Daymond & Anor & Daymond & Ors
[2013] FamCA 215
•9 April 2013
FAMILY COURT OF AUSTRALIA
| DAYMOND AND ANOR & DAYMOND AND ORS | [2013] FamCA 215 |
| FAMILY LAW – PROPERTY SETTLEMENT – where the first and second applicants seek property settlement orders against their respective former spouses, who are brothers – where a significant portion of the “legal and equitable interests” of the parties to each marriage is the shareholding of each brother in a company – where that shareholding was subject to a claim by the first applicant’s son that his father and uncle held their shares on trust for him – where that trust claim was ultimately unsuccessful – whether the existing legal and equitable interests of the parties should be altered – where it is just and equitable to make orders altering the parties’ existing legal and equitable interests. FAMILY LAW – EQUITY – where the third party son of the first applicant and first respondent filed a claim based on constructive trust in the Supreme Court – where that claim was transferred to this Court to be heard with his parents’ and uncle and aunt’s property settlement proceedings – where the third party claims that his father and uncle hold their shares in a company on trust for him – where the third party alleges that his father and uncle made representations to him that he would have control of or be the majority shareholder in the company at an indeterminate point in time – whether a constructive trust arises – where the representations alleged are ambiguous – where, in any event, there is nothing to indicate that the father and uncle have resiled from the alleged representations – where no constructive trust arises – third party’s claim dismissed. |
| Family Law Act 1975 (Cth) |
| Aleksovski & Aleksovski (1996) FLC 92-705 Thomson Reuters, Principles of the Law of Trusts, vol 2 (at Service 104) |
| 1st APPLICANT: | Ms M Daymond |
| 2nd APPLICANT: | Ms R Daymond |
| 1st RESPONDENT: | Mr D Daymond |
| 2nd RESPONDENT: | Mr I Daymond |
| 3rd RESPONDENT: | P Pty Ltd |
| 3rd PARTY: | Mr A Daymond |
| FILE NUMBER: | BRC | 18 | of | 2011 |
| FILE NUMBER | BRC | 11578 | of | 2010 |
| DATE DELIVERED: | 9 April 2013 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Murphy J |
| HEARING DATE: | 23 – 26 July 2012 3 – 4 December 2012 |
REPRESENTATION
| COUNSEL FOR THE 1ST APPLICANT: | Mr George |
| SOLICITOR FOR THE 1ST APPLICANT: | A M Law |
| COUNSEL FOR THE 2ND APPLICANT: | Mr Hackett |
| SOLICITOR FOR THE 2ND APPLICANT: | Bruce Dulley Family Lawyers |
| COUNSEL FOR THE 1ST, 2ND, 3RD RESPONDENTS: | Ms Carew |
| SOLICITOR FOR THE 1ST, 2ND, 3RD RESPONDENTS: | Best Wilson Family Law |
| COUNSEL FOR THE 3RD PARTY: | Mr Williams |
| SOLICITOR FOR THE 3RD PARTY: | Shannon Donaldson Province Lawyers |
Orders
That the Claim and Statement of Claim filed by Mr A Daymond in the Supreme Court of Queensland on 23 March 2012 and transferred to this Court on 30 May 2012 be dismissed.
A.IN THE MARRIAGE OF MR D DAYMOND and MS M DAYMOND
THAT as and by way of settlement of property pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”), the existing legal and equitable interests in the property of the parties as set forth in the Reasons for Judgment herewith be altered so as to effect a division of those interests whereby MR D DAYMOND receives property equivalent to 55 per cent of the value thereof and MS M DAYMOND receives property equivalent to 45 per cent of the value thereof.
THAT so as to give effect to paragraph (2) of these Orders, the parties shall, within 21 days of the date of these Orders, provide via joint e-mail communication to the Associate to Murphy J an agreed minute of order.
THAT in the event that the parties are unable or unwilling to arrive at the orders contemplated by paragraph (3) hereof, the matter be listed for hearing before Murphy J on a date and at a time to be advised and, in that event, the parties shall, not later than 5 days before such date, file and serve all such material as might be necessary so as to make submissions in respect of any order for costs of and incidental to the failure to provide a minute of order as paragraph (3) contemplates.
B.IN THE MARRIAGE OF MR I DAYMOND and MS R DAYMOND
THAT as and by way of settlement of property pursuant to s 79 of the Act, the existing legal and equitable interests in property of the parties as set forth in the Reasons for Judgment herewith be altered so as to effect a division of those interests whereby Mr I Daymond receives property equivalent to 47.5 per cent of the value thereof and MS R DAYMOND receives property equivalent to 52.5 per cent of the value thereof.
THAT so as to give effect to paragraph (5) of these Orders, the parties shall, within 21 days of the date of these Orders, provide via joint e-mail communication to THE Associate to Murphy J an agreed minute of Order.
THAT in the event that the parties are unable or unwilling to arrive at the orders contemplated by paragraph (6) hereof, the matter be listed for hearing before Murphy J on a date and at a time to be advised and, in that event, the parties shall, not later than 5 days before such date, file and serve all such material as might be necessary so as to make submissions in respect of any order for costs of and incidental to the failure to provide a minute of order as paragraph (6) contemplates.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Daymond and Anor & Daymond and Ors has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT BRISBANE |
FILE NUMBER: BRC18/2011 and BRC11578/2010
| Ms M Daymond |
1st Applicant
And
| Ms R Daymond |
2nd Applicant
And
| Mr D Daymond |
1st Respondent
And
| Mr I Daymond |
2nd Respondent
And
| P Pty Ltd |
3rd Respondent
And
| Mr A Daymond |
3rd Party
REASONS FOR JUDGMENT
Mr A Daymond, (“Mr A”) is the son of Mr D Daymond, (“Mr D”)and Ms M Daymond, (“Ms M”). Mr I Daymond, (“Mr I”) and Ms R Daymond, (“Ms R”) are Mr A’s paternal uncle and aunt. Each of Mr D and Ms M and Mr I and Ms R are involved in proceedings for settlement of property in this Court. Mr A sued his father and uncle in the Supreme Court of Queensland. He claims that they hold their respective shareholdings in P Pty Ltd on constructive trust for him. The Supreme Court proceedings were transferred to this court.
The s 79 proceedings pertaining to each of the marriages and Mr A’s claim were consolidated and subsequently heard together. These reasons pertain to each such claim.
Save for the decision about Mr A’s claimed interest, the property potentially available for division pursuant to s 79 is agreed in respect of each marriage, including the value of P Pty Ltd and, as a result, its shares.
The respective s 79 claims depend upon a consideration of whether “…according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property...” require, by reference to justice and equity, a property settlement order to be made in each case.[1] Mr A’s claim potentially affects the existing legal and equitable interests of each of the husbands in the shares held by them in P Pty Ltd. It is necessary, then, to first determine Mr A’s claim so as to found the existing legal and equitable interests of the parties to the respective marriages.
[1] Stanford v Stanford (2012) 293 ALR 70 at [37]. Emphasis in original.
It is not contended by any party that this Court lacks jurisdiction and power to decide Mr A’s claim. I am satisfied that the Court does have jurisdiction and the power to make the orders sought.[2]
[2] See, for example, Warby & Warby (2001) FLC 93-091.
Is Mr A’s Claim Bona Fide?
Counsel for Mr A’s mother, Ms M, suggested that his claim was “concocted” with, in effect, the connivance of each of the respondents. Counsel for his aunt suggested that his claim lacked bona fides.
It is said that there is a suspicious coincidence between the assertion of the interest claimed by Mr A and the s 79 proceedings brought by his mother and aunt. It is argued that the asserted representations occurred in 2000, and there has been a delay of about 12 years in seeking to enforce the alleged interest and the failure to formalise that interest in that intervening period. If the essence of the asserted representations is that Mr A would take control of, or “a controlling interest” in P Pty Ltd, then it is remarkable, it is argued, that he took no steps to do so during that 12 year period. All, it is said, point to a lack of bona fides or connivance.
In written submissions, counsel for Ms R makes specific reference to a number of pieces of evidence in support of that central contention. For example:
§ The absence of discussions until after the breakdown of the marriages;
§ Mr D’s first affidavit in the proceedings did not reveal any interest attributed to Mr A;
§ “[Mr D] could not explain what the beneficial interest he acknowledged [Mr A] had in paragraph 22 of his trial affidavit, even after being provided with the statement of claim and particulars. Nor could [Mr I]”;
§ The affidavits of Mr D and Mr I were “word perfect”; Mr D could not explain it, Mr I conceded copying parts of Mr D’s and had “asked [Mr D] for his to make sure his was consistent.”[3]
[3] Written submissions of the second applicant, p 13.
Exhibit M3 is a letter from the solicitors for Mr A to the solicitors for Mr I and Mr D. The letter refers to the attendance by Mr A, Mr I and Mr
D upon a solicitor, Mr McNally, “…to obtain legal advice in relation to [P Pty Ltd’s] position, [Mr A’s] rights and family law advice for [Mr D and Mr I]” in light of their respective marriage breakdowns. The letter is contended to be wholly self-serving and, in effect, part of the connivance. In any event, it is contended that an adverse inference ought be drawn from the failure of either Mr A, or, with his consent, Mr D and Mr I, to have Mr McNally depose to what is contended in that letter.
The drawing of an adverse inference relies upon the premise that there is something for Mr A to explain in respect of what transpired between he and his then solicitor. That in turn depends on a premise which is solely the creation of the applicants, namely that there was a connivance or concoction of relatively recent invention. I do not consider that any “evidentiary onus” arises on the part of Mr A such that an adverse inference ought be drawn by his failure to adduce evidence from Mr McNally. I consider the same considerations apply in respect of Mr D and Mr I.[4] I decline to draw an adverse inference from the failure to call Mr McNally.
[4]Ho v Powell [2001] NSWCA 168 at [15], per Hodgson JA, Beazley JA agreeing; Australian Securities and Investment Commission v Rich [2009] NSWSC 1229 at [439], per Austin J.
I reject the claim of connivance or lack of bona fides. I assess Mr A’s evidence as essentially honest. I find it unsurprising that informality would have attended, and did in fact attend, any arrangement between Mr A and his father and uncle and any understanding held by each of them, or by them jointly, as to their respective future entitlements inter se and with P Pty Ltd. Equally, the coincidence between the assertion of rights by the institution of proceedings by Mr A with s 79 proceedings by his mother and aunt is, in my view, neither surprising nor inherently sinister; no need had earlier arisen – either as a matter of law or logic – that necessarily commended the assertion of those rights. As a corollary, it would be unsurprising if nothing at all was done by Mr A in circumstances where the marriages of his parents and his aunt and uncle subsisted happily.
What is the Basis of Mr A’s Claim?
The Case as Pleaded
Mr A’s Statement of Claim asserts that all of the shares, or “…such portion of those shares as would be equitable in the Court’s discretion…” currently held by each of Mr D and Mr I are held by each of them on constructive trust for Mr A. Alternative relief is sought by way of an order that each of Mr D and Mr I “… issue ordinary and preference shares in [P Pty Ltd] for no consideration so as to create a majority shareholding for [Mr A]” or for an order that the defendant’s “amend [P Pty Ltd’s] constitution to provide [Mr A] with rights of pre-emption in respect of such shares that are not issued to or held on trust for [Mr A].”
I find that there is no pleaded or evidentiary foundation for Mr A’s claim that “all of the shares” in P Pty Ltd are held on constructive trust for him. No submissions addressed any claim in those terms. Mr A’s claim is limited, by both his pleading and the evidence, to “a controlling interest” or “control” or a “majority shareholding” in P Pty Ltd.
The constructive trust is said to arise from pleaded representations by Mr D and Mr I creating an expectation in Mr A, resulting in Mr A acting to his detriment in reliance upon those representations.[5] The “Expectation” (referred to as such in the Statement of Claim) is pleaded as:
16.1if [Mr A] worked for a minimum wage for [P Pty Ltd] for a period of approximately seven to ten years, then
16.2[Mr A] would be given a controlling interest in [P Pty Ltd], which he understood to mean a majority shareholding in [P Pty Ltd].
[5]The Commonwealth v Verwayen (1990) 170 CLR 394; Giumelli & Anor v Giumelli (1999) 196 CLR 101.
The expectation is said to be based on a number of representations in 2000 (Statement of Claim at [11], [12] and [13]) and to have been “reinforced” by other conversations “[f]rom 2000 to present” which “…includ[ed] references to [Mr A] obtaining control of [P Pty Ltd], and [Mr A’s] children operating the business” (Statement of Claim at [27]).
Mr D and Mr I jointly plead to the Statement of Claim in a Response filed 13 August 2012. They admit that conversations took place, and aspects of them, as pleaded by Mr A, but, crucially, deny that Mr A “…ever said that he expected to obtain a ‘controlling interest’…” and that either of them “ever said during 2000 to [Mr A] that [Mr A] would be given (or would ‘secure’) a ‘controlling interest’ in [P Pty Ltd]”. They plead alternatively that, if the expression “controlling interest” or an expression like it was used, it meant “…the primary responsibility for the control and management of [P Pty Ltd] and its businesses…”
Mr D and Mr I admit to representations made to Mr A that he “…would at an indeterminate point in time in the future be granted control and management of [P Pty Ltd]” and that “…at an indeterminate point in time in the future become the owner and/or controller of an indeterminate number of shares…” either by transfer or bequest or an issue of shares in P Pty Ltd. They go on to plead that such representations as they made were “…impliedly subject to the fortunes of the [P Pty Ltd] and its businesses.”
The Nature of the Representations
Mr A deposes in his affidavit filed 18 September 2012 (paras 32-35) to the conversations the subject of his pleading. The conversations deposed to all occurred during 2000. Discussions about Mr A’s future, his desire to work for the company, and his desire to receive security are contained within those conversations. Those aspects of the conversations provide a context for the representations upon which it is contended that he relied.
In a conversation said to have occurred on 9 April 2000 it is deposed that Mr D (i.e. his father) said that he and his uncle were “…purely custodians of the business and that it had been given to them as a legacy and which would be passed on to me”.[6] He goes on to depose to his father using “words to the effect” that he and his uncle were “… not getting any younger and they wanted me to be taking over control of the business”.[7]
[6] Emphasis added.
[7] Emphasis added.
The issue of retirement is spoken of (at [32(m)]) but nothing concrete is there deposed about any specific plan or date. What is said is that his father said “…words to the effect that he expected to have little involvement with the company after he and my Uncle turned 65.”[8] Mr A goes on to depose that his father “…used the expression that I would have a ‘controlling interest in the business’” and that his understanding of that was that his father and his uncle would “…still be involved but that I would be the one controlling the business”.[9] (Emphasis added in each case).
[8] Emphasis added.
[9] Emphasis added.
In that conversation Mr A does not link any “controlling interest” in the business to any shareholding (save that the expression “controlling interest” might be interpreted as such). At that time Mr D and Mr I each had a 39 per cent interest in P Pty Ltd. Neither had a controlling interest. Mr A goes on to depose that the conversation “…and in particular the effect of the words said by my father in terms of my future involvement in the business were very persuasive…” about “…the decision for my career which I then faced” and then says they were persuasive because he understood them to mean that he would be “…running the family business and that I would be receiving a controlling interest in the business over a period of time”.[10]
[10] Emphasis added.
Further conversations are deposed to in paragraphs 35 and 36 of that affidavit. Again though, nothing within those conversations contain any precise expression of either the interest to be received potentially by Mr A or when and in what form any “control” of the business might occur. For example, paragraph 35(d) again uses the expression “would be being passed to me” in reference to “the business” and deposes to the effect of the words used being that “I would eventually be in control of the business.”[11]
[11] Emphasis added.
The gravamen of what is deposed to by Mr D and Mr I is that the conversations as broadly referred to by Mr A are admitted but they differ in what I consider to be material and important respects. The differences can perhaps be summarised by reference to the deposition by each of Mr D and Mr I in their capacity as directors of P Pty Ltd. In that respect, Mr I deposed that:
…The basis of all conversations that we were having around this time was to assure [Mr A] that he would be controlling the family business in time when [the other brother] and I were unable to do so. From my recollection there was never any promise to [Mr A] of the transfer of a majority shareholding or indeed a shareholding at any specific time. [The other brother] and I had not ruled out the possibility of transferring [Mr A] shares in the company at that time however, if such a transfer was to occur it would have been a long way down the track and whether such a transfer would occur would depend on the prosperity of the business. Any ownership of shares before our passing was never specifically discussed or promised to [Mr A] at this meeting or any other meeting to the best of my knowledge.[12]
[12] Affidavit Mr I filed 5 November 2012 at [23].
Mr D similarly deposed that:
I recall the meeting [in April 2000] described by [Mr A] because it was the meeting that I became excited that the prospect of [Mr A] working for the family business may become a reality. [Mr A’s] recollection of the meeting is accurate from my perspective, although the entirety of the conversation, from my perspective related to [Mr A] having primary control for the management of [P Pty Ltd] rather than him owning a majority shareholding of the company.[13]
[13] Affidavit of Mr D filed 5 November 2012 at [21].
Ms Carew, counsel for both Mr D and Mr I, submits that the representations upon which Mr A relies to found his claim lack clarity and are ambiguous and “capable of numerous interpretations”. Her cross-examination of Mr A illustrates the submission. There, in response to a suggestion by counsel that “ …this idea of you having a majority shareholding is really just your interpretation of what you thought might have been meant by what your father said to you”, Mr A said, “[w]ell, I guess people will always, when we’re told things, interpret them our own ways.”
Although Mr A did not concede that he “might be mistaken about what you interpreted of what your father or uncle said”, Mr A accepted that “… this all comes down to what you might interpret from what was said to you.” Mr A also conceded that, “on the whole” any discussions about him receiving shares prior to the breakdown of his parents’ and aunt and uncle’s marriages were to this effect: “the discussion, such that it was, was always about an inheritance by you.”
In response to a question from me as to whether he could recall any specific occasions that a shareholding was discussed prior to the breakdown of those marriages, Mr A said, “I believe from 2007 I did make some enquiries as to when there may be some shares starting to transfer.”[14] When pushed for further particularity by me, Mr A said a specific occasion “would have been at the time when my wife and I were looking to migrate to … . There were several discussions around how I was going to fund that and at that time I believe there may have been some conversations around the share transfer.”[15]
[14] Emphasis added.
[15] Emphasis added.
As a general proposition, “the representations upon which [promissory estoppel] is founded must be clear and unambiguous”.[16] Tobias AJ has pointed out that this consideration is tempered by the consideration that “… in virtually every statement of existing fact or future intent, some ambiguity or imprecision of language may be found.” [17] His honour continued, “… [i]n its context, the representation is sufficiently clear and unambiguous if it is reasonable for the representee to have interpreted the representation in a particular way being a meaning which it is clearly capable of bearing and upon which it is reasonable for the representee to rely.”[18]
[16]Galaxidis v Galaxidis [2004] NSWCA 111 at [84], per Tobias AJ. See, also, Legione v Hateley (1983) 152 CLR 406 at 437 and Mobil Oil Australia Ltd v Wellcome International Pty Ltd (1998) 81 FCR 475 at 513 – 516.
[17]Galaxidis at [90], by reference to the judgment of Ipp JA in Australian Crime Commission v Gray [2003] NSWCA 318 at [193].
[18] Galaxidis at [93].
Relevant conversations can be considered:
…as a series to be evaluated together in order to ascertain the intention…and the reasonable meaning of [the representor’s] words. Furthermore, it is both appropriate and necessary to consider the whole history of the relationship between [the representor and the representee]…in order to provide a context against which the conversations…are to be understood …[19]
[19] Id at [95].
Even permitting of the context here, which is intra-familial and informal, and even allowing for the representations to emerge (as they did here) in a series, the difficulty in the present case is discerning precisely the terms of any promise made by Mr D and/or Mr I the failure to meet which will found the relevant unconscionability.
The suspicions of Ms M and Ms R notwithstanding, the differences in the evidence of Mr A, Mr I and Mr D are not, in my view, explained by any dishonesty (or disingenuousness) on the part of any of them. Rather, those differences are, I think, a function of, and a reflection of, the arrangement between the three men never being articulated with any precision; each of the father/son and uncle/nephew being content to assume the other could be trusted to “do the right thing” by each other and Mr A and that, in time, Mr A would be “looked after” either by legacy or inter vivos transactions.
I find that representations were made by Mr S and Mr I by a series of representations in 2000 as they admit, but that those representations lacked specificity and particularity. In short, I consider that the representations were, essentially, as pleaded by Mr D and Mr I – that is, Mr A would receive an indeterminate number of shares at an indeterminate time and, despite some specific references in some conversations to post-death arrangements, in an indeterminate manner.
However, I do not understand the law to be that this lack of precision is necessarily fatal to Mr A’s claim; a promise or representation that an indeterminate number of shares would be transferred at an indeterminate period of time may be sufficient to attract equity’s intervention.
A finding in those terms confronts, nevertheless, significant further difficulties. If a promise is made in those terms (leaving aside for the moment the issue of reliance) when and how is it said that the unconscionability arises – that is, how is it established that a promise has not been, or will not be, performed? Secondly, even if unconscionability is established (and assuming, for a moment that a finding of reliance is made), statements (or even a promise) as vague or non-specific as those found here produces real difficulties in fashioning any equitable relief specific to the established unconscionable conduct.[20]
[20] As to which see, for example, Guimelli at 108.
A further crucial impediment to the success of Mr A’s claim emerges from his evidence about further conversations which occurred in 2007.
A Different Expectation?
Mr A deposes to further conversations occurring in 2007 at about the time of discussions about the impact of a major government porject upon P Pty Ltd’s interests. By that time, Mr A had been working remuneratively in the business for some seven years (since July 2000). The conversation there deposed to has Mr A asking his uncle and father “…when the business would be transferred to me and how was it going to occur.”
The response deposed to from “my father and uncle” is them using “words to the effect that their Wills were such that I would inherit a majority shareholding if they died.”[21] He deposes to a further conversation that if a property known as Property K were to be subdivided then this would provide sufficient funds for both his father and uncle to exit the company and “…for me to take over control of the company.”
[21] Emphasis added.
A number of vital considerations emerge from this evidence.
First, it might be seen as an acknowledgement by Mr A that the 2000 conversations were, if not ambiguous, certainly lacking in clarity – at least as far as he was concerned.
Secondly, and crucially, whatever might have been the nature and effect of those 2000 conversations as to any expectation of the inter vivos transfer of shares, by 2007 it was made clear, on Mr A’s own evidence, that any such expectation would not be met and that any shares would be received by way of bequest.
Thirdly, Mr A did nothing at that time, or at any time thereafter until the commencement of the Supreme Court proceedings in March 2012, to assert any right to any inter vivos transfer of shares.
Whatever might have been the expectation created in Mr A by the 2000 conversations, it cannot, to the extent that it involved inter vivos transfers, have survived the 2007 conversation. Put another way, if an expectation of inter vivos transfers was created by the 2000 conversations, Mr A acquiesced in a change to that expectation by his inaction at and after the 2007 conversation. The only expectation he can have had reasonably after that time is the inheritance of a majority shareholding after the death of both his father and uncle.
Moreover, implicit within the expectation created by that conversation is that the value of what would be transferred to Mr A as a result of the transfer of shares post the deaths of his father and uncle – effectively represented by the assets of P Pty Ltd - is such as would exist at the date of the last of their deaths.
Unconscionability and Detriment?
It ought not be forgotten that equitable intervention, whether, as claimed, to construe a trust, or to impose another form of equitable remedy is, relevantly, based on a finding that retreat from a representation (or series of representations) is unconscionable. Macrossan CJ has held, in the context of a domestic relationship:
…The relevant unconscionability which has been referred to must always be found as a basis for the Court’s intervention if the parties’ separate legal titles are to be modified.[22]
Similarly, McPherson J (as his Honour then was) has said:
… The critical element is the conduct of the defendant after the representation in encouraging the plaintiff to act upon it: Olsson v. Dyson (1969) 120 C.L.R. 365, 379, per Kitto J. That is what makes it unconscionable for the defendant to deny the right which the plaintiff has been lead to expect…[23]
[22] Turner v Dunne [1996] QCA 272.
[23] Riches v Hogben [1985] 2 Qd R 292 at 300. Further footnotes omitted.
The difficulty for Mr A in establishing this necessary component of his claim is first evident from his pleading:
32.[Mr A] is at risk that, as a result of the matrimonial proceedings, the interests of [Mr D] and [Mr I] in [P Pty Ltd] may be disposed of, or [P Pty Ltd] wound up in order to meet obligations to their wives ordered in those proceeding[s].
33.Were [Mr D], [Mr I] and [P Pty Ltd] to resile from the Expectation, [Mr A] would by reason of the matters pleaded above suffer detriment.[24]
[24] Emphasis added.
The emphasised parts of the pleading highlight two crucial points. First, as pleaded, the asserted conduct said to constitute a retreat from earlier representations has not yet occurred. Secondly, the pleaded basis of the prospective conduct is not the actions of the representors, but (prospective) obligations arising from orders by which they are bound.
Mr A does not suffer detriment in the relevant sense, and there is no unconscionability in the relevant sense, until such time as the representations are resiled from. It is the failure to make good the promised expectation by reference to the circumstances that exist at the time it is to be performed that gives rise to the requisite unconscionability.
The decisions of the New South Wales Court of Appeal in The Public Trustee v Kukula[25] and Waddell v Waddell[26] are instructive. In the latter case, Campbell JA[27] specifically agreed with the trial Judge’s emphasis that “… the plaintiff’s action or inaction will occasion detriment if the assumption or expectation is not fulfilled, and … the defendant has failed to act to avoid that detriment.”[28] It was further held:
[25] The Public Trustee v Kukula (1990) 14 Fam LR 97.
[26] Waddell v Waddell (2012) 292 ALR 788.
[27] Allsopp P and Sackville AJA agreeing.
[28]Waddell at [66], restating the principles enunciated by Brennan J in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387. Emphasis added.
[53] It is no novelty that a representation upon which an estoppel is founded is subject to limitations or conditions that arise by implication from the circumstances in which the representation is made. For example, Thorner v Major … (2009) 1 WLR 776 concerned a farmer that had represented that his younger relative would be left his farm. They both knew that the identity of the fields that made up the farm had fluctuated over the years. Lord Scott of Foscote at [20] was of the view that the farmer would not have been acting in a way that was contrary to his equitable obligations if it was necessary for all or part of the farm to be sold in his lifetime to meet his own medical expenses or to fund his needs in old age. Lord Walker of Gestingthorpe at [62] and Lord Neuberger of Abbotsbury at [95] regarded the subject matter of the representation as concerning whatever the farm consisted of at the time of the farmer’s death.
[54]In any event, whether the representation was a conditional one is of no practical importance for the outcome of the case. There is the authority of Lord Walker in Thorner v Major at [57], Lord Neuberger in Thorner at [101], Hoffman LJ in Walton v Walton… and this court in Delaforce v Simpson-Cook…and Evans v Evans… for the proposition that:
“…equitable estoppel [by contrast with contract] … does not look forward into the future [it] looks backwards from the moment when the promise falls due to be performed and asks whether, in the circumstances which have actually happened, it would be unconscionable for the promise not to be kept…”
…
[66]… [T]he relevant detriment is one that the plaintiff’s action or inaction (that is, what the plaintiff has done or not done in reliance upon the assumption or expectation) will bring about if the assumption or expectation is not fulfilled. I have earlier referred to how equitable estoppel looks backwards from the moment when a promise falls due to be performed and asks whether, in the circumstances which have actually happened, it would be unconscionable for the promise not to be kept. [29]
[29]Bold emphasis added. Words in square brackets contained in original.
Each of those statements of principle has importance for the determination of Mr A’s claim.
To the extent that detrimental reliance upon representations is established on the evidence, Mr A confronts the difficulties earlier referred to: the 2000 representations lack clarity and precision and, to the extent that they created an expectation of an inter vivos transfer of shares, they were subsumed by a later expectation created by later representations that any transfer of shares would occur by will.
In either event, any representations are productive only of an expectation that Mr A would become entitled to an indeterminate number of shares at an indeterminate future time. There is no evidence to suggest that Mr A will not become so entitled, or indeed, in the case of the 2007 representations, that the time for fulfilment of the promise has arrived.
Put another way, there is no evidence that the representations productive of either or both of Mr A’s expectations have been, or will be, resiled from. Even if all of Mr A’s evidence as to the work done, money spent and sacrifices made is accepted as having been done, and having been done in reliance upon the representations, that is not the relevant detriment; the relevant detriment occurs only when, “looking backwards from the moment” when the representations fall to be called upon, he does not receive that which he was promised.
Even if, which I reject, there was sufficient evidence to find that a series of representations considered in their context was reasonably productive of an expectation in Mr A that he would obtain a “controlling interest” in the company, there is no evidence by which the Court can be persuaded that any such expectation won’t be met or the representations productive of that expectation are being resiled from.
Put in terms of my earlier findings, there is no evidence from which the Court could conclude that Mr A will not receive, as promised, an indeterminate number of shares at an indeterminate future time.
In truth, I consider that, reframed in accordance with the evidence and my findings, Mr A contends that a promised future indeterminate shareholding may when he receives it in the future have a lesser value than it has or would have if Mr D and Mr I do not incur a liability to their respective wives by reason of each wife receiving an order pursuant to s 79. There is no evidence as to how any such order might affect the current or any future shareholding – or any quantity or proportion of shares – including a quantity of shares that might constitute a “controlling interest” in P Pty Ltd.
Further, and in any event, in my view neither Mr D or Mr I can be considered a wrongdoer in equity, or as having behaved unconscionably, by reason of the need to meet an obligation imposed upon them by a court to meet a legal obligation found by a court to exist to their respective former wives. The circumstance that, subsequent to the representations, the representors each confront a marriage breakdown and all of its consequences is but a part of the “circumstances which have actually happened”[30] prior to the time arriving for the promise to be met.
[30] Waddell at [54].
In my view, Mr A makes out neither the required detriment nor the required unconscionable conduct necessary to found the pleaded cause.
Is There an Alternative Claim?
Counsel for Mr D and Mr I sought to articulate what appeared to be an alternative claim beneficial to Mr A.
Ms Carew contended that equitable estoppel could not be made out (counsel contended that the asserted representations were so vague or ambiguous that they could not found the asserted promise or expectation) but argued that “to deny [Mr A] an equity would be unconscionable for the reasons that he has made contributions that are substantially greater than [what] he has received”. Counsel went on to submit that Mr D and Mr I “concede” that Mr A has made “substantial contributions” for which he “has not been properly recompensed”. Counsel contended that “the other leg upon which [Mr A] makes a claim” is “unjust enrichment”.
To the extent that any such claim can be said to have been pleaded by Mr A (consistent, it is assumed, with the submission by Ms Carew as to “the other leg” upon which [Mr A] bases a claim) it would appear to be confined to paragraph 29 of Mr A’s Statement of Claim where it is contended:
By the efforts of [Mr A] in the businesses carried on by [P Pty Ltd] and their management, the value of those business[es] has been improved for the benefit of [P Pty Ltd], and thereby [Mr D] and [Mr I’s] through their shareholding.
Unjust enrichment is not, of itself, a sufficient basis for construing a trust (nor, indeed, is unconscionability). Rather, it must be shown “that some legal or equitable principle operating” in favour of the person asserting same applies.[31]
[31]Thomson Reuters, Principles of the Law of Trusts, vol 2 (at Service 104) [22.580]. See, also, Muschinscki v Dodds (1985) 160 CLR 583 and Coshott v Lenin [2007] NSWCA 153 at [8].
Perhaps with this in mind, Ms Carew went on in her submissions to assert that Mr A’s entitlement arose by reference to a principle “analogous to a joint endeavour” although counsel conceded that she could:
… not point to any evidence higher than that … my clients’ position is that there was an arrangement where [Mr A] was brought in as the only son within the family who was interested in continuing the family company on the basis that when the two shareholders in the company died, he would then receive a portion of the whole of the company...
To the extent that it is submitted that a trust should be construed by reference to detrimental reliance upon a “…common intention that the claimant should have an interest in property …” or restoring “… to a party contributions he … has made in circumstances in which it was not intended that the other party should enjoy them”[32], no common intention or joint endeavour is specifically pleaded nor evidence or submissions directed specifically to it.
[32]Shepherd v Dollan [2005] NSWSC 42 at [31]-[32], per White J, in the latter respect, Baumgartner v Baumgartner (1987) 164 CLR 137 at 148.
If it is to be established, the Court must be able to discern the nature and scope of any asserted joint endeavour.[33] There is no dispute that Mr I and Mr D and, earlier, their mother and father, had been the “custodians” of a longstanding family business. Mr A voluntarily entered an arrangement not attended by any vitiating elements in which he worked for the business and was remunerated.
[33] See, for example, West v Mead [2003] NSWSC 161 per Campbell J at [53]
If it is to be contended that those arrangements are not to be governed by the consensual arrangements between adults with full capacity and existing legal interests but, rather, by reference to a joint endeavour or common intention marked by indicia other than those consensual arrangements, the basis upon which such a claim is made including, importantly, the nature and scope of the joint endeavour, should be pleaded and deposed to with particularity. Here it is not.
Even if it was possible to infer a joint endeavour contrary to the ostensible voluntary arrangements (which in my view it is not), there must be evidence by which this joint endeavour or common intention can be discovered. That claim faces the same problems as those earlier discussed; any joint endeavour is still operational. Put another way, there must be evidence that any such joint endeavour has failed (or, perhaps, inevitably will fail). [34] Here, perforce of the same reasoning outlined earlier in these reasons, there is no evidence that any joint endeavour or common intention between Mr A, Mr D and Mr I has failed – or, indeed, will fail.
[34] See, for example, Shepherd at [33].
Moreover, I accept the submission by Mr Hackett, counsel for Ms R that there is no evidence upon which a finding could be made that “the value of [the] businesses”, (or, it might be said, any of them) “has been improved” as the pleading alleges let alone any evidence of the amount of any such improvement.
Conclusion as to Mr A’s Claim
There is in my judgment no basis for a finding that equity would intervene so as to construe a trust in favour of Mr A in respect of the shareholdings of Mr D and Mr I in P Pty Ltd.
The Section 79 Claims
The result of those findings is that the respective 50 per cent shareholding of each of Mr D and Mr I constitutes “property of the parties or either of them”[35] within each of the respective s 79 proceedings and, of course, part of the “existing legal and equitable interests of the parties in property”.[36]
A. Mr D and Ms M
[35] Section 79 of the Act.
[36] Stanford at [37].
The Existing Legal and Equitable Interests in Property
With the addition of my finding with respect to Mr A’s claim, the existing legal and equitable interests in property of each of Mr D and Ms M or of them jointly is agreed and is contained in Exhibit D1[37] which is reproduced here:
List of Assets of [Mr D & Ms M Daymond]
[37]The exhibit itself contains a difference in the value of the shares in P Pty Ltd consistent with the respective arguments of Mr D and Ms M made in respect of Mr A’s claim. The table above incorporates the finding earlier made in respect of Mr A’s claim.
PERSONAL ASSETS OWNER VALUE
[B Street, Town C] Joint $300,000.00
MotorhomeJoint $60,000.00
Loan [P Pty Ltd] Husband $264,800.00
[P Pty Ltd][Husband] $1,384,055.50
1332 shares [Business S] Joint $2,000.00
Mazda [motor vehicle] Wife $10,000.00
Legal FeesWife $30,000.00
TOTAL GROSS ASSETS $2,050,855.00
LIABILITIES
Bendigo Bank Visa Wife ($1,894.00)
SUPERANNUATION
SunSuperHusband $70,843.00
NETT ASSETS $2,119,804.50
No one submits the superannuation should be treated as a separate “pool”. I consider a “one pool approach” is appropriate.[38]
[38]See, Coghlan & Coghlan (2005) FLC 93-220.
A significant imbalance in value between those assets owned by the parties jointly and those owned respectively by the husband and wife is evident. The shareholding in P Pty Ltd accounts for more than half the value of the net assets and is owned solely by the husband. “The question presented by s 79 is whether those rights and interests should be altered.”[39]
[39]Stanford at [39].
Proof of any or all of the enumerated considerations within s 79(4) is insufficient of itself to alter, by reference to s 79, existing legal (and/or equitable interests). To do so is to “conflate the statutory requirements and ignore the principles laid down by the Act.”[40] Just as marriage gives no licence for any presumption, or starting point, of equality in the assessment of s 79 entitlements[41], so the fact of separation and the proof of any or all of the matters within s 79(4)(a)-(g) gives no licence for an assumption that the existing legal or equitable interests in property should be altered by reference to s 79.[42]
[40]Id at [40].
[41]Mallet at 608.
[42]Stanford at [39]-[40].
Here there was a “voluntary separation”.[43] Property, in one form or another, was used commonly and decisions were made by each of the parties about property within the context of a 38-year relationship. Here it can be said that:
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 assumptions 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 [has been] brought to an end with the ending of the marital relationship.[44]
[43]As that expression is used in Stanford.
[44] Stanford at [42].
It is just and equitable within the meaning of s 79(2) of the Act to alter the existing interests in property held by each of the parties to it by reference to a consideration of s 79(4) of the Act.
The Nature, Form and Characteristics of the Relationship
The parties separated in November 2009 after approximately 38 years of marriage. Ms M was about 18 years of age when she married the husband. He was a clerk when they met and married. The parties have two children both now adults (Ms E born in 1974 and Mr A born in 1977).
At the commencement of the marriage Ms M had no assets of any significance. Mr D held a 3 per cent interest in P Pty Ltd. The asset backing of P Pty Ltd has remained largely unchanged throughout the course of the relationship. The company essentially runs farming properties and also a mine, and also owns several investment properties. Mr D’s shareholding in P Pty Ltd increased to 26 per cent in 1983 as a result of an inheritance from his father’s estate. Further allocations of shares occurred in 1988, 1990 and 1995 including a receipt of shares from the estate of a deceased brother. By 1995 his shareholding in P Pty Ltd was 39 per cent.
Mr D’s mother died in 2005. As a result of the receipt of one-half of the mother’s shareholding in P Pty Ltd, Mr D became a 50 per cent shareholder. Mr D also inherited (together with Mr I) a property, “Property F”. That property was transferred by Mr D and Mr I to P Pty Ltd subsequent to the administration of their mother’s estate and is now included as one of P Pty Ltd’s assets.
In about 2005 Ms M received an inheritance of about $62,000. She gave $5,000 to each of the children and purchased the Mazda motor vehicle which forms part of the property to be divided. She also contributed $35,000 to a motorhome valued at $60,000 in the pool of assets listed above. Mr D has continued to work in the business post-separation and has paid Ms M $400 per week and met other expenses. His payments since separation have averaged about $790 per week. Mr D has also paid out the debt on the motorhome.
For the first 12 years of the marriage Mr D worked remuneratively outside of the businesses run by P Pty Ltd. He commenced working full time for P Pty Ltd in 1984. Ms M disputes this and contends that Mr D commenced working full time for P Pty Ltd in 1985. Little, in my view, turns on this dispute and for the purposes of these reasons I will adopt the date given by Mr D, being 1984. The company then, and now, operates farming and mining businesses. Ms M had little direct involvement in the businesses throughout the marriage. The parties had an arrangement whereby three-quarters of Mr D’s weekly wage was given to Ms M and the company paid for basic household expenditure for the family. Ms M worked remuneratively during the marriage, albeit that she was the primary caregiver for the children during their earlier years and her remunerative work was often casual or part-time. She ceased employment in 2002. There is no contest between the parties that they each worked hard in their respective spheres during the course of the marriage.
The Nature, Form and Characteristics of the Property and Contributions
The shares in P Pty Ltd and the loan to it from Mr D together account for about 78 per cent of the value of the net property of the parties. The shareholding was acquired over time primarily through inheritances received from the husband’s family. The wife accepts that she has made little direct contribution to the business or to any of the assets (predominantly real properties) that comprise its value. Those matters are important.
It is also in my view important that the shareholding in the company is owned jointly with another member of the broader family who has also worked in a business which is of long standing and which emanated from the husband’s family. By way of contrast, it is not a business created by one or both of the marriage partners and developed during the marriage.
Rather, there was an existing corporation with existing pieces of real property upon which its businesses were conducted and which, largely, represent the same assets which the company has now. So too, the current shareholding has an additional characteristic of some importance, namely that from a very minor shareholding at or about the commencement of the relationship, the shareholding has grown during the course of the relationship largely through inheritance.
It is of some significance that Ms M and the children remained living in Town C while the husband, once he started working for the company in 1984, was away during the week. I prefer the evidence of Ms M over that of the husband as to the frequency of those absences. The result is, I accept, that the husband was away four nights per week from about 1985. That is important to assessing the relative contributions of the parties to the welfare of the family including as a homemaker and parent. Those contributions are important.
Mr D paid Ms M $400 per week post separation for her maintenance. Initially, that payment was made voluntarily and, subsequently, by Court order which was made by consent. He has also met other household expenses such that the total outlay, I accept, has been about $790 per week. Mr D also paid out the $36,000 debt on the motorhome (to which, it is accepted, he has had no post-separation access).
The task is to somehow “give a reasonable value to all of the elements that go to making up the entirety of the marriage relationship.”[45] In this very long relationship, a miscellany of differing contributions have been made by each of the parties. One party can be seen to have made a greater contribution by way of direct financial contributions including, in particular, the contribution of capital by way of shares in the business, which is an asset representing a significant proportion of the existing property interests of the parties. The other party can be seen to have made a greater contribution to the equally important role of rearing the children and making a stable home for them.
[45] Aleksovski & Aleksovski (1996) FLC 92-705 at 83,443, per Kay J.
Expressing the position by way of that overview does not, however, necessarily result in a conclusion that contributions should be seen as equal, despite the length of this relationship. In that respect, it seems to me important that the business was that of the husband and his family as opposed to a business established and built up by the parties or by the husband alone in the context of a long marriage.[46]
[46]See Mallet, per Mason J and In the Marriage of Aroney (1979) FLC 90-70l, per Nygh J referred to by Mason J in Mallett.
I consider that the nature, form and characteristics of the property comprising some 78 per cent of that to potentially be divided is a particularly important factor. While giving significant importance to the contributions made by Ms M over a very long relationship, I assess the husband’s contributions overall as greater than the wife’s. I consider that the difference between them should be represented by the proportions 55 per cent to Mr D and 45 per cent to Ms M – a differential of 10 per cent or, in dollar terms, slightly more than $210,000.
Section 79(4)(e)
Mr D is 65; Ms M is 59. Each of their children is now an adult. As has been seen, Mr A and his wife and three children plan to continue to be involved in P Pty Ltd and, ultimately, take an interest in it at some indeterminate future time. By way of corollary at some indeterminate future time, Mr D will withdraw from the business.
A division of property consistent with Ms M receiving 45 per cent of it would see her receiving property with a value of about $954,000. The husband would receive property valued at about $1.165million. Significant in the justice and equity of any orders, and whether any adjustment is required pursuant to s 79(4)(e) to effect same, is the manner in which any settlement is effected. With that in mind, each of the parties in each of the marriages have contended that consequent upon the determination of Mr A’s claim and a finding as to the overall result, they be given the opportunity to agree upon the terms of the orders that ought be made. Given the likely impact on a long-held family business, I consider that appropriate, although as is so frequently the case, that decision is made easier because the Court has only the vaguest of evidence as to what orders contended for by either party might mean in terms of the property of the parties.
Ms M will, in all likelihood, retain the unencumbered Town C property. She deposes to wishing to continue residing there. She has not worked remuneratively for more than 10 years and has some back problems. She accepted that she may obtain some casual employment in the future, but I consider the prospects of future remunerative employment productive of substantial income to be poor. Mr D’s future income will derive from the business for so long as he remains a shareholder. Evidence before the Court suggests that Mr D will have access to income of $270,000 over the next four years from the mine.
No finding can be made with precision as to future income prospects after that point. Historically income has been derived from the business as has the capacity to borrow from the business. What the future holds in that respect is uncertain, but the net effect of the orders that will be made in this case is that Mr D and his brother will continue to control the business and will have it in their hands as to when and how any part or all of the business is transferred to Mr A (if at all during the life of Mr D and his brother) and there remains the potential to retain some interest and/or some income from the business which he controls with his brother. However, that situation will potentially be impacted significantly by the need for Mr D and Mr I to make arrangements so as to utilise the business to meet the orders in favour of their respective wives. Sale of the business, shares and/or assets within it, or borrowings by it, are likely to impact on the overall financial position of both Mr D and Mr I. This is a very significant factor.
A further factor submitted to be relevant to any s 79(4)(e) adjustment is the possible potential for a part of the property known as “Property K” to be developed. It appears that conditional Development Approval was granted by the local council in July 2010. According to the oral evidence of Mr D, that approval expired in July 2012 and, at the time of trial, P Pty Ltd had applied for an extension but had been refused on the basis that the council wanted to “…review the conditions under which it was approved [initially].” The possibility of the Development Approval being extended and what it may (or may not) produce in terms of future capital return is, in my view speculative and there is an insufficient evidentiary foundation for it to be taken into account in any significant way. This is all the more so in light of the valuation evidence of single expert witness, Mr N contained in an affidavit filed 20 January 2012. In that valuation, Mr N opines that the then-current Development Approval in respect of Property K was “…not considered viable in the short term and little added value can be apportioned to this approval at the date of valuation.” There is nothing before me to indicate that that position would be different in the event that the council was minded to grant the extension of the Development Approval.
When account is taken of the potential need to meet orders in favour of Ms M from P Pty Ltd (or its assets or possible borrowings), I decline to take account of the speculation about the potential sub-division or development of Property K.
On balance, when account is taken of all of the matters I consider to be relevant, I do not consider that any further adjustment should be made by reference to s 79(4)(e).
I will, then, make orders that will see Ms M receive 45 per cent of the property of the parties or either of them.
I will, as the parties’ request, frame orders so as to provide for that ultimate finding but affording to them the opportunity to fashion orders giving effect to same as they might be advised.
B. Ms R and Mr I
Again, my finding with respect to Mr A’s claim can be incorporated into what is otherwise an agreed list of the existing legal and equitable interests in property of each of Mr I and Ms R and, again, it is convenient to reproduce the table compiled by the parties in Exhibit C1. As with the property of Mr D and Ms M, there was no suggestion that superannuation interests should be included in a separate pool and I consider it appropriate to adopt what has been called “a one-pool approach”.
List of Assets of [Mr I & Ms R Daymond]
ASSETOWNER VALUE
[G Street, Town H] Joint $180,000.00
[J Street, Suburb L] Wife $320,000.00
Kia Rio Wife $9,500.00
[Professional] practice Husband $30,000.00
Furniture etc Husband $5,000.00
Furniture etc Wife $5,000.00
Loan [P Pty Ltd] Husband $263,596.00
Shareholding [P Pty Ltd] Husband $1,384,055.50
Westpac A/C Husband $1,475.00[47]
[47]No specific submissions were addressed on the difference of $725 between the parties I adopt Ms R’s value.
ANZ Savings A/C Wife $3,000.00
ANZ Cheque A/C Wife $152.00
Legal Fees add back Husband $12,958.00
Legal Fees add back Wife Nil
TOTAL GROSS ASSETS $2,214,736.50
LIABILITIES
ANZ VisaHusband ($300.00)
CBA Mastercard Wife ($6,170.00)
ANZ Mastercard Wife ($100.00)
HECS debtWife ($13,398.00)
Mortgage [Suburb L] Wife ($67,700.00)
TOTAL LIABILITIES ($87,668.00)
SUPERANNUATION
SunSuperHusband $44,733.00
[T Super]Wife $41,990.00
[U Super]Wife $6,374.00
[V Super]Wife $9,798.00
TOTAL SUPERANNUATION $102,895.00
NETT ASSETS $2,229,963.50
A similar picture emerges in respect of the existing legal and equitable interests in property to that as exists in Mr D and Ms M’s marriage.
Here, Mr I’s shareholding in P Pty Ltd comprises about 62 per cent of the net assets and superannuation interests of the parties. The wife resides in a property which she owns in her sole name at Suburb L, valued at about $320,000. There is a jointly owned piece of real property in Town H where Mr I lives valued at $180,000.
In my view, the findings made at [73] to [75] of these reasons pertaining to the application of s 79(2) of the Act can be made equally in respect of Ms R and Mr I’s marriage and property interests.
In making those findings in respect of this marriage, I am cognizant of the earlier separations, including for a lengthy period. No evidence before me suggests that the fact of those separations impacts upon a finding that the “express and implicit assumptions that underpinned existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship”[48] consequent upon the final separation of the parties.
[48] Stanford at [44].
I consider it just and equitable to alter the existing legal and equitable interests in the property of Mr I and Ms R.
The Nature Form and Characteristics of the Relationship
Mr I and Ms R married in February 1989 after commencing cohabitation in December 1988. They have two children, Ms O (born in 1990, and currently aged 22) and Mr Q (born in 1992, and currently aged 20). Mr Q has Asperger’s Syndrome and continues to reside with his mother.
Although they separated some 21 years after marriage in November 2009, the parties had separated for a period of a year in 1997 and for a significant period of seven years between January 2000 and January 2007. Between January 2007 and their final separation nearly three years later, they lived in separate residences; Mr I in Town H and Ms R in Suburb L.
When Mr I and Ms R commenced their cohabitation in December 1988, Mr I held a 13 per cent shareholding in P Pty Ltd. The interest had been acquired in the same manner as that referred to with respect to Mr D. At that time Mr I also had a professional practice, a car and a boat. Little evidence of value attends those items but some measure of its relative value might be gleaned from the fact that the practice has an agreed value of $30,000 now, more than 20 years later. Ms R owned a home at Suburb W valued at about $75,000 with a $30,000 mortgage, together with a motor vehicle worth approximately $5,000 and $15,000 in superannuation.
Mr I worked full-time in his professional practice and also worked in the family business “as and when required”. It appears to be common ground that from the commencement of cohabitation until 2000 Mr I worked seven days a week between both activities.
Ms R was employed with a government department at the commencement of cohabitation and thereafter worked part-time for the husband’s professional practice from 1990-1992, 1994-1996 and 1997-2000. Ms R also worked part-time for P Pty Ltd from 1991 to 1997 and for a local business between 1998-1999. Her income was modest. Ms R later studied for and obtained, in 2007, a university degree. She studied for that degree during the mid-2000s when the parties were separated as earlier referred to.
The wife says that the husband contributed very little to parenting and home-making duties. She claims to have been responsible for the day-to-day care of the children since they were born, taking them to school, picking them up, taking them to their after-school activities, medical appointments and the like. These tasks were, she says, exacerbated by the need to deal with Mr Q’s special needs and the husband’s lifestyle which, she says, centred around drinking. She paints a picture of the husband having had very little involvement and input into the raising of the children. In particular, she deposes to the husband going to the pub each weekday between 12:00 and 3:30pm and then returning to the pub at 4:00pm and not coming home until approximately 7:30pm and spending long periods there on weekends.
The Nature, Form and Characteristics of the Property and Contributions
As the written submissions made jointly on behalf of the first, second and third respondents effectively acknowledge, many of the factors pertaining to Mr D and Ms M’s relationship and what flows from same, in terms of contributions and, indeed, the relevant matters in s 79(4)(e), also pertain to the relationship between Ms R and Mr I. For example:
§ The shares in P Pty Ltd and the loan to it from Mr I together account for about 74 per cent of the net value of the property to be divided in this marriage.
§ Mr I’s shareholding is owned with another member of his broader family.
§ The shareholding was largely acquired by inheritances.
§ The business was not established and run by Ms R and Mr I, but by Mr I’s broader family.
§ The assets held by P Pty Ltd (which comprise its value) consist largely of those which existed prior to Mr I commencing full-time work with the company.
§ Mr I paid Ms R a weekly sum after their final separation.
§ In order to meet Ms R’s entitlement, Mr I’s shares in P Pty Ltd or the businesses broadly, will be affected – by sale of the businesses, sale of its assets, or shares and/or by borrowings.
§ No finding can be made with precision as to Mr I’s future income. He is 67. The evidence indicates an intention, at least at one point, to retire at 65. Plainly he has not retired.
§ His future capital and income position is uncertain by reason of the need for P Pty Ltd or its assets being used to meet the entitlement of Ms R.
Of course, as the outline given earlier makes clear, significant differences between the two relationships also exist.
The use made of the real property owned by Ms R at the outset of the relationship is important. The Suburb W property provided a home for the parties after they were married. I accept Ms R’s evidence that she paid the mortgage, rates, insurance, gas and electricity in respect of that property. I also accept that the husband’s direct financial contribution was limited to paying $50 toward groceries each week and paying the phone bill.
The Suburb W property was sold in 1991 for about $35,000 net which such sum was put into a term deposit in Ms R’s name. The parties moved to Town H in 1990 at which time they purchased a property from Mr I’s sister-in-law. A renovation was carried out to the bathroom and, together with the purchase of other items for the home, the wife says, and I accept, that she spent $10,000 from the proceeds of sale of the Suburb W property. In addition, a further sum of $6,500 was spent on her credit card which, I accept, she paid.
In 2002, the husband provided the wife with $10,000 as deposit for the property at J Street, Suburb L. Both parties agree that that sum constituted repayment by the husband of the amount which remained outstanding from $13,000 loaned to him by the wife in 1991.
It is in my view appropriate to assess contributions across the whole of the approximately 24 years from cohabitation to the date of trial whilst, of course, taking account of the fact that the relationship had, during that time differing forms created by separations, one of which was very lengthy.
I accept Ms R’s evidence in respect of the extent to which Mr I’s use of alcohol and, in particular, the time he spent at the pub, impacted upon the relationship of the parties. Mr I effectively conceded that during cohabitation he attended the hotel on a regular basis but I reject the account he gives of the time which he spent at the hotel in favour of that deposed to by the wife. I reject specifically the contentions contained in the written submissions filed on behalf of Mr I as to the lack of reliability of the publican who gave evidence for Ms R.
It is submitted in addition on his behalf that “socialising at the local pub is part and parcel of maintaining a profile in a small community.” I accept that this might be so as a general proposition but find that the frequency and length of Mr I’s attendances are not explained by any such factor. I consider that Ms R’s contribution as a homemaker and parent significantly exceeded that of Mr I and, as a corollary, that his contribution in that respect was minimal at best.
Ms R is on contract with a government agency until June this year, working as a casual and earning about $24,000 a year. Mr I earns income from both P Pty Ltd and from the professional practice. His last Notice of Assessment (2010/11) shows income of about $51,000 – consistent with taxable income of between $50,000 and $65,000 in the eight years between 2004 and 2011. I reiterate that his income (and capital) position may well change as a result of the need to meet Ms R’s entitlement.
The husband paid the wife about $600 per month between 2001 and 2002 increasing to $800 until 2008. Since 2008, the husband has paid the wife $900 per month. This payment has been by agreement between the parties. The wife and Mr Q continue to live in the Suburb L property. The wife has met the mortgage contributions since its purchase in 2002.
I accept that the husband worked seven days a week, spread between his professional practice and the P Pty Ltd businesses. But, that consideration is subject to the finding earlier made in respect of the time spent at the pub. I consider that he made minimal contributions as a homemaker and parent. I consider that the wife’s role in that respect was exacerbated by the husband’s attendances at the pub and the frequency and length of those attendances. I find that the wife has undertaken the lion’s share of the care for Mr Q, including specifically those matters associated with his special needs arising from the condition from which he suffers.
I find that the wife’s post-separation contributions have been made more difficult as a result of needing to continue to provide for Mr Q’s needs and that she has done so with very little physical assistance from the husband. The husband has, though, continued to make payments to the wife during that time as earlier outlined.
I consider that Ms R made negligible direct financial contributions to the businesses or the property owned by P Pty Ltd. However, like Ms M in her marriage, Ms R contributed indirectly by reason of her support of the husband so as to permit him to work and develop his role in the maintenance of his shareholding and the workings of the business.
The contribution by Mr I represented by inheritances and the shareholdings they produced which now form part of Mr I’s interests in property is very substantial and greater than that of the direct and indirect financial contributions of Ms R. Ms R’s direct financial contributions and the use to which they were put (an initial home for the family and, later, a deposit on real property owned by the wife and forming part of the property to be divided) are also significant. Ms R’s contribution as a homemaker and to the welfare of the family are very substantial and greater than those of Mr I.
Ultimately, taking all of the considerations I consider to be relevant into account I assess contributions as equal.
Section 79(4)(e)
For reasons effectively identical to those applicable to Mr D and Ms M’s marriage, I consider it appropriate to meet the request of Ms R and Mr I that they be given the opportunity to take advice and formulate orders giving effect to my findings.
The factors relevant to the instant marriage by reference to s 79(4)(e) might also be seen to have parallels with those applicable to Mr D and Ms M’s relationship:
§ Mr I is 67; Ms R almost 52.
§ A division of property consistent with Ms R receiving 50 per cent of it would see each of she and Mr I receiving property with a value of about $1.11million.
§ Significant in the justice and equity of any orders, and whether any adjustment is required pursuant to s 79(4)(e) to effect same, is the manner in which any settlement is effected.
§ Ms R will, in all likelihood, retain the Suburb L property.
§ Mr I’s future income will derive from the business for so long as he remains a shareholder but his position in that respect remains uncertain. Evidence before the Court suggests that Mr I will have access to income of $270,000 over the next four years from the mine.
§ No finding can be made with precision as to Mr I’s future income prospects, noting in addition his age, the extent of his drinking and his erstwhile modest income. Historically, income has been derived from the business as has the capacity to borrow from the business.
§ Again, the sale of the business, shares and/or assets within it, or borrowings by it, are likely to impact on the overall financial position of both Mr D and Mr I.
§ Any potential subdivision of Property K remains, at best, speculative. At the date of trial, the Development Approval had lapsed and the council had refused an application for an extension by P Pty Ltd. There is nothing before me to suggest that development of Property K is likely to occur in the near future (or, for that matter, at all) and, more importantly, what any such hypothetical development would mean in terms of the financial position of P Pty Ltd.
Of course, while there are similarities between the two relationships insofar as s 79(4)(e) might pertain, there are also differences of significance.
What looms particularly large is the fact of, and likely extent of, the future care of Mr Q. I find that this will, as has historically been the case, fall largely at the feet of Ms R and that the impost upon her in that respect is likely to be large. Although an adult, Mr Q’s special needs mean that insofar as his future care is concerned, it is as if Ms R was caring for a child into the future.
That said, Ms R is younger than Mr I and, although her current contract is casual she now has qualifications in health care and there is the potential for her to increase her work. That factor is qualified by the fact that she is a person in her mid-50s seeking that employment. Of course, the need to meet a property adjustment order for Ms R is a factor potentially impacting on the capacity of Mr I to earn money from P Pty Ltd and to borrow from it as has historically occurred.
Weighing all of the considerations I consider to be relevant, I consider that an adjustment of 2.5per cent – that is to say a disparity of 5 per cent or about $115,000 – is just and equitable.
I will, then, make orders that will see Ms R receive 52.5 per cent of the property of the parties or either of them.
I certify that the preceding one hundred and thirty-one (131) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Murphy delivered on 9 April 2013.
Associate:
Date: 9 April 2013
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