Cartas and Dennis
[2014] FCCA 12
•29 January 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| CARTAS & DENNIS | [2014] FCCA 12 |
| Catchwords: FAMILY LAW – Property settlement – property pool – contributions –section 75(2) factors. |
| Legislation: Family Law Act 1975 Federal Magistrates Act 1999 Federal Magistrates Court Rules 2001 |
| Stanford v Stanford [2012] HCA52 Bevan & Bevan [2013] FamCAFC 116 Jones v Dunkel (1995) 101 CLR 298 McMahon & McMahon (1995) FLC 92-606 |
| Applicant: | MR CARTAS |
| Respondent: | MS DENNIS |
| File Number: | MLC 8054 of 2011 |
| Judgment of: | Judge McGuire |
| Hearing dates: | 28 – 29 June 2012 10 – 11 September 2012 |
| Date of Last Submission: | 18 September 2013 |
| Delivered at: | Melbourne |
| Delivered on: | 29 January 2014 |
REPRESENTATION
| Counsel for the Applicant: | Mr R Hoult |
| Solicitors for the Applicant: | Coote Family Lawyers |
| Counsel for the Respondent: | Mr G Glover |
| Solicitors for the Respondent: | Richelle Scherman |
ORDERS
That the wife pay to the husband a lump sum of $34,762 within twenty-eight (28) days of the date of these orders.
That within twenty-eight days of the date of these orders the husband transfer and/or vest to the wife all his right title and interest in the following absolutely:
(i)The business “(business omitted)”;
(ii)All personalty and chattels in the possession of or under the control of the wife or at the date of these orders;
(iii)Any motor vehicle registered in the name of the wife or in the wife’s possession as at the date of these orders;
(iv)The balances of any bank accounts in the name of or to the benefit of the wife as at the date of these orders;
(v)The wife’s beneficial interest in any superannuation policies or funds including the Cartas Superannuation Fund No.1 subject to these orders
(vi)The wife’s interest in the property at Property D owned as tenant-in-common with her siblings.
That contemporaneously with the transfer orders in paragraph 2 hereof, the wife transfer and/or vest all her right title and interest in the following to the husband absolutely:
(i)All assets of the (omitted) Trust including real property at Property H(1) and Property H(2) in Victoria;
(ii)The business “(business omitted)”;
(iii)The benefit of the loan to Mr G;
(iv)Any motor vehicle registered in the name of the husband or in the husband’s possession as at the date of these orders;
(v)All personalty and chattels in the possession of or under the control of the husband or as the date of these orders;
(vi)The balances of any bank accounts or like investments in the name of or under control of the husband or (omitted) Trust at the date of these orders;
(vii)The husband’s beneficial interest in any superannuation policies or funds including the Cartas Superannuation Fund No.1 subject to these orders.
That the wife be solely responsible for and indemnify the husband in respect of the following:
(i)Any and all liabilities attaching to any of the assets retained by the wife pursuant to these orders;
(ii)Any and all liabilities incurred by the wife since separation in either joint names or in her name alone.
That the husband be solely responsible for and indemnify the wife in respect of the following:
(i)Any and all liabilities attaching to any of the assets retained by the husband pursuant these orders including the assets of (omitted) Trust;
(ii)Any and all liabilities incurred by the husband since separation in either joint names or in his name alone;
(iii)The debt to Mr G;
(iv)The debt owing to (omitted) Motor Finance;
(v)The (omitted) Tractor loan;
(vi)The debt to (omitted) (motor vehicle lease).
That the parties or either of them have liberty to apply within 28 days of the date of these orders in respect of any splitting order in relation to the Cartas Superannuation Fund No.1 or to bring in a consent order.
IT IS NOTED that publication of this judgment under the pseudonym Cartas & Dennis is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 8054 of 2011
| MR CARTAS |
Applicant
And
| MS DENNIS |
Respondent
REASONS FOR JUDGMENT
The Parties and Background
These are proceedings for property settlement commenced on the husband’s application filed 7 September 2011.
The parties commenced cohabitation on (omitted) 1999. They were married on (omitted) 2000 and separated in August 2011. There are no children of this marriage although the husband has three sons all of whom are now adult and financially independent.
The husband is a (occupation omitted) and self-employed although he says he works part-time with his superannuation entitlement being its payment phase. He is 66 years of age. The wife is aged 50. She is self-employed in her own business known as (business omitted). She worked in (occupation omitted) with (employer omitted) and an (employer omitted) until about 2009 when she commenced her own business.
The parties are in serious disagreement as to the nature and value of the property pool and as to the weight the Court should give their various contributions.
Significant purchases during the relationship
The issues in this matter are complicated to a degree by the husband’s use of various company and trust entities to own and manage his finances and assets. Mr Cartas has control of a company, (omitted) Proprietary Limited (“(omitted)”) which is the trustee of the following:
i)the (omitted) Trust (‘(omitted)”):
ii)the Cartas Superannuation Fund Number 1:
iii)the Cartas Provident Fund (“the Provident Fund”).
The husband and his accountant, Mr D, are directors and shareholders in (company omitted). The wife was a director until August 2007 when she was unilaterally removed. It seems clear that the superannuation fund is non-complying given Mr D’s position. He gave evidence and admitted to same. Surprisingly, he appears to have done nothing to rectify the situation despite clear advice from the auditors.
(omitted) is a discretionary trust. The husband is the appointor. The Cartas Superannuation Fund is a self-managed fund with the parties being the only members.
At the date of commencement of cohabitation the wife owned an apartment at Property L. That property was sold in 2003 when the wife’s equity was approximately $300,000. The wife also had a superannuation entitlement with (omitted) Superannuation.
At that time the husband also owned a unit in (omitted), through a company entity. His equity in that unit was approximately $160,000. The wife concedes that the balances of his provident fund and superannuation fund were $284,131 and $178,557 respectively. She appears to concede, therefore, that his wealth at that time was approximately $623,000.
The husband claims, however, to have had total wealth of approximately $900,000. He says that he had “$350,000” – $400,000 in bank accounts over and above the assets set out in the above paragraph. At paragraph 7 of his affidavit sworn 5 September 2011 the husband says:
“I also had $600,000 in a provident fund account”
The husband’s evidence in this regard is clearly mistaken as the wife produces the financial accounts for the provident fund as at 30 June 1999 showing a member account balance of $284,131.
The husband deposes in his later affidavit sworn 14 May 2012 at paragraph 8:
At the commencement of our cohabitation, I was employed by (omitted) Proprietary Limited, a company I jointly owned with a stockbroker. My income was approximately $40,000. I owned the following assets:
(a) (omitted) Proprietary Limited, trustee of ... Trust see “owner d”:
(b) (omitted) Proprietary Limited a company which I bought as a shelf company in 1994 and which had held and my shareholding of my previous employer, (employer omitted). I resigned from (employer omitted) on 8 July 1999 receiving a termination package of $345,741 which I invested in bank deposits at (omitted) Bank and (omitted) Bank. I sold my shares in (employer omitted) on 31 March 1999 for $447,225 to (omitted) Proprietary Limited, essentially an incoming director.
(c) the Cartas Provident Fund was established in 1999 in connection with the disposal of my shareholding in (omitted) and received attainment of $280,000 on 10 May 1999 in this regard.
(d) the unit of Property L purchased on 23 March 1997 for $310,000, by way of deposit funded by drawing on the Cartas Superannuation Fund No. 1 of $75,000 and a mortgage of approximately $275,000 from the (omitted) Bank. The property was held by (omitted) Proprietary Limited as trustee for the (omitted) Unit Trust. By late 1999 the value of the property had increased to approximately $435,000 and the value of my equity was approximately $160,000.
(e) the Cartas Superannuation Fund No. 1, which I recall was established in 1992. The Cartas Superannuation Fund held assets of $189,220 as at 30 June 1999.
(f) I’ve also had cash at bank of approximately 350 to $400,000. My total assets were approximately 850,000 to $900,000.
I prefer the husband’s evidence as to his financial position as at the commencement of cohabitation in the second half of 1999. I accept his detailed evidence as to his termination package and sale of shares. These alone brought him some $790,000. I expect that the provident fund in 1999 was established with a part of these funds and I must be careful not to double up. His superannuation fund was established as long ago as 1992, and had a withdrawal benefit of $178,577 as at 30 June 1999 and an increase in that financial year of approximately $60,000. It is reasonable to assume that this significant contribution was also from his termination package. I am satisfied, therefore, that the husband’s wealth as the date of commencement of cohabitation was, as he says, in the realm of $900,000.
The parties commenced living together in the wife’s apartment in Property L. They lived there until early 2001 whereupon they rented properties in the city of Melbourne. The wife sold Property L netting some $310,000 which she deposited into the parties’ joint bank account.
The husband ((company omitted)) had already disposed of his (omitted) property in February 2000 bringing some $160,000 net.
In November 2004 (company omitted) purchased a farm at Property H(1) and H(2) for $515,000. The wife says that the purchase was intended to be made in the names of the parties themselves and she cannot explain why the trust was nominated as purchaser. Nothing turns on this issue. There is, however, issue between the parties as to the source of funds for that purchase.
In November 2006 the wife purchased a residential property at Property G, for $587,000. The parties lived in the Property G property for approximately two years whilst spending weekends on the (omitted) farm. The purchase was funded in part by the wife drawing $170,000 from a facility available to she and her siblings secured by mortgage over a Property D property. Property G property was sold in September 2009 for $768,500 and proceeds of $433,000 were placed in a joint account. The $170,000 loan from the “Property D facility” was not and has not been repaid.
In June 2011 Cartas Superannuation Fund purchased properties at Property H(1) and H(2). Shareholdings owned by the fund were sold to assist with the purchase. The value of the fund sits at $472,399. With the wife’s member entitlement at $220,744 and the husband’s entitlement at $251,655. The Property H(1) and H(2) properties represent to overwhelming majority of the fund’s value.
The wife’s father died in 2001. He bequeathed his estate to Ms Dennis, her three siblings, Mr J, Ms A and Ms K, and his own wife in equal shares. The estate comprised of cash of approximately $100,000, which was used to refurbish a dwelling sitting on a substantial property at Property D. The wife’s mother relinquished her entitlement to the wife and to her siblings in 2005. She does, however, continue to reside on the property. That property now has a value of $2,916,000. Also in 2005 the parties secured a (omitted) Bank line of credit facility in a quantum of $1,260,000 and secured by mortgage. That was later increased by a further $100,000.
It is agreed that the wife’s sister, Ms K, drew on the (omitted) Bank line of credit in a sum of approximately $900,000. She has subsequently become bankrupt. Her siblings have paid to annul her bankruptcy or more particularly, the brother Mr J has paid the costs of the annulment but with an agreement to be reimbursed by the wife and Ms A upon the sale of the Property D Property. She in turn has agreed to transfer her one quarter interest in Property D to the other three siblings. No formal transfer of her interest has yet taken place. The wife’s brother, Mr J, has given evidence as to his expenditure on outgoings on the Property D property, payment of interest on the lines of credit, and payment of Ms K’s annulment of bankruptcy.
There is dispute between the husband and the wife as to the value of the wife’s interest in the Property D property and this is dealt with in detail below. There are a number of other relatively minor issues between the parties as to the property pool, including how the Court should treat “farm debts” of approximately $11,000 and an outstanding loan to the husband’s son with approximately $80,000 remaining unpaid.
The parties agree that at separation, the wife unilaterally removed a sum of $374,000 from joint accounts.
Orders Sought by the Husband
The husband’s counsel opened by seeking an order simply that the property of the parties inclusive of superannuation, be divided equally between them. Such a position assumes, of course, the husband’s argument as to the property pool.
In written final submissions filed 8 April 2013, Counsel for the husband argues that the net property pool, inclusive of superannuation, amounts to $1,645,175. He submits that the husband receive 65-70 per cent and specifically argues that he should receive a loading of 10-15 per cent on account of superior contributions and a further five per cent adjustment in his favour after consideration of the relevant section 75(2) factors. Counsel for the husband calculates a cash adjustment from the wife to the husband of $493,972.
Orders Sought by the Wife
In final written submissions the wife seeks orders inter alia whereby there be a splitting order in respect of the Cartas’ superannuation fund in her favour with a base amount of $350,000 and that for these purposes the fund forthwith transfer to her the property situate and known as Property H(1) and H(2), in Victoria and also forthwith assign the benefit of leases over those properties to her.
She proposes that the husband retain the following but subject to the superannuation split:
·The (omitted) Trust including the Property H(1) & H(2) farm
·The Cartas Provident Fund
·The business “(omitted)”
·(omitted) model motor vehicle
·Farm equipment and stock
·The benefit of the loan to his son Mr G unpaid to $80,000
·Cartas Superannuation Fund
·His bank accounts
·All liabilities personal to the husband and loans attaching to the Property H(1) and H(2) farm and the properties at Property H(1) and H(2).
The wife proposes that she retain:
·The sum of $374,000 removed by her from joint bank accounts at separation:
·Her (model omitted) motor vehicle
·The business “(business omitted)”
·Her interest in the Property D property
·Superannuation split – base amount of $350,000.
The Relevant Law
Section 79 of the Family Law Act 1975 (Cth) (“The Act”) provides for alteration of property interests as follows:
·79(1) in property settlement proceedings, the Court may make such order as it considers appropriate … in the case of proceedings with respect to the property of the parties to the marriage or other of them – altering the interests of the parties to the marriage and to property.
·79(2) 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.
·79(4) in considering what order (if any) should be made under this section in property settlement proceedings, the Court shall take into account –
(a) the financial contribution made directly or indirectly by or on behalf of a party to the marriage of a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them …
(b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them …
(c) the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent;
(d) the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e) the matters referred to in sub-section 75(2) so far as they are relevant.
Under section 75(2) of the Act the Court is to consider the following, but not limited to the following factors:
·the age and state of health of each of the parties;
·income, property and financial resources of each of the parties and the physical capacity of each of them for appropriate gainful employment;
·whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;
·commitments of each of the parties that are necessary to enable the party to support himself or herself;
·where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable.
·the duration jurisprudence of the marriage and the extent to which it has affected the earning capacity of the parties.
It is clear that the traditional “force 4 stage process” for trial judges in making determinations under section 79 of the Family Law Act has been reconsidered following recent decisions of the High Court in Stanford v Stanford[1] and the Full Court Bevan & Bevan[2]. The Court must now determine at an early stage whether it is just and equitable pursuant to section 79(2) of the Act to alter the legal and equitable interests of the parties in property. To do so, those legal and equitable interests as currently exist must first be determined. The superior courts have noted with a degree of pragmatism that in most cases the task is a relatively obvious and easy one. As in the matter now before me, the parties have often mingled their finances. The proceeds of sale of the wife’s unit have been paid into joint accounts. Properties have been purchased with the contributions of both parties. There has been common usage of properties. The parties have now separated and, as such, I am satisfied that it is just and equitable to alter their property interests on a full and final basis.
[1] [2012] HCA52
[2] [2013] FamCAFC 116
The notion of justice and equity permeates the entire statutory and intellectual process of consideration for the trial judge. Importantly, however, the justice and equity required under section 79(2) is not to be conflated with a simple and strict consideration of the various contributions of the parties under section 79(4) of the Act and then consideration of whether any adjustments are appropriate after reference to the relevant factors under section 75(2). The High Court in Stanford laid down three “fundamental propositions” to guide trial Judges through the s.79 process and summarised in Bevan at [73] as follows:
1. Determination of a just and equitable outcome of an application for property settlement begins with the identification of existing property interests (as determined by Common Law and equity);
2. The discretion conferred by the statute must be exercised in accordance with legal principles and must not proceed on an assumption that the parties’ interests in the property are or should be different from those determined by Common Law and equity;
3. A determination that a party has a right to a division of property fixed by reference only to the matters in s.79(4), and without separate consideration of s.79(2), would erroneously conflate what are distinct statutory requirements.
At paragraph [72] the Full Court in Bevan observed in respect of the “four-stage process”:
It follows that Judges would be well advised to avoid what we consider to be arid discussion of the “stage in the process” at which “adjustments” are permissible. Such discussion tends to elevate the four-step process to the status of a statutory edict, when in fact it is no more than a shorthand distillation of the words of a statute which has but one ultimate requirement, namely not to make an order unless it is just and equitable to do so.
The Full Court in Bevan observed that it may be inappropriate to continue a tradition of courts making “notional add-backs” of property to a pool where a party may have disbursed or had the benefit of a particular asset. Rather, such matters are properly dealt with under section 75(2)(o) of the Act being:
any fact or circumstance which, in the opinion of the Court, the justice of the case requires to be taken into account in adjusting the entitlements of the parties.
In summary, therefore, the task of the trial judge is to determine the legal and equitable interests of the parties in property as at the date of the hearing. Property includes assets, liabilities and resources. Superannuation is to be “treated as property” for the purpose of this exercise.
The Court must then determine whether it is just and equitable to alter the parties’ interests in a consideration of the particular background and circumstances of the parties.
In determining its orders the Court considers, makes findings, and attributes weight to the various contributions of the parties, including direct and indirect financial contributions and non-financial contributions, including those of homemaker and parent.
The Court also references the relevant considerations under section 75(2) of the Act in determining whether it is appropriate to make an adjustment to one or other of the parties after the findings as to contributions.
Consideration is then given as to the justice and equity of the orders proposed from the above determinations. It is the orders themselves that must be just and equitable, not simply a percentage distribution.
Issues as to the Property Pool
The Property D property
The wife argues her interests in the Property D property to be a one third interest, in that her sister, Ms K, has agreed to forego her interest in favour of the other three siblings and in consideration for the annulment of her bankruptcy. The Property D property has an agreed value of $2,916,000. A one third interest is $972,000.
The wife says, however, that debts accrued to the siblings on the taking of Ms K’s interest (although that interest has not yet legally transferred) must be taken into account in arriving at her net interest.
She says that there are two (omitted) Bank loan facilities totalling $1,360,000 and fully drawn. This would leave an equity in the property of $1,556,000, with the wife’s one third share being $511,200.
The wife then says that there are additional debts owing to her brother, Mr J. Mr J swore an affidavit in these proceedings on 16 May 2012. He deposes to having paid $665,039 to service the loan and pay outgoings on the property. He also paid, pursuant to the sibling agreement, an amount of $229,958 to annul Ms K’s bankruptcy, in return for which she agreed to relinquish her one quarter share of the property. Mr J, the wife and Ms A agreed that these burdens would be shared and that Mr J would be repaid upon the sale of Property D. The siblings were influenced in this respect by caveats placed against the Property D title by Ms K’s creditors. Mr J was not required for cross-examination on his affidavit.
The husband argues that the wife’s interest is a one quarter share. He does not concede the family arrangements made in respect of Ms K’s bankruptcy. In written final submissions the husband asserts the value of $2,916,000 with the (omitted) Bank loan accounts unchallenged at $1,309,376 leaving a net equity of $1,606,624 to be divided four ways leaving the wife with an entitlement of $401,656. As I understand it, the husband’s argument is that the family arrangement was voluntary and that the wife has no legal obligation to either Ms K’s bankruptcy or the contributions made by her brother, Mr J.
On reflection, I prefer the argument of the wife. I am satisfied that the siblings reached an agreement to annul Ms K’s bankruptcy. I am satisfied that it was agreed that Mr J would initially make the payments but that the wife and Ms A would remain liable each for one third thereof. I am satisfied that this was a commercial decision, albeit one obviously influenced by family connections. I note that caveats had been placed by Ms K’s creditors on the Property D property. I note there being consideration for the transaction in the form of Ms K agreeing to relinquish her one quarter share in the Property D property. Significantly, I am satisfied, on the material before me, that the husband was aware of these negotiations and was a party to them. Annexure 11 of Mr J’s affidavit is a letter of advice from solicitors to the siblings. That letter is addressed to the husband, the wife and Mr J.
Consequently, I must calculate the value of the wife’s current interest in the Property D property. I accept that she must contribute to the expenditure made by Mr J as should her sister, Ms A. The wife herself has drawn $181,218 from the loan facility and she must account for these monies.
| Property Value | $2,916,000 |
| Wife’s Drawings | $181,218 |
| Ms A's Drawings | $60,000 |
| TOTAL | $3,157,218 |
| (omitted) Bank Facilities | ($1,360,000) |
| Mr J's Expenditure | ($665,039) |
| Mr J's Payment to Annul Ms K’s bankruptcy | ($229,958) |
| TOTAL | ($2,254,997) |
| Net value of Property D | $902,221 |
| Wife’s one third interest | $300,740 |
The (omitted) Trust
The trust purchased the Property H(1) and H(2) Farm for $515,000 in 2004. That property, together with plant and equipment, are its major assets. The trust’s balance sheets for 30 June 2011 and 2012 show:
| ASSETS | 30 June 2011 | 30 June 2012 |
| Cash | $10 | $6,724 |
| Inventories | $26,167 | $12,760 |
| Trade and other Receivables | $5,022 | $753 |
| Property Plant & Equipment | $636,161 | $630,979 |
| TOTAL ASSETS | $670,360 | $651,216 |
| LIABILITIES | ||
| Mr Cartas | $320,596 | $321,026 |
| Loan – Mr G | $22,148 | |
| Bank Overdraft | $14,292 | |
| Hire Purchase | $33,839 | |
| Unexpired HP Liability | ($2,659) | ($1,137) |
| Loan – (omitted) Bank | $250,500 | $299,074 |
| Loan – Provident Fund | $462,986 | $462,986 |
| TOTAL LIABILITIES | $1,079,554 | $1,129,789 |
| Net Assets-Liabilities | ($412,204) | ($478,583) |
There are two issues in dispute in respect of the trust. Firstly, the wife argues that moneys received by the husband from the (omitted) Bank were retained by him and remain unaccounted in the sum of approximately $360,000.
The husband says simply in his affidavit sworn 14 May 2012 at paragraph 22:
On 27 November 2004 we purchased Property W, (“the Property W property”) for $515,000. The purchase was funded by way of mortgage from the (omitted) Bank of approximately $250,000 and the balance from the cash reserves of the Cartas Provident Fund. The purchasing entity was (omitted) Proprietary Limited as trustee of the (omitted) Trust. In 2005 we spent approximately $80,000 renovating the dwelling which was funded by way of savings and income. We spent a further $25,000 refurbishing the property in April/May 2011 which was funded by way of income and the balance of $16,000 from the proceeds of the sale of the Property G property…
The wife exhibits at (omitted)28 of her affidavit affirmed 16 May 2012 a search of title to the Property W farm. It shows title registered to (omitted) Proprietary Limited on 5 January 2005, but that the (omitted) Bank mortgage was not registered until 14 May 2005 some four months later. She concludes then that the purchase was made with funds other than the bank loan and probably from the husband’s provident fund, noting that the balance sheet still shows a liability to the provident fund of $462,986.
She then argues that the (omitted) Bank moneys were received by the husband but not put to repaying the provident fund loan (at least not in total) and therefore that the husband has had the benefit of the loan moneys.
Counsel for the husband in written submissions argues that the Property W property was purchased for $515,000 and is now encumbered by a (omitted) Bank mortgage (successor to that of the (omitted) Bank) with a liability of $299,073 and consistent with the husband’s evidence above. In any event the husband says that the “loans” to the (omitted) Trust by him and the provident fund are “book entries” only. Despite evidence from the husband and his accountant that the loans are “repayable”, there is no commercial reality to this possibility.
The husband says that the property pool shows a farm at Property W valued at $600,000 with a liability of approximately $300,000 leaving an equity of $300,000. He says that this is the reality of the trust’s financial position. Any “loans” owing to Mr Cartas or his provident fund are book entries and unlikely to be repaid, and, if so, then the value of the (omitted) Trust will be reduced accordingly. After some consideration, I prefer the husband’s submission as being in accordance with reality. Effectively, he asks the Court to disregard the liabilities of the trust to Mr Cartas ($320,596) and the provident fund ($462.986). To do so increases the value of (omitted) by a total of $783,582 from its “book value”.
Further, the husband argues that there is no evidence that he has either secreted away or retained the (omitted) Bank loan moneys. Whilst I accept that the chronology suggested by the wife is more likely in that the property was purchased with moneys from the provident fund and savings, I also note the husband’s unchallenged evidence as to expenditure on the property. The farm has been stocked with cattle. It is one part of the husband’s complex network of companies and trusts used to facilitate ownership of assets and properties. I accept that the proceeds of sale of the wife’s flat were intermingled and I accept the husband’s unchallenged evidence as to lifestyle expenditure set out at paragraph 24 of his affidavit sworn 14 May 2012.
A party asserting a fact has an onus to prove that fact on the balance of probabilities. That proof is to be by way of evidence in probative form and not simply by speculation or unsubstantiated conclusions. It is not for the other party to disprove an allegation or an assertion. In all of the circumstances, I am not satisfied that the wife has, in this instance, proved on the balance of probabilities that the husband has had the personal benefit of or retained the proceeds of the (omitted) Bank loan.
Husband’s Son’s Debt
In 2008 the husband advanced $160,000 to his son, Mr G. The funds were for start-up of a business. $80,000 has been repaid by instalments. The husband in his affidavit sworn 14 May 2012 at paragraph 33 says:
By a loan agreement dated 2008 I made a loan to my son Mr G of $160,000. The funds were used by Mr G to open a (omitted) business in (omitted). The business is unfortunately not progressing as well as expected due to increased costs, particularly utilities and wages, and Mr G is barely able to pay himself a proper wage. The business is on the market for sale, and of the remaining 80,000 liability, I expect to receive approximately $40,000 which we hope to be the entirety of the net proceeds received from the sale of the business. It is possible that the business will sell for less and I will in turn receive less from Mr G.
Mr G was not called to give evidence and hence be subject to cross-examination as to his intentions and ability to repay the remaining debt. It is then open for me to infer that his evidence may not have been favourable to the husband’s case[3]. In all of the circumstances, I do draw such an inference. $80,000 of the advanced capital of $160,000 has been repaid. I do not accept that the remaining $80,000 or part therefore is to be “written off” as implied by the husband. It was clear that the monies were advanced by loan and that there is a remaining liability. I agree with the wife that it should be included in the asset pool.
[3] Jones v Dunkel (1959) 101 CLR 298
The husband claims a liability of “farm debts” of $11,770. The husband has retained the farm and its benefits since separation. The wife has moved to rented accommodation. Farming is by nature a seasonal venture in that at any one point in time there may be considerable debts awaiting the sale of stock or a successful harvest. In all of those circumstances I am satisfied that it is appropriate and just and equitable to exclude the farming debts from the property pool.
Australian Taxation Office Debt (estimated) $20,000
The husband in his evidence and in his counsel’s final submissions anticipates a liability to the Australian Taxation Office of $20,000 for the year ended 30 June 2011. He had not completed his tax return at the time of giving his evidence. In fact, in Court, his evidence was vague and uncertain and at one stage suggested he may be entitled to a refund. It is clear that the husband continues to work part time. It is also clear that his superannuation fund is in its payment phase and that he draws on the fund towards retirement. In the absence of more specific evidence, I am not prepared to find that the husband has a liability to the taxation office of $20,000 or at all.
Loan From Husband’s Parents - $25,000
In June 2011 the husband obtained a loan of $25,000 from his parents for the purchase of a tractor. He deposes that there have been interest-only payments made at three-monthly intervals, but that the capital remains unpaid. The parents did not give evidence. The wife argues simply that the liability is unlikely to be pursued by the parents. I have no evidence one way or the other to suggest that this might or might not be the case. The unchallenged evidence of the husband is that he has made interest payments on the loan. This being the case, I accept that it is a loan rather than a “gift” and should be included in the pool as a liability.
(business omitted) Liabilities - $13,292
The husband continues to operate a business as a (omitted). He deposes to an income of $8000 - $10,000 per month (in addition to drawings from the farm accounts). On the assumption that the business is viable, it should be able to meet its debts. Case outlines disclose “cash in bank” for this business of $10,315. As such I do not intend to include either the cash-at-bank or liabilities into the property pool. There is no evidence that this business has any inherent or “goodwill” value.
Settled Property Pool
On the basis of the above findings and other items agreed between the parties, I find the settled property pool to constitute:
| Husband/(omitted) | Assets | Liabilities | Superannuation Funds |
| The Farm at (Property W) | $600,000 | ||
| Plant and Equipment and Stock | $114,150 | ||
| Cash at Bank | Minimal | ||
| (business omitted) | Nil Value | ||
| Husband’s Motor Vehicle | $10,000 | ||
| (omitted) Bank Loan ((Property W)) | $299,073 | ||
| Debt owed to Husband by Mr G | $80,000 | ||
| (omitted) Loan Mr G | $22,148 | ||
| (omitted) Motor Finance | $6,995 | ||
| (omitted) Tractor loan | $21,974 | ||
| (omitted) (Motor Vehicle lease) | $12,114 | ||
| TOTAL - HUSBAND | $804,150 | $362,304 | |
| NETT TOTAL | $441,846 |
| Wife | |||
| One-third Share – Property D | $300,740 | ||
| Cash retained by wife at separation | $374,000 | ||
| Wife’s Motor Vehicle | $29,000 | ||
| Not included | |||
| The wife has some business stock, but offset by minimal credit card liabilities. | |||
| TOTAL | $703,740 | ||
| Cartas Superannuation Fund | Comprising of properties at Property H(1) & H(2) a ($350,000), Cash ($12,700E) and Shares ($106,802E) | ||
| Wife’s Member Entitlement – Agreed | $220,744 | ||
| Husband’s Member Entitlement – Agreed | $251,655 | ||
| TOTAL | $472,399 | ||
| TOTAL NET PROPERTY INCLUSIVE OF SUPERANNUATION | $1,617,985 | ||
Contributions
The wife argues, in her counsel’s written submissions, that the Court should adopt an asset-by-asset approach in respect of contributions. I expect that this argument is influenced by the nature of the Property D property and it being by way of an inheritance received by the wife in 2001. Nevertheless, this is a relationship that endured between 1999 and 2011, being a period of some 12 years. The parties agree that they mingled their finances, notably by the proceeds of the wife’s Property L flat being placed into a joint account and ultimately used for joint purchases.
Whilst it is open for the Court to properly take either an asset-by-asset or a global approach to consideration of contributions in respect of assets[4], in a matter such as that now before me, I favour the global approach, in that the parties have not kept strictly separate finances during the course of their relationship. I also note the wife’s argument that I should consider her non-financial contributions towards the husband’s children.
[4] McMahon & McMahon (1995) FLC 92-606
I am satisfied that both parties made significant initial financial contributions towards their assets, but that the husband’s financial contribution was greater than that of the wife. The exercise for the Court however is not a mathematical one and I must consider the contributions and the discrepancy in those contributions in light of their usage, the current property pool, the duration of the relationship, and subsequent contributions.
During the course of the marriage and between 2001 and 2005 the wife made a significant contribution of her interest in the Property D property. I find that interest to be valued at $311,000.
The husband received a further redundancy from his employment in 2003 of approximately $144,000. However, on his own admission this employment took place entirely within the duration of the relationship. That being the case, I attribute no particular contribution to the husband.
I am satisfied generally that the parties contributed by their employment, their labours and their ingenuity in the purchase and sale of properties. They each contributed to the comfortable lifestyle led by them during the marriage. I am satisfied on the wife’s unchallenged evidence that the parties shared the homemaker duties, which included provision of accommodation and support for the husband’s son for a period. I am satisfied that the wife contributed by provision of emotional, physical and financial support for that boy, who brought with him some particular difficulties.
I am satisfied that the husband’s greater initial financial contribution should be given some weight, despite the length of the marriage, and that the wife’s contribution of her interest in the Property D farm is also of some considerable weight. In all of the circumstances, I consider that the overall contributions of these parties to be equal in the acquisition and maintenance of the property pool.
Section 75(2) factors
The husband is 66 years of age and reaching the retirement phase of his self-employment, albeit with some options to continue ongoing employment in some capacity. The wife is 50 years of age. She claims to suffer from depression as a result of the marriage.
At 77 and following of her affidavit affirmed 16 May 2012, the wife deposes to suffering emotional difficulties because of the husband’s attitude and the parties’ living circumstances. She says that she felt isolated from friends and family in Melbourne. She says that she was traumatised by the vicinity of a bushfire in February 2009, and that:
Since the fire, I have not been able to face working high-pressure jobs as I used to do. While living full-time in (omitted) my annual income dropped from my previous $85,000 or so to about $30,000.
Selling Property G had a devastating effect on me. I fell into a severe depression with suicidal thoughts. My depression got so bad I required psychiatric assistance and medication. My psychiatrist suggested that I take respite in hospital for a few weeks, but instead he agreed to increase the amount of medication to manage my illness. At one stage I sought assistance from a Berry Street psychologist at work. My mental state worsened and I had to take a few weeks off. The sale of Property G seemed to doom me to living full time in the country, and represented the loss of my dreams of owning and developing Property G. I felt isolated my friends and family. My career prospects were severely reduced as a result of living in (omitted), which has few opportunities and is far from Melbourne.
…
I feel that I would not now be able to cope with any stress or pressure job due to my depression. There are days where I just have to go easy on myself to cope. I can no longer take up a corporate job.
Whilst there is no medical evidence adduced to support the wife’s claims of emotional or psychiatric illness, I accept that she has not been employed in previous corporate roles for some years. She commenced a small business and her unchallenged evidence is of a minimal income, certainly compared to the $10,000 per month that represents the husband’s earning capacity. Even taking into account the husband’s age, he has not yet demonstrated a willingness to immediately enter retirement. Significantly, he has also had the benefit of the use of the farm in the two years since separation. The wife has been required to find alternative rental accommodation. The wife’s counsel in her final submission seeks an adjustment of five per cent in favour of the wife on account of the relevant section 75(2) factors. I am satisfied that such an adjustment is appropriate.
Consequently, after consideration of all of the contribution and relevant section 75(2) factors, I am satisfied that an alteration of the settled property pool as to 55 per cent to the wife and 45 per cent to the husband is just and equitable.
I have found the property pool inclusive of the self-managed superannuation fund to have a net value of $1,617,985. 55 per cent would entitle the wife to $888,982 in monetary terms, and 45 per cent to the husband equates to $728,093 in monetary terms. The wife has the following currently in her hands:
| Interest in Property D Property | $300,740 |
| Cash retained at separation | $374,000 |
| (model omitted) motor vehicle | $29,000 |
| Total | $703,000 |
| Member entitlement of the Superannuation Fund | $220,744 |
| TOTAL | $923,744 |
The husband retains the following:
| Property W | $600,000 |
| Motor Vehicle | $10,000 |
| Plant and Equipment and Stock | $114,000 |
| Mr G debt | $80,000 |
| TOTAL | $804,000 |
| Member entitlement of the Superannuation Fund | $251,655 |
| TOTAL | $1,055,655 |
Less: | Liabilities |
(omitted) Bank Loan | $299,073 |
Parents Loan | $22,148 |
(omitted) Loan | $21,974 |
(omitted) Motor Finance | $6,995 |
(omitted) Bank Loan | $12,114 |
TOTAL LIABILITIES | $362,304 |
NET ASSETS | $693,351 |
Consequently, the wife would make a cash adjustment to the husband of $34,762. I acknowledge that the self-managed superannuation fund comprises real property in the main and that it is undesirable and probably not the intention of the parties that this remains the case (although it is of course open for them to continue as beneficiaries of the fund). I will hear Counsel if necessary as to any appropriate orders in respect of the parties entitlements in the Superannuation fund.
I am otherwise satisfied that orders altering the parties property interests as above with a cash adjustment are just and equitable given the circumstances of the parties and the financial history of their relationship.
I certify that the preceding seventy-five (75) paragraphs are a true copy of the reasons for judgment of Judge McGuire
Date: 29 January 2014
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