Cerny and Cerny
[2013] FMCAfam 315
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CERNY & CERNY | [2013] FMCAfam 315 |
| FAMILY LAW – Property – long marriage, six children – consideration as to notional add-backs to the property pool for division. |
| Family Law Act 1975, ss.75, 79 |
| Stanford v Stanford[2012] HCA 52 Wolter [2012] FamCA 1133 Russell and Russell (1999) FLC 92-877 Teal & Teal [2010] FamCAFC 120 |
| Applicant: | MS CERNY |
| Respondent: | MR CERNY |
| File Number: | SYC 3469 of 2007 |
| Judgment of: | Foster FM |
| Hearing date: | 27 March 2013 |
| Date of Last Submission: | 27 March 2013 |
| Delivered at: | Wollongong |
| Delivered on: | 5 April 2013 |
REPRESENTATION
| Counsel for the Applicant: | Ms Carr |
| Solicitors for the Applicant: | Antwan Lawyers |
| Counsel for the Respondent: | Mr Carney |
| Solicitors for the Respondent: | H K Husseini & Co |
ORDERS
That within one month from this date the husband do all things necessary and sign all necessary documents to transfer to the wife his interest in the former matrimonial property at Property B, being the whole of the land in folio identifier [omitted].
That in default of the husband complying with the previous order within the time provided, the Registrar of the Federal Magistrates Court of Australia at Wollongong is hereby appointed pursuant to Section 106A of the Act to execute any document or instrument in the name of the husband and to do all acts and things necessary to give validity and operation to the said document or instrument and to these orders.
That within two months from this date the husband pay to the wife a sum of $71,520.
That in default of payment by the husband as provided for in the previous order the wife is hereby appointed trustee for sale of the home unit property at [2] Property L at the best price reasonably obtainable and for such purpose the said property shall vest in the wife as trustee for sale and that upon sale the wife distribute the proceeds of sale in the following order and priority:
(a)in payment of agents commission and legal costs on sale,
(b)in discharge of the mortgage encumbrance secured thereon
(c)in payment of the wife of the sum of $71,520 together with interest accrued,
(d)in payment of the balance then remaining to the husband.
Liberty to apply as to implementation of these orders on short notice.
IT IS NOTED that publication of this judgment under the pseudonym Cerny & Cerny is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYC 3469 of 2007
| MS CERNY |
Applicant
And
| MR CERNY |
Respondent
REASONS FOR JUDGMENT
(AS CORRECTED)
Proceedings
These are proceedings for property settlement commenced by the applicant wife by application filed on 17 March 2010.
Final orders sought by the applicant in that application in summary are as follows:
a)that the husband pay, by way of spousal maintenance the sum of $500 per week;
b)that the husband do all things necessary to transfer to the wife is interest in the real estate property at Property B;
c)that the husband do all things necessary to effect a sale of the property at [2] Property L, two properties owned by him in [T], [E] and the proceeds of such sale be divided as to 65% of the wife and the balance to the husband.
At trial the wife did not press her application for periodic spouse maintenance.
In support of orders sought by her the applicant wife relied upon the following documents:
a)her financial statement filed on 15 February 2013,
b)her affidavit filed on 13 July 2012,
c)affidavit of Mr C sworn on 19 July 2012.
The respondent husband filed his response on 10 June 2010 and in that response he sought orders in summary as follows:
a)that the wife transfer to the husband her interest in the property at Property B and that the husband indemnify the wife from any mortgage secured over this property,
b)that the husband transfer to the wife the home unit property at [2] Property L,
c)in the alternative the husband sought orders that provided for a sale of the said properties and that the proceeds of sale be divided equally.
The respondent husband relied upon the following documents at trial:
a)his financial statement filed on 6 September 2012,
b)his affidavit filed on 6 September 2012,
c)the affidavit of Mr J filed on 6 September 2012.
A financial conciliation conference was conducted in the proceedings on 13 January 2011 and the matter was not resolved.
On 11 August 2011 on interim hearing the wife was granted sole use and occupation of the matrimonial home at Property B and the husband was restrained from entering upon or going to those premises without the consent of the wife.
Subsequently the matter was listed for hearing on 23 July 2012. On that day the matter was not ready to proceed due to outstanding valuation issues. Further directions were made and the matter was adjourned to 8 October 2012 for further directions.
On 8 October 2012 the matter was adjourned for hearing to 21 February 2013 and trial directions were made. On 21 February 2013 the matter was adjourned not reached to 27 March 2013 for hearing.
On 27 March 2013 the matter was listed for hearing and judgment was reserved to a date to be fixed.
Background
The wife is presently aged 61. The husband is presently aged 60.
The wife presently receives a Centrelink disability pension by reason of her health circumstances.
The husband asserts long-standing ill health. However it is also his evidence that he has been self-employed as a [omitted] until 2009/2010.
The parties were married in [E] on [date omitted] 1974 and migrated to Australia in about 1979. The husband divorced the wife on 1 January 2010 in [E] and has subsequently remarried. It is the husband’s evidence that he is reliant upon his new wife and her family for his day-to-day support.
At the commencement of their cohabitation the parties had minimal assets.
There are six children of the marriage all of whom are now over the age of 18 years and independent of the parties.
During the course of final submissions each of the parties contended that contributions overall should be regarded as equal with the wife contending for a modest section 75(2) adjustment in her favour and the husband contending that there should be no such adjustment with the matrimonial pool to be divided equally.
In 1980 the parties purchased the matrimonial home at Property B jointly with the husband’s cousin. They provided a deposit from savings at that time with the balance provided by way of mortgage. In the late 1980s the parties acquired the husband’s cousin’s interest in the property and by way of purchase.
Over a period of years various improvements were undertaken to the property either by paid tradesmen or in some circumstances by the husband.
Over the period of the relationship the wife was the primary caregiver for the six children of the marriage and primary homemaker.
At times times during cohabitation both of the parties received modest worker’s compensation payments, which were then applied to matrimonial expenses.
The parties purchased an investment property at [1] Property L for the sum of about $105,000 in about 1994. This property was purchased in the joint names of the parties with the purchase price comprising funds then available to the parties and the balance by way of mortgage. The property was mostly tenanted from 1994 until about 2005.
The husband was in and out of employment during cohabitation and in the latter years was engaged as a [omitted]. The husband now lives primarily in [E] and asserts that he is not in any form of employment.
The investment property at [2] Property L was purchased by the parties in about 1996 for $90,000 with a mortgage of $50,000. For reasons not explained, the property was at this time purchased in the name of one of the parties’ sons who at that time was 16 years of age. In 2009 the property was transferred back into the husband’s name alone. This property has been tenanted since purchase and rental payments were received by the husband who substantially applied payments to outgoings and mortgage payments in relation to the property. The son asserts that when the property was transferred back to the husband there was an outstanding mortgage balance on the property of only $37,000.
In relation to this property in 2007 the child of the marriage Mr C borrowed the sum of $15,000 from the parties by way of redraw as against the mortgage secured over the Property B property. He asserts that he has paid this borrowing back. It appears that in fact sums totalling almost $24,000 were provided by the parties to this son to meet outstanding mortgage payments on this home unit when the son fell into mortgage arrears.
In August 2001 the parties acquired a home unit in [T], [E] for the sum of US$25,000.
In September 2003 the parties opened a joint account with the Arab Bank in [E] with a deposit of $16,272. It appears that subsequently the husband opened an account with the Arab Bank in [E] in his own name and he transferred monies from time to time. In November and December 2004 the husband transferred funds totalling $7,030 to his account.
The circumstances of the parties’ separation are unclear, with the wife asserting that there was a separation under one roof commencing in early 2005 and the husband denying such separation.
The parties continued to live together in the matrimonial home until orders were made as to sole use and occupation in August 2011. Since August 2011 the husband has lived either in [E] on or in Australia.
In about May 2005 the parties sold their investment unit at [1] Property L to their son [name omitted] for the sum of $270,000. The disposition of the net proceeds of sale is the subject of significant dispute between the parties. The net proceeds of sale were in the sum of approximately $221,811. This sum was deposited to the credit of the parties’ joint ANZ Bank account on 7 June 2005.
On the next day a withdrawal from that account in the sum of $220,000 was made. It was put to the husband in cross-examination that this withdrawal was made by him in cash and the funds were subsequently invested by him in a term deposit account and on maturity of that term deposit the husband then deposited the sum of $227,555 into an Arab Bank account in his sole name on 8 February 2006. Thereafter on
13 February 2006 the husband transferred the sum of $200,020 to an Arab Bank account in [E] in his own name and notwithstanding documents being available to evidence these transactions the husband’s evidence in this regard was evasive and non-responsive.
The husband asserts that after applying funds to purchase a home unit in [E], the balance of monies, he asserts in the sum of $180,000, has been expended by him in repayments and living expenses. However notwithstanding the husband being aware as to this issue being a live issue for trial and notwithstanding that he is in possession of all relevant financial documents that would evidence the expenditure of these funds by him he has produced no documents supporting his very broad contention as to how these funds were dissipated. It is the court’s conclusion that there is no reason why the sum of $180,000 should not be included in the notional pool for division.
Subsequent to the sale of this property the husband travelled to [E] and purchased a property at [A], [E] for the sum of US$40,000 in July 2006.
Thereafter the husband was unable to explain overseas transfers in the sum of US$9,500 in April 2007, US$9,000 in May 2007, US$1,000 in April 2008 and US$9,000 in July 2008. However these transfers may have some relevance to the settlement of the purchase of the [A] property.
In February 2010 that the husband concedes that he borrowed the sum of $64,350 by way of additional mortgage borrowing secured against the property at [2] Property L. He further concedes that he has retained this sum for his own use and benefit. The husband asserts that these funds were used by him to meet living expenses and payment of outgoings. However the parties were divorced in January 2010. The husband gives no evidence as to why he did not seek other employment nor as to particulars relating to the expenditure of this sum notwithstanding that such evidence is available to him and within his knowledge.
At trial the husband asserted that he no longer owned the two [E] properties, they having been transferred to his cousin. However the parties are agreed as to the value for the purposes of trial and it is further agreed that they be included in the pool of assets for the purposes of division.
The husband conceded that on 23 February 2012 he withdrew the sum of $11,041 and representing his ANZ Superannuation Bond and that he has retained those proceeds for his own purposes. He asserts that the funds were used to repay a friend in relation to borrowings post separation. There is no reason why this sum should not be notionally included for the purposes of division.
Credit
The court had the opportunity to of observing and listening to the parties’ oral evidence during cross-examination.
Notwithstanding that interpreters assisted both parties during the course of the evidence it was clear that on many occasions the husband understood matters being put to him in cross-examination and initially sought to respond in English until he turned to the interpreter to assist.
The court is of the view that much of the husband’s evidence in terms of the financial history of the marriage was unreliable and in some circumstances his protestations that he was simply unable to recall or had no knowledge of a particular transaction were ingenuous.
This is a matter that has been before the court awaiting hearing for some time. The issues as to the various add-backs sought by the wife are not new and the husband has been aware of such issues for some time. Notwithstanding that circumstance and notwithstanding that the husband it is to be reasonably inferred was able to source financial documents that related to the various impugned transactions he failed to provide documents that at least one would expect in his view would have assisted his case and met the wife’s argument in relation to some if not all of the add-backs asserted by her.
There is no doubt in the court’s mind that it was the husband that managed the party’s finances, their assets and their banking. He has available to him no doubt documents that would reasonably be expected to assist his case. He has chosen not to do so.
In all the circumstances where there is a conflict between the evidence of the wife and the husband the court prefers the evidence of the wife unless the husband’s evidence is supported by objective documents.
The Law
The approach to the determination of an application under section 79 of the Act is set out in Stanford v Stanford[2012] HCA 52.
As was observed by Ryan J in Wolter [2012] FamCA 1133:
“The question which ultimately must be answered is whether it is just and equitable to alter the parties’ rights and interests in their property. The power to make a property settlement order must be exercised in accordance with legal principles, including the principles which the Act itself lays down. In this case the parties agree (as do I) that by reason of the manner by which they conducted their marriage, which has now irretrievably broken down, it is just and equitable that their interests and rights in property are altered; where they disagree is in relation to what that adjustment should comprise.
Thus, it is necessary to first, identify the nature of the parties interests in their property, liabilities and financial resources at the time of the hearing.
Then to evaluate the contributions made by the parties as defined in s 79(4)(a), (b) and (c) and the effect of any proposed order upon the earning capacity of either party.
I must then evaluate the matters contained in s 75(2) insofar as they are relevant, including any other order made under the Act affecting a party or child and any child support under the Child Support (Assessment) Act 1989 (Cth) (“CSAA”) that a party to the marriage is to provide, or might be liable to provide in the future, for a child of the marriage.
Consideration of whether it is just and equitable that an alteration of the parties’ interests is made and, if it is, its terms are required.
The first question must not be conflated with the outcome of the s 79(4) and s 75(2) deliberations, albeit these may inform the justice and equity determination.
Section 81 imposes on the Court an obligation, that as far as practicable, the orders will finally determine the financial relationships between the parties and avoid further proceedings between them.”
Thus the process ordinarily involves a staged process.
The court must identify the existing legal and equitable interests of the parties in the property, the liabilities and financial resources of the parties at the time of the hearing and then whether it is just and equitable to make a property settlement order.
Such a consideration should not be guided by an assumption that the parties’ rights to or interests in property are or should be different from those that then exist. The question is whether those rights and interests should be altered.
There is no presumption that one or other party has the right to have the property of the parties divided between them or a right to an interest in marital property that is fixed by reference to the various matters in s.79(4) (Stanford supra). This consideration addresses the prohibition in s.79(2) of the Act.
The court needs to conclude that it would be unjust or unfair to leave property rights intact. Such a conclusion cannot be informed by reference to s.79(4) and s.75(2) factors.
In many cases this requirement is readily satisfied where the parties are no longer in a marital or defacto relationship and thus, for example, the common ownership or use of property by husband and wife will no longer be possible or the express or implicit assumptions that underpinned existing property arrangements such as the accumulation of assets or financial resources by one for the benefit of both have been brought to an end with the relationship.
In particular such a circumstance arises where both parties seek adjustive orders but are unable to agree as to same.
Once the s.79(2) prohibition is overcome the court then considers the contributions made by the parties as defined in section 79(4)(a) to (c). The court must then consider the subjective considerations as to the parties by having regard to the provisions of section 75(2) in so far as they are relevant. Such a consideration can include arguments as to asserted add-backs, alleged waste by a party or other financial resources that it is contended should be added to the actual pool as notional property or liabilities.
In the light of the reconsideration of the role of s.79(2) as a threshold question it would be appropriate for the court to consider the “justice and equity” of the actual orders to be made (see Russell and Russell (1999) FLC 92-877, Teal & Teal [2010] FamCAFC 120)) in the context of the courts obligation to make “appropriate orders” as provided for in s.79(1) of the Act.
The Legal and Equitable Interests of the Parties
At trial the parties provided to the court a working balance sheet that was admitted into evidence as Exhibit A.
In submissions there was substantial agreement as to the balance sheet but not unexpectedly the parties were in disagreement as to various notional add-backs sought by the wife has against the husband.
The agreed asset pool comprises the following:
Joint Matrimonial home at Property B $415,000
Husband Home unit at Property L $230,000
Wife Contents $ 500
Husband Contents $ 2000
Husband Ford motor vehicle $ 1000
Husband Toyota motor vehicle $ 500
Husband [E] properties $180,000
$829,000
Liabilities:
Husband Mortgage home unit at Property L $110,000
$719,000
Otherwise the wife sought notional add backs in relation to the property pool for adjustment that comprise the following:
ANZ bank drawdown retained by the husband $ 64,000
Sale proceeds of [1] Property L $220,000
Superannuation funds withdrawn $ 11,041
Arab Bank funds not accounted for $ 25,159
Funds withdrawn from husband’s business account $ 14,958
Overseas funds transfers $ 28,500US
Various cheque withdrawals in 2006 $ 33,682
The court has dealt with the first three items sought to be added back by the wife as against the husband in its reasons above. Three sums being $64,000, $180,000 and $11,041 will be notionally added back to the asset pool for division.
However as to the remaining asserted add-backs in all the circumstances the court is not satisfied on the evidence that such sums should be notionally included for the purposes of division. The parties remained on and off living under the same roof until August 2011 when the husband was excluded by court order from the home. He had at least on his evidence ceased employment in 2009/2010 and it is reasonable to expect that modest sums of capital were used for the parties’ support and payment of outgoings.
Accordingly the matrimonial asset pool in the sum of $719,000 will be increased by further sums totalling $255,041, making a total in all of $974,041.
Contributions
Both parties contended in submissions and that the court should regard the parties’ contributions during cohabitation and to trial as equal. The court considers having regard to the evidence this to be a most appropriate circumstance.
On that basis the wife would be entitled to the sum of $487,020. Such an entitlement would see the wife receive the former matrimonial home at Bonnyrigg unencumbered together with a further adjustive payment from the husband of $71,520.
Section 75(2) Factors
The husband contends that there should be no further adjustment from the parties’ contribution-based entitlements by reason of a consideration of the subjective factors in this section.
The court is conscious of the age of both parties and their respective assertions as to their health. Otherwise no other factor referred to in the section is of any significance.
On a contribution-based entitlement the wife would receive the matrimonial home unencumbered and a cash adjustment from the husband of $71,520 that would provide her with some capital reserve.
In all the circumstances the court is not satisfied that there should be any adjustment by reason of a consideration of the section.
Appropriate Orders
The court is required by reason of s.79(1) to make such order as it considers appropriate.
The husband it appears has made a new life for himself in [E] where he has substantial funds. He may choose to refinance the investment property at Property L standing in his name to fund the adjustive payment to the wife or he may resolve to sell the property and then remit the balance of his funds to [E].
The court is satisfied in all the circumstances that an order requiring a transfer of the matrimonial home at Property B to the wife unencumbered together with an order providing for a further adjustive payment from the husband to the wife are appropriate.
The court will make orders accordingly.
I certify that the preceding seventy-two (72) paragraphs are a true copy of the reasons for judgment of Foster FM
Date: 5 April 2013
Corrections
Amendments made to orders 3 and 4(c)
Changes to figures in paragraph 62
Changes to figures in paragraph 64
Change to figure in paragraph 67
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