Dawson & Dawson (No 2)
[2022] FedCFamC1F 533
•26 July 2022
Federal Circuit and Family Court of Australia
(DIVISION 1)
Dawson & Dawson (No 2) [2022] FedCFamC1F 533
File number(s): SYC 7812 of 2018 Judgment of: SCHONELL J Date of judgment: 26 July 2022 Catchwords: FAMILY LAW – PROPERTY – Where the issue at trial was the contributions made by both parties and the characterisation of loans provided by the wife’s parents – Where the wife’s parents joined the proceedings – Where the husband contended that the loans should be characterised as a gift – Where the parties entered into loan agreements with the parents and it was therefore inconsistent with a gift – Where it was found that repayment of the loans would not have been demanded had the parties not separated – Loans provided by the wife’s parents not included in the asset pools for division – Where the wife’s contributions were assessed to be greater than the husband’s – Overall division of assets across two pools assessed to be 54% to the wife and 46% to the husband. Legislation: Family Law Act 1975 (Cth) ss 75, 79, 106A Cases cited: Biltoft & Biltoft (1995) FLC 92-614; [1995] FamCA 45
Commissioner of Taxation (Cth) v McPhail (1968) 117 CLR 111; [1968] HCA 13
Dickons v Dickons (2012) 50 FamLR 244; [2012] FamCAFC 154
Hall v Hall (2016) 257 CLR 490; [2016] HCA 23
Hickey & Hickey & Attorney-General for the Commonwealth of Australia (intervener) (2003) FLC 93-143; [2003] FamCA 395
Horrigan & Horrigan [2020] FamCAFC 25
Jabour & Jabour (2019) FLC 93-898; [2019] FamCAFC 78
Onassis v Vergottis [1968] 2 Lloyd’s Report 403
Pierce v Pierce (1999) FLC 92-844; [1998] FamCA 74
Rodgers and Rodgers (No 2) (2016) FLC 93-712; [2016] FamCAFC 104
Singerson & Joans [2014] FamCAFC 238
Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52
Watson v Foxman (1995) 49 NSWLR 315
Whisprun Pty Ltd v Dixon (2003) 200 ALR 447; [2003] HCA 48
Division: Division 1 First Instance Number of paragraphs: 133 Date of hearing: 18 – 20 July 2022 Place: Sydney Counsel for the Applicant: Mr Wong Solicitor for the Applicant: Sexton Family Law Counsel for the First Respondent: Mr Lloyd SC Solicitor for the First Respondent: Fox & Staniland Lawyers Counsel for the Second and Third Respondents: Mr Othen Solicitor for the Second and Third Respondents: Pigdon Norgate Family Lawyers ORDERS
SYC 7812 of 2018 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS DAWSON
ApplicantAND: MR DAWSON
First RespondentMR FLYNN
Second RespondentMS FLYNN
Third Respondent
order made by:
SCHONELL J
DATE OF ORDER:
26 JULY 2022
THE COURT ORDERS THAT:
1.All existing financial orders be dismissed.
2.By way of final property settlement pursuant to s 79(1) of the Family Law Act 1975 (Cth), the parties forthwith do all acts and things and sign all documents necessary to place on the market and to sell the property known as and situate at H Street, Suburb M in the state of New South Wales (“the Suburb M property”) for its fair market value and further to give effect to the sale:
2.1The parties must within 14 days of the date of this order sign all documents and do all acts and things to list the Suburb M property for sale with such agent as the parties may agree to appoint or in default of such agreement, Mr N of Q Company Suburb E;
2.2The Suburb M property is to be listed for sale by public auction, such auction to be held no later than 45 days from the date of these orders and the parties are permitted to sell the Suburb M property by private treaty prior to the scheduled auction provided that both parties have provided their agreement to same in writing;
2.3The price at which the Suburb M property will be first listed will be the price agreed between the parties on the advice of the listing agent and in the event of any dispute, the listing agent’s opinion must prevail;
2.4The parties are to accept and implement any recommendations by the listing agent in relation to work required to be undertaken to the Suburb M property in preparation for sale with the costs of such work to be reimbursed to the paying party as provided for in Order 5.2 below;
2.5The parties will agree on an independent solicitor to undertake the conveyance of the Suburb M property and if there is no agreement then a solicitor will be appointed by the wife within 7 days of the appointment of an agent in accordance with Order 2.1 herein; and
2.6 The property is to remain on the market until sold.
3.The applicant wife (“the wife”) and the respondent husband (“the husband”) shall co-operate in every way with the agent acting on the sale of the property including (without limiting the generality of the foregoing):
3.1 Making the keys available to the Agent;
3.2 Making the property available to the Agent;
3.3Allowing inspection of the property at all reasonable times as required by the Agent and/or third parties to prepare the property for sale;
3.4 Not do or say anything to hinder or prevent a sale being effected;
3.5Ensuring that the property including the grounds are in a neat, fit state of repair and tidy condition at the time of the inspection by the Agent and prospective purchasers;
3.6Signing all documents as requested by the Agent in relation to the listing for sale of the property except contracts or agreements for sale which have not been authorised by the parties’ solicitors; and
3.7The parties shall each execute contracts for sale on the forms prepared by the conveyancing solicitor appointed in accordance with Order 2.5 above having the conduct of the sale at a price or reserve price agreed upon by the parties or in the absence of any agreement, in accordance with the recommendation by the listing agent.
4.The husband is to vacate the property at least seven (7) days prior to completion of the sale of the property.
5.Upon settlement of the sale of the Suburb M property, the parties do all acts and things to cause the proceeds of sale of the property to be distributed in the following manner and priority:
5.1In payment of all costs and expenses of sale including legal costs and disbursements, agent’s commissions, advertising expenses, valuer fees and auction expenses;
5.2In reimbursement to either of the parties for any costs expended in preparing the party for sale as recommended by the agent in writing provided that the party seeking reimbursement produces copies of invoices and receipts relating to the expenditure;
5.3In payment of the balance as to 52% to the wife;
5.4From the balance remaining after payment of 52% to the wife:
(a)In payment to the wife by way of lump sum child support, the sum of $140,855;
(b)In further payment to the wife of $598,000; and
(c)In payment of the balance to the husband.
6.At settlement following the sale of the property as provided for herein, the following shall apply:
6.1Each of the parties will instruct their representatives to do all acts and things necessary to give effect to the settlement via an electronic conveyancing platform, such platform to be agreed between the parties, and in default of agreement within 7 days of the date of order, to be PEXA (“the electronic conveyancing platform”);
6.2In the event either party is self-represented at any time, then that party will nevertheless instruct a conveyancing practitioner who is qualified to conduct Land and Registry Services registration and who subscribes to the electronic conveyancing platform for the purpose of the settlement, and will meet their own fees and costs of the practitioner instructed by them; and
6.3The parties will pay their own fees and costs for participating on the electronic conveyancing platform, and in the event one party meets the other party’s fees at the date of the settlement, the party who did not pay their own fees will reimburse the other party within 7 days of the date of settlement.
7.The wife indemnify and keep indemnified the husband against any liability arising in relation to the monies loaned to the wife and in relation to any moneys loaned to the husband and wife by Mr Flynn and Ms Flynn, and that the wife be declared solely liable for repayment of those loans.
8.Within 14 days of the date of these Orders, the husband pay to the wife the sum of $1,595 in reimbursement of his half share of the fee payable to the single expert, Mr O and in the event that the husband fails to comply with this Order, such sum to be paid to the wife from the proceeds payable to the husband.
9.Other than as herein provided, the husband and wife will each retain to the exclusion of the other, all assets in their name, including but not limited to, bank accounts, superannuation/annuity entitlements, motor vehicles and other items in their possession or control.
10.Other than as herein provided each of the husband and the wife remain liable for any debts including any and all tax liabilities in his or her sole name and in this respect shall indemnify and hold harmless the other from any liability in relation thereto.
11.In the event the husband or the wife refuses or neglects to comply with any of the Orders herein requiring a party to execute a deed or instrument, the Registrar or Deputy Registrar of this Court at its Sydney Registry is appointed pursuant to s 106A of the Family Law Act1975 (Cth) to execute, in the name of the husband or the wife as the case may be, any deed or instrument necessary to give effect to the orders herein, or any of them, and to do all acts and things necessary to give validity and operation to the said deed or instrument.
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 the pseudonym Dawson & Dawson has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
SCHONELL J:
These are financial proceedings between the applicant wife (“the wife”) and the respondent husband (“the husband”) pursuant to s 79 of the Family Law Act1975 (Cth) (“the Act”) arising out of the breakdown of their marriage. The wife’s parents are the second and third named respondents who sought orders to recover various loans, including a loan of $1,000,000 advanced to the wife on 31 October 2013, a balance of $50,000 from an initial advance of $500,000 advanced on 31 March 2009 to the husband and wife and a company controlled by them, as well as other advances made by them to the wife post-separation.
The parties were originally in dispute over the parenting arrangements for their three children but resolved those matters on the first day of the hearing. On the last day, they reached agreement about child support issues and I made consent orders dealing with that issue, which provide for a lump sum payment to the wife of child support to cover school fees. The remaining controversy related to the characterisation of the loans by the wife’s parents, the consequential findings about contributions, and the s 75(2) adjustments (if any).
The wife sought orders that would see the property of the parties, after repayment of the various loans, divided as 55% to the wife and 45% to the husband. At final submissions, the wife’s orders were said to effect a 58% split of the parties’ assets in the wife’s favour. Enquiries made with the wife’s counsel indicated that in the event that the Court did not find that the loans advanced by the wife’s parents were required to be repaid, then the wife sought a financial adjustment in her favour as to 65% of the pool of assets.
The husband for his part initially contended that the monies advanced by the wife’s parents were gifts and consequentially there was no obligation for them to be repaid. He contended that the parties’ assets should be divided as to 60% in his favour and 40% in favour of the wife. In final submissions, his senior counsel urged that I not be distracted by percentages and contended that a just and equitable outcome was that the husband retain the home, the wife retain the shares, and the husband pay the wife, at some undetermined time, the funds necessary to comply with the child support orders. No attempt, despite my valiant entreaty, was made by his senior counsel to convert such proposal into a percentage.
As will be apparent from my reasons I am of the view that neither party’s proposal represented a just and equitable outcome.
Documents relied upon
The wife relied upon the following documents:
(1)Fourth Amended Initiating Application filed 7 February 2022;
(2)Affidavit of wife filed 1 April 2022;
(3)Financial Statement filed 6 April 2022; and
(4)Case Outline.
The husband relied upon the following documents:
(1)Second Amended Response filed 19 May 2022;
(2)Affidavit of husband filed 19 May 2022 (“trial affidavit”);
(3)Further affidavit of husband filed 18 July 2022;
(4)Financial Questionnaire filed 19 November 2020;
(5)Financial Statement filed 19 May 2022; and
(6)Case Outline.
The second and third respondents relied upon the following documents:
(1)Further Amended Response to Initiating Application filed 2 February 2022;
(2)Affidavit of Mr Flynn filed 29 March 2022;
(3)Affidavit of Mr Flynn filed 14 July 2022;
(4)Affidavit of Ms Flynn filed 29 March 2022; and
(5)Case Outline.
A single expert report by Mr O, financial professional, was relied upon by the wife. The husband submitted that the report was irrelevant.
Each of the parties with the exception of the third respondent and the single expert were cross-examined.
Background facts
The husband was born in 1965 and is currently aged 56 years.
The wife was born in 1971 and is currently aged 51 years.
The parties commenced cohabitation in or about late 2003 and married in 2004.
There are three children of the marriage, being X born 2005, aged 17 and currently in year 11 at school; Y born 2007, aged 15 and currently in year 9 at school; and Z born 2008, aged 13 and currently in year 8 at school. The children all attend private schools.
The wife contends that at the commencement of cohabitation she was the owner of a unit at Suburb P and received net proceeds of sale of $250,000 on or about 6 December 2003. In addition, she also had superannuation entitlements of approximately $17,300 and Motor Vehicle 3 valued at approximately $9,000. The wife’s initial contributions were thus something in the order of approximately $276,000.
The husband contends that the wife received $200,000 as the net proceeds of her unit in Suburb P. He referred to the wife’s other assets but sought to draw no conclusion as to value. There was no cross-examination about her initial contribution and no submission was made by his senior counsel as to how I might resolve the difference in evidence. I prefer the wife’s evidence to the husband’s. She gave evidence that is more detailed as to the circumstances surrounding its purchase and sale, and was not challenged on that evidence.
The wife through her counsel conceded at the commencement of the hearing that the husband’s assets at the commencement of cohabitation had a value of approximately $1,600,000. The husband’s evidence is contained in paragraph 31 of his trial affidavit. He gives evidence that his assets had a value of approximately $1,800,000. There was no challenge to the husband’s assets at the commencement of cohabitation. The husband gives quite specific evidence of his assets. I accept his evidence as opposed to the very general assertion as to value asserted by the wife’s counsel. By any measure, the value of the husband’s assets at the commencement of cohabitation exceeded those of the wife.
At the time of cohabitation both parties were in employment, with the wife working as a public servant and the husband is self-employed
The wife continued working as a public servant until X’s birth, when she stopped work. The wife did not thereafter return to employment until 2013, when she returned to casual employment as a public servant.
Commencing in September 2004, the wife started receiving significant sums of money paid to her by her parents, which were asserted to be interest-free loans repayable on demand. The monies were paid as follows:
DATE OF LOAN ($) AMOUNT 1 September 2004 250,000 1 February 2006 100,000 16 December 2006 100,000 12 December 2007 100,000 28 October 2008 100,000 22 February 2010 100,000 10 March 2011 100,000 12 December 2011 100,000 14 September 2013 1,000,000 TOTAL $1,950,000
On 31 March 2009, the wife’s parents advanced by way of Deed of Loan to the parties and to a trust controlled by the parties, the sum of $500,000 (“the Education Loan”), to be used primarily to meet educational expenses of the parties’ children.
In relation to these loans, by 2018, the recoverability of all but the advance of $1,000,000 to the wife and the Education Loan were statute barred.
The husband contends that the monies advanced by the wife’s parents were not loans but rather gifts to the parties equally. I do not accept the husband’s assertion for the reasons set out later.
In November 2008, the parties purchased the matrimonial home at H Street, Suburb M, New South Wales (“the Suburb M property”), as joint tenants in the sum of $1,285,000. The parties did not obtain a mortgage for the purchase. The parties are at issue as to the source of funds that were used to acquire the property. The wife contends that the source of funds included monies advanced by her parents as well as proceeds of sale of shares owned by the husband from his share-trading activities. The husband denies that any money was provided by the wife’s parents towards the purchase of the property.
The wife’s counsel sought to rely upon documents in Exhibit 8 for the submission that the wife’s contributions to the purchase of this property was approximately $830,000, sourced, it was submitted by her counsel, from the funds provided by her parents. This was said to be a substantial contribution by the wife. The wife’s counsel submitted that it was the ‘lynchpin’ to the purchase of the former matrimonial home and thus consistent with the Full Court’s decision in Pierce v Pierce (1999) FLC 92-844 (“Pierce”), it should be given substantial weight.
The wife’s counsel’s reference to Pierce is a reference to where their Honours said:
28. ln 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 contributions by a party with all other relevant contributions of both the husband and the wife. 1n 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: See also Campo and Campo (unreported, Full Court (Ellis, Lindenmayer and Finn JJ), Sydney, delivered 19 May 1995 at pages 21 and 22 of the joint judgment) and Zahra and Zahra (unreported, Full Court Sydney, delivered 3 October 1996, per Ellis J at page 10).
The husband’s senior counsel did not directly respond to the submission but rather pointed to the evidence in the husband’s affidavit filed 18 July 2022 that indicated that the husband transferred $1,000,000 to the wife’s account sometime in September 2007.
The paucity of cross-examination by either party’s counsel on these competing contentions makes any finding difficult and consequently fraught. It was not pursued with any detail in cross-examination, such that I could make any safe finding. The matter is complicated by the absence of direct evidence by the wife in her affidavit as to how much was contributed by her from her parent’s funds. I am not confident in finding that it was $830,000 as asserted by her counsel. The evidence appears to be that the home was purchased in late 2008. By that time, the wife had received loans from her parents of only $650,000 not $830,000, and had ceased work in 2005.
In February 2010, the parties purchased in their joint names a property at R Street, Suburb S, New South Wales (“the R Street, Suburb S property”). Again, the parties are at issue as to whether the funds to purchase it comprised of monies advanced in part by the wife’s parents or the proceeds of sale of shares owned by the husband. The wife’s contention as to contributions to this purchase from her parent’s loans further undermines the force of her counsel’s submission in relation to her contribution to the Suburb M property purchase.
I cannot resolve the inconsistency in the evidence of who contributed what to each property. If the parties fail to present the evidence clearly and do not cross examine on contested factual assertions, they cannot be heard to complain that the Court cannot make precise findings. In my view, it does not matter given the uncontroversial evidence of both parties of their respective contributions over the length of the relationship.
In March 2010, the R Street, Suburb S property was sold and the proceeds were retained by the parties.
The parties are at issue about their respective contributions as a homemaker and parent during the course of the relationship. The wife contends that she undertook the major contribution as a homemaker and parent. The husband contends that the parties made an equal contribution as a parent as he worked from home and was available, and, as I understand his evidence, he made the more significant contribution as a homemaker.
The wife does not dispute that the major income contribution was by the husband but suggests in her evidence at paragraph 38, that in later years the husband made a loss from his share trading. No submission was made by either counsel as to this matter.
No submission was put that the money contributed by either party (including the monies from the wife’s parents) was spent other than on the parties and their children.
The parties separated in January 2018, when the wife moved out of the former matrimonial home.
Following separation, the wife’s parents, by letters dated 12 October 2018 to the wife and to the parties, demanded repayment of all moneys advanced under the various loans.
On 22 October 2018, the wife repaid $450,0000 to her parents.
In the period post-separation, the wife and children resided in a number of rental properties until the purchase by the wife of a property in January 2021 at J Street, Suburb E, New South Wales (“the J Street property”), the finance for which was provided entirely by the wife’s parents.
The husband’s counsel cross-examined the wife who conceded that she did not disclose the purchase of this property until its settlement. In cross-examination, she said that she did not do so because she did not think she needed to do so until after completion of the purchase. I accept that she had an obligation to disclose the purchase after its exchange. I reject the submission that it was a non-disclosure designed to mislead and deceive. The foundation for such a submission was not established in cross-examination.
The wife’s parents have continued to advance the wife various moneys by way of loan since separation of in excess of $360,000 unsecured. The wife has exclusively had the benefit of these moneys. The husband contends that the wife will never have to repay this money.
The wife gives evidence that in March 2018, the parties attended a mediation and reached an interim agreement that provided for an equal time arrangement in relation to the children.
The wife contends that notwithstanding the agreement reached at mediation, the children did not consistently spend time with each of the parties in accordance with that agreement.
The wife says that on 1 September 2020, the parties entered into interim parenting orders, which provided that X and Y spend equal time with both parents and that Z live with the mother and spend three nights with the father.
As a consequence of the resolution of the parenting case, the parties did not read large sections of their affidavits. The husband elected not to read any evidence of the post-separation parenting arrangements. The wife’s evidence was more fulsome and I conclude from it that in the period post-separation, it would appear that Z has lived substantially with her mother while the other children seem to have shared their time between the parties.
Approach to Property Proceedings
The approach to be adopted in a financial adjustment case under s 79 of the Act is to follow the well-recognised four-step process (see Hickey & Hickey & Attorney-General for the Commonwealth of Australia (intervener) (2003) FLC 93-143). Following such an approach, the Court identifies and values the assets and liabilities at the date of hearing for the purposes of division. Secondly, the Court assesses the contributions of the parties within the meaning of s 79(4) of the Act and determines a contribution based entitlement. Thirdly, the Court identifies the relevant matters under s 75(2) and determines such adjustment as is necessary to the contribution based entitlement. Finally, the Court considers the effect of the findings and must then determine whether the order as proposed is in all the circumstances just and equitable.
Whilst no submission was made consistent with the ratio arising out of the High Court’s determination in Stanford v Stanford (2012) 247 CLR 108, I am of the view that it is just and equitable that an order be made adjusting the property interests of the parties. The parties are no longer living together and there is no longer the common use of their property. The assumptions and undertakings that governed the use of their property ended with separation and both parties sought that there be an adjustive order.
Balance Sheet
The parties’ assets and liabilities were captured in a document, which became Exhibit 5 in the proceedings. By the time of submissions, it revealed the following:
Ownership Description Wife’s Value Husband’s Value POOL A – JOINT ASSETS AND LIABILITIES ASSETS 1. Jnt H Street, Suburb M $3,600,000 $3,600,000 2. Jnt K Company Pty Ltd ATF Dawson Family Trust $NIL $NIL 3. W ANZ Access Advantage account (#...67) (as at 30.06.22) $ 960 $960 4. W ANZ Online Saver account (#...16) (as at 23.06.22) $ 5,030 $5,030 5. W Motor Vehicle 1 $12,700 $12,700 6. W Contents, personalty and furnishings $E 10,000 $10,000 7. W Funds held in Sexton Family Law trust account for legal fees $See item 22 Accounted for at item 26 8. H ANZ Access Advantage account (#...94) (as at 09.06.22) $See item 26 Accounted for at item 26 9. H ANZ Cash Investment account (#...54) (as at 09.06.22) $21 $21 10. H ANZ share portfolio (as at 06.07.22) $1,195,398 $1,195,398 11. H ANZ Access Advantage account (#...33) (joint account for Husband and Z) $Exclude $ Exclude – see notes 12. H ANZ Access Advantage account (#...76) (joint account for Husband and Z) $Exclude $ Exclude – see notes 13. H ANZ Access Advantage account (#...79) (joint account for Husband and Y) $Exclude $ Exclude – see notes 14.
H ANZ Access Advantage account (#...19) (joint account for Husband and Y) $Exclude $Exclude – see notes 15. H ANZ Access Advantage account (#...59) (joint account for Husband and X) $Exclude $ Exclude – see notes 16. H ANZ Access Advantage account (#...67) (joint account for Husband and X) $Exclude $Exclude – see notes 17. H Motor Vehicle 2 $E 20,000 $20,000 18. H Contents, personalty and furnishings $E 5,000 $5,000 Total $4,849,109 $4,849,109
ADDBACKS 19. W Interim property distribution to Wife per Orders of 15.10.19 $150,000 $150,000 20. W Interim property distribution to Wife per Orders of 01.09.20 $45,000 $45,000 21. W Interim property distribution to Wife per Orders of 01.04.21 $100,000 $100,000 22. W Interim property distribution to Wife per Orders of 14.02.22 $100,000 $100,000 23. W Interim property distribution to Wife per Orders of 12.05.22 $50,000 $50,000 24. H Interim property distribution to Husband per Orders of 01.09.20 $45,000 $45,000 25. H Interim property distribution to Husband per Orders of 01.04.21 $150,000 $150,000 26. H Interim property distribution to Husband per Orders of 12.05.22 $260,000 $260,000 Total $900,000 $900,000
LIABILITIES 27. Jnt Personal loan owing to Second and Third Respondents $1,000,000 $NIL 28. Jnt Loan owing by K Company Pty Ltd ATF Dawson Family Trust and Husband and Wife to Second and Third Respondents $50,000 $NIL 29(a) W Loan secured by mortgage on J Street property owing to Second and Third Respondents (as at 06.04.22) Accounted for in Pool B $NIL 29. W ANZ Rewards credit card account (#...70) (as at 19.06.22) $ 2,190 $2,190 30. H ANZ Frequent Flyers credit card account (#...56) (as at 15.05.22) $7,570 $7,570 31. H ANZ Rewards credit card account (#...55) (as at 16.05.22) $E 4,596 $4,596 32. H Tax liability 2021 $4,589 $4,589 33(a) H Tax liability 2022 $NIL $To be confirmed - see notes Total $E1,068,945 $18,945
SUPERANNUATION Member Name of Fund Type of Interest Wife’s value Husband’s value 33. W Super Fund 2 Accumulation $E82,795 $82,795 34. H Super Fund 3 Accumulation $2,993 $2,993 Total $85,788 $85,788
FINANCIAL RESOURCES Ownership Description Wife’s value Husband’s value 35. W Beneficiary of the T Family Trust $NIL $Not known Total $ $ TOTAL NET ASSET POOL (INCLUDING SUPERANNUATION ADDBACKS AND RESOURCES) $E 4,765,952 $5,815,952
POOL B – ASSETS AND LIABILITIES ACQUIRED BY WIFE POST-SEPARATION ASSETS Ownership Description Wife’s value Husband’s value 36. W J Street, Suburb E $3,150,000 $ 3,150,000 Total $3,150,000 $ 3,150,000
LIABILITIES Ownership Description Wife’s value Husband’s value 37. W Loan secured by mortgage on J Street property owing to Second and Third Respondents (as at 06.04.22) $2,939,000 $NIL 38. W Personal loan owing to Second and Third Respondents $363,734 $NIL Total $ 3,302,734 $NIL
SUPERANNUATION Member Name of Fund Type of Interest Wife’s value Husband’s value 39. $NIL $NIL Total $NIL $NIL
FINANCIAL RESOURCES Ownership Description Wife’s value Husband’s value 40. $NIL $NIL Total $NIL $NIL TOTAL NET ASSET POOL (INCLUDING SUPERANNUATION AND RESOURCES) $(152,734) $3,150,000 TOTAL COMBINED ASSET POOLS $E 4,613,218 $ 8,965,952
The only matter in dispute as between the parties in relation to construction of the balance sheet was the characterisation of the loans advanced by the wife’s parents, both during the relationship and post separation being Items 27, 28, 37 and 38.
In relation to all of the advances to the wife, both the wife and her parents contend that these monies were loans that are repayable. In relation to the monies advanced to the husband and the wife, being the Education Loan (Item 28), again the wife and her parents contend that it was a loan repayable on demand.
The husband contends that all monies provided by the wife’s parents were gifts and that no debt obligation arises. In that respect, he says the following in his trial affidavit:
71. I am satisfied, after reviewing the financial disclosure, that [Ms Dawson’s] parents gave [Ms Dawson] $1,750,000 throughout the course of the relationship. [Ms Dawson’s] parents also gifted $500,000 to be used for the children’s school fees. …
The husband’s senior counsel agreed that the amount advanced by the wife’s parents was actually $1,950,000 plus the Education Loan of $500,000.
A gift is a gratuitous transfer of property from one to another without obligation. In Commissioner of Taxation (Cth) v McPhail (1968) 117 CLR 111 at 116, Owen J in the High Court held that:
… to constitute a “gift”, it must appear that the property transferred was transferred voluntarily and not as the result of a contractual obligation to transfer it and that no advantage of a material character was received by the transferor by way of return. …
The loan agreements entered into by the wife and the parties are clearly inconsistent with such definition.
The wife’s parents became the second and third respondents. They initially sought recovery from the husband and the wife of the sum of $500,000 pursuant to the Education Loan, the sum of $1,000,000 pursuant to the loan to the wife in September 2013, and other post-separation loans to the wife totalling $3,292,733.70 (Second and Third Respondents Further Amended Response filed 2 February 2022).
It is unclear why they sought recovery of the funds advanced under the mortgage, with there being no evidence of any default under that facility.
At the commencement of the hearing, the wife’s parents contended that the $450,000 repayment in October 2018 by the wife was in reduction of earlier advances, albeit at the time of the demand, those advances were no longer actionable by dint of the statute of limitations. The wife also maintained that position. In her affidavit, she said:
44. The repayment by me to my parents of $450,000 was in repayment of the following sums advanced by them during the relationship:
a. Loan on 1 September 2004 for $250,000;
b. Loan on 1 February 2006 for $100,000; and
c. Loan on 16 December 2006 for $100,000.
During the course of her cross-examination, the wife was taken to an affidavit that she swore in December 2018 where she said that the payment in October 2018 of $450,000 was in reduction of the Education Loan advanced to the husband and wife in 2009. The wife admitted that what she had sworn in 2018 was truthful. The wife’s evidence in that affidavit was inconsistent with paragraph 44 of her trial affidavit. The husband’s senior counsel sought to suggest the wife’s credit was impeached by this admission, such that she was untruthful. I do not accept this submission. It is correct that her evidence was inconsistent but that does not mean that she was purposively misleading the Court.
Consequent upon the wife’s evidence, counsel for the second and third respondents indicated that they would only be pursuing the husband and wife as to $50,000, being the balance outstanding under the Education Loan. The remaining relief was still pressed, including judgment for the post-separation advances to the wife of nearly of $3.3 million.
An interesting feature of all of these loans is the paucity of evidence as to the circumstances in which the money was provided. The only evidence is contained in an affidavit of the wife’s father filed 14 July 2022, where he says:
4. In 2007 I was diagnosed with […] cancer. Around this time, [Ms Flynn] and I commenced calling family meetings for the purpose of discussing our finances with the children. These meetings occurred annually to the best of my recollection.
5. In attendance at these meetings were [Ms Flynn] and myself, each of our 3 children and where relevant, their respective partners. [Mr U] attended alone until he partnered with [Ms V]. I do not recall a family meeting that occurred where [Mr Dawson] was not present.
6. On a number of the family meetings that occurred during that period, [Ms Flynn] and I provided each of our 3 children with a loan agreement and a corresponding cheque for the amount in that agreement. During each meeting before handing out any loan and corresponding cheque, I said words to the effect in the presence of all attendees “this money is lent pursuant to the terms of the loan agreement”. Each child signed the loan agreement at the meeting. The family meetings happened on or around the date of each of the loan agreements as set out at paragraph 5, 17 and 22 of my trial Affidavit.
7. On or about 14 September 2013 a family meeting occurred where I provided [Ms Dawson] in [Mr Dawson’s] presence a cheque of $1,000,000 together with a loan agreement which was signed by [Ms Dawson].
He was not asked any questions about these paragraphs by the husband’s senior counsel.
He agreed in answer to my questions that at the time of each loan to the wife, a similar amount was loaned to each of his other children. It became apparent in his cross-examination that he has not demanded repayment of any loans made to his other children.
What appears clear from the wife’s father’s evidence is that this was money that the parties did not request but was rather provided to them by way of loan.
The husband contends these monies were gifts. The husband in his trial affidavit states the following in relation to the advance of $500,000:
70. …
f. $500,000 on 31 March 2009 which was deposited into the [K Company Pty Ltd] ANZ Bank Account BSB: […] Account Number: [#…85]
This was a payment in which I was aware of and was advanced by [Ms Dawson’s] parents to cover the children's private school fees.
In around 2009 [Ms Dawson] said to me words to the effect of: “My parents will give us $500,000 to pay the children's private school fees”. I recall responding saying words to the effect of: “I do not agree. We can afford schools already. I do not want this or anything looking like a debt even if they provide it and it doesn’t have to be to be paid back”.
I also recall saying to [Ms Dawson’s] father, [Mr Flynn]: “It’s generous but we are living within our means and that is what I propose to continue to do”. [Mr Flynn] replied: “Don’t worry about it, it's not to be repaid.”
[Ms Dawson] and I signed a Loan Agreement on 30 May 2009 for $500,000 to [Ms Dawson’s] parents. No repayments to this loan were requested by [Ms Dawson’s] parents at any time during the relationship. …
(As per the original)
The wife denied this conversation.
The husband’s senior counsel submitted that I should accept the husband’s evidence of the conversation with the wife’s father as it was not the subject of challenge by counsel for the second and third respondents. The second respondent’s evidence as referred to in [59] above made plain that the advances were a loan. He specifically refers to the Education loan and states that it is a loan. The issue was clearly joined by the competing assertions in each party’s affidavits. Counsel for the second and third respondents did not cross-examine the husband but neither did senior counsel for the husband challenge the wife’s father as to his evidence.
It is unclear from the husband’s affidavit when this conversation was alleged to take place. His evidence is, however, inconsistent with the contemporaneous documentary evidence.
During the course of the husband’s evidence, the husband was referred to his trial affidavit where he says the following:
88.… As deposed above, I only agreed to send the children to private school on the basis that their fees would be covered by the money in which Ms Dawson’s parents had given us.
In cross-examination, the husband agreed that there was an inconsistency between what he says in paragraph 88 and what he says in paragraph 70(f) of his trial affidavit about affording school fees. The husband did not seek in re-examination to resolve the inconsistency between the propositions. As with the wife, I do not find that he was misleading in the presentation of his evidence in this way.
The Education Loan was recorded in a Deed as a loan. It was signed by the husband in his personal capacity and in his capacity as a Director of the Trustee Company. The Deed clearly states it is a loan. The husband provided no credible explanation as to why he would sign a loan document if he thought what was being provided was a gift. The husband did not seek in re-examination to address this issue.
In Watson v Foxman (1995) 49 NSWLR 315, McLelland CJ in Eq said at 319:
… Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience
Lord Pearce in Onassis v Vergottis [1968] 2 Lloyd’s Report 403 observed at 431:
“Credibility” involves wider problems than mere “demeanour” which is mostly concerned with whether the witness appears to be telling the truth as he now believes it to be. Credibility covers the following problems. First, is the witness a truthful or untruthful person? Secondly, is he, though a truthful person, telling something less than the truth on this issue, or, though an untruthful person, telling the truth on this issue? Thirdly, though he is a truthful person telling the truth as he sees it, did he register the intentions of the conversation correctly and, if so, has his memory correctly retained them? Also, has his recollection been subsequently altered by unconscious bias or wishful thinking or by overmuch discussion of it with others? Witnesses, especially those who are emotional, who think that they are morally in the right, tend very easily and unconsciously to conjure up a legal right that did not exist. It is a truism, often used in accident cases, that with every day that passes the memory becomes fainter and the imagination becomes more active. For that reason a witness, however honest, rarely persuades a Judge that his present recollection is preferable to that which was taken down in writing immediately after the accident occurred. Therefore, contemporary documents are always of the utmost importance. And lastly, although the honest witness believes he heard or saw this or that, is it so improbable that it is on balance more likely that he was mistaken? On this point it is essential that the balance of probability is put correctly into the scales in weighing the credibility of a witness. And motive is one aspect of probability. All these problems compendiously are entailed when a Judge assesses the credibility of a witness; they are all part of one judicial process. And in the process contemporary documents and admitted or incontrovertible facts and probabilities must play their proper part.
These observations are apposite to the resolution of the conflict said to be raised by the evidence of the husband, both in relation to the Education Loan specifically but also his more general assertion that all advances made by the wife’s parents were gifts not loans.
The husband asserted in his trial affidavit that “[t]here was never a discussion that any of the money given to [Ms Dawson] needed to be repaid” (at paragraph 72), and that “[he] was not even aware of what other sums of money were given to [Ms Dawson] by her parents until [he] reviewed the financial disclosure as [he] had no access to [Ms Dawson’s] ANZ Trading account. If [he] knew that money needed to be repaid [he] would have told [Ms Dawson] not to accept it” (at paragraph 74). This evidence is inconsistent with the wife’s father’s evidence of meetings attended by the husband and the provision of loan agreements at those meetings.
In the search to resolve the conflict in the evidence, I place more weight on contemporaneous documents that support a party’s assertions than I do on assertions of conversations many years ago based solely on memory. I prefer the evidence of the wife and her father to that of the husband. The husband’s evidence as to the conversation is inconsistent with the signing of a deed. It is inconsistent with his own evidence at paragraph 88. The loan for $500,000 is consistent with all of the earlier prior dealings as to money provided by the wife’s father as loans as evidenced by each of the loan agreements signed at the time of the advance of the funds.
I do not accept the husband’s evidence that these moneys, when advanced, were a gift by the wife’s parents. I accept that they were described as a loan.
Notwithstanding that, the wife’s parents seek to recover $50,000 from the parties and $1,000,000 from the wife by way of loan agreement, there still requires a determination as to whether or not such liability should form part of the balance sheet as between the parties.
This Court has over many years developed the jurisprudence on the approach to be adopted in relation to what might be described as contested liabilities. In Biltoft and Biltoft (1995) FLC 92-614, the Full Court noted the distinction between secured and unsecured liabilities, observing at 82,124–82,125:
A general practice has developed over the years that, in relation to applications pursuant to the provisions of s. 79, the Court ascertains the value of the property of the parries to a marriage by deducting from the value of their assets the value of their total liabilities. In the case of encumbered assets, the value thereof is ascertained by deducting the amount of the secured liability from the gross value of the asset. See, Ascot Investments Pty Ltd v. Harper &Anor (l981) 148 CLR 337 where Gibbs J (as he then was) pointed out at p 355 that the Court “must take the property of a party to the marriage as it finds it. The Family Court cannot ignore the interests of third parties in the property, nor the existence of conditions or covenants that limit the rights of the party who owns it”. Where the assets are not encumbered and moneys are owed by the parties or one of them to unsecured creditors, the court ascertains the value of their property by deducting from the value of their assets the value of their total liabilities, including the unsecured liabilities. See Prince and Prince; General Credits Australia Limited (Intervenor); A-O for the State of Queensland (Intervening); A-G for the Commonwealth of Australia (lntervenor) (1984) FLC 191-501, Evatt CJ. at p 79,076 said:-
“… the outcome of the wife's application will depend upon findings made by the Court as to the parties' assets and liabilities, their contributions and their respective financial resources, means and needs. It would be necessary for the Court to determine so far as is possible the value of the property held by each party. ln accordance with the usual practice this would be done by deducting the value of outstanding mortgages, debts, and other liabilities (e.g. Albany and Albany (1980) FLC 90-905, p. 75,717). The Court may have to determine. as between the parties, the existence of a particular liability (Af Petersens and Af Petersens (1981) FLC 191-095).
The assessment of debts and liabilities is not necessarily arrived at by a strictly mathematical or accountancy approach in all cases. While some liabilities are charges upon the property which can be accurately assessed at a certain date, others are at large, or have not been precisely determined, e.g. tax liabilities (Kelly and Kelly (No. 2) (1981) FLC 91-108 p. 76,801). In some cases the amount of the liability can only be estimated generally (Albany (supra), p. 75,717). The Court can make an allowance for a particular liability if appropriate to do so. In some cases there are sufficient uncertainties as to the alleged liability to lead the Court to disregard it entirely or partly (e.g. a loan from a parent of the party not likely to be enforced; Af Petersens (supra); Quirk (1983) unreported). In other cases, the Court may take the view that because of the circumstances surrounding the incurring of the liability it ought in justice and equity to be wholly or partly disregarded in determining the appropriate order to make under sec. 79 as between the parties to the marriage. Such a result could be reached where a spouse had incurred a liability in deliberate or reckless disregard of the other party's potential entitlement under sec. 79 (Kimber and Kimber (1981) FLC 91-085; Kowaliw and Kowaliw (1981) FLC 9l-092; Antmann and Antmann (1980) FLC 190-908; Af Petersens (supra)). Complex issues can arise in regard to liabilities to third parties (see, e.g. Pockran and Crewes; Pockran (1983) FLC 91-311).
Of course, the Court cannot ignore the fact that there is or may be a liability; the effect is simply that it does not consider that the other spouse should be called upon to in effect ‘contribute’ to the liability by having that spouse’s fair share in the parties’ property reduced by virtue of its existence. The effect may be that the party who has incurred the liability will be left to meet it out of whatever funds remain to that party after satisfying the property order made under sec. 79 (Af Petersens (supra)).”
In Rodgers and Rodgers (No 2) (2016) FLC 93-712, the Full Court canvassed at some length the various authorities as to the treatment of liabilities, and observed relevantly for current purposes that:
40.… the manner in which a particular liability should be treated is, ultimately, dependent upon the nature of the liability, the circumstances surrounding the liability and the dictates of justice and equity shaped by each.
41.… in many cases, perhaps almost all, liabilities will be deducted from the “gross” value of the property because it will be clear (and even if not expressly stated, determined) that the justice and equity of the case demands that the liabilities should be met by the parties in the proportions in which the court determines the property is to be divided. Liabilities that are vague, uncertain, unlikely to be enforced and the like might be treated differently because those circumstances might, in the circumstances of the particular case, render it unjust and inequitable for liabilities to be deducted in that manner. Those so-called “exceptional cases” are but instances of the broader consideration of the justice and equity of the particular case.
(Footnote omitted)
Nothing in subsequent Full Court decisions has undermined or diminished the import of this statement.
I am of the view that, notwithstanding the recording of each of these advances as loans, a proper construction of the circumstances subsequent to their advance leads to the conclusion that the moneys were only sought to be recovered because of the separation of the parties and that if I left the responsibility for payment to the wife, her parents would not seek to recover it from her.
I reach this conclusion for the following reasons:
(1)The wife’s parents advanced to the wife, excluding the Education loan, $1,950,000 over the course of the parties’ relationship. The loans were never called in, nor was any demand ever made until after separation.
(2)Notwithstanding a demand for repayment of the loans to which the wife responded by paying $450,000, the wife’s parents proceeded to thereafter advance further sums of money to the wife in circumstances where she had, at the time, no capacity to repay.
(3)No explanation was provided for why they would, on the one hand call for repayment of various moneys lent pre-separation, while at the same time advance further moneys.
(4)At the time of demand for repayment of the Education Loan, the parties’ eldest child had only just started at school. The very calling in of the loan was entirely contrary to the purposes for which it was initially advanced.
(5)The wife’s parents have provided the same loans to their other children and no demand has been made for their repayment.
(6)The wife’s father agreed that he had sought to treat equally each of his children in relation to advancing the loans. In my view, the demand for repayment is acting contrary to what has been the clear practice of these generous parents over a long period of time of treating their children equally. It is in fact to treat the wife unequally.
(7)The second and third respondents counsel indicated at the time of submissions (notwithstanding the final relief sought), that they sought to only recover the debt to the wife of $1,000,000 and the balance of the Education Loan. They did not seek orders to recover the post-separation advances. The explanation why they did not seek recovery of the post-separation loans was because they trusted that she would repay what was, by then, in excess of $3.3 million. The logic of not applying the same principle to the wife’s pre-separation loans is not apparent.
(8)The wife’s father was asked what would happen if the wife could not repay what she owed, to which he answered, “we will have to wait and see what happens”. That is inconsistent with seeking to recover a debt.
(9)I am satisfied that, but for the separation of the parties, these monies would never have been called in by the wife’s parents.
(10)I am satisfied that, but for these proceedings, the wife’s parents would not have commenced proceedings against their daughter (and former son in law) seeking repayment “forthwith” of what was, at that time, nearly $4.8 million (Order 6 of Second and Third Respondents Further Amended Response filed 2 February 2022).
(11)I am satisfied that in the event that I left the wife with the responsibility to indemnify the husband for the balance of the Education Loan, the wife will never be called by her parents to repay those moneys or the monies that have been provided by them to the wife pre and post-separation.
On 4 November 2020, the wife exchanged contracts for the purchase of the J Street property for the sum of $2,800,000. The funds to acquire the purchase were provided by way of mortgage registered in the name of the wife’s parents in the sum of $2,939,000.
This loan is different in character to the other loans as it is secured by way of mortgage over the land. I am required to take the property of the parties as I find it. There is no basis for ignoring the secured interests of the wife’s parents. For those reasons, I also reject the husband’s assertion that this advance should also be regarded as a gift. The evidence is inconsistent with a gift as established by the entering into of a mortgage.
In those circumstances, therefore, I will, in constructing the pool of assets for distribution, not include a liability of the wife to her parents for the pre separation loans nor the liability of the husband and the wife to the wife’s parents in the sum of $50,000, or for the loan post-separation to the wife of $363,734. The wife will clearly remain liable to her parents for these moneys but they will not form part of the assets for division between the parties.
The parties presented the balance sheet of assets on a two pools approach and I will address the contributions and s 75(2) adjustments accordingly.
I find the pool of assets for division between the parties to be as follows:
Ownership Description Value POOL A – JOINT ASSETS AND LIABILITIES ASSETS 1. Jnt H Street, Suburb M $3,600,000 2. Jnt K Company Pty Ltd ATF Dawson Family Trust $NIL 3. W ANZ Access Advantage account (#...67) (as at 30.06.22) $960 4. W ANZ Online Saver account (#...16) (as at 23.06.22) $5,030 5. W Motor Vehicle 1 $12,700 6. W Contents, personalty and furnishings $10,000 9. H ANZ Cash Investment account (#...54) (as at 09.06.22) $21 10. H ANZ share portfolio (as at 06.07.22) $1,195,398 17. H Motor Vehicle 2 $20,000 18. H Contents, personalty and furnishings $5,000
Total $4,849,109
ADDBACKS 19. W Interim property distribution to Wife per Orders of 15.10.19 $150,000 20. W Interim property distribution to Wife per Orders of 01.09.20 $45,000 21. W Interim property distribution to Wife per Orders of 01.04.21 $100,000 22. W Interim property distribution to Wife per Orders of 14.02.22 $100,000 23. W Interim property distribution to Wife per Orders of 12.05.22 $50,000 24. H Interim property distribution to Husband per Orders of 01.09.20 $45,000 25. H Interim property distribution to Husband per Orders of 01.04.21 $150,000 26. H Interim property distribution to Husband per Orders of 12.05.22 $260,000
Total $900,000
LIABILITIES 29. W ANZ Rewards credit card account (#...70) (as at 19.06.22) $2,190 30. H ANZ Frequent Flyers credit card account (#...56) (as at 15.05.22) $7,570 31. H ANZ Rewards credit card account (#...55) (as at 16.05.22) $4,596 32. H Tax liability 2021 $4,589
Total $18,945
SUPERANNUATION Member Name of Fund Type of Interest Value 33. W Super Fund 2 Accumulation $82,795 34. H Super Fund 3 Accumulation $2,993
Total $85,788
FINANCIAL RESOURCES Ownership Description Husband’s value 35. W Beneficiary of the T Family Trust $Not known
Total $ TOTAL NET ASSET POOL (INCLUDING SUPERANNUATION ADDBACKS AND RESOURCES) $5,815,952
POOL B – ASSETS AND LIABILITIES ACQUIRED BY WIFE POST-SEPARATION ASSETS Ownership Description Value 36. W J Street Suburb E $3,150,000 Total $3,150,000
LIABILITIES Ownership Description Value 37. W Loan secured by mortgage on J Street property owing to Second and Third Respondents (as at 06.04.22) $2,939,000 Total $2,939,000
TOTAL NET ASSET POOL (INCLUDING SUPERANNUATION AND RESOURCES) $211,000 TOTAL COMBINED ASSET POOLS $6,026,952 Assessment of Contribution
Much of the evidence in the affidavits was of limited assistance and much of it amounted to broad ranging submissions and criticisms of the other party’s behaviour or conduct, which was irrelevant. Its irrelevancy was highlighted by the absence of cross-examination on many of the assertions, or any submission by each of the parties’ representatives as to its relevance.
I have, however, read all of the evidence relied upon in the proceedings including the Exhibits but do not propose to repeat all of it in these reasons. As the High Court reminds in Whisprun Pty Ltd v Dixon (2003) 200 ALR 447:
62. … A judge’s reasons are not required to mention every fact or argument relied on by the losing party as relevant to an issue. Judgments of trial judges would soon become longer than they already are if a judge’s failure to mention such facts and arguments would be evidence that he or she had not properly considered the losing party’s case.
The assessment in a property case calls for the exercise of a discretion and a holistic value judgment of the respective contributions of the parties. The Court is required to consider all of the contributions of the parties as the Full Court in Dickons v Dickons (2012) 50 FamLR 244 makes plain:
24.… the task of assessing contributions is holistic and but part of a yet further holistic determination of what orders, if any, represent justice and equity in the particular circumstances of this particular relationship. So much is clear from the terms of s 79 itself and, in particular, s 79(2). The essential task is to assess the nature, form and extent of the contributions of all types made by each of the parties within the context of an analysis of their particular relationship.
25.Doing so is also consistent with the demands of authority that the ultimate assessment of contributions should be made without “giving overzealous attention to the ascertainment of the parties’ contributions” (Norbis v Norbis (1986) 161 CLR 513 at 524 ; 65 ALR 12 at 18 ; 10 Fam LR 819 at 825 ; [1986] HCA 17) and the well-established recognition in the authorities (acknowledged specifically by her Honour in this case) that the process required of the court by s 79 is the exercise of a wide discretion, not the performance of a mathematical or accounting exercise.
26.The necessarily imprecise “wide discretion” inherent in what is required by the section is made no more precise or coherent by attributing percentage figures to arbitrary time frames or categorisations of contributions within the relationship. Indeed, we consider that doing so is contrary to the holistic analysis required by the section and, in the usual course of events, should be avoided.
The Full Court as recently in Horrigan & Horrigan [2020] FamCAFC 25 emphasised and reinforced that the proper approach to the assessment of contributions is:
35.… well established that an assessment of contributions is not a mathematical exercise, but rather involves the identification and assessment of all of the parties’ respective contributions, in a holistic way across the course of the relationship and in the post separation period to the point of assessment. …
I am also mindful of what the Full Court said in Singerson & Joans [2014] Fam CAFC 238 at [66] that for the purposes of s 79 of the Act, there is nothing to suggest that any category of contribution needs to be quarantined and applied solely to particular assets. In my view, the authorities required evaluation of all contributions to the property of the parties, notwithstanding that the categories of property may be different. This view has been confirmed by subsequent Full Courts such as in Jabour & Jabour (2019) FLC 93-898, where their Honours observed that a primary judge should be cautious in emphasising the importance of an increase in value of a particular item of property at the expense of “the myriad of other contributions that each of the parties has made during the course of the relationship” (at [35]).
The consistent theme from the authorities is the assessment of contributions of all types over the course of the relationship in a holistic way.
Guided by such Full Court determination, I propose to assess the parties’ contributions.
As I stated earlier in these reasons, each of the parties contended for a different outcome in relation to the assessment of contribution.
There is no doubt that the husband’s assets at the commencement of cohabitation, as I have found, vastly exceeded those of the wife. During the course of the relationship, the husband was the parties’ major income earner and made a substantial contribution in that respect.
The affidavits of the parties presented competing assertions as to the respective parenting and homemaker contributions.
The wife contended that she was the primary homemaker and parent.
The husband contended that his contributions as a parent were at least the equal of the wife’s and he seems to contend that he made a greater contribution as a home maker.
The husband’s evidence in his trial affidavit was as follows:
Parenting and homemaking contributions
77. [Ms Dawson] and I had equal care of the children. As I worked from home, I was caring for the children. I wanted to be financially debt free and be able to spend time with our children daily and I preferred to take on the role of “house husband”.
78. When the children were young, I was bathing them, feeding them and attending to their care needs. When they commenced school, I took them to and from school, helped them with homework, took them to their extracurricular activities and attended to their care needs.
79. On occasions, [Ms Dawson] would insist that her parents collect the children from school so that the children could spend time with them.
Non-financial contributions
80. During our marriage, [Ms Dawson], and I both undertook the cooking, washing clothes and grocery shopping. I did lawn mowing and maintaining of the garden. I also undertook cleaning and household chores.
(As per the original subject to objections)
The husband’s evidence in relation to his contributions in many respects represented bald assertions, with little to no underlying evidence to support the submission of equal or greater contribution. The paucity of evidence inhibits the finding contented for by the arid submission.
The wife, who was the applicant, gave extensive evidence as to her contributions over the course of the relationship, including what it was that she actually did in her capacity as a homemaker and in her capacity as a parent. In that respect, the wife’s evidence at paragraphs 14, 18, 19, 21, 22, 25, 32, 33, 35 and 36 was not the subject of any challenge. In circumstances where the husband advanced bald contentions and does not seek to challenge the wife’s detailed assertions, I prefer the wife’s evidence over that of the husband. I find that the wife was the primary homemaker and parent.
The wife’s parents have made a significant contribution to the parties living expense and lifestyle by the provision of funds. In circumstances of my finding that the funds advanced by the wife’s parents should not form part of the net property for division, I find that the wife’s parents have provided $2,000,000 over the course of the relationship after repayment of the $450,000. This is a significant contribution on the part of the wife.
I note that in the period post-separation, the husband has had the benefit of occupation of the former matrimonial home whilst the wife has had to meet rental expenses. I also note that there have been various sums of money paid to each of the parties by way of partial property orders. In the balance sheet, there are addbacks in favour of each party totalling $445,000.
The husband has elected to give no evidence as to how he applied the moneys he received.
The wife says that on 15 October 2019, she received the sum of $150,000 of which she applied approximately $20,000 to rent and approximately $34,000 to various expenses for the children, including school fees of approximately $20,000. The wife also gives evidence that in September 2020, she received a further $45,000 of which she applied $15,700 towards rent and $7,722 towards D School fees. In April 2021, the wife received a further partial property settlement of $100,000 of which part was paid by way of mortgage payments. At this time, she was no longer renting. The wife gives evidence as follows:
163. As [Mr Dawson] is not working, I have historically been required to pay him child support though on occasions [Mr Dawson] has been assessed as being required to pay me child support. I otherwise pay for the children’s uniforms, textbooks, orthodontic and psychologist expenses without any assistance from [Mr Dawson]. Whilst I have requested that [Mr Dawson] contribute to these expenses on multiple occasions, he has failed to do so. Currently, I am assessed to pay $20 each week in child support to [Mr Dawson], however this assessment is based on an equal care arrangement for [Z] which is incorrect. I have notified the agency and anticipate the assessment will change in the near future.
164. Since separation, [Mr Dawson] has been in receipt of the dividends from the ANZ Share Portfolio account. To date, I have not received any disclosure about the total dividends received by [Mr Dawson] or how he has applied those dividends. Given that I do not have any updated financial disclosure, I am not aware of [Mr Dawson’s] current taxable income, and whether he has any ongoing tax losses which he may continue to retain the benefit of.
None of this was the subject of any challenge by the husband. I accept the wife’s evidence.
The husband conceded in cross-examination that since separation he has not personally paid any monies by way of school fees. The husband for his part has received interim property distributions of the same amount as the wife. As I said earlier, he has elected to give no evidence as to what he has done with his money. He does not have to give evidence but cannot complain if the evidence permits of findings of a greater contribution in favour of the wife from those funds.
I accept that the wife has made a significant post-separation financial contribution to the children that exceeds that of the husband.
The wife seeks to rely upon the evidence of the accountant, Mr O, as to the value of the benefit that the parties received from the loans provided by the wife’s parents. Mr O has prepared a report, which identifies that had the parties been required to pay interest, then the interest for the period 3 September 2004 to 18 July 2022 would have been some $2,486,478. It is apparent from his report that his assumptions include adoption of an interest rate as provided by the Reserve Bank of Australia for housing loans and that interest has been calculated on a compounding basis.
The wife contends that this evidence of the value of some $2,486,478 provides support for her greater contribution-based finding. I do not accept the entirety of that submission for the following reasons:
(1)The assessment of contribution is a holistic exercise and not an accounting exercise. The approach contended for by the wife is inconsistent with the authorities.
(2)There is no evidence that at the time the wife entered into the loan agreements with her parents, that she requested the monies. The evidence appears to be that the wife’s parents simply provided the monies. The loans were silent as to interest. Had interest been a condition of the loan, then it may have been that the wife would not have borrowed the monies.
(3)The proposition underlying the submission presupposes that the parties would never have repaid any money had they known that interest would be accruing at compounding rates and also presupposes that they would have continued to borrow further monies had interest been a component.
I accept, however, that the receipt of the moneys interest fee was a significant benefit to the parties and will consider that in my overall assessment.
In relation to Pool A, I assess the parties’ contributions as favouring the wife as to 54%. I reach that conclusion notwithstanding the greater initial contribution of the husband, recognising the value of a dollar over time together with his contributions as the primary income earner, his contributions as a homemaker and parent, his contributions post-separation to the children when they were in his care, and the payment to the wife of moneys in 2018. However, I assess the wife’s contributions were greater. They include her initial financial contribution, her greater contribution as a homemaker and parent both during the relationship and post separation, the significant financial contribution represented by her income when working and her parent’s provision of $2,000,000 as well as the benefit that such money was interest free.
I also acknowledge her greater contributions in the period post-separation in the application of her partial property settlements and otherwise her financial contributions to the children in the over four years since separation. I also note the husband has been in occupation of the home for over four years, whilst the wife has either paid rent or interest on a mortgage funded from her partial property settlements.
The husband has not contributed to the property comprising of Pool B. I assess the wife’s contributions to this pool at 100%.
Section 75(2) matters
The husband generates income from share trading and asserts in his Financial Statement that his gross income is approximately $2,000 per week. The wife for her part is employed as a public servant and earns $1,408 per week.
The husband’s income as a self-employed person is provided from the capital that he has invested in various public companies shares. That current capital is represented by shares held by the husband in his name having a value, as ascribed in Exhibit 5, of $1,195,398. In final submissions, the husband sought to transfer the share portfolio to the wife. Such a proposition is inconsistent with the husband’s evidence where he said in his trial affidavit:
105. I earn my income from share trading and dividends. Earning an income is dependent on having capital.
The husband will be able to retain that share portfolio and thus there should be no impact on his earning capacity.
I note that the husband’s income, on a gross basis, is approximately $600 per week more than the wife’s.
The parties have the care of three children. The current living arrangements for the children as a consequence of the final parenting orders made 18 July 2022, are that the elder two children, X and Y, will live and spend time with each parent in accordance with their wishes, whilst Z will live with her mother and spend time with the father in accordance with her wishes.
It is likely that the current living arrangements of the children will in all probability remain roughly as they are, namely, with Z living primarily with her mother and Y living primarily with his father whilst X will live with her parents in accordance with her wishes. In those circumstances, therefore, given their respective ages and the years at which they are currently at school, it is likely that the wife will have a longer period in which Z remains in her care under the age of 18 than it will be in relation to Y.
No submission was put that any party has any health issues that would call for any adjustment under s 75(2).
The superannuation entitlements of the parties are very modest and are not, in and of themselves, a matter that would call for an adjustment under s 75(2).
The High Court in Hall v Hall (2016) 257 CLR 490 said:
55.Whether a potential source of financial support amounts to a financial resource of a party turns in most cases on a factual inquiry as to whether or not support from that source could reasonably be expected to be forthcoming were the party to call on it.
I am satisfied that the wife’s parents represent a financial resource to the wife. They have provided significant sums of money to the wife over the course of the marriage and in the period post-separation. The wife lives in a home, which they purchased for her albeit subject to a mortgage back to them.
Notwithstanding that, the husband’s income is slightly greater than that of the wife’s and the wife will have the responsibility for a child under 18 years longer than the husband will, the financial resource represented by the wife’s parents calls for an adjustment in the husband’s favour. I assess that adjustment at 2% to Pool A. I do not propose to adjust Pool B.
The effect of this is a division of the parties’ assets in Pool A as to 52% to the wife and 48% to the husband and no adjustment to Pool B. Overall it represents a division across both pools of 54% to the wife.
Just and equitable
I am of the view that the orders that I propose represents a just and equitable outcome. Each of the parties will receive a capital sum, based upon the current value of the former matrimonial home and their other assets, of $3,235,295 in the case of the wife and $2,791,657 in the case of the husband. I am of the view that a settlement in that range meets the criteria of a just and equitable result.
The wife sought a sale of the former matrimonial home, the husband sought to retain it. He has elected to call no evidence that he could borrow moneys to pay out the wife’s entitlement. He provided no minute of orders that sets out with precision any process that would permit of that or a sale of the home.
In the absence of any evidence, I will order an immediate sale of the home. In circumstances where the wife provides the only orders to effect a sale, I will adopt her orders. The husband made no submission about the inappropriateness of the form of her orders or the mechanism for sale.
I will order the wife to receive 52% of the net proceeds of sale of the home.
From the husband’s share of the balance, there shall be paid to the wife $140,855, being the husband’s half share of the agreed lump sum child support.
The wife is to receive 52% of the remaining assets in Pool A, excluding the home. These total $2,215,952 of which 52% totals $1,152,295. The wife has property in Pool A, having a value of $554,295. Therefore, from the husband’s share of the proceeds of sale of the home, there will be paid to the wife $598,000.
The husband opposed the making of an order that the wife be reimbursed from the proceeds of sale for the costs of Mr O’s report. No submission was made explaining why he had not complied with previous orders for payment. I am not satisfied that there should be a departure from the rules of Court or why there should be a variation of an earlier order with which the husband has not complied. I will make the orders as sought by the wife.
I am satisfied that such achieves a just and equitable result.
I certify that the preceding one hundred and thirty-three (133) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Schonell. Associate:
Dated: 26 July 2022
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