BAINEY & BAINEY
[2020] FCCA 1292
•25 May 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| BAINEY & BAINEY | [2020] FCCA 1292 |
| Catchwords: FAMILY LAW – Property settlement – marital relationship – initial contributions unclear on the evidence – husband making substantial contributions in supporting the wife’s three children and paying for the mortgage on the former matrimonial home while the wife lived in it for almost three years post-separation – wife having minimal earning capacity due to brain injuries and psychiatric issues – 60:40 split in husband’s favour. |
| Legislation: Family Law Act 1975, ss.75(2), 79(2), 79(4), 121 |
| Cases cited: Kennon v Kennon (1997) 139 FLR 118; (1997) 22 Fam LR 1; (1997) FLC 92-757; [1997] FamCA 27 Stanford v Stanford (2012) 247 CLR 108; (2012) 293 ALR 70; (2012) 87 ALJR 74; (2012) 47 Fam LR 481; (2012) FLC 93-518; [2012] HCA 52 |
| Applicant: | MS BAINEY BY HER LITIGATION GUARDIAN, |
| Respondent: | MR BAINEY |
| File Number: | MLC 9097 of 2017 |
| Judgment of: | Judge Riley |
| Hearing dates: | 5 and 6 August, 14 and 15 October and 10 December 2019 |
| Date of last submission: | 17 January 2020 |
| Delivered at: | Melbourne |
| Delivered on: | 25 May 2020 |
REPRESENTATION
| Advocate for the applicant: | Mr Williams |
| Solicitors for the applicant: | Webb Korfiatis Family Law |
| Counsel for the respondent: | Ms Smallwood SC |
| Solicitors for the respondent: | Forte Family Lawyers |
ORDERS
The asset pool be split 60:40 in the husband’s favour, on the basis that the wife indemnify the husband for her children’s school fees, all other debts lie where they fall, and the wife’s part-property settlements be included in her 40%.
As between the parties, the wife be solely liable for any outstanding school fees for her children.
The wife indemnify the husband, and keep him indemnified, in respect of any school fees that are now owing, or that may be owing in the future, on account of her children.
The wife, from any settlement in this proceeding, pay A Pty Ltd the sum of $184,484.66.
The husband ensure that B Pty Ltd repay the wife the sum of $35,750 within 14 days.
There be additional orders following the submissions of the parties.
NOTATIONS
(A)Section 121 of the Family Law Act 1975 provides that it is an offence punishable by imprisonment for up to one year to publish or disseminate to the public any account of family law proceedings which identifies the parties, witnesses or other people concerned with the proceedings, unless specifically authorised by the court.
IT IS NOTED that publication of this judgment under the pseudonym Bainey & Bainey is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 9097 of 2017
| MS BAINEY by her litigation guardian, MR DRAKE |
Applicant
And
| MR BAINEY |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an application for property adjustment under s.79 of the Family Law Act 1975 (“the Act”).
Chronology
The parties provided a joint chronology which is substantially as follows and which was agreed except where otherwise indicated.
Date
Event
1968
The husband was born.
1972
The wife was born.
2001 - 2006
The wife suffered multiple cerebral aneurysms resulting in an acquired brain injury.
2006
The husband alleged and the wife disputed that he bought C Street, Suburb D for $911,111 which he paid for outright with the net sale proceeds from of a business he sold, being a 50% share in E Pty Ltd.
2007
The wife suffered a stroke.
2007
The property situate at F Street, Suburb G, was transferred from the wife’s former husband’s sole name into the wife’s sole name.
Mid 2009
The wife ceased her employment as a professional for a company.
2010
The parties met.
2010
The wife, and two of her children, X and Y, relocated from Queensland to Melbourne and the parties commenced cohabitation at the husband’s C Street, Suburb D property.
The wife’s assets at the time of cohabitation, as alleged by the wife and disputed by the husband, were:
1. equity in F Street, Suburb G, worth $410,000.00;
2. H shares worth $1,500.00; and
3. benefits in Super Fund J worth $19,500,
totalling $431,000.
08/2010
The husband’s assets at the time of cohabitation, as alleged by the husband and disputed by the wife, were:
1. C Street, Suburb D worth E$1,000.000;
2. Motor Vehicle 1 worth E$50,000;
3. Motorcycle K worth E$25,000;
4. Motorcycle L worth $E6,000;
5. M Pty Ltd, which had assets including the following:
a. 33.33% share in A Pty Ltd worth E$250,000;
b. 33.33% share in B Pty Ltd (called N Pty Ltd at the time) worth E$225,000;
c. 33.33% share in N Pty Ltd worth E$400,000; and
d. 100% share of O Pty Ltd worth nil;
6. P Pty Ltd shares worth E$2,500;
7. bank accounts worth E$10,000; and
8. Super Fund Q benefits worth E$114,203
totalling E$1,759.205.
2010
The wife completed a course.
Early 2011
The wife’s third child, Z, relocated to Melbourne and moved in with the parties.
2011
The wife commenced working for Mr AA, a quadriplegic man in Suburb BB. Her role was to care for him and clean his house.
04/2011
The husband alleged and the wife disputed that he bought out his two business partners in B Pty Ltd for $450,000 by obtaining a loan and securing it against the C Street, Suburb D property. The loan is now secured against the CC Street property. The husband then became the sole director of B Pty Ltd and owned 100% of its shareholdings through M Pty Ltd.
04/2011
The husband travelled overseas. The wife alleged and the husband disputed that she began working in B Pty Ltd undertaking management tasks.
12/2011
The husband (through M Pty Ltd) sold his interest in DD Pty Ltd for approximately $112,500. M Pty Ltd received approximately $49,000 from the proceeds of sale.
2011
The wife alleged and the husband disputed that she drew down the sum of $37,745 from her own funds and paid it to B Pty Ltd. [This debt was described by the joint experts as $35,745. I will take their figure as accurate.]
20/07/2011
The wife drew down $29,000.00 from the F Street, Suburb G mortgage and paid it to B Pty Ltd.
06/02/2012
The wife stopped working for Mr AA after approximately one year.
2012
The wife began working two days per week for Mr EE in Suburb D. Her role was to care for him and clean his house.
07/2012
The parties bought CC Street, Suburb D for $1,110,000. The deposit of $110,000 for the purchase was paid by the wife by drawing down on her facility secured by the F Street, Suburb G property. The parties used bridging finance to settle the purchase, pending the sale of the C Street, Suburb D property. They are registered as joint proprietors.
2012
The interest, costs and expenses of the bridging finance of $60,000 were paid by the wife by drawing down on her facility secured by the F Street, Suburb G property.
2013
The husband (through M Pty Ltd) bought out 50% of the interest of one of the three partners in A Pty Ltd for $175,000. M Pty Ltd then held 50% of the shareholdings in A Pty Ltd.
03/2013
The husband sold his C Street, Suburb D property for $1,035,000. The net sale proceeds were applied to the CC Street, Suburb D property.
01/05/2013
The husband alleged and the wife disputed that she began working at B Pty Ltd and A Pty Ltd. Her role was to count money and do the banking. She worked approximately six hours per week between the two companies.
13/05/2013
The wife drew down $15,000 from the F Street, Suburb G mortgage and paid it to the B Pty Ltd.
Mid-2013
The husband’s daughters indicated that they no longer wished to spend time with him. He did not see them again until the separation of the parties in this proceeding.
Late 2013
The wife began studying at the FF School to be a health care worker.
27/11/2013
The wife sold F Street, Suburb G, Queensland for $520,000. She received the sum of $195,635 in net sale proceeds.
Early 2014
The wife paid for curtains, flooring and rates for the C Street, Suburb D property from the proceeds of sale of the F Street, Suburb G property.
2014
The wife entered a competition after training for approximately six months.
30/04/2014
The wife paid the sum of $25,000 to B Pty Ltd from the sale proceeds of the F Street, Suburb G property.
Mid-2014
The wife began working for Employer GG in Suburb BB as a health care worker.
Mid-2014
From the net sale proceeds of the F Street, Suburb G property, the wife paid the sum of $150,000 into the parties’ joint offset account. M Pty Ltd used $135,000 of this money to repay a loan to A Pty Ltd and the remainder was utilised by the parties.
11/12/2014
The wife resigned from her employment at Employer GG.
01/2015
The wife established her own business at CC Street, Suburb D.
06/2015
The husband’s son indicated that he no longer wished to spend time with him. The husband did not see him again until after separation.
2016
The wife ceased working for Mr EE in Suburb D, due to him being placed in care.
2016
The wife began house cleaning two days per week for Mr & Ms HH in Suburb D.
2016
The parties married.
02/2016
The husband bought a Motor Vehicle 2 for the wife to drive for $86,000 using the line of credit on the mortgage secured against the CC Street, Suburb D property.
03/2016
The husband sold his Motor Vehicle 1 for $20,000.
07/2016
The husband and his co-director of A Pty Ltd agree to each temporarily draw $100,000 from the A Pty Ltd business account to help reduce the interest on personal debts. The husband applied this sum to the parties’ mortgage on the CC Street, Suburb D property.
01/2017
The husband alleged and the wife disputed that the wife stopped working at B Pty Ltd although she continued to receive a salary from B Pty Ltd.
31/01/2017
The wife applied for a job with Employer JJ.
24/06/2017
The husband assaulted the wife. A Family Violence Safety Notice was issued by Suburb BB police.
24/06/2017
The parties separated. The husband vacated the CC Street, Suburb D property and temporarily moved in with his parents. The wife and her children remained living in the CC Street, Suburb D property.
06/2017
The wife stopped working at A Pty Ltd at the request of the husband and his co-director, but continued to receive the same salary.
06/2017
The husband and his co-director of A Pty Ltd each put $100,000 back into the A Pty Ltd business account before the end of the financial year, so that the temporary drawings were not deemed as dividends in their names and therefore did not incur personal tax liabilities.
Between 6 June and 27 July 2017
The husband alleged and the wife disputed that she took $7,000 from B Pty Ltd by buying multiple items on the B Pty Ltd’s credit card ($6,500) and by taking $500 from the till.
27/07/2017
The wife withdrew the sum of $161,177.40 from the A Pty Ltd business bank account without authorisation. The wife also used the B Pty Ltd business credit card to pay for various expenses related to her children in the sum of $4,620.20.
31/07/2017
The wife used the B Pty Ltd business credit card to pay for her family lawyer and a parking fine.
10/08/2017
The wife of A Pty Ltd’s co-director attended Suburb BB police station to report the wife’s alleged unauthorised use of company funds withdrawn from A Pty Ltd.
15/08/2017
The wife attended B Pty Ltd and took $490 in cash from the business.
18/08/2017
A Pty Ltd sought legal advice and Altus Lawyers wrote to the wife terminating her employment with A Pty Ltd and B Pty Ltd. The husband began paying the wife the same amount she received from her salary from his personal income.
18/08/2017
A Pty Ltd issued proceedings in the County Court to recover the sums withdrawn by the wife.
09/2017
The wife alleged and the husband disputed that she received a loan of $40,000 from her ex-partner, Mr KK.
04/09/2017
The wife commenced proceedings in the Federal Circuit Court of Australia.
18/09/2017
Interim orders were made by consent, including that:
1. the wife have the sole use and occupation of the home;
2. the husband indemnify A Pty Ltd for the funds withdrawn by the wife pending final determination of the proceeding; and
3. from the A Pty Ltd monies, the wife be permitted to apply $1,000 per week to her financial support, and $50,000 to legal costs and other expenses.
14/11/2017
Consent orders were made in the County Court which set the matter down for trial in August 2018.
12/2017
The husband moved from his parents’ house to Mr LL’s house.
10/01/2018
The wife attended the ANZ bank and transferred the total amount in the parties’ joint offset account (the account from which the mortgage was paid), being $3,266.19, to her personal account.
14/01/2018
The wife transferred an additional $1,000 from the joint offset account to her personal account. Consequently, the mortgage repayment for January 2018 was unable to be made on time.
21/01/2018
The wife repaid the sum of $4,266.19 to the joint offset account.
16/01/2018
Consent orders were made that the husband pay the wife $46,275 as a part-property settlement.
20/03/2018
The wife made an application to the Victims of Crime Assistance Tribunal in relation to the incident which occurred at separation.
13/04/2018
The parties attended mediation.
31/05/2018
Consent orders were made for:
1. the husband to pay the wife $60,000 as a part-property settlement;
2. the wife to sell the Motor Vehicle 2; and
3. the parties to receive a half share each of the sale proceeds of the Motor Vehicle 2 as a part property settlement.
The Motor Vehicle 2 is yet to be sold.
19/7/2018
The wife’s application to join A Pty Ltd to the Federal Circuit Court proceedings and to stay the County Court proceedings was dismissed and the wife was ordered to pay A Pty Ltd’s costs of the application in a case.
09/08/2018
The wife and A Pty Ltd reached a settlement of the County Court proceedings whereby the wife agreed to repay the funds withdrawn by her in full, with interest and costs, upon the resolution of these proceedings.
29/09/2018
The wife had a holiday in Country MM. The husband alleged and the wife disputed that she left her children at home alone while completing VCE, and, while she was away, the children held a party at the CC Street, Suburb D property where a fight broke out and a boy was glassed.
02/10/2018
The wife received compensation through VOCAT.
10/2018
The husband suffered from shingles and was advised by his GP that it was stress related.
17/02/2019
The wife was admitted to NN Hospital psychiatric ward.
20/02/2019
Consent orders were made in chambers appointing Ms OO as the litigation guardian for the wife.
25/02/2019
The final hearing was adjourned on the application of the wife’s litigation guardian to May 2019 for an interim hearing and March 2020 for trial.
24/03/2019
The wife was discharged from NN Hospital.
10/05/2019
The matter was listed for final hearing to commence on 5 August 2019 and the March 2020 final hearing date was vacated.
12/05/2019
The wife was readmitted to NN Hospital.
25/06/2019
The parties divorced.
31/05/2019
The wife was discharged from NN Hospital.
05/08/2019
14/10/2019
The matter was listed for a two day final hearing. The final hearing proceeded as scheduled on 5 and 8 August 2019, but could not be completed. The hearing also proceeded on 14 and 15 October and 10 December 2019
Ms OO was removed as the wife’s litigation guardian and Mr Drake was appointed as her litigation guardian.
Material relied upon
In her outline of case filed on 2 August 2019, the wife said that she relied upon:
a)her amended initiating application filed on 10 July 2019;
b)her affidavit filed on 8 July 2019;
c)her financial statement filed on 8 July 2019;
d)her affidavit filed on 26 April 2019; and
e)the affidavit affirmed by a valuer, Mr PP, on 8 July 2019.
In his case outline filed on 2 August 2019, the husband said that he relied upon:
a)his further amended response to initiating application filed on 23 July 2019;
b)his affidavit filed on 23 July 2019;
c)his financial statement filed on 23 July 2019;
d)the affidavit sworn by his former wife, Ms QQ, on 23 July 2019;
e)the affidavit sworn or affirmed by Mr RR on 25 June 2019;
f)the affidavit sworn by Dr SS on 2 August 2019; and
g)the affidavit sworn by the valuer, Mr TT, on 25 February 2019.
However, during the course of the trial, the husband indicated that he no longer wished to rely on the affidavits sworn or affirmed by Mr RR and sworn by Dr SS. Mr TT and Ms QQ were not required for cross-examination.
The wife also called her treating psychiatrist, Dr UU, to give evidence. He was cross-examined. The husband and wife were both cross-examined. Mr PP was not required for cross-examination.
Proposals
The wife ultimately proposed that the parties’ combined net assets be split 60% to the wife and 40% to the husband.
The husband ultimately proposed that the parties’ combined net assets be split 80% to the husband and 20% to the wife.
The legislation
Section 79 of the Act gives the court power to alter the interests of the parties to a marriage in the property of the parties to that marriage. Sub-section 79(2) of the Act provides that:
The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
Section 79(4) of the Act sets out the matters the court must take into account when considering what orders, if any, should be made for the alteration of the interests of the parties in property. Those matters are:
(a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d)the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e)the matters referred to in subsection 75(2) so far as they are relevant; and
(f)any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
The matters to be taken into account under s.75(2) of the Act are as follows:
(a)the age and state of health of each of the parties; and
(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
(c)whether either party has the care or control of a child of the marriage who has not attained the age of 18 years; and
(d)commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain; and
(e)the responsibilities of either party to support any other person; and
(f)subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
(i)any law of the Commonwealth, of a State or Territory or of another country; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party; and
(g) where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable; and
(h)the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
(ha)the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant; and
(j)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; 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; and
(l)the need to protect a party who wishes to continue that party’s role as a parent; and
(m)if either party is cohabiting with another person — the financial circumstances relating to the cohabitation; and
(n)the terms of any order made or proposed to be made under section 79 in relation to:
(i) the property of the parties; or
(ii)vested bankruptcy property in relation to a bankrupt party; and
(naa)the terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to:
(i)a party to the marriage; or
(ii)a person who is a party to a de facto relationship with a party to the marriage; or
(iii)the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv)vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(na) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
(o)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(p)the terms of any financial agreement that is binding on the parties to the marriage; and
(q)the terms of any Part VIIIAB financial agreement that is binding on a party to the marriage.
The approach to applications under s.79
In Stanford v Stanford (2012) 247 CLR 108; (2012) 293 ALR 70; (2012) 87 ALJR 74; (2012) 47 Fam LR 481; (2012) FLC 93-518; [2012] HCA 52, the High Court explained the proper approach to an application under s.79 of the Act as follows:
37.First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property. … The question posed by s 79(2) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order.
38.Secondly, although s 79 confers a broad power on a court exercising jurisdiction under the Act to make a property settlement order, it is not a power that is to be exercised according to an unguided judicial discretion. In Wirth v Wirth, Dixon CJ observed that a power to make such order with respect to property and costs “as [the judge] thinks fit”, in any question between husband and wife as to the title to or possession of property, is a power which “rests upon the law and not upon judicial discretion”. … (footnotes omitted)
39.Because the power to make a property settlement order is not to be exercised in an unprincipled fashion, whether it is “just and equitable” to make the order is not to be answered by assuming that the parties’ rights to or interests in marital property are or should be different from those that then exist. All the more is that so when it is recognised that s 79 of the Act must be applied keeping in mind that “[c]ommunity of ownership arising from marriage has no place in the common law”. Questions between husband and wife about the ownership of property that may be then, or may have been in the past, enjoyed in common are to be “decided according to the same scheme of legal titles and equitable principles as govern the rights of any two persons who are not spouses”. The question presented by s 79 is whether those rights and interests should be altered. (footnotes omitted)
40.Thirdly, whether making a property settlement order is “just and equitable” is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s 79(4). The power to make a property settlement order must be exercised “in accordance with legal principles, including the principles which the Act itself lays down”. To conclude that making an order is “just and equitable” only because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act. (footnotes omitted)
…
42.In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, 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 marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4). (emphasis added)(footnotes omitted)
Stanford requires the following matters to be determined in applications brought under s.79 of the Act:
a)whether the parties have separated;
b)the assets and liabilities of each party;
c)the contributions of each party;
d)the future needs of each party;
e)bearing in mind all of the foregoing matters, whether it is just and equitable to make any orders altering the interests of the parties in their property; and
f)what orders, if any, are just and equitable in all the circumstances of the case.
Stanford does not require these matters to be addressed in any particular order. In most cases, it would seem rational to consider them in the order set out above.
The wife’s litigation guardian
The wife has had a litigation guardian for most of this proceeding, partly because of her brain injuries, and partly because of her psychological issues. The order for the appointment of the wife’s litigation guardian was made by consent in chambers.
The wife did not indicate that she wished to rely for the purposes of the final hearing on the evidence that led to the appointment of her litigation guardian. Nor did the husband. Consequently, I am not permitted to take it into account for the purposes of these reasons.
The wife made affidavits for the purposes of these proceedings and gave oral evidence. From that, I take it that the wife conceded, on the advice of counsel, that she had the basic capacity to give evidence, and knew that she was obliged to tell the court the truth.
For days one and two of the final hearing, on 5 and 6 August 2019, the wife was on day release from a psychiatric hospital. On 14 and 15 October 2019, days three and four of the hearing, the wife was not able to attend court at all and was an inpatient at a psychiatric hospital. The wife was midway through her cross-examination at that point. The husband’s evidence was interposed. The wife gave further oral evidence in chief on 10 December 2019 and was also cross-examined on that date.
The wife said in her affidavit sworn or affirmed on 8 July 2019 that her affidavit was made:
… from her own knowledge and belief save where otherwise stated and with the considerable assistance of my Litigation Guardian …
When asked in cross-examination to describe the considerable assistance provided by her litigation guardian, the wife said that the litigation guardian was always there when the wife worked on her affidavit, the wife asked her advice and the litigation guardian discussed things with her lawyers. However, the wife was adamant that she knew what the facts were, and had obtained figures from her bank records. She said that she had difficulty getting things across and can get confused by questions.
The wife’s presentation in the witness box
The wife presented in the witness box as within the normal range intellectually. She did not seem unduly confused by any questions.
That perception is consistent with the wife, since her brain injuries, having undertaken courses in health care, and having worked in those capacities. These jobs are perhaps not as high powered as her previous work as a professional, but they certainly do not suggest that the wife was not able to function as a witness in a trial, or be kept to the usual standards. It is perhaps worth noting that the consequences of aneurisms and stroke range from the very mild to the devastating and, indeed, fatal.
In addition to her brain injuries, the wife suffers from post-traumatic stress disorder, which has resulted in her having a number of admissions to psychiatric hospitals. However, when the wife was able to attend court, she did not appear to be impeded by that condition, and presented as within the normal range.
There were some details that the wife could not remember, but they were of the type that people generally would have difficulty recalling.
Having said all that, there were areas, discussed below, where I was not satisfied that the wife was telling the court the truth. The wife presented as a somewhat entitled person, who wished to blame others for the consequences of her own actions.
The husband’s presentation in the witness box
The husband presented as a stolid person, who gave his evidence in a straightforward and concise way.
Whether the parties have separated
The parties agreed that they had separated.
The assets and liabilities
The parties provided to the court three iterations of a table of their agreed and disputed assets, liabilities, contributions and future needs. In the third iteration of the table (“the Table”), the parties agreed that their only joint asset and its value at the time of trial was CC Street, Suburb D, which was valued at $1,800,000.
The parties agreed in the Table that their only joint liability at the time of trial was the mortgage on CC Street, Suburb D, in the sum of $262,799.
As such, the equity in CC Street, Suburb D at the time of trial was $1,537,201.
The parties agreed in the Table that the wife’s individual assets at the time of trial totalled $10,431, consisting of:
a. shares in Shares H
$9,552
b. money in bank accounts
$879
In relation to the wife’s liabilities, the parties agreed that the wife entered into a deed of settlement with A Pty Ltd whereby she had to repay the money she took, namely, $161,781.40, plus costs and interest. By the last day of trial, the parties agreed that figure had increased to $234,484.66.
However, the parties agreed that the wife should be treated as having received $50,000 of that sum as a part-property settlement. That money was given to the wife, in effect, by the husband assuming $50,000 of the wife’s debt of $234,484.66.
Consequently, as at the last day of trial, being 4 December 2019, the wife had a liability of $184,484.66 to A Pty Ltd, and the husband had a liability of $50,000 to A Pty Ltd.
The husband argued that the valuation of his business included the $184,484.66 that the wife owed to A Pty Ltd. He argued that, if the wife did not pay that amount, the value of the business should be reduced accordingly.
The valuation of the business includes as an asset the value of the debt the wife owes it. Under the deed of settlement, the wife is not required to pay that debt until the determination of this proceeding. The orders that will be made will provide for the payment of the wife’s debt to A Pty Ltd. It is unnecessary to consider a scenario where the wife does not pay that debt.
The parties did not identify it as an asset, but it was common ground, and included in the agreed expert valuation, that B Pty Ltd owes the wife $35,745. A debt owed to a person is an asset of that person. It will be included as such.
The wife alleged in the Table that certain liabilities should be regarded as joint liabilities. The husband argued that they were the wife’s liabilities alone. The liabilities are as follows:
a. school fees owed to VV School
$35,000
b. Centrelink overpayment
$22,000
c. a debt to PBP Lawyers
$11,122.22
The quantum of these liabilities was agreed, but the issue was who should be liable for them.
The school fees were for the wife’s children. The wife argued that the husband had signed the school’s form relating to school fees, and, consequently, he was legally obliged to pay them. The husband said that he should not be held accountable for the school fees, given that he and the wife had now separated.
In my view, the children’s outstanding school fees should be regarded as a liability of the wife alone, as the school fees are for her children and they accrued post-separation. The fact that the husband may have a legal liability to the school says nothing about how the debt should be treated as between the husband and the wife. The wife should indemnify the husband in respect of any legal liability the husband may have in respect of the school fees. Nevertheless, the debt exists, and should be included in the pool as the wife’s debt.
The wife’s debt to Centrelink accrued during the relationship. The wife said that she had been in receipt of a disability support pension prior to cohabitation commencing. The wife said that she continued to claim the disability support pension after cohabitation commenced because the husband insisted that she do so. She said that they had arguments about it, but she continued to claim the disability support pension because the husband insisted, even though, she implied, she knew she was not entitled to it. Because the husband insisted that the wife continue to claim the disability support pension, the wife said that the husband should be held jointly responsible for the Centrelink debt.
The wife also claimed that she disclosed to Centrelink that she was living with the husband, and claimed that she gave Centrelink authority to release its documents for the purposes of this proceeding. However, no documents evidencing the wife’s disclosure to Centrelink were produced to the court. In the absence of such documents, I do not accept the wife’s claim that she disclosed to Centrelink that she was living with the husband.
The husband said that he had no idea that the wife was claiming the disability support pension after cohabitation commenced. He said that the Centrelink debt arose after the wife was given a dividend from his company. He said that the husband and wife jointly decided that the wife should receive the dividend.
The wife said that the transcript of the proceeding at pages 213 to 216 showed that the husband was not genuine in his answers in relation to the Centrelink debt. I do not accept that claim. The husband was consistent that he and the wife had discussed the question of the wife receiving a dividend before it was declared and he did not know that the wife was receiving a Centrelink pension.
I consider that the husband was telling the truth about these matters. It is probable that the wife was not entitled to her previous rate of disability pension, or perhaps any disability pension at all, after she started living with the husband because of her and the husband’s combined incomes. It was dishonest for the wife to continue receiving the disability pension in those circumstances, and casts doubt on her general financial honesty and credibility in this proceeding.
Moreover, the husband presented as financially competent. In addition, he was assisted by an accountant at the time the dividend was declared. I find it implausible that the husband would have arranged for the wife to receive a dividend from his company, if he had known that she was on a disability pension, because he would have known that the dividend would result in the wife having to repay the pension, and expose the wife to penalty.
I also consider that the wife was financially dishonest because, without any authority, she took $161,177.40 from A Pty Ltd. That much was conceded. The wife disputed that she took various smaller sums from B Pty Ltd, either in cash or by using its credit card. However, in view of the wife’s other financial dishonesty, I consider that the wife also took money from B Pty Ltd.
The wife’s position was that, when she took money from A Pty Ltd, she was simply taking what was hers, because the husband had used the proceeds of sale of her property in F Street, Suburb G to support his businesses. That may be so.[1] But when the husband used that money, he took it from a joint account, and was legally allowed to take it. The wife had no legal right to take money from A Pty Ltd or B Pty Ltd.
[1] For example, it was an agreed fact that the husband had transferred to A Pty Ltd $135,000 from the proceeds of sale of the wife’s property in F Street, Suburb G, which she had put into the parties’ joint mortgage offset account.
While it may be understandable for a separated wife, in desperate financial circumstances, to take a small amount of money from her husband’s wholly owned company to put food on the table, A Pty Ltd was not the husband’s wholly owned company. It was jointly owned with an entirely separate and unrelated business partner. And the wife took a very large amount of money from A Pty Ltd which was not required for her basic, immediate needs.
B Pty Ltd at the relevant times was the husband’s wholly owned company. The wife taking thousands of dollars from B Pty Ltd Pty Ltd is less serious than taking $161,781.40 from A Pty Ltd, but still improper.
Leaving aside the fact that A Pty Ltd is an entirely separate third party, just because the wife had put a sum of money into the parties’ combined asset pool did not mean that she was entitled to get it back under family law principles. For example, the sum may have been dissipated on normal living expenses or imprudent purchases, or there may have needed to be an adjustment based on the other party’s future needs.
The courts exist to resolve questions of what money is owed by one person to another. Self-help in the circumstances of this case was inappropriate.
The wife taking such a large sum of money from A Pty Ltd is indicative of the wife having a cavalier attitude to other people’s money, and a misplaced sense of entitlement. Taking $161,781.40 from A Pty Ltd was financially dishonest, and detracts from the wife’s credibility in her evidence to this court.
While care must be taken in extrapolating from one or two acts of financial dishonesty, I consider that the extrapolation in the case of the wife is justified, particularly having seen both parties in the witness box.
I conclude that the wife did not tell the husband that she was in receipt of Centrelink benefits after they commenced cohabitation, and he did not insist that she continue to claim them.
The wife’s submission that her Centrelink debt was all the husband’s fault, because his company gave her a dividend, did not acknowledge the wife’s own role in taking disability pension payments to which she was probably not entitled, once she was living with the husband, given their combined income, even prior to the dividend payment. In making this submission, the wife demonstrated an entitled attitude, and a tendency to blame others for problems of her own making.
The debt to PBP Lawyers was incurred by the wife in her defence of A Pty Ltd’s County Court claim against her for the recovery of the $161,781.40. The wife argued that the husband should have stopped the County Court claim by A Pty Ltd and that he acted in bad faith in allowing A Pty Ltd to pursue that claim. Basically, the wife argued that it was the husband’s fault that she incurred the costs in the County Court legal proceeding and the debt to PBP Lawyers.
That submission is again demonstrative of the wife’s entitled attitude. The fact is that, without any legal right, the wife took $161,781.40 from a third party and, when asked, refused to give it back. Even though she has entered into a deed of settlement with A Pty Ltd requiring her to repay the outstanding balance of the $161,781.40 from her settlement in this proceeding, she persisted until the final day of the trial in saying that the husband should bear that liability as spousal maintenance. Ultimately, when pressed, she withdrew that claim.
The wife also said that the husband had agreed to indemnify her for the funds she had taken from A Pty Ltd. In fact, the husband agreed to consent orders made on 18 September 2017 in which he agreed to seek the agreement of A Pty Ltd for him to indemnify A Pty Ltd:
pending final determination of this proceeding, the County Court proceeding, or further order of the court.
Furthermore, the consent orders had a notation that the husband’s agreement to the orders was:
without any concession that the wife is entitled to the A Pty Ltd money, and he reserves his rights to argue at trial and/or in the County Court proceedings that the A Pty Ltd money belongs to A Pty Ltd.
It was never intended that the husband would assume liability for the wife’s debt to A Pty Ltd. The proposed indemnity was only ever intended to be on an interim basis. The wife’s submission on this point was disingenuous and did not accord with the clear facts.
In my view, the wife is solely responsible for the predicament she got herself into with A Pty Ltd. There is no reason for the husband to be liable for the wife’s debt to PBP Lawyers.
In the joint chronology, it can be seen that the wife alleged that she borrowed $40,000 from her former partner, Mr KK, after separation from her husband. However, it was not included in the Table as a liability, or referred to in the wife’s closing submissions. In these circumstances, I presume it was not pressed.
The parties agreed in the Table that the wife’s superannuation at the time of trial consisted of $28,881.
The parties agreed that the husband’s individual assets at the time of trial and their values included the following:
a. Motor Vehicle 2
$55,000
b. Motorcycle K
$22,000
c. Motorcycle WW
$6,500
d. Shares in P Pty Ltd
2,500
e. NAB Classic Banking Account
$405
In addition, the wife alleged in her closing submissions that the husband’s business entities, The Bainey Group, were valued at $1,307,000. The husband alleged in his closing submissions that The Bainey Group was valued at $1,183,000. The difference is $124,000.
Pursuant to court order, the parties appointed a single joint expert, Mr TT, to value the husband’s business interests. The wife appointed a shadow valuer, Mr PP, to also value the husband’s business interests.
The parties, by consent, tendered a joint statement by the experts, which was dated 2 August 2020 and which became exhibit 1. In that statement, the experts agreed that the value of The Bainey Group was $1,171,000.
However, following the tender of that document, the experts were asked some further questions. They produced another joint statement, which became exhibit 27. In that document, the experts said that the value of The Bainey Group was $1,183,000.
Nevertheless, the experts were also asked to give a valuation on the basis that the debt from the wife to A Pty Ltd was not payable. In that event, the experts said that the value of The Bainey Group was $1,307,000.
However, the debt from the wife to A Pty Ltd is payable ($184,484.66 by the wife and $50,000 by the husband). The total debt owed by the parties to A Pty Ltd in the sum of $234,484.66 should be treated as an asset of A Pty Ltd.
Therefore, the appropriate value to give The Bainey Group is $1,183,000.
On the last day of the trial, the parties agreed that the husband had debts totalling $149,575 as follows:
a.ANZ Frequent Flyer Black Credit Card $17,678
b.Qantas Premium MasterCard $17,322
c.NAB Visa Card $9,575
d.part of wife’s debt to A Pty Ltd
pursuant to the order made on 18.09.2017 $50,000
e.a loan from Mr XX for partial property
settlement paid to the wife $40,000
f.a loan from Mr XX for living expenses,
including the mortgage $15,000
By the time closing written submissions were filed, the husband said that the figures for the credit card debts were a little different. There was no additional evidence on that point, so it is preferable to rely on the figures which the parties agreed.
The wife argued that the husband’s credit card debts accrued post-separation, and he should bear them. The husband gave evidence at paragraph 34 of his affidavit affirmed on 22 July 2019 that the ANZ Frequent Flyer Black Credit Card was primarily used by the wife during the relationship. I accept the husband’s evidence on this point. It was not effectively challenged. The husband appears to have conceded in the same paragraph that the other two credit cards were his alone and he should solely bear them.
In addition, in the Table, the parties agreed that the husband had superannuation of $163,378.
In summary, the assets, liabilities and superannuation of the parties are as follows:
a)the joint equity in CC Street, Suburb D of $1,537,201;
b)the wife’s individual assets totalling $46,175 and consisting of:
i)shares in H Shares $9,552
ii)money in bank accounts $879
iii)debt owed by B Pty Ltd $35,745
c)the wife’s individual liabilities totalling $252,606.88 and consisting of:
i)$184,484.66 to A Pty Ltd;
ii)$35,000 in school fees owed to VV School;
iii)$22,000 for the Centrelink overpayment; and
iv)$11,122.22 to PBP Lawyers;
d)the wife’s superannuation totalling $28,881;
e)the husband’s individual assets totalling $1,269,405 and consisting of:
i)Motor Vehicle 2 $55,000
ii)Motorcycle K $22,000
iii)Motorcycle WW $6,500
iv)Shares in P Pty Ltd $2,500
v)NAB Classic Banking Account $405
vi)The Bainey Group $1,183,000
f)the husband’s individual liabilities totalling $149,575 and consisting of:
i)ANZ Frequent Flyer Black Credit Card $17,678
ii)Qantas Premium MasterCard $17,322
iii)NAB Visa Card $9,575
iv)part of wife’s debt to A Pty Ltd
pursuant to the order made on 18.09.2017 $50,000
v)a loan from Mr XX for partial property
settlement paid to the wife $40,000
g)the husband’s superannuation of $163,378.
In total, the parties combined assets plus superannuation less liabilities total $2,642,858.12.
Contributions
a. Initial contributions
The parties agreed in the Table that the wife’s initial contributions when they commenced cohabitation in August 2010 included $18,000 in the Super Fund J.
The parties also agreed that, at that time, the wife owned F Street, Suburb G, Queensland. She said that she had equity of $410,000 in that property at the time of cohabitation. The husband disputed the amount of the equity during the trial. A retrospective valuation and a mortgage statement from that time were not provided to the court.
However, in paragraph 7 of his closing submissions, the husband conceded that the wife drew down $170,000 from the F Street, Suburb G property for the purchase of the former matrimonial home, and received proceeds of sale of $195,000 when the F Street, Suburb G property was sold. Under the heading of initial contributions, the husband also conceded in his closing submissions that the wife contributed $35,725 to B Pty Ltd. It seems likely that the wife would have obtained that money from her F Street, Suburb G property. Those figures together equal $400,725. If we allow a little for the costs of sale, it is probably fair to say that, at the commencement of the relationship, the wife had equity of $410,000 in the F Street, Suburb G property, as she claimed.
The husband argued that the $35,725 the wife lent to B Pty Ltd was going to be repaid, thus diminishing its significance as an initial contribution. However, the fact that the wife might get that money back as part of her property settlement is a different issue. Obviously, the $35,725 could be characterised as a springboard, albeit a fairly small one.
Suffice to say that the wife’s total initial contributions probably amounted to about $428,000.
The parties agreed that the husband’s initial contributions included assets worth $157,703 as follows:
a. Motorcycle K
E$25,000
b. Motorcycle L
E$6,000
c. P Pty Ltd
E$2,500
d. Bank accounts
E$10,000
e. Super Fund Q
E$114,203
In addition, the husband alleged that, at the commencement of the relationship, he owned other assets worth $1,975,000 as follows:
a)M Pty Ltd, which was worth $925,000, and which owned:
i. 33.33% share in A Pty Ltd;
ii. 33.33% share in B Pty Ltd (called N Pty Ltd at the time);
iii. 33.33% share in N Pty Ltd;
iv. 25% share in DD Pty Ltd; and
v. 100% share of O Pty Ltd; and
b)C Street, Suburb D, which was worth $1,000,000; and
c)Motor Vehicle 1 worth $50,000.
The wife accepted that the husband had all of those assets at the commencement of the relationship but disputed their values and associated debt. The wife noted that the husband did not provide any retrospective valuations, and, more particularly, the husband conceded at paragraph 9.2.1 of his affidavit affirmed on 22 July 2019 that B Pty Ltd Pty Ltd had a debt of $1,021,667 at the commencement of the relationship, which was secured over the husband’s property in C Street, Suburb D. Strangely, the husband said at paragraph 9.1 of that affidavit that the C Street, Suburb D property was unencumbered. The parties agreed that C Street, Suburb D was sold in March 2013 for $1,035,000.
All in all, it seems that the husband has failed to deduct the security over C Street, Suburb D from the overall value of his assets at the commencement of cohabitation. I consider that the husband had assets worth a maximum of $1,061,036 at the commencement of the relationship (being the agreed assets of $157,703, and $925,000 for M Pty Ltd, plus $1,000,000 for C Street, Suburb D less $1,021,667 for the security over C Street, Suburb D).
The wife argued that the court should not even accept that figure, because the husband had not provided any retrospective expert valuations of his corporations and it was obvious that they needed money because the wife drew down funds from her F Street, Suburb G property to support them.
There is strength in that submission. As we know, it is not unusual for small companies to have no equity or negative equity. By way of illustration, C Street, Suburb D was mortgaged to the hilt, to support B Pty Ltd.
Moreover, the husband’s failure to include in his calculations the $1,021,000 debt secured over C Street, Suburb D creates a considerable amount of doubt about the reliability of the husband’s estimates of the value of his assets at the commencement of the relationship.
Although the wife did not produce any expert evidence about the value of her initial contributions, but expected the court to take them into account, she submitted that it would be unsafe to attribute any value to the husband’s initial contributions because there was no sworn evidence by an appropriately qualified expert as to their value. The wife did not seem to be troubled by the inconsistency in her position.
In any event, in the absence of agreement, and in the face of a positive dispute, I am not permitted to accept the husband’s estimates of the value of his assets at the commencement of cohabitation. In such circumstances, the court is only permitted to rely on the sworn evidence of an appropriately qualified expert. There was no such evidence.
However, just as I accepted that the wife’s house probably had about the amount of equity in it that she claimed, as an inference from subsequent events, it seems to me that it would be reasonable on the balance of probabilities to accept that the husband’s businesses had some value at the commencement of the relationship. It was not disputed that those businesses provided an income stream for the family for the seven years of the relationship. I have found that they are now worth $1,183,000. On the balance of probabilities, I conclude that the husband’s real estate and businesses had some value at the commencement of cohabitation, even though a precise figure cannot be ascertained.
Similarly, there was no expert evidence about the value of the husband’s car at the commencement of cohabitation, which he said was worth $50,000. On the other hand, the parties agreed that, six years into the relationship, the husband sold the car for $20,000. In the absence of sworn evidence from an appropriately qualified person, I accept that, on the balance of probabilities, the car was probably worth more than $20,000 at the commencement of the relationship.
The wife agreed that the husband had assets at the commencement of the relationship that were worth $157,000. As discussed above, he had other assets as well, although their value cannot be stated with any precision.
b. Contributions during the marriage
The parties cohabited from 2010 until 24 June 2017, when the husband assaulted the wife. During that time, the wife’s three children, X, Y and Z, lived with them, though Z did not arrive until early 2011.
The parties agreed that the husband’s contributions during the relationship included:
a)financial contributions as follows:
i)the husband was employed full-time throughout the relationship;
ii)he purchased of 66.66% of B Pty Ltd for $450,000, by obtaining a business loan[2] which was secured against the C Street, Suburb D property;
[2] This is reconcilable with C Street, Suburb D securing a $1,000,000 loan to the husband’s business entities at the commencement of cohabitation if it is accepted that the husband repaid some of that borrowing prior to the present borrowing.
iii)he sold DD Pty Ltd for approximately $112,500, receiving net sale proceeds of $49,000;
iv)the parties purchased the CC Street, Suburb D property for $1,110,000;
v)he sold the C Street, Suburb D property for $1,035,000 and the net sale proceeds[3] were applied to the CC Street, Suburb D property;
[3] It is unclear how much these proceeds were.
vi)he purchased 66.66% of A Pty Ltd for $175,000;
vii)he purchased a Motor Vehicle 2 for $86,000; and
viii)he sold the Motor Vehicle 1 for $20,000; and
b)homemaking and parenting contributions as follows:
i)the husband assisted the wife’s children with their homework as he was often working in the home office while they were completing their homework;
ii)the wife and husband shared Z’s extra-curricular commitments, although the husband took him on his own to City YY for a sports tournament at the husband's expense;
iii)the husband attended the majority of X’s extra-curricular commitments which were often five times per week and took her to and from her commitments;
iv)he took X at his expense to Darwin, Adelaide, Brisbane, Town ZZ (twice) and Canberra (twice) – without the wife – for her sporting commitments;
v)he also sponsored a soccer team X played for, through B Pty Ltd for two years;
vi)the husband was the runner for Y's team when she played sports; and
vii)the husband did some vacuuming, dishwashing and other housework but to a lesser extent than the wife.
The parties agreed that the wife’s contributions during the relationship included the following:
a)the wife paid the deposit for the purchase of the CC Street, Suburb D property of $110,000;
b)the wife paid interest, costs and expenses associated with the bridging finance for the CC Street, Suburb D property of $60,000.00;
c)the wife lent $44,000 (of which $35,725 remains outstanding)[4] to B Pty Ltd by drawing down on the loan on her F Street, Suburb G property as follows:
i)$20,000 on 15 July 2011;
ii)$9,000 on 18 July 2011; and
iii)$15,000 on 13 May 2013; and
d)the wife contributed the net proceeds of sale of her F Street, Suburb G property of $195,631, which included:
i)the sum of $150,000 which was paid into the parties’ joint offset account, from which the husband transferred $135,000 to A Pty Ltd; and
ii)the sum of $25,000 which was paid to B Pty Ltd on 30 April 2014.
[4] The outstanding amount is a debt owed to the wife by B Pty Ltd.
The husband alleged and the wife disputed the following matters relating to contributions during the relationship:
a)the husband paid 50% of Z's Year 11 and 12 AAA School fees;
b)in total, he paid school fees to BBB School of approximately $14,500 for X and Y consisting of:
i)100% of X's BBB School fees for four years; and
ii)100% of Y's BB School fees for two and a half years;
c)in total, he paid school fees to VV School of approximately $46,993 consisting of:
i)50% of X's VV School fees for approximately one year; and
ii)100% of Y's VV School fees for approximately one year;
d)the husband paid for laptops and other associated school expenses for the wife’s children;
e)he paid for food, utilities and other living expenses, such as health insurance, for the wife and her children;
f)the husband paid the mortgage; and
g)he also paid for holidays for the wife and her children.
Once the parties were living together, they embarked upon a joint endeavour and mingled their finances. It generally matters little who physically paid for food, the mortgage and so on. One may have paid the mortgage while the other paid the deposit on the house. One may have paid for a holiday while the other organised it.
However, the school fees for the wife’s children, the cost of their sporting commitments, and their living costs are outside the normal run, because private school fees, interstate sporting commitments and living costs for three children add up to a lot of money, and the children were not the husband’s. The money spent by the parties jointly on the wife’s children over the seven years of the parties’ cohabitation was not precisely quantified, but it has to be seen as a significant contribution on the husband’s part.
The wife alleged and the husband disputed the following matters relating to contributions during the relationship:
a)the wife was employed at various times during cohabitation and contributed her earnings to the acquisition, conservation and improvement of the property of the parties;
b)the wife was primarily responsible for the care of the husband’s children when they spent time with the parties; and
c)the wife was the primary care giver for the children during cohabitation and subsequently and was the primary homemaker throughout cohabitation.
I accept that the wife did have some employment during the relationship and contributed her earnings to the parties’ joint endeavour. However, her earnings were not large, especially in comparison to the husband’s.
It was an agreed fact that the husband’s daughters stopped seeing him in 2013 and did not resume seeing him until after the parties separated. It was an undisputed fact that the husband’s son stopped seeing him in 2015 and did not resume seeing him until after the parties had separated. See paragraphs 7.4 and 7.6 of the affidavit sworn by the husband’s former wife, Ms QQ, on 23 July 2019. Ms QQ was not required for cross-examination.
Consequently, the wife’s interactions with the husband’s daughters lasted about two and a half years, and her interactions with the husband’s son lasted about four and a half years. It was not disputed that, at all material times, the husband’s children lived with their mother. Even when they were still seeing him, it appears that the husband’s children spent only a small amount of time with him and the wife each fortnight.
Ms QQ’s unchallenged evidence, which I accept, was to the effect that the husband had a good relationship with his children until the wife in the present proceeding came onto the scene. Ms QQ said that the husband’s older daughter developed anxiety around spending time with the parties. That may have been because the wife called Ms QQ a fucking scumbug in the presence of the older daughter, who was then about 11 years old, and imposed household rules that the children felt inhibited their fun.
The husband’s older daughter had six weeks off school, and the school counsellor recommended that the older daughter cease spending time with the parties. The younger daughter decided to stay at home with her older sister when previously they would have visited their father.
It is difficult to see how the wife could get much credit for caring for the husband’s children, when she caused one of the children to have anxiety serious enough to prevent her from going to school for six weeks, and when the wife apparently caused a rupture in the husband’s relationship with his own children.
It is also difficult to see how the wife should get any credit in this proceeding for caring for her own children.
On the other hand, I do accept that the wife was the primary homemaker during the relationship.
I accept that the wife contributed her earnings during the relationship. However, it was not disputed that they were relatively small compared to the husband’s.
c. Contributions post separation
The parties agreed that the husband’s post-separation contributions included:
a)payment of $8,392 off the parties’ American Express Qantas Premium Card, leaving it with a nil balance; and
b)payment of the mortgage repayments and home and contents insurance for the former matrimonial home of which the wife had sole use and occupation.
The wife has lived rent free in the former matrimonial home from separation on 24 June 2017 until now, a period of almost three years. It should perhaps be mentioned at this point that the trial was adjourned before it commenced due to the wife’s psychiatric condition. When the trial did commence, it had to be adjourned again mid-hearing for the same reason. This has meant that the husband’s commitment to pay the mortgage on the former family home has been of considerable benefit to the wife.
The parties did not agree that the wife made any post-separation contributions.
The husband alleged and the wife disputed the following matters relating to post-separation contributions:
a)that he paid $1,156 per fortnight to the wife from 24 June 2017 until 18 September 2017; and
b)he incurred significant legal fees in the County Court and Magistrates' Court due to the wife's actions, which he described as wastage.
I accept that the husband paid the wife $1,156 per fortnight from 24 June 2017 until 18 September 2017. I also accept that the husband has incurred significant legal fees in the County Court and Magistrates' Court proceedings due to the wife's actions, which are accurately described as wastage on her part.
The wife alleged and the husband disputed in relation to post-separation contributions that she had incurred a substantial debt to A Pty Ltd and significant legal fees in the County Court and Magistrates’ Court due to the husband pursuing those proceedings notwithstanding the family law proceedings. The wife said that this was wastage on the husband’s part. However, as discussed above, it was wastage on the wife’s part.
Part property payments
In addition, the parties agreed that, following separation, the following part-property settlements were paid to the wife pursuant to court orders:
Date of orders
Notes
Amount
18 September 2017
payment for legal costs from the A Pty Ltd money
$50,000
16 March 2018
payment to Pearsons Lawyers
$40,000
16 March 2018
retained by wife from B Pty Ltd
$6,275
31 May 2018
payment from M Pty Ltd
$60,000
Total
$156,275
The future factors
The parties agreed that matters relevant to the husband’s future needs included that:
a.the husband is in relatively good health; and
b.the husband continues to have a good income earning capacity.
The parties agreed that matters relevant to the wife’s future needs included that:
a.she suffered a stroke in 2007 and has an acquired brain injury;
b.she suffers from anxiety and depression such that she was admitted as an inpatient to the psychiatric ward of the NN Hospital on two occasions in 2019 [there were actually three occasions in 2019];
c.as a result of her injury, the wife has difficulty processing complex information;
d.the wife has the care and supervision of her daughter, Y, aged 17 years; and
e.Y suffers from anxiety, is currently on a mental health plan and is prescribed medication.
The husband alleged and the wife disputed that he suffers from anxiety and depression, but hopes that his mental health will return to being more manageable upon the conclusion of these proceedings.
The husband may have some mental health issues. However, it was not suggested that they significantly impair his earning capacity. Consequently, the husband’s mental health issues, if any, are of little relevance in this proceeding.
The wife alleged and the husband disputed that:
a)she does not have a current capacity for gainful employment;
b)even if she were to obtain employment in the future, her capacity to work is limited by her age, medical condition and lack of skills or qualifications such that her income would be substantially less than that of the husband;
c)the wife receives a Centrelink disability pension of $466 per week and child support for Y; and
d)otherwise, the wife does not receive any other financial support or income.
In relation to her earning capacity, the wife relied on the evidence of a psychiatrist, Dr UU. Dr UU did not make an affidavit in this proceeding, but gave oral evidence on 6 August 2019 pursuant to a subpoena.
Dr UU said in his evidence in chief that:
a)the wife was referred to him by her general practitioner, Dr CCC;
b)Dr UU first saw the wife on 6 June 2018 and has seen her about 20 times since then;
c)he last reviewed the wife on Sunday, 3 August 2019;
d)the wife at that time was admitted as an inpatient in a private clinic;
e)Dr UU was not able to estimate when she might be discharged from the clinic;
f)the wife attended court on 5 and 6 August 2019 on day release;
g)she was admitted to the psychiatric hospital on two other occasions in the preceding 12 months, namely:
i)from 17 February 2019 until 23 March 2019; and
ii)from 28 May 2019 until 13 June 2019;
h)in the wife’s first admission, there were concerns about her self-harming;
i)Dr UU prescribed for the wife anti-depressants, a medication to assist with her anxiety and sleep disturbances, and a medication to assist with nightmares caused by post-traumatic stress disorder;
j)Dr UU was currently treating the wife for depression, anxiety, sleep disturbances, post-traumatic stress disorder and nightmares;
k)he diagnosed the wife with:
i)post-traumatic stress disorder with dissociative symptoms; and
ii)depression, probably secondary to the post-traumatic stress disorder, or an independent major depression;
l)Dr UU understood from the wife’s general practitioner that she had a complex medical history including high blood pressure and cerebral aneurisms; and
m)Dr UU obtained a history from the wife relating to post-traumatic stress factors in which she identified that:
i)she had suffered physical, emotional and financial abuse;
ii)she separated from her husband on 25 June 2017;
iii)an intervention order was obtained;
iv)the police were involved;
v)there was significant violence;
vi)she had nightmares involving her husband;
vii)he had choked her multiple times;
viii)she had poor sleep;
ix)she had flashbacks regarding the assault;
x)she had panic attacks and palpitations;
xi)she saw a psychiatrist in 2014 who prescribed no medication;
xii)as a child, she witnessed her father abusing her sister;
xiii)she and her sister were removed from their parents by the authorities;
xiv)she did not have sufficient food during her childhood;
xv)her mother had been in a concentration camp;
xvi)her father had been molested in an orphanage;
xvii)the wife had her first baby at 17 years old, when her parents kicked her out of the house; and
xviii)her daughter had a liver transplant.
Dr UU was asked in evidence in chief what he could say about the wife’s prognosis. He replied that she should focus on her physical and psychological wellbeing.
Dr UU was also asked in evidence in chief what he could say about the wife’s capacity to work. He said that he was not an expert in occupational rehabilitation, but thought that the wife should focus for the next few years on her psychological and physical well-being.
In cross-examination, Dr UU said:
a)the wife had a traumatic childhood;
b)trauma in childhood can predispose a person to having trauma in the future;
c)Dr UU did not see the wife, or know what she was like, prior to the assault by the husband;
d)Dr UU considered that the wife could have suffered post-traumatic stress disorder as a result of any or all of:
i)witnessing her sister being abused;
ii)being abused herself as a child;
iii)being removed from her family by child welfare authorities;
iv)being rejected by her family when she had a child at 17 years of age; and
v)being assaulted by her husband.
e)however, Dr UU considered that the cause of the wife’s current post-traumatic stress disorder was the assault by the husband, because the wife reported having nightmares and flashbacks about that incident but not the others;
f)Dr UU acknowledged that the wife had seen a psychiatrist in 2014, prior to the assault by the husband, but did not know any details;
g)Dr UU acknowledged that it would have been important, in diagnosing deciding that the wife’s post-traumatic stress disorder was caused by the assault by the husband, to know why the wife had seen a psychiatrist in 2014;
h)Dr UU conceded that he did not know why the wife had seen a psychiatrist in 2014;
i)Dr UU also acknowledged that the wife had been seeing a psychologist before she began to see him, but he did not obtain any information from the psychologist, even though it would have been helpful in formulating a diagnosis and a cause of the wife’s current condition;
j)Dr UU acknowledged that his notes of his first meeting with the wife said:
Presented with symptoms, worsening of anxiety in the context of depression and PTSD precipitated by legal issues related to separation from ex-partner.
k)Dr UU agreed that the court proceedings had probably worsened the wife’s symptoms, and that her symptoms would probably improve once the proceedings were over; and
l)Dr UU confirmed that the wife was on day release from hospital, and was well enough to attend court, be cross-examined, and peruse documents, but needed to be in hospital overnight for monitoring of the stress of the proceedings.
The wife said in closing submissions that there should be a substantial 75(2) adjustment on the basis that the wife would not be able to work in the future because:
a)she had a number of aneurisms and a stroke prior to the commencement of the relationship;
b)she suffers from post-traumatic stress disorder arising from the relationship;
c)she is entitled to rely on the principle in Kennon v Kennon (1997) 139 FLR 118; (1997) 22 Fam LR 1; (1997) FLC 92-757; [1997] FamCA 27;
d)she has been granted a disability pension on the basis of her permanent psychiatric condition and on the balance of probabilities will never be able to work again; and
e)her numerous psychiatric admissions underline this conclusion.
The husband said that the evidence did not establish that the wife has an ongoing inability to work. He said that the court could not rely on Dr UU’s evidence to conclude that the wife is experiencing post-traumatic stress disorder because of the assault by the husband, as opposed to the many other adverse life events she had suffered. The husband said that Dr UU’s evidence was to the effect that the court proceedings were a major stressor for the wife and, once they were over, the wife’s psychiatric health could be expected to improve. The husband noted that, while the court cannot take Centrelink benefits into account in assessing spousal maintenance, the court can take them into account in assessing a property division.
The wife’s evidence was to the effect that the husband assaulted her physically and threatened to kill her on the day of their separation. She said the husband was arrested and charged and he eventually pleaded guilty to assault and criminal damage. She said that the husband was placed on a good behaviour bond and ordered to undertake counselling. That evidence was not challenged and I accept it.
Kennon does not look to the consequences of an assault on a person’s earning capacity. Rightly or wrongly, Kennon only requires an examination of whether or not family violence led to a person’s contributions being more onerous.
In the present case, the family violence occurred on the last day of the relationship. It cannot be said, in those circumstances, that the Kennon principle is satisfied in this case. With respect, it may be time for the Full Court of the Family Court to revisit the Kennon principle, or for the Parliament to make some appropriate legislative amendments. However, I am bound by the law as it presently exists.
I am not persuaded that the wife’s brain injuries have significantly reduced her earning capacity, if her pre-relationship earning capacity is compared with her present earning capacity. The wife had her brain injuries before the relationship began. Even after suffering those brain injuries, the wife was able to work as a health care worker, as a cleaner and, on her own admission, in administration in the husband’s businesses. Physically, I consider that the wife still has a work capacity, albeit at the less well paid end of the spectrum.
It is not clear whether the wife’s post-traumatic stress disorder was caused by the assault by the husband, or by one or more of the many adverse life events that the wife had suffered previously. For the purposes of this proceeding, it actually makes no difference. The court is not required to find the causation of a person’s earning capacity. The court is required to take each party’s earning capacity as it is, and make orders accordingly.
It seems likely that the wife’s psychiatric condition will improve once these proceedings are over, as Dr UU indicated.
However, in my view, the wife will still be left with either no or minimal earning capacity. She is now 47 years old. With the COVID-19 pandemic wreaking havoc in the labour market, particularly for people at the less well paid end of the spectrum, it seems fair to proceed on the basis that the wife will have few employment opportunities in the future, and, even if she is successful in obtaining employment, will have low earnings.
Proposals
As noted above, the wife ultimately proposed that the parties’ combined net assets be split 60:40 in her favour.
The husband ultimately proposed that the parties’ combined net assets be split 80:20 in his favour.
Whether it is just and equitable to alter the parties’ property interests
The parties agreed that it would be just and equitable to alter their property interests in this case. In view of paragraph 42 of Stanford, the fact that the parties are no longer living in a marital relationship and the various findings made above in relation to contributions and future needs, I also consider that it would be just and equitable to alter the parties’ property interests in this case.
What order is just and equitable?
In my view, it is just and equitable that the asset pool be split 60:40 in the husband’s favour, on the basis that the wife indemnify the husband for school fees and all other debts lie where they fall, and the wife’s part-property settlements be included in her 40%.
There were initial contributions from both parties, although the husband’s in particular cannot be quantified with any precision. The husband made substantial contributions during the seven year relationship, particularly in the form of major financial support of the wife’s three children, including payment from the matrimonial funds of their private school fees and payment for interstate sporting trips. Moreover, since separation, the husband has made the substantial contribution of paying for the mortgage and insurance on the former matrimonial home for almost three years while the wife lived in it rent free. The former matrimonial home is presumably a nice place to live, as it has an agreed value of $1,800,000. Meanwhile, the husband has been living in much less comfortable circumstances, at his own expense. The contributions, in my view, are 70:30 in the husband’s favour.
On the other hand, the future factors favour the wife. She has a much lower earning capacity than the husband. The future factors warrant a 10% adjustment in the wife’s favour.
Therefore, on balance, the wife should receive $1,057,143.20, including the amounts she has already received as part property settlements. From that sum, the wife must pay all of her debts including the school fees.
The husband should receive $1,585,714.80.
These figures will enable the husband to retain his business. It is unclear whether either party will be able to retain the former matrimonial home, or whether it will have to be sold.
In the circumstances, I will make orders for the wife to pay the school fees and her debt to A Pty Ltd, and indemnify the husband for the school fees. I will also order that the husband ensure that B Pty Ltd repay the $35,750 it owes the wife within seven days. Otherwise, I will hear counsel on the appropriate form of the orders in the light of these reasons.
I certify that the preceding one hundred and forty-eight (148) paragraphs are a true copy of the reasons for judgment of Judge Riley
Associate:
Date: 25 May 2020
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
Legal Concepts
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Remedies
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Injunction
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Fiduciary Duty
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