DRURY & BENSON (No.2)
[2020] FCCA 250
•10 February 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| DRURY & BENSON (No.2) | [2020] FCCA 250 |
| Catchwords: FAMILY LAW – Property – where the parties were in a de facto relationship for approximately 10 years – whether various addbacks should be included in the property pool – whether an alleged loan from the Applicant’s parents should be brought to account – whether the Applicant should receive a Kennon adjustment – orders made for the pool to be divided 60/40 in favour of the Applicant. |
| Legislation: Family Law Act 1975 (Cth), ss.90RD, 90SM, 90SM(3), 90SM(4), 90SF(3) |
| Cases cited: Benson & Drury [2017] FamCA 578 |
| Applicant: | MS DRURY |
| Respondent: | MR BENSON |
| File Number: | ADC 3749 of 2015 |
| Judgment of: | Judge Kari |
| Hearing dates: | 17 July 2019, 19-20 August 2019 |
| Date of Last Submission: | 12 December 2019 |
| Delivered at: | Adelaide |
| Delivered on: | 10 February 2020 |
REPRESENTATION
| Counsel for Ms Drury: | Ms Pyke QC |
| Solicitors for Ms Drury: | D'Angelo Lawyers |
| Counsel for Mr Benson: | Mr Praolini |
| Solicitors for Mr Benson: | Newman Lawyers |
UPON NOTING
(A)That a contract for the sale of the former relationship home situate at D Street, Suburb E was executed and settlement was to occur on 31 January 2020.
ORDERS
That pursuant to section 90RD of the Family Law Act 1975 there be a declaration that a de facto relationship existed between the parties between 2004 and 4 November 2014.
That in full and final settlement of any claim that either party may have against the other or at any time in the future for settlement of property or alteration of interests in property under Part VIIIAB of the Family Law Act 1975 as amended:
(a)That the proceeds from the sale of the former relationship home situate at D Street, Suburb E in the State of South Australia (after the payment of all agents fees and commissions and the costs of sale) shall be distributed as follows:
(i)SIXTY PERCENTUM (60%) to Ms Drury; and
(ii)FORTY PERCENTUM (40%) to Mr Benson.
(b)That on or before 90 days of the date of these Orders, Mr Benson shall pay to Ms Drury the sum of SIX HUNDRED AND FIFTEEN THOUSAND SEVEN HUNDRED AND TWENTY SIX DOLLARS ($615,726).
(c)That contemporaneously with the payment referred to in Order (2)(b), Ms Drury shall do all things and sign all documents necessary to withdraw the caveat registered against the property situate at KK Street, Suburb EE in the State of South Australia, being Caveat number …21, at her sole cost.
(d)That in the event that Mr Benson defaults in the payment due to Ms Drury in accordance with Order (2)(b):
(i)Interest shall accrue on the outstanding amount due to Ms Drury at the rate prescribed by Rule 17.03 of the Family Law Rules 2004 from the date of default until the date of payment; and
(ii)If such default continues for a period in excess of 28 days, the parties shall do all acts and things and sign all documents necessary to effect the sale of the property situate at KK Street, Suburb EE in the State of South Australia and for that purpose the following shall apply:
A. The KK Street, Suburb EE property shall be sold upon such terms and conditions as agreed between the parties and in default of agreement, as ordered by the Court.
B. Mr Benson shall direct and authorise the real estate agent and conveyancer appointed to conduct the sale and settlement of the KK Street, Suburb EE property to communicate with Ms Drury and provide to her any information that she may request with regard to the sale and settlement.
C. On settlement, the proceeds of the sale of the KK Street, Suburb EE property (after the payment of all agents fees and commissions and the costs of sale) shall be distributed as follows:
(a)To Ms Drury such sum as is outstanding pursuant to paragraph 2(b) herein together with interest pursuant to paragraph 2(d)(i) herein; and
(b)The balance to Mr Benson.
(e)Unless otherwise specified in these Orders, Ms Drury shall retain for her sole use and benefit absolutely free from any further claim or demand of Mr Benson:
(i)All items of furniture, household effects and personal effects in her possession, power and control;
(ii)All savings, shares and investments in her sole name;
(iii)Her superannuation entitlements with Super Fund 1; and
(iv)Any other real and/or personal property and/or financial resources in her sole name and/or possession not otherwise specified herein.
(f)Unless otherwise specified in these orders, Mr Benson shall retain for his sole use and benefit absolutely free from any further claim or demand of Ms Drury:
(i)His interest in the property situate at KK Street, Suburb EE in the State of South Australia;
(ii)His equity in the business LL;
(iii)All items of furniture, household effects and personal effects in his possession, power and control;
(iv)All savings, shares and investments in his sole name;
(v)His superannuation entitlements with Super Fund 2; and
(vi)Any other real and/or personal property and/or financial resources in his sole name and/or possession not otherwise specified herein.
(g)Mr Benson shall be solely responsible for the loan to his mother in relation to the KK Street, Suburb EE property and any other liability in his name not otherwise dealt with in these Orders and he shall fully and forever indemnify and keep indemnified Ms Drury from all liability arising in relation to the same.
(h)Ms Drury shall be solely responsible for any liability in her name not otherwise dealt with in these Orders and she shall fully and forever indemnify and keep indemnified Mr Benson from all liability arising in relation to the same.
That each party sign all documents and do all things necessary to give effect to these Orders.
That in the event that either party refuses or neglects to execute any deed or instrument the registrar of the court be appointed pursuant to section 106A of the Family Law Act 1975 (Cth) to execute such deed or instrument in the name of such party and to do all acts and things necessary to give validity to the operation to the deed or the instrument.
Liberty to the parties to apply as to consequential orders.
That all outstanding applications be otherwise dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Drury & Benson is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT ADELAIDE |
ADC 3749 of 2015
| MS DRURY |
Applicant
And
| MR BENSON |
Respondent
REASONS FOR JUDGMENT
Introduction
These proceedings relate to the division of property between the parties arising out of their de facto relationship that subsisted for approximately ten years and ended on 4 November 2014.
The parties have two children, B who is 14 years old and C who is 11 years old.
The parties are no strangers to family law litigation. There were proceedings between the parties over parenting arrangements which proceeded to trial in the Family Court in February 2017. Judgment was delivered and final orders parenting orders were made by Justice Berman on 9 August 2017.[1]
[1] Benson & Drury [2017] FamCA 578.
In addition, I recently heard and dismissed several parenting applications that had been filed by Mr Benson during the property proceedings in this court.[2] It would be a fiction for me not to bear in mind those reasons in the present dispute.
[2] Benson & Drury [2019] FCCA 3472.
I am also aware that since the making of those orders on 29 November 2019, Ms Drury has now filed an application for costs. That application will be determined separately on its merits in due course.
In the context of the financial dispute between the parties, they have been able to agree very little, and it is apparent from the various proceedings that have been before me, that all aspects of the parties’ relationship remain highly acrimonious despite it being over five years since they separated.
There are weighty issues in dispute between the parties in these proceedings including:
a)Whether there should be monies notionally added back to enlarge the property available for division;
b)Whether an alleged loan from Ms Drury’s parents should be brought to account; and
c)Whether Ms Drury should receive an adjustment as a result of the family violence she experienced at the hands of Mr Benson.
Short History
The short history of the parties and their relationship is as follows:
a)Ms Drury was born in 1974 and is 45 years of age.
b)Mr Benson was born in 1966 is 53 years of age.
c)The parties began living together in a de facto relationship in approximately 2004.
d)The parties separated on 4 November 2014.
e)There are two children of the relationship namely:
i)B (“B”) born in 2005, who is currently 14 years old; and
ii)C (“C”) born in 2008, who is currently 11 years old.
The parenting proceedings and current orders for the children
As a consequence of the parenting proceedings, the parenting orders that are in place for the children are those made by Justice Berman on 9 August 2017, which permitted Ms Drury to relocate the children to Melbourne, which she did in January 2018.
His Honour made orders for the children to spend time with Mr Benson if he remained living in Adelaide:
a)For three (3) long weekends per year and in addition, for one (1) weekend in each school term from Friday afternoon to Sunday afternoon;
b)For the Easter period from the afternoon on Maundy Thursday to the afternoon of Easter Monday;
c)For one half of all school holiday periods; and
d)In the event that Mr Benson travelled to Melbourne, for two (2) further weekends in each school term from Friday afternoon to Sunday afternoon.
His Honour also made orders that if Mr Benson was to relocate to Melbourne, then the children were to spend time with Mr Benson:
a)On alternate weekends from the conclusion of school Friday until the commencement of school Monday;
b)In each intervening week from the conclusion of school Wednesday until the commencement of school Thursday;
c)For one half of all school holidays; and
d)On special occasions including Father’s Day, the children’s birthdays and the father’s birthday.
Regardless of where Mr Benson resides, the effect of His Honour’s orders are that the children are to live primarily with Ms Drury and she is to have sole parental responsibility in relation to their health and education (subject to consultation with Mr Benson).
Family violence findings
The litigation between the parties regarding children’s issues proceeded to trial over 6 days in February 2017. Those proceedings on my reading of the judgment appear to have been acrimonious.
In the parenting proceedings findings, were made regarding family violence perpetrated by Mr Benson towards Ms Drury. The findings were in part as a result of concessions made by Mr Benson during cross examination, and otherwise as a result of His Honour having assessed the evidence of both parties and other witnesses.
Those findings have become a feature of the present proceedings as Ms Drury is pursuing what is known by lawyers as a Kennon & Kennon (1997) FLC 92-757 (‘Kennon’) adjustment in her favour with respect to the division of property. It is Ms Drury’s position that her contributions during the relationship were made all the more onerous as a result of the family violence she suffered.
At the commencement of the trial in these proceedings, I had before me applications from both of the parties in which they each sought to rely on various findings made by His Honour, together with portions of the parties’ respective Trial Affidavits filed for the purposes of the parenting proceedings.
Initially it appeared that there was to be some conjecture about Ms Drury’s ability to rely on the findings made by His Honour. However after discussion with Counsel, and reference by Ms Drury’s Counsel to the decision of Adair & Adair [2019] FamCAFC 70, and the court drawing the parties attention to the first instance decision of Justice Watts in Damiani & Damiani [2010] FamCA 217, Counsel for Mr Benson ultimately conceded that specific findings made by Justice Berman with respect to family violence, were findings that the court should adopt in these proceedings.
Accordingly, much time was spent on the first morning of the trial identifying those portions of the judgment to be adopted in these proceedings and orders were made by consent in that regard.
While not repeating all of the findings that are to be incorporated into these proceedings, the findings of His Honour with respect to the occurrence of family violence can be summarised as follows:
a)That Mr Benson perpetrated family violence against Ms Drury, with such behaviour consisting of both physical altercations, as well as coercive and controlling conduct.[3]
[3] Benson & Drury [2017] FamCA 578, [367].
b)That Ms Drury had not exaggerated her allegations of family violence and nor were her allegations a concoction or fabrication.[4]
[4] Ibid [322].
c)That the family violence occurred during the parties’ relationship and persisted in the post-separation period, notwithstanding that there was no longer a physical component.[5]
[5] Ibid [322].
d)That the following incidents of family violence were perpetrated against Ms Drury by Mr Benson during the parties’ relationship:
i)When Ms Drury was pregnant with the parties’ child C, Mr Benson placed his hands around Ms Drury’s throat in the presence of the child B.[6]
[6] Ibid [79], [80], [309].
ii)On one occasion, Mr Benson chased Ms Drury into her office and due to her fear of him, she deadlocked the office door. Mr Benson then hit the door so hard that the deadlock broke and he was able to gain entry and Ms Drury ran out of the room and away from him.[7]
[7] Ibid [167].
iii)In September 2011, Mr Benson became so angry that he smashed plates and swept Ms Drury’s laptop computer onto the floor. He then wrote a derogatory statement about Ms Drury on the wall.[8]
[8] Ibid [112], [313].
iv)In early 2012, Mr Benson tricked Ms Drury into attending upon psychologist Ms AA for counselling, with the ulterior motive of having the psychologist assess Ms Drury in respect of Mr Benson’s belief that Ms Drury suffered from a personality disorder. Mr Benson was unable to understand the distress and upset exhibited by Ms Drury when she learned of his manipulation.[9]
[9] Ibid [114], [115], [314].
v)That on one occasion at a beach Mr Benson grabbed Ms Drury around the neck or in a headlock and threw her in the water in the presence of the children.[10]
[10] Ibid [168].
e)The conduct that constituted family violence continued during the post separation period and included the following incidents:
i)That on 6 July 2015, Mr Benson threatened to kill Ms Drury during handover of the children at Ms Drury’s home, which resulted in Ms Drury obtaining an interim intervention order. Ms Drury was entitled to be fearful in relation to Mr Benson’s threat and her response in contacting the police and obtaining an intervention order were justified.[11]
[11] Ibid [81], [171].
ii)The day after the threat to kill, Mr Benson sent an email to Ms Drury containing insulting language, including that Ms Drury was to blame for all that occurred in their relationship.[12]
[12] Ibid [120].
iii)Ms Drury received persistent levels of communication from Mr Benson, including numerous text messages and emails over short periods of time, notwithstanding Mr Benson’s awareness of Ms Drury’s distress about receiving the same.[13]
iv)Mr Benson attempted to come into close proximity to Ms Drury, particularly at the children’s sporting games, with no regard for Ms Drury and the children’s anxiety.[14]
f)That Mr Benson acknowledged his past behaviour had been violent and abusive and would have frightened Ms Drury.[15]
g)That Mr Benson accepted little responsibility for his conduct and minimised the very real and adverse effect of his behaviour on Ms Drury.[16]
h)That Mr Benson had given evidence that Ms Drury had been experiencing his conduct for a “sufficient period of time now to be able to put it into perspective.”[17]
i)That Mr Benson was keen to minimise or place into context his physical and aggressive displays coupled with clear anger management issues.[18]
j)That Mr Benson lacked insight into the very real and long-lasting consequences of family violence and his controlling behaviour.[19]
k)That Ms Drury did not engage in ongoing family violence and did not exhibit any behaviour that could be considered as provocation or justification for any aggressive responsive by Mr Benson.[20]
l)That the family violence had a “debilitating effect” on Ms Drury.[21]
[13] Ibid [322].
[14] Ibid [323].
[15] Ibid [125].
[16] Ibid [87], [92], [95], [139], [321].
[17] Ibid [86].
[18] Ibid [92].
[19] Ibid [139], [95].
[20] Ibid [326].
[21] Ibid [368].
Financial arrangements during the relationship and in the post separation period
When the parties first began living together:
a)They lived in a home owned by Ms Drury at MM Street, Suburb NN.
b)Ms Drury was part-way through her Degree and worked part-time as a health care worker to the Employer OO.
c)Mr Benson was a professional and was performing consultancy work through his company LL Pty Ltd, of which he was the sole director and shareholder.
At the commencement of cohabitation, the parties agree that they each had the following assets and liabilities:
a)Ms Drury owned the property located at MM Street, Suburb NN, which has been retrospectively valued at $200,000 and was subject to a mortgage in the sum of approximately $92,000.
b)Mr Benson owned the property located at KK Street, Suburb EE, which has been retrospectively valued at $500,000 and was subject to a mortgage in the sum of $40,000.
c)Mr Benson also had a loan from his mother in the sum of $73,000 and that loan still exists today.
There is a dispute between the parties as to their respective initial contributions and in that regard:
a)Ms Drury asserts that she also owned:
i)Shares which she inherited from her grandmother, valued at $30,000; and
ii)A motor vehicle valued at $25,000.
b)Mr Benson asserts:
i)That he also held the sum of approximately $64,000 in savings; and
ii)That Ms Drury’s interest in the MM Street, Suburb NN property was subject to the property settlement claims of her former partner.
During the course of the relationship the parties agree that there were various changes to the property that they owned as follows:
a)In 2005, Ms Drury transferred her interest in the MM Street, Suburb NN property to Mr Benson for the sum of $290,000. It is not clear to me how that purchase was funded. The parties however agree that it was done on accounting advice.
b)Ms Drury applied the proceeds from the sale of the MM Street, Suburb NN property to purchase a property in her sole name at D Street, Suburb E.
c)Sometime thereafter Ms Drury sold the property at D Street, Suburb E, and Mr Benson sold the property at MM Street, Suburb NN and they applied the net proceeds from the sale of the two properties to purchase the relationship home at D Street, Suburb E in their joint names.
d)In about 2011 the parties borrowed the sum of approximately $50,000 and applied $33,000 to purchase shares in a business for Mr Benson called PP Pty Ltd, and the balance was put towards purchasing publically listed shares in QQ, which were also held in Mr Benson’s name.
When the parties separated, there was an agreement between them that they would share the care of the children on the basis that the children would remain living in the former relationship home at D Street, Suburb E, and the parties themselves alternated which of them were to live with the children in the home.
During this period of time and when not in residence at the former relationship home, Ms Drury lived in a home owned by her parents in Suburb R, while Mr Benson resided at the KK Street, Suburb EE property during the children’s summer school holiday period and otherwise with his father in Suburb RR.
Ms Drury asserts that this arrangement became difficult for her and the children for a range of reasons (including matters related to family violence), such that by March 2015 she decided that she would permanently move out of the former relationship home with the children, and she took up full time residence with the children in the Suburb R property owned by her parents.
Mr Benson gave evidence during the trial in which he acknowledged that after Ms Drury and the children vacated the former relationship home:
a)He remained living at the former relationship home until late 2018 when he moved to live in the KK Street, Suburb EE property;
b)He started having Airbnb tenants stay at the former relationship home as and from October 2015;
c)That currently he spends 5 nights a week with his new partner in her home and approximately 2 nights a fortnight at the KK Street, Suburb EE property.
Mr Benson was cross examined at some length as to whether he had moved to Victoria in the period following the children’s relocation and prior to trial. From my perspective his evidence about a permanent move was largely unconvincing and I am not satisfied that at the time that he gave that evidence he had in fact moved to Victoria to live.
However, as a result of the parenting proceedings that I recently determined, I am aware that Mr Benson now asserts that he is living full time in Victoria. In my reasons delivered on 29 November 2019, I commented that I was unable to make findings as to where in fact Mr Benson now resides without the benefit of further cross examination of him. I remain of that view.
So far as post separation financial arrangements are concerned, there is significant dispute between the parties as to what they did and did not discuss in the post separation period. It is apparent from their mutual evidence that Ms Drury agreed that Mr Benson could remain in the former relationship home for a period of approximately one year, and that the parties would make arrangements with the bank to have their home loan repayments made interest only payments, as against payments of principal and interest.
From there however it appears from Mr Benson’s evidence that after that one year period expired and without discussing it with Ms Drury, he stopped making any payments to the mortgage and he allowed the mortgage repayments to come out of the advance payments that the parties had made during the relationship. He says he did so in circumstances where Ms Drury would not agree to making the payments interest only. The effect of this is that from the time that he took up sole occupation of the former relationship home in 2016, Mr Benson did not make any mortgage payments (principal or interest) towards the former relationship home.
The parties have reached agreement as a result of enquiries made with the Commonwealth Bank that a figure of $30,500 represents the interest payments that should have been paid by Mr Benson towards the mortgage in the post separation period, but were not paid (Exhibit A13). This is an amount that Ms Drury wishes to notionally “add back”, and this is a topic that I will return to later in these reasons.
Additionally, Mr Benson gave evidence during cross examination that in the post separation period and without Ms Drury’s knowledge he sold the shares he held with QQ together with his interest in PP Pty Ltd for $25,399 and $277,051 respectively.
The PP shares were sold in about January 2016 and the QQ shares in June 2015. However, Ms Drury did not find out about the sale of either until Mr Benson filed and served his Financial Statement on 24 November 2017. When asked as to why he had delayed telling Ms Drury about the sale and receipt of funds, Mr Benson’s oral evidence delivered in a cavalier fashion was that he could not see “what good would come of it.” When further probed he also commented that he did not disclose the sale of the shares as he was not seeing the children at the time and he refused to acknowledge that there was no link between the two issues. This evidence of Mr Benson was particularly unimpressive.
Mr Benson also acknowledged in his oral evidence that the combined effect of placing tenants in the former relationship home and at various times the KK Street, Suburb EE property was such that the income he received has covered all of the outgoings (rates, taxes, and utilities) that he otherwise would have been required to pay for the properties.
Ms Drury gave evidence that in the post separation period Mr Benson has paid child support in accordance with an assessment that has fluctuated between an amount of $38 and $80 per week, with the current assessment being $183 per month for the period 1 September 2019 to 30 June 2020 (Exhibit A5). When it was put to him by Ms Pyke QC that this was a “very modest” amount to have paid for the children, again Mr Benson gave an unimpressive answer, commenting that he was not willing to use a “subjective term” to describe the amount.
Ms Drury’s position is that the financial manoeuvrings of Mr Benson in the post separation period were designed to maximise the financial advantage to Mr Benson and to place Ms Drury and the children under as much financial strain as possible, taking into account that Mr Benson controlled all of the property of the parties and used it to his sole benefit, whereas Ms Drury was required to house herself and the children without any recourse to the property of the parties or a meaningful level of child support being paid by Mr Benson.
Legal principles
The jurisdiction of the court to make orders with respect to the financial matters arising out of a de facto relationship are set out in Part VIIIAB of the Family Law Act 1975 (Cth).
Section 90RD of the Act empowers the court to make declarations as to the existence of a de facto relationship. If such a relationship exists then section 90SM of the Act empowers the Court to make such orders as it considers appropriate when determining the question of property settlement.
There is no dispute between the parties that they were in a de facto relationship commencing in 2004 and ending in November 2014.
The legal principles relevant to adjusting property interests on the breakdown of a marriage, which also apply to the breakdown of a de facto relationship, were considered by the High Court in Stanford & Stanford (2011) FamCAFC 208 (‘Stanford’).
In particular, the High Court identified:
a)Firstly, that the court must identify the existing legal and equitable interests of the parties in the property, liabilities and financial resources of the parties at the time of the hearing; and
b)Secondly, and importantly, that in the application of section 79(2) of the Act [the equivalent provision for a de facto relationship is section 90SM(3)], the court must not make any order adjusting the parties legal and equitable interests in property unless the court is satisfied that “in all of the circumstances, it is just and equitable” to do so.
c)If the court determines that it would be just and equitable to make orders adjusting the parties interests in property, then section 79(4) of the Act [the equivalent provision for a de facto relationship is section 90SM(4)] requires:
i)The consideration of the contributions made by the parties to the acquisition, conservation and improvement of any property, both of a financial nature but also of non-financial nature;
ii)The effect of any proposed orders on the earning capacity of each of the parties;
iii)Those relevant factors set out in section 75(2) of the Act [the equivalent provision for a de facto relationship is section 90SF(3)];
iv)Any other order affecting each of the parties; and
v)Any child support either party has or is liable to provide, or might be liable to provide in the future for a child of the relationship.
d)Finally, the court must consider the “justice and equity” of the actual orders to be made.
Prior to the decision in Stanford, the appropriate approach in a property settlement case was well settled and had been distilled into the “four step process” as identified by the Full Court in Hickey & Attorney-General (Intervener) (2003) FLC 93-143 as follows:
a)Identification of the value of the property of the parties;
b)Identification and evaluation of the contributions of the parties to the acquisition, conservation and improvement of the property;
c)Identification and assessment of the relevant future needs factors of the parties; and
d)Considerations of justice and equity.
The significance of the decision in Stanford with reference to the four step process was discussed by the Full Court in Bevan & Bevan [2013] FamCAFC 116 (‘Bevan’). In that decision, the Full Court identified that the four step process “merely illuminates the path to the ultimate approach,” but that the overarching obligation of the court is not to make an order unless it is just and equitable to do so.
In Stanford at paragraph 42, the Full Court identified:
“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 relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order …”
Here both of the parties have competing applications for property adjustment before the court, and in addition they jointly own the former relationship home with no common intention as to its ongoing use.
I accordingly consider that in those circumstances it is just and equitable to make an order adjusting the property between the parties.
I otherwise thereafter propose to adopt the four step approach.
The existing legal and equitable interests of the parties
The parties jointly prepared a balance sheet prior to the commencement of the trial and it was subject to variation and comment from each of their Counsel during the course of the hearing.
Ultimately there were a number of uncontentious items of property, liabilities and addbacks with values that the parties were able to agree as follows:
Asset
Ownership
Value
KK Street, Suburb EE property
Mr Benson
$900,000
D Street, Suburb E property (now sold with settlement due on 31/1/2020)
Joint
$880,000
Offset account paid to Applicant as part property
Ms Drury
$147,034
Household contents
Joint
$10,000
Shares with SS Shares
Ms Drury
$4,411
Bendigo Bank Term Deposit
Mr Benson
$51,945
Bendigo Bank Account ending ..62
Mr Benson
$203
CBA Personal Account ending ..17
Mr Benson
$4,862
Equity in LL Pty Ltd
Mr Benson
$63,902
Addback sale of TT Shares
Ms Drury
$14,446
Addback sale of UU Shares
Ms Drury
$16,664
Addback sale of VV Shares
Ms Drury
$12,808
Addback sale of unknown shares
Ms Drury
$4,000
Liability
Ownership
Value
Loan over D Street, Suburb E property
Mr Benson
$413,254
Loan from Respondent’s Mother associated with KK Street, Suburb EE property
Mr Benson
$73,000
Capital gains tax due to PP Pty Ltd sale
Mr Benson
$23,622
Superannuation
Ownership
Value
Super Fund 1
Ms Drury
$249,662
Super Fund 2
Mr Benson
$150,337
There was however, a great number of items that the parties were not able to agree, and I set each out of them together with my findings separately hereunder.
Motor Vehicle and Small Boat
The parties are in dispute as to the value of a motor vehicle in the possession of Ms Drury and a small boat in the possession of Mr Benson, and in that regard:
a)With respect to the motor vehicle Ms Drury initially proposed a value of $1,000 and Mr Benson a value of $3,000.
b)With respect to the small boat Ms Drury initially proposed a value of $2,000 and Mr Benson a value of $1,000.
Neither of these items were the subject of a valuation and nor did the parties give any evidence during the trial about these items.
In the final submissions filed on her behalf it appears that Ms Drury took a pragmatic approach and offered to agree the mid-point between the parties’ two estimations of value for each item, such that the motor vehicle be brought to account with a value of $2,000 and the small boat with a value of $1,500.
It is not the role of the court to guess the value of property in the absence of cogent evidence, preferably from an expert.
In those circumstances and given that the two items differ little in value as estimated by the parties, they differ little in the value between the two items, and as the effect of the ownership of the items is that each party is retaining one of the items in dispute, it is my view that it is appropriate to exclude those items from consideration.
Ms Drury’s bank accounts
Ms Drury holds two bank accounts with the Commonwealth Bank with account numbers ending in …89 and …92.
Ms Drury gave oral evidence of figures for those two accounts as $1,443 and $9,190 respectively being the balances in the account on 11 July 2019 (exhibit A3).
Mr Benson asserted figures for those two accounts as $6,615 and $7,445 respectively.
It is not clear to me how Mr Benson came to the different figures that he did for those two accounts.
I will adopt the figures at 11 July 2019 for the two accounts being a date just prior to the commencement of the trial.
Alleged loan from Ms Drury’s parents
Ms Drury asserts that a liability of $57,785 be brought to account as a liability she asserts she incurred by way of loan from her parents for her living expenses in the Suburb R property in the post separation period.
Mr Benson’s position is that the liability should be excluded.
In her trial affidavit filed on 2 July 2019 Ms Drury deposed that the debt to her parents of $57.785.04 was comprised of:
a)$49,924 for rent;
b)$2,000 for Council rates;
c)$2,086 for electricity;
d)$139.04 for gas;
e)$1,365 for gardening; and
f)$2,271 for insurance.[22]
[22] [110].
In addition, Ms Drury annexed to that same affidavit a letter purportedly written by her mother dated 3 June 2019[23] in which she sets out that:
a)She has loaned Ms Drury $37,000 for the payment of her legal fees on the understanding that this amount would be paid in full once the property settlement had been finalised; and
b)There was a verbal agreement between Ms Drury and her parents that when she moved into the Suburb R property in 2015 that an amount of $300 per week in rent together with an average of $337 a quarter would be paid for the period of her occupation of the property, and that this money was also to be paid once the property settlement had been finalised.
[23] Annexure “D12.”
During her evidence in chief, Ms Drury gave evidence that:
a)At the time that she moved to the Suburb R property owned by her parents, there was an understanding between she and them that she would live in the property for a period of approximately one year; commensurate with the period of time that the parties had agreed to convert the mortgage of the former relationship property to interest only payments.
b)She ultimately lived in the property for almost 3 years until she and the children relocated to Victoria in January 2018.
c)She did not pay rent to her parents, but that her mother has calculated a “less than market rate” for the property at $300 per week, bringing a total amount of rent owed to her parents “conservatively” of $47,000.
d)In addition, her parents paid for all utilities for the property and she also owes them that amount.
During cross examination of Ms Drury she gave further evidence that:
a)Prior to the parties separation, the property had not been tenanted and she had stayed at the property on some occasions;
b)While she was in occupation of the property, her parents had stayed with her “often” when they were required to come to Adelaide for the purposes of Ms Drury’s father having medical treatment. When pressed, Ms Drury indicated that her parents had stayed with her once every two weeks;
c)Since Ms Drury’s relocation to Victoria in January 2018, her parents have not tenanted the property;
d)She understood she would have to pay rent to her parents for the Suburb R property as her sister had been required to pay rent for staying in the family farm.
The question of bringing to account unsecured liabilities was considered by the Full Court in Biltoft and Biltoft [1995] FamCA 45. In that case the Full Court held that there are “well recognised exceptions” to when a court would exclude an unsecured liability, including where the liability is vague or uncertain, whether or not is likely to be enforced or if it was unreasonably incurred.
The submissions on behalf of Mr Benson appear to suggest that:
a)The liability was unreasonably incurred in circumstances where he asserts that Ms Drury was able to pay her living expenses from the income she was receiving in the post separation period and particularly so as she gave evidence that she was able to make regular voluntary superannuation contributions across that period of time; and
b)There is no certainty of Ms Drury’s parents enforcing the liability as Ms Drury has not been required to make any payments towards it and in addition in circumstances where Ms Drury’s parents did not give evidence during the trial there should be a Jones v Dunkel[24] inference drawn against Ms Drury.
[24] (1959) 101 CLR 298.
I have formed the view that there is no certainty that the loan exists or that it will be enforced if indeed it does exist in light of the evidence that I have summarised and in addition taking into account:
a)No monies were actually advanced by Ms Drury’s parents to her;
b)The only document confirming the loan is one created in the lead up to the trial when Ms WW wrote the letter annexed to Ms Drury’s affidavit, which purports to retrospectively assert a liability;
c)The loan was not mentioned whatsoever in Ms Drury’s Statement of Financial Circumstances sworn and filed on 20 October 2017, at which point Ms Drury had been living in the property for approximately 2½ years;
d)There is no evidence that the property was tenanted before or after Ms Drury’s occupation of the property and I am not satisfied that her parents lost out on rental income that they otherwise would have received during Ms Drury’s occupation of the property;
e)There has been no demand by Ms Drury’s parents for the alleged liability to be repaid and nor did they give any direct oral evidence in the proceedings in support of the liability or their instance that it be repaid, and I accordingly consider it appropriate to draw an inference against Ms Drury that the evidence from her parents would not have assisted her.
In taking this approach it is unnecessary for me to determine whether the liability was unreasonably incurred as submitted on behalf of Mr Benson.
I accordingly will disregard this alleged liability.
However, the significant contribution made by Ms Drury’s parents in housing her and the children for such a significant period of time remains a factor that should be considered in weighing up the myriad of contributions made by the parties.
Addbacks
A significant focus of the dispute between the parties was whether or not the court should notionally add back certain amounts that once existed, but no longer exist.
Following the High Court decision in Stanford there has been some conjecture as to whether the adding back of notional property is an appropriate path for the court to take.
In the decision of Vass & Vass [2015] FamCAFC 51 at paragraph 138, the Full Court identified that:
“There is no error committed per se in adjusting the parties’ actual property interests by a calculation involving notionally adding back into the pool sums which have been dissipated by the parties.”
Having said that, the question still remains whether the court should exercise its discretion to add-back notional property as against the alternative approach identified by the Full Court in Bevan & Bevan (2013) FLC 93-545 at 79, that section 75(2)(o) [section 90SF(3) with respect to de facto relationships] of the Act “gives ample scope to ensure a just and equitable outcome when dealing with the unilateral disposal of property”.
While the categories of when the court may consider it appropriate to notionally add back property are not closed, the Full Court in SMB & MFB [2006] FamCA 46 commented at paragraph 69:
“69. In Chorn and Hopkins [2004] FamCA 633; (2004) FLC 93-204, the Full Court considered the issue of add- backs to the asset pool, particularly in relation to post-separation expenditure and legal costs. At paragraph 42 and following they cited extensively from Marker [1998] FamCA 42, 1 May 1998, (per Baker, Kay and Chisholm JJ.)
“2.10 It is well settled that save in exceptional circumstances a trial Judge should deal with the property as at the date of the hearing and make adjustments taking into account the various matters set out under s.79. (Wells v Wells (1977) FLC 90-285; Wardman v Hudson (1978) FLC 90-466; In the Marriage of Geyl 7 Fam LR 219). However, the particular justice of the case may make it appropriate to notionally add back assets which have been demonstrated to have been dissipated either during the marriage or post-separation. Normally it is necessary to demonstrate an appropriate basis for doing so, for example by wastage such as gambling or extravagant living. (Kowaliw v Kowaliw (1981) FLC 91-092; Fane-Thompson v Fane-Thompson (1981) FLC 91-053; Winnel v Winnel (1984) FLC 91-580; Townsend v Townsend [1994] FamCA 144; (1995) FLC 92-569; Doherty v Doherty (1996) FLC 92-652) Additionally, because of the requirement for each party to bear their own costs, it is generally appropriate to add back to the pool of assets notionally any legal costs that have been spent on the litigation and to deal with the costs as a separate issue at the end of the litigation. (see Farnell(1996) FLC 92-681).”
Add back for proceeds from sale of shares by the parties
The parties have already agreed to add back monies received by Ms Drury from the sale of shares in publically listed companies that she received in the post separation period.
As previously set out, in the post separation period Mr Benson sold shares he held with both PP Pty Ltd and QQ, unquestionably in light of his evidence surreptitiously.
Ms Drury’s position is that the amounts that Mr Benson received from the sale of the two lots of shares should be added back, much in the same way as the parties have agreed to add back the proceeds from the sale of the shares that she received.
The total amount that Ms Drury asks the court to add back is a figure of $208,268 which she breaks down as follows:[25]
a)Proceeds of PP Pty Ltd expended by respondent on legal fees, business and personal expenses $115,912;
b)Further proceeds from the Bendigo Bank Term Deposit expended by the respondent on legal and other expenses in June 2019 $49,040;
c)Bendigo Bank Account (ending …62) expended by respondent $17,917;
d)Sale of QQ shares $25,399.
[25] Written Submissions of the Applicant, 4.
Mr Benson asserts that the sale proceeds from the PP Pty Ltd shares be treated as income for duties that he undertook as a Director and shareholder.[26] In the alternative he argues that any amount added back should be reduced by the amount he has paid in capital gains tax on the sale of the shares, together with the amount that remains of those proceeds, being a figure of $51,945.
[26] Affidavit of Mr Benson filed 28 June 2019, [52].
Mr Benson has not enunciated any position as to why the proceeds from the sale of the QQ shares should be ignored.
The parties agree that the proceeds from the sale of the shares was as follows:
a)$25,369 for the QQ shares;[27] and
b)$277,051 (received in two tranches) for the PP Pty Ltd shares.[28]
[27] Statement of Financial Circumstances of Mr Benson filed 24 November 2017, item 59, and Affidavit of Mr Benson filed 28 June 2019, [13.28].
[28] Affidavit of Mr Benson filed 28 June 2019, [48], and Statement of Financial Circumstances filed 28 June 24 November 2017, [59].
Mr Benson deposes in his affidavit of 28 June 2019 that he applied the proceeds from the PP Pty Ltd shares in the following manner (at paragraphs 53-55 and 13.32-13.33):
a)$23,672 towards capital gains tax on the sale of the shares (which the parties agree should be brought to account as a liability);
b)$8,900 to Dadds Jandy Lawyers;
c)$24,750 towards the payment of his barrister fees for the parenting proceedings in the Family Court;
d)$2,000 towards the offset account for the KK Street, Suburb EE mortgage;
e)$81,700 to his Commonwealth Bank Streamline account to pay off his Mastercard;
f)$2,475 in interest payments towards the investment loan taken out to purchase the shares; and
g)The sum of $50,000 to pay down the investment loan.
On my calculation the total of monies that Mr Benson asserts he utilised from the proceeds of sale of the PP Pty Ltd shares is approximately $193,497. That would leave an amount of approximately $83,554 from the sale of the PP Pty Ltd shares which is unaccounted for by Mr Benson in his affidavit material.
Mr Benson does not go into any detail in his affidavit of 28 June 2019 as to the manner in which he applied the proceeds from the sale of the QQ shares.
Mr Benson was cross examined at some length by Ms Pyke QC as to his application of the funds he received from the sale of shares.
During that cross examination Ms Pyke QC put to Mr Benson a copy of correspondence sent to him on 13 June 2019 (Exhibit A8), in which among other things he was asked to disclose details of the amount he had spent on legal fees for both parenting and financial issues, together with documentary evidence to support his contention that a portion of the sale proceeds of the PP Pty Ltd shares were for unpaid wages.
Mr Benson responded to that correspondence by email on 20 June 2019 (Exhibit A9) indicating that:
a)In “round terms” he had spent in total $185,000 on legal fees for both aspects of the dispute;
b)That his contention as to the categorisation of the proceeds of the PP Pty Ltd shares as income was “not a disclosure item”, and that he would “depose in my trial affidavit as to why the proceedings from the sale of the PP Pty Ltd shares should be considered as income.”
Despite having been shown that series of correspondence, when probed further in cross examination as to whether any documents existed to support his contention as to the categorisation of the proceeds of the PP Pty Ltd shares as income Mr Benson initially answered that there were no documents and when pressed further answered that he had not been asked to produce documents. This evidence was confusing, evasive, and in all entirely unconvincing.
Mr Benson gave further evidence that:
a)He was not paid Directors fees for his involvement in PP Pty Ltd and that he had resigned as a Director prior to separation.
b)He was paid on a casual basis from time to time as a “contractor” for work that he had undertaken.
c)The sum of approximately $52,000 currently in his Bendigo Bank term deposit account represents the remaining balance from the proceeds of the sale of shares.
d)After taking into account the amounts applied to discharge the investment loan ($50,000), the capital gains tax paid ($23,622) and the amount remaining ($52,000), that he had the benefit of approximately $150,000 from the proceeds of sale from the PP Pty Ltd shares.
When pressed by Ms Pyke QC as to how he had funded his legal fees in the family law proceedings of $185,000 Mr Benson suggested that some of those expenses had been paid from his salary but that it was “hard to untangle”. When probed further, the effect of his evidence was that the monies from the sale of the shares had been applied to all manner of expenses (living and legal fees) from time to time when there were insufficient funds from his income to meet his expenses, most of which were incurred on his credit card which was paid off at the end of each month.
Mr Benson also acknowledged during cross examination that:
a)On 15 June 2019 (some 5 days before he wrote to Ms Drury’s solicitor indicating that he had spent $185,000 on legal fees) the balance of the Bendigo Bank account (into which the proceeds from the sale of the PP Pty Ltd shares was paid) was approximately $101,000;
b)On 17 June 2019 the sum of approximately $50,000 was transferred by him into his Commonwealth Bank Streamline account;
c)Thereafter a total of $43,000 was transferred from his Streamline account to his solicitors to pay his legal fees in two transactions of $33,000 and $10,000;
d)He could not specify what the remaining $7,000 from the amount transferred from the Bendigo account into the Streamline account had been applied to, and that it had been “intermingled with other funds.”
When later shown statements for his Streamline account (Exhibit A11) Mr Benson corrected his evidence to such that:
a)The deposit into his Streamline account from his Bendigo account had not been made in a single transaction but over a series of dates between 20 June 2019 and 28 June 2019; and
b)Some monies had been paid out of his Streamline account into his LL Pty Ltd business account.
So far as Mr Benson’s assertion that a portion of the PP Pty Ltd proceeds represented remuneration for unpaid work he had done, I do not accept that assertion because:
a)Mr Benson has not produced to the court any documents to support the assertion. While any number of documents might exist evidencing Mr Benson’s assertions, presumably the most obvious document that Mr Benson could have provided to the court in support of his assertions would have been his tax return for the relevant financial year evidencing the categorisation of the proceeds of sale of the PP Pty Ltd shares or a portion thereof as income. His failure to produce any such documents leads me to draw an inference that the funds were not dealt with in the way he asserts. My views are further strengthened, as Mr Benson asserts that he has paid capital gains tax on the disposal of the shares, and that would not have been payable if the funds were treated as income.
b)Moreover, the one document that Mr Benson has put before the court in relation to the sale of the shares is the share transfer form dated 11 June 2016.[29] That document records that the consideration paid for the sale of the shares was $277,052. That figure would not have been recorded if some of that amount represented payment for unpaid work.
c)In addition, Mr Benson’s assertions are entirely incongruous with the totality of his evidence that he had previously been paid on a contract basis for work that he had undertaken for the company, that he had not been paid Directors fees and that he resigned as a Director prior to separation.
[29] Affidavit of Mr Benson filed 28 June 2019, Annexure “B5.”
As to whether any of the funds received from the sale of the QQ and the PP Pty Ltd shares should be added back, it is my view that in light of the totality of Mr Benson’s evidence that I have summarised, there should be some accounting and adding back of those funds in circumstances where it is clear to me that a large portion of the unaccounted funds has been spent on Mr Benson’s legal fees in these proceedings and other proceedings (noting as I do the amount paid to Dadds Jandy Lawyers who acted for him with respect to the Intervention Order proceedings involving Ms Drury).
From my perspective the intermingling of funds by Mr Benson makes the untangling a very difficult exercise unless it is approached in the most simplest of ways. I calculate that:
a)The total amount received by Mr Benson from the sale of the two lots of shares was approximately $302,420.
b)Mr Benson acknowledged that a sum of $185,000 has been paid by him towards legal fees in the family law proceedings, together with an amount of $8,900 to Dadds Jandy, bringing a total amount spent on legal fees to $193,900.
I propose to add back the entire proceeds that Mr Benson paid towards his legal fees of $193,900.
In light of the approach I have taken with respect to these funds, I do not consider it necessary to add back any further amounts as sought by Ms Drury given the intermingling of funds between all of Mr Benson’s accounts.
I equally do not consider it appropriate to approach the issue as Mr Benson has agitated me to do, by deducting the two liabilities associated with the shares (the investment loan and the capital gains tax) together with the preserved amount from the proceeds of sale. If I had taken that approach the amount to be added back would be $176,798. I do not consider that this figure properly brings to account the monies received and applied towards the payment of Mr Benson’s legal fees.
Given the approach that I have taken, it is not necessary for me to separately bring to account the capital gains tax liability that has already been paid by Mr Benson for the sale of the PP Pty Ltd shares.
Add back for Airbnb income
Another significant area of dispute between the parties was Mr Benson’s decision to rent out the former relationship property and to a lesser extent the KK Street, Suburb EE property.
From Ms Drury’s perspective, Mr Benson did this without giving her any information about what he had done and how much rental income he was receiving, increasing her already significant mistrust of him.
In his affidavit of 28 June 2019, Mr Benson sets out the Airbnb income he received for both properties together with all of the expenses and outgoings for both properties he has paid in the post separation period.
The amount that Ms Drury invites the court to add back is a figure of $33,858. She has come to this figure by scrutinising the bank statements showing deposits into Mr Benson’s bank accounts.[30]
[30] Affidavit of Ms Drury filed 2 July 2019, [100]-[101].
During cross examination Mr Benson acknowledged that he did not tell Ms Drury about his decision to put Airbnb tenants in the former relationship property because he had “no idea what complications that would lead to.”
In addition, Mr Benson ultimately acknowledged during the course of cross examination that the net effect of the arrangements he had made resulted in him not having to pay any money towards the outgoings (rates, taxes and the like) for the former relationship property, and that he had not been required to contribute any of his own funds for this purpose. He categorically denied that he made these arrangements to shirk his child support obligations.
Ms Drury’s position is that the court cannot be satisfied that Mr Benson’s evidence about the income he received from the properties is accurate in light of the limited information that Mr Benson has disclosed.
In support of this submission, Ms Drury used as an example the tenants Mr Benson installed in the former relationship property in January 2019. In relation to that tenancy, Ms Drury deposed that she had repeatedly asked Mr Benson for disclosure of the tenancy, including the names of the tenants, the date that they moved in and the financial arrangements for the tenancy, all to no avail.[31]
[31] Affidavit of Ms Drury filed 2 July 2019, [102]-[106].
During cross examination Mr Benson gave evidence that frankly was confusing and inconsistent as follows:
a)The tenants in the property since January 2019 were “caretakers” and not tenants;
b)The “caretakers” had commenced as Airbnb tenants but stayed on as “caretakers”, which they had been for of approximately 6 months by the time of trial;
c)From the time they became “caretakers” they had not paid any rental costs, but made a contribution of $800 (over time) to electricity and other expenses;
d)Mr Benson had changed the terms of their tenancy to “caretakers” as he felt he could not guarantee their privacy (made in reference to Ms Drury’s desire to sell the property and the fact that she had attended at the property without Mr Benson’s knowledge);
e)The standard rate Airbnb tenants had paid to stay at the property was somewhere between $40-$50 per day – but it was not clear to me whether this applied to the “caretakers” or not, or who indeed it had applied to;
f)That he ultimately intended to charge the caretakers rent - how much is entirely unclear, and why he would have done so given his decision to change their occupation to a caretaker role is mysterious;
g)In the end the caretakers had left owing him a lot of money – again just how much and how Mr Benson had calculated the amount is a mystery.
The totality of Mr Benson’s evidence about the “caretakers,” makes it such that I am not prepared to accept Mr Benson’s evidence that he is out of pocket with respect to the 6 months that the “caretakers” were in occupation of the property, particularly when considered in conjuncture with:
a)His decision not to tell Ms Drury that he was putting tenants in the properties;
b)The otherwise savvy and careful financial arrangements he put in place to ensure that he was not out of pocket for both properties in the post separation period; and
c)His failure to provide proper disclosure about the arrangements.
In light of this evidence of Mr Benson, I am not satisfied that the information that he has set out in his trial affidavit is an accurate reflection of all of the Airbnb income that he received in the post separation period.
The reality however is that because of the lack of candour on Mr Benson’s part, I have no certainty whatsoever as to the exact amount that he received as and by way of rental income.
What I am however clear about from Mr Benson’s evidence, is that the net effect of the arrangements that he put in place to rent out the two properties, is that he did not have to meet any of the outgoings for those two properties from his separate funds (whether they be his separate income or the proceeds from the sale of the PP Pty Ltd or QQ shares).
This is a significant financial advantage to Mr Benson across the post separation period in light of the fact that Ms Drury has had to meet the costs of housing herself and the children in the post separation period.
Because it is impossible for me to quantify exactly how much rental income Mr Benson received or the financial advantaged he derived in dollar terms from the arrangement, it is my view that this is something that is best dealt with pursuant to section 90SF(3)(r) and not as an add back.
Interest added to home loan
As referred to earlier in these reasons, the parties have reached agreement that the amount of interest that has been added to the loan as a result of the arrangements Mr Benson put into place for the former relationship property is a figure of $30,500. Ms Drury asks the court to add back this amount.
Mr Benson’s position is that if this amount is added back, it should be reduced by an amount of $20,800 to take into account:
a)He had vacated the property from December 2018; and
b)He had proposed to Ms Drury in November and December 2018 that the property could be leased to neighbours for $800 per week, which he considered to be an inflated sum, but Ms Drury had not taken up that request, and as a result the parties lost out on income of $20,800 which could have offset the impact of Mr Benson’s failure to meet the mortgage payments.
Bluntly put, Mr Benson’s position is self-serving and not one that I intend to adopt, particularly when I consider it in conjunction with his evidence about the “caretakers” across the same period of time.
It is my view that the increase to the home loan was reckless, negligent and wanton,[32] particularly taking into account the otherwise savvy financial arrangements Mr Benson put in place in the post separation period to neutralise his out of pocket expenses.
[32] Kowaliw v Kowaliw(1981) FLC 91-092.
From my perspective Mr Benson was willing to deplete the equity the parties had built up in the property with the resultant effect of diminishing the value of the property to be divided with clear disregard to Ms Drury’s interests.
It is my view that Ms Drury should not be required to contribute to this amount whatsoever. I accordingly intend to add back all of the $30,500 interest that was added to the home loan as a result of Mr Benson’s failure to meet those payments.
The “pool” of property
For all of the reasons that I have enunciated, I find the property of the parties to be as follows:
Asset
Ownership
Value
KK Street, Suburb EE property
Mr Benson
$900,000
D Street, Suburb E property (sold)
Joint
$880,000
Offset account
Joint
$147,034
Household contents
Joint
$10,000
Shares with SS Shares
Ms Drury
$4,411
CBA account ending ...89
Ms Drury
$1,443
CBA account ending …92
Ms Drury
$9,190
Bendigo Bank Term Deposit
Mr Benson
$51,945
Bendigo Bank account ending …62
Mr Benson
$203
CBA Personal account ending …17
Mr Benson
$4,862
Equity in LL Pty Ltd
Mr Benson
$63,902
Add back of unpaid interest on former relationship property
Mr Benson
$30,500
Add back of proceeds of PP Pty Ltd and QQ shares spent on legal fees
Mr Benson
$193,900
Add back sale of TT Shares
Ms Drury
$14,446
Add back sale of UU shares
Ms Drury
$16,664
Add back sale of VV Shares
Ms Drury
$12,808
Add back sale of Unknown Shares
Ms Drury
$4,000
Total Assets
$2,345,308
Liability
Ownership
Value
Loan over D Street, Suburb E property
Mr Benson
$413,254
Loan from Mr Benson’s Mother associated with KK Street, Suburb EE property
Mr Benson
$73,000
Total Liabilities
$486,254
Superannuation
Ownership
Value
Super Fund 1
Ms Drury
$249,662
Super Fund 2
Mr Benson
$150,337
Total Superannuation
$399,999
The net assets of the parties are therefore $1,859,054, together with superannuation entitlements of $399,999. The combined net assets and superannuation entitlements of the parties is $2,259,053.
The contributions of the parties
As outlined earlier in these reasons there is a dispute between the parties as to their initial contributions.
Despite the dispute between the parties as to shares, motor vehicles and savings, the parties agree that their respective contributions both of a financial and non-financial nature are equal, save and except as follows:
a)So far as Mr Benson is concerned, he says that his initial contribution of the KK Street, Suburb EE property is “significantly higher” than Ms Drury’s initial contribution of the MM Street, Suburb NN property warranting a 65% adjustment in his favour; and
b)Ms Drury asserts that the only disparity between the parties at the contribution stage is one in her favour in light of the family violence that she suffered, warranting a 60% division in her favour.
Ignoring the two issues relating to contributions that are in dispute between the parties, I accept the mutual submission put that their contributions over the course of their long relationship were equal in light of their combined efforts in all spheres of the relationship towards the acquisition, conservation and improvement of property.
Should there be an adjustment in Mr Benson’s favour on account of his initial contribution of the KK Street, Suburb EE property?
While Mr Benson acknowledges that Ms Drury owned the MM Street, Suburb NN property at the commencement of the relationship, he asserts that it was subject to a claim from Ms Drury’s former partner. During cross examination, Ms Drury gave evidence that the mortgage liability of $92,000 that she recorded in her affidavit was the amount owing on the loan after she had paid out her former partner for his interest in the property in the amount of $20,000. I accept her evidence in that regard.
So far as the KK Street, Suburb EE property is concerned, the parties also agree that it had a value at the commencement of cohabitation of $500,000 and that it is now valued at $900,000.
The question of the weight to be given to initial contributions has been considered by the Full Court of the Family Court on numerous occasions.
In Carter & Carter (1981) FLC 91-061 at 76,492 the Full Court said:-
“Where property is absolutely owned by one spouse before marriage, different considerations may apply under sec. 79(4)(a) and (b), in the sense that the other spouse may not be able to show any direct or indirect contribution to the acquisition of that property… Nevertheless, the other spouse may be able to rely on a contribution to the conservation or improvement of that property…”
In the recent decision of Jabour & Jabour [2019] FamCAFC 78 (‘Jabour’) the Full Court undertook a comprehensive analysis of decisions which have had a focus on the contribution of a specific asset which remains largely intact at trial and for which the contributing party seeks a contribution based adjustment.
In Jabour the court concluded after extensively reviewing the authorities that “the weight of authority is therefore clear,”[33] and went on to identify error in the primary judge having weighed the myriad of contributions made by the parties over the course of the relationship against the contribution made by the husband in bringing in the property, rather than treating the property as “one of the myriad of contributions made” (emphasis added).[34]
[33] [2019] FamCAFC 78, [69].
[34] Ibid [73].
The Full Court went on to identify that:
a)Those contributions included “contributions that were made in the course of a long marriage during which both parties worked very hard and raised a family”;[35] and
b)Referred to the Full Court decision of Wallis and Manning [2017] FamCAFC 14 with approval saying that it is important for the court to be careful to avoid that the “miscellany of other s 79(4) factors is not accorded a subsidiary role in the assessment of contributions.”[36]
[35] Ibid [83].
[36] Ibid [136].
The position of Mr Benson in these proceedings appears to suggest that the court should weigh the otherwise agreed equal contributions of the parties against his isolated initial contribution of the KK Street, Suburb EE property. As identified by the Full Court, such an approach is erroneous.
In the present circumstances this approach ignores a raft of other factors, including:
a)The parties mutual ability to retain the KK Street, Suburb EE property over the course of their relationship when they were both working and raising a family;
b)The contribution by them over the course of the relationship to the outgoings for the property;
c)Mr Benson’s ability to have retained the KK Street, Suburb EE property in the post separation period at a time when Ms Drury was being firstly housed by her parents and then renting in Victoria and otherwise additionally making very significant parenting and non-financial contributions with limited support from Mr Benson;
d)Ms Drury’s significant superannuation contributions in the post separation period (despite the different nature form and characteristics of superannuation as against those of the non-superannuation assets).
In my view, when all of these factors are taken and weighed together, there is no basis for any adjustment in Mr Benson’s favour with respect to the KK Street, Suburb EE property.
Should there be a contribution based adjustment in favour of Ms Drury as a result of the family violence she experienced
As identified earlier in these reasons, Ms Drury seeks a Kennon[37] adjustment at the contribution stage of analysis.
[37] (1997) FLC 92-757.
At the commencement of the trial Mr Benson agreed to orders admitting earlier findings of family violence in these proceedings. In addition, during cross examination in these proceedings, Mr Benson again confirmed the accuracy of His Honour’s earlier findings, save and except that he did not agree with His Honour’s finding that Ms Drury had done nothing to provoke the family violence she suffered.
While acknowledging the existence of numerous incidences of family violence, Mr Benson asserts that the case does not fall within the rubric of Kennon as Ms Drury has not been adversely affected by the violence and there has been no quantification by her of the effect of the violence she suffered. To the contrary, Mr Benson points to the fact that Ms Drury was able to complete her qualifications and obtain secure employment at a university, as evidence of the lack of any discernible impact on her.
The rationale for a contribution based adjustment was identified in Kennon by Fogarty and Lindenmayer JJ at 84,294:
“Put shortly, our view is that where there is a course of violent conduct by one party towards the other during the marriage which is demonstrated to have had a significant adverse impact upon that party’s contributions to the marriage, or, put the other way, to have made his or her contributions significantly more arduous than they ought to have been, that is a fact which a trial judge is entitled to take into account in assessing the parties’ respective contributions within s.79. We prefer this approach to the concept of “negative contributions” which is sometimes referred to in this discussion.”
And at 84,294 – 84,295:
“It is essential to bear in mind the relatively narrow band of cases to which these considerations apply. To be relevant, it would be necessary to show that the conduct occurred during the course of the marriage and had a discernible impact upon the contributions of the other party. It is not directed to conduct which does not have that effect and of necessity it does not encompass (as in Ferguson) conduct related to the breakdown of the marriage (basically because it would not have had a sufficient duration for this impact to be relevant to contributions).”
(emphasis added)
Kennon and the cases that have followed, have been recently considered by the full court in Keating & Keating [2019] FamCAFC 46 (‘Keating’). In reviewing the earlier authorities, the plurality of Ainslie-Wallace and Ryan JJ at paragraph 37 referred to the decision in S & S [2003] FamCA 905 (‘S & S), which identified three factors the court is to take into account in assessing whether the family violence has had a “discernible impact” on the victim to the violence, namely:
· The incidence of the domestic violence;
· The effect of the domestic violence; and
· Evidence to enable the court to quantify the effect of that violence upon the parties [sic] capacity to “contribute” as defined by section 79(4).
Their Honours went on to say at paragraph 38:
“At first blush the reference in S & S to “quantification” seems to elevate the need for an evidentiary nexus or “discernible impact” between the conduct complained of and its effect on the party’s ability to make relevant contributions, requiring expert or actuarial evidence of the effect of the violence. That impression is reinforced by their Honour’s reference to a comparison with the husband’s failure to adduce evidence to demonstrate the impact on the value of the house by his renovations and improvements…”
And at paragraphs 39 to 40:
“39. This uncomfortable analogy does not illuminate what “quantification” of the effect of violence on contributions might look like. It suggests something more than the evidence by the victim spouse. We struggle to understand what that “quantification” evidence might be beyond that given by the victim spouse as to the incidence and effect of the violence as identified in S & S in the first two dot points at [47]. Furthermore, we fail to see how this third step accords with the decision in Kennon which the Full Court in S & S said governed the situation. Perhaps the use of the word “quantification” is infelicitous and has unintentionally added a gloss to the ratio in Kennon when, in truth, the Court in S & S was merely reinforcing the need for there to be an evidentiary nexus between the conduct complained of and the capacity (and or effort expended) to make relevant contributions. And, depending upon the nature of the violence established, in the absence of express evidence about the effect that violence had on the victim spouse’s contributions, how difficult it might be for the Court to draw inferences which would establish the evidentiary nexus (see S & S at [42]). But we did not have the benefit of argument on the point (nor it seems did the primary judge) and prefer to express no final view about it.
40. In any event, the primary judge gave no consideration to the inferences that might properly be drawn from the wife’s albeit limited evidence as to the effect on her of the husband’s violence taken in conjunction with her evidence of the severity of the violence...”
And significantly at paragraph 43 with reference to the error in the approach taken by the trial judge at first instance:
“…Nonetheless it seems to us that his Honour’s approach to the issue of family violence as demonstrated in his reasons is persuasive of the conclusion that he misdirected his attention from the “discernible impact” of the husband’s violence on the wife’s capacity to make contributions focussing instead on there being no evidence allowing “quantification” of that effect…”
With references to those passages, I do not agree with the submissions made on behalf of Mr Benson that the Full Court in Keating did not “express a final view” about the proper approach to be taken when a Kennon claim is being pressed. The plurality in Keating have made it abundantly clear that a focus on “quantification” is misguided, and that the focus should be on the first two factors identified in S & S.
Turning then to those factors, firstly it is clear that there is no dispute between the parties that Ms Drury was subjected to family violence in all its forms by Mr Benson.
Turning to consider the second factor, Mr Benson drew the court’s attention to a report by Dr O that Ms Drury had adduced in the parenting proceedings, but not relied on in these proceedings, as evidence of the lack of impact on Ms Drury. Particular emphasis was placed on Ms Drury’s self-report to Dr O in 2012 that:
· Her mood was stable;
· She can be emotional at times but this was always in the context of some immediate conflict;
· After the conflict, she felt she was able to regulate her emotions;
· She gave examples of being able to attend to work without ruminating or continuing to display her emotions;
· She was sleeping well, her appetite was good and her concentration, energy levels and motivation were all fine.
It appears to me that Mr Benson’s case rests on a premise that because Ms Drury was high functioning professionally, the family violence that she suffered could not possibly have had a discernible impact on her.
Frankly, this is a proposition that I find difficult to accept. The fact that Ms Drury was able to undertake studies and maintain her employment, does not necessarily mean that she did so easily and without significant burden.
In my view, such an argument is analogous to one the court has rejected on countless occasions, namely that the absence of corroborative evidence does not necessarily undermine a person’s evidence as to the existence of family violence.[38] It cannot be that the court would need to be satisfied in cases involving a victim of family violence who is a working professional, that a person’s education and/or career has suffered before a Kennon claim can be successfully made out.
[38] See for example Eaby & Speelman [2015] FamCAFC 104, [21].
From my perspective, just because it appears that Ms Drury was able to compartmentalise the professional aspects of her life, from the family violence that she unquestionably suffered, does not mean that the family violence did not have any impact on her at all.
While I consider it is open to me to infer that this compartmentalising must have taken some significant effort on Ms Drury’s part, I do not need to draw such an inference in light of the available evidence.
In the first instance, in my view Ms Drury’s self-report to Dr O makes it clear that incidences of conflict with Mr Benson were indeed the source of her emotional dysregulation in 2012, but that she was able to compartmentalise the dysregulation so that it did not impact her work.
Furthermore, the focus and narrow interpretation of the report from Dr O by Mr Benson overlooks the excerpt of the report from psychologist, Ms AA dated 23 March 2012, which was referred to in paragraph 116 of the judgment of Justice Berman and admitted into evidence in these proceedings.[39] At paragraph 116, His Honour noted that Ms AA expressed concern regarding Ms Drury’s psychological presentation upon her and reported that:
“… She was overly tearful and distressed throughout the interview, and waited for the appointment to commence sitting on the front porch of my practice in preference to sitting with [the father] in the waiting area. She expressed feeling threatened by the father’s intermittent outbursts of aggression and referred to instances in which he had “grabbed me by the throat,” thrown objects, and written derogatory comments about her on the walls of their home. [The father] did not deny these behaviours but demonstrated a tendency to minimise and dismiss.”
[39] Benson & Drury [2017] FamCA 578.
This excerpt clearly indicates that Ms Drury was impacted by the family violence perpetrated against her by Mr Benson, and is evidence of the significant emotional dysregulation that she battled at times.
This excerpt and the findings made in the parenting proceedings make it clear that Mr Benson has a tendency to “minimise and dismiss” his behaviours, and in my view the argument now being advanced by Mr Benson as to the impact of the family violence on Ms Drury appears to be an extension of that minimisation tendency.
Additionally, my observations of Ms Drury’s demeanour throughout the course of the trial and as she gave oral evidence is that she continues to be impacted by the family violence she suffered. Ms Drury’s distress and angst was evident throughout the trial. It is not lost on me that the relationship ended some five years ago, and it is clear to me that the tearful and distressed presentation of Ms Drury reported by Ms AA in 2012 is still present today.
As a result of all of these matters, I have taken the view that Ms Drury’s Kennon claim is made out. It is my view that the impact of the family violence on Ms Drury made her contributions both during the relationship and in the lengthy post separation period all the more arduous.
As difficult as the task is of quantifying the adjustment to be given to Ms Drury, I have assessed the adjustment at 5%.
Relevant section 90SF(3) factors
I now turn to those relevant factors set out in section 90SF(3) of the Act.
I acknowledge that Mr Benson is older than Ms Drury, but that otherwise the parties themselves are in good general health.
While Mr Benson presently earns less than Ms Drury, it is my view that the parties have a similar earning capacity. I have formed this view in light of Mr Benson’s unabashed evidence regarding his financial manoeuvrings in the post separation period, such that I am not able to accept his taxable income to be an accurate reflection of his income nor his earning capacity.
Ms Drury gave extensive evidence about the significant impact that her primary care of the children has on her. Undoubtedly Ms Drury has been solely responsible for dealing with the myriad of health issues the children have faced as a result of among other things the family violence that they have witnessed and the ongoing conflict between the parties. Ms Drury also gave clear and unchallenged evidence that she has solely paid all of the children’s out of pocket medical expenses (prior to them qualifying for additional Medicare benefits). I am also mindful that both children have had significant time off school requiring Ms Drury to come to arrangements with the university to work from home as much as possible. Undoubtedly all of these responsibilities are ones that Ms Drury will in the future shoulder entirely alone given she not only has the primary care of the children and sole responsibility for their health and education, but she gave extensive evidence that the children have in recent times been refusing to spend time with Mr Benson. This is a burden that is difficult to quantify, but one which child support is unlikely to ever be able to properly ameliorate, even if paid at an increased rate to that which is currently in place.
I am also of the view that despite Mr Benson’s inability to acknowledge it, he is indeed paying very modest child support for the children. It is also my view that Mr Benson is not likely to be forthcoming in meeting additional costs for the children in the future given the attitude he took in the post separation period towards structuring his finances in such a way to benefit him and only him, whereas Ms Drury was left to financially fend entirely for herself and the children; assisted in large part by the generosity of her parents in agreeing to house her and the children in the Suburb R property.
My views in this regard are amplified when I consider two additional matters:
a)Firstly, the evidence Mr Benson gave that he considered that the payment by him of trauma insurance for the children was his way of making a contribution to their expenses in the post separation period. Again, I do not accept Mr Benson’s interpretation of his actions. If anything, in my view it shows a complete disregard and understanding of the children’s day to day needs and what he might be able to do from a financial perspective to ease the financial burden that Ms Drury faces in having their primary care and dealing with the myriad of health issues that they face.
b)Secondly, the oral evidence of Ms Drury that whenever the children spend time with Mr Benson she provides all items that the children may require during the visit, noting the particularly vivid example she gave of Mr Benson sending her a list of items that he required Ms Drury to provide when he took the children on an overseas holiday.
It appears from Mr Benson’s evidence that since at least December 2018, he has been living with his current partner for the majority of each week and certainly no less than 5 days a week. While Mr Benson did not give any evidence as to the financial arrangements between him and his current partner, I consider that I am able to infer that he is not paying any expenses as a result of that living arrangement. In my view had Mr Benson been paying expenses I am certain that he would have made that clear to the court, particularly in light of the way in which he otherwise managed his financial affairs to his benefit in the post separation period.
Ms Drury on the other hand has been renting a home for herself and the children in Victoria since January 2018.
I also bring to account my earlier findings that Mr Benson has benefitted from the Airbnb income he received in the post separation period, in an unquantifiable amount.
Balancing all of these factors, it is my view that there should be a further 5% adjustment in favour of Ms Drury on account of the factors set out in section 90SF(3).
Conclusion
The combined net assets and superannuation of the parties is $2,259,053.
I consider it appropriate to adopt a combined pool of superannuation and non-superannuation assets in the circumstances given the approach I have taken to the assessment of contributions in the matter.
I note that the D Street, Suburb E property has been sold for $880,000 and that there are costs associated with that sale not only in terms of agent fees and commissions but also significant costs to ready the property for sale. While I am conscious that Ms Drury had initially sought an adjustment in her favour for the costs of readying the property for sale as a result of Mr Benson’s failure to maintain the property, that adjustment was ultimately abandoned.
In any event, because I do not know how much the net proceeds from the sale of the D Street, Suburb E property will be, I propose to otherwise exclude the sum of $466,746 from my calculations for present purposes ($880,000 less the mortgage of $413,254). I will otherwise make an order to the effect that Ms Drury receive 60% of the net proceeds of sale and Mr Benson 40%, whatever they might be.
Excluding the D Street, Suburb E property and the associated home loan from the assets to be divided, the net figure is $1,792,307.
A 60% adjustment in Ms Drury’s favour would result in Ms Drury retaining assets in her possession with a value of $1,075,384, of which $249,662 is held in superannuation.
Ms Drury currently has the following in her possession:
Offset account
$147,034
Shares with SS Shares
$4,411
CBA account ending …89
$1,443
CBA account ending …92
$9,190
Add back sale of TT Shares
$14,446
Add back sale of UU shares
$16,664
Add back sale of VV Shares
$12,808
Add back sale of Unknown Shares
$4,000
Superannuation
$249,662
Total
$459,658
Accordingly, Mr Benson will be required to make a payment to Ms Drury in the amount of $615,726.
A 40% adjustment in favour of Mr Benson will see him retaining assets to the value of $716,923, of which $150,337 is held in superannuation as follows:
KK Street, Suburb EE property
$900,000
Household contents
$10,000
Bendigo Bank Term Deposit
$51,945
Bendigo Bank account ending …62
$203
CBA Personal account ending …17
$4,862
Equity in LL Pty Ltd
$63,902
Add back of unpaid interest on former relationship property
$30,500
Add back of proceeds of PP Pty Ltd and QQ shares spent on legal fees
$193,900
Superannuation
$150,337
Loan from Mr Benson’s Mother associated with KK Street, Suburb EE property
($73,000)
Payment to be made to Ms Drury
($615,726)
Total
$716,923
I appreciate that the effect of my decision is that there is a risk that Mr Benson will need to sell the KK Street, Suburb EE property to meet the payment to Ms Drury. However in circumstances where his evidence is that he only lives in the property at best 2 days a fortnight and that he derives very little rental income for the property, coupled with the current living arrangements with his partner, I am satisfied that if the sale becomes necessary that in all of the circumstances this is not an inappropriate outcome.
The monetary difference between the parties as a result of my decision will result in a differential between them of approximately $358,461, together with whatever the proceeds of the D Street, Suburb E property turn out to be (using a net proceeds figure of $466,746, Ms Drury would be retaining a little under $100,000 more than Mr Benson of the net proceeds of sale). I consider this differential in all of the circumstances to be just and equitable.
I therefore make those orders that appear at the commencement of these reasons.
I certify that the preceding one hundred and eighty five (185) paragraphs are a true copy of the reasons for judgment of Judge Kari
Date: 10 February 2020
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