Bartlett & Gibson
[2007] FamCA 113
•1 March 2007
FAMILY COURT OF AUSTRALIA
| BARTLETT & GIBSON | [2007] FamCA 113 |
| FAMILY LAW - PROPERTY – Settlement in relation to a short marriage – significant initial financial contributions by both parties – husband had a significant contribution which ‘fell-in’ during cohabitation – parties both made significant contributions throughout the relationship – loan from husband’s mother treated as a gift under Kessey – questions of ‘waste’ not made out under Kowaliw – wife was found not to have disposed of shareholding in her sister’s company – costs in the children’s proceedings |
| Family Law Act 1975(Cth) |
Kowaliw & Kowaliw (1981) FLC 91-092
Chorn & Hopkins(2004) FLC 93-204
Townsend & Townsend (1995) FLC 92-569
Jones & Dunkel (1959) 101 CLR 298
Af-Petersens & Af-Petersens (1981) FLC 91-095
W & W unreported judgment of the Full Court, delivered 28 January 1997
Kessey & Kessey (1994) FLC 92-495
| APPLICANT: | Mr Bartlett |
| RESPONDENT: | Ms Gibson |
| FILE NUMBER: | CAF 710 of 2004 |
| DATE DELIVERED: | 1 March 2007 |
| PLACE DELIVERED: | Canberra |
| JUDGMENT OF: | Faulks DCJ |
| HEARING DATE: | 28-30 March 2006 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Millar |
| SOLICITOR FOR THE APPLICANT: | Farrar, Gesini and Dunn |
| COUNSEL FOR THE RESPONDENT: | Mr Ackman QC |
| SOLICITOR FOR THE RESPONDENT: | Crowley, Clifford and Simpson |
| FAMILY COURT OF AUSTRALIA AT CANBERRA |
FILE NUMBER: CAF 710 of 2004
| MR BARTLETT |
Applicant
And
| MS GIBSON |
Respondent
REASONS FOR JUDGMENT
Foreword
This is a case concerning property proceedings between Mr Bartlett, the applicant husband, and Ms Gibson, the respondent wife. Throughout this judgment from time to time reference will be made to the parties as the “husband” and the “wife”. This is for convenience only and I do not intend any offence to either party by doing so.
The husband is 38 years of age, and is currently unemployed. Prior to these proceedings the husband worked as a baker in C Pty Ltd, a business in which the husband purchased a half share in 1995. The wife is currently 34 years of age and works as a waitress. From 1993 until these proceedings the wife had worked with the Department of Defence.
The marriage was one of relatively short duration. The parties commenced cohabitation in late 1998 and married on 10 August 2002. There is some dispute about when they finally separated. It appears that they separated under the one roof some time in 2004 but continued to live in the same property until February 2005.
There were previously children’s matters in dispute however these were resolved by determination of this Court on 21 February 2006 whereby it was ordered that the three children of the parties, L, born in July 1999 (aged almost eight), B, born in October 2001 (aged five and a half) and N, born in February 2003 (aged four) would live in a week-about relationship with their parents. Costs in the residence matter were also reserved to this matter.
I wish also to record at this point my apology for the delay in delivery of judgment. I accept that the delay has undoubtedly caused the parties a level of emotional anguish and possibly some financial difficulty. I offer my sincere apologies.
Orders Sought
The respondent wife did not seek to provide precise of Orders but took the position that she should be awarded particular items of property (about 55 per cent of the pool) as set out at Endnote 1. Endnote 1 The orders sought by the respondent husband are set out at Endnote 2. He seeks 60 per cent of the assets of the parties.Endnote 2
Brief Background
The parties met when they were both working at a Hotel in Canberra. They subsequently began to live together in late December 1998 when it was discovered that the wife was pregnant with the child L. They married in August 2002 and separated at Easter 2004 although they continued to live under the one roof until 2 February 2005 when following an order made by me in relation to an interlocutory application the husband left the home and went to live with his mother.
Prior to the parties’ beginning to live together, the husband had entered into a partnership to buy a business known as C Pty Ltd. This was bought in 1995 for a total price of about $95,000. The wife in her affidavit asserts that as at 30 June 1999 the value of the assets of the partnership was $94,657 with liabilities of $22,452, or net assets of $72,205.[1]
[1] Wife’s affidavit of 20 January 2006 at paragraph [36](e)
It is common ground that there was some borrowing associated with the purchase. It is difficult to be precise about the value of the contribution of the business from the husband. The information set out above is probably a reasonable summary in the circumstances.
The husband had also bought in conjunction with two other partners an interest in two properties in G and H in 1992 and 1993 respectively.[2] These seem to be substantially acquired with borrowed money. The wife maintains they were negatively geared and in fact this is corroborated in part by the husband’s affidavit which refers to a shortfall each month of about $200.[3] This accords with the wife’s assessment[4] that in 1999 the husband’s share of the loss on the properties was $2,638.
[2] according to the husband’s affidavit of 9 December 2005 at paragraphs [6](e) and (f)
[3] Husband’s affidavit of 9 December 2005 at paragraph [6](e)
[4] Wife’s affidavit of 20 January 2006 at paragraph [36](c)
He also bought a shop in the F Shopping Centre in mid-1996. He describes that it was purchased with money from the Advance (subsequently St George) Bank, a loan from his mother ($100,000 but more of this later) and some vendor finance ($5,000)[5]. The husband asserts that by December 1998 – the date of cohabitation – the debt outstanding to the bank had been reduced to $18,096 but there is no evidence of the value of the premises, (net or gross) at the relevant time. Given the proximity of the purchase to the start of cohabitation however, and given the fact that little if anything was done to it during the period between purchase and cohabitation, the figures associated with the purchase less the amount paid off prior to cohabitation provide a reasonable measure of the nature of the contribution made by the husband.
[5] Husband’s affidavit of 9 December 2005 at paragraph [6](d)(i)
He also received during the course of cohabitation $10,000 from his sister in respect of an interest he asserted in a property in P, ACT in about 1999.[6] He also had superannuation which he valued at about $8,000 in a self-managed fund.
[6] Husband’s affidavit of 9 December 2005 at paragraph [6](g)
At or about the time of cohabitation the wife received the proceeds of a personal injuries claim. This was some $175,150. She asserts that she had a small amount of savings[7] and that she owned a Barina subject to a hire-purchase agreement. The husband asserted that the wife had no equity in the Barina at the time of cohabitation.[8]
[7] Wife’s affidavit of 20 January 2006 at paragraph [34]
[8] Husband’s affidavit of 9 December 2005 at paragraph [7]
She also had some furniture and the husband asserts, (and the wife does not deny) that, she had 201 out of 1,002 issued shares in Bowie Smith Pty Limited. This was a company owned essentially by the wife’s sister
The wife also had some superannuation which seems to have been worth about $26,000 at the time cohabitation began. She had commenced employment in the Commonwealth Public Service in 1993 and remained working there until just after separation when she took leave without pay.
The husband began proceedings in this court when he filed an application on 11 November 2004 seeking orders about the children and also about property.
I do not propose to outline all of the interlocutory and interim applications that were filed by the parties except to record that they were many and significant. The husband pursued through various applications attempts to demonstrate that the wife had some beneficial interest in Bowie Smith Pty Limited. This appears to have been on the basis that the wife disposed of an interest in that company for significantly less than it was worth, thereby either generating (apparently) some constructive or resulting trust in her favour with the company or with her sister or (alternatively) simply warehousing her interest until the completion of these proceedings. The net effect of these investigations is set out in several judgments delivered by me during the course of the proceedings and demonstrates in my opinion that there was no untoward activity on the part of the wife and that she has no outstanding equitable or other interest in the company.
The proceedings about the children were resolved by orders from me which in effect meant that the children lived equally with each of the parents.
In 2001 it appears that the other partner was bought out of the business in C Pty Ltd. It is agreed that the husband and wife became joint owners of the property. The husband says that he continued to run the business.[9] He says “[The wife] was a partner but she had no practical involvement in it”.[10] She says that “I had purchased his business partner’s interests (half) in the business”. She comments, and he confirms, that he was heavily involved in the running of the business and as a consequence she says “… he was rarely around to help me with the children”. The husband asserted to the contrary in relation to the children but I accept the wife’s evidence on this matter.
[9] Husband’s affidavit of 9 December 2005 at paragraph [18]
[10] Husband’s affidavit of 9 December 2005 at paragraph [18]
In July 1999 the parties bought the home at K for some $243,000. The wife asserted that she applied her accident money to the purchase of that property.[11] The husband says only $150 000 went in from that source.
[11] Wife’s affidavit of 20 January 2006 at paragraph [35]
For his part the husband increased his line of credit with St George Bank by some $72,000 to make up the difference between the wife’s contribution and the price paid. I note in passing that the discrepancy between the money apparently raised in the way indicated by the husband and the alleged purchase price of $243,000 would represent the difference between $150,000 that the husband says the wife put into the property and the amount of her accident claim. I believe that the wife’s evidence is preferable on this question.
In 1999 in addition, the husband sold his shop in F for $221,500.
He repaid St George Bank and that left he says[12] $125,000. He says he did not repay his mother the money that he had borrowed from her. He asserted further that he paid off the wife’s car ($13,000). I accept his evidence rather than the wife’s on this point. He put the balance of about $112,000 into the purchase of the property D1 for $225,000. This was the first of a number of purchases in that area.
[12] Husband’s affidavit of 9 December 2005 at paragraph [14]
Although the details vary slightly[13] it seems clear that most of the money that was expended in the purchase of the parties’ interest in the D1 property was borrowed. The husband asserts that the process of borrowing and the business associated with it was all his own work. That may or may not be the case. The wife was certainly engaged substantially in the care of the children and any credit the husband may seek to claim in relation to his superior involvement in the business activities in my opinion, is offset by the time and effort the wife spent in being the principal parent.
[13] Compare the wife’s affidavit of 20 January 2006 at paragraph [64] with that of the husband’s affidavit of 9 December 2005 at paragraph [15]
In 2000 the husband asserts[14] that he bought eleven home units in N in joint names with his wife for $420,000. The money to purchase the units was substantially borrowed and the units were subsequently sold in 2001 for $650,000, the profit from which he asserts was invested in the purchase of the D3 property in the parties’ joint names for $465,000, with an additional loan being taken out.[15] The husband asserts that he did all the research and negotiated the finance. The wife’s version of the purchase of the D3 property is different and she asserts that she was involved in the process.
[14] Husband’s affidavit of 9 December 2005 at paragraph [16]
[15] See husband’s affidavit of 9 December 2005 at paragraphs [16] and [17]
For the purposes of these proceedings it does not matter which of those versions is correct, in my opinion contributions during the course of the time the parties were together ought properly to be regarded as equal - subject to some matters to which I will refer in due course.
To further complicate the D property enterprises on or about 1 July 2002[16] the parties bought the D2 property jointly with Mr and Mrs R for $485,000.[17] The husband asserts that the money to pay for their share was borrowed entirely. The wife agrees.
[16] The wife says that this occurred in May 2002 – see wife’s affidavit of 20 January 2006 at paragraph [66]
[17] The agreed value is of the half share of the husband and the wife
In May 2002 (or perhaps September 2002 according to the wife[18]) the parties bought a block of four home units in Y for $421,000. The wife asserts there was a short-fall which came from family finances. The husband does not mention this but acknowledges that most of the purchase price was borrowed.[19] However it is common ground that they were subsequently sold at a profit in May 2004 for $840,000. These funds were used to purchase the property in J and the balance was put into a trust account with M Lawyers.
[18] Wife’s affidavit of 20 January 2006 at paragraph [70]
[19] Husband’s affidavit of 9 December 2005 at paragraph [19]
The parties then invested in some storage units in J for a purchase price of about $435,000 in April 2004. The husband asserted that it was the intention of the parties that the profits from the sale of the Y properties would finance the purchase.
The money was apparently so applied leaving about $100,000 which was initially placed in the trust account of M Lawyers. Subsequently that was subject of my orders on an interim basis whereby some of that money was paid out.
In 2002 the H property referred to above was sold with a minor profit but the sale had the effect of clearing the debt on the G property. The house on that property was then demolished and two residences were constructed, one of which was sold in September 2003 for $552,500. That cleared the St George Bank debts.
In December 2003 the other unit at G was sold for $540,000 and each of the partners (not the wife in this instance) got about $177,000. The husband’s share was applied to reduce the joint debt levels of the wife and him.
The husband asserts (or concedes[20]) that the cost of all the construction had been borrowed.
[20] Husband’s affidavit of 9 December 2005 at paragraph [23]
Various motor vehicles were acquired. I have already made mention of the Barina. In 1998 the husband sold the Honda Accord which he owned before the parties lived together, (he says for about $22,000[21]) and from the proceeds he says he bought a Harley Davidson motor cycle for $21,000. After they separated he sold it for $12,000.
[21] Husband’s affidavit of 9 December 2005 at paragraph [24]
He sets out[22] various sums of money that he says he owes to relatives and friends.
[22] Husband’s affidavit of 9 December 2005 at paragraph [24]
The wife asserts[23] that they bought in March 2000 a white Volvo Sedan for $60,000 with a trade-in from her Barina. (This Barina the husband asserted he had paid off as is set out above.) In 2002 the wife asserts that the white Volvo was sold and the blue Volvo was acquired for $67,995.22 less a small cash deposit. She says that up until early 2005 those payments were deducted out of the business account with St George Bank. That car has now been sold. It appears that this is the motor vehicle referred to in paragraph 36(a)(ii) of the husband’s affidavit as being worth about $35,000. I made orders on 7 April 2005 releasing almost $15,000 from the trust account to enable the wife to make lease payments up to and including June 2005. The car was sold by the wife and I accept that the net proceeds were $12,000.[24]
[23] Wife’s affidavit of 20 January 2006 at paragraph [71]
[24] Wife’s Case Outline document at page 11, filed 28 March 2006
There is also some confusion about a Volvo XC90 four wheeled drive station wagon that the husband drives. This he says has an agreed value of $60,000 but that the amount outstanding on the lease is about $84,000.[25] The husband agrees that the acquisition of this car was an unfortunate error of judgment.
[25] Husband’s affidavit of 9 December 2005 at paragraph [36](a)(i). However the wife’s expert valued the car at $38,000 – see affidavit of … dated 21 March 2006
The wife refers to the same transaction in paragraph 92 of her affidavit in which she asserts that the vehicle was bought (without consulting her) for $97,000. The wife denies that there had been a contract to purchase the car prior to separation.
On balance I accept the husband’s explanation in relation to the purchase of the car and although it is not an asset as such it should be included in a pool of property in liabilities of the parties.[26] It was argued that it will at some stage become an asset. However, to some extent I must take a snapshot of the assets and liabilities of the parties at some point of time and I do this now.
[26] This includes the evidence that the wife test drove the car prior to purchase.
The husband says[27] prior to and since separation all rental income from properties has been paid into a joint bank account with St George Bank from which mortgage payments are met. He asserts that he has managed all of these properties and the wife claims through her counsel that, in effect, the husband has mismanaged these properties and that debts have arisen since separation for rates and other matters which ought properly to be laid at his door.
[27] Wife’s affidavit of 20 January 2006 at paragraph [29]
I do not accept that submission. It may be that the husband has not been as assiduous in his care of the properties as the most enthusiastic investor might be, but in my opinion nothing has been proved which would demonstrate that his activity (or perhaps his inactivity) amounted to anything in the order of “waste” within the term that that is understood at law and in particular in the sense referred to in Kowaliw & Kowaliw.[28]
[28] (1981) FLC 91-092
Property Pool
The property pool consists primarily of items which had been acquired by the parties during the relationship. The values of most of these were agreed however there were a number of items in dispute.
The agreed property pool consists of:
The K property (j) $480 000 The J property (j) $440 000 The D1 property (j) $300 000 The D2 property (j) $300 000 The D3 property (j) $470 000 Volvo (w) $12 000 Harley Davison proceeds (h) $12 000 Furniture, furnishings and effects (h) $4 855 Furniture, furnishings and effects (w) $4 170
During the period for which the judgment has been reserved, a number of applications have been brought about because of the loan account arrears of the parties and the non-payment of outstanding rates. This resulted in my discharging $15,000 from WL and Co account to urgently pay rates on 25 September 2006. It has also resulted in my making orders for the sale of the D3 property.
Superannuation
Both parties have superannuation. The wife has significantly more than the husband. The husband has been largely self-employed, and currently has $3,832 in superannuation. The wife has $72,639 in the PSS from her employment with the Department of Defence of which $26,000 was brought to the relationship after her commencement of employment in 1993.
The value of each of the party’s superannuation should be brought into account and there is no reason in this matter to deal with it other than in a total list of the property of the parties because its comparative value is small. In the wife’s case the sum involved will not be accessible for some time but such is also the case with the husband’s superannuation. In each case the amount is reasonably identifiable and should be added to the pool[29].
Disputed Items
[29] I make this determination conscious of the decision of the Full Court in Coghlan & Coghlan(2005) FLC 93-220 but determine as I have in any event.
Wife’s Shares in Bowie Smith Pty Ltd
The wife’s sister, Ms Bowie, owns a company, Bowie Smith Pty Ltd, which she maintains was established to fund her retirement. It has quite substantial property holdings in Sydney and V. Ms Bowie has also had her brother and sister, (the respondent) hold positions in the company for a number of years. The wife held some shares in the company.
Substantial cross-examination was directed to the wife’s possible beneficial interest in her sister’s company. Many interlocutory matters had been directed to this as well.
I listened carefully to the evidence before the Court and in particular to the cross-examination of the wife and of her sister, Ms Bowie. The physical evidence presented relating to share transfers and the like may reasonably have generated suspicion in the mind of a reasonable and objective bystander. However explanations were offered for each of the relevantly “suspicious” events and on this matter I accept the evidence of Ms Bowie and the wife. Their sworn evidence (which I accept) is that the wife has no interest and had no beneficial interest in the company.
Money from C Pty Ltd
The husband withdrew money from the business. It seems that it was about $31,000 or $34,000. In the end however there appeared to be agreement that most of the money returned to the business. It was agreed that $7,500 should be added back against the husband.
Share Trading
It is asserted that the husband held shares which at separation were worth $15,000 and are currently worth $6,000. As such, the wife sought that $9,000 be added back to the property pool.[30]
[30] Transcript of 30 March 2006, page 16 lns 43-48
It was argued strenuously by Mr Ackman QC that there should be some add-back in relation to this. However in my opinion waste was not made out. I include the shares at the figure of $3,300.
Parties’ Legal Fees
The figures for the parties’ legal costs were agreed and in my opinion are appropriately excluded from the table of the assets of the parties. The principles enunciated by this court in Chorn & Hopkins[31] and Townsend & Townsend[32] apply. There is no reason why one should be put in and the other excluded. However there is no evidence which I accept that any of the parties’ pre-separation assets were applied to costs and in broad terms I accept the submissions of Mr Millar on this matter[33] with the rider that the wife’s costs also should not be added back as they were borrowed. The determination of how the horrendous costs in this matter are to be attributed is a consideration awaiting an application once this judgment has been delivered. I am seriously disturbed that the parties have felt it to be appropriate to dissipate virtually all their assets in the vindication of their respective positions.
[31] (2004) FLC 93-204
[32] (1995) FLC 92-569
[33] Transcript of 30 March 2006, page 27
Parties’ Tax Refunds
There is no reason why the tax refunds of either of the parties received in respect of the time when they were together should be treated other than as assets of the parties and in effect to the extent that they were received and kept by the parties involved a pre-emptive division of property. However there were arguments about the purposes to which the funds were applied and there is force in the submission of Mr Millar that if I am to add back the husband’s tax refund I should also add back not only the wife’s tax refund but also the sums she received for leave at the end of her employment and a lump-sum payment from Centrelink of $6,900.[34] If I were to do this, the add-backs would essentially cancel themselves out.
[34] See transcript of 30 March 2006, page 28
I am not obliged to divide all the property of the parties. I am not obliged to engage in some futile mathematical exercise dissecting and analysing every financial transaction of the parties. I am only to make orders if it would be just and equitable to do so.
In this matter a number of matters have been floated as either potential assets or liabilities. In a number of cases no satisfactory evidence has been produced to enable me to reach a satisfactory conclusion about how the assertion might be resolved. I have attempted to muster as many of these assertions as I can and to make, where I can, determinations between the parties. However some were raised, neglected and I can only assume abandoned. Where I have not included an asset or a liability it can be assumed that I have not been satisfied on the evidence or from the submissions of counsel that it would be just and equitable for me to make an order in relation to it.
In this regard I take some comfort from their Honours in the unreported decision of W & W[35]
“Such findings in our opinion misunderstand the obligation which trial judges have to weigh and assess each party’s contribution under s 79(4) 9a), (b) and (c) and to take proper account of the relevant s 75(2) factors to produce a just and equitable outcome as regards their property. The balancing process is not to be undertaken in the same way as the preparation of a balance sheet, in which there are a series of debits, credits, set-offs and contras.”
[35] Unreported judgment of their Honours Baker, Lindenmayer and Smithers JJ in Full Court, 28 January 1997
The tax refunds and associated payments should not be added in.
Mr M Bartlett’s Trust Account
Another matter which was the subject of dispute (although subsequently appears to no longer be a matter in dispute) related to Mr M Bartlett’s trust account. The position of the wife at an early point in the proceedings was that the husband had used the account of his brother who had a disability for his own purposes. I was given a document which summarised certain transactions in a trust account held by the husband for his brother. It was suggested that some $30,000 had been applied by the husband from this source for his own benefit. It was therefore suggested that he was other than a trustee for the account and that the account ought to be brought into account as property of the husband or alternatively that it was a resource that the husband might draw upon.
This was the subject of significant debate between Mr Ackman QC on behalf of the wife, and me during the course of the proceedings. It was suggested by Mr Ackman QC that the rule in Jones & Dunkel[36] meant that the failure by Mr Millar to provide what Mr Ackman QC submitted should be satisfactory evidence to explain the absence of Mr M Bartlett and the failure to call Mr M Bartlett in some way supported the proposition for which Mr Ackman QC was contending.
[36] (1959) 101 CLR 298
As appears from the transcript[37] I suggested that the issue needed to be resolved after the cross-examination of the husband.
[37] See transcript of 29 March 2006, page 12
Towards the end of that cross-examination[38] I drew Mr Ackman QC’s attention to the fact that he had not directed any cross-examination to the husband about this issue. I put to Mr Ackman QC as follows
[38] Transcript of 29 March 2006, page 51
“His Honour: …I take it that the Jones & Dunkell point has gone away has it, as you asked no questions in cross-examination directed to that point at all?
Mr Ackman QC: That’s a fair statement, your Honour”
His Honour: So that’s no longer an issue?
Mr Ackman QC: Given that I didn’t cross-examination the husband about it then I [sic] can hardly be relevant as to whether his brother was called or whether he wasn’t. …
Mr Ackman QC: I hate to make formal concessions but I think I’m forced to, your Honour”.
No part therefore of the money that the husband withdrew from the account of his brother however it may be categorised will therefore be brought into account as property.
The revised property pool is:
The K property (j) $480 000 The J property (j) $440 000 The D1 property (j) $300 000 The D2 property (j) $300 000 The D3 property (j) $470 000 Volvo (w) $12 000 Harley Davison proceeds (h) $12 000 Furniture, furnishings and effects (h) $4 855 Furniture, furnishings and effects (w) $4 170 Wife’s superannuation $72 639 Husband’s superannuation $3 832 Husband’s withdrawals from C Pty Ltd (h) $7 500 The T Shares $3 300 Husband’s Volvo $38 000 $2 148 296
Liabilities
There were a number of agreed liabilities and some disputed liabilities.
The non-contentious liabilities were:
Mortgage on the J property (j) $306 951 Mortgage on the K property and the D3
property (j)$700 000 Parties’ share of mortgage on the D2 property (j) $184 042 Mortgage on the D1 property (j) $41 569 Land tax (j) $1 460 Debt to Mr & Mrs R (j) $8 999.45 Worker’s Compensation (j) $1 049 Rates (j) $24 507 Husband’s tax liability (j) $2 026 Accountancy fees $3 630
Disputed Items
Loan from Mrs Bartlett to Husband
A disputed item was a loan from the husband’s mother, Mrs Bartlett, to her son in about 1996 for $100,000 to enable the husband to purchase a property in the F Shops. The loan was not originally put into writing. However, on 26 January 1999, after the parties had commenced their relationship, the husband signed a written document with his mother for a loan amount of $86,788, which provided that the loan would be repaid upon the sale of F.
It was asserted by the husband and agreed by Mrs Bartlett in her evidence that no money had been paid back from the period between the initial loan and the signing of the loan document, and that the mother ‘credited’ him some for about $13,000. However, their evidence was that the husband and his sister had bought a house together and then had had a falling out. During this venture it appears that the husband lost money, and as a result Mrs Bartlett reduced the loan by almost $14,000 despite the fact that no money had been repaid. The husband asserts nevertheless that he owes his mother $100,000.
It was conceded during the proceedings that in fact, any amount due to Mrs Bartlett would be $86,788, not $100,000 originally claimed by the husband. It seems clear that whatever the status of the $14,000 that is the difference between the $86,788 and the $100,000, no claim would be made by the mother in that regard for any amount.
In accordance with principles outlined in Af-Petersens & Af-Petersens[39] as a result of the cross-examination of the husband and of his mother, I form the opinion that the $86,788 is not a loan that would ever be recovered by the mother from her son. She certainly would not institute any proceedings to recover the loan and indeed in my opinion, it is improbable that it will ever be repaid. Accordingly, in my opinion, it should not be regarded as a joint liability of the parties or treated as such in the division of the net assets of the parties.
[39] (1981) FLC 91-095
Whether in the circumstances it should be regarded as a loan without recourse or a gift, is probably irrelevant. In either case it represents when contributions are taken into account an additional contribution “by or on behalf of the husband”. The loan was advanced prior to the cohabitation of the parties hence there is no confusion as to whether or not it was advanced to the husband or to the husband and wife. In any event, for the reasons that I have suggested, it should be regarded as an asset in the husband’s hands which should properly then be categorised as a contribution on his part.
Husband’s Volvo
The wife asserted that the husband’s purchase of a new Volvo just prior to the breakdown of their relationship was a folly of his own and that the debt of $78,000 (until completely paid off) should not be considered in these proceedings.
However during cross-examination the wife admitted that she too had been present when the husband had inspected the vehicle, and had even taken it for a test drive herself.
In terms of errors of judgment (as the husband tended to describe it) this one was a fairly good one. There is no doubt that the Volvo did not represent good value for money in the circumstances in which the parties found themselves at that time. I am not satisfied however, that there was any attempt on the part of the husband to do anything other than acquire a vehicle. The wife says she was opposed to its acquisition but I am satisfied from the evidence that she was at least a part of that process even if not a particularly willing part of it. In my opinion, it is reasonable that the liability should be part of the considerations as between the parties.
The revised list of liabilities are:
Mortgage on the J property (j) $306 951 Mortgage on the K property and the D3 property (j) $700 000 Mortgage on the D1 property (j) $41 569 Debt to Mr & Mrs R (j) $8 999.45 Worker’s Compensation (j) $1 049 Husband’s tax liability (j) $2 026 Accountancy fees $3 630 Volvo debt $78 000 $1 142 224
I have omitted land tax of $1,460 and rates of $24,507 because I released some money to pay these liabilities in part but also because I propose to order the sale of all properties and the discharge of all outstanding debts for rates and associated expenses.
This leaves a total property pool of $1,006,072.
Contributions
At the commencement of the relationship, the wife had a personal injury compensation payment of $175,000, some furniture and some small savings. The wife asserts that the Barina was debt-free while the husband asserts that the Barina was financed. The wife possibly also had a HECs-debt at the beginning of the relationship.
I am satisfied that the debt in respect of the Barina was paid off during the course of the parties’ relationship. But in my opinion nothing much turns on that except that it does tend to reduce the overall value of the wife’s initial contribution. I have no reliable evidence about the husband’s allegation that the wife had a HECs-debt at the beginning of the relationship. Again this would have the effect perhaps of diminishing funds available to the parties but not significantly in the overall scheme of things.
The husband had the business (C Pty Ltd) in partnership with another person, about $36,102 net, the two properties in G and H (of little net worth at that time) and the shop in the F Shopping Centre which produced funds in due course. In relation to those funds it is to be noted that that incorporates the money that the husband received from his mother. This should not in these circumstances be double-counted. (Otherwise of course that gift/loan represents as I indicated previously, an additional contribution from the husband in accordance with the provisions of Kessey & Kessey.[40])
[40] (1994) FLC 92-495
The husband also had as I indicated above some $10,000 from his sister and $3,800 in a self-managed superannuation fund. The wife also had what she valued at and which I am prepared to accept for these purposes as superannuation worth about $26,000 at the relevant time. Accordingly, without being prescriptive or precise the husband’s initial contributions were in the order of $173,000[41] and the wife’s in the order of $201,000.[42] There is a discrepancy which favours the husband when the G property is brought into account at $177,000 in 2003 although its value at the time cohabitation commenced was probably significantly less.
[41] Half C Pty Ltd $36,102
[42] Accident claim $175,000
Subsequently when the parties were living together although each of the parties made assertions about the lack of contribution by the other in various ways towards both the earning of money and the care of the children, in my opinion the appropriate determination is that the contributions should be regarded during this period as equal. Mr Millar expressed some concern that there should be some separation of periods of contribution. I do not share his concern.
During the time the parties were together, short though it may have been, each of the parties worked towards common objectives. This is illustrated by the fact that properties which the husband asserted that he was the prime mover in relation to were in fact bought in both names. It is conceded by him that the wife was involved to some extent in the business activities although he sought to minimise that contribution. Of course the wife sought to maximise them. However irrespective of whether or not she was involved in the business activities on a day-to-day basis or perhaps very much at all, she had the primary care of the children and this would have been, in my opinion - and on my finding, - a relatively onerous task because by the husband’s own admission his time available other than at work was small. It is important that those contributions of the wife should be recognised in a meaningful and significant way and it should be noted in this regard that the proceeds of her accident claim were significant in the acquisition of the K property.
Since separation the situation between the parties has become exceedingly confused. Various adjustments have been made from money in trust to enable commitments between the parties to be met. The wife has continued to work although her remuneration has been relatively small. The wife has had the occupation of the former family home but other arrangements have been made on my orders for the payment of rates in relation to this property as well as the other properties. The husband asserts that he intends to embark upon a career in property development but has shown little inclination or even energy in relation to managing the properties which already exist. It would be hard for him to claim significant contribution since separation as some form of additional factor to be taken into account on his behalf.
All in all, taking all of those factors into account, it seems to me that it would be appropriate for me to asses the contributions of the parties as 55 per cent to the husband and 45 per cent to the wife.
I note that Mr Millar urged upon me that I should treat the real estate as separate and to quarantine it from a general consideration of the contributions of the parties. He suggested that I should in fact regard the husband has having contributed almost exclusively to those properties and to proceed accordingly. This necessarily excludes of course the K property to which the wife’s contribution is acknowledged. I do not accept this submission.
For the reasons I have indicated above, the parties worked in what they regarded, even in the short term of their relationship, as a partnership. They were both the registered proprietors of various pieces of real estate and indeed were formally in partnership in a number of matters. In my opinion it would not be just or equitable to treat some of the property as separate from the other given those circumstances.
Section 75(2) contributions
In the long run neither party was prepared to suggest that I should make any adjustment for s 75(2) factors. To some extent the children because they are shared between the parents will not generate any additional allowance to be made on either side. The financial circumstances of each of the parties are notwithstanding the bright shining future that once beckoned, are now precarious. Each of them has spent significant sums on legal fees in these proceedings to the ultimate detriment of each of them and possibly of the children.
The wife owes over $100,000 to her sister and contrary to my view about the husband’s mother’s attitude to recovery of her “debt”, I have no doubt that the somewhat formidable Ms Bowie will seek recovery of and will recover the money she has lent to her sister of about $100,000. I cannot be as certain about the money (again about $100,000) lent to the wife by her father-in-law. It would however be reasonable to assume he will require repayment at the very least because of the nature of the relationship.
The husband will be at least morally obliged to repay his mother.
The reality is that neither party will have anything much left to go on with life. What a tragedy!
I have no doubt that the husband is capable of earning money and of earning significantly more money then the wife. However he has for whatever reason not pursued a remunerated existence in recent times and the wife has chosen employment in part, because of her need to care for the children which was in my opinion less then her abilities might warrant. However, no cross-examination was directed to her on this point and it is fair to say that no criticism can therefore be levelled at her on that basis by the husband.
In my opinion, taking account of those factors and noting also that while there is a discrepancy between the superannuation of the parties neither has any access to that superannuation for some time, it seems to me that there should be no further adjustment between the parties in respect of s 75(2).
Summary
This means that of the net pool of property the wife should receive 45 per cent which is the sum of $452,732 from which should be deducted those items of property that she has or has previously received totalling $88,809, (being the proceeds from the sale of the Volvo, furniture and her superannuation). The husband will receive $553,339 from which he will have deducted these sums $69,487, (being the proceeds from the sale of the Harley Davison, furniture, superannuation, the Volvo, the addbacks from C Pty Ltd, and the T shares).
The husband sought that the properties be retained by him and that he pay out a cash sum to the wife. I am totally unconvinced that he has any capacity whatsoever to raise the sums of money referred to in his present circumstances. This appeared to be conceded during the course of the proceedings and in my opinion the appropriate order that I should make is that all of the property should be sold although either party would have the right to bid for such property. This would have the effect also of removing the likelihood that either party would inadvertently gain from my regrettable delay in delivering this judgment. Nothing in such orders however would preclude the parties reaching agreement if they wanted to that either would retain an item of property or all of it for that matter at an agreed value between them. However in default of any such agreement the properties should be sold and the proceeds divided as I have indicated.
Section 79 provides that I should not make an order about the division of property unless it is just and equitable. This so called fourth stage of the consideration of division of property seems somewhat unnecessary in most cases if in fact a judge has undertaken an appropriate consideration of the other matters under s 79 and s 75. However in this matter if I am to stand back and consider the consequences of the proceedings in this matter subject to the resolution of any questions of costs it seems to me that while the result is in the long run unsatisfactory for both there is a commonality in the unsatisfactory nature of the consequences which in my opinion renders the result just and equitable.
I certify that the preceding ninety-six (96) paragraphs are a true copy of the reasons for judgment of the Honourable Deputy Chief Justice Faulks
Associate
Date: 1 March 2007
F $125,000(including mother’s loan/gift)
Sister’s payment $10,000
Superannuation $2,000 (approx.)
This disregards the husband’s share in the G property which realised $177,000 in 2003 but which was worth significantly less at cohabitation.Superannuation $26,000
Endnote 1
Applicant Wife’s Proposed Property Settlement
1.The wife proposes, consistent with the above, that she receive by way of property settlement 60% of the net value of the parties’ assets of $942,089, 60% of which is $565,235 say $565,000
2.In order to give effect to that result the wife would take:
a. The furniture, furnishings and effects in her possession $4,170
b. The net proceeds of the sale of the Volvo $12,000
c. Her superannuation $72,639
d. Money held in the trust account of WL and Co $14,950
Subtotal (say) $104,000
together with a cash adjustment of $461,000
$565,000
3.The above proposal would require the parties to do such things and sign such documents as are necessary to sell the property at K. Probably, the whole of the net proceeds of sale would be required to be paid to St George Bank in order to reduce the parties’ overall liabilities to the Bank.
4.Accordingly, assuming that the husband wishes to retain all of the remaining assets (including the properties at D1, D2 and D3 as well as the J property), that would require him to refinance the necessary liabilities in order to raise sufficient funds to pay the wife the amount provided for above.
5.In the event the husband is unable or unwilling to refinance the mortgages in order to raise sufficient funds to pay the wife her share of the property settlement there would be an order for sale of some or all of the investment properties in order to raise sufficient funds to make the required payment.
6.
Endnote 2
Minute of Orders Sought by the Respondent Husband
1.Within sixty (60) days from the date of these orders the husband pay to the wife the sum of $190,000, and the wife transfer to the husband the whole of her interest in:
a. The property known as K, Folio Identifier ….
b. The property known as D1, Folio Identifier ….
c. The property known as D2, Folio Identifier ….
d. The property known as D3, Folio Identifier ….
e. The property known as J, Folio Identifier ….
2.The wife transfer to the husband the whole of her interest in any monies held on behalf of the parties in the trust account of WL & Co Real Estate.
3.The wife transfer to the husband, and deliver up to his solicitors within forty eight hours, the Don Bradman print.
4.Upon the transfer referred to in Order 1 hereof, the husband indemnify the wife against liability for, and kept the wife indemnified against liability for:
a. Any money owed by the parties or either of them to the husband’s mother.
b. All debts howsoever existing or arising with respect to the properties referred to in Order 1 hereof, including rates, land tax, and any debt arising under any covenant and any mortgage registered on the title of those properties or any of them, and to that end the husband will, within sixty (60) days, do all things necessary to cause the discharge of existing mortgages in favour of the St George Bank Limited.
5.Otherwise, as against the husband, the wife is declared to be the sole owner of:
a. All benefits accrued or to accrue to her pursuant to her membership of any scheme or fund providing superannuation benefits.
b. Any money in any account in her name with any bank or other financial institution.
c. All goods, chattels and personalty in her possession.
6.Otherwise, as against the wife, the husband is declared to be the sole owner of:
a. All benefits accrued or to accrue to him pursuant to his membership of any scheme or fund providing superannuation benefits.
b. Any money in any account in his name with any bank or other financial institution.
c. All goods, chattels and personalty in his possession.
d.