Cortes & Almeer
[2023] FedCFamC2F 1409
•2 November 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Cortes & Almeer [2023] FedCFamC2F 1409
File number: MLC 3957 of 2021 Judgment of: JUDGE O'SHANNESSY Date of judgment: 2 November 2023 Catchwords: FAMILY LAW – final property orders – short relationship – where one party seeks the sale of a property – where one party made significant contributions and the other made limited contributions – express or resulting trust – where part of the property is held on trust for a child – no admissible evidence as to the value of the property – where the parties jointly took out a personal loan – who should repay the loan – where one party has a considerable income and the other has limited or no capacity to earn an income. Legislation: Evidence Act 1995 (Cth) s 140
Family Law Act 1975 (Cth) ss 79, 90SB, 90SF, 90SL, 90SM, 90SS, 90ST, 117
Cases cited: Benson & Drury [2020] FamCAFC 303
Bosanac v Commissioner of Taxation (2022) 275 CLR 37; (2022) 65 Fam LR 508; FLC ¶94-107; [2022] HCA 34
Calverley v Green (1985) DFC 95-006
Clauson & Clauson (1995) FLC ¶92-595
Dickons & Dickons [2012] FamCAFC 154
Dyer v Dyer (1788) 2 Cox Eq Cas 92
Fields & Smith (2015) FLC ¶93-638
Fox v Percy (2003) 214 CLR 118
Hallinan v Witynski [1999] FamCA 1127
Harrington v Harrington (2007) FLC ¶93-317
Hickey and Hickey and the Attorney-General [2003] FamCA 395; (2003) FLC ¶93-143
Hobson v Hobson (2020) 61 Fam LR 557, [2020] FamCAFC 251
Hoffman & Hoffman (2014) FLC ¶93-591
J & S [2003] FamCA 618
Keskin & Keskin and Anor (2019) FLC ¶93-932
Parshen v Parshen (1996) FLC ¶92-970
Phipson & Phipson [2009] FamCAFC 28
Re F: Litigants in Person Guidelines (2001) FLC ¶93 072
Rosati v Rosati (1998) FLC ¶92-804
Stanford v Stanford (2012) FLC ¶93-518
Tory v Jones (1990) DFC 95-095
Varnham & Moses (2021) FLC ¶94-007
Wallis & Manning (2017) FLC ¶93-759
Wayne & Wayne [2010] FamCAFC 33
Division: Division 2 Family Law Number of paragraphs: 199 Date of last submission/s: 2 November 2023 Date of hearing: 18-20 May and 1 July 2022, and 2 November 2023 Place: Melbourne Counsel for the Applicant: Mr Carne Solicitor for the Applicant: SMR Legal The Respondent: Litigant in Person ORDERS
MLC 3957 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR CORTES
ApplicantAND: MS ALMEER
Respondent
ORDER MADE BY:
JUDGE O'SHANNESSY
DATE OF ORDER:
2 NOVEMBER 2023
Amended pursuant to rule 10.13(1) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)Amended pursuant to rule 10.13(1) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)
THE COURT ORDERS THAT:
1.Order 7 (a) and (b) and Order 8 and Order 9 of the orders of 17 November 2021, and any arrears arising thereunder, be and are discharged.
2.That the Applicant, Mr Cortes, do all acts and things to pay, and to indemnify the Respondent, Ms Almeer, against all and any liability in relation to the B Bank BSB … Account Number …31 (‘the #...31 Loan’) as and when such liability is due or arises.
3.That as between the Applicant and the Respondent, the Respondent retain all her right title and interest in the property known as C Street, Town D, in the State of Victoria (‘the Property’) and the Applicant do all acts and things to cause the removal of any caveat, if any, that he has lodged over the title to the Property.
4.That unless otherwise specified in these orders and save for the purpose of enforcing any monies due under these or any subsequent orders:
(a)Each party be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the possession of such party as at the date of these orders (the furniture, personal possession, and like chattels in the Property being deemed to be in the possession of the Respondent).
(b)Each party retain any superannuation benefits belonging to or earned by that party.
(c)Insurance policies remain the sole property of the owner named therein.
(d)Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.
5.All extant applications are otherwise dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE O’SHANNESSY
INTRODUCTION
Having separated after a relationship of 10 months, the Applicant De Facto Husband, Mr Cortes, and the Respondent De Facto Wife, Ms Almeer, seek the determination of the Court in property proceedings. The main asset of the relationship is a property in the Town D area (‘the Property’), purchased in May 2020, where the title is registered in Ms Almeer’s name alone. The parties have a personal loan in the parties’ joint name (‘the #...31 Loan’).
The questions I have to decide are:
(1)Is it just and equitable to order a property settlement or payment to the Applicant?
(2)If it is what is the property of the parties and how does the applicable law apply?
(3)What is to be done about the debt of the #...31 Loan?
(4)What should be done about the existing obligations on the Respondent by reason of the orders of 7 November 2021?
(5)Should the Respondent contribute to the Applicant’s costs?
I must look at the competing property alteration proposals in accordance with Part VIIIAB of the Family Law Act1975 (Cth) (‘the Act’).
BACKGROUND
This was a short and financially disastrous de facto relationship where the parties lived together from about late 2019 until 20 August 2020.
Mr Cortes was born in 1984 and is aged 39 years old. He earns approximately $107,000 plus superannuation per year as an educator. He has two children from a previous relationship, born in 2015 and 2018, who live with their mother and spend time with Mr Cortes.
Ms Almeer was born in 1983 and is aged 40 years old. She is unemployed and her only income is through Centrelink JobSeeker payments. She has no formal qualifications. She has one child from a previous relationship born in 2017, E, who lived with his grandmother at the time of the final hearing. Her previous partner, Mr F, the father of E, died in 2019 and she received a payout of about $160,000 from the life insurance component of Mr F’s superannuation (‘the Life Insurance Payment’). In was common ground that some of this sum was paid to her on account of, and on trust for, her son E. Ms Almeer alleged that an equivalent sum was held or paid to Mr F’s two other children (from a prior relationship), so the effect was that the life insurance proceeds were divided four ways in equal shares. Ms Almeer alleged at final hearing, and I accept, that she has recently suffered from depression and anxiety.
The parties commenced cohabitation in late 2019 after Ms Almeer relocated from City H to Town D for the purpose of moving in with Mr Cortes. They separated in mid-2020. They have no children together.
Short Financial History of Relationship
At the commencement of cohabitation, Mr Cortes and Ms Almeer shared rental costs, by alternating monthly rental payments. Mr Cortes says that he was mostly but not entirely responsible for day-to-day costs, and I accept that.
During the relationship, the parties started a modest business together (‘the business’).
In mid-2020, Ms Almeer purchased a property in Town D (‘the Property’) for $160,000. She used the funds received from the Life Insurance Payment of around $125,000, including the money held on trust for E. The parties took out a joint personal loan of $35,000 (the #...31 Loan) for part of the remainder of the cost. Repayments were $300.59 per fortnight. The conveyancing and stamp duty cost was paid for by Ms Almeer applying her entitlement to the First Home Owners’ Grant to those costs.
After settlement, Mr Cortes paid all repayments of the #...31 Loan. They otherwise shared costs until the relationship ended and Ms Almeer remained in the Property. At all times Mr Cortes maintained his professional and well-paid (relative to Ms Almeer) employment.
Mr Cortes claims that he undertook significant renovations on the Property, sometimes assisted by Ms Almeer and his parents. Ms Almeer says that her family and family friends also undertook significant renovations on the Property, and she says they did so believing it to be the house she would live in with her son.
After separation, Mr Cortes continued to make repayments on the #...31 Loan until mid-2022. At the time of the final hearing, he says he had paid $12,755.47 toward repayments and the remaining balance was $29,121.17.[1] After payment of the proceeds of (‘the court-ordered’) sale of Ms Almeer’s Motor Vehicle 1 and some of her funds held on trust, as at 6 February 2022 the balance outstanding was $19,513.
[1] See page 4 of exhibit H2.
Between the establishment of the #...31 Loan and the end of the relationship (about three months), Mr Cortes made the only two payments of $300.59, plus three payments of $50, a total of $751.18. Thereafter, the end of the relationship until final hearing, Mr Cortes made another 36 roughly fortnightly payments of $300 or $300.59, one payment of $330, one payment of $301, another six payments of $50, plus a one-off payment of $264.92 and a total of about $11,714.21. He said that if he did not make the payments, they would not be made and his credit rating would suffer and the #...31 Loan could be and would be enforced against him. To trial, altogether he paid $11,714.21. After final hearing in June and July of 2022, Mr Cortes made another three payments of $300.59. He has paid a total of $12,616 towards the loan, and I infer from his income.
THE PROCEEDINGS
Mr Cortes commenced proceedings in this court on 12 April 2021. On 17 November 2021, another Judge gave Mr Cortes leave to institute proceedings for property settlement, and I infer that was in the context of the short length of their relationship, it being less than two years, on the basis of section 90SB, “substantial contributions” and “a failure to make an order would result in serious injustice to the applicant”. Those orders provided as follows:
1.The Applicant Father have leave to institute proceedings for property settlement pursuant to section 90SB(c) of the Family Law Act 1975 (Cth).
2.The proceedings are listed for Final Hearing in the [Town D] sittings of this Court on 1 March 2022 at 10:00am (“the adjourned date”).
3.The Respondent file and serve a Response, any affidavit/affidavits upon which she seeks to rely and a Financial Statement by 10 January 2022.
4.Any party requiring subpoenaed material to be available for inspection in [Town D], advise the Chambers of Judge Stewart by no later than 4.00pm on the Tuesday of the week preceding the Final Hearing.
5.Each party file and serve a case outline by no later than 2 days prior to trial and provide a copy in Word format to [email address].
6.Until further order, the Respondent pay and continue to pay, as and when the same falls due, all mortgage payments owing to [Bank] on the personal loan in the parties’ joint names, … (“the loan account”).
7. On or before the adjourned date, the Respondent:-
(a)pay to the Applicant the sum of $7,842 by depositing that amount into a bank account nominated by the Applicant in writing (not being the loan account); and
(b)refinance or discharge the loan account such that the Applicant no longer has any legal responsibility for payment of the same.
8.Until further order, the Respondent be and is hereby restrained from accessing or reducing her superannuation entitlements save to make the payment to the Applicant as referred to in order 7(a) hereof.
9.Until further order and in the event that the Respondent receives any compensation payments as a result of the litigation conducted on her or her child’s behalf by [Solicitor A], such payment (less any legal costs owing by the Respondent to [Solicitor A]) be placed in an interest bearing trust account in the name of the Respondent with [Solicitor A] pending further order of this Court or with the consent in writing of the Applicant AND THE COURT NOTES THAT for this purpose:
(a)The Applicant shall serve a sealed copy of these orders on [G Law Firm]; and
(b)Pursuant to section 112AD of the Family Law Act 1975 (Cth) there are sanctions available to the Court on appropriate application on parties that fail to comply with orders.
10.In the event that the Respondent fails to comply with orders 3 and/or 7(a) and/or 7(b) by the adjourned date, the Applicant shall have liberty to apply for final property orders on an undefended basis (subject to the discretion of the presiding Judge).
11.The parties attend for property mediation with an accredited Family Dispute Resolution Practitioner (“FDRP”) as nominated by Relationships Australia (Victoria) on [FDRP date].
12.Each of the parties contact Relationships Australia (Victoria) [contact details] to confirm arrangements for mediation within 14 days of the date hereof.
13.Within 14 days of being notified of the nominated FDRP, each party send to the FDRP documents outlining the dispute including the following:-
(a) a copy of their Application/Response;
(b) a full list of their assets (including any superannuation) and liabilities;
(c) details of any alleged financial contributions;
(d)any relevant factors pursuant to section 75(2) of the Family Law Act 1975;
(e) their proposal for property settlement; and
(f) any current intervention or restraining orders.
14.Unless otherwise exempted from payment the Applicant must pay the Conciliation Conference fee in accordance with the Family Law (Fees) Regulation 2012 prior to the property mediation.
15.Each party exchange a market appraisal or valuation of any asset in dispute no later than 14 days prior to the property mediation.
16.Each party provide to the nominated FDRP any market appraisal or valuation of any asset in dispute no later than 7 days prior to the property mediation.
17.Regardless of whether the Respondent has complied with any of these orders, she attend at the Court personally (electronically) on the adjourned date with or without a legal practitioner, failing which the Court may proceed to hear the matter on an undefended basis (subject to the discretion of the presiding Judge).
18.The question of any property adjustment (if any) to be made in the proceedings is adjourned to the adjourned date.
19.The Applicant’s costs of 11 November 2021 and this day be reserved to the adjourned date.
The matter was listed before me in the Town D Circuit sittings of this Court (‘the Town D Circuit’) in March 2023, where I adjourned the matter to the May Town D Circuit and directed the parties to comply with their duties of disclosure. In March I implored Ms Almeer to file material so that her side of the story could be understood. She did not.
Ms Almeer did not file any documents with the Court or provide the Court with an outline of case. However, shortly before the May 2022 hearing, again after I had implored her to provide her side of the story, she provided emails and documents to the Court that were marked as exhibits and confirmed in her evidence in chief. In particular, exhibit W3 was an email sent by Ms Almeer to the Court and Mr Cortes’ solicitor detailing her side of the story and orders she sought.
The Final Hearing
The Final Hearing commenced on 18 May 2022 in the Town D Circuit and ran over three days. The matter concluded at 5:24 pm on Friday 20 May 2022, the last day of the May Town D circuit sitting of the Court. On 20 May 2023 I made orders for Mr Cortes to sell Ms Almeer’s Motor Vehicle 1 (that was in his possession) and for the proceeds of that sale to go toward repaying the #...31 Loan. I also ordered that Ms Almeer arrange for funds held on trust for her, that somehow relate to the estate of Mr F, to be paid towards the discharge of the #...31 Loan. I reserved orders and reasons. These are those reasons and orders.
Mr Cortes was represented by solicitor and counsel, and Ms Almeer remained a litigant in person throughout the final hearing. I had regard to Ms Almeer being a litigant in person and provided some information to the parties pursuant to the settled law of the obligations of a Judge described in Re F: Litigants in Person Guidelines (2001) FLC ¶93 072 at [253].
Because of the COVID-19 pandemic-related restrictions, all of the hearing was conducted electronically over Microsoft Teams.
Only the parties were cross-examined.
On 6 June 2022 the solicitor for Mr Cortes emailed my Chambers with a receipt for the sale of the Motor Vehicle 1 for $5,000 and bank statements that showed the movement of those funds to repay the #...31 Loan.
On 7 June 2022 Ms Almeer emailed my Chambers the following:
Your honour,
I put to you if you would please consider [Mr Cortes] transfer me $500 out of [Mr F’s] death estate. I am asking you to consider this as I have a […] in [City H] to be able to obtain furniture that would in my regards if I was able to obtain this and sell I could sell some of the belongings that [Mr F] and I had to make a further contribution to the loan.
I have friends that have my property and [Mr Cortes] is aware of what's in there. There should be an asset of atleast [sic] $5000 of furniture that I will sell. I also have some essential sentimental items that I'm sure [Mr Cortes] would want me to obtain.
I have emailed [Mr Cortes’] solicitor] in regards to this. And she has informed me to email you and cc her as I have.
Thankyou for your time
Kind regards
Though it was in an irregular format, I considered that email to be an application to reopen the proceeding while judgment was reserved to provide further evidence of assets in the joint pool, and for an interim property order to transfer money in order to enlarge the asset pool. I listed the matter for a further hearing on 1 July 2022 at 10.00am via Microsoft Teams. I made orders for $1,600 of funds held in trust to be provided to Ms Almeer on condition that those funds be applied toward the removal and sale of the assets of a container of furniture, and for the entire proceeds of the sale of the container contends to be put toward repayment of the #...31 Loan.
On 18 January 2023, while the trial decision was reserved, my Chambers received an email from Mr Cortes’ solicitor requesting leave to file a short affidavit updating the Court on matters that had passed since the final hearing. On 20 January 2023 I made orders in Chambers giving both parties leave to file short affidavits. Mr Cortes did so on 6 February 2023, but Ms Almeer did not.
On Friday 27 October 2023 my Associate emailed the parties requesting to be provided with the current balance of the #...31 Loan and details of any payments toward the outstanding personal #...31 Loan by either party since 6 February 2023. On Tuesday 31 October 2023 the solicitor for Mr Cortes sent an up-to-date bank account statement of the outstanding balance. I am grateful to Mr Cortes’ solicitor for her assistance to the Court.
On Monday 30 October 2023, my Associate listed this matter for judgment delivery via Microsoft Teams and sent the parties and practitioners the hearing details. In that email I requested the parties acknowledge receipt so that I was sure all parties were aware of the hearing. Ms Almeer had not responded by Wednesday 1 November 2023 and so my Associate tried to call her and the phone number on the record was disconnected. My Associate then emailed Mr Cortes’ solicitor and requested that they provide any further contact information for Ms Almeer. Mr Cortes’ solicitors contacted Ms Almeer via Facebook and notified her of the hearing, providing screenshots of that conversation to the Court via emails which have been marked exhibits H15 and H16.
The delivery of this judgment is well outside the three-month guideline for delivery of judgments of this Court. I apologise to the parties and their lawyers for the delay. In writing these reasons I have re-read the affidavits of evidence in chief and the exhibits and I have read the transcript of the proceedings. I have, assisted by that reading, a clear recollection of the demeanour of the witnesses, the evidence, the issues and the rhythm of the trial.
The further oral evidence
On the day listed for judgment via Microsoft Teams, Mr Cortes appeared by his solicitor and Ms Almeer again appeared in person. When taking appearances Ms Almeer was accompanied (seated behind her) by a man. I enquired of her what the circumstances of the man’s attendance was and I was told that he was a friend and he paid her rent for a room. The man identified himself as Mr J and Mr J, without objection, was sworn in and he gave evidence. Mr J denied being in an intimate relationship with Ms Almeer and told me he has been unemployed “since COVID” although he hopes to resume working when some legal matters and paperwork have been cleared up. He told me that his JobSeeker benefit was about $640 per fortnight and that he paid about $300 per fortnight to Ms Almeer as rent and that his family help with groceries and the like. He denied being in an intimate relationship with Ms Almeer. It is implausible that Mr J would provide half of his JobSeeker benefit to Ms Almeer in return for staying at her house/use of a room. In those circumstances I do not accept that evidence but I do accept that he makes some small contribution or payment to Ms Almeer when he is able.
On further inquiry Ms Almeer told me she had obtained work for about a month or two, but she could not maintain that employment in circumstances where her dog got run over. Ms Almeer was sworn in and gave evidence that what she had told me (from the electronic bar table) was true and correct. She further denied being in an intimate relationship with Mr J or that she or he regularly used illicit substances. Ms Almeer told me that E remains with her mother and she sees him at Christmas. Mr Cortes, who appeared by his solicitor, did not seek to ask Mr J or Ms Almeer any questions. After this evidence I adjourned until later in the day to revise aspects of my reasons and consider the further evidence. I accept Ms Almeer’s evidence about E and having been employed for only a month since May of 2022. I accept her evidence it took her 9 weeks, without income, to get back on the JobSeeker benefit.
I am not satisfied that “rent” from Mr J is a regular or reliable source of income or that it will be in the future. I am not satisfied about the nature of Ms Almeer’s relationship with Mr J is as they say it is but I cannot find, on the balance of probabilities, that she is cohabiting with any person. If Ms Almeer was cohabiting with Mr J that would not lead me to conclude her financial circumstances were materially improved. As set out under the heading of section 90SF factors I am not satisfied that the further evidence makes any material affect to the outcome of the proceedings.
Documents relied upon
Mr Cortes relied upon the following documents:
·Outline of case filed 1 March 2023;
·Amended initiating application filed 16 August 2021;
·Affidavit of Mr Cortes filed 16 August 2021;
·Financial statement filed 12 April 2021;
·Affidavit of Service filed 19 April 2021;
·Affidavit of Service filed 17 August 2021; and
·Affidavit filed 6 February 2023.
Ms Almeer did not file any documents in these proceedings. However, she relied upon the exhibits marked with “W,” listed below.
Exhibits tendered
Exhibits tendered are listed in the below chart:
Date
Exhibit:
Description:
Tendered by:
19/05/22 H1 Applicant’s minute of proposed final orders Mr Cortes 19/05/22 W1 Motor Vehicle 1 receipt Ms Almeer 19/05/22 H2 Mr Cortes’ financial documents, tender bundle pages 4-6, 8. Mr Cortes 19/05/22 W2 The promise document Ms Almeer 19/05/22 W3 Email from 2 March 2022 at 6:52pm (affidavit of Ms Almeer) Ms Almeer 19/05/22 W4 Email from 2 March 2022 at 5:03pm Ms Almeer 19/05/22 W5 Email from 2 March 2022 at 9:58pm Ms Almeer 19/05/22 W6 Email from 3 May 22 at 12.40am Ms Almeer 19/05/22 W7 Email from 18 May 22 at 11.20 – Wife’s super balance Ms Almeer 19/05/22 W8 Bundle of photos, screenshots and receipts Ms Almeer 20/05/22 W9 Email chain re: proposals - tender bundle pages14-16, 9 Ms Almeer 20/05/22 H3 The initiating affidavit Mr Cortes 20/05/22 H4 The initiating financial statement Mr Cortes 20/05/22 H5 Applicant’s “new” tender bundle Mr Cortes d 20/05/22 H6 Financial documents Mr Cortes 20/05/22 H7 Bank details Mr Cortes 20/05/22 H8 Mr Cortes’ costs notice Mr Cortes 20/05/22 H9 Pages 18-20 of the tender bundle Mr Cortes 01/07/22 H10 Statement of agreed facts Mr Cortes 31/10/23 H11 First email from Mr Cortes’ solicitor on 31 October 2023 Mr Cortes 31/10/23 H12 Balance sheet of the #...31 Loan as of 30 October 2023 Mr Cortes 31/10/23 H13 Second email from Mr Cortes’ solicitor on 31 October 2023 Mr Cortes 31/10/23 H14 Balance sheet of the #...31 Loan as of 31 October 2023 Mr Cortes 1/11/23 H15 Email from Mr Cortes’ solicitor and Facebook screenshots Mr Cortes 1/11/23 H16 Email from Mr Cortes’ solicitor and Facebook Messager screenshots Mr Cortes APPLICABLE LAW
Standard of proof
In these reasons, statements of fact are findings of fact. I apply section 140 of the Evidence Act 1995 (Cth) (‘the Evidence Act’) which states as follows:
(1)In a civil proceeding, the court must find the case of a party proved if it is satisfied that the case has been proved on the balance of probabilities.
(2)Without limiting the matters that the court may take into account in deciding whether it is so satisfied, it is to take into account:
(a) the nature of the cause of action or defence; and
(b) the nature of the subject-matter of the proceeding; and
(c) the gravity of the matters alleged.
Credit of the parties
In Fox v Percy (2003) 214 CLR 118 (‘Fox v Percy’), at first instance, the rider of a horse was found to be a more reliable witness than the driver of the Kombi Van that had collided with oncoming horses and riders who were coming around the bend. The issue was upon which side of the road the collision occurred. The Court of Appeal of the Supreme Court of New South Wales had to interfere with the first instance decision where it had been incorrectly determined, by reason of the apparent reliability of the witnesses, that the collision occurred on the wrong side of the road for the Kombi Van. The Court of Appeal found the first instance decision was wrong because of the position of the braking skid marks of the Kombi Van that were in evidence. The skid marks of the Kombi Van incontrovertibly demonstrated that the Kombi Van had been on its correct side of the road at the point of collision. The High Court found that the Court of Appeal was justified in upholding the appeal.
When discussing the drawing of conclusions about truthfulness and reliability solely or mainly from the appearance of the witnesses, the plurality of the High Court observed:
[31]…in recent years, judges have become more aware of scientific research that has cast doubt on the ability of judges (or anyone else) to tell truth from falsehood accurately on the basis of such appearances. Considerations such as these have encouraged judges, both at trial and on appeal, to limit their reliance on the appearances of witnesses and to reason to their conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events…
[Citations omitted]
I have endeavoured to rely on objectively established facts and the apparent logic of events in this case as well as the evidence and the demeanour in the witness box of the parties.
PROPERTY APPLICATIONS
The applicable law
On 17 November 2021, Mr Cortes leave obtained pursuant to section 90SB[2] of the Act to institute proceedings under Part VIIIAB. The property orders dispute falls to be determined by application of Part VIIIAB of the Act and in particular the provisions of sections 90SF, 90SM, 90SL and 90SS of the Act.
[2] The relationship was less than two years.
Those provisions were brought into the Act (and hence giving this Court the task of determining property alteration or property settlement arising from de facto relationships) from 1 March 2009. The concepts within those provisions (largely but not entirely) mirror corresponding provisions in Part VIII of the Act that apply to property alteration or property settlement arising from legal marriage.
Section 90SM(1), (3) and (4) of the Act states:
Section 90SM – Alteration of property interests
(1)In property settlement proceedings after the breakdown of a de facto relationship, the court may make such order as it considers appropriate:
(a)in the case of proceedings with respect to the property of the parties to the de facto relationship or either of them--altering the interests of the parties to the de facto relationship in the property; or
…
including:
(c)an order for a settlement of property in substitution for any interest in the property; and
(d) an order requiring:
(i) either or both of the parties to the de facto relationship; or
(ii) the relevant bankruptcy trustee (if any);
to make, for the benefit of either or both of the parties to the de facto relationship or a child of the de facto relationship, such settlement or transfer of property as the court determines.
…
(3)The court must not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
(4)In considering what order (if any) should be made under this section in property settlement proceedings, the court must take into account:
(a)the financial contribution made directly or indirectly by or on behalf of a party to the de facto relationship, or a child of the de facto relationship:
(i)to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them; or
(ii) otherwise in relation to any of that last-mentioned property;
whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the de facto relationship or either of them; and
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the de facto relationship, or a child of the de facto relationship:
(i)to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them; or
(ii) otherwise in relation to any of that last-mentioned property;
whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the de facto relationship or either of them; and
(c)the contribution made by a party to the de facto relationship to the welfare of the family constituted by the parties to the de facto relationship and any children of the de facto relationship, including any contribution made in the capacity of homemaker or parent; and
(d)the effect of any proposed order upon the earning capacity of either party to the de facto relationship; and
(e)the matters referred to in subsection 90SF(3) so far as they are relevant; and
(f)any other order made under this Act affecting a party to the de facto relationship or a child of the de facto relationship; and
(g)any child support under the Child Support (Assessment) Act 1989 that a party to the de facto relationship has provided, is to provide, or might be liable to provide in the future, for a child of the de facto relationship.
By section 90SM(4)(e) I am to take into account section 90SF(3) and that provision states as follows:
Section 90SF – Matters to be taken into consideration in relation to maintenance
…
(3) The matters to be so taken into account are:
(a)the age and state of health of each of the parties to the de facto relationship (the subject de facto relationship ); and
(b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c)whether either party has the care or control of a child of the de facto relationship who has not attained the age of 18 years; and
(d)commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii)a child or another person that the party has a duty to maintain; and
(e) the responsibilities of either party to support any other person; and
(f)subject to subsection (4), the eligibility of either party for a pension, allowance or benefit under:
(i)any law of the Commonwealth, of a State or Territory or of another country; or
(ii)any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party; and
(g) a standard of living that in all the circumstances is reasonable; and
(h)the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
(i)the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant; and
(j)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k)the duration of the de facto relationship and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l)the need to protect a party who wishes to continue that party's role as a parent; and
(m)if either party is cohabiting with another person--the financial circumstances relating to the cohabitation; and
(n)the terms of any order made or proposed to be made under section 90SM in relation to:
(i) the property of the parties; or
(ii) vested bankruptcy property in relation to a bankrupt party; and
(o)the terms of any order or declaration made, or proposed to be made, under this Part in relation to:
(i)a party to the subject de facto relationship (in relation to another de facto relationship); or
(ii)a person who is a party to another de facto relationship with a party to the subject de facto relationship; or
(iii)the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv)vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(p)the terms of any order or declaration made, or proposed to be made, under Part VIII in relation to:
(i) a party to the subject de facto relationship; or
(ii)a person who is a party to a marriage with a party to the subject de facto relationship; or
(iii)the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv)vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(q)any child support under the Child Support (Assessment) Act 1989 that a party to the subject de facto relationship has provided, is to provide, or might be liable to provide in the future, for a child of the subject de facto relationship; and
(r)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(s)the terms of any Part VIIIAB financial agreement that is binding on either or both of the parties to the subject de facto relationship; and
(t)the terms of any financial agreement that is binding on a party to the subject de facto relationship.
The Court has wide powers as set out as section 90SS of the Act:
90SS General powers of the court
General powers
(1)The court, in exercising its powers under this Division, may do any or all of the following:
(a)order payment of a lump sum, whether in one amount or by instalments;
(b) order payment of a weekly, monthly, yearly or other periodic sum;
(c)order that a specified transfer or settlement of property be made by way of maintenance for a party to a de facto relationship;
(d)order that payment of any sum ordered to be paid be wholly or partly secured in such manner as the court directs;
(e)order that any necessary deed or instrument be executed and that such documents of title be produced or such other things be done as are necessary to enable an order to be carried out effectively or to provide security for the due performance of an order;
(f) appoint or remove trustees;
(g)order that payments be made direct to a party to the de facto relationship, to a trustee to be appointed or into court or to a public authority for the benefit of a party to the de facto relationship;
(h)make a permanent order, an order pending the disposal of proceedings or an order for a fixed term or for a life or during joint lives or until further order;
(i) impose terms and conditions;
(j) make an order by consent;
(k)make any other order, or grant any other injunction, (whether or not of the same nature as those mentioned in the preceding paragraphs of this section) which it thinks it is necessary to make to do justice;
(l)subject to this Act and the applicable Rules of Court, make an order under this Division at any time before or after the making of a decree under another provision of this Act.
…
Stanford
In the High Court of Australia case of Stanford v Stanford (2012) FLC ¶93-518 (‘Stanford’) the majority stated some fundamental propositions about section 79 proceedings. Section 90SM(3) mirrors section 79(2) and so Stanford is applicable in this case.
In Stanford the essential issue was whether it was just and equitable to make any property order at all, in circumstances where the consortium vitae or marriage relationship had not broken down by way of a separation and the wife’s needs were otherwise provided for. The parties had become physically separated due to the ill health of one of them with that party being in residential care and the other remaining in the matrimonial home. The proceedings for the party in ill health were conducted by a case guardian who was also the beneficiary under the will of that party.
The Family Court of Western Australia had made an order for a property settlement that would have necessitated the sale of the former matrimonial home where the husband continued to reside. For 37 years prior to the wife moving to a nursing home, the parties had made their matrimonial home in a house registered in the husband's name. The wife’s expenses in accommodation were being met and she had the benefit of a sum set aside in the event she needed anything further. It was the second marriage for both of the parties.
The High Court varied the order of the Full Court and found that in the circumstances it was not just and equitable that a property settlement or property alteration order be made at all. This was so despite 37 years of marriage and contribution by the wife. Hence section 79(4) or section 90SM (4) contribution, even 37 years of it, was not to be conflated with the section 79(2) “just and equitable” requirement but should be considered separately.
The High Court also observed that it should not be concluded that the making of an order is just and equitable only because of, or only by reference to, the matters in section 79 (also applicable to section 90), without a separate consideration of section 79(2) (and/or section 90SM (3)). The majority observed:
[41]...The fundamental propositions that have been identified require a court have a principled reason for interfering with the existing legal and equitable interests of the parties to the marriage and whatever may have been their stated or unstated assumptions and agreements about property interest during the continuance of the marriage.
[42]In many cases where an application is made for property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice by made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and the wife. No less importantly, the express implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship... And the assumption that any adjustment of those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4),
In Stanford, the High Court did not go on to comment upon how section 79(4) or section 90SM should be applied where it was just and equitable that a property alteration or settlement order be made. Stanford was not concerned with the nuts and bolts of how section 79(4) or section 90SM was to be applied in the ordinary run of cases, to the extent there is such a thing.
In Stanford nondisclosure or false evidence of a party’s financial circumstances was not an issue. Stanford does not touch upon whether it is just and equitable to alter property interests in favour of the non-disclosing party or a party giving false evidence of his or her financial position.
Mr Cortes contends that it is just and equitable that I make section 90SM property alteration orders. Ms Almeer did not make any specific submission as to whether the making of any orders under section 90SM would not be in the interests of justice. However, I consider implicit in her case was the proposition that orders would not be just and equitable because;
·Mr Cortes signed a document whereby he promised not to make a property claim and she relied on the promise in entry of the #...31 Loan agreement and cohabitation with Mr Cortes;
·At all times she wanted to keep the house and it was in her sole name;
·At least half of the money she put into the purchase price and renovation was money held on behalf of her son; and
·She believes she could refinance half the remaining debt (I note here that for the reasons later set out I ultimately do not accept she can).
Mr Cortes’ letter with the promise
At about the time of receipt of the Life Insurance Payment, February 2020, Mr Cortes signed a letter and gave it to Ms Almeer. The letter read:
To [Ms Almeer],
If you deport money into my savings account with the [K Bank] I promise that I will not touch this money. I promise that I am not in this relationship for the money. I am completely in love with you and I want to help and support you and [E].
[Signed by [Mr Cortes]] 11-2-20
I accept this promise was made. Ms Almeer interprets that letter as a promise not to make a claim on the Property. But Ms Almeer did not deposit the money into his account. Events moved swiftly on. Ms Almeer purchased the Property by the application of most of the Life Insurance Payment and Mr Cortes and Ms Almeer borrowed the balance to settle that purchase. They renovated the Property and then the relationship ended in acrimonious terms.
The letter with the promise is not an impediment as a matter of law to Mr Cortes claim. Only a formal financial agreement in accordance with the Act would be such an impediment. The “promise” is a matter to be considered along with all the circumstances. The “promise”, in the circumstances, only touches on but does not determine or significantly influence whether it is just and equitable to make orders in accordance with the Act.
Mr Cortes’ payments to the #...31 Loan
During the relationship, over three months or 12 weeks, Mr Cortes paid about $751 towards the #...31 Loan,[3] or about $63 per week (on average) over that time. His net of tax and child support (for his two children of his prior relationship) income was about $1,200 to $1,300[4] per week, plus superannuation. The money he paid towards the #...31 Loan was from his income, not from capital. His 2021 financial statement, while living with his mother and paying her $100 per week “rent” with “all other expenditure” of $750 per week, Mr Cortes had an excess of income over expenditure (while accommodated with his mother) of $296 per week.
[3] See H5 at page 6, 4 payments of $300.59 and 3 payments of $50 plus establishment fee of $195 = $1,547.36
[4] Based on his filed 12 April 2021 financial statement that showed weekly salary of $2,064 less tax of $530 less child support of $211 = $1,323 as at 2021. It was uncontested that during the relationship he paid higher child support of $703 per fortnight or $351 per week and so his net of child support and tax income would have been lower by about $140 per week. It was also uncontested that during the relationship until he received his “property settlement” from his prior relationship that he paid something towards a mortgage obligation relating to that relationship.
I make this calculation based on his filed 12 April 2021 financial statement that showed a then weekly salary of $2,064, less tax of $530 less child support of $211, equalling $1,323 as at 2021. His salary was likely a little less in 2019 than in 2021, and it was uncontested that during the relationship, at some point, he paid higher child support of $703 per fortnight or $351 per week, and so his net of child support and tax income for a time would have been about $140 per week less. It was also uncontested that during the relationship he paid something towards a mortgage obligation relating to his prior relationship until he received his “property settlement” from that relationship.
At some point in the short period between cohabitation and the end of the relationship, Mr Cortes received a property settlement of $25,000 that he applied to his finance obligation encumbering his motor vehicle, not the purchase price or the renovation cost of Property.
At the end of the relationship Mr Cortes retained his motor vehicle, the business (including the Motor Vehicle 1 and some of the business equipment), his not insubstantial superannuation and most importantly, his intact earning capacity. He also retained the joint obligation to repay the #...31 Loan.
After separation, Ms Almeer’s second-hand car was broken into in an attempted theft. Her car was then inoperable and she could not afford to get it fixed. She got around on a bicycle until she fell off and broke her arm, requiring surgery that at that time prevented her from working or even seeking work.
At the end of the relationship Mr Cortes decided what business equipment he would keep and left some of the equipment for Ms Almeer outside the Property where it was removed, and Ms Almeer thinks stolen. Ms Almeer had bought into the relationship the Motor Vehicle 1 (later sold by court order and applied to the #...31 Loan). Mr Cortes kept it (and kept it safe) as “leverage” in the hope of getting Ms Almeer to take on, or refinance or discharge the #...31 Loan. Hence Ms Almeer did not have a motor vehicle or Motor Vehicle 1 to operate the business with, even had the equipment Mr Cortes left behind not been removed or stolen and had Ms Almeer had the emotional resilience and sufficient mental health to operate such a business. I am not satisfied that she did.
Soon after separation Ms Almeer “lost” the additional “Centrelink” or social security payment that related to her care of E when he went to live with Ms Almeer’s mother. Thereafter she struggled financially. She got a little work as a part time cleaner, at times earning up to $300 per week and sold a ring for $… to survive. Ms Almeer did not pursue the business after the end of the relationship, nor was she able to. She asserts that at some point she at least applied for a job in hospitality but did not get the job because she was not “double vaccinated” against COVID-19. I accept that evidence. She did not see vaccination as sensible for her because she had experienced “a medical condition”. I accept she had suffered a medical condition but her approach to and understanding of her own vaccination is one more personal disaster she experienced after the relationship ended.
Soon after the end of the relationship Ms Almeer was alone, unemployed, in poor mental health, lacking resilience and without a motor car, but she had the Property and some modest superannuation. At the time of final hearing Ms Almeer’s total weekly income was JobSeeker, which she said was about $600 per fortnight ($300 per week).[5] The Department of Social Service website information shows the single no children “JobSeeker Payment” as at May 2022 was $642.70 per fortnight, which is more reliable than Ms Almeer’s evidence on that point. The $321 per week is a tad more than Mr Cortes’ claimed excess of income over expenses in his April 2021 financial statement.
[5] Transcript page (TP) 64 of day 1.
If I do not make any property orders, that would leave the parties with the joint obligation or debt of the balance of the #...31 Loan that is now about $21,030.[6] It is unlikely that Ms Almeer will make any contribution to that obligation. It is likely Mr Cortes would end up paying the whole of the obligation because of his legitimate concern about his credit rating and future borrowing. It is likely that the arrears of the #...31 Loan would be readily enforced against him given he is in regular employment.
[6] After Mr Cortes repays his two drawings of $500 on 20 Mar 2023 and 15 May 2023 that were made in error as he says he will (see email of 31 October 2023 being exhibit ….)
Further, if no orders were made the issue of matters like coborrower obligations to the other and the parties being linked by the ball and chain of the joint #...31 Loan obligations would remain. Section 90ST provide as follows (Mirroring section 81, which applies for married couples):
In proceedings under this Division, other than proceedings under section 90SL, the court must, as far as practicable, make such orders as will finally determine the financial relationships between the parties to the de facto relationship and avoid further proceedings between them.
Because of section 90ST and the ball and chain of the #...31 Loan and the joint obligation, I am satisfied that it is just and equitable to make property alteration orders pursuant to section 90SM in this case.
The preferred approach
In Keskin & Keskin and Anor (2019) FLC ¶93-932 (‘Keskin’) the Full Court, Strickland, Kent & Austin JJ, at [44] approved what was the age old and pre-Stanford “preferred approach” as to the how the nuts and bolts of section 79(4), and hence section 90SM fitted together. That preferred approach is set out or restated at [39] of Hickey and Hickey and the Attorney-General [2003] FamCA 395; (2003) FLC ¶93-143 (‘Hickey’) as follows:
[39] The case law reveals that there is a preferred approach to the determination of an application pursuant to the provisions of section 79. That approach involves four interrelated steps. Firstly, the court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of hearing. Secondly the court should identify and assess the contributions of the parties within the meaning of section 79(4)(a), (b) & (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly the court should identify and assess the relevant matters referred to in section 79(4) (d), (e), (f) & (g) (“the other factors”) including, because of section 79(4), the matters referred to in section 75(2) so far as they are relevant and determine the adjustment study (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case.
[Citations omitted]
In case it is suggested that there may be a conflict between the High Court’s rejection of “entitlement” to a section 79 or section 90SM order by mere separation and/or section 79(4) or section 90SM(4) contribution on the one hand, and the use of the word “entitlements” in the Hickey passage cited above on the other. I regard the use of “entitlement” in the above passage as intended to be synonymous with “assessment”. I will have regard to what I find to be the contribution-based assessment rather than entitlement.
Many family lawyers find that failing to have regard to the preferred approach in negotiations, mediation or litigation (including submissions) is likely to widen the areas of dispute and make resolution by agreement more difficult and often results in a party, or both, merely seeking what he or she simply wants or regards as fair from his or her point of view, at a time of intense grief and trouble due to the breakdown of their marriage, rather than seriously contemplate, with advice, what the law of the land provides. The law of the land is the Act and the authorities guiding its application.
The preferred approach assists me in making a principled and orderly determination of the parties’ property dispute.
THE PARTIES’ CASES
Mr Cortes’ case
Mr Cortes’s wants either Ms Almeer to refinance the #...31 Loan and make a payment of $50,000 to him, or the Property be sold and the proceeds be put toward those payments. He says that would be an equitable outcome because:
·He has made payments of about $13,000 toward the #...31 Loan;
·He had been the only one making the payments for the #...31 Loan;
·The proceedings had been delayed several times due to the Wife’s noncompliance with orders and/or not appearing at hearings, leading to legal fees higher than reasonably expected;
·The equity in the Property has gone up by (he says) $120,000 since purchase;
·Mr Cortes contributed to the equity of the Property through his financial contributions and he and his family’s renovations and work;
Counsel for Mr Cortes submitted that Ms Almeer’s noncompliance and nonattendance suggested that there was no possibility of her being able to refinance the #...31 Loan or make any payments toward Mr Cortes, and so the Property would have to be sold.
In his updating affidavit filed 6 February 2023, Mr Cortes added that:
·$1600 was released to Ms Almeer from funds held in trust to enable her to remove and sell goods from a motor vehicle;
·In late July and August, Mr Cortes’ solicitors sent Ms Almeer three emails requesting information about her movements in relation to that sale and did not receive a response; and
·That Ms Almeer had not, at that point, made any repayments to the #...31 Loan.
I accept Ms Almeer has not made any repayment. I am not satisfied she was successful in receiving any substantial sum form her attempt to sell the second-hand furniture as she intended.
Ms Almeer’s case
Ms Almeer seeks to keep the Property and for the parties to each repay half of the #...31 Loan, being $15,000 each. She also said she was open to refinancing the #...31 Loan when I mentioned that possibility to her during the final hearing, although I am not satisfied that she is capable of doing so. Essentially Ms Almeer did not want any order that meant her home had to be sold.
Towards the end of the hearing when pressed she offered to pay off her half of the remaining #...31 Loan as such:
·$6,000 to $6,500 from the rest of her deceased partner’s trust (but before the $1,600 was paid to her);
·$5,000 from the sale of a motor vehicle; and
·The rest from her superannuation (notwithstanding she has not made any inquiry about that could happen).
She also claims that she could try to pay off the #...31 Loan through working via the business, however she says she needs Mr Cortes to give her the equipment so that she can recommence business. I am not satisfied Ms Almeer is able to obtain and keep employment for any sustained time. The further oral evidence this day confirms that finding.
Subsequent to final submissions the then outstanding balance was reduced by $10,800 by $5,000 from the sale of Ms Almeer’s Motor Vehicle 1 and $5,080 from her compensation payments held in trust.
The Graphic Communications
Ms Almeer also made accusations that Mr Cortes had, at the time of separation or shortly afterward, made sexually inappropriate comments to her that he would watch her through the window of her house and that those comments disturbed her. She sent the Court some text messages and graphic images of genitalia that she says, and I accept, were sent to her from Mr Cortes. The messages were responded to in lewd terms by Ms Almeer. I place no weight on those messages and images. There is no reliable evidence about whether they did or did not have any impact on Ms Almeer and I am not satisfied they did.
The sending of graphic uninvited images of genitalia may be at least unwelcome behaviour, but in this case, including where they were responded to in the manner they were, that behaviour does not inform, and is not relevant to, the property division and debt allocation controversy.
SIGNIFICANT EVENTS
The business
At the commencement of cohabitation, Mr Cortes was working and Ms Almeer was not. They decided to start a business together that Ms Almeer would mainly operate. It is agreed that they used Ms Almeer’s ABN at that time. Ms Almeer did most of the work and Mr Cortes did some jobs outside of his working hours. At some point, Ms Almeer secured regular work for L Company. At one point, a Motor Vehicle 1 was purchased and altered to more easily work with their business equipment.
Ms Almeer says she did the administration, most of the work and ran the social media account for the business. She says Mr Cortes would do a couple of jobs with her on weekends. She says they would do some cash-in-hand work on weekends. She says they considered the money they made to be a joint asset and spent it on bills.
At separation, Mr Cortes says that he offered Ms Almeer the Motor Vehicle 1 and the business equipment, but she told him that she no longer needed it as she did not want to do it anymore. He says they had ended up with two sets of many of the equipment items and that he offered that they each take one set, and that she agreed and chose the items that she took. He says they each ended up with business equipment.
Mr Cortes says that he continued to run the business for a time, changed the business onto his ABN and has since ceased the business altogether.
Ms Almeer claims that at or around separation Mr Cortes broke into her storage box and maliciously took the business equipment and a receipt book, knowing that she would not be able to earn an income without those things. Mr Cortes disputes those accusations and says that at separation he offered her the Motor Vehicle 1 and the equipment but she refused them because that was “something we had together” and she did not want to run the business anymore.[7] Mr Cortes says that the items were removed.
[7] Transcript page 32.
Ms Almeer says that Mr Cortes also continued running the business without her and took all their clients. She claims he may still be running the business, including still using her ABN. She claims that he had posted on social media about the business the previous Christmas (which I take to mean Christmas in 2021), which she says shows that he is still running the business or was at least running the business until that time. He did continue to run the business, and he says earning a modest income of $80 a week or so, until approximately two months before the final hearing.
In his trial affidavit, Mr Cortes said that during the relationship he worked full time as an educator and Ms Almeer was engaged full time as a homemaker. He said:[8]
During our relationship the Respondent and I occasionally did [work] for people. We did not have a business and did not issue invoices. We did not have many people we [worked] for but has [sic] some regular work.
[8] At [10].
During the final hearing, Mr Cortes shifted this position and agreed that they did run a business and that until two months prior to the final hearing he had earned about $80 per week “cash” from the business. He says the business was his idea and that he that he paid for the equipment himself, out of his bank account and using cash, and did all the research on them beforehand. He says the business did not earn significant money until the L Company contract work commenced.
Mr Cortes says the Motor Vehicle 1 was traded from a client in exchange for five business jobs (of a value of $250 each), which he says he did himself. He says he added a ramp to the back of the Motor Vehicle 1 to more easily move equipment in and out, which he says added about $500 to $600 in equity. I am not satisfied the parties have reliable recollections of just who paid for what equipment. But if Mr Cortes paid for anything it was from income he earned during the relationship and if Ms Almeer paid for equipment or renovations to the Property, she paid with capital from that part of the Life Insurance Payment not applied to the purchase of the Property.
I take into account that Mr Cortes paid for things from his income and regard that as a contribution, but I do not give that contribution the same weight as the application of Ms Almeer’s, likely once in a lifetime, capital from the Life Insurance Payment arising from Mr F’s death.
Although not disclosed or mentioned in either his initial affidavit or his trial affidavit, Mr Cortes continued to operate on a small part time basis the business until two months before the final hearing, with the modest equipment acquired during the relationship. He said in evidence that he obtained only about $80 per week from that activity, and I infer this was gross income before expenses like fuel, parts and repairs. I accept that evidence. But the ownership or possession of the modest equipment and the income should have been referred to in both affidavits and his financial statements. The Judge that made the 7 November 2021 orders was not aware of that circumstance because Mr Cortes did not refer to that information and Ms Almeer did not refer to it either.
The Life Insurance Payment
Mr Cortes’ evidence about the Life Insurance Payment included the following:
7(b)savings of approximately $125,000, being the balance of funds received from a superannuation payout of $160,000 following the death of her partner [in] 2019. I believe she may have received some of the funds in her name directly and some as trustee for her son [E]. The Respondent told me she had paid some debts from when she was living in [City H] such as phone accounts and veterinary bills. I believe she also paid out a personal load but cannot recall the details of this.
Ms Almeer never discovered any Life Insurance Payment documents to Mr Cortes. His initial affidavit had addressed the matter as follows:
10.The Respondent purchased a property in [mid-]2020 at [address] for $160,000 … She had received a superannuation payout following her former partners death. I believe she received the payment as a trustee for [E]. However, by the time of settlement I believe she only had around $125,000 remaining. She had paid some debts from [City H] such as phone accounts and veterinary bulls. I believe there was also a personal loan but cannot recall the details of this.
I was not provided with any explanation about why Mr Cortes changed his position from “the payment” to “some of the funds” being paid to Ms Almeer as “trustee” for her son E.
Ms Almeer’s evidence (see exhibit W3) about this was as follows:
I acquired this property from a $165,000 death insurance payment from my deceased finance ([Mr F]). Half of this money was for my son however he was very young so I was able to access it…
In cross examination she said:
Mr Carne.And therefore you needed some additional funds to be able to purchase the property?
[Ms Almeer]. I did not need it. I had 175,000 I received from – which was half of my son’s and half of mine from when [Mr F] passed away, and I had that money, and I was going to put it all towards the house, but [Mr Cortes] convinced me to put some aside so that we could move in straight away and renovate it quickly …
In discussion I raised the issue with counsel:
His HonourSo you – I need you to address me on that, and then I need you to address me on the issue that’s raised in [Mr Cortes]’ first statement where he says that the money was – to purchase the house – was held on trust for [E]. That’s absent his current affidavit, and what do I do, legally, with the concept that it’s actually – on one version, the whole of it is [E]’s house. On the other hand, half of it is [E]’s house, and how does your client get a property settlement out of [E]’s house – or half of [E]’s house. Do you follow my conundrum.
Ms Almeer said she transferred Mr Cortes $30,000 from the estate money. She did not. She ultimately conceded she did not know which or whose account the $30,000 from the Life Insurance Payment was deposited to. A small amount, less than $3,000 was applied to business equipment. It is not clear what came from the Life Insurance Payment and what was paid for by Mr Cortes from his salary. She says the rest of the money from her late husband’s superannuation was spent on renovations to the Property.
Improvements to the Property
The Property was purchased in mid-2020 for $160,000, using $125,000 in money controlled by Ms Almeer and a jointly controlled personal loan of $35,000 (the #...31 Loan). Both parties agree that after settlement, improvements were made to the Property. Mr Cortes submits that the Property, at the time of the final hearing, had a value of $280,000, and that growth in equity was partially due to those improvements. Ms Almeer submits that the Property is worth $200,000. I have not been provided with any admissible expert evidence as to the value of the Property.
Mr Cortes says that he undertook physical work on the Property, as well as financial contributions. He claims that he undertook “most of” the labour of removing plaster from the kitchen, bathroom and laundry, he assisted with the replastering, and he landscaped the front garden. He also says that his father built new side gates. He says that he spent $3,500 on plumbing and $1,890 on window replacing (total $5,390) from his own personal money. He also says that he borrowed $5,000 from his parents that was spent:
·$800 on carpeting;
·$1,500 on vinyl flooring;
·$2,500 on rewiring.
He did not provide any details about the loan to the parents to the Court, including repayment details. His parents did not provide any evidence in these proceedings. I accept those funds came from his parents, but I am not satisfied there is a loan with a legal obligation to repay. There may be a moral obligation to repay the money.
Ms Almeer says that the improvements were financed mainly by the $30,000 that she says she transferred to Mr Cortes. She says they never sat down and worked out what was spent, where money came from or went, or looked at their bank accounts. To the best of her knowledge, she says that (in approximate dollar amounts):
·$7,000 was spent on rewiring and electric works,
·$6,000 was spent on plumbing,
·$500 was spent on tiles,
·$700 was spent on a kitchen countertop,
·$200 was spent on a dishwasher,
·$700 for a kitchen re-fit; and
·smaller amounts were spent on other items such as light globes and paint.
Mr Cortes agrees that Ms Almeer spent some money on improvements. He says those amounts claimed by her are “a little bit out”. He says that the amounts paid toward the electrical was more like $5000 and toward the kitchen was more like $1000, plus $400 for a skip hire. He says overall she spent around $10,000 on improvements to the Property, and he spent $10,390 (including the money borrowed from his parents).
I accept that both funded the improvements but do not regard the “guesstimate” of dollar amounts of either party as sufficiently reliable to satisfy me as on the balance of probabilities. I am also satisfied that the evidence of each party, to a modest degree, is influenced by what each perceives as helpful to his or her case and by the lack of records and the frailty of recollection of small transactions some time ago.
APPLICATION OF THE PREFERRED APPROACH
Step one: identify the property and liabilities
I turn now to step one of the preferred approach.
The effect of the assets and liabilities position of each party, and modified to represent the movement during and after final hearing, is as follows:[9]
[9] From page one of exhibit H5 and what I was told in Court.
Owner Mr Cortes’s value Ms Almeer’s value Assets The Property Ms Almeer $280,000 $200,000 Less Ms Almeer’s obligation to E Not included ($100,000) Half[10] Funds held in Trust $6,978 (before $1,600 released to Ms Almeer) and balance applied to the #...31 Loan Ms Almeer - - Motor Vehicle 3 $1600 Ms Almeer $5,000 - Motor Vehicle 2 Mr Cortes $25,000 $25,000 Mr Cortes’ business equipment Negligible $1,500 (plus) Total Assets $310,000 $126,500 Liabilities The #...31 Loan Joint ($21,030) ($21,030)[11] Net non-superannuation Assets $288,970 $105,470 Superannuation Mr Cortes’s superannuation Mr Cortes $119,797 $119,797 Ms Almeer’s superannuation Ms Almeer $60,327 $60,327 [10] Inferred
[11] Inferred
Evidence of value of the Property
Mr Cortes filed an appraisal of the Property, at annexure 3 to his trial affidavit, that purported to assess its value to be in the range of $255,000 to $280,000 (‘the $280,000 appraisal’). Mr Cortes asserted that the Property should be assessed as having the value of $280,000 given the delay of a further 10 months between that appraisal and the final hearing. Ms Almeer claimed that the property was worth only $200,000. Neither party provided any admissible expert evidence of value. I regard the $280,000 appraisal as an attempt by Mr Cortes to obtain evidence of value, but not admissible evidence of value. I regard Ms Almeer’s assertion of the value being $200,000 as an admission against interest, and admissible. This is far from profound evidence and can be given only modest weight, but is the only admissible evidence I have. When I inquired of Mr Cortes’ counsel what to do with the valuation conundrum, I was advised that, given Mr Cortes’ case was the likely outcome being the inevitable sale of the Property, the precise value would be determined by the market.
I proceed on the basis that the value of the Property is at least $200,000.
I am not satisfied of the value of the minor business equipment.
E’s interest
I am satisfied that half of the Life Insurance Payment received by Ms Almeer was for the benefit of E and she received that sum, either expressly or by operation of law on trust for him. She applied those funds to the Property. There is no evidence or even suggestion that Ms Almeer should be released from that obligation to hold the funds, and hence the property the funds were applied to, on trust for E and in the proportions as she received them. I accept her evidence that she received half of the funds on trust for E and not “some” or the whole payment as asserted at different times by Mr Cortes.
I am satisfied Ms Almeer received in the order of $160,000 in the Life Insurance Payment on her own behalf and on behalf of E. That she is obligated to hold those funds and/or the property acquired with the funds on trust for E follows as a matter of law. Whether Ms Almeer holds the funds and hence the Property on an express (meaning actually stated or set out or declared) trust or a resulting trust does not matter. Ms Almeer asserts, and I accept, she received the funds (half of the Life Insurance Payment) on trust for E, a child. The terms of the trust are unclear. If Ms Almeer’s dealing with the money and her evidence, which I accept, does not establish an express trust, the evidence establishes a resulting trust.
Although the lawyers will understand what a resulting trust is, for the benefit of Ms Almeer and Mr Cortes, a resulting trust can be explained as follows. The principle is as stated in Calverley v Green[12]:
“……where two or more persons advance the purchase price of property… it is presumed that the person or persons to whom the legal title is transferred holds or hold the property upon resulting trust in favour of those who provided the purchase price in the shares in which they provided it.”
[12] Calverley v Green (1985) DFC 95-006 per Deane J at 75,145.
The principle can be traced back to at least 1788 in Dyer v Dyer where it is concisely stated:
“…..the trust of a legal estate, results to the [person] who advances the purchase money.”[13]
[Emphasis added]
[13] Dyer v Dyer (1788) 2 Cox Eq Cas 92 at 93 expressed in the patriarchal values of the time; Evans M., Outline of Equity and Trusts, Butterworths 1988, page 232.
The High Court of Australia also affirmed and explained the conventional application of the presumption of resulting trust in Bosanac v Commissioner of Taxation (2022) 275 CLR 37; (2022) 65 Fam LR 508; FLC ¶94-107; [2022] HCA 34. Back in 1990, in a clear and methodical discussion of trusts and legal presumptions, Powell J, in the Supreme Court of NSW crisply stated the principal thus:
“….the presumption is that the legal title is held upon trust for the person or persons, providing the money, in the case of more than one person, in proportion to the amount contributed by them respectively.”[14]
[14] Tory v Jones (1990) DFC 95-095 at 76,230.
Save for the assertions of express trust that would be consistent with a resulting trust, no evidence points to anything that would rebut the presumption of resulting trust in this case. I also accept that Mr Cortes was aware of the obligation Ms Almeer had to hold the funds or the property purchased with the funds on trust for or for the benefit of E. Section 90SM property alteration proceedings bring into account the debts and property of Ms Almeer and Mr Cortes, but not property of, or held for, someone else.
What then is E’s interest? In this case the funds directly and indirectly contributed to the purchase and improvement of the property and contemplated at the point of purchase are:
·$80,000 of the Life Insurance Payment by Ms Almeer on account of E or on trust for E;
·$80,000 of the Life Insurance Payment on account of herself;
·$17,500, half of the jointly borrowed funds of the $35,000 from the #...31 Loan by Mr Cortes and applied to the purchase;
·The amount of the first home buyers grant contributed by Ms Almeer and applied to conveyancing, titles charges and stamp duty of about, I estimate in the absence of evidence, of about $6,000;
·A total of about $201,000.
Funds paid on improvements, mortgage or debt payments after purchase, in the absence of actual agreement at the time of purchase, are not regarded as contribution to the purchase but may, depending on the circumstances, justify an equitable charge relating to that contribution.
Doing the best I can on the evidence I have, it is tolerably clear and I accept that E’s interest is, for the purpose of this proceeding, $80,000 as a proportion of $201,000 or 39.8% of the Property.
Conclusion as to the “pool”
Hence, re-ordered into Mr Cortes’s ‘keep’ and Ms Almeer’s ‘keep’, the assets and liabilities of the parties are as follows:
| Item | Value[15] | ||
| Ms Almeer’s non superannuation assets or ‘keep’ | |||
| 1 | The Property, 100% less E’s interest of 39.5% or 60.2% and 60.2 % of $200,000 = | $120,400 | |
| 2 | Ms Almeer’s car | Negligible | |
| 3 | One half of the #...31 Loan remaining | ($10,500) | |
| 4 | Ms Almeer’s net non-superannuation ‘keep’ | $109,500 | |
| Mr Cortes’s net assets or ‘keep’ | |||
| 5 | Motor Vehicle 2 | $25,000 | |
| 6 | One half of the #...31 Loan remaining | ($10,500) | |
| 7 | Mr Cortes’s business equipment | Negligible | |
| 8 | Mr Cortes’s savings and household contents[16] | Negligible | |
| 9 | Mr Cortes’ net non-superannuation ‘keep’ | $14,500[17] | |
| 10 | Parties’ total net non-superannuation assets | $124,000 | |
| Superannuation (no splitting order is sought by either party) | |||
| Mr Cortes’s super fund | $119,797 | ||
| Ms Almeer’s super fund | $ 60,327 | ||
[15] All whole dollars after rounding.
[16] Described in his financial statement as $2,500 and $3,500 but I infer his savings will have been applied to legal fees and I don’t accept his estimate of second “contents” as likely to be accurate and there is no equivalent on Ms Almeer’s side of the ledger.
[17] Equivalent to 11.6% of the total.
I am not satisfied that any party has any hidden or undisclosed asset, bank account or source of income.
Step two: section 90SM(4)(a), (b) & (c) contributions
The thrust of the authorities of the Full Court, which I endeavour to apply, is that all direct and indirect contributions, financial and non-financial, made long ago or made recently must be considered and had regard to in a holistic manner. Many of the below cases refer to section 79, which largely (but not exactly) mirrors section 90SM, and so are relevant in this case.
I am assisted by statements of the Full Court, including in Hoffman & Hoffman (2014) FLC ¶93-591 at [52], where the Full Court observed:
[52]In each case, we consider that the point being made is that there is no principle or guideline (or, indeed, anything else emerging from s 79), that renders the direct contribution of income or capital more important – or “special” – when compared against indirect contributions and, in particular, contributions to the home or the welfare of the family.
I note and follow the observations of the Full Court in Fields & Smith (2015) FLC ¶93-638 where at [42], they observed:
[42]If it is necessary to make the point again, and to highlight it for the purpose of this appeal, we add our endorsement to what has been made clear in the authorities referred and to the Full Court’s comments in [52] of Hoffman, that the words of s 79 do not provide endorsement for any category of contribution related to any class of property (for example, high wealth) being, by virtue of that category or class, more valuable or important that another. In each case the contributions made by the parties must be evaluated in the context of the facts particular to that case.
I am mindful of the Full Court’s observations in Dickons & Dickons [2012] FamCAFC 154, as recently restated in Benson & Drury [2020] FamCAFC 303, and although a case dealing with a “Kennon” claim, the observations of the Court are apposite. Those observations include the following:
[35]… all contributions must be weighed collectively and so it is an error to segment or compartmentalise the various contributions and weigh one again the remainder.
[36]That principle has a counterpart in the application factors prescribed in section 75(2) or section 90SM(3) of the Act. Any adjustment to the parties contribution-based- entitlements should be determined inclusively after considering all relevant factors; not by aggregating incremental adjustment in respect of each relevant factor.
[Citations omitted]
Hence I must avoid, “the error of segmentation and the comparative of analysis of one feature of the evidence against all others”.
It is clear that the terms of section 90SM(4) require that I take into account all contributions within the terms of section 90SM(4)(a),(b) and (c) whenever they were made, and that it is an error to give greater or lesser weight to any particular type of contribution.
In regards to assets and liabilities brought in at, or soon after, the start of the relationship, I accept that Mr Cortes made the following contributions:
·A Motor Vehicle 2 (subject to a loan repaid with his property settlement) now valued at $25,000;
·A matrimonial settlement where $25,000 was received;
·Superannuation of $94,320; and
·Personal and household goods of negligible value.
I find Ms Almeer brought in or made the following initial contributions:
·A Motor Vehicle 3 now of negligible value;
·Her part of the Life Insurance Payment of $80,000, being half of the $160,000 total Life Insurance Payment. Of that $125,000 was directly applied to the purchase of the property and the balance, a further $25,000 was applied to the purposes of the relationship including renovations. Precisely who paid for which particular renovation does not inform the section 90SM of the Act exercise.
·The Motor Vehicle 1 later sold for $5,000 and applied to the #...31 Loan.
·The remainder of the funds held in trust and of which $5,080 was applied to the #...31 Loan.[18]
·Superannuation of something in the order of a bit less[19] than her current balance.
[18] I do not regard the $1,600 released to Ms Almeer from the funds held on trust to assist in selling the container contents as a contribution and I have no information about what happened, but no funds from that were applied to the #...31 Loan.
[19] Ms Almeer did not make any contributions to superannuation during the relationship and I infer the fund will have made some earnings or increase since then.
In the matter of Parshen v Parshen (1996) FLC ¶92-970 (‘Parshen’) the Full Court of the Family Court observed at 83,665:
In our view, in the absence of evidence to the contrary, it should be inferred in proceedings pursuant to the provisions of s 79 that moneys howsoever received by a party during the course of the parties' cohabitation, are used by that party for the benefit of the family unit. Such moneys, in those circumstances, thus constitute a financial contribution by the party who received the moneys.
I am satisfied that principle is equally applicable to section 90SM (de facto) proceedings as to section 79 (married) proceedings.
Parshen is now almost 30 years old, but that principle in Parshen has been approved by the Full Court in J & S [2003] FamCA 618, at [57] of Hallinan v Witynski [1999] FamCA 1127, and at [29] of Harrington v Harrington (2007) FLC ¶93-317 and so remains good law.
During the short relationship, each of the parties and each of their families worked on and contributed to the renovations. Each party contributed to the best of their ability. Mr Cortes’ family gave or lent modest sums to Mr Cortes. Ms Almeer’s family undertook significant work including plastering. Overall, I am satisfied that Ms Almeer’s family undertook more work on her behalf. I dismiss the notion that Mr Cortes contributions were somehow defective because of any mistake or error was made.
During the relationship each party worked in the business effort. Mr Cortes continued in his employment and, save for child support and mortgage payments in relation to his prior relationship, he contributed his income to the purposes of the family. Each party undertook the burden and responsibility of the borrowing of the #...31 Loan.
In regards to contributions since separation, I am satisfied that from the end of the relationship until the middle of 2022, not quite two years, Mr Cortes made regular payments from his income of $300.59 until the middle of 2022, and including three payments after the final hearing. After the end of the relationship, he paid a total $12,616 from his income. That is so not withstanding that, he has not had any use of the Property since separation. He submits that he has done so for the betterment of his own credit, or at least to not degrade his credit standing, and I accept that. This not insignificant contribution must be considered and weighed. In addition, he had the trouble of storing and then selling Ms Almeer’s Motor Vehicle 1 and applying her funds to the #...31 Loan. He ceased the payments to the #...31 Loan in February 2023.
However, the overwhelming contributions are the direct financial contributions of Ms Almeer of her half of the Life Insurance Payment of $80,000, her application of her first homeowners grant and the application of the extrinsic contribution of the Motor Vehicle 1 proceeds of $5,000, and the balance of her funds held on trust of $5,080.
Overall, I regard and assess contribution as about 80/20 in Ms Almeer’s favour in regard to the non-superannuation assets. That is a ratio of about 4:1. In dollar terms that assessment comes to about $99,200 for Ms Almeer and $24,800 for Mr Cortes at the end of the second step analysis.
I regard the contribution to superannuation as being in the proportions that each holds in their own fund. In this short relationship I do not regard either as making in significant contribution greater than the balance of his or her fund.
Step three: section 90SF(3) factors
I refer to and repeat the shopping list of section 90SF(3) factors or provisions recited earlier.
I refer to the observations of the Full Court on section 75(2) (and, by extension, section 90SF(3)) adjustments in Hobson v Hobson (2020) 61 Fam LR 557, [2020] FamCAFC 251 (‘Hobson’). In that matter, the trial judge made an adjustment of 4% on account of section 75(2) factors. The Full Court found that adjustment to be inadequate and upheld the wife’s appeal and remitted the matter for another hearing. I am assisted by the general principles of Hobson but the underlying facts, both extent of income disparity and the size of the asset pool and length of the relationship, are very different and not comparable, and so that case does not provide guidance as to the particular percentage adjustment in this case. However, in Hobson the weighing or analysis of the section 75(2) adjustment as a proportion of the parties’ income was adopted and it was found to be an error for that not to occur.
The observations of the Full Court in Clauson & Clauson (1995) FLC ¶92-595 (‘Clauson’) have guided judges and practitioners since 1995. In Clauson the Full Court did not interfere with a contribution assessment of 75/25 in the husband’s favour. But on a re-exercise of discretion, the Full Court made a section 75(2) adjustment of 25% and included the observation (at 81,911) about consideration of section 75(2) factors that:
…in any event it is the real impact in money terms which is ultimately the critical issue.
In Rosati v Rosati (1998) FLC ¶92-804 (‘Rosati’) the Full Court had reason to re-exercise the discretion in the division of the parties’ assets in a $1,500,000 pool of assets back in 1998. After finding that section 79(4) contribution should be regarded as 60/40 in the husband’s favour the Full Court found a 10% adjustment on account of section 75(2) factors was appropriate. But it is significant how the Full Court addressed the income disparity on account of section 75(2), way back in 1998, and it was addressed as follows at 85,046:
On our adjusted figure for the value of the parties net assets ($1,503,863), adjustment of 10% in the wife’s favour results in an increase in her entitlement of $150,386, and a corresponding reduction in the husband’s entitlement, producing a differential movement between them of $300,772 …
Decisions where the Full Court finds error and re-exercises the discretion or decision are of particular assistance to Judges and practitioners where the facts are similar enough to be roughly comparable. The principles of law stated on appeal would ordinarily be binding on the Trial Judge and the re-exercise of discretion on the facts a helpful example, although not binding.
In Wayne & Wayne [2010] FamCAFC 33 (‘Wayne’), the Full Court dealt with an appeal where the total asset pool was $937,000 (in 2010 dollars), the parties had 4 children aged 18, 16, 10 and 8. The 18-year-old could be regarded as independent and the 16-year-old, having left school, and was soon enough to be working or looking for work. The 10- and 8-year-old children lived in a 5/9 nights per fortnight in school term and shared holiday arrangement, with the husband for the 9 nights. The 16-year-old also lived with the husband. The husband was found to have a full-time earning capacity of $45,000 to $50,000 and the wife worked 35 hours per week and had slightly less earning capacity[20]. Contribution was found to be 48/52 in the wife’s favour and that was not interfered with on appeal.
[20] See at [58] and despite complaint the Full Court did not interfere with those findings.
In Wayne, in those circumstances, the Learned Trial Judge made a section 75(2) or third step adjustment of 10%. The Full Court found the extent of that adjustment to be an error of law and decided the adjustment should be only 4% in the circumstances. The rational of that decision can be easily discerned from the following paragraphs of the appeal decision:
[107]It is also important to recall what was said in Phipson & Phipson [2009] FamCAFC 28 when the Full Court was dealing with another appeal from the trial Judge in the present proceedings:
[39]It is always important to keep in mind that an adjustment of X% for s 75(2) factors leads to a disparity in the value of property received by the parties representing 2 x X%. It is that disparity, measured in “money terms”, that requires consideration in determining whether the result is just and equitable: see Campbell v Kuskey (1998) FLC 92-795 at 84,928.
[108]The 10% adjustment his Honour made on account of s 75(2) factors has led to a disparity in favour of the wife equivalent in value to 20% of the assets. In money terms this represents $187,733 out of a total asset pool of $938,665. Apart from the issues associated with the care, accommodation and maintenance of the children, the s 75(2) factors largely balanced out (save that as a result of the assessment of contributions the wife would have more capital than the husband). The husband was going to have whatever responsibility remained for the care, accommodation and maintenance of J. Both parties would have significant responsibility for the two younger children. It is true the wife will have the children with her about 20% more of the time than the husband, but this amounts to only a little more than 70 additional days a year.
[109]In our view an assessment leading to a disparity of $187,733 in the capital/superannuation to be received by each party was outside the reasonable ambit of the trial Judge’s broad discretion, even taking into account the matters found by his Honour relating to the non-payment of child support in the period after the husband gave up his employment. Our conclusion is sufficient to enliven appellate intervention (House v The King (1936) 55 CLR 499 and Norbis v Norbis (1986) 161 CLR 513). The appeal will therefore be allowed.
…
[113]Taking these matters into account, and the failure of the husband to pay child support after giving up his employment, we consider there should be a 4% adjustment for s 75(2) factors, creating a disparity of 8% between the parties – or in money terms an amount of $75,093.
In Lovine & Connor another Full Court approved the observations in Wayne and demonstrated that the percentage, the actual dollar amount of the adjustment and the disparity the adjustment creates should be taken into account when considering a section 75(2) adjustment.
The disparity that a 15% adjustment made between the parties in Lovine & Connor contributed to that Full Court finding that such an adjustment was wrong in that case. However, the facts of that case are very different to this one and so that case does not assist with what would be an appropriate adjustment in dollar or percentage terms but the cited principle remains applicable. In Wallis & Manning (2017) FLC ¶93-759 the Full Court, after a discussion of the section 75(2) factors applicable to that case, concluded:
[169]In our view, s 79(4)(e) requires those matters to be taken into account in arriving at orders that are just and equitable as between the parties. In arriving at an appropriate assessment for those factors, a dollar value of it should be uppermost in our minds [79] and, of course, the ultimate disparity in entitlements which it might produce. That dollar value is, in turn, dependent upon the value of the interests in property of the parties.
In Varnham & Moses (2021) FLC ¶94-007 the Full Court again approved the “real money” approach of Wayne, and of Phipson & Phipson [2009] FamCAFC 28 (cited in Wayne), and of Lovine & Connor.
There can thus be no doubt that settled law requires, when considering all relevant section 75(2) factors that the “real money” as well as the “percentage” must be considered, as well as the disparity between the parties, that any adjustment creates and an eye to the relationship of the quantum of any adjustment compared to ant income disparity of the parties and take account of the length of the relationship along with all relevant section 75(2) or section 90SF(2) factors.
The parties did not specifically address section 90SF factors in submissions but the evidence compels their application.
Discussion of section 90SF(3) factors
The following headings, for convenience, paraphrase clauses of section 90SF(3), recited earlier, but I take into account the whole of the relevant cause.
Age and state of health
Mr Cortes is 39 years old and Ms Almeer is 40 years old. I am satisfied Ms Almeer has had, and has, significant emotion and mental health issues that significantly impact on her ability to obtain and/or keep paid employment. I am so satisfied from the manner of Ms Almeer’s chaotic conduct of the proceedings and her case and her demeanour during the hearing (and this day) and the limited medical evidence she has produced and the evidence of her circumstances. Ms Almeer’s demeanour and conduct of her case is consistent with and corroborative of her suffering depression and anxiety. Ms Almeer’s losing effective custody of E to her mother soon after the end of the relationship is consistent with her suffering depression and anxiety and having limited employment capacity. Mr Cortes was generally aware of her difficult plight when he sent a text message stating “your mum was right taking [E] of [sic] you” and “You don’t even care for him or you would be at the hospital with him now”[21] shortly after the end of the relationship.
[21] See exhibit W8 at page 3.
I have no evidence suggesting Mr Cortes has any significant health issues.
Both have many years of life before they can access their superannuation unless hardship provisions apply, and I have no evidence of those.
Income, property, financial resources and capacity for employment
Mr Cortes earns approximately $107,000 per year plus superannuation as a professional. He says that his financial resources were limited due to his obligations to make repayments of the #...31 Loan of $300 every fortnight since purchasing the Property until July 2022 when he stopped paying. At that time the sale of Ms Almeer’s Motor Vehicle 1 and the application of her compensation payments relating to Mr F’s passing, about $10,000 in total, or about a third of the balance of the #...31 Loan had put the loan in front or in credit.
Mr Cortes’ financial statement from April 2021 says that he pays $100 per week in rent or mortgage payments. On his financial statement he had an excess of income over expenses of about $296 per week. That sum is almost Ms Almeer’s entire income from JobSeeker. That is not to suggest that Mr Cortes lives the “life of Riley” or has life easy but his financial circumstances are far superior to Ms Almeer’s. He has retained the most significant asset he brought into the relationship, his earning capacity.
Mr Cortes’ superannuation between the start of the relationship and final hearing increased by almost $30,000, roughly equal to the amount of the #...31 Loan. Mr Cortes has very substantial and significant outstanding legal fees. Those fees were exacerbated by the chaotic way Ms Almeer responded to Mr Cortes’ application.
Ms Almeer’s only income is from Centrelink. She said to me at the final hearing that she had worked on-and-off in hospitality but had not been employed due to her vaccination status. I find that she has very limited employment prospects unless and until her emotional and mental health significantly improves. Ms Almeer struggles to get by on JobSeeker and, I infer, lives in poverty. I am satisfied that the circumstance of Mr J living in her house in recent times has not materially improved her financial circumstances. That Ms Almeer has been only able to hold a job for a month or so since May of 2022 only confirms that the personal circumstances of mean Ms Almeer is not able to obtain and sustain employment.
Mr Cortes has roughly $120,000 in superannuation and Ms Almeer has $60,000 in superannuation. It is likely that Mr Cortes, with his significantly greater earning capacity, will make greater superannuation contributions until retirement than Ms Almeer will.
Mr Cortes’ financial position is far superior to Ms Almeer’s.
Care of children under 18 years
The parties do not have any children together. Mr Cortes has the care of two children of a previous relationship that live with him on alternate weekends. Ms Almeer did not have care of her child from a previous relationship at the time of the final hearing. On the evidence before me, Mr Cortes will likely have more costs relating to the care of children going forward than Ms Almeer. Mr Cortes also pays significant child support.
Commitments of each of the parties to support themselves or a child
Mr Cortes, in his financial statement filed in April 2021, says that he pays $211 per week in child support and after that has an excess of income over expenses of $296 after his unchallenged claimed discretionary expenditure of $750 per week, tax and child support.
On her JobSeeker income, that is a bit less than half Ms Almeer’s discretionary income and about a quarter of Mr Cortes’ net of tax and child support income, Ms Almeer has struggled, and struggles, to survive.
Responsibilities of either party to support any other person
Mr Cortes supports his children when spending time with them and pays assessed child support. Ms Almeer provides some counselling and things for E when she can.
Entitlement to a means tested pension
Ms Almeer is supported by the taxpayers of the Commonwealth of Australia though the social security benefits of JobSeeker while she is not in paid employment and does not have E living with her. If E did live with her she would have the greater income of parenting payments but also the greater expense of providing for E and her circumstances would not be materially advanced.
Ms Almeer has some superannuation, but on the evidence, I am not satisfied that is available to her.
Reasonable standard of living
Ms Almeer submits that she will find it difficult to purchase another home, if I were to order the Property to be sold, even as a default provision. I am satisfied that because of her tiny income, Ms Almeer’s standard of living is considerably less than during the relationship. I am satisfied that, because Mr Cortes has the drive and determination to maintain his employment, his living standard has not materially diminished.
Mr Cortes’ standard of living, because of his own efforts, is far superior to that of Ms Almeer..
Would maintenance assist education or training
The parties did not provide any indication that this factor was relevant in these proceedings. I hope Ms Almeer proves me wrong, but I am not satisfied that she currently has the emotional and intellectual capacity for education or training. Ms Almeer did not seek that Mr Cortes pay for such training.
Effect on creditors
Mr Cortes submits that orders are necessary in order to ease his burden of repayment of the #...31 Loan. I place significant weight on Mr Cortes’ repayments to the #...31 Loan and also of the payments, of a roughly equivalent amount to a third of that loan, made from the capital assets of Ms Almeer had that were applied to that loan after the hearing.
Effect party contributed to the earning capacity and property of the other
I am not satisfied either contributed to the earning capacity of the other.
Whether party cohabiting with another person
There is no evidence that Mr Cortes is cohabitating with another person. As set out earlier I took evidence this day about whether Ms Almeer was cohabiting with Mr J who lives in her house. I remain sceptical about the evidence about the circumstances of his living in Ms Almeer’s house but do not find, on the balance of probabilities, that Mr J and Ms Almeer are cohabiting in a de facto relationship. I am not satisfied the circumstance of Mr J living in her house, that has arisen since the final hearing, has made any significant or material difference in Ms Almeer’s capacity to support herself or her standard of living or her financial circumstances.
Any fact or circumstances required to take into account
Reflection on submissions
I raised with the parties at the end of the hearing (at 5:20 pm on Friday evening) that I was contemplating ordering Ms Almeer to pay out the balance of the #...31 Loan, and in default the Property be sold. Ultimately, and upon reflection, I am not satisfied that Ms Almeer has any realistic capacity to refinance the #...31 Loan. Upon reflection I may well have been on the way to being so persuaded of that by the grace and persuasiveness of Mr Carne’s submissions. I indicated that I would look at all the evidence.
Realistic Prospect of refinance
If Ms Almeer had any realistic prospect of raising those funds, ordering that she do so may have been an appropriate and just and equitable outcome of the conventional four step analysis. Despite her optimistic but unrealistic statements of intention to raise funds, I do not find that she has any realistic prospect of raising those funds.
Chaos added to Mr Cortes’ legal costs
I also take into account the additional expense Ms Almeer’s chaotic conduct of her response or case has caused to Mr Cortes’ legal fees.
Consequence/effect of proposed orders
I also need to take into account the consequence to each of the parties to potential orders. At first blush, Ms Almeer should be responsible for all of the #...31 Loan outstanding because she retains her interest in the Property and the use of that part held on trust for E and because Mr Cortes has no continuing benefit from the Property. That concept has some attraction but does not determine the application of sections 90SM and 90SF of the Act.
Ms Almeer has a bad credit profile and an unpaid debt relating to defaulting on a car loan from many years ago. If there is no realistic prospect of Ms Almeer refinancing the #...31 Loan, the consequence or effect of an order requiring her to do that with sale in default is actually, in substance, an order for sale. The sale of the Property will be devastating for Ms Almeer. However, where just and equitable and a proper order taking account of section 90SM(4) and section 90SF(3), such orders are routinely made and I would not shrink from that order in those circumstances.
If Mr Cortes is left with the burden of the balance of the #...31 Loan, he will feel a sense of injustice and he will take some time to payout that loan from his income unless it is refinanced. The balance of the #...31 Loan is less that the financial obligation that was on his car at the start of the relationship. The balance of the #...31 Loan (~$21,000) is, for him, about 31% of one year’s net of tax and child support income. However, Mr Cortes would be effectively left with his job, his superannuation, a debt roughly equal to the value of his car, and substantial legal fees.
Mr Cortes’ modest additional income after separation
Mr Cortes earned about, he says, $80 per week cash from the business from separation until about “two months ago” (two months May 2022). I did not understand him to mean each and every week and so treat that as about only 30 weeks per year. That is roughly equivalent to about $50 per week on average, about $215 per month, or about ⅔ of the monthly payment of $300.59 due on the #...31 Loan.
The extant interim orders
I must also take into account the interim order of 7 November 2021, where Ms Almeer was ordered to pay the repayments and the payment of $7,842 to Mr Cortes. She did not make either payment and I am not satisfied she had the capacity to do so. Mr Cortes had her Motor Vehicle 1 and she was bound by an injunction not to access funds held by a solicitor from Mr F’s estate.
The Judge that made that interim order was not informed of the additional business income that Mr Cortes had. As an interim order it may be varied or discharged on final hearing upon careful examination of all of the evidence. Mr Cortes did not disclose either the retention of the business equipment or the cash income from it and Ms Almeer, I am told and accept, did not raise it with the Judge. I am not satisfied it is appropriate to now enforce, directly or indirectly, that 7 November 2021 interim order. It is not proper that the order be left “hanging” and that would be contrary to section 81 of the Act.
All in orders sought
The orders Mr Cortes sought, sensibly, were on an “all in” basis that took account of the interim orders rather than seeking to enforce the orders and then seek more. He sought that Ms Almeer refinance to #...31 Loan, a payment of $50,000 and some party/party costs on scale. However, his case was fundamentally flawed as he sought that the substantial part of the Life Insurance Payment funds held on trust for an infant be treated as the property of Ms Almeer and that he obtain a part of it. An order predicated on that basis would be neither just and equitable or proper.
Ms Almeer has the use of E’s interest
I must take into account that Ms Almeer has the financial resource of the use, for her own accommodation purposes, including for E if he gets to stay with his mother at some point, of the substantial part of the funds held for E applied to the Property purchase. It is not clear how those funds or that interest will be dealt with in the future but that does not make the funds, or the property they were applied to, Ms Almeer’s property or property available for alteration or distribution pursuant to Part VIIIAB of the Act.
Act not about compensation
If only dealing with human emotions, it is not unreasonable for Mr Cortes to feel that it is fair that he receive repayment or compensation of the income he applied to the relationship and the Property and the #...31 Loan. However, that is only one of the suite of matters, retrospective and prospective, that sections 90SM and 90SF command to taken into account.
Conclusion as to section 90SF(3) adjustment
All of the circumstances still compel an adjustment pursuant to section 90SF(3). That adjustment will be 20% of that pool or $24,800, creating a disparity on account of section 90SF(3) factors of $49,600 in Ms Almeer’s favour. Mr Cortes’ net of tax and child support income is about $1,323,[22] or $68,800 (rounded) per annum. That adjustment of $24,800 is about 36% of one year’s annual net of tax income.
[22] $2,064 less $211 child support and less $530 income tax but not including superannuation that will not be available to him for many years.
Although not the measure, that disparity is roughly equivalent to about 72% of Mr Cortes’s income after tax and child support.
Step four: Conclusion and Just and Equitable Orders
Standing back and looking at the overall effect I am satisfied that it is just and equitable, after considering the evidence and the application of section 90SM and 90SF, that Mr Cortes be responsible for the whole of the balance of the #...31 Loan. This can only be achieved by him being required to indemnify Ms Almeer in regards to the #...31 Loan. The effect of this is that Ms Almeer retains effectively the whole non-superannuation asset pool. This does not require him to pay out that loan other than in accordance with the #...31 Loan contract over time or to refinance that loan, but he may do so if he chooses. There is some tension between determining just and equitable orders and section 90ST (“the court must as far as practical … finally determine financial relationships”) but I am not satisfied that it is either practical or just to impose on Mr Cortes any further obligation about the #...31 Loan other than to meet payments due.
I take account of the fact that the efforts of both parties in renovating the Property likely improved its value and market forces may well have also increased its value.
Mr Cortes came in to the relationship with a professional job, superannuation, a car, debt about equal to the car and a modest property settlement entitlement of $25,000. He will remain with that job, his superannuation and a car and debt about equal to the value of that car, but he will no longer have the property settlement entitlement of $25,000.
Ms Almeer will end up with all of the available equity in the non-superannuation assets of the parties of about $120,000 and the use of that part held for E. Mr Cortes will have only about $5,000 of equity, and with depreciation of his motor vehicle that maybe nil or very little.
Mr Cortes will retain superannuation of about $120,000 and Ms Almeer will retain superannuation of about $60,000.
I repeat and acknowledge that Mr Cortes would be left effectively left with only his job, his superannuation and the #...31 Loan debt roughly equal to the value of his car and substantial legal fees.
I am satisfied orders to give effect to that conclusion are just and equitable.
COSTS
Costs are usually determined at the end of a case after consideration of findings. In this case it was not unreasonable that costs be pressed as part of the substantive hearing as Mr Cortes did.
Costs are determined by section 117 of the Act and do not simply follow the event. That section provides as follows:
117 Costs
(1)Subject to subsection (2), subsections 45A(6) and 70NFB(1) and sections 117AA and 117AC, each party to proceedings under this Act shall bear his or her own costs.
(2)If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A), (5) and (6) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
(2A)In considering what order (if any) should be made under subsection (2), the court shall have regard to:
(a) the financial circumstances of each of the parties to the proceedings;
(b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f)whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
(g) such other matters as the court considers relevant.
The circumstance that overwhelms other considerations in this case is the financial circumstances of the parties. If appropriate, costs order can be made against a person in very needy circumstances. Mr Cortes’ financial circumstances, after taking account of the effect of these orders that leave him with the #...31 debt of about $21,000, are far superior to Ms Almeer’s. Ms Almeer struggles to get by on JobSeeker or social security. Her income is less than her reasonable needs based on the standard of living during the relationship.
Neither party is in receipt of legal aid.
Mr Cortes’ solicitor has conducted the proceedings in textbook fashion with only courteous and helpful communication with Ms Almeer in trying circumstances. The extent of costs sought was not unreasonable. Ms Almeer was an incompetent litigant in person. Ms Almeer did not comply with court orders as to filing of material or disclosure and was given many chances. Were Ms Almeer’s financial circumstances and personal competence different to what they are her conduct of the proceedings would powerfully contend for an order for costs against her. Some of the costs were incurred because Ms Almeer failed to comply with orders of the court to file material.
Mr Cortes has been wholly unsuccessful in the proceedings. His original position or application was not unreasonable until Ms Almeer’s circumstances were taken into account pursuant to section 90SF(3) of the Act. It was not unreasonable to seek a property settlement and particularly as to the #...31 Loan debt. But the failure to differentiate between E’s interests and Ms Almeer’s interest in the Property, or at least her obligation to deal with the funds held on trust, was unfortunate. However, this aspect did not significantly add to his costs or the costs of Ms Almeer.
Mr Cortes’ solicitor made reasonable open proposals in writing and again, were Ms Almeer’s financial circumstances and personal competence different to what they are, her failure to engage with the solicitor’s reasonable letters would powerfully contend for an order for costs against her.
Balancing all considerations, I am not satisfied it is appropriate that the starting position of section 117(1), each pay their own costs, should be departed from in this case. No order as to costs will be made.
I certify that the preceding one hundred and ninety-nine (199) numbered paragraphs are a true copy of the Reasons for Judgment of Judge O'Shannessy. Associate:
Dated: 2 November 2023
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