DELRIO & JINDRA (No.2)
[2020] FCCA 2234
•15 September 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| DELRIO & JINDRA (No.2) | [2020] FCCA 2234 |
| Catchwords: FAMILY LAW – Alteration of property interests – where applicant husband died before hearing – where application carried on by his legal personal representative – where financial agreement did not cover all of the property of the parties – interpretation of the financial agreement and its relevance to later s.79 application – whether contribution made to property that is covered by financial agreement is relevant to assessment of contribution to property not so covered – interaction of s.71A and s.79(4) – whether it is just and equitable to make any order – whether it is appropriate to make any order under s.79(8)(b) – where application is dismissed. |
| Legislation: Acts Interpretation Act 1901 (Cth), s.15AB Family Law Act 1975 (Cth), ss.4, 71A, 75, 79, 90DA Family Law Amendment Act 1983 (Cth) Family Law Amendment Act 2000 (Cth) |
| Cases cited: Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 Bevan & Bevan [2013] FamCAFC 116 Delrio & Jindra [2019] FCCA 1186 Fulton v Fulton [2014] NSWSC 619 Hospital Product Ltd v United States Surgical Corp (1984) 156 CLR 41 Life Insurance Co of Australia Ltd v Phillips (1925) 36 CLR 60 Pretswell (Deceased) & Pretswell [2019] FamCA 395 Ross v R [1979] HCA 29; (1979 141 CLR 432 Stanford & Stanford [2012] HCA 52 Tasmanian Trustees Ltd v Gleeson (1990) FLC 92-156 |
| Applicant: | MS GRAY AS PERSONAL LEGAL REPRESENTATIVE OF MR DELRIO |
| Respondent: | MS JINDRA |
| File Number: | WOC 1021 of 2017 |
| Judgment of: | Judge Altobelli |
| Hearing dates: | 9 – 10 June 2020 9 July 2020 |
| Date of Last Submission: | 9 July 2020 |
| Delivered at: | Wollongong |
| Delivered on: | 15 September 2020 |
REPRESENTATION
| Counsel for the Applicant: | Mr Ahmad |
| Solicitors for the Applicant: | Adams Legal Pty Ltd |
| Counsel for the Respondent: | Mr Dura |
| Solicitors for the Respondent: | Delaney Lawyers |
ORDERS
The Further Amended Initiating Application filed 26 March 2018 be dismissed.
The Respondent must notify Chambers within 7 days in the event they intend to make an application for costs, so that directions may be made for such application to proceed by way of written submissions.
IT IS NOTED that publication of this judgment under the pseudonym Delrio & Jindra (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT WOLLONGONG |
WOC 1021 of 2017
| MS GRAY as Personal Legal Representative of MR DELRIO |
Applicant
And
| MS JINDRA |
Respondent
REASONS FOR JUDGMENT
Introduction
These Reasons for Judgment explain the Orders that the Court has made in an application for alteration of property interests, commonly known as a property settlement, between the Legal Personal Representative of the deceased Husband, and the Respondent Wife.
Background
On 12 June 2019 the Court made orders and published its Reasons for Judgment in what the Court considers to be the first stage of the present proceedings. Those Reasons were published as Delrio & Jindra [2019] FCCA 1186. It is important to understand what was the effect of those Orders and its relevance to the present proceedings.
The earlier proceedings determined the Applicant Husband’s further Amended Initiating Application filed 26 March 2018, and the Wife’s Response to the Amended Application of the Husband, filed 23 October 2018.
In the Husband’s Application aforesaid he sought a number of orders. The first two orders related to a Financial Agreement in 2011 between the parties. The Applicant Husband at the time sought a declaration that it was not binding on the parties or, in the alternative an order that the Financial Agreement should be set aside or declared void. The Court dismissed orders 1 and 2 of the Husband’s said Application which sought these orders.
Significantly for present purposes, however, the Husband also sought in orders 3 and 4, orders for the payment of money to him by the Wife ($1,500,000) as well as an order in relation to the possession of the personal property (the dog known as Q). There is no doubt that these orders were sought pursuant to the provisions of s.79 of the Family Law Act1975 (Cth) (hereafter referred to as the Act).
In relation to that part of the Husband’s Application, this was stood over for Hearing. These Reasons for Judgment explain the Orders made in relation to the Husband’s Application. The present proceedings are, therefore, merely a continuation of the Husband’s Application, as amended, filed 26 March 2018. The present proceedings are not separate proceedings.
The Wife’s Response filed 23 October 2018, ignoring the costs issue, firstly sought an order that the Husband’s Amended Application be dismissed, and secondly a declaration as to the binding nature of the Financial Agreement. Both orders were dismissed.
Other than noting that there was an application for costs arising out of this part of the proceedings, which was duly determined by the Court, there is no need to deal with that part of the present application in these Reasons. The Court notes that at paragraph 28 of its Reasons it stated in the last sentence:
The remainder of the Husband’s claim, presumably under section 79 of the Act and directed to property not covered by the Financial Agreement, cannot be dismissed at this stage.
The Reasons for Judgment dated 12 June 2019 explain why the Court made the Orders that it did. Those Reasons also explain why the Court came to the conclusion that there was property of the parties to the marriage that was not covered by the Financial Agreement. There was no appeal from the Orders made.
It must follow that the evidence before the Court in that part of the litigation, is evidence before the Court in the present litigation. It must also follow that, at least prima facie, findings made in that part of the litigation remain open to the Court and should only be departed from if the Court is convinced by evidence led or submissions made in the present proceedings that such findings were plainly wrong. As it turns out, the Court has no reason to doubt any of the findings of fact made in that part of the litigation. Moreover, there is no cogent reason why the Court could not have regard to the transcript of the proceeding before it at that time. Both parties could have, and arguably should have, had regard to the transcript if they had so desired.
In mid 2020 the Husband tragically died at his own hand. In mid 2020 his current Wife, Ms Gray, was appointed the Legal Personal Representative of the Husband’s estate.
When the present part of the proceedings recommenced the Applicant Husband, through his Legal Personal Representative (hereafter referred to as the Applicant Husband), continued to seek an order that the Wife pay $1,500,000, handover the dog Q, and pay costs. The Wife, however, sought an order that the Husband’s Application be dismissed, and an order for indemnity costs in her favour.
The scope of the application: what property?
It is important to make some preliminary findings about what property is relevant for the present application.
The starting point in this regard is the Financial Agreement in 2011.
At paragraph 6 of the Court’s Reasons for Judgment delivered 12 June 2019 the Court made the following observation:
The Court observes that in this critical provision the parties only agreed that; “all of their property, real and personal, owned when they commenced living together will remain their respective property notwithstanding their cohabitation.” The Court can only assume that they consciously agreed to limit the parameters of their agreement to the property they owned when they commenced living together and thus not property acquired by either of them after they commenced living together.
Thus, the fact is that the Financial Agreement does not govern future acquired property of either the Husband or Wife, with the exception of future acquired joint property. Indeed, as the Court observed at paragraph 8 of its Reasons, the Financial Agreement did not cover future acquired real property. The Court found at paragraph 11 of its Reasons as follows:
It is apparent that, for whatever reason, the parties’ agreement was either not intended to, or certainly did not have the effect of, covering real estate acquired during the course of cohabitation, either individually or jointly.
The Wife’s existing property at the time of the Financial Agreement is clearly articulated in Schedule C to the Financial Agreement and, as set out at paragraph 13 of the Reasons for Judgment aforesaid, the relevant real estate is identified as follows:
Real Estate
A one-third share in C Street, Suburb D NSW
E Street, Suburb F NSW
G Street, Suburb H NSW
J Street, Suburb K NSW
Moreover, Schedule C also deals with the Wife’s bank accounts which were identified as follows:
Bank Accounts
S Bank Accounts
T Bank account number ...18
Offset Account ...35
M Bank Managed Funds account number ...43
V Pty Ltd. ANZ business Extra account number ...58
There is no doubt that the items identified above were covered by the Financial Agreement and in this regard clause 6 of the Agreement states:
Mr Delrio specifically acknowledges and agrees that Ms Jindra owns or is beneficially entitled to the property listed in Schedule C hereto to which he has made no contribution and over which he will make no claim.
The Wife’s Trial Affidavit sworn 22 April 2020 contains the following evidence about the assets held at the date of separation. At paragraph 142, she deals with bank accounts and credit cards as follows:
As at separation, I held the following bank accounts and credit cards: -
·An NAB Classic Banking account in my sole name (BSB: ...2, Account Number: ...50) (“the NAB Classic Banking account ending ...50”) which has a balance of approximately $113,522.
·The Coles Mastercard credit card ending ...02, which had a liability of approximately $208.
·The ANZ Frequent Flyer credit card ending ...12, which had a liability of approximately $725.
The Wife’s evidence is not entirely clear about her other assets held at the date of separation. Having regard, however, to the manner in which the Wife’s case was presented it is clear, and the Court accepts, that the only property in respect of which the Court could have jurisdiction is the property situated at W Street, Town Y, a township near Town Z in New South Wales. This property will be referred to as the W Street, Town Y property, but in the documents is sometimes referred to as Town Y.
The Court acknowledges the valiant efforts made on behalf of Counsel for the Wife to contend that the W Street, Town Y property was not, in fact, a relevant property because it was covered by the Financial Agreement. The Court rejects this contention as a matter of the plain construction of the Financial Agreement. There is nothing in the evidence to indicate that it was the intention of the Husband and Wife to include future acquired real estate. Indeed the language used indicates to the contrary. If the Court is wrong and there is some ambiguity in the language used, there was no evidence which would enable the Court to interpret the Financial Agreement as contended on behalf of the Wife. Moreover, the Court is not prepared to apply a reasonable person test to interpret the Agreement in order to ascertain the parties’ objective intention, because there is no cogent extrinsic evidence to assist in the interpretation of the Agreement: Hospital Product Ltd v United States Surgical Corp (1984) 156 CLR 41 at 62. Finally the Court does not consider its interpretation of the language used in the Agreement to be capricious, unreasonable, inconvenient or unjust: Gibbs J in Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 at 109-110. For all present purposes the W Street, Town Y property was not covered by the Financial Agreement.
The Wife’s evidence about the purchase of the W Street, Town Y property commences at paragraph 182 of her Trial Affidavit, and is quite extensive. For present purposes, suffice it to say that the Wife purchased the W Street, Town Y property in July 2016. At paragraph 184, she explains how the property purchase was financed. At paragraphs 184.1 and 184.2 she states as follows:
[184.1] On 15 July 2016,1 paid the sum of $ 122,570 from the NAB Classic Banking account ending ...50 by way of deposit on the purchase of Town Y. Exhibited hereto at Tab 83. of Exhibit 2, being page(s) 734 to 740, is a copy of the statement for the NAB Classic Banking account ending ...50 for the period from 1 June 2016 to 29 July 2016 and confirmation of deposit
[184.2] I met the balance of the purchase price of Town Y, being $1,200,000 by way of the ANZ Residential Investment Loan account ending ...59. Exhibited hereto at Tab 84. of Exhibit 2, being page(s) 741 to 756, is a copy of the Loan Document for the ANZ Residential Investment Loan account ending ...59 dated 18 July 2016 and settlement adjustment sheet.
On the Wife’s case, however, the W Street, Town Y property was purchased after the date of separation and divorce using savings, and a loan. The savings came from her NAB account – ...50 which is not, of course, an account identified in Schedule C to the Financial Agreement. Even the loan referred to at 184.2 is not referred to in Schedule D to the Financial Agreement, listing liabilities.
The Wife deposes from paragraph 197 onwards of her Trial Affidavit about the sale of the property known as Street G, Suburb H which, of course, is found in Schedule C of the Financial Agreement, and which is thus covered by the same. The Street G, Suburb H property was sold in March 2017. She explains at paragraph 199.2 that approximately $171,000 from the sale proceeds was paid to the ANZ Bank to reduce her mortgage obligation to the said bank. At paragraph 198 she had already deposed that this was part of a refinancing of her loan commitments which was secured against not just the W Street, Town Y property, but what she described as the Street E, Suburb F property, another property referred to in Schedule C to the Financial Agreement.
There were surplus sums, however, and she deposes at paragraph 199.4 to applying the (unspecified) balance to purposes including “significant improvements” to W Street, Town Y, and machinery for W Street, Town Y.
It is possible, the Court acknowledges, that the effect of the refinancing was, in fact, to reduce the Wife’s equity in W Street, Town Y, not increase it. As it turns out, whether that is the case or not, and if it is the case to what extent her equity was reduced, are matters in respect of which the Court does not need to make findings. If the Wife’s equity in W Street, Town Y had increased, then the Court acknowledges there could have been an interesting argument about whether the sale proceeds of a property that was covered by the Financial Agreement could be traced into a property that was not covered by the Financial Agreement. That is an argument for another case, on another day, but it probably falls to be decided by contractual principles: what were the intentions of the parties to the Agreement ascertained objectively from the language used: Life Insurance Co of Australia Ltd v Phillips (1925) 36 CLR 60 at 78.
The Court finds that the W Street, Town Y property is not covered by the Financial Agreement, and the cash used to purchase the property was also not covered by the Financial Agreement.
The real issue for determination in this case, therefore, is what is a just and equitable order altering the Wife’s interests in the W Street, Town Y property, having regard to the contributions and other matters allegedly made by the Husband, in accordance with s.79 of the Act? In this regard, another significant preliminary issue arises.
How does s.79(4) apply to property covered by a Financial Agreement?
The Applicant Husband’s case was that on any interpretation of s.79(4) the contribution to which the Court should have regard to could not be limited by reference to the Financial Agreement. Counsel for the Applicant Husband submitted, therefore, that the scope of s.79 of the Act cannot be read down by reference to the provisions of a financial agreement that does not cover the property in respect of which an alteration of property interests is sought. Counsel emphasised that the various forms of contribution referred to in s.79(4) refer to all property of the parties to the marriage whether or not that property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them. Thus, in effect, contribution would need to be assessed holistically in respect of all property, not just property still in existence and not just property covered by a Financial Agreement.
Counsel for the Wife contended, conversely, that the Court must limit its assessment of contributions to the contribution the Husband made to property that is not covered by the Financial Agreement. In this regard, Clause 6 of the Financial Agreement contains a specific acknowledgement that the Husband:
…acknowledges and agrees that the Wife owns or is beneficially entitled to the property listed in Schedule C to which he has made no contribution and over which he will make no claim.
Two issues arise from the submissions made on the Respondent Wife’s behalf.
The first matter arises by inference from the submissions made by Counsel for the Wife. This contention is that property covered by a Financial Agreement, and specifically contribution towards that property, is not in the category of contribution to property that is contemplated by the words: “whether or not that last mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them”.
The words in question were inserted as a result of the Family Law Amendment Act 1983 (Cth). The Explanatory Memorandum to the Bill explains that the purpose of this amendment was to remove the possibility of an interpretation of s.79(4) of the Family Law Act requiring that there be a nexus between a spouse’s contribution and a specific item of property in s.79 proceedings and also to put it beyond doubt that a contribution to property subsequently disposed of can be taken into account in such proceedings.
There is force to the argument that property that enjoys the benefit of s.71A of the Family Law Act because it is covered by a financial agreement is not property that has “ceased to be the property” of the parties. Such property remains the property of the parties who have taken advantage of the statutory provisions enacted by the Family Law Amendment Act 2000 (Cth) to create a binding regime for Financial Agreements.
The second matter that arises is the interaction of s.71A and s.79(4). This involves a consideration of Part VIIIA of the Act. Indeed, it commences with a number of relevant definitions, all of which are found in section 4(1) of the Act. Thus, financial matters is defined as follows:
“Financial matters” means:
(a) in relation to the parties to a marriage—matters with respect to:
(i) the maintenance of one of the parties; or
(ii) the property of those parties or of either of them; or
(iii) the maintenance of children of the marriage; or
(b) in relation to the parties to a de facto relationship—any or all of the following matters:
(i) the maintenance of one of the parties;
(ii) the distribution of the property of the parties or of either of them;
(iii) the distribution of any other financial resources of the parties or of either of them.
Financial agreement is defined as follows:
“Financial agreement" means an agreement that is a financial agreement under section 90B, 90C or 90D, but does not include an ante‑nuptial or post‑nuptial settlement to which section 85A applies.
The key provision relating to financial agreements is not in fact found in part VIIIA, but at section 71A which is part of Part VIII of the Act. Section 71A states:
This Part does not apply to certain matters covered by binding Financial Agreements
(1) This Part does not apply to:
(a) financial matters to which a Financial Agreement that is binding on the parties to the agreement applies; or
(b) financial resources to which a Financial Agreement that is binding on the parties to the agreement applies.
(2) Subsection (1) does not apply in relation to proceedings of a kind referred to in paragraph (caa) or (cb) of the definition of matrimonial cause in subsection 4(1).
Section 71A is at the heart of the Respondent Wife’s submissions, indeed at the heart of her case. In effect, she contends that there can be no alteration of property interests under s.79 of the Act in relation to financial matters and financial resources to which a binding financial agreement applies.
It is clear that Part VIII does not, because of the effect of section 71A, apply to any property or resource that is covered by the Financial Agreement. But does that mean, for example, that section 79(4) must be, in effect, read down as being subject to section 71A such that contribution made to property covered by a financial agreement, cannot be considered in the context of assessing contribution to a property not covered by the financial agreement?
Counsel for the Respondent Wife contended that this must be the case as it would otherwise defeat the whole purpose of Part VIIIA, let alone be consistent with section 71A.
The Court accepts this submission. The Financial Agreement, and specifically Clause 6 of the Financial Agreement, cannot be ignored. It is not as if a financial agreement has no role to play in the context of an alteration of property interests under section 79. Indeed, this is acknowledged in section 79 itself where, in section 79(4)(e) the Court must take into account the matters referred to in subsection 75(2), so far as they are relevant. Section 75(2) entitles the Court to have regard to matters including, at paragraph (p): “the terms of any financial agreement that is binding on the parties to the marriage.”
Indeed, there is another possible basis for having regard to the terms of the Financial Agreement in these circumstances. Whilst Counsel for the Wife did not specifically refer to section 79(2) in this specific context, the allusion was clear. It could reasonably be argued, therefore, that a Court should not ignore a provision such as Clause 6 of the Financial Agreement in a fact situation such as this one, because it would not be just and equitable to make an order inconsistent with that clause. Indeed the majority in Stanford & Stanford [2012] HCA 52 (15 November 2012) stated at [41]:
If the parties have made a financial agreement about the property of one or both of the parties that is binding under Pt VIIIA of the Act, then, subject to that Part, a court cannot (s 71A) make a property settlement order under s 79. But if the parties to a marriage have expressly considered, but not put in writing in a way that complies with Pt VIIIA, how their property interests should be arranged between them during the continuance of their marriage, the application of these principles accommodates that fact. And if the parties to a marriage have not expressly considered whether or to what extent there is or should be some different arrangement of their property interests in their individual or commonly held assets while the marriage continues, the application of these principles again accommodates that fact. These principles do so by recognising the force of the stated and unstated assumptions between the parties to a marriage that the arrangement of property interests, whatever they are, is sufficient for the purposes of that husband and wife during the continuance of their marriage. The fundamental propositions that have been identified require that a court have a principled reason for interfering with the existing legal and equitable interests of the parties to the marriage and whatever may have been their stated or unstated assumptions and agreements about property interests during the continuance of the marriage.
Thus there has to be a principled reason for interfering with what the Husband and Wife in this case themselves agreed to do.
If there is any inconsistency in the interpretation and application of s.71A and s.79 (4) (a), (b) and (c) insofar as contribution is said to apply to property that is covered by a financial agreement, the Court would resolve this by giving precedence to s.71A. There are two reasons for this. Firstly, and consistently with s.15AB Acts Interpretation Act 1901 (Cth), the precedence given to s.71A is simply giving the section its ordinary meaning conveyed by the rest of the provision taking into account its context in the Act, its purpose and underlying object. Secondly, however, and as a last resort (to use the words found in Pearce and Geddes Statutory Interpretation Australia 9th ed. at [4.54]) when it is not possible to reconcile two sections in an Act, the later section prevails over the earlier: Wood v Riley (1867) LR 3 CP 26; Ross v R [1979] HCA 29; (1979 141 CLR 432 at 440.
But is there some other basis, beyond the provisions of section 79(4)(a) and (b) that the Husband’s alleged contribution to property that is covered by the Financial Agreement, may nonetheless be relevant? Counsel for the Applicant Husband contended, for example, that some of his contribution would be covered by section 79(4)(c), that is as contribution to the welfare of the family constituted by the parties to the marriage, including any contribution made in the capacity of homemaker. The Court doubts very much whether the contribution referred to in paragraph (c) of section 79(4) can be treated any differently, on the facts of this case, to the contribution covered in paragraphs (a) and (b). Paragraph 6 of the Financial Agreement is plain and clear: the Husband specifically acknowledged and agreed that “he has made no contribution...”. There is no basis for reading this down so as to limit it just to financial contribution. Indeed section 79(4)(b) clearly covers non-financial contribution. In any event, on the evidence before the Court the Husband’s contribution under section 79(4)(c) is so limited that it could not, of itself, warrant an order altering property interests.
What property? : conclusion
The Court’s conclusion above thus significantly narrows the scope of the dispute. The contribution that the Husband made in relation to property that is covered by the Financial Agreement is irrelevant to the present proceedings.
The evidence
In the Applicant’s case, he relied on the following documents:
a)Further Amended Initiating Application filed 26 March 2018;
b)Affidavit of Mr Delrio sworn and filed 3 March 2020;
c)Affidavit of Mr R affirmed 21 February 2020 and filed 28 February 2020;
d)Affidavit of Ms AA affirmed 21 February 2020 and filed 28 February 2020;
e)Affidavit of Ms BB filed 5 June 2020;
f)Financial Statement of Mr Delrio filed 26 September 2017;
g)Case outline document received 5 June 2020 and
h)Closing submissions filed 2 July 2020.
In the Respondent’s case, she relied on the following documents:
a)Response to Initiating Application filed 14 November 2017;
b)Affidavit of Ms Jindra filed 23 April 2020;
c)Affidavit of Ms O filed 18 April 2020; and
d)Financial Statement of Ms Jindra filed 18 April 2020
e)Case outline document received 4 June 2020 and
f)Outline of submissions filed 8 July 2020.
The following material was tendered as evidence during the course of the proceedings:
a)Financial Agreement in 2011;
b)Valuation Report dated 26 May 2020;
c)Bundle of correspondence dated 11 - 12 February 2020 and
d)Transcript of the proceedings which took place on 28 – 29 March 2019.
The applicable law
This is an application under s.79 of the Act which relevantly provides:
Alteration of property interest
(1)In property settlement proceedings, the court may make such order as it considers appropriate:
(a)in the case of proceedings with respect to the property of the parties to the marriage or either of them--altering the interests of the parties to the marriage in the property; or
(b) in the case of proceedings with respect to the vested bankruptcy property in relation to a bankrupt party to the marriage--altering the interests of the bankruptcy trustee in the vested bankruptcy property;
including:
(c)an order for a settlement of property in substitution for any interest in the property; and
(d) an order requiring:
(i) either or both of the parties to the marriage; or
(ii) the relevant bankruptcy trustee (if any);
to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines.
…
(2)The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
(4)In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
(a) the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c) the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d) the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e) the matters referred to in subsection 75(2) so far as they are relevant; and
(f) any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
Section 79(4) incorporates the provisions contained in s.75(2) of the Act, which states:
(2) The matters to be so taken into account are:
(a) the age and state of health of each of the parties; and
(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years; and
(d) commitments of each of the parties that are necessary to enable the party to support:
(i)himself or herself; and
(ii)a child or another person that the party has a duty to maintain; and
(e) the responsibilities of either party to support any other person; and
(f) subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
(i)any law of the Commonwealth, of a State or Territory or of another country; or
(ii)any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party; and
(g) where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable; and
(h) the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
(ha) the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant; and
(j) the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k) the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l) the need to protect a party who wishes to continue that party's role as a parent; and
(m) if either party is cohabiting with another person--the financial circumstances relating to the cohabitation; and
(n) the terms of any order made or proposed to be made under section 79 in relation to:
(i)the property of the parties; or
(ii)vested bankruptcy property in relation to a bankrupt party; and
(naa) the terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to:
(i)a party to the marriage; or
(ii)a person who is a party to a de facto relationship with a party to the marriage; or
(iii)the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv) vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(na) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
(o) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(p) the terms of any Financial Agreement that is binding on the parties to the marriage; and
(q) the terms of any Part VIIIAB Financial Agreement that is binding on a party to the marriage.
In Bevan & Bevan [2013] FamCAFC 116, the Full Court of the Family Court of Australia considered the High Court’s decision in Stanford & Stanford [2012] HCA 52, which provided guidance on how s.79 was to be interpreted and implemented. Bevan endorsed the continuing application of the four-step approach articulated by the Full Court in Hickey & Hickey & Attorney General for the Commonwealth of Australia [2003] FamCA 395, but on the basis that it is a shorthand distillation of the words of s.79, as opposed to being a statutory edict. The four steps articulated in Hickey at paragraph 39 are:
a)Identify and value the property, liabilities and financial resources of the parties; and
b)Identify and assess the contributions of the parties and express them as a percentage of the net value of the property; and
c)Identify and assess the other facts relevant under s.79(4)(d)-(g) including s.75(2) and determine the adjustment (if any) to be made to the contribution entitlements at step two; and
d)Consider the effect of the above and resolve what order is just and equitable in all the circumstances.
It is important to recognise that neither Bevan nor Hickey involved a consideration of s.71A of the Act. The four steps articulated in Hickey probably do not apply to property covered by a financial agreement as they would in other cases.
The decisions in Stanford and Bevan also emphasise the importance of making findings that any order is just and equitable for the purposes of s.79(2), independent of the s.79(4) process. In most cases, such as the present one, it makes no difference to the outcome of the alteration of property interests exercise. Even if the just and equitable consideration were treated as a threshold issue in this case the parties have, by their actions (separation, and re-ordering of their financial lives since then), and claims (divergent claims about their property under s.79 of the Act), indicated that they themselves consider it just and equitable that some order be made under s.79 adjusting their property interests as presently held. It is clearly just and equitable in this case to make an order.
Both decisions also emphasise the importance of identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property. This is not inconsistent with step one in Hickey.
The Court notes, that the provisions of section 90DA of the Family Law Act have been satisfied. There was no need for a separation declaration in order for the Financial Agreement to take effect. This was because, consistent with section 90DA(1A), the parties had divorced.
The competing contentions
As will be seen below, there were substantial differences between the parties about the constitution of the Balance Sheet. Putting that aside for one moment, the Husband’s case was that he had made a contribution towards the pool of assets which he contended included W Street, Town Y and the Street E, Suburb F property which, on the Husband’s calculations, would provide him with a payment of about $203,000. On his assessment, if the 15% was assessed purely by reference to the W Street, Town Y property, this would result in a payment to him of $95,250. The Applicant’s case, however, as set out in his Counsel’s closing submissions became somewhat harder to discern when the further submission was made that, in fact, the Balance Sheet should have added back to it the entire net sale proceeds of the Street J, Suburb K property, as well as the sale proceeds of the Street G, Suburb H and Street C, Suburb D properties. For a reason that is still not clear to the Court his 15% contribution morphed into a 25% contribution to the net equity of the W Street, Town Y and Street E, Suburb F properties together with the superannuation. At paragraph 6.21 of the Applicant’s closing submissions the statement is made: “in this sense the Applicant seeks a payment of $356,287.25 to the estate within 60 days.”
The Court observes that whatever the Applicant’s claim for assessment of contribution actually was, it is entirely dependent on findings by the Court as to what should be included in the Balance Sheet and, in any event, the Court would need to make its own assessment of the Husband’s contribution, if any.
The Respondent Wife’s case was much clearer. Her first contention was that there was no property of the parties that was subject to an application under section 79 but, even if there were, in light of the facts, including the overwhelmingly greater contributions made by the Wife, the Court would not find it just and equitable to make any order under section 79.
Clearly, therefore, there are a number of significant issues for the Court to determine. Firstly, the Court will need to make findings about the constitution of the Balance Sheet. Secondly, the Court will need to assess contribution. Thirdly, it will need to assess whether there is any scope for the application of section 75(2). Finally, the Court will need to determine whether it is just and equitable to make any order, and if so what is a just and equitable order.
Before doing so, however, there are further preliminary issues that need to be clarified.
Impact of s.79(8) of the Act
On 18 May 2020 the Court ordered that Ms Gray be appointed as the Legal Personal Representative for the Applicant Husband Mr Delrio pursuant to section 79(8) of the Act. There was no appeal against that Order. Notwithstanding that, the provisions of section 79(8) need to be considered. Subsection (8) provides:
(8) Where, before property settlement proceedings are completed, a party to the marriage dies:
(a) the proceedings may be continued by or against, as the case may be, the legal personal representative of the deceased party and the applicable Rules of Court may make provision in relation to the substitution of the legal personal representative as a party to the proceedings;
(b) if the court is of the opinion:
(i) that it would have made an order with respect to property if the deceased party had not died; and
(ii) that it is still appropriate to make an order with respect to property; the court may make such order as it considers appropriate with respect to:
(iii) any of the property of the parties to the marriage or either of them; or
(iv) any of the vested bankruptcy property in relation to a bankrupt party to the marriage; and
(c) an order made by the court pursuant to paragraph (b) may be enforced on behalf of, or against, as the case may be, the estate of the deceased party.
With respect to the Applicant’s case, not much attention was paid to this provision. The Order made by the Court on 18 May 2020 was based on section 79(8)(a). That did not, of course, automatically entitle the Legal Personal Representative of the deceased Husband to an order under section 79, because paragraph (b) sets out, in effect, threshold requirements about this. Section 79(8)(a) is procedural in its nature. There was no requirement for the Court to work out at that stage the precise order to he made. Any other interpretation is likely to create significant practical difficulties at a Hearing.
The onus of proof was on the Applicant to establish the matters set out in s.79(8)(b)(i) – (iii) (Tasmanian Trustees Ltd v Gleeson (1990) FLC 92-156, 78,085). The Respondent’s case was quite clear – quite independently of the other arguments raised against the making of any orders, it was also asserted that the Applicant had failed to establish these requirements.
It is interesting to observe the use of the words “still appropriate” and “such order as it considers appropriate” in s.79(8)(b)(ii). Section 79(2) requires the Court not to make an order under section 79 unless it is satisfied that, in all the circumstances, “it is just and equitable” to make the order. It is clear that an order under section 79(8) must still be just and equitable but, it is equally clear, that it must be “appropriate”.
In Pretswell (Deceased) & Pretswell [2019] FamCA 395 (4 July 2019) Harper J considered at length the cases pertaining to s.79(8) at [52] – [65]: The Court respectfully adopts His Honour’s statement of the law:
[51] Pursuant to s 79(8)a), the property proceedings, having been commenced prior to the husband’s death, may continue. The proceedings do not abate. Section 79(8) has been upheld as constitutionally valid: Fisher v Fisher (1986) 161 CLR 438; [1986] HCA 61. It is helpful to set out the terms of s 79(8) of the Act in full…
[52] It appears from the terms of s 79(8), the Administrator, in conducting these proceedings in substitution for the deceased husband, stands in the same position as the deceased would have stood, but for his death. This broad observation is subject to qualifications, which I discuss later in these reasons. It is important to point out here that s 79(8)(b) only permits the Court to make orders altering the property interests of the parties to the marriage in such circumstances if two preconditions are satisfied: the Court is of the opinion (a) it “would have made an order” prior to the death of the husband (s 79(8)(b)(i)) and (b) it is “still appropriate” to make such an order (s 79(8)(b)(ii)).
[53] The correct approach to determining the satisfaction of the preconditions has been the subject of comment in several decisions in the context of final hearings.
[54] In Grace v Grace [2012] NSWSC 976, Brereton J stated the applicable principles at [242]-[243] as follows:
[242] Under Family Law Act, s 79(8), there are two necessary conditions for a court to make a property order after the death of a party: first, that the court be of opinion that it would have made an order with respect to property if the deceased party (relevantly Colin) had not died (s 79(8)(b)(i)); and secondly, that it be of opinion that it is still appropriate to make such an order (s 79(8)(b)(ii)). As to the first of those conditions, the court is required to consider and decide whether, if the deceased spouse had not died, the court would have made an order in the proceedings, and in considering that question the court has regard to the substantive circumstances relevant to the exercise of the jurisdiction invoked by the initiating application which existed immediately before the death of the deceased spouse. In short, the court must be satisfied that at the time of the death one or other party had a good cause of action for an order under s 79 in respect of which the court's jurisdiction had been regularly invoked [Bourke v Bourke [1998] FamCA 69, [4.8]-[4.10]]. The court is not required to work out the precise order it would have made had the deceased not died [Allan & Allan (1987) FLC 91-824; Randle & Randle (1987) FLC 91-828; North & North (1987) FLC 91-831].
[243] As to the second condition, relevant factors include the consequences of the death of the deceased spouse on the financial position of the surviving spouse. For example, the surviving spouse may benefit from the deceased's estate in such a way that any further property adjustment is unnecessary. Another common consideration is that the deceased spouse has no continuing maintenance needs: this will often have a marked impact on the balance of the s 75(2) factors. Otherwise, the court takes into account the considerations relevant on an application under s 79, including in particular the contribution based factors specified in s 79(4)(a), (b) and (c), and the means and needs factors referred to in s 75(2) and incorporated by s 79(4)(e). The court does not take into account the claims or financial circumstances of the beneficiaries of the deceased spouse's estate [Menzies & Evans (1988) FLC 91-969, 77,010; Re Berry & Berry [1989] FamCA 76;(1990) FLC 92-118, 77,779; Mason v Hannaford; Mason-King (1993) FLC 92-398, 80,055, 80,056, 80,057]. This means that the claim of or against the surviving spouse is to be considered essentially as between husband and wife before the claims of other beneficiaries are taken into account.
[55] In Neubert (deceased) & Neubert and Anor (No. 2) [2017] FamCA 829, Benjamin J at [91] cited with approval the following statement of principle by Wilson FM (as he then was), in Cornell & Stokes [2008] FMCAfam 774, after a review of the relevant authorities, including the Full Court decision in Bourke & Bourke [1998] FamCA 69:-
[23] From the above authorities, I conclude that the appropriate way in which to deal with a case where one of the parties has died since the commencement of proceedings is as follows:
(a) The party representing the deceased party to the marriage must demonstrate that, at the time of the death of the party so represented, the court would have made an order in favour of that party. In so doing, the party is not limited to the state of evidence at the date of death;
(b) In reaching an opinion about that first prerequisite imposed by s 79(8)(b)(i) of the Act, the Court is not required to determine precisely what orders would have been made in that deceased party’s favour, just that an order would have been made in that party’s favour;
(c) To reach that opinion, the Court must embark upon the exercise in s 79(4) of the Act;
(d) Having determined that it would have made an order in the deceased party’s favour had he or she survived, the Court must then consider whether it is still appropriate to make an order;
(e) In that regard, the Court’s discretion should not be exercised lightly, and should only be exercised in limited circumstances, so as to satisfy moral obligations that remain unsatisfied;
(f) The deceased party to the marriage has a prima facie moral entitlement to his or her contributions based entitlements to matrimonial property;
(g) The size of the pool and the needs of the surviving spouse, including s 75(2) factors must be taken into account in formulating any orders.
[24] In this process, the onus of establishing the appropriateness of making a property order post mortem rests on the representative of the deceased party: Tasmanian Trustees Ltd (Administrators of Estate of Gleeson, B J) & Gleeson, D W (1990) FLC 92-156, applied by Carmody J in Rutter [2004] FamCA 424; and by Boland J in Ford & Marchant [2001] Fam CA 1585.
[56] In Neubert (supra) at [92], Benjamin J also accepted that exercising discretion to permit the continuation of proceedings pursuant to s 79(8) is to be undertaken in “limited circumstances” and “not lightly”, having regard to the obiter of Gibbs CJ in Fisher (supra) at 448. See also Flanagan & Sobek (supra).
[57] In my view, the terms of s 79(8)(b) of the Act are not limited to the question of whether the Court would have made, and would still make, an order in the deceased’s favour. The question is whether the Court would have made, and would still make, “an order with respect to property if the deceased party had not died”, that is, the enquiry is not limited to orders in the deceased’s favour. Here an order with respect to property includes an order in favour of the applicant wife.
[58] Orders pursuant to s 79 of the Act altering the property interests of the parties may only be made if the court is first satisfied that it is just and equitable to make such orders: s 79(2) of the Act, Stanford (supra) at [35]; Bevan & Bevan [2013] FamCAFC 116 at [70]. The issue of the justice and equity of any property adjustment orders thus also permeates the two separate inquiries required by s 79(8)(b)(i) and 79(8)(b)(ii): In the Marriage of Mason (1993) 17 Fam LR 269 at 286; Flanagan & Sobek (supra) at [13].
[59] The consideration of the preconditions generally takes place as part of a final hearing. The authorities indicate that in the process of forming the necessary opinion about satisfaction of the precondition in s 79(8)(b)(i), the Court must, inter alia, embark upon a number of different factual and legal enquiries, which overlap with the usual enquiries required in property adjustment proceedings pursuant to s 79. This must also involve the formation of a view about the justice and equity of any proposed outcome, although the authorities do not make clear the extent to which the court must form such a view when considering the preconditions in s 79(8)(b)(i). Forming such a view is more difficult if, as the authorities hold, the Court is not required to determine precisely what orders would have been made in that deceased party’s favour, just that an order for property adjustment would have been made. Plainly, from what has already been said above, it is even more difficult where the court is considering the position at an Interim Hearing…
[62] I observe here that if the preconditions are satisfied the Court may make “such order as it considers appropriate with respect to… any of the property of the parties to the marriage or either of them”: s 79(8)(b)(iii). It is unclear whether this power to make orders with respect to the property of the parties should be understood as separate to the powers elsewhere in s 79 to make orders. No argument was directed to this question…
[65] There appears to exist some controversy in the authorities on the question of the date at which the assessment for the purposes of s 79 should be undertaken where s 79(8) is engaged. Some decisions say the broad assessment to be undertaken is referable to the time of the spouse’s death: North v North; Public Trustee of NSW (Intervener) (1987) FLC 91-831 per Gee J. There is another view that it is at least arguable that it is referable to the time of hearing [e.g Doyle and Doyle (deceased) (1989) FLC 92-027 at p 77,397 per Lindenmayer J. The statement of principle in Neubert (supra) supports the view that the parties are not limited to evidence available at the time of death. In the circumstances of these proceedings and for the purposes of an interim application, there is little practical difference, in my view. The evidence did not carefully differentiate the position as at the death of the husband and as at the date the interim application was heard. I will undertake the broad assessment as at the date of hearing the interim application.
The Balance Sheet
It is unsurprising on the facts of this case that the parties could not reach agreement about a Balance Sheet. For present purposes, the Court will adopt as its starting point the Balance Sheet contended for on behalf of the Husband. This is reproduced below:
| Ownership | Description | Applicants value | Respondents value | |
| ASSETS | ||||
| 1. | W | W Street, Town Y | $ 1,660,000 | |
| 2. | W | Street E, Suburb F Property | $ 1,600,000 | |
| 3. | H | ANZ Savings Account | $ 750 | |
| 4. | J | Furniture and household effects purchased during the relationship | $ ? | |
| 5. | W | NAB bank Account # ...50 | $ 2,664 | |
| 6. | W | Farm machinery | $ 65,831 | $ |
| 7. | W | Horses | $ 35,000 | $ |
| 8. | W | ANZ Account # ...21 | $ 3,510 | $ |
| 9. | W | Jindra Family Trust | ? | |
| 10. | CC Pty Ltd | ? | ||
| 11. | DD Pty Ltd | ? | ||
| Total | $ | $ |
| ADDBACKS | ||||
| 12. | W | Legal Fees Paid | $ 133,411 | $ |
| 13. | W | Legal fees paid by parents | $ ? | |
| 14. | W | Proceeds of Street G, Suburb H (the warehouse | $ 1,743,605.35 | $ |
| 15. | W | Proceeds Street J, Suburb K | $ 730,000 | |
| 16. | W | Proceeds of Sale of Street C, Suburb D | $ 782,730 | |
| Total | $ | $ 0 |
| LIABILITIES | ||||
| 17. | W | Mortgage secured against W Street, Town Y | $ 1,014,168 | |
| 18. | W | Loan Ms O and Mr P | $ ? | |
| 19. | H | Cost order owed to Wife by Husband (Order 1 of Orders 10.10.19 | $ 26,173 | |
| 20. | W | Mortgage on Street E, Suburb F property | $ 889,9224 | |
| 21. | H | Legal costs of the husband | $ 136,500 (exl counsels fees) | |
| Total | $ | $ |
| SUPERANNUATION | |||||
| Member | Name of Fund | Type of Interest | Applicants value | Respondents value | |
| 22. | W | Super Fund EE | $ 69,241 | $ | |
| 23. | H | Super Fund FF | $ 3,700 | $ | |
| 24. | $ | $ | |||
| 25. | $ | $ | |||
| 26. | $ | $ | |||
| Total | $ 0 | $ 0 |
| FINANCIAL RESOURCES | ||||
| Ownership | Description | Applicants value | Respondents value | |
| 27. | W | Jindra Family Trust | Nil | $ |
| 28. | W | $ NK | ||
| 29. | W | $ NK | ||
| Total |
There is no dispute about item 1. The W Street, Town Y property has an agreed value of $1,660,000.
For reasons identified above, item 2 should not appear on the Balance Sheet. It is covered by the Financial Agreement which the Court considers to be binding.
There is no issue about item 3, and item 4, but these items were never identified or valued in an admissible form.
In relation to item 5 the Court has already made a finding in relation to NAB account – ...50 but it cannot rule out the possibility that these current savings represent the Wife’s income after separation, and thus is an asset that was not covered by the Financial Agreement. Item 5 remains on the Balance Sheet.
Items 6 and 7 are, the Court is satisfied, the property of V Pty Limited as trustee of the Jindra Family Trust which operates the businesses undertaken on the W Street, Town Y property. The said company, and the said trust, are expressly identified in Schedule C to the Financial Agreement. These items should not be included in the Balance Sheet.
Item 8 appears to be a bank account held by the Wife in respect of which there is no reference in the Financial Agreement. It remains on the Balance Sheet.
Items 9 – 11 should not appear on the Balance Sheet. The evidence indicates that V Pty Limited is the trustee of the Jindra Family Trust referred to at item 9, and that items 10 and 11 are, for all practical purposes businesses operated and owned by the trust.
Item 12 relates to legal fees paid by the Wife, but the jurisprudential basis for adding these fees back on to the Balance Sheet is by no means clear. The onus was on the Applicant in this regard and he has not discharged the same. Item 12 should read nil.
Items 14 – 16 relate to property expressly referred to in Schedule C to the Financial Agreement, and thus should not appear on the Balance Sheet.
There is no dispute about item 17.
In relation to item 18 any loan to or from the Wife’s parents is not a relevant liability for present purposes, even if it could have been quantified. Item 18 should be nil.
The Court accepts the relevance of item 19, being the Husband’s liability to the Wife pursuant to a costs Order made by this Court on 10 October 2019 arising out of the earlier stage of these proceedings. Whilst it is clearly relevant, however, and the Court will take it into account in a general sense under section 75(2), it should not appear on the Balance Sheet. This is a post-separation liability of the Husband alone and its inclusion on the Balance Sheet would merely distort any attempt to assess contribution and future needs. It will not appear on the Balance Sheet.
Item 20 is irrelevant as the property in question is referred to in Schedule C to the Financial Agreement. It will not be included on the Balance Sheet.
Item 21 falls into the same category as item 19. The Court accepts that the Husband’s estate owes his solicitors the sum referred to, indeed probably more. This will be taken into account, but the liability will not appear on the Balance Sheet.
Item 22 is the Wife’s Super Fund EE superannuation, but this is also expressly referred to in Schedule C to the Financial Agreement, and thus, consistent with the Court’s earlier rulings, should not appear on the Balance Sheet.
Item 23 is the Husband’s superannuation. It is not referred to in the Financial Agreement. The Court accepts, therefore, that it should remain on the Balance Sheet.
Item 27 contends that the Wife’s interest in the Jindra Family Trust is a financial resource to which the Court would have regard. Firstly, the Court observes, the evidence indicates that the Wife’s interest in the family trust is probably far more than just a financial resource, and it is more likely than not that she is the effective controller of the trust. There is no doubt that any assets held by the trust are covered by Schedule C of the Financial Agreement. It seems, therefore, that the common intention of the parties was that the trust was property, and not just a financial resource. If it were a financial resource, or if for example the contention were that the income that the Wife derives from the trust is a financial resource, as opposed to the underlying capital assets, it would be relevant under sections 79(4)(e) and 75(2)(b) but on the evidence the Wife’s income seems to be primarily from the trust in question.
Based on these findings, therefore, the final Balance Sheet will be as follows:
| Ownership | Description | Court’s value | |||
| ASSETS | |||||
| 1. | W | W Street, Town Y | $ 1,660,000 | ||
| | | Street E, Suburb F | |||
| 3. | H | ANZ Savings Account | $ 750 | ||
| 4. | J | Furniture and household effects purchased during the relationship | $ Nil | ||
| 5. | W | NAB bank Account # ...50 | $ 2,664 | ||
| | | | |||
| | | | |||
| 8. | W | ANZ Account # ...21 | $ 3,510 | ||
| | | Jindra | |||
| | | ||||
| | | ||||
| Total: | $ 1,666,924 | ||||
| ADDBACKS | |||
| 12. | W | Legal Fees Paid | $ Nil |
| 13. | W | Legal fees paid by parents | $ Nil |
| | | | |
| | | | |
| | | | |
| Total: | $ Nil | ||
| LIABILITIES | |||
| 17. | W | Mortgage secured against W Street, Town Y | $ 1,014,168 |
| 18. | W | Loan Ms O and Mr P | $ Nil |
| | | | |
| | | | |
| | | | |
| Total: | $ 1,014,168 | ||
| SUPERANNUATION | ||||
| Member | Name of Fund | Type of Interest | Court’s value | |
| | | | ||
| 23. | H | Super Fund FF | $ 3,700 | |
| 24. | ||||
| 25. | ||||
| 26. | ||||
| Total: | $ 3,700 | |||
| FINANCIAL RESOURCES | |||
| Ownership | Description | Court’s value | |
| 27. | W | Jindra Family Trust | $ Nil |
| 28. | |||
| 29. | |||
| Total: | $ Nil | ||
The Court acknowledges that an alternative approach was open to it. In theory, and perhaps consistent with the Full Court’s decisions in Bevan and Hickey all of the items excluded from the Balance Sheet as being covered by the Financial Agreement could have been expressly included the Balance Sheet, but then either put into a separate pool of assets in order to facilitate assessment of contribution, or perhaps simply left as one pool of assets. This Court is of the view to have left the assets covered by the Financial Agreement in the Balance Sheet, and somehow assess contribution whilst seeking to uphold the parties’ common intention reflected in the Financial Agreement, would have been unnecessarily complex, and possibly productive of error. If the correct view is that even the property covered by a Financial Agreement should be included in the Balance Sheet for present purposes, a safer, clearer approach might have been to put it in a separate pool of asset thus making assessment of contribution much more precise.
Assessment of contribution
A preliminary issue here is when, exactly, the Husband and the Wife separated. This was an issue in the first part of the case, and continued to be an issue in the last part of the case. On reflection, the date on which the Husband and Wife actually separated does not actually assist the Court in assessing contribution. Section 79 makes it clear that any contribution made by the Husband and the Wife after the date of separation, is as relevant as the contribution they made before the date of separation. The issue of the date of separation remained what it was in the first round of this case, namely an issue going to credit. The credit of the Wife, in particular, was a relevant matter in assessing the contribution of both the Husband and the Wife.
The Court made credit findings at paragraphs 40 – 42 of its Reasons for Judgment delivered 12 June 2019. The most relevant paragraph is paragraph 42:
The Wife’s evidence contrasted to that of the Husband. The Court accepts that it must have been difficult for her to be cross-examined by her former Husband in the circumstances of this case. And yet even the Wife’s Senior Counsel conceded in closing submissions that, whilst it was important to remember the context of being cross-examined by her ex-Husband, she was nonetheless “extremely argumentative and, on occasions, certainly at the beginning, not terribly responsive…”. The Court accepts, as Mr Campton pointed out, that her evidence did improve once the Court had intervened and made some observations about the importance of answering questions. When the Wife’s evidence is examined carefully, the Court finds she was more likely to exaggerate and obfuscate about matters relating to contribution during the relationship, and on the issue of when the relationship came to an end, than on issues relating to the Financial Agreement.
The Court had the benefit of once again being able to observe the Wife in cross-examination, but this time the cross-examination was conducted by highly skilled Counsel, rather than the Husband. Notwithstanding that, the Court’s conclusion about the Wife’s evidence is exactly the same as the finding made in paragraph 42 above. Specifically, the Court once again finds that the Wife was more likely to exaggerate and obfuscate about matters relating to contribution during the relationship, and on the issue of when the relationship came to an end, than on other issues. This finding accentuates the importance of corroborative evidence.
The Wife’s evidence about when the relationship came to an end, continued to be highly problematic.
Paragraphs 111 – 114 of the Court’s earlier Reasons for Judgment provides:
[111] The final issue in respect of which the Court has concerns about the Wife’s evidence is in relation to her divorce application. Her own evidence in cross-examination was that on the date that the divorce application was served on the Husband they were sharing a bed. When one has regard to the divorce application it is clear that she was contending that they were separated, albeit under the same roof. Having regard to the evidence referred to above, that does not seem plausible. They were sleeping in the same bed. Her contention that “We weren’t having sex or anything…” is implausible (transcript 29 March 19, page 156, line 26).
[112]Moreover, the Wife conceded that the divorce was undefended by the Husband and that at the time he was in hospital because of a suicide attempt and also, according to the Wife, after “he attempted to kill me”. (Transcript 29 March 2019, page 156, line 47.)
[113] In the Wife’s Application for Divorce filed 20 May 2016 she asserted that the parties separated on 17 March 2014, that they lived together between April and June 2015 for eight weeks, and thereafter from November 2015. However, she contends that they did not live together as Husband and Wife. The Wife’s Affidavit in support of her Divorce Application was made on 13 May 2016. At no point in that Affidavit does she disclose that she and the Husband shared the same bed or that their finances continued to be intermingled.
[114] The totality of the evidence before me, in the context of a fully Defended Hearing where the evidence could be and was tested, it is highly unlikely that the date of separation was 17 March 2014. The date of separation was much later, but it is not necessary for present purposes to establish when precisely it was. The significance of the issue is one of credit. But it does not follow that the Wife’s evidence about the agreement should not be accepted.
The Wife’s evidence about the end of the relationship with the Husband is found in her Trial Affidavit paragraphs 134-141, 144-155 and 170-177. For present purposes, the paragraph of the Wife’s evidence that causes the Court the greatest concern is paragraph 176 which is reproduced below:
Shortly prior to the morning the process server arrived at the warehouse to serve Mr Delrio with my divorce papers I was taking heavy sedatives, anti-anxiety and pain killing drugs as well as sleeping tablets in the lead-up to my mastectomy. The night before, Mr Delrio has arrived at my property uninvited as he often did and insisted I let him in. I relented, and later retired to my bedroom on my own When I awoke Mr Delrio was lying on top of the bed next to me. When the doorbell rang, I got up and answered the door to find the proceed server standing there ready to serve Mr Delrio. I called him to the door, and he was then served the divorce papers. Mr Delrio and I had a conversation as follows:-
Mr Delrio: “You’ve got to be fucking kidding me, you lied on a legal document about us being separated.”
Me: “No I did not. It been over for years. You have known this was coming for a long time and now it is done please leave us alone and don’t come back.”
The Wife was cross-examined about this evidence. Firstly, the Wife acknowledged that she gave the instructions for the process server to serve the Husband at what she described as the warehouse, in which she lived. The Court draws the inference that she gave these instructions to her process server because she thought that is where the Husband could be served. In paragraph 176 of her Affidavit, however, she deposes that the Husband arrived at the property uninvited the night before he was served. That proposition is implausible, given her instructions to the process server to serve him at her home, on the day in question.
In cross-examination, the Wife agreed with Counsel for the Husband that she and the Husband were sharing a bedroom on the day of service but, according to the Wife: “...not sharing the bed...”. Her acceptance of the proposition that she was sharing the bedroom with him is inconsistent with paragraph 176 of her Affidavit. Counsel suggested to the Wife that when she woke up she found him sleeping in the bed with her, but the Wife insisted that he was “on the bed”. This is consistent with paragraph 176 of her Affidavit where the Wife deposes that the Husband “...was lying on top of the bed next to me.”
Later in cross-examination, however, Counsel suggested to the Wife that at the date of service of the application for divorce the Husband was in fact living with her at the property known as the warehouse. The Wife said words to the effect: “...he was there, in another bedroom.” That, of course, is inconsistent not just with paragraph 176 of her Affidavit but the evidence she previously gave in cross-examination. Nonetheless, she maintained, consistently with her other evidence, that the Husband was not in her bed, but on her bed.
Thus, after hearing further evidence from the Wife about the issue of when the relationship ended, all the Court can safely conclude is that the Wife’s evidence is unreliable on this issue. This finding means that a cautious approach needs to be adopted as regards her evidence about contribution. The Husband’s evidence about the date of separation is also imprecise and unreliable in the sense that it is not possible for the Court to find when, precisely, this relationship ended. It was not when the Wife contended. It was later. The relationship continued in some form after the divorce on 16 August 2016. As foreshadowed above, a finding about the precise date of separation is unnecessary, and the Court’s primary task in assessing contribution is unaffected by when separation occurred.
The Court will address one further submission made in the Husband’s case which sought, in effect, to further undermine the Wife’s credit. In cross-examination the Wife was criticised for her lack of timely disclosure of her financial circumstances. The cross-examination of the Wife provided ample justification for the assertion of lack of timely disclosure. The Court notes that in the first part of the proceedings the Wife blatantly failed to provide a Financial Statement even though she herself consented to an order to that effect. The Wife’s failure to provide disclosure does nothing to assist the Court in relation to the concerns it has about the Wife’s credibility in relation to issues of contribution. The legal arguments advanced on her behalf about the impact of the Financial Agreement is ultimately accepted by this Court. That does not justify, ex post facto, her reluctance to provide disclosure.
The real issue for the Court is to examine the evidence about the contribution made and to then assess the same. For the reasons set out above, the focus is on the W Street, Town Y property. That is why it is largely irrelevant whether the parties separated in 2014, or as late as November 2017 which is the Applicant’s case. The fact is that the W Street, Town Y property was not purchased by the Applicant until August 2016. The Applicant’s case about his contribution to the W Street, Town Y property and indeed generally for the purposes of section 79 are limited, of course, by reference to the Financial Agreement, and focused on a relatively short period of time between the date of purchase of the W Street, Town Y property, and November 2017 when the Applicant contends the parties separated, well after their divorce.
The Applicant’s evidence about his contribution in relation to the W Street, Town Y property is found at paragraphs 69-78 of his Trial Affidavit filed 2 March 2020.
The Respondent’s evidence about W Street, Town Y is found at paragraphs 201-204 of her Affidavit (where she responds to the Husband’s Trial Affidavit). Her evidence-in-chief in this regard is found at paragraphs 182 – 200 of her Affidavit.
As the Husband died before the Hearing, some observations need to be made about the weight to be given to an Affidavit where it is not possible to cross-examine the deponent. There are a number of observations made by the Applicant’s Counsel that should be acknowledged. Firstly, at paragraph 2.1 of the Applicant’s closing submissions, Counsel states:
It is accepted that the Applicant’s trial affidavit is largely disorganised, repetitive, and in some parts incapable of being relied on in any probative way. This is regrettable and does prejudice his case.
The Court accepts Counsel’s description of his (deceased) client’s Trial Affidavit.
At paragraphs 2.4-2.7 of the Applicant’s closing submissions, Counsel for the Applicant states:
[2.4] It is respectfully submitted that the Court refrain from making general credibility findings in circumstances, where sadly, the applicant was not capable of being cross examined on matters that might have been readily conceded.
[2.5] In Fulton v Fulton [2014] NSWSC 619, Hallen J provided some guidance as to the way evidence should be treated where that evidence was not the subject of cross-examination and cross-examination was required:
“111. However, affidavit evidence, however good, which, for whatever reason, is not subject to cross- examination when cross-examination is required, will always be discounted, as appropriate, if the affidavit is used with leave without cross-examination. The degree to which it will be discounted may depend on various factors, including the circumstances that lead to cross-examination being dispensed with, the nature of the evidence and its centrality and degree of significance to the case. The degree of discount appropriate will be judged according to all the circumstances of the case…”
[2.6] In this sense, the Court has had the benefit of having been exposed to the applicant’s evidence in the first tranche of proceedings. Respectfully, the applicant submits the Court take that impression into account.
[2.7] As for the respondent, it is respectfully submitted that under cross examination she was forthright, responsive and direct in answering questions. Whilst she was a direct and responsive witness, it is not accepted that her evidence as a whole be believed. To the contrary it is respectfully submitted that her evidence as a whole, including her trial affidavit that was in large part excessively legalistic revealed an account that was highly motivated in resisting (and unfair in doing so)
(a)the existence of a shared relationship between the parties;
(b)the existence of significant contributions made by the applicant; and
(c) the duration of the relationship.
The Applicant’s Trial Affidavit was allowed to be read as evidence in the Applicant’s case. The weight to be given does need to be discounted, not just because of its form, but because no cross-examination could occur. The degree of discount to the weight of the evidence in question is rendered more complex by the fact that the Court has reservations about the Respondent Wife’s own evidence as to matters of contribution. The harsh reality in this case is that the evidence of both parties about matters of contribution was inadequate, but at least the Wife’s evidence was corroborated by the Affidavits of some of her witnesses.
Notwithstanding the above, the Court finds that the Husband made no contribution towards the purchase price of the W Street, Town Y property. This conclusion is derived in the following manner. The most reliable evidence about the circumstances of the purchase of the W Street, Town Y property remains that of the Wife herself, and in particular her Trial Affidavit of 22 April 2020. At paragraph 142 of her Affidavit she deposes that at separation she had about $113,522 in her NAB account number ending – ...50. At paragraph 184 she deposes that the W Street, Town Y property was purchased using a deposit of $122,570 from the same NAB account. According to the Wife, the date of separation was March 2014, and the date of purchase of W Street, Town Y was July 2016. The Court considers it a reasonable inference to draw from all of the evidence, including the bank statements exhibited to the Wife’s Affidavit, that the money used as the deposit on W Street, Town Y was the same money held at the date of separation.
Nonetheless, the Court has specifically turned its mind to whether the funds used to purchase W Street, Town Y in fact came from the sale proceeds of the Street J, Suburb K property. This is an impression that can be formed from paragraph 165 of the Wife’s Affidavit, but when paragraphs 142, 165-6 and 184 are carefully read together, it is more likely that the sale proceeds of Street J, Suburb K were applied to the costs associated with the work to the Street G, Suburb H property.
The conclusion that the Husband made no contribution to these funds is also based on the terms of the Financial Agreement between the parties. It has already been noted that at Clause 6 the Husband acknowledged and agreed that the Wife owned the property listed in Schedule C, which include the Street J, Suburb K property and that: “...he has made no contribution and...he will make no claim” to that property. Whilst the effect of the Financial Agreement was not to specifically cover, or protect, the sale proceeds of property referred to in Schedule C, and covered by Clause 6 of the Financial Agreement, the substantive effect of Clause 6 remains. The Husband acknowledges that he made no contribution to the sale proceeds of the Street J, Suburb K property and thus, even if that was the source of the money used to purchase W Street, Town Y he still therefore, made no contribution to the deposit on the W Street, Town Y property. This conclusion follows as a matter of logic.
In any event, the Husband’s case insofar as it related to his contribution towards the deposit on W Street, Town Y was entirely based on the contribution that he had made to the Street J, Suburb K property, as well as the other real estate referred to in Schedule C. The Court must give effect to the intention of the parties to the Financial Agreement. It must logically follow, therefore, that if they intended to, in effect, protect from claims under Part VIII of the Act the property referred to in Schedule C, and further if they had intended to give effect to their mutual covenants of acknowledgement in relation to non-contribution, it logically follows that the Husband agreed that he made no contribution to the sale proceeds of a property clearly covered by the Financial Agreement. Of course, it would have been better for this to have been expressly articulated in the agreement. Nonetheless, the Court finds that the common intention of the parties was as identified above.
The Court found helpful the approach to the evidence adopted by Counsel for the Applicant in his Closing Submissions document filed 2 July 2020.
Firstly, Counsel for Applicant analysed the Applicant’s cross-examination of the Respondent on the issue of financial contributions in the first part of the proceedings. None of the relevant cross-examination pertained to the W Street, Town Y property.
| 47 W Street, Town Y | Rendering half the chimney (8 hours) [75](hh) | This is not addressed by the respondent | The respondent does not challenge these works. |
| 47 W Street, Town Y | Mowing lawns 4 times (32 hours) [75](ii) | Ms Jindra (23/04/2020) at [203.3] | The respondent admits the applicant mowed the lawns but disputes the number of times and says she paid him for the work. |
| 47 W Street, Town Y | Stripping the roof sheets over the balcony and replacing them (20 hours) [76](kk) | Ms Jindra (23/04/2020) at [203.5] | The respondent confirms that this work was completed but disputes the time it took. |
| 47 W Street, Town Y | Cleaning of gutters to the cottage (8 hours) [76](mm) | Ms Jindra (23/04/2020) at [203.7] | The respondent confirms that this work was completed but disputes the time it took and says that she paid him for the work. |
| 47 W Street, Town Y | Cleaning of pool tile areas (10 hours). | Ms Jindra (23/04/2020) at [203.8] | The respondent confirms that this work was completed but disputes the time it took and says that she paid him for the work. |
Nextly, Counsel for the Applicant set out at 11.1 of the written closing submissions, a detailed schedule identifying the concessions made by the Respondent in relation to the Applicant’s contributions. There are only five rows on the spreadsheet that pertain to the W Street, Town Y property, as follows:
The Court accepts that the five rows of the spreadsheet accurately summarise the nature and extent of the concessions made by the Respondent in relation to the Applicant’s contended contributions to the W Street, Town Y property.
In a separate spreadsheet at 11.6 of the written submissions, Counsel identifies the contributions asserted by the Applicant that were denied by the Respondent. There are three relevant rows relating to W Street, Town Y found at the bottom of page 23, reproduced as follows:
47
W Street, Town Y
Installation of two ceiling fans to the bunk house (5 hours) [75](gg) Ms Jindra (23/04/2020) at [203.2] The respondent denies this. 47
W Street, Town Y
Dismantling the barn guttering (4 hours) [75](jj) Ms Jindra (23/04/2020) at [203.4] The respondent denies this. 47
W Street, Town Y
Repairing leaks on the roof (30 hours) [76](ll) Ms Jindra (23/04/2020) at [203.5] The respondent denies this.
At 11.7 of the Applicant’s Closing Submissions, Counsel correctly identifies that the Respondent denies that other contributions were made by the Applicant and, indeed, provides evidence from other tradesmen who claim to have completed that work. This corroborating evidence is found in the Affidavits of Mr GG, Mr HH, Mr JJ and Mr KK. The Affidavit relevant to W Street, Town Y is that of Mr JJ. The evidence of Mr JJ is important because he was not required for cross-examination, and because of the nature and extent of his involvement in the W Street, Town Y property in 2016 even before the Applicant purchased the property. The Court is satisfied from Mr JJ’s evidence that in respect of the period June to December 2016 the Husband’s contribution to the W Street, Town Y property was limited and that, in fact, he was only there on two or three occasions.
The weight to be given to the Applicant’s evidence about what he described as the works performed at the W Street, Town Y property is significantly reduced by its very poor form, quite apart from the inability to cross-examine him. He says, for example at paragraph 75, that the Wife and he lived at W Street, Town Y for about one and a half months before they separated. He contends at paragraph 3 that separation took place in November 2017. The Court suspects that there might be a typographical error in paragraph 3 of the Affidavit, or the Applicant was plainly wrong about the date of separation. There are two reasons for believing this. Firstly, in the final sentence of paragraph 59 of his Affidavit the Applicant states: “Ms Jindra and I continued to live together as Husband and Wife following this until November 2016.” What the Husband was referring to as “this” was his attempted suicide and admission to a mental facility. These are matters that the Court believes are such significant life events that the Husband is, more likely than not, able to accurately recall the dates. Thus, where at paragraph 75 the Husband asserts that he lived with the Wife at the W Street, Town Y property for one and a half months before separation, having regard to his own assertion at paragraph 71 that the Wife purchased W Street, Town Y in August 2016, he must mean that the separation took place in 2016, and not 2017.
In any event, at paragraph 75 he deposes to the work he allegedly did at W Street, Town Y in this period of one and a half months before separation. He purports to quantify the total time spent at 177 hours, and particularises this in an annexure to his Affidavit. It must follow that the work in question was undertaken during the same period of time that Mr JJ was working on the property. The Court prefers his evidence about only seeing the Husband there at W Street, Town Y on two or three occasions. The Court notes that apart from the Husband asserting that he lived, and presumably made contributions to the W Street, Town Y property for approximately one and a half months before separation, he does not give evidence about precisely when the alleged work was undertaken.
There is a broad consistency between the Wife’s evidence, and Mr JJ’s evidence. Moreover, the Court accepts the Wife’s response to the Husband’s allegations about the work he performed at W Street, Town Y at paragraphs 201-204 of her Trial Affidavit. The Court’s impression of the Wife in cross-examination is that she was not always there to personally observe the length of time that it took the Husband to do some of the work that he claims. It should be noted, however, that this does not detract from the reality that even on the Husband’s own case, the work he did to the W Street, Town Y property was for a limited period of time, and was limited in its scope.
It is instructive to consider Counsel for the Applicant’s written submissions on the evidence of contribution by his (deceased) client. At paragraph 13.1, for example, Counsel candidly, and quite correctly, acknowledges in relation to the Husband’s Trial Affidavit that it is: “...in some respects incapable of being accepted...”. Counsel then makes detailed, but as it turns out irrelevant, submissions about the contributions made by the Husband to the Street E, Suburb F, Street C, Suburb D, and Street J, Suburb K and Street G, Suburb H properties. The reality is that Counsel could not make detailed submissions about the Husband’s contribution to the W Street, Town Y property because, even on the Husband’s evidence, such contributions were limited in scope.
When all of the evidence about contribution is carefully reviewed, and taking into account the very difficult circumstances of this case with the Husband’s evidence being unable to be tested, even if the Court takes the Applicant’s evidence at its highest, his contribution to the items in the Balance Sheet is minimal. It must follow, consistently with the totality of the evidence, that the Respondent Wife’s contribution to the assets not covered by the Financial Agreement, and represented in the Balance Sheet, is overwhelming.
If the Court believed that it was necessary to attribute a numeric percentage to the Husband’s contribution to the W Street, Town Y property it would be less than five per cent. Of course, contribution needs to be assessed having regard to all of the assets on the Balance Sheet, though the reality is that the largest asset is the W Street, Town Y property.
Justice and equity
The remaining issue in this case is whether it is just and equitable to make any order in the circumstances, both by reference to section 79(2), but also by reference to section 79(8)(b).
Counsel for the Respondent submitted that in the circumstances of this case it is not just and equitable to make an order under section 79. Relevantly, Counsel submitted this was because the evidence did not reveal the Applicant as making any direct financial contribution towards the acquisition of relevant property. The evidence supports this submission. Counsel further submitted that the evidence of the Applicant fails to establish on the balance of probabilities that he made any direct financial contribution to the conservation or improvement of any of the relevant property. Again, the evidence is consistent with this submission. Counsel also submitted that any indirect contributions made by the Applicant were minimal, and were wholly overborn by the vastly greater contribution of the Respondent. Again, this submission is consistent with the evidence.
Section 75(2) consideration
Counsel for the Respondent also submitted that the Applicant’s section 75(2) factors were minimal. The submissions about section 75(2) pertaining to the Applicant were minimalistic. At paragraph 14.6 of the written submissions, Counsel for the Applicant merely asserted that the Court must take into account the variety of matters referred to in section 75(2) including the property and financial resources of each of the parties.
The Court notes that the scope for the application of section 75(2) in this case is limited not so much by reference to the Financial Agreement between the parties, but because the Applicant is deceased. Thus, in general terms, any future needs are non-existent. It is true that the income, property and financial resources of the Wife appear to be substantial and that the terms of the Financial Agreement provide a benefit to her. These factors do not, of course, somehow operate to create section 75(2) considerations favouring the Applicant when none exist. The fact that his estate has debts may well be relevant as a consideration under section 75(2)(ha) but there seems to be nothing in the evidence that warrants the Court engineering an outcome wherein the Wife would, as a result of an order under section 79, make a payment to the estate of the Husband so that he can meet debts that were in no way attributable to the Wife or to their marriage.
There are no relevant section 75(2) considerations that warrant an adjustment in the Husband’s favour. Counsel for the Wife’s submission that the Husband’s 75(2) factors “were minimal” actually overstates the fact.
Conclusion
It is not just and equitable to make an order under section 79 in favour of the Applicant. It is also not appropriate to make an order under s.79(8)(b) for the same reasons. No evidence was led, and no submissions made, about the dog Q. The Application should be dismissed. If the Respondent wishes to make an application for costs in the circumstances of this case, any such application should proceed by way of written submissions. If the Respondent wishes to proceed with such an application she should notify Chambers within 7 days, so that appropriate directions can be made. On the evidence before the Court, however, any order for costs would represent a pyrrhic victory for the Respondent and one wonders whether the Court’s time could be better used.
The Court observes and records in these Reasons for Judgment that the Applicant’s case as presented at the Hearing did not pursue a number of arguments that had been foreshadowed in the Applicant’s case outline and in opening submissions to a lesser extent. By way of background the Applicant’s Solicitor’s letter to the Respondent’s Solicitors dated 3 March 2020 provided, pursuant to Orders of this Court, further and better particulars of the basis on which the Applicant sought orders against the Respondent. That letter refers to the relief sought by the Applicant in equity based on a remedial constructive trust based on, in substance, the contributions made by the Applicant to the W Street, Town Y, Street C, Suburb D, Street G, Suburb H, Street J, Suburb K and Street E, Suburb F properties owned by the Respondent. Moreover, the letter in question foreshadowed contention that insofar as the Financial Agreement sought to exclude the Street G, Suburb H and Street J, Suburb K properties from the pool of assets in respect of which adjustment could be made under section 79, the Financial Agreement was unenforceable as:
…the character, nature and value of the property is so radically different, it is not of the kind reasonably contemplated by the parties to be subject to the Financial Agreement.
These interesting arguments were not pursued at the Hearing. No submission was made by Counsel for the Applicant about these contentions, in closing submissions. When Counsel for the Applicant acknowledged in closing submissions that no argument had been made about constructive trusts, he also submitted that this argument was not abandoned. The Court made it very clear to Counsel, with respect, that unless submissions were made the Court would consider that argument abandoned. No submissions were made.
Other than acknowledging that these interesting arguments were not pursued, the Court makes no criticism of Counsel for not pursuing these arguments on the facts of the case before it. Whilst the Court acknowledges that these are interesting arguments, they are interesting arguments for another day, in another case. The Court observes in passing that section 79 is an adequate remedy for any Applicant who can establish the matters set out therein. It is part of a comprehensive scheme. But as this case demonstrates, part VIII is subject to part VIIIA of the Act. Thus, even if the constructive trust had been established on the evidence, one wonders how that would necessarily change the outcome in a case where there is a Financial Agreement which the Court has found to be binding. In this case, in Clause 6 of the Financial Agreement, the Husband acknowledged that the Wife was “beneficially entitled” to the property, an acknowledgement which is inconsistent with the assertion of a constructive trust. Moreover, in Clause 6 the Husband covenanted both that he “made no contribution” to the property in question, and that he would “make no claim” to the property.
Indeed, perhaps the more interesting argument is that clauses in a financial agreement are unenforceable when the “character, nature and value of the property is so radically different...” to that reasonably contemplated by the parties to be subject to their financial agreement. Hypothetically, it is not beyond the realms of possibility that this could occur. It certainly did not occur on the facts of this case. The “character, nature and value of the property” specifically the properties at Street G, Suburb H and Street J, Suburb K, did not change in character or nature simply because of substantial redevelopment which included acquisition of a strip of property and consolidation of the titles. Moreover, it could not be the case that a radically different value of property renders that part of the Financial Agreement referring to it unenforceable. One could imagine, perhaps in a flight of fancy, that if a financial agreement referred to property consisting of a lump of coal at the time of the agreement, but by the time of enforcement of the agreement the lump of coal had changed into a diamond, that the “character, nature and value of the property” was so radically different, that it was not of the kind reasonably contemplated by the parties to be subject to the financial agreement. This argument in extremis perhaps illustrates the hypothetical outer limits of this interesting argument, but there may be less dramatic cases which provide the foundation for the argument. There is no room for the operation of this interesting concept on the facts of this case.
I certify that the preceding one hundred and thirty-one (131) paragraphs are a true copy of the reasons for judgment of Judge Altobelli
Associate:
Date: 15 September 2020
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