Devoto and Devoto & Ors
[2014] FamCA 1156
•12 December 2014
FAMILY COURT OF AUSTRALIA
| DEVOTO & DEVOTO AND ORS | [2014] FamCA 1156 |
| FAMILY LAW – PROPERTY SETTLEMENT IN RELATION TO MARRIAGE – Contributions – Where the husband made a more substantial financial contribution than the wife during the marriage – Where the wife made a more substantial home-maker contribution and cared for the children during the marriage – Where the husband was not involved in the care of the children post separation – Where the wife and the children had the sole occupation of joint property post separation – Where the wife had an equitable interest in a property legally owned by her mother and daughter – Where there was insufficient evidence to quantify the value of the equity – Where the wife’s equity was taken into account as a financial resource – Contributions assessed as equal – Adjustment of 2.5 per cent in favour of the husband pursuant to s75(2). FAMILY LAW – PROPERTY SETTLEMENT IN RELATION TO MARRIAGE – Superannuation – Splitting order made pursuant to contribution assessment and 75(2) adjustment. FAMILY LAW – PROPERTY SETTLEMENT IN RELATION TO MARRIAGE – Family violence – Consideration of principles in Kennon v Kennon (1997) FLC 92-757 –Where the evidence does not support an adjustment being made on account of family violence. |
| Family Law Act 1975 (Cth) ss 75, 79, 90MT, 90ME, Family Law Rules 2004 (Cth) Family Law (Superannuation) Regulations 2001 (Cth) Part 6 |
| Calverley v Green (1984) 155 CLR 242 |
| APPLICANT: | Mr Devoto by his Case Guardians Ms X Devoto and Ms Y Devoto |
| 1st RESPONDENT: | Ms A Devoto |
| 2nd RESPONDENT: | Mrs Sabatini |
| 3rd RESPONDENT: | Ms J Devoto |
| FILE NUMBER: | SYC | 6548 | of | 2011 |
| DATE DELIVERED: | 12 December 2014 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Rees J |
| HEARING DATE: | 28, 29 and 30 October 2014 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Sansom |
| SOLICITOR FOR THE APPLICANT: | Craddock Murray Neumann |
| COUNSEL FOR THE RESPONDENT: | Mr Livingstone |
| SOLICITOR FOR THE RESPONDENT: | L.P. Alidenes & Company |
| COUNSEL FOR THE 2ND RESPONDENT: | Ms Smith |
SOLICITOR FOR THE 2ND RESPONDENT: | CM Lawyers |
| SOLICITOR FOR THE 3RD RESPONDENT: | Shipton & Associates |
Orders
IT IS ORDERED
That within 60 days of the date of these Orders the wife pay to Mr Devoto (“the husband”) the sum of $425,174.
That upon payment to the husband of the sum in Order 1, the husband shall do all acts and things required to transfer to the wife his right title and interest in the property situated at 4 Q Street, Suburb G (“4 Q Street”) being the land in Title Reference ...
That in the event the wife has not paid the whole of the sum in Order 1 herein by the due date, then each of the husband and the wife shall do all things required to sell 4 Q Street and to pay the proceeds of sale in the following manner and priority:
(a) Agent’s commission and legal costs of sale.
(b) The sum of $425,174, together with interest from the due date until the date of payment calculated in accordance with the Family Law Rules 2004 (Cth) to the husband.
(c) The balance to the wife.
That each of the husband and the wife do all things required to pay the sum of $7,072 in the Award Saver Account to M School on account of school fees outstanding and that each of the husband and the wife pay to M School the sum of $613.50.
That pursuant to s 90MT(4) of the Family Law Act 1975 (Cth) (“the Act”), the Court allocates a base amount to the wife in respect of the husband’s superannuation interests in the State Authorities Superannuation Scheme (“SASS”) of $72,455 (“the base amount”).
That in accordance with s 90MT(1)(a) of the Act, whenever a splittable payment within the meaning of s 90ME of the Act becomes payable to or on behalf of the husband from his interest in the SASS, the wife is entitled to be paid (by the Trustee of the SASS) the base amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 (Cth) and there is to be a corresponding reduction in the entitlement the husband would have had but for these Orders.
That the husband, the wife and the Trustee of the SASS do all things and sign all necessary documents to ensure payment to the wife in accordance with Orders 6 and 7 of these Orders.
That the operative time for Orders 6, 7, 8 and 9 of these Orders is twenty eight (28) business days after the service of these Orders on the Trustee of the SASS.
That orders 6 to 9 inclusive are binding on the Trustee of the SASS.
That liberty is reserved to the said Trustee to apply to this Court about the Orders made or the form thereof within the period of twenty eight (28) days after service of a copy of these Orders on the Trustee.
That other than as provided in these Orders, the husband and the wife are each entitled to all assets in his or her possession, and responsible for all liabilities in his or her name, at the date hereof.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Devoto & Devoto and Ors has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 6548 of 2011
| Mr Devoto |
Applicant
And
| Ms A Devoto |
First Respondent
And
| Mrs Sabatini |
Second Respondent
And
| Ms J Devoto |
Third Respondent
REASONS FOR JUDGMENT
This is a matter involving two extended families and their intertwined and intergenerational financial dealings. Three generations of the families have been involved – the husband and the wife, their respective father and mother and their daughter (“J”). Matters are made more complex because both the husband’s father (“Mr Devoto Snr”) and the wife’s mother (“Mrs Sabatini”), who were involved in those financial dealings, are elderly and infirm. Mr Devoto Snr was not well enough to attend for cross-examination.
In addition, the husband himself has suffered a brain injury and these proceedings were conducted on his behalf by his sisters, who are his case guardians.
Mr Devoto (“the husband”) married Ms A Devoto (“the wife”) for the first time in 1989. In 1991, their first child J was born.
The husband and the wife separated in November 1991 and were divorced in July 1993.
They reconciled in 1994 and married for the second time in 1995.
Their second child, X, was born in 1997 and their third child, N, was born in 2001.
They separated for the second time in December 2009.
THE CONDUCT OF THE PROCEEDINGS
The husband relied upon a financial statement and affidavits by himself, his two case guardians, his sister’s partner, his father and his father’s treating doctor.
The wife relied upon an affidavit and a financial statement sworn by her.
Mrs Sabatini relied upon two affidavits and a financial statement sworn by her, and affidavits of three of her children and her treating doctor.
J relied upon two affidavits and a financial statement sworn by her.
The Court was assisted by evidence of a single expert neuropsychologist, Dr R, who examined the husband and reported his assessment, inter alia, of the husband’s general mental functioning level. Dr R was not required for cross-examination.
The Single Expert valuer, Mr B, prepared a valuation report as to the values of 4 Q Street, Suburb G (“Q Street”) and both historical and current valuations of the property at 9 Q Street, Suburb G (“9 Q Street”) which became the focus of much of the proceedings.
At the commencement of the hearing, objections were taken by Counsel for the husband to the material relied upon by the respondents. Much of that material was rejected and in consequence a number of witnesses were not required for cross-examination.
No objections were taken by Counsel for the wife.
Counsel for the respondents, having considered the report of Dr R and of Mr Devoto Snr’s doctor, did not seek to cross-examine either the husband or his father, conceding that neither would be able to give oral evidence. The weight to be ascribed to their evidence is therefore qualified where contradicted by other evidence. However, much is not challenged.
Mrs Sabatini attended for cross-examination with the assistance of an interpreter. She had no recollection of much of the material in her affidavit which had been sworn nine days before. In submissions it was conceded by Counsel for the wife and Mrs Sabatini and the solicitor for J, that “very, very little weight” could be placed on Mrs Sabatini’s evidence.
Thus in relation to the evidence of the husband, his father and Mrs Sabatini, the primary focus was on documentary evidence.
THE HUSBAND’S COMMON LAW CLAIM AND INITIAL CONTRIBUTION
When the husband was about 11 years old he was hit by a car when crossing the road and sustained extensive injuries, including brain injuries. Many of those injuries are permanent.
Mr Devoto Snr commenced proceedings on behalf of the husband and in 1980 an order was made for the payment of $145,603 in damages. Mr Devoto Snr received the money as trustee for the husband.
Using those funds, the husband’s father purchased D Street, Suburb P (“the P property”) for $51,000 and S Street, Suburb C (“the C property”) for $81,500. Both properties were rented and the rent returned to the trust. Mr Devoto Snr paid the outgoings and maintenance from his own funds.
In January 1989, the husband’s father purchased T Street, Suburb V (“the V property”) for $155,500. It is Mr Devoto Snr’s evidence that there were not sufficient funds in the trust’s accounts to pay the whole of the purchase and that he and his wife used their own savings to complete the purchase. Again, the husband’s father paid the outgoings on the V property from his own funds and the rent from the V property was paid into the accounts of the trust. The evidence does not disclose how much of the purchase money came from the trust and how much from the husband’s father.
The husband’s father does not claim to have an interest in the V property by virtue of his contribution of a portion of the purchase price. In his affidavit he says:
My wife and children knew about the properties and I also discussed the properties with the children as they grew older. I did this because of (the husband’s) injuries and to ensure that if something happened to me, his brother or sisters could take over the management and assist (the husband).
Thus when the husband and the wife first married in 1989, the husband was the beneficial owner of three unencumbered properties and the husband’s father caused the rent from the three properties to be paid to the husband.
It is agreed that, for the purposes of these proceedings, the property at Suburb P should not be treated as part of the husband’s initial contribution because, when the P property was eventually sold, the money was not received by the husband. However he did receive the rent from the P property until it was sold in October 1991.
THE FINANCIAL HISTORY
In order to determine the issues, it is necessary to set out the financial history of the marriage.
In January 1986, the wife purchased 9 Q Street in her sole name for $75,000. She borrowed $41,000 from the Commonwealth Bank of Australia (“CBA”). Mrs Sabatini asserts that she provided the balance of the purchase price and that she made the mortgage repayments.
The husband and the wife married and commenced co-habitation in 1989.
When they married, the husband was the beneficial owner of three unencumbered properties and receiving rent from all three.
Both the husband and the wife were working.
They lived together in 9 Q Street. There is a dispute about whether the husband made any contribution to their costs of housing.
In May 1991 the mortgage over 9 Q Street was discharged.
J was born in 1991.
In October 1991 the husband’s father sold the P property for $115,000. He retained the proceeds of sale.
In November 1991 the husband and the wife separated. The wife and J remained living at 9 Q Street.
On 10 February 1992 the wife transferred 9 Q Street to Mrs Sabatini for a stated consideration of $150,000. No money actually changed hands.
The husband and the wife were divorced on 14 July 1993.
In November 1994 they reconciled and resumed their relationship. The husband asserts that he remained living in his house at Suburb V and then at Suburb O and the wife remained living at 9 Q Street.
The wife claims that between the separation and the resumption of the relationship she had saved $60,000.
In December 1994 the husband’s father sold the V property for $222,000. The proceeds of sale were used by the husband to purchase L street, Suburb O (“the O property”) subject to a mortgage of $60,000.
In 1995 they remarried. There is a dispute about whether they then lived together, at all times or from time to time.
On 31 January 1996, the husband’s parents paid out the O property mortgage from their own funds and registered a mortgage of $57,000 to them over the O property.
In October 1996 the husband sold the O property for $283,800. The husband then moved to live with the wife at 9 Q Street.
In June 1997 the husband and the wife purchased 4 Q Street for $253,000 in joint names, using the proceeds from the sale of the O property. The wife claims to have contributed $40,000. The husband says that he does not recall the wife contributing any money to the purchase.
The husband moved into 4 Q Street. The husband asserts that the wife remained living at 9 Q Street. The wife asserts that the parties lived together.
In 1997, X was born.
In late 1997 the husband and the wife borrowed $31,000 by way of mortgage from the CBA and renovated 4 Q Street.
In September 2001 the husband’s father sold the C property for $252,000. The funds were used by the husband to pay off the mortgage on 4 Q Street and $200,000 of the balance was placed in a term deposit with the CBA. The husband deposes that the term deposit was used to pay living expenses and that, by 2006, the fund had reduced to about $80,000.
In 2001, N was born.
In 2006 the husband transferred the term deposit into an account in the joint names of the husband and the wife.
In late 2006 and 2007, Mrs Sabatini gave J funds totalling $233,225. The money came from the sale of property in Italy. The circumstances of the gift are discussed later in these reasons. It is common ground that this was a perfected gift and that Mrs Sabatini retained no interest in the fund.
The money from Mrs Sabatini to J was placed into two term deposits and by late 2009 the funds had grown to $250,856.
In 2009 it was decided that the house on 9 Q Street would be demolished and a duplex built.
In April 2009 the wife, the children and Mrs Sabatini moved into 4 Q Street with the husband while the demolition and re-building of 9 Q Street proceeded.
J says that, in mid-2009, she opened an account in the joint names of the husband and the wife so that they had access to her money in order to pay for various building expenses.
On 29 December 2009 the husband and the wife had a violent argument and separated. The husband left the house and the wife remained living in 4 Q Street with the children and Mrs Sabatini.
On 30 December 2009 the husband transferred $83,645.45 from the joint account to an account in his name. There is a dispute about the ownership of these funds. J asserts that the money was transferred from an account she had opened in the joint names of her parents so that they could issue cheques to pay for building work on the duplex.
Later on 30 December 2009 the wife transferred the money out of the husband’s account, initially into her own account and then to J’s account.
On 26 October 2010 the CBA made an ex gratia payment to the husband of $83,645.45.
Construction of the duplex on 9 Q Street was completed in August 2013.
In December 2013, the plan of subdivision in relation to 9 Q Street was registered and two lots, 9 and 9A, were created from the previous title.
In March 2014, Mrs Sabatini signed a transfer document to transfer her interest in respect of one of the subdivided lots (9 Q Street) to J for consideration of $15,000.
The transfer was lodged for registration in June 2014 and on 8 August 2014 J became the registered proprietor of 9 Q Street. Mrs Sabatini became the registered proprietor of 9A Q Street.
THE PROCEEDINGS
The parties to the proceedings are the husband, the wife, Mrs Sabatini and J.
The Court was assisted by evidence from a Single Expert, Mr B, as to the current value of 4 Q Street and 9 Q Street.
Mr B also prepared historical valuations of 9 Q Street at the date of the first marriage and the date of the second marriage.
Mr R, a Clinical Neuropsychologist and Clinical Psychologist, prepared a report as a Single Expert on the husband’s present capacities, including his ability to participate in the proceedings and his capacity for employment.
THE COMPETING APPLICATIONS
The husband in his application initially sought orders pursuant to s 106B of Family Law Act 1975 (Cth) (“the Act”) to set aside the transfers of 9 Q Street, firstly from the wife to Mrs Sabatini and then from Mrs Sabatini of the newly sub-divided lot to J. He then asked for an order that 4 Q Street be sold and that he receive the whole of the proceeds of sale.
Further, the husband sought an order pursuant to s 90AE(2) in the following terms:
Orders pursuant to s.79 and s.90AE(2) of the Family Law Act 1975 Cth. (as amended) that the interest of the Second respondent in the property at [9A Q Street, Suburb G] New South Wales (being lot 1 and deposited plan …96 – Folio Identifier 1/…96) and the interest of the Third Respondent in [9 Q Street, Suburb G] ( the land contained in Folio 2/…96) be altered such that both of the said properties be transferred by the Second and Third Respondents respectively to the wife to abide appropriate or just and equitable orders being made in these proceedings between the husband and the wife.
The provisions of s 90AE are set out in full below:
FAMILY LAW ACT 1975 - SECT 90AE
Court may make an order under section 79 binding a third party
(1) In proceedings under section 79, the court may make any of the following orders:
(a) an order directed to a creditor of the parties to the marriage to substitute one party for both parties in relation to the debt owed to the creditor;
(b) an order directed to a creditor of one party to a marriage to substitute the other party, or both parties, to the marriage for that party in relation to the debt owed to the creditor;
(c) an order directed to a creditor of the parties to the marriage that the parties be liable for a different proportion of the debt owed to the creditor than the proportion the parties are liable to before the order is made;
(d) an order directed to a director of a company or to a company to register a transfer of shares from one party to the marriage to the other party.
(2) In proceedings under section 79, the court may make any other order that:
(a) directs a third party to do a thing in relation to the property of a party to the marriage; or
(b) alters the rights, liabilities or property interests of a third party in relation to the marriage.
(3) The court may only make an order under subsection (1) or (2) if:
(a) the making of the order is reasonably necessary, or reasonably appropriate and adapted, to effect a division of property between the parties to the marriage; and
(b) if the order concerns a debt of a party to the marriage--it is not foreseeable at the time that the order is made that to make the order would result in the debt not being paid in full; and
(c) the third party has been accorded procedural fairness in relation to the making of the order; and
(d) the court is satisfied that, in all the circumstances, it is just and equitable to make the order; and
(e) the court is satisfied that the order takes into account the matters mentioned in subsection (4).
(4) The matters are as follows:
(a) the taxation effect (if any) of the order on the parties to the marriage;
(b) the taxation effect (if any) of the order on the third party;
(c) the social security effect (if any) of the order on the parties to the marriage;
(d) the third party's administrative costs in relation to the order;
(e) if the order concerns a debt of a party to the marriage--the capacity of a party to the marriage to repay the debt after the order is made;
Note: See paragraph (3)(b) for requirements for making the order in these circumstances.
Example: The capacity of a party to the marriage to repay the debt would be affected by that party's ability to repay the debt without undue hardship.
(f) the economic, legal or other capacity of the third party to comply with the order;
Example: The legal capacity of the third party to comply with the order could be affected by the terms of a trust deed. However, after taking the third party's legal capacity into account, the court may make the order despite the terms of the trust deed. If the court does so, the order will have effect despite those terms (see section 90AC).
(g) if, as a result of the third party being accorded procedural fairness in relation to the making of the order, the third party raises any other matters--those matters;
Note: See paragraph (3)(c) for the requirement to accord procedural fairness to the third party.
(h) any other matter that the court considers relevant.
The exercise of discretion pursuant to s 90AE(2) is subject to the restriction created by s 90AE(3). It was conceded by Counsel for the husband in submissions that it is not necessary for the Court to order the transfer of 9 and 9A Q Street to the wife in order to satisfy the husband’s entitlement. Counsel for the husband submitted that the husband’s entitlement would be satisfied by an order that required the husband and the wife to sell 4 Q Street and to pay to the husband an amount equivalent to no more than 57.5 per cent of the net proceeds of sale.
The Court must also be satisfied that it is just and equitable to make the order. For the reasons set out in the consideration of the nature of the wife’s interest in 9 and 9A Q Street, I have determined that the wife has an equitable interest in those properties. Absent an order pursuant to s 106B of the Act, Mrs Sabatini and J are the legal owners and registered proprietors.
Because of the unsatisfactory nature of the evidence presented by all of the respondents, it is not possible to satisfactorily quantify the equities.
Nothing in the evidence persuades me that it is just and equitable to convert the wife’s equity (indefinite as it is) to a legal interest.
If I am in error in relation to sub-s (3)(d), the provisions of sub-s (3)(a), considered with the concessions made by Counsel for the husband, are sufficient to prevent the making or the order sought in the husband’s case pursuant to s 90AE(2).
Ultimately, in submissions, Counsel for the husband abandoned the s 106B application and conceded that the husband’s entitlement could be satisfied from 4 Q Street.
The wife sought an order that the husband transfer his interest in 4 Q Street to her and that she be allocated $90,000 from his superannuation.
Mrs Sabatini and J ask that all applications by the husband concerning 9 Q Street be dismissed.
THE ISSUES
To unravel this web of transactions it is necessary to look at individual property dealings and determine their legal and equitable effect so as to make findings as to the parties’ respective legal and equitable interests.
At the commencement of the trial, the issues to be determined appeared to be:
· What were the legal and equitable interests in 9 Q Street at the date of purchase?
· What is the consequence, if proven, of Mrs Sabatini’s having paid the mortgage instalments and repaid the principal of 9 Q Street?
· What was the legal and equitable effect of the transfer of 9 Q Street from the wife to Mrs Sabatini in 1992 and then from Mrs Sabatini to J in 2014?
· Who was the owner of the sum of $83,645.45?
· What was the source of the money used to pay for the construction of the duplex on 9 Q Street?
· What was the cost of construction?
· Did the husband contribute $98,000 (or some other amount) to the cost of construction?
· What equities, if any, arose from the construction of the duplex using funds provided by J?
· Did the transfer from the wife to Mrs Sabatini have the effect of defeating the husband’s claim? (This issue was abandoned.)
· If the transfer had the effect of defeating the husband’s claim, should it be set aside? (This issue was abandoned).
· Did the transfer from Mrs Sabatini to J have the effect of defeating the husband’s claim? (This issue was abandoned.)
· If the transfer had the effect of defeating the husband’s claim, should it be set aside? (This issue was abandoned.)
· What was done with the sum of $155,000 being the proceeds of sale of the P property? (It was agreed that only the rent from the P property should be taken into account as a contribution and that the sale proceeds should not be brought to account. It was not necessary to determine this issue.)
· Does the husband’s father owe the trust $155,000? (It was agreed that there was no evidence from which any conclusion could be drawn in relation to this issue.)
· Was the sum of $200,000 from the sale of the C property (or part thereof) used for general living expenses by the husband and the wife?
· What funds were used for the purchase of 4 Q Street?
· What was the involvement of the wife in the management of the husband’s funds? (This issue is considered in the context of contributions.)
· Has the wife disclosed all of her funds?
· When did the husband and the wife live in the same residence?
· The wife’s allegations of family violence.
Ultimately, in submissions, some of those issues were resolved by agreement or abandoned. Consequently, in these reasons, it is not necessary to make findings in relation to each issue.
THE PURCHASE OF 9 Q STREET– LEGAL AND EQUITABLE INTERESTS
In January 1986, when the wife was 21 years old, she purchased 9 Q Street for $75,000. The wife borrowed $41,000 from the CBA by way of mortgage secured over the property. The wife, in her affidavit sworn 29 May 2014, says that Mrs Sabatini contributed the balance of the purchase price and that money was borrowed from her brother for stamp duty and legal fees.
In her affidavit sworn 20 October 2014, Mrs Sabatini said:
My daughter (the wife) agreed to obtain a mortgage from the Commonwealth Bank on my behalf to secure a loan of $41,000 which was applied to the purchase of ([9 Q Street]).
And:
The purchase of ([9 Q Street]) was made in the name of (the wife) for the sole purpose of satisfying the mortgage requirement of the Commonwealth Bank of Australia.
In cross-examination, Mrs Sabatini said that she had no discussions with the wife about the requirements of the bank, that she had no knowledge of the bank’s requirements and that she, herself, had sufficient funds to buy the property.
No weight can be given to the evidence of Mrs Sabatini of the circumstances of the purchase of 9 Q Street.
The wife’s brother, Mr E, deposes to lending Mrs Sabatini $10,000 “to add to her deposit”.
Neither the wife nor Mrs Sabatini gives evidence of any conversations between them at the time of the purchase of 9 Q Street which might indicate their respective intentions in relation to the purchase.
On any version of the evidence, the wife contributed $41,000 to the purchase of 9 Q Street. It is not clear where the balance of the money was sourced as Mrs Sabatini says in her affidavit she had no assets at the time.
If Mrs Sabatini, contrary to her sworn evidence, contributed the balance then it is presumed that a resulting trust arose in her favour as to 45.33 per cent, that being the proportion of her contribution to the purchase price.
However, the presumption of a resulting trust is subject to the exception of the presumption of advancement. In Calverley v Green (1984) 155 CLR 242, Gibbs CJ said at page 246:
Where a person purchases property in the name of another, or in the name of himself and another jointly, the question whether the other person, who provided none of the purchase money, acquires a beneficial interest in the property depends on the intention of the purchaser. However, in such a case, unless there is such a relationship between the purchaser and the other person as gives rise to a presumption of advancement, i.e., a presumption that the purchaser intended to give the other a beneficial interest, it is presumed that the purchaser did not intend the other person to take beneficially.
His Honour further said at page 250:
The presumption should be held to be raised when the relationship between the parties is such that it is more probable than not that a beneficial interest was intended to be conferred, whether or not the purchaser owed the other a legal or moral duty of support.
And at page 251:
However, both the presumption of advancement, and the presumption of a resulting trust, may be rebutted by evidence of the actual intention of the purchaser at the time of the purchase: see Charles Marshall Pty. Ltd. v. Grimsley (1956) 95 CLR 353 at 364-5 … Where there are two purchasers, who have contributed unequal proportions, but have taken the purchase in their joint names, the intentions of both are material. Even if the parties had no common intention, the intentions of each may be proved, for the purpose of proving or negating that one intended to make a gift to the other.
It is settled law that the relationship of parent and child gives rise to the presumption of advancement. Once the presumption has arisen, it can only be rebutted by admissible and cogent evidence.
The evidence to rebut the presumption of advancement is evidence of the actual intention of the parties, in this case, the wife and Mrs Sabatini, at the time of the purchase.
As the Full Court said in Vadisanis & Vadisanis and Anor (2014) FLC 93-593 at p 792,289:
44. The correct time to determine the beneficial interests in a property is at the time of acquisition. This is to be ascertained by evidence of the acts and declarations before or at the time of purchase or so immediately after it as to constitute a part of the transaction (Calverly v Green at 262). However, as was explained in Trustees of Property of Cummins (a bankrupt) v Cummins (2006) 227 CLR 278 at [65]:
… whilst evidence of subsequent statements of intention, not being admissions against interest, are inadmissible, evidence of facts as to subsequent dealings and of surrounding circumstances of the transaction may be received. [footnote omitted]
Absent evidence of the actual intention of the wife and Mrs Sabatini at the time of the purchase, the presumption of advancement applies and the wife held 9 Q Street both legally and beneficially.
Both Counsel for Mrs Sabatini and the solicitor for J conceded that the wife was both the legal and beneficial owner of 9 Q Street at the time of purchase.
9 Q Street has been valued by a Single Expert at the date of the second marriage at between $148,000 and $155,000. For the purpose of these reasons, I propose to adopt the mean figure of $151,500. There is no evidence of the amount of the mortgage at the date of the marriage.
Thus, the wife’s initial contribution is 9 Q Street less its encumbrance which, on any version of the evidence, is significantly less than the value of the husband’s unencumbered properties. The significance of that contribution has to be weighed against the manner in which the wife subsequently dealt with that property.
THE PAYMENT OF THE MORTGAGE BY MRS SABATINI
It is contended that Mrs Sabatini, from her own funds, paid the periodic instalments on the mortgage raised by the wife in relation to 9 Q Street and, at a later time, using funds from the sale of property in Italy and/or from her Italian pension which she allowed to accumulate in Italy, discharged the mortgage.
Neither the husband nor the wife asserts that they made mortgage repayments or contributed to the lump sum payment of the discharge.
However, annexure “J” to the affidavit of Mrs Sabatini sworn 20 October 2014 is a series of certificates for post office savings. On the face of the certificates, each is in the name of Mrs Sabatini and the wife. Thus the wife appears to have been the owner of some of those funds. On the evidence before me, it is not possible to say what the wife’s interest may have been but it would be unsafe to conclude that the funds used to discharge the mortgage came solely from Mrs Sabatini.
In so far as Mrs Sabatini’s funds were used to discharge the mortgage, that is a contribution on the wife’s behalf but the amount of her contribution cannot be quantified.
THE LEGAL AND EQUITABLE INTEREST IN 9 Q STREET AFTER THE TRANSFER TO MRS SABATINI
On 10 February 1992, about two months after the husband and the wife separated, the wife transferred her interest in 9 Q Street to Mrs Sabatini for a stated consideration of $150,000. No money was actually paid.
The transfer took place about two months after the husband and the wife first separated.
It is necessary to determine the legal and equitable interests in 9 Q Street consequent upon the transfer.
It is not disputed that no money changed hands.
Thus the wife, who legally and beneficially owned 9 Q Street, provided the whole of the acquisition cost for Mrs Sabatini and, prima facie, the presumption of resulting trust arises so that Mrs Sabatini held 9 Q Street for the wife, who remained the beneficial owner.
The presumption of advancement does not arise when the advance is from a child to a parent.
Mrs Sabatini bears the onus of rebutting the presumption of a resulting trust in favour of the wife. As has already been discussed, the relevant evidence is the evidence of the intention of the relevant parties, being the wife and Mrs Sabatini, at the date of the transaction.
The wife gives no relevant admissible evidence. Mrs Sabatini says in her affidavit that “In 1992 my daughter and I made arrangements to have the house transferred into my name finally after the home loan was paid”.
That evidence is insufficient to rebut the presumption that a resulting trust arose upon the transfer of 9 Q Street to Mrs Sabatini. The wife, after the transfer to Mrs Sabatini, was the beneficial owner of the property.
That concession was made by both the Counsel for Mrs Sabatini and the solicitor for J in submissions.
However, that is not the end of the issue.
THE EFFECT OF THE CONSTRUCTION OF THE DUPLEX ON 9 Q STREET
In 2009, at a time when the husband and wife were still together after their second marriage (and living at 4 Q Street), Mrs Sabatini and her granddaughter, J, decided to demolish the residence on 9 Q Street and build a duplex residence. They intended that Mrs Sabatini would live in one of the residences and that J would either live in the other or rent it out. The work was completed.
There is a dispute about the source of the funds used to pay for the demolition of the house and the construction of the two new residences. There is no evidence about the amount which was spent.
J was the person primarily responsible for the management of funds and the payment of accounts in relation to the construction. In cross-examination, she said that she had “some records” but had misplaced others. She said that some of the records were with her solicitor and some were “at home”. She believed that some of the records that she had may have been attached to the affidavit of Mrs Sabatini. Annexure “L” of Mrs Sabatini’s affidavit is comprised of 66 pages of tax invoices and cheque butts relating to the construction works. Whilst it is difficult to ascertain which amounts have been paid and which are still outstanding, doing the best I can, the total amount of those invoices and cheques comes to approximately $174,000.
It is not possible to assess whether any of those invoices was paid using funds from any particular source. No attempt has been made to provide evidence which might show how, and from what money, particular expenses were paid. Thus it is not possible to know whether any part of the expenses referred to by Mrs Sabatini were paid from funds provided by the husband and the wife.
J said in cross-examination that there was a folder into which all the relevant invoices and the like were placed. The folder was in her possession. She had not carried any analysis of the total cost of the construction. When asked to estimate the cost, she estimated $600,000, despite the fact that such a figure had never been previously mentioned and there was no evidence of any such sum having been available to her. When asked whether she had done any calculation of the costs of construction, she said that she had not.
It was particularly and peculiarly within her power to provide evidence of the costs of the construction of the duplex. She did not.
Mr B was not asked to value the improvement to the property consequent upon the construction of the duplex.
The wife’s brothers Mr AE and Mr E, and the wife’s brother-in-law, Mr DE, who all had experience in construction, supervised and assisted with the work. They each lent money for the work but each was repaid by J. There is no evidence of the value of the work they each performed. That evidence could have been available.
The general rule is that if a third party expends money on improving the property of another, prima facie they do not acquire a proprietary interest in that property: Pettit v Pettit [1970] AC 777.
However, there are exceptions to this general rule. Equities may arise in favour of a party who contributed to improvements on the property of another where it would be unconscionable for the party with whom the ownership of the property is vested not to recognise the interest of the contributing party: Muschinski v. Dodds (1985) 160 C.L.R. 583, Giumelli v Giumelli (1999) 196 CLR 101, Morris v Morris [1982] 1 NSWLR 61, Cierpiatka & Cierpiatka and Cierpiatka (1999) FLC 92-864.
In the present case, although the wife remained the beneficial owner of the whole of 9 Q Street at the time of the transfer to Mrs Sabatini, Mrs Sabatini and J then expended their own moneys on improving the property in circumstances where it was not intended, by either the wife or by Mrs Sabatini and J, that the wife should receive the benefit of these improvements. As outlined earlier, it was anticipated that Mrs Sabatini and J would be the legal owners of the subdivided lots and would live in (or alternatively, in J’s case, receive the rents from) their respective properties.
Accordingly, the wife’s beneficial interest in 9 and 9A Q Street is subject to the equities of Mrs Sabatini and J arising from their contributions toward the improvements.
The authorities suggest that, according to the circumstances, the equity could be for the value of the improvements, for the amount by which the improvements increased the value of the property or for the amount which was actually spent.
In the present case, there is no evidence of the value of the improvements or of the amount by which the value of the property was increased by reason of the improvements. That evidence could have been available. If Mrs Sabatini and J contended that either approach was appropriate, then it was incumbent upon them to bring the evidence upon which such a finding could have been made. They did not.
The only evidence available to the Court is the evidence of J about the money she and Mrs Sabatini spent and the evidence of the amount which was contributed towards the construction costs from the joint account of the husband and the wife.
J gave evidence that, from the money given to her by Mrs Sabatini, she contributed $233,689.08. In addition she spent about $50 per week from her earnings which she estimated totalled $7,800 and she spent the First Home Owners’ Grant of $15,000. Thus J spent $256,489.
J, in cross-examination, said that in addition to the money she used, Mrs Sabatini spent about $40,000 of her own money on the construction.
A further amount was provided from the joint funds of the husband and the wife. Although there was some dispute about the exact amount, it is safe to conclude that the amount is best quantified by adding up the withdrawals from the relevant Netbank account which (excepting a withdrawal to pay J’s tertiary education fees) total $83,258.
Mrs Sabatini’s sons gave evidence of substantial work done in the construction by them, for which they did not expect or receive, payment.
The only finding that might be made is that, in relation to 9 Q Street prior to the subdivision, the equity of J was $256,489 and the equity of Mrs Sabatini was $40,000. However, while it is safe to conclude that this represents the minimum of the equity of Mrs Sabatini and J, there is no basis to conclude that, had their case been properly presented, they could not have established that their equity was substantially more.
The evidence does not permit findings which would safely quantify the equity of the wife in the property prior to its subdivision.
9 Q Street was subdivided into two lots – 9 and 9A. This occurred at a time when the husband’s application to set aside the transfer of 9 Q Street from the wife to Mrs Sabatini was on foot but had not been determined. Mrs Sabatini is now the registered proprietor of 9A Q Street and J is the registered proprietor of 9 Q Street. The subdivision cannot affect the fact that the wife was the equitable owner of 9 Q Street or the equities of Mrs Sabatini and J respectively in that property.
Mrs Sabatini and J take their interests in 9 and 9A subject to the equities which existed prior to the subdivision.
The combined value of 9 and 9A is $1,255,000. Because of the manner in which the evidence was presented, it is not possible to give a value to the wife’s equitable interest.
There is no application before the Court which would result in the wife’s receiving the benefit of her equity.
The question that arises, in the peculiar circumstances of this case, is how best to recognise the value of the wife’s equity within the pool of matrimonial assets in circumstances where none of the parties seek an order that 9 Q Street and/or 9A Q Street be sold, where the wife does not want the title of either lot to be transferred to her, where the husband has withdrawn his 106B application to set aside the transfers, and where 9A is the home of Mrs Sabatini, who is elderly and infirm.
However, the wife’s substantial equity in these properties, and the husband’s contributions to this equity, must be accounted for in the matrimonial property division.
The only safe course available, in the circumstances of this case, is to treat the wife’s equity as a financial resource of unknown value.
I will assess the husband’s contributions toward this equity later in these reasons.
THE BALANCE SHEET
Other than in relation to 9 and 9A Q Street, there is no disagreement as to the remaining non-superannuation assets and liabilities of the husband and the wife. The assets and liabilities are:
ASSETS
4 Q Street, Suburb G (joint) $800,000
School fees account (joint) $ 7,072
Husband’s car $ 400
Husband’s bank account $ 862
Husband’s contents $ 2,500
Funds held by husband’s sister $ 3,165
Wife’s ANZ account $ 123
Wife’s car$ 15,000
Wife’s Contents $ 1,000
TOTAL$830,122
LIABILITIES
School fees outstanding $ 8,299
NET ASSETS (NON SUPERANNUATION) $821,823
There is a disagreement as to the value to be ascribed to one of the husband’s superannuation entitlements. Documents produced by State Super show that the value of the interest at 30 June 2014 is $144,755.82. The value at eligible retirement age, 58 years, is $178,641.48. The wife contends for the higher figure.
The husband was born in 1961 and is now 53 years of age. No basis was suggested by Counsel for the wife to justify including his interest in that fund at the value which will be achieved in five years. The interest will be included as at 30 June 2014.
The husband also has superannuation entitlements in the Hesta superannuation fund with a value of $25,974 as at 30 June 2014.
The husband has superannuation interests totalling $170,730 and the wife has superannuation interests of $16,460.
The net assets of the husband and the wife are $1,009,013.
The wife has the financial resource of her equity in 9 and 9A Q Street, Suburb G. The value of the two properties is $1,255,000. Whatever may be the value of the wife’s equity, it is a significant resource having regard to the size of the net asset pool.
SECTION 79(2)
The husband and the wife have separated and no longer jointly use their accumulated assets. They both ask the Court to make a distribution between them and in these circumstances it is just and equitable to do so.
FAMILY VIOLENCE
The wife asserts that her relationship with the husband was violent, that they argued constantly and that the husband threw things at her and hit her. In November 1991 the wife says there was an incident where the husband and the wife argued and the husband picked up a broom and started to hit her over the head and back and legs shouting at her and calling her offensive names. She says that on that occasion he punched her with a closed fist. The husband and the wife separated after that incident.
The wife gives evidence of an incident in 2007 where the husband slapped J across the face with an open hand. She refers to an incident in 2009 on N’s birthday when the husband flew into a rage and hit her across the face in front of the children. She gives evidence of the incident on the day the husband and the wife finally separated on 29 December 2009 when, on her version, the husband called her offensive names, hit her with his fist on her head and face and pulled her hair. In the course of the same incident the wife says that the husband kicked in the tail lights of her car and damaged the panels on the car.
The wife relies on the decision in Kennon v Kennon (1997) FLC 92-757 where the Full Court said at pp 84,294 – 84,295:
Put shortly, our view is that where there is a course of violent conduct by one party towards the other during the marriage which is demonstrated to have had a significant adverse impact upon that party's contributions to the marriage, or, put the other way, to have made his or her contributions significantly more arduous than they ought to have been, that is a fact which a trial judge is entitled to take into account in assessing the parties' respective contributions within s 79. We prefer this approach to the concept of ``negative contributions'' which is sometimes referred to in this discussion...
…However, it is important to consider the ``floodgates'' argument. That is, these principles, which should only apply to exceptional cases, may become common coinage in property cases and be used inappropriately as tactical weapons or for personal attacks and so return this Court to fault and misconduct in property matters ¾ a circumstance which proved so debilitating in the past. In addition, there is the risk of substantial additional time and cost.
However, in our view, s 79 should encompass the exceptional cases which we described above. It would not be appropriate to exclude them as a matter of policy because of this risk. It is a matter of commonsense for the lawyers involved and, where that may not be sufficient, it is a matter for a firm hand by the Court at an early stage when a case appears to raise those issues.
It is essential to bear in mind the relatively narrow band of cases to which these considerations apply. To be relevant, it would be necessary to show that the conduct occurred during the course of the marriage and had a discernible impact upon the contributions of the other party. It is not directed to conduct which does not have that effect and of necessity it does not encompass (as in Ferguson) conduct related to the breakdown of the marriage (basically because it would not have had a sufficient duration for this impact to be relevant to contributions). Similarly, in Killick v Killick (1997) 21 Fam LR 331 at 341, in proceedings under the De Facto Relationship Act 1984 (N.S.W.), the Court of Appeal rejected the argument for the male partner that incidents of infidelity during the relationship by the female partner should be taken into account as diminishing her contribution as homemaker or parent.
The husband disputes the wife’s allegations of violence and contends that there was only one incident which occurred and that was on 29 December 2009 being the day when the husband and the wife separated.
It is the husband’s evidence that, on that day, there was an argument between them when the wife hit him and yelled at him calling him offensive names. The husband says that on that occasion he retaliated and called the wife offensive names and that she then punched and hit him. The husband says that one of the children intervened and he left the house but was followed by the wife who threw a brick at him which hit him in the throat, chin and teeth, causing him to bleed.
There is some corroboration of the husband’s version of that event in the affidavit of his sister, who gave unchallenged evidence that, on 29 December 2009, the husband came to her house with blood and scratches on his face and throat and recounted to her the events which had just occurred, in the same terms as the husband set out in his affidavit.
There is some corroboration for the wife’s complaints in the notes produced by the Z Local Health District (“ZLHD”) where the husband attended the brain injury rehabilitation unit. In 2004 when the husband and the wife were seen together for the initial interview at the unit there was a note “Violence towards family, wife and mother-in-law. Mostly verbal but (unreadable) physical. Not towards children”.
In an interview on 8 October 2004 the husband stated that he had an angry outburst once a week, mainly with his wife and older daughter. He stated that he had struck his wife but only after she had hit him first.
In an interview on 21 January 2005 the husband reported that he had become angry at the wife and yelled at her, knocking a box of soap powder out of her hand.
The wife’s evidence, taken at its highest, does not come within that exceptional category of cases where a course of violent conduct has been established.
Taking into account all of the evidence in relation to violence it is likely that there was violence by the husband towards the wife on occasions and that there was violence by the wife towards the husband on occasions. Sometimes the events included mutual violence.
In those circumstances it is not appropriate to take the violence into account and no adjustment will be made in relation to contribution having regard to that evidence.
THE PROCEEDS OF SALE OF THE O PROPERTY
When the husband purchased the O property he did so subject to a mortgage of $60,000 to the bank. Shortly after the purchase, the husband’s parents paid out the mortgage using their own funds and caused a mortgage in the sum of $57,000 to be registered over the O property in their favour. That mortgage remained on the title until the O property was sold in October 1996 for $283,800.
The husband’s father, in his affidavit says “(The husband) did not repay to my wife and I the sum secured by the mortgage over [the O property]. It remains outstanding.”
It is safe to assume on the basis of that evidence, there being no evidence to the contrary, that the husband had available to him the whole of the proceeds of the O property.
THE PURCHASE OF 4 Q STREET SUBURB G
In June 1997 the husband and the wife purchased 4 Q Street for $253,000. It was the husband’s case that the whole of the purchase price for 4 Q Street was sourced from the sale of the O property. The wife asserts that she provided $40,000 from her own savings towards the purchase price and that the only funds which were provided by the husband came from a term deposit of $195,910.
Dealing firstly with the wife’s assertion that she had savings of $60,000, when she remarried the husband in November 1995. The wife does not assert that she had any savings at the time of the first separation in November 1991. The wife provided no documents to substantiate her assertion of significant savings.
At the time of the first separation the wife was at home caring for J. She returned to work full time in about 1993. In her affidavit she deposes that by the time of the second marriage in 1995 she was earning approximately $630 per week. I assume that amount is net of tax.
For the wife to have saved $60,000 between 1993 and 1995 (assuming she had three full years to do so) she would have needed to save, on average, $385 a week out of earnings of $630. It is highly unlikely that she would have been able to do so and I do not accept that the wife had savings of $60,000.
It follows that I do not accept the evidence of the wife that she paid $23,000 from those savings towards the renovation of 4 Q Street.
There is no assertion on the part of the wife that the husband dealt with the balance of the proceeds of sale of the O property in any particular way. She does not admit that the proceeds were applied to the purchase of 4 Q Street but gives no other explanation.
The most likely source of funds for the purchase of 4 Q Street was the net proceeds of sale of the O property as the husband asserts.
THE SALE OF THE C PROPERTY
In September 2001, the C property was sold for $252,000 and the husband received the net proceeds of sale after the payment of commission and costs. The husband used that money to pay off the small mortgage over 4 Q Street which had been taken out to fund renovations and the balance of $200,000 was deposited in a term deposit with the CBA. Thus by 2001, the husband had realised his pre-marriage properties and contributed to the marriage $283,800 from the sale of the O property and $252,000 from the sale of the C property (less selling costs).
Whilst there was initially a dispute about the use of the money from the sale of the C property it was ultimately conceded by the wife that the money was placed in a term deposit in September 2002 maturing in May 2004. When the deposit matured $165,000 was reinvested and that account was closed in December 2006 by which time the balance was $79,930.
There is no evidence about the manner in which the money which was not reinvested was used and, absent evidence, it is to be assumed that the money was used for the benefit of the family.
On 6 December 2006, $80,000 was placed in a term deposit and by 27 November 2008, with interest, that amount had increased to $89,443. On 27 November 2008, $89,223 was placed in a term deposit in joint names which matured on 11 May 2009 having increased with interest to $91,802. Those funds were invested in a joint account in the names of the husband and the wife in the CBA.
Initially in cross-examination the wife denied any knowledge of that transaction. The wife was shown the documents which established a Streamline account ending in the numbers 298 in the names of the husband and the wife. The document was clearly signed by the wife and the husband and only one signature was required to operate the account.
Either at the same time or shortly thereafter the husband and the wife opened a Netbank Saver account ending in the number 300. Again, the account was in their joint names, the documents were signed by both of them and only one signature was required to operate the account. The wife gave evidence that the Netbank account is an online account that attracts higher interest than the Streamline account.
Only the Streamline account had a cheque facility attached. The wife gave evidence that the husband and the wife transferred money from the Netbank account into the streamline account to cover cheques which were written. Ultimately, the wife conceded, having been shown the cheques, that cheques totalling $98,483.52 were written until such time as the Netbank account was not only exhausted but overdrawn. Many of the cheques were written and signed by the wife. Ultimately she conceded that those funds were used, with the exception of an amount of $10,400 paid on J’s behalf for tuition, for the construction of the duplex.
When dishonoured cheques were taken into account it was established that he sum of $83,258 sourced from the sale of the C property, was applied towards the construction costs of the duplex at 9 Q Street.
TRANSACTIONS ON 29 AND 30 DECEMBER 2009
J deposes that in 2007, when she was 16 years old, Mrs Sabatini gave her a large sum of money which she described as an early inheritance for J, X and N. By September 2009 the money was in two term deposits, one for $176,500 and one for $74,356. J deposes that she rolled the deposits over as they matured.
What happened to the money in late 2009 is the subject of some controversy.
J deposes that, in mid-2009, she went to the bank to set up two accounts. One account was to be in her name to receive money from the term deposits. The second account was to be in the names of the husband and the wife so that J could transfer money into that account and either the husband or the wife could write cheques to pay for construction costs for 9 Q Street.
J deposes that the accounts were inadvertently set up in the names of the husband and the wife only and that on 30 December 2009 she was told that the husband had transferred $83,000 from the account, that being her money.
She annexes to her affidavit a statement that, she says, relates to the account she caused to be opened. The statement refers to the Netbank account ending in 300, which was opened by the husband and the wife on 11 May 2009, with the deposit of funds from the Term Deposit which had their origins in the sale of the C property.
The husband and the wife signed the documents to set up the account and I do not accept the evidence of J that she caused the account to be set up or, that because of bank error, the account was mistakenly set up in the joint names of the husband and the wife.
No deposits were made into the account by J until November 2009 when the proceeds of Term Deposits held by her, totalling $124,552 were deposited into the Netbank 300 account. By this time, the money initially deposited into the account by the husband and the wife had been spent, primarily on the construction of the duplex on 9 Q Street.
The husband and the wife separated after an argument on 29 December 2009.
The husband deposes that on 30 December 2009, using internet banking and with the assistance of his sister, he transferred $83,645.45 which were the remaining funds from the sale of the properties owned by the trust and his wages into his personal account. The evidence now establishes that the husband was mistaken as to the source of the funds.
On 31 December 2009, the husband found that there had been an internet transaction on the evening of 30 December 2009 and $83,645.45 was transferred out of his account, leaving him with no money. That money was transferred out of the husband’s account by the wife into her own account and then into an account in the name of J.
The husband complained to the bank and on 26 October 2010 the bank made an ex gratia payment to him of $83,645.45.
He retained the ex gratia payment and the funds were held by his sister who has used them, in part, to pay rent, living expenses and legal fees being Counsel’s fees and disbursements. $11,691 has been applied to those fees. $3,165 remains. The husband has paid, from that money, for the Single Experts’ reports and asks the Court to order that the wife reimburse him for half of those expenses. The money cannot be categorised as joint funds because all of the joint funds had been spent. It is safer to categorise the ex gratia payment as a windfall. Since the Single Experts were paid from the windfall, it is not appropriate to order that the wife reimburse the husband.
THE EXTENT OF MUTUAL RESIDENCE
Curiously, the husband and the wife each advocated a position in relation to their mutual residence which was against interest.
The husband’s case was that, after the reconciliation in 1994, he lived at the V property and then at the O property and the wife lived at 9 Q Street. The wife and children visited him but did not stay overnight. This situation continued after the purchase of and renovation of 4 Q Street. It was not until 9 Q Street was demolished in about April 2009 that the wife and the children and Mrs Sabatini moved into 4 Q Street.
Members of the husband’s family corroborate his version of the residential arrangements.
Both X and N were born during the period when the husband says that he and the wife lived in different residences.
There is also some corroboration in the records of the CBA when accounts were opened in 2009 and the wife’s address is noted as 9 Q Street.
The wife’s case is that the husband and the wife always lived together after they reconciled, firstly in the V property, then the O property and then in 4 Q Street. J gives evidence that she lived in 4 Q Street with her parents from the time it was purchased. J was eight years old when 4 Q Street was purchased.
There is no evidence that allows a finding to be made on this issue. However, both the husband and the wife regarded their relationship to be on foot from November 1994, when they reconciled, until December 2009, when they separated. The fact that they may have lived in different residences (although from 1997 in the same street) is not relevant to the manner in which they used their joint finances.
The husband worked full time. The wife cared for the children. His was the main source of income and his income was used to support the whole family. Nothing turns on their living arrangements.
HAS THE WIFE DISCLOSED ALL OF HER FUNDS?
The wife was cross-examined about deposits and withdrawals into and out of her Award Saver account ending with the numbers 620. In relation to a number of substantial deposits she gave evidence that the funds were deposits by her cousin in Italy who transferred money owned by Mrs Sabatini in Italy.
Large withdrawals were said to be the payment of Mrs Sabatini’s funds to her account. There were no documents to corroborate any of that evidence.
With the exception of the deposit into the wife’s account of $83,647.45 on 30 December 2009 and the withdrawal of $84,450 on the same day, the transactions upon which she was cross-examined occurred in earlier years. By December 2006 the account totalled some $67,000 and all but $500 was withdrawn.
Mrs Sabatini gave oral evidence that all money sent to her from Italy was sent to her own account. However, as Counsels for the wife and Mrs Sabatini agreed “very, very little weight” can be placed on Mrs Sabatini’s evidence.
Whilst the possibility of the wife’s having an undisclosed source of funds between 2004 and 2006 is not fanciful, noting the Italian post office savings certificates bearing her name, it has not been established, on the balance of probabilities, that the wife’s version of those transactions cannot be accepted.
THE HUSBAND’S GAMBLING
The wife asserts that the husband wasted significant amounts of money gambling on poker machines.
The wife deposes of an incident in 2008 when the husband won $2,000 on poker machines and refused to leave the hotel and come home with her.
There is some evidence of the husband’s gambling in the notes produced by ZLHD. On 28 July 2005 the notes record a discussion with the husband about gambling. The wife was not present. The husband told the counsellor that he gambled after he and the wife had an argument and that he was, at that time, spending between $60 and $100 on three occasions each week.
On 1 December 2005 the husband told the counsellor that there had been one episode of gambling. The notes are difficult to read. The sum of $20 is recorded but it is not possible to tell in what context.
The wife relies on banking records of an account ending with the numbers 892 in the name of the husband between 1 January 2005 and the second separation. This is the account to which she had access to by a card and from which amounts were paid for periodic expenses such as rates, insurance, Foxtel, school fees and the like. The husband’s wages were paid into this account. Counsel for the wife pointed to a number of withdrawals from the G Hotel which the wife said were not made by her.
Between January 2005 and January 2007 the husband withdrew $32,230 from the cash machine at the G Hotel. On some occasions, within that period, there were multiple withdrawals on one day. After January 2007, there were very few, if any, such withdrawals.
The wife was aware that on one occasion, the husband won $2,000. It cannot be assumed that whatever money he withdrew was lost. Neither can it be assumed that whatever money the husband withdrew at the G Hotel was used in poker machines. The husband deposed that he gave the wife cash to pay household expenses.
The husband denies that he had a gambling problem. He admitted that he played poker machines, but not excessively. He recalled winning a jackpot and then being assaulted by a man who had been playing the machine before him.
The evidence does not allow a conclusion that the husband wasted funds by gambling or that the husband spent a particular amount on poker machines.
CONTRIBUTIONS
At the commencement of the relationship the husband contributed the unencumbered properties at Suburb C and Suburb V. He also contributed the rent which was received by him from those two properties and the P property.
The wife contributed the property at 9 Q Street valued at $151,500 subject to a mortgage. The nature of this contribution and of the husband’s later contributions toward the improvements on the property will be discussed later in these reasons as part of the assessment of contributions. However, having regard to the findings I have made in relation to her equity in that property and the decision to treat that equity as a financial resource for the purpose of this decision, it is not appropriate to take her initial contribution of 9 Q Street into account. It was transferred by the wife to Mrs Sabatini without consideration. That was the submission of Counsel for the wife. I prefer the approach urged on the Court by Counsel for the wife who submitted that the husband’s initial contributions vastly exceeded those of the wife.
The husband and the wife and the children had the benefit of residing in 9 Q Street.
The husband and the wife during the course of the marriage made further contributions and further contributions were also made on their behalf both by Mrs Sabatini and by the husband’s father and mother.
In December 1994 the V property was sold and the husband received $222,000 from the proceeds of sale. The husband used this money to purchase the property at Suburb O. Ultimately the O property was sold for $283,800.
On 20 November 1997, the husband signed a document entitled “Authority to operate” with the CBA giving the wife authority to operate on his bank accounts. That authority remained in place until it was revoked on 31 December 2009. In cross-examination the wife conceded that, from the husband’s 892 bank account, into which his wages were paid, and into which his rent was paid, amounts were withdrawn by periodic debit for the payment of recurring expenses. She also conceded that she had a card which allowed her to operate freely on the account. An examination of the statements shows money being spent at shopping centres and chain stores. I reject the evidence of the wife that the husband’s contribution from his earnings was no more than $100 to $150 per week.
There is no evidence that the husband’s wages and income by way of rent was applied other than for the benefit of the family.
Both the husband and the wife were employed when they first married. The husband worked throughout the marriage and contributed his income. The wife did not work after J was born and resumed her work in 1993. Mrs Sabatini cared for J after the wife returned to work. She stopped working full time when X was born in 1997. After N was born in late 2000 she did some part time work but that work ceased in April 2003 when she became her mother’s full time carer.
The husband and the wife set up an account for the payment of the children’s school fees into which $100 per fortnight was paid from the husband’s wages. When they separated the account had a balance of about $7,000. No funds have been withdrawn from the account since separation and the balance is now $7,072.
Until separation the husband’s financial contributions, having regard to his initial financial contributions, substantially exceeded those of the wife.
After separation in December 2009, the husband made little direct financial contribution although the wife and the children had the sole occupation of 4 Q Street which, by that time, was the only substantial asset of the husband and the wife.
After separation, the husband had little significant contact with the children. The current parenting orders do not provide for face to face time with the children. From December 2009 until the hearing, it was the wife who was solely responsible for their parenting and for their financial support.
In December 2010 the husband lost his job and did not find employment until February 2012.
The husband did not pay child support until May 2012. He currently pays in accordance with an assessment referable to an income of $586 gross per week.
At the time when the wife was responsible for the children after separation, the husband was contributing to his superannuation. He joined the State Authorities Superannuation Scheme fund in 1982, seven years before the marriage, and continued to contribute until December 2010. That fund has a current value of $144,756. He is also a member of the HESTA fund which he joined in April 1998 and to which he continues to make contributions. That fund has a current value of $25,974. The husband’s contributions to superannuation after the second separation are not significant.
Taking all of those matters into account, I consider that contributions to the asset pool should be assessed as equal.
The contribution made by the parties, from the sale proceeds of the C property, to the construction of the duplex, will be recognised in the consideration of the s75(2) adjustment.
SECTION 75(2)
Each party seeks an adjustment in his or her favour. The husband seeks a small adjustment of 2-2.5 per cent.
The wife seeks a substantial adjustment of 10 per cent.
The husband earns a modest income such that he also receives a Centrelink payment. He worked throughout the marriage, despite his disabilities, at times working in more than one job at a time. There is no evidence that he is capable of earning more than he does. He works as a personal carer. He is 52 years old.
The wife currently earns an income from Centrelink as Mrs Sabatini’s carer. It was conceded on her behalf that, if she were not responsible for the care for Mrs Sabatini, she could earn an income as a carer. Mrs Sabatini is 92 years old.
The wife will have the responsibility for the care of the younger children. X is 17 and will be 18 in July 2015. N is almost 14.
Both the husband and the wife asked for superannuation to be split so each will have a modest entitlement to superannuation. Both appeared to concede that superannuation should be apportioned in the same proportions as the other assets.
The most significant factor to be taken into account is the wife’s equity in 9 and 9A Q Street. The parties made a contribution to that equity in that they contributed the sum of $83,258 (from the sale of the C property) to the construction of the duplex. That sum is significant. The identifiable cost of the construction of the duplex was $379,747. The parties contributed 22 per cent of the identifiable cost of the construction.
While the wife may choose not to take any step to realise some or all of her equity, her entitlement cannot be ignored.
The wife’s equity in 9 and 9A Q Street requires that an adjustment be made in favour of the husband.
Taking into account the wife’s responsibilities for X and N, the adjustment should be 2.5 per cent in the husband’s favour.
Thus the husband will receive 52.5 per cent of the net assets (excluding the school fee account for the reasons set out below).
The wife asks for an opportunity to buy out the husband’s entitlement and so to retain 4 Q Street. She should have that opportunity.
The assets (excluding the school fee account and the superannuation) total $823,050. The husband has assets worth $6,927. He is entitled to $432,101. Therefore the wife must pay him $425,174.
The superannuation will be split so that the husband retains 52.5 per cent of the present combined entitlement. The combined entitlement of the husband and the wife is $187,190. The wife is entitled to 47.5 per cent of this entitlement, or $88,915. The wife’s superannuation entitlements are currently $16,460. Therefore, the wife will be entitled to receive the sum of $72,455 from the husband’s superannuation.
SCHOOL FEES
Both the husband and the wife agreed that it was appropriate for the children to be educated in the Catholic school system. The fees are modest. There are current arrears of $8,299 and the school fee account contains $7,072 which should be applied to those outstanding fees, leaving $1,227 outstanding. Each of the husband and the wife should pay half of that amount.
I certify that the preceding two hundred and forty-eight (248) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 12 December 2014.
Associate:
Date: 12 December 2014
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
Legal Concepts
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Remedies
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