Ayers & Ayers
[2023] FedCFamC1F 33
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
FIRST INSTANCE
Ayers & Ayers [2023] FedCFamC1F 33
File number(s): BRC 7331 of 2021 Judgment of: CAREW J Date of judgment: 3 February 2023 Catchwords: FAMILY LAW – PROPERTY – constructive trust – where parties contend equal division appropriate however disagree on the composition of the asset pool – where the husband holds one per-cent of the legal title in jointly owned real property with his de facto partner – where the husband contributed to the purchase price and has paid all outgoings to date – where it would be unconscionable to rely upon the legal title limiting the husband’s interest to one per-cent
FAMILY LAW – PROPERTY – resulting trust – where $300,000 provided from joint bank account to the husband’s parents to assist in the purchase of real property – where the wife claims a one half interest is held by the husband’s parents on trust for the husband and wife – where the husband asserts the money was provided as a gift – where inference of resulting trust can be drawn from the relevant objective facts
Legislation: Evidence Act 1995 (Cth)
Family Law Act1975 (Cth)
Family Law (Superannuation) Regulations 2001
Cases cited: Baumgartner v Baumgartner (1987) 164 CLR 137
Best & Best (1993) FLC 92-418
Biltoft & Biltoft (1995) FLC 92-614
Bosanac v Commissioner of Taxation (2022) FLC 94-107
Calverley v Green (1984) 56 ALR 483
Clauson & Clauson (1995) FLC 92-595
In Af Petersen and Af Petersens (1981) FLC 91-095
Muschinski v Dodds (1985) 160 CLR 583
Stanford v Stanford (2012) 247 CLR 108
Number of paragraphs: 129 Date of hearing: 28 – 30 November 2022 Place: Brisbane Counsel for the Applicant: Mr J Selfridge Solicitor for the Applicant: Australian Family Lawyers Counsel for the Respondent: Mr D Matta ORDER
BRC 7331 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR AYERS
Applicant
AND: MS AYERS
Respondent
order made by:
CAREW J
DATE OF ORDER:
3 February 2023
THE COURT ORDERS THAT:
1.Pursuant to s 78 of the Family Law Act 1975 (Cth) (“the Act”), it is declared that Mr Ayers (“the husband”) holds (for the purposes of these proceedings only) a 50% equitable interest in the property situate at N Street, Suburb D in the State of South Australia, and more particularly described as Certificate of Title Volume … Folio …, registered in the names of the husband and Ms E as tenants in common in unequal shares (“Suburb D”).
2.Pursuant to s 78 of the Act, it is declared that the husband and Ms Ayers (“the wife”) hold (for the purposes of these proceedings only) a 50% equitable interest in the property situate at F Street, Suburb G in the State of Queensland, in the building known as ‘Property H’, and more particularly described as Title Reference …, which is registered in the names of the husband’s parents, Mr B and Ms GG (“Property H”).
3.Within 7 days of the date of this Order, the parties do all acts and things and sign all necessary documents to distribute the balance of the funds in the joint Commonwealth Bank of Australia account #...70, being the net sale proceeds of the former matrimonial home at W Street, CC Town in the State of Victoria, in the sum of $1,265,465 to the wife and $153,067 to the husband, with any accrued interest above that sum to be divided equally, and thereafter close the account.
4.Further to paragraph 3 of this Order, the parties do all acts and things and sign all necessary documents to forthwith close all remaining joint bank accounts.
5.Contemporaneously with the distribution in paragraph 3 of this Order, the parties do all acts and things and sign all necessary documents for the wife to:
(a)Withdraw the caveat lodged on her behalf against Property H (caveat number …82);
(b)Resign as a director from M Pty Ltd and K Pty Ltd;
(c)Transfer to the husband all of her shareholdings in M Pty Ltd and K Pty Ltd; and
(d)Relinquish and assign to the husband any beneficial interest she may have in the Ayers Family Trust,
at the husband's expense.
6.The base amount of $433,486.50 be allocated to the wife from the interest held by the husband, Mr Ayers, born … 1961 in his Super Fund 1 Policy - Account Number …09, as required by section 90XT(4) of the Act.
7.In accordance with Section 90XT(1)(a) of the Act, whenever the Trustee of Super Fund 1 - P Limited (“the Trustee”), makes a splittable payment in the interest of the husband, the Trustee shall pay the wife the entitlement calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001, using the base amount specified in paragraph 6 of this Order and make a corresponding reduction in the entitlement the husband would have had but for this Order.
8.Paragraphs 6 and 7 of this Order have effect from the operative time being four (4) business days after the date of service of a certified copy of the sealed Order upon the Trustee.
9.Paragraphs 6, 7 and 8 of this Order shall bind the Trustee to observe the Trustee obligations set out under the Act and the Family Law (Superannuation) Regulations 2001.
10.The husband, wife and/or the Trustee have liberty to apply in relation to the implementation of the splitting order set out in this Order.
11.The husband retain for his own use and benefit, to the exclusion of the wife, all assets and liabilities in his sole name and indemnify the wife in relation to any liability arising from or associated with the following, with the wife to relinquish any interest in:
(a)Property H;
(b)His interest in Suburb D;
(c)His Motor Vehicle 1, registration …;
(d)His part property settlements of $200,000 and $50,000;
(e)The balance of his bank account/s;
(f)His interest in:
(i)M Pty Ltd;
(ii)The Ayers Family Trust;
(iii)K Pty Ltd;
(iv)L Pty Ltd;
(v)J Pty Ltd;
(g)The personal loan of $100,000 owing to Mr C;
(h)The artwork and jewellery in his possession;
(i)All liabilities in his name and howsoever associated with the entities listed in paragraph 11(f) of this Order, including but not limited to credit card debt/s and personal loans and/or taxation liabilities; and
(j)His superannuation entitlements, subject to the split provided in this Order.
12.The wife retain for her own use and benefit, to the exclusion of the husband, all assets and liabilities in her sole name and indemnify the husband in relation to any liability arising from or associated with the following, with the husband to relinquish any interest in:
(a)The balance of her bank account/s;
(b)Her Motor Vehicle 2, registration …;
(c)Her part property settlement of $200,000;
(d)All liabilities in her name including but not limited to credit card debt/s, personal loans and taxation liabilities;
(e)Her superannuation entitlements; and
(f)The superannuation split provided in this Order.
13.Unless otherwise specified in this Order and save for the purposes of enforcing monies due under this Order:
(a)Each party be solely entitled to the exclusion of the other to all property (including choses-in-action) in their own name or possession as at the date of this Order;
(b)Monies standing to the credit of the party in any bank accounts are to be retained by the party in whose name the account is held;
(c)Each party forego any claims they may have to any superannuation benefits belonging to or earned by the other than as provided in this Order;
(d)Insurance policies remain the sole property of the owner named thereon;
(e)Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to this Order; and
(f)Any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
14.In the event that the wife has not already done so, she reimburse the husband for one half of the costs incurred in relation to valuations and a mediation, in the total sum of $6,110.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
Carew J.
Mr Ayers and Ms Ayers were married for nearly 40 years and have two adult children. They had amassed significant wealth before losing most of it during the global financial crisis in 2008. They nevertheless continued to live a comfortable lifestyle, mainly due to Mr Ayers’ earning capacity.
Mr Ayers is currently employed by J Pty Ltd and receives a salary package of $478,296 plus generous bonuses. Ms Ayers has been out of the paid workforce since 1992 and has few prospects of earning anything other than a very modest income.
Both parties, to their credit, acknowledge the significant contribution each has made to their long marriage partnership and both contend that an equal division is the appropriate outcome.[1] However, they disagree on the composition of the asset pool to be divided.
[1] If certain assets are not included, the wife seeks a 60 per cent distribution.
The most significant assets (about which they agree), are the proceeds of sale of the former matrimonial home at W Street, CC Town, Victoria (“the former matrimonial home”) of approximately $1,418,532, and combined superannuation of $882,169. The wife proposes that she receive the entire proceeds of sale and half the superannuation on the basis that the husband holds a half interest in two other real properties, and the wife contends that such a division will achieve equality. The husband contests the interest in the two other real properties. If the husband’s alleged interest in the two real properties is included in the balance sheet, it increases the pool by approximately $1,035,952 in net terms.
The husband’s anticipated legal fees (including the estimated fees for the three day trial) are $306,704 and the wife’s are $160,360.
BACKGROUND
The parties commenced cohabitation in or about 1980 and married in 1983. They separated on 2 February 2020 and divorced on 10 July 2021. There are two adult children of the marriage born in 1986 and 1991 respectively.
The husband is 61 years of age and the wife is 62 years of age. As already noted, the husband is employed by J Pty Ltd. The wife is unemployed. The husband intends to stay employed until 2026 unless his health dictates an earlier retirement.
The husband lives in South Australia in a jointly owned property with his de facto partner, Ms E. Ms E is 51 years of age and has been unemployed since she and the husband moved to South Australia in or about March 2021. Prior to that, Ms E worked in sales for the previous eighteen years. The husband and Ms E have recently set up a joint business which will be operated by Ms E and four staff when it shortly commences trading. Ms E is confident that the business will be very profitable and estimates a net profit of $400,000 per annum. The business will provide beauty services. The husband and Ms E are joint directors and equal shareholders of L Pty Ltd, which was established for the purposes of the business. The husband and Ms E jointly borrowed $245,000 for the acquisition of the business and also obtained vendor finance of $125,000.
The husband and Ms E bought a property at Suburb D, South Australia (“Suburb D”) in mid-2021 for “in excess of” (according to the husband’s evidence in chief) $2,350,000 plus stamp duty and fees of $240,000. A deposit of $630,000 was paid, with the husband contributing at least $100,000, borrowed from his brother, Mr C. It is contended on behalf of the husband that Ms E contributed the balance deposit of $530,000. The husband and Ms E jointly borrowed $1,910,000 from the Commonwealth Bank in order to complete the purchase. The property is registered in the joint names of the husband and Ms E as tenants in common in the proportion 99% to Ms E and 1% to the husband. Suburb D has a current agreed value of $2,600,000 and an outstanding mortgage of $1,878,096. Since its purchase, the husband has met all mortgage repayments and all outgoings. He has also largely supported Ms E who has complete access to a joint account into which the husband’s salary is paid.
The wife lives in rented accommodation in regional Victoria. The wife has not re-partnered.
At the commencement of their relationship in 1980, the husband was a public servant and the wife worked in allied health. Neither of them had any assets of significance.
After marriage, the husband commenced employment with the Defence Force. The husband resigned from the Defence Force in 1992 and thereafter has been employed in senior positions in various corporations. His salaries and benefits have been significant, and enabled the parties to acquire various investments and properties. As a result of his employment, the husband and wife often moved and the husband was often away from home for extended periods.
After marriage, the wife initially continued to work in allied health. The wife has not been employed since 1992. Since separation, the wife has unsuccessfully sought employment in both allied health and the retail sector.
It is common ground that each of the parties worked hard and to the best of their ability throughout their long marriage, and the husband acknowledges the sacrifices made by the wife which enabled his career to advance.
At the height of their wealth, and just prior to the global financial crisis in 2008, their assets were apparently worth about $18,000,000. The global financial crisis had a significant impact on their wealth and thereafter they suffered additional setbacks in relation to the operation of a farming property which ultimately sold at a loss.
During the marriage, the husband suffered a number of medical issues and has undergone surgery on a number of occasions. The husband was also diagnosed in 2014 with a medical condition. There is no medical evidence suggesting that the husband’s working life will necessarily be cut short but one might expect that such a history would have some impact on the longevity of his working life.
The wife was diagnosed with depression relatively early in the marriage and has taken anti-depressants from time to time. She also has a medical condition. There is no medical evidence suggesting that these conditions will preclude the wife from obtaining some form of employment in the future, although it is common ground that her earning capacity is modest at best.
Objections to evidence
In case it becomes relevant for other purposes, I record that on the first day of the trial, each party took objection to various parts of the affidavit material of the other. A combined list of objections was provided by counsel for the parties (which remains with the Court papers). The list identifies objections which are conceded and as such those parts of the evidence have been struck out. There are additional objections in the list about which the parties remain in dispute but neither party sought a formal ruling in relation to them.
In particular, and prior to the commencement of oral evidence, the parties’ counsel informed the Court that paragraphs 189 to 223 of the husband’s affidavit filed 24 October 2022 should be struck out by agreement on the basis that the those paragraphs, and letters annexed to the affidavit relating to those paragraphs, contained evidence relating to negotiations between the parties and were therefore privileged pursuant to s 131 of the Evidence Act 1995 (Cth).
Section 131 provides that (subject to certain exceptions) evidence is not to be adduced of:
(a)a communication that is made between persons in dispute, or between one or more persons in dispute and a third party, in connection with an attempt to negotiate a settlement of the dispute; or
(b)a document (whether delivered or not) that has been prepared in connection with an attempt to negotiate a settlement of a dispute.
Notwithstanding the concessions about material subject to privilege, counsel for the husband, on two separate occasions, asked the wife questions about concessions that had allegedly been made by her, firstly during the proceedings and secondly in certain correspondence. The wife was unrepresented at times during the proceedings. On the first occasion, counsel put these questions to the wife:
And throughout the course of these proceedings, at various times, you’ve suggested in your material and pled your case to the extent that there was a loan that existed between yourself and [the husband] and his parents, haven’t you?
…
… You’ve made it very clear in your material, throughout the course of these proceedings, that there were conversations to the extent that moneys had to be repaid, and there was a clear understanding between the parties that moneys had to be repaid?
The husband’s counsel confirmed that his questions were intended to suggest that the wife had made prior statements inconsistent with the case being agitated by her at trial i.e. that she and the husband or the husband alone has a one half equitable interest in Property H pursuant to a resulting trust. Counsel asked for the matter to be stood down so that he could locate the “material”.
When the matter resumed, counsel for the husband sought to proceed on another topic and revert to that matter at a later time. Counsel indicated that the “material” he sought to put to the wife was “a piece of correspondence, I believe” but he was unable to take the witness to it at that time.
The following day, the husband’s counsel asked the wife further questions on this topic without producing the “material” in question:
… Post-separation, which was in February 2020, do you accept that before you engaged your current lawyers you’re then clear position in your having discussions with [the husband] or with his lawyers was that – and you put it in writing – that the $300,000 that was advanced to [the husband’s parents] was a loan? …
…
… Now, you, in fact, would you accept sent letters on at least three occasions, two to my client through his lawyers and one to a gentleman by the name of [Mr O], asserting that you had loaned – you and/or [the husband] had loaned $300,000 to his parents?
- - - and that you wanted 150,000 – an equal distribution – of that loan, as you called it, didn’t you?
As a consequence of objection to the questions on the basis that concessions had already been made that the letters referred to by counsel for the husband should be struck out of the trial material and any offers allegedly made by the wife during a time when she was self-represented would still be protected as privileged pursuant to s 131 of the Evidence Act 1995 (Cth), the matter was again stood down so that counsel for the husband could identify what communications or letters he was questioning the witness about.
Ultimately, the husband’s counsel did not pursue this line of questioning.
ISSUES
The parties identified the following issues for determination:
(1)In identifying the parties’ legal and equitable property interests:
(a)Is the $100,000 advanced by Mr C to the husband a liability that he will have to repay?
(b)As between the husband and the wife, is a 50% equitable interest in the property known as Suburb D, held on trust for the husband by way of a constructive trust?
(c)As between the husband and the wife, is a 50% equitable interest in the property known as Property H, held on trust for the husband and/or the husband and wife jointly by way of an express or resulting trust?
(2)Should the sum of $50,000 received by the wife pursuant to the Orders dated 6 September 2021 be added back into the balance sheet as a part property settlement, or should it instead be treated as lump sum spousal maintenance?
(3)What adjustment if any, to the husband and wife should be made pursuant to ss 75(2)(b) and 75(2)(k) of the Family Law Act1975 (Cth) (“the Act”)?
APPLICABLE LEGAL PRINCIPLES
In property settlement proceedings, the Court may make such order as it considers appropriate, altering the interests of the parties to the marriage in the property of the parties or either of them, including an order for a settlement of property in substitution for any interest in the property for the benefit of the parties, and an order requiring either or both of the parties to the marriage to make, for the benefit of either or both of the parties, such settlement or transfer of property as the Court determines (s 79(1) of the Act).
The Court cannot make an order unless it is satisfied that, in all of the circumstances, it is just and equitable to make the order (s 79(2)).
In considering what order (if any) should be made in property settlement proceedings, the Court is required to take into account the following (s 79(4)):
(1)The financial contribution made directly or indirectly by or on behalf of a party to the acquisition, conservation or improvement of any property of the parties or either of them, whether or not that property still exists;
(2)The contribution (other than financial) made directly or indirectly by or on behalf of a party to the acquisition, conservation or improvement of any property of the parties or either of them, whether or not that property still exists;
(3)The contribution made by a party to the welfare of the family constituted by the parties and any children, including any contribution made in the capacity of homemaker or parent;
(4)The effect of any proposed order upon the earning capacity of either party;
(5)The matters referred to in s 75(2) of the Act so far as relevant;
(6)Any other order made under the Act affecting a party; and
(7)Any child support under the Child Support (Assessment) Act 1989 (Cth) that a party has provided, is to provide, or might be liable to provide for a child of the marriage.
The High Court of Australia in Stanford v Stanford[2] identified certain principles to be applied in property settlement proceedings. In particular, when considering whether it is just and equitable to make an order, it is firstly necessary to identify, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property.[3] Secondly, the discretion as to whether or not to make a property settlement order, although extraordinarily wide, must nevertheless be exercised in a principled way.[4] Thirdly, there is no presumption that the parties’ rights to or interests in property are or should be different from those that currently exist.[5] The consideration of whether it is just and equitable to make an order should not be considered by reference only to the matters in s 79(4). It is necessary to give separate consideration to s 79(2) and (4) and not to ‘conflate’ the two subsections.[6]
[2] (2012) 247 CLR 108 (“Stanford”).
[3] Ibid at 120, [37].
[4] Stanford (n 2) at 120–121, [38].
[5] Ibid at 121, [40].
[6] Ibid at 120, [35].
Is it just and equitable to make an order?
The husband and the wife contend that it is just and equitable to make an order. That position is understandable given that the husband and wife separated nearly three years ago and “there is not and will not thereafter be the common use of property” by the parties.[7] Additionally “the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the relationship”.[8] In such cases, the “just and equitable requirement is readily satisfied”[9] and I am satisfied in this case that it is just and equitable to make an order.
[7] Ibid at 122, [42].
[8] Ibid.
[9] Ibid.
Balance Sheet
The largely agreed balance sheet adopted by the parties is set out below (the items about which there is disagreement are in bold type):
Description Ownership Husband’s value Wife’s value ASSETS 1 Sale Proceeds Held in CBA Net Bank Account #...70 Joint $1,418,532 E$1,418,532 2 Property situated at N Street owned by Applicant and his current de facto partner “Suburb D” Husband $100,000 $1,300,000 3 Alleged Equitable Interest in Property situated at F Street, Suburb G “Property H” Husband $Nil $675,000 4 CBA Account “MA Settlement” #...76 (containing remainder of interim distribution) Husband $Nominal $Nominal 5 CBA Private Bank Account #...49 Husband $11,991 $11,991 6 Half Share of Q Bank Offset Account Husband $402 $402 7 Interim Distribution to Applicant Husband $200,000 $200,000 8 Interim Distribution to Applicant Husband $50,000 $50,000 9 Interest in L Company as Director, Shareholder and Secretary Husband $Nominal NK 10 Shares held in J Pty Ltd Husband $60,000 $60,000 11 Artwork & Jewellery Husband $21,000 $21,000 12 Motor Vehicle 1 Husband $52,500 $52,500 13 Interest in Asset T (owned by M Pty Ltd of which both parties are Directors/Shareholders) Joint $30,000 $30,000 14 NAB Banking Account #...07 Wife $7,447 $7,447 15 S Bank Account #...04 (containing remainder of interim distribution and alleged loan funds from Ms U) Wife $Nominal $Nominal 16 Interim Distribution to Respondent Wife $200,000 $200,000 17 Interim Distribution to Respondent Wife $50,000 $NIL 18 Artwork & Jewellery Wife $25,000 $25,000 19 Motor Vehicle 2 Wife $17,000 $17,000 Assets subtotal $2,243,872 $4,068,872 LIABILITIES 20 Loan to Mr C – for the property situated at N Street Husband $100,000 $NIL 21 Half Share of Q Bank Home Loan Account #...90 (Suburb D) Husband $NIL $939,048 22 R Finance Account #...08 Husband $NIL $NIL 23 CBA Credit Card Account #...77 Husband $NIL $NIL 24 Tax payable on J Pty Ltd Shares Husband $NIL $NIL 25 Half Share of CBA Business Loan for L Pty Ltd, Account Number Ending #...62 ($245,000 jointly owed by the Applicant and his partner) and vendor finance for equipment ($125,000 jointly owed by the Applicant and his partner), but for the purposes of this matter, the value will be nominal noting the business is currently in deficit. Husband $Nominal $NK Liabilities subtotal $100,000 E$939,048 SUPERANNUATION Name of Fund Type of interest Member Applicant’s value Respondent’s value 26 Super Fund 1 Accrued Husband $492,664 $492,664 27 Super Fund 4 Defined benefit Husband $331,584 $331,584 28 Super Fund 2 Accrued Husband $50,323 $50,323 29 Super Fund 3 Accrued Wife $7,598 $7,598 Superannuation subtotal $882,169 E$882,169 TOTAL (assets – liabilities) $2,143,872 E$3,129,824 TOTAL (assets – liabilities + superannuation) $3,026,041 E$4,011,993 OTHER Description Ownership Applicant’s value Respondent’s value 30 K Pty Ltd Joint Nominal Nominal 31 The Ayers Family Trust Joint Nominal Nominal 32 M Pty Ltd – Trustee for the Ayers Family Trust Joint Nominal Nominal Other subtotal $NIL $NIL IN IDENTIFYING THE PARTIES’ LEGAL AND EQUITABLE PROPERTY INTERESTS:
(A) IS THE $100,000 ADVANCED BY MR C TO THE HUSBAND A LIABILITY THAT HE WILL HAVE TO REPAY?
At the time of purchase of Suburb D, the husband borrowed $100,000 from his brother, Mr C (“Mr C”), and contributed that sum to the deposit. The husband and his brother entered into a formal loan agreement dated 22 April 2021, the terms of which required the loan to be repaid in monthly instalments between December 2021 and April 2022. No repayments have been made by the husband.
Mr C insists that he expects and requires repayment in full but is undecided about whether or not he would legally enforce payment if it were not forthcoming. Mr C has previously lent the husband money and it was repaid.
While the wife accepts that Mr C would expect repayment, the wife submits that the debt should not be included in the balance sheet because it is unlikely to be enforced.
In property proceedings, it is the general practice to deduct from the assets of the parties or either of them, all liabilities, be they secured or unsecured. There are exceptions to that practice, e.g. where an unsecured liability was incurred after separation, or where an unsecured liability is “vague or uncertain, if it is unlikely to be enforced or if it was unreasonably incurred”.[10]
[10] Biltoft & Biltoft (1995) FLC 92-614 at 82,127; see also In Af Petersen and Af Petersens (1981) FLC 91-095 at 76,669.
In this case, I propose to include the debt of $100,000 in the balance sheet in circumstances where the loan was obtained for the purpose of the purchase of Suburb D, one half of which the wife contends should be included in the asset pool together with one half of the debt jointly incurred by the husband and Ms E. The husband, the wife and Mr C, all agree that Mr C expects the debt to be repaid by the husband and that previous loans have been repaid. There is nothing vague or uncertain about the loan and while Mr C may not go to the extent of taking legal action against his brother if the loan is not repaid, I do not regard that as sufficient reason to ignore it. The husband is adamant that he will repay it.
(B) AS BETWEEN THE HUSBAND AND THE WIFE, IS A 50% EQUITABLE INTEREST IN THE PROPERTY KNOWN AS SUBURB D, HELD ON TRUST FOR THE HUSBAND BY WAY OF A CONSTRUCTIVE TRUST?
The wife contends the husband’s interest in Suburb D should be included in the balance sheet at 50 per cent of its current value less 50 per cent of the current mortgage balance i.e. $360,952.
While disputing an equal interest in Suburb D, the husband concedes that:
134. If the property sold today, I would entirely expect my deposit to be returned to me in full, [Ms E’s] deposit would be returned to her and the balance equity if any would be split 99% to [Ms E] and 1% to myself. That has been our discussion and agreement since [early] 2021….
At least to this extent, the husband concedes that the registered legal title does not accurately reflect the husband’s beneficial interest in Suburb D.
Ms E is not a party to these proceedings. As such, any declaration made as sought by the wife, i.e. that the husband has a 50% equitable interest in Suburb D, or indeed any contention by the husband that his equitable interest exceeds one per cent, does not bind Ms E. The declaration, if made, will be for the purposes of these proceedings only. Neither party contended to the contrary.
In the alternative to including Suburb D and the outstanding liability in the balance sheet, the wife submits that “[i]n the event the Court is unable to discern the precise equitable interest of the [h]usband in the [Suburb D] property, it is submitted that his interest ought be a factor considered pursuant to subsections 75(2)(b) and 75(2)(o) of the Family Law Act 1975 (Cth)”.
Section 75(2) of the Act (which is required to be taken into account so far as relevant pursuant to s 79(4)(e)) relevantly provides:
(2) The matters to be so taken into account are:
…
(b) the … financial resources of each of the parties …
…
(o)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account.
Applicable legal principles
The wife seeks a declaration pursuant to s 78 of the Act which provides:
(1)In proceedings between the parties to a marriage with respect to existing title or rights in respect of property, the court may declare the title or rights, if any, that a party has in respect of the property.
(2)Where a court makes a declaration under subsection (1), it may make consequential orders to give effect to the declaration, including orders as to the sale or partition and interim or permanent orders as to possession.
The wife does not seek any consequential orders in the event a declaration is made.
It is uncontroversial that equity will intervene to prevent a person unconscionably retaining the benefit of a property in the context of a joint relationship or endeavour to which another person has made contributions.[11] In the High Court decision of Muschinski v Dodds[12] Deane J expressed the principle as follows:[13]
… the principle operates in a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specially provided that that other party should so enjoy it. The content of the principle is that, in such a case, equity will not permit that other party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him so to do.
[11] Muschinski v Dodds (1985) 160 CLR 583; Baumgartner v Baumgartner (1987) 164 CLR 137.
[12] (1985) 160 CLR 583.
[13] Ibid at 620.
A constructive trust can be imposed irrespective of the intentions of the relevant parties:[14]
… the constructive trust can properly be described as a remedial institution which equity imposes regardless of actual or presumed agreement or intention (and subsequently protects) to preclude the retention or assertion of beneficial ownership of property to the extent that such retention or assertion would be contrary to equitable principle.
[14] Ibid at 614.
The reasoning of Deane J (and adopted by Mason J) was followed by the High Court in Baumgartner v Baumgartner[15] where Mason, Wilson and Deane JJ, said:[16]
… the constructive trust serves as a remedy which equity imposes regardless of actual or presumed agreement or intention “to preclude the retention or assertion of beneficial ownership of property to the extent that such retention or assertion would be contrary to equitable principle” … In rejecting the notion that a constructive trust will be imposed in accordance with idiosyncratic notions of what is just and fair his Honour acknowledged that general notions of fairness and justice are relevant to the traditional concept of unconscionable conduct, this being a concept which underlies fundamental equitable concepts and doctrines, including the constructive trust.
(footnotes omitted)
[15] (1987) 164 CLR 137.
[16] Ibid at 148.
The purchase of Suburb D
It determining this issue, it is relevant to consider the circumstances relating to the purchase of Suburb D. The husband and Ms E moved to South Australia for the husband’s employment. Ms E sold her home and left her job in Queensland. Thereafter, the husband and Ms E looked at numerous properties before settling on Suburb D, which was convenient to the husband’s work and suited his preference to live near the beach. Ms E could not have afforded Suburb D without the husband. At best, Ms E could have acquired a property worth about $700,000.
As earlier noted, Suburb D was purchased (according to the husband) for “in excess of” $2,350,000 plus stamp duty and fees of $240,000 i.e. a total of at least $2,590,000. The husband and Ms E borrowed $1,910,000 to complete the purchase. It would appear therefore that the sum of at least $680,000 was required to complete the purchase.
Ms E contends in her evidence in chief that she contributed “no more than $535,000” to the purchase of Suburb D. When asked how she arrived at the $535,000 figure, Ms E said she had regard to her bank statements. Ms E completed a ‘personal balance sheet’ (Exhibit 1) in early 2021 in order to obtain finance (with the husband) to complete the purchase of Suburb D. In that document, she lists her assets as comprising a car, furniture and jewellery, and total savings (largely from the sale of a property she had owned in Queensland) of $469,015.11. Ms E was unable to explain the shortfall of $65,984.89 other than to say she had other savings. Despite being given the opportunity to produce evidence of such additional savings, no further documents were produced. I conclude that Ms E’s contribution was limited to her savings as evidenced by Exhibit 1.
The husband contends that his contribution to the Suburb D acquisition was limited to the $100,000 he borrowed from his brother. I consider that to be unlikely. Ms E and the husband had a joint bank account into which the husband deposited his salary (disclosed as $400,000 per annum to the Commonwealth Bank at the time of the loan application). The husband, in addition, disclosed to the Bank in his ‘personal balance sheet’ (Exhibit 1), savings in a private account of $31,422 and an ‘invoice due in 7 days’ of $42,700. In the absence of evidence establishing Ms E’s additional savings, I consider it more likely that Ms E’s contribution was limited to $469,015 and that the balance required to complete the purchase (including stamp duty and fees) was contributed by the husband. The wife contends the husband’s contribution was at least $160,000. I note that according to the husband’s evidence in chief, the sum required to complete the purchase would have been at least $210,985.
The husband and Ms E are a de facto couple (and were a de facto couple at the time of purchase of Suburb D), with joint bank accounts, joint loan accounts, and have recently established a joint business for which they have jointly borrowed funds. In order to acquire the joint business, the husband and Ms E borrowed a further $245,000 which was only possible because of the husband’s substantial income.
Outstanding commissions (from her previous employment) received by Ms E after mid-2021 (of an unknown sum), a tax refund (of an unknown sum) and the proceeds of sale of some furniture disposed of by Ms E (again of an unknown sum) appear to have been retained by Ms E and later contributed as modest start-up funds for the joint business, L Company.
The husband has paid all mortgage repayments on Suburb D, initially $5,250 per month interest only, increasing to over $8,000 and currently $10,798 per month principal and interest. The principal debt has been reduced by $31,904. The husband has paid all outgoings for the property including rates, insurance, utilities and water (currently $1,790 per month). The husband has also met almost all living expenses for himself and Ms E since their move to Adelaide, which he stated were $5,984 per month in the Commonwealth Bank loan application documents.
Doing the best I can, it would appear that over the more than 18 month period (from date of purchase of Suburb D until date of trial) the husband’s contributions including the initial purchase of Suburb D, the ongoing payment of mortgage repayments, rates, insurance, utilities, water, and the payment of living expenses for Ms E, would be in the vicinity of $400,000 plus.
In addition, Ms E made a number of concessions during her evidence, namely:
(a)That she could not have afforded 50% let alone 99% of Suburb D without the husband’s financial assistance;
(b)That she was able to jointly secure the loans from the Commonwealth Bank only because of the husband’s income;
(c)It was up to her and the husband as to what was recorded on the title as the husband’s interest in Suburb D; and
(d)That she and the husband have an understanding that what she has is his and what he has is hers.
Conclusion – Suburb D
This is a case where the husband and Ms E made a joint decision to purchase Suburb D for their mutual benefit and enjoyment. While Ms E contributed a greater proportion of the initial purchase costs, Ms E was only able to acquire her interest in Suburb D with the assistance of the husband, who is jointly and severally liable under the mortgage secured on the property. Additionally, the husband has paid all outgoings on Suburb D including mortgage repayments, rates, insurance, utilities and water, and has financially supported Ms E since at least mid-2021.
In such circumstances, it would be unconscionable for Ms E to rely upon the legal title limiting the husband’s interest in Suburb D to 1%.
Having regard to the nature of their relationship, where they have pooled resources to acquire a joint property for their mutual benefit and enjoyment and have each made significant contributions of the nature identified above, a declaration that Ms E and the husband hold Suburb D on a constructive trust in equal proportions is justified.
If I am wrong in my assessment of the husband’s proportional interest in Suburb D, I would nevertheless take into account the husband’s interest in Suburb D, which I regard as significantly greater than the legal interest of one per cent, as a financial resource pursuant to s 75(2)(b) or alternatively as a relevant factor pursuant to 75(2)(o) of the Act.
(C) AS BETWEEN THE HUSBAND AND THE WIFE, IS A 50% EQUITABLE INTEREST IN THE PROPERTY KNOWN AS PROPERTY H, HELD ON TRUST FOR THE HUSBAND AND/OR THE HUSBAND AND WIFE JOINTLY BY WAY OF AN EXPRESS OR RESULTING TRUST?
Mr B and Ms GG are the registered owners of Property H as joint tenants. They are not parties to these proceedings. As such, any declaration made as sought by the wife, i.e. that the husband, or the husband and the wife, have a 50% equitable interest in Property H, does not bind them. The declaration, if made, will be for the purposes of these proceedings only.
It is not in dispute that at the time the husband’s parents purchased Property H in 2001, the sum of $300,000 was provided to them from a joint account of the husband and wife and the sum represented one half of the purchase price. A one half interest in Property H is now valued at $675,000.
The wife contends that a one half interest in Property H is held by the husband’s parents on trust for the husband and wife, or for the husband alone, either by way of an express trust or by way of a presumed resulting trust. The husband contends that the $300,000 provided to his parents was a gift and that neither he nor the wife have any interest in Property H.
Applicable legal principles
As noted in relation to the declaration sought about the husband’s interest in Suburb D, the power to make the declaration is found in s 78 of the Act and can only bind the parties to these proceedings.
Whether or not a half interest in Property H is held on trust, be that an express trust or a resulting trust, is dependent upon what objective intention can be found or imputed to the husband or to the husband and the wife on the evidence.[17]
[17] Bosanac v Commissioner of Taxation (2022) FLC 94-107.
The law as to the presumption of a resulting trust was, with respect, succinctly stated by the High Court of Australia, in Calverly v Green[18] where Gibbs CJ held:[19]
Where a person purchases property in the name of another, or in the name of himself and another jointly, the question whether the other person, who provided none of the purchase money, acquires a beneficial interest in the property depends on the intention of the purchaser. However, in such a case, unless there is such a relationship between the purchaser and the other person as gives rise to a presumption of advancement, i.e., a presumption that the purchaser intended to give the other a beneficial interest, it is presumed that the purchaser did not intend the other person to take beneficially. In the absence of evidence to rebut that presumption, there arises a resulting trust in favour of the purchaser.
[18] (1984) 56 ALR 483.
[19] Ibid at 485.
There is no suggestion in the current case of any relationship giving rise to a presumption of advancement.
The High Court recently considered, among other things, the law relating to the presumption of a resulting trust in Bosanac v Commissioner of Taxation[20] where it was said by Gordon and Edelman JJ:[21]
[20] (2022) FLC 94-107.
[21] Ibid at 81,657-8.
105. The presumption of resulting trust – the standardised inference that allocates the onus of proof – serves the same function as a civil onus of proof and operates to resolve a factual contest when the relevant evidence is “uninformative or truly equivocal”. It arises if there be a paucity of evidence as to an intention to declare a trust. Put in different terms, where the presumption arises, the existence of a resulting trust is an inference drawn in the absence of evidence when, for example, a purchaser of property causes it to be transferred to another or when a person contributes to the purchase of property which is registered in the name of another. But such an inference – of resulting trust – cannot arise where a plaintiff has led evidence that tends to establish an objective intention or the lack of an objective intention to create a trust.
106. As a resulting trust is an inference drawn in the absence of evidence, it is necessary to start with the objective facts. It is a factual inquiry. The question may be framed in these terms: what were the parties’ words or conduct at the time of the transaction or so immediately thereafter as to constitute part of the transaction – the objective facts?
107. There are three dimensions to that factual inquiry.
108. Where the objective facts based on evidence led by the plaintiff tend to establish an objective intention that a provider of part of the purchase price would hold an equitable interest as to a particular proportion of a particular property, there will be an express trust which satisfies the three certainties of intention, subject and object. That is the case that the defendant has to meet. There is no need for a presumption of resulting trust to shift the onus of proof. The presumption of resulting trust does not arise. It is unnecessary.
109. On the other hand, where the objective facts based on evidence led by the plaintiff tend to establish, even weakly, an objective intention inconsistent with a declaration of trust, then there will be no case for the defendant to meet. Again, the presumption of resulting trust will not arise. In this circumstance, the fact that there is a spousal relationship is one of the objective facts: at best it merely reinforces, and is not determinative of, the objective intention of the parties established by the objective facts.
110. Where, however, the objective facts based on evidence led by the plaintiff are neutral, truly equivocal, non‑existent or uninformative as to the objective intention of the parties, then, consistent with the weak presumption of resulting trust, an inference can be drawn of a declaration of trust by the provider of part of the purchase price. That weak inference will be the case that the defendant has to meet.
111. As Lord Diplock said in Pettitt v Pettitt, the presumption is an example of the courts' technique of:
“imputing an intention to a person wherever the intention with which an act is done affects its legal consequences and the evidence does not disclose what was the actual intention with which [they] did it. ... [The presumption is] not immutable. A presumption of fact is no more than a consensus of judicial opinion disclosed by reported cases as to the most likely inference of fact to be drawn in the absence of any evidence to the contrary”.
With the qualification that these references to “actual intention” must be understood as the objective manifestation of intention, the presumption of resulting trust “cannot prevail over the actual intention of that party as established by the overall evidence”; it will “operate to place the burden of proof, if there be a paucity of evidence bearing upon such a relevant matter as the intention of the party who provided the funds for the purchase”. As has been explained, the first step is the objective factual inquiry of ascertaining the parties’ words or conduct at the time of the transaction or so immediately thereafter as to constitute part of the transaction.
(footnotes omitted)
Evidence relied upon by the wife
Conversations
The wife’s evidence in chief as to the circumstances at the time the $300,000 was paid is as follows:
23. Based on my conversations with [the husband] around the time of the advancement of funds, and insofar as the transfer was communicated to me by [the husband], it was my understanding that as a result of transferring one-half of the purchase price, we would acquire a one-half interest in the property. That is supported by my conversations with [the husband], and with [Mr B] and [Ms GG], and the letters provided by [the husband]’s parents, as set out below. At no stage did [the husband] and I discuss the funds being a gift to his parents. Our conversations about the advancement of funds and the [Suburb G] property were based upon it being an investment for us, of which we would derive a financial benefit. At times when [the husband] and I discussed our financial position over the following years, [the husband] treated the interest in the [Suburb G] property as part of our assets.
24. I also had conversations with [the husband]’s parents about our interest in the [Suburb G] property, including when we visited their home over the following years. [The husband]’s father took an interest in the [V Region] real estate market, and he often mentioned recent sales in the area to us, including telling us about “how well” apartments in the [Property H] complex were selling. I recall one conversation when [the husband]’s father remarked to [the husband] and I, “you two are going to do so well out of this property” (or words to that effect) which I took to mean that it would end up being a good financial investment for us as the value of the property, and consequently our interest, was expected to increase.
When cross-examined about the conversations between the husband and wife at the time the sum was paid, the wife candidly conceded that she could not recall the conversations but contended - “I do know that it would have happened”. The wife contends that she was not present during the telephone conversation between the husband and his father in 2001, when the offer of the funds was made, but that the husband told her about it shortly after the event and that it had her “blessing”. Whether or not the wife was present during the telephone call (as alleged by the husband) and immediately endorsed the proposed payment (as opposed to a later time) is of little consequence as the parties both agree that the wife agreed for the sum to be paid. The wife maintains that there was never any conversation suggesting the money was a gift but rather it was an investment for the husband and the wife.
As to any conversations involving the husband’s parents, the wife’s evidence during cross-examination was that in 2006 the husband’s father initiated a conversation (to which she was privy) as a result of his concern about the husband “getting his money back eventually” and the need to write a letter to confirm that. According to the wife, the concern arose because of the animosity between the husband and his siblings and that the matter may end up in court after their death.
Letters
The wife submits that the content of three letters written by the husband’s father to the husband in 2006 (and certified as true and correct in 2009), 2014 and 2016 corroborate her contention that at the time the money was paid, it was the husband’s intention (and hers) to have an equitable half interest in the property. Relevant parts of the letters are reproduced below:
Letter 1: 30 April 2006
[Mr C, Mr Ayers, Ms Z], [the husband’s brother, the husband and the husband’s sister]
In the event that we both die we want it known that [the husband] owns half our unit in [Property H]. Thereafter, on our death the unit is to be sold and [the husband] is to receive one half of the nett proceeds from the sale.
[signed by the husband’s parents]
Letter 2: 30 October 2014
Dear [the husband],
This letter replaces the one I forwarded to you and that you have mislaid.
Your mother and I are forever grateful that you loaned us $300,000 for the purchase of our apartment [F Street]. Without your generosity we would never have been able to finance it. The $300,000 at the time was half the purchase price.
Therefore, in our wills we have directed that half the sale price of the unit is to go directly to you…
[signed by the husband’s parents]
Letter 3: 6 August 2016
Dear [the husband],
This letter replaces the one which I previously gave you and which you misplaced.
Your mother and I wish to recognise the fact that you provided half of the purchase price for the unit as per the address above. As a result, when we die, it is our wish that half the nett proceeds of the sale of the unit are to go to you…
[signed by the husband’s parents]
Given that the husband and wife were married at the time of the letters, I do not regard it as determinative that the letters refer to the “husband’s” interest only.
Mr AA and Ms HH
Mr AA and Ms HH are long-time friends of the husband and wife. They have known each other and been friends for over 40 years. I reject the husband’s attempt to minimise the history of their friendship. Immediately after the separation of the husband and wife, and for at least several months, Ms HH provided considerable emotional support to the husband. Ms HH last saw the husband in late 2020 at a brunch organised with the husband by Mr AA. As a result of their continued support of the wife, the relationship between them and the husband has soured.
Mr AA and Ms HH contend that on the weekend of 15 – 17 February 2019, while they were staying with the husband and wife, the husband told them that he owned a half share of his parents’ home and that when his sister found out she would be livid, because she would only inherit one sixth of Property H.
Mr AA’s evidence in chief includes that:
14. On one occasion after I had recently returned to Australia from a work trip to [Country DD], [Ms HH] and I were invited to stay at [the husband] and [the wife’s] home in [CC Town] for the weekend from 15 until 17 February 2019. Whilst having dinner together at their home on 15 February 2019, [the husband] told [Ms HH] and I (and [the wife], who was also present) that he had financially assisted his parents, [Ms GG] and [Mr B], in the purchase of [Property H in the V Region]. I recall [the husband] commented that one day, “probably in the context of an inheritance being received”, his siblings [Mr C] and [Ms Z] would learn that they each only had a one-sixth share, and not a one-third share, in their parent’s property.
…
16. During that conversation, [the husband] made comments to the effect that he was a joint owner of the property with his parents. At the time, I felt as thought it was an odd topic of conversation for [the husband] to raise given it was clearly an intimate family matter, and I was uncomfortable that [the husband] appeared to want to gloat about how the news would cause his sister to be upset when she found out.
Ms HH’s evidence in chief includes that:
16. … [The husband] then shared some information that I had not heard before, by telling us that he and [the wife] had financed half of the purchase of his parents’ home in Queensland. He said words to the effect that “we ([the husband and wife]) own half of my parents’ home.”
17.I distinctly recall [Mr Ayers] recanting (sic) this information with delight, and letting out a loud laugh when telling us that his brother and sister did not know about the advancement of funds or that he and [Ms Ayers] had acquired an interest in the property. He asked us a rhetorical question, to the effect that, "Can you imagine the look on [Ms Z’s] face when she finds out that she is only getting one-third of half the property!'
The husband denies he made such statements.
List of assets document
In 2016, the husband was involved in litigation with a former employer and in the course of preparing documents in support of a bank loan for litigation funding, the husband prepared a list of assets in which he included as an asset of himself and the wife, a two thirds interest in Property H which the wife contends “represented the existing one-half interest acquired from advancing the $300,000, plus an additional one-third interest of the remaining one-half held by his parents.” The husband concedes including a “50% interest” in the document, but contends it was done only in the hope that it might assist with obtaining the loan. The husband contends there was “no actual intention by either of us to actually claim an interest in my parent’s property”. As it turned out the loan was not required and the document was not submitted to the bank.
Evidence relied upon by the husband
In his affidavit filed 24 October 2022, the husband contends that:
159. On one occasion during a phone call, I was informed by my parents that they had found a great apartment, but it was outside their budget. I asked how much it was, and they said $600,000. I asked how much they needed to be able to purchase the property, and my dad responded with words to the effect, “we are short about $300,000.” I said words to the effect, “we’ll give it to you.” My dad was quite stunned and said he could not accept that. I confirmed with [the wife] who was standing next to me at the time and she wholeheartedly agreed that it was no issue at all. At the time, we were relatively well off and the decision of giving my parents $300,000 was easy for us to make.
160. The money was always a gift from [the wife] and me. Neither of us ever expected repayment. There was never any discussion about repayment, any commercial terms or consideration for any loan terms. To my knowledge and understanding, it was always in both [the wife]’s and my mind a gift this money to my parents whom I loved and wanted to help in their retirement. In fact, for more than ten years it was never discussed, or even thought about by any of us.
The husband contends that a gift of $300,000 to his parents was consistent with the parties’ practice at the time to provide various gifts to family members. In his affidavit of evidence in chief, the husband contends that he and the wife provided the following gifts to family members:
(a) We purchased a new car for [the wife]’s parents;
(b)We provided a gift of funds in the order of $50,000 to the best of my recollection, to both of [the wife]’s two brothers;
(c) We [provided] an $80,000 gift to [the wife]’s cousin, [Ms BB];
(d)We provided a $70,000 short term loan, without interest or any paperwork to my brother in the early 2000’s to assist him with the purchase of a property [in the V Region]. My brother has since repaid this loan as per our agreement;
(e)In 2007, we took [the wife]’s parents on an all-expenses paid business trip all around Europe. We also took my parents in 2008/09 on a first-class trip to the [Americas].
When cross-examined about those assertions, the wife said:
(1)The new car for her parents was purchased for their wedding anniversary in the late 1990’s. The car was a Motor Vehicle 3 purchased for about $16,000. The wife was not challenged on her response;
(2)The wife denied that they had given her two brothers $50,000. The wife said that they had given her brother Mr EE $5,000 when he was going through a divorce in about 2005 which he returned to her in 2020 and said she had no recollection of providing her brother, Mr FF, with any sum;
(3)The wife agreed that they had given her cousin, Ms BB, money to start up her own business but that the husband was part of the business. The wife was not challenged on her response. The wife agreed that the sum advanced was not repaid;
(4)The wife did not recall a loan to the husband’s brother but in any event it was repaid;
(5)The wife agreed that they had taken the wife’s parents on an all-expenses paid holiday to Europe in 2007/2008 for about four weeks and that they took the husband’s parents on an all-expenses paid holiday to the Americas in 2008/2009.
Mr B contends in his evidence in chief that during a telephone call with the husband in 2001 during which he said that he and Ms GG had found the perfect unit but could not afford it, and that after the husband found out they were about $300,000 short, the husband said words to the effect “I’ll give it to you”.
Other evidence
In the husband’s evidence in chief, he denies that the letters (referred to at [83]) were ever given to “us because [the wife] or I ever expected, needed or requested them” (my emphasis). This evidence appears to be at odds with the letters in 2014 and 2016 which refer to them being written because the husband has misplaced the earlier letters. In his oral evidence, the husband denied being aware of the letters other than the one in 2016. Again, that seems to be at odds with the content of the letters themselves and with the oral evidence given by Mr B. Mr B agreed that he had forwarded the 2006 letter to the husband and that he would only have written the 2014 letter to replace the 2006 letter if the husband had told him the 2006 letter had been misplaced. Mr B also said that he would only have written the 2016 letter if the husband had told him he had misplaced the earlier letter and if the husband had asked him for a further letter.
The husband also insisted that he would have been “absolutely happy for [Property H] to have been divided three ways” upon the death of his parents. Given the evidence of Mr AA and Ms HH’s relating to the glee with which the husband referred to the shock his sister would experience when she found out that she would only inherit a one-sixth interest in Property H, and the husband’s own evidence that he has been “periodically estranged” from his sister, I have some difficulty accepting the husband’s evidence to that effect.
Mr B’s evidence in chief also includes the following:
16. Whilst it was clear to me that [the husband] did not expect to be repaid, it has always been my intention to see the funds [the husband] gave to us returned to him once [Ms GG] and I pass away. I hand wrote a letter to [the husband] and [the wife] to that effect on or about 30 April 2006. This was done of my own volition. …
17. In August 2009 I wrote a further letter as I was aware than [the husband] and [the wife] had lost a significant amount of money as a result of the Global Financial Crisis ("GFC"). …
18. In October 2014 when [Ms GG] and I were redoing our Wills, I wrote a further letter to [the husband] thanking him for the most generous gift. In this letter, I characterised the gift as a ‘loan’ misguidedly to demonstrate my intention to repay [the husband] and [the wife] for their generosity by way of our Wills. Again, this letter was done of my own volition, and it was not requested by [the husband] or [the wife].
…
21. I provided a letter in 2016 with the hope this would support his application for litigation financing.
22. I considered then and still consider now, that when [Ms GG] and I have both passed away, that [the husband] should receive the $300,000 back before our estate is divided between [the husband] and his siblings in equal shares. It is my understanding that [Ms GG] shares my view about this.
During cross-examination, when asked about his understanding at the time the $300,000 was advanced, the following exchange occurred between counsel for the wife and Mr B:
Counsel for the wife: … the question I’m asking you is, is that at the time [the husband] and [the wife] advanced the $300,000 to you back in 2001, it was your understanding that if you were ever to sell the property or if you and [Ms GG] passed away that he would receive half the equity in that property. Do you agree with that?
[Mr B]: No, I don’t.
Counsel for the wife: Right. What was your understanding at the time?
[Mr B]: I mean, it – my understanding was that he was to get back $300,000 plus from the remainder of the will he would receive a third.
When cross-examined about the contents of letters the following exchange occurred:
Counsel for the wife: I will read you the entirety of the letter [13 April 2006], [Mr B]. It says:
[Mr C], [the husband], [Ms Z], in the event we both die, we want it known that [the husband] owns half our unit in [Property H]; therefore, on our death, the unit is to be sold and [the husband] is to receive one half of the net proceeds from the sale.
…
Okay. And the part I want you to focus on is when you say:
We want it known that [the husband] owns half our unit in [Property H].
That you accept that that’s a very clear statement?
[Mr B]: It’s a very clear statement, but it’s a silly statement on my behalf …
Counsel for the wife: … And on the 13 April 2006 that represented the truth, didn’t it? That as far as you were aware, [the husband] owned half of the unit, didn’t he?
[Mr B]: I suppose so, …
…
…The intention was to pay him back the $300,000 which was given to us, without asking or anything else. We told him it was – we were short 300,000 when he was asking us what was happening on the telephone, and we replied that we had seen the unit that we liked, that it was 300 – that we were short of money for it and he said, “How much short are you?” and we said, “$300,000”, and he said, “I will send it to you”.
…
Counsel for the wife: That 30 April 2006 letter is certified as a true copy on 17 September 2009 and signed by you. Okay?
[Mr B]: Yes.
Counsel for the wife: Do you recall why you certified it in 2009?
[Mr B]: I can’t remember.
Counsel for the wife: Okay. But you would accept that if it didn’t reflect your intention in 2009 you probably would have corrected that letter, wouldn’t you?
[Mr B]:I have queried this half the value of the property a thousand times in my mind, and I can’t believe that with the experience I’ve had in life and in business and so on that I wouldn’t have picked upon that straightaway. The only thing I can think of was that 300,000 was half the value of the property when it was bought, and for some reason I’ve got myself stuck on that particular train of thought. I can’t imagine, with the passing of time and so on, that I wouldn’t be aware that half the value of the property, which is probably – the property – I don’t know what it’s valued at the moment, but it’s worth a lot more than 600,000. I can’t believe that I would have signed the thing saying that he got half the property when that wasn’t the intention.
…
Counsel for the wife: … [Mr B], you drafted a second letter. … On 30 October 2014 …
… You then say:
Your mother and I are forever grateful that you loaned us $300,000 for the purchase of our apartment [F Street]. Without your generosity, we would never have been able to finance it. The $300,000 at the time was half the purchase price, therefore, in our wills we have directed that half the sale price of the unit is to go directly to you.
Now again, [Mr B], there’s nothing ambiguous about that is there?
[Mr B]: No I don’t think so.
…
Counsel for the wife: [Mr B], the question was that you accept that the intention was your son receive half of the sale price, not half of the purchase price when you sent that letter in 2014. Do you agree with that? That’s what the letter says?
[Mr B]: No, I – that’s what the letter says.
Counsel for the wife: Yes?
[Mr B]: I can’t believe that I wrote that about that. I don’t know whether you’ve got the value of the property now, as opposed to the property when we first bought it, but there’s a vast difference between half what it was when we bought it and half what it’s worth now. Vast difference.
…
Counsel for the wife: Well, [Mr B], just pause for a moment. The point I’m simply making is, is that you may have made a mistake in 2006, but surely you didn’t repeat the same mistake in 2014. Do you agree with that?
[Mr B]: I do.
…
Counsel for the wife: And he told you that he lost the letter, which caused you to draft yet a further letter in 2016, didn’t he?
[Mr B]:He would have asked me to, yes.
Counsel for the wife: Yes. And you say:
Your mother and I wish to recognise the fact that you provided half the purchase price for the unit as per the address above. As a result, when we die it is our wish that half of the net proceeds of sale of the unit are to go to you.
Again, [Mr B], there’s nothing ambiguous about that, is there?
[Mr B]: No.
…
Counsel for the wife: What I’m putting to you, [Mr B], is that in 2016 when you wrote that letter, that reflected your true intention, didn’t it?
[Mr B]:It must have.
Counsel for the wife: Yes. Okay. Thank you
[Mr B]: I don’t write letters that I don’t believe in.
…
Counsel for the wife: ... Can I suggest this to you, [Mr B]. Is it possible that up until 2016, at least, your understanding and your intention at the time was to ensure that [the husband] had a half interest, but since that time you’ve changed your mind. Is that possible?
[Mr B]:It is possible.
Conclusion - Property H
Understandably, given the passage of time, all witnesses were somewhat vague at times, when tested, about precisely what was said, when it was said and by whom. Overall, I consider that each party and their respective witnesses, did their best to recall conversations and events to the best of their ability. It is also likely the recollection of the husband is coloured, to some extent, by his divergent interests now that he and the wife have separated.
The relevant enquiry is as to the intention of the husband and wife, as owners of the $300,000, at the time the sum was advanced in 2001. The husband contends that he said to his father – “we will give it to you” and that the wife agreed with the money being given to his parents. The wife contends that she “understood” that the money was an “investment” which was confirmed in later conversations with Mr B during which he said “you two are going to do so well out of this property”. Mr B does not deny saying this.
In his oral evidence, Mr B said that during the telephone call in 2001, the husband said – “I will send it to you” (my emphasis).
The words used by the husband, do not unequivocally resolve the issue of intention. Even if the husband said he would “give” his parents the money that does not preclude an intention thereby to have some interest in the property which would not be called in until some future time or upon the death of his parents. Certainly, if he merely said he would “send” the money, his intention is unclear.
The letters, while written considerably after the fact, and not by the husband or the wife, can be relied to draw an inference as to the intention of the husband (and indirectly the wife) at the time the money was advanced. In my view, Mr B was recording in writing the intention of the husband or the husband and the wife at the time the $300,000 was paid. While some focus during the trial was placed on Mr B’s intention, it is not his intention that is most relevant to the enquiry. I am satisfied that the 2014 and 2016 letters were written at the instigation of the husband in order to protect his interest in Property H from any future claim by his siblings. I reject the husband’s evidence that he was unaware of the three letters at the relevant times.
The 2006 letter relevantly states:
In the event that we both die we want it known that [the husband] owns half our unit in [Property H]. … [the husband] is to receive one half of the nett proceeds from the sale.
The 2014 letter relevantly states:
… half the sale price of the unit is to got directly to [the husband]. …
The 2016 letter relevant relevantly states:
… half the nett proceeds of sale of the unit are to go to [the husband] …
If the husband did not intend to have an interest in Property H, he had many opportunities to write back to his parents and correct the statements contained in the letters. If Mr B did not mean to confirm that the husband had a half interest in the unit and was entitled to receive one half of the sale proceeds, he too had ample opportunity to correct the record. To the contrary he repeated the statements in the later letters.
The list of assets prepared by the husband in 2016 included a joint half interest in Property H. In my view, this adds further corroboration to the intention at the time the money was paid, for the husband and wife to have a joint half interest in Property H.
The evidence from Mr AA and Ms HH, while also at a time considerably after the payment, can also be relied upon to draw an inference as to the intention of the husband and wife at the time the money was advanced. I accept their evidence that the husband told them that each of his siblings only had a one sixth interest in Property H and that he or that he and the wife held a half interest in Property H.
The limited history of providing gifts of a car, travel and business start-up costs to family members is of marginal relevance. The gifts provided were of modest sums when compared to the $300,000 in contention. The largest sum of $80,000 was part of a business start-up in which the husband was involved and the $70,000 to the husband’s brother was in fact required to be repaid.
In my view, given the paucity of unequivocal evidence as to the parties’ intention at the time of the advance of the $300,000 in 2001, it is not possible to find that an express trust was created. The evidence does not however establish an objective intention inconsistent with the creation of a trust. In those circumstances, an inference of a resulting trust as to one half of Property H can be drawn from the relevant objective facts, which in this case, I find to be as follows:
(1)$300,000 was provided to the husband’s parents from a joint account of the husband and the wife;
(2)The words said at the time by the husband to his father was that “we” would either “give” or “send” the money to him;
(3)The wife gave her blessing to the funds being provided on her understanding that it was an investment;
(4)Mr B made a number of comments over the years to the husband and wife that “you two are going to do so well out of this property”;
(5)Three letters were written to the husband by his father in 2006, (the 2006 one was certified as a true copy by the husband’s father in 2009), 2014 and 2016. The 2014 and 2016 letters were written at the instigation of the husband to protect the half interest in Property H from possible future claims from the husband’s siblings;
(6)The letters recorded what the husband and wife and the husband’s father intended to be the case in 2001 i.e. that the $300,000 was an investment by the husband and wife creating a joint one half interest in Property H;
(7)In 2016 the husband included the half interest in Property H as a joint asset of himself and the wife;
(8)In 2019 the husband said to Mr AA and Ms HH that he and the wife had a half interest in Property H.
SHOULD THE SUM OF $50,000 RECEIVED BY THE WIFE PURSUANT TO THE ORDERS DATED 6 SEPTEMBER 2021 BE ADDED BACK INTO THE BALANCE SHEET AS A PART PROPERTY SETTLEMENT, OR SHOULD IT INSTEAD BE TREATED AS LUMP SUM SPOUSAL MAINTENANCE?
It is common ground that the wife was dependent on the husband for financial support after separation and that he paid all outgoings on the former matrimonial home, and the costs of preparing it for sale and, until January 2021, he paid $500 per week for the wife’s support.
On 29 January 2021, shortly after the parties’ attempts to settle the dispute failed, the husband gave notice that he would no longer pay the $500 per week. This caused considerable distress to the wife and she wrote on four separate occasions to the husband, via his solicitors, seeking the recommencement of her weekly spouse maintenance. The letters went unanswered and the husband did not recommence the maintenance payments.
The husband contends that he too was struggling financially as he was between jobs. While that may have been true for a short period, I note that within three days of his ceasing the wife’s weekly support, he purchased gifts for Ms E for $2,550. As at 28 February 2021, the husband had $7,301.84 in his bank account. As at 29 March 2021, he had $73,242.26 in his bank account. As at 29 May 2021, he had $29,929.44 in his bank account. As at 29 June 2021, he had $22,319.94. As at 29 July 2021, he had $72,075.60 in his bank account and as at 29 August 2021, he had $103,556.86 in his bank account. By March 2021, the husband had obtained employment on a salary of $400,000. It is hard not to conclude that the purpose of the husband’s withdrawal of support at that time was a direct response to the failure to reach a property settlement, as suggested to the husband during cross-examination.
Ultimately, the wife withdrew $52,000 from her superannuation over the period March 2021 to August 2021 to make ends meet. The wife was for a period unable to afford legal representation.
In late 2021, the former matrimonial home was sold and the parties agreed to each receive $200,000 by way of partial property settlement. An additional $50,000 was subsequently received by each of the parties by agreement, with the wife’s additional $50,000 to be characterised at trial.
The wife has provided a schedule as to how she spent the $50,000 (Exhibit 5).
The wife was not challenged on any of her expenditure.
The wife was unable to support herself adequately without financial support from the husband and but for the advance of the $50,000 would have been entitled to spouse maintenance. I characterise the $50,000 as spouse maintenance and it will not be added back into the balance sheet.
WHAT ADJUSTMENT IF ANY, TO THE HUSBAND AND WIFE SHOULD BE MADE PURSUANT TO SECTIONS 75(2)(B) AND 75(2)(K) OF THE FAMILY LAW ACT 1975?
Before determining this issue it is necessary to identify the relevant pool and then to consider overall contributions.
The pool to be divided
The assets and liabilities of the parties or either of them as conceded by them (and for which a value has been attributed) or as found by me, are set out in the table below:
Asset Value Joint assets Sale Proceeds Held in CBA Net Bank Account #...70 $1,418,532 Interest in Asset T (owned by M Pty Ltd of which both parties are Directors/Shareholders) $30,000 50% equitable Interest in Property situated at F Street, Suburb G “Property H” $675,000 Value of joint assets $2,123,532.00 Husband’s assets 50% equitable interest in property situated at N Street owned by husband and his current de facto partner “Suburb D” $1,300,000 CBA Bank Account #...49 $11,991 Half Share of Q Bank Offset Account $402 Interim Distribution to husband $200,000 Interim Distribution to husband $50,000 Shares held in J Pty Ltd $60,000 Artwork & Jewellery $21,000 Motor Vehicle 1 $52,500 Liability Half Share of Q Bank Home Loan Account #...90 (Suburb D) ($939,048) Loan to Mr C ($100,000) Net value of husband’s assets $656,845 Wife’s assets NAB Bank Account #...07 $7,447 Interim Distribution to wife $200,000 Artwork & Jewellery $25,000 Motor Vehicle 2 $17,000 Value of assets of wife $249,447.00 Net assets (excluding superannuation) $3,029,824 Superannuation Super Fund 1 Accrued Husband $492,664 Super Fund 4 Defined benefit Husband $331,584 Super Fund 2 Accrued Husband $50,323 Super Fund 3 Accrued Wife $7,598 Total superannuation $882,169 Net assets (including superannuation) $3,911,993
Conclusion on contributions
As earlier noted, apart from their dispute about Property H and Suburb D, the parties agree that their contributions (at least up to the time of separation) should be regarded as equal.
In relation to Property H, it is not in dispute that the contribution of $300,000 for its acquisition was sourced from the joint funds of the husband and the wife. The equitable interest of the husband and wife in Property H is valued at $675,000.
The husband’s contribution to Suburb D (apart from the loan from his brother) has been sourced from after separation income. The husband’s equitable interest in Suburb D is valued at $360,952 but the husband has an additional loan outstanding to his brother of $100,000.
The husband maintained the former matrimonial home after separation and prepared it for sale including paying for “remedial work … related to [repairs and renovation]” The husband contends that the costs were in excess of $162,000. The wife did not dispute this. The husband also supported the wife financially until January 2021.
In my view, contributions should favour the husband in the proportion, 55/45.
S 75(2) factors
Section 79(4)(e) of the Act requires that matters referred to in s 75 are to be take into account so far as relevant. The parties have identified only two of the subsections of s 75(2) as relevant. Subsections 75(2)(b) and (k) refer to the following matters to be taken into account:
(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
…
(k) the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration;
The husband has a far greater earning capacity than the wife for at least the next approximately four years, assuming his health does not deteriorate. If he is well, it is conceivable that he will be able to work longer if he so chooses. His earning capacity is significant. The husband’s current annual salary is $432,588 and superannuation is contributed on his behalf of an additional $45,708 (annually). In addition, the husband is eligible for significant bonuses dependent upon a number of factors. In particular, the husband is eligible for a short term incentive payment of approximately $216,000 and long term incentive options which, if granted, have a present day value of about $72,000. The husband was confident in his oral evidence about receiving (at least) a considerable portion of his short term incentive.
The husband leaves the marriage with a significant ‘asset’, namely, his earning capacity, which was built up during the course of the marriage.[22]
[22] Best & Best (1993) FLC 92-418 at 80,295; Clauson & Clauson (1995) FLC 92-595 at 81,911.
The husband concedes that the wife’s own career path was sacrificed for his own. If the wife is able to obtain employment, she will at best earn a very modest income.
The husband’s de facto, Ms E was unemployed at the time of the trial but informed the Court she was about to commence operation of the joint business she has acquired with the husband and has already employed four staff. Ms E anticipated earning a significant after tax profit from the business in the not too distant future to which the husband will have a joint entitlement.
While I have included a half interest in Property H in the property pool, the husband is unlikely to have access to that interest until his parents sell the property or until after their deaths.
In my view, on balance, an appropriate adjustment for the s 75(2) factors is 5 per cent to the wife which represents about $195,000.
WHAT PROPERTY SETTLEMENT ORDER SHOULD BE MADE?
Overall, an equal division of the assets and the superannuation achieves a just and equitable outcome.
In my view a just and equitable outcome will be achieved:
By the husband retaining:
Asset Value Share of sale Proceeds Held in CBA Net Bank Account #...70 $153,067 Interest in Asset T (owned by M Pty Ltd of which both parties are Directors/Shareholders) $30,000 50% equitable interest in property situated at N Street owned by husband and his current de facto partner “Suburb D” $1,300,000 50% equitable Interest in Property situated at F Street, Suburb G “Property H” $675,000 CBA Bank Account #...49 $11,991 Half Share of Q Bank Offset Account $402 Interim Distribution to husband $200,000 Interim Distribution to husband $50,000 Shares held in J Pty Ltd $60,000 Artwork & Jewellery $21,000 Motor Vehicle 1 $52,500 Subtotal $2,553,960.00 Liabilities Half Share of Q Bank Home Loan Account #...90 (Suburb D) ($939,048) Loan to Mr C ($100,000) Net assets (excluding superannuation) $1,514,912 Superannuation Super Fund 1 $59,177.50 Super Fund 4 $331,584 Super Fund 2 $50,323 Total superannuation $441,084.50 Net assets (including superannuation) $1,955,996.50 And by the wife retaining:
Asset Value Share of sale Proceeds Held in CBA Netbank Account #...70 $1,265,465 NAB Banking Account #...07 $7,447 Interim Distribution to wife $200,000 Artwork & Jewellery $25,000 Motor Vehicle 2 $17,000 Subtotal (excluding superannuation) $1,514,912 Superannuation Super Fund 1 $433,486.50 Super Fund 3 $7,598 Total superannuation $441,084.50 Net assets (including superannuation) $1,955,996.50
If I am wrong in my conclusions as to the husband’s equitable interest in Suburb D and/or Property H, the pool would thereby be reduced and in those circumstances a greater adjustment to the wife pursuant to s 75(2) would be warranted, in the order of ten to 15 per cent.
Summary
In summary, I have found that an equal division of the property pool (which includes a half interest in Suburb D and Property H and the loan to the husband’s brother) achieves a just and equitable outcome and an order to effect that result will be made. The order will include a superannuation splitting order as sought by both parties.
I certify that the preceding one hundred and twenty-nine (129) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Carew. Associate:
Dated: 3 February 2023
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