Fancham & Ayrus
[2022] FedCFamC2F 1431
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fancham & Ayrus [2022] FedCFamC2F 1431
File number: DGC 3573 of 2019 Judgment of: JUDGE O'SHANNESSY Date of judgment: 24 October 2022 Catchwords: FAMILY LAW – party has a medical episode during hearing – recovers – final property orders – short marriage – post separation inheritance – disparity of initial contributions – weight to be given to value at co-habitation compared to value of part of asset at final hearing – section 75(2) adjustment. Legislation: Evidence Act 1995 (Cth) s 140
Family Law Act 1975 (Cth) ss 75, 79
Cases cited: Blass & Blass (2022) FLC 94-085
Bushby & Bushby (1988) FLC 91-919
Hallinan and Witynski (1999) FamCA 1127
Harrington & Harrington (2007) FLC 93-317
Hickey and Hickey and the Attorney-General [2003] FamCA 395
Jabour & Jabour (2019) 59 Fam LR 475
J & S [2003] FamCA 618
Kessey & Kessey (1994) FLC 92-495
Mabb & Mabb (2020) FLC 93-947
Parshen & Parshen (1996) FLC 92-720
Stanford v Stanford [2012] HCA 52; (2012) FLC 93-518
Williams & Williams [2007] FamCA 313
Division: Division 2 Family Law Number of paragraphs: 133 Date of last submission/s: 30 August 2021 Date of hearing: 28 October 2020, 17 May 2021, 20 May 2021, 11 – 12 August 2021 Place: Melbourne Counsel for the Applicant: Mr J. Moore Solicitor for the Applicant: Guthrie and Associates Counsel for the Respondent: Mr E. Hall Solicitor for the Respondent: Lardners Solicitors ORDERS
DGC 3573 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS FANCHAM
Applicant
AND: MR AYRUS
Respondent
order made by:
JUDGE O'SHANNESSY
DATE OF ORDER:
24 october 2022
THE COURT ORDERS THAT:
1.That within 60 days of these orders, or such other period as agreed in writing between the parties, the real property situate at and known as B Street, Suburb C in the State of Victoria, being the whole of the land more particularly described in Certificate of Title Volume … Folio … (“the B Street, Suburb C property”) be placed upon the market for sale through an agreed estate agent and in default of agreement within 14 days as nominated by the President of the Real Estate Institute of Victoria (“REIV”) (“the B Street, Suburb C sale”).
2.The parties have the joint conduct of the B Street, Suburb C sale.
3.The B Street, Suburb C property be offered for sale by private treaty for 30 days and if not sold then the property be offered for sale by public auction within a further 14 days, or such other period as the parties agree in writing and the parties are at liberty to bid for the property at auction.
4.Both parties shall do all acts and things necessary to effect the marketing and sale of the B Street, Suburb C property as requested by the selling agent including providing a key to the selling agent, making the property available at all times nominated by the selling agent for photographs, inspections and otherwise when requested by the selling agent and do all other things lawfully requested by the selling agent to complete the sale.
5.The auction reserve price be as agreed and in default of agreement $1,400,000.
6.The sale contract settlement period be 60 days unless otherwise agreed in writing.
7.After the expiration of 14 days, both parties be permitted to attend the B Street, Suburb C property, at times agreed in writing, when necessary to give effect to the preparation, marketing and auction of the said real property.
8.Upon completion of the B Street, Suburb C sale the proceeds be applied:
(a)First to pay the costs, commissions and expenses of the sale;
(b)Secondly to reimburse either party for money spent after the date of this Order in preparing the property for sale, subject to proof of the expenditure and prior written agreement to the expenditure;
(c)Thirdly to discharge any encumbrances or other outgoings payable by the parties as vendor upon the sale, save for the items described in order 8(d)(iii) hereof;
(d)Fourthly to divide the balance thereafter remaining in the following proportions:
(i)47.67% to the Husband, care of his solicitors; and
(ii)52.33% to the Wife (“the Wife’s share”) care of her solicitors,
(iii)provided that from the Wife’s share the following be deducted at source and paid to the Husband care of his solicitor:
A.The sum of $4,976.45 to reimburse the husband for the Wife’s part of the cost of property valuations detailed in Notation B;
B.A sum equal to any unpaid rates or other outgoings of the B Street, Suburb C property incurred since 31 December 2018; and
C.The sum required to discharge any caveat or other encumbrance lodged over the B Street, Suburb C property upon the authority of the Wife.
9.That pending the completion of sale of the B Street, Suburb C property:
(a)Save as provided for in Order 7 hereof the Wife have sole use and occupation of the B Street, Suburb C property and during such right of occupation she pay all outgoings including rates relating to the B Street, Suburb C property;
(b)The Husband shall pay all instalments pursuant to the mortgage to Company D secured against the real property at E Street, Suburb F, being the whole of the land more particularly described in Certificate of Title Volume … Folio … (“the E Street, Suburb F property”);
(c)The parties hold their interests in the B Street, Suburb C property, the E Street, Suburb F property, and G Street, Suburb H being the whole of the land more particularly described in Certificate of Title Volume … Folio … (“G Street, Suburb H”) upon trust pursuant to these Orders;
(d)Until the execution of these orders is completed and save for the purpose of complying with these orders, neither party encumber any of the said real properties without the prior written consent of the other party.
10.Within 28 days of these orders the Wife make available for collection by the Husband the following chattels:
(a)The television entertainment unit in the lounge room;
(b)All CDs and DVDs that were located in the above entertainment unit prior to separation;
(c)Two café chairs;
(d)The leather chaise lounge; and
(e)The stereo system with speakers.
11.That on or before the completion of sale of the B Street, Suburb C property:
(a)The Wife transfer to the Husband at the expense of the Husband all her right, title and interest in the real properties situate at and known as:
(i)E Street, Suburb F, Victoria (“the E Street, Suburb F property”); and
(ii)G Street, Suburb H, Victoria (“the G Street, Suburb H property”); and
(b)The Husband shall contemporaneously obtain a discharge or release of the Wife from all liability pursuant to mortgage loan no. … to Company D (“the E Street, Suburb F mortgage”) and indemnify the Wife against all payments in respect thereof.
12.In default of the Husband’s compliance with order 11 the E Street, Suburb F property be sold altogether out of Court and on completion of the sale the proceeds be applied:
(a)First to pay the costs, commissions and expenses of the sale;
(b)Secondly to discharge the E Street, Suburb F mortgage; and
(c)Thirdly to pay any balance remaining to the Husband.
13.Unless otherwise specified herein and save for the purpose of enforcing any monies due under these or any other Orders:
(a)each party be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the possession of such party at the date of these Orders (the contents of the B Street, Suburb C property being divided in accordance with Annexure A hereto and otherwise deemed to be in the possession of the Wife) and the spa at the B Street, Suburb C property be sold with the B Street, Suburb C property unless the parties otherwise agree in writing. ;
(b)both parties retain the motor vehicles in their respective possession;
(c)monies in any joint bank account are to be divided equally between the parties;
(d)each party retain their own superannuation entitlements;
(e)insurance policies remain the sole property of the owner named thereon;
(f)each party be solely liable for against any liability encumbering any item of property to which that party is entitled pursuant to these Orders;
(g)each party be solely liable for credit card, personal loan and other debts registered in his/her sole name;
14.That each party do all acts and things and sign all documents necessary to give effect to these orders.
15.That in the event either party fails, refuses or neglects to execute any deed or instrument required to give effect to these orders the Registrar of Court be appointed pursuant to s.106A of the Family Law Act 1975 to execute such document on behalf of the defaulting party and to do all acts and things necessary to give validity to the operation of the deed or instrument.
16.That there be liberty to apply regarding the B Street, Suburb C sale.
AND THE COURT NOTES THAT:
A.That pursuant to s81 of the Family Law Act 1975 these Orders are intended to finally determine the financial relationship between the parties and avoid further proceedings between them.
B.Wife’s half-share of single expert valuation reports is $4,976.45 calculated as follows:
Date Cost
29 April 2020 $2,776.40
16 September 2020 $2,226.50
23 October 2020 $1,200
29 April 2021 $3,750
Total $9,952.90
Reimbursement due by Wife to Husband: $4,976.45
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 Fancham & Ayrus has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE O’SHANNESSY
INTRODUCTION
The question I must decide is how I should divide or adjust the parties’ property pursuant to section 79 of the Family Law Act 1975(Cth) (‘the Act’).
Ms Fancham (‘the Wife’), is currently 57 years old and is the Applicant in these proceedings. The Wife is a self-employed part-time tradesperson. Mr Ayrus (‘the Husband’), is currently 64 years old and is the Respondent in these proceedings. The Husband is a retiree who has engaged as a casual professional work.
The commencement of the parties’ relationship is disputed. On the Wife’s case the relationship commenced in 2011 and on the Husband’s case 2012. It is common ground that the parties were married in 2016. The date of the parties’ separation is also disputed. On the Wife’s case the parties separated in May 2019 and on the Husband’s case separation occurred in September 2018. It is common ground that within that journey separations occurred but the parties disagree when those separations occurred.
PROCEDURAL BACKGROUND
The Wife commenced proceedings on 25 October 2019 at the Dandenong Registry. The matter was initially before another Judge and on 12 October 2020 the matter came before me for final hearing over Microsoft Teams on 28 October 2020, initially listed for a two day hearing. The final hearing commenced on 28 October 2020 where I heard the opening arguments, dealt with some housekeeping issues and at 3:19pm the Wife went into the virtual witness box and was sworn in. Cross examination of the Wife continued until the Husband collapsed due to a medical crisis. Shortly after the Husband was taken to hospital for emergency treatment by ambulance. First aid was administered by his counsel and following 45 minutes of CPR, and treatment in the ambulance and at hospital, the Husband underwent two surgeries.
The court adjourned as the Husband’s counsel commenced first aid on his unconscious client. The matter was mentioned the following day and adjourned to a date to be fixed once further information was known of the Husband’s health. He survived and recovered his health to a substantial extent, but with a then uncertain prognosis.
The matter then returned to me for mention on 16 March 2021. It was canvassed that the matter still had an estimated remaining duration of two days. I listed the matter into what was otherwise a judgment writing week on Monday 17 May 2021 and Thursday 20 May 2021. At the conclusion of 20 May, the evidence was not finalised and the matter returned before me during another judgment writing week on 11 and 12 August 2021. On this occasion, counsel were able to finalise the evidence, but left no time for final address. I note that some time was lost checking and adjusting the parties’ facilities to attempt to eliminate feedback and other technical issues from time to time during the hearing when being heard by video link. Rather than adjourn yet again for final address, with the agreement of counsel, I required written final submissions which were submitted by the Husband on 26 August 2021 and the Wife on 27 August 2021. The Husband’s closing submissions were of 199 paragraphs plus table plus 4 pages of minutes of orders sought. The Wife’s closing submissions were 13 pages including minutes of orders sought plus 7 pages of bank statements.
The guideline of this court is that a reserved judgment should be delivered in no more than three calendar months from the last submission. I apologise to the parties that it has taken more than a year since the final written submissions for me to deliver this judgment. In writing this decision I have reread the materials and the transcript of the proceedings, analysed each of the many exhibits referred to in evidence and I have a clear recollection of the evidence and the demeanour of the parties when giving evidence and being cross examined.
Materials relied upon
The Wife relied on the following materials:
·Amended Initiating Application filed 4 September 2020.
·Affidavit of the Wife filed 12 October 2020.
·Affidavit in Reply of the Wife filed 21 October 2020.
·Financial Statement of the Wife filed 12 October 2020.
·Affidavit of Company J filed 21 October 2020.
·Affidavits of K filed 5 May 2021 – updated valuation for each real property.
·Affidavit of Ms L sworn 13 May 2021.
The Husband relied on the following materials:
·Amended response of the Husband filed 18 September 2020.
·Trial affidavit of the Husband filed 8 October 2020.
·Affidavit of the Husband filed 21 October 2020.
·Financial statement of the Husband filed 7 October 2020.
·Affidavit of Mr M filed 7 October 2020.
·Affidavit of Dr N filed 3 May 2021.
·Affidavit of O filed 3 May 2021.
·Affidavits of K filed 5 May 2021.
·Case summary document of the Husband filed 8 August 2021.
Exhibited documents
I made the following documents exhibits over the five days of final hearing:
·W1 28 October 2020 Joint table of divisible property
NEW W1 - Joint table of divisible property (amended version 17 May 2021).
·W2 28 October 2020 Summary of Objections to Evidence (joint document).
·W3 17 May 2021 Updated case outline for final hearing 17 & 20 May 2021 on behalf of Applicant Wife.
·W4 20 May 2022 ANZ banking statement for period 10 Jan 2021 to 17 May 2021.
·W5 20 May 2022 Notice of Assessment – Year ended 30 June 2011.
·W6 20 May 2022 Applicant Wife – Financial Contributions to B Street, Suburb C (aka W10).
·W7 20 May 2022 Husband’s proposed minute of orders with annexure – shown to wife.
·W8 20 May 2022 Document with properties attached – shown to wife.
·W9 11 August 2021 P Group – Valuation Property Q –2011.
·W10 11 August 2021 Applicant Wife – Financial Contributions to B Street, Suburb C (aka W6).
·W11 11 August 2021 Tender Bundle 1 - emailed 11 August 2021 from Mr Hall (42 pages).
·W12 11 August 2021 Email of 14 April 2021 emails between Husband and sister Ms R (sent in by Mr Moore).
·W13 11 August 2021 Email of 19 February 2021 emails between Husband and sister Ms R (sent in by Mr Moore).
·H1 11 August 2021 Page 1-21 of Respondent’s Court Book (in folder 1/3) - (index filed 19/04/2021 at 10.16am).
·H2 11 August 2021 Page 272-406 of Respondent’s Court Book (in folder 1/3) - (index filed 19/04/2021 at 10.16am).
·H3 11 August 2021 Page 407-409 of Respondent’s Court Book (in folder 2/3) - (index filed 19/04/2021 at 10.16am).
·H4 11 August 2021 Page 410-414A of Respondent’s Court Book (in folder 2/3) - (index filed 19/04/2021 at 10.16am).
·H5 11 August 2021 Page 415-525 of Respondent’s Court Book (in folder 2/3) - (index filed 19/04/2021 at 10.16am).
·MFI H6 11 August 2021 Page 646-1172 of Respondent’s Court Book (in folder 3/3) - (index filed 19/04/2021 at 10.16am).
·W14 11 August 2021 Tender Bundle 2 – emailed 11 August 2021 from Mr Hall (1-4 pages).
·W15 12 August 2021 S Law Firm 24 November 2020 (pages 5-6 of W14) and pages 93-94 (of the court book) and P Group Response dated 26 April 2021 (pages 7-8 of W14) (6 pages in total).
·W16 12 August 2021 Wife’s …01 account (209,000 account).
·W17 12 August 2021 Wife’s …28 account (other side of …01).
·W18 12 August 2021 27 September 2018 – sale nomination form.
·H8 12 August 2021 Pages 38-40 of Respondent’s Court Book (in folder 1/3) - (index filed 19/04/2021 at 10.16am).
·H9 12 August 2021 Pages 46-59 of Respondent’s Court Book (in folder 1/3) - (index filed 19/04/2021 at 10.16am).
·H10 12 August 2021 Pages 76-77 of Respondent’s Court Book (in folder 1/3) - (index filed 19/04/2021 at 10.16am).
·W19 12 August 2021 Loan application from re E Street, Suburb F file (fifth page) (tendered via email).
·W20 12 August 2021 Photographs of Husband and Wife x3.
·W21 12 August 2021 Text message exchange between Husband and Wife on 14 December 2018.
·W22 12 August 2021 Facebook message conversation between Husband and Ms T.
·W23 24 August 2021 Pages 109-173 of Respondent’s Court Book (in folder 1/3) - (index filed 19/04/2021 at 10.16am) (Item 10).
·W24 24 August 2021 Pages 174-235 of Respondent’s Court Book (in folder 1/3) - (index filed 19/04/2021 at 10.16am) (Item 12).
·W25 24 August 2021 Pages 236-254 of Respondent’s Court Book (in folder 1/3) - (index filed 19/04/2021 at 10.16am) (Item 13).
·W26 24 August 2021 Pages 255-261 of Respondent’s Court Book (in folder 1/3) - (index filed 19/04/2021 at 10.16am) (Item 14).
·W27 24 August 2021 Pages 262-271 of Respondent’s Court Book (in folder 1/3) - (index filed 19/04/2021 at 10.16am) (Item 15).
·W28 24 August 2021 Pages 526-645 of Respondent’s Court Book (in folder 2/3) - (index filed 19/04/2021 at 10.16am) (Item 21).
Balance of probabilities
The standard of proof in this case is the balance of probabilities and I will apply section 140 of the Evidence Act1995 (Cth), which is as follows:
Section 140 Civil proceedings: Standard of Proof
(1)In a civil proceeding, the court must find the case of a party proved if it is satisfied that the case has been proved on the balance of probabilities.
(2)Without limiting the matters that the court may take into account in deciding whether it is so satisfied, it is to take into account:
(a) the nature of the cause of action or defence; and
(b) the nature of the subject-matter of the proceeding; and
(c) the gravity of the matters alleged.
Credit of parties
In Fox v Percy (2003) 214 CLR 118 (‘Fox v Percy’), a High Court case concerning the skid marks of a Kombi van on the correct side of the road, at [31], when discussing the drawing of conclusions about truthfulness and reliability solely or mainly from the appearance of the witnesses, the plurality observed:
[31] …in recent years, judges have become more aware of scientific research that has cast doubt on the ability of judges (or anyone else) to tell truth from falsehood accurately on the basis of such appearances. Considerations such as these have encouraged judges, both at trial and on appeal, to limit their reliance on the appearances of witnesses and to reason to their conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events…
[citations omitted]
In Fox v Percy, the trial judge had found the rider of the horse to be a more reliable witness than the driver of the Kombi Van, the issue being upon which side of the road the accident happened. The High Court had to interfere with that judgment because by determining which side of the road the accident happened, by reason of the apparent reliability of the witnesses, the Court got it completely wrong because the skid marks of some 50 metres were incontrovertibly and indisputably, in evidence at first instance and they demonstrated at all material times, the Kombi van had been on its correct side of the road. That is the context to that observation. In this judgment I apply those principles from Fox v Percy.
Background
It was eventually common ground that as at the date of cohabitation, whether 2012 as asserted by the Wife, or 2012 as asserted by the Husband, the Wife owned a property, of land and dwelling, (the ‘original B Street, Suburb C property’) wherein she resided, valued at about $700,000 and encumbered by a substantial mortgage of about $281,000, $275,000 or 260,000. It was common ground that soon after cohabitation, arising from the Wife’s own attempts at property development some years before cohabitation, a judgment debt in the approximate sum of $1,200,000 had been entered against the Wife. It was common ground that soon after cohabitation the Wife had transferred the original B Street, Suburb C property to the Husband and that he had discharged the existing borrowings secured over that property with further borrowings himself.
It was common ground that after cohabitation the original B Street, Suburb C property was subdivided into two parcels described as “the front of B Street, Suburb C”, which included the original dwelling, and “the back of B Street, Suburb C”. It is common ground that the Husband did some work renovating the dwelling on the front of B Street, Suburb C and expended his money in doing so. The extent of his work, the extent of the money he spent on materials for that work and whether that added to the value of the property is disputed. It was uncontested that the parties attempted to sell the back of B Street, Suburb C, then a vacant building block, and were successful. It is common ground that the Wife then arranged for the sale of the front of the B Street, Suburb C property by the Husband, without a selling agent, for the sum of $720,000.
It was not disputed that the Husband retired from his employment after about 37 years of service in 2016, that is about four years after cohabitation.
THE PARTIES ARGUMENTS
The Wife’s Case
The Wife’s case shifted from the first day of the trial to the last. The Wife’s outline of case filed for the hearing on 28 October 2020 asserted that she should be regarded as bringing into a six-year relationship equity in real estate and other assets, debts and superannuation totalling about $509,000 as at the commencement of cohabitation in 2012. She asserted that the Husband should be regarded as bringing in equity in real estate and other assets plus a defined superannuation benefit, being a total of about $1,127,000. On the Wife’s initial case, the total value of assets that the parties brought in together was about $1,636,000. The Wife’s case included that money received from the Husband’s mother was in fact a gift to the parties jointly but that most of that sum, about $130,000 should be regarded as a contribution by the Husband unmatched by any other financial contribution by her.
The defined superannuation benefit was to be regarded as a contribution as at its value according to the records of the superannuation fund, as at the date that she said cohabitation occurred, and not the value that the Husband received upon his retirement from full-time employment about four years into the parties’ cohabitation. It was not disputed that when the Husband received his defined benefit superannuation as a lump sum that he had contributed to that superannuation fund or entitlement by 37 years of employment. It was not disputed that prior to cohabitation the Husband had reached the maximum multiplier under the rules of the defined benefit superannuation fund.
The Wife’s case disputed the extent of the Husband’s contribution by working in unpaid labour on the renovation of various properties including the property that the Wife owned at the commencement of cohabitation. The Wife sought that she be regarded as having contributed in percentage terms as about 43% of total assets and sought a further adjustment in her favour 5% on account of the section 75(2) factors. The effect, according to the Wife, of a proper exercise of section 79 discretion was that the Wife would retain the jointly owned former matrimonial home and pay the Husband the sum of about $49,000 within 120 days.
When the final hearing resumed on 17 May 2021, the Wife filed another outline of case (Exhibit W3) and the real estate assets of the parties had risen substantially in value, after being revalued by the agreed single expert valuer. The Wife still maintained at this time that the bundle of assets and liabilities and superannuation that she brought into the relationship had a net value of about $509,000 and asserted that the Husband’s bundle of assets, liabilities and superannuation that he brought into the relationship should be regarded as a little more than previously, about $1,157,000, for a total initial capital contributions pool of about $1,666,000. At this time the Wife maintained that the parties jointly, not the Husband solely, had received $175,000 from the Husband’s mother, but then she acknowledged that was a contribution by the Husband. The Wife pressed for a global approach rather than an asset by asset approach, but also asserted:
2.When the parties began living together, the husband had more than double the assets of the wife, in the husband’s case mostly made up of superannuation, much of which he then accessed during the marriage. The husband had 69% and the wife 31% of the assets at cohabitation.
…
34.It should not be overlooked that the subdivision, partial sale and funded by that sale, development of the wife’s property, were each made possible by the wife bringing the property into the relationship and undertaking a joint venture with the husband, as well as the husband applying his funds to the enterprise.
The Wife also asserted that she had not wasted or failed to account for any of the funds that she had received during the relationship and she asserted (at paragraph 11):
Since the husband has all of the wife’s bank statements it is submitted that the onus is upon him to establish the wife wasted or sequestered funds in some way during the relationship, not upon the wife to establish how each dollar was applied.
The Wife’s outline of case provided a detailed chronology and table to be cross-referenced against the Wife’s bank accounts or statements and the Husband’s to demonstrate the application of funds during the relationship.
Notwithstanding the claimed disparity of direct initial financial contribution (69/31), and before the gift from the Husband’s mother was taken into account, the Wife pressed that she should be regarded as contributing about 43% overall with a 5% adjustment pursuant to section 75(2). She argued that this would take account of a number of matters including the Husband’s likely inheritance from his deceased mother of about half of $875,000. The end result the Wife contended for was that overall she should receive 48% of the existing assets, the pool being all of the assets of both of the parties as at the time of hearing (but not including the Husband’s inheritance). The effect was said to be that the Wife would retain the former matrimonial home (agreed value at trial of $1,400,000) and pay to the Husband the sum of $67,000.
As a witness the Wife was mostly responsive to the questions asked. However, her demeanour when cross examined did not promote her reliability as a witness. On many occasions the Wife said she could not remember, and this was particularly so in regard to details surrounding the $1,200,000 debt that she brought into the relationship that crystallised into a judgment debt soon after cohabitation. The Wife was confused about the date of the significant event of entry of the judgment for about $1,200,000 against her. She was 5 years out.
The Wife found it difficult to make any concession that she perceived would favour the Husband’s case. For example, about how the Husband had expended monies or superannuation or income that he brought into the relationship on either the front or back of the B Street, Suburb C property or of the other properties acquired. The Husband said this expenditure was corroborated by an examination of banking records. The Wife’s own examination of those banking records was some time before the trial, limited to a couple of hours, and I find not a detailed and careful examination necessary if a proper contradiction of the Husband’s assertions was to be made. I find the Wife failed to, or was slow to, concede the Husband’s work and expenditure on the various properties. This was not because his assertions were contradicted by her examination or knowledge of contemporaneous banking and other records, but because it appeared to her not to suit her case to make such concessions. This goes to the reliability of the Wife’s evidence.
The Husband’s case
The Husband’s case was that the parties had commenced cohabitation in about 2012 and that they separated in about September 2018. The Husband asserts that the Wife made an initial contribution of net assets and superannuation at the date of cohabitation contended by him of about $428,000 but that he had brought in a bundle of assets and liabilities including a gift from his mother and equity in unencumbered real property and substantial superannuation of a total of about $1,779,506 and that total extraneous contributions were $2,207,302. The Husband asserts on those figures that he bought in 81% of all extraneous and initial contributions. The Husband asserts that in a short relationship without children, and a later in life relationship for both of the parties, that the law and precedent authorities compel the court and the parties to concentrate on initial and extraneous direct financial contributions.
The Husband’s case was that he contributed 81% of those initial and extraneous contributions.
The Husband seeks overall an 80/20 division of the available assets in his favour. The Husband’s case was that his indirect and non-financial contributions of working hard in unpaid labour of the renovation of the front of the B Street, Suburb C property, the building of the unit on the G Street, Suburb H property and the building of the dwelling on the back of the B Street, Suburb C property as an owner builder. The latter was in the circumstances that at a crucial stage of the building of the dwelling on the back of the B Street, Suburb C property, he claims the Wife packed up complete with removal van and remained away for six months, leaving the Husband with the burden and responsibility of completing the dwelling to avoid a further financial disaster.
The Husband’s case also sought that the income earned on his superannuation be treated as an extraneous contribution. The Husband’s case, and it was not contested, was that during the relationship prior to his retirement, he had earned substantially more than the Wife and applied his earnings to the purposes of the relationship.
The Husband’s case commenced on the basis that a very substantial part of the equity that the Wife brought in had been applied for the personal benefit of the Wife, as opposed to the joint purpose of the relationship. By the end of the case it was common ground that from the proceeds of sale of the land and dwelling (being the front of the B Street, Suburb C property). There had been a transfer of $210,000 into her own separate account. It was not contested that the Wife had also received further sums of about $40,000. The Husband’s case concluded on the basis that only part of that $250,000 had been applied to joint purposes and the balance to the Wife’s “personal benefit”. Just what this sum was said to be spent on was not identified. He asserted that this sum had been “effectively dissipated” by the Wife.
The Husband sought that the court assess overall contributions at the second step of the orthodox or preferred approach as 80/20 in his favour and that there should be no adjustment on account of section 75(2).
I am satisfied that the Husband attempted to genuinely address the questions asked of him in cross examination, particularly when a single proposition or question was put to him. The Husband made concessions that could reasonably be expected. It was apparent from his demeanour that he was genuinely attempting to answer questions as honestly and apparently as he could recall. The Husband had a much more clear recall of dates and significant events than the Wife.
At paragraph [72] of the Wife’s trial affidavit, filed 12 October 2020, the Wife referred to the Husband’s mother passing away and that she did not know what his entitlement was in respect of her estate. The Husband responded to that paragraph at [194] of his reply affidavit filed 21 October 2020 as follows:
194. As to paragraph 72 of the Wife's Affidavit, I say my mother passed away. Her assets comprise a house worth approximately $450,000 and savings of approximately $265,000. There has been no grant of probate. Furthermore, there is a dispute between my sister and I regarding the division of the estate. I do not know what my ultimate entitlement will be.
There is no love lost between the Husband and his only sister, Ms L (and her husband). The two of them will share almost all of the estate and they are joint executors. However, there was a genuine dispute between the executors. It appears undisputed that Ms L and her husband had attended the deceased’s home soon after her passing and either taken or secured for safe keeping some cash and jewellery, that the Husband believes to be of a very significant value, and that his sisters conduct in that regard seriously agitates the Husband.
Ms L gave evidence that it was the Husband who was holding up the administration of his mother’s estate. In evidence are two emails from the Husband to his sister and, apart from demonstrating the genuineness of his unhappiness and the extent of the animosity between siblings, include the following passage in the email of 19 February 2021 (Exhibit W13):
… Settlement for mums at the moment, will not be on my agender [sic] till after I settle with [the Wife], which I’m hoping will be in [mid year]. As you would have known, I’ve had a [medical episode], and need some time, to get over the grief of my separation, mum dying, and you and [[Mr U]], removing items from mums, before probate was granted. …
The email of 12 April 2021 (Exhibit W12) was to similar effect and one passage is as follows:
My court dates to settle with [the Wife] is over 2 days. 17th May, and also 20th May. [the Wife] is trying to go part of Mums estate, according to the way her affidavit reads.
The Husband affirmed his affidavit of reply as true and correct when he commenced his evidence. Paragraph 194 was not wrong, but it was not the full and accurate story. The Husband did provide, but late, sufficient information for the Wife and the court to have a reasonable idea of the future prospect of what would be received. The dispute about the estate related to the manner in which his sister had taken possession of cash and jewellery. That dispute, as well as the Husband’s intention to resolve the matrimonial proceedings first, was the cause of the delay in the grant of probate. That should have been disclosed by the Husband. That failure to be full and frank on this aspect has caused me to look carefully at the Husband’s evidence.
Notwithstanding the Husband’s failure to provide the full story in regard to the estate dispute, overall I regarded his evidence as truthful and reasonably reliable. This was because of his demeanour under cross examination; he readily made concessions that should have been made, he attempted to test his memory and to engage with the cross examiner’s concepts and chain of questioning without obfuscation, and he demonstrated a determination to examine the tedious detail of the parties banking and other records (such as they were). Where his examination, assisted by his lawyers, of the tedious detail of the records exposed facts that contended against his case as previously put, those new facts were readily put before the court and the Wife. For example he (or he and his lawyers) had earlier made a mistake by contending that his long service leave entitlements of about $65,000 at his retirement had been paid to him separately and in addition to his superannuation. Before the Wife or her lawyers advised or disclosed they were aware of that error, he pointed to documents, acknowledged the error and no longer alleged bringing in long service leave in addition to his superannuation. Another example is, when after careful examination of the detail of the Wife’s allegations that she had spent about $142,000 of the $210,000 she received from the sale of the front of the B Street, Suburb C property, that was conceded, notwithstanding such concession contradicted an earlier position. The concession in cross examination of the Wife’s mortgage (discussed later) being likely $261,000 not $281,000 is another issue.
Overall I find that the Husband’s account and evidence is more reliable than the Wife’s on the disputes about:
·the date when cohabitation commenced;
·the extent of the Husband’s work expense and labour on renovating the various properties including the front of the B Street, Suburb C property;
·the dates of the separations alleged by the parties;
·the date of separation or the breakdown of the marital relationship;
·the Husband’s expertise and knowledge as a handyman/tradesman and owner builder;
I accept his evidence on those matters save for the date of final separation. That does not mean that I found that the Wife has lied or been dishonest or was generally lacking credit, as asserted in the Husband’s written closing address. I do not take that additional step or finding, on the balance of probabilities (see Blass & Blass (2022) FLC 94-085 at [39] & [40]). I only find that her evidence in regard to those matters is less reliable than the Husband’s.
I find that the relationship ended in December 2018 (not September 2018 as the Husband asserted) when the Husband moved into separate accommodation, notwithstanding the Husband’s ponderings that the last separation may have been merely one of many. Ultimately nothing turns on this as my findings in regard to the contribution stage mean that both parties appropriately conserved the assets in his or her control to take advantage of market movements from separation to the date of trial. However, in determining relevant factual disputes I have primarily had regard, as far as possible, to contemporary materials, objectively established facts and the apparent logic events rather than determining past events solely upon the credit or the reliability of the parties.
I deal with my determinations of the above and other disputes at the appropriate place within the preferred four step approach discussed later in these reasons.
Other witnesses
The Husband’s adult son, Mr M, a qualified tradesman, affirmed an affidavit that went to his observations when assisting his father renovate or improve the properties during the relationship and his work renovating the dwelling on the front of the B Street, Suburb C property. Mr M observed his father working long and hard on those properties and he did not see the Wife conduct any renovation or improvement works at the property, save for gardening and basic tidy up of the property. Mr M was not required for cross examination and I accept his evidence of what he saw and observed, but not his opinions about events such as at [11] about the original B Street, Suburb C property being a property “he had bought from [the Wife]”.
The Husband’s general medical practitioner, Dr N, provided a medical report and affidavit and was not required for cross examination. I accept his evidence and opinions.
As referred to earlier, the Husband’s sister, Ms L, swore an affidavit and was cross examined. The point of Ms L’s affidavit was to corroborate the Wife’s assertion as to the date of cohabitation and also to demonstrate that there was more to the lack of progress in her mother’s estate than the Husband had asserted. Ms L relied on recollection of events to corroborate the date of cohabitation. For the reasons set out later I have determined to accept the Husband’s evidence at the date of cohabitation. This is not a reflection on the credit of Ms L, but I find the business records (referred to later) to be more reliable than the parties’ recollections of just which month it was when the parties changed their relationship from dating or going out to cohabitation.
APPLICABLE LEGAL PRINCIPLES
The law to be applied includes the following provisions of the Act:
Section 79 Alteration of property interests
(1)In property settlement proceedings, the court may make such order as it considers appropriate:
(a)in the case of proceedings with respect to the property of the parties to the marriage or either of them--altering the interests of the parties to the marriage in the property; or
…
(2)The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
(4)In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
(a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d)the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e)the matters referred to in subsection 75(2) so far as they are relevant [see below]; and
(f)any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
…
Section 75Matters to be taken into consideration in relation to spousal maintenance
(1)In exercising jurisdiction under section 74, the court shall take into account only the matters referred to in subsection (2).
(2) The matters to be so taken into account are:
(a)the age and state of health of each of the parties; and
(b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c)whether either party has the care or control of a child of the marriage who has not attained the age of 18 years; and
(d)commitments of each of the parties that are necessary to enable the party to support:
(i)himself or herself; and
(ii)child or another person that the party has a duty to maintain; and
(e)the responsibilities of either party to support any other person; and
(f)subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
(i)any law of the Commonwealth, of a State or Territory or of another country; or
(ii)any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party; and
(g)where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable; and
(h)the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
(ha)the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant; and
(j)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k)the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l)the need to protect a party who wishes to continue that party's role as a parent; and
(m)if either party is cohabiting with another person--the financial circumstances relating to the cohabitation; and
(n)the terms of any order made or proposed to be made under section 79 in relation to:
(i) the property of the parties; or
(ii) vested bankruptcy property in relation to a bankrupt party; and
…
(o)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
The Stanford Principle
In the High Court of Australia case of Stanford v Stanford [2012] HCA 52; (2012) FLC 93-518 (‘Stanford’) the majority stated some fundamental propositions about section 79 proceedings.
In Stanford the essential issue was whether it was just and equitable to make any property order at all, in circumstances where the consortium vitae or marriage relationship had not broken down by way of a separation.
The High Court varied the order of the Full Court and found that in the circumstances it was not just and equitable that a property settlement or property alteration order be made at all (and also that section 79(8) had not been complied with). This was so despite 37 years of marriage and contribution by the Wife. Section 79(4) contribution, even 37 years of it, was not to be conflated with the section 79(2) “just and equitable” requirement but should be considered separately and first. The result of the High Court's order was that the property settlement order as originally made was dismissed with costs.
The majority observed at [37]:
[37]First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property... The question posed by s 79(2) [and/or section 90SM(3)] is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order.
The majority continued at [41-42]:
[41]The fundamental propositions that have been identified require a court have a principled reason for interfering with the existing legal and equitable interests of the parties to the marriage and whatever may have been their stated or unstated assumptions and agreements about property interest during the continuance of the marriage.
[42]In many cases where an application is made for property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice by made by one or both of the parties, the Husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the Husband and the Wife…
In Stanford the High Court did not go on to comment upon how section 79(4) should be applied where it was just and equitable that a property alteration or settlement order be made. However, I find that in this case, because both parties seek section 79 orders and because the parties no longer have the joint enjoyment of the major asset of the former matrimonial home (‘FMH’) I am satisfied that it is just and equitable that property settlement orders be made.
The Preferred Approach
In Keskin & Keskin and Anor [2019] FamCAFC 236; (2019) FLC 93-932 (‘Keskin’) the Full Court, Strickland, Kent & Austin JJ, at [44] approved what was the age old and pre Stanford “preferred approach” as to the how the nuts and bolts of section 79(4) and 75(2) fitted together:
[20]In Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener) [2003] FamCA 395; (2003) FLC 93-143 at [39] the Full Court, in setting out what the case law revealed as the “preferred approach” to the determination of an application under s 79 of the Act, referred to four inter-related steps, including that “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”. The Full Court did not purport to elevate the preferred approach as being mandatory, as was observed by a later Full Court in Bevan & Bevan [2013] FamCAFC 116; (2013) FLC 93-545 at [61]- [63], [72]. However, adoption of that preferred approach is a means by which many of the mandatory factors in s 75(2) of the Act, in particular paragraph (b) – the income, property and financial resources of each of the parties; paragraph (ha) – ability of a creditor to recover debt; paragraph (n) – the terms of any proposed order under s 79 of the Act; can be considered, as these must be considered, in determining any adjustment pursuant to s 75(2) of the Act. Conversely, if the preferred approach is not adopted there must be a means discernible from the reasons to identify that these relevant mandatory s 75(2) factors have been considered, and how they have been brought into account, in the making of any s 75(2) adjustment...
That preferred approach set out at [39] of Hickey and Hickey and the Attorney-General [2003] FamCA 395; (2003) FLC 93-143 (‘Hickey’) is as follows (citations omitted):
[39]The case law reveals that there is a preferred approach to the determination of an application pursuant to the provisions of section 79. That approach involves four interrelated 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 hearing. Secondly the court should identify and assess the contributions of the parties within the meaning of section 79(4)(a), (b) & (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 section 79(4) (d), (e), (f) & (g) (“the other factors”) including, because of section 79(4), the matters referred to in section 75(2) so far as they are relevant and determine the adjustment study (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.
Lest it be said there is a conflict between the High Court’s disavowal of “entitlement” to a section 79 order by mere separation and/or years of section 79(4) contribution on the one hand, and the use of the word “entitlements” in the Hickey passage cited above, I regard the use of that word in the above context as synonymous with “assessment.” I will have regard to what I find to be the contribution based assessment rather than entitlement.
The preferred approach assists me in making a principled and orderly determination of the parties’ property dispute and the parties helpfully addressed me about those matters.
Step one: identify the property pool
The following table is taken from the Husband’s written closing submissions with reference to the Wife’s closing written submissions and hence it is evident that the agreed asset pool is as follows:
Item Legal Owner Value $ Agreed ? 1 [the back of the B Street, Suburb C property] Joint 1,400,000 Agreed 2 [E Street, Suburb F] $940,000 Joint Agreed 3 [E Street, Suburb F] mortgage (608,992) Joint Agreed 4 [E Street, Suburb F] equity Joint 331,008 Agreed 5 [G Street, Suburb H property] Joint 850,000 Agreed 6 Property Q Husband 170,000 Agreed 7 Cash at bank Wife 10,712 Agreed 8 Motor Vehicle 1 Wife 15,000 Agreed 9 Chattels in Wife’s possession Joint 3,000 Agreed 10 Cash at bank Husband 8,181 Agreed 11 Motor Vehicle 2 ($8,000), Motor Vehicle 3 ($15,000) Husband 23,000 Agreed 12 Jet ski ($2,000), trailers ($900) Husband 2,900 Agreed 14 Motor home sale proceeds (applied to legal costs) Husband 30,000 Agreed 15 Legal costs paid from Super Fund 1 drawdown Husband 10,000 Agreed NET CURRENT ASSETS 2,853,801[1] Agreed Superannuation 20 Super Fund 1 Husband 157,154 Agreed 21 Super Fund 2 Wife 29,000 Agreed Total Superannuation 186,154 Agreed NET CURRENT ASSETS & SUPER’N 3,039,955[2] Agreed [1] Not $2,853,981 as the Husband’s table asserts at [10] of his written final address. $180 error.
[2] Not $3,040,135 as the Husband’s table asserts at [10] of his written final address. The Wife’s final address table did not indicate a total.
It is convenient to reformulate that pool or description of those assets and liabilities into three categories; assets where who ends up with the property is in dispute, assets it is agreed or intended that the Wife will retain (that can be described as the Wife’s “Keep”) and assets it is agreed or intended that Husband will retain (that can be described as the Husband’s “Keep”) and is as follows:
Item Legal Owner Value $ Agreed ? Dispute: Wife to retain or be sold 1 [back of the B Street, Suburb C property] Joint 1,400,000 Dispute To be retained by Husb (Husband’s Keep) 2 [E Street, Suburb F] $940,000 Joint 3 [E Street, Suburb F] Mortgage ($608,992) Joint 4 [E Street, Suburb F] equity Joint 331,008 Agreed 5 [G Street, Suburb H property] Joint 850,000 Agreed 6 Property Q Husband 170,000 Agreed 10 Cash at bank Husband 8,181 Agreed 11 Motor Vehicle 2 ($8,000), Motor Vehicle 3 ($15,000) Husband 23,000 Agreed 12 Jet ski ($2,000), trailers ($900) Husband 2,900 Agreed 14 Motorhome proceeds (applied legal costs) Husband 30,000 Agreed 15 Legal costs paid from Super Fund 1 drawdown Husband 10,000 Agreed 20 Super Fund 1 Husband 157,154 Agreed Total Husband’s Keep 1,582,243 To be retained by Wife (Wife’s Keep) 7 Cash at bank Wife 10,712 Agreed 8 Motor Vehicle 1 Wife 15,000 Agreed 9 Chattels in Wife’s possession Joint $3,000 Agreed 21 Super Fund 2 Wife 29,000 Agreed Total Wife’s Keep 57,712 NET CURRENT ASSETS & SUPER’N 3,039,955
A summary of the asset pool is as follows;
Back of B Street, Suburb C property: value agreed at trial 1,400,000 Dispute Total Husband’s Keep 1,582,243 Agreed Total Wife’s Keep 57,712 Agreed NET CURRENT ASSETS & SUPER’N 3,039,955 Agreed
It was common ground that the post final separation inheritance of the Husband was not to be included as an asset for division. This does not mean it should be disregarded.
Step two: Section 79(4)(a),(b) & (c): contribution assessment
There is little dispute as to the assets and liabilities that each party had at the time of cohabitation and that they brought into the relationship. The date that the parties commenced cohabitation is in dispute. The parties dispute the value to be attributed to the assets that each brought in for the purpose of considering their initial or extrinsic contributions at this point of the preferred approach analysis.
Parties’ cases
The following table, being the combination of the Wife’s table at paragraph 7 of her written final address and the Husband’s table at paragraph 74 of the Husband’s final address into one table, sets out the two positions of how the different assets should be had regard to.
Husband’s case $ Wife’s case $ Contribution by wife 1 Equity in original B Street, Suburb C property:
Value at co-habitation: $700,000[3] less mortgage of $281,642[4] leaving equity of:418,358 2 Equity in original B Street, Suburb C property:
Treat as 2015 sale proceeds of front of B Street, Suburb C property (after Husband’s work on renovation) and;406,000 current land only value of FMH aka back of B Street, Suburb C property Not included 765,000 3 Wife’s CBA savings account …19 18,103 Not included 4 Wife’s Motor Vehicle 4 2,000 Not included 5 Wife’s credit card debts (13,518) Not included 6 Wife’s debts to her family (25,000) Not included 7 Wife’s Legal costs paid during marriage- Bank judgment defence (5,604) Not included 8 Super Fund 3 at co-habitation 33,458 Wife’ current superannuation 29,000 9 Wife’s net initial/extrinsic contribution (excluding Bank debt) should be regarded as: 427,797 1,200,000 10 Debt to Bank (Judgment debt not in dispute) (1,211,697) Not included 11 Wife’s net Initial Legal Position (783,900) Not included Contributions by Husband 1 [G Street, Suburb H property] (unencumbered) 330,000 Current value of [G Street, Suburb H property] “property somewhere between” unimproved land only value ($625,000) and current whole property value of ($850,000) midpoint[5] 737,500 2 Total Super Fund 1 (including payout) received at retirement 1,091,186[6] Different approach Super Fund 1 applied to marriage by application to B Street, Suburb C property, [G Street, Suburb H property] and E Street, Suburb F (up to end of 2018) 609,000 3 Property Q 170,000[7] 170,000 4 Savings at cohabitation 4,026 Not included 5 Prior family law property settlement 10,593 Not included 6 Jet Ski 8,000 Not included 7 Bike 1,800 Not included 8 Gift from Husband’s mother 174,450 114,450 Husband’s net initial/extrinsic contribution (excluding Bank debt) should be regarded as: 1,790,055[8] 1,630,950 ALL EXTRANEOUS CONTRIBUTIONS 2,217,852[9] 2,830,950
[3] Agreed value at co-habitation.
[4] Wife asserted by end of case mortgage was $261,000 (ie $20,108 less)
[5] Wife sought this be regarded as “G Street, Suburb H, net of wife’s contributions and sums applied from above (Husband’s superannuation and proceeds of sale of front of B Street, Suburb C property)”. The midpoint figure was not put by the Wife but included by the court to give a comparison basis.
[6] As at date of retirement in 2015.
[7] Agreed value at cohabitation $130,000 but at final hearing agreed at $170,000.
[8] Not $1,779,505 as asserted.
[9] Not $2,207,302 as asserted.
Dispute recognising the Wife’s initial contribution of encumbered original B Street, Suburb C property
On this issue the Husband acknowledged the undisputed single expert valuation at the time of cohabitation of $700,000. However, at one point he sought to reduce that to $650,000 by taking into account the Husband’s opinion of the improvement in value he said his renovation to the front dwelling of the B Street, Suburb C property had caused after cohabitation. That position was abandoned eventually and the Husband conceded the original B Street, Suburb C property should be regarded as the retrospective value attributed to it by the single expert valuer, notwithstanding what was said to be the inaccuracies of information put to the valuer on behalf of the Wife.
It is common ground, or at least not contested (see Exhibit W26), that the Wife had been involved in a commercial development investment with a previous intimate partner from 2003. This involved about $800,000 borrowed from a facility (‘the Mortgagee’) and applied to that investment. The investment was unsuccessful. By 2009, the Wife and her partner had been issued with a noticed to vacate and a demand by the bank to make payment and to give up possession of the property which secured the borrowings. By the middle of 2009, interest was accruing at about $100 per day and a writ was issued, but not served, against the Wife and her partner by the Mortgagee. The writ was served on the Wife in 2010 and in 2010 her solicitor filed a defence. In 2010 the dispute was fixed for a trial in 2011. That trial did not proceed and correspondence continued. For context I note that the Wife alleges the date of cohabitation was 2012 and the Husband asserts 2012. In 2012 a deed of settlement between the mortgagee and the borrowers was executed whereby the Wife and her partner had until the end of the 2013 financial year to subdivide the property and repay the borrowings. The end of the 2013 financial year, 30 June 2013, came and went without the borrowings being repaid, notwithstanding the deed of settlement nine months earlier.
The Wife’s solicitor, Mr V, wrote to the Wife in April 2013 (Exhibit W27 page 269), and from at least that time the Wife was contemplating the transfer of the property to the Husband. At some point in the middle of 2013 the Wife and the Husband arranged for the original B Street, Suburb C property, lock stock and barrel, to be transferred to the Husband and the Husband arranged to borrow more than $250,000 to discharge the existing mortgage debt secured over the original B Street, Suburb C property. The Wife had asserted in her affidavit of evidence in chief that that mortgage as at the time of cohabitation was a debt of $275,000. At no point did the Wife produce any document to corroborate or qualify what her own mortgage was in the middle of 2013. The Husband pointed to the borrowings that he solely took out on the property with mortgage loan number #...08 (Exhibit H5), which showed that as at 5 July 2013 he had a loan draw down on that facility of $281,642.80. The Husband’s evidence was that the whole of the sum borrowed had been applied to the discharge of the Wife’s mortgage and he relied upon the mortgage statement to demonstrate the amount. In cross examination of the Husband a bank statement (contemporaneous business record) of his account #...27 (page 689) was put to the Husband that included the entry as a credit to that account as follows:
PROCEEDS OF LOAN DRAWDOWN FROM …08 $20,108.02
When cross examined, the Husband conceded that that may well be the case. The bank statement (at Exhibit H5) records the total of the borrowing, not the disposition or application of the borrowed funds.
I infer from the business records (including Exhibit H1, the title search) that 5 July 2013 was the settlement day whereby the transfer of the original B Street, Suburb C property to the Husband, the discharge of the Wife’s initial mortgage and the borrowing by the Husband in the new loan #...08 were finalised. I conclude that the Wife’s mortgage discharged at settlement on 5 July 2013 and registered on title on 15 July 2013 was in the approximate sum of $261,000, not $275,000 as asserted by the Wife or $281,000 as asserted by the Husband.
Also on that day in July 2013 the mortgagee filed a consent judgment with the court, which I infer was based upon the deed of settlement or like document. The matter did not proceed that day but was rescheduled or adjourned to 2 August 2013. In the meantime the Husband became the registered proprietor of the original B Street, Suburb C property on 15 July 2013.
The Wife has led no evidence as to what became of the mortgaged property or the mortgage debt and the Wife was vague about the whole commercial development debt scenario. There is no evidence that the Wife has received any further demand from the mortgagee. The actual out of pocket cost to the parties during the relationship was the payment of legal fees by the Wife to the solicitor with the conduct of the litigation at the suit of the mortgagee. It was uncontested that those costs paid were about $5,600.
The judgment debt against the Wife and her partner of $1,200,000 was subject to the mortgagee’s obligation to mitigate the loss by maximising the sale proceeds of the mortgaged property of which they had taken possession or at least controlled. I infer, from the information available in the summary of the subpoenaed records concerning the mortgage debt (Exhibit W26), the title search (Exhibit H1) and the apparent logic of events, that in ways not disclosed to the Husband or the court, that the mortgagee proceeded to deal with the secured property and sell it in one or more lots and hence recover some or all of the of the money lent. I also infer that it may have been that the extent to which there was a shortfall between the monies recovered by the mortgagee and the debt meant that it was not worth the powder and shot of the mortgagee to continue to pursue the Wife.
Hence it is not correct to regard the Wife as bringing in only a debt of $1,200,000 in regard to the commercial development because the Wife would have also had the equitable interest in the mortgaged property. That included the obligation of the mortgagee to mitigate its loss and sell the property. The value of the property ultimately recovered, whatever it was, would need to be set off against that debt. Further, the Wife was one of two co-borrowers or joint venturers and absent any other evidence I infer that she would have had the equitable remedy or right to contribution as between co-borrowers.
However, it is also incorrect to overlook these circumstances and the difficult position that the Wife was in at the commencement of cohabitation. From the very commencement of cohabitation, and alternatively at the very latest from the deed of settlement of 2012, which is soon after either party’s date of cohabitation, there was a real risk that there would be a substantial shortfall on the mortgage debt, that further enforcement proceedings would be taken against the Wife and that ultimately there may be a forced sale of the original B Street, Suburb C property and either some or all of the equity would be paid to the mortgagee. At some risk to himself, and for the purpose of attempting to preserve the equity that the Wife had in the original B Street, Suburb C property for the two of them, the Husband undertook substantial borrowing and repayment of those borrowings by monthly payments thereafter.
This is the context where the Husband undertook the substantial borrowing to discharge the Wife’s mortgage and thereafter pay that mortgage from his income until the later subdivision of the original B Street, Suburb C property and sale of the front of the B Street, Suburb C property which discharged his borrowing.
It is then common ground, although the Wife found it difficult to make any frank concessions about it, that the Husband (whilst working full-time) engaged in substantial hard work, effort and expense to renovate the dwelling on the front of the B Street, Suburb C property. He undertook the subdivision of the block. He cooperated with the Wife when she obtained a purchaser for the dwelling and land being the front of the B Street, Suburb C property.
In about April 2015 (different dates between March to May 2015 were put and agreed to in cross examination) the front of the B Street, Suburb C block property, that included the dwelling renovated by the Husband, was sold for $720,000. After discharge of the Husband’s #...08 mortgage, the Husband received $446,278 (page 784 of Exhibit H6 and see TP591). The Husband transferred to the Wife $210,000 in February 2017 (see page 485 of H5). It is common ground that the Wife spent about $142,000 of those funds directly on the development of the dwelling on the back of the B Street, Suburb C property.
The Husband retired in 2016 and received $927,000 in superannuation and long service leave entitlements after 37 years of service in his profession. Thereafter he, with the assistance at times of the Wife, undertook substantial hard work and long hours over more than a year on the building of a high-quality dwelling on the otherwise vacant block of land known as the back of the B Street, Suburb C property, including actual work complementing the work of outside contractors. The dwelling on the back of the B Street, Suburb C block was sufficiently complete for the parties to be able to move in there in April 2018, following quite a lengthy separation. The Husband contends in the document known as “Supplement to the Husband’s May 2021 case outline”, adopted as correct in evidence in chief, filed 8 August 2021, that of his superannuation and income of superannuation he had applied about $630,000 to that project. That document was ultimately relied upon in part by the Wife in final address despite substantial criticism of the form of the evidence in cross examination of the Husband.
The Husband asserts that he had applied about $240,000 of superannuation and income from superannuation (part had been converted to a pension) to the E Street, Suburb F. The E Street, Suburb F had been purchased by the Husband just before separation and was registered in the joint names of the Husband and the Wife. The Husband and the Wife include all of the equity in that property as it was at the date of trial in the property pool.
In her outline of case, the Wife concedes that up to about the time of separation the Husband had applied $609,000 from his superannuation to the B Street, Suburb C property (and I infer she means the building of the dwelling on the rear of the B Street, Suburb C property), the G Street, Suburb H property and the E Street, Suburb F. After careful examination of bank records, the Husband asserts that he spent about $81,000 in addition to his work on the renovation of the front of the B Street, Suburb C property before its sale.
I accept and find that the Husband did undertake what I regard as significant renovations to that property. I find this because of the care that the Husband and the lawyers have taken in the examination of contemporaneous records. The Wife’s counsel made only very broad but largely un-particularised criticism of that evidence. It is common ground that the Husband did work on the property, but the significance of that work was contested.
The law requires me to take into account all of the parties disparate contributions. The law does not require a profit or an improvement in value, let alone a dollar for dollar improvement in value of any contribution whether by initial capital, income earned, undertaking of risk and borrowing, physical work and labour or intellectual work, effort and worry.
Proving contributions
The parties put considerable effort in attempting to retrospectively identify what money (and from where) had been applied to which particular real estate property or project for the purpose of the relationship such as living expenses or the purchase of the campervan or a new car. This exercise included considerable time in argument about the form of the evidence and in cross examination as to the detail. Early on in the proceedings I drew the parties attention to the Full Court authority of Parshen & Parshen (1996) FLC 92-720 (‘Parshen’) where at 83,665, the Full Court of Ellis, Finn and Purdy JJ observed:
… In our view, in the absence of evidence to the contrary, it should be inferred in proceedings pursuant to the provisions of section 79 that moneys howsoever received by a party during the course of the parties’ cohabitation, are used by that party for the benefit of the family unit. Such moneys, in those circumstances, thus constitute a financial contribution by the parties who received the moneys.
Parshen was referred to and approved by the Full Court in J & S [2003] FamCA 618 (unreported), Hallinan and Witynski (1999) FamCA 1127 at [51], and in Harrington & Harrington (2007) FLC 93-317 at [29].
I regard this principle in Parshen as binding on me and of equivalent weight to the principles in regard to gifts and inheritances discussed in Kessey & Kessey (1994) FLC 92-495 (‘Kessey’) which have been described by another Full Court in Mabb & Mabb (2020) FLC 93-947 at [37] as an evidentiary device. I treat that principle from Parshen and cited above as an evidentiary device. In this case I do not have any evidence that either party spent or dealt with any funds or assets that they either brought into the relationship or earned as income during the relationship other than for the purposes of the family unit of the Husband and the Wife as they were at the time of their separation.
I am not prepared to draw the inference, as I understand I am being invited to, that unless the Husband or the Wife can demonstrate by reference to contemporaneous bank or other records that the money was applied to building projects (as pressed by the Wife) or for the purposes of the relationship or the family unit (as pressed by the Husband), that it should not be regarded as a contribution. The same applies to money expended by each of the parties during the periods of separation.
Despite this, for most of the funds brought into the relationship either by capital or superannuation entitlement or income I have evidence that the bulk of the parties’ funds were applied to the various building projects of the parties or to living expenses. It is common ground that the various building projects and properties the subject of expenditure during the marriage are, and should be, included in the asset pool for the purpose of division in these proceedings.
It is in this context and in these circumstances that the Wife identifies the sale proceeds of the front of the B Street, Suburb C property, received in 2015, and the remaining value of the land (only) of the back of the B Street, Suburb C property.
At paragraphs 162 and 163 of his final written address, counsel for the Husband submitted as follows:
162. In Williams (2007) the Full Court held that it may not give adequate recognition to refer to the value of an item at the commencement of a relationship ‘without reference to its value at the time it was realised or its value to the parties at the time of trial ‘if still intact’ and giving the examples of ‘an investment portfolio or a block of land or a painting that has risen significantly in value as a result of market forces’, ‘but in so doing it is equally as important to give recognition to the myriad of other contributions that each of the parties has made during the course of their relationship’.
163. Subsequently in Jabour the Full Court held at paragraph 43,
“We consider that the decisions in Baker and Bilous indicate that the Court in Williams somewhat overstated the importance of the increase in value of a piece of property at the expense of “the myriad of other contributions that each of the parties has made during the course of the relationship” (Williams at [26]).
I accept those submissions as accurately stating the law as it applies in the circumstances of this case.
There may well be cases with different circumstances where it would be appropriate to apply the submission made by the Wife’s counsel at paragraph 5(e) that:
The appropriate weighing of the financial contributions, amongst all forms of contribution, should be as those sums came in, rather than an attempted ‘tracing’ focussed solely on the [B Street, Suburb C property] construction…
I must take into account all of the contributions of the parties, direct and indirect, and I must take account of the length of the relationship, including the three separations that occurred as asserted by the Husband. In the end I place little weight on the separations save that over the period of the third separation (from October 2017 until about April 2018) the Husband kept on with the hard work and effort involved to complete the building of the dwelling on the back of the B Street, Suburb C property as an owner-builder. The Wife attended when he was not there to keep an eye on things and clean up a little.
However, in this case I do not accept that the approach of counsel for the Wife as appropriate and I am troubled as to whether it is consistent with orthodox principles routinely applied in this court. Between cohabitation and the trial there has simply been far too much water under the bridge for it to be appropriate to have regard to only some of the financial contributions of the parties and to apply the approach sought by counsel for the Wife. There has been toil, trouble and financial investment by both parties but considerably more so by the Husband. There has also been considerable indirect contribution of both parties.
The counsel for the Husband submitted at [165] of written final address as follows;
165. The Husband refers to the Full Court decision of Bushby & Bushby (1988) FLC 91-919, a case involving a marriage of four years, with no dependent children being involved. The Full Court upheld the finding of the trial judge that primary issue was the actual financial contribution to the marriage made by each party. The Full Court stated (at 76667):
“The proceedings before her Honour were spread over four hearing days, due in the main to the legal practitioners' failure to address the real issues and to provide the trial Judge with proper documentary evidence as to the nature and quantum of the parties' respective financial contributions to the marriage.
In a marriage of four years, with no dependent children being involved on either side, it ought to have been apparent to the parties' legal advisers that each party's actual financial contribution to the marriage was the primary issue.”
There are no special principles for what may be regarded as a short marriage. The whole of the provisions of section 79 must be regarded. The circumstances of a relationship of relatively short duration, without children and where there has been substantial initial and extraneous financial contributions made directly, necessarily calls for a careful analysis and substantial weight to be given to the parties’ initial and extraneous contributions. As in the example, in Bushby & Bushby (1988) FLC 91-919, each party’s actual financial contribution to the marriage is the primary issue.
I acknowledge the submission of counsel for the Wife at 6(h) of final written submission, which was as follows:
It should not be overlooked that the subdivision, partial sale and funded by that sale, the development of the wife’s property, were each made possible by the wife bringing the property into the relationship and undertaking a joint venture with the husband, as well as the husband applying funds to the enterprise.
I do not overlook that concept and I take it into account. The issue is the weight to be given to that contribution amongst all of the other contributions. By the time of trial it is not appropriate to have regard to that contribution by reference to the value at trial of the land alone. In all the circumstances of this case, I accept that the approach of weight to be given to initial contributions is generally as sought by the Husband’s counsel. That is, as best can be ascertained as to the actual value or equity at the time of cohabitation or reasonably proximate thereto.
I must look at what the Wife asserts is the value of those assets at that time. By the table at part E of the Wife’s updated outline of case (Exhibit W3), the Wife pressed that she actually brought in, using values of the time, equity in assets and liabilities of about $509,000 and that the Husband bought in, subject to tax, equity in assets and liabilities of about $1,157,179. For transparency I set out that table as follows:
The wife’s home at [B street, Suburb C property] purchased in 1991 with her first husband, joint retrospective valuation by P Group as at 2011, of which land value $600,000 $700,000 The wife’s CBA Netbank Saver account x…93 of $44,941 as at 1 February 2012 $44,941 The wife’s mortgage over the B Street, Suburb C property, refinanced by the husband in July 2013 with transfer of property to him (e. $275,000) The wife’s CBA Awards Card with $6,123 owing (e. $6,123) A Motor Vehicle 4 e. $5,000 The wife’s net non-superannuation position $468,818 The wife’s superannuation e. $40,000 The wife’s ‘total’ position $508,818 The husband’s home at [G Street, Suburb H property], joint retrospective valuation by P Group as at 2011
Of which land value $220,000$330,000 A [Property Q] $75,000 A Motor Vehicle 2 $6,000 Savings $2,500 A bike subsequently sold to purchase another similar $1,800 The husband’s net non-superannuation position $415,300 The husband’s superannuation c 2012, consisting of a defined benefit interest and an accumulation component according to a document annexed ‘-4’ to the husband’s reply affidavit filed 21 October 2020
rolled over to an income stream worth $930,000 in 2016.e. $741,879
‘before tax’ circa 30 June 2012The husband’s total position, subject to tax on superannuation when withdrawn $1,157,179 Total net assets including superannuation $1,665,997 Date of co-habitation
Another dispute that is relevant at step two of the preferred approach is the Wife’s savings or money in the bank at the time of cohabitation. As at February 2012, the date the Wife contends for, the Wife had about almost $45,000 in the bank. By July 2012, the date the Husband contends for, she had about $18,000 in the bank.
The Wife, in unequivocal terms in her affidavit of evidence in chief, contended that cohabitation commenced in 2012 date because she could recall that she was already employed at the Employer W at the time cohabitation commenced. The Husband purports to have a clear recollection of the time of the commencement of cohabitation. He was not shaken on that evidence, despite a thorough cross examination. In cross examination, contemporaneous business records (bank accounts showing first receipt of salary and superannuation records) were put to the Wife which showed that she commenced work at the Employer W in about the middle of 2012. The Wife then asserted that she had been mistaken about when she commenced work at the Employer W, not the date of the commencement of cohabitation. The Wife’s evidence in chief rested upon her recollection of working at the Employer W when cohabitaiton commenced, which was not challenged. Contemporaneous incontrovertible business records show she was not working at the Employer W until about two months after she says cohabitation has commenced. Those same records are consistent with the Husband’s case of the date of cohabitation. In the circumstances I accept that the parties commenced cohabitation in about 2012, as the Husband’s case asserts. This means I should regard the Wife as bringing in $18,103 to the relationship in her bank account.
Credit cards
The Wife contends she only had $6,123 of credit card debt at cohabitation and the Husband contends I should regard her credit card debts as $13,518. The evidence that the Husband has been able to muster shows that at a point in time later than July 2012 the Wife had credit card debts of $13,518. I am not satisfied on the balance of probabilities that the Wife, at the time of cohabitation asserted by the Husband, had the extent of credit card debt as he asserts. I will take into account the figure of $6,123 as asserted by the Wife, even though that assertion is at an earlier point in time.
Debt to family
The Wife’s table of assets that she had at the time of cohabitation does not take account of debt that the evidence showed she brought in due to her family. The Husband asserts I should regard that debt as $25,000. One of the repayments of debt made by the Wife to her family during the relationship was in the sum of $10,000, however the Wife asserted that this was for borrowings undertaken during the relationship, not debt she had prior to cohabitation. The Wife frankly conceded about $14,000 of debt to family that she brought into the relationship that was repaid during the relationship. I accept that evidence and I am not satisfied on the balance of probabilities that the Wife is wrong about the other $10,000 of debt and that it too, was a pre-relationship debt.
Legal costs of dispute with mortgagee
The Wife’s $509,000 figure of assets and debt brought into the relationship does not recognise legal costs relating to the dispute with the mortgagee. It was not disputed that those costs were incurred and paid during the relationship. It is appropriate to have regard to all of the parties’ assets and liabilities that they brought into the relationship and so it is appropriate to have regard and to and include this cost as the equivalent of a debt.
The Property Q: at cohabitation or at trial
The undisputed single expert retrospective valuation put the Property Q at 2011 at $75,000. For my purposes that is reasonably or sufficiently approximate to the date of cohabitation. By final hearing the agreed value of that Property Q was $175,000. Each sought that it be brought in at the value of $175,000, but in different context and for different purposes.
I have broadly accepted the approach of counsel for the Husband, which I find consistent with the broad scope of authority, to take account of the value of the assets and liabilities as they were at the time of cohabitation. In these circumstances it is appropriate to take into account the value of the Property Q at $75,000.
The Husband’s superannuation
As to the value to be placed upon the Husband’s superannuation and leave entitlements, the Husband’s position is that I should regard that as an initial contribution or capital of $1,091,186, including leave entitlements of about $65,000. The uncontested evidence disclosed that what the Husband had brought in was in accordance with the table at paragraph 66 of the Husband’s written closing submissions and I recite that table now;
COMPONENT VALUE COURT BOOK REFERENCE 1 Super Fund 1 entitlements at 30 June 2016: Super Fund 1 Retirement Income Stream Fund $926,355.53 [364] Super Fund 1 Accumulation Fund $1,581.74 [385] TOTAL $927,939.27 2 Investment earnings 1/7/2017- 30/9/2020 $153,978 See above 3 Super Guarantee Contributions, FY 2017-21: $10,033 See above 4 Less amounts withheld and paid to ATO ($30,617) See above 5 Plus tax offsets refunded by ATO (i) $15,782 [276] (ii) $13,978 [277] TOTAL Super Fund 1 CONTRIBUTION $1,091,186[10] [10] Actually $1,091,091.27, but nothing turns on it.
It was not disputed that that the Husband commenced contributing to his superannuation in 1979. Hence, as at the date of cohabitation had been contributing to that superannuation for 33 years. It was not disputed that as at 30 June 2011 (a year before cohabitation), the status of the Husband’s superannuation defined benefit fund was such that the records (H2 page 332) stated;
Your maximum Benefit Multiple of 7.73778 has already been reached.
Your optional maximum multiple to transfer to the Beneficiary Account of 8.40 has already been reached.
Those statements were repeated in the annual benefit statement of the Husband for the financial years ending 2012, 2013, 2014 and 2015. As at 17 June 2016 there was “rolled in” the actual sum of $925,659 to the income stream fund after some minor adjustments and fees as at 30 June 2016 (Exhibit H2, page 363-4).
It is not contested that between cohabitation and when the Husband received his superannuation benefit on retirement that he did not make any capital contributions. His superannuation balance increased from $741,879 at 30 June 2012 to the larger balance as at 30 June 2016. That increase was due to the nature of the fund, the Husband’s 33 years of contribution up to the date of cohabitation, the fund earnings and the application of the Husband’s leave entitlements of $65,000 to his superannuation fund rather than taking it in cash. The Husband’s figure of $1,091,186 includes investment earnings on the superannuation fund from 1 July 2017 until 30 September 2020 of $153,978, plus super guarantee contributions over the same period and less tax withheld and tax offsets. Those post 1 July 2017 contributions total $163,246.73.
In closing, the Wife asserted that I should only take into account such of that superannuation and/or leave entitlements she said the Husband had specifically proved he had applied prior to separation to real estate projects. She said that would be the sum of $609,000, which included a conceded $470,000 directly applied to the back of the B Street, Suburb C property. The Wife’s outline of case (Exhibit W3) had earlier asserted that I should have regard to the business record of the Husband’s superannuation fund of the stated value of the defined benefit as at 30 June 2012, of $741,879. I do not accept as appropriate the approach or concept that lies behind the $609,000 assertion. I do not accept as appropriate the approach or concept that lied behind the previous $741,879 assertion. This is because of the nature of the superannuation assets, the years of cohabitation to it, that the maximum benefit multiple had been reached pre-separation and there was no direct contribution or payment to the superannuation fund during cohabitation.
That net of tax income from the asset brought in must be had regard to as a contribution by the Husband. However, I do not regarded it appropriate to treat that net of tax income from the superannuation after the Husband had accessed it in the same manner as if it were an initial capital contribution. Had the Husband brought in an asset, for example a residential house unencumbered worth $927,939 and that house brought in net of tax income of $163,246, that income would be had regard to. However, on orthodox principles the capital contribution or the initial contribution would be, or should be regarded as $927,939 not $928,000 plus $163,246.
I accept that I must have regard to the nature form and characteristics of the assets that the parties have brought in. Here, a result of many years of contribution, the Husband brought in superannuation that was $927,939 and that earned considerable income thereafter; actually about $163,000 of after-tax income.
Conclusion as to initial and extraneous contributions
Hence, I regard the value that should be attributed to the Husband’s contribution of superannuation that he brought into the relationship as $927,939 (what he actually received on or about 17 June 2016).
The gift from the Husband’s mother: $114,000 or $175,000
It is common ground that the gift from the Husband’s mother should be recognised as a contribution on the Husband’s side in accordance with orthodox Kessey principles. However, the Wife asserts that I should only recognise part of the funds because some were applied to extinguish a debt secured on a motorcar, and another part was applied to the purchase of campervan that was ultimately sold and those proceeds applied to legal fees. The amount applied to legal fees from that source is added back or included in the pool for division by the Husband. The motorcar upon which the debt was extinguished is included in the pool by both parties. When the liability on the Husband’s motorcar was extinguished, I infer from those facts, that the Husband then had equity in the motorcar. The Husband’s approach does not include any equity in the Husband’s motorcar as an initial contribution. In all of those circumstances it is appropriate to include the whole of the $174,450 gift to the Husband by the Husband’s mother as an extraneous contribution by the Husband (see Kessey).
Conclusion as to initial contributions
To summarise all of those findings I now repeat the table of contending positions as to initial contribution but with my findings.
Initial Contributions by wife Finding 1 Equity in original B Street, Suburb C property:
Value at co-habitation: $700,000[11] less mortgage of $261,534[12] leaving equity of:418,358 3 Wife’s CBA savings account …19 18,103 4 Wife’s Motor Vehicle 4 2,000 5 Wife’s credit card debts (6,123) 6 Wife’s debts to her family (14,000) 7 Wife’s Legal costs paid during marriage- M’gee judgment (5,604) 8 Super Fund 3 at co-habitation 33,458 9 Wife’s net initial/extrinsic contribution should be regarded as: 446,192 Initial Contributions by Husband 1 G Street, Suburb H property (unencumbered) 330,000 2 Total Super Fund 1 Superannuation (including payout) received at retirement 2016 927,939[13] 3 Property Q 75,000[14] 4 Savings at cohabitation (the values of items #4-7 were uncontested) 4,026 5 Prior family law property settlement 10,593 6 Jet Ski 8,000 7 Bike 1,800 8 Gift from Respondent’s mother 174,450 Husband’s net initial/extrinsic contribution (excluding Bank debt) should be regarded as: 1,531,808 ALL INITIAL & EXTRANEOUS CONTRIBUTIONS 1,978,000 [11] Agreed value at co-habitation.
[12] $281,642 less $20,108.
[13] As at date of retirement in 2016 but not including income earned subsequent to retirement.
[14] Agreed value at cohabitation $75,000 not as at final hearing agreed at $170,000
Hence, in proportional terms the Wife’s initial contributions are about 22.55% and the Husband’s initial contributions about 77.45% of the parties’ initial and extraneous contributions.
Other contributions
I must now have regard to all of the other contributions of the parties during the relationship and since. During the relationship the parties worked hard on, improved and conserved the assets they brought in. The Wife applied herself as best she could with her skills and the Husband applied himself as best he could with his skills. The application of the Husband’s skills as a tradesman/handyman/owner-builder actually produced a greater dollar result than the application of the Wife’s skills. However, I do not place any weight on that circumstance. Save for the periods of separation, the Wife supported the Husband and undertook more of the homemaking duties for herself and him. Hence, in regard to those indirect contributions I regard the parties of having made a roughly equivalent or equal contribution.
The Husband earned considerably more than the Wife by reason of experience and training in his profession, from cohabitation 2012 until he retired in 2016. However, as a result of my previous findings of each applying themselves to their different tasks, I do not find that there is any basis to regard one as making a greater contribution in this manner than the other.
The superannuation and leave entitlements the Husband brought in after retirement contributed a further $163,000 of income net of tax during the latter part of the marriage and after separation, up until 30 September 2020 or the time of trial commencing. I do not regard this as an initial contribution by the Husband, but it is still a significant contribution and regard must be had to it. I take into account that sum, which I round down to $160,000, as equivalent to about 5% of the total pool.
Taking account of all of the parties contributions over the whole of the relationship and between separation and final hearing, I assess the Wife has having contributed in the proportion of 21% and the Husband is having contributed in the proportion 79%.
Step 3: section 75(2) factors
The Husband was 63 years old at the time of conclusion of final hearing and is now a year older. As a result of the medical episode and surgery, on a sound basis, in April 2021 his doctor recommended that he only work about six hours per day, one day per week, on light consultancy or administrative duties. The Husband had returned to work as a professional by the conclusion of the trial on a very part-time basis of one day per week, and was earning about $533 per week as a result of that work. The Husband would be well advised to no longer work in physical labour as hard as he did during the relationship.
The Husband can expect to receive half of his mother’s estate in the not too distant future that will be in the order of somewhere around about $400-$500,000. That is equivalent to about 15% of the agreed for division asset pool. The Husband’s right to the due administration of his mother’s estate is an asset of his. The Wife must be regarded as having made no contribution to those funds.
At the end of the contribution stage, after this relatively short marriage, the Husband has about four times the assets and/or capital that the Wife has of the pool of $3,039,955.
Neither party has any dependents.
The Wife is 56 years of age and in good health. The Wife is able to earn about $32.50 per hour as a tradesperson and I accept she has significant skill in that occupation. The Wife has had the benefit of the income from the former matrimonial home since separation (rental income including short stay rental). The Wife’s hourly rate is on a contract basis where her clients or customers seek a day or two, or a few hours here and there. There is no evidence that the Wife would be able to earn $32.50 per hour on a 40 or more hour week. The Wife could have, if she chose, obtained work for more hours in the lead up to the final hearing, but I do not accept she would be able to earn $32.50 per hour as a full-time occupation. The Wife has considerable experience, and I find considerable skill, in retail and would be able to obtain employment in that field if she chose.
The Wife is able to support herself and the relatively short marriage has not had any significant impact on the Wife’s earning capacity. The Wife’s earning capacity from employment is, when the Husband’s health is taken into account, less than the Husband’s. Given the Wife’s age and the Husband’s health, the Wife will be able to continue gainful employment for longer than the Husband.
The Wife contended that in all the circumstances that there should be a 5% adjustment on account of section 75(2) factors, but from a different contribution assessment basis. A 5% adjustment creates a 10% disparity between the parties on account of section 75(2) factors. In the circumstances of this marriage, including the Husband’s post separation inheritance and the capital disparity at the end of the cohabitation stage, a disparity on account of section 75(2) factors of about $300,000 would be appropriate or just and equitable. I will make a 5% adjustment on account of section 75(2).
Conclusion: just and equitable: and nuts and bolts.
In all those circumstances, in accordance with section 79 it is just and equitable that the parties’ assets should be divided in the proportions of 26% to the Wife and 74% to the Husband.
The effect of the orders is, assuming a value of the back of B Street, Suburb C property of $1,400,000 as follows. The total pool is $3,039,955. 26% of $3,039,955 is $790,388 and the Wife’s Keep is $57,712. Hence the Wife should end up with assets of a further $732,676 or 52.33% of the value of the former matrimonial home. The Wife brought in assets of about $446,000 and will end up with about $790,000 of assets, or about 1¾ of the dollar value of what she brought in. The Husband brought in about $1,531,000 of assets and will end up with about $2,250,000, or about 1½ times the dollar value of what he brought in, assuming the back of B Street, Suburb C property nets $1,400,000 after selling expenses.
If the Wife is to retain that home at the value agreed at trial, she will have to pay to the Husband a sum calculated as follows;
·The Wife’s total assessment, 26% of $3,039,955 = $790,388
·The Wife’s keep of $57,712 plus the back of B Street, Suburb C property at $1,400,000 would mean the Wife has assets of $1,457,712, against the Wife’s assessment of $790,388
·This leaves an excess or payment to the Husband of $667,324, plus her half of single expert fees paid on her behalf.
The Wife’s evidence was that she could raise by borrowing a total of about $380,000 at the then prevailing interest rates. Her evidence was that her mother may be able to assist her. The loan application that the Wife had made demonstrated that the maximum borrowings of $380,000 was on the basis that the Wife rented out both of the separate dwellings contained within the back of the B Street, Suburb C property and that she would live with her mother. Further, the Wife has outstanding legal fees of about $80,000 that will have to be paid and likely from borrowings if the Wife is to retain the home.
I was sympathetic to the concept of the Wife having the opportunity to retain the home and make a payment to the Husband if that was feasible. If the Wife is able to borrow $380,000, then after payment of outstanding legal fees there is or would be about $300,000 to make a payment to the Husband. The necessary payment will be more than double what the Wife is able to arrange on her evidence on a best case scenario, and that assumes she can live long term rent-free with her mother. Hence I find that it is unrealistic to expect the Wife to make a payment to the Husband in the order of $667,324 and hence the back of B Street, Suburb C property will need to be sold.
The Wife’s assessment of $790,388 (Keep) is $732,676 and as a proportion of the FMH of $1,400,000 (the value of the FMH) is 52.33%. The Wife should receive 52.33% of the net of sale proceeds, less her share of the single expert cost paid by the Husband on her behalf. There is no dispute as to that concept of amount.
Further, there may have been movement in the market on the agreed values from where they were at the conclusion of written submissions in August 2021 to where they are now in October 2022. That gap from August 2021 to October 2022 is through no fault of the parties. Although there is no application to reopen and lead evidence of any change in value, there is the potential in a moving market for injustice to one party or the other of proceeding upon the sale value of the home at this point in time being as it was in August 2021.
However, the primary reason that I will order that the property has to be sold is because on the evidence, it is not realistic to expect the Wife to fund such payment. Were I to do so I would have to consider penalty interest should apply on a default sale.
Hence, I will make orders more or less in the form sought by the Husband but adapted to reflect a 26/74 overall division of the assets of the parties including the collection of those items of his Annexure A of Exhibit W7 that the Wife conceded in cross examination. I find such division to be just and equitable taking into account all of the evidence, all of the parties contributions and the matters relevant to the application of section 75(2).
I certify that the preceding one hundred and thirty-three (133) numbered paragraphs are a true copy of the Reasons for Judgment of Judge O'Shannessy. Associate:
Dated: 24 October 2022
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