Angove & Cranz
[2023] FedCFamC2F 633
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Angove & Cranz [2023] FedCFamC2F 633
File number: ADC 658 of 2021 Judgment of: JUDGE McGINN Date of judgment: 25 May 2023 Catchwords: FAMILY LAW – Property settlement – undefended by respondent – de facto relationship – nearly 17 years – 1 adult child – add backs – contributions – property settlement – division of property – sale of property if failure to refinance – orders made. Legislation: Family Law Act 1975 (Cth)
Federal Circuit and Family Court of Australia (Division 2) (Family Law) Rules 2021
Cases cited: Barnell & Barnell [2020] FamCAFC 102; (2020) FLC 93-961
Candle & Faulkner [2021] FedCFamC1A 102
NHC & RCH (2004) FLC 93-2004
AJO & GRO (2005) FLC 93-218
Trevi & Trevi [2018] FamCAFC 173; (2018) FLC 93-858
T & T (2006) FLC 93-263
Division: Division 2 Family Law Number of paragraphs: 161 Date of last submission/s: 23 February 2023 Date of hearing: 22 November 2023, 23 February 2023 Place: Adelaide Counsel for the Applicant: Mr Boehm Solicitor for the Applicant: Tindall Gask Bentley Respondent: No appearance ORDERS
ADC 658 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR ANGOVE
Applicant
AND: MS CRANZ
Respondent
order made by:
JUDGE McGINN
DATE OF ORDER:
25 May 2023
IT IS ORDERED:
1.That pursuant to s 90SM of the Family Law Act 1975 there be orders in terms of paragraph 2 to 23 inclusive.
2.The parties do all things and execute all documents necessary to cause the whole of the land known as and situate at B Street, Suburb C, in the State of South Australia being the whole of the land comprised and described in Certificate of Title Volume … Folio … together with all improvements thereon (“Suburb C”) to be sold.
3.That by way of consequential arrangements to give effect to the sale of Suburb C pursuant to order 2:
(a)the respondent de facto wife do all things and execute all documents and authorities necessary to authorise the applicant de facto husband to have the conduct of the sale of Suburb C;
(b)the respondent de facto wife shall do all things and execute all documents and authorities necessary to authorise any real estate agent or property manager or leasing agent or other authority (whether statutory or not) or a servant or agent of the de facto wife to provide information to and to take instruction from the applicant de facto husband in relation to the leasing/rental of Suburb C including the taking of any steps necessary to terminate and/or conclude any rental or leasing agreement, including but not limited to the provision to any tenant or occupant of any notice or the taking of steps required by any legislation to enable Suburb C to be sold with vacant possession;
(c)the respondent de facto wife do all things and execute all documents and authorities necessary to enable the applicant de facto husband to appoint a sales agent and a conveyancer to undertake the sale of and the settlement upon the sale of Suburb C;
(d)the applicant de facto husband provide all instructions to the said sales agent and conveyancer to give effect to these orders including but not limited to:
(i)the method of sale;
(ii)advertising and marketing of the Suburb C property;
(iii)the sale price provided that such sale price is not less than $390,000;
(iv)the acceptance or rejection of offers to purchase Suburb C received by the sales agent;
(v)the execution of the contract of sale;
(vi)release of the settlement statement;
(vii)ascertain the status of rates and payments and any information as to any utility accounts outstanding in respect of Suburb C; and
(viii)the payment of the proceeds of sale in accordance with these orders.
4.That pending settlement upon the sale of Suburb C the respondent de facto wife do all things and execute all documents necessary to authorise and permit the applicant de facto husband:
(a)access to Suburb C by the de facto husband and any sales agent or other person necessary for the purposes of the marketing and sale of Suburb C;
(b)to attend to keeping Suburb C in good order and repair and/or to do works required in accordance with the recommendations of the sale agent to present Suburb C to the market the sale; and/or
(c)to expend such reasonable monies as are necessary to cause Suburb C to be maintained in good order and to be repaired and worked upon in accordance with the recommendations of the sales agent.
5.That pending settlement upon the sale of Suburb C the respondent de facto wife be restrained and injunction is granted restraining her from renewing or varying (including extending) the current terms of any lease, rental agreement or tenancy in respect of Suburb C or otherwise leasing renting or granting permission to any person to attend at or reside upon Suburb C.
6.That the parties do all things and execute all documents to cause the proceeds of the sale of Suburb C to be paid as follows:
(a)firstly, in payment of the costs (including commission) and expenses of sale and conveyancing;
(b)secondly, in discharge of the loan secured by registered mortgage number … to the Commonwealth Bank of Australia and that mortgage;
(c)thirdly, in reimbursement of the applicant de facto husband in respect of moneys paid pursuant to orders 4(b) and 4(c);
(d)fourthly, in payment of any expense incurred but not paid by the applicant de facto husband to give effect to orders 4(b) and 4(c); and
(e)lastly, in payment of the balance then remaining to the trust account of the de facto husband’s solicitors to abide order 7 of these orders.
7.That the parties do all things and execute all documents necessary to cause:
(a)the confirmation of the appointment of a registered tax agent or chartered accountant by the de facto husband after consultation only with the de facto wife to undertake the calculation of reasonable provision for any taxation liability arising in respect of a capital gain upon the sale of Suburb C;
(b)the payment from the balance of the proceeds of sale of Suburb C in the de facto husband’s solicitor’s trust account referred to in order 6(e) of the reasonable fees and expenses associated with the calculation undertaken pursuant to order 7(a);
(c)the setting aside and payment of the amount calculated pursuant to order 7(a) to be paid on account of capital gains tax arising from the sale of Suburb C into a separate trust account of the de facto husband’s solicitors established for that purpose and to be applied on the de facto wife’s behalf in respect of any assessment of taxation liability in so far as such liability arises from and is attributable to and assessed as a capital gains tax liability arising from the sale of Suburb C; and
(d)the payment of the balance then remaining in the de facto husband’s solicitor’s trust account and after the setting aside and payment of the sum referred to in order 7(c) as follows:
(i)as to 52.5% to the respondent de facto wife; and
(ii)subject to the de facto husband having paid to the de facto wife the sum pursuant to order 7, 47.5% to the de facto husband.
8.That the de facto husband on or before payment is made to the de facto husband pursuant to order 7(d)(ii) of these orders do pay to the de facto wife the sum of $32,700 less any mortgage instalment or part thereof paid by the de facto husband on behalf of himself and/or the de facto wife in respect of the loan secured by registered mortgage number … over the property known as and situate at D Street, Suburb E in the State of South Australia (being the whole of the land comprised as described in Certificate of Title Volume … Folio … (“Suburb E”)) between the date of these orders and the date of settlement upon the sale of Suburb C.
9.That the portion of the proceeds of sale of Suburb C due to the de facto husband pursuant to these orders are charged with the obligation to pay to the de facto wife the sum pursuant to order 8 of these orders.
10.That within two calendar months of these orders:
(a)subject to the de facto wife discharging the loan secured by registered mortgage number … and that mortgage over Suburb E to the full and complete exoneration of the de facto husband, that the de facto husband do all things and execute all documents necessary to transfer at the respondent de facto wife’s expense in all things the whole of his interest both in equity and at law in Suburb E to the respondent de facto wife; and
(b)the respondent de facto wife pay all monies and do all things and execute all documents necessary to cause the discharge in full of the loan secured by registered mortgage number … and that mortgage registered over Suburb E to the full and complete exoneration of the applicant de facto husband.
11.That in the event of default of the discharge by the de facto wife in full of the loan secured by registered mortgage number … and that mortgage in accordance with order 10 then and in such event that the parties shall do all things and execute all documents necessary to cause Suburb E to be sold and that by way of consequential arrangements for such sale:
(a)appoint a sales agent and a conveyancer to undertake the sale of and the settlement upon the sale of Suburb E;
(b)execute all documents requested by the sales agent to list Suburb E on the market for sale;
(c)determine the method of sale by private treaty or auction or otherwise as recommended by the sales agent;
(d)request the sales agent to recommend a listing price to be placed on Suburb E property for the purpose of sale and, subject to such recommendation not being less than $390,000, accept such recommended listing price;
(e)co-operate in every way with the sales agent in relation to the marketing of the Suburb E including making the key available and allowing inspection of the property at times and upon conditions requested by the sales agent and ensuring that Suburb E is in a neat and clean condition at the time of inspection by prospective purchasers;
(f)that in the event Suburb E is not sold by private treaty within (3) three months of the appointment of an agent the applicant de facto husband and the respondent de facto wife are to forthwith do all acts and things necessary including the execution of all documents necessary for the sale of the Suburb E by public auction and in the event that Suburb E is not sold by public auction when first offered for sale by auction property shall thereafter be resubmitted for sale by public auction pursuant to the provisions of these orders at intervals of not less than two (2) months until the property shall eventually be sold and the applicant de facto husband and the respondent de facto wife are to do all acts and things necessary including the execution of all documents necessary for the sale of Suburb E by public auction and in particular are to:
(i)place Suburb E with an auctioneer of the parties' choice (hereinafter called “the auctioneer'') for the sale of the Suburb E by auction at the earliest possible date;
(ii)execute all documents requested by the auctioneer for the sale of Suburb E;
(iii)request the auctioneer to recommend a reserve price to be placed on the Suburb E for the purpose of the auction sale and accept such recommended reserve price;
(iv)pay to the auctioneers one half of any sum requested for advertising expenses in relation to the auction;
(v)co-operate in every way with the auctioneers in relation to the auction of Suburb E including making the key available and allowing inspection of Suburb E at times requested by the auctioneers and ensuring that the Suburb E is in a neat and clean condition at the time of inspection by prospective purchasers;
(vi)attend at the auction sale and negotiate with the highest bidder in the event that the reserve price is not reached;
(vii)accept the advice of the auctioneer as to the acceptance of a price less than the reserve price; and
(viii)execute all other documents necessary to complete the sale.
12.That in the event that Suburb E is sold pursuant to order 11 of these orders then and in such event the proceeds of sale of Suburb E shall be applied as follows:
(a)firstly, in payment of the agents commission and auction expenses (if any) due;
(b)secondly, in discharge of any loan secured by mortgage over Suburb E and in discharge of that mortgage;
(c)thirdly, by reimbursement of any mortgage instalment due in respect of Suburb E paid by the de facto husband on behalf of the de facto husband and/or de facto wife between the date of these orders and the date of settlement upon the sale of Suburb E not otherwise reimbursed to the de facto husband pursuant to order 8 of these orders; and
(d)lastly, the balance then remaining to the de facto wife.
13.That in relation to the applicant de facto husband’s interest in Superannuation Fund 1 (“the Fund”) and pursuant to section 90XT (4) of the Family Law Act 1975 (Cth), whenever a splittable payment becomes payment in respect of the applicant de facto husband’s interest in the Fund the respondent de facto wife shall be entitled to be paid an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 using a base amount as at the operative time of $152,025 and there be a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made but for this order.
14.That order 13 have effect from the operative time.
15.That the operative time of orders 13 and 14 shall be the fourth business day after the day on which a sealed copy of these orders is served on the trustee.
16.That orders 13 to 16 bind the trustee of Superannuation Fund 1.
17.That subject to these orders, the applicant de facto husband do retain as his property free from any claim by the respondent de facto wife:
(a)the property known as and situated at F Street, Suburb H in the State of South Australia;
(b)Motor Vehicle 1 currently in his possession;
(c)any amount standing to his credit in any bank account building society or credit union account in his name;
(d)furniture, clothing, jewellery and personal effects currently in his possession;
(e)any shares in his name;
(f)his superannuation entitlements with Superannuation Fund 1; and
(g)all other property in his possession or control whether registered in sole name or not.
18.That subject to these orders, the applicant de facto husband do indemnify and keep indemnified the respondent de facto wife in relation to any capital gains tax liability arising in his name from the sale of shares, the loan secured by mortgage over the property at F Street, Suburb H, his G Financial Services Credit Card ending … and his J Financial Services credit card ending ….
19.That subject to these orders, the respondent de facto wife do retain as her property free from any claim by the applicant de facto husband:
(a)Suburb E;
(b)Motor Vehicle 2 motor vehicle in her possession;
(c)furniture and effects currently in her possession;
(d)clothing, jewellery (including diamond ring) and personal effects currently in her possession;
(e)all amount standing to her credit in any bank account, building society or credit union;
(f)superannuation entitlements in her name; and
(g)all other property in her possession or control whether registered in sole name or not.
20.That subject to these orders, each party do release the other party from any liability for any claim that either one may have against the other and the parties do discharge their several debts and liabilities without calling upon the other to contribute (including any income tax liability or capital gains tax liability assessed in their respective names).
21.That each party is restrained and injunction is granted restraining each of them pledging the credit of the other.
22.That each party shall do all acts and things and sign all documents necessary to give effect to the terms of these orders.
23.That without prejudice to any other relief that may be available to a party, that if either party shall refuse or neglect or omit to execute any document necessary to give effect to the terms of these orders within seven days after the same shall have been tendered to that party by or on behalf of the other party then in such event of refusal, neglect or omission a Judicial Registrar, Senior Judicial Registrar or other judicial officer of this Court or of any court exercising jurisdiction under the Family Law Act1975 (Cth) upon proof by affidavit of such refusal, neglect or omission is hereby appointed to execute and if in that judicial officer’s opinion it shall be necessary to do so to settle the same and do all such other acts and things and execute such other documents as shall be necessary to give full force and effect to these orders.
24.That all other applications and responses thereto do otherwise stand dismissed.
25.That the de facto husband do cause a sealed copy of the orders made this day be served upon the respondent de facto wife forthwith.
26.That either party’s application for costs pursuant to Rule 12.13 be listed before Judge McGinn.
Liberty to apply as to consequential orders.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Angove & Cranz has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE McGINN
Before the Court for determination at trial are the parties’ competing applications for property settlement.
The respondent de facto wife has failed to file any affidavit material for the purposes of the trial hearing in this matter pursuant to orders and directions made by the Court on 17 May 2022. The de facto wife last attended at hearings before the Court on 1 April 2022 then appearing on her own behalf.
The Court has determined that the trial of the competing applications proceed on an undefended basis. In this case this has meant that the trial proceed in the absence of the de facto wife.
The parties commenced living together in about early 2003, never married, and separated on a final basis on 2 December 2019[1] with their relationship approaching 17 years in length. The relationship was conducted in South Australia.
[1] De facto husband’s Trial Affidavit dated 4 October 2022, [8] and [13].
The applicant de facto husband's claim for property came before the Court by way of his Amended Initiating Application filed 8 July 2021. The respondent's application for property settlement came before the Court by way of her Response to an Application for Final Orders of 10 December 2021.
The evidence at trial comprised the applicant de facto husband's trial affidavit of 4 October 2022, his Financial Statement of the 11 February 2021, an affidavit of a valuer, Mr K, of 21 November 2022 and documents tendered at the trial hearing comprising an updated schedule of assets and liabilities, a minute of the orders sought on behalf of the de facto husband, a costs notice of the de facto husband, a letter from the de facto husband’s solicitors to the de facto husband's superannuation fund dated 21 November 2022 and an affidavit of the de facto husband’s solicitor providing evidence of procedural fairness being afforded to the trustee of Superannuation Fund 1.[2]
[2] Affidavit of Mr L of 22 February 2023, Exhibit 8.
For the reasons that follow I have determined that it is just and equitable that there be orders for property settlement and that those orders should take the form as set out at the beginning of this judgment.
SECTION 90SM(3)
Given that each of the parties have filed applications for property settlement seeking different final orders after just over 16 and a half years of cohabitation which saw the birth of the parties’ only child (who had turned 18 by the time of the trial hearing), I am satisfied in all the circumstances that it is just and equitable for orders for property settlement to be made as the previous assumptions about the use and the benefit of use of the property adopted by the parties during their relationship have lapsed.
In being so satisfied I have noted the claimed extent and nature of the pool of assets and liabilities of the parties.
Exhibit 1 was tendered at the trial asserting on the applicant de facto husband’s behalf, the assets and liabilities and superannuation of the parties.
That Exhibit 1 is now set out below as Table 1:
Table 1 (Exhibit 1)
Description Ownership Applicant’s value ASSETS 1. D Street ("the Suburb E property") Joint $724,000 2. F Street, Suburb H ("the Suburb H property") Applicant $580,000 3. B Street Suburb C ("the Suburb C property") Respondent $390,000 4. Motor Vehicle 2 Respondent $4,000 5. Motor Vehicle 1 Applicant $11,500 6. Transaction Account with V Lender (…17) as at 27 September 2022 Applicant $302 7. Transaction Account with V Lender (…16) as at 27 September 2022 (redraw facility against the mortgage over the Suburb H property) Applicant $76,025 8. J Financial Services Transaction Account as at 27 September 2022 Applicant $3,849 9. Transaction Account with V Lender (…17) as at 27 September 2022 Respondent $0 10. M Financial Services account ending in …20 as at 1 February 2022 Respondent $1,727 11. Commonwealth Bank Smart Access Account ending in …94 as at 3 February 2022 Respondent $4,211 12. Add back for cash withdrawal from Commonwealth Bank Smart Access Account ending in …94 between 13 October 2021 and 25 January 2022 (no explanation provided) Respondent $29,000 13. Furniture and effects Applicant $4,000 14. Furniture and effects Respondent $8,000 15. Diamond ring Respondent $735 16. Shares – N Company, O Limited and P Limited as at 27 September 2022 (value reduced as … Q Limited shares were sold to fund legal fees). Value as at separation was approximately $5,118.40. Applicant $24,323 Assets subtotal $1,827,674 LIABILITIES 17. Mortgage over the Suburb E property as at 27 September 2022 Joint $282,413 18. Mortgage over the Suburb H property as at 27 September 2022 (expected balance by October 2022 is approximately $276,672.04) Applicant $246,672 19. Mortgage over the Suburb C property ending in …00 as at 1 February 2022 Respondent $15,066 20. G Financial Services Credit Card as at 27 September 2022 Applicant $0 21. J Financial Services Credit Card as at 21 September 2022 Applicant $3,262 Liabilities subtotal $547,414.14 SUPERANNUATION Name of Fund Type of Interest Member Applicant’s Value 22. Superannuation Fund 1 as at 27 September 2022 Accumulation Interest Applicant $306,352 23. Superannuation Fund 2 as at 30 June 2022 Respondent $2,303 Superannuation subtotal $308,656 TOTAL (Assets – Liabilities) $1,314,260 TOTAL (Assets- Liabilities + Superannuation) $1,622,916
That table identifies on the applicant’s reckoning that the applicant held $450,065 in net non-superannuation property and superannuation of $306,352 and the respondent held $422,607 in net non-superannuation property and $2303 in superannuation. There remained beyond these holdings a net non-superannuation property in the form of equity in the jointly held property at Suburb E of $441,587.
Subject to the findings below about values and add backs I find that the property set out in Table 1 reasonably represents the existing property and superannuation of the parties.
CONSIDERATION OF THE POOL OF ASSETS AND LIABILITIES
Having determined that it is just and equitable to make orders for property settlement, I shall now determine what orders should be made by considering the extent of the pool of assets and liabilities and superannuation, the matters set out in ss 90SM(4) of the Family Law Act 1975 (Cth) (the “Act”) and whether the orders that come to be made are just and equitable.
THE VALUE OF SUBURB E
In relation to the pool of assets and liabilities, the de facto husband sought to rely upon an affidavit of an expert valuer a Mr K of late 2022 identifying the value of the Suburb E property as being $690,000 as at late 2022.
The de facto husband gave evidence that in his opinion the value of the Suburb E property had declined from about $724,000, which was asserted by him at Item 1 in Exhibit 1 and in his trial affidavit of 4 October 2022 at paragraph 14, on account of the property not being kept tidy and orderly.
The de facto husband’s evidence of his personal view was contradicted by the expert evidence adduced on his behalf as part of his case through Mr K’s affidavit of 21 November 2022. The evidence of Mr K in his report says[3]:
"We note that the home presented in a somewhat neglected condition from the street with a lack of general maintenance being carried out. The home would benefit from a general painting.
There were no signs of damage to the house and given a coat of paint and general replant and watering of the garden the appeal of the home could be brought back to a good standard. We did note some rubbish items left around the front of the house which detracts from the overall appeal."
[3] See Mr K’s report at page 34 of 128 (as paginated upon sealing) of his affidavit of 21 November 2022.
Page 47 of 128 of the sealed copy of Mr K’s affidavit makes a reference to comparable sales presenting "in a superior condition to the subject property" and noting that the market value assigned to the property of $690,000 "takes into consideration the below-average condition of the home externally". The evidence of Mr K whilst undertaking a "check" by way of median house price increase in the suburb in which the home is situated does not go so far as to say that the value of the property would be at $724,000 as asserted by the applicant de facto husband on the basis of the property "as if" it was neater and tidier and/or having had a repaint. As much is indicated at page 34 of 128 of Mr K’s affidavit of 21 November 2022.
The question of whether the impact on value as if the property had been maintained in a different way was not put to the expert valuer by the letter of instruction to him and I do not read his affidavit as indicating otherwise.
It was indicated to the Court at the hearing that the valuer could be called if the Court had any questions to put to the valuer in relation to his affidavit evidence. I do not consider that it was the Court's role to examine or test the valuer in relation to the discrepancy between what the de facto husband considered the value of the property to be and what the valuation evidence (such as it was) led by him as part of his case indicated it should be.
The Court notes that the de facto wife did not cooperate in the valuation process by not facilitating access to the interior of the Suburb E property necessitating a kerbside valuation.[4]
[4] See Mr K’s report at page 45 of 128, [7.1] (as paginated upon sealing) of his affidavit of 21 November 2022.
The Court also notes that the Suburb E property in which the de facto wife has been living since separation is in the valuer’s opinion “below average condition externally”.[5]
[5] See Mr K’s report at page 34 of 128 and page 47 of 128 (as paginated upon sealing) of his affidavit of 21 November 2022.
For the Suburb E property Mr K has undertaken a calculation of an “adjusted purchase price” for Suburb E based on the change in median house prices for the “Suburb E area”.[6]
[6] See Mr K’s report at page 47 of 128, (as paginated upon sealing) of his affidavit of 21 November 2022.
This calculation along with an “Improved Land Rate Analysis” appears to be nothing more than a valuation technique to cross check and support “Market Approach (Comparable Transaction Method)” which was adopted.
The lack of maintenance of the property is a matter to which general regard is had. However, that regard cannot and should not be quantified as $34,000 being the difference between the “adjusted purchase price” figure of $724,000 and the market value of $690,000.
The extent to which Suburb E could be “brought up to standard” which by Mr K’s report does not appear to be overly extensive[7] would have been a matter taken into account by him in determining Suburb E’s market value.
[7] See Mr K’s report at page 34 of 128 (as paginated upon sealing) of his affidavit of 21 November 2022.
The expert evidence of Mr K that the de facto husband placed before the Court only permits the Suburb E property to be brought to account at $690,000. Having considered the evidence, I find that is the value of the Suburb E property that would be brought to account.
The value which is asserted to be “missing” on account of the state of the property being inadequately maintained is a matter for consideration as either a matter of contribution under s 90SM(4)(b) or (c) in respect of the ongoing use of the Suburb E property by the de facto wife or alternatively, as a matter to be brought to account under s 90SF(3)(r) via s 90SM(4)(e).
The updated schedule of assets and liabilities as at 21 November 2022 tendered on behalf of the applicant de facto husband at trial on 22 November 2022 largely reflects what is either set forth in his trial affidavit of 4 October 2022 or in the case of the value of the Suburb E home, in Mr K’s affidavit of the 21 November 2022.
VALUE OF SUBURB C AND SUBURB H PROPERTIES
The differences between that which is asserted in the de facto husband's trial affidavit and the schedule of assets and liabilities comprising Exhibit 1 relates to the following:
(a)the value of the property at B Street, Suburb C has been reduced from the sum identified in the de facto husband's trial affidavit of about $445,000-$390,000 to that opined by Mr K in his affidavit of 21 November 2022 at page 103 of 128 as being $390,000; and
(b)the house property at F Street, Suburb H has been increased from $578,000 as appearing in the de facto husband's trial affidavit to $580,000 without explanation.
The Court adopts the valuation figure of $578,000 for the Suburb H property as set forth in the de facto husband's trial affidavit of 4 October 2022 at paragraph 14 as the evidence of the value of the Suburb H property.
As Suburb C is to be sold, little turns on the figure to be used other than to govern a condition of sale.
OTHER ASSETS: VEHICLES AND BANK ACCOUNTS
The valuation figures assigned to motor vehicles are based upon “red book" valuations which the Court accepts as a proper basis for the determining value.[8]
[8] See T & T (2006) FLC 93-263.
The valuation of bank accounts are based upon statements insofar as they have been available to the applicant in respect of those accounts in his own name and those of the respondent. The respondent's accounts are identified and include somewhat historical values but this arises as no updating disclosure has been received on behalf of the respondent de facto wife. In the circumstances, I accept the de facto husband’s evidence of bank account balances and those amounts will be adopted.
ADD BACKS
The applicant de facto husband seeks to have included in the pool of assets and liabilities as an “add back" withdrawals totalling $29,000 from a Commonwealth Bank account ending in …94 in the de facto wife’s name and to otherwise in addition have brought to account a current balance of $4,211. The relevant account statement seeking to establish the “add back” is found annexed to the de facto husband's trial affidavit as annexure “A 13”.
Examination of that annexure to the de facto husband's affidavit shows the following withdrawals:
(a)13 October 2021 - $5,000;
(b)21 October 2021 - $500;
(c)26 October 2021 - $1,450;
(d)27 October 2021 - $1,450;
(e)28 October 2021 - $1,450;
(f)16 November 2021 - $6,000;
(g)25 January 2022 - $8,000;
(h)25 January 2022 - $3,000;
(i)25 January 2022 - $7,000; and
(j)31 January 2022 - $1,450.
These amounts total $35,300. Excluding the amounts of $1,450 or less the total of the amounts withdrawn comprise $29,000. This seems to explain the amount claimed as an add back by the de facto husband.
As might be expected, there is no explanation provided in the applicant's trial affidavit as to the possible reason for these withdrawals.
In Candle & Faulkner [2021] FedCFamC1A 102 the Federal Circuit and Family Court of Australia (Division 1) on appeal held at [52] and [58]:
“52. The treatment of property already distributed and exhausted prior to trial, usually called “add backs”, has been the subject of many authorities in this Court. In AJO & GRO (2005) FLC 93-218 at [30] , following Kowaliw & Kowaliw (1981) FLC 91-092 and Townsend & Townsend (1995) FLC 92-569 (“Townsend”), the Full Court held that add backs fall into “three clear categories”. where [sic] the parties have expended money on legal fees, where there has been a premature distribution of matrimonial assets, and “waste” or wanton, negligent, or reckless dissipation of assets. This latter category indicates that the nature of the expenditure of post-separation or premature distributions can be relevant to the exercise of discretion to add back.
…
58. In our view, these authorities establish four relevant propositions. First, adding back property which has been distributed and spent is discretionary, and reflects an exceptional exercise of the discretion as an “accounting” or “balance sheet” exercise for the purposes of ss 79(2) and (4) to achieve justice and equity between the parties. Secondly, the nature of the expenditure reflected in add backs is relevant, and reasonably incurred expenditure does not usually come within accepted categories of add back. Thirdly, the decision in Stanford [(2012) 247 CLR 108; [2012] HCA 52], followed by Bevan[(2014) FLC 39 – 572; [2014] FamCAFC 19], does not necessarily require the conclusion that adding back notional property is per se an error, but proper consideration must be given to existing interests in property. Fourthly, in cases which are not exceptional, expended interim distributions can be taken up under s 75(2) rather than as part of the balance sheet exercise.”
By “matrimonial assets” reference is understood to be made to assets in existence at the practical not legal conclusion of the marital relationship at separation. By analogy, the equivalent of “matrimonial assets” can be understood to be those assets existing at separation of de facto partners.
There is no evidence which permits the Court to determine whether the withdrawals can in any way be considered a reasonable expenditure. The extent of some withdrawals appears on the face of the statements to be unusually and uncharacteristically high when compared against those withdrawals which are otherwise identifiable in annexure “A 13”.
Given that the respondent has not answered the evidence put forward on behalf of the applicant de facto husband in this particular regard, the Court is satisfied on the balance of probabilities that the withdrawals totalling in the sum of $29,000 were not for ordinary and/or reasonable living expenses.
The bank account in respect of which an add back is sought is an account solely in the respondent's name. The examination of the annexure “A 13” to the de facto husband’s affidavit shows that there are credits to the Commonwealth Bank account which appear to be related to the property at B Street, Suburb C and relatively minor deposits being refunds from Medicare totalling a sum of about $267.
However, the applicant through his solicitors sought an explanation for some of the withdrawals by letter of the 25 February 2022[9] to which no response had been received. A further call for particulars in relation to the withdrawals was made on 9 September 2022. [10] That call went unanswered.
[9] See applicant’s trial affidavit sealed 4 October 2022, Annexure A 28 at Page 225 of 349.
[10] See applicant’s trial affidavit sealed 4 October 2022, Annexure A 28 at Page 297 of 349.
The Court could take the amount of $29,000 into account as an “add back" if there exists evidence of the monies having been withdrawn as being “a premature distribution of matrimonial assets” as that term was used in Candle & Falkner[11].
[11] [2021] FedCFamC1A 102.
There is no evidence as to the balance of that account as at the date of separation.
The phrase “premature distribution of matrimonial assets” does not simply arise whenever “a party has expended money realised from the disposition of assets that existed as at the date of separation”.[12]
[12] Trevi & Trevi [2018] FamCAFC 173; (2018) FLC 93–858 at [28].
On 2 December 2019 the parties separated on a final basis.
Annexure “A 13” to the de facto husband’s trial affidavit does not disclose what the balance of this account was as at the date of separation. The earliest date given for an account balance in that annexure is 30 September 2021 when the account balance was $44,722. This, of course, is not the balance at separation.
The de facto husband’s trial affidavit records that the respondent held two types of Commonwealth Bank accounts. Firstly, a Commonwealth Bank account to which the applicant did not have access and in which the respondent’s salary was paid. Secondly, the respondent held a Commonwealth Bank account associated with the Suburb C property.
The mortgage over the Suburb C property is disclosed in the de facto husband’s trial affidavit as being Commonwealth Bank account ending…00.
Annexure “A 13” contains the amounts constituting the claimed add back of $29,000 for the period 30 September 2021 to 3 February 2022 and records credits from Medicare and from “[B Street]”. These latter credits appears to be referencing income from the property at B Street, Suburb C of which the respondent de facto wife is the sole owner.
Annexure “A 13” also contains numerous references to loan repayments in respect of account ending 1000 which appears to be a reference to the mortgage loan from Commonwealth Bank secured over the property at Suburb C.
I do not think that all these matters in relation to the account from which the withdrawals were made, either taken on their own or in combination, permits the finding that the sum of $29,000 should be recognised as an add back in the schedule of assets and liabilities of the parties.
Further, in making this determination I also take into account that following separation, the applicant de facto husband has met legal fees of these proceedings by:
(a)drawing against the mortgage over the property at F Street, Suburb H in an amount of $35,000 by the time of his trial affidavit of 4 October 2022 with a further $25,000 to be drawn in a similar manner later that month; and
(b)selling shares to raise funds to pay legal fees giving rise to a capital gains liability of $3,222.
The de facto husband’s costs notice (Exhibit 3) showed as at trial the legal fees paid and counsel fees paid of approximately $48,641 and nearly $37,000 being held in his solicitors’ trust account. The monies in trust are disclosed as being drawn from the mortgage loan of the Suburb H property. It is not possible to ascertain from the applicant’s trial affidavit what portion of the paid legal fees were met from the proceedings of the sale of shares.
The schedule of assets and liabilities presented by the applicant de facto husband included a mortgage loan balance secured against the Suburb H property which comprised in part the $35,000 which had been drawn down.
The further drawing of $25,000 had not been made and so was not represented in the schedule of assets and liabilities presented to the Court by the applicant de facto husband.
The applicant de facto husband’s schedule of assets and liabilities set forth in his affidavit in support of his Application records the value of his shareholding as at 27 September 2022 as being $24,323.
His affidavit filed in support of his Application makes it plain that this amount does not include 8,579 shares that were sold to fund legal fees giving rise to a capital gains tax liability of $3,222.
The applicant de facto husband, whilst including add backs for the de facto wife in respect of the $29,000 withdrawn from the Commonwealth Bank account ending …94 referred to above, does not seek similar treatment of his drawing on the Suburb H mortgage of $35,000 and the proceeds of sale of the shares.
The de facto husband’s evidence permits the inference that both equity in Suburb H and the shares existed at separation although to what extent is not clear.
Where assets are realised or drawn upon for the purposes of paying legal fees they are liable to comprise an add back under what might be considered “guidelines” set out in well-known authorities such as NHC & RCH (2004) FLC 93-204 and AJO & GRO (2005) FLC 93-218.
There is not sufficient evidence before the Court to permit the inference that the shares sold to fund legal fees were sold for any particular amount or that that amount (even if it could be ascertained) should not otherwise constitute an add back as being an expenditure from the capital held at separation and applied to the payment of legal fees.
The applicant’s case has gone forward in seeking an add back for the respondent de facto wife’s drawings on the Commonwealth Bank account whilst at the same time seeking that the Court disregard and not apply similar guidelines in respect of realisation of assets to enable the payment of legal fees for the applicant de facto husband’s benefit.
If the Court was to include as an addback the respondent de facto wife’s drawings on the Commonwealth account, then the de facto husband’s payment of legal fees from drawing on the Suburb H property mortgage and the sale of shares would correspondingly need to be brought to account.
The Court is not persuaded to exercise the discretion to include as an add back the $29,000 drawings by the respondent de facto wife nor the proceeds of sale of shares and drawing down of the Suburb H property by the applicant de facto husband.
The Court will otherwise have regard to the drawing of $29,000, the drawing on the Suburb H mortgage and the sale of shares in determining what orders should be made in this matter.
DETERMINATION OF POOL OF ASSETS AND LIABILITIES FOR PURPOSES OF ORDERS TO BE MADE
The Court therefore considers the pool of assets and liabilities and superannuation for the purposes of determining orders for property division to comprise the following:
Table 2
Description Ownership Applicant's value ASSETS 1. D Street ("the Suburb E property") Joint $690,000 2. F Street, Suburb H ("the Suburb H property") Applicant $578,000 3. B Street Suburb C ("the Suburb C property") Respondent $390,000 4. Motor Vehicle 2 Respondent $4,000 5. Motor Vehicle 1 Applicant $11,500 6. Transaction Account with V Lender (…17) as at 27 September 2022 Applicant $302 7. Transaction Account with V Lender (…16) as at 27 September 2022 (redraw facility against the mortgage over the Suburb H property) Applicant $76,025 8. J Financial Services Transaction Account as at 27 September 2022 Applicant $3,849 9. Transaction Account with V Lender (…17) as at 27 September 2022 Respondent $0 10. M Financial Services account ending in …20 as at 1 February 2022 Respondent $1,727 11. Commonwealth Bank Smart Access Account ending in …94 as at 3 February 2022 Respondent $4,211 13. Furniture and effects Applicant $4,000 14. Furniture and effects Respondent $8,000 15. Diamond ring Respondent $735 16. Shares – N Company, O Limited and P Limited as at 27 September 2022 (value reduced as Q Limited shares were sold to fund legal fees). Value as at separation was approximately $5,118.40. Applicant $24,323 Assets subtotal $1,796,672 LIABILITIES 17. Mortgage over the Suburb E property as at 27 September 2022 Joint $282,413 18. Mortgage over the Suburb H property as at 27 September 2022 (expected balance by October 2022 is approximately $276,672.04) Applicant $246,672 19. Mortgage over the Suburb C property ending in 1000 as at 1 February 2022 Respondent $15,066 20. G Financial Services Credit Card as at 27 September 2022 Applicant $0 21. J Financial Services Credit Card as at 21 September 2022 Applicant $3,262 Liabilities subtotal $547,413 SUPERANNUATION Name of Fund Type of Interest Member Applicant’s Value 22. Superannuation Fund 1 as at 27 September 2022 Accumulation Interest Applicant $306,352 23. Superannuation Fund 2 as at 30 June 2022 Respondent $2,303 Superannuation subtotal $308,655 TOTAL (Assets – Liabilities) $1,249,259 TOTAL (Assets- Liabilities + Superannuation) $1,796,672 SECTION 90SM(4) (A)-(C)
The evidence in the applicant's trial affidavit discloses that at the commencement of cohabitation in 2003 he held non-superannuation assets of about $43,000, plus furniture and personal effects and superannuation of approximately $10,000.
At that time the respondent owned the property at B Street, Suburb C which the respondent had said had approximately $60,000 of equity in it and owned a motor vehicle valued at about $6,000, some furniture and personal effects.
The applicant de facto husband says that the respondent at the commencement of cohabitation in 2003 had nominal superannuation entitlements.
Of the assets which the respondent held at the date of the parties’ cohabitation was the house property at B Street, Suburb C. Initially the respondent lived in that property but upon the parties commencing cohabitation the property was rented out and continued to be until the date of trial.
Both parties were working at the time of cohabitation with the applicant's income being greater than that of what he understood the respondent was earning. The fact that the applicant’s income was greater than that of the respondent at the commencement of the relationship remained to be the case throughout the relationship. Whilst the applicant continued in gainful employment, the respondent left employment just prior to the birth of the parties’ only child Ms U born 2004 and did not resume paid employment until November 2018. The employment then continued at the time of the parties’ separation in December 2019 and until August 2021.
The de facto wife’s Commonwealth Bank account was utilised to meet the outgoings in respect of the Suburb C property including the servicing of its mortgage.
Otherwise, the parties conducted joint accounts with the applicant having no account in his sole name.
The respondent's income from property rentals and paid employment was paid to her Commonwealth Bank account.
The rental income from the Suburb C property as well as the respondent’s income from paid employment was paid into the Commonwealth Bank accounts solely in the respondent's name and to which reference has been made above.
Within a month of the parties commencing cohabitation in early 2003, the parties purchased a property at R Street, Suburb S, for $177,000.
The applicant de facto husband's savings which he held at cohabitation of some $35,000 were applied towards that purchase and the balance of the purchase price was raised by way of a loan secured by mortgage and in the parties’ joint names.
The applicant then set about improving the Suburb S property which then came to be sold in 2004, realising net proceeds of $222,000.
In 2004, the parties purchased a property known as “T Property” for $238,000 using the net proceeds of sale with the balance being made up by way of a loan secured by mortgage. Again, the applicant de facto husband attended to the improvement of that property over the course of time until the T Property came to be sold in 2016 to the de facto husband’s parents for $360,000 realising net proceeds of $241,782.
In 2016, prior to the sale of the T Property the parties purchased a property at D Street, Suburb E, for around $466,000.
The parties paid a deposit of $25,000 and secured the balance of the purchase price by way of a loan secured by way of mortgage over the property.
After the settlement on the sale of the T Property the net proceeds of $241,782 were paid into an offset account in respect of the mortgage loan for the Suburb E property and then $102,246 was applied toward the reduction of the mortgage over the Suburb E property.
Although the de facto husband's affidavit does not say as much, the Court infers that either upon the purchase of the Suburb E property in 2016, or after the sale of the T Property in 2016 the parties and their daughter Ms U commenced residing in the Suburb E property.
In about late 2016 or early 2017, the de facto husband moved from the Suburb E property into the T Property (which by then had been purchased by the de facto husband’s parents). The respondent then remained in occupation of the Suburb E property with the parties’ daughter Ms U.
In early 2017 the parties’ daughter Ms U stopped living with her mother at the Suburb E property and came to live with her father, the de facto husband.
After moving out of the Suburb E property in about late 2016 or early 2017 the de facto husband continued to pay the mortgage of about $1,624 per month in respect of the Suburb E property.
It turns out that since Ms U’s birth in 2004 and until Ms U left the Suburb E property in early 2017 the respondent de facto wife was Ms U’s primary carer.[13]
[13] See the applicant’s trial affidavit sealed 4 October 2022 at [45].
From late 2016 or early 2017 until 2 December 2019, the parties appear to have lived at separate residences with this state of affairs maintained until they ended their relationship in December 2019.
In mid-2019 the applicant de facto husband received a lump sum payment of nearly $27,000 by way of long service and entitlements from his then employer and used those monies to buy shares in the sum of about $10,500 and placed the balance of approximately $16,000 into his savings account.
Just prior to separation, in late 2019, the applicant de facto husband purchased a house property at F Street, Suburb H in his sole name for $345,700. He paid a deposit of $20,000 part of which was made up with the long service monies which he had received on account of long service leave entitlements together with about $4000 he had otherwise accumulated in savings from his earnings. To facilitate this purchase the de facto husband also withdrew approximately $67,700 from the remaining balance of the proceeds of sale of the T Property.
To complete the purchase of the Suburb H property the de facto husband then obtained a mortgage for the balance of the purchase price of Suburb H of about $276,000.
Whilst the respondent de facto wife had been Ms U’s primary carer between 2004 and early 2017, the applicant de facto husband was in gainful employment and in addition undertook renovation works in relation to each of the Suburb S, T Property and Suburb E properties. The applicant also undertook domestic tasks for the benefit of the household constituted by himself, the de facto wife and their daughter.
Further, it is to be noted that after the parties’ separation in December 2019:
(a)the de facto wife remained in residence at the Suburb E property and the de facto husband continued until mid-2020 to meet mortgage payments and water rates for that property;
(b)the applicant de facto husband has also met home and contents insurance on the Suburb E property in the sum of about $83 per month;
(c)the de facto husband has paid $3,762 in relation to the mortgage over the Suburb E property on those occasions when the respondent de facto wife is not able to since early 2022; and
(d)the parties have each had the use of property in their respective control. In particular, the de facto wife has had the benefit of the use of accounts and the de facto husband, the shares and equity in the Suburb H property.
The payment by the de facto husband of the mortgage over Suburb E property in which the de facto wife has continued to reside since separation is part of the contribution he has been making to the consideration of that property and the increase in equity in it.
The applicant de facto husband has always been responsible for meeting expenses for Ms U including school fees and uniforms, motor vehicle, dental and orthodontic costs, driving instructor fees and tutoring fees without contribution from the respondent.
Since purchasing the Suburb H property in 2019 the applicant de facto husband has also undertaken and financed renovations to the property. The de facto husband has expended $18,300 in that regard.
There is expert evidence saying that a value of $20,000 has been attributed to the value of the Suburb H property on account of those works and improvements. That expert opinion evidence will be given little weight in terms of the evaluation of the parties’ respective contributions because the evaluation of contributions is not a mathematical or accounting exercise.[14]
[14] Barnell & Barnell [2020] FamCAFC 102; (2020) FLC 93-961 at [30] citing with approval Lovine & Connor and Anor [2012] FamCAFC 168; (2012) FLC 93-515 at [41].
In terms of contributions, the Court adopts a global approach to the assessment of contributions over the whole of the period of cohabitation to the date of hearing.
In evaluating the contributions in this case, the Court takes into account the initial discrepancy in the non-superannuation and superannuation positions of the parties at the outset of the relationship, the differing roles the parties undertook during the course of their cohabitation and the consequential different opportunities that provided for undertaking paid employment and acquiring benefits associated with paid employment. Such benefits included long service leave, the financial and other support provided in respect of Ms U’s care and the use of the property (both in terms of real estate and of financial assets) since the parties separated in December 2019.
In evaluating those respective contributions the Court considers that they should be expressed in percentage terms as 57.5% in favour of the applicant de facto husband and 42.5% as to the de facto wife.
SECTION 90SM(4)(D)-(G)
The Court must now have regard to those matters which are identified in subsection 90SF(3) of the Act to which regard must be had pursuant to subsections 90SM(4)(d)-(g) of the Act including those matters in subsection 90SF(3).
The Court notes that the applicant de facto husband is now 44 years of age and the respondent de facto wife is currently 41 years of age.
That applicant de facto husband is in good health. Although he manages a diagnosis of depression, that condition does not affect his ability to work.
The respondent de facto wife’s health is also good although she may have experienced some mental health issues which required the assistance of a counsellor in early 2022 and which may be related to depression. There is no evidence before me that suggests that any such condition impacts upon the respondent de facto wife’s ability to undertake gainful employment.
The applicant de facto husband presently earns approximately $122,000 or thereabouts per annum and the respondent de facto wife last earned about $17,500 per annum until about mid‑2021 together with receiving rental income of approximately $17,160 gross per annum from the Suburb C property.
Other than the employment generating income of approximately $17,400 gross per annum (and the rental income from Suburb C) the respondent de facto wife has not otherwise been gainfully employed since the birth of the parties’ daughter Ms U in 2004. Up until Ms U’s birth, the de facto husband estimates that back then the de facto wife was earning $15,000 per annum as a health professional.
There is a significant difference in the parties’ earning capacities.
The applicant de facto husband has not re-partnered and there is no evidence that the respondent de facto wife has re-partnered.
The de facto husband has the ongoing care of Ms U who is 18 years old. Ms U does not spend any time with her mother and it appears that she will be continued to be supported throughout her tertiary education by the de facto husband. Ms U is presently not spending any time of the mother and has not done so since March 2020. As of late 2022 Ms U has about 12 months of her tertiary study remaining.
The Court finds that the father has a moral duty to support Ms U until she completes her tertiary studies and that duty should be brought to account.
Neither party has any responsibility to support any person other than Ms U.
There is no evidence that either party receives any income tested pension or benefit.
Neither party on account of their age, health circumstances or otherwise appear to have any entitlement to draw upon their superannuation. Otherwise the parties’ respective superannuation entitlements are that the applicant de facto husband has $306,532 and the respondent as best the applicant can figure has about $2,303.
In relation to non-superannuation assets the applicant de facto husband would hold $448,065 dollars net and the respondent de facto wife would hold $426,260 dollars. There remains the Suburb C property with net equity of $374,934. This results in a non-superannuation pool of about $1,249,000.
In relation to superannuation, the applicant de facto husband has $306,352 and the respondent de facto wife $2,303.
The Court finds that the parties have in the past enjoyed a reasonable standard of living that comes from being members of a household which has had the benefit of the de facto husband's income and the capacity to permit the maintenance of not only a home in which they and their daughter have lived but also to maintain a rental property in the form of Suburb C enabling one of the parties to accumulate savings.
The orders the Court proposes that it may make in this matter will not impact the ability of any creditor to recover any debt and there is no application presently prosecuted before the Court with respect to maintenance.
The de facto relationship in this matter was of approximately 17 years’ duration and that has had an effect upon the ability of each of the parties to participate in and benefit from active participation in the paid workforce. The Court finds that the de facto husband has benefits from such participation and that the respondent de facto wife has not benefited to the same extent.
The applicant de facto husband will continue to support Ms U even though she has attained 18 years of age. However, the Court notes that Ms U, while she is a child of the relationship and is due to complete her tertiary studies within about 12 months, is already at the point of being able to contemplate living (if she does not already do so) a life independent of her parents.
There are no orders to be made in favour of any other married party or de facto partner of either of the parties.
Child support is not a feature of the present case.
The Court must recognise withdrawal of monies by the de facto wife from the Commonwealth Bank account in her sole name between October 2021 and January 2022 of a sum of $29,000, and also brings to account the fact that the de facto husband has expended the proceeds of the sale of Q Limited Shares to meet legal fees leaving him with a capital gains tax liability of $3,222 and he has drawn down upon the equity in the Suburb H property by trial.
The Court also brings to account as a matter pursuant to section 90SF(3)(r) and 90SM(4)(e) the de facto wife's failure to comply with orders as to disclosure and the obligations as to disclosure associated with the conduct of these proceedings by failing to participate in them and the de facto husband’s liability for legal fees.
There are no relevant financial agreements in relation to the circumstances of the parties.
The orders sought by the applicant de facto husband includes the sale of Suburb C property which will mean the loss of rental income otherwise received by the de facto wife. That income is said to be $17,160 gross per annum.
In balancing each of the factors which the Court has identified as relevant pursuant to subsection 90SM(4)(d)-(g), the Court considers that there should be an adjustment largely but not exclusively in favour of the de facto wife of 10% on the contribution assessment of the non-superannuation pool of assets and liabilities and 7.5% adjustment on the superannuation pool. Such adjustment is to be made largely but not exclusively on account of the extent of the discrepancy in the parties’ earning capacities as relative to the size of the asset pool.
ADJUSTMENT OVERALL
Overall, the Court considers that it would be just and equitable if the applicant de facto husband received 47.5% and the de facto wife 52.5% of the non-superannuation pool and each of the parties received 50% of the superannuation pool.
FASHIONING OF THE ORDERS TO BE MADE
The applicant sought orders as set out in Exhibits 2 and 7. Those orders amongst other things sought the sale of the Suburb C property. That property is presently tenanted and has been so tenanted since the parties commenced cohabitation in 2003. The property has not been lived in by the parties since that time with the exception of possibly a brief period in 2004 being the time at or about the time concerning the sale of the Suburb S property and the purchase of the T Property property.
The de facto husband seeks orders reserving a portion of the proceeds of sale for the payment of capital gains tax. There is no evidence in his trial affidavit or otherwise of such liability or the likely extent of it. However the Court accepts that capital gain may arise upon the sale and that it may be different for each party although more likely to be a liability of the respondent de facto wife as she is the registered proprietor of the Suburb C property.
With respect to the non-superannuation assets of the parties, if one puts the equity of the Suburb C property of some $374,934 to one side, the non-superannuation pool of assets and resources of the parties comprise a total of $874,321.
A consideration of the non-superannuation assets excluding the equity of the Suburb C property discloses that of the balance of the remaining non-superannuation property the de facto husband holds about $448,065 and the de facto wife holds about $426,260.
For the reasons that I set out above the de facto husband should receive 47.5% of the non‑superannuation pool.
This means excluding the Suburb C property that notionally the de facto husband should hold or retain 47.5% of the non-superannuation pool (which, excluding the equity in the Suburb C property, is a total of $874,321) of $415,302.
To the extent that this notional amount exceeds the value of what the de facto husband holds, an adjustment should be made by way of payment by him to the de facto wife.
The difference between $448,065 and $415,302 is $32,763. I would round this down to $32,700.
There should be an adjustment due to the de facto wife in respect of the non-superannuation pool excluding the Suburb C property of about $32,700 in respect of that portion of the non‑superannuation pool comprising the non-superannuation assets other than the Suburb C property equity. Such a payment would achieve a 47.5% division of the non-superannuation assets for the de facto husband and a 52.5% division for the de facto wife.
THE SUBURB C PROPERTY
The de facto husband seeks orders with respect to the Suburb C property to the following effect:
(a)that the Suburb C property be sold;
(b)that the applicant de facto husband have the conduct of the sale; and
(c)that the net proceeds from the sale of the Suburb C property be distributed as follows:
(i)$50,000 to the de facto husband’s solicitor’s trust account to pay for the assessment of and the payment of capital gains tax arising on the sale of the Suburb C property;
(ii)reimbursement to the applicant de facto husband for the payment of the mortgage over the Suburb E property from 6 March 2022 until settlement upon the sale of Suburb C property;
(iii)an amount not specified to effect a 55/45% division of the parties’ non-superannuation and superannuation assets in favour of the applicant de facto husband; and
(iv)balance to the respondent de facto wife.
The de facto husband’s application is predicated upon there being an adjustment in his favour in respect of both the non-superannuation and superannuation assets. I have not found this to be the case.
The Suburb C property is registered in the name of the respondent de facto wife. The property is presently tenanted. The Suburb C property provides income for the de facto wife. As stated above the de facto husband in effect supplements that income stream to the de facto wife by him servicing the mortgage over the Suburb C property as he had on occasions done since February 2022.
Any sale of the Suburb C property will require notice to be given to the tenants presently residing in the property.
The de facto wife has not meaningfully participated in the trial proceedings. I am satisfied that she had been given notice of the orders sought by the de facto husband for the sale of Suburb C property including him having conduct of that sale, notice being given to the tenants to permit such a sale and the distribution of the net proceeds of sale.
I am also satisfied that it should be part of the orders to be made in respect to the question of property settlement that the Suburb C property should be sold.
The de facto wife’s lack of participation in the trial and her failure to give disclosure enables me to infer (as I do) that a lack of participation in the trial is to avoid and resist orders being made as to property settlement and to any such orders being readily carried into effect.
The evidence before me discloses that the equity in the Suburb C property may be about $375,000 or so.
The Suburb C property was purchased in 2001 for $91,000.[15] Its value has been opined as being about $390,000. It may sell for more or less.
[15] See Mr K’s report at page 84 of 128 at [3.3] (as paginated upon sealing) of his affidavit of 21 November 2022.
There is no basis as to why only $50,000 as stipulated in the orders by the de facto husband or any other specified amount should be set aside to meet capital gains tax liability arising upon the sale of Suburb C. At the same time, the liability should be paid on behalf of the respondent de facto wife before there is a distribution of the proceeds of that sale.
The presentation of evidence as to the likely capital gains tax liability would have simplified the nature of the order to be made in this matter. However, given the lack of disclosure by the wife the presentation of any such evidence can reasonably be anticipated to have been problematic.
The applicant de facto husband also seeks orders for the sale of the Suburb E property in which the de facto wife continues to reside in the event that the Suburb C property does not realise sufficient proceeds after the payment of the respondent de facto wife’s capital gains tax liability to pay an adjustment in his favour. I do not see that such an order is necessary on my determination as to the likely value of the respective property settlements the parties should receive.
The wife’s lack of participation at trial indicates that cooperation as to the sale of Suburb C property may not be readily forthcoming and so the de facto husband should have the conduct of the sale of the Suburb C property.
ORDERS TO BE MADE
In my view the orders for property settlement should provide:
(a)for the sale of the Suburb C property and for the conduct of the sale of that property by the de facto husband;
(b)for the proceeds from the sale of the Suburb C property after the payment of selling costs and conveyancing costs and the discharge of the mortgage being retained until there is:
(i)a calculation of and an assessment of the amount of capital gains tax to be paid by the de facto wife arising out of the sale of the Suburb C property such calculations and lodging of returns for the purposes of assessment to be paid from the balance of the proceeds from the sale of the Suburb C property;
(ii)in due course after the issue of an assessment to pay tax, the payment on behalf of the de facto wife of the capital gains tax so calculated and assessed from the then remaining proceeds from the sale of the Suburb C property; and
(iii)for the remaining balance of proceeds from the sale of the Suburb C property to be distributed as to 52.5% to the de facto wife and, subject to a charge for the payment of $32,00 referred to below, 47.5% to the de facto husband.
(c)that upon the payment of the assessed capital gains tax liability of the de facto wife the de facto husband pay to the de facto wife the sum of $32,700. It is open to the Court to determine that the de facto husband make the payment immediately – he having the funds available in the transaction account ending …16 to do so – but the delay in the receipt of monies from the de facto husband should provide an incentive for the de facto wife to proceed with the sale of Suburb C as quickly as practicable and so immediate payment will not be required. Rather, the payment of the sum of $32,700 should be made no later than when the de facto husband’s share of the proceeds of the Suburb C property are due to be distributed to him. If the balance of the Suburb C proceeds due to the de facto husband are insufficient for him to make that payment he shall have to find monies elsewhere to do so;
(d)that the de facto husband do retain for his sole use and benefit and/or keep the de facto wife indemnified (where necessary) in relation to the Suburb H property, the mortgage loan over the Suburb H property, his Motor Vehicle 1, the balance of the transaction account ending …17, the balance of the transaction account ending …16, his J Financial Services transaction account, his furniture and effects, his shares, G Financial Services Credit Card and J Financial Services credit card. The de facto husband will also remain responsible for the capital gains tax liability arising from the sale of shares which he has made for the purposes of funding his legal fees;
(e)that the de facto wife do retain the sole use and benefit and/or keep the de facto husband indemnified (where necessary) in relation to the Suburb E property, the mortgage over the Suburb E property, her Motor Vehicle 2, the transaction account ending …17, the M Financial Services account ending …20, the Commonwealth Bank account ending …94 and the furniture and effects in her possession including a diamond ring; and
(f)to give effect to the above order, the de facto wife will need to organise for the de facto husband to transfer to the de facto wife his interest in the Suburb E property which is registered in the joint names of the parties and the de facto wife will need to refinance the mortgage over that property. Should it be the case that the de facto wife is unable to do so, the Suburb E property will need to be sold and the de facto wife to retain the proceeds of that sale. In making such an order the Court is conscious that the evidence of the de facto husband is brought forward as to the de facto wife’s borrowing capacity being limited and that a sale of the Suburb E property would see the de facto wife then in need of obtaining alternative accommodation. The Court could delay, until the receipt of the proceeds from the sale of the Suburb C property, the transfer of the Suburb E property from the joint names of the parties to the de facto wife’s sole name and the consequent refinancing by the de facto wife of the existing mortgage liability. This would have the effect of permitting the de facto wife to use the net proceeds from the sale of the Suburb C property which would otherwise be available to the wife (together with the payment of $32,700 due to the de facto wife by the de facto husband) so as to lessen the amount which she may need to borrow on any refinancing of the Suburb E property mortgage. For such a course to be adopted, there would need to be the payment of the mortgage instalments over the Suburb E property which remain in the joint names of the parties. The de facto wife despite residing in the property has not met all of the mortgage instalments as they have fallen due and the de facto husband has paid some of them as he wishes to preserve his credit rating. The de facto wife should be granted a period of about 2 months to permit her to further explore the prospects of refinancing the mortgage over the Suburb E property for the purposes of facilitating the transfer of said Suburb E property into her sole name. Should she fail to do so the Suburb E property will also need to be sold so as to bring to an end the parties’ financial commitment in respect of its mortgage. In the event that the de facto husband pays the mortgage instalment on behalf of the parties during the period running from this judgment to the date of settlement upon any sale of the Suburb E property he should be reimbursed any payment that he so makes on behalf of the parties.
There may arise difficulties in giving effect to orders now made by the Court. If so, those difficulties will have to be dealt with if and when they arise. The de facto husband’s Application at paragraph 12 of the orders sought at trial (seeking an order pursuant to section 34 of the Family Law Act 1975) is otiose as that section was repealed on 1 September 2021.
Liberty to apply as to consequential orders will be granted and an order for a Judicial Registrar or other judicial officer of this Court to execute and settle any documents necessary to give effect to the order for property settlement shall be made. Such orders are made so that any orders, in addition to those that might otherwise be sought under the Rules or Act, can be sought to ensure that as prompt effect as possible is given to the order of the property settlement now made.
With respect to superannuation the applicant de facto husband seeks orders that there be a super split of $152,025 from his superannuation in favour of the respondent de facto wife.
By the schedule of assets and liabilities such a division would see each of the de facto husband end up with $154,327 the de facto wife with $156,630 in superannuation. This approximates an equal division and the Court determines that such superannuation splitting order would be just and equitable.
COSTS
The de facto husband’s Amended Initiating Application seeks orders for costs.
The orders to be made in respect of the parties’ competing applications for property settlement leaves outstanding the husband’s application for costs. Under rule 12.13(3)(b) such an application can be made by filing the requisite application within 28 days of the final orders being made.
Such an application may be made by both parties after consideration of this judgment. In the event that any such application is made then the party or parties making such application should have it considered by the trial judge. A direction to that effect will be made.
For these reasons orders are made as they appear at the beginning of these reasons.
I certify that the preceding one hundred and sixty-one (161) numbered paragraphs are a true copy of the Reasons for Judgment of Judge McGinn. Associate:
Dated: 25 May 2023
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