Dyer & Kaeser
[2023] FedCFamC2F 452
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Dyer & Kaeser [2023] FedCFamC2F 452
File number: DNC 117 of 2021 Judgment of: JUDGE YOUNG Date of judgment: 29 March 2023 Catchwords: FAMILY LAW – property – where the husband alleges he owes large debts to members of his family – where the wife alleges the debts are either non-existent or should not be considered – where the husband was not a reliable witness – where the wife was a generally reliable witness - where the husband’s brother gave evidence in support of the alleged debts – where the husband’s brother sent the husband letters requesting the debts be repaid – where there was an unavoidable inference that these letters had been written for the purpose of court proceedings - where the court was not satisfied the debts exist – court orders an adjustment in the wife’s favour of $100,000 – husband is to pay the wife $288,969. Legislation: Family Law Act 1975 (Cth) s 90SM Cases cited: Biltoft & Biltoft [1995] FamCA 45
Rogers & Rogers (No 2) [2016] FamCAFC 104
Division: Division 2 Family Law Number of paragraphs: 27 Date of hearing: 22 - 24 and 29 March 2023 Place: Darwin Counsel for the Applicant: Mr Simon Taylor Solicitor for the Applicant: Bowen Lawyers Counsel for the Respondent: Mr Gregg Stagg Solicitor for the Respondent: Ward Keller ORDERS
DNC 117 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR DYER
Applicant
AND: MS KAESER
Respondent
order made by:
JUDGE YOUNG
DATE OF ORDER:
29 MARCH 2023
THE COURT ORDERS THAT:
CASH PAYMENT
1.That within sixty (60) days of the date of these Orders, Applicant shall make pay $288,969 to the Respondent.
2.That in the event the Applicant fails to comply with Order 1 herein, the parties shall forthwith do all acts and things and sign all necessary documents to effect the sale of the property at B Street, Suburb C in the State of Queensland and more particularly described as Title … Lot … of Registered Plan … and for that purpose the following shall apply:
(a)The property shall be listed for sale by private treaty with such real estate agent as is agreed between the parties and failing agreement within fourteen (14) days from the date of these Orders, the real estate agent will be as nominated by the then Chief Executive Officer of the Real Estate Institute of Queensland at the request of the parties or either of them
(b)The list price of the property shall be an amount as is agreed between the parties and failing agreement within fourteen (14) days, the list price will be as nominated by the real estate agent.
(c)The sale price of the property shall be such amount as is agreed between the parties and failing agreement, any offer to buy the property that is at least 80% of the list price shall be accepted by the parties as the sale price.
(d)The Applicant is to co-operate in every way with the real estate agent in relation to the marketing of the property for sale including making the keys readily available, allowing inspection of the property at all times reasonably requested by the agent, and ensuring that the property is clean, neat and in good order at the time of inspection by any prospective buyer.
(e)That upon agreement being reached for sale of the property, the Applicant shall execute the contract of sale and all other documents necessary to complete the sale of the property including all transfer documents forthwith upon its submission to him by the agent or his solicitor.
(f)The contract of sale shall provide for completion within thirty (30) days after the date of the contract.
(g)The proceeds of sale of the property shall be paid in the following manner and priority:
(i)To discharge the mortgage no. … to D Bank.
(ii)Payment of the agent's commission and advertising or other expenses, if any, payable upon the sale.
(iii)Payment of any legal costs and outlays relating to the sale.
(iv)The balance to be divided:
A.57.5% to the Respondent
B.42.5% to the Applicant.
3.That in the event that the property is not sold by private treaty pursuant to Order 1 on or before six (6) months from the date of this Order then the Applicant and Respondent shall do all acts and sign all documents as are necessary to sell the property by auction and the following shall apply:
OTHER
4.That as between the Applicant and Respondent, and subject to the above Orders, the Applicant and Respondent shall each respectively retain all interest in and entitlement to:
(a)All personal property now in their respective possession or control.
(b)All shares, debentures, units in unit trusts, bank, building society or credit union accounts standing in their sole name respectively.
(c)All interests in life insurance policies and superannuation funds standing in their sole name respectively.
5.That as between the Applicant and Respondent and subject to the above Orders, the Applicant and Respondent shall indemnify the other and keep the other indemnified for all credit cards, personal loans, and any other liabilities in their sole name.
6.That the parties shall do all acts and things necessary and give all consents and execute all documents and writings to give effect to these Orders in the time periods prescribed.
7.That in the event that either party refuses or neglects to execute any deed, document or instrument necessary to give effect to these Orders, the Registrar of the Federal Circuit and Family Court of Australia be appointed pursuant to Section 106A of the Family Law Act 1975 to execute such deed, document or instrument in the name of the said party and do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of affidavit.
8.That should the Respondent seek any orders as to costs, an Application in a Proceeding particularising the orders sought, and any affidavit of evidence relied on in support shall be filed and served on the Applicant within fourteen (14) days of the date of these Orders.
9.That should the Applicant oppose any costs application brought by the Respondent or seek any orders as to costs of his own, then a Response to an Application in a Proceeding particularising the orders sought, and any affidavit of evidence relied on in support shall be filed and served on the other party within twenty-eight (28) days of the date of these Orders.
10.That written submissions, if any, in respect of any costs application made by either party be filed and served within thirty-five (35) days of the date of these Orders and if any of the parties want to be heard, orally, in respect of any costs application, a request for the matter to be listed for hearing of oral submissions shall be made in writing to the Court.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Dyer & Kaeser has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
EX TEMPORE REASONS FOR JUDGMENT
Judge Young
This is a proceeding pursuant to section 90SM of the Family Law Act for alteration of property interests between a de facto couple. The applicant, whom I shall call the husband, and the respondent, whom I shall call the wife, began to cohabit in 2004. They separated in February 2022. The parties have three children who are now aged 15, 13 and 11 years. The children live with the wife in Town E in Region K and spend time with the husband in Brisbane on at least two occasions a year pursuant to final parenting orders. The wife has re-partnered and the husband has not. The wife continues in employment as a professional. The husband has, in the past, been employed as a tradesman. His present capacity for gainful employment is discussed below.
The husband seeks property orders providing for a 45 percent/55 per cent split in the wife’s favour but on the basis of a net asset pool, excluding $47,000 worth of superannuation held in the wife’s account, of about $111,000. The husband points to large debts owed to members of his family as significant liabilities reducing the net asset pool. The wife seeks orders providing for a 35 percent/65 percent split in her favour, but on the basis that the alleged debts said by the husband to be owed to his family are non-existent or, if existent, should be disregarded. She says the net asset pool, excluding her superannuation again, is in the order of $523,000.
The forensic battle between the parties focused on the debts allegedly owed by the husband to his family. By way of history, the parties initially lived together in a house owned by the husband’s brother in Brisbane. They lived in the property for about seven years until around 2011. The husband asserted that their occupation was rent free and he said that that should be seen as a large financial contribution made on his behalf. However, the husband also said that he undertook very substantial renovation works on this property for his brother, apparently in return for the asserted rent-free status of their occupation. There was, in fact, no evidence to suggest that the renovation work carried out by the husband was anything other than complete compensation for the rent-free status of their occupation.
The husband also asserted that he had made an initial contribution of $250,000 and annexed a bank statement from May 2007. This showed an amount of approximately $250,000 was deposited into the account on 25 May 2007. Previously, there had been a nil balance. On 1 August 2007, $50,008 was withdrawn and the statement finished at that point. The origin and destination of the money was not explained. It may well have been payment for work but that is speculation on my part. In any event, I am satisfied that this was not an initial contribution, as the parties began to cohabit in 2004, although it was clear from cross‑examination that the husband had on at least one earlier occasion asserted that cohabitation began in 2007.
I am satisfied that the husband’s evidence on this point was untrue and indicates an opportunistic attempt to match the beginning of cohabitation to a time when he had an unexplained capital sum in his bank account. For this and other reasons which will be explained below, I am not satisfied the husband is a reliable witness. I do not accept his evidence unless it is uncontested or subject to independent corroboration. The husband’s claim about the initial contribution should also be compared with his financial questionnaire filed on 28 June 2022 which refers to him having $40,000 in cash at the commencement of cohabitation along with some tools and a car. There was no reference in the husband’s trial affidavit to this $40,000 in cash.
I accept the wife was a generally reliable witness.
The husband alleges the existence of the following debts: (a) a loan from a Mr F of $50,000, (b) wages owed by the husband to his father of $100,000, (c) a debt owed to his father of $23,000 and (d) a debt to his brother of $267,000. There was no evidence other than the assertion of the husband in relation to the claimed amounts (a), (b) or (c). In relation to the wages allegedly owed to his father, the husband said that he and his father had often worked on construction projects together. The terms of any arrangements between them were unclear. There was no particularisation of the claim or description of what works it may have related to. Significantly, there is no evidence from the husband’s father. I infer that such evidence would not have assisted the husband. I am not satisfied that any of these alleged debts exist.
The husband’s claim of indebtedness to his brother of $267,000 was more complex and was supported by evidence from the husband’s brother, Mr G. Mr G deposed that in 2009 he lent his brother $150,000 to buy a house. The agreement between them was said to be that the money would be repaid interest-free on the sale of the house. The house purchased was at H Street. This house was sold but the money was not repaid. The evidence for this advance was a single item in a bank statement of Mr G which said:
$150,000 withdraw.
There is no direct evidence of this money being used to purchase the H Street property but it was roughly equivalent to an amount provided by the husband, according to the bank loan approval document dated the following day which I accept is a contemporaneous document. Curiously, the $150,000 was apparently sourced from a mortgage offset account in the name of the husband’s parents, brother-in-law, sister, and Mr G, according to Mr G’s evidence.
In 2013, according to Mr G, the husband asked for another $110,000 to which Mr G agreed. The new agreement was said to be that the total amount would be repaid on the sale of the second house purchased by the husband at Suburb J. In 2013 the Suburb J property was sold by the husband. The net proceeds were in the order of $550,000. However, the debt said to be owed was not repaid pursuant to the agreement. According to the evidence of the husband and his brother, they agreed that the proceeds of the sale of the Suburb J property would be directed to the purchase of another property at Suburb C, which remains the property of the husband, and the new agreement was said to be that Mr G would be repaid when this property was sold. That property is the former matrimonial home and remains unsold. Currently the alleged debt in the case of the $150,000 advanced is outstanding after 14 years. In the case of the advance of $110,000 made in 2013, this debt is still outstanding after 10 years. Further, according to the husband, he borrowed $38,000 from Mr G for renovations on the Suburb J property. Mr G says in his affidavit something slightly different. He said that he was overseas in 2015 and he asked the husband to sell a vehicle for him. The husband sold the vehicle and the proceeds of sale were paid into the husband’s bank account. Mr G said he did not intend to lend the money but the husband’s business at that point was insolvent or having solvency problems and the money was required to keep it afloat. In what was possibly an example of careless or confused drafting, the husband’s trial affidavit said that he borrowed $271,000 from Mr G to purchase the Suburb C property in 2016. This was, according to the husband in cross-examination, simply incorrect.
According to Mr G, he has advanced a total of $301,000 to the husband over the years since 2009, including a further advance of $3,000 as recently as 2022. According to Mr G, the husband had repaid him small amounts over the years from 2013 to 2020 ranging from $1000 to $5000, totalling in all, $34,000, leaving a balance outstanding of $267,000. In February 2020 the parties separated. On 9 April 2020 Mr G caused two letters to be sent to the husband. One demanded repayment of $150,000 said to have been lent in 2009, and the other demanded payment of $148,000 said to have been made up of the $110,000 advance in 2014 and the $38,000 from the vehicle sale.
Both letters threatened legal proceedings. Both letters set out in detail the history of the advances. It is an inescapable inference that the letters were intended to be read by a third party, presumably this Court, and were intended to bolster the husband’s claim of a debt. The letters claim debts totalling $298,000. Neither letter refers to the $17,000 said by Mr G to have been repaid by the husband between November 2013 and August 2016. On 2 October 2021 Mr G caused another letter to be written in similarly detailed terms which acknowledged that $17,000 was said to have been repaid by the husband to Mr G between August and November 2020.
However, Mr G’s affidavit states that by November 2020 the husband had allegedly repaid $29,000. By 2 October 2021, according to Mr G’s affidavit, the husband had, in fact, repaid $34,000 not $17,000. In cross-examination, Mr G was asked whether the separation of the husband and wife in February 2020 was one of the reasons for writing the letters. He denied that was the case. I am satisfied, having regard to the content of the letters, that they were not simply letters of demand but were intended to bolster the husband’s allegation of a debt. I am satisfied that Mr G’s denial was false.
Shortly before the trial, the husband and Mr G signed a document that was titled, “Loan Agreement.” Perhaps more accurately, it purported to be an acknowledgement of an existing debt. The loan agreement annexes a statement which referred to an account in the name of five people including Mr G. The other four family members were the family members I have identified earlier in these reasons as the source of the advance of the $150,000. Mr G said in evidence that the other family members had agreed to draw down on a mortgage offset account to advance the money to the husband.
Technically, one would think this was an advance by all five to the husband. In cross‑examination Mr G said they had agreed to this advance. However, there is no mention of this agreement in the affidavit material or recognition that, technically, any loan would be one made by all five account holders. It is clear from the evidence that the Dyer family mix finances to a significant degree. The wife said, and I accept, that they often worked on each other’s investment properties and the arrangement between them was generally that their work or their investment of labour was repaid at the time of the sale.
This appears to have been particularly the case between the husband and the husband’s father. Overall, as noted, I have found the husband to be an unreliable witness. I am satisfied that Mr G’s evidence was, at least in one respect, false. I am not satisfied that Mr G is a reliable witness. The details surrounding the alleged loan arrangement were, in my view, inconsistent: (a) the advance of $150,000 was said to be by Mr G, but the documents suggest that the advance was made by five members of the husband’s family; (b) there is evidence that there was an agreement that the advances were to be repaid by the sale of a property but, in fact, they were never repaid despite the sale of at least two properties that would have permitted repayment of the money, being the H Street and Suburb J properties; (c) the letters of demand, surprisingly, fail to accurately acknowledge repayments; and (d) there is an absence of independent evidence to support the existence of the loans.
I am prepared to accept that advances totalling $260,000 were made to the husband in 2009 and 2013. However, I am not satisfied that this amount or any similar amount, after allowing for repayment by the husband, remains outstanding. I consider there is clear evidence of family entangled finances on shared projects and the lack of independent evidence about these alleged loans leaves me in a state of suspicion. I am not satisfied that the amount of $267,000 or any amount remains outstanding between the husband and Mr G. If I am wrong about that conclusion and some amount remains outstanding, I am not satisfied that any such debt will be pursued by Mr G or the other four family members involved in the advance of the initial $150,000.
The fact that the first advance was made in 2009 and the second in 2013 and any recovery has been minor or non-existent suggests there is a lack of commitment to recover the money owing, if any, by the husband. I am also satisfied, contrary to his evidence, that the husband continues to do some work and it is at least conceivable that some other arrangements have been entered into between family members. I am satisfied that the situation is analogous – although not identical – to the facts in Biltoft & Biltoft [1995] FamCA 45 and Rogers & Rogers (No 2) [2016] FamCAFC 104. I am not satisfied that any debt will be pursued and, accordingly, should not be included in the balance sheet.
THE BALANCE SHEET
The parties excluded by agreement certain amounts said to be referable to the husband’s company, Dyer Pty Ltd. Those are items 2, 3, 18 and 19 which have been put at nil by agreement. I am satisfied that in respect of the sum of $9945, which was withdrawn by the husband from his superannuation, that that should be treated as an add-back. The husband said that that amount was withdrawn so that he could afford to spend time with his children. However, the evidence seemed to indicate, and the husband agreed, that a significant amount of that money was used to maintain registration of his company and as the moneys were received only a couple of days before the children ceased spending time with him it seems unlikely that any significant amount was spent on the children and, rather, the amount was used for the husband’s own purposes.
CONTRIBUTIONS
I am not satisfied that either party had any significant assets at the beginning of cohabitation and that the assets they presently hold have largely been built up during the relationship. The husband worked throughout the relationship, although his business ran into financial difficulties in about 2015, it would appear. The wife also worked as a public servant, apart from time off for children. Overall, I am satisfied that the financial and non-financial contributions of the parties were equal. The wife has also made a very significant post‑separation contribution to care of the children because the husband does not pay Child Support. His only income is, apparently, Centrelink payments at the moment. However, I propose to address this issue of contributions in the discussion below.
SECTION 90SF(3)
The husband and wife are 45 and 41 years old respectively. The wife is in good health. The husband was injured in 2017. A patient health summary was admitted into evidence. This confirmed that the husband suffered an injury to his arm in 2017. In 2021, he had undergone surgery. In mid-2021, he had surgery to address leg pain. There was no evidence that these matters prevented the husband working. The husband annexed to his trial affidavit a Centrelink medical certificate wherein a doctor certified that the husband was unfit for work from January 2023 to April 2023.
The husband’s condition was said to be related to arm injury which occurred in 2021 and which was said to be “temporary”. He also complained of pain and a limited range of movement. The other condition on which the certificate was based was said to be “depression and anxiety”. In his trial affidavit the husband said he had “not fully recovered from his injuries and continued to be limited in his work”. He said, “I am unable to return to my work as a [tradesman] due to my medical condition”. In cross-examination, the husband admitted to maintaining the registration of his company and to having done some recent work. This was not mentioned in his trial affidavit.
The husband also said he had obtained some work but it was not economic due to the cost of professional indemnity insurance. This was not mentioned in his affidavit either. The husband did not call any medical evidence as to his capacity for gainful employment. I consider that it is likely that the husband experiences some discomfort in his arm but I am not persuaded it constitutes a significant limitation on his capacity for gainful employment. The extent, consequences and likely duration of any condition of anxiety and depression was not the subject of detailed or expert evidence. It is possible that it presently affects his capacity for gainful employment but, beyond that, I am unable to make a finding.
As noted, the wife has responsibility for the care of the three children of the parties aged 11, 13 and 15. In relation to the other matters in section 90SF(3) I take into account the following matters. The husband is, apparently, in receipt of JobSeeker payments. Given that I have not been able to make a finding about the husband’s capacity for gainful employment, I have some difficulty in making an assessment under subsection (g). The mother cohabits with a partner who, according to her financial statement, earns $23,000 a week. I presume this is an error of some sort but, nevertheless, the wife’s partner would appear to be employed and is possibly earning $2,300 a week.
The wife says she earns $831 a week, including Family Tax Benefit A and B of $371 a week. She says she works part-time as a public servant for 25 hours a week. The husband does not pay Child Support and has not done so since separation. In my view, this is a very significant factor. The wife has been primarily responsible for the support of the children for the past three years on a limited income and she will remain responsible for them for the foreseeable future. In my view, this merits a significant adjustment in her favour of approximately $100,000. The overall result, then, as I have set out in the balance sheet is as follows.
Description De facto husband De facto wife Totals Assets 1 B Street, Suburb C Qld $820,000 2 Dyer Family Trust Nil 3 Dyer Pty Ltd Nil 4 Motor Vehicle 1 $15,000 5 Motor Vehicle 2 $45,000 6 Bank Accounts $1,500 7 Bank Accounts $6 8 Tools (old) $500 9 Furniture & Effects $1,500 10 Chattels $300 11 Jewellery $2,000 12 Vehicle 4 $1,000 13 Vehicle 5 $2,000 14 Vehicle 6 $5,000 15 Cash from sale of Vehicle 6 $500 16 Motor Vehicle 3 $2,000 17 Shares L Company $2,000 18 Loan to Dyer Pty Ltd Nil 19 Beneficiaries Accounts (Dyer Family Trust) Nil Total Assets $870,306 $28,000 $898,306 Liabilities 21 Mortgage B Street $317,165 22 Westpac Mastercard # …65 $10,251 23 Westpac Personal Loan Nil 24 Loans from Mr G Nil 25 Loan from Mr F Nil Total Liabilities $327,416 Nil $327,416 Net assets $542,890 $28,000 $570,890 Superannuation 26 Wife’s Super Fund 1 $47,418 27 Add-back - withdrawn from superannuation $9,945 Total Superannuation $9,945 $75,418 $57,363 Total assets and superannuation $552,835 $75,418 $628,253 De facto husband pays de facto wife ($288,969) $288,969 Overall result 42%/58% $263,866 $364,387 $628,253 $288,969/$502,835 = 57.5%
i.e. a proportion of payment to the wife to net equity in B Street
I am satisfied that on the basis of equal contributions, but requiring an adjustment in the wife’s favour of $100,000, this equates to a 58 per cent/42 per cent split in the wife’s favour. I do not propose to make a separate division in relation to superannuation, in part because I consider that if the husband is to have any chance of paying the cash amount that I propose to order him to pay, then it is in his interest to essentially have access to cash rather than a superannuation interest. In any event, the parties did not raise the issue with me.
Overall, this means I find that the husband should pay the wife $288,969. I propose to make orders that the husband has 60 days within which to do that. If he is unable to pay the wife within 60 days then the property at B Street, Suburb C is to be sold according to the terms set out in the orders sought by the wife.
I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the ex tempore Reasons for Judgment of Judge Young. Associate:
Dated: 29 March 2023
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