Cai and Han
[2009] FMCAfam 7
•26 February 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CAI & HAN | [2009] FMCAfam 7 |
| FAMILY LAW – Alteration of property matters – brief marriage – cohabitation commencement dispute – pre-relationship contributions – moneys advanced to husband by parents gift or loan – moneys advanced by parties to wife’s family gift or loan – rule in Jones v Dunkel – no adjustment for section 75(2) factors. |
| Family Law Act 1975 (Cth), ss.75(2), 79(1), 79(4), 79(4)(c) |
| In the Marriage ofHickey (2003) 30 FLR 355 Monahan, G. and Young, L. (2006) Family Law in Australia (6th edition), Chatswood, New South Wales: Lexis Nexis, Butterworths |
| Applicant: | MR CAI |
| Respondent: | MS HAN |
| File Number: | MLC 2535 of 2008 |
| Judgment of: | Monahan FM |
| Hearing date: | 13 November 2008 |
| Date of Last Submission: | 14 November 2008 |
| Delivered at: | Melbourne |
| Delivered on: | 26 February 2009 |
REPRESENTATION
| Counsel for the Applicant: | Ms Dellidis |
| Solicitors for the Applicant: | Gillian Coote Family Law |
| Counsel for the Respondent: | In Person |
| Solicitors for the Respodent | In Person |
ORDERS
That the husband retain all of his right, title, interest in the property situated at Property R, Victoria (“the former matrimonial home”).
That within ninety (90) days the wife pay to the husband the sum of $60,000.00 and contemporaneously with the payment the wife retain all of her right, title, interest in the property situated at Property S, Victoria (“the investment property”).
That in default of the payment by the wife in whole or in part as provided for in Order 2 herein, the husband and wife shall make all such arrangements and do all such acts and sign all such documents and pay all monies equally necessary to procure a sale by public auction and the reserve price shall be as agreed between the parties or, failing agreement, shall be nominated by the auctioneer agreed to by the parties, or failing agreement, as nominated by the Chief Executive Officer for the time being of the Real Estate Institute of Victoria, and upon completion of the sale, the net proceeds be applied:
a) to discharge the existing mortgage;
b) to pay all costs, commissions and expenses of the sale; and
c) to pay the husband $60,000.00 and the wife the remaining balance.
The husband retain the following property free of any claim by the wife:
a) all motor vehicles in his possession;
b) any monies standing to his credit in any bank or financial institutions;
c) all furnishings and household effects in his possession; and
d) all his estate and interest in the following superannuation schemes:
i)MLC Masterkey Business Superannuation Plan;
ii)AXA; and
iii)Aussie Fund.
The wife retain the following property free of any claim by the husband:
a) any monies standing to her credit in any bank or financial institutions;
b) all furnishings and household effects in her possession;
c) all her estate and interest in her AMP Retirement Savings Account; and
d) the loan to the wife’s family in the amount of $3,000.00.
The husband indemnify the wife with respect to:
a) all rates, taxes, levies and other outgoings in respect of the former matrimonial home; and
b) all other debts and liabilities in the husband’s sole name.
The wife indemnify the husband with respect to:
a) all rates, taxes, levies and other outgoings in respect of the investment property; and
b) all other debts and liabilities in the wife’s sole name.
IT IS NOTED that publication of this judgment under the Cai & Han is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLC 2535 of 2008
| MR CAI |
Applicant
And
| MS HAN |
Respondent
REASONS FOR JUDGMENT
Introduction
This matter involves a property application by the Applicant husband. The husband is a 32 year old [occupation omitted] working in a warehouse for [S] at [a suburb in South-East Melbourne]. The wife is a 33 year old [occupation omitted] working for [E] in Melbourne. The husband’s initial application filed on 20 March 2008 sought a financial settlement between the parties “as deemed appropriate by this Honourable Court”. The husband subsequently filed an amended application on 7 November 2008 where he sought more specific final orders including:
“1) that the husband retain the property at Property R;
2) that the wife pay to the husband the sum of $70,000 representing one half of the net equity in the property atProperty S;
or in the alternative,
3) that the husband and wife do all such acts and things and sign all such documents as are required to forthwith place the property at Property S on the market for sale by public auction, and that at settlement of sale the proceeds be divided as follows:
a) in payment of the costs of and incidental to the sale;
b) to discharge the mortgage; and
c) to divide the balance equally between the parties;
4) such further or other Orders as are deemed appropriate by this Honourable Court.”
The husband’s application was supported by his affidavit filed on
20 March 2008 and sworn 19 March 2008, his further affidavit filed on 7 November 2008 and sworn 7 November 2008, his Form 13 statement of financial circumstances filed on 20 March 2008 and 7 November 2008 and an affidavit from Mr D, certified practising valuer, filed on
7 November 2008 and sworn 07 November 2008.
In her response filed on 23 April 2008, the Respondent wife sought various property orders, namely,
“1) that the property at Property R, Victoria, registered in the sole name off the Applicant shall be shared equally between the Applicant and Respondent;
2) that the loan agreement signed between the Applicant and his parents on 6 September 2005 shall be declared void and of no legal effect;
3) that the property at Property S, Victoria registered in the sole name of the Respondent shall be shared equally between the Applicant and Respondent.
4) That the Applicant and Respondent shall share the mortgage loan equally.”
The wife’s response was supported by her affidavit file on 23 April 2008 and sworn 23 April 2008 and her Form 13 statement of financial circumstances filed on 6 May 2008.
At the hearing the husband was represented by counsel and the wife was a litigant in person.
The issues
The following issues were in dispute at the hearing:
the commencement date of the parties’ cohabitation;
whether the Court should adopt an ‘asset-by-asset’ or ‘global’ approach in respect of the assessment of contributions;
the valuation of the real property;
the parties’ contributions made prior to cohabitation;
the parties’ contributions made during the relationship;
the parties’ contributions made following separation; and
the parties’ respective future needs and obligations.
Relationship history
The Applicant was born in 1976 in Taiwan. He moved to Australia in 1999 and is now an Australian citizen. The wife was born in 1975 in China. She moved to Australia in early 2002 and is now an Australian citizen.
The parties were married in a civil ceremony in Melbourne in July 2007. It appears the parties also went through a form of wedding ceremony in Taiwan in December 2006. Both parties agree that they lived together in a defacto relationship prior to their marriage but disagreed on the date that cohabitation commenced. This issue will be considered shortly. According to the husband, the parties separated under the one roof in August 2007 and continued to reside together under the one roof until the wife left the former matrimonial home at Property R on or about 4 October 2007. The wife maintains that the parties separated on this later date.
Both parties agree that they met each other when they commenced sharing a house as ‘flatmates’ in rented accommodation in [B] during April 2004. In her evidence the wife admitted that she had several business trips to China between May 2004 and November 2004. She had a further trip to China commencing Christmas Day 2004 and returning to Australia on or around 11 January 2005. According to the husband, the parties commenced a ‘boyfriend/girlfriend’ relationship in November 2004 whilst they were living in the rented [B] house. He further alleges that their ‘boyfriend/girlfriend’ relationship was discontinued in February 2005 when the wife left the [B] house. He then maintains that their relationship resumed in January 2006 when the wife moved into the Property R home (the former matrimonial home).
In contrast, the wife alleges that the parties commenced a defacto relationship in November 2004. Notwithstanding, the wife also conceded in evidence that throughout 2005, when she was living at the rented premises at [B], the husband was living in premises in [E]. The wife also conceded that the parties moved into the Property R home (the former matrimonial home) during January 2006. In light of the overall evidence the Court is satisfied on the balance of probabilities that the parties commenced cohabitation sometime during January 2006 which continued until their marriage in Melbourne in July 2007. The Court is also satisfied that the parties separated on or about
4 October 2007 when the wife left the matrimonial home.
The law - the four steps
Section 79(1) of the Family Law Act 1975 (“the Act”) provides that the Court may make such order as it seems fit altering interests in matrimonial property. The Court’s discretion is not unlimited and must be exercised in accordance with the factors set out in the legislation and more specifically, Section 79(4). The preferred approach to the exercise of the discretion has been outlined in numerous decisions of the Full Court of the Family Court, most recently in cases like In the Marriage ofHickey (2003) 30 FLR 355 and AJO v GRO (2005) 33 Fam LR 134. That approach involves four interrelated steps:[1]
“First, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Second the Court should identify and assess the contributions of the parties within the meaning of Section 79(4)(a), (b) and (c) and determine the contribution - based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Third the Court should identify and assess the relevant matters referred to in Section 79(4)(d), (e), (f) and (g) (the other factors). Including, because of 79(4)(e), the matters referred to in Section 79 (2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution- based entitlements of the parties established at step two. Fourth, the Court should consider the effects of those findings and resolve what order is just and equitable in all of the circumstances of the case.”
[1] Monahan, G. and Young, L. (2006) Family Law in Australia (6th edition), Chatswood, New South Wales: Lexis Nexis, Butterworths, pages 498-499.
First step - asset pool
The Court is satisfied that the property pool is as follows:
| ASSETS (excluding superannuation) | Ownership | Valuation |
| Property R (former matrimonial home) | husband | $515,000.00 |
| Property S (investment property) | wife | $360,000.00 |
| Loan to wife’s family in China | wife | $3,000.00 |
| 2006 Honda Jazz motor vehicle | husband | $10,000.00 |
| 2000 Mitsubishi Magna | husband | $2,000.00 |
| Business ([A] Pty Ltd) | husband | nil value |
| Contents (husband) | husband | $3,000.00 |
| Westpac Account (1) | husband | $100.00 |
| Westpac Bank Account (2) | husband | $1,000.00 |
| Westpac Bank Account (3) | wife | $800.00 |
| Westpac Bank Account (4) | wife | $2,299.32 (as at 31 August 2008) |
| TOTAL ASSETS (excluding superannuation) | $ 897,199.32 |
| SUPERANNUATION | Ownership | Valuations |
| Superannuation (MLC Masterkey Business Superannuation Plan) | husband | $9,785.00 |
| Superannuation (AXA) | husband | $1,000.00 |
| Superannuation (Aussie Fund) | husband | $114.00 |
| Superannuation (AMP Retirement Savings Account) | wife | $4,985.45 (as at 13 November 2008) |
| TOTAL SUPERANNUATION | $15,884.45 |
| LIABILITIES | Responsibility | Value |
| Loan by husband’s parents (Property R property) | husband | $400,000.00 |
| Loan byAIMS (Property S property) | wife | $236,540.44 (as at 28 October 2008) |
| Accumulated HELP (Higher Education Loan Programme) debt | wife | $4,085 (as at 1 June 2007) |
| TOTAL LIABILITIES | $640,625.44 |
| Net Assets (excluding superannuation) | $897,199.32 |
| Total Liabilities | $640,625.44 |
| BALANCE | $256,573.88 |
Step 2 - contributions
Property R
The husband purchased the property at Property R (the former matrimonial home) on 2 September 2005 for $370,000.00. During the course of their brief relationship in 2006 and 2007 both parties assisted in paying related outgoings in relation to the former matrimonial home. The purchase was assisted by a loan from the husband’s parents entered into on 6 September 2005. The loan agreement (being annexure “CC 1” to the husband’s affidavit sworn 19 March 2008) was prepared by Clifford Lawyers and Migration Agents and Solicitors of East Doncaster. During cross examination the husband admitted that his father may have signed the loan agreement after 6 September 2005. Notwithstanding, the Court is satisfied that it was the parents’ intention to lend the husband those funds to enable the property to be purchased and that the provision of those funds is not to be considered a gift by them. As to the current value of the property, the husband filed and relied upon an affidavit from Mr D, certified practising valuer sworn and filed 7 November 2008 which at annexure “ND 2” valued the property at $515,000.00. The wife did not challenge this valuation in her evidence. Consequently the Court finds that the net equity in the property is $115,000.00. It also clear from the evidence that the husband has paid all related outgoings for former matrimonial home since separation. Overall, given their brief relationship, and the fact that the wife had the benefit of accommodation during the relationship, the Court is satisfied that the wife made no relevant contributions to the former matrimonial home.
Property S property
On 11 July 2006 the parties purchased an investment property at Property S. The property was purchased in the wife’s name only. According to the husband’s evidence, this was done to enable the parties to obtain the benefit of the first home owners grant. In her evidence, the wife contended that the investment property was not jointly acquired but rather was purchased for her benefit only. In cross examination, the wife did admit that the husband encouraged her to buy the investment property in her name only in order to obtain the benefit of the first home owners grant. The Court therefore finds that the investment property was purchased in the wife’s name only for various reasons, including the obtaining of a first home owners benefit.
In his evidence, the husband contends that he contributed $37,560.00 to the purchase of the investment property and the wife admitted this in her evidence. The wife maintains that she contributed an equal sum (ie approximately $37,000.00) for the purchase of the investment property. In his affidavit filed on 20 March 2007 the husband in paragraph 12 admitted this, although he later amended his evidence in light of documentation produced and submitted that the wife’s contribution to the purchase of the investment property was no more than $30,000.00 The balance of the purchase was funded by way of a mortgage loan from AIMS Financial Group. It is a little unclear from the wife’s evidence as to the current liability with respect to the AIMS Financial Group, although it is clear from exhibit “R4” that at the time the husband alleges the parties separated (ie during August 2007) an amount of between $230,508.81-$231,137.23 was owing and that by the date that the parties finally separated (ie 4 October 2007) an amount of $238,058.51 was owing. That having been said, it is also clear that the wife deposited and drew down on the mortgage between January 2007 and August 2007 and again during September to October 2007, and beyond. The reasons for this are unclear although it was suggested by the husband that this relates to the financial assistance the wife may have provided to her family back in China. It is clear nonetheless, that during the period late August - early October 2007 the wife redrew a net amount of $8,000.00 causing an increase in the amount owed under the mortgage. Consequently, the Court agrees with the submission made by counsel for the husband that an amount of approximately $231,000.00 should be used to represent the outstanding mortgage amount due at the time of separation. It is clear from the evidence that the wife has made some financial contributions to the investment property for related outgoings and expenses. The wife, of course, received the benefit of the rent paid for the investment property at all times. Overall, and given the lack of clear evidence as to what specific financial contributions were made by the parties in respect of the acquisition, conservation and improvement of the investment property, the Court proposes to assess their contributions to the investment property equally.
As to the current value of the investment property, the husband filed and relied upon an affidavit from Mr D, certified practising valuer, sworn and filed 7 November 2008 which at annexure “ND 2” valued the investment property at $360,000.00 In her evidence the wife disagreed with this valuation and stated in her Form 13 statement of financial circumstances that the investment property was worth $310,000.00. As the wife did not provide an independent valuation for the investment property, the Court finds that the investment property is valued at $360,000.00. Allowing for the mortgage due at the time of separation, the Court finds that the net equity in the property for the purposes of these proceedings is $129,000.00.
Loan to wife’s family in China
In his evidence the husband contends that he provided the wife with $3,000.00 to assist her family to purchase a property in China. This appears to have occurred after the parties commenced cohabitation or during their marriage. The Court was not given any details about the location or value of the property that the wife’s family allegedly purchased. The husband further believes that the wife contributed an additional $4,000.00 to assist with this alleged purchase. In her evidence the wife acknowledges that she spent “family savings” of $3,000.00 “with the applicant’s permission” to purchase this alleged property. No documentation was tendered by either party in relation to this alleged transaction. There is no evidence to suggest that the parties have equity in this alleged property or that the advances made by the parties were in the nature of a gift to the wife’s family. That having been said, the Court finds that in all probability, the parties have provided a loan to the wife’s family of at least $3,000.00 to assist in the purchase of real property in China.
Motor vehicles
During the relationship the husband purchased a 2006 Honda Jazz motor vehicle currently valued at $10,000.00 which remains in his possession. In addition, the parties acquired a 2000 Mitsubishi Magna currently valued at $2,000.00. In his evidence, the husband contends that Magna was a gift to him from his mother. In contrast, the wife contends that the Magna was a gift to the parties. As it is clear from the evidence that the wife had the use of the Magna during the relationship, and given that there was no evidence from the husband’s mother to confirm the nature of her gift, the Court is satisfied on the balance of probabilities that this car was a gift by the husband’s mother to both parties and they should share in its acquisition contribution.
Other alleged liabilities
The husband contends that on 8 June 2006 he borrowed the sum of $20,000.00 from his parents to start an IT business ([A] Pty Ltd). According to his evidence, the business was not successful and he maintains that he still owes that amount of money to his parents. Further, he contends that he borrowed a further $20,000.00 from his parents in July 2005 following a car accident. These alleged loans were not documented nor was any further evidence produced in support, in particular evidence from his parents. In the absence of evidence to the contrary the Court does not propose to find that these alleged loans are matrimonial liabilities, and in all probability, they were gifts made by the parents to the husband which were expended by him before cohabitation commenced.
In her evidence, the wife alleges that she borrowed the sum of $30,000.00 from one Mr R to assist her with re-establishment expenses following the parties separation. The wife later conceded in evidence that Mr R was a former boyfriend and that although her romantic relationship ended prior to her involvement with the husband, she had travelled with Mr R in China in late 2004 - early 2005. It appears Mr R is associated with, or employed by, the AIMS Financial Group, which funded the loan for the investment property. The wife provided no documentation to support this alleged loan nor did Mr R give any evidence that supported the existence of this additional personal loan. Given the High Court’s decision in Jones v Dunkel (1959) 101 CLR 298, [2] the Court does not find that this alleged personal loan is a relevant matrimonial liability.
[2] For a discussion of the rule in Jones v Dunkel see Heydon, J.D. (2004) Cross on Evidence (7th edition), Chatswood, New South Wales: Lexis Nexis Butterworths, [1215].
Superannuation
Both parties have modest superannuation entitlements. According to the husband, his combined superannuation entitlements are currently valued at $10,899.00. In her Form 13 statement of financial circumstances filed 6 May 2008 the wife contended that her superannuation entitlements were then valued at $2,061.00. The wife subsequently gave oral evidence estimating the value of her superannuation entitlements to be $3,000.00. At the Court’s insistence the wife subsequently produced a statement from AMP dated
13 November 2008which valued her superannuation entitlements at $4,981.45 (see exhibit “R8”).
Contributions analysis
The two significant assets in dispute in this matter are the former matrimonial home and the investment property. There are no real issues in relation to the parties other possessions nor their superannuation entitlements. The Court believes that the assessment of contributions in this matter should be dealt with on a “asset-by-asset” basis given the brevity of the relationship. It also notes that the assessment is not assisted by the wife’s failure to provide full and frank disclosure in relation to documentation to support her claim. The wife also seems to be under the impression that as she is married to the husband she is entitled to an equal division of assets. That, of course, is not the law as it currently stands.
The Court is satisfied that the parties cohabitated from January 2006 to October 2007. Consequently, the Court is satisfied that the wife made no contributions to the purchase of the former matrimonial home which remains subject to a loan agreement. The evidence does not support, as the wife contends, that the husband’s parents made a gift of $400,000.00 either to their son alone, or to the parties jointly. In evidentiary terms, the loan is supported by a comprehensive loan agreement prepared and executed with a law firm. The Court is further satisfied that this loan remains outstanding. As to outgoings, it is apparent from the evidence that both parties assisted in the living expenses and associated payments related to their occupancy of the former matrimonial home during the period of their cohabitation.
In relation to the investment property, this was tenanted immediately after purchase and remains so. The Court is satisfied that the wife has made some modest contributions to that property in the payment of body corporate insurance and any additional payments needed due to the difference between the rental income received and the mortgage repayments and other outgoings. Although purchased in the name of the wife only, the Court is satisfied that the intention of the parties was to purchase the property jointly. As previously stated, the Court accepts that the property was purchased in the wife’s name only, most likely to facilitate the first home owner’s benefit. It is clear from the evidence that the husband contributed $37,560.00 to this purchase and that the wife contributed $30,300.00. It is also clear that the wife’s contribution included $5,000.00 that she received from the sale of her previous motor vehicle.
The Court is also satisfied that the husband gave the wife $3,000.00 to assist her and her family to purchase real property in China, and that the wife has had the benefit of those funds.
The husband has maintained the former matrimonial home since separation. He further contends that the wife has had the benefit of contributions associated with the cost of the wedding, the furnishing of the home, the use of a motor vehicle (following the sale of her vehicle to purchase the investment property) and support for undertaking a [occupation omitted] course. With the exception of the issue relating to the issue of the [occupation omitted] course, the Court is satisfied that these contributions “made by the husband’s family” were in the nature of gifts to the parties and that the parties should share equally in relation to these additional contributions. In relation to the [occupation omitted] course, the husband contended that no benefit flowed to the husband from that study. The Court disagrees, as the qualification would have clearly assisted the parties’ relationship should they have remained together. Moreover, it is relevant to the argument as to whether any further adjustment should be made pursuant to the section 75(2) factors and this is discussed below.
Neither party argued any relevant contributions under section 79(4)(c) of the Act. The Court notes that there are no children of the relationship and that both parties worked full time during their relationship.
Step 3 - section 75(2) and related factors
The parties are relatively young and both in good health. The husband currently works as a [occupation omitted] and the wife works as an [occupation omitted]. I agree with the following comments made by counsel for the husband who said, in her closing submissions,
“this case is all about contributions. I submit that there’s no adjustment that need be made for section 75(2) factors. I agree with the wife that they each have a bright future ahead of them and certainly, if one was to consider their respective qualifications, their capacity to negotiate with the world in terms of their English language skills and their income-earning capacity, the wife is ahead on all those points.”
Given these matters, and in particular the wife’s potential to earn a greater income than that currently earned by the husband, the Court is satisfied that no adjustment for the section 75(2) factors is needed.
Final step - Justice and equity
Section 79(2) of the Act provides that:
“The Court shall not make an Order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the Order.”
In relation to the former matrimonial home, the Court is satisfied that the wife made no contributions of relevance to its acquisition, conservation or improvement. In relation to the investment property the Court is satisfied that both parties made a significant financial contribution to its acquisition. Although there is some disagreement as to the exact amount that the wife contributed, as previously indicated, the Court is satisfied that the husband contributed some $37,560.00 to its purchase and that the wife contributed at least $30,300.00. In addition, the wife has made some additional modest financial contributions to the investment property since separation. Overall, as previously indicated, the Court finds that the parties have made out an equal contribution in relation to the investment property. In addition, the Court finds that the parties have made an equal contribution to the outstanding loan of $3,000.00 to the wife’s family to facilitate a purchase of real property in China.
The husband should retain all of his interest in the former matrimonial home and there should be no adjustment in the wife’s favour in respect of this property. The wife should retain all of her interest in the investment property subject to a monetary payment by the wife to the husband as discussed below. The property settlement needs to reflect the fact that the husband has retained the motor vehicles and the bulk of the contents of the former matrimonial home, and that the wife and or her family have had the benefit of some $3,000.00 to assist in the purchase of real estate in China. The Court also accepts that there is a HELP liability still owing in respect of the wife’s tuition to become a [occupation omitted].
The property settlement needs to factor in the parties respective superannuation entitlements. The Court notes that neither party has sought any specific order in relation to the splitting of the superannuation entitlements. Consequently, the Court proposes that each party retain their respective superannuation entitlements.
The parties should retain the proceeds of their various bank accounts and any furniture, white goods or other personal effects that are currently in their respective possession and indemnify the other in respect of any loans and the like. The husband should retain the benefit of the motor vehicles in his possession. As the husband’s retention of the contents of the former matrimonial home and the motor vehicles is clearly to his benefit, this will be reflected in the amount of the monetary adjustment discussed below.
Overall the Court is satisfied that a just and equitable outcome requires the wife to pay to the husband a sum of $60,000.00 This amount represents the husband’s interest in the investment property discounted slightly in the exercise in the Court’s discretion to reflect the matters referred to above.
I certify that the preceding thirty-three (33) paragraphs are a true copy of the reasons for judgment of Monahan FM
Associate: Shani Drogemuller
Date: 24 February 2009
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