BEST & VIDMA
[2017] FamCA 447
•27 June 2017
FAMILY COURT OF AUSTRALIA
| BEST & VIDMA | [2017] FamCA 447 |
| FAMILY LAW – PROPERTY – Just and Equitable – Dispute as to contributions – Where the wife made a significantly greater financial contribution to the asset pool – Where the husband asserts he made financial and non-financial contributions to the wife’s properties – Where there is little objective evidence to support the husband’s assertions – Where the husband asserts the wife used his income to pay household expenses – Where it was appropriate for the wife to do so when the parties were living together – Where the wife handled the husband’s finances – Where the wife received a substantial compensation pay out which she applied to her properties – Where the wife earns significantly more than the husband –Where there are suspicions as to the husband’s capacity to work – Where it is just and equitable to make property adjustment – Where the adjustment should reflect the significantly greater contributions of the wife to the asset pool – Where an adjustment should be made in favour of the husband for section 75(2) factors – Orders made. FAMILY LAW – COSTS – Where application by wife seeking declaration as to binding financial agreement – Where application withdrawn and dismissed – Where appropriate that wife pay husband’s costs. |
| Family Law Act 1975 (Cth)ss 75, 79, 117 |
| Best & Vidma [2015] FamCA 715 Russell & Russell (1999) FLC 92-877 Scott & Danton [2014] FamCAFC 203 Teal & Teal [2010] FamCAFC 120 |
| APPLICANT: | Mr Best |
| RESPONDENT: | Ms Vidma |
| FILE NUMBER: | PAC | 705 | of | 2014 |
| DATE DELIVERED: | 27 June 2017 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Foster J |
| HEARING DATE: | 21 and 22 November 2016 and 6, 7, 8 and 9 March 2017 and 8 May 2017 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Sansom |
| SOLICITOR FOR THE APPLICANT: | McPhee Kelshaw |
| COUNSEL FOR THE RESPONDENT: | Mr Duane |
| SOLICITOR FOR THE RESPONDENT: | Turner Freeman Lawyers |
Orders
That within 14 days from this date the husband and wife do all things necessary to authorise and direct that monies held in a controlled money account on behalf of the parties be paid out as to the sum of $269,000.00 to the husband and the balance then remaining to the wife.
That the wife pay the husband’s cost of and incidental to these proceedings on a party/party basis in so far as they relate to the issue of the financial agreement signed by the parties in October 2001 with such costs to be as agreed or in default of agreement within one month from this date as assessed.
That any application for costs be by way of written submission filed and served by the party seeking such order within 28 days from this date with any submissions in response within a further 14 days with judgment thereafter reserved to chambers.
That otherwise all applications be dismissed.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Best & Vidma has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT PARRAMATTA |
FILE NUMBER: PAC 705 of 2014
| Mr Best |
Applicant
And
| Ms Vidma |
Respondent
REASONS FOR JUDGMENT
The question for determination is that of property settlement as between the applicant husband and the respondent wife.
Proceedings were commenced by the husband in March 2014 at which time he sought orders for property adjustment.
On 29 April 2014 orders were made by consent that provided for the sale of a real estate property at C Street, Suburb B with the net proceeds of sale to be held in a controlled monies account pending further order.
The wife filed a Response to the husband’s Initiating Application on 30 June 2014 in which she sought orders that the husband’s application be dismissed.
The wife initially contended that there was a Binding Financial Agreement between the parties dated 22 October 2001 that precluded any application for property adjustment by the husband. Subsequently the validity or otherwise of the binding financial agreement occupied the parties for about 12 months with proceedings as to the validity of the binding financial agreement being listed for hearing for three days commencing 25 March 2015.
On 17 March 2015 the parties agreed that the asserted agreement was not a binding financial agreement that precluded the husband’s application for property settlement. On that date the approaching hearing dates were vacated with the costs of both parties in relation to the proceedings thus far being reserved. The question of such costs is also the subject of this judgment.
The parties were ordered to attend a financial conciliation conference with a Registrar on 10 June 2015 and on that date the matter did not resolve, it being noted by the Registrar that there still remained outstanding disclosure issues and significant issues as to fact.
On 6 August 2015 the husband’s interim property application was heard with judgment reserved. Further interim orders were made by consent relevantly as follows:
…
2.The Wife be at liberty to do all acts and things to complete the sale of the property known as and situate at [C Street, Suburb B] in the state of New South Wales being all of the land contained within Folio Identifier … ("the [Suburb B] Property") pursuant to the Contract for Sale dated 22 May 2015, subject to the following.
3.The proceeds of sale of the [Suburb B] property be distributed in the following manner and priority:
3.1In payment of any Council and water rate adjustments;
3.2In payment of the legal fees, real estate agent's commission, marketing fees and costs of sale;
3.3In payment and discharge in full of the St George Loan Account Number …00 to a maximum of $370,000.00.
3.4The balance to be held in a controlled monies account in the parties joint names, and operated by the Husband's Solicitors.
4.The Applicant Husband do all acts and things and sign and lodge all documents necessary to withdraw the caveats from the titles of the [Suburb B] property and produce the said Withdrawal of Caveat at settlement of the sale.
5.The Applicant Husband is hereby restrained by injunction from lodging any caveats on the titles of the [Suburb B] property.
6.The Respondent Wife is hereby restrained by injunction from causing the [Suburb C] property to be sold, other than with the consent of the Applicant Husband or by Order of this Court, or from being future encumbered.
On 31 August 2015 reasons for judgment were delivered and orders in respect to the husband’s interim application were made (Best & Vidma [2015] FamCA 715) as follows:
PENDING FURTHER ORDER, IT IS ORDERED THAT:
1.That the husband and wife do all things necessary to authorise and direct that from the net proceeds of sale of the property at [Suburb B] the sum of $100,000 be paid to each of them or as they may otherwise direct in writing and that otherwise the net proceeds of sale be held in an interest bearing controlled monies account in trust for the parties jointly.
2.That the characterisation of the payment of such monies be reserved to trial.
3.That the costs of the present application be reserved.
The matter was subsequently listed for trial commencing 6 March 2017. On 9 March 2017 as a consequence of an outstanding evidentiary issue proceedings were adjourned part heard to 8 May 2017 and the hearing was concluded on that day with judgment reserved.
The Parties’ documents and orders sought
At trial the husband relied upon his financial statement filed 28 October 2016, his affidavit filed 28 October 2016, the affidavit of his mother Ms S Best filed 28 October 2016 and the affidavit of Ms O filed 3 June 2015.
The wife relied upon her financial statement filed 27 October 2016, her affidavit filed 27 October 2016, the affidavit of Mr P filed 17 November 2016, the affidavit of Mr Q Vidma filed 11 November 2016 and the affidavit of Ms R Vidma filed 3 March 2015.
The husband at the commencement of the trial (Exh “A”) sought orders that in summary provided:
a)that the husband be paid the whole of the monies presently held in a controlled monies account on behalf of the parties pursuant to previous interim orders;
b)that within two months the wife pay to the husband the sum of $412,000.00;
c)consequential orders as to enforcement.
The wife at the commencement of trial (Exh “E”) sought orders that in summary provided that the husband be paid $191,001.50 from the controlled monies presently held on behalf of the parties and the balance of those funds be paid to the wife.
Context
The wife at trial was aged 41 and the husband aged 43.
The parties commenced their friendship in 1997 at which time the husband was then living at his mother’s residence at Suburb J. The wife was living at her parent’s home at Suburb K.
The wife commenced assisting the husband with his finances at that time mainly attending to paying his bills, taking over that role from the husband’s mother.
D Street, Suburb C
In April 1997 the wife purchased the property at D Street, Suburb C for $170,250.00. To finance the purchase the wife borrowed about $150,000.00 by way of mortgage with the balance of purchase price comprising her funds at that time and some funds provided by her mother. The total purchase price including stamp duty and other costs was about $179,250.00. The mortgage on this property was discharged in full in July 2012 with part of the proceeds of the wife’s motor vehicle accident compensation verdict. The discharge figure was $92,460.00.
The property at Suburb C had two dwellings erected on it known as 1 and 2 D Street. Subsequent to purchase of the property, the wife rented out both of the cottages, initially through a real estate agent and at the time of trial pursuant to a private rental arrangement.
Cohabitation
The parties’ commenced cohabitation as best can be determined in early 2001 and by October 2001 has signed a financial agreement. The wife asserts that at that time the husband moved into her flat at her D Street, Suburb C property after her sister moved out in December 2000. Her evidence is supported by her sister. The husband says that he recalls being at the D Street property when made redundant from his then employer. His 30 June 2000 tax return evidences continuing payments from that employer inconsistent with his assertion that cohabitation commenced in early 1998. This evidence is consistent with the commencement of cohabitation in early 2001. Prior to that time it was not possible for the wife and the husband to occupy the premises as they were occupied by the wife’s sister.
As will be seen not much turns on the date cohabitation commenced in any event.
The parties married in 2009 and separated on a final basis on 13 February 2013.
There are no children of the parties’ relationship.
The actual periods of the parties’ physical cohabitation are the subject of some dispute. The wife asserts that the parties lived apart for 14 months between February 2008 and April 2009 and then again for a period of two years and 10 months from December 2009 until late October 2012. During these periods the wife asserts that the husband resided with his mother. As to the latter period, the husband concedes that he was primarily living at his mother’s home. Otherwise, the wife contends that there were various other shorter periods of separation throughout the relationship.
In August 1997 the wife purchased a home unit property in H Street, Suburb I “off the plan” for $231,500.00. A deposit was paid from the wife’s savings and partly by way of a deposit bond. The balance of the purchase price including purchase expenses was secured by way of mortgage advance of $250,000.00: Exh “S”. The final purchase of this property was completed in July 2000. Subsequent to purchase the wife rented out the property.
In December 2003 the wife sold the property at Suburb I for $323,000.00. On settlement the wife received $34,202.00 plus the balance of the 10 per cent deposit less agent’s commission. This provided to her some capital funds.
In early 2001 the wife purchased a property at L Street, Suburb F for $227,500.00. The property comprised a cottage and granny flat. The purchase price was funded by way of a deposit bond and thereafter a mortgage advance of $193,375.00. The balance of purchase price was funded by an advance from her mother to cover the payout of the deposit bond and additional purchase costs including stamp duty. Later the wife increased the mortgage by $150,000.00 to assist with the purchase of her Suburb G property.
In October 2006 the wife sold the Suburb F property for $395,000.00 with the net proceeds of sale paid to her being $70,741.00 and paid into her Westpac bank account. Prior to sale the property was repainted with assistance from various members of the wife’s family. The wife asserts that the husband provided no assistance in this work, he says he did, although his assistance, by his own assertion, is modest at best. The proceeds of sale were substantially expended in payments for rendering of the Suburb F property before sale and the Suburb G and Suburb C properties and general maintenance.
At about the time of the parties commencing cohabitation the wife had the following assets:
Property at 1 and 2 D Street Suburb C subject to mortgage
Property at H Street Suburb I subject to mortgage
Deposit paid on purchase of property at L Street, Suburb F
A motor vehicle
Money at bank
Superannuation
Furniture and personal effects.
The husband at about the time of cohabitation had the following assets:
A work utility
Work equipment clothing and personal effects
Fishing gear
Westpac bank account
Superannuation
The wife has been in employment throughout the period of cohabitation and thereafter. The husband has been mostly in employment throughout as a tradesman.
In October 2001 the parties signed the previously mentioned financial agreement.
In February 2003 the wife purchased a property at M Street, Suburb G for $390,000.00. The purchase price substantially comprised a mortgage advance of $292,500.00 and a drawdown as against the mortgage secured on her Suburb F property of $150,000.00. Any remaining shortfall she says was met with monies provided by her mother. The husband asserts that he did some work in and around the property. His evidence is contradicted by the wife and her father. In November 2012 the wife sold the Suburb G property for $510,000.00. The wife received from the net proceeds of sale $96,986.00 after having paid part of the proceeds of sale in the sum of $150,000.00 to her self-managed superannuation fund.
In about 2003 the husband received a Family Provisions Act (NSW) settlement of $16,168.00 in relation to his father’s estate. These funds were deposited to his Westpac account and later $15,000.00 was withdrawn by cheque. The funds were withdrawn by the wife as a loan to her and in July 2006 she repaid $16,000.00 to the husband’s business account with funds provided from her parents together with a further $21,000.00 to “encourage him to purchase a home”. The payment of the total of $36,000.00 is evidenced in the husband’s bank statement on 13 July 2006. The suggestion that it was the proceeds of the husband’s car insurance claim is rejected by the wife and not supported by any objective evidence. Funds in the husband’s business account were dissipated over the next month or so primarily by cash ATM withdrawals and cheque transactions. The husband adduces no evidence as to the cheques drawn and otherwise simply asserts the funds were taken by the wife, an assertion she rejects.
In October 2003 the wife purchased the property at C Street, Suburb B for $755,000.00. The purchase price substantially comprised a mortgage advance of $600,000.00. The deposit was advanced by the wife’s mother with a further $40,000.00 drawn against a Line of Credit mortgage secured over the Suburb G property. The husband asserts some modest work by him to the roof at the time of purchase. The wife later repaid the funds advanced by her mother from the net proceeds of sale of her Suburb I property in late December 2003. The property was sold in June 2015 for $865,000.00 with the proceeds of sale being the subject of interim orders referred to above with $200,000.00 being distributed to the parties.
In February 2005 the wife was involved in a serious motor vehicle accident that involved a number of hospital admissions until April 2011. It is clear that for several years after the accident her available income after outgoings was diminished by her reduced capacity to work.
In May 2007 the wife received a redundancy payment from her employer of $12,603.00 net. Thereafter the wife made various payments for overseas trips taken by her and the husband totalling about $12,000.00.
In February 2008 the wife found significant cash in the home at D Street. The husband, she says, asserted it was cash from the sale of drugs by him. He says it was cash from his work. The wife asserts the parties then separated for a period. They resumed their relationship in April 2009, although, asserts the wife, they were not living together just “dating”. The husband refutes any suggestion of separation.
Notwithstanding a violent domestic incident involving the Police in mid-2009 (Exh “I”) the parties married in the following month.
The December 2009 separation: In December 2009, after the wife asserts she found a quantity of marijuana in her home the parties separated again and did not reconcile until October 2012. The husband says there were no drugs and the separation was a sham for the purposes of the wife’s motor accident claim and even though he remained at his mother’s he spent most weekends at D Street. Such contention is supported by his mother’s evidence. Yet Police records (Exh “I”) reveal:
a)That on 30 July 2010 the husband was stopped by Police at a known drug location. His address was given as that of his mother. He was identified as a known drug user.
b)That on 24 March 2011 the husband was at a hotel when stopped and searched by police using a drug detection dog. His address was given again as that of his mother.
c)That on 15 October 2011 the husband as a victim was spoken to by police, giving his address as that of his mother. He complained to police: that he had been in a relationship for 12 months and his partner had miscarried about 6 weeks previously, that his partner who was affected by alcohol, alleged he had been sleeping with other partners, that he was called to his partners unit, that he attended and an argument ensued. The Police were called by neighbours. He was spoken to by police at the partners unit then left.
The husband in oral evidence perplexingly denied any knowledge of the last incident despite being clearly identified in the police particulars.
The wife throughout continued to manage his financial affairs although he had his own ATM card access to his account for some of this period. The wife acknowledges that she was able to draw cheques on his account and did so to pay his bills particularly his suppliers for his business and his taxation obligations. She refutes the suggestion that she used his funds for her purposes save where conceded by her above.
In January 2012 the husband was paid $6,550.00 by way of long service accumulation from his previous employer. The funds were paid to his Westpac account. These funds were promptly withdrawn by three cheques within a matter of days. The husband adduces no evidence as to the payees of cheques drawn, simply asserting that the wife used the funds. Again in August 2012 the husband received a tax refund and asserts that the wife then drew $6,600.00 by cheque the next day. He adduces no evidence of the payee of the cheque.
In June 2012 the wife received a net lump sum compensation payment of $351,166.00 in relation to injuries received by her in the motor vehicle accident in February 2005. The wife applied the compensation funds received by her as follows:
a)in discharge of the $92,460.00 mortgage secured over her Suburb C property;
b)in July 2012 a $105,550.00 reduction of the mortgage secured over the Suburb B property;
c)in July 2012 a $105,550.00 reduction of the mortgage secured over the Suburb G property;
d)a payment on 13 December 2012 of $120,000.00 into her self-managed superannuation fund with this deposit comprising some of the funds from the sale of the Suburb G property.
The overall award dated March 2012 comprised various components:
Past loss of earnings incl super $ 70,000.00
Future loss of earnings incl super $ 185,000.00
Past treatment: $ 117,429.00
Future treatment: $ 15,000.00
Past gratuitous care: $ 48,576.00
Future commercial care: $ 40,000.00
$ 476,005.00
Ultimately, the wife received $351,166.00 net after costs, Health insurance payback of $1,881.00 and Workers Compensation payback of $106,757.00.
Counsel for the husband contends that the award was a windfall to both parties. This ignores the fact that it was the wife that suffered the injury and was compensated for the losses to her by reason of same. A significant sum was to provide for future expenses and losses after March 2012. The husband contends that the separation from 2009 to 2012 was occasioned by some evidentiary issue relating to her compensation claim. Ultimately, there was no evidence capable of supporting such a contention. It is accepted that, in fact, the parties were indeed separated for reasons put forward by the wife but that their relationship continued in some fashion over the period until full cohabitation resumed. Ultimately, the reasons for the separation are of no assistance.
Subsequent to separation and in May 2014 the wife paid out $6,051.00 being the balance of a joint personal loan that the husband had requested her to facilitate. The borrowed funds of about $11,000.00 were used to repay cash funds advanced to the husband by a friend. The husband asserted that the funds borrowed by him over a period were used to ready the Suburb G property for sale. The wife refutes this assertion. The “borrowing” was repaid to his friend from the bank personal loan advance.
The Wife’s Self-Managed Superannuation Fund
In mid-2012 the wife set up the Vidma Super Fund, her self-managed superannuation fund. The trustee of the fund is Vidma Investments Pty Ltd, controlled by the wife.
As at February 2013 the fund had cash assets of $334,796.00 at bank with a credit union. Part of the funds comprised a $66,500.00 rollover of her accumulated commercial fund entitlements: Exh “L”.
As at 30 June 2016 the wife had an accumulated benefit in her fund of $274,767.00 with the assets of the fund comprising substantially of two leveraged and rented real estate properties.
The parties’ evidence
The issues between the parties are diverse. They represent conflicting case theories as to what transpired during the relationship.
The Court has had the opportunity to see and hear the evidence of both parties.
The evidence of the husband must be considered with some leniency due to his literacy disabilities, yet it was most unsatisfactory. There were forensic gaps in his evidence particularly as to the wife’s asserted use of his account to supplement what he says were her deficient resources. The wife was not taken to task in any detail as to her finances from time to time which, if the husband was to be believed, would show in her accounts a paucity of resources to meet significant property outgoings. Her explanation of funds borrowed from her parents was not put in issue. She received capital funds from the sale of her properties at Suburb I, Suburb F and later Suburb G.
The husband’s oral evidence was at best self-serving, seeking to promote a case theory that was not supported by evidence.
The wife gave clear and precise evidence. She was methodical when taken to task on particular issues. Her explanations were supported by evidence. Yet the impression was given that she and her witnesses were intent on only a begrudging acknowledgment of the husband’s non-financial tasks undertaken in relation to her various properties and deprecatory of his evidence in this regard.
Yet overall where there is a significant conflict between the evidence of the husband and wife the evidence of the wife is to be favoured unless the husband’s evidence is subject to objective corroboration.
The issue of contributions
The primary issue in contention is the nature and extent of the husband’s contributions to the asset pool, if any.
The wife asserts that the husband made little non-financial contribution to the properties at Suburb F or Suburb B and work that he did at Suburb G and Suburb C was paid for by her in payment totalling $4,300.00.
The wife concedes that the husband had advanced some funds to her during cohabitation. In April 2006 he advanced $1,080.00 with those funds being repaid to him by July 2006. Sometime after 2002 the husband advanced to her funds he received from a Family Provisions claim. The wife asserts that he was later paid a total of $37,000.00 as referred to above. This sum is asserted by the husband to be his car insurance payout, yet he adduces no evidence to support such contention.
The wife asserts that since the commencement of cohabitation she and the husband have kept their finances separate and that she did not consult the husband in relation to any of her investment or financial decisions. That appears clear from his lack of knowledge as most, if not all, of her financial dealings. She says that such arrangement was implemented by her in accordance with the financial agreement entered into by them in 2001 and that she abided by that arrangement: assets in her name were hers.
She says that any work undertaken at her properties was undertaken by her father, who gives evidence that he undertook substantial works for her, or tradesmen. Any work done by the husband she says was paid for by her on a commercial basis. The wife’s elderly father gave somewhat unhelpful evidence on the issue but the wife’s mother was supportive of her daughter’s contentions. The husband rejects this proposition. He, she says, made little or no financial contribution to her properties and if so she sought to minimise same.
The wife asserts that she met her mortgage obligations from rent with any shortfall being funded from her salary or monies advanced to her by her parents over a period of years. She otherwise contends that she, as a consequence of the husband’s poor literacy skills, managed the husband’s finances and did his books for him.
The husband agrees that that the wife managed his finances well, paying his business bills and tax obligations, but asserts that she operated on his bank account and its ATM card as she wished to use his income (and tax refunds) for household and domestic expenses and as required for her property outgoings and expenses. He conceded in his oral evidence that during periods he had access by ATM card to his account.
The capacity for the husband to contribute depends on his available after tax income. His and his company tax returns comprise Exh “J”. The wife’s comprise Exh “K”.
The available after tax income (taxable income plus or minus tax refunds or tax liabilities) for both parties was as follows:
Husband: Wife:
2001 $ 13,291.00 2001 $ 27,643.00
2002 $ 13,614.00 2002 $ 29,120.00
2003 $ 17,586.00 2003 $ 25,730.00
2004 $ 23,983.00 2004 $ 17,514.00
2005 $ 25,184.00 2005 $ 11,468.00
2006 $ 35,316.00 2006 $ 8,881.00
2007 $ 34,158.00 2007 $ 9,925.00
2008 $ 61,909.00 2008 $ 25,937.00
2009 $ 65,281.00 2009 $ 45,514.00
2010 $ 43,378.00 2010 $ 28,430.00
2011 $ 68,057.00 2011 $ 43,208.00
2012 $ 23,869.00 2012 $ 54,800.00
2013 $ 16,848.00 2013 $ 76,618.00
$ 442,474.00 $ 404,784.00
The wife’s figures are after her various rental property deductions are included and thus represent funds available save for any component of principal paid off her mortgages. The overall difference over 13 years is minimal, averaging about $3,000.00 per annum. As she asserts any shortfall needed was met by funds advanced by her parents from time to time. Such advances will be considered as her contributions.
The husband asserts the use of his income by the wife to fund her properties and to some extent their joint household expenses. It is difficult to classify the latter as a contribution to property and there is no evidence supporting the former.
The husband’s case is based on general assertions and innuendo. There is no evidence such as to quantify the effect of his non-financial contributions, such as they are, to the properties of the wife. They must loom most insignificant in the light of the wife’s overall financial contributions.
There is no issue taken that the capital funds used to acquire the wife’s various properties were those of the wife. Yet after the application of the wife’s income to her property outgoings and expenses her available income otherwise was available to her to meet household and other expenses.
At all relevant times the husband resided in the home owned by the wife.
The parties’ circumstances
The wife is in full time employment earning about $100,000.00 per annum gross plus rental income.
The husband was in full time employment earning about $40,000.00 per annum after tax until August 2015 when he was dismissed. He was the subject of some mental health concerns in October 2015 but there is no evidence of any engagement with a mental health professional: Exh “H”.
He thereafter worked casually doing small cash jobs until injured in late January 2016 in a fall. He had surgery on a torn bicep tendon in April 2016 with good result by August 2016: Exh “G”.
At trial he was in receipt of Newstart benefits from Centrelink. He lives with his elderly mother who has provided significant financial support for him post separation. He asserts he is not capable of employment, yet has not undertaken remedial therapy for the injury. His mother, at whose home the husband resides on some nights of the week, in oral evidence asserted that indeed he was working a few days per week. He also assists her around her home: “lawn mowing and anything that needs to be done”.
It is agreed that he has poor literacy skills and suffers from dyslexia. His circumstances could be improved with tutoring.
The Law: The Approach to Property Adjustment
The approach to the determination of an application under s 79 of the Family Law Act 1975 (Cth) (“the Act”) is set out in Stanford v Stanford (2012) 247 CLR 108 and further considered by the Full Court in Bevan & Bevan [2014] FamCAFC 19, Chapman & Chapman [2014] FamCAFC 91 and Scott & Danton [2014] FamCAFC 203.
The Court must identify the existing legal and equitable interests of the parties in the property, the liabilities and financial resources of the parties at the time of the hearing and then whether it is just and equitable to make a property settlement order.
Such a consideration should not be guided by an assumption that the parties’ rights to or interests in property are or should be different from those that then exist. The question is whether those rights and interests should be altered.
There is no presumption that one or other party has the right to have the property of the parties divided between them or a right to an interest in marital property that is fixed by reference to the various matters in s 79(4). The Court needs to conclude that it would be unjust or unfair to leave property rights intact under s 79(2) of the Act.
In many cases this requirement is readily satisfied where the parties are no longer in a marital or defacto relationship and, thus, for example, the common ownership or use of property by husband and wife will no longer be possible or the express or implicit assumptions that underpinned existing property arrangements such as the accumulation of assets or financial resources by one for the benefit of both have been brought to an end with the relationship. Such is the case in this matter.
In particular, such a circumstance arises where both parties seek property adjustment orders but are unable to agree as to same. Here the wife seeks an order for adjustment of property as does the husband.
It would thus be unjust or unfair to leave the parties’ present property rights intact where there remains common ownership and discrete assets are sought by each.
Section 79(4) requires a consideration of the contributions made by the parties as defined in s 79(4)(a) to (c). The Court must then consider s 79(4)(d) to (g), in particular, the subjective considerations as to the parties by having regard to the provisions of s 75(2) in so far as they are relevant (s 79(4)(e)).
The Court can then consider the “justice and equity” of the actual orders to be made: Russell & Russell (1999) FLC 92-877; Teal & Teal [2010] FamCAFC 120, in the context of the Court’s obligation to make “appropriate orders” as provided for in s 79(1) of the Act.
The “Pool”
The parties provided to the Court a draft balance sheet (Exh “F”).It was not contended that there should be other than a one pool approach.
Following submissions the agreed assets and liabilities of the parties are as follows:
Assets:
Wife D Street, Suburb C $ 675,000.00
Joint Controlled monies account $ 277,106.00
Wife Motor vehicle $ 11,000.00
Husband Utility vehicle $ 1,000.00
Wife Vidma Super Fund $ 274,757.00
Husband CBUS Super $ 37,612.00
$ 1,276,475.00
Otherwise, it is appropriate to addback the preliminary property distributions made to each party of $100,000.00 under the interim orders as that distribution represents a significant portion of the pool.
Accordingly the pool for consideration is $1,476,475.00.
Contributions
The evidence is set out and discussed above. The determination properly depends upon the husband providing evidence as to his contributions in the context of s 79(a) and (b) that provide for the Court to consider:
(a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them;
The assessment of contributions was considered years ago in Harris and Harris (1991) 15 Fam LR 26 at [31] the Full Court said:
…In assessing contributions “the task of the court in proceedings under section 79 (and thus s 90SM(4)) is not akin to an accounting exercise. To borrow a phrase used by McClelland J in Davey v Lee (1990) DFC 95-084; (1990) 13 Fam LR 688 at 689 in relation to section 20 of the De Facto Relationships Act 1984 (NSW):
''the Court is required to make a holistic value judgment in the exercise of a discretionary power of a very general kind'.'
That statement was reinforced recently by the Full Court in Petruski & Balewa [2013] FamCAFC 15 and Lovine & Connor and Anor [2012] FamCAFC 168.
At the commencement of cohabitation the wife’s assets exceeded those of the husband. There is no evidence of values save for the details as to the purchase of the two properties then owned.
The husband’s contended contributions overall in the context of this childless relationship fall into two categories:
a)His non-financial contributions to the wife’s properties by reason of his work done in relation to same. Even accepting the husband’s evidence with some reservation and accepting that the wife sought to minimise any such contribution, there is no evidence that such work enhanced or increased the value of the subject property. At best his work relieved the wife of having to pay for tradesman/labourers or reduced to onus on her father to do work. The husband gives no evidence of the value of the work allegedly undertaken by him.
b)His financial contributions by reason of him earning income during the relationship. Yet apart from general assertions as to the wife as it were, appropriating his income for some purpose or other there is no evidence supporting such assertions. No detailed bank records were in evidence for the period of cohabitation. He could not be seen to complain should the wife apply part of his income to household and living expenses when he is living in her home. Otherwise, the evidence is that her income after substantially all of her property expenses was similar to his, leaving the question unanswered as to what his income was applied to. Such was a forensic issue left unanswered by the husband.
The wife contends that she kept their finances separate and the evidence is mostly supportive of that.
The conclusion must be that the wife’s contributions including her personal injury award result in an overwhelming finding as to contributions in her favour. That is the submission on behalf of the wife and it is accepted.
It is considered that such should be reflected in a finding that contributions favour the wife 85 per cent to the husband’s 15 per cent.
Section 75(2)
The husband contends that his health is a significant factor. This is discussed above. There is evidence that he is capable of some employment but some suspicion that he chooses not to exercise what might be a greater capacity.
There is a significant income capacity disparity between the parties. The wife earns about $100,000.00 per annum with commensurate superannuation accruals and has rental income.
The wife will retain significant assets as a consequence of the contribution based findings. The husband will have much less.
The parties do not contend any other relevant consideration. Such is the case.
The husband asserts that an adjustment of 15 per cent to the contribution findings is appropriate. That would create a disparity of about $442,000.00 between the parties. It is considered that by reason of the matters referred to an adjustment of 10 per cent creating a disparity between the parties of 20 per cent of the pool or just under $300,000.00 is in the circumstances appropriate.
Overall
Overall the result would be that the husband should receive 20 per cent of the pool. Such is equal to the sum of $369,000.00.
The husband having received an interim distribution of $100,000.00 his entitlement can be met by him receiving $269,000.00 from the balance of the controlled money account, with the balance payable to the wife.
Orders will be made accordingly.
The Question of Costs: The Binding Financial Agreement proceedings
The husband seeks an order for his costs thrown away by reason of the wife’s abandonment of her application seeking to have the financial agreement declared binding.
Section 117 of the Act provides that each party to the proceedings shall bear his or her own costs.
That principle is, however, subject to the discretion afforded to the trial judge in subparagraph (2), which provides that if the Court is of the opinion that there are circumstances that justify it in doing so, the Court may, subject to further subsections thereof and the applicable Rules of the Court, make such order as to costs as the Court considers just.
Although s 117(2) requires a finding of justifiable circumstances as an essential preliminary to making an order for costs, there is no additional or special onus on an applicant who seeks an order for costs: see Penfold v Penfold (1980) 144 CLR 311.
The matters relevant to determining what order, if any, should be made for costs are set out in subsection (2A) of that section. They relevantly, in these proceedings, relate to the following:
(a)the financial circumstances of each of the parties to the proceedings;
(b) whether any party has legal aid and the terms of any grant of aid;
(c) the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answers, questions, admissions of facts, production of documents and similar matters;
(d) whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the Court;
(e) whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f)whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
(g) such other matters as the Court considers relevant.
The Full Court in Hawkins & Roe [2012] FamCAFC 77 said:
17. With respect to the application of the section, in Penfold and Penfold (1980) 144 CLR 311, the High Court said at 315 and 316:
Sub-section (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs. Consequently, with respect to their Honours in the Family Court, we do not agree with the suggestion made in the judgment under appeal that an order can only be made under s. 117 (2) in "a clear case".
Sub-section (2) does not in our view as a matter of law require the judge to specify the circumstances which justify the making of an order. It does not expressly say so, and in the context of the making of an order for costs there is no sufficient basis for making an implication. Judges very frequently make orders for costs without giving reasons or making findings, even when costs are in issue. The absence of reasons or findings does not in itself indicate that a judge has erroneously exercised his discretion to award costs, though it will place an appellate court in the position of examining the circumstances and of determining for itself whether the circumstances show that the discretion was erroneously exercised (Kent v. Kent). Accordingly, in the absence of some positive legislative indication we should not attribute to Parliament the requirement that a judge must make particular findings in relation to an order for costs.
18. The weight to be given to a particular consideration under s 117(2A) is a matter for the discretion of the judge. However, in I and I (No 2) (1995) FLC 92-625 the Full Court of this Court held that the relevant matters in s 117(2A) “must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs”. That is not to say that one single matter may not ultimately be determinative. The Full Court confirmed this in Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Another (2005) 33 Fam LR 123 at paragraph 41:
… A number of factors are then listed in the subparagraphs. The financial circumstances of each of the parties to the proceedings is the first mentioned factor. Nowhere in subs (2A) or elsewhere in s 117, is there any prescription that more than one factor must be present before an order for costs is made nor of comparative weight of the factors set out in subs (2A). As a consequence, there is nothing to prevent any factor being the sole foundation for an order for costs.
The financial circumstances of both parties as a consequence of property orders are set out above. It is clear that the wife has the capacity to meet a costs order. The husband is in a weaker financial circumstance.
Neither party has legal aid.
The wife‘s response to the husband’s property application was to assert the binding validity of the financial agreement dated October 2001. That issue was the focus of the parties for the next 12 months with the issue being substantially prepared for trial at which time the wife informed the husband that she conceded the issue.
The wife was wholly unsuccessful on the issue.
In all the circumstances a departure from the general rule is justified.
An order for costs to be agreed or in default of agreement assessed on a party/party basis will be made.
I certify that the preceding one hundred and sixteen (116) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 27 June 2016.
Associate:
Date: 27 June 2017
Key Legal Topics
Areas of Law
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Family Law
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Property Law
Legal Concepts
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Costs
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Remedies
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Statutory Construction
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Appeal
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