Farnham & Farnham
[2022] FedCFamC2F 83
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Farnham & Farnham [2022] FedCFamC2F 83
File number(s): LNC 264 of 2020 Judgment of: JUDGE TURNBULL Date of judgment: 4 February 2022 Catchwords: FAMILY LAW – PROPERTY – Both parties wish to retain the matrimonial home – possibility of selling the former matrimonial home for a greater amount than it is valued in the proceedings – range of possible valuations – addbacks – parties signed a Heads of Agreement – whether court bound by prior agreement of the parties. Legislation: Family Law Act 1975 (Cth), ss.75, 79, 90XT
Duties Act 2001 (Tas), s.56
Cases cited: Lotta & Lotta [2017] FamCA 50
Woodcock & Woodcock [1997] FamCA 5
Hsiao & Fazarri [2019] FamCAFC 37
DW & GT [2005] FamCA 161
Stanford & Stanford [2012] HCA 52; 247 CLR 108
Hsiao & Fazarri [2020] HCA 35
Manifold & Alderton [2021] FamCAFC 61
Blatch v Archer (1774) 98 ER 969
Williams & Williams [2007] FamCA 313
Jabour& Jabour [2019] FamCAFC 78
Wallis & Manning [2017] FamCAFC 14
Beck & Beck (1983) FLC 91-318
Clauson & Clauson (1995) FLC 92-595
Mabb & Mabb [2020] FamCAFC 18
Kowaliw & Kowaliw (1981) FLC 91-092
Phillips & Phillips [2002] FamCA 350
Teal & Teal [2010] FamCAFC 120
Myerthall & Myerthall [1977] FamCA 59
Aleksovski & Aleksovski [1996] FamCA 111
Dovgan & Dovgan [2021] FamCA 306Division: Division 2 Family Law Number of paragraphs: 224 Date of last submission/s: 3 September 2021 Date of hearing: 14 July 2021 Place: Burnie Counsel for the Applicant: Ms R Brown Solicitor for the Applicant: Legal Solutions Barristers & Solicitors Solicitor for the Respondent: Mr M Trezise Solicitor for the Respondent: McVeity Dean Lawyers ORDERS
LNC 264 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS FARNHAM
Applicant
AND: MR FARNHAM
Respondent
ORDER MADE BY:
JUDGE TURNBULL
DATE OF ORDER:
4 FEBRUARY 2022
THE COURT ORDERS THAT:
1.Ms FARNHAM (“the Wife”) and Mr FARNHAM (“the Husband”) will immediately do all acts and things necessary to sell the property situated and known as B Street, Town C in Tasmania and comprised in Certificate of Title Volume … Folio … (“the B Street, Town C property”) and to that end:
a.Both parties will list the B Street, Town C property with D Real Estate for a price not less than $450,000.00;
b.Both parties will follow the reasonable advice of the Real Estate Agent engaged to sell the B Street, Town C property;
c.The Husband will, at his expense, (noting that such expense will be reimbursed to him from the proceeds of sale of the B Street, Town C property), undertake in a timely fashion all reasonable maintenance, repairs and improvements to the presentation of the B Street, Town C property as recommended by D Real Estate and agreed to by the Wife;
d.The Husband will make the B Street, Town C property available for inspection by potential purchasers at times nominated by D Real Estate, including for open homes and private inspections; and
e.The Husband will allow the Wife access to the B Street, Town C property at all reasonable times nominated by the Wife, to inspect the property, provided the Wife provides the Husband with 48 hours written notice;
2.Upon the sale of the B Street, Town C property the following will occur:
a.The solicitors for the Wife will have carriage of the conveyancing on the basis of a two thirds/one third division of the legal fees relating to the conveyance, as between the Wife’s and Husband’s solicitors; and
b.The proceeds from the sale of the B Street, Town C property will be dispersed in the following manner and priority:
i.In payment of the Real Estate Agent’s commission and costs of sale, including legal fees and costs;
ii.To discharge any mortgage registered against the title to the B Street, Town C property;
iii.To repay to the Husband any costs incurred by him, as proved with relevant invoices and bank statements, in accordance with paragraph 1(c) of this order, and
iv.With the balance to be divided as between the Husband and the Wife in accordance with the formula set out at paragraph 8 of this order;
3.Pending the settlement of the sale of the B Street, Town C property, the Husband will make full payment of all instalments of principal and interest (including any arrears), relating to the loan(s) secured by the ANZ Bank mortgage registered against the title to the B Street, Town C property, immediately as they fall due;
4.Pending the settlement of the sale of the B Street, Town C property, the Husband pay as and when they fall due (including any arrears), the rates, water licencing fees, and all electricity bills and house insurance relating to the B Street, Town C property;
5.The Husband retain for his own use and benefit the Kubota excavator, boat trailer and motors, motor bike, ATV and chainsaw which have an agreed value of $21,950.00 and his money at bank of $348.00, his tractor and slasher with a value of $2,100.00 and the proceeds of sale of the cattle he has retained of $3,151.76, combined to have a total value of $27,549.76;
6.The Wife retain for her own use and benefit the Motor Vehicle 1 and chainsaw which have an agreed value of $10,200.00, together with her money at bank of $2,060.83, combined to have a total value of $12,260.83;
7.Within twenty one (21) days of the date of this order, the Husband and Wife do all things and take all necessary and reasonable steps to sell the following jointly owned assets (“the joint assets”):
a.Kubota ride on lawn mower;
b.Tractor and implements;
c.Caravan;
d.Eight Hereford Friesian cows (the parties acknowledging that two of those cows belong to their son, W); and
e.Cattle scales;
8.There be a division of all property of the parties (excluding superannuation) in the proportion 55% of the Wife and 45% to the Husband calculated as follows:-
a.WHERE:
A= the assets retained by the Husband ($27,549.76);
B= the assets retained by the Wife ($12,260.83);
C= the net proceeds of the sale of the B Street, Town C property;
D= the net proceeds from the sale of the joint assets listed in paragraph 7 of this order;
E= funds held in trust by Jonathan Smith Lawyers
ABN 24 861 034 593; and
F= the sum of $33,831.62 (together with any interest accrued) being those funds held in the ANZ bank account;
b.AND A+B+C+D+F = I;
i.the Wife shall receive a sum equal to (I x 55%) – B, being $12,260.83; and
ii.the Husband shall receive a sum equal to (I x 45%) – A, being $27,549.76;
9.Both parties have liberty to apply in relation to any issues that arise relating to the sale of the B Street, Town C property and/or the distribution of monies pursuant to paragraph 8 of this order and/or the sale of the joint assets pursuant to paragraph 7 of this order;
10.Pursuant to s 90XT(1)(a) of the Family Law Act 1975 (Cth) whenever a splittable payment becomes payable in respect of the Husband’s interest in the Super Fund R superannuation fund (member number …) the Applicant Wife shall be entitled to be paid an amount calculated in accordance with pt 6 of the Family Law (Superannuation) Regulations 2001 (Cth) using a base amount, in the sum of $67,242.00 and there will be a corresponding reduction in the entitlement the Husband would have had in the superannuation fund but for this order;
11.Having been accorded procedural fairness, this order binds the trustees of the superannuation fund and will take effect from the operative time which will be seven (7) days after the day on which the trustees are served with a sealed copy of this order;
12.Unless otherwise specified in this order:
a.Each party be solely entitled at the exclusion of the other to all other property and chattels of whatsoever nature and kind in the possession of such party as at the date of order and that for this purpose bank accounts and deemed to be in the possession of the person whose name appears on the bank records thereof, insurance policies are deemed to be in the possession of the person who is named as the worker whose age or working future provides that condition of payment out of such entitlement; and
b.Each party be solely liable for and indemnify the other against the other against any liability encumbering any item of property to which that party is entitled pursuant to this order;
13.The parties indemnify each other as to any outstanding liability encumbering any item of property to which that party is entitled pursuant to this order and in relation to any outstanding debts otherwise owed by them as at the date of this order;
14.The parties undertake all things, do all acts and sign all relevant documentation to give effect to the terms of this order;
15.If either party refuses or neglects to sign or execute any documents, instruments or writing or comply with any part of this order after seven (7) days of being requested to do so by the other party in writing, then the Registrar of the Court be empowered pursuant to s 106A of the Family Law Act 1975 to sign and execute such documents, instruments or writings on behalf of either party as may be necessary to give full force and effect to the terms of this order;
16.This order is binding upon the parties’ heirs, executors and beneficiaries; and
17.All extant property orders be discharged and all extant proceedings be dismissed.
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 Farnham & Farnham has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
Judge Turnbull
INTRODUCTION
Ms Farnham (‘the Wife’) commenced parenting and property proceedings against Mr Farnham (‘the Husband’) in the Federal Circuit Court of Australia on 15 May 2020.
The Wife resides in City F, Tasmania. She is 40 years of age and works in retail.
The Husband resides at Town C, Tasmania. He is 44 years of age and works as a tradesman.
The parties have four children:
·W born in 2004, aged 17 years (‘W’);
·X born in 2006, aged 15 years (‘X’);
·Y born in 2009, aged 13 years (‘Y’); and
·Z born in 2014, aged 8 years (‘Z’).
The parties finalised their parenting dispute by consent on 27 January 2021. Their agreement was formalised by order of his Honour Judge McGuire, as he then was. The consent orders provide that W spend time with each parent as agreed between him and his parents. The consent orders also provide that X, Y and Z spend time with their parents on a week-about basis with changeovers on Sundays. The parties also share Christmas and Easter time with X, Y and Z in alternating years, and share time on birthdays, Mother’s Day and Father’s Day as agreed. The parties have equal shared parental responsibility for all four children.
The property proceedings continued to final hearing on 14 July 2021 in Burnie.
Upon commencing the final hearing Ms Brown, on behalf of the Wife, indicated that the matter should be adjourned part-heard to allow the filing of more valuation evidence. Ms Brown submitted that the Wife’s valuation affidavit from E Valuers should be filed. She further submitted that the parties’ valuers, Mr F and Ms G, should confer pursuant to the orders of 28 May 2021. Mr Trezise, on behalf of the Husband, opposed the adjournment application.
After receiving evidence from the parties, I allowed the adjournment. I did so because the administration of justice required the Court to have before it proper evidence in relation to the parties’ most valuable asset, the property at B Street, Town C (‘the B Street, Town C property’). I further noted that neither party had complied with the order of 28 May 2021 with respect to filing valuation evidence. Lastly, and importantly, the valuers had not yet had an opportunity to meet. As the Husband’s solicitors had been provided with a copy of Ms G’s valuation, it was my view that the matter should adjourn.
The proceedings adjourned until 22 July 2021, at which time the matter adjourned again, part heard, to 30 August 2021.
The matter resumed on 30 August 2021 via telephone conference, at which time the Court received valuation evidence and final submissions. Fortunately, the parties were able to agree upon a value for the B Street, Town C property. The agreed figure, being $450,000.00, was the revised value of Mr F and Ms G following a conference of experts.
The agreed asset pool with agreed figures is contained in Exhibit A, extracted at paragraph 102 of these Reasons.
Ms Brown and Mr Trezise submitted on 30 August 2021 in relation to the ultimate fate of the B Street, Town C property. Both the Wife and the Husband wish to retain the property instead of the same being sold and the proceeds split. Submissions were also received on whether, and if so in what proportion, to add back sale proceeds from six cattle as currently held by the Husband.
Final submissions concluded on 3 September 2021, again via telephone conference.
DOCUMENTS RELIED UPON
The Wife relied upon the following documents:
·Amended Initiating Application filed 24 January 2021;
·Affidavit of Ms Farnham filed 19 January 2021;
·Financial Statement of Ms Farnham filed 19 January 2021; and
·Affidavit of Ms G filed 23 July 2021.
The Husband relied upon the following documents:
·Second Amended Response filed 20 January 2021;
·Amended Response filed 12 January 2021;
·Affidavit of Mr Farnham filed 12 January 2021;
·Financial Statement of Mr Farnham filed 7 July 2020; and
·Affidavit of Mr F filed 21 January 2021.
The parties also jointly rely upon Exhibit A, being an agreed list of assets and liabilities, set out at paragraph 102.
OVERVIEW
The facts of this case indicate a twenty year effort between the parties to work hard and improve the circumstances of themselves and their children. Both parties, either as a couple or as individuals, have evidently come up against some obstacles in this respect. Nonetheless, they generally appear to have applied themselves to the best of their ability.
The parties commenced their married life in 2000 in Town H, and moved in together at this time. Both had lived with their respective parents prior to commencing cohabitation as a married couple.
Immediately following their wedding, the parties opened a joint bank account with ANZ bank.[1] The joint account received each party’s employment income and met their expenses and bills, both individual and shared.[2] The parties applied their joint funds towards their shared life until separation.
[1] Exhibit A, extracted at paragraph 102, item A5.
[2] Affidavit of Ms Farnham, 19 January 2021, [6]; Affidavit of Mr Farnham, 12 January 2021, [7].
At the time of their wedding the parties held some modest property.
In 1998 the Husband had purchased a property at J Street, Town K (‘the J Street, Town K house’). He held the property in his sole name, and it was tenanted until the parties took up occupancy in 2000. The purchase price for that house was $142,000.00. While the Husband’s affidavit states that he paid a $40,000.00 deposit,[3] he conceded during cross-examination that he could not corroborate this figure. This was because Ms Brown enquired as to his parents’ role as his guarantors under the contract of sale. If the Husband had the funds to meet the $40,000.00 deposit, Ms Brown put, he would not have needed a guarantor. The Husband maintained that he would certainly have paid more than $10,000.00 as a deposit. The balance of the purchase price was borrowed.
[3] Affidavit of Mr Farnham, 12 January 2021 (n 2), [5].
In addition to the J Street, Town K house, the Husband owned at the outset of the marriage a Motor Vehicle 2 for which he paid approximately $5,000.00. He also held an interest in superannuation at the time of the wedding. The Wife did not own any real estate at that time, and says that she owned a Motor Vehicle 3 worth $1,500.00, some personal effects, and some superannuation. The Husband notes in his affidavit that both parties had superannuation holdings but ‘it is likely neither of [them] had much’ upon commencing cohabitation.[4]
[4] Ibid [6].
The parties’ first matrimonial home was the J Street, Town K house. They continued to reside there until the Husband sold that property in 2001. During their residence they undertook gardening, painting and other renovations. The parties agree that they both contributed in this respect.[5]
[5] Affidavit of Ms Farnham, 19 January 2021 (n 2), [5(b)]; Affidavit of Mr Farnham, 12 January 2021 (n 2), [7].
The J Street, Town K house was sold for $185,000.00, with the sale proceeds of approximately $73,000.00. These sale proceeds were applied in part to the purchase of a property at L Street, Town H (‘the L Street, Town H house’) for approximately $128,000.00.
The purchase price of the L Street, Town H house was also funded by a mortgage of $50,000.00.[6] The Husband notes in his affidavit that using sale proceeds from his own property decreased the amount that the parties had to borrow, signposting the contention about the weight to be afforded to the J Street, Town K house as a financial contribution.
[6] Affidavit of Ms Farnham, 19 January 2021 (n 2), [7]; Affidavit of Mr Farnham, 12 January 2021 (n 2), [8].
I note that the affidavit material evidences some disagreement about the time at which the parties purchased the L Street, Town H house. The Husband says that, after selling the J Street, Town K house in 2001, the parties rented for about 18 months until they purchased the L Street, Town H house in early 2002.[7] The Wife says that the L Street, Town H house was purchased in about 2003.[8] Given the Husband’s own estimation of 18 months, it is likely that the Wife’s recollection of purchasing the L Street, Town H house in 2003 is more accurate. Further, the Wife confirmed under cross-examination that the parties lived in rental properties for about two years before purchasing the L Street, Town H house. This accounts for the gap in time from May 2001 to, most likely, early 2003.
[7] Affidavit of Mr Farnham, 12 January 2021 (n 2), [8].
[8] Affidavit of Ms Farnham, 19 January 2021 (n 2), [7].
In 2004 the parties welcomed their first child, W, into their developing family. The Wife says that with each child she ceased paid work approximately two weeks before giving birth and returned to the workplace about a month after giving birth.[9]
[9] Ibid [11].
Between 2004 and 2006, the parties lived in a number of places. They moved to City M in 2004 because the Husband had obtained work there. The Wife found casual work soon after the parties relocated. They lived in rental properties in City M until 2006, at which time they purchased a property at Town N, City M (‘the Town N house’). Having sold the L Street, Town H house in 2005, the parties purchased the Town N house with the L Street, Town H sale proceeds and a mortgage.
The parties sold the Town N house in either mid-2009 or early 2011.[10] They saved the proceeds of sale, and for the following four to five years lived in rental properties in Town O and Town P. During this period, the Husband says that the parties lived in a rental property in Town O owned by the Husband’s parents (‘the Town O rental property’) for two to three years at reduced rent.
[10] Ibid [8]; Affidavit of Mr Farnham, 12 January 2021 (n 2), [11].
The rent at the Town O rental property was, according to the Husband, $100.00 per week. The Husband conceded under cross examination that the property required some work and that the power bills were high because the house was difficult to heat. This, in turn, would have reduced any benefit received by the parties by virtue of living there. He also conceded that there was no evidence as to the normal market rent which they otherwise would have had to pay for the Town O rental property. He did not call either of his parents to corroborate his position in this regard.
The Wife’s affidavit omits mention of the rent at the Town O rental property, but she said at trial that the rent was not reduced and as such they did not receive a benefit as the Husband contends. In her account, the Husband’s parents let them an unfinished property somewhat in a state of disrepair. The $100.00 per week was, according to the Wife, the correct amount of rent for that property. The Wife also inferred that the Husband’s parents received a financial benefit from leasing their property to them, in saying that the parties were described as “share farmers” on the lease and had to pay rent in cash.
Both affidavits show vastly different experiences of the period between moving from City M and purchasing the B Street, Town C property. The Wife states that the Husband hated being in City M and would leave her and the children there most weekends, and as such she prompted the move back to the Town Q area.[11] She further recounts that the Husband had to change jobs during this period and was ultimately re-employed in Town H. The Husband says that his parents rented to them at reduced rent to help their finances, as both parties were out of work at some points during this time. He recounts that he took nine months to recover from injuries to (and resulting surgeries upon) both of his shoulders, and that the Wife was also unwell with a then-undiagnosed condition.[12] The Wife has since been diagnosed with a number of conditions and says she requires surgery, and is unsure of how this will affect her prospects of paid employment.
[11] Affidavit of Ms Farnham, 19 January 2021 (n 2), [8].
[12] Affidavit of Mr Farnham, 12 January 2021 (n 2), [12].
The parties’ evidence in relation to events after their relocation from City M and before their purchase of the B Street, Town C property differs greatly. Their evidence nonetheless reveals what must have been a tumultuous and stressful time in their marriage.
A few years after leaving City M (but before they lived at the Town O rental property) the parties purchased a vacant block of land at R Street, Town O (‘the R Street, Town O block’) for $129,000.00. They bought the block outright with the Town N house sale proceeds.
The R Street, Town O block was purchased out of the parties’ shared ambition to build their family home on the land. That dream was not realised. The parties instead ran cattle on the block until it was sold after separation. The remaining proceeds of sale, being $51,000.00, are held on trust by Jonathan Smith Lawyers in Town H and are to be divided according to the determination under s 79 of the Act.
The Husband asserts that the Wife returned to work in late 2018, after being absent from paid employment for a total of 12-18 months in the last three years of their marriage.[13]
[13] Ibid [16]-[17].
In 2015 or September 2018,[14] the parties purchased property at B Street, Town C, Town O (‘the B Street, Town C property’) for about $315,000.00. To do so, the parties drew from their shared savings, took out a mortgage with ANZ Bank and borrowed $100,000.00 from the Husband’s parents confirmed by a loan agreement. The Husband, under cross-examination, was shown the loan agreement for the $100,000.00 from his parents. The agreement terms incorporated, by reference, the commercial interest rate charged by Westpac Bank. The Husband conceded that the interest payable to his parents was the Westpac commercial rate. This ended any contention that the parties, in borrowing from the Husband’s parents, benefitted from a lower interest rate than that available from a commercial lender.
[14] Affidavit of Ms Farnham, 19 January 2021 (n 2), [17(c)]; Affidavit of Mr Farnham, 12 January 2021 (n 2), [14].
The parties secured the $100,000.00 loan from the Husband’s parents with the R Street, Town O block, and repaid the loan in full upon selling that block.[15]
[15] Affidavit of Ms Farnham, 19 January 2021 (n 2), [10]; Affidavit of Mr Farnham, 12 January 2021 (n 2), [14].
The Wife asserts that they purchased the B Street, Town C property in 2015 and, between then and separation, jointly carried out several improvements to that property.[16] The Husband, asserting that the same was purchased in September 2018, makes no mention in his affidavit of the work described by the Wife. Further the Wife asserts that, for the various properties owned by herself and the Husband, they worked and improved upon them in the same fashion as they did for the J Street, Town K house.[17]
[16] Affidavit of Ms Farnham, 19 January 2021 (n 2), [17(c)].
[17] Ibid [17(b)].
Only a short time shy of separation, the parties purchased supplies to renovate the B Street, Town C property. Those supplies consist of new carpet and vinyl flooring planks, neither of which were installed before separation. The carpet is currently stored at the retailer in Town H, and the vinyl planks are stored at the Husband’s parents’ home.
The parties clearly anticipated renovations to the B Street, Town C property prior to separation. In this context, it is possible that some work was undertaken on that property in the manner described by the Wife.
The parties separated on 17 February 2020. They agree that as of separation they ceased using the joint ANZ account to deposit their income and meet their personal expenses.
Both parties initially moved out of the B Street, Town C property upon their separation, but the Husband recommenced living there after ‘several weeks’.[18] The Wife and the children moved into her mother’s home.
[18] Affidavit of Mr Farnham, 12 January 2021 (n 2), [20].
Upon returning to the B Street, Town C property on 12 March 2020, the Husband found the house cleaned out and damaged. He alleges the Wife is responsible for the damage incurred and items of personal property removed.[19] Until the Husband moved back into the house, he says he visited often to feed the animals. He says that he was returning there on 12 March 2020 to gather items as listed by the Wife.
[19] Ibid [19].
In late 2020, the parties seem to have entertained the idea of selling the B Street, Town C property. The Wife says that they received offers of $530,000.00 and later $540,000.00 from D Real Estate. In the Wife’s account, the Husband refused both offers and the purchasers have withdrawn.[20] The Husband says that he wishes to keep the B Street, Town C property, and that he obtained a valuation of the same in November 2020. He refers to the parties’ disagreement as to the value of the house, saying that the real estate agency gave the Wife an ‘unrealistic’ impression of its value.[21] While the parties now agree on a value of $450,000.00 for the purpose of the trial, their disagreement about the property’s worth remains relevant to its ultimate fate. Either the property will be retained by one party, or it will be sold and its proceeds divided between the parties.
[20] Affidavit of Ms Farnham, 19 January 2021 (n 2), [18].
[21] Affidavit of Mr Farnham, 12 January 2021 (n 2), [26].
The Wife further alleges that the Husband, though he remains resident in the B Street, Town C property, does not meet any outgoings except for the power bill. She says that he has ceased paying the mortgage (the repayments for which used to be drawn from their now-frozen ANZ account) and the rates.[22] The Husband conceded that he had not made those payments since he moved back in in March 2020, notwithstanding that his income would have enabled him to do so.
[22] Affidavit of Ms Farnham, 19 January 2021 (n 2), [20].
The Husband also said that he has paid rates, house insurance and water licencing fees from the sale of two cattle in August 2020.[23]
[23] Affidavit of Mr Farnham, 12 January 2021 (n 2), [27].
The Husband agreed that he took items from the B Street, Town C property when he initially left. These items included, among some others, wood that had some value and a tractor. He also agreed that he removed a door from the fridge because, from his point of view, the fridge was too big. He conceded, however, that he may have done this to upset the Wife.
In relation to the purported loan from the Husband’s parents to purchase the Kubota excavator, he confirmed that he brought no evidence to corroborate the loan’s existence. He conceded that he and his brother purchased the digger together.
The Husband explained during examination-in-chief that he sold four head of cattle for which the sale proceeds were $7,150.00. He said that all of the proceeds, save for between $500.00 and $1,000.00, was used to meet necessary expenses associated with B Street, Town C as a farming property. The Wife maintains that the total sale proceeds from the four head of cattle, in the amount of $7,150.00, should be added back to the asset pool for division.
The Husband conceded that two of the cows sold by him in fact belonged to the parties’ eldest son, W. He confirmed that he would give W the proceeds from those two cows after accounting for amounts owed by W to him. The proceeds remain in his control until he decides what to do with them.
On 22 September 2020, the parties signed a Heads of Agreement (“the Heads of Agreement”) providing for the sale of the B Street, Town C property.[24] That document, while only an indication of the parties’ consensus at that time, reveals that they planned to sell the B Street, Town C property to the purchaser offering $535,000.00.[25] The Heads of Agreement also reveal that the sale of the parties’ cattle was to take place with the sale of the B Street, Town C property.[26]
[24] Affidavit of Ms Farnham, 19 January 2021 (n 2), annex A.
[25] Ibid [18] annex A. The Wife’s affidavit sets out that the parties first received an offer of $530,000.00 in October 2020, following the mediation in September 2020 at which they signed the Heads of Agreement.
[26] Ibid annex A, 10.
The terms of the Heads of Agreement largely accord with the terms of the order now sought by the Wife as contained in her case outline.
The Heads of Agreement, summarised for the purposes of these Reasons, provides that:
·the Husband retain for his own use and benefit the Kubota excavator, boat, trailer, motors, motorbike and ATV with a total agreed value of $21,950.00;
·the Wife retain for her own use and benefit the Motor Vehicle 1 with a total agreed value of $10,200.00;
·as soon as practicable the parties sell the Kubota ride-on mower, the tractor and implements, caravan, cows (notwithstanding that 2 belong to W) and the cattle scales;
·the B Street, Town C property be sold for $535,000.00, but if not sold by private treaty within 90 days it be sold at auction;
·the non-superannuation assets, after the sale of B Street, Town C (taking into account the assets retained by each party), be divided on a 57.5/42.5 basis in favour of the Wife;
·the Husband split to the Wife $67,242.00 from his superannuation interest with Super Fund R;
·the parties otherwise retain all assets in their possession; and
·the cows be sold with the B Street, Town C property.
The Husband agreed during cross-examination that he refused to sign the contract for sale in the amount of $540,000.00, which was subject to finance and a building inspection.[27] He agreed that he refused to sign because he wanted to keep his property. Further, he conceded that he telephoned one of the potential purchasers and told them the property was not for sale.
[27] Ibid annex B. The contract for the sale of real estate, as between the parties and two prospective purchasers, provided that the contract price was to be $540,000.00. The sale was to be conditional on finance allowing the purchasers 30 days to obtain the same, and on further inspection conditions as included in the Particulars of Sale and in the annexure thereto. Neither the Particulars of Sale nor the Standard Conditions of Sale were signed by either prospective vendor.
Not long after the $540,000.00 contract for sale fell over, the parties were presented with an unconditional contract offering $460,000.00 for the B Street, Town C property. The Husband again refused to sign.
With respect to the valuation of the B Street, Town C property, the Wife engaged E Valuers to value the property on 9 June 2019. The Husband conceded that his lawyers received a letter dated 3 June 2019 asking that the valuation to take place. He further conceded that the valuation did not occur because neither he nor his mother were at the property to facilitate the valuation. In his account, an emergency prevented him from being near the property at the valuation time. Instead, he was 45 minutes to one hour away. Consequently, the E Valuers valuation was not completed until 18 June 2021. Having organised his own valuation with Company S, the Husband was available to grant his valuer access to the property. The Husband’s valuation report was completed on 19 November 2020.[28]
[28] Affidavit of Mr F, 21 January 2021, 6.
As for the Wife’s current financial circumstances, she works at a general store on a permanent part-time basis (20-25 hours per week) from which she earns $650.00 gross income per week. She maintained employment as a hospitality worker or retail assistant throughout the marriage.
The Wife confirmed during cross-examination that the man to which she referred as her ‘boyfriend’ was not her partner. She did, however, claim that her boyfriend will assist her to purchase the B Street, Town C property. Unfortunately, she did not call her boyfriend as a witness. There is therefore no corroborative evidence that her boyfriend is prepared, or in fact willing, to assist her in financing a loan to acquire the Husband’s interest in that property. The Wife simply stated that she was confident he would do so, on the understanding that he would be repaid upon the sale of the B Street, Town C property.
As for the Husband’s current financial circumstances, he conceded that he works full-time earning $1,000.00 per week. He also has a car which incurs fuel costs, and telephone costs. He pays the Wife $263.83 per fortnight in child support, though the Wife says that he does not contribute to any of their children’s other expenses.[29]
[29] Affidavit of Ms Farnham, 19 January 2021 (n 2), [19].
Both parties clearly contributed a great deal to their nearly 20-year marriage. Both have detailed their own and each other’s health issues which, at times, prevented them from maintaining paid employment.
As for the parties’ parenting arrangements, the orders dated 27 January 2021 remain in force. W has remained primarily resident in his mother’s home and, pursuant to the orders, can spend time with his father as he wishes. X, Y and Z are to spend week-about time with their father, and have done so since a few months following separation.
X is 15 years of age. The Wife said she is doing all she can to restore the shared time arrangement that has been ordered. There was no suggestion that the Wife was pressuring X not to see her father.
The Wife maintained under cross-examination that she wanted to retain the B Street, Town C property. She did not agree that the Husband or the children had any particular attachment to that property. She indicated that the parties had only owned the property for a few years.
The Wife said that if the B Street, Town C property is transferred to her, she will spend money improving it. The property has become run down since separation, but the Wife intends to sell it after completing renovations. She believes that the property will achieve a far greater price than the agreed valuation.
If the B Street, Town C property is to be transferred to the Husband, he explained during examination-in-chief that it would allow him to retain a farming property which is close to the children’s school and his work. Further, he said that the property is also close to his mother’s home, who has an ongoing caring role for the children. Under cross-examination, however, he conceded that he had no long-term or family attachment to the property and that at least one other farming property was for sale in the area.
Both parties advanced alternative arguments that if the order does not have them retain the B Street, Town C property it should be sold.
TERMS OF ORDER SOUGHT
With respect to the B Street, Town C property, the Wife’s proposal at trial diverged from her case outline. Instead of seeking that it be sold with the proceeds to be distributed between herself and the Husband, the Wife sought to retain the B Street, Town C property. Ms Brown explained that the Wife wants the B Street, Town C property transferred to her, and wants to assume responsibility for the ANZ Bank mortgage. The Wife’s position is that, in retaining the B Street, Town C property, she will pay to the Husband the cash sum to which he is entitled pursuant to this Court’s ultimate determination.
The Wife’s proposal otherwise remained consistent with her case outline. Her proposal incorporates her alternate position of selling the B Street, Town C property if it is not transferred to her. Her proposal is that:
3.the Husband retains for his own use and benefit the Kubota excavator, boat trailer an motors, motor bike, ATV and chainsaw which have an agreed value of $21,950;
4.the Wife retain for her own use and benefit the Motor Vehicle 1 motor vehicle an chainsaw which have an agreed value of $10,200;
5.as soon as practicable the Husband and Wife take all necessary and reasonable steps to sell the following jointly owned assets:
(a) Kubota ride on lawn mower;
(b) Tractor and implements;
(c) Caravan;
(d)Eight Hereford Friesian cows (the parties acknowledging that two of those cows belong to their son, W); and
(e) Cattle scales;
6.there be a division of all property (excluding superannuation) in the proportion 57.5% of the Wife and 42.5% to the Husband calculated as follows:-
WHERE A= the assets retained by the Husband ($21,950)
B= the assets retained by the Wife ($10,200)
C= the net proceeds of the sale of the matrimonial home
D= the net proceeds from the sale of the assets referred to in order 5
E= funds held in trust by Jonathan Smith lawyers
F= the sum of $39,482 which includes those funds held in the ANZ bank account
G= the sum of $3,151.76 being the sale proceeds of two cattle
AND A+B+C+D+F+G=I
(a) the Wife shall receive a sum equal to I x 57.5%-$10,200
(b) the Husband shall receive a sum equal to I x 42.5% -$21,950
7. there be a split of the Husband's interest in his Super Fund R in the sum of $67,242 in favour of the Wife;
8. unless otherwise specified in these Orders:
(a) Each party be solely entitled at the exclusion of the other to all other property and chattels of whatsoever nature and kind in the possession of such party as at the date of Order and that for this purpose bank accounts and deemed to be in the possession of the person whose name appears on the bank records thereof, insurance policies are deemed to be in the possession of the person who is named as the worker whose age or working future provides that condition of payment out of such entitlement.
(b) Each party be solely liable for and indemnify the other against the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders; and
9. each party have liberty to apply on 3 days' notice as to the implementation of these Orders.
The Husband sought an order in the terms of his case outline, being that:
1. Within 42 days of the date of these orders the Applicant Wife will transfer to the Respondent Husband all her right, title and interest in and to the former matrimonial home situate at B Street, Town C, in Tasmania and comprised in Certificate of Title Volume …Folio ….
2. Prior to the transfer pursuant to order 1 of these Orders the Respondent Husband will do all things necessary to effect the registration of a discharge of the parties’ existing mortgage to the ANZ Bank (mortgage number …) or a discharge of the Applicant Wife’s personal responsibility pursuant to that mortgage.
3. Contemporaneously with the transfer pursuant to paragraph 1 above the Respondent Husband will pay to the Applicant Wife the sum of $87,944.
4. The Applicant Wife will retain the entirety of the proceeds of sale presently held in the Trust Account of Jonathan Smith Lawyers and the parties’ joint ANZ Bank account (account number …37).
5. The parties will do all things reasonably necessary so as to sell the Kubota rideon mower and Caravan with net proceeds of sale to be divided equally between the parties.
6. Pursuant to section 90XT(1)(a) Family Law Act 1975, whenever a splittable payment becomes payable in respect of the Respondent Husband’s interest in the Super Fund R (member number …90) the Applicant Wife shall be entitled to be paid an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001, using a base amount, in the sum of $67,242.00 and there will be a corresponding reduction in the entitlement the Respondent Husband would have had in the superannuation fund but for this order.
7. Having been accorded procedural fairness, this order binds the trustees of the superannuation fund and will take effect from the operative time which will be seven days after the day on which the trustees are served with a sealed copy of this order.
8. Each party will otherwise retain the assets and financial resources in their respective possession or control and will remain solely liable for their respective debts.
ISSUES
Issues agreed
During the trial the parties tendered a balance sheet (Exhibit A) setting out the property and liabilities of the parties and the values and amounts that were agreed and not agreed. Exhibit A is extracted at paragraph 102 of these Reasons.
As foreshadowed earlier, the parties agreed a value of $450,000.00 for the B Street, Town C property. That value is included in Exhibit A.
The parties also agree upon the sale of various items of property as set out in Exhibit A, extracted as follows:
“Items to be sold and proceeds of sale to be divided as the Court determines:-
Cattle (6 remaining — 2 belonging to son [W] and 4 belonging to the parties)
Cattle scales
Kubota ride-on mower
Caravan”
Exhibit A further provides that the Husband retain the tractor and slasher, at a value of $2,100.00.
Finally, the parties agree that a sum of $67,242.00 of the Husband’s superannuation holding should be split to the Wife’s Super Fund T superannuation holding pursuant to s 90XT of the Act.[30]
[30] Wife’s Case Outline, 24 January 2021, 2, included at [7] of the proposed terms of order; Husband’s Case Outline, 22 January 2021, 2, included at [6] of the proposed terms of order.
Issues for determination
The parties disagree as to whether the proceeds of sale of 4 cattle, in the sum of $7,150.00, should form part of the property pool for distribution. The Wife wishes to include the entire amount, but the Husband wishes only to include a proportion of that amount.
There are also some facts upon which the parties disagree which flow into this Court’s assessment under s 79 of the Act. This Court cannot arrive at a just and equitable property adjustment order (if making such an order is appropriate) by relying upon disputed accounts of relevant facts. As such, I must determine the following issues of fact:
·the extent of the equity in the property at J Street, Town K at the time of cohabitation, given the Husband has not corroborated the value he prescribes as set out in his affidavit with bank statements or mortgage statements;
·the degree to which the parties contributed to works undertaken on all of their properties, not just the J Street, Town K house and the B Street, Town C property;
·whether the parties received reduced rent at the Town O rental property and obtained a benefit from the Husband’s parents; and
·whether each party has the financial capacity to take up the mortgage and pay out the other party for their interest in the B Street, Town C property.
With respect to a property adjustment order under s 79 of the Act, the following main issues arise:
·whether this Court is bound, or at a minimum should give consideration to, the Heads of Agreement.
·whether, and if so in what percentages, there should be a property adjustment order under s 79; and
·whether the B Street, Town C property should be retained by the Husband or the Wife, or alternatively whether the same should be sold and the proceeds divided in appropriate proportions between the parties.
EVIDENCE
The Wife gave evidence largely in accordance with her affidavit. She gave her evidence directly and, at times, against interest when pressed under cross-examination by Mr Tresize. I generally accept her evidence.
The Husband also gave evidence and was cross-examined by Ms Brown.
The Husband generally answered questions put to him under cross-examination directly. He also made a number of concessions. Against interest he admitted that he intended to drag the proceedings out, with his aim being for the Wife to get ‘nothing’. He admitted that he told the Wife of his intention in this respect. Further, he conceded that he reneged on the Heads of Agreement. He presented as a man committed to retaining his home, even if to do so meant refusing an offer to sell the property for nearly $100,000.00 more than its agreed market value.
I was concerned about the Husband’s conduct with respect to the Wife’s attempt to value the B Street, Town C property. The Wife contends that the Husband did not do all that he could to facilitate the valuation scheduled for 9 June 2021, notwithstanding that his lawyer received notice to arrange that time. I accept the Wife’s position in this respect.
The Husband’s conduct has clearly impacted these proceedings — the Wife did not file her valuation evidence, and his own valuation evidence was received late. Further, Mr F and Ms G were unavailable to provide evidence at the scheduled trial date and were unable to confer for the purposes of reporting to the Court as ordered.
The Wife is not blameless in not filing her valuation evidence, as the inspection took place in June 2021 and the trial was listed for 12 July 2021. While no evidence was put to the Court during this window of time, the Husband conceded that his solicitors received a copy of the valuation notwithstanding that it was not filed with an affidavit.
The Husband’s behaviour during the litigation, and in particular in relation to selling the B Street, Town C property, has created distrust. The Wife firmly believes that if the Husband retains the B Street, Town C property he will gain a financial advantage at her expense. In light of his poor conduct during these proceedings, I am suspicious of his motivations for keeping the B Street, Town C property. He claims he wishes to retain it because of some attachment to it as a farming property and as a convenient location. It is more likely, however, that he is motivated by a belief that the property is worth more than the figure agreed between the valuers and adopted by the parties in Exhibit A.
PROPERTY SETTLEMENT — PRINCIPLES
Foster J in Lotta & Lotta [2017] FamCA 50 explains the considerations to which a Court must direct itself in assessing the justice and equity of an order, and the process by which a Court undertakes the inquiry:
“281.The approach to the determination of an application under s 79 of the Act is set out in Stanford v Stanford [2012] HCA 52 and further considered by the Full Court in Bevan & Bevan [2014] FamCAFC 19, Chapman & Chapman [2014] FamCAFC 91 and Scott & Danton [2014] FamCAFC 203.
282.The Court must identify the existing legal and equitable interests of the parties in the property, the liabilities and financial resources of the parties at the time of the hearing and then whether it is just and equitable to make a property settlement order.
283.Such a consideration should not be guided by an assumption that the parties’ rights to or interests in property are or should be different from those that then exist. The question is whether those rights and interests should be altered.
284.There is no presumption that one or other party has the right to have the property of the parties divided between them or a right to an interest in marital property that is fixed by reference to the various matters in s 79(4). The Court needs to conclude that it would be unjust or unfair to leave property rights intact under s 79(2) of the Act.
285.In many cases this requirement is readily satisfied where the parties are no longer in a marital or de facto relationship and, thus, for example, the common ownership or use of property by Husband and Wife will no longer be possible or the express or implicit assumptions that underpinned existing property arrangements such as the accumulation of assets or financial resources by one for the benefit of both have been brought to an end with the relationship.
286.In particular, such a circumstance arises where both parties seek property adjustment orders but are unable to agree as to same. Here the Wife seeks an order for adjustment of property and the Husband contends that there should be no such adjustment.
287.It is thus important to ascertain the present property and resources of the parties so as to facilitate a consideration of the s 79(2) question.
288.In some circumstances it is not possible to determine whether it is just and equitable to make adjustment orders as to the parties present property rights without a consideration of s 79 (4) matters.
289.Section 79(4) requires a consideration of the contributions made by the parties as defined in s 79(4)(a) to (c). The Court must then consider s 79(4)(d) to (g) in particular the subjective considerations as to the parties by having regard to the provisions of s 75(2) in so far as they are relevant (s 79(4)(e)).
290.The Court can then consider the “justice and equity” of the actual orders to be made: Russell & Russell [1999] FamCA 1875; (1999) FLC 92-877; Teal & Teal [2010] FamCAFC 120, in the context of the Court’s obligation to make “appropriate orders” as provided for in s 79(1) of the Act.” [31]
[31] Lotta & Lotta [2017] FamCA 50, [281]-[290].
Section 79(4) of the Act states that in considering what order (if any) should be made pursuant to s 79(1), this Court should 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; 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 79(4)(e) requires this Court to consider the factors set out at s 75(2), as far as they are relevant to altering the parties’ proprietary interests. The matters to be taken into account under s 75(2), extracted in full, 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) a 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
(naa)the terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to:
(i)a party to the marriage; or
(ii)a person who is a party to a de facto relationship with a party to the marriage; or
(iii)the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv)vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(na)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; 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
(p)the terms of any financial agreement that is binding on the parties to the marriage; and
(q)the terms of any Part VIIIAB financial agreement that is binding on a party to the marriage.”
PRELIMINARY ISSUE 1 — HEADS OF AGREEMENT
The Wife argues that, at least in the alternative to an order that she retain the B Street, Town C property, I should make an order in accordance with the Heads of Agreement.
An agreement which purports to alter parties’ property interests, unless formalised by court order or through s 90G of the Act,[32] is vulnerable. This is true even of uncontentious agreements. The Full Court in Woodcock & Woodcock [1997] FamCA 5 concluded:
“[i]t may be that the ability of a court to take into account the terms of an unapproved agreement creates in the words of Hoffman LJ “the worst of both worlds” as it would be impossible to predict from case to case, exactly what weight ought to be given to the agreement. … However it is the dominant and unwavering thread of all the cases that the parties cannot by their conduct or agreement oust the jurisdiction of the court.”[33]
[32] Family Law Act 1975 (Cth), s 90G.
[33] Woodcock & Woodcock (1997) FLC 92-739, 83,968 (Murray, Baker and Kay JJ).
The Full Court confirmed as much in Hsiao & Fazarri [2019] FamCAFC 37,[34] extracting the following from DW & GT [2005] FamCA 161:
“Where parties enter into an agreement concerning property... the Court must determine the application on its merits having regard to the factors as set out in s 79(4) as they exist at the time of the hearing. There is no threshold test, before embarking upon the s 79 exercise, to determine whether the earlier agreement was just and equitable at the time it was made according to the facts as they then existed and the law then in force. The earlier agreement should be considered (as an indication of what the parties may have regarded as just and equitable at the time), but its provisions only given effect if they coincide with an order which is just and equitable according to s 79 at the time of the hearing.”[35]
[34] Hsiao & Fazarri [2019] FamCAFC 37, [82]-[84] (Strickland, Kent & Watts JJ).
[35] DW & GT [2005] FamCA 161, [39] (Finn, May and O’Reilly JJ).
In the context of prior agreements between parties, the Court in DW & GT also said the following about identifying property interests:
“However, and perhaps more significantly, it would generally be necessary for the Court to acquaint itself with changes in the composition and value of the property pool, so that post-separation contributions can be assessed.”[36]
[36] Ibid [40]-[41].
An agreement which in fact alters the parties’ property interests is, of course, relevant to identifying their existing legal and equitable interests as required by Stanford & Stanford [2012] HCA 52; 247 CLR 108 (‘Stanford’).[37] A party may enter a new employment contract with a higher salary, or sell personal or real property. Those agreements form the backdrop for the parties’ current property interests, and aid the Court to ‘acquaint itself with changes in the composition and value of the property pool’.[38] Agreements of this nature are used like a historical source, and do not enshrine the parties’ own ambitions of what their property interests should be under a settlement.
[37] Stanford & Stanford (2012) 247 CLR 108, [37] (French CJ, Hayne, Kiefel and Bell JJ).
[38] DW & GT (n 35), [40]-[41].
Courts exercising jurisdiction under s 79 of the Act may, in some circumstances, accommodate ‘stated or unstated assumptions and agreements about property interests during the continuance of the marriage’.[39] Of course, separation typically brings to an end any explicit or implied understandings between the parties as to the arrangement of their property interests. Parties in togetherness rarely create agreements or assumptions suitable for their post-separation circumstances. It may be that it will not be just and equitable to make a property alteration order, and that an agreement which survives separation may remain in place in line with Stanford.[40] The Heads of Agreement, made after separation, cannot represent the married parties’ consensus as to their property arrangements explicitly in anticipation of separation.
[39] Stanford & Stanford (n 37), [41].
[40] Hsiao & Fazarri [2020] HCA 35, [50] (Kiefel CJ, Bell and Keane JJ). This case is relevant to cite due to their Honours’ remarks that, though no submissions were put to this effect, it may have been open to the primary judge to find that it was not just and equitable to adjust the parties’ existing property interests. The case involved a Deed of Gift executed by the appellant prior to the marriage which expressly anticipated the parties’ separation. In the Stanford context, it is possible that their express or implicit understandings as to their property interests had not come to an end upon separation.
The Heads of Agreement do not constitute an agreement in the sense discussed in Stanford and expanded upon in Hsiao & Fazarri [2020] HCA 35, nor is it an agreement as formalised by a court order or s 90G of the Act. As such, it is not a document to which I must have reference when determining whether the s 79 discretion should be exercised.
Section 79 provides to this Court a ‘classical judicial discretion, where no one consideration, and no combination of considerations, is necessarily determinative of a result’.[41] The assessment of justice and equity is an overarching and continuing process, in which I may have regard to the principles in the Act itself and other relevant matters in the circumstances.
[41] Bevan & Bevan [2014] FamCAFC 19, [45] (Bryant CJ and Thackray J).
That being said the facts which so often accompany a disputed agreement, and which would otherwise give rise to equitable estoppel, may aid this Court’s assessment of whether it is appropriate to make an order under s 79.[42] This Court may make an order in cognizance of an agreement by which it is not bound, but it cannot craft an order in that agreement’s shadow.
[42] Woodcock & Woodcock (n 33), 83,968.
I am not bound by the Heads of Agreement in assessing whether an order should be made, or in drafting the contents of an order. I will determine these proceedings following the legislative pathway outlined above. In following the legislative pathway, however, some of the agreements between the parties will be relevant. In particular, the parties agreed to sell the B Street, Town C property, and I will take into account that they were for a period of time agreed on that course of action at an agreed price.
PRELIMINARY ISSUE 2 — THE ASSET POOL
Exhibit A was tendered at the commencement of proceedings. That document sets out a largely agreed list of assets and liabilities. The parties at that time disagreed as to the value of the B Street, Town C property and about whether the cattle sale proceeds should be included in the property pool for distribution.
Fortunately, by 30 August 2021 the parties agreed upon a value for the B Street, Town C property in the amount of $450,000.00. The agreed value is reflected in Exhibit A, updated and extracted at paragraph 102.
The parties remain disagreed on whether the sale proceeds from four cattle (as expended by the Husband) should be included in the property pool. Those sale proceeds amounted to a total sum of $7,150.00.
Exhibit A contains the items agreed and disputed and is extracted below. The table has been edited from its original appearance to add item numbers on the left side.
ASSETS A1 House 450,000.00 A2 Chattels in Wife’s possession 10,200.00 A3 Chattels in Husband’s possession 21,950.00 A4 Funds held in trust by Jonathan Smith 51,000.00 To be divided between parties as determined by the Court A5 Joint ANZ Bank Account 33,831.62 To be divided between parties as determined by the Court A6 Wife’s Savings Account 2,060.83 A7 Husband’s Savings Account 348.00 A8 Proceeds of sale of 4 cattle 7,150.00 Inclusion disputed and to be determined by the Court A9 Tractor & slasher 2,100.00 Husband to retain TOTAL ASSETS $578,640.45 LIABILITIES L1 Mortgage over B Street, Town C, 122,726.08 TOTAL LIABILITIES $122,726.08 NET POOL $455,914.37 SUPERANNUATION S1 Wife’s superannuation 40,185.14 As at July 2021 S2 Husband’s superannuation 174,237.00 As at July 2021 TOTAL SUPERANNUATION $214,422.14
Exhibit A also notes that, outside the stated asset pool, the parties will sell the remaining cattle, cattle scales, Kubota ride-on mower, and the caravan. These items of property will be subject to separate paragraphs in the ultimate order, and any sale proceeds will be divided according to each party’s adjusted property interests, as I determine, pursuant to s 79.
Should the asset pool include the proceeds of sale from the four cattle as already spent by the Husband?
As foreshadowed earlier, in considering what order (if any) this Court will make under s 79 of the Act, I must apply the process identified by the High Court in Stanford. This Court must first identify:
‘according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property.’[43]
[43]Stanford & Stanford (n 37), [37] (French CJ, Hayne, Kiefel and Bell JJ).
Only after ascertaining the parties’ property and their interests therein can this Court, in its principled discretion under s 79, order that their existing interests should be adjusted by reference to their contributions and other factors under s 79(4)(d)-(g).[44]
[44] Ibid [40].
This Court must first ‘make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing’.[45] The Court is not necessarily bound to do so at the date of the hearing, and may establish the value of items of property at times which best serve the interests of justice.[46]
[45] Hickey & Hickey & Attorney-General for the Commonwealth of Australia [2003] FamCA 395, [39] (Nicholson CJ, Ellis and O’Ryan JJ).
[46] Foley & Foley [2019] FamCAFC 61, [32] (Alstergren CJ, Watts and Austin JJ).
Austin J as part of the Full Court in Manifold & Alderton [2021] FamCAFC 61 remarked recently upon this step in the process, noting that it is fundamental to the entire assessment under s 79 (emphasis added):
“124. It is, of course, impossible to discern whether the outcome was indeed just and equitable, which enquiry the Act demands be made and answered affirmatively, without any findings at all being made as to the identity and value of the parties’ property interests, the parties’ respective overall contributions, and what, if any, adjustment was justified by reference to future circumstances. The decision was made in error, since it lacked any proper factual or legal foundation.”[47]
[47] Manifold & Alderton [2021] FamCAFC 61, [124].
The evidence indicates that the cattle sale proceeds were used to meet the necessary costs of running the farm at B Street, Town C, including removing thistles. The Husband explained that, of the total sale proceeds, between $500.00 to $1,000.00 remains. His position in this respect was not particularly challenged during cross-examination.
This is not a case in which post-separation expenditure of shared property has been reckless or wanton — the sale proceeds were spent as necessary to maintain the farm. The evidence was, however, slightly unclear as to the exact amount left owing after meeting the reasonable costs of doing so.
During final submissions, Mr Trezise submitted that the addback for the sale proceeds of the cattle should be $3,151.76. This is because the Husband, during his evidence, conceded that he had sold two further cows for which the sale proceeds were not included in the trial materials. Mr Trezise and Ms Brown agreed that the further two cows sold for about $2,000.00. Since Mr Trezise estimated that approximately $1,000.00 remains from the earlier cattle sale proceeds, he combined the two sums to arrive at the figure of $3,151.76. Given the Husband’s concession, I determine that it is appropriate to add back that figure for distribution.
The property pool for the purposes of the s 79 determination, taking into account the addback, is extracted below.
ASSETS A1 B Street, Town C 450,000.00 A2 Chattels in Wife’s possession 10,200.00 A3 Chattels in Husband’s possession 21,950.00 A4 Funds held in Trust by Jonathan Smith 51,000.00 A5 Joint ANZ Bank Account 33,831.62 A6 Wife’s savings account 2,060.83 A7 Husband’s savings account 348.00 A8 Sale proceeds from 6 cattle 3,151.76 A9 Husband’s Tractor and Slasher 2,100.00 TOTAL ASSETS = $574,642.21 LIABILITIES L1 Mortgage over B Street, Town C, 122,726.08 TOTAL LIABILITIES = $122,726.08 TOTAL NET NON-SUPERANNUATION PROPERTY = $451,916.13 SUPERANNUATION S1 Wife’s superannuation 40,185.14 S2 Husband’s superannuation 174,237.00 TOTAL SUPERANNUATION = $214,422.14 TOTAL NET PROPERTY = $666,338.27 PROPERTY ADJUSTMENT PURSUANT TO S 79
By reference to the parties’ existing property interests, is it just and equitable to adjust their interests through an order pursuant to s 79?
There is little doubt that it is just and equitable to adjust the parties’ property interests through an order pursuant to s 79 of the Act, and neither party submitted otherwise.
The High Court in Stanford insists that interference with legal and equitable interests of parties must adhere to principled reason.[48] The principles to which this Court may have reference include, but are not limited to, ‘those principles which the Act itself lays down’.[49] Justice and equity, with respect to property settlement, does not admit to an exhaustive definition and it is ‘not possible to chart its metes and bounds’.[50]
[48] Stanford & Stanford (2012) 247 CLR 108, [41].
[49] Ibid, citing R v Watson; Ex parte Armstrong (1976) 136 CLR 248, 257.
[50] Stanford & Stanford (n 48), [36].
The principles contained within the Act also accommodate ‘stated or unstated assumptions and agreements about property interests during the continuance of the marriage’.[51] It is just and equitable, according to Stanford, for a Court to make a property settlement order if such agreements or assumptions with respect to marital property interests during the marriage have been brought to an end, which usually occurs with the end of the marriage.
[51] Ibid [41].
The parties no longer live together in a marital relationship.[52] They have jointly owned property, and the express and implied agreements and assumptions as to how they would hold property have come to an end. Neither party wishes for their property to be retained jointly, but both wish to retain the B Street, Town C property individually. Alternatively, the property will need to be sold.
[52] Stanford & Stanford (n 37), [42]. The Court discussed the uncontentious situation in which making an order would be just and equitable, whereby the parties cease living together as spouses. Thus, they no longer have common use of property and they no longer arrange their shared life according to the explicit or implied understandings that existed during their relationship. See: Hsiao & Fazarri (n 40).
In these circumstances I find that it is just an equitable to make a property order.
Section 79(4)(a)-(c) — contributions
Section 79(4)(a) — direct financial contributions
Both parties largely conceded that their contributions, financial and non-financial, were equal. This was, for both parties, save for this Court’s determination as to the impact of the Husband introducing the J Street, Town K house at the start of the relationship. From the Husband’s point of view, he also conceded that the parties’ contributions were equal save for the benefit to the parties from renting the Town O rental property and the low interest loan from his parents. The Husband seeks a 5% adjustment in his favour as a result of these two factors.
As outlined in the facts, the Husband owned the J Street, Town K house before the parties married. The Husband’s affidavit states that he purchased the property for $142,000.00, with a $100,000.00 mortgage and a $40,000.00 deposit. He did concede that there was no corroborative evidence for this and, it being noted that his parents acted as guarantors, he further conceded that he paid less than $40,000.00 as a deposit.
In light of the Husband’s concession as to the J Street, Town K house, I find that he had minimal equity in that property at the commencement of the relationship. He had, perhaps, $10,000.00 in equity as he stated. It is clear that upon its sale approximately a year later that property provided $78,000.00 towards the purchase of the L Street, Town H house.[53]
[53] Affidavit of Mr Farnham, 12 January 2021 (n 2), [8]. I note that the Husband described the J Street, Town K house as an ‘investment property’. It is unknown whether he paid capital gains tax as a result of selling that property. Ms Brown led no evidence in relation to this issue.
The Husband further conceded that the Wife’s work on the J Street, Town K house enhanced its value.[54] I find that the Wife contributed to that property in the manner described by her, at a time post-cohabitation and after its sale, ultimately aiding its increase in value. This being the case, the monies flowing from the J Street, Town K house into the L Street, Town H house cannot be considered the result of a contribution made solely by the Husband.
[54] Affidavit of Ms Farnham, 19 January 2021 (n 2), [5(b)]. The Wife describes the work undertaken at the J Street, Town K house as being undertaken by herself and the Husband together.
The parties did not bring a great deal of other valuable assets into the relationship.
Also outlined in the facts of this case was the Husband’s contention that the parties benefitted from reduced rent at the Town O rental property, owned by his parents. He contends that they lived there for less than market rent, at $100.00 per week, for two to three years. In his view, this should be regarded as a contribution made by him to the marriage, though he conceded that none of his evidence established the actual market rent which would have otherwise been payable at the relevant time. He did not call either of his parents as witnesses to corroborate that they charged the parties reduced rent at their property.
I am entitled to infer that the Husband’s parents’ evidence would not have assisted his case on this issue. In the words of Lord Mansfield in Blatch v Archer (1774) 98 ER 969:
“all evidence is to be weighed according to the poof which it was in the power of one side to have produced, and in the power of the other side to have contradicted.”[55]
[55] Blatch v Archer (1774) 98 ER 969, 970.
As a ‘particular application’ of this rule, this Court:
“can be confident about drawing inferences against a party who has chosen not to give evidence [if] it was within the power of the party to produce evidence on that matter.”[56]
[56] Australian Securities and Investments Commission v Rich [2009] NSWSC 1229, [439] (Austin J). See also Jones v Dunkel (1959) 101 CLR 298, 308 (Kitto J) which, with respect to the trial directions forming the basis of appeal, states that ‘what should have been added, and not being added was in the circumstances as good as denied, was that any inference favourable to the plaintiff for which there was ground in the evidence might be more confidently drawn when a person presumably able to put the true complexion on the facts relied on as the ground for the inference has not been called as a witness by the defendant and the evidence provides no sufficient explanation of his absence’.
The Wife’s position is that $100.00 per week was the market rent for the property. She further said, and the Husband partially agreed, that the property was in an unfinished state and was expensive to heat. The Wife also said that the Husband’s parents benefitted from this arrangement as well — the parties were regarded as ‘share farmers’ and paid rent in cash.
The evidence is insufficient to determine that the parties paid less than market rent while they lived at the Town O rental property. The evidence is also insufficient to determine whether the arrangement otherwise advantaged the Husband’s parents at their request. I do not, therefore, find that the Town O rental property should be regarded as a benefit received from the Husband’s parents and as such a contribution by the Husband to the marriage.
The Husband conceded that, post separation, he has not made any mortgage repayments despite having the income to service these repayments. Instead, the mortgage was paid from a joint account which was otherwise frozen.[57] I note here that the Wife has paid rent following separation, while the Husband has remained resident in the B Street, Town C property since March 2020.
[57] Affidavit of Ms Farnham, 19 January 2021 (n 2), [20].
The evidence did not set out the actual financial impact upon the Wife in this respect. The reality is, however, that the Husband relied on the joint account to make mortgage repayments for a property in which the parties no longer jointly lived. He also used the proceeds of sale of cattle to meet other outgoings. I can therefore infer that, for over a year and a half, the Husband financially benefitted at the Wife’s expense. This is an indirect post-cohabitation contribution of the Wife.[58]
[58] Carron & Laniga [2019] FamCAFC 115, [47] (Aldridge, Kent and Austin JJ).
As for the J Street, Town K house, Mr Trezise also submitted that it ‘seeded’ subsequent property purchases. It appears, from the chronology, that the parties typically applied the sale proceeds of past properties to the acquisition of new properties. The Husband’s position is that the J Street, Town K house kick-started that process and, as such, his contribution of the same should be afforded significant weight.
This submission emanates from the decision in Williams & Williams [2007] FamCA 313, in which the Full Court said:
“26. We think that there is force in the proposition that a reference to the value of an item as at the date of the commencement of cohabitation without reference to its value to the parties at the time it was realised or its value to the parties at the time of trial, if still intact, may not give adequate recognition to the importance of its contribution to the pool of assets ultimately available for distribution towards the parties. Thus where the pool of assets available for distribution between the parties consists of say an investment portfolio or a block of land or a painting that has risen significantly in value as a result of market forces, it is appropriate to give recognition to its value at the time of hearing or the time it was realised rather than simply pay attention to its initial value at the time of commencement of cohabitation. 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.”[59]
[59] Williams & Williams [2007] FamCA 313, [26] (Kay, Coleman and Stevenson JJ).
The Full Court in Jabour& Jabour [2019] FamCAFC 78 (‘Jabour’) said the following of the approach taken in Williams:
“46. We consider that the decision 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]).”[60]
[60] Jabour & Jabour [2019] FamCAFC 78, [43] (Alstergren CJ, Ryan and Aldridge JJ).
The Full Court in Jabour considered the way in which contributions are to be assessed and, in doing so, considered a number of case authorities. The Court cited and extracted the following from Wallis & Manning [2017] FamCAFC 14, in which the wife appealed a property order on the basis that the primary Judge did not afford her contributions sufficient weight:
“110.The approach adopted by the parties before her Honour is repeated in the supplementary submissions filed on behalf of the respondent Husband; it is there asserted that “the contributions of the parties would be equal aside from gifting by the Husband’s father of significant parcels of land which remain in existence at the present point in time”. Counsel for the Wife, in his further submissions, makes no such specific assertion but implicitly does so by relying upon the trial judge’s findings and manner of assessment. For the reasons given earlier, we reject that approach; the gifts by the Husband’s father should be taken into account as a contribution together with the miscellany of other contributions made by each of the parties over the course of their marriage.”[61]
[61] Ibid [59].
The Full Court also noted that Wallis & Manning said, consistently, that:
“20.Yet, that approach must also ensure that the “myriad of other contributions” and the duration over which, and circumstances in which, the miscellany of other s 79(4) contributions were made is not accorded a subsidiary role. The essential s 79(4) task is for “trial judges [to] weigh and assess the contributions of all kinds and from all sources made by each of the parties throughout the period of their cohabitation.”[62]
[62] Jabour & Jabour [2019] FamCAFC 78, [60].
The approach to assessing contributions under s 79 is often explained (and even more frequently embarked upon) by courts. Yet, the undertaking remains complex and rich with possibilities of error. In Jabour, the Full Court noted the ways in which the trial Judge erred in weighing the contributions of the parties:
“73.As can be sees the primary judge weighed the myriad contributions made by the parties against the contribution made by the Husband in bringing in Property A rather than treating Property A as one of the myriad contributions made.”[63]
[63] Ibid [73].
This approach had the effect of the contributions of the Wife in that case being overlooked,[64] including those contributions ‘made in the course of a long marriage during which both parties worked very hard and raised a family’.[65]
[64] Ibid [82].
[65] Ibid [83].
In this case, the introduction of the J Street, Town K property was one of several important financial contributions made during the marriage.
At the time cohabitation commenced, however, the Husband held only a small amount of equity in the J Street, Town K house. Further, it was renovated by both parties after cohabitation. It was one of many contributions made by both parties throughout their twenty years of marriage.
Section 79(4)(b) — indirect financial contributions
Both parties contend, and I accept, that they equally contributed in this regard. The parties’ various indirect financial contributions include their work renovating their various properties, including the J Street, Town K house.
Section 79(4)(c) — contributions to the welfare of the family, including contributions as homemaker or parent
Until the final parenting orders of May 2021, the children lived primarily with the Wife. Those orders provide for an equal time arrangement.
It is noted, however, that X has been living full time with her mother since before Christmas 2020. This situation may change. At this stage, I must account for the reality of X’s arrangements notwithstanding that the parenting orders provide for equal time.
I find that the Wife was primarily responsible for the care of the children during the relationship. The Husband concedes this point on the basis that he was working full time.[66] That primary care role arrangement continued for all the parties’ children until May 2021, and for the moment remains in place for X.
[66] Affidavit of Mr Farnham, 12 January 2021 (n 2), [33].
Conclusion regarding the parties’ contributions
I regard the parties as having made equal contributions of a financial and non-financial nature over the 21 years since their marriage. In making this determination I take into account the significant contributions of both parties in various respects. Further, I make this determination notwithstanding that the Husband has not made mortgage repayments, nor met other outgoings, for nearly two years.
Section 79(4)(d)-(g), including s 75(2) — other factors
Section 79(4)(d) – the effect of any proposed order upon the earning capacity of either party to the marriage
The Full Court in Beck & Beck (1983) FLC 91-318 defined ‘earning capacity’ for the purposes of s 75(2)(k), applicable the Act generally, as:
“a capacity to obtain income which could be used to provide maintenance … and not merely as current income from personal exertion or from the use of personal skills.”[67]
[67] Beck & Beck (1983) FLC 91-318, 78,166 (Evatt CJ, Emery and Hase JJ).
Neither party’s earning capacity will be impacted by any order made.
Section 79(4)(e) – the matters referred to in subsection 75(2) so far as they are relevant
Paragraphs 146-184 below extract the relevant factors from s 75(2).
Section 75(2)(a) — the age and state of health of each of the parties
The Wife is 40 years of age, and the Husband is 44 years of age.
The Wife has suffered a variety of medical issues, which she says may affect her ability to work in the future.[68] The Husband agrees that, for the last three years of the marriage, the Wife was unwell.[69]
[68] Affidavit of Ms Farnham, 19 January 2021 (n 2), [16].
[69] Affidavit of Mr Farnham, 12 January 2021 (n 2), [16].
The Husband has incurred significant injuries to his shoulders.[70]
[70] Ibid [12].
Neither party produced medical evidence to establish that they are unable to continue working, at least to their current capacity.
Section 75(2)(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
Both parties have maintained paid employment throughout the relationship, notwithstanding periods of injury and illness. Both continue to work and aim to maintain employment, at least to their current capacity.
The Wife earns a part-time income of $657.60 per week, plus child support of approximately $131.92 per week ($263.83 per fortnight). While no longer eligible for a Parenting Payment, the Wife confirmed under cross-examination that she continued to receive Family Tax Benefit of $453.70 per week. The Wife’s total weekly income is therefore approximately $1,243.22 per week.[71] She was not questioned as to her capacity to work full-time.
[71] Financial Statement of Ms Farnham, 19 January 2021, 4. The total income on the Wife’s Financial Statement is listed as $1,111.30. The figure above accounts for the weekly amount of child support not included in the original figure.
The Husband earns a full-time income of $1,114.00 per week. The Wife contends that his employment also affords him the financial benefit of a motor vehicle for which fuel costs are paid, and a phone as part of his overall package. The Husband did not refute that he receives these additional benefits, but did not refer to the same in his Financial Statement.
While the parties earn a similar total weekly income, some disparities are present in their employment income, work benefits and earning capacity. The Husband receives a greater employment income than the Wife, and receives work benefits to which the Wife does not have access.
Further, the Husband has maintained full-time employment for the majority of his working life.
In Clauson & Clauson (1995) FLC 92-595, the Full Court stated:
“It has long been recognised that in most cases the most valuable “asset” which a party can take out of the marriage is a substantial, reliable, income-earning capacity: see Best and Best (1993) FLC 92-418 at 80,295.”[72]
[72] Clauson & Clauson (1995) FLC 92-595, 81,911 (Barblett DCJ, Fogarty and Mushin JJ).
Their Honours further remarked that:
“In addition, it should not be forgotten that the payment of child support in no way compensates the custodial parent for the loss of career opportunity, lack of employment mobility and the restriction on an independent lifestyle which the obligation to care for children usually entails: see Langford (16 January, 1995, Full Court, not reported).”[73]
[73] Ibid.
The parties’ income disparity from employment will continue over time unless the Wife can work more hours or retrain into a position that earns a higher income. The Wife has previously worked full-time.[74]
[74] Affidavit of Ms Farnham, 19 January 2021 (n 2), [16(d)], [17(b)].
Mr Trezise submitted that I should not consider the parties’ incomes too far beyond the present time. The monies the Wife receives will naturally reduce as the children attain 18 years. Currently there is little disparity from all forms of income received by the parties, if one ignores the other benefits of the Husband’s employment package.
Ms Brown submitted, on the other hand, that the Wife does not receive the same income or benefits from employment as the Husband and that the reality of this situation ought to be taken into account.
There is a difference in the parties’ incomes, employment benefits and earning capacity, favouring the Husband. I will take that difference into account.
Section 75(2)(c) — whether either party has the care or control of a child of the marriage who has not attained the age of 18 years
Following separation, the Wife says that she had to meet the children’s costs without the Husband’s support, save for his payment of child support as assessed.[75] This was not challenged. I take into account that the Wife has met a greater amount of the children’s ongoing costs associated with their schooling and other activities.
[75] Ibid [19].
The parties have, as already stated, agreed upon an equal time arrangement. For the moment, however, X remains in the Wife’s full time care. This being the case, the Wife’s financial responsibility for the children is higher than the Husband’s financial responsibility in this respect.
Section 75(2)(d) — commitments of each of the parties necessary to enable them to support themselves and a child or another person that the party has a duty to maintain
Neither party submitted that their income or other available monies are insufficient to support themselves or the children.
Section 75(2)(e) — the responsibilities of either party to support any other person
The Husband pays child support in the sum of approximately $131.92 per week. Neither party has any other dependants.
Section 75(2)(f) —the eligibility of either party for a pension, allowance or benefit under any law or superannuation fund, and the rate of any such pension, allowance or benefit being paid to either party
The Wife receives Family Tax Benefit of 453.70 per week,[76] and says that she no longer receives a Parenting Payment.
[76] Financial Statement of Ms Farnham, 19 January 2021 (n 71), [12].
Section 75(2)(g) — a standard of living that in all the circumstances is reasonable
Neither party submitted that the proposed terms of order will impact their standard of living.
Section 75(2)(h) — the extent to which a party’s earning capacity could be increased by enabling them to undertake a course of education or training or to establish themselves in a business or otherwise to obtain an adequate income
Notwithstanding that the Wife could earn a greater income if she retrains for a higher-income position, neither party submitted that the other should retrain or increase their hours of work to improve their earning capacity.
Section 75(2)(j) — the extent to which a party has contributed to the income, earning capacity, property and financial resources of the other party
Both parties have made significant contributions over their 20-year of marriage and following separation. The parties largely agree that their contributions are equal in this respect, noting the determination above that the Wife made contributions to the J Street, Town K house brought into the relationship by the Husband.
Section 75(2)(k) — the duration of the marriage and the extent to which it has affected the earning capacity of each party
The parties were married for 20 years. The Husband sustained employment throughout that period and following separation. The Wife had little time off work in anticipation of and following the birth of each of the children.
The marriage has not affected either parties’ earning capacity. The Husband maintains secure full-time employment. The Wife remains employed part-time.
Section 75(2)(l) — the need to protect a party who wished to continue that party’s role as a parent
The parties share the care of their three youngest children — X (15), Y (12) and Z (7). Given the children’s ages, both parties will have children in their care for some years ahead.
X lives with the Wife on a full-time basis, and the Wife is X’s full-time parent at least for the time being. X may commence time with her father. When that will occur, if ever, is unknown.
Section 75(2)(m) — if either party is cohabiting with another person—the financial circumstances relating to the cohabitation
Neither party has re-partnered.
The evidence is insufficient to support a finding that the Wife is cohabiting with her boyfriend, though she does benefit from using his motor vehicle. The use of this vehicle is, to a minor extent, a financial resource of the Wife.
Section 75(2)(n) — the terms of any order made or proposed to be made under section 79 in relation to the property of the parties
I determined at paragraph 142 above that the parties contributed equally in respect of the non-superannuation assets.
That property pool amounts to a total of $451,916.13, as set out at paragraph 111. An equal division of that amount results in each party retaining non-superannuation property with a net value of $225,958.07. Further there will be an equal division of the parties’ superannuation interests.
Section 75(2)(o) — any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account
Both parties want to retain the B Street, Town C property. If a party has the property transferred to them, they will not have to pay some of the costs of transfer, including duty.[77] If I order that the B Street, Town C property be retained by one party, that transferee will receive that financial advantage.
[77] Duties Act 2001 (Tas), ss 56(1)(a), 56(1)(b)(iii).
On this point, the following question arises — should this Court take into account that the Husband acted obstinately and undermined the sale of the B Street, Town C property for $540,000.00?
If the property had sold for $530,000 or $540,000.00, the parties would have significantly more funds to divide between them. That said, the contract was conditional on finance and inspection. Further on this point, though, the Husband admitted that he rang the purchasers and told them the property was no longer for sale. His actions undermined the Heads of Agreement, as reached between the parties at mediation, and would have upset the Wife.
This does not, in my view, quite reach the level of waste identified in Mabb & Mabb [2020] FamCAFC 18 (‘Mabb’). On appeal, the husband in that case argued that the trial judge erred in fact and law by regarding his refusal to accept offers to buy a property as ‘waste’ in the sense set down in Kowaliw & Kowaliw (1981) FLC 91-092.
The Full Court in Mabb found that the trial judge was not in error to take into account (under s 75(2)(o)) the husband’s refusal to respond to a high offer where the relevant property ultimately sold for a far lesser amount. The Full Court stated that (emphasis added):
“76. By “waste” we understand the challenge to be to her Honour taking into account the husband’s refusal to accept the offer as having a direct and deleterious financial effect on the parties. Here, as her Honour correctly found, it was the husband’s deliberate conduct which had produced a loss to the parties of the more advantageous selling price, in a clearly falling market as the decreasing offers to purchase made to the parties from 2011 demonstrates.”[78]
[78] Mabb & Mabb and Anor [2020] FamCAFC 18, [76] (Ainslie-Wallace & Aldridge JJ).
The Husband has, by his own admission, conducted himself in a manner in which he purposefully undermined the potential sale of the B Street, Town C property. The contract was, however, conditional. There is insufficient evidence to support a finding that the sale would have been completed but for the Husband’s conduct.[79] His conduct cannot, using the words in Mabb, be said to have had a ‘direct and deleterious financial effect’ or to have ‘produced’ the loss.
[79] Ibid [74]. Their Honours found that the trial judge did not err in finding that the husband’s failure to respond caused a loss to the parties in them having to accept a lower offer. In so finding, their Honours remark that the primary judge’s finding was ‘not only entirely open to her but driven by the evidence’, crucially including evidence that the purchaser had her finances ‘sorted’ as extracted at [71]. There is a distinguishable lack of evidence as to drive the same conclusion in this case.
There was a further contract for $460,000.00, which the Husband also did not sign. The $460,000.00 contract was presented a short time after the contract for $540,000.00. His failure to sign the $460,000.00 contract also cannot be regarded as waste, since the property now has an agreed value of $450,000.00. If the property was sold for $460,000.00 there would have been costs of sale, ultimately making for a negligible difference between the two figures.
While the Husband’s conduct was poor, and no doubt upsetting and stressful for the Wife, I cannot take his actions into account under s 75(2)(o).
Section 79(4)(f) – any order made under this Act affecting a party to the marriage or a child of the marriage
As stated, the parenting order provides for an equal time arrangement for the parties’ three youngest children. Under this arrangement, the financial burden of caring for the children is shared equally.
The reality with X is, however, that the Wife has full-time care and therefore shoulders the majority of the financial burden associated with caring for X.
Section 79(4)(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
The Husband, on his concession, pays child support in the sum of approximately $131.92 per week. The parties’ younger children, apart from X, live otherwise in a shared time arrangement. The Wife has however, paid for the children’s schooling and other expenses.
Conclusion regarding the matters referred to in s 79(4)(d)-(g)
Mr Tresize submitted that there should be no adjustment for the matters set out above. I however, determine that there should be a 5% adjustment in the Wife’s favour for the matters in s 79(4)(d)-(g). In making this assessment, I particularly take into account:
a.the Wife’s inferior income from employment and employment benefits in comparison to that of the Husbands full employment entitlements;
b.the Wife’s continuing full-time care of X, which is likely to continue for an undetermined amount of time; and
c.the Wife’s higher contribution to schooling and other expenses for the children.
The result of a 55 / 45 division is, based on the net non-superannuation property pool of $451,916.13, the Wife being entitled to $248,553.87 and the Husband to $203,362.26 worth of non-superannuation property. This results in a differential of $45,191.61.
The Wife will retain chattels and a savings account with a value of $12,260.83. The Husband will retain chattels, a savings account, the cattle sale proceeds, and the tractor and slasher, amounting to a value of $27,549.76.
If the Wife retains the B Street, Town C property at a value of $450,000.00 and its mortgage, along with her possessions and savings, she will retain assets worth net $339,534.75. In those circumstances, the Husband will retain the trust monies from the R Street, Town O block sale proceeds together with his possessions, the savings in the ANZ account and his savings. The value of assets received by the Husband will therefore be $112,381.38, meaning $90,980.88 is the gap between assets received or retained and the non-superannuation property to which he is entitled as set out at paragraph 189. That gap is the amount payable by the Wife.
If the Husband retains the B Street, Town C property and its mortgage, he will retain non-superannuation assets with a net worth of $354,823.68. In those circumstances, the Wife will retain the trust monies from the R Street, Town O block sale proceeds together with her savings and possessions and the monies in the ANZ account. The value of the non-superannuation property which will be retained by her equals $97,092.45, meaning $151,461.42 is the gap between assets received or retained and the non-superannuation property to which she is entitled, as set out at paragraph 189. That gap is the amount payable by the Husband.
What is the just and equitable exercise of discretion?
After assessing contributions and other factors this Court must consider whether, in light of those assessments and the actual property to be divided, the proposed exercise of the discretion under s 79 is just and equitable. In Clauson, the Full Court said the following:
“… that exercise is not done in isolation; it is done against the background of conclusions already arrived at on contributions, the consequence of which will be in some cases to intrude into the s. 75(2) exercise because of the dimension of the former conclusion and the total pool.
It is largely for that reason that it is ultimately necessary to stand back from the process and reach a conclusion which appears overall to be a just and equitable exercise of the discretion.”[80]
[80] Clauson & Clauson (n 72), 81,911-81,912.
Before I can stand back and consider whether the 55 / 45 division is just and equitable with respect to the parties’ property, I must decide which party (if any) should retain the B Street, Town C property.
I note that the parties previously agreed, as recently as September 2020 as evidenced by the Heads of Agreement, that they would sell the B Street, Town C property. The Wife maintained that it should be sold up until the trial, at which time she changed her proposal. The Husband, as conceded, decided he wished to retain the property upon the contract of sale being provided to him for signature.
During final submissions, the parties presented different views as to what should be done with the B Street, Town C property. It is neither party’s first choice that it be sold, but they disagree about to whom it should be transferred.
The Wife did not give or produce any evidence in support of her ability to take on the B Street, Town C mortgage and pay out the Husband’s share in the property. Crucially, she did not produce any evidence (in the form of an approval from a financial institution or anything else) that she could borrow enough funds to refinance the mortgage and pay to the Husband all the monies due to him. To do so, the Wife would need to borrow a sum exceeding $212,000.00.
The primary contention in respect of the B Street, Town C property is the Wife’s concern that, if the Husband retains the property, he will sell it for a value higher than $450,000.00. Her concern arises from the somewhat complex chronology of the parties’ attempts to sell the property. The Heads of Agreement specified a sale of $535,000.00 by private treaty, and the parties later received an offers of $530,000 and $540,000.00 to purchase the property in late 2020. Both sums are significantly higher than the agreed value contained in Exhibit A. If the Husband sells the property at a similar price to that initially offered he would experience a windfall gain.
While the Wife did not pursue her original position of selling the house, both parties acknowledged selling the house as an alternative if the house is not transferred to them.
The Wife’s position upon final submissions was that she should be given the opportunity to purchase the house at the price for which she was prepared to pay — $480,000.00. No valuation grounded this figure as provided by the Wife, though professional and market valuations (and the parties’ own estimation) have produced the following range:
·$375,000.00, by Mr F;
·$460,000.00, as per the unconditional offer rejected by the Husband;
·$475,000.00, by Ms G;
·$450,000 being the revised joint valuation of Ms G and Mr F;
·$480,000.00, the latest offer from the Wife during final submissions; and
·$530,000.00, as per the offer rejected by the Husband;
·$540,000 a further conditional offer rejected by the Husband; and
·$535,000 being the agreed sale price in the Heads of Agreement.
The range of possible values above leaves me uncertain as to the true value of the B Street, Town C property, notwithstanding the accepted valuation evidence.
The Husband’s position is that he has more borrowing capacity to refinance the loan and pay out the Wife’s interest in the property. Unfortunately, he did not produce evidence to corroborate his position.
The Husband claims that he does not wish to sell the B Street, Town C property, and instead wishes to use it as a farming property. Further, he said that it is close to his mother’s house (who helps care for the children) and that, put simply, he likes living there.
The case authorities point to several common but non-exhaustive factors with respect to whether a real estate asset (most often the family or matrimonial home) should be sold. These factors are as follows:
·Has the party seeking to retain the property, along with any children of the relationship, lived in the property since separation and do they intend to continue doing so? If yes, the Court should look to the effect of the sale in that party losing their home.[81]
·To what degree would the assessment under s 79(4), as a percentage, be disrupted by ordering that a party retain the property in question? Is it just and equitable in the circumstances for the assessment under s 79(4) to be so altered?[82]
·What is the borrowing capacity of the party or parties seeking to retain the property?[83]
·Where is the property situated? For example, is it close to favoured schools or the residences of family or friends?[84]
·Is the mortgage on the property subject to a very favourable interest rate which cannot presently be obtained on a mortgage?[85]
·If a party is ordered to have a right of occupation in the property, would the state of repair of the property be detrimental to the party who continues to occupy the property? For example, are the costs of keeping the property in modest repair greater than the amount owing on the mortgage?[86]
·What is the zoning of the property, and how may this indicate the property’s future uses? Is it possible or likely that the property will be rezoned?[87]
·If the effect of the order is to leave one party without housing, what is the cost of alternative housing?[88]
·For the purposes of parenting orders, would the child/ren with whom a party spends time derive more benefit from this arrangement if their time occurred in the property sought to be retained?[89]
·Is the property co-owned with third parties to the marriage? If so, it may be less appropriate to order the sale of the property.[90]
[81] Phillips & Phillips [2002] FamCA 350, [65]-[70] (Finn, Kay and O’Ryan JJ) citing Clauson & Clauson (n 72), 81,911.
[82] Teal & Teal [2010] FamCAFC 120, [71] (Finn, Boland and Dawe JJ).
[83] Melvin & Melvin [2018] FCCA 1847, [123]-[126] (Judge Harland). The wife in that case relied upon Phillips & Phillips (n 81) in arguing that she should retain the home, on the basis that she and the children had lived in it since separation. Her Honour Judge Harland did not have evidence of the wife’s borrowing capacity.
[84] Myerthall & Myerthall [1977] FamCA 59, [6] (Demack and Watson SJJ and Emery J).
[85] Ibid.
[86] Ibid.
[87] Ibid.
[88] Aleksovski & Alexovski [1996] FamCA 111, [99] (Kay J).
[89] W & D [2005] FMCAfam 171, [95] (Federal Magistrate Ryan). Her Honour, as she then was, commented that neither party to the litigation appeared to have anything more than an emotional connection to the property, but that the property nevertheless may offer a familiar and comfortable environment for the children to spend time with their father after highly contentious litigation.
[90] Dovgan & Dovgan [2021] FamCA 306, [227] (Harper J).
The Court in Myerthall & Myerthall [1977] FamCA 59, from which factors (d)-(g) are extracted above, remarked that listing feasibly relevant matters does not create an ‘exhaustive catalogue of matters which ought to be looked at’ in each case.[91] Further, their Honours noted that:
“ … evidence of these matters ought to be led if the Judge is going to be invited to exercise [their] discretion to make any of the variety of orders open to ‘them’ under sec. 79.”[92]
[91] Myerthall & Myerthall (n 84), [7].
[92] Ibid.
Both the Husband and the Wife have invited me, as their first option, to order that they retain the B Street, Town C property. In so arguing, they must have laid a sufficient evidentiary foundation.
Mr Trezise argued that this Court should effectively follow the evidence. The Husband says that he can obtain a loan to pay out the Wife’s interest in the property, and that he does not wish to sell it. Mr Trezise submitted that the valuation of the B Street, Town C property has been proved and accepted and, in those circumstances, the property should be transferred to the Husband.
Ms Brown submitted that the Wife should be allowed to purchase the B Street, Town C property at a price of $480,000.00. The Wife should, in her view, be given the first opportunity to purchase the property because she is prepared to offer a higher amount than the valuation at $450,000.00.
Based on the facts of this case, the Wife is right to be suspicious about the Husband’s motivations. The Husband, on his own admission, deliberately interfered with the potential sale of the property for almost $90,000.00 more than its current agreed value. Further, the offers of $530,000 and $540,000.00 were consistent with the sale price agreed between the parties in the Heads of Agreement signed in September 2020. Finally, the Husband admitted that following separation he told the Wife, in effect, that she would ‘get nothing’.
The Wife will feel a real sense of inequity if the B Street, Town C property is transferred to the Husband at a value of $450,000.00. This is, however, not the determining factor.
On the Husband’s evidence I cannot be satisfied that, if he retained the property, he would have sufficient borrowing capacity. He would have to obtain a loan in excess of $273,000.00 to refinance the loan and to pay out the amount owing to the Wife as set out at paragraph 192. Further, he did not establish that justice and equity requires him (or the children) to continue occupying the B Street, Town C property. Mr Trezise made reference to some of the authorities listed above, but the evidence does not support the exercise of my discretion in the manner sought by the Husband.
Neither party has provided evidence to support their borrowing capacity. Neither party produced evidence from a financial institution that they had pre-approval for a loan sufficient to retain the property. I am not satisfied that either party has proved that they have the financial means to take on the mortgage and pay the other party the amount due to them.
Further, neither party has led sufficient evidence to the effect that they must, for some reason grounded in justice and equity, retain the B Street, Town C property. This being the case, I find that it is just and equitable to order the sale of the B Street, Town C property. Both parties submitted that this was an appropriate outcome if the property was not transferred to them.
In selling the B Street, Town C property, each party is entitled to bid for the property if they so desire. One of them may be the highest bidder — a contingency accepted by both parties — and come to own the property albeit by a different path. They may achieve a price greater or less than $450,000.00, which will be the reserve price. There will be costs of sale.
Standing back, I am satisfied that selling the B Street, Town C property is the best way to give both parties an opportunity to purchase the property while ensuring its true value is achieved.
I intend also to order that the parties be required to do all things necessary to immediately sell the B Street, Town C property. I will order that D Real Estate be engaged as the selling agent, as that firm was previously engaged to sell the property. The Husband and Wife are expected to work with the Agent to sell the property as quickly as possible. In doing so, the Husband must ensure that the property is properly presented and available for inspection.
The Wife will need to attend the property to inspect the same and have input into the sale. The terms of the order will allow the Wife reasonable access to the property for that purpose, on written notice to the Husband.
I will provide liberty to apply regarding the sale of the B Street, Town C property to deal with issues relating to the same. I expect both parties to cooperate with each other, the Agent and potential purchasers with the aim being to sell the property quickly and attain its best price. I will also provide liberty to apply in relation to the sale of chattel items and the distribution of funds in accordance with the order made, once the property sells.
There may be some maintenance or other works required to enable the property to achieve its best price. If the Real Estate Agent recommends such works, the Husband will meet the cost and be reimbursed from the sale proceeds. This is because he occupies the property. He will need to prove any expenditure with invoices and bank statements. The Wife will need to agree in writing to any expenditure before it is incurred.
I will also order the Husband to pay the mortgage and other outgoings for the B Street, Town C property, pending its sale, including any arrears. It is just and equitable that he now make those payments, given that he occupies that property, and has done so for nearly 2 years.
The parties’ superannuation property totals $214,422.14. Upon the splittable payment of $67,242.00 being made from the Husband’s superannuation holding, the Wife’s superannuation holding will amount to $107,427.14, being 50.1% of the parties’ superannuation property. The Husband’s superannuation holding will therefore equal $106,995.00, being 49.89% of the parties’ superannuation property, following the splittable payment as agreed between them.
The total property pool, including superannuation and non-superannuation property, amounts to $666,338.27. The Wife will receive $355,981.01 of superannuation and non-superannuation property, which constitutes 53.42% of the total property pool. The Husband will receive $310,357.26 of superannuation and non-superannuation property, which constitutes 46.58% of the total property pool.
The final order will also account for the property retained by the parties as it affects their individual entitlements under a 55 / 45 division of the property pool. The formula contained in the order will add known and unknown amounts together to create a total of ‘I’. ‘I’ includes the value of property retained by the parties, and will be multiplied by 55% for the Wife and 45% for the Husband. The value of the property as retained by each party (as in ‘A’ and ‘B’ of the formula) will then be deducted from the sum of ‘I’ multiplied by that party’s entitlement to arrive at the sum ultimately receivable for each party.
I remain satisfied that a 55 / 45 division of the net non-superannuation property of the parties, in favour of the Wife, and an equal division of the superannuation assets, is just and equitable.
I certify that the preceding two hundred and twenty-four (224) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Turnbull. Associate:
Dated: 4 February 2022
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