BRETT & BRETT
[2014] FCCA 3124
•22 May 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| BRETT & BRETT | [2014] FCCA 3124 |
| Catchwords: FAMILY LAW – Property adjustment – lengthy marriage – consideration of indirect financial contributions. |
| Legislation: Family Law Act 1975, s.75(2) |
| Norbis & Norbis (1986) FLC 91-712 Robb & Robb (1995) FLC 92-555 Kowaliw & Kowaliw (1981) FLC 91-092 Stanford & Stanford [2012] HCA 52 Ferraro & Ferraro (1993) FLC 92-335 Hickey & Hickey [2003] FamCA 395 AJO & GRO [2005] FamCA 707 Pierce & Pierce [1998] FamCA 74 |
| Applicant: | MR BRETT |
| Respondent: | MS BRETT |
| File Number: | PAC 1833 of 2013 |
| Judgment of: | Judge Harman |
| Hearing dates: | 21-22 May 2014 |
| Date of Last Submission: | 22 May 2014 |
| Delivered at: | Parramatta |
| Delivered on: | 22 May 2014 |
REPRESENTATION
| Counsel for the Applicant: | Ms Shearman |
| Solicitors for the Applicant: | Warren F Ball & Co |
| Counsel for the Respondent: | Mr Greenaway |
| Solicitors for the Respondent: | John Spence & Associates |
ORDERS
The Applicant Mr Brett shall, no later than close of business 14 June, 2014, do all things, sign all documents necessary and given all consents and authorities as are appropriate to transfer to the Respondent, Ms Brett the whole of his right, title and interest in the property known as and situate at Property I in the State of NSW and the Respondent shall indemnify the Applicant and hold the Applicant harmless with respect to all and any liabilities relating to that property.
Each of the parties shall thereafter do all things, sign all documents necessary and give all consents and authorities as are appropriate to cause the property Property A in the State of NSW to be listed for sale and sold by private treaty using an agent, a solicitor or conveyancer and at a price agreed between them.
In the event that the parties are unable to agree as to a listing agent, solicitor or conveyancer or listing price then the following shall apply:
(a)In the event that the parties are unable to agree on a listing agent then each party shall be authorised to select one agent to act with respect to the sale and upon such nomination or election being made known both parties will do all things and give all consents, cooperation and authority necessary to enable each of those agents to advertise the property for sale and conduct inspections.
(b)In the event that the parties are unable to agree on a solicitor or conveyancer to act on sale then either party may request in writing of the President for the time being of the Law Society of NSW the appointment of a solicitor or conveyancer and upon such nomination being made by the President or their nominee then each party shall do all things, sign all documents and give all consents and authorities necessary to enable the person so appointed to discharge their role.
(c)In the event of any disagreement as to listing price then the parties or one of them shall request the agent or agents who are instructed to nominate a realistic sale price by a realistic vendor for the property (and in the event that two agents a mean of such advices shall be used) and upon such advice being given the property shall be offered for sale at 105% of that estimate and the parties will accept any offer for sale that is equal to or in excess of 95% of the listing price.
Upon completion of any sale of the Property A property then each of the parties shall do all things, sign all documents and give all consents and authorities necessary to enable the net proceeds of sale after adjustment in payment of council and water rates to be distributed as follows:
(a)In payment of costs on sale including both real estate and solicitor/conveyancer fees;
(b)As to 37.5% of the equity then remaining to the wife; and,
(c)As to the net balance then remaining to the husband.
Pending completion of the sale of the Property A property the husband shall be responsible for and shall make all payments with respect to Council and Water rates and service and utility fees connected with the property and shall keep the property insured at all times for its full insurable value and shall maintain the property in a neat, fit and proper state of repair.
Pursuant to section 78 of the Family Law Act 1975 that each of the parties shall be and is hereby declared to be the sole and absolute owner in law and in equity of:
(a)Any motor vehicle in their respective possession;
(b)All items of furniture, furnishings, contents, personalty and chattels in their respective possession;
(c)All funds held by them in any banking account whether in their sole name or jointly with any other person or in trust for any other person;
(d)All contributions to or benefits or entitlements arising from membership of any superannuation fund.
Each of the parties shall be liable for and shall indemnify the other with respect to any liability in their sole name.
In the event that either party shall fail, neglect or refuse to sign any deed, document or instrument required by or to give effect to these orders then the Registrar of the Federal Circuit Court Parramatta shall be and is hereby authorised, directed and empowered to sign such deed, document or instrument in the name of the defaulting party (same to be proved by production of an affidavit by the party requesting signature) and to thereafter do all things and acts necessary to give validity and operation to same.
All outstanding Applications and Responses are withdrawn and dismissed and all issues removed from the list of cases awaiting hearing.
Upon the expiration of the Appeal period and in the event that no appeal is lodged that all exhibits then be returned to the party who tendered same and that all material produced on subpoena be returned to the person or organisation who produced same.
IT IS NOTED that publication of this judgment under the pseudonym Brett & Brett is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT AT PARRAMATTA |
PAC 1833 of 2013
| MR BRETT |
Applicant
And
| MS BRETT |
Respondent
REASONS FOR JUDGMENT
These are proceedings involving competing applications for property adjustment.
The parties to the proceedings are Mr Brett, the husband and the Applicant, and Ms Brett, the wife and Respondent.
Evidence considered
Each of the parties has, through their counsel and prior to the commencement of the hearing, provided a useful and extensive case summary document. Each case summary has identified the material relied upon by that party and which is enumerated as follows.
In the case of the husband he has relied upon his Application filed 30 April 2013. It is to be noted that at trial the orders that are sought by the husband are varied in two significant respects, although counsel for the wife has made clear that they are not taken by surprise and/or unable to meet the husband's case as a consequence of those amendments.
Firstly, the husband no longer seeks to retain a parcel of real property at Property A which, by his initial application, he had sought to retain. He now seeks its sale. That, no doubt, has arisen at least in part, from the agreed value for that property being significantly higher than initially believed and thus it is not realistic for him to retain that property.
Secondly, the husband seeks to vary, again no doubt connected with that increase in agreed value, the relief that is sought as regards a percentage division of that property.
In any event what is sought and proposed both in the Initiating Application and at trial is a relatively equal division of all property.
The husband otherwise reads his:
a)Affidavit of evidence-in-chief filed 12 March 2014; and
b)Financial Statement filed 10 April 2014.
In the husband's case no material is tendered.
The wife in her case relies upon a number of affidavits.
The wife moves for relief in accordance with her Response filed 8 August 2013 and she relies upon affidavit material comprising:
a)A substantial affidavit of evidence by herself filed 31 March 2014;
b)A Financial Statement filed 1 April 2014;
c)Affidavits by each of:
i)Mr D;
ii)Mr G;
iii)Mr J;
iv)Mr A; and
v)Mr B.
The above deponents are three brothers of the wife, together with two adult children of the wife respectively.
The parties have each been cross-examined. The other witnesses have not been required for cross-examination. That was an entirely prudent and appropriate forensic decision made in the Applicant's case as there was nothing to be gained from that cross-examination in light of where the evidence sat at the conclusion of the wife’s cross-examination.
The parties have also provided a balance sheet and in the wife’s case two exhibits have come into evidence comprising:
a)Exhibit W1, a copy of a previous will made by the husband; and
b)Exhibit W2, certain bank statements relating to and evidencing the transfer of funds initially derived from the wife’s superannuation entitlements and transferred from her bank account into a bank account for a business previously operated by the husband but no longer operating.
Pool of property
The balance sheet provided by the parties contains unusually and remarkably for proceedings before this Court, a comprehensive suite of agreed values. The balance sheet is incorporated herein:
| ASSETS | ||||
| Ownership | Description | Wife/de facto partner’s value | Husband/de facto partner’s value | |
| 1 | Joint | Property I, NSW | 290,000 | 290,000 |
| 2 | Wife | Property A, NSW | 600,000 | |
| 3 | Wife | (omitted) Bank Account | 3, 358 | 3, 358 |
| 4 | Wife | (omitted) Bank Account: (omitted) | 33,432 | 33,432 |
| 5 | Wife | Box Trailer | 1,000 | 1,000 |
| 6 | Wife | Household Contents at Property I | 3,000 | 3,000 |
| 7 | Husband | (omitted) Subaru Liberty Registration No. (omitted) | 800 | 800 |
| 8 | Husband | Household contents at Property A | 1,000 | 1,000 |
| 9 | Husband | (omitted) Bank Account | E160 | E160 |
| 10 | Husband | (omitted) Bank Account | ||
| Total | $ | $ | ||
| ADDBACKS | ||||
| Ownership | Description | Wife/de facto partner’s value | Husband/de facto partner’s value | |
| 11 | Wife | Holiday package paid for by the wife in 2012 | $14,000 | $14,000 |
| Total | $14, 00 | $14, 00 | ||
At the closing of the case one variation to the agreed balance sheet arose. This was as a consequence of a useful accord and compromise between the parties and their counsel as to the address of funds expended by the husband post separation and primarily in meeting legal fees together with funds retained by the wife but upon which a significant lien will attach as regards payment of legal fees.
As a consequence, the wife’s (omitted) Bank account ending in (omitted) reflected in the balance sheet as having a value of $33,432 is agreed to be reduced by the balance of outstanding legal fees for which Ms Brett is liable, namely $22,000. That account will thus be incorporated at $11,432.
Whilst the balance sheet includes a notional add-back of funds expended by the wife with respect to a holiday in 2012 ($14,000), I do not propose to include that amount. That is not to suggest controversy as to the utility of what are generally referred to as notional add-backs but purely as the evidence would not support it as a premature distribution of property which should be added back.
Similarly, I do not propose to include items of entirely modest value being a box trailer retained by the wife and a vehicle retained by the husband which have relatively equal value and the values of which are asserted by the parties rather than the subject of evidence. In any event they are valued by the parties on their own “guesstimate”, if one might call it such, at $1000 and $800 respectively.
The parties also assert modest values for furniture and contents which they retain. It was unclear the basis upon which those values were asserted (I assume they were, again, “guesstimates”) and I do not incorporate them.
Thus the asset pool would, without any controversy, comprise two parcels of real estate at Property I and Property A, respectively, and the savings accounts of the parties. These items total $884,790. From the Property A property, with an agreed value of $600,000, an agreed anticipated sale cost of $20,000 is deducted thus arriving at the amount set out above.
The evidence of the parties
There are a number of evidential issues that arise between the parties. Helpfully, each party has provided a chronology of events which largely reflects matters which are not the subject of controversy. Accordingly, I propose to incorporate within these Reasons the chronology of events set out in the case outline document provided by Mr Brett’s counsel, it being the more extensive. That is in no way a criticism of the chronology provided in the wife’s case but purely for the sake of capturing and reflecting as many of the relevant transactions as possible.
Date
Event
Reference
(omitted) 1947
Husband born (66)
H#3
(omitted) 1949
Wife born (64)
H#4
(omitted) 1975
Mr B born (38)
(omitted)
Mr A born (36)
(omitted)1984
Parties marry and commence cohabitation at Property A, owned by wife.
H#6, 15
Husband working full-time, earning about $700 per fortnight. Husband commences providing his pay-packet to wife each pay and wife provides an allowance, initially of $15 (Wife says $50).
Wife has full-time care of sons Mr B, 9 and Mr A, 6.
Husband had no debts, and owned a (omitted) Vehicle valued at $4000 and other personal goods.
Wife had property in Property A worth $59,5000 ($30,000 mortgage), household items worth $2000 and other personal goods.
H# 15
H#9, 11
1985
Wife states she worked part-time, 24-28 hours a week, with (employer omitted).
The husband recalls the wife commenced working in about 1990.
W2 #9
H #66
1989
Husband inherits about $32,000 from his mother.
· Bought Subaru wagon for $21,000;
· Gave Mr S $5,000;
· Bought a lounge for $2,500;
· Used $3,000 for betting and made $1,500 profit.
Wife states she ceased employment with (employer omitted) due to ill-health.
H#18
W2 # 9
1989
Wife states she received redundancy payment from (employer omitted), which she applied to Property A mortgage.
The husband recalls the wife commenced working in about 1990.
W2#10
H #66
1990
Husband became eligible for (omitted) Superannuation.
Wife enrols in TAFE, does (omitted) work and earns an income from (omitted).
H#21
1992
Wife commences full-time employment with (employer omitted).
Wife travels overseas to (country omitted) for 9 weeks. Spends approx. $9,000.
H#35
W2 #29
1993
Husband left (employer omitted) and received $21,000 in long service leave, leave entitlements and unused sick leave.
HA2 #10, #13
1993
Property A unencumbered.
HA2 #14
1993
Husband and wife start (omitted) business called (omitted) business, funded by husband’s $21,000 (omitted) payout.
Mr A commences working.
HA #15, 16.
AB #14
@1994
Husband receives Superannuation of approximately $5000 to $6000, which he rolled over into another fund.
Wife travels to (country omitted) for 2 weeks. Spends approx. $2000.
HA2 #13
W2 #29
1995
Wife works part time with (employer omitted) and assists husband with business books.
W2 #12
1996
Wife travels to (country omitted) and (country omitted) for 4 weeks. Spends approx. $4,500.
W2 #29
1997
Wife travels to (country omitted). Paid by brother.
W2 #29
1999
Parties purchase Property B for about $88,000 as an investment.
$8000 drawn from business account and balance covered by (omitted) Bank mortgage. Wife states she paid $12,000 from her account towards the mortgage.
H#40
W#14
2000
Parties purchase, in joint names, unit at Property M for about $52,000. Property B property used as security.
Wife travels to (country omitted) and (country omitted) for 10 weeks. Spends approx. $14000
H#41
W2 #29
2001
Mr D commences living with the parties at Property A and contributed money for food, electricity, water and phone. Mr S did not pay rent. He attended to improvements to convert the garage into a flat.
H#43
W2 #23
2003
Wife ceases employment with (employer omitted). She continues to manage the books for the business.
Wife states she receives voluntary redundancy payment from (employer omitted) of total $17,000 plus super, totalling $50,000. $2000 spent on a quad bike for husband.
Wife travels to (countries omitted) for 11 weeks. Spends approx. $15,000.
H#36
W2 #12
W2 #29
2003 or 2004
Parties sell Property M for about $90,000.
H#41
2004
Parties purchase Property I, for approximately $239,800. Deposit $24,080. (omitted) Bank provided the finance.
H#42
2006
Wife travels to (countries omitted) for 3 weeks. Spends approx. $2000
W2 #29
2007
Mr D moves from Property A to Property I.
H#44
September 2008
Husband withdrew his (omitted) Superannuation in the sum of $39,537.44 and applied it against the housing loan.
Wife receives payment from a super account of $56,848.45.
· spends $40,000 of this to the Property I mortgage;
· transfers $10,000 to the business account to pay for (omitted) and reimburse overseas trip expenses.
Parties travel to (countries omitted).
H#51
W2 #22, 35
2008/2009
Property I property becomes unencumbered.
2009
Mr A commences living in the Property I property.
H#46
October 2010
Husband closes (omitted) business and sells ute to Mr A for $1,000.
H#47
09/2011
Parties separate.
H#6
@November 2011
Parties sell Property B, for about $205,000. After sales and commission the parties each received about $32,500.
H#40
26/11/2011
Mortgages on Property I and Property A paid out in the sum of $127,698.60
W#14, annexure (omitted) Bank Home Loan statements.
July 2012
Husband commences receiving $80 per week from a tenant in a granny flat at the Property A Property.
H#48
5/12/2012
Husband becomes eligible for pension.
HA2 #32
2012
Wife travels to (countries omitted) for 11 weeks. Spends approx. $14,000.
W2 #29
2/5/13
Husband files Initiating Application in FCC at Parramatta, along with Financial Statement.
20/11/2013 Tenant vacates granny flat at Property A. H#49
The matters that are set out within the chronology are very largely agreed.
What is abundantly clear from the evidence of the parties is that at the commencement of the relationship the wife owned the property at Property A in which the husband is presently living. That property is registered in the wife’s sole name.
That property had been owned by Ms Brett with her former partner and at or shortly prior to the relationship between these parties she had acquired the property such that it was transferred into her sole name and subject to a mortgage to the (omitted) Bank of approximately $30,000. The parties are agreed that the property thus had equity, at the commencement of their relationship, approaching $30,000.
Very early in the relationship the wife received a redundancy or other employment-related payment which was used to significantly reduce, although not entirely discharge, the mortgage. However, the absence of discharge did not arise through an inability for that to be so but as a consequence of a term and condition of the mortgage which provided a significant penalty for early discharge.
The husband’s assets at the commencement of the relationship were less substantial than the wife’s. The husband owned a motor vehicle, had a nominal amount in cash and some personal belongings.
During the relationship the husband also received two significant funds as to which there is no dispute. He received a termination payment from his employment with (employer omitted) when he left that employment and he also received an inheritance. There is some controversy as to the total value of the inheritance but nothing of significance turns upon that controversy.
During his employment with (employer omitted) the husband had accumulated very little superannuation. At the time that the relationship commenced the husband was not required to make contributions and did not receive employer contributions for superannuation. Thus he had accumulated a very modest sum of superannuation by the time that his employment was terminated. The superannuation he did have and which he received on leaving (employer omitted) was largely applied towards the purchase of items in establishing a business which was then operated by him under the name and style “ (omitted) business”.
There is some controversy as to when the business began to become self-supporting. However, what is clear is that it had earned a modest and comfortable income for the parties during its currency and for most of its years of operation. It ultimately ceased to operate and was not sold but simply wound up and its assets disposed of. There is again some controversy as to whether those assets were sold at their full realisable value or not, particularly arising in the context that some of those assets were sold to the children or relatives of Ms Brett. Thus it is suggested by Mr Brett that they were provided at a lesser value than might have been realised with an arm's length transaction. Nothing turns upon that for reasons that I will come to shortly.
The husband’s inheritance fund was also largely expended or distributed in a fashion which is not the subject of any great controversy between the parties, although some little controversy relating to that which Mr Brett describes as the implementation by him of a “betting system” using the sum of $3000 of the inheritance moneys. Those inheritance moneys were a little over or a little under $30,000.
The wife also received a payout of her superannuation when she retired from employment and those superannuation moneys were applied towards part purchase of a property at Property I, the second parcel of real estate owned by the parties.
In submissions, the Property I property was described by Mr Brett's counsel as a “money pit”. That was not intended by her to be in any way pejorative of the parties but simply a reflection that the amount that the parties have invested, not only in cash but in labour and materials, significantly exceeds its present value. They have “overcapitalised”.
The property was purchased in 2004 for $239,800. The deposit of $39,000 Ms Brett asserts and I accept was derived from a redundancy payment she received together with funds from her superannuation. The balance was borrowed by way of mortgage.
The mortgage has since been discharged through the application of a variety of funds, including, from funds introduced to the relationship by each of the parties, including, from their superannuation.
There is some real controversy as to the calculation of the suggested value of labour undertaken in effecting repairs, renovations and improvements to the property, particularly by Ms Brett’s extended family. Ms Brett’s brothers assert that labour with a total market value of $159,000 was applied. Mr and Ms Brett assert that amounts of or approaching $100,000 was expended in purchasing materials as well as their own labour. Clearly they both provided labour towards those works.
The property is presently valued at $290,000 and accordingly there is some real basis to the suggestion that the property has, to some extent been something of a “money pit”, the parties having invested far more money than they could presently realise if it was sold.
The property at Property A has an agreed value of $600,000. As the parties agree that the property will be sold, an amount of $20,000, which is an agreed figure for anticipated sale costs, will be deducted from its value leaving equity of $580,000 for division.
I do not propose to canvass all of the evidence of all of the witnesses, suffice to say it has all been read and considered and taken into account. I propose to touch upon the areas of significant controversy between the parties.
Gambling
Ms Brett asserts in her case that during the relationship Mr Brett had engaged in “significant gambling”. The evidence with respect to that issue is contained within paragraph 20 of Ms Brett's Affidavit. That includes and concludes with the assertion that in 2004 or thereabouts Mr Brett attended at least two meetings with Gamblers Anonymous. It would appear to be suggested that Ms Brett attended a support group for those in a relationship with problem gamblers.
Mr Brett denies any knowledge or recollection of those events. That might perhaps be taken in the overall context whereby Mr Brett concedes that his memory is less than perfect. Again, I am not critical of him for that, however his concession as to his less than perfect memory largely relates to historical transactions and specific figures for different amounts. I have no reason to doubt his denial of participating in the meetings suggested. However, not a great deal turns upon it other than potentially by inference that his gambling was of far greater quantum than he concedes, and I will turn to his concession shortly.
Ms Brett’s evidence suggests that in late 1993, around the time and as a consequence of the receipt of funds from the estate of Mr Brett’s deceased mother, whereby Mr Brett received about $30,000, that Mr Brett made three bets of $1000 of which Ms Brett is aware. Her evidence clearly envisages that other transactions may well have occurred and she does not seek to limit her evidence to purely those three transactions of which she is aware.
Ms Brett annexes copies of a number of cheque stubs drawn, it would seem, against the then company account and made out for cash. There is some controversy between the parties as to whether the handwriting upon those documents is that of Mr Brett or Ms Brett however, even accepting it is Mr Brett’s handwriting, the most that it could prove is that cheques for cash were made out and one would presume presented. What was done with the funds is not demonstrated thereby. That is no criticism of Ms Brett and there are many cases where parties do not present evidence that is readily available and should have been obtained but simply prefer to rely upon non-probative assertion. In this case documents from 1993, well over 20 years, would simply not be available.
Mr Brett’s evidence with respect to gambling does not seek to suggest that he has never engaged in gambling. Indeed, it is clearly something he enjoys and he is entitled to enjoy it. To each their own. Mr Brett’s evidence is that he had, following receipt of funds from his mother’s estate, kept aside $3000 which he used to implement a betting system involving placing $1000 bets at a time. He suggests at paragraphs 18 to 20 of his Affidavit that the betting system operated for about 10 weeks but that he, through an exercise of rigorous self-restraint, discontinued the system as he had broken one of the rules he had established for himself by dipping into the fund to pay another bill.
He suggests that he had five $1000 bets during that period. It is inferred from his evidence that as the system that he had wished to implement operated for about 10 weeks, that there may have been up to 10 bets of $1000.
Mr Brett’s evidence is that he gave half of any winnings to Ms Brett. She denies that this ever occurred. Mr Brett’s evidence though, to the extent that it is not controversial nor is there corroboration or evidence that would suggest that his evidence is inaccurate, is that when he was “on the punt” he won.
Mr Brett suggests that he made a small net profit of $1500 through the use of his system over a 10 week period and that he did not make a loss. Mr Brett also makes clear that betting is something that he enjoys or has enjoyed in the past. He has given evidence that he has placed bets through a phone tab account. Indeed, the evidence of Ms Brett’s now adult children would suggest that his phone betting through tab was fairly extensive at different points during their childhoods. They are now in their thirties.
On the basis that there is no evidence that would suggest that there was any premature distribution or what might be called wastage of assets, whether through income which might have been applied to liabilities or accumulated or otherwise, I am not satisfied that I could take anything of significance from the evidence other than Mr Brett “enjoyed having a punt” as his preferred recreation.
At paragraph 58 of his Affidavit Mr Brett denies the allegation that he is, or was a problem gambler and gives some detail of his betting habits through TAB, whether in person or by phone. That gives rise to the further vexed issue, or at least so it was presented in the evidence, as to financial control of income during the relationship.
Mr Brett asserts that throughout the relationship and whilst he was in employment that all income that he earned was available to Ms Brett, either through her conducting the bookwork of his business or whilst he was an employee by his returning home and providing his wage packet to Ms Brett. Indeed, that is reflective of a nostalgic time when people were paid in cash and received a wage packet.
Ms Brett denies that she ever received the wage packet as such but agrees that funds were provided to her by Mr Brett from his income and that she returned to him an allowance. To the extent that it is sought to criticise Ms Brett for that practice, I do not do so and for two reasons:
a)Firstly, it is simply how these parties organised their affairs during the relationship. It is what many would have referred to in past times as “prudent financial management”. They pooled their incomes. A person with control of the money and responsible for the running of the household, Ms Brett, retained the income and subject to each having an allowance to meet and expend as they desired and thus ensuring that all household bills were met. There is nothing on the evidence to suggest that Ms Brett was other than an entirely competent and prudent manager of household finances.
b)Secondly, there is no suggestion on the evidence that Ms Brett has done anything with any funds that she has received, whether through her own efforts and exertions or Mr Brett’s, other than to apply them prudently and competently. There is no suggestion that she has secreted or “squirreled away” money, enriched herself or provided largess to others to the disadvantage of these parties. It is simply and transactionally how these parties ran their affairs and Ms Brett cannot and should not be criticised in that regard.
As a corollary to the above arrangements what is clear from Mr Brett's own evidence is that he spent his allowance, his weekly spending money, as he chose, either in placing bets with the TAB, rounds of golf, purchasing cigarettes, buying his lunch when at work and the like. To his credit, Mr Brett makes clear that he is not a drinker at all and thus his expenditure has been on the things which bring him enjoyment in life.
That has some relevance in that Ms Brett is, on one level, criticised for having undertaken numerous overseas trips during the marriage which Mr Brett did not participate in. The parties did participate in some trips together but Ms Brett certainly travelled more extensively. Again, that was her desired expenditure. That brought her happiness and it is how these parties organised their affairs within their lengthy marriage.
It is to be remembered that these parties were not together for a brief period. They were married in 1984 and they did not separate until quite recently. On that basis, the entirety of their relationship is not something which needs be examined. Absent an allegation by one party of some financial chicanery by the other one can simply accept, and I do accept, that they have conducted their affairs as they have conducted them - sensibly, prudently and consensually.
It is not the role of this Court to engage in a forensic examination of each transaction in the marriage of these parties. At a happier time when they lived together and had mutual commitment and endeavour they made joint, consensual decisions as to how they would conduct their affairs, and did so. On that basis I am satisfied, again, that there should be and is no criticism of Ms Brett because she chose to save her money prudently and diligently so that she could enjoy holidays, whereas Mr Brett expended his funds as he wished and for which he should also not be criticised. If he wishes to listen to the races, study the form guide and have a punt that is a matter for him.
There is some real issue as to initial contributions. Ms Brett seeks an adjustment, potentially of some significance, on the basis of her having introduced the property at Property A to the relationship.
The property was appropriately described as introduced, or very soon in the relationship rendered, unencumbered. That provided some real benefit to the parties. These parties did not have to meet a housing cost during the relationship other than ancillary expenses, utilities and the like.
There is some force to the position advanced by Ms Brett. Clearly, one could not mathematically calculate the value of that contribution. Similarly, and to her credit, Ms Brett does not instruct her advisers to seek to suggest that an asset-by-asset approach be adopted. Clearly, if suggested, it would in all probability have been rejected, the global-pool approach generally being preferred in accordance with Norbis & Norbis (1986) FLC 91-712 and a range of other Full Court decisions and in this case more accurately and appropriately reflecting the nature of the parties’ relationship and transactions.
However, the value of the home to the parties, whilst it cannot be mathematically calculated, need not be and should not be. It provided a home base for the parties and it allowed the parties to engage in their lifestyle and the other transactions in which they have engaged without the distraction of a mortgage.
At the time that the parties commenced their relationship there was a small mortgage. The modest mortgage was subject to interest rates which could well be described as minimal.
In any event, I am conscious that there is no real controversy regarding the introduction of the home save whether and if so, how an adjustment might be effected.
A similar issue was raised, although not ultimately pressed in the case of Mr Brett, regarding the extent to which he has provided parenting to the children of Ms Brett from her previous relationship. It was established at an early stage in the proceedings that a Robb & Robb (1995) FLC 92-555 style contribution would not be agitated by Mr Brett.
The evidence of the adult children goes largely to suggested corroboration of gambling. However, the evidence would not establish, I am satisfied, anything which could fall within a Kowaliw & Kowaliw (1981) FLC 91-092 style argument of wastage or premature distribution of property.
There is some controversy regarding the use of property since separation. The property at Property I is occupied by one of Ms Brett’s brothers who has paid some occupation fee but certainly, at first blush, it would appear less than market rental. Nothing turns on whether it is or is not market rental. It is a choice that the wife is entitled to make and indeed is consistent with behaviours during the relationship of providing some assistance to the wife’s brother.
Mr Brett urges that some consideration should be given to the fact that Ms Brett’s brother had lived in their home for some years without paying rent or other contribution. There is some controversy as to whether that is factually accurate. I am not satisfied that it could be or should be taken into account. It is a transaction that the parties engaged in during their marriage and with each other’s knowledge, consent and cooperation. Thus it is not something which this Court need trouble itself with.
The benefit to Ms Brett of retaining the Property I property in the future is apparent. She wishes to do so. There is no controversy that she will. Clearly, her brother derives some benefit from it which she wishes to continue and support and she and other members of her family have had and will continue to have the benefit of that property. However, I am not satisfied that this is a factor which should erode, to the extent that such language has any place in determinations of this Court, Ms Brett’s contributions nor that it would bolster the case of Mr Brett.
Similarly, it is suggested that Mr Brett, having had occupation of the Property A property and the use of a flat constructed thereat which has in the past, if not at present, been rented at some modest rental, is a factor of significance. Certainly, it is a matter of some relevance, particularly as Ms Brett has indicated that she has been required to obtain rental accommodation. Perhaps it is in that spirit that Mr Brett has raised issues regarding Property I, suggesting that the wife might have avoided that rental expenditure by simply moving to that accommodation, whether sharing it with or in the absence of her brother. However, they are possibilities and hypotheticals whereas the reality is that Mr Brett has continued to occupy the Property A property, as he is entitled, but he has thus had no real housing cost whereas Ms Brett has.
That is particularly apparent as Mr Brett, through his Financial Statement, had asserted that he had spent some funds which he had held at separation in meeting living expenses and legal fees. His evidence would suggest ultimately that the vast majority of that expenditure was on legal fees rather than expenses, with the only identifiable expense having been replacement of a hot water system that required mending. Thus I am not satisfied that those factors have any great bearing upon the outcome of the determination although the occupation for some years now of the Property A property without significant housing expense has some relevance.
The major factual issue between the parties relates to the indirect financial contributions on behalf of Ms Brett by her brothers in undertaking work at Property I and also at the Property A property, engaged in building and construction work.
In relation to the Property I property there can be no issue as to the level of work that was undertaken by Ms Brett’s extended family. So much is clear from the evidence of the three brothers who have each filed affidavits and have not been required for cross-examination.
Particular controversy arises regarding the acknowledgment by the parties of that work and its value during their marriage. To that end exhibit W1, the will previously made by Mr Brett, is relied upon in supporting recognition by Mr Brett of that work and its value. That will, now changed, had purported to give a life tenancy or right of residence to Mr D for as long as he wished to reside within that property and without payment of any rent or occupation fee as well as a one-sixteenth share to each of the four brothers, the (omitted) brothers, thus one-quarter of that property by the will being gifted to them in total.
Mr Brett asserts that a testamentary gift is as far as “acknowledgement” ever went a gift or act of generosity or largesse. Ms Brett’s evidence and indeed that of her brothers is that there had been active discussion regarding an acknowledgment of their interest in the property. Thankfully, for the avoidance of sake of complexity, cost and expeditious hearing of the matter, neither party has sought to agitate equitable relief in the nature of constructive or resulting trusts regarding the Property I property nor need either party.
The parties agree that Property I will be retained by Ms Brett and thus she will be in a position to address those issues with her brothers directly without the need for intervention or declaratory relief by this Court. However, on the evidence as it stands, and largely uncontested, clearly Ms Brett's family have made substantial and significant efforts in providing assistance in renovating and improving that property.
It might be asserted, returning for one moment to the description of the Property I property as a “money pit”, that those contributions have not had any substantial net worth to the parties in that they have not significantly increased the value of the property. However, that would be to treat those contributions as other than upon their full weight which I am satisfied they are entitled to receive. It is a significant issue.
As regards future needs, what is clear is that these parties, at a post-employment period in their life, are each, to some extent, dependent upon income-tested pensions and benefits. Neither is in a particularly healthy financial position, at least as regards income, and neither has any realistic prospect nor desire to return to full-time paid employment.
In those circumstances Ms Brett does not agitate for any adjustment by reference to section 75(2) of the Act.
Mr Brett agitates for some slight adjustment but largely based not upon disparity in income-earning capacity or appropriateness for gainful employment but more so related to the fact that he will, as a consequence of the sale of Property A, be required to find alternate accommodation and if he purchases a property meet stamp duty and acquisition costs.
I am not satisfied that I can or should properly include those anticipated expenses as they are matters that may arise at some point in the future and are a possibility rather than a certainty. In any event such transactions are a part of the natural transition of parties from married to separated, divorced and property divided between them and Ms Brett has met such costs for some few years now whilst Mr Brett has not. Ms Brett, if she chose not to live at Property I (where she has never in reality lived on a full-time basis), would be in exactly the same position. Thus I am further reassured that such an adjustment is not particularly warranted or relevant.
Thankfully, in this case jurisdiction is established without difficulty. The parties are married. If they were not, a great many other issues might arise including to the extent to which the parties maintained separate bank accounts, some discourse as to their level of financial commitment and mutual sharing. Thankfully, that is not relevant.
As regards findings of credit, I am not satisfied that it is fundamental for me to make any. I prefer to approach the matter from the perspective of accepting Ms Brett’s evidence wherever there is factual controversy between the parties regarding historical transactions. On the evidence Ms Brett was clearly responsible for creating and maintaining financial records and clearly has a better memory of matters. That is not to suggest that I believe that Mr Brett has sought to mislead the Court or has done anything than his best in being frank and honest. It is purely, as he concedes, that his memory is not as good as it could be and that is far from surprising when, in some cases, transactions that are cross-examined on go back over 30 years.
I do not propose to discuss the evidence further although I may touch upon specific elements of it in addressing the legislative framework to which I now turn.
Counsel suggests that there is now significant controversy as to whether there are three or four steps required to be undertaken in the determination of property adjustment proceedings in the post Stanford & Stanford [2012] World. My view would be that there are and have always been three, justice and equity being far from a separate determination but infusing each of the separate steps. However, I will deal with both three and four steps for abundant caution but making clear that justice and equity will be considered throughout.
It is suggested, though not by counsel in this case, that there is also some controversy that the High Court’s decision in Stanford creates a “threshold” regarding the exercise of the Court’s jurisdiction. None exists.
As the High Court identified clearly in paragraphs 42 to 44 of their judgment what is required is a determination by the Court that it is appropriate to assume jurisdiction. As was clearly identified by the High Court that test will be readily met, in the vast majority of cases including this case, by the fact that parties, who have previously been married or in a committed de facto relationship, have determined that they no longer wish to be and thus that fact will, by and of itself, establish that it is appropriate to proceed. I thus proceed on that basis.
By reference to the previous authorities, Ferraro & Ferraro (1993) FLC 92-335, Hickey & Hickey [2003] FamCA 395, AJO & GRO [2005] FamCA 707 and Stanford [2012], clearly I must commence with an identification of the pool of property available at trial and that is very clearly identified in this case through these well-advised and prudent litigants agreeing on their asset pool and its value, a net value of $884,790.
I must then assess contributions.
It is submitted in the wife’s case that I would find that her contribution exceeds the husband’s significantly and to the extent that her contribution would be found to be in the order 63.5 per cent. It is to be noted that that is a significant and appropriate concession from the starting point as set out in the relief proposed in her Response. That is not a criticism of that sought in the Response. However, as the evidence lies and as is appropriate in any litigation, with the ebbs and flows of evidence, that concession is made and put fairly to the Court. It is to Ms Brett’s credit and that of her advisers that it is so.
Mr Brett for his part concedes that contribution might favour Ms Brett but in no way to the extent that she urges. Mr Brett urges the Court to find that contribution is in the nature of perhaps 52 per cent or a little higher in the wife’s favour but that this would be eroded by section 75(2) adjustments, as referred to above, so as to reduce the overall division of property to an equal division.
The contributions that largely favour Ms Brett, and I accept are appropriately identified, relate to the initial contribution and the contributions made through the (omitted) brothers to the Property I property. I propose to deal with each briefly and separately.
Initial contributions, whilst one eschews the language of "erosion", might often and in many circumstances can be suggested to have diminished in importance over time. Indeed, there is, in most cases, some real basis for a suggestion that the effluxion of time has caused such a diminishing of importance.
Initial contributions, as discussed by the Full Court in authorities such as Pierce & Pierce [1998] FamCA 74 and AJO & GRO [2005], are not exceptional contributions. They are simply contributions which must be weighed against all other contributions. Thus one should not adopt a mathematical approach and I do not propose to do so. It is not a matter of weighing up what the property was worth at the commencement of a relationship and trying to extrapolate some artificial percentage value for that contribution in the present day. What must be assessed is the benefit that was provided to the parties and the present composition of the asset pool by that contribution and weighing it against all other transactions and contributions.
During the relationship, I am satisfied that the parties have, by and large, and absent the two issues identified, contributed equally. These are decent, hardworking folk. They are not the kind of people who spend all of their money on drugs, alcohol or other socially-deviant behaviours. They have each held employment and done exactly that which is expected of a member of civil society: earned income, paid tax, and provided the safety net which now supports them in their twilight years, and one would hope many more to come.
On that basis, whilst there have been the factors identified above as to how they have managed their affairs, who has spent their allowance, (if it might be so described), on what, clearly, they have each derived benefit from knowing each other. That has some relevance in terms of the initial contribution.
Ms Brett introduced a property which was or very soon became effectively unencumbered. These parties, and without intending to be in any way offensive or pejorative to these parties, were not “young moonstruck lovers” when they came together. They were in their middle years.
Unlike “young moonstruck lovers” in the present day, dependent upon the largesse of their parents to assist them in raising their deposit for increasingly unaffordable accommodation, they were able to attain a property at a reasonable value and using a reasonable amount of their weekly disposable income to service debt, even with interest rates as they were in the mid-1980s. That benefit of unencumbered or very close to unencumbered accommodation was very real and tangible for these parties.
Whilst the property was introduced at the commencement of the relationship a very long time ago that has, on one level, potentially diminished the contribution but on another level potentially increased it. It means that the parties, for the entirety of their relationship, had no trauma from or difficulty in dealing with mortgages. They were able to earn such income as they desired and to engage in the transactions as set out in their evidence, and largely without controversy, in buying and selling properties.
I am satisfied that some weight must be attached to that initial contribution rather than it being disregarded entirely. In other circumstances that may be different. If, for instance, the property had been introduced with a substantial mortgage and for 25 years these parties had each worked hard and paid down and ultimately discharged the mortgage that would be a very different creature. As a consequence of the introduction of this effectively unencumbered home and then shortly thereafter the receipt of funds from pre-cohabitation employment benefits on the part of Ms Brett, I am satisfied that it increases the weight which should be attached.
As regards, Property I, I am conscious that, appropriately neither party urges me to seek to take some mathematical calculation. I am urged on the part of Ms Brett to assess that contribution as substantial. This is urged as the parties had, whether through mutual agreement or otherwise, made concessions at one point or another, whether in discussion and conversation, (and the brothers are all united in their evidence as to discussions on the point), or through the wills that they had each made in the past, acknowledged that significant benefit had been provided and effort exerted by Ms Brett’s brothers. Whether that was 25 per cent of the value of the property or any other amount, need not be mathematically determined by me. What is clear is that great work was undertaken.
Similarly, however, there has been some benefit to Ms Brett’s brothers. As Mr Brett points out the home has been used openly by extended family for holidays and the like and certainly Ms Brett’s brother Mr D continues to live in the property. But those benefits do not obviate against, although it might have some impact upon the weight attached to, the contributions that were made by those persons and thus indirectly made by Ms Brett.
Those two contributions in combination must, I am satisfied, be of some real weight to Ms Brett’s position. That is not to suggest for one moment that Mr Brett has not been a hardworking and decent man who also now, at his twilight, has needs for the future including to accommodate himself.
I am conscious in assessing an adjustment to contribution to not be mathematical but, to the extent that I might be perceived as being so I will consider, in real and practical terms, not just an adjustment but the difference it produces between the parties. They are connected but different things.
Regrettably, although counsel in this case has been highly conscious of addressing the matter whereas others are not, adjustments are often sought which bear no relationship to reality, particularly the difference that is then produced in outcome for each party. It is trite to observe that the parties commenced this determination with a property pool which comprises 100 per cent of their assets. Regrettably, far too many counsel, although I hasten to add not in this case, lose sight of the fact that an adjustment must be taken from within that pool and not elsewhere.
An adjustment is an exercise in double-entry bookkeeping not the creation of wealth by conjuring. A 10 per cent adjustment produces a 20 per cent difference and in the context of the relationship between these parties and its length, and the overall contributions they have each made, that might be viewed as a significant and perhaps disparate proportion of differentiation.
To the extent that I am urged to find Ms Brett’s contribution to be 63.5 per cent I am not persuaded that I could extend that far without falling into appealable error. I am, however, satisfied that an adjustment in the higher fifties and up to the low sixties would be justified. That is not a significant difference, however the difference between a 10 per cent adjustment and a 13.5 per cent adjustment is significant. It takes the difference from 20 per cent to 27 per cent or more than a quarter of the total pool, a quarter being a significant fraction.
I am not satisfied that I could or should engage in any actuarial reading down of the value of the contributions made, particularly to the Property I property, nor that I could possibly view those contributions as being less valuable simply because they did not produce an overall corresponding increase in value of the property. In all of those circumstances, I am satisfied that within the range I have identified high fifties to low sixties, that an adjustment of nine per cent should be made.
As regards section 75(2) adjustments, clearly, the parties are in remarkably similar financial positions as regards their present and future financial needs, capacity to earn income and the income that is, in fact, available to them to meet their needs. If orders were made without adjustment that would result, following the sale of the Property A property, in Mr Brett receiving a fund approaching $350,000. Far be it for this Court to suggest where a party should live but, clearly, if Mr Brett was intending to purchase a property outright and unencumbered it would not be in Sydney. However, the Court cannot change median housing prices but purely determine, through application of legislation, controversy between parties.
As regards contribution and the nine per cent adjustment, clearly, Ms Brett would receive significantly more than Mr Brett. In fact, it would be a difference of a little over $180,000. I am conscious to ascertain that difference because it may impact both upon the justice and equity of the decision and upon adjustments that might be made pursuant to section 75(2) of the Act. I am also conscious that of the property that Ms Brett will retain $290,000 of it, more than one half of the total, will be tied up in the Property I property which, on the evidence as it lays, is unlikely to be of immediate financial benefit to Ms Brett other than through the payment of an occupation fee by her brother, albeit a modest amount.
Accordingly, by reference to that difference, I am satisfied that the contribution adjustment of nine per cent is justified, is just and equitable, and does not impact upon nor cause any injustice.
As regards consideration of section 75(2) Mr Brett urges, and appropriately, that future costs might be incurred by him in purchasing a property, particularly in relation to stamp duty. However, that is not certain and it is potentially also something which could be met by Ms Brett.
Clearly, the parties’ ages and states of health are similar. Each asserts that they have some health issues although there is no expert evidence, nor need there be in the context of this case.
Clearly, the reality for Mr and Ms Brett, of whom I am conscious to express the greatest of respect as hardworking people who have separated and brought their case before the Court as they are entitled to, is that they are unlikely to be returning to paid employment.
The income, property and financial resources of the parties and their physical and mental capacity for gainful employment I am satisfied does not warrant any adjustment.
Neither party has the care of children under 18 years.
The parties each have commitments necessary to support themselves. To some extent Ms Brett might be taken and seen to be providing some support to her brother, Mr D. However, she is entitled to do that with her property. It is not for this Court to interfere. However, I am not satisfied that it would warrant an adjustment in her favour either, nor is it agitated.
Neither party has any commitment necessary to support anybody else.
Both parties are entitled to receive income-tested pensions and benefits, and so they should be. It is, after all, what one pays tax for, to receive some return in times of hardship or, in this case, having made valuable contributions as members of society for very many years then receiving the benefit society should offer to them, not as an entitlement, not as an expectation, but as a right.
In terms of maintaining a standard of living, I am satisfied that the parties can do so based upon a contribution based division of their assets and without any further adjustment.
Neither party seeks payment of maintenance but in any event neither has contributed to the present earning capacity of the other nor would any course of education or training assist them in increasing their earning capacity.
The orders proposed by either party or by a contribution adjustment of property between the parties will not affect creditors.
The duration of the marriage is relevant. The parties were together for a very long time, a sizeable portion of their lives. During that time they have accumulated some modest wealth, much more than many but still not a significant amount to support themselves for the rest of their lives.
The length of the relationship, I am satisfied, would obviate against a larger contribution adjustment and obviates against the need for any section 75(2) adjustment.
There is no need to protect the homemaking and parent role of either party.
Neither party is cohabiting.
Orders as proposed do not affect interests in bankruptcy or creditors.
Child support is not relevant.
As regards other facts and circumstances, as I have indicated, I am not satisfied that it would be appropriate to make the adjustments that are urged, albeit entirely modest, on the part of Mr Brett.
In those circumstances, I propose to make orders that will result in an adjustment of the total property pool at or approximating, without counting fractions of a per cent, 59 per cent of the asset pool in Ms Brett’s favour. That would, on the basis of the assets already held by each or which the parties agree Ms Brett will retain, require a sale of Property A, as both parties urge and agree to, and a division of the proceeds.
Ms Brett will retain Property I and her savings funds of a little over $14,500. She will thus, with Property I and her savings, have $304,790. To receive the percentage of the total property pool she would need to receive a further 37.5 per cent of the proceeds of sale of Property A after adjustment for sales costs and, accordingly, orders will be made to that effect.
I certify that the preceding one hundred and twenty eight (128) paragraphs are a true copy of the reasons for judgment of Judge Harman
Associate:
Date: 23 February 2015
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
Legal Concepts
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Remedies
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Costs
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Injunction
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Fiduciary Duty
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Appeal
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