Elsey & Wainwright
[2024] FedCFamC1F 133
•8 March 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Elsey & Wainwright [2024] FedCFamC1F 133
File number(s): BRC 15493 of 2019 Judgment of: JARRETT J Date of judgment: 8 March 2024 Catchwords: FAMILY LAW – PROPERTY – Loans asserted from applicant’s family – Loans not proven – Further loan from applicant’s mother – Where further loan was utilised unilaterally by applicant – Whether applicant should be solely responsible for loan Legislation: Family Law Act 1975 (Cth) s 79 Cases cited: Jones v Dunkel (1959) 101 CLR 298
King v Hoare (1844) 153 ER 206
Division: Division 1 First Instance Number of paragraphs: 71 Date of hearing: 11 December 2023 Place: Brisbane Solicitor for the Applicant: Litigant in person Counsel for the Respondent: Ms Stone Solicitor for the Respondent: Emmerson Legal and Accounting Pty Ltd ORDERS
BRC 15493 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR ELSEY
Applicant
AND: MS WAINWRIGHT
Respondent
ORDER MADE BY:
JARRETT J
DATE OF ORDER:
8 MARCH 2024
THE COURT ORDERS THAT:
1.The proceeds of sale of the M Street property currently paid on trust be distributed as follows:
(a)$150,000 to Ms N;
(b)$582,347.06 to the respondent; and
(c)the balance to the applicant.
2.The parties otherwise retain all assets, liabilities and financial resources in their sole names.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JARRETT J:
Mr Elsey (now aged 38 years) and Ms Wainwright (now aged 42 years) commenced a relationship in 2014 in Town D, New South Wales. They married in 2017 and separated in about June, 2019.
They have two children, X (presently aged 6 years) and Y (presently aged 5 years). There are orders in place regulating the parenting arrangements for the children, the details of which I have set out more fully later in these reasons.
The parties are in dispute about how their property should be divided between them now that their marriage relationship has ended. The issues requiring determination that will inform the outcome in this case, generally speaking, concern money advanced by the applicant’s family members to the applicant, or the applicant and the respondent and how that money should be treated in these proceedings. Issue is also joined as to contributions and future needs more generally (though there was limited factual dispute on these matters).
BACKGROUND AND SOME FINDINGS OF FACT
At the commencement of their relationship in 2014 the applicant worked for a company called P Pty Ltd owned by his cousin Mr Q. From the account of both parties, Mr Q has extensive business interests, is a wealthy individual and is particularly generous with financial assistance to his close family, friends and employees.
The respondent had moved from Brisbane to Town D for work purposes and the parties met in Town D. Soon thereafter they commenced cohabitation in a residence rented by the respondent.
The applicant owned some shares, an encumbered investment property, a motor vehicle and some superannuation. There is no evidence of the value of these assets. The respondent owned an investment property in Brisbane with, she says, equity of $100,000. She had a credit card debt of approximately $20,000, according to the applicant.
In late 2014 the parties purchased a property at M Street, Town D, New South Wales for $380,000. A deposit of $38,000 was required and was furnished by Mr Q. The parties agree that this amount was a loan to be repaid after they had renovated the property and refinanced their own borrowings in respect of it. Interest was not payable on the loan.
To help fund the purchase of M Street the applicant sold his investment property (which yielded no surplus funds) and his shares. His shares realised about $11,000 or $12,000 and all of that was contributed to the purchase price or the costs of the purchase. To assist with raising the necessary finance, the respondent was able to make her parents’ home located at Town R, Queensland available as security for a loan of $348,000 for the balance purchase price.
Prior to the parties’ marriage, at a time not otherwise more precisely identifiable from the evidence but which seems to be about early 2015 the respondent sold her investment property. The net sale proceeds of $60,000 were paid by her into the parties’ joint offset home loan account that they had opened together when they purchased M Street. It resided there and reduced the interest liability on their home loan until it was eventually used by the parties to pay for their wedding in 2017, a two-week honeymoon overseas and a seven-day trip overseas. Any residual funds were used for day-to-day living expenses.
It seems uncontroversial that the respondent worked in full-time employment from the time the parties commenced their relationship until late 2015. She does not say what her income was from this employment. From late 2015 she worked in hospitality earning a salary of $55,000 per annum. However, she was only with this employer until early 2016. The respondent commenced part-time customer service work at a local business in early 2016 and remained there until mid-2016. Again, she does not say what her income was from this employment.
In her affidavit of evidence-in-chief the respondent says that she took the position at the hospitality business and later with the other business because good jobs were few and far between in Town D and she needed work to earn money to contribute to the parties’ mortgage. She asserts that she was sacrificing her prospects of a career “after spending years completing [an undergraduate qualification] followed by a [postgraduate qualification] so [the applicant] could pursue his opportunity as CEO with [P Pty Ltd]”.
A couple of observations need to be made about this assertion. The first is that the applicant was not the CEO of P Pty Ltd. Although it seemed to be the respondent’s case that the applicant had been earmarked by Mr Q to take on the role of CEO for Mr Q’s company or group of companies, that assertion did not feature in the respondent’s cross-examination of the applicant. It was not suggested to the applicant in cross-examination that he had been or was ever likely to be the CEO of any of Mr Q’s enterprises. The second is that it was the respondent’s own evidence that she was given access to information and data from P Pty Ltd by Mr Q to assist her to complete her postgraduate qualification. That evidence tends to suggest that far from sacrificing her study and career, she was actively pursuing it by completing study whilst in her relationship with the applicant and that she was assisted by the applicant and his family to do so.
From mid-2016 the respondent was an executive assistant until commencing maternity leave close to the birth of the parties’ first child in 2017. She does not say what her income was from this employment.
It seems that in late 2017 the parties commenced renovating the M Street property. The property apparently required restumping, relevelling and had to be raised above the flood level for that area. This work cost approximately $38,500.
The parties also planned far more extensive renovations of the M Street property and for that purpose, the applicant says that he organised a friend who was a carpenter “to work with me at a reduced rate so that we could get the renovation works to [M Street] performed at less expense”. Notwithstanding the reduced rates, securing the services of this friend turned out to false economy.
The respondent swears that she started working in public service in early 2018 four days per week. I think she is mistaken about the date and it is probably early 2019 because she deposes that at that stage the parties’ second child had arrived (in 2018). She does not say what her income was from this employment.
The applicant gives no particular evidence about the amount he earned during the course of the parties’ relationship. It seems that he was always gainfully employed and characterised himself as the primary income earner, particularly when the parties’ children came along. On the respondent’s case, he was earning $110,000 per annum and was being groomed by Mr Q to take over management responsibility for some or all of Mr Q’s enterprises.
The parties agree that during the relationship the respondent told the applicant that she would prefer to leave Town D and to live elsewhere – perhaps Brisbane. It is also uncontroversial, however, that the parties agreed that they would remain in Town D.
Renovation work on the former matrimonial home started in mid-2018. Invoices for the work were usually directed to P Pty Ltd for payment. Over time P Pty Ltd met payment of invoices and the payments were recorded in the accounts of the company, ostensibly as a loan to the parties.
Indeed, the applicant’s case is that the funds paid by P Pty Ltd were a loan to the parties. He said it had a limit of $200,000. However, there was no written loan agreement and his evidence is bereft of any particulars about the funding arrangements.
The respondent says that the provision of financial accommodation via P Pty Ltd was an act of generosity on the part of Mr Q, something that he was accustomed to extending to his family, friends and employees. Her evidence is that she knew nothing of the assistance being a loan. Such a proposition was never discussed with her. Rather, what occurred was entirely consistent with her observations about the way in which Mr Q helped out those around him that he considered worthy of his assistance. I accept her evidence about these matters.
I am satisfied that the funds advanced by Mr Q to the parties, either personally or via the facility established with P Pty Ltd were not a loan. I am satisfied that neither the applicant nor the respondent is liable to repay any sum to Mr Q or P Pty Ltd in respect of the funds advanced by P Pty Ltd for the costs of the renovations to the M Street property. I reach those conclusions for the following reasons.
First, the applicant’s evidence about this “loan” was devoid of any facts. His evidence-in-chief consisted of nothing more than assertion and conclusion in the most general of terms. He gave no particulars of the making of the agreement, nor any particulars of the terms of the advances save that there was a limit of $200,000, which on his evidence, was exceeded in any event. Nothing is said about repayment. The agreement was not recorded in writing.
Second, P Pty Ltd commenced proceedings against the respondent in the District Court of New South Wales in 2021 for the alleged debt. Gibson DCJ entered judgment for the respondent in early 2023. It is curious that the proceedings were against the respondent only. P Pty Ltd did not sue the applicant for the debt said to be owed by the respondent. In the absence of any stipulation to the contrary, the funds advanced by P Pty Ltd must have been advanced to the applicant and the respondent jointly because they were the joint owners of the M Street property. Where there is one cause of action against joint debtors, “the judgment of a court of record changes the nature of that cause of action, and prevents its being the subject of another suit, and the cause of action, being single, cannot afterwards be divided into two.”: King v Hoare (1844) 153 ER 206 at 210. Having sued the respondent for the debt and failed, P Pty Ltd cannot now bring a claim against the applicant for the same debt. It is unrecoverable, even if there was a debt in the first place.
Third, the applicant did not lead any evidence at all from Mr Q. There was no suggestion that he was not available to give evidence before me. That failure leads to an inference, which I draw, that calling Mr Q, a key witness one might think, would not have assisted the applicant’s case in establishing the loan or loan agreements for which he now contends: Jones v Dunkel (1959) 101 CLR 298.
Fourth, the applicant’s admission to falsifying invoices to avoid the payment of GST (a scheme to defraud the Australian Taxation Office which the applicant admitted at page 21, line 20 of the transcript) makes it difficult to believe any of his evidence, let alone evidence about the quantum of money he owes resulting from those invoices.
In any event, leaving aside any question of liability to repay, whilst there is no dispute between the parties that P Pty Ltd met some of the costs (or perhaps all) of the renovation of the M Street property, there is a significant dispute as to how much it paid in that regard.
The cost of the M Street renovations escalated unexpectedly. The applicant’s evidence is that the amount spent on renovations and funded by Mr Q (via P Pty Ltd) was in the order of $344,000 or $368,000. His evidence of the amount spent consisted of an itemised list in his affidavit of evidence-in-chief. However, he did not annex, or otherwise tender, the invoices themselves. Moreover, there was an internal inconsistency in the applicant’s evidence-in-chief about the amount spent by P Pty Ltd (compare paragraphs 7.12 and 8). In cross-examination, he could offer no clarity in respect of this inconsistency.
The respondent put the amount spent on the renovations in issue in two ways. First, she says that many of the invoices that she has seen in the course of the proceedings do not refer to the M Street property at all and so it cannot be ascertained whether they related to other, unrelated expenditure by P Pty Ltd. Some refer to other locations and addresses that having nought to do with the M Street property. This point is conceded by the applicant. Second, the respondent submits that the applicant has admitted to amending the invoices so as to avoid GST. These matters tend to undermine the reliability of what little evidence the applicant had led on this issue.
Moreover, there is no evidence that the amounts on the invoices were ever actually paid. Nonetheless, in submissions counsel for the respondent conceded that the amount paid by P Pty Ltd to the parties’ benefit was at least $120,000.
I am satisfied that P Pty Ltd met at least $120,000 of the cost associated with the partially completed renovations to the M Street property. The evidence simply permits of no more precise a finding than that. It may have been more, but how much more it is impossible to say given the state of the evidence.
Whatever the amount furnished by P Pty Ltd might have been, even after the receipt of those funds the parties still required significant additional capital to complete the renovations – something in the order of $150,000. In May, 2019 the applicant’s mother, Ms N, provided the applicant and the respondent that sum by way of loan. There is no dispute that this amount should be repaid to Ms N. There is a dispute, however, about who should bear that liability. The applicant contends that it is a joint liability to be brought to account in these proceedings. The respondent says that it is not.
Of the $150,000 Ms N gave the parties, it is agreed that $38,000 was earmarked to repay the money owed to Mr Q for the deposit he funded when the property was purchased. The remaining $112,000, the respondent says, was to be paid towards the renovations yet to be completed. Ms N also gave evidence to this effect in cross-examination. However, the applicant, without the respondent’s permission or knowledge, directed Ms N to deposit the money into an account operated by P Pty Ltd. That had the effect, the applicant argues, of reducing the amount owing to Mr Q or P Pty Ltd for works already completed and funded by P Pty Ltd. The applicant says there is $150,000 owing to his mother and $256,000 remains owing to Mr Q or P Pty Ltd.
The respondent’s position about this issue was difficult to pin down. She accepted that $38,000 was owed to Mr Q and this was to be repaid from the advance from Ms N. But she argued that the remaining $112,000 advanced by Ms N should be borne solely by the applicant because he unilaterally appropriated that amount to repayment of a non-existent debt to Mr Q or P Pty Ltd. Having decided to pay away that money in that way, he should be solely responsible for it.
I accept the respondent’s submission that it is appropriate for the balance $112,000 owed to Ms N be borne solely by the applicant. He has received the money and used it for his own purposes, rather than for the purposes for which the parties (and Ms N, I find) intended – namely the completion of the renovations to the M Street property.
Very soon after Ms N’s advance, in June, 2019 renovation works stopped on the M Street property when the parties separated. The renovations remained unfinished and the property was sold at auction in 2023 for over $1,200,000. Settlement had not yet been effected as at the time of trial. After the conclusion of the trial, and before delivery of this judgment, I received into evidence with the consent of both parties the amount that was held on trust as the balance proceeds of sale after payment of the debt secured over the property and other outgoings related to the sale. The amount held on trust is $897,582.31.
On 19 December, 2019 the applicant commenced these proceedings. Shortly thereafter, in December, 2019, the respondent unilaterally relocated with the children from Town D, New South Wales to Suburb J, Queensland.
In mid-2021 the applicant moved to Region S in Queensland.
Final Parenting orders were made by consent in November, 2021. By those orders, the parties’ share parental responsibility for the children, the children live with the respondent and spend one weekend per month and two periods each year of five days duration with the applicant.
The parties were divorced in late 2022.
The parties agree that in the general circumstances I have just described, it will be just and equitable to make a property adjustment order between them. Now that their marriage relationship has come to an end, they no longer enjoy the use of jointly owned property as they had initially envisaged they would.
ASSETS, LIABILITIES AND FINANCIAL RESOURCES
Neither party provided a balance sheet at the final hearing. Instead, I was taken through the parties’ financial statements to ascertain where there were differences. There were two minor differences and one significant difference.
As to the minor differences, the respondent asserted she had household contents of $5,000. The respondent disagreed, but did not offer an alternative value, rather saying he did not know the value of the respondent’s household contents. In circumstances where the value of the respondent’s household contents was not agreed, it was incumbent upon the respondent to provide expert evidence as to its value, which she did not do. However, given the minor value of the household contents compared to the value of all other assets, I accept her statement about the value of her household contents and find that she has household contents worth at least $5,000.
The respondent also has an engagement ring which she estimates has a value of $5,000. Again, this is an estimated value rather than any proper evidence as to value. The applicant asserted that a valuation was undertaken at the time the ring was purchased for $12,000 or $13,000. He did not provide evidence of this valuation. Neither party has provided any evidence as to the value of this ring. For that reason, I have declined to include it on the balance sheet. The respondent will keep the ring. It was, after all, a gift to her from the applicant.
I have already dealt with the significant issue, namely how the financial accommodation given to the parties for the renovation of their former matrimonial home should be treated. I have not concluded that the parties have any liability to P Pty Ltd or Mr Q as the applicant contends.
I find that the parties have the following assets, liabilities and financial resources:
ASSETS: Funds held on trust following sale of M Street property (J) $897,582.31 Respondent’s motor vehicle $2,000.00 Respondent household contents $5,000.00 Applicant household contents $2,000.00 Recreational vehicle (A) $4,000.00 TOTAL $910,582.31 LIABILITIES Ms N loan (J) $38,000.00 TOTAL $38,000.00 SUPERANNUATION Applicant’s Superannuation Fund 1 $147,970.15 Respondent’s Superannuation Fund 2 $57,461.00 TOTAL $205,431.15 NETT TOTAL $1,078,013.46
In addition, there is the balance of the advance from Ms N of $112,000 which I will deal with later in these reasons.
CONTRIBUTIONS
The respondent submitted that I should take a “two-pool approach” with superannuation and non-superannuation assets treated separately. I have, however, in the circumstances of this case resolved to consider the assets, superannuation and non-superannuation alike, as a whole. There are two reasons for that approach. First, on the respondent’s evidence she accessed her superannuation to provide for the children of the relationship. She reduced her superannuation balance to provide financially for the children. Second, neither party led any evidence as to their superannuation balances at the commencement of their relationship. Even if I wanted to assess the parties’ contributions to their superannuation separately, the evidence does not permit me to do so.
Both parties made modest contributions at the commencement of their relationship although the respondent’s were greater in value. They applied their initial contributions differently. The applicant contributed his share sale proceeds to the purchase of the M Street property, reflected now in its nett sale proceeds. The respondent contributed her equity in her investment property largely to fund wedding costs and overseas travel.
The respondent was able to call upon her parents’ property as security for the loan raised by the parties to fund the purchase of M Street. Interest free assistance was also provided by Mr Q. These are contributions made by each party respectively. I take them into account.
It was accepted by the respondent that the payments made by P Pty Ltd on behalf of the parties for the M Street renovations were a contribution sounding in favour of the applicant. However, counsel for the respondent submitted, and I accept, that the quantum of that contribution is very difficult to ascertain with precision. It was for the applicant to provide evidence establishing the quantum. He has not. At the least it is $120,000 (based upon the respondent’s concession about that) and I so find.
The respondent also submitted that the value of this contribution should be reduced by the $112,000 paid by Ms N to P Pty Ltd at the direction of the applicant, thereby reducing whatever amount it had paid on behalf of the parties. However, I do not accept this submission. In circumstances where the respondent now argues that the applicant should be wholly responsible for the $112,000 to his mother, the value of the contribution made through P Pty Ltd should not be discounted.
The ready access to capital from Mr Q and P Pty Ltd for the parties to utilise for their renovations and the provision of that capital at better than commercial rates, is also a contribution on behalf of the applicant that I take into account.
It is tolerably clear from the evidence, and I find, that both parties contributed their income to joint purposes during their relationship. They had a mortgage to pay, living expenses to meet and subsequently, children for whom to care. I am satisfied that the applicant earned more than the respondent, but how much more I cannot tell from the evidence. It is likely to be substantially more.
Neither party gave evidence-in-chief about their non-financial contributions. In cross‑examination, the applicant accepted that the respondent stopped working to give birth and be a homemaker to care for the children. He also accepted that the respondent’s mother provided some assistance. The respondent did not return to work until early 2019. Until then she was the primary homemaker and parent. Given that the applicant was always in full-time employment and on the respondent’s unchallenged evidence, working long hours, often away from Town D, I find that the respondent made the majority of the non-financial contributions to the welfare of the children and homemaking during the parties’ relationship.
After separation, the applicant met the repayments on the mortgage on the M Street property until September, 2022 but since then, they have shared the costs. He has also met the rates and other utility costs. The respondent has had the majority care of the children.
The respondent submitted that I should assess contributions 55% in favour of the applicant and 45% to the respondent. The applicant initially submitted I should assess contributions at 60% in his favour, though later recanted and said that 60% was the overall outcome for which he was advocating. After going through all the factors relevant to contributions in this case with the applicant, he said he did not know how he would assess contributions.
It is difficult to make accurate assessments of contributions in cases where the evidence is so severely lacking. Doing the best I can, bearing in mind the short length of the parties’ relationship and having regard to the initial contributions of the parties, the greater financial contributions of the applicant throughout the marriage, the greater non-financial contributions of the respondent, the provision of capital from the applicant’s family and the parties’ disparate but important contributions since separation, I assess contributions at 55% in favour of the applicant and 45% in favour of the respondent. Of the nett value of the parties’ property I have identified above, that means that the applicant is entitled to $592,907.40 and the respondent is entitled to $485,106.06.
SECTIONS 79(4)(D), (E), (F) AND (G)
Neither party suggested that the matters raised by ss 79(4)(d) and 79(4)(f) had any relevance to the issues to be determined between them.
The applicant is in good health and presently works as a manager for T Group. He earns $110,000 per annum from this employment and it is his only source of income.
Pursuant to final parenting orders made on 12 November, 2021 the children live with the respondent in Brisbane and spend time with the applicant from the first Friday of each month from 2pm until 2pm Sunday afternoon. They also spend time with him for two periods each year of five days duration during periods of his annual leave and at Christmas and Easter. The applicant claims he has not re-partnered. The respondent suggested he had been living with his partner of four years, though provided no evidence to that effect. The respondent also suggested he was living on the business property rent-free as part of his remuneration package. He was not cross-examined on either point, though because his financial statement discloses no rent payments, it is likely to be the case and I so find.
The respondent is currently a part-time executive assistant at U Pty Ltd where she has worked for less than 6 months (as at 27 November, 2023) and earns (per her financial statement) $65,988 per annum before tax. There is a current earning capacity difference between the applicant and respondent given she has to care for the children, though given the respondent’s education, which she agreed had improved her job opportunities, that difference is unlikely to be permanent.
The applicant pays $487 per week in child support. I am satisfied that will continue.
The applicant will have the debt to his mother of $112,000 to be paid out of the property he receives. He also, according to his evidence, has a debt to his former solicitors of $74,764. I take those matters into account.
The applicant’s “understanding” was that the respondent had paid some of her legal fees from monies withdrawn from her superannuation. He did not provide any evidence of this, nor did he cross-examine her about it. His understanding was unproven. There was no evidence that the respondent had any other debts not otherwise included on the balance sheet.
The respondent submitted that an overall adjustment to the parties’ contribution-based entitlement of 15% in her favour was appropriate in this case. The applicant made no submission as to what the appropriate adjustment was.
A 15% adjustment, on the balance sheet I have found, equates to $161,702.02. On the difference in earnings between the parties, that equates to a little under four times the annual difference. Given that the respondent will have caring responsibility for the children for the majority of the time and that is likely to impact upon her income earning opportunities, such an adjustment is appropriate.
ORDERS
I am satisfied that the property of the parties should be divided 60% to the respondent and 40% to the applicant. The applicant is entitled to $431,205.38. The respondent is entitled to $646,808.08.
The parties agreed that Ms N should be repaid her loan of $150,000 from the proceeds of the M Street property. $38,000 of that will be borne rateably by the parties as I have discussed above. The balance of $112,000 will fall at the feet of the applicant and the orders will reflect that.
The respondent will receive the assets she currently holds, plus a payment from the sale proceeds of M Street of $582,347.06. The applicant will be paid the balance after his mother is paid out.
I find that such orders are just and equitable. I make the orders set out at the commencement of these reasons.
I certify that the preceding seventy-one (71) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Jarrett. Associate:
Dated: 8 March 2024
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