight months.
So far as the contention that the purchase sum and construction costs were funded by a refinance of the N Street property, no refinance documentation was produced. The respondent may have been correct in his statement. However, the point was not proved.
So far Unit 1 B Street, Suburb R was concerned, the respondent’s submissions were a mix of fact and unproven assertion. He submitted –
a)the purchase price was $330,000;
b)a deposit of $33,000 was paid;
c)settlement occurred on 13 June 2016; and
d)the respondent is the registered proprietor of the land.
The first consideration as identified above by Sir Richard Eggleston where a witness’s evidence contains internal contradictions, the question of which part of the witness’s evidence should be accepted and which part rejected has been surveyed in Dublin Wicklow and Wexford Rly Co v Slattery[34] and Christmas v Nicol Bros Pty Ltd.[35]
[34] (1878) 3 App Cas 1155.
[35] (1941) 41 SR (NSW) 317.
A test for assessing the truth of a witness’s evidence has also been stated by Gosnell J in GH v The Catholic Child Welfare Society (Diocese of Middlesbrough).[36]There, his Lordship said –
In his instructive article entitled The Judge as Juror: The Judicial Determination of Factual Issues,[37] published in Current Legal Problems 38, Mr Justice Bingham (as he then was) made this observation –
The main tests needed to determine whether a witness is lying or not are, I think, the following, although their relative importance will vary widely from case to case –
(1) the consistency of the witness’s evidence with what is agreed, or clearly shown by other evidence, to have occurred;
(2) the internal consistency of the witness’s evidence;
(3) consistency with what the witness has said or deposed on other occasions;
(4) the credit of the witness in relation to matters not germane to the litigation;
(5) the demeanour of the witness.
[36] [2016] EWHC 3337 (QB).
[37] Thomas Bingham, The Judge as Juror: the Judicial Determination of Factual Issues (1985) 38(1) Current Legal Problems 1.
As to that last point, demeanour, I was also able to observe demeanour of the applicant and the respondent, a fact that provided a considerable advantage as was reflected in an array of cases. Those cases include Coghlan v B Street,[38] Dearman v Dearman,[39] Owners of SS Hontestroom v Owners of SS Sagaporack; SS Hontestroom v SS Durham Castle,[40] Paterson v Paterson,[41] Warren v Coombes,[42] Brunskill v Sovereign Marine & General Insurance Co Ltd,[43] Jones v Hyde,[44] Abalos v Australian Postal Commission,[45] Devries v Australian National Railways Commission,[46] State Rail Authority of New South Wales v Earthline Constructions Pty Ltd,[47] Fox v Percy[48] and Husain v O & S Holdings (Vic) Pty Ltd.[49]
[38] [1898] 1 Ch 704.
[39] (1908) 7 CLR 549.
[40] [1927] AC 37.
[41] (1953) 89 CLR 212.
[42] (1979) 142 CLR 531.
[43] (1985) 59 ALJR 842.
[44] (1989) 63 ALJR 349.
[45] (1990) 171 CLR 167.
[46] (1993) 177 CLR 472.
[47] (1999) 73 ALJR 306.
[48] (2003) 214 CLR 118.
[49] [2005] VSCA 269.
It is important not to give too much credence to demeanour when considering the evidence of a witness. In Fox v Percy, the High Court observed that it can be dangerous to place too much reliance upon the appearance of a witness rather than focusing on more objectively reliable matters.
In this case I have not relied solely on witness credibility. Even unchallenged evidence may be accepted but if it does not go to a fact in issue then the utility of that unchallenged evidence diminishes. To the extent that unchallenged evidence addresses a fact in issue, it is long established that unchallenged evidence need not be accepted if it is inherently incredible or inherently improbable. Cases that stand for that proposition include Precision Plastics Pty Ltd v Demir,[50] Ellis v Wallsend District Hospital,[51] Levinge v Director of Custodial Services[52] and Allied Pastoral Holdings Pty Ltd v Federal Commissioner of Taxation.[53]
[50] (1975) 132 CLR 362.
[51] (1989) 17 NSWLR 553.
[52] (1987) 9 NSWLR 546.
[53] (1983) 1 NSWLR 1.
In Kuhl v Zurich Financial Services Australia Ltd[54] the High Court acknowledged that it was a serious matter to reach the conclusion that a party’s witness had failed to comply with the duty to tell the whole truth to the court. The plurality of the High Court said the following –
…Witnesses are supposed to answer questions put by counsel responsively: they are supposed to give a full answer, but no more. It is one thing to say that a witness was not asked the right questions. It is another thing to say that a witness did not answer the questions that were asked. And it is an even more serious thing to say that a witness was “reluctant” to answer. The duty of a witness is to tell the truth, the whole truth, and nothing but the truth so far as the questions asked seek it. The duty of a witness to answer questions responsively involves not only a negative duty (not to volunteer material for which the question does not call), but also a positive duty (to proffer all material within the witness's knowledge for which the question does call).
[54] (2011) 243 CLR 361 (at [62]).
So far as the benefit enjoyed by a trial judge on matters of witness assessment and credibility are concerned, it is critical to identify the observations on point by the High Court in Louth v Diprose.[55] There, the court was concerned with an appeal on factual findings made by the learned trial judge, King CJ of the Supreme Court of South Australia. An appeal to the Full Court of the Supreme Court against factual findings made in support of conclusions about unconscionable conduct was dismissed. On further appeal to the High Court those factual findings were not disturbed. Various members of the High Court made observations about the fact-finding process in which a trial judge engages. Deane J held as follows –
As Rich J. observed in Wilton v. Farnworth,[56] in a judgment with which Dixon and McTiernan JJ. agreed, a trial judge in an undue influence case in which the parties directly involved give evidence ordinarily enjoys an immeasurable advantage in estimating the characters and capacities of those involved in the impugned transaction.
[55] (1992) 175 CLR 621.
[56] (1948) 76 CLR 646, 654.
Over the course of the last century the High Court has made observations about and applied the principles in relation to a trial judge’s findings of fact. Those High Court decisions include McLaughlin v Daily Telegraph Newspaper Co Ltd (No 2),[57] Dearman v Dearman,[58] Scott v Pauly,[59] Paterson v Paterson,[60] Voulis v Kozary,[61] Warren v Coombes,[62] Brunskill v Sovereign Marine & General Insurance Co Ltd,[63] Abalos v Australian Postal Commission,[64] Devries v Australian National Railways Commission,[65] State Rail Authority of New South Wales v Earthline Constructions Pty Ltd,[66] Walsh v Law Society of New South Wales,[67] Rosenberg v Percival,[68] Fox v Percy,[69] CSR Ltd v Della Maddalena,[70] Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd,[71] Minister for Immigration and Border Protection v SZVFW[72] and Lee v Lee.[73]
[57] (1904) 1 CLR 243, 247.
[58] (1908) 7 CLR 549, 561.
[59] (1917) 24 CLR 274, 278-281.
[60] (1953) 89 CLR 212, 218-225.
[61] (1975) 180 CLR 177, 181-183.
[62] (1979) 142 CLR 531, 537-533.
[63] (1985) 59 ALJR 842.
[64] (1990) 171 CLR 167,178-179.
[65] (1993) 177 CLR 472, 479-481.
[66] (1999) 73 ALJR 306 (at [73]-[93]).
[67] (1999) 198 CLR 73 (at [54]).
[68] (2001) 205 CLR 434 (at [27], [37]-[41], [92], [103], [163]-[164]).
[69] (2003) 214 CLR 118 (at [22]-[31]).
[70] (2006) 80 ALJR 458 (at [17]-[24]).
[71] (2010) 241 CLR 357 (at [76]).
[72] (2018) 264 CLR 541 (at [29]-[34], [153]).
[73] (2019) 93 ALJR 993 (at [1], [55]).
The Full Court of the Federal Court of Australia recently considered the point in Jadwan Pty Ltd v Rae & Partners (A Firm),[74] judgment in which was handed down on 9 April 2020.
[74] [2020] FCAFC 62.
Deane J also explained in Louth v Diprose that where an intermediate appellate court has agreed with the findings of fact made by the trial judge, even the High Court should not disturb those concurrent findings in the absence of special reasons such as plain injustice or clear error. So much was held in The Commonwealth v Introvigne,[75] South Australia v Johnson,[76] Waltons Stores (Interstate) Ltd v Maher[77] and Walker v Wilson.[78] Of special relevance are the comments of Deane J in Waltons Stores (Interstate) Ltd v Maher about the rationale and justification for such an approach. It was as follows –
In a context where the cost of litigation has gone a long way towards effectively denying access to the courts to the ordinary citizen who lacks access to government or corporate funding, it is in the overall interests of the administration of justice and of the preservation of at least some vestige of practical equality before the law that, in the absence of special circumstances, there should be an end to the litigation of an issue of fact at least when the stage is reached that one party has succeeded upon it both on the hearing before the court of first instance and on a rehearing before the court of first appeal.
[75] (1982) 150 CLR 258, 274.
[76] (1982) 42 ALR 161.
[77] (1988) 164 CLR 387.
[78] (1991) 172 CLR 195, 200.
The plurality (Dawson, Gaudron & McHugh JJ) expressed matters slightly differently but to like effect. Their Honours held as follows –
The assessment of character is part of the process involved in determining questions of credit, although, as here, there may be cases in which character assumes a significance of its own. The process of accepting or rejecting evidence has been described as one that involves an inference based, at least in part, on “a principle of faith in human veracity sanctioned by experience”.[79] Likewise, the assessment of character, which is often an earlier step in the process of determining issues of credit, may be described as involving an inference based, at least in part, on a principle of faith in human conduct sanctioned by experience. In both cases, the process is one in which the decision maker brings to bear his or her experience of life and, perhaps, his or her personal predilections. Because of this, different people may come to different conclusions about character and credit and, hence, as to disputed matters of fact.
It is precisely because different people may come to different conclusions as to character, credit and disputed matters of fact that, in a forensic contest, findings as to those matters are entrusted to the trial judge (or, in cases of trial by jury, to the jury) in accordance with rules and procedures that guarantee a considerable measure of finality. And in a forensic contest, findings as to those matters will usually be bound up with each other and involve some consideration of demeanour in the witness box - as they did in this case.
[79] J. H. Wigmore, Wigmore on Evidence, vol. IA (Tillers ed, 1983) p. 954, referring to an unverified citation from T. Starkie, Law of Evidence, (1824). See also Doney v The Queen (1990) 171 CLR 207, 214.
The plurality also mentioned the relevance of demeanour. It was as follows –
They are findings which were substantially dependent on the trial judge's assessment of character and credit and which were reached having regard to the demeanour of the parties in the witness box. As such and as the authorities repeatedly acknowledge, they are findings which, unless some error is to be discerned, an appeal court must respect.[80]
[80] Paterson v Paterson (1953) 89 CLR 212, 218-224; Taylor v Johnson (1983) 151 CLR 422, 441-443; Brunskill v Sovereign Marine & General Insurance Co Ltd (1985) 59 ALJR 842, 844; Baumgartner v Baumgartner (1987) 164 CLR 137, 144-146; Abalos v Australian Postal Commission (1990) 171 CLR 167, 178-179; Dawson v. Westpac Banking Corporation (1991) 66 ALJR 94, 99, 105, Wilton v Farnworth (1948) 76 CLR 646, 654-655; Blomley v Ryan (1956) 99 CLR 362, 409.
Making findings of fact in a case such as this imposes an enormous responsibility on the trial judge. I have approached the task diligently focused on the requirements set out above.
Here, where the evidence of the applicant on a particular issue conflicted with the evidence of the respondent on the same issue I preferred the applicant’s version of events. In making that finding I have not taken into account the submissions of the applicant about the respondent serving a community corrections order said to have arisen from charges that, so it was put, included a conceded charge of theft and use of illicit substances leading to the respondent being remanded for 56 days.
Yet on the respondent’s own written submissions he conceded he had been imprisoned. He said the following –
I have been made to feel like I am being set up to fall and return to prison again.
The evidence did not reveal why he was imprisoned. The fact of being imprisoned, in and of itself, does not tell definitively of a witness’s credibility.
Suffice it to say that for reasons other than the respondent’s imprisonment I have preferred the applicant’s evidence where it conflicts with the respondent’s.
The orders the applicant proposed were, save for superannuation, reflective of orders altering property interests of the parties as to 70% in favour of the applicant and 30% in favour of the respondent. As mentioned earlier, the discrepancy lay in the post-separation contributions and in the applicant’s non-financial contributions in relation to managing the properties post separation, especially preventing the mortgaged properties from mortgage enforcement steps. In addition the discrepancy lay in the unanswered evidence that the respondent had appropriated substantial amounts in rent for his own purposes. Further, the discrepancy lay in the difficulties created by the respondent by his defective disclosure. A verifiable insight into his true financial contributions was rendered impossible by reason of the dereliction in his approach to disclosure.
In those circumstances it seemed to me that the applicant’s contentions were correct when he proposed orders altering the property interests of the parties on the basis of 70% in favour of the applicant and 30% in favour of the respondent. The applicant proposed orders as follows –
Cash payment from the Respondent to the Applicant and transfer of N Street property
(1) On the date the following take place contemporaneously (settlement) –
(a)the respondent pay the applicant $40,959 as directed by the applicant (payment);
(b)the respondent transfer to the applicant at the applicant’s expense all his right title and interest in the N Street Property;
(c)the applicant discharge the registered Westpac mortgage in respect of the N Street Property;
(d)the applicant remove the caveat registered against the B Street Property;
(e)the applicant remove the caveat registered against the T Street Property; and
(f) in relation to the transfer and discharge –
(i)each party will pay their own conveyancing/legal costs and PEXA service fees relating to the Transfer and Discharge;
(ii)the applicant will pay the transfer lodgement fee for the transfer;
(iii)the applicant will pay all discharge fees.
(2)If the respondent has not made the whole of the payment or the applicant has not discharged the N Street mortgage by the date (default), settlement will not proceed on the date and –
(a) if the respondent is responsible for the default –
(i)the respondent will pay the applicant interest on the outstanding balance of the payment at the rate set by the Family Law Rules calculated weekly from the date (interest);
(ii)if the respondent is not able to complete settlement within 28 days of the date, the T Street and B Street Properties will be listed for sale forthwith (sale) with the parties to have the joint conduct of the sale of those properties and liberty to apply in relation to the sale process;
(iii)upon settlement of the sale of each of the T Street or B Street Properties, the proceeds of sale will be applied –
A.first, to pay all costs, commissions and expenses of the sale;
B.second, to discharge the mortgage and any other encumbrance registered against the property;
C.third, to pay the applicant the balance of the payment then outstanding together with any interest;
D.fourth, to pay the balance to the respondent;
(iv)upon the whole of the payment being made to the applicant, if either of the T Street or B Street properties remain unsold, that property may be removed from sale;
(v)the remaining matters for settlement pursuant to paragraph 1 will take place contemporaneously upon the final payment to the Applicant.
(b) if the applicant is responsible for the default –
(i)if the applicant is not able to complete settlement within 28 days of the date, the N Street Property will be listed for sale forthwith (sale) with the parties to have the joint conduct of the sale and liberty to apply in relation to the sale process;
(ii)upon settlement of the sale of each of the N Street Property, the proceeds of sale will be applied –
A.first, to pay all costs, commissions and expenses of the sale;
B.second, to discharge the mortgage and any other encumbrance registered against the property;
C.third, to pay the balance to the applicant;
(iii)upon the applicant discharging the N Street mortgage, the N Street property may be removed from sale;
(iv)the remaining matters for Settlement pursuant to paragraph 1 will take place contemporaneously upon the applicant discharging the N Street mortgage.
(3) Pending the completion of Settlement pursuant to paragraphs 1 or 2 –
(a)the applicant will be entitled to all rental proceeds for the N Street Property;
(b)the respondent will be entitled to all rental proceeds for the T Street and the B Street Properties;
(c)the applicant will be solely liable for all mortgage instalments and other outgoings for the N Street Property and will maintain building insurance for the N Street property;
(d)the respondent will be solely liable for all mortgage instalments and other outgoings for the T Street and the B Street Properties and will maintain building insurance for the T Street and the B Street Properties;
(e)neither party will encumber the N Street, T Street and/or B Street Property without the written consent of the other party;
(f)each party will hold their interest in the N Street, T Street and/or B Street Property on trust pursuant to these orders.
Q Street property
(4)Forthwith, the balance sale proceeds from the sale of the Q Street property held in the trust account of Blackwood Family Lawyers be paid to the applicant as directed by the applicant.
Superannuation
Applicant’s W Superannuation
(5)In relation to the applicant’s superannuation interest in the W Superannuation Plan (W Superannuation Plan):
(a)there will be an allocation for the purposes of s 90XT(4) of the Family Law Act of a base amount of $52,000 to the respondent from the applicant’s interest in the W Superannuation Plan;
(b)pursuant to s 90XT(1)(a) of the Family Law Act whenever a splittable payment becomes payable in respect of the applicant’s entitlements in the W Superannuation Plan the respondent will be paid an amount calculated in accordance with pt 6 of the Family Law (Superannuation) Regulations using the base amount specified at paragraph 5(a), and there will be a corresponding reduction in the entitlement the applicant would have had in the W Superannuation Plan but for this order;
(c)paragraph 5(a) will take effect from the operative time being four business days after the day a sealed copy of this order is served upon the trustee of the W Superannuation Plan;
(d)having been afforded procedural fairness the trustee of the W Superannuation Plan will be bound to observe the provisions in paragraph 5(a) and the requirements pursuant to the Family Law Act and the Family Law (Superannuation) Regulations;
(e)within 14 days of this order being made –
(i)the respondent will serve a sealed copy of this order upon the trustee of the W Superannuation Plan; and
(ii)the respondent will give notice in writing to the trustee of the W Superannuation Plan pursuant to reg 72 of the Family Law (Superannuation) Regulations.
DD Super Fund
(6)The parties forthwith do all acts and things necessary to enable the accountant for X Pty Ltd ATF DD Super Fund to complete and lodge all tax returns and financial statements for the DD Super Fund within seven days of receiving a request from the other party.
(7)In relation to the respondent’s superannuation interest in DD Super Fund –
(a)there will be an allocation for the purposes of s 90XT(4) of the Family Law Act a base amount of $44,662 to the applicant from the respondent’s interest in the fund;
(b)pursuant to s 90XT(1)(a) of the Family Law Act whenever a splittable payment becomes payable in respect of the respondent’s entitlements in the Fund the applicant will be paid an amount calculated in accordance with pt 6 of the Family Law (Superannuation) Regulations using the base amount specified at paragraph 7(a) and there will be a corresponding reduction in the entitlement the Respondent would have had in the Fund but for this order;
(c)paragraph 7(a) will take effect from the operative time being seven days from the date of these orders;
(d)having been afforded procedural fairness the trustees of the Fund will be bound to observe the provisions in paragraph 7(a) and the requirements pursuant to the Family Law Act and the Family Law (Superannuation) Regulations;
(e)the respondent will request the trustees of the Fund to transfer the balance remaining of the respondent’s entitlements in the Fund (being the respondent’s member entitlements less the base amount allocated to the applicant pursuant to paragraph 7(a)) by way of a cash payment to a complying superannuation Fund of the respondent’s choice;
(f)contemporaneously with the transfer of the whole of the respondent’s entitlements in the DD Super Fund the respondent will –
(i)close his member account in the DD Super Fund;
(ii)resign as a trustee of the DD Super Fund;
(iii)resign as a trustee of the DD Trust;
(iv)resign as a director of X Pty Ltd;
(v)resign as a director of P Pty Ltd;
(vi)transfer to the applicant or his nominee his shareholding in X Pty Ltd; and
(vii)transfer to the applicant or his nominee his shareholding in P Pty Ltd.
General orders
(8)Save as otherwise provided in these orders and save for the purposes of enforcing the payment of any monies due under these or any subsequent orders –
(a)the parties will close any joint bank accounts and the balance will is to be divided equally between the parties;
(b)the applicant will retain for his sole use and benefit all property (including choses-in-action) in his possession as at the date of these orders including but not limited to –
(i)the V Street property;
(ii)the cars in his possession;
(iii)bank and like accounts in the applicant’s name;
(iv)the applicant’s superannuation entitlements;
(v)the personal effects, furniture and contents in the applicant’s possession including all of the furniture and contents at the properties he is to retain pursuant to these orders;
(c)the respondent will retain for his sole use and benefit all property (including choses-in-action) in his possession as at the date of these orders including but not limited to –
(i)the B Street property;
(ii)the T Street property;
(iii)the 2 dogs namely “AA” and “BB”;
(iv)bank and like accounts in the Respondent’s name;
(v)the respondent’s superannuation entitlements with CC Superannuation;
(vi)the personal effects, furniture and contents in the respondent’s possession including all of the furniture and contents at the properties he is to retain pursuant to these orders;
(d)any joint tenancy of the parties is hereby expressly severed;
(e)all insurance policies will remain the property of the named owner;
(f)each party will be solely liable for and indemnify the other in relation to –
(i)any liability encumbering any item of property to which they are entitled pursuant to these orders; and
(ii)any and all other liabilities their sole name.
(9)The parties will sign all documents and do all things necessary to give effect to these orders.
(10)In the event that either party (“defaulting party”) refuses or neglects within 14 days to comply with the provisions of the paragraphs 1, 2 or 7 of the orders, the other party is hereby appointed as attorney to execute all deeds and documents in the name of the defaulting party and to all acts and things necessary to give validity and operation to this order.
Superannuation
While the amounts involved are comparatively modest, the orders in respect of superannuation that the applicant proposed were complicated. The respondent may not have appreciated the subtleties associated with the superannuation orders because his written submissions contained no proposals in relation to superannuation.
The parties at all relevant times have been the sole members of a self-managed superannuation fund in which each holds equal entitlements to $94,840. The relevant fund was established shortly prior to separation. It was common ground that each party made a $40,000 capital contribution in the financial year ended 30 June 2016. In addition, the respondent and the applicant maintained industry fund superannuation. The applicant recognised that by reason of the differential in the parties’ respective industry fund values, the respondent was entitled to an adjustment in his favour of an amount of $7,338.
Self-evidently, the parties cannot both remain as members of their self-managed superannuation fund. The fund’s primary asset is the equity in real property. In order to realise the parties’ entitlements in circumstances where the trustee of the superannuation fund owns real property, the property would need to be sold. Attention would need to be given thereafter, consequent upon the sale of the fund asset including the winding up of the fund, to paying selling costs and any applicable capital gains tax liabilities.
The applicant submitted that, to use his words, the balance of convenience weighed heavily against selling the superannuation fund asset and paying the respondent his entitlements in cash. The applicant contended that the better alternative was for the respondent to be paid in cash together with his industry fund entitlement, adjusted in the manner described above. The applicant argued that such a course benefitted both parties because, so he submitted, “the costs of dismantling the SMSF (including sales costs and GST) particularly in an uncertain market would see the net equity available to them as superannuation from the SMSF significantly reduced”.
While not stated in as many words, embedded in the applicant’s submissions was a recognition that the relevant parcel of real property be preserved and not sold and that the respondent be removed from the fund by a cash payout thereby rendering the fund asset intact but ultimately controlled by the applicant.
To that the applicant added a contention that from any cash payment to the respondent a discount of 30% should be made having regard to the parties’ youthful ages. In arithmetical terms that equated, so the applicant said, to a discount on $102,718 diminishing it to $71,524. In apparent support of the favourable consideration of that submission, the applicant contended that an order in those terms “would provide the respondent with some immediate cash in circumstances where he asserts financial hardship”.
Being concerned that the applicant’s proposal might work a very real hardship to the respondent, I arranged for a further post-trial virtual hearing to be conducted. I did that to give an opportunity to the applicant to persuade me of the wisdom of the applicant’s proposal as well as to give the respondent an opportunity to make such submissions as he wished to make on the whole issue of superannuation, having regard to his present silence on point.
On 20 August 2020 a further post-trial hearing was conducted. Ms Sturgeon represented the applicant. The respondent was not represented. Ms Sturgeon argued as follows –
a)the self-managed superannuation fund of which the applicant and the respondent are both members should be retained by the applicant with the respondent to be paid a monetary amount at a discounted rate of 30%;
b)the respondent would enjoy the benefit of immediate access to funds from the approach proposed by the applicant;
c)the respondent is not burdened by hardship given that the respondent is free to invest that money in another fund, property, shares or other appreciating asset;
d)although the applicant would retain the benefit of his interest in the self-managed superannuation fund, given the ages of the parties the applicant would not have access to those funds for a considerable time;
e)the 30% discount rate proffered was a discretionary sum and such an adjustment could be considered under s 75(2)(o) of the Family Law Act which would not be outside that which would be considered reasonable given the quantum of the amount in question; and
f)in the event that an order for the sale of the property was to be made, the applicant would first want an opportunity to buy out the respondent’s share in the property in the fund based on valuation evidence before the court.
The respondent made certain reply submissions. Relevantly paraphrased they amounted to the following –
a)any adjustment should be as to 50% each and no discount rate should be applied in any cash settlement proposed by the applicant; and
b)the best outcome for both parties would be for the real property under the self-managed superannuation fund to be sold forthwith and the proceeds of sale disbursed as to 50% to the applicant and 50% to the respondent.
Having considered the matter with the benefit of those submissions, it seemed to me that the respondent was correct. In my view the applicant’s proposal was likely to have the effect of occasioning undue hardship to the respondent. Further, the applicant’s submissions that by selling the real estate an unnecessary erosion of the selling price would be orchestrated was more apparent than real. Not only that, but the applicant’s proposal involved ascertaining the existing value of that parcel of land and improvements, dividing the value in half then applying a further 30% discount and remitting whatever was left to the respondent. In the process the applicant retained very valuable real estate in his sole name. Thereafter he was to be conferred with the property’s capital accretion in value. That was not a just and equitable outcome. I reject it. The property must be sold and the net proceeds divided as to 50% each. If the applicant can persuade the respondent to buy out the respondent’s interest, then it is no place for this court to interfere. However, any such proposal must be put and accepted within 60 days, in default of which the property must be sold at public auction.
Conclusion
The orders I make are those set out in the first few pages of these reasons.
I certify that the preceding two-hundred and five (205) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Wilson delivered on Friday 4 September 2020.
Associate:
Date: 4 September 2020
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