Fenton & Terrell

[2021] FCCA 1275

FEDERAL CIRCUIT COURT OF AUSTRALIA

Fenton & Terrell [2021] FCCA 1275

File number(s):

BRC 13615 of 2018

Judgment of:

JUDGE JARRETT

Date of judgment:

17 May 2021

Catchwords:

FAMILY LAW – The Family Law Act and related legislation – property adjustment – assessment of contributions.

Legislation:

Family Law Act 1975 (Cth) ss 79, 117(1)

Cases cited:

Allen v Snyder [1977] 2 NSWLR 685

Briginshaw v Briginshaw (1938) 60 CLR 336

Calverly v Green [1984] 155 CLR 242

Holdcroft v Market Garden Produce Pty Ltd [2000] QCA 396

Stanford & Stanford [2012] 293 ALR 70

Number of paragraphs:

29

Date of last submission/s:

17 May 2021

Date of hearing:

17 May 2021

Place:

Brisbane

The Applicant:

Self-represented

The First Respondent:

Self-represented

The Second Respondent:

Self-represented

ORDERS

BRC 13615 of 2018

BETWEEN:

MR FENTON

Applicant

AND:

MS TERRELL

First Respondent

MR TERRELL

Second Respondent

ORDER MADE BY:	JUDGE JARRETT
DATE OF ORDER:	17 MAY 2021

THE COURT ORDERS THAT:

1.The Initiating Application filed 23 November, 2018 be dismissed.

2.The Application in a Case filed 23 February, 2021 be dismissed.

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 under the pseudonym Fenton & Terrell is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

REASONS FOR JUDGMENT

JUDGE JARRETT:

1. This is an application for property adjustment.  There are three parties:  a husband, a wife – the ex-husband and the ex-wife, and the ex-wife’s son, Mr Terrell who is the second respondent. 

2. The evidence shows that the parties (excluding Mr Terrell) commenced a relationship in early 2001 or late 2000 and they commenced living together in 2008.  They married in 2012 and separated in June of 2015.  They were divorced in June, 2018.  These proceedings were commenced soon thereafter and to the extent that the wife says in her most recent affidavit that the proceedings have been commenced by her husband out of time, she is wrong about that. 

3. The parties have no children between them, but the wife has children of a prior relationship.  There are four of them:  three sons and a daughter.  She continues to care for her daughter who is autistic and requires significant assistance.  During their time together, the parties also cared for another child, referred to in the material as a “kinship foster” or some similar description.  They received financial assistance for doing so. 

4. The authorities, such as Stanford & Stanford [2012] 293 ALR 70 make it clear that the court’s task under s.79 of the Family Law Act 1975 (Cth) is to determine, first of all, whether it is just and equitable to make a property adjustment order at all, and to do so, requires the court to identify the parties’ property – their legal and equitable interests in the property that might be available for distribution between them in the proceedings.

5. The evidence here, taken from the husband’s case outline as statements against his own interests, and the wife’s affidavit demonstrate that she has a bank account with about $860 in it, a motor vehicle which she estimates to have a value of $7,000, a superannuation account of $72,000 and some household contents that she estimates to be worth $3,000.  She has a credit card debt of $12,031, a liability in respect of her motor vehicle of $14,418 and a HELP debt in relation to studies she has undertaken of $8,801. 

6. The husband has, according to his material, a liability to a bank of $246.52, a second bank account that has $280.94 in it, a motor vehicle that he asserts is worth $500, a second motor vehicle which he asserts is worth $19,000, some antiques that he says are worth $2,500 and other household chattels worth $500. 

7. The significant asset that is in dispute is an interest in a property situated at B Street, Town C.  I will return to that shortly but it is as well to say something about the property pool as I have found it to be. 

8. There are no valuations before me.  No valuations for the wife’s motor vehicle or her contents.  There are no valuations before me about the husband’s motor vehicles, the antiques or the household contents.  It is incumbent on these parties, both of them, to provide valuations in respect of those assets and that they have not demonstrates an abject failure on their part to provide proper evidence upon which the court can decide the case.  Having said that, I intend to use the values to which I have referred because they have been taken from the parties’ material.  It is their own estimates and as such I treat them as statements against interest and accordingly find that their assets are worth at least the amount that each of them have ascribed to their own assets held by them. 

9. The B Street, Town C property is a parcel of real estate that was purchased in about 2010 by the third respondent.  There is a dispute between the parties about the circumstances in which it was purchased.  It is plain enough that, indeed it is the subject of agreement that prior to the purchase of that property, the husband and the wife, occupied a property owned by the husband in Suburb D.  It had been constructed by him, seemingly overcapitalised and it needed to be sold.  There was a sale of it in due course, but before it was sold the parties agreed that they would find another property.  The property at B Street, Town C was located and according to all of the evidence before me, it suited these parties and the children for whom they needed to care.  But they were unable to purchase it immediately.

10. There is an assertion by each of them, by the husband and the wife, and the third party that there was an agreement reached between the three of them about the purchase of that property by the third party.  They do not agree about the terms of that agreement.  Much of my criticism of these parties in this case is focused upon the abject lack of evidence about that agreement.  Each asserts in conclusory terms the agreement as they perceived it, but there is no real evidence before me about the nature or extent of the agreement or the terms of it.  There are simply assertions by each of the parties. 

11. I will consider the objective facts to try and determine if there was, indeed, an agreement and the nature of it.  The parties agree that there was an agreement in some form.  So that is a starting point.  The objective facts demonstrate that the property was purchased in the name of the second respondent, Mr Terrell.  He paid the deposit.  There was some argument about whether he paid all of the deposit from his savings or not but it does not matter.  He paid $32,000 and contributed the first home owners’ grant to which he was apparently entitled.  Given that he was not living in the property, one wonders about his eligibility for the grant but that is something to which I will come to again shortly.  There is some suggestion in some of the evidence that he was spending some nights in the property but the wife’s evidence cannot put a figure on it – see her third filed affidavit in these proceedings, I think. 

12. The applicant says that the terms of the agreement that were reached was that the $32,000, which he ascribes as being the deposit, would be a loan to he and the first respondent.  The loan is not documented.  There is no suggestion in the material that there was any agreement or acknowledgment of debt.  He says it was agreed that the title would be in the second respondent’s name.  Indeed, it is in the second respondent’s name.  He said that the – well, he asserts that the second respondent would contribute the First home owners’ grant.  Indeed, that seems to have happened too.  Although he does not assert that it is a term of the agreement – see his affidavit filed initially with these proceedings and read it carefully – what he says is that after the purchase of the property he and the first respondent made all of the mortgage repayments to the financier, with whom the second respondent had organised finance to fund the balance of the purchase price. 

13. It seems common ground between the parties that the first and second respondents met those mortgage payments.  They came out of the first respondent’s bank account.  She was, until 2012, the primary income earner of the household consisting of the applicant, the first respondent and the children with them from time to time.  At that stage, the applicant commenced some employment as a labourer.  The parties also had the financial emoluments that came to them by reason of caring for the children under their control.  From those things, it seems that they were able to make the mortgage repayments.

14. It is asserted by the applicant that it was agreed that in the event that the property was sold, the net proceeds of sale, less full repayment to the second respondent for whatever was outstanding in respect of the loan to which I have earlier referred, and any other funds that might be owed to him, would then be made available to the first respondent and the applicant.  I put to the applicant in the course of his cross-examination, that, really that meant that it was intended that he would be the owner or he and the first respondent would be the owner of the property but he seemed to deny that proposition.  But that is of course what it meant.  Any equity would belong to, on his version, the applicant and the first respondent.

15. By implication he asserts, therefore, that assuming all of the other matters he asserts are accepted, in the event that the applicant and the first respondent divorced or separated, they would be entitled to the equity in the property.  I am not sure that follows.  The implication of terms in contracts happens according to well settled principles.  A term is implied into a contract if it is necessary to give the contract business efficacy; if it is a term that would be said to have been agreed between the parties had they turned their mind to it.  I do not think this term meets those descriptions.  The term suggested by the applicant is not necessary to give this contract, if there be one, business efficacy because all that needed to be done to trigger the entitlement to equity, according to the applicant’s version, would be a sale of the property, whether the parties were separated or not.  The intervening event of a divorce or separation before a sale does not need to, and in my view does not, trigger an entitlement to equity in any event. 

16. But that is just on the applicant’s version of the agreement. He points out that the parties acted in accordance with his version of the agreement ever since it was made, but that is not true. In fact, what the evidence shows is that the parties entered in to a tenancy agreement, it was signed, the applicant says, in 2015 and backdated to 2011. It is asserted in his affidavit, most recently filed at paragraph 14, that it is a forgery but I do not accept that is so. To assert a matter such as a forgery is a serious thing. It is tantamount to alleging that the parties against whom the assertion is made have committed a criminal offence. Section 140 of the Evidence Act 1995 (Cth) codifies the ruling of the High Court of Australia in Briginshaw v Briginshaw (1938) 60 CLR 336, which is to this effect, that even though a case is to be determined on the civil standard, like this one, on the balance of probabilities, the more serious the allegation, the more certain, essentially, the court needs to be to make the relevant findings.

17. I am not certain at all in the context of this case that the tenancy agreement is a forgery.  In fact, I am satisfied that it is not.  It seems a perfectly legitimate document, which was produced to a financier by the second respondent for the purposes of demonstrating that he had some income.  And that there is a tenancy agreement is more consistent with what I think the second respondent suggests the agreement was. 

18. The first respondent, in her first and second affidavits filed in these proceedings, sets out her understanding of the agreement, again, in a less than helpful way, just as the applicant does.  But her understanding was that the parties were to purchase the B Street, Town C property in the event that the Suburb D property sold within 12 months, and that they were going to use the equity that was realised by that sale to assist with the purchase of the B Street, Town C property.  But, as it turns out, the Suburb D property was sold at a loss and money was still owed to the financier in respect to that property once the sale of the property had been finalised.  Accordingly, there was no equity.  The purchase of the B Street, Town C property using those proceeds could not proceed. 

19. So the first respondent says that the agreement that was reached between the applicant, she, and the second respondent, fell apart.  She says that they continued to rent.  There is some other objective evidence that suggest that the first respondent’s version, such as it is, is more likely to be true than that of the applicant’s, and that is that these parties –three of them – in one form or another have apparently represented to the Department of Social Security, or whatever department is responsible for the provision of rental assistance – Centrelink, at the time, I suspect – that there was indeed a tenancy.  They did that because they claimed rental assistance.  On the applicant’s version of the agreement, he was never a tenant, and so never had any entitlement to rental assistance from the government.  But, nonetheless, it seems common ground that he claimed it;  so too, the first respondent.  The second respondent was complicit because he needed to sign the relevant certificates and on his own evidence, did so.  So all three of these parties have misled the government – Centrelink – into giving them money – the applicant and the first respondent – to which, at least on the applicant’s case, they were not entitled.  I will return to that little issue shortly. 

20. But for present purposes, it is necessary to refer to some law.  There is a decision called Allen v Snyder [1977] 2 NSWLR 685. It was decided in 1977, not long after the Family Law Act came into being, but it is not a case that concerns the Family Law Act. It concerned property between unmarried people. But the effect of ownership of real property was discussed in that case. At page 689, Glass JA said this:

    …Any claim to a beneficial interest in real property by a person in whom the legal title is not vested, must be based on a trust.  Trust may be expressed, implied, or constructive.  An express trust of land is not enforceable unless it is evidenced in writing and signed by the party able to declare the trust: Conveyancing Act 1919, s. 23c.  By way of exception, any express trust may be proved by oral evidence, where otherwise the statute would be made “an instrument of fraud”.  An implied trust (also called a resulting trust) arises where the legal owner has provided none, or only part, of the purchase price.  A resulting trust is presumed in favour of the party providing the money.  His beneficial interest is proportionate to his contribution.  If, however, the legal owner is a wife, and the purchase price has been provided by her husband, there is a countervailing presumption of advancement, viz. that she takes the beneficial interest as a gift.  Both presumptions, being rebuttable, will yield to evidence as to the actual intention of the parties.  Constructive trusts arise where it would be a fraud for the legal owner to assert a beneficial interest.  Unlike express and implied trusts, which reflect actual intentions, they are imposed, without regard to the intentions of the parties, in order to satisfy the demands of justice and good conscience.  Constructive and implied (resulting) trusts, may be enforced without evidence in writing.  Except for the presumption of advancement, the same principles apply to co-habiting parties who are not legally married.  References to spouses will therefore apply, mutatis mutandis, to them also.

21. So the starting point is to recognise that, here, the second respondent is the legal owner of this property; he is the registered proprietor.  He, too, has provided the purchase price for it, he provided the deposit and he provided the balance of the proceeds of sale through a mortgage.  In that respect, the remarks of the High Court of Australia in Calverly v Green [1984] 155 CLR 242 are particularly apposite and those of the Chief Justice and Justice Mason, where they both point out that, sometimes it is thought that the repayment of a mortgage gives a person an entitlement, a beneficial interest in property, but the Justices in that case pointed out that that is not so. It is the contribution to the purchase price represented by the raising of the money in the first place to purchase the property through the mortgage that is the contribution to the purchase price. The repayment of the mortgage, subsequently, is not a contribution to the purchase price at all. And so, having regard to those principles, I conclude that the legal owner of the B Street, Town C property is the second respondent. I also conclude that he is the equitable owner, or the beneficial owner, of that property, as well.

22. It might be argued that there is some form of constructive trust that might be imposed, in equity and good conscience, to take account of the fact that the mortgage repayments that were made until 2015, when the applicant moved out of the property, were made by the applicant and the first respondent.  But one might see that as no more than having paid an occupation fee, or a rent, if you like, and that is consistent entirely with the parties’ representations to Centrelink.  I am not satisfied that the applicant and the first respondent have an interest in the B Street, Town C property, either legally – they are not registered proprietors – or beneficially – they are not the beneficiaries of any trust in respect to that property. 

23. That means that the property pool is as I have found it;  that is, the wife has her bank account, her motor vehicle, her household contents, and a superannuation lesser debts.  She has an excess of assets over her liabilities taking into account her superannuation – but she cannot access her superannuation yet.  And the husband has the assets and liabilities to which I have earlier referred.  He seems to have an excess of assets over liabilities, so he is in a better financial position than the wife.  She has a greater earning capacity than he does.  There is some evidence that suggests that the applicant is unwell.  The first respondent suggested that he had a life expectancy – some years ago – of four years, but he cross-examined her about that and suggested that that was not true.  Whatever the case, he is retired and earns income through an aged pension and perhaps some other benefits. 

24. So having regard to those matters, it seems to me that there is no basis on the material before me for the making of any property adjustment order at all.  It would not be just and equitable to make an order which adjusts the parties’ interests in their property as I have found it to be.  At best, there could be a superannuation splitting order that might split some of the wife’s superannuation to the husband, but there is no warrant for that in this case, given that he holds far greater cash assets than she does. 

25. Some other matters need to be mentioned.  If I am wrong about the conclusion that I have come to, that there is no legal or equitable ownership of the relevant property at B Street, Town C vested in the applicant and the first respondent, then I would nonetheless decline to grant relief in this case. 

1. In doing so, I would expressly apply the principle that, as a matter of public policy, the court does not give its imprimatur to improper or illegal conduct by parties when carrying out contracts.  Whilst the contract, or the agreement, whatever version is accepted – that of the applicant or that of the first respondent – is not, on its face, illegal – it is not a contract for an illegal purpose – it is, nonetheless, an agreement which, on all of the evidence, was carried out in an illegal way, that is, by reference to the accessing of government benefits, the rental assistance, when it was not available to these parties. 

2. The principle that I apply was discussed by the Supreme Court of Queensland in Holdcroft v Market Garden Produce Pty Ltd [2000] QCA 396. A relevant passage appears in the judgment of Thomas J at paragraphs 26, 27, 28. Whilst the court does not lightly raise issues such as these – or deny its aid to parties who have made a contract – in circumstances where the contract has been carried out in a way which involves an imposition on the revenue authorities – as the parties’ conduct here has – then the court will not be backward in refusing its assistance to the parties – this is one of those cases.

3. There is no suggestion here that the parties were entitled to receive the rental assistance – at least, on the applicant’s case – that they were entitled to receive the rental assistance that they did.  I gave the applicant plenty of opportunity to explain to me how it was consistent with the agreement that he suggested existed between the parties, but my question was always avoided.  So irrespective of my conclusion about the interest in the B Street, Town C property, I would nonetheless refuse relief, because the parties’ conduct in this case, as a matter of public policy, disentitles the applicant to enforce the agreement, if it be in the terms that he suggests.  For all of those reasons, the application is dismissed. 

   RECORDED  :  NOT TRANSCRIBED

4. I refuse a costs order, because under section 117(1) of the Family Law Act, parties to proceedings in this court usually bear their own costs. There is a discretion in the court to make a different order as to costs if it thinks in circumstances of the case it should do so, but there are no justifying circumstances here for the making of an order for costs.

I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Jarrett delivered on 17 May, 2021.

Associate:

Dated:       8 June 2021