BALDOCK & CAIRNEY

[2020] FCCA 1547

FEDERAL CIRCUIT COURT OF AUSTRALIA

BALDOCK & CAIRNEY [2020] FCCA 1547

Catchwords:
FAMILY LAW – Property – application for alteration of property interests for de facto relationship pursuant to s.90SM – where parties have jointly purchased and contributed to real property – where parties contested contributions to various chattels – where parties disputed how to share growth in superannuation during relationship – where the earnings on the superannuation funds attributable to the period of the relationship were similar.

Legislation:

Family Law Act 1975 (Cth) ss.90SF(3), 90SM

Applicant: MS BALDOCK

Respondent: MR CAIRNEY

File Number: ADC 2829 of 2019

Judgment of: Judge Young

Hearing dates: 27 & 28 May 2020

Date of Last Submission: 28 May 2020

Delivered at: Darwin

Delivered on: 2 June 2020

REPRESENTATION

Counsel for the Applicant: Mr I Roberts

Solicitors for the Applicant: Adelaide Family Law

Counsel for the Respondent: Ms J Miller

Solicitors for the Respondent: AK Family Law

ORDERS

THE COURT DECLARES BY CONSENT THAT:

1. That pursuant to s90RD(1) of the Family Law Act a de facto relationship existed between the parties from 2012 until 18 April 2018.

THE COURT ORDERS:

1. That within 7 days (“the settlement date”) the net proceeds of sale of the property situate at A Street, Suburb B, namely the $53,651.20 remaining in the trust account of C Conveyancing be divided between the parties in the following manner:

   (2.1)As to the Applicant the sum of $41,824 and to the Respondent the sum of $11,827.20.

AND THE COURT FURTHER ORDERS BY CONSENT:

1. That the Applicant do indemnify the Respondent and keep him forever indemnified with respect to all instalments of principal and interest pursuant to Memorandum of Mortgage No. ...35 (“the Applicant’s mortgage”).

2. That within 120 days (“the second settlement date”) the Applicant do cause to be discharged the Applicant’s mortgage and the Commonwealth Bank loan with account number ...94 (“the Applicant’s loan”);

3. That save and except as is necessary to comply with this order, that pending discharge of the Applicant’s loan, the Applicant be restrained and an injunction be granted restraining her from selling, further mortgaging, encumbering or in any other way dealing with the property at D Street, Suburb E in the State of South Australia with Certificate of Title reference Volume ...0 Folio ...3 (“the D Street, Suburb E home”).

4. That should the Applicant be unable or unwilling to discharge the Applicant’s loan on or before the second settlement date the then the D Street, Suburb E home shall be placed on the market for sale within a further 21 days with the sale to be conducted by Auction no later than 4 weeks after being placed on the market. Once the said property is sold the Applicant’s Loan shall be discharged from the sale proceeds.

5. That the Respondent do indemnify the Applicant and keep her forever indemnified with respect to all instalments of principal and interest pursuant to Memorandum of Mortgage No. ...08 (“the Respondent’s mortgage”).

6. That on the second settlement date, the Respondent do cause to be discharged the Respondents mortgage and the Commonwealth Bank loan with account number ...86 (“the Respondent’s loan”).

7. That save and except as is necessary to comply with this order, that pending discharge of the Respondent’s loan, the Respondent be restrained and an injunction be granted restraining him from selling, further mortgaging, encumbering or in any other way dealing with the property described as F Street, Suburb G in the State of Victoria (“the F Street, Suburb G property”).

8. That should the Respondent be unable or unwilling to discharge the Respondent’s loan on or before the second settlement date the then the F Street, Suburb G property shall be placed on the market for sale within a further 21 days with the sale to be conducted by Auction no later than 4 weeks after being placed on the market. Once the said property is sold the Respondent’s Loan shall be discharged from the sale proceeds.

9. That the Applicant make available for collection by the Respondent or his nominee within 7 days his motorcycle with registration number ... and that it be in good order and repair.

10. That within 28 days the Applicant do all such things necessary to transfer any ownership right or entitlement she may have in the H Timeshare held by the parties jointly in to the sole name of the Respondent.

11. That parties do all such things necessary to sell the lease of site ... at the J Caravan Park together with any and all ownership of the caravan and structures upon said site (“the caravan”) and do execute any document necessary to give effect to same.

12. That in default of the parties agreement as to the reserve price for the sale of the caravan, that the reserve price be $13,000.

13. That the proceeds of sale of the caravan be applied as follows:

    (15.1)As to any outstanding fees due and payable to the J Caravan Park for site ...;

    (15.2)As to any sales and marketing costs;

    (15.3)As to 50% of the balance then remaining to the Applicant.

    (15.4)As to 50% of the balance then remaining to the Respondent.

14. As to Baldock-Cairney Trust (“the Trust”):

    (16.1)The Applicant shall on the settlement date within 28 days of this Order resign as a trustee of the Trust.

    (16.2)The Applicant shall on the settlement date surrender her power of appointment in the Trust in favour of the Respondent.

    (16.3)The Applicant shall on the settlement date transfer and/or assign any credit loan account which she may have in the Trust to the Respondent.

    (16.4)Following the date of this Order, the Applicant and the Respondent shall hereafter be restrained and an injunction is granted restraining them from taking any action so as to cause a distribution of capital or income to be made to the Applicant.

    (16.5)Following the date of this Order, if any distribution of income or capital is made to the Applicant as a beneficiary of the Trust, then the Respondent shall pay any income tax assessed against the Applicant as a beneficiary of the Trust.

    (16.6)The Respondent hereby indemnifies and shall forever indemnify the Applicant with respect to any of the debts or liabilities of the Trust including (but not limited to) any debit loan account which the Applicant may have in the Trust.

15. That within 28 days the Applicant do all things necessary and sign any such documents as may be required to assign her interest in the K Franchise to the Respondent.

16. That henceforth the real property and all personalty in the possession of the Applicant including but not limited to the Applicant savings, superannuation entitlements, long service leave entitlements, life insurances, shares and investments and any furniture, furnishings and effects in the possession of the Applicant shall vest absolutely in the Applicant free of all further claim or demand or right or entitlement of the Respondent.

17. That henceforth the real property and all personalty in the possession of the Respondent including but not limited to the Respondents savings, superannuation entitlements, long service leave entitlements, life insurances, shares and investments and any furniture, furnishings and effects in the possession of the Respondent shall vest absolutely in the Respondent free of all further claim or demand or right or entitlement of the Applicant.

18. That it be a condition of these Orders that if either party shall refuse or neglect to execute any Memorandum of Transfer or any other document necessary to give effect to the terms hereof in the proper form within seven days after the same shall have been tendered to that party by or on behalf of the other party then in such case a Registrar or Deputy Registrar of the Federal Circuit Court of Australia, upon proof by affidavit of such refusal or neglect, is hereby appointed to execute and if in his or her opinion it shall be necessary to do so, to settle the same and do all such other acts and things and execute such other documents as shall be necessary to give full force and effect hereto.

19. That each party do release the other party from any liability for any claim that either one may have against the other.

20. That each party shall pay their own costs of and incidental to these proceedings but the transferee in each case shall pay the cost and disbursements of and incidental to any transfer to give effect to the terms of this order.

IT IS NOTED that publication of this judgment under the pseudonym Baldock & Cairney is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT DARWIN

ADC 2829 of 2019

MS BALDOCK

Applicant

And

MR CAIRNEY

Respondent

REASONS FOR JUDGMENT

Ex-Tempore

1. These reasons for judgment were delivered orally. They have been corrected from the transcript. Grammatical errors have been corrected and an attempt has been made to render the orally delivered reasons amenable to being read.

2. This is an application for alteration of property interests pursuant to section 90SM of the Family Law Act. The de facto wife, who I will call the wife without intending any disrespect, is 53 years old. The de facto husband, who similarly I will call the husband, is 46 years old. There are no children of the relationship though both have children of previous relationships and in the case of the wife the children are adults. The children of the husband appear to have lived with their mother throughout the subject relationship.

3. The parties began to live together in 2012 in Town L.  It seems they moved about, essentially following the husband’s transfers of employment with his employer, Employer M.  He was employed as I understand it as a tradesman.  Judging by the evidence the wife invariably found employment as well when she accompanied the husband on his transfers. 

4. It seems for the most part of the relationship and certainly before about October 2014 they lived in accommodation provided by the husband’s employer, though there were short periods when they rented private accommodation.  It also appears from the evidence that in the earlier years of the relationship, before about October 2014 when they purchased a property jointly, the parties shared expenses but did not otherwise maintain joint finances. 

5. It is agreed the de facto relationship lasted from 2012 to separation in April 2018, a period of about five years and nine months.  As I have noted for a significant part of the beginning of the relationship, a little more than two years, they shared expenses but did not maintain joint finances.

6. At the commencement of the de facto relationship each of the parties owned real estate.  The wife owned a property at D Street, Suburb E which was tenanted throughout the relationship.  The husband owned a property at F Street, Suburb G which was also tenanted. 

7. Neither party suggests they made any contributions, financial or non-financial, to these properties owned by the other party, except in the case of the husband.  He says that he did some gardening work and also knocked down a wall at the wife’s property towards the beginning of the relationship.  I accept that he did some work but I am not able to put any real value on it and I do not consider it was a significant contribution. 

8. In relation to another property partly owned by the wife at N Street, this is a property the wife received after separation.  It is jointly owned by the wife with her father and the husband does not claim to have made any contribution to this property. 

9. The parties jointly purchased a home at A Street, Suburb B in 2014.  The purchase price was $455,000 and $422,000 was borrowed. Both parties say they had saved the deposit and there is nothing to suggest their contribution to this property was anything other than equal. 

10. The parties contested contributions to various chattels and other property.  It was not in question that the husband owned a motorbike before the relationship. 

11. In May 2014 the husband received payments from his employer of 19 years, that is, an employment that began in about 1996 with Employer M.  He was made redundant in 2014 and received a number of payments related to his redundancy.  He received a payment of $24,000 in cash and it was not in question that $16,000 of that was used to purchase a business and franchise called K Franchise.  The husband valued this business in his financial statement at $25,000 but it was evident that included in the value were tools and equipment independently valued at about $11,000, so in that assessment of value of $25,000 from the husband there is to be included another item which was independently valued, being tools and equipment. 

12. The business itself was not valued but I have treated the husband’s figure of $25,000 as an admission against interest, including the $11,000 for tools and equipment that I have mentioned.  By way of a rough check the franchise itself, apparently without any equipment or anything else apart from the franchise rights, was purchased for $16,000.  The tools and equipment as I mentioned have been valued for about $11,000 so I can consider that the husband’s admission is probably somewhere within the ballpark. 

13. Overall, taking into account that this redundancy money was, I assume, a function of the years of the husband’s employment with Employer M and compensation for future loss of earnings, I consider that the wife’s contribution to this fund and in turn the acquisition of the business was a small contribution at best. 

14. Another aspect of the husband’s redundancy was an entitlement to what was called in evidence the Super Fund O.  The evidence about this was slight but it was not challenged that contributions were made to this fund over the years of the husband’s employment apparently by the employer, though possibly some contributions were made by the husband himself – his evidence about that was vague.  Some $32,000 of that fund being, as I understand it, the entirety of the fund was drawn down by the husband in 2018 after separation.  He said $18,000 of that has been spent, including about $12,000 spent on legal fees for these proceedings.  The residue of the money is $14,297, which appears in the balance sheets inserted at the end of these reasons for judgment.

15. Notwithstanding that $12,000 of that fund has been spent on legal fees in these proceedings and notwithstanding the submission made by Mr Roberts for the wife that this should be an add back, I have decided not to add that figure back into the balance sheet because I also take into account that a personal loan of $23,570 stands in the balance sheet as a liability of the wife and her evidence was that that was spent on legal fees.  Taking into account both those matters I will not make any further adjustment and will not make an add back. 

16. Another item in dispute was the jet ski.  As I understood her evidence the wife said she purchased it using money given to her by her father though I notice in her affidavit she said that the money was from her savings.  On the other hand the husband said that he purchased the jet ski from pre-relationship savings.  The wife tendered a contract in evidence that showed her as the only purchaser and I consider that her version is more likely.

17. However, both parties suggested that contributions to this chattel were equal and I have proceeded on that basis.  The wife sought a compensatory payment to her representing half of the value of the jet ski, which stands at $7,500 in the balance sheet. 

18. Another item of dispute was a Motor Vehicle 1 sold by the husband after separation.  It was not challenged that there was an equal contribution to the vehicle.  The wife said that as the husband had received a trade-in on another car for the Motor Vehicle 1 worth $18,000 that amount should be added back into the balance sheet.  The car purchased with the trade-in is now valued less than the financed debt and that car is not included in the balance sheet as its overall value appears to be zero which makes no difference to the balance sheet. 

19. With wasting assets such as cars I think the notion of add back is artificial but I consider that there should be some adjustment to recognise the wife’s contribution to the Motor Vehicle 1.  I also take into account that the wife’s Motor Vehicle 2, which is still in her possession, was purchased around about the same time the husband took possession of the Motor Vehicle 1 and began to use it for himself. 

20. Taking into account both of these factors I think there should be an adjustment in the wife’s favour of $10,000.  This includes a notional payment of $6,000 to take into account her loss of the benefit of the trade-in on the Motor Vehicle 1 added to the half the value of the jet ski, which would see an adjustment to her of approximately $9,750, rounded to $10,000. 

21. Also taking into account that all of the funds used to purchase the K Franchise business were accrued during the husband’s employment and that the bulk of that period of employment pre-dated the relationship, but not entirely, I consider that a total adjustment of $15,000 to the wife is merited.  That payment will be made from the funds presently being held in the trust account being the proceeds of sale of the former matrimonial home.  The end result of that will see the wife paid $41,825 from that fund and the husband will keep the residue of $11,826. 

22. In relation to superannuation the wife submitted that she should share in half the growth of the fund during the period of the relationship.  According to a calculation made by the husband’s solicitor, during the period entirely encompassing the relationship or the financial years from 1 July 2012 to 30 June 2018, in the first years from his employment and in later years apparently from the mowing business, the husband made contributions of $26,539.  There are earnings over this period of $121,850, less fees of $4,706, so that is a total growth in the fund of $143,683. 

23. As the bulk of the earnings on the fund are referrable to pre-relationship contributions and accumulation of superannuation by the husband, I consider that the wife’s approach is wrong in principle.  A division of half and half, as was submitted to be appropriate, would not be just and equitable and I do not propose to follow that approach. 

24. The husband’s approach, on the other hand, was to look at contributions during the relationship only.  The husband made contributions of $26,539, as mentioned, and the wife made contributions of $18,719 during that period.  The sum of those two figures is $45,258.  If there was to be an equalisation that would see, according to the husband’s calculation, a splitting order in favour of the wife of $3,910, which is less than the minimum amount permitted in the regulations for a splitting order.  I do not propose to follow that approach either. 

25. I have approached the question of superannuation in this way.  The wife’s contribution to superannuation during the period of the relationship was $18,719, as noted, and there were earnings of $24,886, less fees of $10,090.  In other words a total growth in the fund over the period of $33,515. 

26. Given that the husband contributed to superannuation from the commencement of his employment with Employer M in about 1996, that is some 22 years to 30 June 2018, the earnings during the relationship could be seen as constituting six twenty-seconds of the total or $39,186.

27. Given that the two figures are $33,515 and $39,186 I see no reason to make any adjustment for superannuation. 

28. Both parties are in good health and employed and neither party sought an adjustment for subsection 90SF(3) factors.  I have not made any orders about the spa or the H Timeshare.  Both parties agree these are worthless but as I understood their final position, each simply said that that those items could rest where they fell.  I understand the agreement of the wife was that the husband should retain the H Timeshare which, as I have said, was said to have no value.  The effect of the orders is set out in the accompanying balance sheets below:

Balance Sheet - before alteration

Description	Wife	Husband	Total
Assets
1	Sale proceeds A Street, Suburb B (jointly held $53,651)	$26,825	$26,826
2	D Street, Suburb E	$260,000
3	N Street, Suburb E (agreed value of wife’s interest in property jointly owned with her father)	$150,000
4	F Street, Suburb G	$350,000
5	CBA account	$445
6	Motor Vehicle 2	$6,500
7	Furniture, domestic items	$1,320
8	K Franchise (including tools and equipment valued at $11,687)	$25,000
9	Personal CBA acc (from Super Fund O)	$14,297
10	CBA acc	$171
11	Westpac acc	$844
12	Husband’s motorbike	$13,000
13	Jetski	$7,500
14	Caravan (jointly owned valued at $13,000)	$6,500	$6,500
15	Business CBA acc	$17,645
16	H Timeshare	nil
17	Spa	nil
Total assets	$451,590	$461,783	$913,373
Liabilities
1	Personal loan CBA	$23,570
2	D Street, Suburb E mortgage	$76,000
3	F Street, Suburb G mortgage	$320,000
4	Zip Pay	$520
5	Debt to caravan park	$3,165	$3,165
Total Liabilities	$103,255	$323,165	$426,420
Net assets	$348,335	$138,618	$486,953
Superannuation
1	Wife	$95,778
2	Husband	$288,000
Total Superannuation	$95,778	$288,000	$383,778
Total assets and superannuation	$444,113	$426,618	$870,731

Balance Sheet - after alteration

Description	Wife	Husband	Total
Assets
1	Sale proceeds A Street, Suburb B (jointly held $53,651)	$41,825	$11,826
2	D Street, Suburb E	$260,000
3	N Street, Suburb E (agreed value of wife’s interest in property jointly owned with her father)	$150,000
4	F Street, Suburb G	$350,000
5	CBA account	$445
6	Motor Vehicle 2	$6,500
7	Furniture, domestic items	$1,320
8	K Franchise (including tools and equipment valued at $11,687)	$25,000
9	Personal CBA acc (from Super Fund O)	$14,297
10	CBA acc	$171
11	Westpac acc	$844
12	Husband’s motorbike	$13,000
13	Jetski	$7,500
14	Caravan (jointly owned valued at $13,000)	$6,500	$6,500
15	Business CBA acc	$17,645
16	H Timeshare	nil
17	Spa	nil
Total assets	$466,590	$446,782	$913,372
Liabilities
1	Personal loan CBA	$23,570
2	D Street, Suburb E mortgage	$76,000
3	F Street, Suburb G mortgage	$320,000
4	Zip Pay	$520
5	Debt to caravan park	$3,165	$3,165
Total Liabilities	$103,255	$323,165	$426,420
Net assets	$363,335	$123,617	$486,952
Superannuation
1	Wife	$95,778
2	Husband	$288,000
Total Superannuation	$95,778	$288,000	$383,778
Total assets and superannuation	$459,113	$411,617	$870,730

I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for judgment of Judge Young

Associate: 

Date: 11 June 2020