ARUNACHALAM & ARUNACHALAM
[2012] FamCA 26
•2 February 2012
FAMILY COURT OF AUSTRALIA
| ARUNACHALAM & ARUNACHALAM | [2012] FamCA 26 |
| FAMILY LAW - PROPERTY SETTLEMENT – determining matrimonial asset pool – where husband has joint legal interest in a parcel of real estate with his mother – husband sought declaration of trust to the effect that he held his interest in the property on trust for his mother, or alternatively, a declaration pursuant to section 78 that he had no beneficial interest in the property – where neither declaration would result in a change to the registered proprietorship of the property – no application was made for the husband’s mother to be joined or intervene in proceedings – where husband’s interest in the property was interlinked with the parties’ matrimonial affairs – husband’s one-half legal and equitable interest in property included in matrimonial pool FAMILY LAW - PROPERTY SETTLEMENT – contributions – parties contributions assessed globally – husband made significantly greater initial financial contribution than the wife – parties had relatively equal contributions during relationship – husband asserted he made greater financial contributions post-separation – parties lived under one roof for two years following separation – husband’s contribution-based entitlement is greater than the wife’s – husband’s entitlement to matrimonial pool measured at 57.5 per cent and wife’s at 42.5 per cent FAMILY LAW - PROPERTY SETTLEMENT – adjustment – husband has been a high income earner – wife is a professional person – both parties likely to have long, well-paid working lives – parties’ child seven years of age – likelihood husband’s equitable interest in the property owned jointly with his mother will be retained by his mother – 5 per cent adjustment in favour of wife FAMILY LAW - PROPERTY SETTLEMENT – just and equitable orders – husband’s entitlement to matrimonial pool measured at 52.5 per cent and the wife’s at 47.5 per cent |
| Family Law Act 1975 (Cth) ss 75, 78, 79 |
| Allen v Snyder (1977) 2 NSWLR 685 |
| APPLICANT: | Mr Arunachalam |
| RESPONDENT: | Ms Arunachalam |
| FILE NUMBER: | PAC | 6104 | of | 2009 |
| DATE DELIVERED: | 2 February 2012 |
| PLACE DELIVERED: | Newcastle |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Austin J |
| HEARING DATE: | 1 & 2 December 2011 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Givney |
| SOLICITOR FOR THE APPLICANT: | Warren McKeon Dickson Lawyers |
| COUNSEL FOR THE RESPONDENT: | Not Applicable |
| SOLICITOR FOR THE RESPONDENT: | Not Applicable |
Orders
The wife shall pay to the husband the sum of $231,061 within six weeks of the date of these orders.
Subject to compliance with Order 1 hereof, and in consideration of that payment, the wife is declared the sole legal and beneficial owner (as between the parties) of the real property and improvements comprising Folio Identifier …, being the property more commonly known as … N Street, Sydney Suburb 1, NSW (“the property”), and the husband shall do all such things and sign all such documents as may be necessary to transfer all his right, title, and interest in the property to the wife contemporaneously with his receipt of payment pursuant to Order 1 hereof.
Subject to compliance with Order 2 hereof, and in consideration of that transfer, the wife shall indemnify and keep indemnified the husband against all rates, taxes, statutory charges, mortgage repayments, and other outgoings and liabilities affecting or relating to the property.
In default of compliance with Order 1 hereof, the parties shall do all such acts and things and sign all such documents as may be necessary to forthwith list the property for sale by private treaty.
For the purposes of implementing Order 4 hereof:
(a)The listing agent shall be as agreed between the parties, and in default of agreement, with the agent chosen by ballot from the respective choices of the parties.
(b)The listing price for the property shall be as agreed between the parties, and in default of agreement, the price nominated by the listing agent.
(c)In the event of the property not being sold within 3 months from the date of its listing for sale then it shall be put to sale by public auction on the following terms:
(i)The auctioneer shall be as agreed between the parties, and in default of agreement, the auctioneer chosen by ballot from the respective choices of the parties.
(ii)The auction shall take place within six weeks of the deadline date for sale by private treaty.
(iii)The reserve price shall be as agreed between the parties, and in default of agreement, the reserve price nominated by the auctioneer.
(d)In the event that the property is not sold by auction, or private negotiation within a further seven days, then it shall be submitted to successive auctions within further six weeks periods until sold, otherwise upon the same terms and conditions as applied to the first auction.
Upon completion of the sale of the property pursuant to Orders 4 and 5 hereof, the proceeds of sale shall be applied as follows:
(a)Firstly, to pay all costs, commissions, and expenses of the sale, and to pay any Council and water rates and maintenance levies outstanding in respect of the property;
(b)Secondly, to discharge any encumbrance registered over or affecting the property;
(c)Thirdly, to pay the sum of $549,883 to the wife;
(d)Fourthly, to pay 52.5% of the balance then remaining to the husband; and
(e)Fifthly, to pay the balance then remaining to the wife.
Pending implementation of Order 1-6 hereof, the wife shall continue to keep the property in good repair and shall continue to meet the cost of mortgage repayments, rates, levies, and insurances as and when they fall due.
The husband is declared the sole legal and beneficial owner (as between the parties) of his interest in the real property and improvements comprising the property commonly known as … S Street, Sydney Suburb 2, NSW.
The husband is declared the sole legal and beneficial owner (as between the parties) of, and the wife shall execute all such documents as may be necessary to transfer to the husband all legal and equitable title in, the following items of property:
(a)The funds banked in the joint names of the parties with the Commonwealth Bank of Australia in account number … 98; and
(b)The funds banked in the joint names of the parties with the Commonwealth Bank of Australia in account number … 18.
Unless otherwise provided:
(a)Each party shall be the sole legal and beneficial owner (as between the parties) of all other assets in their respective possession as at the date of these orders, and for that purpose bank accounts are deemed to be in the possession of the person named as the account holder, investment accounts are deemed in the possession of the named investor, and superannuation entitlements are deemed in the possession of the superannuant; and
(b)Each party shall be solely liable for and shall indemnify the other against any and all debts attaching or relating to the property in their respective possession, and any debts in their respective sole names.
In the event of either party refusing or neglecting to sign within seven days of a written request to do so any document necessary to implement the terms of these orders the Registrar of the Family Court of Australia at Newcastle is empowered to execute such documents on behalf of the parties pursuant to s.106A of the Family Law Act 1975 (Cth).
Any and all outstanding applications are dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Arunachalam & Arunachalam is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: PAC 6104 of 2009
| Mr Arunachalam |
Applicant
And
| Ms Arunachalam |
Respondent
REASONS FOR JUDGMENT
Introduction
These are property adjustment proceedings between the applicant husband and respondent wife.
The parties married in November 1999, but did not begin cohabitation until after their religious marriage ceremony in July 2000. They did not intermingle their financial affairs until after they began cohabitation.
Their only child was born in May 2004 and is now aged seven years. He lives primarily with the wife.
The parties separated on 30 January 2009, but both continued to live within the former matrimonial home at Sydney Suburb 1 until the husband vacated it on 5 March 2011.
Arrangements for the parties’ child were settled consensually. Parenting orders were made on 24 December 2009 and a binding child support agreement was made on 4 March 2011.
Proceedings in relation to the adjustment of the parties’ property interests were commenced in September 2010.
On 10 March 2011 the parties reached agreement about an interim property settlement. The agreement provided for the wife’s sole and exclusive occupation of the former matrimonial home, the equal division between the parties of a bank account containing approximately $110,000, the wife’s retention of a car, and their division of items of furniture and jewellery.
Proposal and primary evidence of the husband
The husband abandoned the orders set out within his Amended Initiating Application filed on 3 November 2011 and instead sought the orders set out in his Case Outline document.
Essentially, the husband proposed that he receive the parties’ joint bank accounts containing about $200,000 and the wife retain the Sydney Suburb 1 property, subject to her discharge of the mortgage secured over it and her payment to him of $239,781. Otherwise, he proposed the parties retain the other assets and resources within their personal control.
It was also the husband’s primary contention that his one-half legal interest in another parcel of real property situated at Sydney Suburb 2 should be excluded from consideration as part of the matrimonial pool because it is, in reality, beneficially owned by his mother.
The husband relied upon the evidence contained in:
a)His affidavit filed on 24 November 2011;
b)His financial statement filed on 23 November 2011; and
c)The affidavit of his mother, Ms S, filed on 23 November 2011.
Proposal and primary evidence of the wife
The wife pressed for the orders set out within her Amended Response filed on 2 November 2011, which provided for the transfer to her of the Sydney Suburb 1 property and a joint account containing nearly $200,000 in cash, together with her retention of other assets and resources within her personal control. By the conclusion of the trial the wife accepted her proper entitlement would likely be reflected in a more modest share of the matrimonial pool.
The wife relied upon the evidence contained in:
a)Her affidavit filed on 24 November 2011;
b)Her financial statement filed on 29 November 2011; and
c)The affidavit of her father, Mr M, filed on 24 November 2011.
Process of property settlement
In determining the property adjustment orders that should be made between spouses the Court follows a recognised four-step process (see Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 at [39]).
Firstly, the Court should identify and value the matrimonial pool of property, comprised of assets, liabilities and financial resources at the date of the hearing.
Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss 79(4)(a)-(c) of the Family Law Act 1975 (Cth) (“the Act”), and determine the contribution-based entitlements of each party as a percentage of the matrimonial pool of assets.
Thirdly, the Court should identify and assess the relevant matters referred to in ss 79(4)(d), (e), (f) and (g), and s 75(2), and determine the adjustment, if any, that should be made to the contribution based entitlements of the parties.
Finally, the Court should consider the effect of those findings and resolve what order is just and equitable in all the circumstances of the case.
Pool of property
I find the matrimonial pool of property and resources comprises the following, calculated to the nearest dollar:
| No. | Assets | Party | Value | Total |
| 1 | Sydney Suburb 1 property | Joint | 1,200,000 | |
| 2 | Sydney Suburb 2 property (50%) | H | 260,000 | |
| 3 | CBA acc. … 98 | Joint | 221[1] | |
| 4 | CBA acc. … 18 | Joint | 197,975[2] | |
| 5 | Rabobank acc. … 00 | H | 79,438[3] | |
| 6 | CBA acc. … 84 | H | 17,561[4] | |
| 7 | CBA acc. … 73 | H | 353[5] | |
| 8 | Bankwest acc. … 20 (50%) | H | 659[6] | |
| 9 | IAG shares | H | 2,037[7] | |
| 10 | Symbion unclaimed money | H | 1,937[8] | |
| 11 | Interactive Brokers managed acc | H | 39,459[9] | |
| 12 | Perth Mint investment | H | 58,977[10] | |
| 13 | Audi car | H | 62,100 | |
| 14 | Household contents | H | 5,000[11] | |
| 15 | CBA acc. … 27 | W | 18,716[12] | |
| 16 | CBA acc. …15 | W | 4,227[13] | |
| 17 | Toyota car | W | 5,000[14] | |
| 18 | Household contents | W | 6,000[15] | |
| 19 | Jewellery | W | nil | |
| Sub-total | 1,959,660 | 1,959,660 | ||
| Add-backs | ||||
| 20 | Negative equity in husband’s car | H | 16,004 | |
| 21 | Legal fees paid from interim property settlement | W | 48,000 | |
| 22 | Husband’s chose in action against his mother | H | 45,000 | |
| Sub-total | 109,004 | 2,068,664 | ||
| Liabilities | ||||
| 23 | Mortgage (re Sydney Suburb 1) | Joint | 210,000[16] | |
| 24 | Mortgage (re Sydney Suburb 2) (50%) | H | 52,649[17] | |
| 25 | CBA mastercard | H | 7,936[18] | |
| 26 | Car loan (re Audi) | H | 78,104[19] | |
| 27 | CBA mastercards (x 2) | W | 2,054[20] | |
| 28 | American Express credit card | W | nil | |
| 29 | Loan due to wife’s cousin | W | 5,000[21] | |
| Sub-total | 355,743 | 1,712,921 | ||
| Superannuation | ||||
| 30 | Super Fund 1 | H | 4,295[22] | |
| 31 | Super Fund 2 | H | 138,948[23] | |
| 32 | Super Fund 3 | W | 46,595[24] | |
| 33 | Super Fund 4 | W | 44,548[25] | |
| Sub-total | 234,386 | 1,947,307 | ||
| Net total | 1,947,307 |
[1] Husband’s financial statement, Schedule A
[2] Husband’s financial statement, Schedule A
[3] Husband’s financial statement, Schedule A
[4] Husband’s financial statement, Schedule A
[5] Husband’s financial statement, Schedule A
[6] Exhibit H4
[7] Husband’s financial statement, Schedule B
[8] Husband’s financial statement, Schedule B
[9] Husband’s financial statement, Schedule B
[10] Husband’s financial statement, Schedule B
[11] Husband’s financial statement, par 42
[12] Wife’s financial statement, Part O
[13] Wife’s financial statement, Part O
[14] Wife’s financial statement, par 40
[15] Wife’s financial statement, par 42
[16] Husband’s financial statement, par 46; Wife’s financial statement, par 46
[17] Exhibit H2
[18] Husband’s financial statement, par 51
[19] Husband’s financial statement, par 50
[20] Wife’s financial statement, par 51
[21] Wife’s financial statement, par 50
[22] Husband’s financial statement, par 45
[23] Husband’s financial statement, par 45
[24] Wife’s financial statement, par 45
[25] Wife’s financial statement, par 45
The parties generally agreed with the constitution of the matrimonial pool when the issue was discussed during final submissions. However, some of the items and values comprising the pool of property require explanation.
The values of items 1 and 2 were established by a single expert witness appointed by the parties pursuant to procedural orders made by the Court. The parties accepted the evidence without the need to cross-examine the expert.
Item 28 relates to the wife’s American Express credit card liability. The wife asserted she had such a liability, which she regularly paid, but she adduced no evidence as to the quantum of the liability.[26] She was not asked about it in cross-examination. I attribute no value to the liability because of the absence of relevant evidence. I am fortified in taking that course because the wife said from the bar table, without giving sworn evidence of it, that she fully discharges the credit card liability from month to month.
[26] Wife’s financial statement, pars 30, 46-54
The Sydney Suburb 2 property
Item 2 comprises the husband’s one-half legal interest in the parcel of real estate at Sydney Suburb 2. His mother is the proprietor of the other one-half legal interest in the property.
The husband initially sought a declaration of trust to the effect that he held his interest in the Sydney Suburb 2 property on trust for his mother. Alternatively, he sought a declaration pursuant to s 78 of the Act that he had no beneficial interest in the Sydney Suburb 2 property.
However, the husband’s mother and the mortgagee were not parties to the proceedings. Neither a declaration of trust nor a declaration pursuant to s 78 of the Act would result in any change to the registered proprietorship of the Sydney Suburb 2 property. Such orders would not bind the husband’s mother. Nor would they affect the mortgagee’s rights in respect of the property, or the mortgagee’s causes of action against the husband and his mother. The real property register would continue to disclose the husband and his mother as joint proprietors of title in the Sydney Suburb 2 property. For orders of this Court to be effective it would be necessary for at least the husband’s mother to be a party to the proceedings so that consequential orders could bind both her and the husband to take steps to alter the real property register to reflect the intent of the proposed declaration. Orders of the Court cannot directly affect the rights of third parties who are not party to the proceedings (see Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337 at 342, 351-354). That procedural issue was raised with the parties. No application was subsequently made by the husband to join his mother to the proceedings. Nor was any application made by the husband’s mother, who apparently conferred with the husband and his legal representatives over the issue, to intervene in the proceedings.
The husband asserted that, notwithstanding his partial legal interest in the Sydney Suburb 2 property, his mother was the sole beneficial owner of the property because it had been acquired for her sole and exclusive use. The purchase was funded by joint borrowings,[27] but although the husband was a joint borrower and a joint mortgagor, he did not make any direct financial contribution towards acquisition, maintenance or improvement of the property from his own resources.
[27] Husband’s affidavit, pars 28-29
The total cost of the purchase was funded by withdrawal of funds under the loan secured over the Sydney Suburb 1 property, to pay the deposit and associated expenses, and a fresh loan secured over the Sydney Suburb 2 property, to pay the balance of the purchase price. Although the funds for the purchase were borrowed in entirety, they were borrowed jointly by the husband and his mother. Their financial contributions to the acquisition of the property were therefore equal and, significantly, equitable interests in real property are presumed to correlate with the proportional contributions to the purchase price (see Allen v Snyder (1977) 2 NSWLR 685 at 689-690; Calverley v Green (1984) 155 CLR 242 at 246).
The Sydney Suburb 2 property was acquired by the husband and his mother contemporaneously with the transfer by the husband’s mother to the wife of her one-half interest in the Sydney Suburb 1 property.[28] The two transactions were necessarily interlinked. It was agreed the husband’s mother would transfer her one-half interest in the Sydney Suburb 1 property to the wife and acquire another property with the husband in its stead. The Sydney Suburb 1 property was used as collateral in the acquisition of the Sydney Suburb 2 property and the monies progressively paid by the parties to the husband’s mother for their acquisition of her interest in the Sydney Suburb 1 property were used by the husband’s mother to reduce the mortgage secured over the Sydney Suburb 2 property.[29]
[28] Husband’s affidavit, pars 20-22, 28-30
[29] Wife’s affidavit, pars F(B)5, F(B)6
The transactions would not have been possible, but for the wife’s agreement to the payment by the parties of $250,000 to the husband’s mother and also to the husband’s commitment to further liability as a joint borrower and mortgagor in respect of the Sydney Suburb 2 property.
The wife is mistaken, however, to believe the parties have an interest in the Sydney Suburb 2 property merely by reason of their payment of $250,000 to the husband’s mother. That payment was simply consideration for, and ensured the wife’s acquisition of, the husband’s mother’s one-half interest in the Sydney Suburb 1 property. What the husband’s mother did with the monies paid to her for that purpose was a matter for her sole discretion. Her decision to use the whole or part of that sum to diminish the mortgage encumbering the Sydney Suburb 2 property did not invest the husband or the wife with equitable interest in that property.
The evidence does not satisfy me that the husband is without equitable interest in the Sydney Suburb 2 property. It is possible that the husband’s one-half equitable interest in the property may have been incrementally diminished to a smaller proportion, though not extinguished, by the husband’s mother’s individual commitment to loan repayments under the mortgage (see Allen v Snyder at 691), but that issue was not addressed at all by the parties and so I decline to speculate any further. Consequently, the husband’s one-half legal and equitable interest in the property should properly form part of the matrimonial pool.
However, practical consequences cannot be ignored. I accept the husband regards the Sydney Suburb 2 property as being beneficially owned solely by his mother,[30] as does his mother,[31] but that is a salient consideration at the third stage of the property adjustment process. Their common belief is evidenced by the husband’s mother assuming sole and exclusive responsibility for the loan repayments and other expenses related to the Sydney Suburb 2 property, about which there was no factual controversy.
[30] Husband’s affidavit, par 30
[31] Affidavit of Ms S, par 36
The husband alternatively argued for the matrimonial property to be divided into two pools – one containing the Sydney Suburb 2 property, to which the wife allegedly made no contribution and which should therefore be quarantined for the benefit of the husband, and the second pool containing all other assets and resources.
I reject that approach, consistently with the wife’s submission that the acquisition of the husband’s interest in the Sydney Suburb 2 property was interlinked with their matrimonial affairs, and in particular, their acquisition of the husband’s mother’s interest in the Sydney Suburb 1 property and the payment to her of $250,000 in consideration for that interest. I intend to constitute one pool of matrimonial property and resources and to assess the parties’ contributions globally, as is the common approach (see Norbis v Norbis (1986) 161 CLR 513 at 523, 532-533, 541) and as the wife submitted should occur.
Item 24 is the husband’s one-half share of the current balance of the loan secured by mortgage over the Sydney Suburb 2 property. The loan balance is artificially inflated by a series of withdrawals made against the loan by the husband’s mother in mid 2010.[32] Those withdrawals totalled $90,000, and so one-half of that amount is notionally added back to the matrimonial pool as an asset in the husband’s hands. The husband conceded the efficacy of the add-back in the event his one-half interest in the Sydney Suburb 2 property and the mortgage encumbering it were included in the matrimonial pool. The add-back is item 22.
[32] Husband’s affidavit, pars 37-40; Affidavit of Ms S, pars 37-38
The Audi car
The value of item 13 was agreed between the parties. They did not bother to appoint the single expert witness pursuant to the procedural orders they sought from the Court.
Items 20 and 26 relate to the Audi car in the possession of the husband. The car was purchased by the husband after separation. Almost the entirety of the purchase price was financed.[33] The value of the car has depreciated in a short space of time so that the car is now worth less than the debt attached to it. Item 26 is the quantum of the liability and item 20 is the differential between the quantum of the liability and the value of the car. The husband conceded that item 20 should be notionally added back to the pool, presumably because he recognised it as reckless to purchase an expensive car which devalued so greatly in such a short space of time (see Omacini v Omacini (2005) 33 Fam LR 134 at 144-145).
[33] Husband’s affidavit, pars 102-106
The interim property settlement
The parties accomplished an interim property settlement in March 2011.[34] Those orders did not exhaust the Court’s jurisdiction, nor bind the final exercise of discretion now undertaken (see Gabel v Yardley (2008) FLC 93-386 at 82,957-82,959; Strahan & Strahan (Interim Property Orders) (2009) 42 Fam LR 203 at 229-230).
[34] Husband’s affidavit, par 79
Pursuant to those orders the parties equally divided a joint bank account,[35] from which they each received $54,917.50.[36]
[35] Order 5 made on 10 March 2011
[36] Husband’s affidavit, par 85
The wife gave evidence in cross-examination that she spent approximately $48,000 of the sum she received in the payment of her legal fees. Item 21 represents an add-back of that amount as a notional asset of the wife, who had the benefit of those funds, consistently with the principle of adding back paid legal costs when the payment is a premature distribution of funds in which both parties have an interest (see Chorn v Hopkins (2004) FLC 93-204 at [55], [57]). The remainder of the money received by the wife was spent unexceptionally in a manner that does not require its add-back.
Of the same sum received by the husband, he invested $17,000 in his Interactive Brokers and Perth Mint investments,[37] which already appear as items 11 and 12 in the balance sheet. The husband exhausted the remainder of the amount he received on other expenditure,[38] some of which is reflected in the value of personal chattels in his possession. The amount received by the husband in the interim distribution is therefore either already accounted for in the pool or not amenable to add-back.
[37] Husband’s affidavit, pars 88-92
[38] Husband’s affidavit, par 86
Items 14 and 18 are the personal chattels individually retained by the parties, which must necessarily incorporate the chattels they divided in the interim property settlement.[39]
[39] Orders 7-9 made on 10 March 2011; Husband’s affidavit, par 83
Item 17 is the car transferred to the wife as part of the interim property settlement.[40]
[40] Order 6 made on 10 March 2011; Husband’s affidavit, par 84
Item 19 recognises that the interim property settlement expressly provided for the wife to retain her jewellery.[41] However, the wife attributed no value to her jewellery,[42] about which she was not challenged. In the absence of any evidence as to its value I attribute no value to the jewellery.
[41] Order 9 made on 10 March 2011
[42] Wife’s financial statement, par 43
Superannuation
The Court is generally exhorted to treat the parties’ superannuation entitlements separately from assets, but that need not necessarily be the case (see Coghlan v Coghlan (2005) FLC 93-220 at [57]–[68]). When the issue was raised with the parties they each submitted their superannuation interests should be considered as part of the pool and treated like other matrimonial assets. I am satisfied it is appropriate in the circumstances of this case to do so. Their superannuation entitlements are reasonably modest amounts, their respective interests are not disproportionate, and overall they represent only a relatively small proportion of the pool.
Assessment of contributions
The parties contributed disparate amounts at the commencement of their relationship. That disparity must be reflected in their ultimate entitlement, although the parties disagreed about the extent of the disparity.
Although legally married, the parties did not cohabit and remained financially independent until after their religious ceremony in July 2000.[43] Neither party alleged that they made a relevant contribution for the purposes of these proceedings until their cohabitation.
[43] Husband’s affidavit, par 18; Wife’s affidavit, pars 15, 19, F(A)3, F(A)4
The husband took into the relationship his one-half interest in the Sydney Suburb 1 property, which was encumbered by mortgage. At or about the time of their commencement of cohabitation the Sydney Suburb 1 property was valued at $500,000.[44] The mortgage balance at that time approximated $184,000.[45] It therefore follows that the value of the husband’s one-half interest of the net equity in the property at the time was about $158,000.
[44] Husband’s affidavit, par 19; Wife’s affidavit, pars C25, F(C)10
[45] Husband’s affidavit, par 19
Although that must also have been the value of the equal one-half share of the net equity enjoyed by the husband’s mother in the property, the parties agreed to pay to her the sum of $250,000 for the wife to acquire her one-half share in the property.[46] The wife argued that they overpaid the husband’s mother for her interest in the property, which argument I accept and the husband’s counsel conceded.
[46] Husband’s affidavit, pars 20, 22; Wife’s affidavit, pars C21, F(B)6
The overpayment to the husband’s mother necessarily diluted the value of the husband’s net equity in the property, but I do not accept the validity of the wife’s calculations of the diluted value.[47] Nor do I accept her assertion that the computation is “simple”.[48] The diluted value of the husband’s interest is not capable of precise computation for a number of reasons.
[47] Wife’s affidavit, pars F(E)12, F(E)13, F(E)14
[48] Wife’s affidavit, par F(C)
First, the basal sum of $250,000 was repaid by the parties progressively over a period of years, without accrual of interest.
Secondly, the value of the property continued to escalate over the period of years during which the payments were made by the parties to the husband’s mother, but there was no corresponding change in the amount paid to the husband’s mother.
Thirdly, the debt to the husband’s mother was diminished by both cash payments and credits which were allowed for various reasons.
Fourthly, the parties’ acquisition of the husband’s mother’s interest in the property was interlinked with the purchase of the Sydney Suburb 2 property by the husband and his mother, as earlier explained. Loans over the properties were contemporaneously re-financed.
Fifthly, although the parties agree they completely discharged the debt of $250,000 to the husband’s mother, there is considerable controversy about the mathematical manner in which the repayment was achieved. That controversy seems insoluble. I do not intend to try and resolve it because it makes little difference to the outcome. It remains a fact the husband made a significantly greater initial financial contribution than the wife.
Immediately upon cohabitation the parties assumed sole financial responsibility for the Sydney Suburb 1 property. They met the mortgage repayments and utility costs together,[49] and re-financed the mortgage some little while after.[50] The husband’s mother only made financial contributions to the household as a boarder from the time the parties’ began cohabitation in the Sydney Suburb 1 property.
[49] Husband’s affidavit, par 21; Wife’s affidavit, pars C20, C22, C24
[50] Husband’s affidavit, par 23
The husband also introduced to the relationship a car of minimal value and some superannuation entitlements of undisclosed value.[51]
[51] Husband’s affidavit, par 41
By comparison, there is very little evidence about the wife’s introduction of assets to the relationship. The evidence only inferentially proves the wife had bank accounts containing about $13,500 at or about the time cohabitation commenced.[52]
[52] Exhibit W2
The parties mutually conducted the trial on the basis that they each devoted their available time in equal measure for the benefit of the family unit, albeit that they assumed different roles. They each worked in paid employment, they each performed domestic duties, and they each afforded care to and supervision of their child. The husband was a greater breadwinner and the wife was a greater homemaker. Their efforts in the household were assisted from time to time by the paternal grandmother, the maternal grandparents, and paid cleaners. I assess their mutual contributions in that regard to be equal and neither party disputed that assessment when confronted with the proposition during the trial.
During the course of the marriage the husband received and contributed to the parties’ resources a redundancy payment of $160,000.[53] The husband derives no extra credit for that financial contribution because it was received as an incident of his employment with a particular employer for whom he worked only during the parties’ relationship. No component of the payment related to a period of employment that extended beyond the margins of the parties’ relationship (see Marriage of Burke (1993) FLC 92-356 at 79,764).
[53] Husband’s affidavit, par 50
Although the parties separated on 30 January 2009, they remained living with the child at the Sydney Suburb 1 property until the husband vacated the property in March 2011, following agreement about the wife and child having sole and exclusive occupation of that property.[54]
[54] Husband’s affidavit, par 72-73; Wife’s affidavit, pars A13-14, E52, E(iv)72
The husband asserted he made significantly greater financial contributions following separation, which were enabled by his high income. His gross income for the financial year ended 30 June 2010 was $232,000 and for the year ended 30 June 2011 it was $207,000.
The husband asserted his post-separation financial contributions could be identified by the greater value that now rests in the parties’ investments and superannuation interests.
It is true the husband contributed more cash than the wife to their joint account in 2009 and 2010, but the difference was only about $20,000.[55]
[55] Husband’s affidavit, par 76
It is also true the husband was able to accumulate more superannuation entitlements after separation. At the conclusion of the 2009 financial year his superannuation entitlements were worth approximately $86,000,[56] whereas they are now worth approximately $143,000.
[56] Exhibit H1
Although the husband expressly relied upon the Perth Mint investment as a manifestation of his post-separation financial contribution, the state of the evidence is somewhat confusing. The husband re-structured his superannuation interests in 2010.[57] One of the investments held by his superannuation fund is an investment in Perth Mint,[58] the value of which must necessarily comprise part of the overall value of the husband’s superannuation interest. However, the husband also disclosed an investment of his own in Perth Mint in his financial statement, which is therefore included in the matrimonial pool at a value of $58,977, separately from his superannuation interests. The investment statement provided by the Perth Mint, annexed to the husband’s affidavit, is furnished in the personal name of the husband and discloses a similar but not identical value.[59] That statement discloses initiation of the investment in May 2010. I therefore infer the husband has invested personally in Perth Mint since separation using monies earned by him post-separation.
[57] Husband’s affidavit, pars 93-95
[58] Husband’s affidavit, par 95(d)
[59] Husband’s affidavit, par 99, Annexure AF
While the wife acknowledged the significant financial contributions made post-separation by the husband, she ably submitted that the parties remained living under the same roof for more than two further years until March 2011, during all of which time their financial affairs remained intertwined.[60] In effect, their lives continued much the same after separation as they had before, even though both appreciated the marriage was at an end. They lived in the same house, working and raising their child as they had done since cohabitation began.
[60] Husband’s affidavit, pars 73-78
The husband asserted his contributions entitled him to the entirety of his interest in the Sydney Suburb 2 property, which remained quarantined, together with 57.5 per cent of the pool of property containing all other assets and resources.
Alternatively, in the event of only one pool of property, the husband asserted his entitlement to 67.5 per cent of it.
The wife, who argued for only one pool of property, admitted the husband did have greater entitlement to the pool, but asserted his entitlement would not exceed 52 per cent.
I accept the veracity of the parties’ joint submission that the husband’s contribution-based entitlement is greater than the wife’s. The extent of the disparity is the pivotal issue.
Taking into account the husband’s greater initial contribution, allowing him some credit for the post-separation financial contributions whilst the parties were separated but lived under the same roof, and attributing equal weight to the parties’ contributions as breadwinners and homemakers during the relationship, I assess the husband’s entitlement to the single pool of property at 57.5 per cent. Axiomatically, the wife’s entitlement is 42.5 per cent.
Adjustment
Both parties conceded that, on the basis of a single pool of property, a third-stage adjustment should sound in favour of the wife. Again, the controversy was over the quantification of the adjustment.
The husband is now 40 years of age.[61] He is apparently in good health.
[61] Husband’s affidavit, par 2
Although the husband has been a high income earner, his employment contract has now ended.[62] He was given notice the contract would not be renewed and has unsuccessfully sought other work, even that from which he would derive substantially less income.[63] He is therefore actively attempting to acquire alternate skills to assist in his search for replacement employment.[64]
[62] Husband’s affidavit, par 56
[63] Husband’s affidavit, pars 57-58
[64] Husband’s affidavit, par 59
Although the husband’s high income employment has been interrupted, he retains the capacity to earn high income if the opportunity presents. His past employment record is impressive.[65] I have little doubt the husband will obtain replacement employment, even if it does only generate more modest income.
[65] Husband’s affidavit, pars 41, 44, 50, 51, 55
The wife is currently 38 years of age. She is highly qualified, holding undergraduate and post-graduate tertiary qualifications, and is currently employed in a professional capacity, with no suggestion her employment is in jeopardy.[66]
[66] Wife’s affidavit, pars 1-12
The parties both likely have long, well-paid working lives ahead of them. Their incomes will likely sustain comfortable lifestyles and enable their accumulation of substantial superannuation interests. The current values of their superannuation interests are not too dissimilar and neither proposes a superannuation splitting order.
The parties’ child is still only seven years of age.[67] He lives primarily with the wife and will continue to do so. The parties reached separate agreement about the child support payments due by the husband to the wife, with which obligation the husband has complied.
[67] Wife’s affidavit, par 29
The wife adduced evidence of her sufferance of a “stress breakdown” in September 2006 and “similar symptoms” in mid 2008,[68] which apparently led to her medication and treatment, but no medical evidence was adduced in relation to the matter. The husband did not suggest it diminished the mother’s contributions and the wife did not suggest it was a continuing affliction for which a third stage adjustment in her favour was warranted. The wife also made mention in submissions of a medical complaint concerning her leg, but no evidence, medical or otherwise, was adduced about it.
[68] Wife’s affidavit, pars 44, 49
I accept the husband and his mother regard the husband’s proprietary interest in the Sydney Suburb 2 property to belong entirely to the husband’s mother. The wife probably did also, at least until when the parties separated and dispute arose about the adjustment of their property interests. Even though the husband will retain his interest in the Sydney Suburb 2 property as part of the property settlement, in all likelihood he will surrender his equitable interest in the property to his mother, despite his name remaining on the title. As was submitted for the husband, that is a consideration under s 75(2)(o) of the Act, the effect of which is to ameliorate the adjustment that might otherwise be made in the wife’s favour.
There were no other factors that either party submitted should materially influence the exercise of the Court’s discretion in the third stage adjustment.
Having regard to the factors discussed I am satisfied an adjustment in favour of the wife of 5 per cent is warranted.
Just and equitable orders
According to those conclusions, the husband’s entitlement to the matrimonial pool is measured at 52.5 per cent and the wife’s at 47.5 per cent.
Given the pool has a net value of $1,947,307, the husband’s share computes to $1,022,336 and the wife’s share to $924,971 (to the nearest dollar).
The parties agree the wife will retain assets (items 15-19), add-backs (item 21), resources (items 32-33), and liabilities (items 27-29) which have a net value of $166,032. Her extra entitlement is therefore calculated at $758,939 (= 924,971 – 166,032).
It is the wife’s desire to retain the Sydney Suburb 1 property, where she continues to live, subject to its encumbrance. The net value of the Sydney Suburb 1 property is $990,000 (= 1,200,000 – 210,000).
In order for the wife to acquire sole proprietorship of that property she would need to pay a cash adjustment to the husband of $231,061 (= 990,000 – 758,939). She does not have the assets or resources from which to make such a payment, but she may be able to borrow the funds, either commercially or from family or friends. The wife asked for the opportunity to try and do so, with which the husband was content.
The orders therefore provide for the wife to acquire the Sydney Suburb 1 property, subject to her indemnifying the husband against liability under the existing mortgage and her payment to him of a cash adjustment in the sum of $231,061.
The parties agree the husband will retain assets (items 2-14), add-backs (items 20, 22), resources (items 30-31), and liabilities (items 24-26) which have a net value of $791,275. Upon payment of the cash adjustment of $231,061 the husband will have received assets and resources with a net value of $1,022,336, which is his 52.5 per cent entitlement.
In the event the wife is unable to make the cash adjustment to the husband, the orders provide for the property to be sold and the net proceeds divided in a way that will achieve an overall division of 52.5/47.5 per cent. That is achieved by the wife taking an amount of $549,883 from the net proceeds of sale and the balance of the proceeds of sale being divided in the proportions of 52.5/47.5. It is preferable that orders allocate percentages rather than fixed sums to parties (see Marriage of Waters & Waters (1981) FLC 91-019 at 76,207-76,209; Marriage of Nolan & Ingram (1984) FLC 91-585 at 79,724; Marriage of Bell & Bell (1993) FLC 92-347 at 79,683; ON v ON [2005] FamCA 1110 at [48]).
I am satisfied the orders set out at the commencement of these reasons represent a just and equitable adjustment of the parties’ property and resources.
I certify that the preceding ninety two (92) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Austin delivered on 2 February 2012.
Associate:
Date: 2 February 2012
Key Legal Topics
Areas of Law
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Family Law
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Property Law
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Equity & Trusts
Legal Concepts
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Constructive Trust
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Remedies
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