CELONA & ALDRIN
[2020] FCCA 2393
•7 September 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| CELONA & ALDRIN | [2020] FCCA 2393 |
| Catchwords: EVIDENCE – Objections to evidence – rulings. |
| Legislation: Evidence Act 1995 (Cth), ss.4AA(2), 55, 56, 69, 135 and 135(a), (b) & (c) Family Law Act 1975 (Cth), ss.4AA, 75(2), 90RD(1), 90SF, 90SF(3), 90SM, 90SM(4)(a)-(g) |
| Cases cited: Jonah & White [2011] FamCA 221 Hickey & Hickey (2003) FLC 93-143 |
| Applicant: | MS CELONA |
| Respondent: | MR ALDRIN |
| File Number: | SYC 7481 of 2016 |
| Judgment of: | Judge Heffernan |
| Hearing dates: | 24 May, 18 July, 3 September & 26 October 2018 |
| Date of Last Submission: | 25 January 2019 |
| Delivered at: | Adelaide |
| Delivered on: | 7 September 2020 |
REPRESENTATION
| Counsel for the Applicant: | Mr Schonell |
| Solicitors for the Applicant: | McLachlan Thorpe Partners |
| Counsel for the Respondent: | Ms Lowson |
| Solicitors for the Respondent: | Konstan Lawyers |
DECLARATION
The Court makes the following declaration pursuant to s 90RD of the Family Law Act 1975 (Cth):
The parties were in a de facto relationship from October 2012 until June 2016.
ORDERS
That there be a division of the assets of the relationship on the basis of 30 percent to the applicant de facto wife and 70 percent to the respondent de facto husband with the following orders to give effect to the same.
That the net proceeds from the sale of the property referred to as ‘The B Property’, currently held in Konstan Lawyers controlled monies account, be divided as follows:
(a)An amount of $210,063.10 to be paid to the trust account of the solicitor for the de facto wife; and
(b)The balance to the de facto husband.
The de facto wife be solely entitled to the exclusion of the de facto husband the following:
(a)Any savings or investments held in his her sole name or with any other person;
(b)Her motor vehicle;
(c)Her superannuation entitlements; and
(d)Any other items of personalty in her possession or control.
The de facto husband be solely entitled to the exclusion of the de facto wife the following:
(a)Any savings or investments held in his sole name or with any other person;
(b)His motor vehicle; and
(c)Any other items of personalty in his possession or control.
The de facto husband will indemnify the de facto wife in respect of any liability in his name at the date of these orders.
The de facto wife will indemnify the de facto husband in respect of any liability in her name at the date of these orders.
Otherwise each party shall remain liable for any liabilities in their name not dealt with by these orders, and shall forever indemnify the other in respect of same.
Each party shall forever indemnify the other in relation to the property they are to retain pursuant to these orders, including but not limited to any liabilities, taxes, and claims of whatsoever nature.
Each party pay their own costs of these proceedings.
Pursuant to s 106A of the Family Law Act 1975 (Cth) that in the event that either party refuses or neglects to comply with the provisions of these orders, the Registrar of the Federal Circuit Court of Australia at Adelaide is hereby appointed to execute all deeds and documents in the name of the defaulting party.
IT IS NOTED that publication of this judgment under the pseudonym Celona & Aldrin is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYC 7481 of 2016
| MS CELONA |
Applicant
And
| MS ALDRIN |
Respondent
REASONS FOR JUDGMENT
Introduction
This matter proceeded before me by way of a trial seeking orders for the division of the parties’ assets and liabilities arising from the cessation of their de facto relationship. The fact of the relationship is not disputed but its length is. For the sake of convenience during the course of these reasons I will refer to the parties as the applicant/wife and the respondent/husband.
The central issue between the parties relates to the division of the balance of the proceeds from the sale of a property known as ‘The B Property’ and situated at B Street, Town C, New South Wales (Folio ...) (‘The B Property’), in which they resided during the course of their relationship.
On the 30 January 2017, orders were made providing that the proceeds from the sale of The B Property be paid out as follows:
a)To discharge the relevant mortgage and loan to the Commonwealth Bank of Australia;
b)To pay the agent’s commission, advertising expenses and legal expenses of the sale; and
c)The balance of the funds to be held in a controlled monies account by the husband’s legal representative until written agreement between the parties or further order of the Court.
On 6 December 2017, the Court made an order that the proceeds from the sale of The B Property be distributed as follows:
a)The sum of $600,000 was paid to the husband;
b)The sum of $100,000 was paid to the wife; and
c)The balance of the proceeds from the sale was withheld in a controlled monies account pending final orders.
Orders sought by applicant wife
The applicant initially sought an order that she receive a sum equal to 60% of the total property pool. That was on the basis of an outline prepared by her solicitor. At the conclusion of trial, her counsel submitted that she should receive an amount equivalent to 40% of the property pool inclusive of an adjustment for s 90SF factors. In addition she seeks orders that she retain:
a)All savings and investments held in her sole name or with any other person;
b)Her motor vehicle;
c)Her superannuation entitlements; and
d)All items of personal property in her possession.
She proposes that the respondent husband retain the equivalent items in his name or possession with the exception of superannuation. In addition, she seeks orders that the husband indemnify her with respect to any liabilities in his name at the date of the orders. She proposes that she indemnify the husband with respect to any liabilities in her name at the date of the orders. To the extent that either party has liabilities in their own name which have not been identified in the course of proceedings and dealt with in final orders, the wife proposes that each party shall indemnify the other. The wife proposes that each party should bear their own costs of the proceedings. The wife does not seek a superannuation splitting order.
At the commencement of the trial the wife indicated the ambit of the factual matters in dispute as being:
a)The period of the parties de facto relationship;
b)The respective financial contributions of the parties and in particular the application of the wife’s income and inheritance for the joint benefit of the parties;
c)The respective non-financial contributions of the parties including the extent of any improvements undertaken by the wife to the former matrimonial home; and
d)What, if any, adjustments should be made pursuant to s 90SF(3).
Orders sought by respondent husband
In his Response to the wife’s Initiating Application, the husband sought a final order that he be required to pay the wife an amount of $80,000 within 42 days of such order being made. He also sought that his costs be paid by the wife. His Response sought no other orders at that time. His trial affidavit[1] did not further identify the specific orders sought by him. The husband’s case outline identified his contentions at trial to the effect that the wife’s application was frivolous or vexatious or both. In his closing submissions, the husband sought to depict the wife as disingenuous, sponging, and wasteful, and her application almost craven in its presumptuousness. The husband asserted that there was no basis on which the wife should be paid an amount in addition to the $100,000 paid to her by way of interim property settlement in December 2017. He sought an order that the Court dismiss the wife’s application, make orders that the balance of the proceeds of sale of The B Property be released to him, and that he be awarded his costs. In the event the Court did not accept that submission, the husband proposed that the parties should be regarded by the Court as being equal with respect to s 90SF(3) factors and make no other order, except with respect to the release of the monies from the sale to him.
The course of proceedings
[1] Trial Affidavit, Mr Aldrin, sworn 1 May 2018.
This matter was listed for trial and proceeded to trial on 24 May 2018. It was listed for one day. Even before the advent of a development, to which I shall refer in a moment, this matter was clearly not a one day trial. I was assured by counsel at the outset that the matter could proceed and would be finalised within that timeframe.
Just prior to the applicant commencing her evidence, counsel for the husband disclosed that he was seriously ill with prostate cancer. That matter had not been referred to in his trial affidavit. It was a relatively recent diagnosis, but it had been made prior to the affidavit being sworn.In the course of his evidence, the husband gave evidence as to his understanding of the implications of that diagnosis as best he could but it was apparent that his prognosis had not yet been fully determined. The illness had the potential to impact on his life expectancy and for that reason had relevance to s 90SF factors. No medical report had been obtained at that stage and no timeframe could be given within which an accurate prognosis would be known. It was obvious that the husband’s case would not be able to be completed on that day. Had that matter been known to me prior to the matter commencing, the matter would very likely have been adjourned rather than proceeding on a part-heard basis because of the obvious implications that matter had for the husband’s case, and the inherent uncertainties which would attend on an assessment of what was just and equitable for the purpose of these proceedings, without reliable evidence on the topic. I accept that in his evidence he told the Court everything he knew about the present state of his condition to the best of his ability. The matter proceeded before me for one day and was adjourned part-heard.
On 18 July 2018, the matter proceeded before me by way of a directions hearing conducted in Adelaide with the solicitors for the parties appearing by telephone. On that occasion, the husband had only recently obtained a medical report from his oncologist. The wife had not yet had an opportunity to consider the report and provide instructions to her counsel. The wife was not in a position to indicate whether the oncologist or any treating doctor would be required for the purpose of cross-examination. Additionally, the husband had recently provided further banking materials to the wife by way of disclosure. They were materials which should have been, but were not, annexed to his trial affidavit. I did not determine on that day whether the husband would be given leave to tender that material. Depending on its’ content, it had potentially obvious implications for the conduct of the trial, including the possibility that the wife might seek to re-open her case. I listed the part-heard trial for hearing on 25 January 2019 in Adelaide via videolink, setting aside half a day. The matter was adjourned for a further directions hearing on 3 September 2018 with an order requiring the husband to file an affidavit within 10 days annexing the medical reports which had been obtained by him.
On 3 September 2018, the solicitor for the wife and counsel for the husband again appeared by telephone. The husband had not by that stage been able to comply with the order for filing an affidavit annexing the reports obtained from his oncologist. The solicitor for the wife advised the Court that no final forensic decision had yet been made as to whether or not the husband’s oncologist was required for the purpose of cross-examination. I was advised that, on balance, the doctor was most likely to be required for cross-examination. At a subsequent directions hearing, the wife confirmed that neither the senior or junior oncologist would be required for cross-examination.
The matter continued by way of final submissions on 25 January 2019 via videolink in Adelaide, and I reserved judgment.
Background
The applicant wife was approximately 60 years old at the time of trial. She has qualifications as a health care worker and at one time ran her own small business called “D” which sold clothing.
The respondent husband was approximately 68 years of age. He has worked in the technology industry in various capacities and at the time of cohabitation held a 50% share in a business called E Pty Ltd. He was earning approximately $100k per annum at the time of cohabitation. The parties met on an internet dating site in 2011. They met for the first time in person about a month later. In mid 2012, the husband resolved a property settlement with his former partner. There is a dispute as to when the parties commenced living together. On the wife’s case, this occurred in October 2012 with all of her possessions being delivered to The B Property a month later in November. The husband asserts that the parties began living together at the end of November 2012. Nothing much turns on that question. The wife asserts that the parties travelled to Country F together for a week in late 2012. The husband accepts that the wife paid all of the expenses for that trip.
At the commencement of the relationship, the wife had few, if any, liabilities and a significant lump sum available to her from an inheritance. The husband had significant assets and substantial liabilities. A feature of the first two years of the relationship was the significant advances of money from the wife to the husband, she says in order to help him resolve his financial problems. In general terms there is no dispute that the wife did so.
Another feature of the relationship was that the parties travelled overseas together on a number of occasions and the wife on her own on some occasions. It is to be noted that the wife had a son living in Country G.
Monies advanced by the wife to the husband and financial difficulties
The wife advanced a sum of $10,000 to the husband on 14 December 2012, and a further $10,000 4 days later. Five days later she advanced an amount of $9,000 to the husband and a further $9,000 on Christmas Eve that year. On the wife’s case, she undertook a significant amount of work re-decorating the interior of The B Property and further work to the outbuildings, garden, and the grounds.
On 21 March 2013, a document was executed by the husband acknowledging that he had a debt to the wife of $250,000. The implications of and circumstances surrounding the signing of that document are a matter of dispute. It was obviously signed at a very early stage in their relationship.
Between 24 March 2013 and 31 March 2013, the wife advanced a further $10,000 to the husband. The exact date is disputed.
The parties travelled to Country H in mid 2013. On their return, the wife advanced an amount of $2,000 to the husband, she says on 28 April 2013, but the husband asserts that it was on 30 April 2013. The wife travelled to Country G between mid 2013 and late 2013. On 29 July 2013, the wife says that she advanced $1,000 to the husband. She advanced a further $5,000 to him on 18 September 2013. In October 2013, the husband executed a will bequeathing The B Property to the wife unencumbered in addition to a 20% shareholding in any proprietary company in which he held shares at the time of his demise. The wife advanced a further $5,000 to the husband on the 29 October 2013. The husband asserts that those monies were advanced on the following day. On 5 November 2013, the wife advanced a further $1,000 to the husband. Once again, he says that it occurred on the following day. On 20 December 2013, the wife advanced a further sum of $5,000 to the husband.
In early 2014, the husband suffered a heart attack whilst in the home. He was unable to work for a period of about 18 months.[2] Approximately one week later, the husband registered a new business, ‘J Pty Ltd’. On the wife’s case, he advised her that he had spent approximately $80,000 establishing the company. The company never operated. Throughout the course of 2014, the wife continued to advance money to the husband. Over twelve separate further occasions she gave him a total amount of $39,630.10. The wife accepts that he repaid a total amount of $24,000 over four occasions between June and December 2014.
[2] Transcript 93, lines 32-33 and 94, lines 19-46.
On the wife’s case, the parties were experiencing financial difficulties at this time. She says that in early 2015 she contacted Credit Counsellors Australia for information and advice that might assist them to reduce debt and improve their financial circumstances. She says that after discussions with the husband he entered into hardship arrangements with AMEX, CBA and NAB. The husband asserts that the parties separated under the same roof in about March 2015. At some time in 2015, the husband established a business called “K”.
The wife travelled to Country L for a fortnight in early 2015. On her case, the parties intended for the husband to join her there but he was prevented from doing so by cyclonic weather conditions. On her return from Country L, the wife withdrew her superannuation entitlements in the amount of approximately $35,500. She says that she applied approximately $8,500 to the parties’ joint expenses. The remainder was gifted to her son.
In mid 2015, the wife travelled to Country H. From late May until mid-June the husband and wife travelled to Country G for a period of about one month. Whilst there, the wife advanced an amount of $1,000 to the husband. On their return from Country G, the wife commenced work with Employer M as a health care worker.
Between July 2015 and September 2016, the wife asserts that she advanced a further $2,500 to the husband. He asserted that he repaid her a further sum of $1,000 sometime in July 2016.
Sale of E Pty Ltd and N Street, Suburb O apartment
On the wife’s case, the husband sold his interest in a business, E Pty Ltd, for $130,000 at some time in February 2013. On the husband’s case, he sold his interest in E Pty Ltd for $130,000 on 23 December 2013. On his case, money from that sale was used to extinguish credit card debts and to reduce the mortgage over The B Property.
On 22 April 2016, the husband sold a property situated at N Street, Suburb O, Australian Capital Territory, for $560,000.
Separation
On the wife’s case, the parties separated under the same roof in June 2016. These proceedings were commenced by the wife on 14 November 2016. She moved out of The B Property in December 2016 travelling to Country G for several weeks and returning to Australia in early 2017. The wife commenced casual employment as a health care worker at Employer P in 2017. The husband says the parties separated under one roof in about March 2015.
As I have noted earlier, The B Property was sold by order of the Court with settlement occurring on 10 July 2017. The sale price was $1.9m. After the repayment of the CBA mortgage; a personal loan taken out to pay out his former partner; sales costs; commission; council rates; and adjustments were deducted, the proceeds of the sale was $1,067,554.28. That represents about 55% of the sale price. The mortgage to the CBA was $805,230.33.[3] Whatever the efforts of the husband to make payments towards it during the relationship, the mortgage increased after 2012.
[3] Trial affidavit, Ms Celona, Exhibit ‘1’, tab 48, 250.
The company, “D”, ceased trading in early 2018. As will be seen, the business barely traded during the course of the relationship and produced very little financial benefit to the wife during that time.
The re-zoning of The B Property
The wife relied on the expert report and valuation by Mr Q, which had been obtained at the joint request of the parties.
Mr Q’s opinion was that the value of The B Property at various times was as follows:
a)mid 2011 - $860,000; and
b)late 2012 - $920,000
His evidence was that between late 2012 and April 2017 the significant increase in the value of the property can be attributed to a change in the Local Area Plan for the area in which The B Property is situated. This reduced the area needed for the construction of a dwelling from 80 hectares to 40 hectares. This allowed The B Property to be subdivided in two subject to council approval. The change to the Local Area Plan was announced in July 2014. Further, in his view, the increase in demand for residential property in Canberra has caused a corresponding increase in demand for rural properties such as The B Property. He regarded the landscaping as a necessary maintenance item, in this case not a matter for which he could place an assessable contribution towards sale value. He regarded the renovation/completion of the property as being similarly maintenance which had no identifiable impact on the sale price. I note that he expressed no view as the rate at which the property increased in value between late 2012 and April 2017.
Rulings on evidence
Both parties sought to exclude numerous matters referred to in the other’s trial affidavits and filed a schedule of the disputed evidence. For expediency, the matter having been listed for one day only, it was agreed that I should hear the evidence and make rulings in the course of these reasons. The majority of the objections raised by both parties related to hearsay, relevance and opinion. In addition, the husband sought to exclude various passages in the wife’s trial affidavit on the basis that they were more prejudicial than probative.
I will deal with these matters briefly, by reference to the paragraph numbers in the respective trial affidavits, but I will not set out in full the passages complained of.
Applicant wife’s objections to evidence in respondent husband’s trial affidavit
I decline to exclude paragraph 7. The evidence can be admitted simply on the basis of the respondent’s understanding of the chronology.
I decline to exclude the portions of paragraph 11 in which the respondent estimates the value of certain assets prior to the commencement of the de facto relationship. They are admitted only for the purpose of establishing his estimates. In the absence of expert valuations and to the extent that any of those values were disputed on cross-examination, his evidence in that regard is a matter of limited weight.
As to paragraph 13, I exclude the evidence of the valuation of the respondent’s 50% interest in E Pty Ltd.[4] The report annexed to the trial affidavit indicates in the first paragraph, that the report was prepared only for the purposes of negotiations and states: “it is not to be used as an expert report for court matters.” It does not indicate anywhere that the author of the report was aware of and agreed to comply with the rules of this Court or the Family Court as to the preparation of expert reports. It was not introduced under cover of an affidavit from the expert and its contents cannot be regarded as being sworn. That alone would be a sufficient basis for excluding it. In its current form, and given the limited weight, if any, which could be given to it, also offends s 135(a) of the Evidence Act 1995 (Cth) (‘the Evidence Act’) in that its probative value is clearly outweighed by the danger that it would be unfairly prejudicial to the applicant, the valuer not being available for cross-examination.
[4] Trial Affidavit, Mr Aldrin, Annexure B.
I exclude paragraph 24 on the basis that it is purely speculative, has little probative value, and to that extent offends s 135(a) of the Evidence Act.
I exclude paragraph 30 on the basis that it is a matter for submissions.
I decline to exclude paragraph 32 because it establishes the respondent’s belief as to the value of his unit in Canberra. There is of course no expert evidence on that matter and to the extent that the figure is disputed, the issue will come down to a question of weight. In any event, the apartment was sold during the course of the relationship and its value became self-evident.
I decline to exclude the evidence at paragraphs 39 and 40 as it relates to matters within the direct knowledge of the respondent, it explains his reasons for selling his interest in a business which forms part of the property pool, and has relevance to his contributions.
I decline to exclude the disputed evidence in paragraph 48 as this was a matter within the respondent’s direct knowledge. Whether there was an agreement between the applicant’s son about providing start-up funding for a business venture was a matter of fact, as was the withdrawal of the applicant’s son from any such agreement. In any event, no particular significance was attached to that evidence by either party at trial.
I decline to exclude the passages referred to in paragraph 66. Whilst those matters are not expressed with great accuracy, they are not so vague and imprecise as to offend against subs 135(a), (b) or (c) of the Evidence Act. For the same reason I decline to exclude the passage complained of in paragraph 84.
I decline to exclude the evidence in paragraphs 86 and 87 which the applicant asserts are irrelevant. Those matters are relevant to the asserted circumstances of separation, the applicant’s state of mind at about that time, and potentially the respondent’s evidence as to the timing of separation. For the same reason, I decline to exclude the passage complained of in paragraphs 89 and 95. The respondent’s state of mind from time to time is capable of having bearing, if accepted, on the weight to be given to his evidence as to the timing of separation.
Objection is taken to paragraphs 111 to 117 which deal with the sale of The B Property. Whilst of limited probative value, these paragraphs support the respondent’s contention that the property was marketed properly. This was not the subject of dispute – what is disputed is that she was excluded from the sale process – but in any event the evidence does not prejudice the applicant. I decline to exclude these paragraphs.
I exclude the words “reasonable and” in paragraph 122 of the respondent’s trial affidavit.
I decline to exclude paragraph 123 as it has relevance to the respondent’s circumstances after the sale of The B Property, and if accepted, may be some evidence supporting the proposition that his financial circumstances were in poor shape at that time.
I decline to exclude the evidence in paragraph 136 as to the value of the W Street, Suburb X, WA property. There is no expert valuation of that property. The evidence is admitted as the applicant’s belief as to the approximate value. To the extent that that matter is seriously challenged in cross-examination it would become a matter of the weight, if any, which can be given to that estimate.
Respondent husband’s objections to evidence in applicant wife’s trial affidavit
I decline to exclude the evidence in paragraph 8 of the applicant’s trial affidavit and the emails under ‘tab one’ referred to as part of Exhibit ‘1’ to that affidavit. The evidence consists of a printout of an email sent by the applicant to her children telling them that she had met the respondent, and which she forwarded to the respondent; the respondent’s emailed reply to the applicant commenting on the contents of the email sent to the children; and the applicant’s response to the respondent’s reply. In my view, the emails are relevant and admissible pursuant to ss 55 and 56 of the Evidence Act. If accepted, the evidence of the email exchange could either directly or indirectly rationally affect the assessment of the probability of the existence of a fact in issue, namely when the de facto relationship commenced. The emails do not become more prejudicial than probative simply because they may tend to support the applicant’s case rather than the respondent’s case. To the extent that the complaint is made that the document is incomplete, that is a matter for cross-examination and submissions.
The first nine words of paragraph 10 were objected to on the basis that the statement that the applicant and the respondent separated in around June 2016 is opinion evidence. I reject that submission. Whether the parties were legally separated or still cohabiting at a particular time is a mixed question of law and fact. The applicant’s state of mind as to the basis of their relationship at a particular point in time is, if accepted, relevant to the question of whether she and the respondent were in a committed relationship to the exclusion of others.
The respondent objects to paragraph 21 in which the applicant states that she contributed amounts of just over $6,000 towards the parties’ joint living expenses between late 2011 (prior to the commencement of cohabitation) and October 2012 and identifies some specific items and categories in which those expenses were incurred. The respondent complains that this is opinion evidence. They are statements of fact. Whether they are disputed by the respondent is another matter but the fact that they might be disputed does not make them prima facie an opinion. I decline to exclude paragraph 21.
The respondent’s schedule of objections indicated that the admissibility of paragraphs 23 to 30 inclusive was disputed but does not identify a basis on which objection was taken. The disputed evidence is a table of assets and liabilities asserted by the applicant at the time of cohabitation and a list of supporting bank documents under separate tabs in Annexure 1. I am satisfied that they are relevant and admissible.
The respondent objects to the statement in paragraph 40 of the applicant’s trial affidavit that she received a payment of $250,000 from her mother’s estate. This statement is objected to on the basis that it is hearsay. The evidence was not seriously disputed at trial. I decline to exclude it.
The respondent further objects to evidence in paragraph 41 to the effect that $200,190 was deposited into her Westpac Choice Account on 23 October 2012, and to the supporting bank documents under tab 15 of 1, the basis of the objection that the evidence is more prejudicial than probative. I reject that submission. It is evidence which if accepted supports the applicant’s claim to having received a significant inheritance from her mother’s estate which in turn is a question directly relevant to the state of her finances at the commencement of her cohabitation with the respondent. It is clearly relevant. No prejudice was identified by the respondent. I decline to exclude paragraph 41 and tab 15.
Paragraph 43 is objected to on the basis that it amounts to opinion, hearsay and/or it is more prejudicial than probative. The statement made by the applicant is that she and her brother Mr R received a sum of money as joint trustees of her mother’s estate from which she received a certain amount. That is a statement of fact within her knowledge. On the same topic, the respondent objects to paragraph 44 and tab 16 which relate to a letter received from the solicitors acting for her mother’s estate confirming payment of the proceeds of the estate into a bank account held by herself and Mr R as joint trustees. It was said that this letter is irrelevant. It is highly relevant because it corroborates the evidence of the wife as to having come into a significant inheritance at about the time she says she commenced a relationship with the respondent, which is a matter that has direct relevance to her capacity to have made financial contributions during the course of the relationship. The document is a business record under s 69 of the Evidence Act, containing a previous representation made or recorded in the document in the course of or for the purposes of the business of the solicitor acting for the estate of the applicant’s mother. It appears to have been made by a person who might reasonably be supposed to have had personal knowledge of the facts asserted in the document.
I reject the submission of the respondent that paragraph 45, in which the applicant states that she applied $21,000 from her share of her mother’s estate towards the purchase of a car, and that she used the balance towards joint living expenses for her and the respondent, should be excluded on the basis that it is more prejudicial than probative. I acknowledge that I have a discretion pursuant to s 135 of the Evidence Act to refuse to admit evidence inter alia where its probative value is substantially outweighed by the danger that it might be unfairly prejudicial to a party or be misleading or confusing. That could not be said in relation to this evidence. As I have noted above, the fact that evidence might be disputed does not render it inadmissible by reason of unfair prejudice to the other party. It is difficult to identify the prejudice alleged with respect to this evidence. The fact that it might have significant probative value, if accepted, does not elevate it to the status of being unfairly prejudicial, misleading or confusing.
The statement by the applicant in paragraph 47 that she continued to work throughout the relationship notwithstanding the fact that she had a significant illness is not, as asserted by the respondent, more prejudicial than probative. It is relevant to her circumstances and may, if accepted, support her evidence as to her financial contributions and given the asserted illness, her degree of commitment to the relationship generally at that time. I do not accept that the impugned passage comes within any of the categories identified in s 135 of the Evidence Act. The same observation can be made with respect to the complaint about paragraph 50 which I also decline to exclude.
Paragraph 72 is objected to on the basis that it is hearsay. It consists of the assertion by the applicant that she ceased to operate her company, “D”, in February 2018 on the advice of her accountant. That is a statement of fact and not hearsay. The accountant gave her advice, which is an asserted fact. She says that she acted on that advice, which is also an asserted fact. What she did in order to act on that advice was to cease operating her company, is once again, a fact asserted by the applicant. Nothing in the paragraph purports to report on or summarise the content of the advice itself. I decline to exclude paragraph 72.
Paragraph 100 was objected to on the basis that it is not the best evidence, it amounts to opinion, and in any event it is more prejudicial than probative. That paragraph simply says that between 1 December 2012 and 30 December 2016 the applicant paid almost $24,000 towards the respondent’s medical costs and associated health expenses. That is information which is within her own knowledge. It is not opinion evidence. The funds were either expended in the manner asserted by the applicant or they were not. A lack of corroborative evidence with respect to that assertion may be properly a matter for cross-examination and a comment as to weight. I am not satisfied that it is more prejudicial than probative.
Objection was taken to information the wife had compiled with respect to her finances and which she reduced to a series of tables, referred to as ‘Reckon Tables’, and produced with an accounting software programme. The tables were not the best evidence. Her bank documents were produced. Section 172 of the Evidence Act permits a person to give evidence based on knowledge and belief or on information they have, subject to setting out the source of the knowledge, information or basis of belief. The Reckon Tables are admissible on that basis. Further, the objection was effectively abandoned by the respondent as he invited me in his written closing submissions to rely on information in one of the Reckon Tables for the truth of the matter asserted.[5] He also invited me to make adverse findings against the wife on the basis of that information. I decline to exclude this evidence. I decline to exclude the Reckon Tables.
[5] Respondent’s written outline of submissions, 5(e)(iv).
The respondent objects to paragraphs 117 to 127 of the applicant’s affidavit on the basis of relevance. It details the wife’s complaint that she was excluded from the sale process for The B Property. The wife does not assert that the property was sold at less than market value. The majority of that evidence is simply narrative from the wife’s perspective of her version of the sale of The B Property. It is not relevant to the dispute at trial. I exclude these paragraphs. There is one exception to that observation. At paragraph 129, the wife annexes copies of the correspondence from the husband’s solicitor annexing schedules of the disbursements of moneys after settlement. That information is clearly relevant and admissible.
Paragraph 151 is challenged on the basis that it is more prejudicial than probative. It annexes copies of S Bank statements under tab 52 and is part of a chain of bank documents which purport to illustrate what the wife did with her superannuation funds once she had withdrawn them. The bank documents are business records. I am not satisfied the evidence is more prejudicial than probative.
In paragraph 186 of her trial affidavit, the applicant says that she travelled with the respondent and other persons to Country G. She states that the respondent paid his own airfares but that she met the cost of travel insurance, accommodation, and other expenses. The respondent seeks to have the reference to his name excluded from this paragraph on the basis that it is opinion evidence, hearsay evidence, and in any event, more prejudicial than probative. It is none of those things. It is not hearsay because the applicant says that she travelled with the husband and she has direct knowledge of that fact. It is not opinion, because the travel either did or did not occur in the circumstances she has described. If the complaint about it being opinion relates to a dispute about whether they could be properly said to have been travelling ‘together’ at that point in time, because of the husband’s assertion that they had separated under the same roof a couple of months earlier, it was not clearly articulated as such. If the husband’s position is that he simply did not travel to Country G with the wife at that time, which is simply a matter of competing evidence, but it would not render otherwise admissible evidence inadmissible on any of the bases complained of.
I exclude the words ‘and June 2016’ from paragraph 203.8 because they do not appear to reflect the timeframe within which the emails under tab 65 were apparently sent.
Legislative framework
Both parties accept that they were in a de facto relationship for a period of time. It will be necessary for me to make a declaration as to the duration of the relationship in this matter. As there is a dispute as to when the relationship ceased, the matters relevant to the existence of a de facto relationship are also relevant.
Section 4AA of the Family Law Act 1975 (Cth) (‘the Act’) defines a de facto relationship as follows:
“Meaning of de facto relationship
(1)A person is in a de facto relationship with another person if:
(a)the persons are not legally married to each other; and
(b)the persons are not related by family (see subsection (6)); and
(c)having regard to all the circumstances of their relationship, they have a relationship as a couple living together on a genuine domestic basis.
Paragraph (c) has effect subject to subsection (5).
Working out if persons have a relationship as a couple
(2)Those circumstances may include any or all of the following:
(a)the duration of the relationship;
(b)the nature and extent of their common residence;
(c)whether a sexual relationship exists;
(d)the degree of financial dependence or interdependence, and any arrangements for financial support, between them;
(e)the ownership, use and acquisition of their property;
(f)the degree of mutual commitment to a shared life;
(g)whether the relationship is or was registered under a prescribed law of a State or Territory as a prescribed kind of relationship;
(h)the care and support of children;
(i)the reputation and public aspects of the relationship.
(3)No particular finding in relation to any circumstance is to be regarded as necessary in deciding whether the persons have a de facto relationship.
(4)A court determining whether a de facto relationship exists is entitled to have regard to such matters, and to attach such weight to any matter, as may seem appropriate to the court in the circumstances of the case.
(5)For the purposes of this Act:
(a)a de facto relationship can exist between 2 persons of different sexes and between 2 persons of the same sex; and
(b)a de facto relationship can exist even if one of the persons is legally married to someone else or in another de facto relationship.”
The Act provides for a declaration to be made as to the existence or otherwise of a de facto relationship. In this regard, s 90RD(1) says:
“(1)If:
(a)an application is made for an order under section 90SE, 90SG or 90SM, or a declaration under section 90SL; and
(b)a claim is made, in support of the application, that a de facto relationship existed between the applicant and another person;
the court may, for the purposes of those proceedings (the primary proceedings), declare that a de facto relationship existed, or never existed, between those 2 persons.”
No single circumstance under s 4AA(2) of the Act is essential before a declaration can be made. The approach to determining if a de facto relationship exists was described by Murphy J in Jonah & White[6] as follows:
“60.In my opinion, the key to that definition is the manifestation of a relationship where “the parties have so merged their lives that they were, for all practical purposes, ‘living together’ as a couple on a genuine domestic basis”. It is the manifestation of “coupledom”, which involves the merger of two lives as just described, that is the core of a de facto relationship as defined and to which each of the statutory factors (and others that might apply to a particular relationship) are directed.”
[6] Jonah & White [2011] FamCA 221 at [60].
His Honour went on to summarise that it was the “nature of the union” between the parties that lies at the heart of the non-exhaustive statutory consideration[7] rather than simple questions such as how much time the parties spent with each other.
[7] Ibid at [60].
In order to make a declaration as to the existence of a de facto relationship, there is a geographical requirement to be met. Section 90RG states as follows:
“A court may make a section 90RD declaration only if the court is satisfied that a person referred to in paragraph 90RD(1)(b), or both of those persons, were ordinarily resident in a participating jurisdiction when the primary proceedings commenced.”
The geographical requirement is met in this matter.
With respect to the duration of a relationship before it can be regarded as de facto for the purposes of orders affecting the division of property s 90SB provides as follows:
“A court may make an order under section 90SE, 90SG or 90SM, or a declaration under section 90SL, in relation to a de facto relationship only if the court is satisfied:
(a)that the period, or the total of the periods, of the de facto relationship is at least 2 years; or
(b)that there is a child of the de facto relationship; or
(c)that:
(i)the party to the de facto relationship who applies for the order or declaration made substantial contributions of a kind mentioned in paragraph 90SM(4)(a), (b) or (c); and
(ii)a failure to make the order or declaration would result in serious injustice to the applicant; or
(d)that the relationship is or was registered under a prescribed law of a State or Territory.”
Section 90SM confers power to make orders altering the property interests of parties to a de facto relationship.
In this matter, I have taken the approach identified in Hickey & Hickey[8] and accordingly, there are four interrelated steps that I am required to take in determining the appropriate orders for the division of the matrimonial assets. The first is to identify and value the property, liabilities, and the financial resources of the parties as at the trial date. The second step requires me to identify and assess the contributions made by the parties pursuant to subs 90SM(4)(a)-(c) of the Family Law Act and then make an assessment of the entitlement of the parties based on their contribution and expressed in terms of a percentage of the net value for the property. Thirdly, I must identify and assess the relevant matters referred to in subs 90SM(4)(d), (e), (f) and (g), which includes those matters referred to at s 90SF(3) of the Act, so far as they are relevant and consider whether any adjustments should be made to the contribution based entitlement of the parties. Finally, I must stand back and consider the implications of the findings and the determination I have made and satisfy myself as to the orders being just and equitable in all of the circumstances of this case.
[8] (2003) FLC 93-143.
Materials relied on
The applicant relies on her Trial Affidavit including annexures, Initiating Application, Financial Statement and Exhibits as tendered at trial, in particular the Affidavit of Mr Q[9] to which was annexed to his valuation of The B Property as at November 2012 and his explanation as to re-zoning. That evidence was not the subject of cross-examination. The respondent relied on his Trial Affidavit, Financial Statement, the Affidavit and Expert Report of Dr T, and Exhibits as tendered at trial.
[9] Exhibit A1.
The Pool
The parties relied on a joint balance sheet. On the morning of trial the items of the pool were refined and simplified. By the end of the trial the contentions of the parties as to the pool were as follows with the exception of a matter to which I will later refer:
ASSETS
Wife’s Value
Husband’s Value
Jewellery of (W)
NIL
$5,000
Motor Vehicle 1 (H)
$6,700
Motor Vehicle 2 (W)
$4,000
$4,000
Proceeds from The B Property
$375,389
$375,389
Partial property settlement husband
$600,000
$600,000
Partial property settlement wife
$100,000
$100,000
Combined total of wife’s bank accounts
NIL
$36,517
Gross non-super Assets on Wife’s figures
$1,079,389
Gross non-super Assets on Husband’s figures
$1,127,606
Agreed Liabilities
Husband’s NAB Visa credit card
$4,665
Husband’s AMEX credit card
$18,500
Husband’s deb to Mr U
$16,047
TOTAL
$39,212.
Therefore the net assets are on the wife’s figures $1,040,177 and on the husband’s figures $1,088,394.
Between them the parties have the following financial resources.
Superannuation
Wife’s Super Fund V
$54,577
Other financial resources
Wife’s value
Husband’s value
Husband’s property at W Street, Suburb X, WA
$650,000
$540,000
As can be seen, the dispute on the pool is very narrow. As to the jewellery of the wife, she seeks to have that excluded. There is no valuation of it. There was no evidence during trial that she made extravagant purchases of jewellery for herself when it was purchased or that it was purchased from joint funds. I exclude her jewellery from the pool.
The main item that was not agreed as to the pool was the current balances in the wife’s bank account. As to the bank balances of the various accounts in the name of the wife, she contends that they should not be included in the pool because they are in effect included in the amounts paid by way of partial property settlement orders on 6 December 2017. The husband contends that the balances in the wife’s savings accounts should be included in the pool. I accept the submission of the wife in that regard and exclude the monies in her bank accounts. To do otherwise would involve double counting.
I accept the husband’s estimate of the value of his Motor Vehicle 1.
There was reference in the evidence to a significant financial resource of the husband, namely the property at W Street, Suburb X, Western Australia. Neither party sought to have it included in the property pool as an asset. It is properly regarded as a financial resource on the part of the husband. The applicant made no contribution to the property and there is, as the respondent contends, no certainty as to when it will convert from a financial resource to an asset to his benefit. I have not included it as an asset for that reason. It is nonetheless a financial resource of which he will have the benefit in the future.
Accordingly I find the pool to be as follows:
ASSETS
Motor Vehicle 1
$6,700
Motor Vehicle 2
$4,000
Remaining proceeds from The B Property
$375,389
Combined partial property settlement
$700,000
TOTAL ASSETS
$1,086,089
LIABILITIES
Husband’s NAB Visa credit card
$4,665
Husband’s AMEX credit card
$18,500
Husband’s deb to Mr U
$16,047
TOTAL
$39,212
NET ASSET
$1,046,877
Superannuation
Wife’s Super Fund V
$54,577
Other financial resources
Husband’s property at W Street, Suburb X, WA
$540,000
The date of separation and length of the relationship
Before considering the question of contributions it is appropriate to make a finding with respect to the length of the relationship and the date of separation. It is clear on the evidence that the parties commenced a de facto relationship on cohabitation and that cohabitation occurred in late 2012. I accept the evidence of the wife that the parties commenced living together in October of that year, but that her personal belongings arrived only in November.[10] I reject the evidence of the husband that separation occurred under the same roof in March 2015. He had at that stage still not returned to work after his heart attack. There is no evidence that he asked the wife to pay rent after March 2015. I accept that the wife continued to provide financial support to the husband after that time.[11] It will be recalled that the husband made a will in October 2013 leaving The B Property to the wife. He did not rescind that will until the making of a later will on 29 September 2016, 18 months after the month in which he claimed the parties had separated.[12] I do not accept his evidence that the delay in changing his will was simply a reflection of the fact that the matter was not high on his list of priorities. The B Property was his main asset. His earlier will was drafted with the express purpose of providing the wife with financial security in the event that he died. There was no need to do so after the relationship ended. The timing of him making his subsequent will was far more consistent with the relatively recent separation as claimed by the wife, namely June 2016. I accept the evidence of the wife that the relationship was ongoing after March 2015. The fact that the relationship may have gone through a period of disharmony leading up to the separation and the wife sleeping in a separate room due to the respondent’s snoring, did not alter the essential nature of the relationship they shared; a joint life together, centred around each other and their aspirations for The B Property in the lead up to an eventual retirement. I do not accept the evidence of the respondent that this commitment had ended prior to the applicant moving out. I find that the de facto relationship was extant until separation on the wife moving out of the property in June 2016. The relationship lasted approximately 3 years and 8 months.
[10] Trial Affidavit, [9].
[11] Ibid [85].
[12] Transcript, 127-128.
Contributions
The parties are in disagreement as to their respective initial contributions.
The respondent has submitted that given the short length of the relationship, that a close scrutiny should be made of the relative financial contributions at the outset and during the course of the relationship, essentially on an asset by asset basis. That should include a close scrutiny of individual expenditures from time to time, such as on wine and Kindle books purchased by the wife. I accept that financial contributions at the outset and during the relevant time are important and must be considered. I am not, however, satisfied that a strict asset by asset approach would adequately reflect the myriad of contributions of all kinds including non-financial contributions in the circumstances of this relationship.
On the wife’s case, she brought approximately $300,000 in assets to the relationship at or about the time of cohabitation. She asserts that when the husband’s mortgage on The B Property and other liabilities are taken into account, he had approximately $350,000. As I have already noted, the respondent’s case is that the wife brought minimal assets to the relationship and that during the course of the relationship was hopeless with money. A theme that was emphasised in cross-examination of the wife was that she was looking to be supported by the respondent in the pursuit of a lifestyle of travel and comfort. The wife’s evidence was that the parties were in a genuine loving relationship and that they were committed to spending a joint future together. She says the assets she brought to the relationship were substantially dissipated towards that end. The effect of the wife’s evidence was that her initial financial contribution and her support of the husband throughout the relationship helped dig her husband out of a financial hole at a crucial time.
At the start of the relationship the wife says that she had savings and superannuation in the amount of $53,341.56.[13] She deposes, and I accept, that she had no significant liabilities at the time of cohabitation. She says that at about the time cohabitation commenced she received an inheritance from the estate of her mother in a total amount of approximately $250,000 in two payments.[14] That brings her total savings and financial resources at the outset of cohabitation to approximately $303,000. I accept her evidence in that regard. When she received the inheritance she used $21,000 to purchase a car and says that the balance of the inheritance was applied to joint living and recreational expenses with the respondent. It was not disputed that the wife’s “D” business had no significant value.
[13] Trial Affidavit, affirmed 18 April 2018 [23].
[14] Ibid [41]-[42].
On the applicant’s case, the respondent’s financial contributions at the outset of the relationship were as follows:
ASSETS
The B Property
$920,000
N Street, Suburb O apartment
$550,000
Superannuation
$254,000
Interest in E Pty Ltd
nil/negligible
Machinery
$75,565
Ute
$23,000
TOTAL
$1,822,565
She says that the respondent had the following liabilities:
LIABILITIES
Credit card debts
$88,000
Debt to lawyers
$38,000
Mortgage secured against The B Property
$736,000
Mortgage secured against the N Street, Suburb O apartment
$393,000
TOTAL
$1,255,000
NET ASSETS
$567,565
On that basis, the wife asserts that the initial contributions favoured the respondent 65% to her 35%. Of course, the interest in E Pty Ltd cannot have been nil at the time of cohabitation, because it was later sold by the husband for $130,000.
As I have noted, the value of The B Property at the commencement of cohabitation was established by expert report. The wife also points to the judgment of Brewster FM in this Court relating to the respondent’s property proceedings with his former partner. That judgment was delivered approximately five months prior to the parties in this matter cohabiting.[15] Findings were made after a trial in April 2012 as to the value of The B Property, the N Street, Suburb O apartment, and other assets and liabilities of the respondent, and the wife relies on those findings and the expert report for the asset values asserted above.
[15] Ibid, Exhibit 1, tab 13.
The wife says that by 1 July 2014 the mortgage over The B Property had risen to $720,000.[16]
[16] Ibid [36].
The husband asserted in his trial affidavit that at the time of cohabitation The B Property was valued at $1.3 million; the N Street, Suburb O unit was worth $675,000; his 50% interest in E Pty Ltd was worth $227,570; the farm equipment for The B Property was valued at $133,567; his Motor Vehicle 1 was valued at $35,000; and he had superannuation in the amount of $254,989 bringing his total assets to $2,670,126.
I have ignored the value and liability with respect to the Motor Vehicle 3, referred to in the husband’s trial affidavit, as it was leased by E Pty Ltd and when finally sold, the proceeds went to that company.
He says that his liabilities at the time of cohabitation were a mortgage over The B Property in the amount of $736,150; a mortgage over the N Street, Suburb O apartment in the amount of $392,000; credit card debts in the amount of $88,000; outstanding legal fees for his family law matter in the amount of $38,000; and a liability for a private loan to the family of his former partner in the amount of $130,000. On his case, he had total liabilities at the time of cohabitation of $1,377,150.
On the figures of the respondent, he had total net assets at the time of cohabitation of $1,292,976.
The B Property was purchased by the respondent husband in 1994 for an amount of $230,000. As can be seen from the figures above, the value of The B Property increased significantly during the course of the relationship. For obvious reasons, the husband’s ownership of that property was a very significant financial contribution made by him at the start of the relationship.
I have some difficulty in accepting the figures deposed to by the respondent husband as to his assets and liabilities at the time the relationship commenced. Indeed, the husband abandoned his asserted value of The B Property in cross-examination. The respondent provided no historical valuations with respect to the N Street, Suburb O apartment; his 50% share in E Pty Ltd;[17] the farm equipment for The B Property; the Motor Vehicle 1; or the existence of his superannuation funds. He made no attempt in his trial affidavit to explain why the valuations to which he deposed were being applied to the various assets listed above. It is difficult to accept that the farm machinery for The B Property would have increased in value to such an extent in the approximately six months between the trial in the proceedings with his former partner and the date of cohabitation with the applicant. No attempt was made to explain this in his trial affidavit or his evidence at trial. Similarly, if the evidence of the respondent is accepted, both The B Property and the N Street, Suburb O apartment showed an unexplained and very significant increase in value during that time. He conceded in cross-examination that The B Property was worth only $920,000 at the time of cohabitation.[18] This was of course the value ascribed to it by Mr Q.
[17] It should be noted that I excluded the purported valuation of E Pty Ltd.
[18] Transcript, 95, line 12.
I accept the evidence of the husband that he had an outstanding debt in the amount of $130,000 to the family of his former partner at the time of cohabitation.[19] That debt appears to have been extinguished. He gave no evidence as to when or how that occurred. I note that on the evidence presented at trial in April 2012, the husband’s superannuation interests comprised a self-managed superannuation fund in the amount of $213,582.
[19] Trial Affidavit, Mr Aldrin [11].
I accept the evidence of the applicant wife as to her initial contributions and the figures she promotes with respect to the initial financial contributions of the respondent husband with the exception that E Pty Ltd clearly had a value. That issue was resolved when the husband realised his interest in the company for $130,000. By virtue of the limited evidence available, a precise calculation of the husband’s financial position at the start of cohabitation is not possible. I am comfortably satisfied on balance that at the outset of the relationship the husband’s assets and liabilities were approximately as follows:
Assets
The B Property
$920,000
N Street, Suburb O Unit
$550,000
Farm Equipment
$75,565
Motor Vehicle 1
$23,000
Liabilities
The B Property
$736,150
N Street, Suburb O apartment
$393,000
Credit card debts
$88,000
Debt to lawyers
$38,000
Debt to family of former spouse
$130,000
On the above figures his net assets at the start of the relationship were $203,415 in addition to the financial resource of his superannuation of $254,989.
The above analysis shows the husband to have had total net assets and superannuation of $458,404 at the time of cohabitation.
When combined, the parties can be seen to have had net assets and superannuation of approximately $761,404. That makes their respective contributions at the outset approximately 40% to the wife and 60% to the husband.
Financial contributions during relationship
I accept, and it is not disputed, that the husband earned a significantly greater amount by way of income during the course of the relationship. This was the case from the outset of cohabitation. The wife’ evidence is that in the financial year ending in June 2013, the husband’s taxable income was $101,792 whereas she earned $30,142 and “D” earned $6,037. In the financial year ending 2014, the husband’s taxable income was $150,255 as against the amount of $35,986 for the wife. In the next financial year the wife says that his taxable income was $50,348 whereas he says that he had no taxable income for that year. In the financial year ending June 2016, the husband had a taxable income of $40,908 and the wife $76,347. For the financial year ending in June 2017 the wife earned $49,534. There was no evidence for the husband’s income for that period. Even allowing for differences in the parties’ estimates of income during the relationship, it can be seen that the husband’s financial contributions through income far exceeded those of the wife.
It was not disputed that the wife advanced significant sums of money to the husband during the course of the relationship. I have referred to those above. Of the approximately $100,000 advanced to the husband her evidence is that he repaid to her an amount of approximately $24,000. I accept her evidence that the respondent did not discuss with her how he applied those funds. I accept that she believed that he was applying the funds towards various payments and debts. It is clear that this was the case. I am satisfied that this occurred in the context of her commitment to their mutual life together. I further accept the evidence of the wife that she paid an amount of approximately $23,000 during the course of the relationship towards medical and health costs incurred by the respondent.
I accept the evidence of the husband that after a business dispute he sold his interest in E Pty Ltd in late 2013 for approximately $130,000.[20] He then sold the Motor Vehicle 3 which had been leased through E Pty Ltd and the proceeds of the sale went to the company. I have explained why I have not included this in the pool or as a contribution. I accept the evidence of the respondent that he received a tax refund in the sum of approximately $31,000 in November 2013. I accept his evidence that he applied the proceeds of the sale and his tax refund towards various debts including credit card debts and an unidentified amount towards the mortgage over The B Property.
[20] Trial Affidavit, Mr Aldrin [39]-[42]
The respondent says that he sold various items of farm equipment and applied the proceeds of a further tax refund to repay the monthly expenses and the parties’ day-to-day living expenses. He acknowledges, and it seems quite clear on the evidence, that he had significant difficulties in repaying past debts that he had brought into the relationship. In particular, his credit card debts were incurring significant interest payments and he would on occasions receive phone calls from financial institutions demanding significant payments or else enforcement proceedings would be commenced. He says that within that context, the applicant advanced money to him in the form of loans. On his evidence, she offered to help him manage and extinguish his outstanding debts. He says that at one point he offered to sell the N Street, Suburb O unit but that the applicant insisted he not do so because it was producing income. The fact that the wife had that degree of involvement in helping him to navigate his financial problems is a contribution made by her. He acknowledges that amounts given to him by the wife were paid into his savings account and became mixed with his own funds and that to that extent funds advanced by her contributed towards their overall monthly liabilities. He insists, however, that the monies advanced by the applicant were specifically to meet his past debts. During that same period, he found it necessary to obtain a loan from his friend, Mr U, which is acknowledged by the applicant.
The husband acknowledges that the wife paid his expenses for a trip to Country F in late 2012 and a trip to Country H in mid 2013. Together the parties engaged the services of a combined gardener and house cleaner. The husband says that he made the majority of the payments for this assistance. It was at the instigation of the wife that they dispensed with that service due to the cost involved. He acknowledges that the wife made contributions towards improving the interior of The B Property.
The significance of the promissory note
An unusual feature of the evidence was the existence of what has been referred to both as a loan document and a promissory note signed by the respondent and witnessed by a public notary on 13 March 2013 less than six months after cohabitation commenced. The document is addressed to the wife and says: “This letter acknowledges the debts that I owe you of $250,000 payable on demand”. The wife was not able to explain in detail the purpose or provenance of that document except to say that it was prepared at the instigation of her son who was concerned she was making a financial commitment with no security. The husband says that the document was the wife’s idea in order to give her financial security in the event that something suddenly happened to him. He acknowledges that at the time he signed the document he was very much in love with the wife and his evidence was that it reflected a general desire on his part to keep her financially secure in the event of his death or incapacity[21]. He says that he signed the document because he had not at that stage had time to alter his will or make changes to his insurance. In October 2013, the husband changed his will to provide that the wife would be left with The B Property in the event of his death. Of course, at the time the promissory note was signed, the wife had not advanced anything like that amount of money to the husband. There was no ‘debt’ to her in that amount. It seems that in the early stage of the relationship this document was simply a quick fix to provide the wife with a safety net until such time as the husband could make appropriate alternative arrangements. Those arrangements were made when the husband altered his will. The document is however a powerful piece of evidence suggesting that the parties were committed to a joint future with mutual financial goals and aspirations. They were both committed to securing and improving The B Property.
[21] Transcript pp 101-102.
Contributions towards The B Property
The respondent submitted that the wife could not establish that she had made any indirect financial contribution to the preservation of The B Property.[22] With respect to the large amount of money advanced to the husband over time, it was submitted that there was no evidence that he would have been unable to secure a loan for $100,000 during the relationship to assist him to meet his liabilities. For example, whilst money from the applicant was used to pay off the husband’s considerable legal debt, there was no evidence that he would not have been able to obtain a loan to meet this debt if he had been minded to, or reach some sort of agreement with his former lawyers to pay the debt over time. For that reason, it was submitted that I should ignore the fact of and timing of the monies advanced by the wife to the husband. I find that submission difficult to accept. He did neither of those things. He relied on the financial assistance given to him by the wife. He had significant debts and there is no evidence that he would have been able to obtain a loan. Even if he had been able to, he obviously chose not to. Further, on his own case, his financial circumstances were such that the assistance afforded him by the wife was not enough. He had to borrow a significant sum of money from a friend which he claims still not to have been able to repay as he has included it in his liabilities.
[22] Respondent’s written submissions [5].
It was further submitted by the respondent that this is not a case where the parties were committed to a shared financial future together and that the applicant was a house guest more than a de facto partner.[23] There is no mention of the significance of the respondent’s will in his written submissions. The will was made at a time when by his own admission the respondent was very much in love with the applicant. That document suggests a significant commitment by the respondent to the future of the applicant and an acknowledgment of his financial responsibility towards her. Further, whilst it is correct of the respondent to point out that the parties did not have a joint bank account, I do not accept the broader submission that the parties meticulously kept their finances apart. As I will refer to later in these reasons, their financial interests became intermingled nonetheless.
[23] Respondent’s written submissions [22]
The wife’s ready access to the money from her inheritance provided a vital financial buffer to the husband at a time when, by his own account, he had very significant and unmanageable debts. That financial buffer played a significant role in the husband being able to retain The B Property for as long as he did. That she contributed financially in this way was particularly significant given the husband’s departure from E Pty Ltd; the failure of the business J Pty Ltd; his heart attack in early 2014; and his inability to earn income through “K” until mid-2015. During the course of the relationship, the value of the property increased significantly. The wife made a contribution to the increase in equity in The B Property by helping the parties retain it for as long as they did. In cross-examination, the husband at first acknowledged and then denied this implication. I am satisfied that it is the case and I place significant weight on that matter. Had the applicant not been able to contribute in the way she did, The B Property would have had to be sold much sooner than it was. He acknowledged that the property value had increased significantly during the relationship.[24] It is not suggested by either party that the significant increase in value of The B Property was substantially or solely due to the efforts of either of them. There was a remarkable increase in value from the time of cohabitation due to the re-zoning of the area. They both maintained the property. The increase can be considered a contribution by both parties.[25] In the respondent’s written closing submissions he strongly disputed that the applicant should benefit from any increase in the value of The B Property during the period of the relationship. He is critical of the fact that the applicant adduced no evidence as to the value of the property in 2015, 2016 or 2017[26] and invites the Court to conclude that The B Property increased in value to its’ ultimate sale value in 2014 when the property was re-zoned. There is no expert evidence adduced by the respondent to support that submission. There is no logical reason to reach that conclusion. All that can be established by the valuation evidence is that after the re-zoning in 2014 the property increased in value by virtue of that fact. The ultimate sale price speaks for itself as to the value at the time of sale. However, even if I were to conclude that the property assumed a value of $1.9m the day after the re-zoning, that would make little difference to the respective contributions of the parties. On the evidence, the increase in value was an unexpected, unearned and providential occurrence which came about because of a local planning decision. The situation which arose here was similar to that identified in Hurst & Hurst:
“The evidence of the single expert valuer posited market forces and a 2016 rezoning as the contributors to the very significant increase in value from about $400,000 when received in 2003 to $1.82 million at the date of trial. In particular, the valuer agreed that “[t]he biggest jump in the value … is a result of the town plan changing” in 2016 … … neither that evidence nor any other evidence before her Honour suggests any specific actions or inactions by either party contributing to the increase in value of the parties’ property, including in particular the Suburb C property (whether, in that case, attributable specifically to market forces or to rezoning).”[27] (Citations omitted)
[24] Transcript 95, lines 11-19.
[25] Jabour & Jabour [2019] FamCAFC 78 [84]; Zappacosta v Zappacosta (1976) FLC 90-089.
[26] Respondent’s outline of submissions, 4 [5b].
[27] [2018] FamCAFC 146 [26].
Neither of the parties was a particularly good money manager. Having committed herself to the relationship with the husband and being aware of his precarious financial circumstances, the wife’s preference for regular overseas travel might be seen to have been somewhat imprudent. From his perspective, being aware of his significant liabilities he was nonetheless prepared to travel on overseas holidays with the wife largely at her expense. The husband’s liabilities, particularly with respect to the credit card debts, and his reliance on the money advanced to him by the wife, are indicative of his own difficulties in managing finances. In my view, it would be artificial to attempt to categorise the monies advanced by the wife to the husband simply as a loan. Whilst both parties make reference to some repayments by the husband and whilst the wife appears to have had an expectation that money advanced to the husband to extinguish his debts would be repaid, there was no formal arrangement for that to occur, no agreement as to interest and no agreement between the parties for a schedule of repayments or any urgency on the part of the wife to pursue the debt. These parties may not have mingled their finances in the sense that the term is typically understood in proceedings such as this, but they assumed joint responsibilities for financing their lives together. They did so in a somewhat unorthodox fashion. It may be that this was simply a feature of the stage of life at which they were both at. Both of them had adult children and were looking towards the future to secure a comfortable lifestyle together.
Non-financial contributions
I am satisfied that both parties made significant non-financial contributions towards the relationship and in particular to the maintenance, improvement and upkeep of The B Property. I accept the evidence of the wife that the parties had a long-term plan to sort out their finances, make The B Property ready for an eventual sale, and use the proceeds to secure the most comfortable retirement together that they could. That the parties fully intended to spend their retirement together was acknowledged by the respondent in his trial affidavit who referred to “… the fun and care-free future we were to have shared together in our retirement”.[28] The wife gave detailed and largely unchallenged evidence, which I accept, of her contribution to the decoration and furnishing of The B Property and the completion of various unfinished features of the home.[29] I accept that both parties contributed to the gardening and maintenance of the grounds. I do not doubt the evidence of the wife to the effect that she was interested in and strove towards making The B Property a comfortable and improved residence and was doing so in part in anticipation of it being ultimately sold. I accept her evidence that she spent a significant amount of money in the course of doing this. I accept that she took on additional shifts in her employment after the respondent sold his interest in E Pty Ltd.
[28] Trial Affidavit, Mr Aldrin [87].
[29] Trial Affidavit, Ms Celona [108]-[114].
The husband emphasised that early in the relationship, the wife travelled to Country G to be with family between mid 2013 and late 2013. In the context of a relatively short relationship, I accept that this reduced her capacity to make non-financial contributions towards The B Property during that period.
The wife also made a contribution in her care of the husband after he had his heart attack. In part, that included paying for the two of them to have a holiday together on the Region Y. I accept that the wife instigated the respondent to engage with a credit counselling service to discuss strategies for each of them to reduce their debts. As a result, the husband entered into a hardship agreement with AMEX, the Commonwealth Bank and National Australia Bank. I accept that she took it upon herself to encourage the respondent to moderate his spending habits.
The respondent has given evidence, which I accept, that when the apartment in N Street, Suburb O was sold, the proceeds were applied to paying off credit card debt and reducing the mortgage of The B Property.
The assessment of contributions is almost always inherently incapable of precise calculation.[30] The discretion in the assessment is wide. I remind myself of the observations of the Full Court in Petruski & Balewa:[31]
“The task of assessing contributions under s 79 of the Act is an holistic one; what is required is to evaluate the extent of the contributions of all types made by each of the parties in the context of their particular relationship ...”[32]
[30] Kessey & Kessey (1994) FLC 92-495.
[31] [2013] FamCAFC 15.
[32] The observation applies equally to contributions in de-facto property disputes.
I am not to conduct a minute or scientific analysis when considering the assessment of contributions made by the parties. I must evaluate the weight and significance of the respective contributions. It is the nature and form of contributions of all types that is essential.
A similar observation was made by the Full Court in Bolger v Headon[33] (‘Bolger’) where the Court emphasised the breadth of the discretion as to the assessment of contributions and reminded itself of the stricture of the High Court, agreeing with the Family Court in Norbis v Norbis[34] (‘Norbis’) that the assessment of contributions should be made without “giving over-zealous attention to the ascertainment of the parties’ contributions …”
[33] [2014] FamCAFC 27 at [28].
[34] (1986) 161 CLR 513, 524.
Taking the holistic approach, I have considered the evidence of initial contributions and both direct and indirect financial contributions during the course of the relationship and post-separation. I am satisfied that the relative contributions should be assessed on the basis of the applicant having contributed 25% and the respondent 75% to the net value of the assets. I am satisfied that it is just and equitable to make order for the division of the property of the relationship.
Section 90SM(4)(d) – (g) factors (including section 90SF(3))
An order for the division of property is unlikely to have a significant effect on the earning capacity of either party. At the time of trial the husband was not in employment and claimed to have an income of about $25 per week. The wife had ceased employment shortly prior to the trial and told the Court in her evidence-in-chief that a recent worsening of her health had meant that she was no longer able to work in her former job.
Neither party is in good health. The wife suffers from chronic health problems and as I have noted, resigned from her employment shortly prior to the trial. She is now in her 60’s and limited to part-time and casual work. Her Financial Statement indicates that her income was $1,100 per week before her resignation. She has very limited financial resources and by virtue of her illness a limited capacity to pursue gainful employment. Her superannuation is said to be approximately $54,000.
Her children are now adult and financially independent. She has no responsibility to maintain any dependents. Her circumstances are considerably straightened in comparison to those she enjoyed during the course of the relationship. She has had limited accommodation options, having spent time staying with friends and renting. She is entitled to a standard of living which is reasonable in all of the circumstances but of course, the size of the pool in this matter will not enable her to continue with a standard of living enjoyed by the parties when they were together. It is unlikely at this point in life and given her medical condition that she will be able to re-train to enter the workforce in a different capacity. As I have noted above, her access to finance at a crucial time in their relationship made a significant contribution to the property owned by the respondent. This was a relatively short relationship and there is nothing about it which could reasonably be said to have affected the earning capacity of the applicant. I note her submission that the financial stress of the relationship has had a deleterious effect on her health and capacity to work. It is difficult to see how there is a direct correlation but I accept that her health has deteriorated and she has the reduced capacity to which I have referred. There are obviously no considerations of child support in this matter and no other order made under the Act affecting the parties to the relationship with the exception of the orders previously made for partial property settlement.
The respondent is approximately 70 years of age. His financial statement discloses that his weekly income is approximately $25. He does not have a significant capacity to earn an income in the future by virtue of his age and illness and has now retired. He has been diagnosed with prostate cancer but on the balance of the evidence it seems unlikely that this condition will greatly impact upon his life expectancy. He has a significant financial resource available to him in the Western Australian property. His superannuation is now effectively exhausted by reason of the explanation he gave in his trial affidavit. His children are adult and financially independent. I am not aware of any responsibility he currently has to support any other person. His debts appear now to be under control, his Financial Statement indicating that he has no liabilities, although I note the agreed liabilities I have referred to above. His contribution to the relationship in his ownership of The B Property was obviously very significant notwithstanding the fact that it was subject to a very substantial mortgage when the parties started cohabiting. He has not re-partnered. He is entitled to a reasonable standard of living and I note in that regard, with the partial property settlement of $600,000, he has purchased a yacht on which he intends to live. This was a short relationship which he entered with a significant debt burden. I am not satisfied that there is anything about the relationship which has affected his capacity to work or earn an income. I take into account that his present illness may cause him to incur significant future medical expenses which at this time cannot be ascertained. His treating oncologist, Dr T, has described his condition as incurable, aggressive and metastatic. While he found it difficult to predict the prognosis, and further treatment would be required to which responses are variable, his view was that the respondent’s prognosis may be limited to two to three years.
Neither party seeks an order for maintenance.
The wife seeks an adjustment by virtue of her more limited financial resources; her lack of stable accommodation; limited capacity to work, the impact of which was evident given her circumstances at the time of trial; and younger age. The wife gave evidence that she had found it necessary to stop working because of her medical condition. There was no expert evidence introduced by the wife which could support a finding that she is unable to work in the future. I am satisfied that she has a reduced capacity to work. There is no evidence before me to suggest that she will have a reduced lifespan because of her illness. She nonetheless is capable of earning an income, in contrast to the husband. The husband also has the security of significantly greater financial resources than the wife which also suggests an adjustment is appropriate. I am satisfied that it is just and equitable to make an adjustment of 5% in favour of the wife.
Standing back and as a final check, orders in the above terms would see the wife with 30% and the husband with 70% of the net assets. From a net pool of $1,046,877 that would entitle the wife to an amount of $314,063.10. It would entitle the husband to an amount of $732,813.90. The wife has retained her Motor Vehicle 2 valued at $4,000 and has had the benefit of her partial property settlement of $100,000. This would require a distribution to her of $210,063.10 from the monies remaining from the proceeds of the sale of The B Property. The husband has his Motor Vehicle 1 valued at $6,700 and has had the benefit of the partial property settlement in the amount of $600,000. This would require a distribution to him from The B Property proceeds of $126,113.90. As I have already noted, the husband also has the financial resource of the Western Australian property. I am satisfied that no further adjustments are required and that orders in these terms would be just and equitable.
I make the declaration and orders to be found at the beginning of these reasons.
I certify that the preceding one hundred and thirty-two (132) paragraphs are a true copy of the reasons for judgment of Judge Heffernan
Associate:
Date: 7 September 2020
CORRECTIONS (26 October 2020)
In the table located at paragraph 103, page 29, the figure in the Assets column for The B Property is amended from ‘$900,000’ to ‘$920,000’.
In paragraph 104, page 30, the figure of ‘$183,415’ is amended to ‘$203,415’.
In paragraph 105, page 30, the figure of ‘$438,404’ is amended to ‘$458,404’.
In paragraph 106, page 30, the figure of ‘$741,404’ is amended to ‘$761,404’.
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