Curtain & Curtain
[2016] FamCA 577
•15 July 2016
FAMILY COURT OF AUSTRALIA
| CURTAIN & CURTAIN | [2016] FamCA 577 |
| FAMILY LAW – PROPERTY – final orders – where the wife seeks orders for property settlement – where the orders are opposed by the husband – where there are farming properties –where each party seeks to retain various properties including farming properties – where the was a settlement agreement – where consideration is given to contributions of the parties – where consideration is given to s 75(2) factors – where an order is made for the wife to receive 45 per cent of the property of the parties and therefore the husband is required to pay a settlement sum. |
| Family Law Act 1975 (Cth) s 4, 75, 79, 106A |
| Bevan & Bevan (2013) FLC 93-545 |
| APPLICANT: | Ms Curtain |
| RESPONDENT: | Mr Curtain |
| FILE NUMBER: | ADC | 4409 | of | 2013 |
| DATE DELIVERED: | 15 July 2016 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Adelaide |
| JUDGMENT OF: | Berman J |
| HEARING DATE: | 4, 5, 6 & 7 April 2016 and 30 May 2016 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Litigant in Person |
| SOLICITOR FOR THE APPLICANT: |
| COUNSEL FOR THE RESPONDENT: | Mr McQuade |
| SOLICITOR FOR THE RESPONDENT: | Howe Jenkin |
Orders
That by way of settlement of property or alteration of interest in property:-
(a)Within sixty (60) days of the date of this order the husband do pay direct to the wife the sum of
FIFTY FIVE THOUSANDSIX HUNDRED AND THIRTY FOUR DOLLARS($55,634)($634) (“the settlement sum”);(b)Contemporaneously with the payment by the husband to the wife of the said settlement sum, the wife shall:-
(i)Transfer to the husband all her estate and interest in the property situate at and known as B Street, C Town being the whole of the land comprised and described in Certificate of Title Volume … Folio … (“the C Town property”);
(ii)Resign as a director of D Pty Ltd ACN … and do transfer her shareholding in D Pty Ltd to the husband;
(iii)Do relinquish her appointment as a trustee of the Mr Curtain Family Trust, the Mr Curtain No 2 Family Trust and the E Family Trust and do transfer and assign to the husband all her estate and interest in any of the assets of the said trusts.
(c)Contemporaneously with the payment of the said settlement sum and the transfer of the wife’s interest in the C Town property and her shareholding in D Pty Ltd, the husband do transfer to the wife all his estate and interest in the property situate at and known as F Street, Suburb G being the whole of the land comprised and described in Certificate of Title Volume … Folio … (“the Suburb G property”);
(d)The husband do indemnify the wife and keep her forever indemnified with respect to any liabilities of D Pty Ltd, Mr Curtain Family Trust, Mr Curtain No 2 Family Trust and E Family Trust and keep her forever indemnified with respect to any liabilities in respect of same PROVIDED THAT the wife shall relinquish or assign any credit loan account (if any) to the husband;
(e)The wife shall retain her interest in the H Family Trust and I Family Trust free of claim of the husband;
(f)The partnership between the husband and the wife styled MR & MS Curtain be dissolved as at 30 June 2016 and the wife do execute all such documents as are necessary to transfer the assets of the partnership to the husband at their tax or book values;
(g)The husband shall retain his interest in E Consulting Pty Ltd free from any claim by the wife;
(h)The husband indemnify the wife and keep her forever indemnified with respect to any liabilities of MR & MS Curtain and E Consulting;
(i)The husband and wife take all such steps as may be necessary to roll over the wife’s member account balance with the Curtain Superannuation Fund to such superannuation fund as the wife shall nominate and that forthwith thereafter the wife do resign as trustee of the Curtain Superannuation Fund;
(j)The wife do retain as her sole property her interest in the property at J Town and in the property previously occupied by the wife’s mother at L Town;
(k)The husband do all things necessary to discharge the ANZ residential loan secured over the Suburb G property to the effect that the property shall be transferred to the wife free and unencumbered by any liability, charge, guarantee or security;
(l)In respect of the parties interest in personalty, they shall retain as their sole and separate property their savings, shares, motor vehicles, superannuation entitlements, furniture and household effects, jewellery and all other items presently registered in their names or in their respective possession;
(m)The husband will indemnify the wife and keep her indemnified in respect of any liability outstanding to the husband’s mother;
(n)In default of the payment of the said settlement sum either in whole or in part or if the husband shall fail to discharge the mortgage liability secured over the Suburb G property and in circumstances where that default shall remain outstanding for a period greater than thirty (30) days THEN the parties shall do all things necessary to cause the C Town property and the properties known as “M” and “E” to be placed on the market for sale by private treaty or public auction upon such terms and conditions as the parties may agree but in default of agreement as may be ordered by this Honourable Court and that following the sale of the said property or properties and the payment out of the necessary costs of sale and the discharge of any secured mortgage, from the net balance remaining (if any) the wife shall receive the settlement sum or so much of the settlement sum as shall remain outstanding together with such sum as may be required to discharge any mortgage liability secured over the Suburb G property together with default interest at 10 per centum per annum and the husband shall be entitled to the balance remaining.
That a Registrar of this Honourable Court shall have power pursuant to s 106A of the Family Law Act 1975 (Cth) to sign all such documents as may be required to give effect to these orders in circumstances where upon proof by affidavit a party has refused or neglected to sign such documents as may be presented to him or her and that such refusal or neglect has continued for a period longer than seven (7) days after the said documents were presented.
All matters be removed from the pending list of cases.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Curtain & Curtain has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth)
| FAMILY COURT OF AUSTRALIA AT ADELAIDE |
FILE NUMBER: ADC 4409 of 2013
| Ms Curtain |
Applicant
And
| Mr Curtain |
Respondent
REASONS FOR JUDGMENT
INTRODUCTION
The proceedings relate to settlement of matrimonial property in respect of a marriage spanning nearly 26 years as at the date of separation. Ms Curtain (“the wife”) commenced the proceedings by the filing of an Initiating Application on 25 November 2015. The orders sought by the wife are now reflected in an Amended Initiating Application filed 15 February 2016. She seeks orders for settlement of property pursuant to Part VII of the Family Law Act 1975 (Cth) (“the Act”). Mr Curtain (“the husband”) opposes the orders sought by the wife and seeks his own relief as set out in his Amended Response filed 31 March 2016.
By her Amended Initiating Application, the wife seeks orders summarised as follows:-
·That the wife retain for her sole use and benefit the farming land known as “N” and “E”.
·The property situate at F Street, Suburb G (the “Suburb G property”).
·That the wife retain furniture and effects at E and situate in the Suburb G property, her interest in the H Trust and I Family Trust, her motor vehicle and other personal property.
·That she be responsible for the mortgage in respect of the Suburb G property, personal loans to Ms K, Mr A and Ms O.
·That the husband retain the farming land known as “M”.
·That the husband retain the property situate B Street, C Town (“the C Town property”).
·That the husband retain his interest in furniture and effects situate at M and C Town.
·That the husband retain his interest at E Enterprise Trust, P Investments, Q Trust, R Pty Ltd and Company S.
·That the husband retain all other personalty not otherwise stated.
In order to give effect to the wife’s application to retain the N property, she seeks a splitting order in respect of the husband’s superannuation entitlements to the wife (to include an in specie transfer of the N property to her) to give effect to the wife receiving 50 per cent of the husband’s splittable interest in Curtain Superannuation Fund.
By his response, the husband seeks orders summarised as follows:-
·That the wife transfer to him her interest in the C Town property.
·That the husband transfer to the wife his interest in the Suburb G property.
·That the wife resign as a director of D Pty Ltd Nominees Pty Ltd, ACN … (“D Pty Ltd”).
·That the wife resign as a trustee of the Mr Curtain Family Trust, the Mr Curtain No 2 Family Trust and the E Family Trust and do transfer and assign to him her interest in those trusts.
·That the husband indemnify the wife in respect of any liabilities pertaining to the trusts and the company.
·That the partnership between the husband and the wife styled MR & MS Curtain be dissolved as at 31 December 2012.
·That the parties do all things necessary to roll over the wife’s member account balance with the Curtain Superannuation Fund to such fund as may be nominated by the wife and that thereafter the wife resign as trustee.
·The wife retain her interest in the property situate at J Town and L Town.
·That the parties retain as their sole property their savings, shares, motor vehicles, superannuation entitlements, furniture and household effects, jewellery and all other items of personalty in their name or separate possession.
DOCUMENTS RELIED UPON
The wife relies upon the following documents:-
(1)Amended Initiating Application filed 15 February 2016
(2)Trial Affidavit of wife filed 15 February 2016
(3)Further Affidavit of wife filed 26 May 2016
(4)Financial Statement filed 15 February 2016
Additionally, I was assisted by an Outline of Case document dated 4 April 2016 and a further Affidavit of the wife filed 26 May 2016 which was received in lieu of written submissions.
The husband relies upon the following documents:-
(1)Further Amended Response filed 31 March 2016
(2)Trial Affidavit of husband filed 30 March 2016
(3)Financial Statement filed 4 April 2016
(4)Affidavit of Mr T (accountant) filed 26 May 2016
(5)Further Affidavit of husband filed 31 May 2016
I was also assisted by an Outline of Case document filed 1 April 2016 and written submission in respect of the “section 79(2)” argument.
As set out in the wife’s Case Outline document, she seeks an overall division of the assets as between the parties in the following proportion, namely 60 per cent to her and 40 per cent to the husband.
The husband seeks a distribution of the parties assets as to 55 per cent to him and 45 per cent to the wife.
GLOSSARY OF TERMS
M - farming property situate at L Town
The registered proprietor is D Pty Ltd Nominees Pty Ltd. The husband and the wife are the only directors and equal shareholders of the company. The property is described as Certificate of Title Volume 5937 Folio 869 and Volume 5990 Folio 455.
E - farming property situate at L Town
The husband and the wife are the registered proprietors of the property in their capacity as trustees of the E Family Trust. The property is described as Certificates of Title Volume 6043 Folio 663, Volume 6043 Folio 665 and Volume 6043 Folio 666.
N farming property situate at L Town
The registered proprietor is the Mr Curtain Superannuation Fund.
Suburb G property
The husband and the wife are the registered proprietors of the property situate at F Street, Suburb G. The wife resides in this property and it is generally agreed that the husband will transfer his interest to her.
C Town property
The husband and the wife are the registered proprietors of a property at 2/10 South Point Drive, C Town. It is agreed that the wife will transfer her interest in the property to the husband.
D Pty Ltd
D Pty Ltd Nominees Pty Ltd is the trustee for the Mr Curtain Family Trust. The M property is registered in the name of D Pty Ltd.
Curtain & Sons
The husband was in a partnership with his parents which conducted farming operations. The partnership was dissolved in 2007. The husband received his share of the partnership of approximately $270,000 and 8,500 U Limited shares.
Company V
The wife commenced a joint venture with friends to develop a business. The investment entity on behalf of the parties was Mr Curtain No 2 Family Trust.
W Pty Ltd
In 2014 the husband became a director of W Pty Ltd. The husband has a consultancy arrangement with the company.
Company S
The husband and two others established a company named Company S Pty Ltd. The husband is a shareholder only.
P Investments
The husband has an interest in a unit trust with six other members.
L Town property
In 1999 the wife and her four siblings purchased a property at X Street, L Town. The wife’s mother initially resided in the property but it is now occupied by the wife’s father.
J Town
In 1998 the wife received an interest in a property situate at Y Street, J Town.
E Consulting
In May 2013 the husband set up a new entity to operate the farming business. The husband is the sole director and shareholder.
MR & MS Curtain
This entity was the previous farming partnership. The husband seeks that it be dissolved as at 31 December 2012.
CHRONOLOGY
…63
Date of birth of wife.
…63
Date of birth of husband.
1983
Parties form a relationship.
…88
Date of marriage.
1990
Parties purchase minority interest in a cattle station with funds contributed by each of the parties from their pre-cohabitation savings.
1992
Parties purchase “M” for $90,000.
1992
Parties dispose of their interest in the cattle station.
…93
Date of birth of Ms Z Curtain.
1994
The parties purchase land adjoining “M” for $72,000 using personal and borrowed funds.
1995
Husband appointed as CEO of L Town Council.
..95
Date of birth of Mr AA Curtain.
1998
The wife and her siblings acquire an interest in property at J Town. Wife’s father provides the deposit. Balance is provided by the parties extending their overdraft account.
..98
Date of birth of Ms BB Curtain.
1999
Wife and her siblings purchase a property at L Town for their mother. Wife’s contribution is drawn from the joint bank account of the parties.
2000
Husband is appointed as CEO of DD Region JJ Board.
2002
Parties purchase C Town property by way of a deposit of $30,000 and the balance comprising borrowed funds.
…02
Date of birth of EE Curtain.
2005
Parties purchase half share in “N” using borrowed funds in the sum of $300,000.
2007
Farming partnership of Curtain & Sons is dissolved with the husband receiving a substantial cash sum and U Limited shares.
2007
Following the dissolution of the farming partnership, the parties purchase “E” for $480,000 using borrowed funds. The property is purchased by the parties as trustees of the E Family Trust. The parties set up a new farming partnership known as Curtain Farming.
2008
The parties invest $60,000 in “Company V” in partnership with Mr and Ms FF and “Mr Curtain No 2 Family Trust”.
2011
The husband enters into a unit trust investment known as “P Investments”.
14.11.11
Parties separate.
2012
Husband acquires one third of the shares in a company “Company S Pty Ltd”.
2013
Husband borrows $165,000 from his parents to cover the ongoing farming costs.
May 2013
Husband establishes a new farming entity as opposed to the farming partnership known as “E Consulting Pty Ltd”.
22.5.13
Husband resigns from his position as CEO of the JJ Board.
9.12.13
Order by consent that wife receive a lump sum of $25,293.
18.2.14
Parties obtain a divorce order.
24.2.14
Order by consent that the wife receive the sum of $15,000 by way of partial property settlement and that the husband discharge the wife’s taxation liability of $15,671 and a further sum of $7,115 by way of outstanding credit card liabilities for the parties.
31.3.14
Order by consent that the husband pay the wife’s rent, child support and spousal maintenance together with the sum of $3,660 being the wife’s rental bond.
25.6.14
Order by consent noting that the husband has the day to day management of the farming enterprise and that proceeds of the sale of crop can be paid to his parents in reduction of the outstanding loan.
25.6.14
Order by consent restraining the wife from redrawing any funds from the parties accounts.
Oct 14
The husband as a director of D Pty Ltd is required to pay a settlement sum of $160,000 to JJ Australia and husband borrows $50,000 from his parents in order to meet the settlement obligation.
6.12.14
Wife enters into a contract to purchase the Suburb G property for $875,000.
15.12.15
“N” is purchased by the Mr Curtain Superannuation Fund for $400,000 and that sum together with a further cash payment of $88,802 is used to effect the purchase of the wife’s Suburb G property.
BACKGROUND
The parties are both presently aged 52 years. They commenced their relationship in 1983 and were married in 1988. There are four children of the marriage. Ms Z, Mr AA and Ms BB are adults. EE is currently aged 13 years.
The parties separated on 14 November 2011 but from time to time lived under the same roof on the E property. The wife left the family home on 26 January 2013 and took up rental accommodation in Adelaide with the four children.
Both parties were born at L Town, South Australia. The husband came from a farming background and the wife accepts that as at the date of the commencement of their relationship he was part of a family farming partnership called Curtain & Sons. For her part, the wife undertook administrative employment upon her move to Adelaide..
The parties commenced their cohabitation as at the date of marriage and the wife concedes that she had modest assets comprising $20,000 on fixed deposit, a motor vehicle and some personal effects. Whilst not conceding the husband’s assertion as to the extent of property owned by him at the time, she acknowledges that the husband held his interest in the farming partnership, substantial savings and an entitlement to a compensation claim in respect of an injury sustained by the husband to his foot in 1985. The extent of the assets held by the husband at the commencement of cohabitation is a significant issue in the proceedings. The husband asserts that he had personal savings of $120,000, a motor vehicle to the value of $14,000 and he estimates the value of his interest in the pre-existing family farming partnership at $100,000.
In 1990 the parties purchased an interest in a Northern Territory property for between $110,000 and $140,000 with funds contributed by the wife of $20,000 from her pre-cohabitation savings and $120,000 from the husband’s savings.
The husband received a substantial payout in respect of his compensation claim. He asserts that the figure was $96,000, whereas the wife is prepared to concede the settlement sum being $70,000. Not much turns on the difference. The sum contributed was in any event substantial.
In 1992 the parties purchased “M” for about $90,000 principally using the husband’s compensation monies to effect the purchase. The parties then borrowed a further $30,000 from the husband’s father in order to assist in the farming operation.
In 1994 the parties purchased further farming land adjoining the M property for $72,000 and transferred both the original M property and the adjoining land to D Pty Ltd Nominees Pty Ltd as trustee for the Mr Curtain Family Trust. The transfer occurred on 28 May 2007.
Notwithstanding that the husband was appointed as the CEO of L Town Council, the parties continued to farm at M. The wife accepts that it was effectively farmed by Curtain & Sons at least insofar as farming machinery of the partnership was utilised.
In 2000 the husband obtained a new position as CEO of the JJ Board and the family moved to C Town, initially residing in rental accommodation but later purchasing the property.
Following the birth of the parties fourth child, the wife and the children returned to live on the M property with the husband remaining in C Town during the week and returning to the farm on weekends.
In 2005 the parties purchased a half share in “N” with borrowed funds in the sum of $300,000. The remaining half of the N land was leased by the parties as and from 2003/2004.
In 2007 Curtain & Sons was dissolved and the husband asserts that he received about $270,000 and a substantial quantity of U Limited shares. The partnership proceeds were then used to purchase “E” via the E Family Trust. The parties’ farming venture continued via a new partnership entity known as Curtain Farming.
It is a matter of some contention that in 2007 and without the consent of the husband, the wife transferred his U Limited shares to his parents and brother for no remuneration. The husband estimates that the shares held a value in excess of $69,000 at the time of transfer.
The parties disagree as to the manner in which a livestock was purchased in 2005. The wife considers that it was her idea. The husband considers that it was with the joint involvement of the parties. Nothing turns on the dispute. The husband concedes that integral to the establishment of the flock, the wife undertook training and that she managed the livestock, animal husbandry and preparation for sale. What is important is that each of the parties consider that the livestock formed a significant component within the overall farming venture.
In 2008 the parties invested in a joint venture named Company V. It is conceded that the business has little or no value. In 2012 the husband obtained a shareholding in Company S Pty Ltd. He is not a director and has received no remuneration from the company to date. He estimates the current value of his interest to be $2,000. There is no disagreement in respect of the husband’s assessment of his interest or its value. The husband obtained units in 2011 in a unit trust known as P Investments. The husband estimates the value of his interest at $45,119. The value of the husband’s interest is not in dispute.
The husband also accepts the acquisition by the wife of her interest in the property at X Street, L Town and Y Street at J Town.
The parties separated under the same roof in November 2011 with the wife and children relocating to Adelaide in January 2013. Following separation the husband remained on the farm and maintained his employment as CEO for the JJ Board. The wife commenced employment as a care provider and commenced a course of study to obtain a relevant qualification.
Following separation the wife sold the livestock in two tranches receiving $35,000 in October 2012 and a final payment of $19,000 in February 2013.
In May 2013 the husband resigned from his position with the JJ Board and received a lump sum payment of $33,472.
The parties were in dispute as to the manner in which the wife accessed the ANZ overdraft accounts for her own purposes. The wife concedes that generally she did not seek the husband’s consent to withdrawals, but considered she was entitled to utilise the funds drawn down on the various accounts to support both her needs and those of the children. In an attempt to stem the wife’s access to the farming funds, the husband established E Consulting in May 2013 in order to operate the farming venture without involvement by the wife. The husband considers that the farming partnership operating as MR & MS Curtain was effectively dissolved by his conduct and seeks an order that the partnership be dissolved as at 31 December 2012.
Following separation the parties underwent a collaborative law process to explore a potential resolution of the dispute. The husband contends and the wife agrees that as and from 2013 the cropping program would be at the husband’s sole risk. He would be entitled to reward but also obliged to bear any loss. To give effect to the immediate needs of the 2013 crop, the husband borrowed $165,000 from his parents which remains outstanding in the sum of about $56,000 subject to whether interest is levied on the outstanding sum. If so, the husband estimates the amount outstanding to be $60,228.
By order dated 25 June 2014, there would appear to be confirmation that the husband was to make the day to day decisions regarding the cropping venture for 2014 and that any monies that may become available are to be utilised at least in part to repay the husband’s parents.
In respect of the 2015 and 2016 cropping programs, the wife gave her consent that enabled the husband to put in place short term financial arrangements to cover the farming inputs with the facilities being repaid.
The proceedings were commenced by the wife filing her application on 25 November 2013.
LEGAL PRINCIPLES TO BE APPLIED
Section 79 of the Act provides:-
(1)In property settlement proceedings, 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 marriage or either of them – altering the interests of the parties to the marriage in the property; or
(b)…
including:
(c)an order for a settlement of property in substitution for any interest in property; and
(d)an order requiring:
(i)either or both of the parties to the marriage; or
(ii)the relevant bankruptcy trustee (if any);
to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines.
Section 79(2) provides:-
The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
“Property” is defined in s 4(1) of the Act as meaning:-
…property to which those parties are, or that party is, as the case may be, entitled, whether in possession or reversion…
In Stanford v Stanford (2012) 247 CLR 108 the majority held:-
[35]It will be recalled that s 79(2) provides that “[t]he court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order”. Section 79(4) prescribes matters that must be taken into account in considering what order (if any) should be made under the section. The requirements of the two sub-sections are not to be conflated. In every case in which a property settlement order under s 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order.
[36]The expression “just and equitable” is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its metes and bounds…
Importantly the Court found at [39]:-
…whether it is “just and equitable” to make the order is not to be answered by assuming that the parties’ rights to or interests in marital property are or should be different from those that then exist.
It is therefore not to be assumed that a party to a marriage has a right to an interest in property by reference to matters arising under s 79(4). In effect, a party cannot pull themselves up by their own boot straps by asserting contribution under s 79(4) and then using that position to satisfy the obligation created by s 79(2). To do so would be to “conflate” the relevant sections.
The High Court in Stanford sought to define its likely application to cases in the following manner:-
[42]In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as a result of the choice made by one of both of the parties, the husband and wife are no longer living in a marital relationship. It would 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 the property by the husband and wife. No less importantly, the express and 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. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to 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).
The parties were married for almost 26 years.
Both parties seek that there should be an alteration of their respective interests in property and I take into account that they are no longer living in a marital relationship and will not have the benefit of common property.
I am satisfied that it is just and equitable in the circumstances of a mutual commitment made by each of the parties during the course of a long marriage that the Court should embark upon a consideration of an adjustment to the property interests of each of the parties.
CONTENTIOUS ISSUES
The parties are not in agreement as to the value to be ascribed to all of their separate and joint legal and equitable interests. The asset pool is not concluded and whilst there is some agreement, the parties remain in dispute as to the treatment of the proceeds of the sale of the livestock by the wife and monies received by her both by way of Court order and unilateral withdrawal. There remains no agreement as to the treatment of unpaid creditors in respect of E Consulting and in relation to the partnership. There appears to be a concession that an amount of $60,228 being outstanding to the husband’s mother in respect to the 2013 crop year should be brought to account, but this is to some extent interrelated to the husband’s position that the farming partnership should be dissolved as at 31 December 2012 being the date that the husband commenced E Consulting.
The parties are not agreed as to the further sum of $20,654 borrowed from the husband’s mother to assist in the settlement of the claim against the husband with JJ Australia.
Each of the parties seek to bring to account personal expenses being the husband’s ANZ credit card account as at 22 February 2016 and the wife’s Centrelink debt as at 17 February 2016.
The wife seeks that the parties do all that is required to transfer to her the farming land known as N and E. The husband seeks to retain those properties and relies upon a purported agreement entered into between the parties and titled “Financial Settlement Agreement” dated 15 January 2015. That document allegedly sets out a broad settlement strategy between the parties that would have as its essential terms a settlement to the wife of $962,366 which includes the wife retaining the Suburb G property freehold and the husband retaining the farming properties and the C Town property.
The husband does not rely on the purported agreement to oust the jurisdiction of the Court to consider settlement of property, but he does argue that it is a relevant consideration in determining who should retain the farming properties as part of the final settlement of property.
The parties are not agreed as to the weight that should be given to their respective contributions.
The wife concedes that the financial circumstances of the parties were enhanced by the property held by the husband at the commencement of cohabitation. The wife does not necessarily accept the value as asserted by the husband, but it is conceded by her that the husband had substantial property and certainly significantly in excess of the relatively modest property held by the wife.
In addition, the wife concedes that the husband received a compensation payout in 1994 and assisted with the purchase of the farm and home property.
The wife however argues that she was instrumental in the day to day management of the farming enterprise, acquired her interest in the J Town and X Street, L Town properties and in particular, her management of the livestock.
The wife relies upon the husband’s concession that “the wife undertook the majority of the parenting duties whilst I was working fulltime and long hours and she undertook those duties in an exemplary manner”.
To place the dispute into context, each of the parties seek a finding as to contribution of 60 per cent.
The parties are not in agreement as to the weight to be given to s 75(2) factors. It seems that the husband concedes that there should be an adjustment of 5 per cent in favour of the wife, presumably to bring to account the earning capacity of the husband, whereas the wife’s position remains unclear. She raises the husband’s earning capacity, but considers that if she is successful in retaining the farm properties known as N and E, then her ability to generate an income from those properties would promote no further adjustment in favour of either party. In summary and based upon a global approach, the husband considers that there should be a 55/45 division of the net asset pool in his favour, whereas the wife contends a more generous outcome to her of 60 per cent providing it includes the disputed properties.
RESOLVED ISSUES
In her Amended Initiating Application, the wife sought the following orders:-
·That the husband pay spousal maintenance either by way of lump sum or by way of such period sums as the Court may determine.
·That the husband pay adult child maintenance for the children Ms Z and Mr AA in such sum as the Court may determine appropriate until the completion by each child of their first tertiary qualification.
·That the husband pay child support for EE to be determined by means of departure from the administrative assessment.
At the commencement of the proceedings the wife conceded that she had presented no evidence which would support her application for spousal maintenance and adult child support.
Following discussions between the parties, agreement was reached in terms of orders made by consent on 7 April 2016 which provided for an order by way of departure that the husband pay child support at the rate of $300 per week in respect of the child EE for the period from 7 April 2016 to 18 September 2020 and in addition, that he shall pay all school fees arising from EE’s attendance at GG School at the day attendance rate.
In addition, the husband is to pay orthodontic expenses for EE up to an accumulated sum of $6,000.
It was not argued that the payment of child support should be brought to account as a contribution factor in favour of either party.
In addition, the division of furniture and effects was agreed on the basis that the husband shall make available to the wife items listed at paragraph 189 of his trial affidavit.
PARTIES LEGAL FEES
Each of the parties complied with an order to provide a summary of their separate legal costs. The wife’s summary of legal costs indicates that she has a total of $147,016 outstanding to solicitors, counsel and Court hearing fees.
For his part, the husband has paid a total of $22,455 to the solicitors involved in the collaborative law process and a further $68,296 to his present solicitors.
There are third party fees (counsel and valuation disbursements) of $46,271 and the anticipated fees to the conclusion of the matter including counsel fee is approximately $82,500.
As at 27 May 2016, the balance of funds held in trust on behalf of the husband was $8,077.78 and it is acknowledged that following the withdrawal of the wife’s previous solicitors following proceedings in respect of disqualification, a sum of $25,000 was paid to the husband’s solicitors on 8 September 2015 which has been used to meet some of the husband’s costs including counsel and legal fees.
Monies paid by the husband has been sourced from accounts in the name of E Consulting.
There was no exploration by the wife as to the breakdown of money being deposited into the E Consulting accounts, but I accept that the payment by the husband of his legal fees (where not met by settlement funds from the wife’s previous solicitors) is derived from income generated by the husband after separation, derived either from farm generated income or from the husband’s consulting fees.
ASSETS AND LIABILITIES OF THE PARTIES
The following list of assets and liabilities appear to be agreed.
Assets
Property “M”
$ 645,000
Property “E”
$ 750,000
B Street, C Town
$ 610,000
F Street, Suburb G
$ 875,000
(Wife) J Town property (wife’s 1/3rd interest)
$ 36,000
L Town property (wife’s 1/5th interest)
$ 35,000
Farming plant and equipment (husband)
$ 316,360
Farming plant and equipment (E Consulting Pty Ltd) (husband)
$ 13,885
motor vehicle (E Consulting Pty Ltd) (husband)
$ 22,500
Total of E Consulting bank accounts
$ 7,669
Bendigo bank account (husband)
$ 867
ANZ Progress Saver account (husband)
$ 263
ME bank account (wife)
$ 647
P Investment (husband)
$ 45,119
Company V (husband’s ½ interest)
Nil
Company S (husband’s 1/3rd interest)
$ 2,000
Furniture and effects E and C Town (total $33,200 less value of furniture to wife of $7,800) (husband)
$ 25,400
Furniture and effects (E/C Town) (wife)
$ 7,800
Furniture and effects (wife)
$ 19,500
Grain stored (husband)
$ 58,000
Seed stored (husband)
$ 20,000
Total
$ 3,491,010
Liabilities
ANZ overdraft (joint)
$ 284,432
ME Bank (C Town) (joint)
$ 398,300
Rabo Bank (E) (joint)
$ 485,000
ANZ residential loan (Suburb G) (wife)
$ 408,072
Taxation liability (partnership BAS)
$ 24,962
Personal taxation liability 2014 (husband)
$ 10,985
Personal taxation liability 2015 (husband)
$ 56,883
Personal taxation liability (wife)
$ 16,000
Taxation liability 2015 (Mr AA Curtain)
$ 21,219
Unpaid amount owing to husband’s mother (2013 crop) (husband)
$ 60,228
Total
$ 1,766,081
Superannuation
Mr Curtain Superannuation Fund (30/6 2015) (husband)
$ 429,852
Curtain Superannuation Fund (husband)
$ 17,715
Curtain Superannuation Fund (wife)
$ 40,739
Super SA (wife)
$ 9,433
Hesta Superannuation (wife)
$ 5,541
Total superannuation of parties
$ 503,280
Save as to the value attributed to N of $400,000, the superannuation interests of the parties are modest.
Excluding the value of N which was transferred into Mr Curtain Superannuation Fund in order to enable the purchase of the wife’s Suburb G property to occur, the balance of the husband’s superannuation entitlement is $47,567 and the wife’s entitlement is $55,713. Given the focus of the parties upon the fate of the N property, the age of the parties and the modest nature of their separate superannuation entitlements when considered against the value of the non-superannuation assets, I do not consider that there would be an injustice to the parties, nor was it the subject of contrary submission that I treat their separate superannuation entitlements as if they were property available for division.
In any event on the wife’s case, such an approach would be to her advantage and on the husband’s case, there would be little disadvantage particularly where there were no submissions which would suggest that if the Court adopted a two pool approach, different considerations would apply to the adjustment in respect of the property of the parties as distinct from their separate superannuation interests.
The matter is complicated by the manner in which the superannuation was used to assist in the purchase of the Suburb G property using the fiction of a sale and transfer of N into the newly established fund of the husband.
The parties agreed to exclude the motor vehicle which the husband originally attributed to the wife. In addition, I have not brought to account the BAS liability for E Consulting in the sum of $9,676, nor unpaid creditors of E Consulting or the partnership in the sum of $4,158 and $18,737 respectively.
Whilst I have included the unpaid loan owing to the husband’s mother for the 2013 crop of $60,228, I have excluded monies owing to her by the husband in the sum of $20,654 being further monies provided in order to assist the husband to settle the dispute with JJ Australia.
I bring to account the Bank SA loan in respect of the motor vehicle of $18,000 and the wife’s Centrelink debt of $22,257 reduced by $3,800 being a total of $18,457.
SALE OF LIVESTOCK
The husband alleged that at the time of separation the wife had control of the parties livestock. There was an initial dispute as to whether the flock should be sold. The husband alleges that he made numerous requests to the wife not to sell the flock, but his requests were either refused or ignored and the livestock were ultimately sold.
The wife asserted that she received $19,000 by way of a final payment in respect of the sale of the livestock, with those monies being received in February 2013 and deposited into the ANZ overdraft account.
The husband initially disputed both the amount received by the wife and considered that a further 303 livestock did not appear to have been accounted for.
Ultimately, the husband resiled from his allegations and accepted the wife’s evidence that the final payment received was indeed $19,000.
There is however a concession by the wife that she received the benefit from the sale of livestock as a result of money being withdrawn from the ANZ overdraft account.
I find that the proceeds of the sale of the livestock were retained by the wife and have effectively been spent.
I also consider that the wife was cavalier in her disregard in respect of the husband’s request that the livestock not be sold.
WIFE’S ACCESS TO FUNDS
It is not contested by the wife that following separation and her move with the children to Adelaide, that the husband caused her rental expenses to be paid in the Suburb G, Suburb HH and Suburb II rental properties. The husband asserts that in addition to rental payments, he also paid the rental bonds as required. The wife does not dispute that the total amount of rental bond paid by the husband was $11,087. No proportion of the rental bonds paid were ever refunded to the husband.
In addition, the husband paid child support of about $200 per week in respect of Mr AA, Ms BB and EE and then later a sum of $150 per week directly to Mr AA pursuant to an order dated 24 June 2014.
The husband continues to pay the costs associated with private health cover on a family basis covering the wife and the children during the currency of their eligibility.
As reflected in the most recent consent order, the husband has paid private school tuition fees for each of the children for their last two years of secondary school education.
In 2013 the wife enrolled Ms BB in a private school as a boarder notwithstanding that the wife had relocated to Adelaide and lived within a few kilometres from the school. The boarding costs were approximately $20,000 per year, but the payment by the husband of any amount over and above the normal tuition fees was opposed by him.
Inexplicably, the wife refused to accede to the husband’s opposition and maintained the enrolment.
The refusal by the wife to accept any restraint in respect of this expenditure provides at least some explanation of her refusal to limit the manner in which she spent money both by way of order and withdrawal from the overdraft account.
At the time that the wife and children relocated to Adelaide EE had reached year five level. The husband was prepared to make the same accommodation in respect of EE namely, that he could be enrolled in private school education from year 10. The wife enrolled the child in year five. The fees were in excess of $14,000 per annum. The husband was not able to cover the costs of private school education, but ultimately caused the sum of $10,910.96 to be paid in August 2015.
By consent order made 9 December 2013, the wife received the following payments:-
·The proceeds of the sale of Telstra shares in the sum of $5,020.
·Lump sum payment in the sum of $25,000.
·Lump sum payment in the sum of $25,293.
The order reflected that the total sum of $55,313 was to be characterised at trial, but it is the husband’s position that it should be considered received by her by way of partial property settlement.
The evidence as to the manner in which the funds were dispersed is scant. At paragraph 106 of the wife’s trial affidavit she sets out the monies received and how the money was applied. Essentially the money has been spent on the wife’s day to day living expenses.
By consent order on 24 February 2014 the wife received a further lump sum of $15,000 by way of partial property settlement. The wife asserts that the money was spent on day to day living expenses including rent, but also the payment of legal fees.
The husband also caused a taxation liability of the wife in the sum of $15,671 and a Bank SA credit card debt in the joint names of the parties in the sum of $7,115 to be discharged.
By consent order made 31 March 2014 the husband paid to the wife an upfront payment of $10,000 in respect of rent, child support and spousal maintenance for a defined period and a further sum of $3,660 in respect of a rental bond payment for the wife’s rental property at Suburb II.
Whilst the total sum ordered to be paid by the husband was $18,395, before the final sum of $8,395 was paid the wife unilaterally withdrew from the ANZ overdraft account the sum of $1,000 on 9 May 2014 and $7,395 on 19 May 2014. The characterization of the total sum was a matter to be determined at trial.
As discussed, the wife did not present any evidence in support of an application for spousal maintenance. I propose to treat the monies received by the wife in respect of the orders of 9 December 2013, 24 February 2014 and 31 March 2014 as monies received by way of partial property settlement.
The wife concedes that between 3 February 2013 and 9 June 2014 she withdrew the total sum of $64,750 from the ANZ overdraft. The husband alleges that the total sum withdrawn was $83,700.
The wife concedes that $33,700 was withdrawn from the account in June 2014 in order to pay the tuition and boarding fees for Ms BB for the 2014 year notwithstanding the husband’s opposition.
On 8 June 2014 a further sum of $15,000 was withdrawn from the overdraft account in payment of EE’s 2014 tuition fees notwithstanding that the wife understood the husband’s objection to that being paid.
The wife effectively withdrew in excess of $83,000 within a four day period.
I accept the husband’s evidence that the withdrawals were unilateral and without his consent, tacit or express. Moreover, the wife’s actions were deliberate and conducted in total disregard of what she understood would be the husband’s opposition. Her behaviour was opportunistic and rapacious.
Ultimately the husband obtained an order on 25 June 2014 restraining the wife until further order from redrawing any funds from the ANZ overdraft account and/or the ME Bank home loan account.
Notwithstanding that order the wife has acknowledged that she withdrew a total sum of $4,950 from the various accounts without consent of the husband and in clear contravention of the order made.
The wife was not able to explain her behaviour.
The husband seeks to treat the monies both obtained and received by the wife as partial property settlement. Notwithstanding that the money received by the wife has been spent and is not represented in any asset currently remaining, the husband contends that it is proper that the funds be treated by way of an add back into the pool.
The wife argues that the money was spent on her day to day living expenses, some proportion of her legal fees and expenses in respect of the children, in particular private school tuition and boarding fees.
The wife presented only scant evidence in respect of what she says are the “detailed records of all expenses since separation which evidence that all amounts received have been used for day to day expenses for me and the children”.
In Woodland & Todd (2005) FLC 93-217 the Full Court was required to consider whether the trial judge had failed to have regard to the identity and value of property as it existed at the time of trial.
The Court found that the trial judge “was required to refer to the asset pool at the time of the hearing and consider the contributions of both parties to that property.”
It may be the case that issues of contribution arise, but other than in unusual circumstances, it is an appropriate starting point to bring to account the assets and liabilities of the parties as they properly exist at trial and then give consideration to the behaviour of the parties in respect of the manner in which assets and liabilities may have been affected by their separate behaviour.
In Kowaliw & Kowaliw (1981) FLC 91-092 Baker J held as follows:-
As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a)where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets; or
(b)where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in Kowaliw (supra) which may have an economic consequence is a relevant consideration under s 75(2)(o).
NOTIONAL ADD BACKS
The husband seeks to agitate the inclusion of the monies obtained by the wife whether by way of court order or unilateral withdrawal as a direct add back or to bring it to account as a contribution factor or an issue to be considered pursuant to s 75(2)(o).
Following Stanford (supra), I consider that whilst it is open to a Court as an appropriate way forward to add property back to the interests of each of the parties, such an outcome would be rare and may well be restricted to those circumstances where there is a realistic possibility that the property might be retrieved or is retained or hidden.
Whilst the issue of add backs is considered against the background of the decision in Stanford (supra), this Court gave proper consideration to the controversy in La Costa & La Costa (2007) FamCA 1176, following its consideration of Chorn & Hopkins (2004) FLC 93-204 and M & M [1998] FamCA 42. In LaCosta (supra) the Court quoted from Chorn & Hopkins (supra) where at [42] the Full Court cited the decision of Marker [1998] FamCA 42 said:-
2.10It is well settled that save in exceptional circumstances a trial Judge should deal with the property as at the date of the hearing and make adjustments taking into account the various matters set out under s. 79. (Wells v Wells (1977) FLC 90-285); Wardman v Hudson (1978) FLC 90-466; In the Marriage of Geyl 7 Fam LR 219). However, the particular justice of the case may make it appropriate to notionally add back assets which have been demonstrated to have been dissipated either during the marriage or post-separation. Normally it is necessary to demonstrate an appropriate basis for doing so, for example by wastage such as gambling or extravagant living. (Kowaliw v Kowaliw (1981) FLC 91-092…). Additionally, because of the requirement for each party to bear their own costs, it is generally appropriate to add back to the pool of assets notionally any legal costs that have been spent on the litigation and to deal with the costs as a separate issue at the end of the litigation. (see Farnell (1996) FLC 92-681).
The issue arises because of the focus of the High Court in Stanford (supra) on the “existing legal and equitable interests of the parties in their property”.
As is set out helpfully in the written submissions on behalf of the husband in Watson & Ling [2013] FamCA 57 Murphy J considered that even in those cases where “waste” or “premature distribution” is established by necessary implication title both legal and equitable will have passed.
Whilst his Honour considered that there may be some opportunity to argue the inclusion of an asset in respect of which title had passed, the scope for such an application would appear to be limited to those transactions that might be considered a sham, or that the property was held on trust for another. The common thread is that conceptually whilst the property has passed to another at least ostensibly, it nonetheless still exists.
Bryant CJ and Thackray J in Bevan & Bevan (2013) FLC 93-545 at [79] said:-
We observe that “notional property”, which is sometimes “added back” to a list of assets to account for the unilateral disposal of assets, is unlikely to constitute “property of the parties to the marriage or either of them”, and thus it is not amenable to alteration under s 79. It is important to deal with such disposals carefully, recognising the asset no longer exists, but that the disposal of them forms part of the history of the marriage - and potentially an important part…
The wife has chosen not to assist the Court with clear evidence as to how the monies were utilised. Nonetheless, taking into account the wife’s circumstances and her dislocation from the farm property, it is likely that a substantial portion of monies received by her have been used for her day to day living expenses.
That cannot however provide a complete explanation for all of the monies received by the wife. Her conduct could only be described as recalcitrant and it was clear both by her actions but also exemplified by a level of bravado when giving evidence that she did not feel she should be criticised for the manner in which she accessed funds.
The total received by the wife was in the sum of $266,898. The money was withdrawn or received over a period of a little more than 12 months save as to the monies obtained by the wife in apparent contravention of the order of injunction.
A significant component of the wife’s expenditure is represented by the unnecessary and reckless payment of boarding fees for the parties daughter at her private school.
I consider that as to a significant proportion of the monies received, the wife’s behaviour can be described as reckless indifference to the consequences of her actions. It is likely that at least in part the liability of the husband as represented by the C Town mortgage and the E overdraft have increased, thereby diminishing the pool.
Whilst I do not consider that the wife’s actions should be reflected in a notional add back, I consider that it is proper that they be reflected pursuant to s 75(2)(o).
LEGAL FEES
Whilst each of the parties have provided a summary of their costs, it is difficult to ascertain whether costs paid by each of them have derived from the property of the parties or from income generated post separation.
I am uncertain as to what extent some of the wife’s costs have been met from monies she has received, but by reference to the schedule in paragraph 106 of her trial affidavit, there is at least some reference to legal fees having been paid from the money received pursuant to the order of 24 February 2014.
In La Costa & La Costa (supra), consideration was given to the treatment of adding back assets notionally into the pool, but in respect of the specific issue of legal costs, the following was cited from Marker [1998] FamCA 42:-:-
…Additionally, because of the requirement for each party to bear their own costs, it is generally appropriate to add back to the pool of assets notionally any legal costs that have been spent on the litigation and to deal with the costs as a separate issue at the end of the litigation. (see Farnell (1996) FLC 92-681).
The treatment of legal fees have been given significant recent consideration and as an indication of an alternate view in Truman & Truman [2013] FamCA 765 Fowler J said at paragraph 54:-
This Court does not follow the practice of adding back and dividing non-existent assets. There is no warrant for doing so in the Act. The once fashionable practice was one which assisted in pointing perhaps the way to a just solution; however, there exists plenty of opportunity for the Court to come to a just and equitable assessment as to the source and application of funds in its consideration of contribution under section 79(4) and matters referred to in section 75(2), and also in particular section 75(2)(o).
The parties have incurred significant legal fees and disbursements. The submissions in respect of the treatment of legal fees is scant and I have not been asked either by counsel for the husband or the wife to add back any component of the parties legal fees.
In the absence of clear evidence as to how the parties have dealt with their legal fees, I propose to leave the question of legal fees out of consideration.
PASSPORT APPLICATION
Whilst unrelated to the question of property settlement, but relevant to credit, the wife admitted that she forged the husband’s signature in respect of an application to obtain a passport for their daughter Ms BB in May 2015.
The wife’s actions are curious in circumstances where the husband had not refused, but rather was seeking some further information.
It is an example of the wife’s total disregard for the husband that she would brook no disagreement or challenge by him. Rather than show the husband the simple courtesy of providing some further information which in the circumstances would have readily elicited his consent, the wife considered that it was more appropriate to act in a duplicitous fashion.
It is the husband’s evidence that he had not indicated opposition and in fact had provided the necessary passport application fee to his daughter.
SETTLEMENT PAYMENT MADE BY HUSBAND
Following the husband’s resignation as CEO of the JJ Board in August 2013, a review was conducted and it was alleged that the husband may have been unjustly remunerated in respect of an overlap of the terms and conditions of his employment as CEO of both the JJ Board and JJ Australia.
The husband agreed to resolve the dispute by the payment of a settlement sum of $160,000 paid by way of two transactions of $25,000 on 17 October 2014, and $135,000 on 20 October 2014.
It is accepted that the settlement amount was obtained by a loan from the husband’s parents of $50,000 with the balance of $90,000 being paid from funds held in E Consulting.
There was no significant exploration of the manner in which funds held by E Consulting were accumulated. It is reasonable to find that the husband’s income from his consulting work and the farm operation went through the account. Whether and to what extent the ANZ overdraft account and the Rabo Bank (E) overdraft reflect the activities of the husband is unknown.
The payment by the husband of the settlement sum raises two issues. The first is the extent to which the outstanding loan to the husband’s parents in the sum of $20,654 should be brought to account and the second issue is the extent to which the payment of part of the settlement sum funded from E should be considered as an action of the husband that has had the effect of wasting the property of the parties, or a notional entitlement of the wife in circumstances where notwithstanding the purported dissolution of the farming partnership by the husband, nonetheless income is generated via the use of the farming property.
If the husband’s explanation is accepted, then clearly the issue arises from an overpayment of benefits and remuneration to him in the years leading up to 2013.
It seems that the parties gain the benefit of the husband’s income and accordingly it could not be said that the husband has either deliberately, wantonly or negligently wasted property of the parties or an entitlement of the wife.
The money outstanding to the husband’s parents requires different considerations. I accept that it was paid, but I am of the view that in circumstances where there is no evidence as to the financial performance of the farming enterprise in the name of E Consulting, any entitlement of the wife cannot be determined.
Accordingly, I do not propose to bring to account any outstanding sum to the husband’s parents.
REVISED LIST OF PARTIES ASSETS AND LIABILITIES
Assets
Property “M”
$ 645,000
Property “E”
$ 750,000
B Street, C Town
$ 610,000
F Street, Suburb G
$ 875,000
J Town property (wife’s 1/3rd interest)
$ 36,000
L Town property (wife’s 1/5th interest)
$ 35,000
Farming plant and equipment (husband)
$ 316,360
Farming plant and equipment (E Consulting Pty Ltd) (husband)
$ 13,885
Motor vehicle (E Consulting Pty Ltd) (husband)
$ 22,500
Total of E Consulting bank accounts
$ 7,669
Bendigo bank account (husband)
$ 867
ANZ Progress Saver account (husband)
$ 263
ME bank account (wife)
$ 647
P Investment (husband)
$ 45,119
Company S (husband’s 1/3rd interest)
$ 2,000
Furniture and effects (E and C Town) (husband)
$ 25,400
Furniture and effects (Suburb G) (wife)
$ 19,500
Furniture and effects (E/C Town) (wife)
$ 7,800
Grain stored (husband)
$ 58,000
Seed stored (husband)
$ 20,000
Total
$ 3,491,010
Liabilities
ANZ overdraft (joint)
$ 284,432
ME Bank (C Town) (joint)
$ 398,300
Rabo Bank (E) (joint)
$ 485,000
ANZ residential loan (Suburb G) (wife)
$ 408,072
Taxation liability (partnership BAS)
$ 24,962
Personal taxation liability 2014 (husband)
$ 10,985
Personal taxation liability 2015 (husband)
$ 56,883
Personal taxation liability (wife)
$ 16,000
Unpaid amount owing to husband’s mother (2013 crop) (husband)
$ 60,228
Motor vehicle loan (husband)
$ 18,000
Centrelink debt (wife)
$ 18,457
Total
$ 1,781,319
Net Balance
$ 1,709,691
Superannuation
Mr Curtain Superannuation Fund (30/6 2015) (husband)
$ 429,852
Curtain Superannuation Fund (husband)
$ 17,715
Curtain Superannuation Fund (wife)
$ 40,739
Super SA (wife)
$ 9,433
Hesta Superannuation (wife)
$ 5,541
Total Superannuation
$ 503,280
TOTAL NET ASSETS (including superannuation)
$ 2,212,971
CONTRIBUTIONS
The husband seeks an adjustment of 10 per cent to represent his superior contribution primarily arising out of his assertion that the property and interests held by him at the date of marriage significantly contributed to the acquisition of property that remains available for division.
In addition, the husband received a significant personal injuries settlement in 1994 with the proceeds being used to purchase a farm property from the husband’s grandfather.
In addition, in 2007 the husband received his share of the Curtain & Sons partnership totalling $270,000 plus 8,500 ABB shares, notwithstanding that ultimately the shares were transferred by the wife to the husband’s family.
The wife had only modest assets at the commencement of the marriage, but did acquire an interest in the property at J Town and then X Street, L Town.
Section 79(4)(a)
Accordingly each of the parties have made a valuable contribution to the acquisition, conservation and improvement of property.
It is not controversial that the husband’s savings as at the date of commencement of marriage enabled the parties to purchase their interest in the Northern Territory property and importantly, the farming property known as M.
The husband received his compensation award in 1994 and the parties were able to purchase the adjacent farming land to M.
Following the dissolution of Curtain & Sons, the husband’s partnership interest was used to purchase E.
Whilst the wife did acquire an interest in the J Town property and the X Street, L Town property, to a significant degree her interest was acquired from funds available to be drawn from the parties’ overdraft account and their joint savings account. There was however an opportunity available to the wife to acquire her interest in the properties in a manner advantageous to the parties.
Section 79(4)(b)
Each of the parties can be considered to have made a contribution either directly or indirectly to the property of the parties.
Significantly, the parties operated a farming venture utilising M, N and E farming land. Each of the parties worked on the properties and conducted the farming business to the best of their separate ability and availability. For his part, the husband received off farm income, but when he was able to do so, I find that he attended to the farming obligations with diligence. The same can be said for the wife. For the most part and certainly up until the physical separation of the parties, the wife remained on the farm and did all that was reasonably required of her.
In respect of the livestock, the husband properly concedes that the wife may well have been instrumental in the establishment of the livestock and was primarily responsible for the management of this component of the farm enterprise.
After separation there were changes to the parties arrangements. The husband remained responsible for the operation of the farm, whereas the wife moved to Adelaide with the children, two of whom at the time were under the age of 18 years.
I accept the husband’s evidence that there was a clear agreement between the parties that he would be responsible for the operation and management of the farming enterprise.
Section 79(4)(c)
The husband raises no issue in respect of the significance of the contribution made by the wife as a homemaker. The parties remain proud of their children and each of them continue to take an active role in their lives both in respect of the adult children and in particular, EE.
The wife however could be considered to have the primary care of the children, particularly during the period that the husband lived and worked in C Town only returning to the farm on the weekends.
Section 79(4)(d)
The wife has retrained and is now holds the qualification of a health professional. Her income is principally derived from her employment.
The wife seeks that two of the properties be transferred to her. It does not appear to be her intention to farm the properties, but rather that they be the subject of lease thereby providing her with additional income.
To some significant degree, any advantage in that regard may be offset by the wife’s borrowing costs in terms of the provision of a settlement sum to the husband. A further consideration is the extent to which the wife will need to borrow funds to discharge her outstanding legal fees.
No evidence was presented by the wife as to the effect of the orders that she seeks upon her earning capacity.
The husband’s position is not dissimilar. He is clearly successful in his role as a consultant.
Currently he receives income from leasing arrangements in respect of the farming properties. It is likely that any settlement sum payable to the wife may well be affected by further borrowings. That may well affect the husband’s income, but it is unlikely that the orders he seeks will impact upon his earning capacity to income received.
In the early decisions Bremner & Bremner (1995) FLC 92-560 and Money & Money (1995) FLC 92-485, the Court considered that a substantial initial contribution “may be “eroded” to a greater or lesser extent by the later contributions of the other party even if those later contributions do not necessarily at any particular point outstrip those of the other party”.
This approach was considered by the Full Court in Pierce & Pierce (1999) FLC 92-844 and was ultimately criticised as follows:-
In our opinion it is not so much a matter of erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contribution by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution. In the present case that use was a substantial contribution to the purchase price of the matrimonial home.
In Quaresmini & Quaresmini [1999] FamCA 1314, the Court stressed that:-
There is no principle that the length of the marriage leads to a likelihood that other contributions will outweigh or weigh equally with “a particular contribution”.
Similarly, in Brown & Brown [2005] FamCA 389 at paragraph [62] the Full Court acknowledged a substantial contribution on behalf of the husband but said that:-
…those contributions must be weighed and balanced against the myriad of other contributions made by the wife during the course of the marriage, including the period of over twenty years prior to separation, of the occupation and operation of the cane farm.
The clear focus must be upon the weight to be attributed to the introduction into the marriage of substantial property held by the husband at the commencement of cohabitation, the settlement award received as a result of injuries sustained by the husband prior to the commencement of cohabitation and then the significant advantage of a payout to the husband in respect of his partnership interest with his family. Moreover, much of the husband’s financial contribution is reflected in the property that is now comprised in the pool.
Taking into account the size of the pool and noting that the relevant issue is not one of percentage adjustment, but rather the effect of any adjustment, in all the circumstances I consider it appropriate for an adjustment in favour of the husband of 10 per cent to properly reflect the weight that should be given to the contributions of the parties. In doing so, I acknowledge that the consideration of weight that is to be given to a contribution is not an arithmetical exercise, nor indeed is it a process that should be considered by reference to the allocation of each individual aspect of contribution. That would introduce and unacceptable level of artificiality, particularly against the background of a long marriage.
SECTION 75(2) FACTORS
Section 79(4)(e) requires the consideration of s 75(2).
The parties are of similar age and there are no health or other considerations.
The parties each have appropriate gainful employment and there is nothing to suggest that either the husband or the wife will be compromised in their ability to continue in their current occupation. The wife is an enrolled nurse. The husband is a consultant with his income currently being supplemented by his farming activities.
Historically, the ability of the husband to generate income from off farm activity is significantly superior to that of the wife.
There is one child under the age of 18 years. The husband is generous in respect of the level of financial support provided for the child and I do not consider that there is a substantial residual financial obligation that will be borne by the wife.
The extent of commitment to child support both in respect of the needs of the child but also as to a contribution to his school and tuition fees is not a factor in favour of the husband, but in the circumstances of this case it is not to be seen as detracting from his contribution.
The parties are each able to support themselves and there is no evidence that either of them have any obligation to support any other person.
The extent of property available for division between the parties is such that each of them will maintain a reasonable standard of living and lifestyle. The husband would seek to retain the farming properties and to engage in either direct farming or to enter into leasehold arrangements. In any event he will continue to reside in the C Town property. For her part, the wife will retain her Suburb G property.
There is no application in respect of spousal maintenance by one party in favour of the other, nor would it be necessary in circumstances where the parties are each able to support themselves without assistance from the other.
A significant issue arises in respect of the weight to be given to s 75(2)(o). In that respect I bring to account my findings in respect of the substantial money received by the wife both by way of consent orders for property settlement and monies unilaterally removed from the parties various accounts.
The wife’s evidence and explanation for her conduct in respect of the removal of money without the husband’s consent or knowledge and the lack of evidence in respect of the manner in which monies received were spent are matters that are relevant to the consideration under s 75(2).
In particular, the wife can gain no comfort from the manner in which substantial funds were spent on boarding school fees and other tuition related expenses when the wife understood that those liabilities were opposed by the husband.
The wife’s conduct was without restraint, nor did she desist notwithstanding an injunctive order restraining her from accessing the accounts of the parties.
In acknowledging the superior financial position of the husband, an adjustment in favour of the wife of 10 per cent would be warranted, but this must be further tempered by my findings in respect of the wife’s conduct pursuant to s 75(2)(o) and accordingly the adjustment in favour of the wife should be restricted to 5 per cent.
The overall apportionment is as to 55/45 in favour of the husband.
THE AGREEMENT TO SETTLE
The wife seeks to retain the farming land known as N and E. That would leave M with the husband. The husband opposes the wife’s proposal.
The husband argues that following a conciliation conference in December 2014, the parties reached an interim agreement that each of them considered would be the underlying structure to which a final settlement could ultimately be negotiated.
There was a considerable level of sophistication to the agreement of the parties. A document entitled “Financial Settlement Agreement” (“the agreement”) was prepared and ultimately signed by the parties in January 2015.
The agreed terms were as follows:-
(1)That the parties were keen to record an agreement as being an interim property settlement to “ensure the security of housing property in Adelaide for [Ms Curtain]”.
(2)That the wife was to receive a total settlement equivalent to $962,366.
(3)That a deposit has been paid by the husband on the Suburb G property to secure its availability for the wife exclusively.
(4)That the total cost of the property including stamp duty was $915,000.
(5)That the wife agreed to a payment by way of partnership property settlement and superannuation to achieve the total settlement of $962,366.
(6)That the husband would ensure and be responsible for the repayment of any mortgage necessary to purchase the Suburb G property.
(7)That the wife agreed to remove her name from the titles and contracts in respect of all of the farming assets and trusts for the properties in L Town and the C Town property.
(8)That the husband would pay all outstanding liabilities and indemnify the wife in respect of same including all debts and amounts owing to the Australian Taxation Office with regards to GST and liabilities derived by the joint farming business and the C Town property.
Paragraph 10 of the document records the assets anticipated to be retained by the wife and paragraph 11 records as follows:-
The above property settlement represents the majority of property settlement between the parties.
The parties agree to a conciliation conference with each parties legal representatives.
The purchase by the wife of the Suburb G property was problematic. Without warning, the wife advised the husband on 6 December 2014 that she had signed a contract to purchase the Suburb G property for $875,000. The wife had not obtained finance and was aware that the husband could not have arranged finance in circumstances where he was unaware of the purchase.
The initial indication of the husband was that the purchase of the Suburb G property may not be possible, but if it was, it could only occur in the context of an overall settlement.
I accept the husband’s evidence that he urged the wife to exercise her cooling off rights.
The wife had the contract redrawn in order to reduce the deposit and to make the purchase subject to the wife obtaining a loan in the sum of $315,000.
There was no certainty of the parties being able to effect a settlement, but the husband was prepared to explore all options given that the wife ran a real risk of contractual breach and a potential liability for damages.
The rearranging of the husband’s financial affairs could only be described as heroic. He caused a new self-managed superannuation fund to be created at significant expense. He transferred the balance of his accumulation fund with Statewide to his new fund. A 50 per cent interest in the N property was purchased by the new fund for $400,000. That sum together with a cash deposit of $88,802 enabled the acquisition of the Suburb G property.
The husband then arranged an ANZ bank loan in the sum of $415,000. Penalty interest was incurred as a result of the complexity of the arrangements.
The outcome for the husband is that he incurred ongoing monthly payments in respect of the ANZ home loan of $2,165. I accept his evidence that he only entered into the financing arrangements on the basis of what he considered to be an interim agreement and importantly, that it was to include a concession on the part of the wife that the farming properties would be retained by him.
As an indication of how parlous the husband’s financial position was as a result of the purchase of the Suburb G property is his evidence that by April 2015 he instructed solicitors to apply to discharge various injunctive orders in respect of the farming property to give him the option of selling both property and plant and equipment to meet his immediate financial needs. Orders were made to vary the injunctive orders, but the husband’s position altered, 2015 was a successful cropping year and he no longer needed to sell the properties or the plant and equipment.
As discussed, the agreement reached between the parties was not raised by the husband in order to oust the jurisdiction of the Court but rather, to support the orders that the husband seeks namely, the retention by him of the farming properties.
The doctrine of estoppel does not operate to prevent the Court from exercising its jurisdiction to make orders under s 79. It is generally accepted that the Court in exercising its jurisdiction under s 79 is entitled to take into account the circumstances that give rise to the action wherein the doctrine of estoppel might otherwise operate.
The Full Court in Woodcock & Woodcock (1997) FLC 92-739 quoted at length from Walton Stores (Interstate) Limited v Maher (1988) 164 CLR 387. At [413] Brennan J said in Walton Stores (supra):-
A party who induces another to make an assumption that a state of affairs exists, knowing or intending the other to act on that assumption, is estopped from asserting the existence of a different state of affairs as the foundation of their respective rights and liabilities if the other has acted in reliance on the assumption and would suffer detriment if the assumption were not adhered to…
The Full Court in Woodcock (supra) concluded on the authorities that the Court’s jurisdiction to grant relief under s 74 or s 79 of the Act can only be ousted by the Court or by an agreement approved pursuant to the provisions of s 87. Nevertheless, the Full Court held that facts relied upon to establish the existence of circumstances where the doctrine of estoppel might otherwise operate (e.g. an agreement reached or a representation made and acted upon) may well be relevant to determine:
(a)whether it is proper to make an order for the provision of maintenance pursuant to s 74 of the Family Law Act;
(b)whether it is appropriate to make an order for alteration of property interests pursuant to s 79(1) of the Family Law Act;
(c)whether it is just and equitable to make an order for the alteration of property interests within the meaning of s 79(2) of the Family Law Act;
(d)whether it is necessary to make an order to do justice within the meaning of s 80(1)(k) of the Family Law Act;
(e)whether it is just and equitable to make an order with respect to the application for the benefit of all or any of the parties to, and the children of a marriage of the whole or part of any property dealt with by anti-nuptial or post-nuptial settlements made in relation to the marriage within the meaning of section 85A of the Family Law Act.
In Ruane & Bachmann-Ruane [2009] FamCA 1101 Cronin J considered Woodcock and was of the view that the application of estoppel to financial agreements was a vexed question saying at [54]-[55]:-
In contract law, principles of estoppel arise in relation to the creation of rights where non-contractual promises and representations are made. Those matters are unlikely to arise in agreement under Part VIIIA because there needs to be a written agreement in the first place. Representations as to what the parties were offering and intending are also catered for in Part VIIIA because of s 90K. That provision presupposes at least an agreement which can then be set aside on all of the bases well known in contract law such as mistake, misrepresentation, deceptive conduct, duress, undue influence and unconscionability.
Estoppel is a concept known to the law and s 90KA provides that equity principles are to be applied in determining the enforceability of the agreement. Whether estoppel principles can override the statutory requirements in Part VIIIA is a vexed question. In this case, if there is a failure to strictly comply with a statutory requirement, does estoppel apply to preclude the party asserting the deficiency thereby abandoning the private arrangement? Does s 90KA extend to the principle of rectification so that the deficiency can be rectified? The principle of strict compliance with the statutory provisions does not sit comfortably with the equitable principle that parties to a contract cannot avoid their contractual obligations by claiming they entered the contract under the influence of a mistake. How much more so should they be able to avoid their contractual obligations only because of a statutory condition precedent particularly one which is not being complied with, albeit not known to the parties at the time?
In this case the husband has placed himself in a position of significant disadvantage by his reliance upon the terms and conditions of the agreement. As was considered by the High Court in Commonwealth of Australia v Verwayen (1990) 170 CLR 394, the Court held that:-
The question whether such a departure would be unconscionable relates to the conduct of the allegedly estopped party in all the circumstances. That party must have played such a part in the adoption of, or persistence in, the assumption that he would be guilty of unjust and oppressive conduct if he were not to depart from it. The cases indicate four main, but not exhaustive, categories in which an affirmative answer to that question may be justified, namely, where that party:
(a)has induced the assumption by express or implied representation;
(b)has entered into contractual or other material relations with the other party on the conventional basis of the assumption;
(c)has exercised against the other party rights which would exist only if the assumption were correct;
(d)knew that the other party laboured under the assumption and refrained from correcting him when it was his duty in conscience to do so.
The agreement reached between the parties cannot be considered in isolation. It was the expectation of the wife that the husband would act upon the agreement namely, to cause the Suburb G property to be purchased and ultimately to form part of the wife’s property settlement. In a somewhat cavalier manner, the wife created what might have been considered a self-fulfilling prophesy by unilaterally contracting for the purchase of the Suburb G property without there being any clear understanding as to how the purchase price and settlement would be paid and finalised.
The husband acted on the agreement in circumstances where he would not have done so without a reasonable expectation that at the very least the farming properties would be retained by him.
The husband has had a connection with the properties both in terms of his own historical farming background and the connection with his family and the E property previously owned by the husband’s grandfather.
In the circumstances as presented, I propose to reject the orders sought by the wife that would see the farming lands known as N and E being transferred to the wife. It must also be acknowledged that a consequence of the purchase of the Suburb G property was the transfer of N into the husband’s self-managed superannuation fund.
DISSOLUTION OF PARTNERSHIP
The husband seeks that the farming partnership be dissolved as at 31 December 2012 as being the date proximate to the new farming entity namely, E Consulting.
Neither party has presented any evidence in respect of the conduct of the farming enterprise. I am of the view that it would be inappropriate to artificially determine the partnership as at 31 December 2012, but rather, should be dissolved as at 30 June 2016. Such determination may or may not result in an adjustment in favour of the wife. If it results in a liability, I propose to order that the husband indemnify the wife in respect of same.
CONCLUSION
Accordingly, in respect of the wife’s entitlement to 45 percent of the property of the parties, she is to receive a settlement sum of $995,837. She is to retain the following property:-
F Street, Suburb G
$ 875,000
J Town property (1/3rd interest)
$ 36,000
L Town property (1/5th interest)
$ 35,000
ME Bank account
$ 647
Furniture and effects, Suburb G
$ 19,500
Furniture and effects, E/C Town
$ 7,800
Total
$ 902,947-973,947
Less Wife’s Centrelink Debt
$ 18,457-34,457
Net non-superannuation property
$ 884,490 939,490
Curtain Superannuation Fund
$ 40,739
Super SA and Hesta
$ 14,974
Total
$ 940,203 995,203
Accordingly, the husband is to pay a settlement sum to the wife of
$55,634$634 within 60 days of the date of this order.I make orders as appear at the commencement of these reasons.
I certify that the preceding two hundred and twenty (220) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 15 July 2016.
Associate:
Date: 15 July 2016
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