BELASCO & BELASCO & ANOR
[2020] FCCA 3078
•13 November 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| BELASCO & BELASCO & ANOR | [2020] FCCA 3078 |
| Catchwords: FAMILY LAW – Property – Second Respondent added to the proceedings – Second Respondent is the husband’s mother – whether funds advanced by the Applicant’s parents is a loan required to be repaid – held that the funds advanced were not loans – significant contribution made by the husband – adjustment to the wife for section 75(2) factors – property pool to be divided 60% to the husband and 40% to the wife. |
| Legislation: Family Law Act 1975 (Cth), ss.75, 79 |
| Cases cited: Bevan v Bevan [2013] FamCAFC 116 Dickons & Dickons [2012] FamCAFC |
| Applicant: | MR BELASCO |
| First Respondent: | MS BELASCO |
| Second Respondent: | MS C BELASCO |
| File Number: | MLC 7054 of 2019 |
| Judgment of: | Judge Blake |
| Hearing dates: | 10, 11 and 13 August 2020 |
| Date of Last Submission: | 13 August 2020 |
| Delivered at: | Melbourne |
| Delivered on: | 13 November 2020 |
REPRESENTATION
| Counsel for the Applicant: | Mr Combes |
| Solicitors for the Applicant: | Christopher William Legal |
| Counsel for the First Respondent: | Ms Hannan |
| Solicitors for the First Respondent: | McGowan Family Law | |
| Counsel for the Second Respondent: | Mr Felkel | |
| Solicitors for the Second Respondent: | Horvat Legal |
DECLARATION
The Applicant and First Respondent do not owe money to the Second Respondent pursuant to a loan agreement or otherwise.
ORDERS
The proceeds of sale of B Street, Suburb D, which are currently being held on trust by the Applicant’s solicitors and the sums already received by the parties pursuant to the interim release of funds be divided between the parties as follows:
(a)60% to the Applicant; and
(b)40% to the First Repondent.
The Applicant and the First Respondent each retain their own motor vehicles registered in their respective names, to the sole exclusion of the other.
The Applicant and the First Respondent each retain their own funds standing to the credit of their respective bank accounts, to the sole exclusion of the other.
With respect to the Applicant's superannuation and for the purposes of these Orders:
(a)The Applicant is the member spouse.
(b)The First Respondent is a non-member spouse;
(c)The superannuation fund is Super Fund E (“the Fund”);
The trustee do all such acts and things and sign all such documents as may be necessary so that in accordance with the obligations set out under the Family Law (Superannuation) Regulations 2001 the trustee can calculate the entitlement of and make payment to the First Respondent in accordance with these Orders.
Pursuant to Section 90XT(1)(a) of the Family Law Act 1975 (“the Act”) whenever a splittable payment becomes payable from Mr Belasco’s interest in the fund, the trustees shall pay to Ms Belasco the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001, using a base amount of $67,331.29 and there should be a corresponding reduction in the entitlement of the person to whom a splittable payment would have been made but for these Orders.
These orders binds the Trustee of the Fund and these Orders takes effect from the operative time being the beginning of the fourth business day after the date of service of these Orders on the Trustee.
The Trustee of the Fund must comply with the obligations imposed upon the trustees of eligible superannuation plans under the Act and Family Law (Superannuation) Regulations 2001.
That each party and the Trustee of the fund have leave to apply in relation to the implementation of these Orders insofar as they relate to superannuation.
Until the occurrence of any of:
(a)The establishment of the separate account in the name of the non-member spouse in the superannuation fund; or
(b)The payment or "rolling over" into another superannuation fund of the payment split created by these Orders; or
(c)The non-member spouse satisfies a condition of release and is paid the payment split which was created by these Orders; or
(d)The non-member spouse executing a waiver of rights within the meaning of section 90MZA of the Act in relation to the payment split created by these Orders;
the member spouse be and is hereby restrained by himself, his servants or agents from executing a death benefit nomination in favour of any person or doing any other act or thing which would render any part of his interest in the superannuation fund a "non-splittable payment" in the meaning of regulation 12 or regulation 13 of the Family Law Superannuation Regulations 2001.
Unless otherwise specified in these orders:
(a)Each party be solely entitled to all other property (including choses in action) in the possession of that party as at the date of these orders;
(b)Each party forgo any claims they may have to any superannuation benefits belonging to or earned by the other;
(c)insurance policies remain the sole property of the owner named therein;
(d)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders;
(e)any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
The Applicant and First Respondent do all acts and things and give all consents and execute all documents necessary to give effect to these orders.
Each party have liberty to apply as to the implementation or enforcement of these Orders upon the giving of seven days written notice to the other.
All extant applications be dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Belasco & Belasco & Anor is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 7054 of 2019
| MR BELASCO |
Applicant
And
| MS BELASCO |
First Respondent
| MS C BELASCO |
Second Respondent
REASONS FOR JUDGMENT
Introduction
The Applicant Husband filed an Initiating Application on 26 June 2019. In it, he sought the making of orders in relation to parenting and property matters.
The First Respondent is the Applicant’s former wife. The Second Respondent is the Applicant’s mother. The Second Respondent was added as a party to the proceeding pursuant to an Application in a Case filed by her. She seeks an order to reclaim, prior to any distribution to the parties, an amount of approximately $200,000 that she says she loaned to the Applicant.
Ultimately, the Applicant and the First Respondent resolved the parenting matters between them on the first day of the trial. Final Orders were made by consent of the parties in relation to parenting matters. Accordingly, what remains for determination are the property matters between the parties.
For the reasons that follow, I have determined that:
a)The funds advanced to the Applicant by his parents are not loans and are not required to be repaid;
b)Overall, the Applicant made the greater contribution to the acquisition or maintenance, etc, of the property of the parties;
c)There should be an adjustment in favour of the First Respondent having regard to the section 75(2) factors.
d)The property pool of the parties be divided 60% to the Applicant and 40% to the First Respondent. There be a superannuation splitting order of the parties’ superannuation entitlements in the same division, 60% to the Applicant and 40% to the First Respondent.
Background Facts
The parties prepared a joint statement of agreed facts. What follows below is either taken from that statement, or is not controversial.
The Applicant is 39 years of age. He is in good health. He presently works full-time in employment as a Professional at Employer F.
The First Respondent is currently 41 years of age. She is in good health. She is not presently in paid employment and works as a homemaker.
There are three children of the relationship. They are X aged 8 years, Y aged 6 years and Z aged 4 years. The First Respondent also has one adult child from a previous relationship, Ms G.
The parties met in 2002 via an online chat program and commenced a relationship in around 2002.
In around 2006, the Applicant purchased the property at B Street, Suburb D (‘Property’). The purchase price was $320,000. Following renovations and rectification work, the Applicant moved into the Property in late 2007.
The parties were engaged in 2008. They subsequently married in 2010. Following the marriage, the parties commenced living together in the Property.
The Applicant maintained full-time employment for the duration of the marriage, save for a period following his retrenchment. The First Respondent did not work in paid employment throughout the course of the marriage.
The parties lived with the Applicant’s parents in the period late 2013 to mid 2014 while further renovation work was carried out on the Property.
The parties separated on or around 1 July 2018. The period in which the parties lived together was approximately 7.5 years.
The Property was sold by public auction for $1,256,000 on or around mid 2018. The proceeds of the sale of the Property are held by the Applicant’s solicitors.
The Applicant has resided with his parents post separation. The First Respondent has resided in a rental property post separation.
The parties were divorced on 14 March 2020.
Prior to final parenting orders being made, the three children of the marriage spent six nights each fortnight with the Applicant, and eight nights each fortnight with the First Respondent. That arrangement will continue under the orders made by the Court by consent but will, in the middle of 2021, move to an equal shared care arrangement.
Issues in Dispute
The key issues in dispute are as follows:
a)whether an amount of approximately $200,000 advanced by the Applicant’s parents to the Applicant is properly regarded as a loan and, if so regarded, whether that amount should be paid to the Second Respondent prior to any further distribution of the property pool to the parties;
b)the weight to be attributed to the financial and non-financial contributions made by the parties;
c)whether any adjustment is required under section 75(2) of the Family Law Act 1975 (‘Act’).
Relevant principles
The power of the Court to alter the property interests of parties is contained within the Act.
Section 79(1) of the Act empowers the Court to make such orders as it considers appropriate in altering the interests of the parties to the marriage. The power of the Court under section 79(1) is a power to be exercised having regard to the subsections that follow, and in particular, section 79(2), section 79(4) and consequently, section 75(2).
The provisions set out above have been the subject of extensive consideration by both the High Court of Australia and also by the Full Court of the Family Court of Australia: see Stanford v Stanford [2012] HCA 52 at [35]-[40], [42]; Bevan & Bevan [2013] FamCAFC 116 at paragraphs [73] to [86], [89]. I am required to approach the matter consistently with the principles articulated in these authorities.
When it comes to the assessment of contributions and the approach to be taken, I have had regard to the comments of the Full Court in Dickons & Dickons [2012] FamCAFC 154 especially paragraphs [23] and [24], and Eufrosin & Eufrosin [2014] FamCAFC 191, and Lovine & Connor [2012] FamCAFC 168 at [42].
I am satisfied that in this matter it is just and equitable to embark upon an exercise of determining how the assets between the parties are to be split. The parties have been separated since July 2018. Divorce occurred in March 2020. It is self-evident that the parties are no longer in a relationship and that there will no longer be any common property available for shared use by the parties.
The Asset Pool
The parties agreed that the items below were to be included in the pool of assets:
Assets
Ownership
Value
Proceeds of sale of B Street, Suburb D
Joint
$516,564.35
Interim funds received by way of interim release of funds
$160,000
($80,000 each)
Total Assets
$676,564.35
Total net non-superannuation assets
$676,564.35
Superannuation
Applicant
$170,810.74
Respondent
$1,655
Total Superannuation assets
$172,465.74
Total pool inclusive of superannuation
$849,030.09
There is a dispute between the parties in relation to whether the Second Respondent loaned an amount of $200,000 to the Applicant. If the loan is found to exist, it may be included in the asset pool. It is to that matter that I now turn.
The loan from Applicant’s parents
The Applicant contends that various sums of money advanced to him and/or the parties by his parents should be treated as loans which he is obliged to repay. The Applicant’s mother, the Second Respondent, gave evidence in support of this contention, as did Mr Madafferi, a solicitor who was engaged to draft a written loan agreement between the Applicant and his parents.
The First Respondent disputes that the amounts advanced were loans. She submits that, to the extent monies were received, they should largely be treated as gifts to the parties.
In determining whether a loan is genuine, the Court is required to take into account all of the circumstances of the matter.
In In the Marriage of CJ and V Biltoft (1995) 19 Fam LR 82, a Full Court of the Family Court of Australia considered an unsecured loan given by a third party to the husband. An issue before the Full Court was whether a debt to a third party should have priority over the claim of the wife. The Court looked at all the circumstances of that matter, which included the unsecured nature of the debt and the steps taken (or more accurately, not taken) by the third party to recover the amounts, before determining that the trial judge did not fall into error in refusing to give the third party debt priority over the claim of the wife. In so holding, the Full Court held that where an unsecured liability is vague or uncertain, or unlikely to be enforced, the Court may determine not to take it into account.
In contrast, in In the Marriage of FS and LM Petersens (1981) 7 Fam LR 402, Nygh J found that a debt arising from money advanced by the father of the husband to a family company was not a sham and that the proceeds of the sale of the company property should be paid in reduction of that mortgage debt. Among the factors pointing to the existence of the debt being genuine in that case included minutes of a directors meeting, and a formally executed and registered mortgage.
In the present matter, the Applicant produced to the Court a document entitled ‘Loan Agreement’ made on 28 May 2009 between the Applicant and his parents. The Loan Agreement discloses, among other things, that the lenders give to the borrower ‘(inclusive of the current advance, past advances and debts) the sum of TWO HUNDRED THOUSAND DOLLANS ($200,000)’ (emphasis in original). Further, it is a term of the Loan Agreement that the borrower will ‘repay the lender an annual interest on the principal sum at the rate of six (6%) per cent to be paid annually on the 30th June each year’. The Loan Agreement also provides that if the borrower fails to make the interest payment, the borrower must repay the principal sum and pro rata interest upon 120 days written notice from the lenders, or by 30 June 2039, whichever is earlier.
A written loan agreement may normally be regarded as good evidence of the existence of a loan. The Applicant and the Second Respondent, understandably enough, place much emphasis on the Loan Agreement. There exists, however, other evidence that suggests, unfortunately for them, that any advances made were not in the nature of loans.
The Loan Agreement was entered into following the engagement of the Applicant and the First Respondent. Its execution arose in circumstances where members of the Applicant’s family expressed a concern about Applicant potentially being taken advantage of by the First Respondent. The concern arose following the engagement party of the parties. Accordingly, the execution of the Loan Agreement arose in circumstances where the Applicant’s parents, and to some extent the Applicant, were concerned to protect sums of money that had already been advanced to the Applicant. Critically, that was the intention of the parties to the Loan Agreement. The parties did not execute the Loan Agreement with the intention of creating a genuine relationship of a debtor and creditor. Rather, they entered into the Loan Agreement as a way to protect the amounts the Applicant’s parents had already given to him.
The second issue confronting the Applicant and the Second Respondent is the date of execution of the Loan Agreement. The Loan Agreement is dated mid 2009. It purports to cover payments that had already been made to the Applicant by his parents in the period from 2006 to the date of execution. The Loan Agreement attempts to characterise these prior advances as amounts loaned to the Applicant, in some cases more than three years after the payment was advanced.
No doubt cognizant of this issue, the Applicant and the Second Respondent gave evidence that it had been intended by them at the relevant times the funds were advanced, that the funds were being loaned to the Applicant. I have considered that evidence closely. I reject it. The evidence that amounts advanced prior to 2009 were agreed to be loans at the time the funds were advanced is scant. The Applicant, and for that matter, his mother, simply assert at a high level that the funds were advanced as loans. There is not, however, any detailed evidence of the discussions that took place prior to the funds being advanced, where those discussions took place, what the repayments were to be, what interest was to be charged, or any other matters. It might ordinarily be expected that had amounts received before the execution of the Loan Agreement been forwarded as genuine loan amounts, there would at least have been some specific evidence as to the circumstances attending to those matters at the time.
The other difficulty with the Loan Agreement is this. It is expressed to be a loan for $200,000 covering past advances, a current advance and future advances. The Applicant’s own evidence, however, is that he had already received, at the time of the execution of the Loan Agreement, sums in excess of $200,000 from his parents. The Loan Agreement is relied on as evidence of a genuine loan arrangement, yet it does not accurately record the amounts said to have been advanced as loan amounts at the time of its execution. Further, it purports to cover further unidentified advances notwithstanding the loan amount of $200,000 had already been exhausted, according to the Applicant, at the time it was executed. During the hearing, it was put that what was intended was that the Loan Agreement was to operate as a cap of $200,000 owing to the Second Respondent, irrespective of whether she advanced amounts in excess of that. That, I consider, to be a convenient reconstruction of events. It is not a construction supported by the terms of the Loan Agreement. It also fails to take account of the fact that the Second Respondent in her affidavit asserted, at least initially, that advances she made between 2015 and 2018 were also required to be repaid.
The matters that I have discussed above give rise to a further problem for the Applicant and the Second Respondent’s claim that a loan existed between them. It is well recognised that for an advance to be considered a loan, there must be an obligation to repay the amount. Underpinning that principle is the following: the amount taken as a loan and to be repaid must be crystal-clear. No lender would lend without knowing what has been lent. No right minded borrower would take money without knowledge of the precise amount borrowed and what is to be repaid. In this matter, however, there was a complete lack of clarity as to the amount actually borrowed.
The Applicant’s evidence as to what he owed his parents as at the date of the trial was inconsistent and vague. In his Initiating Application, the Applicant says the amount owed is $228,528.99. The Loan Agreement, of course, records the amount as being $200,000. The Applicant in his affidavit included a table setting out the amounts he said constituted the sums advanced under the Loan Agreement. Those amounts exceed an amount of $200,000 and total $214,364.81. Questioned about all of this in cross examination, the Applicant had little idea about what was owed, and what was not owed.
The Applicant’s evidence in respect of the Loan Agreement and what was outstanding also suffered from other ambiguities. At one point during cross examination, he appeared to claim that certain amounts advanced for everyday items that were given to him by his parents after the execution of the Loan Agreement in 2009 were in fact given to him as loans. The Applicant was not able to distinguish, when questioned, as to which items were gifts and which were loans, and appeared to claim all of these were loans.
The Applicant’s difficulties were not aided by the Second Respondent. She commenced her involvement in this matter by seeking repayment of the sum of $200,000 in her Court documents. She nevertheless in her affidavit evidence claimed amounts that were greater than this. The second day of the trial saw her Counsel recant her previous position, and indicate that the amount she claimed was now approximately $180,000. She also walked away from any claim for interest, which is expressly provided for in the Loan Agreement.
Of course, the issues surrounding the lack of clarity as to the amounts claimed to be loaned that I have identified in the paragraphs above become even more significant when the Loan Agreement itself is unclear as to what was being advanced, a matter I have alluded to earlier in these reasons. In my view, such vagueness and ambiguity around such a critical term as the amount loaned does not bespeak a genuine loan agreement.
Some emphasis was placed by the Second Respondent on the fact that the Applicant repaid $20,000 when asked to do so in late 2014. A single payment from an alleged borrower back to the lender does not, however, of itself prove the existence of a loan. To that I would add the following. The payment did not accord with the terms of the Loan Agreement. No evidence was produced of the ‘written notice’ requiring the payment to be made, which the Loan Agreement requires. There was no evidence of any interest component having been paid.
Some emphasis was also placed by the Applicant and the Second Respondent on the fact that a caveat was placed over the Property by the Applicant’s parents at around the time the Loan Agreement was executed. Had that caveat remained, I can accept it would be a factor that would point to the loan being genuine. However, the evidence is that the caveat was removed in subsequent years when the parties wished to renovate the Property. The removal of the caveat tends to support the conclusion that the loan arrangement was not genuine.
The evidence before the Court is that the Applicant and his parents were a close and loving family. Indeed, the Applicant is the only son of his parents. They had, on the evidence, assisted him for a long period of time prior to the marriage. They had continued to do so during the relationship. They have continued to do so after the relationship. In my view the Second Respondent was never motivated by a desire to be repaid by her son. She was motivated by a desire, as is the case in many families, to help her son succeed in life and, when he proposed to marry the First Respondent, to protect the amounts of money she had given to him. She took steps, when she became concerned about the prospect of her son marrying the First Respondent, to attempt to protect the amounts advanced to her son. By that time, however, it was all too late. The money had been advanced, and not advanced as a loan.
When all of the above matters are considered, I find that none of the amounts advanced by the Applicant’s parents to him were loans. Whatever was paid to the Applicant was not paid to him in the expectation that he would repay it.
For the reasons above, the asset pool available for distribution to the parties is as set out at paragraph 25 above.
Contributions
There is not any dispute that the Property was acquired by the Applicant in 2006 at a time when the parties were in a relationship. The parties were, however, neither engaged to be married at the time of the acquisition of the Property, nor living together. The parties did not commence living together until after the marriage in 2010.
Much of the proceeding before me was occupied by the question of whether amounts said by the Second Respondent to be advanced to the Applicant and/or the First Respondent were advanced by way of loan. I have answered that question earlier in these reasons. I am, however, required to consider whether sums advanced by the Second Respondent to the Applicant and/or the First Respondent are nevertheless to be regarded as contributions of the Applicant to the marriage.
As I have indicated above, sums said by the Applicant and the Second Respondent to have been advanced in the period 2006-2010 total $214,364.81. I deal later in these reasons with the actual quantum of funds advanced to the Applicant. For present purposes, it is important to observe that the payments in this period were given by the Applicant’s parents to the Applicant prior to him marrying the First Respondent. Indeed, the majority of the funds advanced appear to have been given to the Applicant by his parents prior to his engagement. There is also clear evidence before me that the Applicant’s parents were not encouraging of the relationship between the Applicant and the First Respondent. When these matters are considered, I conclude that any advances made during the period 2006 to 2010 were made by the Second Respondent and her husband to the Applicant with the intention of benefiting him alone. They were not made with the intention of benefiting the First Respondent. Accordingly, any such payments made in this period should be regarded as contributions of the Applicant.
The question that then arises is what contributions were made during the period 2006 to 2010 and what the value of those contributions was. It is to those matters that I now turn.
The First Respondent concedes a contribution by the Applicant of the equity in the Property at the time the marriage commenced. There is no evidence of the value of the Property at the time of the marriage. This makes giving weight to the contribution conceded by the First Respondent difficult. The evidence before me in relation to the value of the Property around the time of the marriage is as follows.
First, the Property was purchased for $320,000 in 2006. Second, the loan for the Property was $288,000 at the time of purchase, and that this had been reduced to an amount of $170,000 by around mid-2013. Third, an email from the ANZ Bank values the Property at $840,000 in around 2013. None of this evidence is particularly helpful when trying to establish a value on the contribution made by the Applicant at the time of the marriage. Doing the best I can, however, it seems to me for reasons that I discuss below, that the equity in the Property was at least $50,000. I would not credit the Applicant with a value greater than $50,000, given his failure to lead evidence on the issue.
It is not in dispute that the Second Respondent advanced to the Applicant the sum of $13,964.81 on around early 2006, and the sum of $50,000 also in early 2006. The First Respondent concedes a $50,000 contribution by the Applicant.
I now deal with the remaining individual amounts.
I find the amount of $13,964.81 was not a contribution to the property of the parties by the Applicant. The Applicant’s own evidence was that he used that sum for a range of expenses, including the purchase of a car stereo, a laptop computer, and to discharge various credit card debts. Accordingly, while the amount was advanced to and received by him, it is not a contribution to the acquisition or maintenance, etc, of the property of the parties.
There are then amounts that the Applicant claims his parents advanced him in connection with the purchase of the Property. Those amounts are $50,000, $32,000 and $16,400. The evidence of the Applicant and the Second Respondent is that these were separate amounts. The Applicant’s evidence is that $50,000 was retained by him in a mortgage offset account and used, among other things, to assist with mortgage repayments in the period from 2007 till 2010. The evidence of both the Applicant and the Second Respondent is that the Second Respondent contributed $32,000 by way of a deposit on the Property, and $16,400 toward the cost of stamp duty incurred because of the purchase of the Property.
The First Respondent disputes the account above. Her evidence however is inconsistent. She came into the trial saying that she was told by the Applicant that his parents had gifted him the sum of $30,000. She stuck by this amount in cross examination. Her affidavit, however, then referred to payments by the Applicant’s parents of $32,000 for the deposit and $16,400 on stamp duty and on one reading then seemed to acknowledge a further payment of $50,000. In closing submissions, her Counsel conceded an amount of $50,000 paid by the Applicant’s parents.
There are then other amounts that the Applicant and the Second Respondent gave evidence about. The Applicant says that his parents contributed $67,000 toward the costs of renovation and rectification work to the Property during 2007. The Second Respondent provides a somewhat detailed breakdown of those expenses. Both agree the expenses total $67,000. There is no contemporaneous corroborating documentary evidence of the expenses having been incurred, but it is largely agreed the Property needed renovation work before the Applicant was able to reside in it.
Finally, the Applicant and the Second Respondent gave evidence that the Applicant’s parents paid $20,000 in the period 2007 to 2010 for items such as insurance, rates and other outgoings on the Property. There is also evidence that a further $15,000 was paid by the Applicant’s parents towards furnishing the Property.
The First Respondent disputes the contention that the Applicant’s parents contributed $67,000, $20,000 and $15,000 in the manner described above. She says a number of things, including that she was told the husband’s employer was providing assistance with the rectification works to the Property, that she purchased the lights for the Property, and that rectification of the Property involved a number of other individuals pitching in.
Ultimately, I am of the view that, notwithstanding the absence of corroborating documentation, the Second Respondent did contribute the amounts of $32,000 (deposit), $16,400 (stamp duty), $67,000 (rectification work), $20,000 (outgoings on the Property) and $15,000 (furniture). I accept the amounts for stamp duty and the deposit were paid in addition to an amount of $50,000 given to the Applicant. I prefer the evidence of the Applicant and the Second Respondent over the evidence of the First Respondent. It is the First Respondent’s own evidence that the parties were living separately until they were married, and that they had no combined or joint finances at that time. Consequently, she was not privy to what amounts were passing between the Applicant and his parents, or how the renovations were being funded. Further, she was not living with the Applicant and therefore did not have the opportunity to closely observe what was going on. Also, her evidence in relation to the amounts of $50,000, $32,000, and $16,400 is inconsistent, as described above. Her contribution of the lights to the Property she herself describes as a gift to the Applicant.
There are two other points to mention. First the Loan Agreement stipulates an amount of $200,000. While I have found that the loan is not genuine, I regard the Loan Agreement as reasonably contemporaneous evidence of the approximate total of amounts advanced by the Second Respondent to the Applicant. I have also found the Loan Agreement arose out of a desire by the Second Respondent to protect the assets of the Applicant. If I were to make the findings that the First Respondent urges upon me in relation to the amounts she disputes were advanced, I would be accepting the evidence of someone who was not in a position to know, over the amount recorded in the Loan Agreement, which was recorded at time when the advances were reasonably fresh in the minds of those who made the Loan Agreement.
Finally, the Applicant’s parents have assisted him with the purchase of the Property. Having done so, and given the closeness of the family, I consider it more likely and consistent with other evidence that the Applicant’s parents would have also have contributed to the necessary renovation works to ensure that their son was comfortable, and in general, helped him in any reasonable way they could have.
For the above reasons, I regard the following amounts – being $50,000, $32,000, $16,400, $67,000, $20,000, and $15,000 as firstly, assistance given by the Applicant’s parents made with the intention of benefiting him alone, and secondly, as contributions of the Applicant toward the property of the parties.
The Applicant also submitted that he held approximately $47,000 in superannuation as at 31 December 2010. The Applicant’s Counsel provided a one page document in closing submissions from what appears to be the Applicant’s superannuation fund. It is regrettable that this document was not tendered during the evidence of the parties. In any event, the First Respondent concedes that the Applicant did have some superannuation at the commencement of their relationship.
As to any initial contributions by the First Respondent, her evidence was that she worked on a full-time basis with Employer H in 2008 as well as working part-time at a business in 2008. She sought to have these contributions recognised. I am not persuaded that I ought to recognise these as initial contributions. It is her evidence that the parties maintained separate finances at this time. It is reasonable to assume, therefore, that she retained those funds for her personal use.
In light of what is set out above, it is self-evident that the Applicant made a significant initial contribution to the property of the parties. The task of this Court, however is to weigh all contributions holistically. I therefore now turn to consider the other contributions of the parties.
There is no dispute that the Applicant maintained full-time employment during the marriage, except for a short period of time following his position being made redundant. There is also no dispute that the First Respondent did not work in paid employment throughout the course of the marriage and was the primary caregiver and homemaker. In closing submissions, the parties agreed that contributions during the marriage were equal, and I accept that on the evidence before me.
It is appropriate to record that post separation, the First Respondent appears to have borne a number of expenses in relation to the children without the assistance of the Applicant. She says, and I accept, that the Applicant’s contribution to school fees during 2019 was not existent, that he has not contributed to other expenses associated with the children post separation, beyond paying minimal child support, and that he did not provide assistance to the First Respondent in respect of surgery expenses for X. I regard all of these as financial contributions of the First Respondent post separation.
Self-evidently, each party has made contributions. When the period of the relationship is assessed as a whole, the Applicant’s contributions, which effectively commenced with the purchase of the Property, started in 2006, well before the parties were engaged or married, but while they were in a relationship. The Applicant’s initial contributions paved the way for the parties to purchase the Property and, consequently, to have the funds in trust that are now available for distribution. The Applicant’s contributions in this initial period, and also into the marriage, were financial. They were collectively significant. There is no doubt that he has made the vast majority, if not all, of the substantial financial contributions in the relationship.
The First Respondent’s contributions really only commenced in a substantive sense in 2010 once the parties were married. She took on the role of homemaker and primary carer and has continued to perform that function. These were substantial contributions by the First Respondent, and the Applicant has appropriately recognised her contribution in the home. Her contributions did not, however, extend over the same period as the Applicants, with his commencing in 2006 and hers commencing in 2010.
The First Respondent says that while the Applicant made initial contributions, they ought to be given less weight given the duration of the marriage. Contributions, of course, are to be assessed holistically. The marriage was 7.5 years in length and the first of the Applicant’s substantive contributions occurred some 14 years ago. It is true that the marriage cannot be described as a marriage of short duration. Equally, however, it is not a marriage of long duration. I therefore do not accept the submission of the First Respondent that the initial contributions should be given minimal weight when assessed holistically against other contributions. It is appropriate to recognise them, and weigh them against the equal contributions of the parties during the marriage, and the contributions of the First Respondent post separation.
Given the matters above, I am of the view that the Applicant has made greater contributions when compared with the First Respondent.
Section 75(2) factors
Both parties appeared before me and were cross-examined. The Applicant’s and the First Respondent’s evidence are that they are in good health.
Both parties are reasonably young at 39 years and 41 years respectively. The Applicant, after a period in which he appears to have had some difficulty securing employment, is now working full-time as a professional at Employer F. He has worked consistently throughout his life. There is no reason to think he will not continue to be employed.
The First Respondent’s case was that it had been agreed that she would forgo earning an income to care for the children. That contention was disputed by the Applicant. His evidence was to the contrary; that the First Respondent was encouraged to work but refused to do so.
The differing evidence given by the parties in relation to this issue was not the subject of comprehensive testing during cross examination. I am not able, on the evidence before me, to make a finding as to whether or not there was an agreement that the First Respondent not work, or whether she in fact refused to work despite encouragement to do so.
Whatever might be said about the existence or otherwise of an agreement that the First Respondent not work, the fact is that the First Respondent has not worked since at least 2010. She is not qualified. She says she intends to find and commence work next year in the retail sector. Given the COVID-19 pandemic and the disruption it has caused to the retail sector, the length of time she has been out of the workforce, and her lack of qualifications, I expect that the First Respondent will have some difficulty securing employment. For the present, the First Respondent is in receipt of a single parent and carers pension, and receives some rental income from her adult daughter and child support of $86 per week for all of the children.
Allied to the matters above is the standard of living the First Respondent may be expected to enjoy. As I have noted, she may have some difficulty finding work. She presently lives in rental accommodation and does not have the benefits of living with family that the Applicant enjoys. She is going to remain, however, a person who has care of the children of the marriage for at least 50% of the time.
The various matters identified above, in my view warrant an adjustment in the First Respondent’s favour.
The parties resolved the parenting dispute between them immediately prior to the trial commencing. Final parenting orders were made by consent. Under those orders, the children will initially spend six nights per fortnight with the Applicant. From the third term of 2021, the orders provide that the children will live with each of the parties on a week about basis. Holiday time is effectively split between the parties. Further, the orders provide that the parents are to share the cost of school fees, books and uniforms for the children equally.
The consequence of the parenting arrangements that I have described above mean that, apart from remainder of this year and half of next year, the parties will share the care, and the expense, of raising the children. Accordingly, this is not a case where there needs to be a significant adjustment in favour of the First Respondent on the basis that she will have primary care of the children. An adjustment is however, warranted to take account of the fact that until the week about care arrangements commence, the First Respondent has care of the children for more than 50% of the time, and that she will have care of the children for 50% of the time after mid-2021.
Neither party has re-partnered. The evidence does not disclose that either party has an obligation to support another person.
Finally, the First Respondent contended that her legal fees and the amount of $50,000 ought to be taken into account as a matter under section 75(2)(o) of the Act.
The question of whether some adjustment should be made for the incurring of legal fees under section 75(2)(o) of the Act involves an exercise of the Court’s discretion. I was not taken to any authority in relation to how that discretion ought to be exercised. My own research, which was limited given the demands of also managing a full docket, has not disclosed any authority as to how the discretion ought to be exercised in the context of legal fees being incurred.
The First Respondent’s submission, as I understand it, is that she should receive an adjustment because first, the Applicant was able to pay his fees from savings and second, the Applicant refused a request to provide litigation funding or a partial property settlement. These matters may be true, however, they do not make good the proposition that the justice of the case requires me to exercise a discretion to make an adjustment for legal fees incurred by the First Respondent. Nor do they take account of the fact that each party received in the lead up to trial an amount of $80,000.
Given the matters referred to above, I will not make any adjustment on account of the First Respondent’s legal fees.
When the above matters are considered, the factors under section 75(2) of the Act warrant an adjustment being made in favour of the First Respondent on the following basis. First, the fact that she will have greater care of the children until term three of 2021, and care for the children 50% of the time thereafter. Second, that all of the circumstances of the case suggests that the First Respondent will have some difficulty obtaining full-time employment given the matters to which I have referred. Third, she will, however, continue to share care of the children and her standard of living is a matter to take account of.
Conclusion
Taking into account all of the above, I am satisfied that is just and equitable that the property pool, excluding superannuation, referred to in paragraph 25, should be divided 60% to the Applicant and 40% to the First Respondent. There should also be a superannuation splitting order of 60% to the Applicant and 40% to the First Respondent.
The above division will see the Applicant receive approximately $325,938.61 in cash and the First Respondent receive approximately $190,625.74 in cash, taking into account that they each received an interim distribution of $80,000. These figures may be more given the funds are held in what I assume is an interest bearing account.
The superannuation splitting order will provide the First Respondent with a total of $68,986.29, after receiving $67,331.29 from the Applicant’s superannuation. The Applicant will retain $103,479.44 of superannuation. I will otherwise make orders that the parties retain all other property in their possession and indemnify the other in relation to any liabilities in their sole name.
It is appropriate to step back and consider the opposed orders as a whole in the circumstances of the case. I am satisfied they are just and equitable. The orders recognise the greater contributions made by the Applicant and weighs that against the First Respondent’s future needs. While the settlement results in the Applicant having access to a greater share of the asset pool, the First Respondent will receive a significant sum that will enable her to re-build her life and care for the children. Therefore, I am satisfied that the orders that I have outlined above are just and equitable in the circumstances of this matter.
I certify that the preceding ninety-three (93) paragraphs are a true copy of the reasons for judgment of Judge Blake
Associate:
Date: 13 November 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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Fiduciary Duty
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Constructive Trust
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