Edgley and Edgley
[2014] FCCA 2707
•3 December 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| EDGLEY & EDGLEY | [2014] FCCA 2707 |
| Catchwords: FAMILY LAW – De facto property settlement – short relationship – financial contributions. |
| Legislation: Family Law Act 1975, ss.90SF(3), 90SM |
| Stanford v Stanford, [2012] HCA 52, (2012) 47 Fam LR 481, (2012) FLC ¶93-518 Watson & Ling, [2013] FamCA 57, (2013) FLC ¶93-527 Hickey & Hickey; A-G for Commonwealth (Intervener), [2003] FamCA 395, (2003) 30 Fam LR 355, (2003) FLC ¶93-143 Birkett & Hemsley, [2014] FCCA 1568 C & C, [2005] FamCA 429, (2005) 33 Fam LR 414, (2005) FLC ¶93-220 AJO & GRO, [2005] FamCA 195, (2005) 33 Fam LR 134, (2005) FLC 93-218 |
| Applicant: | MR EDGLEY |
| Respondent: | MS EDGLEY |
| File Number: | PAC 5090 of 2011 |
| Judgment of: | Judge Halligan |
| Hearing dates: | 31 July, 1 August, 13 and 14 October 2014 |
| Date of Last Submission: | 14 October 2014 |
| Delivered at: | Parramatta |
| Delivered on: | 3 December 2014 |
REPRESENTATION
| Counsel for the Applicant: | Mr Campton SC |
| Solicitors for the Applicant: | Mills Oakley Lawyers |
| Counsel for the Respondent: | Ms McIntosh |
| Solicitors for the Respondent: | Peter Cornock & Assoc |
ORDERS
Within 2 months, the Applicant shall-
(a)pay to the Respondent or as she may direct in writing the sum of $352,538 (the sum); and
(b)cause the joint debt of the parties secured by mortgage over the property situate at Property M, being the land in certificate of title Folio Identifier [omitted] (the property), to be repaid in full and the mortgage to be discharged.
Simultaneously with the Applicant complying with the preceding Order, the Respondent shall do all things and sign all documents necessary to transfer her interest in the property to the Applicant and shall vacate the property.
If the Applicant fails to comply with Order 1, both parties shall do all things and sign all documents necessary to list the property for sale by private treaty and for this purpose shall do the following:
(a)The parties shall instruct a solicitor or conveyancer as agreed to have the conduct of the sale on behalf of the parties and shall be entitled to charge the appropriate conveyancing fee with respect to that sale but failing agreement the President of the Law Society shall nominate a solicitor;
(b)The parties shall within fourteen (14) days of the Applicant’s default under Order 1, appoint such agent as they agree upon to have the conduct of the sale and in default of agreement shall instruct such agent as the President of the NSW Division of the Australian Property Institute (“the agent”) and the costs of an incidental to such appointment be borne equally by the Applicant and Respondent as when same falls due;
(i)For the purposes of appointing a real estate agent, the Applicant shall provide the Respondent with the names of three local Real Estate Agents and the Respondent shall pick one.
(c)In the event the property does not sell by way of private treaty within three (3) months of the listing dated, the parties shall list the property for sale by auction and the following shall occur:
(i)The reserve price for the purpose of such auction shall be no less than $1,275,000 or such price as the parties agree upon in writing, or, in the absence of agreement reached shall be the price nominated as the fair market value of the home by a Valuer appointed by the President of the NSW Division of the Australian Property Institute (“the valuer”) but not less than $1,275,000 and the costs of and incidental to such appointment and valuation be borne equally by the Applicant and the Respondent when same falls due.
(d)In the event the bidding at the auction of the property does not reach the reserve price, the Applicant/Respondent may negotiate with the highest bidders or any other interested person and effect a sale of the property at a price which is not more than 6% below the reserve price, or at such other price as the Applicant and Respondent agree in writing;
(e)The Applicant and Respondent shall accept an offer or bid for the purchase of the property if that offer or bid is $1,275,000 or above;
(f)In the event the property does not sell at auction, the parties shall forthwith list the property for sale by public auction and Orders 3(a) to 3(e) are effective for the purposes of that sale;
(g)The Applicant and Respondent shall each co-operate in every way with the agent including (without limiting the generality of the foregoing):
(i)Making the key available to the agent;
(ii)Allowing inspection of the home at all reasonable times requested by the agent;
(iii)Doing or saying nothing to hinder or prevent a sale being effected;
(iv)Ensuring the property including the grounds are in a neat and clean condition at the time of inspection by the agent and prospective purchasers and for this purpose, the Applicant shall remove as soon as practicable from the property at his own expense items including but not limited to scrap metal, machinery, dirt mounds and rubbish and the Respondent shall maintain the lawns.
(v)The parties shall each pay one half share of any costs relating to the sale and shall pay those monies in the time nominated by the real estate agent;
(vi)The Applicant and Respondent may use the available funds of $6,400 held by the Applicant accrued from the rent from the stone cottage to pay for improvements to the property for the purpose of selling if the parties agree and do so in writing.
On settlement of the sale of the property, both parties shall do all things and sign all documents necessary to cause the proceeds of sale to be paid in the following manner and priority:
(a)All costs and expenses of sale, including agent’s commission, valuer’s fees, auction expenses (including re-payment of any such expenses as has been paid by either or both of the parties);
(b)Legal costs and disbursements associated with the sale/auction;
(c)In discharge of the mortgage to ANZ account number [omitted];
(d)In payment of $352,538 to the Respondent provided that if the sale price of the property exceeds $1,275,000, the Respondent shall be paid 57.25% of the amount remaining;
(e)The balance to the Applicant if any.
The Applicant shall no later than seven (7) days before settlement of the sale of the property and at his own expense remove all items from the property including machinery, scrap metal, shipping container, dirt mounds etc and shall ensure those areas are left in a neat and tidy condition.
In the event the Applicant does not comply with Order 5 and settlement of the sale does not occur on the date nominated for settlement pursuant to the contract for reason of the failure to remove items the Applicant shall be solely liable for any interest or damages incurred and accrued by reason of that failure to settle.
In the event the Applicant has not removed all of the items pursuant to Order 5, the Respondent may arrange for removal of such times and for storage of those items at a storage facility located in the [omitted] area and the Respondent shall be reimbursed for any costs and expenses incurred by reason of the Applicant’s default including but not limited to removal and storage costs.
In the event the Respondent exercises her right to remove items from the property according to Order 7, the Applicant shall do all acts and things and sign all documents to secure the nominated storage facility.
That within fourteen (14) days of the making of these Orders, the Applicant and Respondent shall do all acts and things necessary to place [P] Pty Ltd in voluntary liquidation and subject to that liquidation and assessment of the personal liabilities of the parties, the parties are to pay in equal shares any personal liability arising from that corporation whether joint or several including any liability arising from any personal guarantee given by either party including any liability arising from rental/lease payments from a personal guarantee given by the Respondent.
That other than provided for in these Orders, each party shall be the sole owner to the exclusion of the other party of the following:
(a)Any shareholding, debentures, units in unit trusts, stocks or interest in any company standing in their respective sole names as at the date of making these Orders:
(b)Any motor vehicles registered in their respective sole names as at the date of making these Orders;
(c)Any interest in any savings accounts, investments or superannuation funds standing in their respective sole names as at the date of making these Orders;
(d)Any items of personalty in their respective sole possession as at the date of making these Orders.
That each of the parties is solely liable and hereby indemnifies the other in relation to any debt, liability of claim in their respective names not otherwise referred to in these Orders.
That all parties shall do all things necessary to give effect to these Orders including but not limited to signing all documents to give effect to these Orders and if any such parties default then pursuant to Section 106A of the Family Law Act as amended by the Registrar of this Honourable Court shall be entitled to sign such document or documents on behalf of the defaulting party or parties.
IT IS NOTED that publication of this judgment under the pseudonym Edgley & Edgley is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PARRAMATTA |
PAC 5090 of 2011
| MR EDGLEY |
Applicant
And
| MS EDGLEY |
Respondent
REASONS FOR JUDGMENT
(As Corrected)
Introduction
These are property settlement proceedings under Part VIIIAB of the Family Law Act 1975.
The Applicant is the former de facto Applicant. The Respondent is the former de facto Respondent. I will refer to them in these reasons as the Applicant and the Respondent respectively.
The Applicant seeks Orders that within two months he pay the Respondent $180,000 and secure the discharge of the mortgage over their jointly owned home at [M], and that the Respondent transfer her interest in that property to him. He also seeks Orders that both parties do all things necessary to de-register [P] Pty Limited.
The Respondent seeks Orders that within 28 days the Applicant pay to her solicitors on her behalf the sum of $541,029 and secure the discharge of the mortgage secured on the [M] property, and that she transfer her interest in that property to the Applicant. If the Applicant fails to pay the specified sum and secure the discharge of the mortgage, then she seeks the sale of the [M] property and payment to her from the net proceeds of sale of the sum of $541,029 plus 50% of any equity above $1,275,000 if the property sells for more than that amount. If the net proceeds of sale are less than $541,029, she seeks that the Applicant pays her the shortfall within 7 days of settlement of the sale of the property.
It is the Applicant's case that the matter should be approached on an asset by asset basis. His case is that of the major assets, his contributions to the jointly owned home should be assessed at 70% to the Respondent's 30%, his contribution to his shares in [R] Pty Limited should be assessed at 100%, his contribution to the inheritance he received after separation from his deceased mother's estate should be assessed at 100%, each of the parties should be assessed to have made 100% contribution to their respective superannuation interests, and there should be no adjustment to any of the contribution based entitlements by reference to non-contribution considerations.
The Respondent's case is that the matter should be approached on a global basis. It is her case that the Applicant's contributions should be assessed at 60% and hers at 40%, and that there should be a 10% adjustment to the parties’ contribution based entitlement in her favour by reference to non-contribution considerations, giving her an entitlement to half of all the parties’ joint and separate property.
Background
The Applicant is aged 57 (born [omitted] 1957), the Respondent is 52 (born [omitted] 1962). The parties commenced cohabitation on 15 October 2007, and finally separated in December 2010. The total period of their cohabitation is therefore three years and two months. The parties continue to reside at the [M] property, the Respondent in what the parties describe as the stone cottage, and the Applicant in the main house.
There are no children of their relationship.
Both the Applicant and the Respondent have children to prior partners. The Respondent has two children, [names omitted], both now adult. The Applicant has two children to his former partner [name omitted], one now adult ([name omitted]) and one now aged 16 ([X], born [omitted] 1998).
Consent interim Orders were made on 24 September 2012 that the parties sell the [M] property and a [business] conducted by [P] Pty Limited, a company controlled by the parties. Neither was sold.
Jurisdiction
In relation to the court’s jurisdiction to deal with this matter under Part VIIIAB of the Family Law Act-
a)It is agreed there was a de facto relationship between the parties.
b)It is agreed that relationship has broken down.
c)It is agreed that it broke down after the commencement of Part VIIIAB on 1 March 2009.
d)It is agreed the de facto relationship continued for not less than two years.
e)It is agreed the parties cohabited in New South Wales for the entire period of their cohabitation.
f)The Applicant's property settlement application was filed within two years after the de facto relationship broke down.
It is therefore agreed by the parties that the issue of property division between them may be dealt with under Part VIIIAB.
Credit of witnesses
The Applicant and the Respondent were the only witnesses. The evidence of both was unreliable on some matters, albeit I am satisfied the Applicant's evidence was unreliable significantly more often than the Respondent's. I am not satisfied the credit of either generally was destroyed. While I am satisfied both parties were careless with the truth on occasions, the Applicant more often than the Respondent, I am not satisfied either deliberately lied or deliberately set out to deceive the court. I am satisfied that generally the Respondent was a more reliable witness than the Applicant.
The evidence
As mentioned, the parties commenced cohabitation in mid October 2007.
The Applicant asserted in one place in his evidence in chief that the Respondent moved into the [M] property in December 2007, and in another place in 2008. He suggested that he did not live with the Respondent in her premises on a full time basis for the entire period from the commencement of cohabitation until they occupied the [M] property together.
The Respondent said that the parties cohabited in her premises from October 2007 to April 2008 and then moved to the [M] property.
I am satisfied it is more likely than not that the parties cohabited at the Respondent's premises from October 2007 until about March or April 2008. It was around March or April 2008 that the Applicant effected a property division with his former partner using $200,000 provided by the Respondent inter alia to buy out his former partner’s interest in the [M] property. This is also around the time the parties entered into a deed of trust under which the Applicant declared that he held a half interest in the [M] property on trust for the Respondent. This is also consistent with the time when the Respondent commenced contributing to the mortgage repayments on [M].
Applicant's property at commencement of cohabitation
At the commencement of the parties’ cohabitation, the Applicant had a half interest in the [M] property jointly with his former de facto partner, subject to a joint debt to the ANZ bank, shares in a company, [R] Pty Limited, that he controlled and through which he conducted his business, savings in bank accounts, an interest in a superannuation fund, and a credit card debt of $15,108.59.
The Applicant said his half share of the equity in the [M] property was worth $199,722.75, his superannuation interest was worth $97,408.33, his savings totalled $50,376.42, and his shares in [R] Pty Limited were worth $298,210. Neither the [M] property nor the Applicant's shares in [R] were valued at the commencement of the parties’ cohabitation, or when the Applicant effected a property division with his former partner in early 2008. No admissible evidence of their value in 2007 was adduced in this hearing.
The Applicant and his former partner agreed that for the purposes of negotiating a property settlement in early 2008, the value of the [M] property was $950,000 and the mortgage balance as $551,607.42, as recorded in their Termination Agreement pursuant to the Property (Relationships) Act 1984 (NSW). That valued the Applicant's half share of the equity at $199,196.29.
The Respondent said the Applicant's half share of the equity in the [M] property was worth “less than $200,000”. She said the property was worth $950,000 and the mortgage balance was $585,000. She adduced no admissible evidence of either figure. However, based on these figures the value the Applicant’s half share of the equity is $182,500.
On 8 April 2008 the Respondent signed a deed of trust as beneficiary in which the [M] property was stated to be worth $950,000 with a mortgage of $550,000, not $585,000, giving the Applicant's half share of the equity a value of $200,000.
I am satisfied that the value of the Applicant's equity in the [M] property at the commencement of the parties’ cohabitation was a little less than $200,000.
The value the Applicant attributed to his shares in [R] Pty Limited was also the value he and his former partner agreed on for the purposes of their property division. In the absence of any valuation and any express or implied admission of this figure by the Respondent, I am unable to determine the value of those shares at the commencement of cohabitation.
The Respondent said that in addition to the credit card debt, the Applicant owed his former partner $50,000. She gave no source of knowledge for this assertion. I am satisfied the Respondent is referring to the loan of $50,000 advanced to the Applicant's former partner in April 2008 using funds provided by the Respondent, and that there was no debt owing by the Applicant to his former partner as at October 2007.
Respondent's property at commencement of cohabitation
At the commencement of cohabitation, the Respondent had the proceeds of sale of a property she sold in Queensland, a motor vehicle, a 1998 former ambulance, furniture and belongings, and nominal superannuation.
I accept the Respondent's evidence that she had no liabilities at the commencement of cohabitation.
The Respondent said she received approximately $480,000 from the sale of her Queensland property. She said that from the proceeds of sale she bought a motor vehicle for use by her son for approximately $26,000 and bought a ski boat for $8,000, after which she deposited $456,953.59 into an interest bearing deposit on 22 October 2007.
The bank statement the Respondent attached to her affidavit does not support this evidence. On 17 October 2007, the date on which the Respondent signed the transfer of her Queensland property, $456,953.59 was deposited to her NAB FlexiDirect account, giving a credit balance in that account of $457,031.82. On 23 October 2007, the Respondent transferred $450,000 and $2,000 from this account, both marked to “i-saver”. The only transaction on the Respondent's bank account on the day she said she deposited $456,953.59 into an interest bearing deposit is the deposit of this sum into her general bank account.
The Applicant said that at the commencement of cohabitation he was aware the Respondent had $200,000. I am satisfied the Applicant was aware the Respondent had more than $200,000. The Respondent paid that sum so the Applicant could effect the property settlement with his former partner, and in addition, he believed the Respondent paid $12,000 for the ski boat in early 2008, he was aware she bought a caravan in early 2008, and he knew she lent him $50,000 to meet business expenses in 2008.
I am satisfied the Respondent had funds approximating $457,000 at the commencement of cohabitation.
While there is no evidence that the Respondent retained any significant savings at separation, the evidence does not establish what became of a significant part of these funds.
Parties’ income
The Applicant said his assessed taxable income for the years ending 30 June 2008 to 30 June 2011 was-
a)30 June 2008, $95,222;
b)30 June 2009, $115,797;
c)30 June 2010, $126,628;
d)30 June 2011, $119,120.
He was not challenged on this evidence, despite an apparent inconsistency between this evidence and his taxable income of $48,000 per annum as recorded in the Termination Agreement between the Applicant and his former partner entered into in February 2008.
The Applicant asserted that “to a significant degree” the parties kept their finances separate, including keeping separate bank accounts at all times. However, funds provided by both parties were intermingled in one account in the Applicant's sole name.
The Respondent said she was a foster carer caring for high needs children from May 2007 to 2010. As such, she was required to be at home and not engage in paid work. She received a carer’s allowance to support the foster children and herself, and she said she used this to pay for the expenses of the foster children other than electricity. She said that she received between $2,500 and $2,700 per week. She had foster children from the commencement of cohabitation until a [business] business was acquired just before separation, except of a period of about six months when her approval as a foster carer was suspended.
In October 2008, the Respondent had the care of a 16 year old boy who could not be left with other children due to sexualised behaviours. She was receiving $1,000 a week for his care. The boy alleged that the Applicant assaulted him, and the Respondent's approval as a foster carer was suspended. Between October 2008 and April 2009 she received no carer’s allowance and lived on her savings until the allegation was dealt with and her approval as a foster carer was reinstated. She then resumed as a foster carer for high needs children. There is no evidence before me that the Applicant assaulted the foster child.
In April 2009, the Respondent secured a [omitted] position with a community organisation earning approximately $500 per week, as well as continuing as an in-home foster carer. This evidence contradicts her assertion that as a foster carer she was not permitted to take employment outside the home. She was not cross-examined on this inconsistency. She left this employment when the parties acquired the [omitted] business.
I accept the Respondent's evidence as to her income during cohabitation, and despite the inconsistency between his affidavit evidence and the Termination Agreement, I accept the Applicant's unchallenged evidence as to his taxable income during cohabitation.
Financial contributions
It was ultimately the Respondent's case that she contributed $280,000 from her pre-cohabitation property, while the Applicant conceded she contributed $250,000.
There is no issue that from the Respondent's funds at cohabitation, she provided a total of $200,000 for the Applicant to meet his obligations to his former partner under their Termination Agreement. I accept the Respondent's evidence that from her pre-cohabitation funds she also paid $8,000 for a ski boat purchased in late 2007 or early 2008, $10,000 for a caravan purchased in early 2008, site fees of $2,500 in early 2008, $24,000 after trade-in to buy a car, and also paid a total of $38,820 towards renovations to the [M] property and for furniture and appliances for the property, as I will particularise later, a total of $283,320.
Other than the $26,000 for a motor vehicle for her son, the Respondent did not indicate how she spent the balance of the funds she had at the commencement of cohabitation other than to say that she met living expenses from savings for the six months from October 2008 to April 2009 when her approval as a foster carer was suspended. She gave no evidence of the level of her expenditure from savings during this period, nor did she provide evidence of the amount of her savings at October 2008 and at April 2009. There was no explanation for the absence of such evidence.
I am therefore satisfied that the Respondent has established that she contributed $280,000 from the cash resources she had at the commencement of cohabitation.
The Applicant gave evidence of various sums he said he expended during cohabitation, including $9,022.86 on home improvements, $10,831.27 for repairs to the ski boat, site fees for the caravan totalling $10,700, and $15,805.13 between June 2008 and December 2010 for the installation of fencing, primarily to secure the Respondent's horses, piping to troughs and lighting up the driveway at the property. In fact, the money expended on home improvements was expended by [R]. He otherwise gave no evidence as to the source of the funds used to make these payments. He said that he expended a total of $8,654.37 from his income and savings in 2008 to install a concrete slab and bathroom for a foster child in the Respondent's care. There is otherwise no specific evidence as to what the Applicant did with the approximately $50,300 in savings he said he had at cohabitation.
Allowing for his credit card debt of approximately $15,100, that leaves net savings of approximately $35,200 that the Applicant had at the commencement of cohabitation. The total of expenditure on the boat repairs, site fees and fencing etc is about $35,000. I infer that at least a significant part of this expenditure was more likely than not met from the Applicant's pre-cohabitation savings.
In early 2008, the Applicant and his former partner agreed that she would transfer her interest in the [M] property to him in return for him paying her the sum of $150,000 and lending her $50,000, repayable when their child [X] completes high school or becomes self-supporting. Under the settlement, the Applicant retained [R] Pty Limited and the business he conducted through it, and his superannuation.
The Respondent provided $200,000 from her pre-cohabitation savings to pay the Applicant's former partner the moneys owing under their Termination Agreement.
On 8 April 2008, the Applicant and Respondent entered into a Trust Deed reciting that the equity in the [M] property was $400,000 and that the Respondent had advanced $200,000 to or at the direction of the Applicant, and provided that the Applicant as trustee held 50% of the [M] property on trust for the Respondent in fee simple as beneficiary “from the date of transfer of the [M] property”, presumably from the date of the transfer to the Applicant of his former partner’s interest in the [M] property under their property settlement.
The Trust Deed further recited that both parties intended to advance further funds from time to time for improvements to be effected to the [M] property, for example to construct a swimming pool, and it provided that when the Respondent advanced more funds to the Applicant in relation to the [M] property, then the Applicant as trustee “shall enter into a further Declaration of Trust to record the Beneficiary’s increased equity in the [M] property taking into consideration any further advances then made by the Trustee in his individual capacity”. There was no evidence of any further trust deed being entered into.
Under the Termination Agreement between the Applicant and his former partner, the $50,000 loan was to assist the Applicant's former partner to buy another property. While no interest is repayable on the capital sum, the Applicant is entitled to be repaid $50,000 plus an additional amount to bring the total payment to a sum representing the proportion of the then value of the property purchased by his former partner that the $50,000 bore to the purchase price of that property. That is, if the Applicant's former partner purchased a property for $400,000 using the $50,000 loan from the Applicant, then the total sum repayable to the Applicant is one eighth of the value of the property at the time of repayment of the loan. If the property purchased for $400,000 was worth $600,000 at the time of repayment of the loan, the Applicant would be entitled to be repaid a total of $75,000.
There is no evidence as to the purchase price of the property the Applicant's former partner acquired or what it is now worth. There is thus no evidence as to the contingent asset the Applicant may have in the uplift provided for in the Termination Agreement on repayment of the $50,000 loan.
In June 2008, the Respondent traded in the motor vehicle she had at the commencement of cohabitation. She paid approximately $24,000 on the purchase of a $36,000 vehicle after trade in. I am satisfied this sum came from the Respondent's pre-cohabitation resources.
On 6 August 2008, the Respondent lent the Applicant $50,000 to enable him to meet liabilities of his company. The company subsequently repaid the money without interest in two instalments, on 8 and 9 October 2008. I am satisfied the loan moneys came from the Respondent's pre-cohabitation resources. There is no direct evidence as to what the Respondent did with these funds when they were repaid to her, but I am satisfied it is more likely than not that she contributed these funds during cohabitation.
I am satisfied that during their cohabitation, both parties contributed their income to meet their own reasonable expenses and the joint expenses of their household.
I prefer the Respondent's evidence over the Applicant's and find that during the six months the Applicant resided with her in her premises, he made no contribution to her household expenses. During this period the Applicant was meeting the whole of the outgoings on the [M] property. By providing the Applicant with free room and board, the Respondent made an indirect contribution to the outgoings on the [M] property paid by the Applicant during this period.
From the end of April 2008 until March 2011, the parties each paid half the mortgage repayments on the [M] property. The Respondent deposited half the monthly repayment into the Applicant's bank account from which mortgage payments were made. The Respondent made no other periodic direct financial contribution to the outgoings on the [M] property. She did however make other direct and indirect financial contributions to those outgoings.
The Respondent made no contributions to the mortgage repayments after March 2011 despite continuing to live at the property.
The Applicant said that from April 2008 to June 2014, he paid a total of $335,281.35 to the joint mortgage and the Respondent paid a total of $65,381 to the joint mortgage. He annexed spread sheets to his affidavit that he said recorded the various contributions by each party. Both the spreadsheet particularising the parties’ mortgage payment contributions and the Applicant's evidence as to the totals each contributed are incorrect. He double counted the Respondent's contribution to the mortgage, both including it in the total he said he paid and separately acknowledging it as the Respondent’s contribution. He put into evidence an amended spread sheet that showed the correct attribution of the source of funds to make the mortgage repayments over this period.
The Applicant said improvements were made to the main residence on the property in 2008 and 2009 costing a total of $9,022.86. He said the improvements included renovations to the kitchen, family room and veranda, and some doors were installed. He said he paid the full cost from his income. He acknowledged in cross-examination that this evidence was incorrect in several respects, namely-
a)The renovations cost more than $9,022.86.
b)The sum he said he contributed to the cost was in fact paid by [R].
c)The Respondent contributed to the cost of the improvements.
The parties renovated the kitchen, family room and verandah and installed doors in the main house. I am satisfied that the Respondent contributed $15,470 to the kitchen renovations, and further funds for other work including fencing and purchase of furniture, bringing her total contribution to $38,820.
The Respondent said she paid for all groceries for the Applicant and his daughter [X], who spent alternate weeks with the Applicant. She said she also paid for excursions, clothing, bed, bedding, entertainment and trips away for [X]. She said she paid for “all groceries” for the Applicant's mother until late 2010. She said the Applicant gave her $400 per fortnight for about two months and then ceased paying her anything. The Applicant agreed in cross-examination that at times the Respondent spent money on [X], but said he reimbursed the small amounts the Respondent spent on his daughter. The Respondent denied the Applicant reimbursed her for what she spent. I prefer the Respondent's evidence to the Applicant's as to these contributions.
When [Y] a foster child came into the Respondent's care in 2008, the Applicant at the Respondent's request installed a concrete slab and a bathroom so [Y] could live in a caravan placed on the concrete slab, at a total cost of $8,654.37 which he paid from his income and savings.
The Applicant said he also contributed a total of $71,586.86 in relation to the [M] property as follows-
a)Council rates, $9,450.84;
b)Home and contents insurance, $20,483,96;
c)Electricity, $35,489.65;
d)Gas, $4,392.51;
e)Water, $1,770.
In relation to this evidence-
a)In relation to rates, a further $4,704.51 was paid from funds sourced from a joint borrowing by the parties.
b)In relation to insurance, a further sum of $3,281.04 was paid from funds sourced from a joint borrowing by the parties, and the Applicant did not explain whether the insurance covered improvements used by [R] Pty Limited. I note in 2012 and 2013 two payments were made on the same date, one described as “Farm Package” and the other as “Household”. Both payments in 2012 were sourced from joint funds.
c)In relation to electricity, all payments the Applicant claims he made were in fact made by [R] Pty Limited. He gave no evidence to apportion the electricity charges between business and personal use, nor did he give evidence to suggest he refunded any part of the electricity charges to [R] or that otherwise he became personally responsible for those charges. To the extent the electricity charges were related to the business of [R] Pty Limited, they were of course a tax deductible business expense. The Applicant said in cross-examination that the company pays most of the utilities, with some paid by him and some paid with funds from his account into which jointly borrowed funds and the Respondent's mortgage contributions were deposited.
d)All except two of the payments for gas the Applicant claimed as payments he made were in fact made by [R] Pty Limited. The same comments apply as to the electricity expenses paid by [R] Pty Limited. Of the $4,392.51 the Applicant said he paid for gas, he in fact paid a total of $292.62.
e)All but one of the payments for water were made by [R] Pty Limited, not the Applicant. The Applicant paid one amount of $140 for water.
As mentioned, the Applicant conducted his business as a [omitted] through [R] from the [M] property. There were buildings located on the property used by [R] for this purpose. No rent was paid by [R] to either party in relation to its use and occupation of part of the [M] property. The Respondent therefore made a contribution to all earnings of [R], and thus to expenses paid by [R] in relation to the [M] property and income derived by the Applicant from [R], and thus to the expenses met from the Applicant's income.
The Applicant paid site fees at [P] in June 2009 and June 2010 totalling $10,700. The Respondent said the Applicant paid the site fees for 2009 and 2010 in the sum of $10,000. The Respondent did not disclose the source of knowledge for this evidence, and I therefore prefer the Applicant's evidence on this point. The Respondent paid the 2011 site fees of $5,000.
The Applicant said that since separation the Respondent had not permitted him access to the site at [P]. The Respondent said that the Applicant had a Christmas party for his [omitted] business at the site without her consent in 2010 and used the site over the 2010 Christmas period. She said he used it again with his friends and family at Easter 2011 without her knowledge. In cross-examination the Applicant admitted he held a Christmas function at the [P] site in the year the parties separated and continued to use the site in 2011. His evidence in chief that the Respondent did not permit him to use the site after separation was either wrong, or if true it was misleading, as it implied he did not use the site after separation.
The Applicant predominantly used the ski boat the Respondent purchased. It required constant repair. The Applicant said he spent $10,831.27 on the repairs, but admitted in cross-examination that the Respondent contributed to the costs of repairs. His evidence that he spent time effecting repairs to the boat was unchallenged and uncontradicted and I accept it. The Respondent said she and the Applicant shared the repair costs of approximately $8,000, but she did not say in what proportions they shared the cost. While I am satisfied both parties contributed to the cost of repairs to the boat, the evidence does not enable me to determine the amounts each party contributed to the boat repairs.
Respondent's involvement in [R] Pty Limited
The Respondent said she worked in the office of [R], including for two weeks while the Applicant's secretary was away. There is no issue she worked for the two weeks the Applicant's secretary was away, nor is there any issue that the Respondent was not paid for this work, although there is an issue as to how this arose. There is no evidence of the Respondent working in the office otherwise.
The Respondent said she also picked up materials from various suppliers and delivered them to the Applicant at jobs being undertaken by his business. The Respondent did not particularise any occasion she picked up and delivered materials for the Applicant's business, nor did she indicate the frequency of such activity. I am unable to be satisfied that this occurred on other than the two occasions the Applicant conceded.
Rent from the stone cottage
The stone cottage on the [M] property was tenanted at the commencement of the parties’ cohabitation by Mr W. The rent was $250 per week plus an unspecified contribution towards the electricity. The Applicant received the rent in cash. This tenancy continued until the end of December 2010. From mid October 2007 to December 2010, the total rent approximates $41,000, or $34,500 from April 2008 when the Respondent acquired a half interest in the [M] property. The Applicant failed to acknowledge the contribution by Mr W to the electricity in his spreadsheet seeking to claim the credit for the payment of electricity and other charges. The contribution to electricity charges by Mr W would accrue jointly to the parties, at least from April 2008.
The Applicant leased the stone cottage to new tenants, Mr and Mrs S, in November 2011. He said he did so over the Respondent's objection. The rent was $285 a week plus an unspecified contribution to the electricity. The same comments apply to their contribution to electricity charges as apply to Mr W’s contributions. These tenants remained until August or September 2012, paying a total of approximately $11,400 in rent.
The Applicant deposited the rent from the second tenants to an account in his sole name. He conceded that there was $6,400 in the rent account in September 2012. There was no evidence as to what the Applicant did with the contribution by Mr and Mrs S to electricity charges.
The Applicant said he gave the Respondent approximately 60% to 70% of the rental income from the first tenant, and they both used the rent for general living expenses. He did not say how he calculated the percentage division of the rent. The Applicant said the rent from the second tenant was divided between him and the Respondent or applied “to the joint benefit of the [M] property”. The Applicant did not say in what proportions the rent was “divided” between him and the Respondent, how the Respondent received her share, what was paid from the rent “to the joint benefit of the [M] property”, or what it was that the rent was applied to.
The Respondent denied receiving a share of the rent from either tenant. She said on very rare occasions the Applicant would give her nominal amounts of money by way of reimbursement for monies she spent on his daughter. She said she did not know whether any of the small amounts the Applicant gave her came from the rental income.
The Respondent was not shaken in this evidence, and given the various instances where the Applicant misrepresented his contributions, I am not satisfied the Applicant gave the Respondent a share of the rent from either tenant.
In about September 2012, the Respondent asked a man, Mr B, to move into the stone cottage as she claimed to be fearful of the Applicant, his employees and his friends and she wanted him there for her protection. There is no evidence that the Respondent had any rational basis to fear the Applicant, his employees or his friends. Be that as it may, this man occupied the stone cottage rent free from September to December 2012.
The Applicant said that all rates and outgoings generated by Mr B were paid by him without contribution from the Respondent. This is untrue, as the Applicant well knew based on his own spreadsheets. Between August and December 2012, one rate instalment was paid by the Applicant from his funds and one was paid with funds sourced from a joint borrowing, electricity and gas was paid by [R], and insurance was paid with funds from a joint borrowing. There is no evidence of any other “rates and outgoings” during the period of this tenant’s occupation of the stone cottage.
In August 2012, the Respondent invited a friend [Ms D] to move in with her. Her medical practitioner had recommended that she have a support person stay with her while she was stabilised on new antidepressants. The Respondent did not indicate how long [Ms D] lived with her. The Applicant said she resided at the property until December 2013.
The Respondent gave no evidence of any payment made by [Ms D] for her occupation of the property. The Applicant said that she paid $553 between 8 October 2012 and 23 December 2013. I am satisfied this money was paid to him for him to be aware of such a precise amount.
The Applicant said that during [Ms D]’s occupation of the main home, the Respondent made no contribution in the form of payment of utilities or rates. As already noted in relation to the tenant the Respondent installed in the stone cottage between August and December 2012, this is untrue. In addition to the payments to which the Respondent contributed or that were made by [R] between August and December 2012, [R] paid for all electricity and gas in 2013 except for one payment for electricity that was from funds sourced from a joint borrowing, as were the funds used to pay the three rate instalments paid in 2013. This is based on the Applicant's own spreadsheets.
In late 2012 or early 2013, the Respondent moved from the main house into the stone cottage. She has stored furniture and other belongings in a locked part of the main house ever since.
The Respondent said that a woman (Ms I) has been at the property “virtually all the time” since mid 2012 as the Applicant's guest. She later said that since she moved from the main house to the stone cottage, this woman has slept in the main house at least five to six nights a week. In cross-examination, the Applicant said that while
Ms I is not at the property all the time, she is there often, three or four nights a week. He denied she is there six or seven nights a week. He said she does not contribute to the costs or expenses of the property.
Non-financial contributions
The Respondent said that during the six months the Applicant resided with her in her premises at the beginning of the parties relationship, he and did not assist her with mowing, cleaning, cooking or maintenance and repairs of her premises. The Applicant agreed he did not assist the Respondent with cleaning the home, but denied he did not assist her with mowing, cleaning outside the home, cooking or repairs.
The Respondent said at the [M] property she did all the washing, ironing, cooking and homemaker chores, and outside mowing, fencing and maintenance. In cross-examination she at first denied that she and the Applicant shared these tasks, but when pressed conceded that the Applicant did assist although she did the majority of these things. She admitted that her affidavit evidence and her initial evidence in cross-examination were incorrect.
I find that the Respondent performed most but not all of the task she claimed to perform throughout the parties’ cohabitation, and that the Applicant gave her some relatively minor assistance.
The Respondent attended excursions and assemblies for the Applicant's daughter [X] and got [X] ready for school.
The Applicant performed the following work on the [M] property-
a)“Gurneying” the timber cladding, roof and gutters;
b)Mowing and/or slashing paddocks;
c)Inspecting and maintaining the waste water system, and maintaining the plumbing;
d)Cleaning water tanks;
e)Installed plumbing in the downstairs kitchen and the upstairs kitchenette in the main house;
f)Installed ceiling linings in the family room in the main house; and
g)Constructed an earthen mound for landscaping.
The Applicant also had employees of [R] perform the following work on the property-
a)Fencing;
b)Re-roofing the garage;
c)Paving the back entry to the main house;
d)Repairs and maintenance to the water tanks;
e)Various drainage works;
f)Removal and installation of water heating units;
g)Relocation of LP gas bottles;
h)Roof flashings to the doors to the main house;
i)Repairs to the doors to the main house;
j)Repairs to the waste water system; and
k)Gardening, weeding and picking up horse manure.
[R] paid the full wages of these employees while doing this work. Wages are a deductible business expense of the company. [R] operated its business from the [M] property, owned jointly by the Applicant and Respondent, rent free.
The Applicant expressed the opinion that the costs of renovations carried out in 2008 and 2009 were “significantly reduced” because of the work he performed. There is no evidence to support this conclusion. The only work he said he performed that might relate to renovations was plumbing two kitchens and installing ceiling linings in one room. There is no evidence how much the installation of the ceiling linings would have cost had a tradesman been engaged to do it. I note the Applicant is a [occupation omitted], conducting his own [omitted] business through [R]. He could have given admissible expert evidence as to the cost at normal commercial rates of the [omitted] work he said he carried out, but failed to do so. I am satisfied the unexplained absence of this evidence warrants my drawing the inference that the evidence would not have assisted his case.
The Respondent worked with the Applicant's apprentice all day on one occasion filling PVC pipes with concrete to assist in improvements to a paddock for the horses.
Other matters as to contribution
The Applicant's aged mother lived at the [M] property from mid 2008 until her death on [omitted] 2011. She owned her own property, which was leased when she moved to the [M] property. The Applicant believed the rental on his mother's property was between $600 and $800 per week.
The Applicant's mother suffered diabetes and osteoporosis, and had some special needs. Someone needed to ensure she took her medication, and she needed assistance with cooking and shopping, and needed someone to clean for her.
I am satisfied that the Respondent was the Applicant's mother's primary carer from mid 2008 until early 2009. She attended doctor’s appointments with the Applicant's mother, and bought her clothing, food, cigarettes and medication.
The Respondent said the Applicant's mother was an abusive person with unreasonable demands, which she suggested may have been at least in part a function of advanced age and deteriorating health. She said she “reduced” caring for the Applicant's mother as she could not handle her abuse. The Applicant said the Respondent ceased being his mother's primary carer in early 2009.
I am satisfied that the Respondent's involvement in assisting with the care of the Applicant's mother reduced very significantly after early 2009. She was her primary carer from mid 2008 to early 2009 only.
The Applicant's mother’s estate was divided between the Applicant and his two siblings. The Applicant was entitled to $260,410.81 from the sale of his late mother's home. The Applicant lent $100,000 from his inheritance to his brother. That amount remains unpaid. The Applicant's evidence is that there was no discussion about interest or when the money would be repayable when he agreed to lend his brother the money. The Applicant said that $74,709.56 of his current savings came from his inheritance. I accept this evidence.
The Applicant said that a water pipe leaked upstairs in the main house in December 2009, causing damage to walls, ceilings and flooring. He said he effected repairs using his own money. He did not say what the cost of these repairs was. He said a cheque for $6,341.19 was received in satisfaction of an insurance claim for this damage after he had effected the repairs. He said the Respondent banked this cheque into her own account. He said he received none of these funds. I accept this uncontradicted evidence.
The parties had a holiday to Canada in February 2009. The Respondent paid approximately $8,000 of the $15,000 cost of the holiday.
[P] Pty Limited
The Applicant said that in early 2010 the mortgage was refinanced in the parties’ joint names and the property was transferred into their joint names as tenants in common in equal shares. When the mortgage was refinanced, the Applicant said the borrowing was increased by $63,610.
These funds were deposited into an account in the Applicant's sole name, being the account into which the Respondent’s contributions to the mortgage repayments were deposited. The Applicant said these funds were applied as follows-
a)$18,663 to pay out the Respondent's NAB Visa card debt;
b)$11,000 withdrawn by the Respondent on 9 June 2011 from the joint loan account;
c)$10,827.55 withdrawn by the Applicant on 14 June 2011 from the joint loan account and deposited into an account in his sole name, and subsequently applied to unspecified “general expenses for the [M] property”;
d)The balance, that is $23,119.45, “to set up the business known as [P] Pty Limited”.
The Respondent said the mortgage was extended by $63,610 to install a pool and make other improvements at the property. She agreed that her Visa credit card debt of about $18,000 was repaid from the borrowed funds.
The Applicant paid his child support and other personal expenses from the account into which these borrowed funds were deposited. The payments he said were met from the borrowed funds were made with funds from this bank account.
At the end of 2010, the loan secured over the property was further extended by $135,000 to purchase a [business]. The [business] was acquired through a company, [P] Pty Limited. The parties were equal shareholders in the company and the Respondent was the sole director.
The Applicant’s evidence in chief about the purchase of the [business] through [P] Pty Limited was marked by inconsistencies and contradictions.
He said he and the Respondent decided to acquire the [business] on 10 December 2010, yet in the same paragraph of his primary affidavit he said the business was purchased by contract dated 27 November 2010, and the whole of the funds used for the purchase had been committed by 7 December 2010 according to one of the Applicant’s spreadsheets.
Be that as it may-
a)The Applicant said the purchase price of the business was $146,150.79.
b)The Applicant said that the purchase price was funded as to $135,000 from joint borrowings secured over the [M] property, $6,552.70 from his savings and a loan of $3,740.59 from [R], giving a purchase price of $145,293.29.
c)A spreadsheet he said he prepared “setting out the costs incurred in the purchase of (the [business])” showed that $146,150.79 was contributed from joint funds, not $135,000.
d)The same spreadsheet showed a payment of $14,500 described as “Deposit 10% purchase price”, suggesting yet a third figure as the purchase price, $145,000.
e)If the “10% deposit” is added to the $146,150.79 apparently paid to complete the purchase, a fourth figure emerges from the Applicant's evidence as the purchase price, $160,650.79.
f)The total that the Applicant said was applied to the acquisition and setting-up of the [business] from the two extensions of the joint secured loan in 2010 ($158,119.45) is greater than the amount the Applicant asserted in his spreadsheet was contributed from joint funds ($146,150.79).
The Respondent said the cost of the [business] was $145,000. I accept her evidence.
The Applicant said he assisted the Respondent in taking over the operation of the business and conducting it in the initial month or two. The Respondent said the Applicant “expected” her to run the business, in which she had no experience. She said the Applicant came to the [business] on about three occasions in the first month, but provided no assistance in running the business thereafter, despite requests she said she made to him for assistance in running the business, none of which she particularised.
The Applicant said he was aware that “in the early days”, the average EFTPOS income from the business was $1488 per week. This was in the period immediately following separation. He did not indicate whether he was aware what the average gross takings, average expenses and average net income of the business then were. However, he stated that from the average EFTPOS takings alone he “assumed that things were going well”. He did not explain why EFTPOS takings alone would indicate the business was going well.
I accept the Respondent's evidence that the business never did well financially. She worked long hours in the [business] from December 2010 until about May or July 2012. The Respondent worked six to seven days a week in the business from between 10.00am and 8.00pm until between 1.00am and 5.00am, sometimes staying overnight at the business premises.
The maximum return the Respondent said the business achieved was $300 gross a week. In a financial statement she swore or affirmed to be true on 20 December 2011, she said her income from [P] Pty Limited was estimated at $300 per week. I am satisfied that the Respondent received a very modest income for the very long hours she worked in the business, but it was an unsuccessful business.
The Respondent said that she borrowed $1,250 from her daughter to pay towards the business overdraft and approximately $1,500 to pay the telephone bills of the [business]. She was not challenged on this evidence despite not disclosing any debts currently outstanding to her children in her financial statement.
In 2011 the Respondent said she received $9,000 from her deceased mother's estate, which she used to meet bills of the [business], and contributed another $3,000 from her own funds for that purpose.
In June 2011 the Respondent drew down $11,000 on the mortgage and used the money to pay bills of [P].
On 14 December 2011, an Order was made for the [business] to be valued by a specified valuer. The Respondent failed to provide the valuer with the information he requested, and the business was not valued.
In April 2012 the Respondent told the Applicant in text messages and emails that she was struggling to manage the business. About a month later, the Respondent's solicitors wrote to the Applicant advising him the rent on the business premises from which the [business] operated was $14,300 in arrears. The Applicant said he offered to assist with selling the business. He said the Respondent failed to provide him with financial information about the business when he requested it, and failed to sign a sales agreement. He gave no evidence as to the sale price under the agreement the Respondent failed to sign, nor when this occurred.
The Respondent commenced work in May 2012 as a [omitted] while continuing to run the [business]. The business bank account was closed in July 2012, overdrawn. I am satisfied that the business closed around mid 2012.
As previously mentioned, an Order that the parties sell the [business] was not carried into effect.
By March 2013, the unpaid rent on the premises from which the [business] had operated was $30,983.29, and was in the hands of debt collectors. By the end of 2013, the outstanding rent was in excess of $55,000. The rent had been personally guaranteed by the Respondent but not by the Applicant. The Applicant entered into negotiations with the landlord and reached an agreement to settle the outstanding rent for $40,000, which he paid using moneys he received from his deceased mother's estate.
[P] Pty Limited has not traded since mid 2012 has no commercial value.
Parties’ financial circumstances
The Applicant earns $2117 per week as a director of his company, [R] Pty Limited. He is not currently cohabiting with another person, although he has a female friend who stays with him for a majority of nights of the week. He has no commitments to support any other person. I will deal with his property, resources and liabilities later in these reasons.
The Respondent commenced employment as a [omitted] in May 2012. She was working approximately 25 hours a week earning $500 until 30 January 2013. She used all her leave and subsequently became unemployed in February 2013. She relies on Centrelink payments of $262 per week. She is not currently cohabiting with another person. She has no commitments to support any other person.
The Respondent earned about $40,000 in the period 1 July 2012 to when she ceased her last employment in February 2013. She said she did not think she could now earn at least $50,000 per annum. She said in cross-examination that she had been seeking employment since February 2013, but made no reference to this in her evidence in chief. She said she wanted to return to fostering but could not do so in her current circumstances. The inference is that when these proceedings are completed and the Respondent secures her own accommodation, she will seek to return to fostering. During cohabitation she said she received between $2,500 and $2,700 per week, tax free, suggesting she could expect to receive approximately $130,000 per annum tax free after these proceedings are completed and she secures her won accommodation, with the commitment of financially supporting foster children in her care from that amount.
Otherwise, the Respondent suggested she was seeking part time work of about 30 hours a week as a casual [omitted]. She said the hourly rate from such employment was between $21 and $28 per hour. Such employment would give her income of between $630 and $840 per week.
The Respondent said she would like to take more hours of work but her health prevented her doing so. She adduced no admissible expert opinion evidence to suggest her ability to work full time was impaired in any way. I therefore proceed on the basis that the Respondent has the capacity to work full time.
I will otherwise deal with her property, resources and liabilities later in these reasons.
The applicable law
The court may make such Order as it thinks appropriate in these proceedings (s.90SM(1)), but must not make an Order unless satisfied it is just and equitable to do so (s.90SM(3)). In deciding whether to make an Order, and if so what Order, the court must have regard to those of the considerations in s.90SM(4), including s.90SF(3), the provisions of which are incorporated into s.90SM(4) by reference, as may be relevant in a particular case.
Section 90SM(3) is in identical terms as section 79(2), in relation to property settlement between parties to a marriage or former marriage. The High Court has emphasised the importance of the injunction in s.79(2) that the court shall not make any property settlement Order unless it is satisfied in all the circumstances of the particular case that it is just and equitable to do so, noting that s.79(2) and s.79(4) must not be conflated (Stanford v Stanford, [2012] HCA 52 at [35], (2012) 47 Fam LR 481, (2012) FLC ¶93-518).
These principles are equally applicable to s.90SM(3).
However, the just and equitable requirement may be readily satisfied where the parties no longer live in a marital relationship (Stanford at [42]), or, I am satisfied, for a property settlement application under Part VIIIAB, where the parties no longer live in a de facto relationship (Watson & Ling, [2013] FamCA 57 at [4], (2013) FLC ¶93-527). It is agreed between the parties that it would be just and equitable to make an Order altering their interests in property. They are in dispute about what alteration should be made to those interests.
The structure of section 90SM is similar to section 79, with subsections 90SM(3) and (4) being in similar terms to subsections 79(2) and (4). In Hickey & Hickey; A-G for Commonwealth (Intervener), [2003] FamCA 395, (2003) 30 Fam LR 355, (2003) FLC ¶93-143, the Full Court explained the preferred approach in determining property settlement proceedings under s.79, as follows (FamCA at [39]; FLC at 78,386; Fam LR at 370):
“39. The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s.79. That approach involves four inter-related steps. Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss.79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss.79(4)(d), (e), (f) and (g), (“the other factors”) including, because of s.79(4)(e), the matters referred to in s.75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what Order is just and equitable in all the circumstances of the case: Lee Steere and Lee Steere (1985) FLC ¶91-626; Ferraro and Ferraro (1993) FLC ¶92-335; Davut and Raif (1994) FLC ¶92-503; Prpic and Prpic (1995) FLC ¶92-574; Clauson and Clauson (1995) FLC ¶92-595; Townsend and Townsend (1995) FLC ¶92-569; Biltoft and Biltoft (1995) FLC ¶92-614; McLay and McLay (1996) FLC ¶92-667; JEJ and DDF (2001) FLC ¶93-075 and Phillips and Phillips (2002) FLC ¶93-104.”
As I said in Birkett & Hemsley, [2014] FCCA 1568 at [250] – [251]-
“250. This must now be read subject to Stanford, in which the High Court said that the court should first determine the parties interests in property in accordance with normal legal and equitable principles and then consider whether it would be just and equitable to make an Order altering the parties’ interests in property (s.79(2)). Having regard to the High Court’s admonition not to conflate the process required by s.79(2) with a consideration of the matters under s.79(4), and contrasting the wording of sub-ss.79(1) and (2), it seems to me that if the court determines that it would be just and equitable to make an Order under the section, the court should then “identify and assess the contributions of the parties within the meaning of ss.79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties”, then “identify and assess the relevant matters referred to in ss.79(4)(d), (e), (f) and (g), (“the other factors”) including, because of s.79(4)(e), the matters referred to in s.75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties”, and finally determine what Order, if any, altering the parties’ interests in property is “appropriate” (cf. sub-ss.79(1) and (2)) to give effect to the parties’ entitlements thus determined.
251. It seems to me that adopting the wording of s.79(1), rather than s.79(2), at the final step in the decision making process may help avoid the conflation of sub-ss.79(2) and (4) warned against by the High Court in Stanford, and provides a decision making pathway that recognises and gives effect to all the provisions of s.79.”
In my view, property settlement under section 90SM should be approached in the same way.
Where the pool of divisible assets and resources includes a superannuation interests, the Full Court in C & C, [2005] FamCA 429, (2005) 33 Fam LR 414, (2005) FLC ¶93-220, considered the approach that should be taken. The majority said (at [58]):
58. Thus, we consider that because of the obligation under s 79(2) to make a just and equitable Order, then in Order to ensure such a result the Court should wherever there is a superannuation interest apply the provisions of s 79(4)(a) to (g) (which will include the matters contained in s 75(2)) to that superannuation interest whether or not a splitting Order is sought.”
Again, because of the similarity of the provisions in Part VIIIAB, in my view the same approach should be taken in property settlement proceedings under that Part.
The property and resources of the parties
The parties agreed (Ex F) that debts of the Respondent in the sum of $56,000 to Esanda and $74,316 to the ATO would not form part of the balance sheet or pool of property available for adjustment between the parties, and will not be taken into account as part of the s.90SM process.
The parties further agreed (Ex F) that their furniture is to be removed from the balance sheet and will be divided as agreed between them.
In the past, in some circumstances courts deciding property settlement applications have adopted the practice of treating property or funds no longer owned by a party as if it was still owned by a party, and adding the value of the property or funds back into the pool of assets (AJO & GRO, [2005] FamCA 195 at [30], (2005) 33 Fam LR 134, (2005) FLC 93-218). This was often done at the first step of the decision making process as referred to in Hickey (above) and gave rise to the concept of a “notional asset”.
However, doing so at the point at which the court made “findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing” in fact merged two distinct processes, namely the determination of the legal and equitable interests of the parties in property and their resources and liabilities, and taking into account in an appropriate way the “premature distribution” of an asset in which a party no longer had an interest as a relevant consideration under s.79(4) or s.90SM(4).
The decision of the High Court in Stanford (above) suggests considerable caution needs to be taken in continuing this practice, at least in the shorthand way that has arisen (see discussion by Murphy J in Watson & Ling, above, at [27] et seq).
I propose therefore to deal separately with the determination of the parties’ present legal and equitable interests in property and their resources and liabilities, and then issues concerning the suggested dissipation of any asset by a party that is argued to be relevant under s.90SM(4). If I am satisfied a party has dissipated an asset in a way that is relevant under s.90SM(4), I will then determine how that fact should appropriately be taken into account, be that by the addition of an amount representing a “notional asset” in the hands of one party to the actual legal and equitable interests of the parties in property or otherwise.
Property
There was a significant controversy over whether the Applicant owned a “4WD camper trailer”. The Respondent contended that the Applicant owned a 4WD camper trailer, and hence she bears the onus of proving the fact. Proof of the fact is relevant to the case presented by the Respondent in two separate ways. First, she contended he had an interest in property, namely the 4WD camper trailer, that should be taken into account in determining her property settlement claim. Second, she contended that the Applicant was in breach of his duty of full and frank financial disclosure for not disclosing his asserted interest in the trailer, and this should be taken into account in her favour and adverse to the Applicant in assessing her property settlement claim to ensure he did not benefit from his failure to fully discharge that duty.
Consent Orders made on 25 February 2013 referred to a “4WD camper trailer”, inferentially as property of the Applicant. The Applicant maintained that there was no such item of property, and that he owned only one ordinary box trailer that he had taken when he went camping on occasions.
On 14 March, 2013, the Applicant’s then solicitor wrote to the Respondent's solicitor advising what the Applicant contended was the value, inter alia, of the “Applicant’s trailer”, $1,000. On 18 March 2013, the Applicant's solicitors wrote to the Respondent's solicitors stating-
“With respect to the valuation of $1,000.00 put forward by us with regard to the trailer, we confirm that the trailer to which we referred is the ordinary trailer, not the 4WD pop up campervan.”
Thus, up to a month before the matter was originally listed for final hearing, the Applicant through his then solicitors was carefully distinguishing between two different trailers, the “ordinary trailer” and the “4WD pop up campervan”. There was no suggestion in the solicitor’s letter of 18 March 2013 that the latter was not then nor had ever been owned by the Applicant, which was his contention at trial. There is no evidence of the Applicant disputing the existence of a 4WD camper trailer before his then solicitors wrote to the Respondent's solicitors on 10 April, 2013 asserting there was no such trailer.
The Respondent asserted that the 4WD camper trailer comprised a trailer with an attachment that could be opened up to facilitate camping. She put into evidence a photo she said she took of the 4WD camper trailer that she said she had seen attached to the Applicant's ute just prior to 16 April 2013. She said she had subsequently seen it being driven back and forth into the “big shed” on the property opposite the stone cottage where she lived.
What is depicted in the photo the Respondent put into evidence appears to be the same as what is depicted in photos the Applicant put into evidence. Both show a box trailer with the same registration number, with a cover over it. The cover appears to be a simple covering of canvas or like material. It is not apparent from the photos either party put into evidence that there is anything to “pop up” or that could be used to facilitate camping.
In relation to the registration number on the trailer shown in both parties’ photos, the Respondent said that subpoenaed documents from Roads and Maritime Services showed the trailer to be “a standard Wakeman box trailer”. While those records were not put into evidence, the Respondent’s contention was not challenged and I accept it. The item depicted in both parties’ photos appears to be a standard box trailer.
However, the Respondent said that in 2010, the Applicant told her he was going to put the plates from a friend’s trailer on his work trailer, which had been involved in an accident “so I don’t get caught”. While not suggesting this related to the disputed trailer, she suggested she was uncertain whether the correct plates were on the camper trailer. She was implying that the trailer depicted in her photos as the 4WD camper trailer may have had number plates from a different trailer attached to it. However, she gave no evidence of having seen the trailer with different registration plates to the ones shown in the photos. And as already stated, both parties’ photos appear to depict a standard box trailer, consistent with the vehicle to which the registration is said to relate.
The Applicant's actions in at least acquiescing in it being represented in court Orders that he had a 4WD camper trailer, and in instructing his solicitors to clearly differentiate between the “ordinary trailer” and the “4WD pop up campervan” without asserting he owned the former but not the latter, are difficult to reconcile with his subsequent assertion that no such trailer existed. However, the trailer depicted in both parties’ photos appears to be the same, the Respondent did not put into evidence any photo of a camping attachment, pop up or otherwise, attached to or separate from the trailer, such as she said existed, and the Respondent gave no evidence of having seen the relevant trailer with a number plate other than the one depicted in each of the parties’ photographs.
I am not satisfied on the evidence that it is more likely than not that there is either another trailer in addition to the one both parties said was represented in their photos or some additional piece of equipment that, when added to the trailer represented in the parties’ photos, converts it into a camper trailer. Hence, the Respondent's case fails on the two issues to which this fact went.
The Respondent still owns the caravan she bought at [P] in 2008. She intends moving it to her daughter’s property and living in it after she vacates the [M] property until she can purchase another property herself. She failed to disclose this caravan in her financial statement. There is no evidence as to its value. It was conceded on behalf of the Applicant that the caravan did not have a significant value.
While I am not satisfied the Respondent has made out her case of financial non-disclosure by the Applicant, I am satisfied she has failed to discharge the same duty of disclosure. Not only did she fail to disclose the caravan in any of three financial statements she filed in these proceedings, she also failed to disclose all her bank accounts in at least one of those three financial statements, and failed to comply fully with repeated requests over the course of the proceedings to produce copies of her tax returns, tax assessments and bank statements. She offered no reason for her repeated failure to produce relevant financial records in her possession requested by the Applicant's legal representatives.
She suggested in cross-examination that she could not remember when she last lodged a tax return, but in re-examination suggested it was in 2006. While her foster carer allowance may have been tax free, she has derived income from employment at least since late 2010, first from [P] Pty Limited, and then as a [omitted] from May 2012 until February 2013. It would seem the Respondent has failed to comply with her obligation to file tax returns for these periods.
I find that the parties current property and liabilities are as follows-
Item Description Title Amount 1 [M] property Joint $1,275,000.00 2 Shares (10) in [P] Pty Ltd Applicant $0.00 3 Applicant's shares (45,004) in [R] Pty Ltd Applicant $228,640.00 4 Applicant's ME Bank account Applicant $82,897.35 5 Applicant's ANZ account Applicant $8,187.89 6 Loan to brother Applicant $100,000.00 7 Trailer Applicant $1,000.00 8 [omitted] tractor Applicant $5,000.00 9 Shares (1,871,698) in [omitted] Holdings Applicant $0.00 10 2009 Ford motor vehicle Respondent $12,000.00 11 Jewellery Respondent $2,000.00 12 Respondent's NAB account ***223 Respondent $157.00 13 Respondent's NAB account ***922 Respondent $56.00 14 Respondent's Nab account ***195 Respondent $17.00 15 Respondent's NAB account ***571 Respondent $6.00 16 Respondent's CBA account Respondent $5.00 17 Horses Respondent $460.00 18 Shares (10) in [P] Pty Ltd Respondent $0.00 19 Caravan Respondent $0.00 20 ANZ mortgage Joint -$659,293.00 21 Applicant's Visa card Applicant -$11,151.00 Total $1,044,982.24
The Applicant contended that his shares in [R] Pty Limited, $74,709.56 of the funds in his bank account, that he contended came from his inheritance, and the loan of $100,000 owing to him, that also came from his inheritance, should be treated separately from the other property. The Respondent contended that all the property should be dealt with in a single pool.
There is no evidence as to the value of the Respondent's caravan.
Superannuation interests
The parties’ superannuation interests are agreed as follows-
1 Applicant's [C] super Applicant $195,194.22 2 Respondent's [H] super account ***766 Respondent $20,137.00 3 Respondent's [H] super account ***424 Respondent $2,982.00 Total $218,313.22
It was agreed that the Applicant had $97,408.33 in his superannuation account at cohabitation.
Resources
The parties agreed to treat the debt of $50,000 owing to the Applicant by his former partner as a resource, and not as property. It seems it is repayable by the end of 2016 at the latest.
The Applicant has accumulated annual leave and long service leave worth $26,111 and $30,143 respectively. These are the values attributed by the expert valuer of the Applicant's interest in [R] as at 26 March 2014 net of tax, the gross amounts being $37,301 and $43,061 respectively. It was conceded these are a resource in the Applicant's hands.
“Add-backs”
The Respondent sold a boat for $4,000 and the ambulance she owned at cohabitation for $5,000 after separation. She has expended those funds, and there is no evidence as to how she expended them. It was agreed these amounts should be treated as a premature distribution by the Respondent and that it was appropriate to proceed as if the Respondent still held those funds, adding them back as a notional asset of the Respondent.
The assessment of contributions
I accept the submission on behalf of the Applicant that in assessing the parties’ contributions, an asset by asset approach is more appropriate than a global approach, and that some items should be treated separately from others because of the relatively short period of cohabitation and the very limited contributions by the Respondent to some items compared to her very significant contributions to the others.
I am not satisfied that the Respondent contributed to the Applicant's post separation inheritance from his mother. The Respondent gave significant assistance to the Applicant's mother for the first six months after she moved to the [M] property, relieving the Applicant of the need to provide that assistance himself and to that extent she freed the Applicant to work and earn income in his business, which he then used to meet various expenses, including his contribution to the mortgage repayments and to other household expenses. That in my view is the appropriate way to recognise that contribution by the Respondent.
To the extent to which it was submitted that the Respondent contributed to the Applicant’s inheritance through his mother's rent free occupation of the [M] property while her own property was leased, there is no evidence that the Applicant's inheritance increased as a result of this.
As for the Applicant's shares in [R], the Applicant owned them at cohabitation, and retains them. There is no evidence as to their value at cohabitation, and it is agreed they are now worth $228,640, less than the value the Applicant believed they had at cohabitation. The Respondent's contribution to [R] in allowing it rent free use and occupation of part of the [M] property resulted in greater profits for the company than it would otherwise have derived, allowing the Applicant to draw a higher income. There is no admissible evidence as to the value to the company of the rent free use and occupation of part of the [M] property and hence it is not possible to place a dollar value on the benefit of that use and occupation to the Applicant through increased income. I am satisfied that the rent free use and occupation of part of the [M] property and the two weeks work in the office for which the Respondent was not paid can and should be more appropriately taken into account in assessing contributions to the remaining property.
In relation to the $5,000 proceeds of sale of the Respondent's ambulance that is an agreed add back, I am satisfied it should be treated separately, as the Applicant's inheritance and company are. There is no evidence of any use of this vehicle during cohabitation, and there is no evidence that any funds were expended by either party on it during cohabitation, for registration or otherwise. The evidence does not disclose whether it was registered during the parties’ cohabitation. There is thus no evidence of any contribution by the Applicant in relation to the ambulance. Nor is there any evidence that the Respondent made any contribution during the parties’ cohabitation through the ambulance. She made the only contribution to its acquisition, it was her property at the commencement of cohabitation, she retained it at separation, and she has disposed of it and used the proceeds for her own purposes. I am satisfied that the Respondent made 100% contribution to it, and she should retain 100% of the sale proceeds.
As to the remaining property, I am satisfied the Respondent contributed a total of $280,000 from her pre-cohabitation property and the Applicant contributed approximately $235,000 from pre-cohabitation property.
The Respondent's capital injection of $200,000 to meet the Applicant's obligations under the Termination Agreement with his former partner was a very significant direct financial contribution to the preservation of the Applicant's interest in the [M] property. Not only did the Respondent's contribution enable the Applicant to retain the property, it enabled him to continue to operate his business through [R] without the disruption a relocation of the business to other premises would have entailed. The Respondent agreeing not to go on the title immediately also enabled the Applicant to retain a mortgage loan on favourable terms that he otherwise would have lost.
I am satisfied both parties contributed their incomes during cohabitation. I am satisfied that the Respondent contributed to the Applicant's income both in the care she provided to the Applicant's mother and in allowing [R] rent free use and occupation of part of the [M] property in which she had a half interest. She also had a half interest in the rent the Applicant received from the tenant of the stone cottage during cohabitation. I am satisfied the Applicant made some contribution to the Respondent's income as a foster carer both in permitting the foster children to live at the property in which he had a half interest and in installing the concrete slab and toilet for the foster child [Y]. I also take into account the fact that from the income the Respondent received as a foster carer, she had to meet the living expenses of the foster children in her care.
I am satisfied that the Respondent provided both financial and non-financial care and support to the Applicant's daughter.
I am satisfied that the Respondent made a greater financial contribution to the home renovations than the Applicant, and she performed the household tasks with only minor assistance from the Applicant.
To the extent to which [R] paid for renovations and for utilities at the property, I accept this was a contribution by the Applicant through his endeavours in running the business of [R], and while there may have been tax advantages in the company being able to claim some or all of these as business expenses, it nonetheless reduced the profit of the business that otherwise would have accrued to the Applicant.
While the Applicant met the whole of the outgoings on the [M] property after March 2011, the Respondent contributed to those outgoings to the extent to which the Applicant's income benefitted from the rent free use and occupation of part of the jointly owned property by [R], and to the extent to which the Applicant received the whole of the rent paid by tenants in the stone cottage. The Applicant's amended spreadsheet seeking to quantify the payments each of the parties made to the mortgage is simplistic and misleading. It ignores the contributions the Respondent made to the Applicant's income and his receipt and use of the whole of the rent.
The Applicant contributed $40,000 from his inheritance after separation in settlement of rent arrears for the business premises of [P].
It was submitted on behalf of the Applicant that his contributions to the parties’ property, excluding items sourced from his inheritance and his shares in [R], should be assessed at 70%, while his contributions to his inheritance and his shares in [R] should be assessed at 100%.
It was submitted on behalf of the Respondent that her contributions to the total pool of the parties’ property and superannuation should be assessed at 40%. It was not indicated what the Respondent's case as to contribution was if the court approached the matter on an asset by asset basis as the Applicant submitted it should.
In relation to the parties’ property, other than the Applicant's savings sourced from his inheritance, the loan to his brother from the same source, and his shares in [R], and the Respondent's ambulance, I am satisfied that the parties’ contributions should be assessed as equal. While the Applicant has paid the outgoings on the property since March 2011 without direct financial contribution by the Respondent, she has made some contribution in the form of the rents the Applicant received and the rent free use and occupation of part of the property by the company from which he derives the income used to make these payments. While the Applicant's direct financial contributions since March 2011, including the $40,000 in settlement of the rent arrears for the [business] premises, would nonetheless remain significantly greater than the Respondent's, the Respondent contributed approximately $45,000 more than the Applicant from pre-cohabitation assets, made greater non-financial contributions than the Applicant during the parties’ cohabitation, including in the care and material support of the Applicant's daughter and mother, contributed to the Applicant's income with which he made various payments, including child support for his children, through the rent free use of part of the [M] property by [R] and by caring for the Applicant's mother for six months, and contributed jointly borrowed funds that the Applicant deposited to an account from which he met personal expenditure, including child support payments.
As to the superannuation, it was submitted on behalf of the Applicant that the parties’ superannuation had increased in value by a similar amount during cohabitation, but there is no evidence of the value of the parties’ superannuation interests at separation. It was the Applicant's case that the parties’ current respective present superannuation interests were an appropriate reflection of their contributions to the superannuation. As indicated, the Respondent's position was that all the parties’ property and superannuation should be combined in a single pool and her contribution should be assessed at 40%, with no indication what her claimed contribution to the superannuation might be as a separate pool.
The evidence in relation to contributions peculiar to the superannuation is very limited. The Applicant had superannuation worth $97,408.33 at cohabitation while the Respondent's superannuation was negligible. The current value of the parties’ superannuation interests is agreed. There is no evidence as to the value of the parties’ superannuation interests at separation. To the extent the accrual in value of the parties’ superannuation interests during cohabitation was directly referable to their employment – and there is no evidence whether it was - I have already observed that each has contributed to the income of the other.
Almost the whole of the Respondent's current superannuation of $23,119 has accumulated from the commencement of cohabitation until she last worked in February 2013, a period of five years and four months, for three years and two months of which the parties cohabited. While interest may have accrued since February 2013 on the balance of her superannuation when she ceased work, there is no evidence of this fact and I infer any interest over this period would be relatively minor.
The increase in the Applicant's superannuation from cohabitation has been $97,786 over a period of seven years, three years and two months of which coincided with the parties’ cohabitation.
There is no evidence as to how the parties’ superannuation accrued since the commencement of cohabitation. If it accrued at a constant rate, the proportion of the Respondent's superannuation that accrued during cohabitation would be about 59.4%, or about $13,727 of her current superannuation of $23,119, while approximately 45% or $44,237 of the increase in the Applicant's superannuation since cohabitation, $97,786, would have accrued during cohabitation.
Taking this limited evidence specific to the superannuation into account together with the parties’ overall contributions, I assess the parties’ contributions to the accrual of superannuation during cohabitation as broadly equal. I assess the Respondent's contribution to the current superannuation of both parties in the range of about 12.5% to 15%.
The assessment of non-contribution considerations
There is no evidence that any proposed Order will affect the earning capacity of either party (s.90SM(4)(d)).
It was submitted on behalf of the Applicant that despite the Applicant's superior earning capacity, the Respondent had an adequate earning capacity, their relationship was of a relatively short duration, the parties’ earning capacities had not been affected by their cohabitation, and hence no adjustment should be made to the parties’ shares in their property and superannuation as reflected by their respective contributions.
It was submitted on behalf of the Respondent that on a global basis, given the Applicant's superior earning capacity, the fact the Respondent will need to reaccommodate herself and will be living in a caravan for a short period until she can secure new accommodation, that an adjustment to the contribution based entitlements of 10% in her favour is appropriate. It was not indicated what adjustment the Respondent would seek if the matter was dealt with on an asset by asset basis. I will proceed on the basis she sought an adjustment in her favour representing 10% of the total property and superannuation of the parties however the matter was approached.
Based on my assessment of the parties’ contributions, the Applicant would be entitled to all of what remains of his inheritance, namely the $100,000 loan to his brother and $74,709.56 of his savings, his shares in [R] worth $228,640, and half of the remaining items in the pool of assets plus half of the added back proceeds of sale of the boat, namely $322,816, for a total of $726,166, while the Respondent would be entitled to half of the pool of assets other than those to which she made no contribution, half the add back for the boat and 100% of the agreed add back for the ambulance, a total of $322,821, plus the caravan of modest but undetermined value.
In relation to the superannuation, based on my assessment of contributions the Respondent's share of the total superannuation pool would be between $27,289 and $32,748, while the Applicant's share would be between $191,024 and $185,566. The Respondent's current superannuation of $23,119 is less than her contribution based entitlement, necessitating an adjustment of between $4,170 and $9,628 in her favour. However, neither party sought a splitting Order.
Taking onto account the relatively short period of cohabitation, the Applicant's superior earning capacity, the relatively greater short to medium term security of the Applicant's employment, the significant disparity in the parties’ property based on their contribution based entitlements, and the resources of the Applicant comprising the $50,000 loan to his former partner and his accrued leave, and to reflect he imbalance in the parties’ current superannuation interests based on my assessment of contributions where no splitting Order is sought, I am satisfied an adjustment should be made in the Respondent's favour of about 7.5% of the net pool of assets excluding items sourced from the Applicant's inheritance, the Applicant's shares in [R] and the Respondent's proceeds of sale of the ambulance. That pool is worth $645,633, giving the Respondent an adjustment of $48,422 to her contribution based entitlement.
What Order, if any, is appropriate (s.90SM(1))?
It is agreed that the parties should retain property in their sole names and that the parties will agree on the division of furniture. It is agreed that an appropriate Order is one providing for the Applicant to retain the [M] property if he pays the Respondent a sum to effect an appropriate division of the property.
The Respondent currently has her motor vehicle, jewellery, bank accounts, horses and the benefit of the added back proceeds of sale of the boat, worth $18,701, and the caravan of unknown but little value. For her to receive 57.5% of the general pool of assets, she is to receive a total of $371,239. That is, the Applicant needs to pay the Respondent $352,538 and discharge the joint mortgage debt if he is to retain the [M] property.
The appropriate Order in my view is that the Applicant pay the Respondent this sum and discharge the mortgage within 2 months, in default the parties sell the [M] property and the Respondent receive $352,538 from the net proceeds, and if the property sells for more than $1,275,000, she receive 57.25%, being the proportion that the capital sum the Respondent is to receive bears to the present equity in the [M] property.
I certify that the preceding one hundred and ninety five (195) paragraphs are a true copy of the reasons for judgment of Judge Halligan
Associate:
Date: 3 December 2014
Corrections
Order 4(e) “The balance to the Applicant if any.” in lieu of “In payment of $622,508 to the Respondent.”
Key Legal Topics
Areas of Law
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Family Law
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Property Law
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Civil Procedure
Legal Concepts
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Remedies
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Costs
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Injunction
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Damages
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Jurisdiction
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Procedural Fairness
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