Bhandari & Garrett
[2024] FedCFamC2F 11
•10 January 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Bhandari & Garrett [2024] FedCFamC2F 11
File number(s): MLC 7810 of 2021 Judgment of: JUDGE STEWART Date of judgment: 10 January 2024 Catchwords: FAMILY LAW – PROPERTY – Section 78 – Equitable interests – Property outside jurisdiction – Declarations – Orders made Legislation: Family Law Act 1975 (Cth) ss 31(2), 44(3), 78, 78(1), 78(2), 79, 111AA, 131(2)
Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 25(2), 131(2)
Cases cited: Ali & Ali [2019] FamCA 1012
Archer v Preston (1672) 1 Eq Abr 133
Bosanac v Commissioner of Taxation [2022] HCA 34
Chen & Tan [2012] FamCA 225
Davies v The National Trustees Executors and Agency Co of Australasia Ltd [1912] VLR 397
Galloway & Midden (No.2) [2014] FamCAFC 60
Hamlin v Hamlin [1986] Fam 11
Lord ArglassevMuschamp (1682) 1 Vern 75; 23 ER 322
Lord CranstownvJohnston (1796) 3 Ves 170; 30 ER 952
Lord Kildare v Eustace (1686) 2 Ch Cas 188; 22 ER 905
Martin v Martin (1959) 110 CLR 297
Michael Wilson and Partners Ltd v Robert Colin Nichols [2008] NSWSC 1230
Pates v Pates [2018] FamCAFC 171
Teo & Guan [2015] FamCAFC 94
The British South Africa Company v The Companhia de Moçambique [1893] AC 602
West v Mead [2003] NSWSC 161
Division: Division 2 Family Law Number of paragraphs: 78 Date of hearing: 10 May 2023 Place: Melbourne Counsel for the Applicant: Mr Howe Solicitor for the Applicant: Swiftly Legal Solicitor for the Respondent: The Respondent appearing in person ORDERS
MLC 7810 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS BHANDARI
Applicant
AND: MR GARRETT
Respondent
ORDER MADE BY:
JUDGE STEWART
DATE OF ORDER:
11 JANUARY 2024
THE COURT ORDERS THAT:
1.Pursuant to subsection 78(1) of the Family Law Act 1975 (Cth) (“the Act”), it is declared that the parties own the property known as B Street, Suburb C, in the State of Victoria (“the Suburb C Property”), as joint tenants as to 50% to the Applicant Wife and 50% to the Respondent Husband.
2.Pursuant to subsection 78(2) of the Act:
(a)An option be and is hereby granted to the Respondent Husband to purchase the Applicant Wife’s right title and interest in the Suburb C Property.
(b)The Respondent Husband must advise the Applicant Wife in writing within 30 days of the date of these orders whether he wishes to exercise the option granted under order 2(a) hereof.
(c)If the Respondent Husband notifies the Applicant Wife in accordance with order 2(b) hereof that he wishes to exercise the option granted under order 2(a) hereof, then:
(i)Within 90 days of the date of these orders (“the due date”), the Respondent Husband shall pay to the Applicant Wife amounting to 50% of the equity in the Suburb C property (“the Suburb C Purchase Payment”), which shall be calculated as follows:
A.($1,600,000 less the quantum of the National Australia Bank mortgage secured against the Suburb C Property on the date of the Suburb C Purchase Payment) divided by 2.
(ii)Contemporaneously with the Suburb C Purchase Payment:
A.The parties must do all things and sign all documents necessary to discharge the mortgage on the Suburb C Property (National Australia Bank account number …63) and release the Applicant Wife from her personal covenants in respect of that mortgage and from any guarantee by the Applicant Wife in relation to that mortgage;
B.The Respondent Husband shall be solely responsible for the moneys required to discharge the current mortgage on the Suburb C Property; and
C.The Respondent Husband shall indemnify the Applicant Wife against all future payments and liabilities pursuant to the current mortgage as well as all apportionable rates, taxes and outgoings with respect to the Suburb C Property of whatsoever nature and kind.
(iii)If the whole of the Suburb C Purchase Payment has not been made by the due date, then the parties shall do all acts and things required to sell the Suburb C Property and, to that end, order 3 hereof shall apply.
(d)If the Respondent Husband either notifies the Applicant Wife that he does not wish to exercise the option granted under order 2(a) hereof, or if the Respondent Husband fails to make the notification required by order 2(b) hereof, then the Suburb C Property shall be listed for sale in accordance with order 3 hereof.
3.Pursuant to subsection 78(2) of the Act, then within 14 days of either order 2(c)(iii) or order 2(d) hereof coming into effect, the parties shall do all acts and things and sign all documents necessary to list for sale and sell the Suburb C Property for the best price reasonably obtainable and in the following manner (except as otherwise agreed between the parties in writing):
(a)the parties will appoint an agent as agreed in writing (and in default of agreement as to agent, then within twenty-one (21) days the Applicant Wife shall nominate three agents and the Respondent Husband shall select one of those agents) (“the agent”) to list for sale and sell the Suburb C Property by auction, the costs of such appointment and any costs of the sale to be paid by the parties in equal shares s and when such costs become due and payable;
(b)the reserve price for the purpose of such auction will be as agreed by the parties in writing or, in the absence of agreement reached by fourteen (14) days prior to the date of the auction, as nominated as the fair market value by the agent;
(c)if bidding at the auction does not reach the reserve price, the parties or such of them as attends the auction (whether in person, by telephone, or by their nominee) is entitled to negotiate with the highest bidders or any other interested person at the auction and effect a sale of the Suburb C Property at such price as the parties agree upon in writing and in default of agreement by the date of the auction at a price which is not lower than 5 percent below the reserve price;
(d)if the Suburb C Property remains unsold following the auction, then the parties will do all acts and things and sign all documents necessary to immediately list the home for sale by public auction again on a date to be nominated by the agent, and at such auction the reserve price will be 5 per cent lower than the previous auction (or such other amount as agreed between the parties in writing);
(e)the parties will instruct D Law Firm to have the conduct of the sale, including preparing a sale contract, vendor’s statements and all other documents to effect the sale and settlement of the Suburb C Property; and
(f)upon settlement of the sale of the Suburb C Property, the Applicant Wife and Respondent Husband will forthwith cause the proceeds of sale to be applied as follows:
(i)to meet the costs and expenses of the sale, including legal fees of the conveyance and real estate agent fees and commissions;
(ii)to discharge the National Australia Bank mortgage, account number …63; and
(iii)to distribute the balance as follows:
A.50 per cent to the Applicant Wife; and
B.50 per cent to the Respondent Husband.
4.Pursuant to subsection 78(2) of the Act, pending either the Respondent Husband purchasing the Applicant Wife’s interest in the Suburb C Property in accordance with order 2 hereof, or the settlement of the sale of the Suburb C Property in accordance with order 3 hereof:
(a)the Respondent Husband shall have exclusive use and occupation of the Suburb C Property; and
(b)the Respondent Husband shall have sole responsibility for paying all mortgages, rates, taxes and similar costs concerning the Suburb C Property (as and when such fall due).
5.Pursuant to subsection 78(1) of the Act, it is declared that the parties are the joint owners of the chose in action constituted by the joint National Australia Bank account …58.
6.Pursuant to subsection 78(1) of the Act, it is declared that the Respondent Husband holds $50,000 on trust for the Applicant Wife’s benefit, in his personal bank account.
7.Pursuant to subsection 78(1) of the Act, it is declared that the Applicant Wife holds the title in the property at Town E, Country F (“the Town E Property”) on trust for the benefit of herself and the Respondent Husband in equal shares.
8.Pursuant to subsection 78(1) of the Act, it is declared that the Applicant Wife holds the title in the property at Suburb G, Country F, (“the Suburb G Property”) on trust for the benefit of herself and the Respondent Husband in equal shares.
9.Pursuant to subsection 78(2) of the Act, within 30 days of the date of these orders, the Respondent Husband shall pay to the Applicant Wife:
(a)$21,254;
(b)50% of all interest received on the joint National Australia Bank account number …58 since 4 May 2023 (being the date on which the parties filed the statement of agreed facts in this matter); and
(c)50% of all interest received on the Respondent Husband’s personal bank account since 4 May 2023.
10.Pursuant to subsection 78(2) of the Act, upon the Husband making the payment required under order 9 hereof, that payment will be taken to have the following effects:
(a)the Respondent Husband shall become solely entitled to all remaining moneys in the parties’ joint National Australia Bank account number …58;
(b)the Respondent Husband shall no longer be considered to hold any moneys on trust for the benefit of the Applicant Wife, and all moneys in his personal account shall be held solely for the Respondent Husband’s own benefit;
(c)the Applicant Wife shall no longer be considered to hold the Town E Property on trust for the benefit of herself and the Respondent Husband, and the Town E Property shall be held solely for the Applicant Wife’s own benefit; and
(d)the Applicant Wife shall no longer be considered to hold the Suburb G Property on trust for the benefit of herself and the Respondent Husband, and the Suburb G Property shall be held solely for the Applicant Wife’s own benefit.
11.Pursuant to subsection 78(2) of the Act, upon the Respondent Husband making the payment required under order 9 hereof, the parties shall forthwith do all acts and things and sign all documents necessary to transfer the joint National Australia Bank account number …58 to be in the Respondent Husband’s name solely.
12.Pursuant to subsection 78(2) of the Act, until the Respondent Husband makes the payment required under order 9 hereof and the transfer of ownership of the joint National Australia Bank account number …58 required under order 11 hereof is complete, neither party may remove any moneys from the joint National Australia Bank account number …58, save that the Respondent Husband may use moneys in that account to make the payment required under order 9 hereof.
13.Leave is granted to the parties to approach the Chambers of Judge Stewart by email (…@...) to have the matter listed within 14 days from the date of these orders for mention as to the form (but not substance) of these orders.
14.All extant applications be otherwise dismissed and the matter removed from the list of pending cases maintained by the Court.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE STEWART
INTRODUCTION
These are property proceedings between the Applicant Wife (born in 1976, now 47 years old) and the Respondent Husband (born in 1970, now 53 years old). The parties met in Country F in 2003, and commenced cohabitation in 2004. The parties separated on 5 July 2016, and a divorce order took effect in 2017. The parties have two children (one born in 2005, now 18 years old, and the other born in 2009, now 14 years old). No parenting orders have been sought in these proceedings. The children currently spend equal time with the parties in a shared-care arrangement.
APPLICATION UNDER SECTION 78 OF THE ACT
Since the parties’ divorce took effect in 2017, the Applicant Wife is out of time to make an application for property orders under section 79 of the Family Law Act 1975 (Cth) (“the Act”). As per section 44(3) of the Act, the Wife would therefore require leave in order to make her application, which would likely have been heard as a threshold issue in the proceedings. However, instead the Wife has chosen to make an application under section 78 of the Act. Section 78 is not subject to the same time limits, and the Wife does not require leave to make her application.
Because the Wife has chosen to apply for orders pursuant to section 78 of the Act, the scope of the Court’s powers in this matter are reduced. In section 79 applications, the Court can make orders altering the parties’ property rights. In section 78 applications, the Court can only make orders declaring what the parties’ existing property rights are and make orders consequential to those declarations. Section 78 declarations may still have the effect of altering the formal legal ownership of certain property, for example if the Court were to declare that the legal owner of particular properties held those properties on trust for another. However, key tools commonly used in section 79 applications (most notably add backs and superannuation splitting orders) are unavailable in section 78 applications. Critically, the Court also has no power under section 78 to re-arrange the parties’ affairs, even where the Court considers that it would be just and equitable to do so. In order to impose a remedy such as a constructive trust, the Court must find that it would be unconscionable to allow the legal ownership of specific properties to remain. Mere unfairness does not suffice.
Given the uncommon, but not unheard of, nature of this application, I invited the parties to consider whether the application might be able to be amended by consent to be a section 79 application, accompanied by consent to proceed on that application out of time. No agreement could be reached. The decision by the Wife to apply under section 78 instead of seeking leave to apply out of time under section 79 has complicated this matter, and I am not persuaded it has been to her advantage. For example, Counsel for the Wife also acknowledged that the Wife could not seek orders to equalise the parties’ superannuation, but would have done so had this been a section 79 application. Counsel for the Wife noted, for completeness, that it might be possible to assert that the Husband held part of his superannuation on trust for the Wife, though the Full Court has repeatedly declined to answer that question. Despite that being a possibility, I consider Counsel properly conceded the Wife could not seek such orders here. I note that the Wife may not have received leave to apply out of time under section 79 (though there is no reason why an applicant could not apply for leave to proceed out of time under section 79, and in the alternative seek remedies under section 78), and I do not express any concluded views on her prospects had she sought leave to apply out of time because that was not the question before me. However, on an initial reaction, the Wife would appear to have had an arguable case for leave.
The Husband (who was self-represented) decided to accept section 78 as the basis on which the application should proceed, rather than, for example, lodging his own application for the matter to be dealt with under section 79. Again, that would have required leave to apply out of time, but such leave would seem difficult for the Wife to have resisted, given she would then have been seeking simultaneous orders. As will be seen, the Husband’s proposed orders effectively seek to establish a property adjustment in his favour of 62%-38%, uniformly across all significant property of the marriage. However, since the matter has proceeded as a section 78 application, he has been compelled to argue for the existence of constructive trusts over every major asset the parties hold, which is a more complicated task. I remarked during the hearing that the case struck me as one likely to achieve a 50%-50% result, had it been a section 79 application. The Husband faced a more complicated task in preparing arguments regarding trust law and international jurisdiction, rather than regarding what would be a just and equitable result between the parties. That is no small additional burden on a self-represented litigant.
THE PARTIES’ PROPOSALS:
The Wife seeks orders (inter alia):
(a)a declaration (under section 78(1) of the Act) that the parties hold the property known as B Street, Suburb C, Victoria (“the Suburb C Property”) as joint tenants;
(b)consequential orders (under section 78(2) of the Act) that the Husband have an option to purchase the Wife’s interest in the Suburb C Property for 50% of the agreed value (that is, for $800,000, being 50% of $1.6 million), failing exercise of which option the Suburb C Property must be sold and the proceeds divided equally between the parties;
(c)a declaration that the parties are joint owners of a particular National Australia Bank account;
(d)consequential orders that $35,556.18 be paid out of that account to the Wife, and the balance to the Husband;
(e)a declaration that the Husband holds a further $50,000 on trust for the Wife’s benefit;
(f)consequential orders that the Husband pay the Wife that further $50,000; and
(g)a declaration that all other property not expressly dealt with in these orders (including choses in action and superannuation) are otherwise beneficially owned by the current legal owners.
The Wife seeks that there be no orders regarding any properties held in Country F.
The Husband seeks (inter alia):
(a)a declaration that the parties hold the Suburb C Property on trust for the benefit of Husband and the Wife in a 62%-38% ratio, respectively;
(b)consequential orders that the Husband have an option to purchase the Wife’s interest in the Suburb C Property for $608,000 (being 32% of the agreed value of $1.6 million), failing exercise of which option the Suburb C Property must be sold and the proceeds divided 62%-38% between the parties;
(c)a declaration that the parties hold the National Australia Bank account jointly on trust for the benefit of the Husband and the Wife in a 62%-38% ratio, respectively;
(d)consequential orders for the National Australia Bank account to be closed following discharge of the mortgage on the Suburb C Property, with the proceeds divided 62%-38% between the parties;
(e)a declaration that the Husband holds a further $38,000 on trust for the Wife’s benefit;
(f)declarations that the Wife holds two properties in Country F (the first at Town E, and the second at Suburb G – collectively “the Country F Properties”) on trust for the benefit of the Husband and the Wife in a 62%-38% ratio, respectively;
(g)consequential orders that the Wife have an option to purchase the Husband’s interests in one or both of the Country F Properties at prices the Husband asserts represent 62% of the fair value of each property, failing exercise of which option(s) one or both of the Country F Properties must be sold, with the proceeds divided between the parties 62%-38% in the Husband’s favour;
(h)further consequential orders that, if the Country F Properties are sold, then the Wife’s share be increased by the $38,000 that the Husband holds on trust for the Wife, whereas if the Wife buys the Husband’s interests in the Country F Properties, then the purchase price be reduced by the $38,000 that the Husband holds on trust for the Wife; and
(i)a declaration that all other property not expressly dealt with in these orders (including choses in action and superannuation) are otherwise beneficially owned by their current legal owners.
It was agreed by all parties that it is not possible for the Husband to become the legal owner of the Country F Properties, as Country F law imposes a 100% property tax upon non-citizens who become legal owners of land in Country F. The Wife is a Country F citizen, but the Husband is not.
Counsel for the Wife argued that the Court has no jurisdiction to make orders that consider or take account of the Country F properties at all, since that would be a declaration of property rights in a foreign country. I discuss that argument in detail below.
AGREED AND DISPUTED FACTS
Helpfully, the parties provided a lengthy statement of agreed facts, which covered almost all material facts in this matter. The matters discussed in the introduction to this judgment are taken from that statement, and I reproduce the rest of that statement here, as it addresses most facts required to evaluate the parties’ competing proposals.
Initial Contributions
6. The wife had no significant assets when the parties began living together, while the husband had approximately $26,784; his assets came from 1.4 million [Country F currency] that he brought with him when he migrated to Australia. Neither party had any significant liabilities.
The [H Street] Property
7. In 2004, one or both parties purchased the property known as [H Street, Suburb J], VIC ([H Street] Property) property for $240,000. The deposit was paid using savings and a First Home Owners Grant, and the balance was paid via mortgage finance. In 2011, the property was sold for [around $370,000]; the net sale proceeds (amount unknown) were used to reduce the debt secured by the [K Street] (see the next paragraph).
Gifts Received from Husband’s Mother
8. During the parties’ relationship, the husband received a total of $10,785 in cash gifts from his mother. These gifts were received in 2004, 2006, and 2012, respectively, and were put towards the parties’ savings ($9,283) and the property known as [Suburb G, Country F] ([Suburb G] Property) ($1,053 – see paragraph 11)
The [K Street] Property
9. In 2007, the parties purchased a parcel of land at [K Street Suburb J] ([K Street] Property) for $215,000. The deposit (amount unknown) was paid using their joint savings, and the balance of the purchase price was paid via mortgage. Shortly after purchasing the land, they built a house on it. The building costs amounted to $240,000, and the parties relied on savings and debt to finance the project.
10. The [K Street] Property was sold in [early] 2013 for $725,000, and the net sale proceeds (amount unknown) were deposited into a joint account. Thereafter, the parties moved to a rented property situated at [L Street, Suburb M] and occupied this property until their separation in July 2016.
The [Country F] Properties
11. In 2011, the parties’ purchased the property known as [Town E, Country F] ([Town E] Property) for [around $30,000]. The purchase price was paid from the parties’ savings. This property has been occupied by the wife’s parents since it was purchased. The current value of the property is $63,886.
12. In 2012, the wife’s parents gifted her [around $6,000], being the sale proceeds of their former family home, and the husband’s mother gifted him [around $1,000]. These funds were put towards the purchase of the [Suburb G] Property. The total purchase price was [around $20,000]. The balance of the purchase price was paid from the parties’ savings. The current value of the property is $64,718.
13. Both the [Town E] Property and the [Suburb G] Property were registered in the wife’s name because the husband was unable to include his name in the title due to a restriction in [Country F]’s property investment laws. This restriction prohibited foreign citizens from becoming registered owners of real estate in [Country F] unless they paid a 100% property tax. The wife is a citizen of [Country F], whereas the husband is not.
The [Suburb C] Property
14. In [late] 2013, the parties purchased the property known as [B Street, Suburb C] ([Suburb C] Property) for $840,285, including the stamp duty and closing costs. The parties contributed $204,285 towards the acquisition costs, and the balance of the purchase price was paid via mortgage. The property’s current value is $1,600,000.
15. They rented the property out to third parties from the time it was purchased until the husband moved into the property in July 2016.
16. After the husband moved to the [Suburb C] Property, he paid for improvements to the house. These included [improvements], which cost approximately $3,000, and installing [appliances] at a cost of $1,200.
The Joint Accounts
17. The parties’ joint account at National Australia Bank, which was opened in [late] 2013 and to which their respective earnings were credited until the date of separation, was a requirement imposed by the bank for approval of the mortgage secured against the [Suburb C] Property. The purpose of the account was to facilitate monthly loan repayments by direct debit.
Other Contributions
18. Based on her tax returns and assessments, the wife’s aggregate earnings during the parties relationship were $500,826.
19. Based on his tax returns, the husband’s aggregate earnings during the parties’ relationship were $797,407.
20. The parties were both employed during their relationship and performed domestic and parenting tasks in equal proportions. They pooled their incomes together to pay family expenses, and they were both employed full-time.
I pause here to note that the Husband’s submissions relied heavily on the aggregate earnings set out in the statement of agreed facts, which he asserts shows he made approximately 62% of the financial contributions to the marriage (on my calculations, his contribution would be rounded to 61%, but as will be seen, nothing turns on that). During cross-examination, the Husband agreed that the earnings totals set out above were pre-tax amounts. The Husband conceded he would have paid more tax than the Wife, and therefore the after tax contributions would have been somewhat closer in proportion than the 62%-38% on which the Husband based his case. Neither party advanced an alternative calculation of the post-tax break-down, and I do not have evidence before me to enable me to estimate approximate taxation liabilities, as the years in which different amounts were earned would radically alter the total liability. Again, as will be seen, nothing turns on the difference between pre- and post-tax aggregate income totals in this case.
One further material fact was agreed between the parties before the start of the trial, though it did not appear in the statement of agreed facts. Following separation, the Husband unilaterally removed $180,000 from the parties’ joint bank account. The Husband told the Wife this was an attempt to acquire security against the possibility of the Wife keeping the full ownership of the Country F Properties without any compensation to the Husband. The Husband stated he would return $80,000 to the joint account once the transaction authority was changed to require two signatures. The Husband returned the $80,000 as stated, but retained the $100,000, which he says reflects the value of his equitable interest in the Country F Properties.
Initially, based on the affidavit material, it appeared there was an extensive list of additional factual disputes between the parties, though very few seemed likely to be material facts. At trial, the parties agreed that almost all disputed facts were not material, and the Husband advised he no longer wished to cross-examine the Wife. Since the Husband has affidavit material on the Court File, I do not take that as the Husband conceding the further facts alleged by the Wife, but rather agreeing to allow the disputed facts to be determined based on the papers.
I took the remaining material factual disputes to be as follows:
(a)Whether there was an intention or understanding that the Husband should own a greater proportion of shared property to reflect his greater financial contribution;
(b)Whether (in the event I find I have jurisdiction to decide the matter) there was an intention that the Country F Properties should be joint property, even though they had to be legally owned exclusively by the Wife; and
(c)Whether the primary purpose in the parties owning the Suburb C Property was solely advancing the family’s welfare (including through access to school districts) or was also a financial investment.
Counsel for the Wife undertook a brief (though appropriate) cross-examination of the Husband. During that cross-examination, the Husband appeared to give full and frank answers to Counsel’s questions, including freely making concessions that were quite damaging to the Husband’s case. I did not consider I had any reason to doubt the Husband’s credibility or reliability, and I take his evidence under cross-examination as reflecting the Husband’s honest views and beliefs about matters in dispute.
During cross-examination, the Husband agreed to the following propositions put by Counsel for the Wife:
(a)Each party paid half the mortgage payments on the Suburb C Property during the relationship;
(b)Once the Husband began living in the Suburb C Property after separation, he was responsible for the full mortgage payments, in lieu of rent;
(c)Both of the parties’ full salaries went into their joint account, and they “both pooled [their] resources for… the common good” with an intention that both parties would benefit from the pooled moneys;
(d)Money for various investments in shares during the relationship was sourced from the parties’ joint savings (and I note that the Husband’s unchallenged evidence in his affidavit is that the shares were sold and the proceeds returned to the joint bank account);
(e)There was never any agreement or specific intention about particular proportions in which each party would benefit from their pooled resources, instead (in the Husband’s words) “We both – we said, ‘Okay. It’s our money’,” and there was never any discussion about which proportions of shared property each party owned; and
(f)The Husband did not have the Wife’s permission to withdraw $180,000 from the joint account.
FACTUAL FINDINGS
Was there a Shared Intention that Joint Assets should be owned in Unequal Proportion?
The factual dispute over whether there was a shared intention for the parties to own different proportions of joint property in accordance with their respective financial positions must fall away, given the Husband’s concessions. Based on the Husband’s answers under cross-examination, the most he can assert is that he had believed that outcome would occur.
There is one more matter I should note regarding the parties’ intentions, because it affects my conclusions regarding the Country F Properties. The Husband was not asked when he formed the view that the parties would own unequal proportions of their shared assets, based on financial contribution. Depending on how the Husband’s trust arguments are understood, the time at which an intention is formed is relevant to whether a trust can be found, and if so, what terms the trust is found to operate on.
Since the Husband was not asked when he formed the understanding or intention regarding the parties owning shared property in unequal proportions, I have limited evidence on which to make such findings. However, one conclusion may be safely drawn. The Husband’s argument for a 62%-38% division was expressed to be based on calculations of aggregate income over the whole of the relationship. Those calculations occurred after the relationship concluded. It therefore cannot be the case that the Husband, let alone the parties, intended specifically a 62%-38% division prior to the conclusion of the relationship.
Was the Suburb C Property an Investment Property?
Under cross-examination, the Husband rejected the proposition by Counsel for the Wife that the Suburb C Property was purchased in order to access a more desirable school district. The Husband noted the parties’ previous residence was within the same district, and only three kilometres from the Suburb C Property. Counsel for the Wife did not challenge the Husband’s statement that both residences were in the same school district. The Husband also stated that the reason the parties were listed on the Suburb C Property as joint tenants, rather than tenants in common with specified shares of ownership, was that the bank insisted on joint tenancy as a requirement for the mortgage. However, the Husband conceded that general family welfare, not just financial welfare, was part of what drove the decision to buy the Suburb C Property.
The Husband’s position that family and financial welfare were joint motivations in buying the Suburb C property was not successfully impugned by Counsel for the Wife. A role for financial motivation is also inherently plausible, since the statement of agreed facts declares that the parties “rented the property out to third parties from the time it was purchased until the husband moved into the property in July 2016” – that is, until about the time of separation. By contrast, Counsel for the Wife’s suggestion that the sole or primary motivation for buying the Suburb C Property was school district is not sustainable in light of the Husband’s unchallenged evidence was that the previous residence was already in the relevant school district.
I also note there is nothing in the Wife’s trial affidavit that asserts the Suburb C Property was intended as a family home, or for access to school districts. The first such suggestion is in the written submissions for the Wife, which refer to the Suburb C Property as the “Family Home”, despite the parties never having lived in that property as a family. However, even in the Wife’s written submissions, the Wife does not make a positive assertion that the Suburb C Property was intended to be a family home, and instead merely argues that the Husband’s written material has not successfully demonstrated that the property was purchased for a commercial purpose instead of family welfare.
Unlike the Wife, the Husband has said the following in his affidavit:
16. Like the [Country F] properties, [Suburb C] Property was also bought with the intention of earning capital gains and some rental income. My preference was to register the title of this property my name (as we did with [K Street] Property) so that we could get the maximum negative gearing tax deductions. However, the bank insisted that we register it as joint tenants instead.
…
21. The loan associated with the [Suburb C] Property was originally an interest only Investment Property Loan. It was converted to a principal and interest loan in 2018. Between July 2016 and March 2023, the bank debited $116,397 of interest to our Joint Account along with $103,295 of principal repayments.
In his written submissions, the Husband points me to the case of Bosanac v Commissioner of Taxation [2022] HCA 34 (“Bosanac”). The Husband in particular quoted extracts of paragraphs [32] and [33] of the judgment by Kiefel CJ and Gleeson J (with which the rest of the High Court agreed, with similar reasoning). I reproduce those paragraphs in full here.
32. The question of intention is entirely one of fact, and concerns the intention manifested by the person or persons who contributed funds towards the purchase of the property. In Martin v Martin [(1959) 110 CLR 297 at 304], it was observed that for the most part it can be assumed that proof of intention will be made out by the circumstances. Reference was made [Martin v Martin (1959) 110 CLR 297 at 304) to what had been said by Cussen J in Davies v The National Trustees Executors and Agency Co of Australasia Ltd [[1912] VLR 397 at 403]:
“It is impossible to try to arrange into certain sets of categories certain facts, and say beforehand they will or will not become decisive or immaterial. The attention must be kept steadily fixed on the one fact in issue – What was at the time the intention of the purchaser or transferor? Anything which is relevant to that issue is admissible.”
33. Cussen J went on to say that evidence of that person’s thinking at the time might be accepted, although it would be received “with caution”. That circumstance does not arise for consideration in the present case. There is no direct evidence as to the intention of either Ms or Mr Bosanac. The question is what inference is to be drawn from the available facts and in particular the history of the parties’ dealings with property.
The full paragraphs [32] and [33] have a somewhat different nuance than the isolated extracts quoted by the Husband in his submissions. That said, the overall conclusion of the High Court in that case aligned with the substance of the Husband’s argument: parties’ ownership intentions at the time one or more of them purchases property are determined as a question of fact, and how the parties deal with the property is relevant to assessing that fact.
I note that Bosanac is a case dealing with resulting trusts, whereas under cross-examination the Husband stated he believed he was seeking a joint endeavour constructive trust over all property in the relationship. How the Husband’s trust arguments should be approached is a matter I address below. However, for the moment, I accept that Bosanac can usefully be drawn on to understand how to assess parties’ intentions in purchasing property regardless of what kind of trust is being asserted. Critically, Bosanac emphasises that Courts must start by asking what, as a question of fact, was the parties’ manifested intention? Questions about whether any particular trust arises come after the assessment of intention as a question of fact. It would be inconsistent with that proposition to restrict Bosanac’s application to factual assessments of intention by reference to categories of trusts.
In this case, the parties dealt with the Suburb C Property as an investment property, the loan for the purchase was an investment loan, and the only evidence on affidavit is that the Suburb C Property was an investment property. Yet the Husband acknowledged in cross-examination that the Suburb C Property was purchased for family welfare as well as financial welfare, and the Wife’s submissions would have me treat a ‘family welfare’ motivation as being mutually-exclusive with the Suburb C Property having been intended as an investment property.
I must therefore decide whether I think there is in fact any contradiction between the Husband’s concession during cross-examination and the Suburb C Property having been an investment property. I do not consider there is any such contradiction. Financial stability directly contributes to a family’s general welfare. I take the Husband’s evidence under cross-examination as indicating that he understood the Suburb C Property in that light. I therefore have no difficulty in finding that the Suburb C Property was, on balance of probabilities, purchased by the parties with the intention of it being an investment property.
Does the Court have Jurisdiction to Make Findings regarding the Country F Properties?
Counsel for the Wife submitted that the Court does not have jurisdiction to make findings about the Country F Properties, because that would involve making declarations as to title of land in another country. Counsel submitted that it is well-established that Australian Courts cannot make such declarations. Counsel cited the following cases in support of that argument:
(a)Ali & Ali [2019] FamCA 1012 (especially at paragraphs [80]-[86]) (“Ali”); and
(b)The British South Africa Company v The Companhia de Moçambique [1893] AC 602 (“Moçambique”).
In reply, the Husband cited what he said was subsection 31(2) of the Family Law Act 1975 (Cth) (“the FLA”), which he asserted reads:
(2) Subject to such restrictions and conditions (if any) as are contained in the regulations, the jurisdiction of the Family Court may be exercised in relation to persons or things outside Australia and the Territories.
Subsequent investigation found that subsection 31(2) has been repealed. That does not reflect badly on the Husband, as he was self-represented, and overall managed to participate in the proceedings in an efficient and effective manner.
After the conclusion of the trial, I confirmed that subsection 25(2) of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (“the FCFCOA Act”) provides that:
(2) Subject to such restrictions and conditions (if any) in:
(a) section 111AA of the Family Law Act 1975; or
(b) regulations made under that Act; or
(c) the Rules of Court made under this Chapter;
the jurisdiction of the Federal Circuit and Family Court of Australia (Division 1) may be exercised in relation to person or things outside Australia.
Likewise, subsection 131(2) of the FCFCOA Act provides that:
(2) Subject to such restrictions and conditions (if any) in:
(a) section 111AA of the Family Law Act 1975
(b) regulations made under that Act; or
(c) the related Federal Circuit and Family Court of Australia (Division 2) Rules, as defined by that Act;
the jurisdiction of the Federal Circuit and Family Court of Australia (Division 2) may be exercised in relation to person or things outside Australia.
The substance of subsections 25(2) and 131(2) of the FCFCOA Act thus appear largely to replicate the former FLA subsection 31(2). I do not consider there is any lack of procedural fairness in considering subsections 25(2) and 131(2) of the FCFCOA Act in determining whether I have jurisdiction to make orders or findings with regard to the Country F Properties, despite the Wife not having been formally advised of those subsections during the trial itself. The ability of the Court to make orders with extra-territorial consequences is hardly unknown. Further, the substance of the argument (that the Court has capacity to make orders with extra-territorial consequences) was put to Counsel for the Wife by both the Husband and the Bench.
The Husband appeared to consider the former FLA subsection 31(2) to be a complete answer to the Wife’s jurisdictional argument. That is understandable since, on the former provision’s face (and now on the face of subsections 25(2) and 131(2) of the FCFCOA Act), it covers land (being a ‘thing’) outside Australia, which logically includes Country F. However, I am required to take my analysis further.
The cases highlighted by Counsel for the Wife appear to speak to a limiting principle of Court jurisdiction that applies regardless of apparent statutory provisions to the contrary. As put by Counsel for the Wife, the ‘Rule in Moçambique’ amounts to a restriction that no Australian court can make binding declarations about the title to land in another country, because title to land is exclusively part of that other country’s sovereignty, and Australian courts lack the power and the competency to adjudicate disputes under that other country’s laws. As Moçambique being a House of Lords decision from the 19th Century, it was important to establish that the case remains good law in Australia, and Counsel for the Wife argued that Ali demonstrates Moçambique still reflects the modern Australian position.
On my review of Moçambique and Ali, those cases are far more nuanced and involved than Counsel’s summary would suggest. It is therefore necessary to examine them in some detail.
The British South Africa Company v The Companhia de Moçambique [1893] AC 602
Moçambique reflects the House of Lords’ late 19th Century efforts to reconcile various apparently-conflicting doctrines in the wake of the Judicature Acts. The case concerns an action for alleged trespass to land in South Africa (then part of the British Empire, though not within the normal territorial operation of domestic British law). The plaintiff alleged that there was no ready court in South Africa that could hear the matter, and therefore sought to have the matter heard in Britain. The defendant argued, among other things, that there was no trespass because the plaintiff held no title to the land in question. The defendant further argued that, since the title to the land was in dispute, British courts could not hear the matter at all, because British Courts had no power to adjudicate title claims in South Africa.
The outcome in Moçambique hinged on a remarkably technical issue. There was precedent suggesting British courts were indeed tightly constrained in hearing extra-territorial tort applications, but also several cases before the learned Lord Mansfield in which his Lordship had concluded he had jurisdiction to hear extra-territorial tort actions. The plaintiff argued that the restriction on hearing extra-territorial matters was a mere procedural rule. Prior to the Judicature Acts, in any matter where the location of the alleged tort was important to the case outcome, British courts were required to select juries from that local area. In matters where the tort did not depend on local factors, a jury could instead be selected from the region where the case was heard. The distinction, which will become important below, was said to be between actions that were in rem versus in personam. The plaintiff in Moçambique correctly noted that the Judicature Acts and related reforms had abolished the requirement for a local jury, and therefore argued that the limit on hearing extra-territorial matters had been likewise abolished.
The House of Lords, especially in the lead speech by Lord Herschell LC, rejected the plaintiff’s interpretation. Lord Herschell LC agreed that the local jury requirement had been abolished, and therefore some extra-territorial matters certainly could be heard more easily than in the pre-Judicature Acts era. However, His Lordship also concluded that there was an entirely separate and additional limit on British courts hearing matters that required making determinations regarding the title to land in foreign countries. This restriction prevented both decisions assigning legal title, and decisions resolving disputed titles. His Lordship said:
[I]n considering what jurisdiction our Courts possess, and have claimed to exercise in relation to matters arising out of the country, the principles which have found general acceptance amongst civilised nations as defining the limits of jurisdiction are of great weight.
It was admitted in the present case, on behalf of the respondents, that the Court could not make a declaration of title, or grant an injunction to restrain trespasses, the respondents having in relation to these matters abandoned their appeal in the Court below. But it is said that the Court may inquire into the title, and, if the plaintiffs and not the defendants are found to have the better title, may award damages for the trespass committed. My Lords, I find it difficult to see why this distinction should be drawn. It is said, because the Courts have no power to enforce their judgment by any dealing with the land itself, with it is outside their territorial jurisdiction. But if they can determine the title to it and compel the payment of damages founded upon such determination, why should not they equally proceed in personam against a person who, in spite of that determination, insists on disturbing one who has been found by the Court to be the owner of the property?
…It is quite true that in the exercise of the undoubted jurisdiction of the Courts it may become necessary incidentally to investigate and determine the title to foreign lands; but it does not seem to me to follow that because such a question may incidentally arise and fall to be adjudicated upon, the Courts possess, or that it is expedient that they should exercise, jurisdiction to try an action founded on a disputed claim of title to foreign lands.[1]
[1] The British South Africa Company v The Companhia de Moçambique [1893] AC 602, 624-6 (“Moçambique”).
Some elements of Lord Herschell LC’s speech do support the arguments made by Counsel for the Wife. I agree that a clear rule is articulated that the Courts cannot determine disputes as to legal title in foreign countries. Indeed, even without this precedent, such an outcome would seem clearly necessary in this case, because this Court does not have expertise in Country F law, nor competency to determine how Country F law would apply if the title to land were disputed.
The catch, however, appears to be that Lord Herschell LC’s rule only appears to apply to disputes over legal title. Where the legal title is not disputed, His Lordship did not appear to see any equivalent barrier to the Court hearing matters related to foreign land titles. Indeed, that was how Lord Herschell LC reconciled Lord Mansfield having heard extra-territorial actions for trespass. Lord Herschell LC said:
Nor am I satisfied that either Lord Mansfield or Story would have regarded an action of trespass to land as a suit for personal damages only, if the title to the land were in issue, and in order to determine whether there was a right to damages it was necessary for the Court to adjudicate upon the conflicting claims of the parties to real estate. In both the cases before Lord Mansfield, as I understand them, no question of title to real property was in issue. The sole controversy was, whether the British officers sued were, under the circumstances, justified in interfering with the plaintiffs in the enjoyment of it.[2]
That is, Lord Mansfield could hear the relevant cases for trespass because all parties agreed on the title, and the question of lawful excuse for trespass was one that fell squarely within British courts’ jurisdiction and competency. Lord Herschell LC did not argue that British courts must be blind to foreign land holdings, nor that British courts could not hear any matters that depended on foreign title being established, only that the dispute regarding title itself was generally beyond British courts’ competency.
[2] Moçambique 624.
Lord Herschell LC’s rule is thus more limited than Counsel for the Wife asserted, and that more limited nature almost entirely undercuts the Wife’s case on the jurisdictional argument. The Husband is not seeking to have the Court resolve an issue of disputed title. Paragraphs [8] and [11]-[13] of the parties’ statement of agreed facts state very clearly that the Wife holds the legal title to the Country F Properties, and that the Wife holds that title solely and in her own name. There is no dispute as to the legal title. That is, there is no dispute regarding the parties’ rights in rem. Instead, the Husband seeks a declaration that the Wife holds that legal title on trust for both of the parties. The Husband makes an argument in Equity, rather than Law. Equity, traditionally, concerns rights in personam, acting on the conscience of the parties, even though those rights in personam have consequences for how the parties may use and dispose of their rights in rem.
Lord Herschell LC admitted in his speech that the restriction on hearing common law disputes regarding titles to foreign land does not apply, or at least applies very differently, in equitable actions. His Lordship said:
Reliance was placed on the decisions of Courts of Equity, as shewing that our Courts were ready, when no technical difficulty of venue stood in the way, to adjudicate on the title to lands situate abroad…
Whilst Courts of Equity have never claimed to act directly upon land situate abroad, they have purported to act upon the conscience of persons living here. In Lord Crawstown v. Johnston [sic], Sir R. P. Arden, Master of the Rolls, said: “Archer v. Preston, Lord Arglasse v. Muschamp, and Lord Kildare v. Eustace, clearly shew that with regard to any contract made, or equity between persons in this country, respecting lands in a foreign country, particularly in the British dominions, this Court will hold the same jurisdiction as if they were situate in England.”[3]
[3] Moçambique 626.
The claim the Husband makes for a trust over the Country F Properties is a claim for rights as between two people, both of whom are within Australia and subject to Australian law. While a decision to impose a trust, if I determine to do so, will have consequences affecting the Country F Properties, it will be the persons in Australia who are bound by that decision in their personal capacities. Lord Herschell LC’s speech does not support the argument by Counsel for the Wife that I have no jurisdiction to make a determination as to whether the Wife holds the Country F Properties on trust for both the parties.
The other substantial speech in Moçambique was that of Lord Halsbury, who agreed with Lord Herschell LC, as did the other members of the House of Lords who spoke. Lord Halsbury framed the rule in question as follows:
Vattel distinguishes the questions which may properly be tried where defendant has his settled place of abode, but always subject to this, that if the matter relates to an estate in land or to a right annexed to such an estate, “in such a case, inasmuch as property of the kind is to be held according to the laws of the country where it is situated, as the right of granting it is vested in the ruler of the country, controversies relating to such property can only be decided in the state in which it depends.”[4]
[4] Moçambique 631, quoting Story’s Conflict of Laws at s. 553.
Lord Halsbury’s framing confirms that the restriction in adjudicating title disputes relates to the legal title to land, and is a result of one nation’s courts having no power over land in other nation. Lord Halsbury does not directly address whether a Court of Equity would have jurisdiction to hear such a matter. However, as noted above, an inability to alter legal title in another country cannot logically bar an equitable action for trust, because such an action does not alter legal title. It merely places in personam obligations on how the legal titleholder may deal with the property and any proceeds thereof.
Nothing in Moçambique indicates that the extra-territorial jurisdiction provided by subsection 131(2) of the FCFCOA Act should not apply in this case.
Ali & Ali [2019] FamCA 1012
Ali was another complex (albeit far more modern) case, this time a property settlement under section 79 of the FLA. It involved properties in both Australia and the United States of America, with various claims of trusts and informal loans, as well as formally registered mortgages, with a resultant application for joinder of a third party (eventually dismissed). Among the orders sought included orders for various properties in the United States of America to be transferred between the parties, in accordance with assorted alleged equitable rights claimed by the putative Second Respondent (the husband in that case’s mother, known as “Ms K”). Ali thus parallels elements of the present case, in that it relates to equitable claims over foreign property.
A further relevant parallel was the lack of evidence about the legal system in the relevant foreign jurisdiction. In Ali, McLelland DCJ noted:
81. The difficulty for Ms K is that the well-researched submissions of her solicitor, focus upon the operation of Australian law whereas the property is in the United States. No evidence was provided to the court regarding the likely position under the law of the United States or, more specifically, the law of State J where the property is located. This is particularly relevant where, as noted, on 1 April 2010, a Grant Deed was entered into between the husband’s mother and the parties transferring the title of the State J property to the parties. No evidence has been presented as to the significance of that Deed, which was voluntarily entered into by Ms K with the benefit of legal advice. In particular, no evidence has been presented as to the operation of State J law including the extent to which the operation of such a Deed can be displaced by principles with similar effect to those set out in the submissions of the solicitor for Ms K.
McLelland DCJ also expressly considered Moçambique. However, as I have above, McLelland DCJ reached a far more nuanced position about the application of Moçambique to the FLA, stating:
82. Further there is a well-established principle of private international law that it is not competent for this court to make enforceable orders in relation to real property under the jurisdiction of a foreign sovereign. British South Africa Co v Companhia de Mocambique [1893] AC 602.
83. The operation of that principle, has however, been adapted in the context of family law proceedings. The Full Court in Teo & Guan [2015] FamCAFC 94 cited, with approval, passage from a limited paper by Dr Anthony Dickey QC, ‘Orders in respect of foreign property under section 79’ (1993) 67 Australian Law Journal 538:
It may be objected that an order under s 79 cannot be made in respect of foreign property as this offends the common law jurisdictional bar on domestic courts adjudicating upon rights to foreign land as laid down in British South Africa Co v Companhia de Mocambique ([1893] AC 602). It now seems clear, however, that this jurisdictional limitation does not apply to proceedings under s 79, as the rule in the Mocambique case concerns proceedings only to determine existing title to, or existing right to possession of, foreign land. Proceedings under s 79 are of a different character. They concern rights arising from a matrimonial relationship, even though these rights may ultimately involve the disposition of foreign land. This point was made in respect of equivalent English proceedings by the Court of Appeal in Hamlin v Hamlin ([1986] Fam 11 at 21). The Family Court may nonetheless always decline in the exercise of its discretion to make an order under s 79 in respect of foreign land. It may do so, for example, if the order cannot be enforced in the foreign jurisdiction. … [Emphasis in original text]
84. The final two sentences of that extract are significant. They go to the question of the Court exercising discretion to make an order against a party in circumstances where that order might not be enforceable in the foreign jurisdiction. This point was also made by Kent J in Chen & Tan [2012] FamCA 225, where his Honour said at [18] that the ability of the Family Court to make an order against a party “in personam”:
…may be qualified to the extent that, having regard to the principle that a party ought not be ordered to do something illegal in the place it is to be done, when exercising jurisdiction in personam, Courts ought be alive to avoiding the making of an Order in relation to any assets located in a foreign country that might operate in direct conflict with the laws of that country.
(Citations omitted)
Thus, what emerges from McLelland DCJ’s consideration of Moçambique is confirmation that the Court clearly has power to make orders regarding the in personam rights and obligations between the parties, even where those orders will have consequences for how the parties may use and dispose of their in rem rights in foreign property. His Honour confirms that it would be beyond competency to make determinations as to what in rem rights exist in foreign property, at least absent appropriate evidence, but otherwise the Court will generally have ample jurisdiction to hear the matter. At most, the Court should be cautious about making orders that risk incompatibility with the foreign nation’s laws.
Yet, even noting that caution, in Ali McLelland DCJ was prepared to make orders regarding transfer of the American properties notwithstanding that His Honour noted no evidence had been provided about the relevant American laws. The Court’s caution is thus not necessarily decisive even on issues of discretion, and does not operate to deny the Court jurisdiction to hear the matter.
There is one further point that I should note regarding Ali. That case was regarding a section 79 application, whereas the present case is a section 78 application. Unlike section 79, section 78 allows the Court to make declarations as to the parties’ rights in property, but not necessarily to alter those rights. It might therefore be argued that the Court has a broader jurisdiction regarding foreign property cases where those cases are brought under section 79 than under section 78, because under section 79 the Court can make orders for how the ownership of the relevant properties is to be distributed between the parties, which is a distinct power from any power (or lack thereof) to adjudicate disputed questions of title. Since section 78 is solely a declarative power, it might be supposed that section 78 is limited to adjudication of disputed title claims.
Such an argument would be a misunderstanding of both sections. To make an order under section 79, the Court must be satisfied that the order is just and equitable to make. To suggest that the Court can make such an order without being at least reasonably satisfied as to the facts of legal title in the relevant properties is illogical. The limitation is solely that, if legal title is contested, the Court may not have competency to resolve that specific, limited dispute. It may be that the consequence of not being able to resolve that specific dispute is that the Court cannot properly hear any matters depending in whole or part on establishing the legal title. However, where the legal title (as opposed to any equitable rights between the parties) is an agreed fact between the parties, there is no reason why the Court cannot proceed on the assumption that the agreed fact is indeed a fact, and make consequential orders.
Likewise, while section 78 permits declarations of property rights, there is no rule that says a particular property right must be contested for the Court to make a declaration about it. The Court is empowered to make a declaration endorsing the position agreed between the parties. Such a declaration would not be void for lacking controversy. The parties might be in agreement about some elements of their shared property, but in dispute about others. Alternatively, the parties might be in firm agreement as to their current property rights, but disagree about what consequential orders should follow from those property rights. Both situations apply in this case. The parties appear to be in agreement as to their legal rights, disagreement as to their equitable rights, and moderate disagreement as to the consequential orders that should be made to give effect to their legal and equitable rights.
Conclusion on Jurisdiction
I was not referred to the Full Court decision of Galloway & Midden (No.2) [2014] FamCAFC 60 (“Galloway”), which appears to offer further support for the proposition that in personam rights may be taken into account under Australian law when assessing overall property entitlements. Although that was a case involving a section 79 application, it seems to me that the principle remains the same, the salient difference being how that might translate to how one might deal with section 78 declarations to provide appropriate equitable relief. At paragraph [20] of their Honours Strickland, Murphy and Kent JJ’s judgment, the Full Court said as follows:-
20. Even if trusts were created under Australian law and accepting that an Australian court applies Australian law in exercising in personam jurisdiction to adjust the property rights of parties in property located overseas (regardless of any rights acquired or vested in parties under foreign law) an Australian court will avoid making an order in relation to assets in a foreign country that might operate in direct conflict with the laws of that country. (See, for example, Michael Wilson and Partners Ltd v Robert Colin Nichols [2008] NSWSC 1230 at [6]-[7] per Brereton J).
Inferentially, it seems clear that the law contemplates a situation under Australian Law where trusts can be created over property or properties in a foreign jurisdiction even if it is not possible to interfere with title ownership of relevant trust property or properties in the foreign jurisdiction.
On the basis of Moçambique and Ali, as supplemented by Galloway, I would not have competency to resolve a dispute about the legal title under Country F law to the Country F Properties. Per the parties’ statement of agreed facts, that question is not in dispute. I therefore find that I have jurisdiction and competency to hear and resolve all matters actually in dispute in the current case.
Was there a Shared Intention that the Country F Properties Would Be Owned for the Parties’ Joint Benefit?
There was very little cross-examination on the parties’ intentions regarding ownership when purchasing the Country F Properties. The closest to direct evidence regarding intention was Counsel for the Wife putting to the Husband that the parties pooled their resources for the common good, which the Husband conceded. Neither the Husband nor Counsel for the Wife placed any limitations on that point. It was presented as a conclusion generally applicable to all financial matters during the relationship, and I accept that is an appropriately general characterisation.
Turning to the statement of agreed facts, at paragraph [11] records that for the first property “the purchase price was paid from the parties’ savings”. Paragraph [12] records that for the second property, the Wife’s parents gifted her around $6,000, the Husband’s mother gifted him around $1,000, and the balance of the approximately $20,000 purchase price was sourced from the parties’ joint account. I make that balance $14,869. Plainly, both parties made significant financial contributions to the purchase of the Country F Properties.
Returning briefly to Bosanac, all Justices’ unequivocal conclusions were that, while the mere fact of mutual financial contributions to a purchase does not create an automatic assumption that the parties intended joint ownership, it can still provide evidence (to be weighed in the context of all the other evidence in the matter) to support such a finding the joint ownership was intended. I do consider the mutual contributions point to an intention of joint ownership here. For all their other material relationship assets, the parties treated the assets as shared property. The parties also agree that they pooled their resources for the common good. Importantly, an unchallenged element of the Husband’s trial affidavit was that an earlier investment property (disposed of well before the end of the relationship) had been treated as shared property even though it had been solely in the Husband’s name. The mutual financial contributions are at least suggestive that the Country F Properties were intended as a continuation of the parties’ practice of treating assets as shared property, even though (as discussed below) it was necessary that the Wife hold the sole legal title to the properties.
Paragraph [13] of the statement of agreed facts is particularly significant. It states:
13. Both the [Town E] Property and the [Suburb G] Property were registered in the wife’s name because the husband was unable to include his name in the title due to a restriction in [Country F]’s property investment laws.
That is a causal statement. Paragraph [13] presents the Country F legal restrictions as the driving (and seemingly only) reason why the Husband’s name was not included on the legal title to the Country F Properties. Presenting the causal statement in this way creates an implication that, had it been possible for the Husband’s name to be registered on the legal title to the Country F Properties, it would have been, which in turn suggests an intention for shared ownership of the Country F Properties.
Turning to the parties’ trial affidavits, the Wife’s affidavit notes that one of the Country F Properties (the Town E Property) has been occupied by the Wife’s parents, with no rent paid. The Wife also alleges that the choice of location in which to purchase a property was driven by a desire to have her parents near to her aunt. Otherwise, the Wife’s affidavit is silent on the ownership intentions in purchasing the Country F Properties.
The Husband presents the decision-making process for the Town E Property with a different nuance, but the parties’ accounts do not appear to be irreconcilable. The Husband’s affidavit states that the parties were looking for opportunities to invest in real estate in Country F, and the Wife also saw it as a serendipitous opportunity to help her parents move into better accommodation. The Husband agrees that he did not object to this, and that rent was not paid as such. However, he presents the payment of approximately $6,000 to the Wife from her parents as being in lieu of rent. I note that the statement of agreed facts characterises the $6,000 payment as a gift, not as a substitute for rent. I am not prepared to permit the Husband to resile from his agreement to the facts in that statement. I therefore disregard his assertion that the $6,000 was substitute rent.
Save for that assertion regarding purported substitute rent, the differences between the parties’ accounts of the Town E Property in their trial affidavits appear largely to be a question of emphasis, rather than true disagreement as to the facts. It seems likely to me that the Town E Property was intended both as an investment in long-term capital gains, and as a means in the short-to-medium term of providing for the Wife’s parents, and I proceed on that basis.
Regarding the other Country F Property, the Wife’s affidavit is silent, and the Husband’s affidavit states that the property was an investment property. That assertion was not challenged in cross-examination. I accept it as accurate.
Based on the parties’ trial affidavits, I therefore consider that both Country F Properties were investment properties, and one of the properties was also used to help support members of the extended family. I do not consider those matters in and of themselves weigh either for or against a finding that there was a shared intention for joint beneficial ownership of the Country F Properties. Parties to a marriage may purchase investment properties with the intention that those properties should belong only to one member of the relationship (as was the case in Bosanac), or may purchase them as shared assets. Shared assets may also be deployed in ways that in the short-term primarily favour one party without that indicating that the other party has surrendered their interest in those assets. That said, I note that in these parties’ other dealings, they agree that their investments were generally intended to be jointly owned, especially where those investments were bought with funds that had been “pooled… for the common good”. Therefore, within the particular circumstances of this relationship, I consider that the Country F Properties being investment properties is at least consistent with an intention that they be jointly beneficially owned.
On the evidence before me, especially noting the decision by Counsel for the Wife not to challenge in cross-examination the Husband’s characterisation of the decision-making process leading up to the purchases of the Country F Properties, I find it is more likely than not that at the time of those purchases, the parties intended that the Country F Properties should be jointly beneficially owned, even though they were legally owned solely by the Wife. I consider paragraph [13] of the statement of agreed facts in particular makes it very difficult for the Wife to assert that the properties would not have been in joint legal title, had that been possible under Country F law. However, as noted above, the Husband’s concessions under cross-examination mean that I must also find that at the time of purchase there was no shared intention regarding any particular unequal proportions of the Country F Properties that each party would own, and particularly not a shared intention for a 62%-38% split.
CONCLUSION
The significant assets under consideration for the purpose of these proceedings are as follows:-
(a)The Suburb C property with an agreed value of $1,600,000 and subject to a mortgage of $528,955 (net equity $1,071,045), which is in the joint names of the parties;
(b)$71,112 in the NAB mortgage offset account in the joint names of the parties;
(c)$100,000 in the Husband's bank account (being the monies unilaterally quarantined by him);
(d)The Town E Property in the Wife's sole name with a value of $63,866; and
(e)The Suburb G Property in the Wife's sole name with a value of $64,718.
The parties have various other cash accounts in their respective names with the Husband holding marginally more cash reserves than the Wife (Husband $12,541 vs Wife $9,965) and the Husband has superior superannuation entitlements to the Wife (Husband $196,775 vs Wife $93,755). As this is an Application for declaratory relief, and I have little if any information regarding the parties’ smaller cash holdings (excluding the $100,000 as discussed), I thus cannot safely impose any declaratory relief over that property or the parties’ superannuation entitlements (as was conceded). I am therefore left with a consideration of the equitable interests of the respective parties in the other property.
Section 78 of the FLA provides:-
Declaration of interests in property
(1) In proceedings between the parties to a marriage with respect to existing title or rights in respect of property, the court may declare the title or rights, if any, that a party has in respect of the property.
(2) Where a court makes a declaration under subsection (1), it may make consequential orders to give effect to the declaration, including orders as to sale or partition and interim or permanent orders as to possession.
Regarding the parties’ joint bank account, I note for completeness that there is a line of precedent identified by Counsel for the Wife, which is to the effect that unilateral withdrawals from joint accounts are not always wrongful nor automatically mean the withdrawn moneys are held on trust for the other account holder or holders. The cases identified to the Court were West v Mead [2003] NSWSC 161, and Pates v Pates [2018] FamCAFC 171, and each cites extensive prior cases to similar effect. Had the Husband contested the Wife’s assertion that she had an interest in the moneys he removed from the joint account, the Wife would need to have shown that there was some intention, agreement, or understanding limiting the purposes for which moneys could be removed from that account, and that the Husband removing the $180,000 (of which $80,000 has been returned) was prohibited by that limiting agreement. However, the Husband has conceded that the Wife has an entitlement to some share of the outstanding $100,000 the Husband has so far not returned to the joint account, and the only disagreement is as to the parties’ respective shares. Since I have not found that a trust exists over the joint account that would establish the 62%-38% beneficial ownership divide that the Husband proposes, I adopt the default position that funds in a joint account are owned equally by the account holders, and the Wife therefore is owed 50% of the remaining outstanding moneys.
The Wife has thus established that moneys in the joint account were to be used for the parties’ collective benefit, and that the intention for collective benefit restricted the purposes for which the parties could remove sums from the joint account. The Wife therefore cannot now argue that an equivalent obligation would not fall on her regarding the use of moneys from the joint account to purchase the Country F Properties. A specific shared intention to the contrary could potentially have made the purchase moneys for the Country F Properties an exception to that obligation, had it been established. However, as I have found above, it is more likely than not that the Country F Properties were intended to be for the parties’ mutual benefit. Therefore, I consider there is no basis to find otherwise than that the Husband has a 50% beneficial interest in the Country F Properties, just as the Wife has a 50% beneficial interest in the moneys the Husband unilaterally removed from the joint account.
As I have determined that the acquisition of the abovementioned property was a joint effort, and I have jurisdiction to determine the equitable interests of the parties in the Country F properties, it seems clear that:-
(a)The parties each have an equitable interest in the Suburb C property as to 50%;
(b)The Husband has an equitable interest in the two Country F properties as to 50% of each;
(c)The Wife has an equitable interest in the $100,000 held by the Husband as to 50%; and
(d)The parties each have a 50% interest in the joint offset account.
I shall make declarations to that effect.
In order to give effect to those declarations, and noting that I am dealing with the parties’ rights in personam in Australia, I will adjust the Husband’s interest in the Country F Properties against the Wife’s interest in the joint offset account and the $100,000 held by the Husband. The Wife’s interest in the two cash accounts is $85,556, which will be reduced by $64,302, making her entitlement to money out of the accounts $21,254. Additionally, the Wife should receive 50% of any interest accrued on those accounts. The disbursement of those moneys will terminate the Husband’s equitable interest in the Country F Properties.
As I stated earlier, the Wife also proposed order that would allow the Husband to acquire her interest in the Suburb C Property (which I have determined to be 50%). I will make those consequential orders for that opportunity to be afforded to the Husband.
For all of the foregoing reasons I make the orders set out at the commencement of these reasons.
I certify that the preceding seventy-eight (78) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Stewart. Associate:
Dated: 11 January 2024
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