Dlaric & Dlaric and Anor
[2009] FamCA 526
•23 June 2009
FAMILY COURT OF AUSTRALIA
| DLARIC & DLARIC AND ANOR | [2009] FamCA 526 |
| FAMILY LAW – PROPERTY – Settlement in relation to marriage – third party |
| Family Law Act 1975 (Cth) ss 75(2), 79 |
| Lee Steere and Lee Steere (1985) FLC 91-626 Ferraro and Ferraro (1993) FLC 92-335 Hickey and Hickey (2003) FLC 93-143; 30 Fam LR 355 Coghlan and Coghlan (2005) FLC 93-220; 32 Fam LR 414 Clauson and Clauson (1995) FLC 92-595; 18 Fam LR 693 |
| APPLICANT: | Mr Dlaric |
| RESPONDENT: | Ms Dlaric |
| 2ND RESPONDENT: | Mr K |
| FILE NUMBER: | SYC | 7577 | of | 2007 |
| DATE DELIVERED ORIGINALLY: RE-DELIVERED PURSUANT TO THE SLIP RULE: | 23 June 2009
|
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Johnston JR |
| HEARING DATE: | 26 & 27 February 2009 |
REPRESENTATION:
| COUNSEL FOR THE APPLICANT: | Ms Carr |
| SOLICITOR FOR THE APPLICANT: | G L Jankov, Solicitor |
| COUNSEL FOR THE RESPONDENT: | Ms Stenmark |
| SOLICITOR FOR THE RESPONDENT: | Noel Brown & Associates |
| COUNSEL FOR THE 2ND RESPONDENT: | Mr Berry |
| SOLICITOR FOR THE 2ND RESPONDENT: | Gary Cleary & Associates |
Orders
That the orders made on 23 June 2009 are discharged pursuant to the Slip Rule and replaced by the following.
That within 42 days the wife pay to the husband the sum of $195 473.
That upon the wife’s compliance with the above order the husband shall forthwith do all things and sign all documents necessary to transfer to the wife his interest in the property known as B, New South Wales being the land described in Folio identifier … (“B property”).
That in the event that the wife fails to comply with order 2 above the husband and wife shall forthwith do all things and sign all documents necessary to cause the B property to be sold and the sale proceeds are to be paid as follows:
(i)the costs, expenses and commission of the real estate agent or agents on the sale of the property;
(ii)the costs fees and disbursements of the lawyers acting for the parties on the sale of the property;
(iii) any adjustments of water and council rates;
(iv)54.298 percent of the balance to the husband and the remainder to the wife.
That the wife retain the furniture and furnishings at the B property.
That otherwise each party be separately entitled to any other personalty, including bank accounts, furniture, furnishings, investments, shares, proceeds of superannuation policies or other personal or real property in that party’s possession or control.
That in the event that either party refuses or neglects to execute any deed or instrument necessary to give effect to these orders, then a Registrar of the Family Court of Australia, Sydney Registry, be appointed pursuant to s.106A of the Family Law Act to execute the deed or instrument in the name of that party and to do all acts and things necessary to give validity and operation to the deed or instrument and that the defaulting party pay the costs of the other party/s on a lawyer / client basis in relation to obtaining the Registrar’s signature.
That the husband and wife both have leave to re-list these proceedings on 7 days notice in relation to the implementation of these orders.
That all exhibits be released.
That the husband and wife each pay their own costs as between themselves as parties.
IT IS NOTED that publication of this judgment under the pseudonym Dlaric & Dlaric is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 7577 of 2007
| MR DLARIC |
Applicant
And
| MS DLARIC |
Respondent
And
| MR K |
2nd Respondent
REASONS FOR JUDGMENT
Introduction and Applications
These are property proceedings. The parties in these proceedings are Mr Dlaric and Ms Dlaric and Mr K, the wife’s adult son. For convenience I shall refer to them as “the husband” and “the wife” and “Mr K” respectively.
The husband seeks orders to the following effect:
1.That within 6 weeks of the date of these orders, the wife pay to the husband the sum of $200 000 or 30 percent of the net asset pool, whichever is greater.
2.That upon the wife’s compliance with order 1, the husband immediately do all acts and things and sign all documents necessary to transfer to the wife his interest in the property situate at and known as [B property], New South Wales, being the land described in Folio Identifier […] (‘[B] property’).
3.That in the event that the wife fails to make the payments referred to in order 1 above, then the husband and the wife are to immediately do all acts and things necessary to cause the [B] property to be sold and the sale proceeds are to paid as follows:
(i)the costs, expenses and commission of the real estate agent or agents on the sale of the property;
(ii)the costs fees and disbursements of the lawyers acting for the parties on the sale of the property;
(iii) any adjustments of water and council rates;
(iv)$200 000 or 30 percent of the net asset pool, being whichever is the greater amount, to the husband and the remainder to the wife.
4.That the wife retain the furniture and furnishings at the [B] property.
5.That otherwise each party be separately entitled to any other personalty, including bank accounts, furniture, furnishings, investments, shares, proceeds of superannuation policies or other personal or real property in that party’s possession or control.
6.That in the event that either party refuses or neglects to execute any deed or instrument necessary to give effect to these orders, then a Registrar of the Family Court of Australia, Sydney Registry, be appointed pursuant to s.106A of the Family Law Act to execute the deed or instrument in the name of that party and to do all acts and things necessary to give validity and operation to the deed or instrument and that the defaulting party pay the costs of the other party/s on a lawyer / client basis in relation to obtaining the Registrar’s signature.
On the other hand, the wife seeks the following orders:
1.That the husband transfer to the wife his interest in the [B] property upon payment by her to him of $75 000
2.That otherwise the husband and wife each be declared the sole owner of all other property in their possession and/or control respectively.
Second Respondent
The husband joined the wife’s adult son Mr K as a third party in the proceedings and sought orders directly against him.
It is unnecessary to set out the orders sought. Suffice it to say that it was unnecessary for the husband to seek orders against the second respondent because there is sufficient property available to the husband and wife to fulfil a proper order pursuant to s 79(2) of the Act without having to have recourse to the property of the second respondent.
In these circumstances, at a very early stage in the trial I made an order dismissing the husband’s application against the second respondent. I also reserved the costs of the second respondent.
Background
The husband was born in March 1944 and he is therefore 65 years of age. The wife was born in July 1944 and she is therefore 64 years of age.
The parties met at the end of 1990. They commenced a relationship in early 1991. They cohabited for a period of 15 years, having married in June 1991 in Serbia and having separated in April 2007 under the one roof. There are no children of the marriage.
The husband has one child from his former marriage, an adult son. The wife married her first husband in August 1966 and there is one child from that marriage namely Mr K born in February 1968 who is therefore 41 years of age.
Shortly before their marriage the parties entered into a deed which set out the provisions of an agreement between them about how their property would be dealt with upon their proposed marriage. As things have turned out, both parties concede that this agreement will not bind the Court in these proceedings. In my view it has little relevance other than as being part of the history of the parties’ circumstances following their decision to marry. But amongst other things the agreement recorded what property each of the parties owned just prior to their marriage.
Accordingly, at the time of marriage the husband’s property consisted of:
(a)unencumbered land at P, Serbia, which the parties agreed at the time had a value of approximately AUD150 000;
(b)unencumbered land at C, Serbia which the parties agreed at the time had a value of approximately AUD1500;
(c)furniture, furnishings, electrical goods and chattels with an agreed value at the time of approximately AUD10 000; and
(d)cash with an agreed value of AUD2000.
At the time of marriage the wife’s property consisted of:
(a)house and land at V with an agreed value of approximately AUD140 000;
(b)house and land at D with and agreed value of approximately AUD130 000
(c)a half-interest as tenant-in-common with her son Mr K in land at 12 B with an agreed value of approximately AUD80 000;
(d)savings in the Commonwealth Bank of Australia of AUD21 000;
(e)trust account in Commonwealth Bank of Australia for wife’s son Mr K approximately AUD1302; and
(f)Chrysler Sigma motor vehicle with an agreed value of AUD500.
In September 1991 upon the wife’s return to Australia after the parties’ marriage, she was in receipt of workers compensation payments as a consequence of a neck injury suffered by her at work prior to marriage.
In December 1991 the wife commenced part time work at a motel 2 or 3 days per week.
On 5 May 1992 the husband migrated to Australia. He and his son commenced living with the wife in her home at V.
In April 1993 the wife received a worker’s compensation payment of $27 145 for the neck injury sustained whilst in the employ of U Company.
Shortly after this time the parties attended the husband’s son’s wedding in Serbia and met half the costs of the wedding. They spent approximately $10 000 in this manner.
Prior to their marriage the parties had discussed a proposal to have a home constructed on the wife’s land at G. In fact there were references to such a proposal in the deed they made in contemplation of their marriage.
On 5 December 1994 the wife sold her V property for $143 500 and used the proceeds to pay for construction of a home on her G land. This construction cost approximately $144 000.
During late 1994 and 1995 the husband and the wife lived with the wife’s parents rent-free for six months during the construction of the G property.
In 1995 the husband, the wife, the wife’s son Mr K and his girlfriend moved into the new home. The husband and wife lived in the home for 4 years until the purchase of B property.
On 14 August 1997 the wife’s D property was sold for $130 000. The D property had been rented continuously since purchased in 1984 until it was sold.
The sale proceeds of the D property were used to purchase the property at B. This was purchased on 22 August 1997 and cost $143 500. The wife also contributed an additional $7000 for this purchase and the husband provided $7000. The property was registered with the wife being tenant in common in relation to ¾ thereof and the husband being tenant in common of ¼ thereof.
There was no mortgage over the B property.
The husband’s son and his wife and their daughter lived there for two years at a rental of $100 per week. This money was used to pay for construction of a verandah at the G property.
In 1999 the B property was rented for a further two years. The rent was deposited into the joint account of the husband and the wife at the Commonwealth Bank of Australia, B branch.
From 1992 to 2000 the husband sent approximately AUD1000 each year through E Company Pty Ltd to his brother in Serbia. Between 8 September 2000 to 5 October 2007 the husband transferred a total of $6050 to his brother in Serbia by eleven separate transactions.
In 2001 the husband and the wife moved into the B property. They continue to reside there to date.
On 21 January 2003 the G property was valued at $400 000 by Ms L registered valuer.
On 14 March 2003 the wife transferred the G property to her son Mr K as sole registered proprietor. The wife was concerned that if this property remained in her name this would affect her eligibility to receive the age pension.
The property was valued for the purpose of the transfer at $400 000. Mr K gave a mortgage to the wife for $400 000 at 8 percent interest. The wife lodged a caveat over the property.
In 2004 the husband and the wife purchased a one year old Toyota Avalon motor vehicle for approximately $23 000. The husband traded in his old Toyota Camry motor vehicle for $1000.
On 18 December 2005 the husband and the wife purchased a new Toyota Corolla motor vehicle for $22 000 for the wife.
In 2006 the husband transferred the Toyota Corolla to the wife’s sole name.
In early 2006 the wife received a further worker’s compensation payment for the injury sustained to her hands and shoulders whilst in the employ of the motel. These funds of $58 125 were banked to the joint account at the Commonwealth Bank.
In 2006 the husband received a worker’s compensation payment of $6000 for a back injury. These funds were deposited to the joint account at the Commonwealth Bank. The husband received weekly payments of $430.
In February 2006 the wife transferred her one-half share of the Toyota Avalon to the husband.
On 1 May 2006 the husband received a superannuation payment of $21 990. These funds were banked to the joint account at the Commonwealth Bank.
On 31 July 2006 Mr K sold the G property for $490 000. There was no repayment of the mortgage to the wife. The wife signed a discharge of the mortgage.
On 24 August 2006 Mr K purchased a home on the Central Coast for $502 500.
In April 2007, as indicated above, the parties separated under the one roof.
On 28 May 2007 the husband received $7500 for a deafness claim. These funds were banked in an account in the husband’s sole name.
In 2007 the husband withdrew $60 000 from the joint account and placed those funds in an account with the Commonwealth Bank in his name only. Shortly thereafter the wife withdrew a total of $60 000 from the joint account and another account and deposited these monies into an account in her name with the Commonwealth Bank.
On 2 November 2007 the husband filed his Application for Final Orders.
Whether Mr K had an equitable interest in G Property
In 1987, approximately four years prior to the parties’ marriage the wife and her former husband decided to purchase the land at G in the names of the wife and their son Mr K as tenants in common in equal shares. The purchase price of $36 500 was funded from money provided by the wife’s father and from the savings of the wife and her former husband. The wife and her former husband took a mortgage from their son in the amount of $18 250. But their son only repaid one or two thousand dollars of the loan.
Sadly, the wife’s former husband was killed in June 1990. The wife and son were badly affected by this. Mr K was regularly abusing alcohol and behaving aggressively. The wife became concerned that he might deal with his interest in the property. In her affidavit sworn in October 2008 the wife said as follows (para 20)
20.After several serious incidents involving [Mr K’s] behaviour, whilst intoxicated, I became concerned that [Mr K’s] one-half share of the [G] Property might be at risk of being the subject of a Court Order. After paying legal bills for [Mr K] and after giving the matter lengthy consideration, I spoke to [Mr K], in late 1990 and convinced him to transfer his one-half share in the [G] Property to me, for a consideration of $1.00.
At the time, I said to him, words to the following effect:
“Son, Mum thinks it’s better that you transfer the land back into Mum’s name so that you might not have a problem where you risk losing it if you wouldn’t be able to come up with the money when something arose. Mum will keep it for your, just like before and then, when the time comes to build a house for you on it, I will sell one of the other houses and do that.”
[Mr K] replied, in words to the following effect:
“Alright, Mum. If you think that’s better, we’ll do it that way.”
I can accept the likelihood that the wife was concerned that her son’s interest as tenant in common in the G property might be at risk because of his behaviour. But I have considerable difficulty in accepting the wife’s assertion that she informed her son that she would keep the property for him and build a house on it for him. This is because within months of this alleged conversation, namely on 7 May 1991, the wife had her solicitor include the following passage in the pre-nuptial agreement between herself and the husband:
It is the intention of each party hereto that both [the husband] and [the wife] will work for approximately 2 years after their marriage and they will save certain monies out of their earnings, to be used by them for the erection of a home on [the wife’s] land at [G] and that [the husband] will then borrow in his name and thereafter in due course repay, sufficient money to complete the erection of that home on that land. When that home is complete, then, it is the intention of [the wife] to transfer a one half share in the land and improvements erected there on to [the husband], so that [the wife] and [the husband] will own the land and improvements erected thereon at [G], jointly, in equal shares.
This is completely inconsistent with the wife’s assertion. There is no suggestion in the above passage that the wife was holding any part of the land at G as trustee for her son.
In addition, in my view, there is no room for any proper suggestion that the circumstances were such as to give rise to a constructive trust. It was submitted by learned senior counsel for the wife that the circumstances of the transfer involved creation of a constructive trust. In my view, it cannot be said that there was some unfairness in the wife seeking transfer of the son’s interest to her such that equity would regard it to be unconscionable for the trust to be denied. After all, it is not as though the son had paid what he owed his parents for his interest in the property. All he had paid was a very small fraction of its value.
It was also submitted on behalf of the wife that the wife also operated a bank account in the name of her son and that when she sold the V property she deposited the net proceeds of sale into the son’s account. The wife subsequently used these monies to fund the construction of the G home. It was said that using these monies in this way was consistent with her obligations as a trustee. But I must say I have difficulty with this. The wife also put other funds into this account and dealt with the funds as her own monies. The wife conceded during cross-examination that she used this account because she did not want to mix the money which she earned with that of her husband. I do not accept that this adds any weight to the submissions that the wife’s operation of this account is consistent with a constructive trust. In my view it is not.
Accordingly, in my view, it is not available to this Court to find that the wife was holding any interest in the G property in trust for her son Mr K. This is not to say that the wife did not intend to make provision for her son at some time in the future. I accept that she had it in mind since before the parties’ marriage that one day she would endeavour to make provision for him and that her hope was to provide him with a home.
Before leaving this issue I must make an observation about something upon which the wife’s representative endeavoured to place much significance. The husband was asked very late in his cross-examination a question to the effect that at all times he knew that the G property was going to be given to the wife’s son and he replied “Yes”. But I must say I do not regard this as being a concession on his part that a trust had been created in favour of the son. This answer by the husband was inconsistent with earlier similar questions which were asked by reference to particular times. In respect of each such question the husband denied that he knew the wife was going to transfer G property to her son. In these circumstances, I can accept that late in the marriage the husband became aware that the wife was going to transfer the property to her son. But I do not accept that he knew this “at all times”.
The Applicable Law
Sub-section 79(1) of the Act provides that in property settlement proceedings, the Court may make such order as it considers appropriate.
Sub-section 79(2) provides that the Court shall not make an order under the above sub-section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
There is a long-standing preferred approach to the determination of an application brought pursuant to the provisions of s 79. This involves four inter-related steps. Firstly, the Court should make findings about the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss 79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss 79(4)(d), (e), (f) and (g), including, because of s 79(4)(e), the matters referred to in s 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case.
This approach has been confirmed in numerous cases in this Court including for example Lee Steere and Lee Steere (1985) FLC 91-626; Ferraro and Ferraro (1993) FLC 92-335; Hickey and Hickey (2003) FLC 93-143; 30 Fam LR 355; Coghlan and Coghlan (2005) FLC 93-220; 32 Fam LR 414 and Clauson and Clauson (1995) FLC 92-595; 18 Fam LR 693.
Property available for division
As indicated above, at approximately the time of separation the husband withdrew $60 000 from the joint account. Subsequently the wife withdrew $60 000 from accounts. Each party has had the sole use of such funds. I propose to add these back to the pool of property available for division between them.
I also propose to add back to the pool the wife’s superannuation.
The property available for division between the parties consists of the following:-
$
1. Former matrimonial home at B
360,000
2. Value of property at G at time of transfer to wife’s son (add back)
435,0003. Money from accounts used by wife after separation (add back)
60,0004. Wife’s superannuation (add back)
13,442
5. Wife’s motor vehicle
13,000
6. Wife’s furniture
3,000
7. Husband’s property in Serbia
30,000
8. Money from joint account used by husband after separation (add back)
60,0009. Husband’s motor vehicle
9,800
_____________
$984,242
There are no liabilities.
Contributions
As indicated above, at the commencement of the parties’ marriage there was a very significant disparity in the property owned by each of them.
At the time of the marriage the Wife owned the unencumbered properties at V, D and G. In addition the wife owned the monies in her bank account and an old motor vehicle.
At this time the husband owned his land in Serbia, some personal property and approximately $2000 in cash.
Each of the parties has worked during the marriage or been in receipt of workers compensation payments. The wife has also received rent from her properties. But the husband has earned income over the period at a much higher level than the wife.
The wife undertook most of the domestic chores including cooking and cleaning with little assistance from the husband. But the husband undertook maintenance on the various properties as well as some repairs. He also mowed the grass.
Upon completion of the construction of the G property the husband and wife did some landscaping at the rear of the home. The husband tiled the area beneath the pergola. He also built some garden steps from recycled concrete.
When the parties moved into the B property they painted the inside of the house.
The wife made all the curtains for the downstairs room in the G property.
In my view it is clear that the wife’s financial contributions have been much greater than those of the husband. This is because the wife brought into the marriage much more property than the husband as I have said. In my view the wife has also made a stronger contribution to the welfare of the parties although not by a significant margin.
In all the circumstances, in my view the wife has made much greater contributions overall than has the husband and I am satisfied that such contributions have been more than double those of the husband. Accordingly, I assess the wife’s contributions overall to have been 70 percent and those of the husband to have been 30 percent.
s 75(2) matters
The husband is 65 years of age and there are some problems with his health. He says that he is depressed and suffers from constant back pain as a consequence of his back injury in 2004. He is in receipt of workers compensation payments of $450 per week. But he expects these payments to cease in March 2010 on his 65th birthday at which time he will become eligible for the age pension.
On the other hand the wife is 64 years of age and she also suffers from:
·High blood pressure;
·Type 2 Diabetes;
·High cholesterol;
·Thyroid condition;
·Arthritis;
·Heart condition;
·Insomnia;
·Stress and anxiety.
The wife had been in receipt of workers compensation payments but these were expected to cease in March this year. Then the wife expected to be eligible to receive the age pension.
In these circumstances it was conceded on behalf of each of the husband and the wife that neither regarded the other as having any income earning capacity. I accept this.
The husband’s son was married in Serbia in 1993 and the parties contributed to the wedding costs.
For approximately one year the husband’s son and daughter in law rented the property at G at a rental well below market rental.
On the other hand, the wife’s son Mr K and his wife lived with the parties rent free and only making a modest contribution to living expenses for many years.
Mr K was married in Serbia in 2001 and the husband and wife paid the wedding costs.
The wife paid at least $4000 towards her son’s legal costs in criminal proceedings.
The wife has transferred to her son the major part of her property being her equity in the G property.
In my view, upon consideration of these matters, it is not appropriate to set-off any property in favour of either of the parties in order to achieve a just and equitable order as required by s.79(2) of the Act.
Conclusion
The property available for division between the parties has a value of $984 242 as I have said.
The husband is to have 30 percent of the available property. This is property with a value of $295 273 (30% of $984 242 = $295 273).
The husband has the following property:
$
1. Property at P, Serbia
30,000
2. Money from joint account (add back)
60,000
3. Motor vehicle
9,800
_____________
$99,800
To achieve property with a value of $295 273 the husband will require additional property with a value of $195 473 ($295 273 - $99 800 = $195 473). This will come from a payment to him by the wife or from the sale of the property at B.
On the other hand the wife is to have 70 percent of the property available for division between the parties. This is property with a value of $688 969 (70% of $984 242 = $688 969).
The wife has the following property:
$
1. Value of property at G (add back)
435,000
2. Money from accounts used after separation (add back)
60,0003. Superannuation (add back)
13,442
4. Motor vehicle
13,000
5. Furniture
3,000
_____________
$524,442
To achieve property with a value of $688 969 the wife will require further property with a value of $164 527 ($688 969 - $524 442 = $164 527). If the wife was to pay the husband $195 473 there would remain equity in the property at B of $164 527 ($360 000 - $195 473 = $164 527).
The orders I propose will not affect the income-earning capacity of either party because, as indicated above, each accepts that the other has no such capacity.
It must be doubtful that the wife would be able to borrow sufficient funds to pay the husband the sum of $195 473. Perhaps her son might assist her. If she is unable to do this the property at B will have to be sold and the proceeds paid to the parties to achieve the result intended by the Court. This might well leave the wife without a home unless she can purchase a modest home from her share of such proceeds of sale. But the wife gave away to her son a significant amount of her property. To be fair, she cannot expect to be permitted by this Court to give her property away at the expense of her former husband.
I certify that the preceding ninety (90) paragraphs are a true copy of the Reasons for Judgment of Judicial Registrar W P Johnston.
Associate:
Date: 23 June 2009
Amended: 14 July 2009, pursuant to the Slip Rule
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
Legal Concepts
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Costs
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Remedies
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Res Judicata
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Jurisdiction
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