Bryson and Bryson and Anor
[2007] FamCA 1432
•11 December 2007
FAMILY COURT OF AUSTRALIA
| BRYSON & BRYSON AND ANOR | [2007] FamCA 1432 |
| FAMILY LAW – PROPERTY – Settlement in relation to marriage – Sale of overseas property |
| Family Law Act 1975 (Cth) Child Support (Assessment) Act 1989 (Cth) |
| Charles Marshall Pty Ltd & Grimsley (1956) 95 CLR 353 Napier & Public Trustee (WA) (1980) 32 ALR 153 Calverley & Green (1984) 155 CLR 242 Marriage of Omacini (2005) 33 Fam LR 134 Sobluksy & Sobluksy (1976) FLC 90-124 Kennon & Kennon (1997) FLC 93-757 Sheedy & Sheedy (1979) FLC 90-719 Fisher & Fisher (1990) FLC 92-127 at 77,846 Kowaliw & Kowaliw (1981) FLC 91-092 Mead & Mead (1983) FLC 91-354 Hendrikse & Hendrikse (1976) FLC 90-069 St John & St John (unreported, New South Wales Court of Appeal, 19 June 1974) |
| APPLICANT: | Ms Bryson |
| 1st RESPONDENT: | Mr Bryson |
| 2nd RESPONDENT: | Mr D Bryson |
| FILE NUMBER: | SYF | 4460 | of | 2004 |
| DATE DELIVERED: | 11 December 2007 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | O'Ryan J |
| HEARING DATE: | 30 April, 1 & 2 May 2007 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Mater |
| SOLICITOR FOR THE APPLICANT: | John R Quinn & Co |
| SOLICITOR FOR THE 1ST RESPONDENT: | In Person |
| COUNSEL FOR THE 2ND RESPONDENT: | Mr Levy |
| SOLICITOR FOR THE 2ND RESPONDENT: | Humphreys & Feather |
Orders
It be declared that the Husband and the Wife hold their interest in the property situate at and known as the E property in New South Wales and being the whole of the land contained in Certificate of Title Folio Identifier 1/…6 upon trust for Mr D Bryson.
As between the Husband and the Wife and Mr D Bryson and pursuant to Order 1 herein, it be declared that Mr D Bryson is beneficially entitled to an estate in fee simple in the E property unencumbered.
Consequential upon Orders 1 and 2 above within three months of the date of these Orders, the Husband and the Wife do all acts and things and sign all documents and writings necessary to transfer the E property to Mr D Bryson.
The Husband forthwith do all acts and things and sign all documents and writings necessary to sell the property situate at and known as the R property in England and in particular shall:
4.1Place the home with an estate agent in the area for sale of the property at the earliest possible date;
4.2Accept the advice of the estate agent as to the most effective and expeditious method of sale;
4.3Execute all documents requested by the estate agent for the sale of the property;
4.4Request the estate agent to recommend a reserve price to be placed on the property for the purpose of the auction sale, if there is an auction, and accept such recommended reserve price;
4.5Pay to the estate agent any sum requested for advertising expenses in relation to the sale;
4.6Give such instructions as are necessary to a solicitor for the preparation of a contract for sale and for the contract for sale to be made available to the estate agent;
4.7Attend at the auction sale of the property, if there is an auction, (personally or by proxy) and negotiate with the highest bidder in the event that the reserve price is not reached;
4.8Accept the advice of the estate agent as to the acceptance of a price less than the reserve price;
4.9Execute the contract of sale;
4.10Co-operate in every way with the estate agent in relation to the sale of the property including making a key available, allowing inspection of the home at all times requested by the estate agent and ensuring that the home is in a neat and clean condition at the time of inspection by a prospective purchasers;
4.11Execute all other documents necessary to complete the sale.
On settlement of the sale of the R property the Husband forthwith do all acts and things and sign all documents and writings to cause the proceeds of sale to be paid in the following manner and priority:
5.1All costs and expenses of sale including legal costs and disbursements and estate agent’s commission;
5.2The amount required to pay all council and water rates outstanding with respect to the property;
5.3The amounts required to discharge the mortgage secured on the property to Abbey National Plc;
5.4The amounts required to discharge the mortgages numbered:
5.4.1…B;
5.4.2…A; and
5.4.3…C,
being mortgages secured on the E property.
5.5In the payment of the balance remaining to discharge the mortgage secured on the title of the property situate at and known as the J property in the State of New South Wales.
The Husband forthwith do all acts and things and sign all documents and writings necessary to surrender or realise all endowment policies that are security for the mortgage secured on the R property to Abbey National Plc and apply the whole of the proceeds in repayment of the mortgage.
Contemporaneously with compliance by the Husband with Order 5 hereof the Husband do all acts and things and execute all documents and writings necessary to transfer unencumbered the J property to the Wife
Contemporaneously with compliance by the Husband with Orders 5 and 7 hereof the Wife pay direct to the Husband the sum of $279,540.
It be declared that the Husband holds his interest in the J property, subject to an equitable charge in favour of Mr D Bryson in an amount equivalent to the amounts owing pursuant to any and all encumbrances upon the title of the E property as at the date of compliance by the Husband and the Wife with Order 3 herein.
Pending compliance with Orders 3 and 5.4 herein, each of the Husband and the Wife be and hereby are restrained by themselves, their servants and/or agents from doing and/or causing or permitting the increase in any liability secured by way of any existing encumbrance upon; each of the E property and the J property.
Pending compliance with Order 3 and 5.4 herein, the Husband pay as and when they fall due:
11.1All payments, including but not limited to payments in respect of principal and interest, in respect of any liability secured upon the title of either or both of the E property and the J property; and
11.2All outgoings, including but not limited to council rates, water rates and statutory charges, in respect of the E property and the J property.
In the event that upon compliance by the Husband with Order 5.4 herein the amount paid is not sufficient to discharge the mortgages secured on the title of the E property, then the Husband and the Wife shall forthwith do all acts and things, sign all documents and writings and pay all monies necessary to forthwith place the J property upon the market for sale by public auction with a Real Estate Agent and at a reserve price agreed by the Husband and the Wife and failing agreement on either, with a Real Estate Agent and/or at a reserve price determined by the President for the time being of the Real Estate Institute of New South Wales, or his nominee and any costs of such determination to be borne by the Husband and the Solicitor for the Wife shall act on behalf of all the parties for the purpose of the sale and the proceeds of sale shall be divided in the following order and priority:
12.1Payment of agent’s commission, legal fees, adjustment of rates and taxes and other usual outgoings on the sale;
12.2Payment of the amount required to discharge all mortgages registered upon the title of or held as security of the E property; and
12.3Payment of the amount required to discharge all mortgage secured over the title of the J property;
12.4Payment of the balance to the Wife.
In the event that the J property is not sold at the auction referred to in Order 12 herein then the Husband and the Wife shall re-submit the J property to auction at six weekly intervals until sold and in that respect the provisions of Order 12 shall apply mutatis mutandis.
In the event that the J property is sold in accordance with these orders then on completion of the sale of the said property the Husband pay to the Wife a sum equal to the difference between the sum of $390,460 and the amount, if any, received by the Wife pursuant to Order 12.4 hereof and if no amount is received by the Wife pursuant to Order 12.4 hereof then the sum of $390,460.
The Husband do all acts and things, execute all documents and writings and pay all monies necessary to indemnify and keep indemnified the Wife against any and all claims, actions, suits or demands of whatsoever nature that may be brought against the Husband and/or the Wife in respect of the mortgages registered against the title of the J property and the E property and also all council rates and water rates in respect of the J property.
The Husband do all acts and things, execute all documents and writings and pay all moneys necessary to indemnify and keep indemnified the Wife against any and all claims, actions, suits or demands of whatsoever nature that may be brought against the Husband and or the Wife by Mr D Bryson.
The Wife release to the Husband any claim she may have in law or in equity in respect of the sum of $300,000 invested by the Husband between 16 June 2003 and 24 November 2003 in various construction companies.
Unless otherwise specified in these Orders and except for the purposes of enforcing the payment of any money due under these or any subsequent orders, each party be solely entitled to the exclusion of the other to all property in the possession of such party as at this date.
In the event that any party refuses or neglects to comply with the provisions of any order herein, the Registrar of the Family Court at Sydney is hereby appointed pursuant to s 106A of the Family Law Act to execute all deeds and documents in the name of either the Husband or the Wife and do all acts and things necessary to give validity and operation to the said order.
All parties have liberty to apply on seven days notice in relation to the implementation and or enforcement of these Orders.
IT IS NOTED that publication of this judgment under the pseudonym Bryson & Bryson and Anor is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYF 4460 of 2004
| MS BRYSON |
Applicant
And
| MR BRYSON |
First Respondent
And
| MR D BRYSON |
Second Respondent
REASONS FOR JUDGMENT
INTRODUCTION
Before me for hearing is an application for review of an order for property settlement made by a judicial registrar. The applicant is Ms Bryson who I shall refer to as the Wife. The First Respondent is Mr Bryson who I shall refer to as the Husband. The Second Respondent is Mr D Bryson and he is the Husband’s father.
On 4 October 2006 an application in a case was filed on behalf of the Husband’s father in which he sought to review the following orders made on 25 September 2006 by Judicial Registrar Loughnan:
1. The Husband shall forthwith do all things and sign all documents necessary to do all things and sign all documents to cause the property situate at and known as [the R property], England to be sold. On settlement of the sale he is to cause the proceeds of sale be paid in the following manner and priority:
(a)all costs and expenses of sale including legal costs and disbursements, agent’s commission, valuer’s fees and auction expenses;
(b)the amount required to pay all municipal and water rates outstanding with respect to the property;
(c)the amounts required to discharge the mortgage secured on the property to Abbey National Plc and mortgages numbered:
(d)the amounts required to discharge the mortgages numbered:
[…]B;
[…]A; and
[…]C,
being mortgages to Perpetual Trustee Victoria secured on the property known as [the E property] in the State of New South Wales
(e)in the payment of 60% of the balance to the Wife; and
(f)in the payment of the remaining balance to the Husband.
2. Forthwith upon the discharge of the mortgages secured on the property known as [the E property] in the State of New South Wales the Husband and Wife shall do all things and sign all documents necessary to transfer that property to the second respondent, [Mr D Bryson].
3. Unless the parties agree to the contrary the costs of compliance with order 2 shall be born equally by the Husband and the Wife.
4. Within 3 months from the date of these orders, the Wife shall pay the Husband $52,100 and discharge the mortgage to Perpetual Trustee Victoria secured on the property known as [the J property] in the State of New South Wales.
5. Forthwith upon compliance with order 4 the Husband is to do all things and sign all documents necessary to transfer his interest in the [J] property to the Wife, at her cost.
6. In the event that the Wife does comply with order 4, the Husband and Wife shall forthwith do all things and sign all documents necessary to cause the [J] property to be sold and on settlement of the sale they are to cause the proceeds of sale be paid in the following manner and priority:
(a)all costs and expenses of sale including legal costs and disbursements, agent’s commission, valuer’s fees and auction expenses;
(b)the amount required to pay all municipal and water rates outstanding with respect to the property;
(c)the amounts required to discharge the mortgage secured on the property being mortgage numbered […]01 to Perpetual Trustee Victoria;
(d)in the payment of 85% of the balance to the Wife; and
(e)in the payment of the remaining balance to the Husband.
7. Otherwise the Husband and Wife are each declared to own and be beneficially entitled to all other property in their respective possession.
8. The Husband is to indemnify the Wife and keep her indemnified in relation to any claim made by the second respondent for moneys advanced by the Husband’s parents or either of them to the Husband and Wife or either of them.
9. In the event that any party refuses or neglects to execute a deed and or instrument or any other document in compliance with the provisions of the proceeding paragraphs of these orders the Registrar or Deputy Registrar of the Family Court of Australia is hereby appointed pursuant to section 106A of the Family Law Act 1975 to execute all deeds and/ all instruments in the name of the defaulting party or parties and do all acts and things to give effect in operation to the deeds and/ or instruments.
10. The operation of these orders is stayed until 4.00 pm on 4 October 2006. The parties are at liberty to restore the proceedings before Judicial Registrar Loughnan in relation to the form of these orders, by arrangement with his associate on 24 hours notice to the other parties and the associate.
11. The parties are at liberty to apply on 7 days notice in the event of any difficulty arising out of the implementation and enforcement of these Orders.
The Wife seeks the following:
3.1 Payment to the Wife:
That within 30 days of orders being made herein, the Husband pay to the Wife the sum of $175,000.
3.2 Transfer of the [J] property to the Wife:
That within 30 days of orders being made herein, the Husband do all acts and things and execute all deeds, documents, instruments and writings necessary to transfer to the Wife all of his right, title and interest in the property known as the [J property] (“the [J] property”).
3.3 Indemnity and discharge of the mortgage by the Wife:
That forthwith upon the Husband complying with the provisions of sub-paragraphs 3.1 and 3.2 above, the Wife indemnify and keep indemnified the Husband against any proceedings, suit, claims or demands of whatsoever nature brought against the Husband in respect of the first mortgage registered against the title of the [J] property in favour of Perpetual Trustees Victoria Ltd (currently in the amount of $330,746) and also all council rates and water rates in respect of the [J] property and shall do all acts and things to cause the discharge of the existing mortgage within 3 months of the Husband complying with his obligations as set out in sub-paragraphs 3.1 and 3.2 above.
3.4 Sale of Husband’s property in the United Kingdom (“the [R] property”) in the event of default by him:
(a)In the event that the Husband does not comply with his obligations as set out in sub-paragraphs 3.1 and 3.2 above, he shall do all acts and things and sign all documents necessary to cause the sale of his property known as [the R property], United Kingdom (“the [R] property”) by public auction and in particular shall:
(b)Place the home with an estate agent in the area (hereinafter called “the auctioneer”) for sale of the property by auction at the earliest possible date;
(c)Execute all documents requested by the auctioneer for the sale of the property by auction;
(d)Request the auctioneer to recommend a reserve price to be placed on the property for the purpose of the auction sale and accept such recommended reserve price;
(e)Pay to the auctioneer any sum requested for advertising expenses in relation to the auction;
(f)Give such instructions as are necessary to a solicitor for the preparation of a contract for sale and for the contract for sale to be made available to the auctioneer prior to the auction;
(g)Attend at the auction sale of the property (personally or by proxy) and negotiate with the highest bidder in the event that the reserve price is not reached;
(h)Accept the advice of the auctioneer as to the acceptance of a price less than the reserve price;
(i)Execute the contract of sale;
(j)Co-operate in every way with the auctioneer in relation to the auction of the property including making a key available, allowing inspection of the home at all times requested by the auctioneer and ensuring that the home is in a neat and clean condition at the time of inspection by a prospective purchasers;
(k)Execute all other documents necessary to complete the sale.
3.5 Distribution of proceeds of sale of the [R] property:
Upon the sale of the [R] property, the proceeds of sale to be paid in the following manner and priority:
(a)Payment of agent’s commission and auction expenses due on the sale of the property;
(b)Payment of legal costs on the sale of the property;
(c)Water rates, council rates and other applicable conveyancing adjustments;
(d)Payment to the Wife of the sum of $175,000;
(e)Balance to the Husband.
3.6 Transfer of the [E] property
(a)The Wife and the Husband shall do all acts and things and execute all deeds, documents, instruments and writings necessary to transfer to the Husband’s father all their right, title and interest in the property known as [the E property] (“the [E] property”).
Husband to discharge mortgages
(b)The Husband shall do all acts and things and pay all monies necessary to discharge all mortgages registered against the [E] property;
Declaration
(c)A declaration that the Husband holds his interest in the property known as [the R property], United Kingdom (“the [R] property”) subject to an equitable charge in favour of the Wife in an amount equivalent to any amount which the Wife is required to pay as a consequence of the failure of the Husband to discharge all mortgages registered against the [E] property.
(d)Leave to Wife to lodge Caveat against the title of [the R property]
That the Wife be at liberty to cause a Caveat (or the equivalent under English law) against the title of the Husband’s [R] property and to give effect to this order the Husband shall do all acts and things and sign all documents as may be necessary to give effect to this order.
(e)Sale of [the R property] by auction in the event of the Husband’s default under these orders
In the event that the Husband becomes in default under these orders the Husband shall do all acts and things and sign all documents necessary to cause the sale of the [R] property and in particular shall:
(i)Place the home with an estate agent in the area for the sale at the earliest possible date.
(ii)Execute all documents requested by the estate agent for the sale of the home.
(iii)Request the estate agent to recommend a price to be placed on the home for the purpose of the auction sale and accept such recommended price.
(iv)Pay to the estate agent any sum requested for advertising expenses in relation to the auction.
(v)Give such instructions as are necessary to […] Solicitors, […], London for the preparation of a Contract for Sale and for the Contract for Sale to be made available to the estate agent prior to the sale.
(vi)Execute the Contract for Sale.
(vii)Execute all other documents necessary to complete the sale.
(f)In the event that the Husband does not comply with these orders within twenty-one (21) days of the act of default under these orders the Husband shall forthwith do all acts and things and sign all documents necessary to appoint the Wife his Power of Attorney for the purpose of the sale of the [R] property.
(g)Distribution of proceeds of sale of [the R property]
Upon the sale of the proceeds of sale of [the R property] (“the [R] property”) be paid in the following manner and priority.
(i)Payment of agent’s commission if any due on the sale of the [R] property.
(ii)Payment of any monies outstanding on any mortgage registered on the title of the [R] property.
(iii)Payment of legal costs and other expenses associated with the sale of the [R] property.
(iv)Payment of all monies necessary to discharge any mortgages over the property known as [the E property] in the State of New South Wales and the property known as [the J property] in the State of New South Wales.
(v)Payment to the Wife of any monies under these orders.
(vi)The Wife’s legal costs of and incidental to the enforcement of these orders.
(vii)Balance to the Husband.
3.7 Indemnity by the Husband:
That forthwith upon the Wife complying with the provisions of sub-paragraph 3.6 above, the Husband shall indemnify and keep the Wife indemnified against:
(a)Any proceedings, suits, claims or demands of whatsoever nature brought against the Wife in respect of any of the mortgages registered against the title of the [E] property in favour of Perpetual Trustees Victoria Ltd and also all council rates and water rates in respect of the [E] property and shall do all acts and things to cause the discharge of the existing mortgages over the [E] property within 3 months of compliance by the Wife of her obligations as set out above; and
(b)The claim made by the Husband’s father, [Mr D Bryson].
3.8 Release of claim:
That the Wife release to the Husband any claim she may have in law or in equity in respect of the sum of $300,000 invested by the Husband between 16 June 2003 and 24 November 2003 in various construction companies.
3.9 Release of interest in the [R] property:
Subject to the orders herein, the Wife otherwise releases to the Husband any interest she might have in law or in equity in the [R] property.
3.10 Balance of matrimonial property:
That unless otherwise specified in these orders and except for the purposes of enforcing the payment of any money due under these or any subsequent orders, each party be solely entitled to the exclusion of the other to all property in the possession of such party as at this date.
3.11 Appoint of Registrar pursuant to s.106A:
That in the event that either party refuses or neglects to comply with the provisions of any order herein, the Registrar of the Family Court at Sydney is hereby appointed pursuant to s.106A of the Family Law Act to execute all deeds and documents in the name of either the Husband or the Wife and do all acts and things necessary to give validity and operation to the said order.
3.12 Liberty to apply:
That either party have liberty to apply on 7 days notice in the event of any difficulty arising out of the implementation and enforcement of these Orders.
The Husband seeks the following:
1. A declaration that the Second Respondent holds all his right, title and interest in the property known as [the R property], United Kingdom (“the [R] property”) on trust for the Applicant / Appellant.
2. That within seven (7) days of the date of these orders, the First and Second respondents do all things and sign all documents to transfer the whole of their right, title and interest in the property known as [the E property], in the State of New South Wales (“the [E] property”) to the applicant / appellant.
3. That within seven (7) days of the date of these orders, the First and Second respondents do all things and sign all documents to list for sale the property known as and situate at [the J property] in the State of NSW (“the [J] property”) by auction or private treaty as agreed between them at a price as agreed between them, but failing agreement, as determined by the President of the NSW Real Estate Association, or his nominee.
4. That upon completion of the sale of the [J] property the proceeds of sale be divided in the following manner and priority, namely:
a)in payment of agent’s commission and legal expenses on the sale including the advertising expenses and the expenses of obtaining a sale price;
b)in payment of the amount required to discharge the existing mortgage over the [J] property to Mortgage Port;
c)in payment of the amount required to discharge the existing mortgage over the [E] property to Mortgage Port;
d)in payment to the Applicant / Appellant for all monies lent to the second respondent to pay the mortgages over the [J] and [E] properties from the date of separation to date;
e)in payment to the Applicant / Appellant all monies still outstanding to the estate of [Mrs E Bryson] ($21,500);
f)in payment of the balance of any, then remaining, 60% to the First Respondent and 40% to the Second Respondent.
5. That other than as provided in these orders, the parties be declared to have the sole right, title and interest in:
a)any real property, chattels, goods, furnishings and other property which are, as at the date of these orders, in their possession respectively;
b)any monies, share, debentures which stand in their sole name respectively, as at the date of these orders.
6. That the parties be entitled to their respective superannuation interests to the exclusion of the other party.
7. That in the event that any party refuses or neglects to execute any deed or instrument, the Registrar of the Court be appointed pursuant to section 106A of the Family Law Act 1975 to execute such deed or instrument in the name of such party and to do all acts and things necessary to give validity to the operation to the deed or instrument.
8. That pursuant to section 81 of the Act, these orders are intended to finally determine the financial relationship, including any liability for spousal maintenance, between the first and second respondents.
9. Liberty to apply on seven (7) days notice in respect of the implementation of these orders.
The Husband’s father seeks the following:
1. A declaration that the Applicant and First Respondent hold their interest in the property situated at and known as [the E property], New South Wales and being the whole of the land contained in Certificate of Title Folio Identifier 1/[…]6 (“The [E property]”) upon trust for the Second Respondent.
2. A declaration that as between the Applicant, First and Second Respondents and pursuant to Order 1, the Second Respondent is beneficially entitled to an estate in fee simple in [the E property] unencumbered.
3. Consequential upon Orders 1 and 2 above the Court further Orders:
(a)That, within 7 days, the Applicant and First Respondent do all acts and things and sign all documents necessary to transfer [the E property] to the Second Respondent, unencumbered; and
(b)That, within 7 days, the Applicant and First Respondent do all acts and things and pay all monies necessary to discharge all mortgages registered against the Title of [the E property].
4. A declaration that the Applicant and First Respondent hold their interest in the property situated at and known as [the J property], New South Wales (“[the J property]”) subject to an equitable charge in favour of the Second Respondent in an amount equivalent to the amounts owing pursuant to any and all encumbrances upon the title of [the E property] as at the date of compliance by the Applicant and First Respondent with Order 3 or 7 herein.
5. That pending compliance with Order 3 or Order 7 herein, each of the Applicant and First Respondent be and hereby are restrained from by themselves, their servants and/or agents doing and/or causing or permitting:
(a)the disposition, further encumbrance or any other dealing in respect of the interest (if any) of the Applicant, First Respondent and Second Respondent; and,
(b)the increase in any liability secured by way of any existing encumbrance upon;
each of [the E property] and the property known as and situate at [J], New South Wales (“the [J] property”).
6. That pending compliance with Order 3 or 7 herein, the Applicant and/or First Respondent meet, as and when they fall due:
(a)all payments (including but not limited to payments in respect of principal and interest) in respect of any liability secured upon the title of either or both of [the E property] and the [J] property; and
(b)all outgoings (including but not limited to council rates, water rates and statutory charges) in respect of [the E property] and the [J] property.
7. In the event that Order 3 herein is not complied with, then the Applicant and First Respondent shall forthwith do all acts and things, sign all documents and pay all monies necessary to forthwith place the [J] property upon the market for sale by public auction with a Real Estate Agent and at a reserve price agreed by the Applicant and the First Respondent and the Second Respondent and failing agreement on either, with a Real Estate Agent and/or at a reserve price determined by the President for the time being of the Real Estate Institute of New South Wales, or his nominee, any costs of such determination to be borne equally by the parties. The Second Respondent’s Solicitor shall act on behalf of all the parties for the purpose of the sale. The proceeds of sale shall be divided in the following order and priority:
(a)Payment of Agent’s commission, legal fees, adjustment of rates and taxes and other usual outgoings on the sale;
(b)Payment of the amount required to discharge all mortgage secured over the title of the [J] property;
(c)Payment of the amount required to discharge all mortgages registered upon the Title of or held as security of [the E property]; and
(d)Payment of the balance as the Applicant and First Respondent may direct or the Court may Order.
8. In the event that the [J] property is not sold at the auction referred to in Order 7 hereof then the parties shall re-submit the [J] property to auction at 6 weekly intervals until sold and in that respect the provisions of Order 7 shall apply mutatis mutandis.
9. A declaration that the First Respondent holds all of his right, title and interest in the property known as [the R property], United Kingdom (“[R] property”) upon trust for the Second Respondent.
10. That the First Respondent forthwith do all acts and things and sign all documents necessary so as to transfer to the Second Respondent all his right, title and interest in the [R] property.
11. Should any party refuse or neglect to sign any document required to give effect to these Orders then the Registrar of this Honourable Court is hereby authorised, pursuant to s. 106B of the Act, to sign such document in place of the party in default and to do all such acts and things necessary to give full force and effect to the said document.
12. That the First Respondent and Applicant pay the Second Respondent’s costs of and incidental to these proceedings.
The Husband’s father was born in April 1933 and is presently aged 74 years. The Husband’s parents were married in 1956. The Husband’s mother is deceased.
The Husband was born in July 1957 in the United Kingdom and the Wife was born in January 1959 in the United Kingdom.
The Husband and the Wife met in 1992 and the Wife contended they commenced cohabitation in April 1993. The Husband contended that cohabitation commenced in July 1994. The parties separated in January 2003 and were divorced on 9 August 2005.
There are three children of the marriage, G who was born in June 1996 and is presently aged 11 years; C who was born in January 1998 and is presently aged nine years and N who was born in March 2000 and is presently aged seven years. The children live with the Wife and spend time with the Husband.
Each of the children attend W Public School. The children have special needs. The child G has a number of food allergies and intolerance to a range of foods. The child C has Cerebral Palsy, affecting the right side of his body. The child N has a speech impediment.
In my view, this is a very unfortunate and unusual case. On one view of the evidence the Husband and the Wife have very little equity in their assets even if the claim by the Husband’s father in relation to the R property were to fail. All parties have incurred significant legal costs. As well, the evidence before me was, in a number of respects, confusing and inadequate. I also formed the impression that the Husband, who was unrepresented, approached the hearing as if he were a disinterested observer. In fact in final submissions he told me that he had very little to say about the assets of the parties as there is nothing left to argue about.
PROPERTY PROCEEDINGS-RELEVANT PRINCIPLES
The approach to the determination of an application pursuant to s 79 of the Family Law Act1975 (Cth) is well established by authority. Section 79(2) provides that I shall not make an order, under the section, unless I am satisfied, in all the circumstances, that it is just and equitable to make the order. I am required, in considering what order, if any, I should make, to take into account the respective contributions of the parties referred to in paragraphs (a), (b) and (c) of s 79(4); the effect of any proposed order upon the earning capacity of the parties; the matters referred to in s 75(2), so far as they are relevant; any other order made under the Act affecting a party or a child, and any child support under the Child Support (Assessment) Act1989 (Cth).
There is a preferred approach to the determination of such an application which involves four inter-related steps. The first step is that I have to make findings as to the identity and value of the assets of the parties at the date of the hearing. The second step is that I have to identify and assess the contributions of the parties within the meaning of paras (a), (b) and (c) of s 79(4) and determine the contribution based entitlements of each party expressed as a percentage of the net value of the property of the parties. The third step is that I have to identify and assess the matters referred to in paragraphs (d), (e), (f) and (g) of s 79(4)(d). Pursuant to s 79(4)(e), this includes consideration of the matters in s 75(2). I have to determine the adjustment if any that should be made to the contribution based entitlements of each party established at the second step. The fourth step is that I have to consider the effect of my findings and determinations in relation to the first three steps and resolve what order in all the circumstances of the case it is just and equitable to make.
BACKGROUND
In 1988 the Husband obtained a degree in Engineering. The Wife has a Bachelor of Education degree.
On 17 November 1989 a property being the R property in England was purchased in the joint names of the Husband and his father for £70,000, funded by £10,000 from the Husband’s father and an interest only loan for £61,000 from a building society called Abbey National. Documents produced by the Husband’s father included a Completion Statement dated 17 November 1989. That revealed a deposit of £7,000 and a further £3,514.59 paid in apportioned rent, stamp duty, other costs and disbursements. According to a letter dated 1 March 2007 (Exhibit L) that was sent to the Husband by Abbey National on 17 November 1989 he borrowed £61,297.50.
The Husband and his father contended that the R property was acquired under what was a government mortgage relief scheme called the Mortgage Interest Relief At Source scheme which I will hereafter refer to as the MIRAS scheme. The arrangement of the scheme was that interest rates on the mortgage would be discounted provided it related to an owner occupied property. To qualify for the scheme the Husband’s father had to apply for an interest only loan. To qualify for the interest only loan the building society required an endowment policy of which the building society was a beneficiary. At the end of the term of the loan the principal had to be repaid in full and an insurance policy for repayment of the principal was also required. In other words the initial purchase was undertaken though various endowment policies which allowed a reduction in repayments to interest only payments over 25 years. The Husband and his father contended that because of the age of the Husband’s father, and the term of the loan, the building society required someone of a younger age to be a joint owner of the property. The Husband’s father contended that because he was then 56 years of age he could not obtain the required insurance for a 25 year loan. It was for this reason that the Husband became a co-owner namely because an endowment policy for a long term could be obtained on his life. In other words, the Husband and his father could not have obtained the benefit of the MIRAS scheme unless the property was also acquired in the name of the Husband and the endowment policy was on the Husband’s life.
The Husband’s father contended that in or about 1989 he was working for a telecommunications company and was transferred from a position in Glasgow to London. When he and his former Wife arrived in London they decided to purchase a flat in R to live in. They already owned a home in Glasgow which they rented out. The Husband’s father said that the reason they decided to purchase a property in London was because there were taxation advantages in doing so. At the time there was the MIRAS scheme and the purpose was to encourage people to buy property. Interest rates at the time were high and the way the scheme worked was that if the borrower was an owner occupier of the property the government would provide a discount on the interest payments. The Husband’s father said he could not recall the exact amount of the discount but that at the time the standard interest rate was 15 per cent per annum. The claim for the discount was not made through any taxation return but was deducted from the interest payments required by the lender such that the amount to be paid in interest on a property that was being owner/occupied was less. The Husband’s father attached to his recent affidavit of evidence in chief a document from the United Kingdom Government which he contended explained the MIRAS scheme.
The Husband’s father contended that he and his former Wife subsequently found the R property and negotiated a price of £70,000. He annexed to his affidavit a copy of a letter received by an estate agent in relation to the purchase. He then approached Abbey National with a view to obtaining an interest only loan for 25 years to allow him to obtain the benefit under the MIRAS Scheme. As seen, he contended that the building society required the repayment of the principal of the loan at the expiration of the 25 year period to be secured by endowment policies but because of his age they required that the Husband be a party to the transaction. He recalled the bank required an insurance policy for repayment of the principal of the loan in the event that the Husband died and that as part of the endowment policy the Husband’s life was insured for the sum of the principal owing on the property.
The Husband gave evidence both in an affidavit he swore on 12 September 2005 and an affidavit he swore on 5 February 2007 about a conversation he had with his father and there are some slight differences. As well, the Husband’s father gave evidence of a conversation which he had with the Husband and again there are some differences. In any event there is no issue as to the amount of the purchase price, the amount borrowed from the Abbey National or the amounts that the Husband’s father contributed to the purchase.
The Husband’s father contended that he arranged for endowment policies to be obtained from Phoenix Insurance in the amount of £40,000 and Scottish Life in the amount of £15,000. He contended that the reason there were two endowment policies was that he already had an existing policy on the property he owned jointly with his late wife in Glasgow in an amount of £15,000 and so he was able to use that policy to secure part of the repayment of the principal for the R property on the maturation of the loan. He contended that the reason why the endowment policies were for less than the amount of the loan was because it was forecast that projected profit on the endowment policies over the life of the policies would pay for the difference. The total amount payable on the endowment policies at the time was £76.70 and the amount has not changed. He contended that he paid the premiums for the endowment policies from the date of their inception to date and he exhibited to his affidavit a copy of bank statements relating to an account with the Royal Bank of Scotland which he contended reveal payments that were made for the endowment policy premiums.
The Husband’s father contended that in about late November 1989 he and his former wife commenced to live in the R property and that he made payments from his bank account with the Royal Bank of Scotland for the interest payments on the loan. He and his late wife lived in the property for a period of less than 12 months.
The Husband contended that in 1990 to 1991 he was living and working in Central London and sharing a flat with other people. The Husband said that he had a conversation with his father during which his father told him that he had been transferred to Glasgow and would be moving out of the R property. The Husband then moved into the flat and stayed with his parents for a couple of weeks before they returned to Glasgow.
The Husband’s father contended that the Husband moved to London where he resided with his parents until mid 1990. The Husband’s father contended that he made all loan repayments until he and his wife returned to Glasgow and at the time the Husband was living in the R property and was also employed in London.
In mid 1990 the Husband’s parents commenced to live in Glasgow. The Husband remained residing in the R property and he paid the interest payments in respect of the loan as well as utilities and outgoings being rates and body corporate fees. The Husband and his father contended that the Husband made these payments in lieu of rent. The repayments to the building society were made by direct debit from what the Husband identified as his “First Direct” bank account. This account was in the name of the Husband. In his first affidavit sworn in 2005 the Husband said that from about two months after the purchase of the property in 1989 and up to his immigration to Australia in 1994 he paid the interest on the loan while he lived at the R property.
In June 1990 the Wife purchased a property at H, London, for £57,000. To pay the costs she obtained a mortgage loan for £40,000. She sold this property in September 2003 for £104,000.
The Husband’s father contended that about six weeks after returning to Glasgow he was again transferred by his employer and this time to Edinburgh. His late wife decided that she wanted to purchase a flat in Edinburgh and so in late 1990 or early 1991 the Husband’s mother purchased a property at D in Edinburgh. The purchase of the Edinburgh property was financed by what the Husband’s father called a normal loan requiring repayment of interest and capital over the term of the loan. The loan was guaranteed by the Husband’s father. The property was not acquired under the MIRAS Scheme.
The Husband in his affidavit of 5 February 2007 contended that in or around 1991 he had a conversation with his father during which his father said that because he was not actually living in the R property he could not keep claiming the interest discount and that if he transferred the property into the Husband’s name then the Husband would qualify for the discount under the MIRAS scheme and thus, the Husband’s father would continue to get the benefit of the low interest rates. In his first affidavit of 12 September 2005 the Husband contended that in about 1992 his father transferred his half interest in the R property to the Husband for no payment and that before the transfer the Husband had a conversation with his father during which his father said that he was buying another property and that it would be to the Husband’s benefit “tax wise” if the Husband’s father transferred his interest in the R property to the Husband. As seen, the Husband’s father contended that in late 1990 or early 1991 his late wife purchased another property in Edinburgh. I note that the letter which the Husband’s father contended he wrote to the building society in relation to the transfer of the property into the sole name of the Husband was written in October 1990.
The Husband contended that by transferring the whole of the R property into his name his father was able to maintain the loan repayments to the bank at an interest rate that was much lower than would have applied had the property remained as to one half in his name. According to the evidence of the Husband’s father the property which the Husband’s late mother acquired in Edinburgh was not purchased under the MIRAS scheme. As I understand the effect of the evidence, as a result of the R property being acquired initially in the joint names of the Husband and his father they were able to get the benefit of the MIRAS scheme in relation to the mortgage loan from Abbey National. The purchase of a property in Edinburgh in 1990 or 1991 by the Husband’s late mother had no effect on the benefit which the Husband and his father were getting under the MIRAS scheme given that any monies borrowed to purchase the Edinburgh property did not get the benefit of the scheme. In fact on one view, there is no evidence that suggests that anything occurred which related directly or indirectly to the benefits received from the MIRAS scheme that provided the explanation for the transfer by the Husband’s father to the Husband of his interest in the R property.
In his affidavit of 5 February 2007 the Husband said that after his parents returned to Glasgow he paid the interest payments over the property and “to the best of my knowledge I probably also paid the outgoings including electricity, gas, rates and body corporate fees”. In his affidavit of 12 September 2005 the Husband said that “from about two months after the purchase of the property in 1989 and up to my immigration in 1994 I paid the interest on the loan while I lived at [the R property]”.
As it transpired notwithstanding the evidence of both the Husband and his father in relation to the transfer of the Husband’s father’s half interest in the R property to the Husband in 1990 or 1991 the transfer did not occur until March 1993.
The Husband’s father annexed to his affidavit of 27 February 2007 what purported to be a copy of a letter dated 1 October 1990 which he wrote to Abbey National in which he stated:
With regard to the above property I would be obliged if you could now arrange to transfer this solely into my son’s name, [the husband], as I am no longer living in these premises.
My Wife and I are currently living in Edinburgh and this will become our main residence on completion of necessary repairs. This property is the subject of a loan from Abbey National, Edinburgh.
The parties met in 1992 and the Wife contended they commenced cohabitation in April 1993. The Husband contended that cohabitation commenced in July 1994.
At the commencement of the relationship the Wife owned the H property in London. The Wife contended that the Husband owned the R property. The Husband contended that he held this property on trust for his father. The Husband also owned a motor vehicle, furniture and personal possessions.
The Wife was employed by the local Council as a coordinator in local government. The Husband was employed in the telecommunications industry.
On 8 March 1993 the Husband’s father completed the transfer of his interest in the R property to the Husband. The Husband and his father contended that the transfer was for tax reasons and that they did not intend that the beneficial interest would pass with the transfer. Thereafter the Husband continued to pay interest on the mortgage loan. It is contended that the Husband’s father continued to pay rates and other outgoings.
There was put into evidence (Exhibit G) a copy of a transfer lodged with the relevant authorities in the United Kingdom pursuant to the Land Registration Acts 1925-1971. The “Transferors” are the Husband and his father; “The Donor” is the Husband’s father and “The Recipient” is the Husband. The transfer is dated 8 March 1993. The transfer states that the existing loan is in an amount of £48,509.79. It goes on to recite that:
In consideration of love and affection of the Donor for the Recipient the Transferors as trustees by direction of the Donor directing as beneficial owner in respect of his estate and interest in the Property with the intent that such estate and interest be released to the Recipient transfer to the Recipient the Property.
Further, in the document it is recited that:
The Society hereby releases the Donor and his estate and effects from the observants and performance of the covenants and conditions on his part expressed in the Charge.
Further that:
The Recipient hereby covenants with the Donor that he will pay all principal monies and interest and other monies secured by and henceforth to become due under the Charge in the manner and at the times provided by the Charge and that he will henceforth observe and perform all and singular the covenants and provisions on the part of the Chargor therein contained and implied and will at all times hereafter indemnify and keep indemnified the Donor and his estate and effects from all claims and demands in respect thereof.
It appears from letters dated 12 February 2007 and 1 March 2007 (Exhibit L) that capital repayments of the Abbey National loan were made as follows: £7,210.45 on 5 January 1990, £3,000 on 22 March 1990, £1,000.08 on 3 April 1990, £1,000 on 12 November 1992, £13,000 on 23 April 1999 and £7,000 on 10 August 2001.
In March 1994 the Husband vacated the R property. The Husband and his father contended that the Husband’s father then carried out renovations to the property. The Husband and his father contended that the Husband’s father furnished the property and arranged for it to be tenanted. The Husband’s father managed the rental. The rent was applied in reduction of the loan and any shortfall was met by Husband’s father.
The Husband and his father contended that after the Husband and the Wife moved to Australia the Husband’s father paid all outgoings for the R property except for the interest on the borrowings and one payment of £3,000 made from the First Direct account. The property was rented out from July 1994. The rent was paid into the First Direct account of the Husband and interest payments continued to be paid from that account by direct debit.
The Husband had a Porsche 944 motor vehicle which he sold shortly prior to leaving England.
In July 1994 the Husband and the Wife moved to Australia.
Upon arrival in Australia the parties resided in rented accommodation in Sydney.
After arrival in Australia the Husband was employed in the telecommunications industry earning $65,000 per annum for the period from 1994 to 1996.
The Wife enrolled in a secretarial course and did casual work. In 1994 the Wife worked as a office clerk.
In January 1995 the parties were married in New South Wales. The Husband’s parents travelled to Australia for the wedding.
From 1995 to 1996 the Wife did temporary work with an Employment Agency.
On 29 August 1995 the Husband’s father sent £20,000 to the parties. The money was deposited to the credit of an account in the joint names of the Husband and the Wife. The Husband contended that of the amount of £20,000 an amount of $20,000 was a wedding gift and the balance was spending money for use by Husband’s parents while they were in Australia. When the Husband’s parents left Australia there was $3,000-$4,000 left with the parties. The Wife contended that all of the £20,000 received from the Husband’s parents was a wedding gift but for the purposes of this litigation the Wife did not dispute the Husband’s father’s allegation.
On 31 August 1995 the Husband and the Wife purchased, in joint names as joint tenants, the E property for $200,000. To pay the costs the parties applied savings and a mortgage loan for $160,000 from Perpetual Trustees Victoria Ltd. As well, an amount of $20,000 came from the Husband’s parents as a wedding gift and a further $3,000-$4,000 was an additional gift to the Husband and Wife. The rest of the £20,000 was for spending money to be used by the Husband’s parents when they came to Australia.
In June 1996 the child G was born.
In 1996 and 1997 the Husband was employed as a consultant earning $100,000 per annum.
In 1997 the Wife was employed as a clerk for a government agency. Thereafter the Wife ceased paid employment in order to look after the children and the home.
In the period 1997 to 2002 the Husband was employed by T Company at a salary of $100,000 per annum increasing to $150,000 per annum, plus $12,000 as a car allowance and a 10 per cent performance based bonus and superannuation.
In 1997 the Husband told his father that the parties were listing the E property for sale at a price of $250,000. The Husband’s parents agreed to purchase the unit from the parties for $260,000. The Wife agreed to find tenants for the E property until the Husband’s parent’s arrived in Australia. The Husband’s father sold his home in Glasgow.
On 3 September 1997 the Husband’s father transferred £20,000 ($44,121) to the Husband and the Wife on account of the anticipated sale of the E property. On 20 October 1997 the Husband’s father transferred a further £100,000 ($222,668) from the proceeds of sale of the home in Glasgow to the Husband and the Wife on account of the anticipated sale of the E property to the Husband’s parents and to discharge the existing mortgage on the title of the unit. In summary, the Husband’s parents paid approximately $266,000 to the Husband and the Wife as consideration for the transfer of the E property.
However notwithstanding the sale, the title of the E property remained in the joint names of the Husband and the Wife. The Husband’s father contended that it was his understanding that the E property was not immediately transferred because of Foreign Investment Board Restrictions. The Husband gave evidence of a conversation he had with his father and the explanation is that the Husband and his father agreed to leave the title of the E property in the joint names of the Husband and the Wife in order to save stamp duty, gain tax advantages and facilitate rental.
The Husband’s parents agreed to the rental of the E property with the Husband and the Wife managing the property and retaining the rental. The departure from England of the Husband’s parents was delayed for 18 months due to the Husband’s father’s medical condition.
In 1997 and 1998 the Husband and the Wife received $260 per week rent from the E property for over 12 months. The Wife managed the rental and paid outgoings from the rent received.
On 26 November 1997 the Husband and the Wife purchased, in joint names as joint tenants, a property at S for $430,000. The purchase was funded by an amount of $200,000 borrowed from Perpetual Trustees Victoria Ltd and the amount of £120,000 being approximately $262,639 provided by the Husband’s parents.
In his affidavit of evidence of 5 February 2007 the Husband contended that the parties had a conversation during which he said that they should talk to his father about putting all the money he had given for the E property into the S property and that they could then negatively gear the mortgage repayments over the E property which would be better for tax and that the Wife said that it was okay if the Husband’s father agreed. The Husband went on to say that he was aware that his father would be liable to pay stamp duty on the transfer of the E property and at the time he had a discussion with his father in the presence of the Wife during which he said that instead of transferring the E property to his father it be left in his name and thus, stamp duty would be saved. As well, they were going to rent the property out until the Husband’s parents arrived in Australia and if they left the mortgage over the E property in place they could negatively gear it and obtain a tax advantage and that his father agreed. In his first affidavit of evidence in chief the Husband gave evidence about a conversation he had with the Wife and also a conversation with his father and when a comparison is made of the evidence in his first affidavit he gave no evidence about any discussion with the Wife or his father about getting the benefit of negative gearing and that the only benefit identified in the conversations at that time was the possible saving of stamp duty. As to the conversation with the Wife, in his first affidavit the Husband said that he said to the Wife “I think it would be cheaper and easier if we just used the money my parents are paying for the [E property], by putting it straight to the new place, and transferring it to them later. It may be necessary to transfer it and we will save stamp duty that way” and the Wife said “If they are okay with that, then why not”. However, in his second affidavit the Husband said that he said to the Wife “We should talk to Dad about putting all the money he gives us for [the E property] into [the S property]. Then we can negatively gear the mortgage repayments over the [E property] which will be better for our tax” and the Wife said “If your Dad agrees that’s okay”.
In summary, the amount of £120,000 forwarded by the Husband’s father in September/October 1997 was not used to discharge the mortgage over the E property but instead used to fund the purchase of the S property. The Husband’s father agreed to “leave the mortgage over [the E property] in place”.
From 26 November 1997 to 11 March 2002 the Husband and the Wife resided in the S property.
In January 1998 the child C was born.
In December 1998 the Husband’s parents immigrated to Australia. They arrived with a visa for permanent residency.
The Husband’s father arranged for the Husband’s friend Mr W to manage the R property for a 10 per cent commission. The rent was paid to the First Direct account in name of the Husband.
On 27 April 1999 an amount of £3,000 was paid from the First Direct account in reduction of the loan from Abbey National secured over the R property.
The Husband contended that in the period 1999 and 2002 he was earning about $150,000 per annum.
The child N was born in March 2000.
On 24 January 2001 the Wife received a gift of £10,000 or $27,291 from her stepfather. The Wife gave the money to the Husband and he told her that it was paid to reduce the mortgage loan in respect of the S property.
On 19 March 2001 the Wife transferred to Australia £3,000 or $8,625 from the rental income of her H property.
In October 2001 the Husband purchased, as an investment, a property at M for $705,000. To pay the costs he obtained a mortgage loan for $735,000 from Mortgageport. Of the loan an amount of $500,000 was secured by the title of the M property and an amount of $235,000 was secured by the title of the E property. At this time an amount of $97,000 was owing pursuant to the mortgage on the E property. This is the amount that the Husband and the Wife owed to the Husband’s parents.
Documents produced from Mortgagport (Exhibit D) reveal a series of loans being:
·26 November 2001 […]A $60,000
·26 November 2001 […]B $235,000
·26 November 2001 […]C $37,000
The Husband contended that because he wanted to extend the borrowing over the title of the E property he had a conversation with his father during which he said that he and the Wife wanted to buy an investment property and further “When we sell, we’ll split any profit 50/50” and the Husband’s father said that it was okay as long as the Husband paid off the mortgage on the E property when he sold the M property. The Husband contended that he then had a conversation with the Wife before contracts were exchanged to purchase the M property and he told her that his father had agreed to extend the mortgage on the E property as long as the mortgage was paid out when the M property was sold and that he had also agreed that “they can have 50 per cent of the profit we make when we sell it”.
The Husband said that the M property was rented out until the end of February 2003 and the rent helped with the mortgage repayments over the property and he claimed a tax deduction for the balance of the mortgage repayments over and above the rental income.
The Husband’s father undertook significant renovations and met refurbishment costs to the M property. The Husband contended that his father undertook improvements to the property including rewiring, plastering, painting, polishing floorboards, building retaining walls and landscaping. The Husband contended that he assisted his father. The Husband also contended that his father paid the cost of all materials.
On 24 January 2002 a further amount of £4,000 or $10,905 in respect of rental money from the Wife’s H property was transferred from the United Kingdom to Australia and banked in a joint account of the Husband and the Wife for the purpose of reducing the mortgage over the title of the S property.
On 11 March 2002 the parties sold the S property for $571,000. After discharge of the mortgage and costs the net proceeds were applied towards the costs of purchase of a property at J.
On 23 May 2002 the Husband drew down $33,000 on the Mortgageport loan …C which had been reduced to $3,418.
On 29 May 2002 a property at J was purchased in the Husband’s name for $600,500. To pay the costs the Husband applied $18,920 from the proceeds of sale of the S property and borrowed $350,000 from Perpetual Trustees Victoria Ltd secured against the title of the J property and the E property. The Husband said that he also used savings.
I accept that I may have misunderstood the evidence however I do not understand, with any certainty, exactly the source of funds to purchase the J property. The parties purchased the S property in November 1992 for $430,000 and borrowed $200,000 from Perpetual Trustees Victoria Ltd. This property was sold in March 2002 for $571,000 and yet after discharge of the mortgage the parties may have only received $18,920 being the equity they contributed to the purchase of the J property. It may be that this amount of $18,920 is incorrect and that the equity the parties contributed was significantly greater and may have been approximately $250,000.
In July 2002 the parties commenced to live at the J property.
On 6 November 2002 the Husband was made redundant by T Company. The Husband contended that he received $120,000 being a redundancy payment, accrued annual leave and long service leave. The moneys were used to pay for living expenses, mortgage repayments and investment in what are described as “construction loans”. The Wife said that the payment was $140,478 gross and $102,428 net of tax (Exhibit K) and in cross examination this was admitted by the Husband. In his affidavit the Husband said that the amount was used “for everyday living expenses and to pay the mortgages” and in cross examination he contended that an amount of about $40,000 was used to either install or renovate a kitchen in the matrimonial home.
In 2003 the Wife obtained employment in the health industry which she continued until January 2006.
On 6 January 2003 the parties separated when the Husband left the former matrimonial home at J.
Thereafter, the Husband spent time with the children each weekend from Friday afternoon to Sunday night and half of the school vacations.
In February 2003 the Husband commenced to reside at the M property.
As best as I can ascertain at the date of separation the Husband and the Wife had the following:
·The Wife’s flat at H in the United Kingdom.
·The flat at R subject to the claim by the Husband’s father.
·The E property subject to the trust in favour of the Husband’s parents.
·The investment property at M.
·The home at J.
The parties at the date of separation also had significant liabilities being I believe the following:
·The mortgage secured on the E property obtained to acquire the property which by October 2001 had a debit balance of approximately $97,000.
·The mortgage loan to Abbey National secured by the R property and the endowment policies subject to the claims by the Husband’s father.
·The mortgage loans from Mortgageport for a total of $735,000 obtained to purchase the M property.
·The mortgage loan from Perpetual Trustees Victoria Ltd for $350,000 obtained to purchase the J property.
During cohabitation the Husband and the Wife were both from time to time in paid employment and as well received the following:
·The wedding gift from the Husband’s parents of approximately $24,000.
·The gift the Wife received from her stepfather of $27,291.
·The rent the Wife received from her London flat (the H property) of $8,625 and $10,905.
On 30 April 2003 the Husband established the Bryson Superannuation Fund.
From 16 June 2003 the Husband rolled over into the Bryson Superannuation Fund an amount of $60,000 from his previous fund with AMP.
The Husband contended that in June 2003 he met a Mr L, a promoter of “construction loans” and thereafter he decided to invest in such loans.
As to why the Husband decided to invest in construction loans he contended that the interest payable was extremely high and was to be paid quarterly throughout the year. As each stage of construction was completed the loan was to be repaid. Thereafter he entered into a number of loan agreements, some of which I will shortly identify. He contended that he did many hours research on the viability and any risks associated with the loans including investigating the properties that were under construction and met current investors. He also visited the site of one of the buildings under construction. He also spoke to Mr L to verify that “there was no single point of possible failure for the investments”. As it transpired it was a complete failure and the Husband lost all the money invested in the construction loans including the proceeds of sale the Wife received from the sale of her property in London. It will be seen shortly that the Husband’s mother also invested in the loans, however, she did not suffer the same losses that the parties incurred.
The Judicial Registrar said that from 20 February 2003 until 13 August 2003 the Husband drew down $130,000 on one of the mortgages. In 2003 the Husband drew down $143,000 on the Mortgageport mortgage secured by the J property. The Husband used the money to fund the construction loans, pay a tax liability on the redundancy payment and pay tax for the 30 June 2002 and 30 June 2003 financial years.
On 19 June 2003 the Husband entered a contract to invest $50,000 with V Group Pty Ltd for a specific property project of K Pty Ltd.
As at 30 June 2003 the Husband’s superannuation balance was $65,182.
The Wife contended that in August 2003 the parties had a conversation during which the Husband said “I cannot afford to keep you and the kids in the [J property]. The mortgages are crippling me. [The J property] will have to go on the market, I would guess around April time”. The Wife said “It would be the worse thing for the children now to have to move from the family home. I will do anything to avoid moving again. Why can’t you sell [the M property]?” The Husband said “That would be financial suicide. After I have paid all the selling costs and land tax I would make a loss. Plus I need a roof over my head. The only option is [the J property]”. The Wife contended that the Husband also said “My father owns half of that and it has a lot of subsidence problems which will mean no one wants to buy it”. The Wife said “What about if I sell my flat in London and you put the proceeds towards reducing the mortgage on [the J property]? Surely that would ensure we could stay where we are”. The Husband said “That would certainly make a big difference to our financial predicament”. The Wife gave further evidence in chief about this conversation and she was extensively cross examined about it both before the Judicial Registrar and before me.
On 15 December 2003 Y Pty Ltd (ACN 107 397 740) was registered with the Australian Securities and Investments Commission. The Husband contended that in mid 2004 he arranged for the registration of Y Pty Ltd. The purpose was to invest in construction loans. The Husband is the sole director and shareholder. What the Husband said as to when Y Pty Ltd was incorporated is incorrect. As I understand the evidence, Y Pty Ltd was registered in December 2003, the investment in the construction loans was in 2003 and the Australian Securities and Investments Commission in February 2004 froze all constructions involving Mr L.
The Wife sold her property at H in London. On 29 September 2003 the Wife received £104,000 which converted to $254,592. The Wife arranged for $254,592 to be transferred to the mortgage account in the Husband’s name. The money was credited against the account on 30 September 2003 and then 3 October 2003 the Husband drew down $250,000 for investment. The Husband subsequently lost all this money.
The Wife gave evidence that she had a telephone conversation with the Husband during which she said “I only want the money to go straight to the [J property] mortgage account and no other” and the Husband said “Okay”. The Husband contended that the parties agreed to invest the moneys in high interest investments to assist with the mortgage repayments.
Pursuant to a contract dated 3 October 2003 the Husband invested $100,000 with PH Pty Ltd for a specific property project at P.
Pursuant to a contract dated 3 October 2003 the Husband invested $20,000 with NS Pty Ltd for a specific property project at O.
Pursuant to a contract dated 3 October 2003 the Husband invested $100,000 with MS Limited for a specific property project at MG.
There was put into evidence a schedule of payments (Exhibit H) said to have been made by the Husband’s late mother between 7 November 2003 and 12 January 2005 being a total of $95,000. Over the period 7 November 2003 to 12 January 2005, moneys were transferred from the Westpac Bank account of the Husband’s mother to the St George Bank account of the Husband from which the regular instalments were paid on the mortgages secured on the J and the E properties. The mortgagee was Perpetual Trustees Victoria Ltd. The Husband contended that he borrowed a total of $93,500 from his mother in order to meet mortgage payments. The Wife disputed that there was a loan and the Husband’s father knows nothing of the terms of the advance.
Pursuant to a contract dated 24 November 2003 the Husband invested $100,000 with LP Projects Ltd for a specific property project at SL.
According to the above evidence, in October and November 2003 the Husband invested $320,000 in the construction loans. He obtained this money from draw downs on a mortgage facility and the proceeds of sale of the Wife’s London property.
On 3 January 2004 the Husband wrote to his parents inviting them to invest in Y Pty Limited. He said:
I have formed a new company, [Y] Pty Ltd which is able to manage assets on your behalf. I understand that you have invested a sum of money in high interest construction loans and [Y] would like to manage these on your behalf.
As discussed, if you transfer your construction loans into [Y] Pty Ltd, the company will pay you interest at the rate of 15 per cent per annum.
Your loan will be redeemable at 14 days notice should you require. Interest will be calculated on a pro rata basis up to the date of redemption.
On 14 January 2004 the Husband’s late mother wrote to Mr L and requested that he transfer her current investments with his company to Y Pty Ltd being:
·04/04/03 K Pty Ltd Development Group 55,000
·30/04/03 PID Constructions 20,000
·16/6/03 PIL Projects 25,000
·22/8/03 PIL Projects 20,000
·3/10/03 NS Pty Ltd 20,000
The investments were made in 2003. The Husband paid $21,000 in January of each year to his mother prior to her death and to his father after his mother’s death.
In February 2004 the Australian Securities and Investments Commission froze all constructions involving Mr L who was investigated for improper fund raising. In the result the Husband lost all funds invested in construction loans.
In 2004 the Husband’s father sought a valuation of the R property. He attached to his first affidavit a copy of a letter dated 12 March 2004 that was received from the agent. The letter is addressed to “[the husband]”. The Husband’s father was cross examined about the letter and he did not produce a copy of the letter of instructions. In the response it was said “following upon my inspection of your son’s property”. Further, that it was said that the R property is an extremely valuable and marketable property and the value is in the region of £150,000 and £160,000. The letter then discussed a possible sale and concluded “I hope all the above is of interest to your son”.
In June 2004 the Husband, through Y Pty Ltd, contracted services in telecommunications industry. The Husband earned $4,000 per week which was used to pay out the investment made by his mother in the company, meet travelling and accommodation expenses and a salary to the Husband of $20,000 that was used to pay off the mortgage. The investment by the Husband’s mother was the construction loans she transferred to Y Pty Ltd in the month prior to the collapse of the interests of Mr L.
On 29 November 2004 proceedings were commenced when an application for final orders was filed by the Wife. On 20 December 2004 the Husband filed a response to the Wife’s application.
On 21 January 2005 the M property was sold for $800,000. An amount of $503,029 was paid to discharge the mortgage. An amount of $43,369 was paid for costs. The Husband received a net amount of $256,631. The Wife said that the Husband received $236,580. The Husband contended that he transferred $175,000 into the J property mortgage drawdown facility. He then drew $40,000 out of the drawdown facility to pay interest payments. He also paid $93,500 to his mother for money she had lent him to pay the mortgages.
On 23 February 2005 the Husband swore a financial statement. He disclosed an average weekly income of $920 being a salary of $200 and interest paid by Y Pty Ltd of $720. The matter was not pursued before me but I believe that the interest may have related to the investments made in the construction loans. The Husband disclosed total average weekly personal expenditure of $1,005 which included $88 per week paid to Abby National in respect of the R property. As to his property interests, the Husband disclosed a half interest in the R property which he estimated had a value of $210,000. The Husband disclosed as a liability, a debt to his mother of $93,500.
On 28 February 2005 a response was filed on behalf of the Husband. The Husband sought by way of property settlement that the J property be sold and from the proceeds of sale the mortgages and debts on the title of the E property be repaid and that an amount of $87,500 be repaid to his mother. The Husband also proposed that on settlement of the sale he pay to the Wife an amount equal to 30 per cent of the net value of the R property and he described the net value as being the agreed value less any mortgage amount and any outgoings payable with respect to the property. The Husband then sought that he be declared as between the Husband and the Wife the sole and absolute owner of his interest in the R property.
On 22 March 2005 an application was filed by the Husband’s parents. On 23 March 2005 leave was granted to the Husband’s parents to intervene in the proceedings.
On 5 May 2005 a response was filed on behalf of the Husband’s parents and they sought that the Husband and the Wife transfer to them the E property. They sought no other orders.
On 5 May 2005 the Husband’s father swore a financial statement and he did not disclose the R property. He made no reference at all to the property.
On 21 May 2005 the Husband was assessed by the Child Support Agency to pay child support of $21.67 per month for three children. The Wife contended that no payments have been made by the Husband. The Husband contended that he paid the mortgage repayments over J property of $2,500 per month in lieu of child support and contributed to the children’s clothing, food and entertainment.
The Judicial Registrar said that in June 2005 the Husband’s parents last received an interest payment on the loan to Y Pty Ltd.
The parties were divorced on 9 August 2005.
On 12 September 2005 a financial statement was sworn by the Husband. He disclosed a total average weekly income of $1,607 which included a salary of $769.23, interest income from Y Pty Ltd of $403.85 and rent of $434. The rent was from the R property. The Husband disclosed total personal expenditure of $1,661. As to his property interests the Husband disclosed a half interest in the R property which he estimated had a value of $238,000.
On 2 November 2005 the Husband wrote to his parents and said that it was difficult for him to commute on the Gold Coast and that he could readily make use of a car while he was on the Gold Coast. He said that he had seen a car which he believed was exceptional value and requested that they lend him $60,000 to cover the purchase of the vehicle.
On 14 November 2005 the Husband’s late mother withdrew $60,030 from an account in her name.
The Husband’s mother died on 11 February 2006. The Husband’s father was the sole beneficiary of her estate. Probate of the Will of the Husband’s late mother was obtained in Scotland and also in New South Wales however it was not put into evidence. The probate may have assisted in resolving some of the issues in this case. In fact no evidence was called as to the estate of the Husband’s late mother or what it comprised.
On 20 March 2006 the Husband swore a financial statement. He disclosed a total average weekly income of $1,212 which comprised rent of $443 and income from Y Pty Ltd of $769. The Husband disclosed total weekly personal expenditure of $1,335 which included the mortgage payment of $88 per week to Abbey National in respect of the R property. Again in this financial statement the Husband disclosed as property a half share of the R property which he estimated had a value of $264,000. The Husband disclosed in his liabilities a debt of $60,000 which he described as a car loan.
The Husband attached to his financial statement of 20 March 2006 a document titled “Balance Sheet as at June 2005”. It purports to relate to Y Pty Ltd. It discloses total assets of $92,476.52 and total liabilities of $458,353.65. The liabilities include “[Husband’s] Construction loan” for $300,000 and “[Husband’s mother] Construction Loan – [Husband’s] ACCOU” for $140,000. In cross examination the Husband said that the loan by him for $300,000 related to the investment in the construction loans. The Husband contended that the loan of $140,000 by his mother arose as follows. The Husband’s mother made an investment in her name of $140,000 in the construction loans. The Husband’s mother then assigned her investments to the Company and this assignment was reflected as a loan by the Husband’s mother to the Company.
On 29 March 2006 an amended application was filed by the Wife.
In April 2006 the Husband’s father lent the Husband $20,000 to assist with the mortgage payments. It was contended that the Husband’s father meets the mortgage payments over J property of $6,000 per month.
On 1 May 2006 an amended response was filed on behalf of the Husband.
On 18 May 2006 final parenting orders were made by consent which provided that:
1 The children reside with the Wife.
2 The Husband and Wife each have the sole responsibility for making decisions about the day to day care, welfare and development of the children when the children are in their care.
3 The Husband and the Wife have the joint responsibility for making decisions about the long term care, welfare and development of the children.
4 The Husband have contact with the children as follows:
4.1Weekend Contact
Each alternate weekend from Friday 6.00 pm to Sunday 6.00 pm. Where the weekend is a long weekend contact shall continue to 6.00 pm on the Monday.
4.2School Holiday Contact
One half of all school holidays including Christmas school holidays. If agreement cannot be reached between the parties with respect to school holiday contact then the Husband shall exercise contact during the second half of all school holidays.
4.3Father’s Day Contact
Father’s Day of each and every year from 9.00 am until 6.00 pm, even if it is a non-contact weekend.
4.4Children's Birthday Contact
For a period of not less than two (2) hours on the children’s birthday.
4.5Christmas Day Contact
(a)Commencing at 3.00 pm Christmas Eve and concluding at 3.00 pm Christmas Day in the year 2005 and each alternate uneven ending year thereafter.
(b)Commencing at 3.00 pm Christmas Day and concluding at 3.00 pm Boxing Day in the year 2006 and each alternate even ending year thereafter.
4.5Further Contact
Such further contact as the parties may from time to time agree between themselves.
4.7Contact Generally
(a)That the Husband collect the children from the Wife’s residence at the commencement of the children’s contact with him and that the Wife collect the children from the Husband’s residence at the conclusion of their contact with him.
(b)Telephone contact at least twice per week between 5.00 pm and 7.00 pm.
(c)That the Husband be at liberty to forward letters, email, mail and any items to the children and that the Wife hand same to the children unopened.
(d)That the Husband and the Wife each provide to the other a contact number and address during periods when the other parent has holiday contact with the children.
(e)That either party not relocate from where they live without forthwith first furnishing to the other written notice of the change of address and telephone numbers where they can be reached.
(f)That the Wife provide to the Husband copies of all school reports, circulars and any other document relating to the children’s schooling as soon as practicable after receiving same.
(g)That orders 1.16.1 be suspended:
(i)During such times as the children are living with the Wife during the school holidays.
(ii)From 10.00 am until 6.00 pm on Mother’s Day each and every year, even if it is a contact weekend.
(h)That the Husband deliver and collect the children to and from their curricular activities or sporting activities as agreed upon between the parties during contact weekends.
(i)That the Wife provide the Husband with suitable clothing for the children for such times as they have contact with him and that the Husband return the clothing to the Wife when the children are returned to her.
(j)That the Wife provide the Husband with the following:
(i)The names and addresses of the children’s treating doctors and dentist.
(ii)The dates of parent/teacher functions, sports carnivals and details of the children’s extra curricular activities.
(k)That each party immediately notify the other if either children are seriously ill or are to be admitted into hospital at such times as the children are living with that party.
(m)That each party cause the children to telephone the other party at least twice per week when the children are on holidays with that party.
Examples of this type of conduct may include circumstances where the drinking and gambling of one party has led to the failure of a business or the dissipation of assets. In Mead & Mead (1983) FLC 91-354 the marriage had lasted approximately 20 years and Asche SJ found that throughout the marriage, and particularly the time the parties conducted a business, the husband although he earned money and bought it into the household, spent by far the greater part of that money on himself in drinking and betting and, was a positive detriment to the wife in her attempts to conduct the business. Asche SJ found at p 78,369 that the conduct of the husband was relevant to the extent of the financial contributions of both parties.
In Kowaliw & Kowaliw (supra) Baker J also said at 76,644-645:
It does seem to me however that if a party has either by deliberate act or by economic recklessness reduced the value of assets available for distribution then the economic consequences which flow therefrom, including the resultant burden to the other party are directly relevant to a consideration of the respective contributions of the parties contemplated by s 79(4).
CONTRIBUTIONS
Both parties have made significant financial contributions.
At the commencement of the relationship the Husband had a motor car, some furniture and the endowment policies. The Wife had the H property.
The Husband contributed the R property which was gifted to him by his father in 1993. It was subject to a mortgage. The property had been bought for £70,000 in 1989 and as at March 1993 the mortgage stood at £48,509.79.
The Husband also received other funds from his father. The Husband’s father paid amounts in reduction of the principal debt secured on the R property. In addition he met some unquantified outgoings on the property over the years.
The Husband’s parents sent the parties £20,000 in 1994 and from this amount the parties had the benefit of $23,000 or $24,000.
Although the principal will be recognised in the agreed transfer of the E property, the Husband and Wife had the interest free use of £120,000 from the Husband’s parents from September/October 1997 to date.
The Husband’s parents also permitted the E property to be used by the Husband and Wife to secure further borrowings.
Over the period 7 November 2003 to 12 January 2005 the Husband’s mother contributed about $93,500 directly to mortgage payments for the parties.
There may have also been the injection of funds by the Husband from rental income from the R property.
The Wife owned the H property which was also subject to a mortgage. On sale the Wife ultimately realised $254,592, which she received on 29 September 2003.
The Wife repatriated to Australia two lump sums representing rental on the H property. On 19 March 2001 £3,000 ($A8,625) was received and on 24 January 2002 a further sum of £4,000 ($A10,904) was received. On 24 January 2001 the Wife received a gift of £10,000 ($A27,291) from her stepfather.
Each of the parties was in paid employment for periods of the marriage. The Wife was employed as an office clerk in 1994, undertook temping work through an Employment Agency in 1995 and 1996 and worked as a clerk with a government agency in 1997. She then worked in the health profession from time to time during the period from 2003 until January 2006.
The Husband worked in the telecommunications industry from 1994 to 1996 and for T Company from March 1997 to 2002. He says that from 1999 – 2002 he was earning about $150,000 per annum. In September 2002 he received a redundancy payment of about $120,000. It is the Husband’s case that the parties lived on that redundancy payment for a period. In the last two years he has had some income through his company Y Pty Ltd which contracts out his services. As at March 2006 the Husband estimated his income earned through Y Pty Ltd at $769 per week.
I accept that the Husband’s earnings from paid employment were greater than those of the Wife.
The Husband and his father also maintained and improved the S, J and M properties. That included carrying out repairs, mowing lawns, maintaining the gardens, painting and generally maintaining the properties. At the M property the Husband renovated the garden, renewed the electrics and lights, restructured an internal wall, removed and replaced the kitchen and stripped and polished floors. The Husband refers elsewhere in his evidence to applying funds to renovations. It may be that some of the tasks identified by him above were undertaken by the employment of tradesmen.
It was agreed that the Wife was the primary carer and homemaker. She did not have paid employment from 1997 to 2003 and since then had sporadic employment until January 2006. The Wife undertook domestic tasks.
The Judicial Registrar made findings, which I adopt, about aspects of the Wife’s care of the children. The Judicial Registrar said, and I agree, that each of the children has had some set back and that has made the parenting role more onerous. The child G suffers from vomiting and diarrhoea because of an allergy and intolerance to a range of foods. The Wife prepares special food for him. The child C was slow to reach developmental milestones and was later diagnosed to suffer from cerebral palsy. That affected the right side of his body. He was unable to walk until almost two years of age and had weekly physiotherapy. He wears a splint, has the assistance of a teacher’s aide and now has daily physiotherapy. He receives botox injections and has a plaster cast every year. The Wife took him to many medical appointments and that continues. The Wife attends meetings with the school counsellor and his teacher’s aide. The child N has a speech impediment and the Wife takes him to Hospital for speech therapy. The Wife stayed in hospital with N for six nights in 2004.
The Judicial Registrar was also satisfied, and I agree, that the Husband participated in the parenting role and particularly during the period after he was made redundant from his paid employment, had contact with the children and was involved in their care. However, overall I have no doubt that the Wife made a significantly greater contribution to the care and support of the children both during the relationship and since separation.
There is then the issue in relation to the construction loans. The Judicial Registrar said that the Wife did not argue that the lost funds should be read back into the list of assets and credited to the Husband. She did seek however that the failed investment be taken into account in relation to the contributions made by the parties. The contention was that the investment made by the Husband could be seen as one of the parties acting recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value. The Judicial Registrar said the issue was whether or not the Wife gave informed consent to the investment. This investment was made after separation and against a background of the Husband taking the lead in major financial decisions made during the marriage. The Judicial Registrar said that in his view, once the parties separated, it was necessary for the Husband to secure the Wife’s informed consent if the investment is not to be seen as his sole responsibility. In the same way, although he used joint funds, he may have had a good argument on contribution, had the investment been successful.
The Judicial Registrar said that the background facts suggested that the Wife did not give fully informed consent to the investment. Further, that the Husband went into some detail about the steps he took to satisfy himself of the soundness of the construction loans and he did not say that he involved the Wife in those steps. The Judicial Registrar concluded that had it been the Husband’s own money and if the investments had been successful, the Husband could have claimed credit for a valuable contribution or argued for the resultant profit to be excluded from the joint fund. Similarly, he should bear some responsibility, as between himself and the Wife, for the loss. The Judicial Registrar found that although the concept of negative contributions has not been well received in the authorities it matters little whether he dealt with the issue by reference to contributions, as the Wife advocated or under s 75(2)(o).
I adopt the findings of the Judicial Registrar. This behaviour of the Husband was quite extraordinary and on one view was consistent with his overall financial management. His real estate investments were not a success. Then when the parties were struggling financially and they were separated and the Husband was not in paid employment he undertook, and perhaps convinced the Wife to participate in, a series of disastrous financial investments. I have no doubt that at this time the Wife was very concerned about her security and her ability to house the children. The Wife lost all of the valuable equity she had in the property she owned at the commencement of the relationship. The Husband used a part of his redundancy. The Husband borrowed more money and thus, increased the debts of the parties. The Husband also used a significant part of his superannuation. I also observe that the Husband, in effect, borrowed $140,000 from his late mother and lost it. However the Husband’s parents, unlike the Wife, did get some benefit by payments the Husband made to them for a period of time.
In summary, I am satisfied that the behaviour of the Husband did amount to what was economic recklessness and it reduced the value of assets available for distribution.
Contributions - conclusion
The Wife made significant financial and non financial contributions being the assets she had at the commencement of the relationship, her earnings from paid employment and her contributions as homemaker and parent. I accept that the Wife’s parenting tasks have been made more difficult because of the health problems of the children.
The Husband made significant financial contributions being the R property, his earnings from paid employment and importantly the further direct and indirect financial and non financial assistance from his parents. He also made a contribution as parent and other non financial contributions. However, I also take into account the significant impact of economic reckless behaviour.
I have come to the conclusion that notwithstanding the matters that favour the Wife that the contribution based entitlements should be assessed as to 55 per cent to the Husband and 45 per cent to the Wife. The matter that ultimately favours the Husband is the further direct and indirect financial assistance from his parents.
OTHER FACTORS
I am satisfied that the orders I propose to make will have no effect on the earning capacity of either party.
The Wife is 48 years of age and the Husband is 50. There is no evidence about their health.
The Wife’s income is $555 per week being the parenting payment. She lives with the three children and receives no child support.
The Husband disclosed no income and contended that he is unemployed. He lives with his father. I have no doubt the Husband continues to receive financial assistance from his father.
I am satisfied that the Husband has a significantly greater earning capacity than the Wife. In the past the Husband was able to command remuneration in excess of $100,000 per annum.
As a result of my findings as to the contribution based entitlements the Husband has greater assets than the Wife. The disparity is $70,798.70.
The three children live with the Wife and spend time with the Husband. The orders of 18 May 2006 provide for that time to be alternate weekends from 6.00 pm Friday to 6.00 pm Sunday and continuing to Monday on a long weekend and half of all school holidays.
The children have special needs. The children will live for the preponderance of time with the Wife and she will continue to bear the greater proportion of their day to day living costs. The Wife will continue to bear the major part of the parenting task.
The Wife has to pay legal costs of probably in excess of $70,000 when allowance is made for the costs of the hearing before me.
Other factors - conclusion
In my view, the significant matters are the Husband’s greater earning capacity, the Husband’s greater assets and the Wife’s significantly greater responsibility for the support and accommodation of the children being a task made more arduous by reason of the special needs of the children.
In my view, the other factors favour the Wife and there should be an adjustment of 15 per cent in her favour to her contribution based entitlement.
Effect of orders
The Wife will receive an entitlement of 60 per cent of the net assets or $424,792. The Wife is seeking to retain the home at J and I am of the view that the reasons why are very clear and reasonable. If this could be achieved then it would mean that the Wife’s entitlement would be as follows:
Assets
$
·The J property 670,000
·Bendigo Bank 2,400
·Motor vehicle 500
·Household contents 1,500
·Wife’s superannuation 13,176
·Wife’s pension scheme (UK) 16,756
Total 704,332
Liabilities
·Payment to Husband (279,540)
Balance $424,792
The Husband has an entitlement to 40 per cent of the net assets or $283,195 which would comprise the following:
$
·The R property 495,090
·Add back of money paid from the M property sale 93,500
·St George Bank account 20,843
·First Direct account …4 28,536
·First Direct account …8 1,687
·Household contents 1,500
·Phoenix Life and Pensions policy 37,974
·Husband’s superannuation 4,265
·Husband’s UK pension 29,696
·Payment by Wife 279,540
Total 992,631
Liabilities
·Debts secured over the E property 327,520
·Debt secured over the J property 317,739
·Mortgage over the R property 64,177
Total (709,436)
Balance $283,195
However, before examining the effect of such a distribution it is necessary to isolate the property of the Husband and the Wife from that of the Husband’s father. Because the E property is security for a debt of the parties, this cannot simply be achieved by a transfer.
The ability of the Wife to have the opportunity to retain the J property is not without difficulty as she is dependent on the Husband discharging all debts secured on the title of the E property and the J property except to the extent of the amount she has to pay the Husband. In the circumstances, that would be difficult without financial help and the Judicial Registrar sought to structure the orders to give her that opportunity. However, I have some difficulty seeing how this can be achieved. As counsel for the Husband’s father submitted they are two completely different subjects. In the result another tragedy of this case, and for this family, is that the Wife may not be able to retain the J property and if that happens then those who will suffer most are the children.
The Husband’s father is entitled to the E property unencumbered. The Husband and the Wife have to pay the mortgage secured on the title of this property being the amount of $327,520. The Husband’s father seeks that if the parties do not pay this debt then the J property be sold because the Husband’s father has an equitable charge over this property. He contended that he has this charge because the money that was paid for the purchase of the E property was used by the Husband and the Wife to purchase the property at S. At that time the debt on the E property was $97,000. Then the Husband purchased the M property and to pay the costs obtained a loan for $235,000 secured on the title of the E property. The total debt on the E property was then $332,000. The Husband and the Wife then sold the S property and used the net proceeds of sale to purchase the J property. In summary, it was contended that the funds paid to purchase the E property ultimately went into the purchase of the J property. Because of the tracing, the Husband’s father is now entitled to an equitable charge over the J property in the amount that is secured over the E property. These matters were not challenged by the Wife. The only matter put was that there should be time to enable the R property to be sold in order to discharge the debts on the E property. I accept the submissions on behalf of the Husband’s father that he is entitled to the E property unencumbered and also has an equitable charge over the J property.
If the orders sought the Husband’s father are made and the home at J was sold then subject to costs of sale the net proceeds would be $24,741 ($670,000 - $645,259 ($327,520 plus $317,739) = $24,741). The net assets would be as follows:
Assets
$
·Balance of proceeds of the J property 24,741
·The R property 495,090
·Bendigo Bank 2,400
·Motor vehicle 500
·Household contents 1,500
·Wife’s superannuation 13,176
·Wife’s pension scheme (UK) 16,756
·Add back of money paid from the M property sale 93,500
·St George Bank account 20,843
·First Direct account …4 28,536
·First Direct account …8 1,687
·Household contents 1,500
·Phoenix Life and Pensions policy 37,974
·Husband’s superannuation 4,265
·Husband’s UK pension 29,696
Total 772,164
Liabilities
·Mortgage over the R property (64,177)
Balance $707,987
This would mean that the entitlement of the Wife would be satisfied as follows:
$
·Bendigo Bank 2,400
·Motor vehicle 500
·Household contents 1,500
·Wife’s superannuation 13,176
·Wife’s pension scheme (UK) 16,756
·Payment by Husband 390,460
Total $424,792
The entitlement of the Husband would be satisfied as follows:
$
·Balance of proceeds of the J property 24,741
·The R property 495,090
·Add back of money paid from M property sale 93,500
·St George Bank account 20,843
·First Direct account …4 28,536
·First Direct account …8 1,687
·Household contents 1,500
·Phoenix Life and Pensions policy 37,974
·Husband’s superannuation 4,265
·Husband’s UK pension 29,696
Total 737,832
Liabilities
·Payment to Wife 390,460
·Mortgage over the R property 64,177
Total(454,637)
Balance $283,195
If the R property was sold and the endowment policy realised then subject to costs of sale the net proceeds of sale would be $468,887 ($495,090 + $37,974 = $533,064 - $64,177 = $468,887). The net assets would then be:
Assets
$
·The J property 670,000
·Proceeds of the R property 468,887
·Bendigo Bank 2,400
·Motor vehicle 500
·Household contents 1,500
·Wife’s superannuation 13,176
·Wife’s pension scheme (UK) 16,756
·Add back of money paid from the M property sale 93,500
·St George Bank account 20,843
·First Direct account …4 28,536
·First Direct account …8 1,687
·Household contents 1,500
·Husband’s superannuation 4,265
·Husband’s UK pension 29,696
Total 1,353,246
Liabilities
·Debts secured over the E property 327,520
·Debt secured over the J property 317,739
Total (645,259)
Balance $ 707,987
In other words, if the R property was sold then there would be sufficient funds to discharge the debt on the E property and also part of the debt on the J property. The balance of the debt on the J property would be $176,372 ($468,887 – ($645,259) = ($176,372)). The net assets would then be:
Assets
$
·The J property 670,000
·Bendigo Bank 2,400
·Motor vehicle 500
·Household contents 1,500
·Wife’s superannuation 13,176
·Wife’s pension scheme (UK) 16,756
·Add back of money paid from the M property sale 93,500
·St George Bank account 20,843
·First Direct account …4 28,536
·First Direct account …8 1,687
·Household contents 1,500
·Husband’s superannuation 4,265
·Husband’s UK pension 29,696
Total 884,359
Liabilities
·Balance of debt secured over the J property (176,372)
Balance $707,987
The entitlement of the Wife would be as follows:
Assets
$
·The J property 670,000
·Bendigo Bank 2,400
·Motor vehicle 500
·Household contents 1,500
·Wife’s superannuation 13,176
·Wife’s pension scheme (UK) 16,756
Total 704,332
Liabilities
·Payment to Husband (279,540)
Balance $424,792
The entitlement of the Husband would be as follows:
Assets
$
·Add back of money paid from the M property sale 93,500
·St George Bank account 20,843
·First Direct account …4 28,536
·First Direct account …8 1,687
·Household contents 1,500
·Husband’s superannuation 4,265
·Husband’s UK pension 29,696
·Payment by Wife 279,540
Total 459,567
Liabilities
·Balance of debt secured over the J property (176,372)
Balance $283,195
The primary obligation to pay the debts on the E property is that of the Husband as he is the sole registered proprietor of the J property.
I have come to the conclusion that in order to achieve a just and equitable outcome it is necessary to make a series of orders that deal with a number of possible outcomes. In the first instance, in order to discharge the debts secured on the title of the E property I am going to order that the Husband sell the R property and apply the proceeds to discharge the debts on the E property and also the J property. I accept that there will be selling costs and that values may vary, however I am going to make orders requiring the payment of sums certain and not percentages. With the exception of the rental and sale of the Wife’s H, London property the Husband was always in control of the financial affairs of the Husband and the Wife and I also take into account his failure to adequately assist me in resolving how to achieve a just and equitable outcome in this case: St John & St John (unreported, New South Wales Court of Appeal, 19 June 1974) and Hendrikse & Hendrikse (1976) FLC 90-069. If for example, he does encounter issues with the revenue authorities of Great Britain then that will be his sole responsibility. The Wife will have to pay to the Husband an amount of $279,540 but on the basis that the title to the J property is unencumbered. The debt on the J property should be $176,372 as I have calculated above.
The consequence of this first step is that there will be a deferral of the removal of the debts on the E property. The primary source of the funds to discharge the said debts will be the proceeds of sale of the R property. However, the Husband’s father will retain his equitable charge over the J property. In so far as there may be an issue about the source of jurisdiction and power to make such orders I have no doubt that s 90AE(2) of the Family Law Act enables me to make the orders. Even though this section was not referred to in discussions, there is no issue about procedural fairness to the Husband’s father because what I am doing is consistent with the approach argued by the Wife.
I will then make orders to deal with what will occur if to satisfy the equitable charge of the Husband’s father the home at J is sold. In that event, for reasons I have given, the Husband will pay a sum certain to the Wife namely the sum of $390,460 as I have calculated above.
In my view, the outcome I propose is, in all the circumstances, just and equitable.
I certify that the preceding two hundred and fifty nine paragraphs are a true copy of the reasons for judgment of the Honourable Justice O’Ryan.
Associate
Date: 11 December 2007
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
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Property Law
Legal Concepts
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Constructive Trust
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Costs
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Remedies
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Injunction
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Procedural Fairness
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