Cheetham and Cheetham

[2018] FamCA 155

FAMILY COURT OF AUSTRALIA

CHEETHAM & CHEETHAM [2018] FamCA 155

FAMILY LAW – PROPERTY SETTLEMENT – Contributions – Where to date of trial the parties’ contributions had been equal – Where the wife presumed that she would retain the former matrimonial home – Concluded the wife failed to put evidence before the Court of how she would refinance the current debt and make a substantial payment to the husband – Where the husband pays child support as assessed – Concluded a modest adjustment of 5 per cent in the wife’s favour reflects the constraint on the wife until the child reaches adulthood – Ordered parties cause the former matrimonial home to be sold by auction with the net balance of sale proceeds to be divided [53.5/46.5 per cent] to achieve an overall division of the net asset pool of 52.5 per cent to the wife and 47.5 per cent to the husband – Ordered the parties sell all shares held in their joint names, repay the associated debt and tax and divide the net balance equally between them

Family Law Act 1975 (Cth) ss 75, 79

Bevan & Bevan [2013] FamCAFC 116
Stanford & Stanford (2012) 247 CLR 108

APPLICANT: Ms Cheetham

RESPONDENT: Mr Cheetham

FILE NUMBER: MLC 1499 of 2016

DATE DELIVERED: 15 March 2018

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cleary J

HEARING DATE: 14 & 15 August 2017

REPRESENTATION

COUNSEL FOR THE APPLICANT:	Mr Lethlean
SOLICITOR FOR THE APPLICANT:	Moreheads Lawyers

COUNSEL FOR THE RESPONDENT: Ms Jenkins

SOLICITOR FOR THE RESPONDENT: Conlan Cummings

Orders

1. That within 42 days of the date of these orders both parties take all necessary steps and execute all necessary documents to appoint B Real Estate to cause the property situated at C Street, Suburb D, in the State of Victoria (“the former matrimonial home”) and being the whole of the land in title reference volume … Folio … to be sold by auction at the earliest possible date at a reserve price of $1,660,000 or as otherwise agreed between the parties and that the proceeds of the said sale be disbursed as follows:

   (a)Payment of agent’s commission and advertising expenses and legal expenses of the sale;

   (b)Payment of any money due and owing to the mortgagee, rates, levies and any other encumbrance;

   (c)The net balance to be divided between the parties as follows:

   (i)53.5 per cent to the applicant wife; and

   (ii)46.5 per cent to the respondent husband.

2. That pending the sale of the former matrimonial home the applicant may continue to occupy the home and shall maintain the property in a neat and tidy condition and facilitate inspections as arranged by the agent for sale.

3. That within 28 days of the date of these orders each party shall take all necessary steps and execute all documents to sell all shares held in the joint names of the parties including the H Bank Portfolio shares and apply the proceeds of sale as follows:

   (a)To meet all costs of sale and retention for tax (including provision for CGT);

   (b)       To discharge the Commonwealth Bank of Australia investment loan;

   (c)       The net balance, if any, to be divided equally.

4. That each party retain the superannuation interest in the name of that party.

5. That each party otherwise retains those items of personalty currently in his and her possession.

6. In the event that any party refuses or neglects to comply with any provision of these orders:

   (a)A Registrar of the Family Court of Australia is hereby appointed pursuant to section 106A of the Family Law Act 1975 to execute all deeds and documents in the name of the party in default and do all things and acts necessary to give validity and operation to these orders;

   (b)The defaulting party pay all reasonable costs incurred by the other party for the purpose of exercising this order.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Cheetham & Cheetham has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT NEWCASTLE

FILE NUMBER: MLC1499/2016

Ms Cheetham

Applicant

And

Mr Cheetham

Respondent

REASONS FOR JUDGMENT

Introduction

1. These are competing applications for adjustment of interests in matrimonial property, after the breakdown of a long marriage.

2. The applicant is the wife Ms Cheetham aged 50 years. She is a professional who had, at date of trial, very recently started new employment in a senior role.

3. The respondent is the husband Mr Cheetham aged 50 years. He is a senior manager of a company.

4. The parties met and began a relationship in mid-1991. They married in 1993.

5. Their only child E was born in 2002. He was 15 years at date of trial and living with his mother. Parenting orders were made by consent on 29 August 2016.

6. Soon after his birth, the mother suffered a stroke from which she fortunately fully recovered. She has been monitored since that event by a neurologist. Although she asserted in her affidavit[1] “I am not in good health” there was no evidence to support this assertion and the matter was not pressed.

   [1] Affidavit of the wife filed 26/05/2017, par 5

7. The parties separated when their marriage broke down finally in June 2015.

8. The wife and the parties’ son remain living in the family home. The husband moved to rented accommodation after separation.

Brief History of Relevant Events 

1. When the parties began living together aged in their early twenties neither had assets of any financial significance.

2. In 1993 the parties purchased their first property together in Suburb F (“the Suburb F property”). There is no evidence of the purchase price or how the purchase was financed.

3. The wife asserts that she contributed $20,000 and the husband $11,000.

4. The husband disagrees. He asserts that there was an equal contribution but does not assert particular figures.

5. There was only this sparse information available on this topic of the acquisition of the first house, consisting of best memory after 24 years. There is no documentary evidence to support the assertions of either party.

6. I conclude that the parties, using the borrowing power of their two incomes as young accountants, were able to borrow to buy this first home. Each contributed to the deposits, stamp duty (if there was any) and associated purchase costs.

7. Whatever the ratio of contribution, the disparity, if there was one, would have been reduced in significance by their joint efforts to reduce mortgage debt which followed.

8. Eight years later in April 2001 the parties purchased their second property, in Suburb D (“the Suburb D property”) which became the current family home.

9. The purchase price was $480,000.[2]  The parties undertook renovations at a cost of $460,000.

   [2] Affidavit of the wife filed 26/05/2017, par 8

10. There is no evidence about the financing of the purchase or of the renovation work.

11. I conclude on balance of probabilities that the Suburb F property was sold and that the net proceeds of sale of the Suburb F property were applied to the purchase of the Suburb D property. Further, additional funds were borrowed for the purchase of Suburb D. Likely there was a re-financing or extension of loan to fund the renovations.

12. The parties and their son lived in the Suburb D property together for 14 years until the separation of the parties in June 2015.

THE APPLICATIONS

Wife

1. The wife formally proposed a transfer of the husband’s interest in the family home to her with a payment back to him of $45,000.[3] Her proposal was to refinance the mortgage to take over the debt.

   [3] Exhibit 2

2. This proposal represents the wife acquiring almost 100 per cent of the equity in the home.

3. Together with her superannuation interest and other assets being shares ($91,000) and a car, this represented a division of approximately 73 per cent/27 per cent in favour of the wife. The husband would retain his superannuation interest, a car, $45,000 and shares of a few thousand.

4. In submissions the wife modified her position.

5. The wife also sought substantial spouse maintenance but quite properly in circumstances where she had found full time employment, this claim was not pursued.

Husband

1. The husband proposed a sale of the family home with equal division of net proceeds.[4] 

   [4] Exhibit 3

2. Each party to otherwise retain assets in their possession including superannuation interests.

3. This equated to an equal division of assets.

4. In submissions there was a concession that some small adjustment be made for the care and supervision by the wife of E, sought to be neutralised by an adjustment in favour of the husband for the capacity of the wife to earn at a higher level.

Analysis

1. The wife wishes very strongly indeed to retain the Suburb D property for the benefit of herself but primarily for the parties’ son E. I have no reason to doubt her evidence that the music room and back yard suitably accommodate the two great interests of the boy, music and cricket.

2. Unfortunately the wife gave her evidence with the underlying presumption that she would retain the property. This certainty about outcome may have been the cause of her reluctance to make any concession about contributions during the marriage by the husband. It did not assist her to take this blinkered approach.

3. There is no evidence of the ability of the wife to refinance at a level beyond the range of her application, that is, by an increase of debt by $45,000.

4. In cross-examination the wife referred in general terms to having “spoken to the bank” without referring to a response by the bank, and that family members were “keen to help her [and E]” remain in the home.

5. The wife has just returned to the paid workforce. There are no savings for either party to fall back on.

6. The wife was well aware of the husband’s proposal for equal division of the assets. It was incumbent on her to put evidence before the Court of how, if she were unsuccessful with her application, she would refinance both current debt and a substantial payment to the husband of several hundred thousand dollars. That she did not do so, to any extent, suggests that the wife was either well aware of her inability to do so or was closing her eyes to the reality of her financial position.

Contributions

Financial

1. The financial contributions from income favoured the wife between 1993 and 2002. She earned somewhat more than the husband.

2. In early 2002 the parties’ child was born.

3. Within six months of the birth of the parties’ son the wife was able to obtain full time work with flexible conditions. The parties also had the assistance of the maternal grandparents caring for E at times.

4. From 2007 to 2012 the husband concedes that the wife earned approximately $50,000 per annum more than him.

5. In 2012 the wife received a redundancy payment of approximately $390,000. These funds were used by the parties jointly over the following three years when the wife worked in paid employment part-time and also not at all.

6. Between 2012 and separation in mid-2015 the husband earned more than the wife, he asserted a sum of $689,938.

7. The wife worked in a two day per week position for nine months in 2013 and thereafter chose to leave the paid workforce.

Post-separation June 2015 to August 2017

The husband

1. In July 2015 the husband received a redundancy of $147,733 from Company G. He used the proceeds as follows:

   -    to pay his own living expenses;

   -    to set up new accommodation suitable for himself and E;

   -    for utility bills on the Suburb D property until February 2016;

   -    to repay Commonwealth Bank of Australia credit card debt in the sum of $13,076;

   -    shortfall on lease after sale of a motor vehicle;

   -    lease payments until sale $7,7362;  

   -    50 per cent of E’s expenses;

   -    half the interest on an investment loan.

2. The husband started his current employment at the beginning of 2017.[5]

   [5] Financial Statement of the husband filed 8/06/2017, Part C(7)

3. It was in my view reasonable for the husband to expend $147,000 over eighteen months in the way he did to re-establish himself after separation and to meet his own living expenses and a share of family expenses until he found new employment.

The wife

1. After separation the wife withdrew $80,000 from the parties’ joint funds. Those funds were expended. No full explanation was given. The wife returned to work in April 2016. She held a contract position until 31 March 2017.

2. There was then a period of four months for her out of the paid work force.

3. On 9 August 2017 the wife began her current employment commencing with a three month probationary period.

4. The wife is in a senior position. She works full time, five days per week, 9.00 am to 5.00 pm hours.

5. It was reasonable for the wife to access joint funds in the circumstances where she was not in paid employment for about ten months after separation.

6. In April 2013 the wife took a part-time position two days per week. She was attracted to the flexibility of part-time work. It is not in dispute that whether it was expected of her, or arose from the wife’s own wish to be diligent in the job, the wife in fact worked four to five days per week.

7. The wife asserts that the husband became “tired of the slight inconvenience of me working two days per week.”[6]

   [6] Affidavit of the wife filed 26/05/2017, par 27(d)

8. This is a difficult proposition to follow. The wife had worked full-time (with a six month break for the birth of the parties’ child in 2002) throughout the marriage until 2012.

9. It was the wife’s case that the husband bullied her about the arrangement such that she felt compelled to resign as a result of his insurmountable pressure.

10. It was put to the wife in cross-examination that after she had resigned she thereafter did not engage in paid work for the following two years, with the support of the husband. The wife agreed.

11. Accordingly, I am more inclined to accept the evidence of the husband that he was concerned about the levels of stress being experienced by the wife where so much unpaid work was undertaken by her.

12. I reject the proposition that the husband “waged a form of economic warfare” on the wife.[7]

    [7] Affidavit of the wife filed 26/05/2017, par 30

The Evidence

1. The documents relied on in respect of the application were as follows: 

   The Applicant Wife-Ms Cheetham

   (a)Final Orders – Included in Outline of Case Document;[8]

   (b)Affidavit of Wife filed 26/05/2017;

   (c)Financial Statement of Wife filed 26/05/2017;

   (d)Affidavit of Wife in Reply filed 16/06/2017;

   The Respondent Husband- Mr Cheetham

   (e)Final Orders – Outline of Case;[9]

   (f)Affidavit of Husband filed 8/06/2017;

   (g)Financial Statement of Husband filed 8/06/2017.

   [8] Exhibit 2; Further Amended Initiating Application no longer relied on

   [9] Exhibit 3; Amended Response no longer relied on

Approach to alteration of interests in property

1. In considering applications for alteration of property interests and transfer of property the Court must:

   (i)Identify the existing legal and equitable interests of the parties in property;[10]

   (ii)Consider whether it would be just and equitable in the particular circumstances to make an alteration;

   (iii)

   If an alteration should be made, to consider the matters contained in

   
   

   ss 79(4) and 75(2) of the Act in coming to an adjustment;  and

   (iv)Analyse and consider whether the adjustment under consideration would be just and equitable.

   [10] Stanford & Stanford (2012) 247 CLR 108; Bevan & Bevan [2013] FamCAFC 116

1. Identify the assets and liabilities of the parties

1. The parties’ assets are set out in the joint balance sheet:[11]

   [11] Exhibit 1

Ownership		Description	Wife’s value	Husband value
ASSETS
1	J	Matrimonial home at Suburb D	1,660,000	1,660,000
2	J	Shares	44,292	44,292
3	H	Shares	8,715	8,715
4	W	Shares	91,626	91,626
5	H	Car	7,410	7,410
6	W	Car	6,340	6,340
7	J	H Bank	181,396	181,396
Total		1,999,779	1,999,779
LIABILITIES
8	J	Mortgage	776,202	776,202
9	J	Loan for H Bank shares	180,000	180,000
Net Asset Pool		1,043,577	1,043,577
SUPERANNUATION
10	H	424,940	424,940
11	W	371,485	371,485

1. Notes to Exhibit One:

   (a)Item 2 joint shares;

   (b)Item 7 H Bank shares; and

   (c)Item 9 Investment loan for item 7;

   can be removed from the asset pool.

2. Provision for GST at 20 per cent is $45,137 which effectively reduces the value of the two assets to nil.

3. An order will be made for the sale of the shares (items 2 and 7) repayment of the loan (Item 9) and retention for payment of CGT. In the unlikely event of there being any excess the net proceeds to be divided equally.

4. I note that there is there is an error in the addition of the liabilities totals. The correct totals are as follows.

Corrected Totals 956,202 956,202

1. Revised Asset Pool is as follows:

Ownership		Description	Wife’s value	Husband value
ASSETS
1	J	Matrimonial home at Suburb D	1,660,000	1,660,000
3	H	Shares	8,715	8,715
4	W	Shares	91,626	91,626
5	H	Motor car	7,410	7,410
6	W	Motor car	6,340	6,340
SUPERANNUATION
10	H	Superannuation	424,940	424,940
11	W	Superannuation	371,485	371,485
Gross Asset Pool		2,570,516	2,570,516
LIABILITIES
8	J	Mortgage	776,202	776,202
Net Asset Pool		1,794,314	1,794,314

2. Would it be just and equitable to make an adjustment to interests in property

1. The parties agree that at commencement of cohabitation contributions were equal. The parties had no valuable assets, what they each had was qualifications and a capacity for hard work.

2. There was a concession on behalf of the wife, properly made in my view, that by separation the position was “tantamount to equality.”

3. Both parties had worked hard, both in paid employment and in engagement with the welfare of the family, care, education and supervision of their son and to each other.

4. Between separation in June 2015 and date of trial in August 2017 both parties used the husband’s retrenchment fund [$147,000] and the wife used remaining joint funds [$80,000]. On behalf of the wife I was urged to addback these amounts. I have declined to do so.

5. Accordingly at date of trial I conclude contributions had been equal.

Section 75(2)

1. The parties are both just age 50 years and are in sufficiently good health to be working full time.

2. On behalf of the husband it was conceded that there could be a modest adjustment in favour of the wife, because at least for the next two and a half years until their son is an adult, the wife has responsibility for his care.

3. This was an appropriate concession to make.

4. Notwithstanding education, medical and known extra-curricular expenses being equally shared, the wife is the one who will meet their teenage son’s needs for accommodation, attendance at school, travel and entertainment until the end of 2020 when Year 12 is complete for him.

5. However on behalf of the husband it is submitted that there is an adjusting factor in his favour being the capacity for the wife to earn at a higher level.

6. I am not persuaded by this argument. The wife has earned at a higher level in the past and may do so again. However she is likely to tailor her work to meet their son’s needs until he finishes high school in just over three years.

7. By then eight years will have passed since she earned at a level higher than the husband. She may or may not in her mid-fifties pursue post graduate work in order to compete with younger qualified people.

1. For her part, the wife says a 20 per cent variable should be applied on account of the wife’s care of the parties’ son such that an adjustment of interests 60/40 per cent in her favour is made.

2. In my view this adjustment would be disproportionate. A modest adjustment, namely a differential of five per cent reflects the constraint on the wife’s life and working hours over the next two to three years. Given that the husband pays Child Support as assessed (presently $402 per week) and all other costs will be paid equally, no greater adjustment is required.

3. Each party has superannuation , the husband slightly more (by approximately $50,000) which is a reflection of a break from the workforce by the wife. However each will now contribute from income in an equivalent way.

4. Accordingly, there should be an overall division of assets 52.5 per cent to the wife and 47.5 per cent to the husband.

5. I am satisfied that the orders properly reflect the parties’ contributions during their long marriage.

6. The analysis has been undertaken on the basis of an agreed value for the family home.

7. The sale price will likely be different to the attributed value and there will be sale costs. Whether the ultimate figure for the net asset pool is higher or lower the intention of the orders is that the net pool should be shared by the parties such that the overall division is 52.5 per cent to the wife and 47.5 per cent to the husband. To do otherwise is to risk injustice to one of the parties.

8. The husband to receive 47.5 per cent of asset pool in the sum of $852,299 consisting of:

3	H	Shares	8,715
5	H	Motor car	7,410
10	H	Superannuation	424,940
Plus cash payment from proceeds of sale of the former matrimonial home On present figures 46.5 per cent of net equity in home	411,234
Total		852,299

1. The wife to receive 52.5 per cent of the asset pool in the sum of $942,015 consisting of:

4	W	Shares	91,626
6	W	Motor car	6,340
11	W	Superannuation	371,485
Plus cash payment from proceeds of sale of the former matrimonial home. On present figures 53.5 per cent of net equity in home	472,564
Total		942,015

1. Orders are made accordingly.

I certify that the preceding eighty-seven (87) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cleary delivered on 15 March 2018.

Associate: 

Date:  15 March 2018