Brennan v McGuire

Case [2010] FCA 1443

FEDERAL COURT OF AUSTRALIA

Brennan v McGuire

[2010] FCA 1443

Citation: Brennan v McGuire [2010] FCA 1443
Parties: ROBERT GEORGE BRENNAN v GLENYS FREYA MCGUIRE
File number: NSD 1147 of 2010
Judge: RARES J
Date of judgment: 21 December 2010
Corrigendum: 8 February 2011
Legislation: Domestic Relationships Act 1994 (ACT) s 15
Cases cited:

Baumgartner v Baumgartner (1987) 164 CLR 137 applied
Calverley v Green (1984) 155 CLR 242 referred to
Chorn and Hopkins (2004) FLC §93-204 referred to
Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226 referred to
Commissioner of Stamp Duties (Q) v Livingston (1964) 112 CLR 12 referred to
Ferris v Winslade (1998) 22 Fam LR 725 applied
H v G (2005) 34 Fam LR 35 referred to
In the marriage of AD and AC Townsend (1994) 18 Fam LR 505 referred to

In the Marriage of Wunderwald (1992) 106 FLR 138 referred to

Mallett v Mallett (1984) 156 CLR 605 referred to
McKenzie v Storer [2008] ACTSC 88 referred to
Re Wakim;  Ex parte McNally (1999) 198 CLR 511 referred to
Date of hearing: 29, 30 November 2010
Date of last submissions: 13 December 2010
Place: Sydney (via video link to Canberra)
Division: GENERAL DIVISION
Category: No catchwords
Number of paragraphs: 134
Counsel for the Applicant: A Tonkin
Solicitor for the Applicant: Phelps Reid
Counsel for the Respondent: The respondent appeared in person

FEDERAL COURT OF AUSTRALIA

Brennan v McGuire
[2010] FCA 1443


CORRIGENDUM

1.        In paragraph [129], first line, delete the words “and resources”.

I certify that the preceding one (1) numbered paragraph is a true copy of the Corrigendum to Reasons for Judgment herein of the Honourable Justice Rares.

Associate:  

Dated:             8  February 2011


IN THE FEDERAL COURT OF AUSTRALIA

AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY

GENERAL DIVISION

NSD 1147 of 2010
BETWEEN:

ROBERT GEORGE BRENNAN
Applicant
AND:

GLENYS FREYA MCGUIRE
Respondent

JUDGE:

RARES J

DATE OF ORDER:

21 DECEMBER 2010

WHERE MADE:

SYDNEY (VIA VIDEO LINK TO CANBERRA)

THE COURT ORDERS THAT:

1.On or before 11 January 2011 the parties prepare and exchange short minutes of order to give effect to these reasons.

2.In the event that the parties have not agreed the terms of orders necessary to give effect to these reasons:

(a)on or before 18 January 2011, the questions still in issue be referred to the Registrar for mediation pursuant to s 53A of the Federal Court of Australia Act 1976 (Cth), such mediation to occur on 21 January 2011; and

(b)in the event that any issue remains unresolved following the mediation, on or before 4.00 p.m. on 28 January 2011 each party serve the other with his or her final draft short minutes of orders and written submissions limited to five pages on the matters on which he or she disagrees with the other and provide copies thereof to the associate to Rares J.

3.The proceedings stand over to 3 February 2011 at 9.30 a.m. for the making of final orders.

Note:Settlement and entry of orders is dealt…

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Brennan v McGuire [2010] FCA 1443
Case
[2010] FCA 1443
Decision Date

CaseChat Overview and Summary

In the case of Brennan v McGuire, the parties were involved in a long-term domestic relationship which eventually ended. The primary issue before the court was to determine the just and equitable outcome in adjusting the interests in the property and financial resources of the parties, pursuant to the relevant statutory provisions. The court had to consider the contributions of both parties, financial and non-financial, as well as other relevant factors to arrive at a fair distribution.

The court examined the initial financial positions of the parties, the contributions made during the relationship, and the impact of specific decisions, such as the purchase of a property and investments, on the overall net worth. The court also took into account the lack of transparency in the handling of certain funds by one party and the recent drawing of funds by the other party. The reasoning process involved a detailed assessment of the parties' contributions, both monetary and otherwise, and the consequences of specific decisions made during the relationship.

The outcome of the case was a determination of the respective shares of the parties in their property and financial resources, reflecting the contributions and sacrifices made by each party. The final orders included a distribution of assets that acknowledged the initial financial positions, contributions during the relationship, and the impact of specific decisions on the overall net worth. This distribution aimed to reflect what the court deemed to be a just and equitable outcome, taking into account all relevant factors.

Orders

Orders of the court

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Background

Background to the litigation

Thus, in arriving at a discretionary evaluation of whether it is just and equitable to make an order adjusting the interests in property of the parties to a failed domestic relationship, the Court must have regard to all of the circumstances that bear on the assessment. These include those specifically referred to in ss 15(1)(a)-(d) as well as the more general consideration of such other matters, if any, that the Court considers relevant as provided in s 15(1)(e). The latter allows the Court to assess the overall nature of the parties’ relationship, in the context of the evaluative task of determining the just and equitable outcome in a given case.BACKGROUND – THE PARTIES’ INITIAL POSITION Mr Brennan and Ms McGuire met in Cooma, New South Wales, in late December 1980. She was a divorcee with two young children, Ben aged 7 and Erin aged 6. She had been a hairdresser working from home and had a casual evening job. In late 1980 she received a grant to pursue further studies. She was then 34 years old. Ms McGuire owned her own home in Cooma, New South Wales, which had a small mortgage of about $2,000 and was fully furnished and equipped. She also owned a car and had about $21,000 in savings that she had accumulated principally from gifts by her parents. Other than the mortgage, she had no debts. Her former husband, Geoffrey, provided, irregularly, support for his two children, through the payment of school fees and other maintenance. Although Mr McGuire was not always regular in his payments of maintenance, he kept them up and fulfilled his parental obligations as a divorced parent then and during the subsequent years as his children were growing up. Mr Brennan had had a veterinary practice in Tasmania. He was then 27 years old. He arrived in Cooma on a pushbike with no assets. He stayed initially with one of his three brothers in Cooma until late January 1981. In late June 1981 Mr Brennan returned to Cooma with his personal belongings and commenced living with Ms McGuire and her two children. At that time he was unemployed. She purchased a car for him and supported him. From that time, Mr Brennan was a conscientious step-father for Ben and Erin throughout the continuance of the relationship. In mid-September 1981 Mr Brennan left Cooma to begin working as a veterinary officer in Moss Vale, in the Southern Highlands of New South Wales. Mr Brennan’s employer provided some accommodation for him in a room at the back of a house. Ms McGuire arranged for the sale of her Cooma property which realised $61,000. She packed up her belongings and moved to Moss Vale to be with Mr Brennan. They lived in a caravan and the room provided by his employer for about six months. The children attended local schools. The couple purchased a property in Bowral in about April 1982. Ms McGuire used the proceeds of sale of her Cooma property together with her savings, including interest, to pay the bulk of the purchase monies and the couple gave a mortgage to the Commonwealth Bank to secure a loan of about $30,000, being the balance of the purchase price. Mr Brennan’s parents, Jack and Enid Brennan, supported the couple’s purchase by making available an overdraft facility.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

In arriving at my overall assessment, I have also had regard to the fact Ms McGuire has continued to live in the Forrest home while Mr Brennan has had to find and pay for his own accommodation.CONCLUSION I find that the parties had the following approximate financial position at the time of the trial: I have given nominal values to each party’s personal chattels of $30,000 and cars of $15,000. No doubt over a long relationship parties acquire items for sometimes large sums that objectively have little or no resale value either at the time of purchase or many years later. Here, neither party produced a valuation of his or her property or cars. If either had personal property that materially may have affected the assessment of his or her net assets, then a valuation of the item or items would establish its current worth. The fact that each party was content to rely on his or her own assertion of the value of these items has resulted in there being no reliable foundation to ascribe a value beyond the nominal sum I have adopted. I have taken the value of Mr Brennan’s office furniture from his depreciation schedule in his 2009 tax return. Notionally, Mr Brennan ought to bear the consequences of the failed investment in “Nebo” by it being treated substantially as a distribution to him. Of course, this will treat the $575,000 at its present value, rather than as money that could have been invested in superannuation in 2005 and 2006 and which is likely to have grown somewhat before the impact of the global financial crisis, and later is likely to have recovered its value to some degree. Nonetheless, this sum also represented a lost opportunity for both parties for which Mr Brennan was responsible. Even though this is not a present asset of any value I consider that it is just and equitable to take it into account in making an adjustment. Mr Brennan argued that his contributions to superannuation since separation should be treated as irrelevant to an assessment of the parties’ current assets. I do not accept that submission. He frustrated the management of the parties’ superannuation position during the development of the global financial crisis because he prevented Ms McGuire continuing her previous role of managing the fund and he refused to take any steps to allow this valuable investment to be managed or protected until mid September 2008. Before that, he ignored the superannuation fund’s advisers’ attempts to get instructions. As with “Nebo”, his conduct adversely affected the parties’ overall net worth, albeit that it is not possible to quantify by how much his inaction on the management of superannuation affected that worth. In arriving at the adjustment of the parties’ interests in their property and resources of roughly 52.5% to 47.5% in accordance with Baumgartner 164 CLR at 150, I have made notional adjustments to take account of their drawings on superannuation, the impact of “Nebo” and the other matters which I have just discussed to arrive at the following broad distribution:

Ratio Decidendi

Legal Principle Established

In my opinion, the lack of a full and satisfactory explanation by Ms McGuire as to how she dealt with either the $300,000 or the $433,000 is a matter that I should take into account in arriving at an overall assessment of what is just and equitable to order under s 15(1) of the Act. I will also similarly have regard to Mr Brennan’s recent drawing of $56,000.CONSIDERATION The parties had a long term de facto marriage lasting over 25 years. Mr Brennan left the home on two occasions for relatively short periods, six months in 1991 and about six weeks in 2002. However, his return home on each occasion revived the de facto relationship. There was no dispute, and I am satisfied, that Mr Brennan and Ms McGuire had a domestic relationship within the meaning of the Act. Each had resided in the Territory between 1985 and 2006, and Ms McGuire has continued to do so. Each had made substantial contributions in the Territory of the kind referred to in ss 15(1)(b) and (c). The proceedings were commenced on 12 November 2007, about 11 months after the relationship ended on 6 December 2006. Accordingly, the jurisdictional requirements in ss 11(1), 12(1) and 13(1) have been met. Both parties made substantial financial and non-financial contributions directly and indirectly to the acquisition, conservation and improvement of their property and financial resources within the meaning of s 15(1)(b). In the early years, Ms McGuire introduced a substantial capital base which Mr Brennan’s income helped to conserve and improve by assisting with mortgage repayments while also principally maintaining the day to day needs of the household. When she earned income, Ms McGuire also contributed to that conservation and improvement. The combination of Ms McGuire’s initial capital contributions, their joint liability as mortgagors of each property in joint names and Mr Brennan’s, or the couple’s pooled, earnings enabled them to pay off the mortgage on the Forrest property relatively quickly. This allowed more of their pooled income to be applied to the superannuation fund at an earlier time than many family units find possible. However, Mr Brennan’s decision to purchase “Nebo” through the company and against Ms McGuire’s wishes has had the consequence of significantly diminishing the present value of the parties’ property. Additionally, both parties made substantial contributions as homemakers and parents. Mr Brennan accepted the role of step-father to Erin and Ben. Both he and Ms McGuire fulfilled their parental or quasi parental roles with all three children (see s 15(1)(c)). Sadly, one outcome of the breakdown of Mr Brennan’s and Ms McGuire’s relationship has been his estrangement from both Frith and his step-children.VALUE OF THE COMPANY I have valued the company at $150,000, being the approximate amount that the liquidator indicated will be available for distribution to creditors. Apart from the amount in Mr Brennan’s proof of debt, that the liquidator has admitted, there is no evidence of any other liability owed by the company. I infer that Mr Brennan has discharged any liabilities of the company known to him. This is because, first, the nature of the items that Mr Brennan claimed in his proof of debt and, secondly, the fact that Mr Brennan sought to step into the shoes of the company’s business in his new activity as a sole trader under the name “Rob Brennan & Associates”. He gave evidence that he discharged the company’s liabilities from first, moneys that he received and later from his own money. Mr Brennan was in a position to prove what the assets and liabilities of the company are. He had its records, at least up to the time of liquidation. He had direct contact with its debtors and creditors. He had no evidence to suggest that he had left any creditors unpaid.