Doran and Keyes and Anor
[2017] FCCA 729
•18 April 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
DORAN & KEYES & ANOR [2017] FCCA 729
Catchwords:
FAMILY LAW – Property distribution – de facto couple – argument as to whether advance by intervenor a loan or a gift – wife and children subjected to violence for around ten years from the husband – Kennon adjustment – husband engages in deliberate course of conduct to allow taxes to fall into significant arrears resulting in borrowings for taxation attracting significant penalties requiring further borrowings on mortgage – husband allows mortgage and rates to remain unpaid for years in the knowledge that the house would be sold up by the mortgagee – adjustment for section 90SF(3) factors including wife’s post separation contribution to raising 4 children in difficult financial circumstances – disparity in income – wife on Centrelink benefits – husband earning income – adjustment for waste by the husband and diminished property pool – husband pays no child support – declaration that funds advanced were a loan.
Legislation:
Family Law Act 1975, ss.90SM, 90SM(4), 90SF(3), 90SK
Cases cited:
C & C [2005] FamCA 429;
Stanford & Stanford (2012) FLC 93-495;
Bevan & Bevan [2013] FamCAFC 116;
Watson & Ling (2013) FLC 93-527;
Kennon v Kennon (1997) FLC 92-757;
Kowaliw & Kowaliw (1981) FLC 91-092;
Griers & Malphas(2016) FamCAFC 84;
Jones v Dunkle [1958] HCA 8;
Re: Sabri: Ex parte; Ex parte Brien v Australia and New Zealand Banking Group Ltd (1996) 21 Fam LR 213;
Elias & Elias (1977) FLC 90-267;
Daniher & Garlett [2014] FCCA 2961;
Crandall & Crandell [2009] FamCAFC 120;
Vadisanis & Vadisanis & Anor (2014) FLC 93-593;
Ogilvery & Adams [1981] VR 1041;
Richard Walter Pty Ltd v Federal Commissioner of Taxation (1995) 31 ATR 95;
Meehan & Jones (1982) 149 CLR 571;
In Cranstoun v FCT (1984) 15 ATR 1278;
Calverley v Green [1984] HCA 81.
Applicant: MR DORAN
Respondent: MS KEYES
Intervenor: MS M KEYES
File Number: BRC 1340 of 2015
Judgment of: Judge Willis
Hearing dates: 25 May and 2 & 3 June 2016
Date of Last Submission: 6 July 2016
Delivered at: Cairns
Delivered on: 18 April 2017 REPRESENTATION
Counsel for the Applicant: Mr Mould
Solicitors for the Applicant: North Law
Counsel for the Respondent: Ms Mc Millan Q.C.
Solicitors for the Respondent: Reaston Drummond Law
Counsel for the Intervenor: Mr Cameron
Solicitors for the Intervenor: Croxford Partners ORDERS
IT IS DECLARED THAT:
That the monies advanced by the intervenor to the applicant and the respondent to purchase the real property situated at Property J, formerly known as Property J and more particularly described as (omitted) in the County of (omitted), Title Reference (omitted) (“Property J home”) in the sum of $156,413.55 was advanced as a loan and is due and payable by the applicant and respondent to the intervenor.
The amount of $254,834.02 also advanced as a loan by the intervenor to (omitted) Bank in consideration for a transfer of (omitted) Bank’s mortgage (previously held in the name of the applicant and respondent) of the Property J home is due and payable by the applicant and respondent to the intervenor.
IT IS ORDERED THAT:
(1)That the Applicant do all acts and things and sign all documents necessary to transfer to the Respondent, all of his right, title and interest in and to the property situated Property J home.
(2)The Respondent pay to the Applicant the sum of $58,609.00 contemporaneously with the transfer of the property set out in Order 1 above.
(3)The Respondent will thereafter, indemnify the Applicant and keep the Applicant indemnified in relation to:
(a)Each of the loans to the Intervenor namely $156,413.55 (advance for purchase of the land and legal fees) and $254,834.02 (mortgage and legal fees).
(b)The outstanding rates relating to the Property J home.
(4)That the Respondent will retain and/or receive as her absolute property, all her right, title and interest in and to the following:
(a)The Respondent’s bank accounts;
(b)Furniture, chattels and household effects in the possession of the Respondent at the date of these Orders;
(c)The Respondent’s personal belongings and jewellery in her possession at the date of these Orders;
(d)Shares (as indicated on the table of assets).
(5)That the Applicant retain and/or receive as his absolute property, all his right, title and interest in and to the following:
(a)The Applicant’s bank accounts;
(b)Furniture, chattels and household effects in the possession of the Applicant at the date of these Orders;
(c)The Applicant’s personal belongings and jewellery in his possession at the date of these Orders;
(d)The Applicant’s interest in his (omitted) Superannuation Fund.
General
(6)That the Applicant and the Respondent are jointly liable for the outstanding school fees to (omitted) School in the sum of $44,500.00.
(7)That the parties do all acts and things and sign all documents required to implement these Orders.
(8)That unless otherwise specified in these Orders, and except for the purpose of enforcing the payment of any monies due under these or any subsequent Orders:
(a)Each party is solely entitled to the exclusion of the other to all property (including choses-in-action) in their possession as at the date of this order;
(b)Monies pertaining to the credit of the parties in any bank account is to become the property of the person so named;
(c)Each party hereby forgoes any claim they may have to any insurance policy belonging to, or earned by the other; and
(d)Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders.
(9)In the event that either party refuses or neglects to sign within fourteen (14) days of a written request to do so, any documents necessary to give effect to the terms of these Orders, the Registrar of the Federal Circuit Court of Australia, be appointed pursuant to section 106A of the Family Law Act 1975 (as amended), to execute such documents on behalf of such party.
(10)The parties intend that pursuant to the terms of section 81 of the Family Law Act 1975 (as amended) these Orders, shall as far as practicable, finally determine the financial relationship between them and avoid further proceedings between them.
Costs
(11)Any application for costs the Applicant for costs is to file and serve written submissions attaching a minute of orders sought with reference to the scale within 28 days of the date of this Order.
(12)The Respondent for costs is to file and serve any written submissions in response attaching a minute of orders sought within 14 days of being served.
IT IS NOTED that publication of this judgment under the pseudonym Doran & Keyes & Anor is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT CAIRNSBRC 1340 of 2015
MR DORAN Applicant
And
MS KEYES Respondent
MS M KEYES Intervenor
REASONS FOR JUDGMENT
1.The parties in this matter are unable to agree about the division of their property following on from the breakdown of their de facto relationship.
2.The applicant is Mr Doran the de facto husband (who I shall refer to as “the husband”) and the respondent is Ms Keyes, the de facto wife (who I shall refer to as “the wife”). This litigation involves a third party intervenor, namely the wife’s mother and maternal grandmother of the children of the relationship Ms M Keyes (“the intervenor”).
3.Each of the parties has been represented by Counsel and solicitors. Mr Mould of Counsel appeared for the father, Mr Cameron of Counsel appeared for the intervenor and Ms McMillan of Queen’s Counsel appeared for the respondent. Each party has relied on their material read into the record, their case outlines, oral and written submissions together with a final draft of the Minute of Orders sought sent in by each of the parties.
4.I have had regard to all of the evidence. A statement in these reasons represents a finding of fact unless indicated otherwise. I thank all Counsel for their assistance during the trial and for the bundle of cases and references each Counsel has provided to the Court.
Background
5.At the time of trial the husband, a (occupation omitted), is aged 48 having been born on (omitted) 1968. The wife, a stay at home mother was born on (omitted) 1969 and is aged 46. The parties have four children. They commenced their de facto cohabitation in 1997, though each of the husband and wife has a different recollection of the precise month. They cohabited after their first child Mr L was born (omitted) 1997. The husband says they cohabited from (omitted) 1997, the wife says (omitted) 1997. Nothing turns on which month of the year it was.
6.There are four children of the marriage. Mr L is now 19. Their second child Mr I born (omitted) 1998 is now aged 18. Their third child X born on (omitted) 2000 is now aged 15, and their youngest child Y is only 4 and half at the time of trial having been born on (omitted) 2011. All of the children live at home.
7.The husband says that “we separated on a final basis in January 2014.[1] In his oral evidence however, the husband confirmed that he moved out on 2 May 2014[2] and that Yes I moved out of the – the bedroom in December 2013 into a separate bedroom in the house in 2013. And that’s where I was until I left. The wife says that the parties separated under the same roof in May 2013 until May 2014 when Mr Doran left our home”[3] The parties seem to agree that their physical separation was around May 2014, having separated earlier than that under one roof.
[1] Affidavit 20/04/16, paragraph 6.
[2] Transcript 2/06/16, p 54 line 4.
[3] Wife’s affidavit filed 20/5/16, paragraph 6.
8.Neither party asserts that they owned anything other than modest belongings at the time of cohabitation.
9.It is not disputed that the wife was the primary carer of their four children and homemaker, nor is it disputed that the husband was the primary income earner through his trade as a (occupation omitted).
The competing applications
Applicant husband
10.The husband has provided a minute of Orders sought.
11.The applicant seeks to retain all the furniture, the Holden (omitted), his tools, superannuation and bank accounts standing in his name, and his share in the partnership he has worked in these past 5 or so years. The applicant says he will be responsible for all liabilities in his sole name. The husband seeks an order that the respondent have sole occupation of the Property J property and that whilst doing so, she is responsible for all the mortgage repayments, rates and taxes and house insurance costs and until the transfer of the property to the respondent, the parties be restrained from making any redraw on the mortgage, without the written consent of the other party. The applicant is prepared to transfer his interest in the property to the respondent, provided that contemporaneously with the transfer, the respondent procures a release for the applicant from the liability under their joint mortgage. This transfer is in consideration of the respondent paying the applicant either $161,653 (if the monies advanced by the intervenor is characterised as a loan) or the sum of $178,825 (if the monies advanced by the intervenor are characterised as a gift).
12.Default provisions for the sale of the property are provided for in draft Order 12 onwards. In the event that the property is to be sold, the applicant is seeing a set amount to be paid to him, the same as indicated earlier, and the balance of the sale proceeds to the respondent wife. The husband includes an Order that the amount retained by the respondent is to include spousal maintenance equivalent to $100.00 per week.
13.One of the major issues in contention is that the husband alleges that an advance of funds of $151,000.00 by the intervenor was a gift and therefore that sum ought not to be deducted as a liability or loan. The wife’s position is that the funds advanced were a loan. This is also the position of the Intervenor.
14.Mr Mould of Counsel for the husband made oral submissions at the conclusion of the trial. The trial concluded late in the afternoon and Mr Mould wished to leave to catch a plane back to Brisbane rather than miss his flight. His submissions where incomplete. I therefore allowed Mr Mould to leave in sufficient time to catch his flight but directed that further written submissions be provided by Mr Mould in writing.
15.Subsequently, Mr Mould contacted Chambers and other Counsel to advise of a family bereavement which resulted in a request for further time to consider his additional submissions. That time was of course granted in these circumstances. Mr Mould made further written submissions under cover of correspondence from his solicitor on 6 July 2017. The other Counsel responded that they did not wish to make any further submissions by 13 July 2017. Mr Mould confirmed through his solicitors letter on 20 July 2016, that he did not seek any further Court time in relation to his submissions. Mr Mould submitted that if the Court concluded that the advance made by the intervenor was a gift or a contribution, then an adjustment should be made in favour of the wife of 10% or at best 15% in relation to section 90SM (4).[4]
[4] Transcript 3/6/16, page 241.
16.In relation to the consideration of the 90SF (3) factors, and noting that the wife has been out of the work force since 1997, and that her income from work is nil, and that she has two children under 18 still in her sole care including young Y born in (omitted) 2011 aged 4, Mr Mould submitted that these factors would represent an uplift of 5% to 7.5%.[5] Overall Mr Mould submitted that at the highest the wife should receive 73.5%.
[5] Transcript page 246 line 40 and page 247.
17.In contrast to those oral submissions, however, Counsel’s position in subsequent written submissions is that the wife receives much less in percentage terms than was submitted at trial. The applicant’s Counsel submits in his subsequent written submissions that if the funds advanced by the intervenor are held to be a loan, there should be an overall split of 55/45% in the wife’s favour. Mr Mould of Counsel submits in his written submission that the wife is entitled to a 5% uplift attributable to her current income earning disparity and responsibility of one young child and a partially dependant teenager.
18.Alternatively, the written submissions continue, if the advance is held to be a gift, the applicant husband seeks an order that the property be division occur by way of a final split of 65%/35% in favour of the wife. Mr Mould refers the Court to the decision in Maddock and Maddock (No.2)[6] a decision of Judge Burchardt (then Federal Magistrate Burchardt) as a comparable decision with similar considerations. Mr Mould of Counsel has done the necessary calculations based on the percentages referred to in his written submissions. [7]
[6] [2011] FMCAfam 1340
[7] Submissions under cover of letter from Mr Mould dated 6 July 2016, page 3.
19.Mr Mould on behalf of the husband rejects the wife’s contentions that the husband engaged in any conduct that would amount to a wastage argument and submits that given the wife was equally responsible for the mortgage repayment despite having a substantial share portfolio available for liquidation at all material times. Counsel for the husband does not concede that any family violence alleged by the wife or admitted by the husband warrants an uplift as a Kennon factor, contending in his written submissions that there was no domestic violence order, the isolated and historical nature of the other incidents, nothing was reported to the police and because of the general disharmony of the parties.
The Respondent Wife
20.The respondent wife has also forwarded a precise minute of orders sought. As with the husband, a declaration is sought pursuant to section 90RD. As I have said elsewhere, her position is that the funds advanced were a loan, and therefore the sum is repayable to her mother. The intervenor seeks a declaration in this regard.
21.As to the property division, the wife seeks a division on the basis of an 80/20% in her favour.
22.The wife asserts that the family violence perpetrated by the husband during their de facto marriage towards herself and their children made her non-financial contributions more arduous and is the basis of a Kennon adjustment to the property division sought by the wife.
23.The wife also asks the Court to take account of the deliberate wastage by the husband in terms of his failure to pay taxes, the mortgage and the consequences of those failures in terms of additional interests and penalties. That sum has been calculated and put forth, without objection, as $59,640.47. Ms McMillan QC explained that this sum was calculated and should be in lieu of the previous figure referred to at paragraph 85 of Counsel’s written submissions.[8] Ms McMillan submits that the Court can have regard to this figure as wastage by way of an adjustment in favour of the wife pursuant to s 90SF(3)(r ).
[8] Transcript 3/6/16 page 217, line 30.
24.The wife seeks a further adjustment pursuant to the section 90SF(3) matters to take account of her current income of Centrelink, and negligible future earning capacity and her continuing role as the primary carer of two children under 18 namely X, 15 and Y 4 and a half. Counsel for the wife submits that the wife has suffered financially post separation through not having financial support from the husband to provide for the children or towards the upkeep of the family home. The wife has continued to fully care for the parties’ children.
25.The wife seeks an Order that the husband transfer his interest in the Property J home to her and contemporaneously the wife will pay the sum of $29,399.04 to the husband care of his solicitor’s trust account. Thereafter, the wife will keep the husband indemnified in relation to the initial loan amount of $156,413 and the second tranche of funds advanced by the intervenor, $254,834.02, which it is agreed is owned to the Intervenor. The wife seeks to retain her bank accounts, furniture chattels, personal belongings jewellery and her share portfolio. The husband is to retain similar including his Superannuation fund.
26.As to the submission that the father’s mother saved the parties $41,600.00 in rent, Ms McMillan QC reminds the Court that this speculative evidence was struck out on the basis of being improperly pleaded and being without any evidentiary foundation. I accept that this is so.
27.Ms McMillan QC asserts that the mother’s contributions were made more arduous given the violence by the husband towards herself and the children and so an apportionment under a Kennon argument is put forth. The husband denies some of the allegations of violence and admits others.
28.Ms McMillan QC for the wife submits that the post separation current tax debt of the husband ought not be included as a joint debt. Orders are sought that the parties are to equally share the school fees owing to (omitted) School and to equally pay the current (omitted) Council Rates.
29.Ms McMillan QC submits that Counsel for the husband (when cross-examining the intervenor) did not even suggest to the intervenor that her evidence was false or that she was dishonest.
30.In relation to the alleged Elias principle submission by Mr Mould, Ms McMillan QC submits that there is no evidence that the intervenor said anything to (omitted) Bank, nor is there any evidence that the wife said anything to (omitted) Bank and that there is no evidence at all that the intervenor or the wife were complicit in a plan to mislead the bank. As to the submission made about an alleged “roller coaster” principle, Ms McMillan QC submits that submission completely ignores the fact that the husband and wife went to their own solicitor Mr Phillips, to get legal advice and that Mr Phillips was acting for the husband and wife, not the intervenor.
The orders sought by the intervenor – Ms M Keyes
31.The intervenor seeks a declaration that the monies advanced by her to purchase the Property J property in the sum of $156,413.55 was a loan and that there were terms conveyed to the parties about when the money was repayable. The intervenor denies that the funds of $156,413.55 were a gift and further, she denies that she had any discussions with the husband to the effect that if was a gift, as alleged by the husband.
32.The intervenor also denies the husband’s assertions that she prevented him from entering the solicitor’s office at the time of the settlement in 2001 or that she directed him to stay outside of the solicitor’s on the footpath. The intervenor denies that she insisted that the husband sign a document (as was alleged by the husband) and that she covered up and refused to show the husband the ‘hidden” document and told him that he had to sign it.
33.The intervenor says she advanced the funds as a loan to her daughter and the young family to help them get a start in life, but that it was a significant fund even in 2001, and that she told her daughter it was repayable when the house was sold, or when the parties broke up or when the intervenor need the money back for her own financial support.
34.It is agreed between the parties that the second tranche of funds totalling $254,834.02 advanced by the Intervenor to (omitted) Bank in consideration for a transfer of (omitted) Bank’s mortgage over the property, is due and payable to the intervenor as a loan.
The Law - division of property- Section 90SM
35.The process for determining the division of assets following the breakdown of a de facto relationship is found in section 90SM of the Family Law Act. Section 90SM (4) sets out the considerations the court must take into account including the financial and non-financial contributions. Factors under section 90SF(3) are referred to so far as they are relevant once the court has evaluated the parties respective contributions. The de facto legislation in terms of property division largely mirrors the Family Law provisions under section 79(4) and section 75(2). The four step process set out in cases such as C & C[9] needs to be adopted taking into account however, the comments of the High Court in Stanford and Stanford.
[9] [2005] FamCA 429.
36.In that regard, having seen the Orders sought by each of the parties and heard all of the evidence, I am satisfied that it is just and equitable that this Court make Orders regarding the division of their asset pool. A failure to do so will leave the parties linked through their joint indebtedness in relation to the family home. Having heard the matter and read all of the material, I am satisfied that the geographical requirement in s.90SK is satisfied.
37.The first step is to determine the asset pool, then having regard to the financial and non-financial contributions of each of the parties pursuant to s.90SM (4) assessing the percentage division at that point. The third step is to determine whether that percentage requires adjustment to allow for the factors referred to in s.90SF(3) and then finally to examine the actual division split in dollar terms and being satisfied that the division proposed is just and equitable.
38.The Full Court (Bryant, CJ, Finn & Thackray JJ) noted in Bevan & Bevan[10] at [65] although the High Court in Stanford & Stanford[11] did “not disapprove the four step process, we accept it was not approved either”.
[10] [2013] FamCAFC 116.
[11] (2012) FLC 93-495.
39.However it is clear that after an identification of the existing property interests (as determined by common law and equity), the Court is required to consider under s.90SM(4) whether it is just and equitable to make an order at all.
40.As the High Court said in Stanford at [42]:-
“In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationships. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also bought to an end. Hence it will be just and equitable that the court make a property settlement order….”
41.As to the four step approach, Justice Murphy has suggested in Watson & Ling[12] that as a consequence of what was said in Stanford by the High Court, that:
“As a result of those matters, the Court’s approach to s 79/ s 90SM may be less compartmentalised than what a strict or unthinking adherence to four (or three) “steps” might otherwise reveal. The task is essentially holistic: Is it just and equitable in the particular circumstances of the particular relationship or marriage under consideration to make an order and if so, its terms must similarly meet that criteria. Of course, holistic though the approach is, it must be referenced to what the Act requires and care must be taken to ensure that the Courts reasons make that clear.”
[12] (2013) FLC 93-527.
42.In addition to the legal principles referred to, I have been referred by each Counsel to cases to support their respective propositions. I will deal with those later in these reasons including the relevant considerations as stated in Kennon v Kennon[13] for the wife’s Kennon claim and Kowaliw & Kowaliw.[14] and Griers & Malphas[15]
[13] (1997) FLC 92-757.
[14] (1981) FLC 91-092.
[15] (2016) FamCAFC 84.
43.Counsel for the wife submits that Watson & Ling (Justice Murphy) is authority for the proposition that it is possible for the Court to recognise in a circumstance where, but for the husband’s conduct, the legal and equitable interests of the parties would have been greater, this unfairness can be recognised through an adjustment pursuant to section 75(2)(o) His Honour Justice Murphy stated;
“Equally however, authority dictates that it will be “the exception rather than the rule (C & C at [46]) that a direct dollar adjustment equivalent to the amount of the alleged dissipation of the pool is made to the otherwise entitlement of a party. It may be that aspects of the erstwhile treatment of legal fees pre-Stanford (see for example, NHC & RHC 92—4) FLC 93-204) will require further consideration in an appropriate case. Importantly, of course, as has been emphasised in many authorities including those cited above, not every dissipation by a party can be seen to involve an affront to justice and equity; again the circumstances of the individual relationship must be assessed.”
The Witnesses
The husband
44.Overall, unfortunately, the husband is an unimpressive witness. He has given much self-serving evidence.
45.The husband now says that if he had known that the $156,000.00 initially advanced was a loan, he would not have accepted it and would have just waited longer to save more deposit. Surviving on one salary and living with his parents and then having three children to support, was not financially conducive to the parties being able to save more than $5,000 in four years. Even for a 10% deposit of $30,000.00 the parties needed another $25,000. Based on their savings record to that time, this would have taken around 24 years and the cost of the home would have significantly increased. If the deposit was to be $15,000.00 it would have taken around 12 years on similar considerations. This suggestion of the husband many years after the funds were advanced, and in the context of him admitting that the advance from the intervenor meant that he could look at much larger properties than he had been looking at, and describing his long term wish to sell the house to cash in on the equity and be debt free, he was clearly content to receive the funds. The husband’s comment is thus an example of the self-serving evidence he gave freely in his testimony, without regard to the facts.
46.Having heard the husband cross-examined by Mr Cameron and also Ms McMillan QC, putting the husband’s case at its highest: he had one very short conversation with the intervenor in relation to the entire topic of the advance of the funds to the parties. Thereafter, he now says he assumed the money was a gift.
47.The husband says that on one occasion he can’t be sure when, but some months before the purchase of the Property J home, the wife handed him the phone and that Ms M Keyes (the intervenor) was on the phone.
48.The husband explained:
“I was told for the first time on a phone call that - Ms Keyes was talking with her mother on the phone at the time. I was in the lounge room. It’s something you don’t forget, and I was handed the phone and – and Ms M Keyes somewhat smugly, without me being rude to anybody, she said to me on the phone “I’m going to give you $150,000.00” which I was rather stunned but also extremely grateful, and you know, obviously I said “thank you” and – it was quite difficult to know what to say. And there wasn’t a lot of words between myself and Ms M Keyes on the phone other than – other than that, after which you know, Ms Keyes had the phone back and was talking to her mother again.
49.When questioned, the husband confirmed that all that the intervenor said to him was that “I am going to give you the $150,000.00.” The husband replied, “On that phone call yes”[16]. He also agreed that there was no other phone call. The husband was quizzed as to whether he had made the assumption that it was a gift. His reply was, “Well I -I – that’s - well , that was how it was explained to me. That’s what I believed.”
[16] Transcript 25/5/16, page 35.
50.The husband confirmed that the intervenor did not say to him I am going to gift you $150,000.00 and that all that was said was “I am going to give you the $150,000.
51.The husband added, “I don’t have any other explanation other than that. If – If Ms M Keyes wanted it to be a loan and – and stated more clearly or came and seen me or spoke to me or sat – or we sat down and had a meeting, or some sort of discussion about it, I would have been far clearer, but that never happened.”
52.This one solitary alleged phone call is the basis of the husband’s belief that the money was a gift. The remainder of his evidence about the advance being a gift relies upon drawing inferences he drew that it was a gift. The husband said as “they never sat down and had a meeting, and that it must have been a gift as we never discussed anything about it being a loan or repayments or anything of the above. So of course I saw it as a gift.”
53.Mr Cameron Counsel for the intervenor then suggested to the husband that in his evidence now, his position is that he has no doubt whatsoever that the funds were intended as a gift. The husband replied “Well I am only going on what happened over that timeframe, and as I said, I was never ever – we never ever sat down, we never had a meeting and we never discussed anything about it being a loan or repayments or anything of the above. So of course I saw it as a gift.”
54.Counsel for the intervenor then suggested to the husband that on his own evidence, he was simply not in a position to contradict what the intervenor says which is that the moneys were lent on the basis that if certain things happened in the future, the money would be repayable – and that the husband was not in a position to refute that. The husband replied, “But I was never – I was never told that either.”
55.The husband’s attention was drawn to paragraph 27 (page 10) of his second affidavit filed on 20 April 2016, (which had much more detail than his earlier affidavits) about the circumstances of the alleged phone call from the intervenor and in which the husband stated that the phone call he had from the intervenor was three or four months before purchasing the Property J property. The husband’s affidavit reads, “I further say that approximately three or four months before purchasing the Property J property, I clearly recall, although I cannot recall the exact date, that Ms Keyes was on the telephone to her mother and I was in the lounge room at the time. Ms Keyes handed me the telephone and told me that her mother would like to talk to me. The conversation with Ms M Keyes was very short and to the point. Ms Keyes said to me that she would be giving Ms Keyes and me $150,000.00 to purchase a home. The husband denied anything else was said to him about it being a loan and concludes with “all that was said to me is that she was giving us $150,000.00.”
56.The husband was then taken to his sworn evidence contained in his first affidavit of the 17 February 2015 which was that, “we moved in together in April 1997 when Mr L was about three months old.”
57.And then, "Shortly after we commenced cohabitation I received a telephone call from Ms M Keyes (hereinafter referred to "Ms M Keyes”) Ms Keyes’s mother. Ms M Keyes told me that she intended to give Ms Keyes and me $150,000.00 so that we could purchase a home together. Ms Keyes and I purchased the property in 2001 for $300,000.00 using the deposit of $150,000.00 being contributed by Ms Keyes’s mother.”[17]
[17] Paragraph 109 (a) and (b).
58.The husband’s evidence as to the timing of the alleged phone call is wildly divergent ranging from “just after cohabitation in 1997” through to “three of four months before the purchase in May 2011, to “not that day or week” of the purchase. .
59.The husband cannot recall with any more precision than as outlined in these reasons when this phone call ever took place. He explained the inconsistencies of a few years as to the timing of the phone call, as: I suppose in that context that it was written – or stated – when – you are talking about a time frame of going back from 1997 to 2015 - , it was a – I suppose with – that length of time, when I said “shortly after” I was taking it in context as to the actual whole length of the relationship. I found his evidence regarding an alleged phone call most unsatisfactory.
60.Also unsatisfactory was the husband’s evidence that changed from one affidavit to another. The conversation with the intervenor changed from being a phone call to himself by the intervenor “saying she intended to give Ms Keyes and me $150,000 so that we could purchase a home together”[18] to being a conversation between the intervenor and the wife first and then the phone was handed to him. Contrary to his statement that it is something that you don’t forget the husband has in fact forgotten when the conversation happened and how it happened.
[18] Transcript 25/5/16, page 37, line 10.
61.Mr Cameron confirmed “but you entrusted the matter to your wife at the time, whom you had a good relationship with?” The husband’s response was “and as a wife’s duty, it would have been, you know, for her to explain that to me and not keep it from me.”[19] Mr Cameron then put to the husband “Right. Because it was your wife, my client’s daughter, who went and approached my client to see whether she might be able to assist to provide money to enable the two of you to buy the house: that’s what happened?” The husband replied, “Yes. How – how that happened, I’m not aware of and wasn’t told, but that’s obviously how….”
[19] Transcript 25/5/16, page 35.
62.The husband confirmed on more than one occasion when asked, that he was not privy to the discussions between the wife and the intervenor about money being provided by the intervenor towards the purchase of the home.
63.During cross examination, Mr Cameron for the intervenor suggested to the husband and he agreed, that he stopped paying the school fees in 2010; that he stopped paying the mortgage repayments in 2011; that as at 2012 the husband had not lodged any tax returns for about 7 years; and that the bank was not in possession of the house in 2012.
64.The husband agreed though the bank taking possession of the house was a matter that the husband thought about in the context of if you left your wife in 2012, what might happen.
65.The husband agreed that he was contemplating leaving the wife in 2012 as there were difficulties in the marriage. It was suggested to the husband that in 2012, whilst the bank were not in possession of the house it was a matter that he was concerned about and he had in his mind in 2012. The husband replied that, “Well at that stage no, I had no idea what would happen after I left.” I do not accept the husband’s evidence that he would have no idea what would happen once he stopped making the mortgage repayments in 2011. Clearly, if the mortgage repayments were not paid it was just a matter of time before the bank took action to ultimately take possession of the house.[20]
[20] Transcript 25/5/16, page 37 and 38.
66.The husband gave evidence that he had been looking to sell the home for what he described as “fair period of time before things got well out of hand. There was a massive amount of equity in the home and I had many many discussions with Ms Keyes over the equity in the home and the fact that we could be debt free, have a significant amount of money, have a house without any mortgage whatsoever. There was – I had many conversations with Ms Keyes about our financial position and – I used to say it all the time you know, every single one of those conversations Ms Keyes would end that conversation with three words, I don’t care. And it would be so frustrating but that is what happened in every single one of those conversations. Every single one. She would end the conversation with “I don’t care.”[21]
[21] Transcript 25/5/16, page 39.
67.The husband was asked whether or not in contemplating leaving his wife in 2012, he wanted to know what his rights were and he replied, “yes.” He was also asked by Mr Cameron, “If you left her, you wanted to know what you would be entitled to in terms of property if you left her” the husband replied, “yes.”
68.The husband agreed that another question on his mind in 2012 was how long he would be responsible for the children. When asked that he had in his mind that he wanted to know what his maintenance responsibilities in 2012, the husband replied, “that question never arose in my head at that time.”
69.The husband agreed that he certainly wanted to know in 2012 “how your property and money would be divided.”
70.Counsel for the intervenor suggested to the husband and in 2012, you were concerned as part of this process as to what your obligations to my client (the intervenor) would be if you left the marriage. The husband replied, “yes.”
71.It was also suggested to the husband that he wanted to know that if he left the marriage what money might have to be paid to the intervenor. The husband replied, “that’s a part of the process, yes.” [22]
[22] Transcript 25/5/16, page 40.
72.It was then suggested that it was part of the process because, “you knew as of 2012, that the $150,000.00 that had been advanced by my client (the intervenor) in 2001 to enable you and your wife to buy the house was a loan, and one of the triggers for the repayment of the loan was if the two of you separated? The husband replied, “I – that thought never crossed my mind.”
73.It was again suggested to the husband that he well knew that his separation with the wife was a trigger for the repayment of the $150,000.00. The husband replied, “I never – that – that – that never was a part of it. That didn’t enter any of my conversations or any discussions that I had at – at all.” Mr Cameron replied, “Not at all? No part of your thought process?” The husband replied, “No.”
74.This evidence was soon proved to be false.
75.A list which the husband agreed was in his hand writing was then shown to the husband.[23] That document has various issues written on it prepared by the husband in anticipation of him leaving the wife and consulting his solicitor.
[23] Exhibit 12.
76.After reading it, the husband says that it was prepared in 2014 in between December 2013 and May 2014 before he left the family home. He bases part of that conclusion on the words at the top of what is a long list of issues, which reads “bank has possession of house.” There were other items on the list including that his home life is being made difficult which suggested to the husband that this was in the period when he and the wife were separated but living under the one roof. The husband was quite clear that this list had been prepared in preparation for his own visit to a solicitor (his current solicitor) in relation to his separation and property division with the wife. The husband had written on the list; the wife is going through his car, taking his mail, taking his bank statements. Another entry reads “no tax returns for five years” The husband gave evidence that as of 2012 he had not lodged tax returns for about 5 years.[24] Contrary to his earlier evidence that the thought about his maintenance responsibilities for the children had never crossed his mind, one of his entries reads “what are my maintenance responsibilities?”
[24] Transcript 25/5/16, page 38, line 40.
77.Significantly and relevantly, the husband wrote specifically, “Am I obligated to pay Ms M Keyes?” (Ms M Keyes is the intervenor). The husband also wrote specifically, “what am I entitled to, what is grandma entitled to.” The husband confirmed in his oral evidence that the intervenor is also known as grandma.
78.Having regard to all of the evidence, I do not accept the husband’s evidence that the thought never crossed his mind or that he was unaware that the advance was a loan, or that he did not know that one of the triggers for the repayment of the loan was the separation of him and the wife.
79.I am satisfied that with this knowledge in mind, he wished to find out from the solicitors he was preparing to see, what his liability for the loan would be, noting that there was no other loan that he could be referring to. I do not accept the husband’s position that he was never told by the wife that the advance was a loan. Clearly, the entries on the list relate to the husband’s need to know what was his liability to the intervenor were and what were her entitlements would be within the context of his property division with the wife. This is inconsistent with a belief that the funds were a gift. I am satisfied that these entries related to the advance provided by the intervenor. I am satisfied that the husband knew that the monies were a loan and I accept the wife’s evidence she had discussed this with the husband many times.
80.Other evidence given by the husband about the circumstances of the money being advanced was entirely implausible. This includes the husband’s evidence that when he and the wife were attending at their lawyers (Farrellys Lawyers) in Cairns at the settlement for the conveyance for the purchase of the Property J home, and at which the intervenor was also present to provide her significant advance, that the husband was refused entry to the solicitors office and told by the intervenor that he was to wait outside on the street. The husband said he was told “quite firmly” by the intervenor that I was not to go into the solicitor’s office to witness and discuss the settlement details with the lawyer.
81.Under cross examination by Mr Cameron of Counsel for the intervenor, the husband said the solicitor for him and the wife was Mr Peter Phillips however the husband said of his solicitor Mr Phillips, once again I didn’t deal with him directly. Ms M Keyes did.[25] When it was suggested to the husband that I take it you had had no personal interaction with Mr Phillips at all? the husband replied, I – I spoke to him and I met him on the street, but as far as the sitting down in his office, going over those contracts, I had no – I took no part in that process.
[25] Transcript 25/5/16, page 44.
82.Mr Cameron for the intervenor asked “So you never signed any documents in his presence then, I take it?” The husband replied, “I didn’t sign any documents in his presence no.” The husband was asked was he certain about that to which the husband replied, “yes.” In response to the question by Counsel “You have no doubt at all?” the husband replied, “as far as I know yes.”[26] Counsel for the husband clarified “that’s because your case Mr Doran is that you were kept out of the lawyer’s office. You were outside on the street when all of the documents necessary to have the contract ultimately complete were being signed up. You weren’t privy to any of that?” The husband replied, “That’s right.” The husband confirmed several times that this was the position.
[26] Transcript 25/5/16, page 44 lines 15 onwards.
83.The husband confirmed also that he was a joint purchaser of the property and that he had jointly borrowed money from (omitted) Bank. He said again, “Ms Keyes and I were both outside the office.”
84.The husband also confirmed Counsel for the intervenor’s proposition that “And you say you were told by my client that you weren’t to go into the solicitor’s office to witness and discuss the settlement details with the lawyers?” The husband replied “that’s right, quite firmly.”[27] Counsel for the intervenor clarified, “Notwithstanding that you were one of the purchasers?” And the husband replied “I was incredibly uneasy about it.”
[27] Transcript 25/5/16, page 45 lone 0 – 20.
85.Another aspect of the husband’s case as mentioned earlier was that on the settlement day,[28] he had “firmly been told by Ms M Keyes (the intervenor) to sign a piece of paper which Ms M Keyes produced to me but which had been completely covered over with another piece of paper” so that he did not know what he was being asked to sign. When asked if this happened at the solicitor’s office, the husband said “this was outside the solicitor’s office on the street.”
[28] Affidavit, paragraph 33, page 11.
86.The husband said in his oral evidence he signed the piece of paper even though he didn’t know what it was he was signing.
87.When asked where specifically did he sign this “piece of paper” out on the street, such as on a car or up against a window, the husband replied, “I am thinking there was some sort of pedestal outside one of the shops there and - yes, that’s right. I was – Ms M Keyes was quite firm that “You are not coming in” and “Just sign this”. You know, I’m like “What’s going on here” And yes, she had the page covered over and she said, “Just sign here. That’s all you need to do” and I was pushed, but obviously I’m in a situation where I’m with Ms Keyes, we have got children, we are purchasing a home. I don’t know why that happened like that but it did, and I signed it, because obviously there was pressure there. I was a lot younger.” The husband admitted that he was 33 at the time.
88.The husband continued a little later, “I signed the piece of paper outside the office and then Ms M Keyes went into the office, into Farellys and signed whatever paperwork, and did whatever needed to be done in the office, and myself and Ms Keyes were both outside that office.”
89.The husband confirmed again that he stayed outside and was told quite firmly by Ms M Keyes that I was not to go in that office.[29] Counsel asked again so you never went inside Farrellys office at all? The husband replied I could have gone into the office but not when it came to signing the paperwork.
[29] Transcript 25/5/16, page 46, line 15.
90.The husband confirmed that the three of them (husband, wife and intervenor) went to Farrellys office that day for the purpose of getting the settlement and to have the contract complete saying “that’s correct.”
91.After a series of further questions he confirmed their solicitor Mr Phillips had not ever attended at their home. The husband said that he had met the solicitor on one previous occasion in town here... a long time ago and that he could not recall signing any documents with him on that occasion.
92.Counsel then suggested to the husband that what really happened was that the husband went to the solicitor’s office on 2 July 2001 and met with Mr Phillips on that occasion with the wife and in fact sat down and signed some documents with Mr Phillips. Counsel for the intervenor asked, “So are you saying that what I said is not true. The husband replied, “That’s exactly what I’m saying – well, no that’s - no, I’m. I’m telling you what happened.”[30]
[30] Transcript 25/5/16, page 47 lines 25 onwards.
93.All of this categorical evidence from the husband about being kept outside of the solicitor’s office by direction of the intervenor crumbled and was shown to be entirely false, given the production by Mr Cameron of Counsel for the intervenor, of the mortgage[31] executed by the husband and wife and witnessed by Mr Phillips, their own solicitor. The husband offered no plausible explanation to the proposition that the documents were therefore signed in the presence of his and the wife’s solicitor, and that this documentary evidence was entirely contrary to the case that the husband had been running. The husband when faced with the documentary evidence, was loathe to make any concession, but finally only conceded that it was “quite possible.”[32]
[31] Exhibit 13.
[32] Transcript 25/5/16, page 55 line 30.
94.As to the “piece of paper” that the husband said he was made to sign, I accept the evidence of the intervenor that she had an agreement she wished the parties to sign on that day, however, because she was told by Mr Phillips, solicitor for the husband and wife (not the intervenor) that to do so might jeopardise the chance of the loan of monies by (omitted) Bank to the parties, the intervenor decided against having her prepared agreement formalised. I accept her evidence that at no stage did she ever ask or speak to the husband about signing the lay persons loan document. I also accept that for the purpose of preparation in this litigation the intervenor has tried but has not been able to locate her lay person’s agreement. I accept though that she has taken appropriate steps to try and locate Mr Phillips, the solicitor who, 15 years ago, took her aside and told her of his concerns regarding the mortgage from (omitted) Bank. I have detailed the intervenor’s further evidence in this regard elsewhere in this judgment.
95.It seems to me that the husband, in trying to cover the possibility of the lay persons loan document being found, has given false evidence about being told forcefully to sign a document by the intervenor, which he was not permitted to see. I accept that this entire fanciful story has been concocted by the husband to advance his position in this litigation. I am satisfied that the husband’s version of events as to being forced to sign a document prepared by the intervenor (or anybody else for that matter) is untruthful and implausible.
96.I also reject the husband’s evidence that he was directed by either the intervenor or the wife or both of them to stay outside the solicitor’s office at the settlement date or any other time so as to prevent him signing the necessary documents as also being inherently implausible and false. I am satisfied that the husband and wife signed the mortgage documents in the presence of their solicitor, inside the office.
97.Regrettably, as can be seen by my findings, the husband is not a truthful witness and is prepared to say whatever he thinks will help him strategically in this litigation.
98.I will now turn to the wife’s evidence regarding the initial advance of the intervenor.
Wife’s evidence as to the advance of funds
99.In relation to the wife’s evidence as to the advance of the funds towards the purchase of the Property J home, the wife gave evidence and was cross examined in relation to the money provided by her mother, the intervenor. Her testimony withstood any challenge under cross examination. I accept the wife as an honest witness. She gave her evidence in a matter of fact style without embellishment or emotion. The wife was an accurate historian, as was her mother the intervenor. The wife had suffered through the husband’s refusal to provide her with financial support during the marriage for years, when there was no evidence to substantiate his claims that his business had a down turn and there was no money to pay mortgages, rates and taxes. To the extent that it is implied or inferred by the husband, I do not accept that the wife and the intervenor had concocted a story to pretend that the funds were a loan, rather than a gift. Each of these witnesses gave credible evidence as to the circumstances surrounding the advance of the money. I accept their testimonies.
100.I am satisfied that, as referred to elsewhere in these reasons, the wife told the husband that the funds advanced were a loan, and also that the wife explained the terms as to the repayment of the loan. I am also satisfied that the husband knew that the funds were a loan and he knew the terms of the trigger for repayment which included their separation.
101.I will now turn to the evidence of the Intervenor, Ms M Keyes.
Evidence of the intervenor – Ms M Keyes
102.Ms M Keyes gave evidence and was cross examined. I found her to be an honest witness and a grandmother who had tried to help out her daughter, by providing significant funds as a deposit on a home, at a time when the husband and wife wished to buy their first home.
103.The evidence of the intervenor is that she knew her daughter was financially struggling, that she had a very young family, and that she wanted to help them be able to get ahead in life. The intervenor says that the money was provided with conditions that it was to be repaid if the parties sold the house and there was equity left to do so, the parties separated or the intervenor was in a position of financial hardship and needed the funds back. The husband denies any knowledge of any conditions or any discussions with the intervenor or the wife about the basis upon which the funds were to be repaid.
104.It is agreed that the intervenor bought a car for the wife when she didn’t have a car at a time when the parties had three young children to get to school.
105.Ms M Keyes said that her daughter approached her when the wife and husband were wishing to buy their own home, to see if she would assist them as the husband did not earn enough money to obtain a loan. To her knowledge, they had no savings or equity to contribute to the property. That was back in 2001 when the husband and wife had three young children aged 4, 3 and 1. She said they were a young family with three babies, she lent the money given her daughter was in this position of being part of a young family with three children, to help them start out their life. She said that they were happy times when she advanced the money but she knew that over the years, there was domestic violence in the relationship and that her daughter and family were suffering.
106.I accept her evidence that she did not ever ring the husband directly in the 19 years she knew him as the de facto partner of her daughter. I accept that she did not ask to speak to him on any call she had with the mother, and that she did not ever say to the husband that she was going to gift him or the wife, the amount of $150,000.00. The intervenor said that it was a significant amount of money back in 2001 and she had wanted at least a laypersons loan agreement signed by the husband and wife. I accept that the intervenor saw her own financial planner Mr K and that he drew up a document showing the interest and repayments on a loan of $170,000.00 which was the $150,000 plus stamp duty and which is annexed to the intervenor’s affidavit of 10 March 2016. This was not challenged. I accept also that she disclosed the layperson’s agreement to her financial planner Mr K and that the intervenor tried to locate Mr K for this trial, but without success. The intervenor said that at the time she consulted Mr K in 2001, his wife was very ill and she believes the wife may have passed on. The intervenor said, “I have tried very hard to find him, but I’ve gone through every detail in Melbourne to find this person.. I don’t even know whether he has passed on himself.”[33]
[33] Transcript 25/5/16, page 75.
107.Ms M Keyes senior explained that whilst she couldn’t find the lay persons agreement, she did find a yellow writing pad she had on the day she went to the solicitors. She also explained that she has been chasing people from Farrellys. Ms M Keyes said that she spoke directly with Peter Farrelly on the day of the settlement, but she did not contact (omitted) herself ever. I accept her evidence that she did not press ahead with signatures of the husband and wife on her lay person’s agreement given the discussion she had with Peter Farrelly.
108.Under cross examination Mr Mould of Counsel suggested to the intervenor that when she gave the advance of funds, that she did not ask for any security. The intervenor responded in relation to her agreement, “No, but I was there to have it signed, but it wasn’t signed because of what Peter Phillips told me, that these young people would never get a start.”
109.Mr Mould of Counsel did not put to the intervenor that the moneys advanced by her in 2001 was a gift and not a loan. As close as he got to was, “It was only after they separated that you told Mr Doran you wanted these moneys repaid.” The intervenor responded, “I have never spoken to Mr Doran at all.”
110.Contrary to the husband’s evidence that he did not know that the wife was contending that the sum advanced was a loan until he read her affidavit, the true position is that the husband was told up front that the money was a loan in the wife’s letter in February 2014.[34] The husband did not take issue with the money being termed a loan, until he changed solicitors and then in September 2014, had those solicitors write and say that the intervenor has not in 17 years made any attempt to recover those funds and it was not until our client received your letter in February was he ever told that the money was a loan. We’re instructed that your clients mother made it clear at the time of purchase that the money was a gift that did not have to be paid back. Whilst this is a letter and not sworn evidence from either the intervenor or more particularly the husband, I note that there is no sworn evidence by the husband that the intervenor ever told him it did not have to be repaid. When the husband was asked what it was that the intervenor had allegedly said which made it very clear that the money provided was a gift and did not have to be paid back, there was no further evidence other than the alleged phone call, which lasted for seconds it seems, in which the intervenor said only “I am going to give you the money.”
[34] Husband’s Affidavit filed 9/2/15, annexure TAD1.
111.The letter from Williams Graham & Carman continued, “Certainly by her actions over the last 17 years, this would appear to be the case. Further, there appear to be no documents of any kind signed by our client agreeing that the money provided by Ms M Keyes was a loan to be paid back. Given Ms M Keyes’s business acumen, we’re instructed that had the money been a loan then she would’ve had the relevant documents drawn up at the time of the transaction.” There is sworn evidence which I accept, that this is precisely what the intervenor proposed to do (i.e. draw up documents in relation to the advance) through the use of her layperson’s agreement but that on hearing it may affect the ability of the husband and wife to obtain their loan, the intervenor abandoned her plans to document the loan.
112.In response to the suggestion that it would not come as a surprise to the husband that the intervenor did in fact, as predicted by him as set out in the letter, have a lay persons document drawn up reflecting the terms of the loan agreement, the husband stated, “I didn’t see it and I wasn’t spoken to about it.” It is part of the husband’s case that he was forced to sign a document and I gather from Mr Mould’s submissions that I am to accept that this was a document drawn up by the intervenor, importantly however, there is an inherent flaw in this part of the husband’s story as he also gives evidence that he did not see the document therefore he does not know what it was that he was asked to sign. This is just all part of the implausible matrix of facts that the husband has contrived.
113.I accept that the wife spoke to the husband about the loan and the terms. I do not accept the evidence of the husband that the intervenor spoke to him directly on the phone in any circumstance. Even if I did accept that intervenor spoke to the husband on the phone about the advance (which I don’t), I do not accept that what was allegedly said, would be sufficient basis to conclude that the money’s advanced were a gift, and that the sum was never to be repaid.
114.Ms M Keyes senior confirmed that she and the wife went to an auction and purchased the Holden station wagon for the wife, as the wife had no transport for herself and the children and that this was a gift to her daughter. In relation to the share portfolio of the wife, I accept the evidence of the intervenor that she started buying shares for the wife when she was quite young and when (omitted) and (omitted) came on the market she purchased shares for all of her family and grandchildren.
115.I also accept the evidence of the intervenor as to the critical situation that arose around December 2013, with the relationship between the husband and wife being at the cross roads and that after a period of not hearing from her daughter, the intervenor rang her daughter. At that time there was a concern with the wife’s health and the wife was crying because the wife knew the house might be lost. The wife knew their Property J home where she and the children lived might be lost through the intervention of the bank and given the notice which had been left on her door by those acting for the bank that action could be taken whilst was away from the house even for short period. The intervenor found out that the mortgage was in arrears by $23,000.00 and started to find out what legal steps were open to her.
116.The mortgage had been increased without any notice or agreement of the intervenor. At the time the intervenor spoke to her daughter (the wife) in December 2013 or early January 2014, she learned that (omitted) Bank had engaged Gadens lawyers to issue proceedings in the District Court. Moreover, as a result of a default judgment obtained on 5 December 2013, the husband and wife were formally on notice as set out in a letter of 9 December 2013, that they were to vacate the property within 7 days, or make payment of the judgment amount within seven days (then $240,928.12 and increasing daily) failing which Gadens on behalf of (omitted) Bank would take action to obtain vacant possession of the security property, the Property J home.[35] After the default judgment and the threats of (omitted) Bank to take possession of the house unless the mortgage debt was paid out in full, the wife says that (omitted) Bank caused a letter to be put on the front door of the family home to the effect that as the mortgage was not paid they were foreclosing upon us.
[35] Various copies of correspondence attached to the affidavit of the intervenor filed 29/7/15.
117.The situation was critical and the intervenor sought legal advice about what to do to help save the house in which her daughter and her four grandchildren lived.
118.The intervenor was aware by this stage that the marriage of her daughter and the husband was in difficulty, she was worried about her daughter’s health since the birth of their fourth child in (omitted) 2011, and she was aware that the relationships been plagued with incidents of domestic violence as told to her by her daughter. The mortgage repayments were severely behind at this time totalling around $23,000.00. After initially seeking legal advice as to whether she could place a caveat on the Property J house to defer any sale of the property, the solicitors for the wife reported that they were unable to obtain our client’s ex-partner’s agreement to assign the mortgage to your client. Ultimately, through her lawyers and the wife’s lawyers,[36] a method of saving the house was decided upon whereby the intervenor provided funds to her daughter to pay out the mortgage, that the wife would seek urgent action under the Family Law Act that the husband leave the family home and a mortgage be granted to the intervenor which would enable (omitted) Bank to be paid out.
[36] Affidavit of the intervenor filed 29/7/15, annexure K9.
119.Ultimately, despite a lack of co-operation from the husband until the eleventh hour, through these steps the intervenor paid out (omitted) Bank the amount owing of $254,824.00 in consideration of the transfer of the mortgage to herself. The husband agrees that this second amount ($254,824.00) which was advanced by the intervenor to save the house was a loan and is repayable as such.
120.What is abundantly clear on any account of the evidence, is that these parties would not have been able to purchase the Property J property when they did in 2001 if they had not had the assistance of the intervenor to do so.
121.Up until 2001 when they purchased the Property J home, the husband and wife with baby Mr L, then around 4 months old, had previously lived with the husband’s parents in (omitted) 1997 paying rent of around $100 per week. They had another child the following year on (omitted) 1998, and then a third child 2 years later on (omitted) 2000 with the birth of X.
122.I accept the evidence of the intervenor outlining the circumstances in which the funds were advanced. I found the intervenor to be an honest witness who gave a sensible, measured and accurate account of her decision to provide a loan to enable the purchase a home and that she did this through her close and loving relationship with her daughter and the children. I am satisfied that the intervenor made it clear to the wife that the money was to be repaid when the house was sold and there were sufficient funds to repay her or when the parties separated or when she needed to have the funds returned. I accept the wife’s evidence that she did advise the husband of the fact that the money had to be repaid, contrary to the denials of the husband, and I accept that the wife told the husband the basis upon which the money was advanced.
123.I regard this advance of funds as provided in the context of a family arrangement which for reasons explained herein, was not formalised into a written contract as would have been the case with a commercial lender. I accept the evidence of the intervenor as to the terms of the loan as to when it was to be repaid and that she desisted from formalising the loan upon being told by the solicitor for the husband and wife that to do so, may jeopardize their ability to borrow funds for the mortgage from (omitted) Bank.
124.The husband is not in any position to deny that the terms of the loan were explained to the wife by the intervenor as he has admitted that he was not involved in those discussions. His evidence is that the one and only discussion that he had with the intervenor was on the alleged phone call. For the reasons explained elsewhere in this judgment, I also accept the evidence of the wife that the topic of the loan came up from time to time over the years and that she had explained those terms and conditions to the husband that the funds were a loan and they were repayable when the house was sold, if there was enough equity to do so, or when the parties separated or if and when the intervenor was in financial difficulty such that she required repayment of the loan.
125.In addition to being told the funds were a loan by the wife, and the basis of the loan, it is also apparent from the list prepared by the husband in preparation for seeing his solicitor that he knew the funds were a loan and he knew that the separation of the parties triggered repayment of the loan.
Legal argument put forth by Counsel for the husband
126.Counsel for the husband Mr Mould has submitted an omnibus of legal reasons and principles as to why the Court should not regard the advance as a loan for the purposes of this property division between the husband and wife these concepts include:
a)Jones v Dunkle[37] argument.
b)Mr Mould makes reference to the Elias principle. Mr Mould of Counsel for the husband submits that this Court should reject the suggestion that the funds were a loan, based on the fact that the wife and the intervenor must have mislead (omitted) Bank when their mortgage was applied for and therefore by application of the Elias principle, the wife cannot come to this Court and assert that the funds were a loan.
c)That the statute of limitations prevents the intervenor from demanding payment of this alleged loan.
d)That there was no binding contract at law.
e)That there was no certainty of terms which means the contract is void and raises other contractual arguments to support the position that the funds could not possibly be categorised as a loan.
f)That the advance does not have the characteristics of a loan as there is no interest payable, no mention of the repayments required and no time for capital repayment.
g)That in relation to the laypersons agreement that the intervenor says she initially proposed the husband sign, that the intervenor and the wife are the subject of estoppel by conduct or equitable estoppel, as set out in his submissions.[38]
h)Other legal issues of “unconscionability” are raised by Mr Mould in terms of the intervenor not communicating with the husband in relation to her advancement of the funds along with a submission that the Intervenors purported equitable claim is faced with a valid defence of laches as she sat on” her alleged rights until after the date of separation of the parties. There is no purported constructive claim being made by the intervenor. There is no resulting trust claim being made by the intervenor. I find this submission to be wholly irrelevant.
i)Calverley v Green argument.
[37] Jones v Dunkle & Anor [1958] HCA 8.
[38] Page 8.
127.I shall now turn to address each of these submissions:
Jones v Dunkle
128.Mr Mould submits that the intervenor ought to have provided evidence from it seems, either the solicitor Mr Phillips or her financial advisor at the time who helped her prepare the table of repayments which are attached to her affidavit. Comprehensive submissions have been made in relation to the alleged application of the rule of Jones & Dunkle by Mr Cameron of Counsel for the intervenor. I rely upon but do not repeat those written submissions.[39] In this matter there is no unexplained failure by the intervenor to call a witness such as would substantiate an inference to be drawn that the uncalled evidence would not have assisted the intervenor’s case.
[39] Pages 8 and 9 intervenor’s written submissions.
129.The intervenor gathered up all of the evidence she was still able to locate and without any objection, she relied upon the table of repayments prepared by her financial advisor. I accept the intervenor’s evidence that the passage of 15 years had made it difficult for her to locate the solicitor Mr Phillips who did the conveyance and who suggested that she not proceed with the layperson’s agreement and also her financial advisor.
130.I reject the adverse inferences that are submitted by Mr Mould of Counsel that the court should draw from the unavailability and uncontactability of either Mr Phillips or the intervenor’s financial advisor. I also reject any suggestion that the intervenor consciously decided not to call Mr Phillips the solicitor. I find the rule has no application at all.
Elias Principle
131.Mr Mould of Counsel submits that due to the fact that the intervenor did not mention the advance as a loan to the (omitted) bank, it is submitted that, “that she is estopped from resiling from that representation by virtue of the Elias principle.”
132.I have had regard to the decision in Elias and Elias (1977) FLC 90-267 a single judge decision in which Justice Goldstein of the Family Court of Australia stated that the husband could not be seen to present one position to the Australian Tax Office as he did, that he and the wife were in a partnership, and then come to the Court and contend that the business was solely his. His Honour’s decision was that the husband was bound by his statement to the ATO. This principle is raised from time to time in Family Law cases and referred to as the Elias Principle.
133.In a 2014 decision of this Court, Judge Terry canvassed the authorities on the Elias Principle and the history. I am also aware of the recent judgment in Daniher & Garlett [2014] FCCA 2961 a decision of Judge Terry where the issue of Centrelink payments and statements was also discussed.
134.Her Honour quoted the Full Court Case of Crandall & Crandell [2009] FamCAFC 120 in the Full Court stated:
“The Full Court was referred to Elias & Elias in the 2009 case of Crandall & Crandall and it said as follows:
In the absence of detailed submissions and reference to authority we consider it unnecessary to discuss in detail the parameters and application of the “Elias principle.” A scholarly dissertation is to be found in Jordan & Jordan (1997) FLC92-736 where Chisholm J (at 83,927) posited the following as representing the “Elias principle”:
When a party has made representations of fact to third parties and has gained advantage from doing so, it is open to the Court in subsequent proceedings under s 79 of the Family Law Act to decline to accept from that party evidence which contradicts those representations.
It will be observed that the “Elias principle,” as formulated above, does not represent an inflexible rule. Rather, it imports a discretion permitting the Court to exclude certain evidence. Furthermore, for the “principle” to have any application it is necessary to establish that some earlier representations was made that was inconsistent with the evidence sought to be adduced at trial.”
135.I note that the Full Court considered that the “Elias Principle” as formulated does not represent an inflexible rule and that the Court still retains the discretion as to whether or not to exclude certain evidence.
136.As to the submission that the Elias Principle applies, this submission seems misconstrued. There is no evidence that the intervenor ever made any submissions to (omitted). The intervenor did not obtain any advantage from the husband and wife’s dealings with (omitted) Bank. The intervenor is not approaching this court having made a statement to (omitted) Bank contrary to her position now.
137.Further, there is no evidence that either the husband or wife made any false statements to (omitted) Bank. The wife says that she and the husband filled out any documents and to the best of her recollection there may have been a question about how much deposit the parties may have had. I am not satisfied that the Elias Principle applies at all in this matter.
138.I accept the submissions of Ms McMillan QC and Mr Cameron of Counsel in relation to the Elias Principle being irrelevant.
Statute of Limitations
139.As to the statute of limitations, Mr Mould of Counsel submits that if the agreement is an agreement simpliciter that it is repayable on demand and the limitation date starts from the date the monies are advanced. Otherwise, Mr Mould concedes that the statute of limitations starts from the date that any of the conditions might have eventuated if the Court was to hold that the conditions were certain. Mr Cameron of Counsel in his written submissions has attached a bundle of authorities and has helpfully identified Vadisanis & Vadinsanis & Anor (2014) FLC 93-593 a Full Court decision which touches on issues of loan agreements and the limitation period. The Full Court found in that case that the reasoning of Fullagar J in Ogilvey & Adams [1981] VR 1041 at [1049] and [1052] making reference to the construction of a loan document and the terms which may appear in a contract which may be sufficient to show an intention that the cause of action (to recover the money) is not to arise until some actual demand or some form or demand is made or until some period after the demand has elapsed.[40]
[40] Paragraph 79.
140.Mr Cameron of Counsel submits and I accept that the terms of the provision of the $150,000.00 by the intervenor were clear and certain. The loan was to be repaid after the sale of the property if there was sufficient equity to do so, or when the wife separated from the husband, or if ever the intervenor was in difficult financial crisis that required repayment of the sum. The intervenor stated that has not occurred to date.[41] This loan was therefore not simply payable on demand and therefore, the six year limitation period does not run from the time the funds were advanced.[42]
[41] Paragraph 4 of the Intervenor’s affidavit filed 29/7/15.
[42] Intervenor’s submissions, page 7.
141.That being so, the cause of action in this matter did not accrue until any of the three conditions occurred. The relevant trigger for the repayment of the loan in this matter was the separation of the parties and that occurred in or around January 2014.
142.Therefore, the reference to the statute of limitations does not apply.
No binding contract at law/ no certainty as to the terms of the contract
143.Another legal argument is put forward by Mr Mould of Counsel who suggests that the advance ought not be characterised as a loan because the terms were uncertain, there was no binding contract at law, the intervenor did not change her will to reflect a loan to her daughter. The advance does not have the characteristics of a loan as there is no interest payable, no mention of the repayments required, no time for capital repayment, no communication of offer nor communication of acceptance.
144.Mr Mould of Counsel appears to be making reference to the decision of His Honour Mason J in Meehan & Jones. I have concluded later in this judgment that there is no uncertainty of the terms of the loan and the conditions upon which it was repayable and the certainty that the full amount was repayable.
145.I am satisfied that as between the family members there was an intention to create legal relations between these parties in terms of the advance and the terms which applied to the conditions of repayment in relation to that advance. I have been referred to Richard Walter Pty Ltd v Federal Commissioner of Taxation (1995) 31 ATR 95. In making reference to the fact that a document that on its face purports to be a loan agreement, but it is agreed that the document is intended to give the appearance only of a loan transaction but that it may really be a sham or something devised to delude or trick or something that is intended to be mistaken for something else, His Honour noted the authorities state that in law, nothing can be elevated to something which the law will recognise and enforce merely because documents which are drawn in legal language appear, a series of bookkeeping entries is made and use is made of the banking system. His Honour noted this reference by Justice Carter.[43]
[51] Furniture taken out of the property pool.
Step 2 – Financial and non-financial contributions –Section 90SM (4) - considerations of the financial and non-financial contributions.
183.There is agreement between the parties that they each had very little in the way of possessions at the commencement of the relationship.
184.The wife has been the primary carer of the three children born between 1997 and 2000 and then also their fourth child, Y born (omitted) 2011. These parties have conducted themselves in a fairly traditional manner in that the wife has been a stay at home mother and raised four children whilst supporting the husband’s business endeavours during the relationship. By taking on this responsibility, the husband has been free to work outside of the home and earn an income.
185.There was a contribution on behalf of the wife by the intervenor in buying a vehicle for the parties at a time when they had three children and no car. The car was a Holden (omitted) purchased for $20,000.00. The wife said she hoped to repay her mother for this outlay however they never had funds available to do so. It is agreed that for the first 3 years the parties lived with their children in a home owned by the father’s parents for $100.00 per week. There was however no admissible evidence as to whether that was a reduced rent or the market value.
186.The wife’s mother has also gifted to the wife shares for the respondent, (omitted) (2200) and (omitted) (202). The wife has retained and added to the portfolio. Given my findings about the monies being advanced by the intervenor being classified as a loan, I do not overlook the fact that the loan has been provided interest free which is another contribution on behalf of the wife.
187.The husband who was the primary income earner as a (occupation omitted) during the de facto marriage though did not maintain the mortgage repayments from around 2010 onwards. I set out elsewhere in these reasons the husband’s conduct in failing to make payments to the parties’ joint debts which has resulted in the diminution of the asset pool.
Contributions to the welfare of the family
188.I am satisfied that the husband puts little value on the role the wife played in raising their four children and looking after the welfare of the family. His emphasis on the wife “not working” when she was raising three children was rather illustrative of his views. He also showed no insight into the concept that the work required to care for and provide for the social, educational, medical and other needs of four children still continued, even if they did go to school. Raising children does not occur between the hours of 7am and 3pm, which were typical work hours of the husband. I do not accept his evidence that he was heavily involved with the children when he was home.
189.In this regard I have referred to the authorities such as Fields & Smith[52] Fields and Smith in which their Honours Bryant CJ and Ainslie-Wallace J noted and approved of the comments of the trial judge regarding the contributions of the homemaker and parent. The trial judge stated at paragraph 63;
“A contribution by one party to the role of home-maker and parent and to the welfare of the family more generally that allows the other party to their union the physical and mental space to pursue income and capital generation is, in my view, an often-neglected, yet extremely important contribution. I consider that this is what occurred in this particular marriage; the former contribution being made by the wife so as to allow the latter contribution by the husband. Again I do not consider the one to be more or less important (or valuable) than the other.”
[52] [2015] FamCAFC 57.
190.It is clear from the authorities going back many years that the value of the home maker and contribution to the raising of children is to be given real and not token weight.[53]
[53]Mallett and Mallet (1984) FLC 91-507.); Justice Murphy in Watson & Ling (supra).
191.Significantly, the wife’s primary care of the four children has continued post separation since late 2013 up until trial, 3 years later. The husband contributed little to nothing over these years. Her efforts in this regard are significant. In 2013, Mr L was 15 turning 16, Mr I was 14 turning 15, X was 12 turning 13 and Y was 1 turning 2. The husband did not make financial or non-financial contributions. The wife’s contributions as homemaker and sole parent have continued post-separation and up until trial. The wife’s contributions have occurred in the midst of significant financial pressure with the wife receiving no financial support from the husband.
192.The wife continues to care solo for all four of the children, though two of are now over the age of 18 but who continue to live with the wife. As submitted by Counsel for the wife X and Y are under 18 years of age and rely entirely on the wife to meet their emotional and financial needs. The wife has been left to sort out the financial and emotional carnage left by the husband.
193.I am satisfied that the Kennon argument as advanced by the wife warrants a further uplift in favour of the wife in terms of contributions. I am satisfied that the wife has been subjected to an ongoing course of intimidation and harassment and physical injury for at least ten years. The wife has suffered physically and been abused by the husband. I am satisfied that there have been incidents throughout the relationship and up to the separation which satisfy the criteria referred to in Kennon. I assess the uplift attributable to the Kennon factor which covered a period of almost 10 years to be set at 5%.
194.Having regard to the other financial and non-financial contributions and to the wife’s sole parenting obligation which has continued from separation until the trial, a period of 3 years. I am satisfied that the appropriate assessment of the parties contribution to the asset pool is 55%. Adding this percentage to the Kennon percentage brings the final contribution based assessment at 60% in favour of the wife and 40% in favour of the husband.
Step 3 - Section 90SF(3)
195.I will now turn to the relevant section 90SF(3) factors to examine whether or not a further adjustment is warranted.
196.I note that the parties are aged 48 (husband) and 47 (wife).
197.As to the earning capacity of the parties, the husband’s evidence is at trial that he is earning around $1,000.00 per week. The husband’s financial statement filed 27 February 2015 shows his income at $1,300.00 per week which equates to around $67,600.00 per annum. The husband’s tax return for 2015[54] shows an income of $51,669.00 for the 2014/2015 financial year. The husband has many years of experience as a qualified (occupation omitted) working for himself in a loose partnership with another (occupation omitted). The husband says he is depressed. I have no admissible evidence that he suffers from depression or that he has any health issue which is going to have an impact on his future capacity to earn an income as (occupation omitted).
[54] Exhibit W4.
198.The evidence shows that he is happily continuing to participate in his (hobby omitted) including attending at carnivals. There is no evidence to support the assertion that the husband’s future income earning capacity may be affected by him allegedly suffering depression.
199.The wife has been out of the paid workforce since the birth of their first child in 1996, some 20 years. Any qualification she had in working in (employment omitted) prior to 1996 is her (qualifications omitted) is extremely dated and she has many years of providing for the welfare of the family and being a full-time mother. Submissions made about her ability to obtain employment are completely without foundation. The wife receives Centrelink as her income. Their youngest child Y is 4.5 years old and she has significant child raising obligations ahead of her in the years to come. The second child under 18 year is X, aged 15 is also in the full-time care of the wife, so the wife is the primary and only parent who undertakes the obligation to raise children under 18. X does not spend any time with the husband due to experiences he was exposed to in the family home prior to separation as referred to elsewhere in these reasons and Y has only supervised time with the husband for 2 hours weekly. The amount of time that the wife has been out of the paid workforce has left her significantly ill-equipped to enter the workforce at aged 47. She chooses to continue her role has parent for the remaining two children under 18.
200.Given the ages of Mr L (19) and Mr I (18) and X (16 on (omitted) 2016), and that they have all expressed a strong view not to spend time with the husband, it is highly unlikely that these 3 children will ever be living with the husband.
201.The wife also financially maintains the adult children Mr L and Mr I. The wife has been wholly responsible for the financial support for the 4 children.
202.The husband does not have the care or control of a child under 18 years or of anyone else.
203.The husband has not voluntarily paid any monies towards the support of the children since separation in 2013 even in circumstances according to his financial statement 17 February 2015, he earned $1,300.00 per week and his expenses were $650.00 per week or when he was earning $94,589.00 (2014/2015 tax return) which amounts to $1,819.00 per week. The wife has an exemption from the child support agency due to the domestic violence she says was perpetrated upon herself and the children. The husband’s gross income for 2014/2015 was $94,589.00. He has not paid any child support since separation.
204.If the wife retains the shares she will have dividends payable.
205.It is unlikely that the husband will pay any monies in the future if his past conduct is any indication. A notation was made on the orders of Judge Turner of 12 October 2015, those orders being consent children’s orders wherein it was noted that the husband would pay child support and one half of all school fees for the children. At the time of trial, despite this indication to the Court, the husband had not made any payments of outstanding school fees of $44,355.00 nor had he made any payments towards the current school fees, nor any child support. The vehemence and contempt which the husband showed towards the wife is inconsistent with him being likely to offer any support in the future. This is a significant consideration.
206.It is clear that the wife has been left with the financial burden (as well as the physical burden) or providing for these children. I accept her unchallenged expenditure as deposed to by the wife of having yearly expenses for herself and the children including:
a)$39,920.00 – home insurance, internet, mobiles, groceries, fridge;
b)$7,220.00 - car - petrol etc;
c)$10,870.00 – school and kindergarten;
d)$4,045.00 – haircuts, driving lessons, creams for acne;
e)$8,400.00 – boys sport - registrations, uniforms, football gear;
f)$2,000.00 – one off – graduation;
g)$3,500.00 – Mr I university.
207.As to a standard of living that in all of the circumstances is reasonable, the wife wishes to remain living in the former matrimonial home. If the wife does remain in the home, this will enable her to maintain a reasonable standard of accommodation for herself and the children, however to do so, she will have significant debt. This can really only occur with the assistance of her mother.
208.The considerations of disparity in income and the wife’s length of time out of the workforce, combined with the wife’s continuing responsibility to raise the parties remaining children under 18, are all factors which weigh in the wife’s favour. Also contributions of the wife to child raising have continued since separation in 2013, in very difficult circumstances. This is a significant factor.
209.As to the consideration of the relevant s.90SF(3) factors, I am satisfied that they favour the wife.
210.Before moving to the consideration of the wife’s argument as to waste, on the factors I have referred to herein, namely s.90SF(3)(a) through to (q) and noting in particular the wife’s sole care of two children, one of whom is aged 5, the significant disparity in income between the husband the wife with the wife being on Centrelink and the lack of any child support that will be paid in the future by the husband, I assess the relevant factors under s.90SF(3) as being worthy of an uplift factor in favour of the wife amounting to 15%.
Any other factor that the Court thinks the justice of the case requires– Section 90SF(3)(r)
Waste - Non-payment of mortgage and taxes
211.It seems to me, the husband decided that if the wife would not go back to work or agree to sell the house, he would just pull out of the financial obligations required to keep the family housed in the Property J home. In 2012 the mortgagee was not in possession of the house though the mortgage was unpaid for 12 months.[55] When the husband left the Property J home in May 2014 the bank was foreclosing.
[55] Above n, lines 10-45.
212.Whatever his reasons were, his non-payment of the mortgage and rates and then taxes has been part of a deliberate decision of the husband and has had inevitable consequence. The husband’s plan came to fruition when the bank took steps to foreclose. Even then the husband refused to help save the house by making an application under the hardship provisions of his superannuation. He was loathe to take up the offer of the intervenor to take over the mortgage. I am satisfied that this caused further expense. At times the dividends from the shares were all that the wife had to live off. The husband’s refusal to lodge tax returns meant that the wife could not obtain Centrelink. The husband withdrew financial support for the wife. The husband’s irresponsible and reckless decision in the fiscal management of the household, in not meeting mortgage repayments, taxes, rates and school fees has resulted in the parties’ indebtedness being significantly increased by the time of separation.
213.The husband has run his case on the basis with an emphasis on the fact that he earned the income to support the family. He denies any responsibility for wastage and says the debts should be shared equally, including his most recent tax debt. Yet the husband did not lodge tax returns for 5 years, he did not pay school fees from 2010, he failed to pay the rates for the years 2008 to 2012, and he failed to pay the mortgage after 2011.
214.The husband’s evidence is that the wife ought to have returned to the work force upon X commencing school. X was born in (omitted) 2000. The husband’s anger at the wife for not obtaining employment after their 3rd child commenced schooling was palpable. He alleged and explained very firmly that “we had an agreement” she would go to work once the children started school.[56] In his oral evidence the husband clearly felt very agitated and duped by the wife as she had not entered the paid work force as per the alleged agreement.
[56] Husband’s affidavit filed 20/4/16, paragraph 36.
215.He also said in his evidence with emphatic statements that the wife would not agree to his plans for the sale of the home. This was clearly another burning issue for the husband.
216.I am satisfied that the husband set out to deprive the wife and children of financial support, and that he deliberately let their joint debts fall into arrears.
217.I do not accept the husband’s testimony as to why these financial obligations were not met. His evidence was generalised statements making vague references to the GFC and the boom in real estate. There is a complete lack of documentation to support assertions by him that he just could not afford to pay the mortgage, the rates and the taxes. The same can be said of the school fees.
218.Given the non-payments of debts during the course of the de facto marriage, the husband said he needed to increase the mortgage to fund pay his outstanding taxes and other obligations. The mortgage debt was increased by $20,000.00 to cover the payment of bills and in November 2008 an additional $70,000.00 was borrowed to pay the husband’s unpaid tax liabilities which he had not paid for the previous 5 financial years. The husband says in his affidavit material that the reason I was not able to lodge my tax returns was because I had insufficient funds to pay the tax because of my earnings went to paying for the family expenses. I do not accept this evidence and there is no evidence to support this assertion.
219.On 8 January 2014 the sum of $12,844.12 was also drawn down to pay the (omitted) Council outstanding rates notices, which had gone unpaid for years.
220.Around 2011, the husband set up in a partnership with another (occupation omitted). At trial the husband said he had been in partnership for five years.[57] This was disclosed during cross examination and despite the husband falsely putting “nil” in relation to income from a partnership on his financial statement.
[57] Transcript 2/6/16 p. 69 line 5 onwards.
221.The husband explained, when asked about the distribution of the funds through the partnership to him and the taxable expenses, that he did receive advice about his distribution in the partnership, that he and Mr M together put the BAS statements in for the partnership and he did know about his taxable expenses, and he was aware that tax was payable on his earnings. He said he was aware that the figures provided to him by Mr M indicated that the husband’s work as a (occupation omitted) had been profitable. He was also aware that his partner paid tax on his share of the earnings.[58] The husband said that the partners keep a business account to cover expenses and their GST payments. It is clear that that the husband knew and complied with his tax obligations in terms of doing what he had to do in keeping up with the partnership tax obligations, though he took a completely different attitude to his own personal tax obligations.
[58] Transcript 2/6/16 p. 70 - 71
222.When the husband was asked about the “rising tax debt” and whether the wife knew. The husband replied, rather naively, “I didn’t have a tax debt and it wasn’t rising because I hadn’t done my tax, but she knew all the way along that I was not filing tax returns and it was going to be an issue and it was going to a problem that was looming.”
223.The husband knew tax was payable on his income and he knew he hadn’t paid the tax payable.
Rates and mortgage
224.The husband stopped paying the rates on the Property J property for the four years between 2008 up to and including 2012 again on the basis that he could not afford these expenses. Having accrued a $70,000.00 debt for 8 years of not paying taxes, the husband then proceeded to allow the tax to again remain un-lodged and unpaid for the subsequent years 2008 to 2011. At the time of trial, the husband had a tax debt of around $6878.00 for his current tax liability. I do not accept as was submitted on his behalf, that this debt should be regarded as a joint debt.
225.Consequently, the mortgage debt fell into arrears and by 2013, by which time the mortgage had increased to around $240,000.00, the mortgagee (omitted) was threatening the parties with foreclosure. The spiralling debt and non-payment of the mortgage lead ultimately to (omitted) obtaining a default judgment against the husband and wife in the sum of $240,928 .00 plus costs and interest.
226.At this point on 5 December 2013, the intervenor intervened again to assist the parties pay out the amount of the judgment debt in the sum of $240,928.12 secured by way of a mortgage on the property. The intervenor also paid the legal costs incurred by (omitted) in addition to her own legal costs to affect the transfer of the mortgage. The husband says that he accepts that the additional funds paid by the intervenor to retain the home and extinguish the (omitted) Bank mortgage were paid as a loan.
227.I have regard to the decisions and principles in Kowaliw & Kowaliw[59] and to the more recent Full Court decision in Griers & Malphas:[60]
“I would not necessarily wish to be seen as endorsing the effect of receipt of these funds as “add-backs” to the balance sheet, something which her Honour eschewed. However, the receipt of these funds by the husband requires expression in some form, either as a matter to be taken into account under s75(2)(o), or, as the wife later argues, in relation to contributions.”
[59] (1981) FLC 91-092.
[60] [2016] FamCAFC 84.
228.And later in the joint judgment of Murphy and Kent JJ:[61]
“With respect to the experienced trial judge, we agree with the Chief Justice that the evidence discloses a very significant disparity or examine the purposes for which the money was used. We repeat that this is a matter of discretion and could have been done either by “adding back” or, as has been suggested as often preferable by decisions of the Full Court, by reference to 75(2)(o)”
[61] Paragraph 131.
229.And later at paragraph 143:
“It was within discretion for her Honour to treat that as “waste” and consequently add it back, just as it would have been within discretion for her Honour to treat that expenditure as a matter relevant to s75(2)(o). We do not consider, with respect, that it was open to her Honour to do neither – or, at least not without an analysis of the respective expenditure of the parties and the use to which money was put and reasons why the differential sounded in neither.”
230.In relation to the waste argument, Mr Mould relies on what he refers to as the roller coaster principle. Mr Mould submitted that mutatis mutandis, the alleged waste debt not be sheeted home to the unwitting Husband under the “roller coaster principle.” Mr Mould relies on the following passage said to be relevant from Re Sabri; Ex parte Brien v Australia and Zealand Banking Group Ltd (1996) 21 Fam LR 213 at 235, a decision of Justice Chisholm sitting at first instance in October 1996, namely, “There is force in this [the roller coaster principle’] as a general proposition, but in my view it cannot be taken as an absolute rule, if only because it treats all marriages as the same. Its force is less than overwhelming in cases where one spouse misleads the other, or fails to alert the other to the true position. (underlining included in Counsel’s submissions).
231.This obscure reference is found in a single line in a Law Reform Commission report from 1992. That single reference was referred to in passing by Justice Chisolm sitting at first instance in 1996, in the matter of Re Sabri: context of his discussion in the case before him regarding priorities and Bankruptcy and the relation back period in the context of Family Law property division. The article His Honour referred to was referring to married couples and flowed on as a description to epitomise what was then assumed to have been said in marriage vows “for better, for worse, for richer or poorer”.
232.In Sabri His Honour said he would consider whether this in itself seems to be a just or unjust result. His Honour said (at page 19) It might be argued, perhaps, that marriage being “for better, for worse, for richer or poorer, it is appropriate that a spouse should share the fortunes and misfortunes of the other: If business or commercial dealing are successful, both spouses benefit, but if they fail it is appropriate that the losses too are borne by both parties. The report of the Family Law Council, cited above, (1992 Family Law Council, The interaction of Bankruptcy and Family Law, June 1992, para 3.41) refers to this as the “roller coaster principle.”
233.This Court is dealing with a de facto couple who have chosen not to get married. They have not taken any vows. At the time of the ALRC report, the de facto legislation was years away from being enacted. I would suggest that reference to current leading Full Court or High Court authorities would be more relevant and helpful to a Judge sitting at first instance as these are persuasive authorities.
234.I have had regards to the authorities referred to by Ms McMillan QC for the wife which include Kowaliw & Kowaliw and Griers & Malphas.
235.I am satisfied that in the circumstances of this case, an adjustment should be made in terms of the result of the husband’s reckless fiscal conduct which has diminished the property pool. I will consider this under s.90SF(3)(r).
236.I accept that the husband’s conduct in failing to maintain the mortgage repayments and failing to lodge his tax returns has had a significant financial flow on effect in terms of the current state of the asset pool. The husband failed to pay 4 years of rates on the parties home between 2008-2012 which resulted in a debt to the (omitted) Council in the sum of $12,844.12. That sum was eventually paid by way of a draw down on the (omitted) Bank mortgage thereby increasing the parties indebtedness.
237.Similarly, the parties indebtedness was increased when in November 2008 the sum of $70,000.00 was drawn down to pay the husband’s unpaid tax liability for the previous 7 or 8 financial years. If these funds had been paid as and when they were due they would not have attracted accrued penalties and interest. The interest on the increase in the mortgage, penalties and interest and taxes has been agreed at $59,640.47.[62]
[62] Transcript page 217 onwards 3/6/16.
238.The husband again failed to lodge his personal tax returns for the year 2011 – 2014. The flow on effect of this was that the wife was unable to claim Centrelink benefits for the family tax benefits A and B for the years 2011 – 2014. A further effect of the husband’s failure to lodge his tax returns was that during the relationship between 2008 and 2010 the parties were receiving some Centrelink entitlements. Once the husband lodged his late tax returns, this created a debt to Centrelink in the amount of $33,147.82.
239.Mr Mould of Counsel asks that the court take account of the husband’s current post separation tax debt as a joint debt, on the basis that he paid child support from his post separation income. I reject this submission. The husband earned the income, provided no support for the wife nor did he pay post separation debts, but rather, kept the income for himself. Moreover, the evidence is that the husband has not paid child support since separation, even when he could afford to do so and even when he indicated to Judge Turner that he would. I am satisfied that his post separation tax debt ought to be for the husband alone to pay and not form a joint debt in this property pool.
240.After separation in June 2015, the wife received a lump sum Centrelink payment of $40,000.00. I accept that $20,000.00 of this was spent on legal fees and the balance was properly and reasonably used for herself and the children’s living expenses. The wife had to purchase a car when her previous car was unusable. Mr Mould of Counsel submitted that the wife ought to have paid some or all of the Centrelink money to reduce their debts rather than buy a car. I do not accept this submission. The wife used the funds to buy a car, so that she had a car to take the children to and from school and for their general use. The submission that she spent “too much” on the car is without foundation and the submission that she ought to have spent money on existing debts created by the husband’s non-payment, instead of enabling herself and the children to be able to get to and from school, is without any regard to the practical realities of life. The husband was earning money post separation that left him with funds to spend each week, yet he did not put funds towards the parties’ debts or the school fees. He had his own car and he did not have responsibility to house and feed four children.
241.I am satisfied the husband did not pay the mortgage instalments as and when they fell due and that this was a deliberate decision on the part of the husband. The wife only became aware of this in January 2013 and it was shortly thereafter in May 2013 that the wife became aware of (omitted) Bank’s intention to take legal action against the parties in May 2013.
242.The wife came up with suggestions as to how they could deal with the situation by accessing superannuation standing in the husband’s name to pay the arrears and the husband refused to do so. The wife also asked the husband to complete hardship forms to reduce the mortgage repayments and again the husband refused to do so. The wife requested the financial support of her mother, the intervenor to payout the amount owing to (omitted) which would have meant that the parties could then sell the Property J home privately and when the market improved, rather than have a mortgagee sale. The husband initially refused this suggestion. The husband’s resistance to any attempts by the wife or the intervenor to save the family home from being re-possessed continued even after the District Court judgment issued. This conduct fortifies my belief that the husband was determined that one way or another that the house would be sold. As was submitted by Ms McMillan QC, I find the husband well knew there were no other funds available to pay the judgment debt and that the only way to satisfy the judgment debt was to accept the offer of a loan from the intervenor or to sell the home in which the wife and all of the children resided. Eventually in May 2014 the husband finally agreed to the terms of the intervenor’s loan and then vacated the Property J home.
243.As a result of all of the failures of the husband, (omitted) proceeded to obtain a default judgment in the District Court on 5 December 2013 in the sum of $240,928.12 plus costs and interest. The legal costs incurred by the parties as a result of the default judgment totalled $6,528.55.
244.I accept the force of the submission that if the husband had continued to simply pay the mortgage repayments, the parties would not have had to incur all of the additional legal costs.
245.On 26 May 2014 the mortgage was transferred to the intervenor. I do not accept any of the husband’s evidence about why he didn’t complete the hardship form or why he didn’t access any of his superannuation to save the family home. His conduct speaks for itself and his intentions were clear. Because of his delay in agreeing to the intervenor to take over the mortgage rather than have the house sold, further interest accrued on the amount unpaid to (omitted). Ms McMillan QC submits that the total including penalties, interest on the mortgage, tax and rates, a sum of $59,647.47 overall has been unnecessarily and wastefully incurred by the husband. This figure was agreed to in final submissions. I accept the submissions of Counsel for the wife in this regard.
246.I am satisfied the financial waste by the husband constitutes, a consideration I am able to have regard to under s.90SF(3)(r) namely, any fact or circumstance, which in the opinion of the court, the justice of the care requires to be taken into account in incurring unnecessary penalties due to his deliberate non-payments of debts. This sum amounts to just under $60,000.00 or almost 20% on their net property pool of $338,554.00. I am satisfied that a further uplift should be made in favour of the wife given that the husband has depleted an already modest asset pool.
247.I consider that a further uplift factor in favour of the wife in relation to the waste factor caused solely by the husband, should be assessed at 5%.
248.Adding this to the other considerations as outlined in these reasons pursuant to s. 90SF(3)(a) to (q) factors, results in a total uplift factor of 20%.
249.Adding this to the contribution based assessment pursuant to section 90SM(4), of 60% to the wife and 40% to the husband, brings the final assessment on division of property to 80% to the wife and 20% to the husband.
250.The husband has agreed that the wife can retain the house and he is seeking to be paid out his percentage in cash. Dividing the property pool which has a net asset value of $364,554.00 (as per the table in these reasons) on a 20% division in favour of the husband results in a payment to the husband of $72,911.00.
251.From this figure the husband already has assets (as per the table) in his control which total $14,302.00. Deducting this amount from $72,911.00 results in a payment by the wife to the husband of $58,609.00. On this basis the wife will retain the house and the two debts ($156,413.55 and $254,834.02) payable to the intervenor. The wife will also be responsible for the payment of the outstanding rates.
Step 4 – Just and Equitable Orders
252.In determining whether the orders proposes by the court are just and equitable, it is necessary for me to stand back and reflect as to the actual dollar amounts received by each of the parties is just and equitable.
253.In this matter there are several factors which are peculiar to this case. The wife’s contributions have exceeded those of the husband’s for the reasons referred to. This matter has attracted the application of an adjustment for the Kennon argument. In addition there are significant s.90SF(3) factors such as significant disparity in earnings, the wife having 2 children in her care, the refusal of the husband to pay child support which will continue into the future and finally, a consideration of the waste caused solely by the husband’s conduct. Having regard to all of those matters, I am satisfied, noting that the husband has an occupation and many years of experience and no other person to support that the distribution as proposed is just and equitable.
254.In terms of the intervenor, I intend to make declarations are to the two amounts of money being advanced, as being debts. Given that the wife will retain the house, she will also be solely responsible for repayment of those debts.
255.I intend to make Orders in the form provided by the wife.
I certify that the preceding two hundred and fifty-five (255) paragraphs are a true copy of the reasons for judgment of Judge Willis
Date: 18 April 2017
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