Fitch and Lewis

[2017] FCCA 371

FEDERAL CIRCUIT COURT OF AUSTRALIA

FITCH & LEWIS [2017] FCCA 371

Catchwords:
FAMILY LAW – Property – short relationship – 3 years since separation – Husband made substantial contributions during relationship – income disparity – in all the circumstances no adjustment of existing property interests.

Legislation:

Family Law Act 1975 (Cth), ss.75 and 79

Cases cited:

Bevan & Bevan (2013) FLC 93-545
Chapman & Chapman [2014] FamCAFC 91
Stanford & Stanford [2012] HCA 52
Watson & Ling [2013] FamCA 57

Applicant: MS FITCH

Respondent: MR LEWIS

File Number: SYC 695 of 2015

Judgment of: Judge Sexton

Hearing dates: 8 and 9 September 2016

Date of Last Submission: 17 November 2016

Delivered at: Sydney

Delivered on: 1 March 2017

REPRESENTATION

Counsel for the Applicant: Mr A. Givney

Solicitors for the Applicant: Argyle Lawyers

Counsel for the Respondent: Mr J. Millar

Solicitors for the Respondent: Diana Perla and Associates

THE COURT ORDERS THAT:

1. The Wife's application for property orders filed on 8 February 2015 be dismissed.

2. If the Husband seeks an order for costs, he shall file and serve written submissions (not longer than 5 pages) within 21 days.

3. If the Wife opposes the Husband’s application for costs, she shall file and serve written submissions (not longer than 5 pages) within 21 days of service of the Husband’s written submissions.

4. If the Husband seeks to reply to the Wife’s submissions, he shall file and serve written submissions in reply (not longer than 4 pages) within 14 days of service of the Wife’s submissions.

IT IS NOTED that publication of this judgment under the pseudonym Fitch & Lewis is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYC 695 of 2015

MS FITCH

Applicant

And

MR LEWIS

Respondent

REASONS FOR JUDGMENT

Introduction

1. The Applicant Wife seeks orders for property adjustment against the Respondent Husband by application filed in February 2015.  The Husband does not seek a property order in his favour in response. It is the Husband’s case that it would not be just and equitable for the Court to make any property order. He seeks dismissal of the Wife’s application with indemnity costs. 

2. The parties had a short marriage. The Wife has 4 adult children from a previous marriage, none of whom were dependent on her at the time the parties commenced their relationship.  The Husband has 3 adult children from previous marriages.  His youngest child, Ms C, now 19 years, born of his second wife who died in 2001, remains dependent on him.

3. Both parties were represented by counsel at the hearing. Mr Givney appeared for the Wife and Mr Millar for the Husband.

Background facts

1. The parties met in (omitted) 2010 and married on (omitted) 2012.  The Wife says they commenced cohabitation on (omitted) 2010 and separated 3.5 years later on 30 March 2014. The Husband agrees the relationship began in (omitted) 2010 but says cohabitation commenced when the parties married.  He says the parties separated on 2 July 2013. The parties were divorced on 2 June 2015.

2. The Wife is aged 64 years. She is self employed as a (occupation omitted), and operates a (omitted) business at her residence in Property W, New South Wales. At the time of hearing, the Wife had not re-partnered.  

3. The Husband is aged 71 years. He has his own (business omitted) as a (occupation omitted) and lives with Ms C, born (omitted) 1997, at Property S. The Husband has a new partner who maintains her own residence, and with whom he owns a property at Property W.

Orders sought 

1. In her Initiating Application, the Wife seeks an order for spouse maintenance of $500 a week for two years and a property order for payment to her by the Husband of $200,000:[1]

   for her share in the accrued assets during the course of the relationship and loss of her business income and growth. This sum includes an amount to purchase a replacement motor vehicle.

   [1] Exhibit 14

2. Her case outline document filed shortly before hearing seeks $588,582 by way of property settlement. In final submissions, the Wife’s counsel submits that a payment by the Husband of $200,000 is a fair recognition of her contributions over a short period of cohabitation, and that a further payment of $150,000 by way of adjustment is appropriate when considering section 75(2) factors, a total payment of $350,000. This would leave the Wife (given she currently has net assets of approximately $300,000) with an estimated 10% of the overall net assets of the parties, inclusive of superannuation.

3. The Husband says that he has made substantial financial contributions to the Wife during the period of their relationship and since their separation, and it would not be just and equitable for any adjustment to be made to their existing property interests.

Legal principles  

1. Section 79(1) of the Family Law Act1975 (Cth) gives the Court power to alter the property interests of the parties to a marriage. The High Court in Stanford v Stanford (2012) 247 CLR 108 set out the approach to be taken to a s.79 application. The Court's task is to firstly identify the existing legal and equitable interests in property held by each party, as well as their liabilities and financial resources. The Court must then decide, having regard to the interests identified, whether it is just and equitable to make any property adjustment “in all the circumstances.”[2] The High Court says that it is incorrect to assume that the parties’ interests in their property should be altered, noting, as Mr Millar submits, that there is no community of ownership arising from marriage. In other words, neither party has an automatic right to an adjustment in property by reference to the matters in s.79(4) of the Act. The court must always be careful to ensure that the requirements of s.79(4) and s.79(2) of the Act are not conflated.

   [2] Family Law Act 1975, section 79(2)

2. The High Court explained the meaning of “just and equitable”: 

   The expression “just and equitable” is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its metes and bounds.[3]

   [3] Stanford & Stanford [2012] HCA 52 at paragraph 36

3. If the Court is satisfied it is just and equitable to make a property order, the Court must identify relevant contributions and assess them; then consider relevant matters set out in s.79(4)(d) - (g) of the Act; and finally, determine what order adjusting the property, assets and liabilities of the parties is just and equitable.

4. The High Court makes clear that it is not a requirement to take into account the s.79(4) factors when determining the question of whether it is just and equitable to make any order.[4] However, the Full Court explains that "as long as they are seen as separate and not conflated, the factors in s 79(4) have the potential to inform the decision under s.79(2), along with all other relevant considerations".[5]

   [4] Accepted by the Full Court in Chapman & Chapman [2014] FamCAFC 91

   [5] Chapman & Chapman [2014] FamCAFC 91 at paragraph 9; See also Murphy J in Watson & Ling [2013] FamCA 57 at [12]

5. The Full Court in Bevan emphasised that the pre-condition to making any order for property adjustment is a finding that it is just and equitable to do so in accordance with s.79(2), but did not accept that s.79(2) establishes a threshold issue or that the requirements of s.79 must be followed in a particular order. [6]

   [6] Bevan & Bevan (2013) FLC 93-545

Credit

1. Each party’s counsel asks the Court to find against the other party on credit. 

2. I accept Mr Millar’s submission that there are inconsistencies between the Wife’s evidence as to her financial position and documents tendered in evidence, and that her financial evidence is inaccurate in a number of respects. I also agree with counsel, as later detailed, that the Wife’s gives contradictory evidence about the date of the parties’ separation.

3. In relation to financial issues, despite the Wife’s assurance that the contents of her loan application were accurate, I agree with counsel’s submission that the Wife exaggerated her financial position in February 2016 in her application for a loan to the (omitted) Bank.[7] Values she included for various assets, including her car, her real estate, her jewellery and her home contents, well exceeded the values deposed to in her Financial Statement sworn only a few months later on 18 August 2016 (and well exceeded the values for her car and contents deposed to in her February 2015 Financial Statement), and the values included in the Balance Sheet relied on at the hearing. The Wife also acknowledged in cross examination considerably understating her income from salary, and failing to disclose her bank accounts in her Financial Statement sworn in February 2015[8]. In addition, the Wife did not accurately differentiate her personal from her business expenses in her August 2016 Financial Statement, and excluded a loan of $5,500 to her son which she expects will be repaid. 

   [7] Exhibit 2

   [8] Exhibit 19

4. Mr Givney for the Wife submits that the Husband failed to fully and frankly disclose his financial position. It is true that the Husband made an error in his Financial Statement in relation to his income, corrected in evidence in chief, when he acknowledged omitting his rental income of approximately $15 to $20,000 in the 2016 income figure. In cross examination, the Husband explains that he operates his (business omitted) through (omitted) Pty Ltd. There is no value assigned to shares in that company in the Balance Sheet. However, the balance sheet for the company in the year ending June 2015[9] discloses an amount of $500,000 for goodwill. In cross examination, the Husband says he would not receive a dollar for his (business omitted).

   [9] Exhibit 10

5. Counsel for the Wife questions the likelihood of enforcement of the loan between the Husband and (omitted) Pty Ltd ((omitted) Pty Ltd) included in the Balance Sheet at $1,966,000, given the Husband is the appointor of the Lewis Family Testamentary Trust of which (omitted) Pty Ltd is the Trustee, and the Husband the sole shareholder and Director of that company. Counsel submits that the Husband has absolute control over the Trust because he is the appointor and has the power to appoint a new trustee. The Husband does not deny he controls the Trust. He states that he is the sole shareholder of the Trustee company.  However, he also points out that Ms C has been a co-director of the Trustee company since she attained 18 years. He has obligations as a Director to the Trust and to the beneficiaries of the Trust, of which there are a number. It is not open to him to act solely in his own interests to the detriment of the Trust or its beneficiaries. I am not persuaded the Husband’s responses to counsel’s questions on this issue amounts to a failure to disclose his financial position. Nor do I find it was his obligation to attach the Trust Deed to his affidavit.  

6. Counsel for the Wife further argues that the Husband failed to disclose that funds paid to the Wife during the course of the relationship may have been sourced from borrowings included in the Balance Sheet.  Given the Husband’s case, that he retain his own assets and liabilities and the Wife retain hers, I am not persuaded this omission adversely affects the Wife or amounts to a failure to disclose. The Husband states (and the Wife for the most part accepts) that he paid certain sums of money to the Wife. He is not asking the Wife to reimburse him for those payments or for an adjustment of property in his favour.  I find no evidence to support the Wife’s counsel’s contention that the Husband deliberately failed to accurately disclose his financial position.

7. I have regard to these credit findings when each party gives a different version of the facts.

Length of relationship  

1. There is no agreement on the length of cohabitation.  The Wife seeks to establish that the parties lived together from (omitted) 2010, very shortly after their first meeting on (omitted) 2010, until late March 2014, though says that the parties separated between July and November 2013. The Husband contends that the parties did not cohabit until their marriage in (omitted) 2012 and separated in July 2013 while on holiday in (country omitted). While the Husband acknowledges that he was keen to reconcile, that the parties attempted to reconcile in late November/early December 2013, and that they spent time together until late March 2014, he denies reconciliation ever occurred.[10] The Wife’s counsel submits that the Husband’s failure to put the date of commencement of cohabitation in issue when he filed his Response,[11] and the absence of submissions from the Husband’s counsel’s on the period 1 September 2010 to the date of marriage, proves that the Husband seriously understates the Wife’s contributions during cohabitation.

   [10] The Court made no finding as to the date of separation in the divorce proceedings.

   [11] At paragraph 13 of Wife’s submissions of 7 October 2016

2. The parties maintained their separate residences throughout the relationship. From early September 2010, it is common ground that the parties spent the majority of weekends together, for the most part at the Husband's Property S home in Sydney, but on some weekends at the Wife's home in Property W. The Wife says that until approximately July 2011, she used to return to Property W at the end of a Sydney weekend on Sunday evenings, and thereafter she sometimes returned very early on a Monday morning. 

3. It is common ground that the parties did not live together on week days before their marriage in (omitted) 2012.  From early 2012, the Husband says he encouraged the Wife to spend more time in Sydney and to fly rather than drive to and from Property W, but she continued to spend the working week in Property W. In April 2012, the Husband purchased a home in Property E and moved there with Ms C from Property S in June 2012.  From that time, the Wife spent some week days in Property E. The arrangement initially involved the Wife spending 9 nights a fortnight and the remaining 5 nights a fortnight in Property W, but the Husband says the marriage was not “great”, and the Wife usually spent more than 5 days a fortnight in Property W, with her number of nights in Property E diminishing over time. Ms C does not recall the Wife being at Property E as often as 9 nights a fortnight. The Husband says the Wife never made Property E her home, living out of a suitcase and leaving few clothes in the wardrobe. He says the Wife “walked out” of the apartment on numerous occasions to stay with one of her children (who lived nearby) or to return to Property W.  The Wife, on the other hand, says that she spent 9/14 nights a fortnight in Property E until the parties travelled to (country omitted) in June 2013.   

4. The Husband deposes to the Wife leaving the Property E apartment permanently in April 2013 and returning the Property E keys, though agrees he spent time with the Wife in Property W after that.  In an email to the Wife of 21 May 2013, the Husband pleads with the Wife to attend the pre-planned trip to (country omitted) for Ms C’s sake.[12] The Wife deposes to returning the Property E keys on 28 July 2013,[13] yet relies on an email from the Husband dated 2 September 2013[14] when he refers to her leaving keys. Given the inconsistency in the Wife's position on this issue, I prefer the Husband’s evidence. However, I am not persuaded anything of significance turns on when the keys were returned.  

   [12] At Annexure H to Husband’s affidavit sworn on 17 August 2016

   [13] At paragraph 69 of Wife’s affidavit sworn on 17 August 2016

   [14] Exhibit 16

5. I do not accept that the parties ‘cohabited’ from the first or second weekend they spent together. The Wife remained living in Property W and was spending weekends with the Husband, and not every weekend.  From the date of marriage, I prefer the Husband’s evidence on the amount of time the parties lived together in Sydney. I am satisfied that the marriage deteriorated within a very short time. I accept the Husband’s unchallenged evidence that in June/July 2012, the Wife said to him (referring to the marriage), “I have changed my mind. I have got it wrong again. I do not want an unhappy life.”[15] I accept the Husband’s evidence that the relationship from that time was “not great”, and that the Wife left the Property E home on a number of occasions before leaving permanently in April 2013. However, as already noted, the parties continued to spend time together in (omitted), and neither party suggests that separation occurred before 2 July 2013.

   [15] At paragraph 42 of Husband’s affidavit sworn on 17 August 2016

6. The parties agree they separated while away in (country omitted) in July 2013, and the evidence supports such a finding. The Husband says they did not share a bedroom while away. The Wife relies on a note written about her by the Husband in July 2013 that said,  “She is an evil conniving bitch… and she should leave.”[16] The Wife confirms that on 14 July 2013, the Husband described himself as “separated” on a dating website.  In a letter to the Husband dated 19 August 2013, the Wife says that the separation date was 14 July 2013.

   [16] At paragraph 66 of Wife’s affidavit sworn on 17 August 2016

7. It is common ground that the parties did not communicate from July until November 2013, while the Wife says she continued to make fortnightly trips to Sydney to work and to see Ms C. Each party dated others during that period. 

8. However, it is the Wife’s case that the parties reconciled in November 2013 until late March 2014.[17] This is disputed by the Husband, and by Ms C, whose evidence was unchallenged. It is the Husband’s case that although he very much wanted to reconcile, the parties spent time overnight together, attended a number of social events and holidayed together between November 2013 until March 2014, the parties never reconciled. 

   [17] At paragraph 73 of Wife’s affidavit sworn on 17 August 2016

9. On the basis of the Wife’s evidence, I find there could have been no reconciliation before 21 November 2013, when the Wife sent the Husband an email signed “your very ex-wife Ms Fitch.”[18]  Then, although it is agreed that the parties were together on 24 and 30 November 2013, there could have been no reconciliation before 3 December 2013. In an email to the Husband dated 3 December 2013,[19] the Wife explains her reasons for deciding against any further attempt at reconciliation. On 6 December 2013, the Husband wrote to the Wife offering to enter into a financial agreement providing for him to discharge all her debts, give her control over all his assets, and relinquish any claim against her assets.[20] The Wife refers to the dates thereafter that the parties spent time together, and the Husband does not dispute that the parties spent time together on the following dates: 7, 8, 14, 15, 17, 30 and 31 December 2013; 6, 7, 9, 10, 17, 25 January 2014, which the Husband describes as the “peak point at attempt at reconciliation”, 22 and 23 February 2014, 16-20 March 2014, ((omitted)) 22 March 2014 (Husband’s daughter party in Melbourne) and 26 March 2014 ((omitted)).  The Wife relies on a photo of the Husband still wearing his wedding ring in March 2014.[21] Ms C says the Wife never lived with her and the Husband again after the July holiday to (country omitted), though slept over a couple of times after their return to (omitted) in early 2014.  The Wife’s counsel submits that the Husband deliberately failed to disclose the emails between the parties which would lend support to the Wife’s contention that the parties reconciled.   

   [18] Exhibit 5

   [19] Exhibit 6

   [20] Annexure F to Wife’s affidavit sworn on 17 August 2016

   [21] At page 50 of Wife’s affidavit sworn on 17 August 2016

1. I am not persuaded that the parties reconciled between November 2013 and March 2014, though I accept they made efforts to reconcile (particularly the Husband) and shared social occasions and a number of nights together.  On 1 February 2014, the Wife sent the Husband an email stating, “On this day, after 6 weeks of attempted reconciliation we have agreed that this marriage is irretrievable”[22] [my emphasis]. In February 2016, when the Wife applied for a credit union loan, she stated that the parties had separated in August 2013.[23]

   [22] Annexure J to Husband’s affidavit sworn on 17 August 2016

   [23] Exhibit 2

2. Despite these findings, I am not satisfied there is a substantial difference in each party’s narrative as to their living arrangements and the time they spent together while the relationship was on foot. I find the parties were married on (omitted) 2012 and separated on 2 July 2013, a period of approximately 15 months. I am satisfied that, with the exception of the period July to December 2013, the parties were together from time to time until 26 March 2014, with cohabitation commencing at the time of marriage. I find that the strength of the parties’ commitment to one another varied from time to time during the period of their relationship.  

Existing property interests of the parties

1. The first step requires identification of the property in which the parties have a legal or equitable interest.[24] Neither party asserts an equitable interest in the other party's property. 

   [24] Stanford & Stanford at paragraph 37

2. The parties agree on the items and values set out in the following table:

Assets and liabilities at the date of hearing	$
Property W property (W)	860,000
Wife’s 1/3 share in Property W property (W)	183,333
Bank Accounts (W)	21,500
VW (omitted) (W)	5,000
Home contents (including wine cellar) (W)	60,000
Mortgage (W)	-600,000
Mortgage over Property W (W)	-189,477
Credit Cards (W)	-35,000
Total net assets of the Wife	305,356
Property S (H)	3,200,000
Property R, (H) – 50%	455,000
Bank accounts personal (H)	11,652
Visa account (H)	872,290
Contents (H)	90,000
Share in (omitted) Pty Ltd (H)	2
Superannuation (H)	4,143,696
Mortgage (H)	-895,204
Credit Cards (H)	-7,625
Debt to (omitted) Pty Ltd (H)	-1,966,000
(omitted) Pty Ltd Loan Account (H)	-198,167
Total net assets of Husband (including superannuation)	5,705,644
TOTAL NET POOL (including superannuation)	6,011,000

Is it just and equitable to make an order?

1. It is necessary for the Court to consider “all the circumstances” to determine whether it is just and equitable to make any order for property adjustment.  [s.79(2)]. His Honour Justice Murphy[25] described "circumstances of the parties' relationship" as "its nature, form and characteristics".  His Honour quoted from Stanford[26]:

   The fundamental propositions that have been identified require that a court have a principled reason for interfering with the existing legal and equitable interests of the parties to the marriage and whatever may have been their stated or unstated assumptions and agreements about property interests during the continuance of the marriage. ..

   ...the bare fact of separation, when involuntary, does not show that it is just and equitable to make a property settlement order. It does not permit a court to disregard the rights and interests of the parties in their respective property and to make whatever order may seem to it to be fair and just...

   ... the rights of the parties [are] to be determined according to law, not by reference to other, non-legal considerations..."  (such as moral obligations)

   [25] Watson & Ling at paragraph 11

   [26] Watson & Ling at paragraph 11

Contributions

1. I agree with Mr Millar that the Court must be cautious not to conflate the requirements of sections 79(2) and (4) of the Act in determining whether it is just and equitable to make a property order. However, it is nevertheless appropriate, for the purpose of informing the exercise of the Court’s discretion under s.79(2), to consider each party’s contributions, both financial and non-financial to the property of the parties, as well as to the welfare of the parties during the relationship and after separation. In Watson & Ling[27], Murphy J said that[28]:

   ….provided that the questions required by … s 79(2) and … s 79(4) are seen as separate and applied as such, and not conflated, the enumerated factors within … s 79(4) can inform the … s 79(2) discretion together with any such other considerations as are properly relevant.

   [27] [2013] FamCA 57

   [28] Watson & Ling at paragraph 12

Financial position at commencement of relationship

1. It is not contested that when the parties first met, the Wife was in a precarious financial position with substantial debt[29]. The Husband was in a significantly superior financial position to the Wife in relation to assets, income and financial resources.  The Husband says the Wife did not tell him about the extent of her debt at that time, but he subsequently learned how much financial pressure the Wife was under.  In an email to the Husband dated 27 February 2012, (when the parties were discussing marriage) the Wife acknowledges the Husband’s generosity to her, while admitting to “her shocking financial situation.”[30] The Wife acknowledged moving money around to take advantage of low interest rate offers, and to living extravagantly.  She refers to her (omitted) Finance loan of an estimated $45,000, which she had not mentioned to the Husband previously. 

   [29] At paragraph 16 of Wife’s affidavit sworn on 17 August 2016

   [30] Annexure C to Husband’s affidavit sworn on 17 August 2016

2. At the commencement of the relationship, the Wife held the following assets: 

   a)A property at Property C, subject to a mortgage of approximately $450,000.   

   b)A one third share in an investment unit at Property W, subject to a mortgage of $196,000 with no equity.

   c)Credit card liabilities of approximately $70,000.

   d)A (omitted) Finance loan of approximately $45,000.[31]

   e)A VW motor vehicle. 

   f)Furniture and furnishings.  

   [31] Annexure B to Husband’s affidavit sworn on 17 August 2016

3. The Husband held the following assets: 

   a)Property S1 - $2,500,000.

   b)Property S2 – $2,300,000.

   c)Honda Motor Vehicle - $10,000.

   d)Furniture, furnishings and artwork - $150,000.

   e)Superannuation – Lewis Superannuation Fund - $2,425,000

   f)Mortgages to the (omitted) Bank - $2,700,000

   g)Debt to Testamentary Trust (omitted) Pty Ltd - $1,966,000

4. As already noted, the Husband was and remains the sole shareholder of (omitted) Pty Ltd, the Trustee of the Lewis Testamentary Family Trust established by his late wife, Ms C’s mother. The Husband and Ms C have been co-directors since she attained 18 years.  The principal beneficiaries of the Trust are the Husband and his three children. Spouses, grandchildren and step-children are additional discretionary beneficiaries. The Husband deposes to the Trust lending monies to his two adult children and to himself to purchase homes, and to himself owing $1,966,000 to the Trust at the time of hearing.  The Trust distributes income to Ms C which is used to meet her living expenses, education and other expenses.  

Financial position at end of relationship

1. When she filed a Financial Statement in February 2015, 12 months after the relationship had ended, the Wife had a mortgage debt of $450,000 and owed $94,000 on her credit cards.  In February 2016, she increased her mortgage debt by $150,000 to $600,000 and paid her credit card debts, specifying the purpose of the loan as repayment of credit card debt and improvements to the Property W property.[32] The Wife says she has used all those additional funds for living, medical and legal fees and assisting her adult children, one of whom still owes her $5,500. She has no savings. She now has 6 credit cards and includes a figure of $35,000 for her credit card debt on the balance sheet, though says in cross examination that she recently repaid approximately $26,000. She estimates having paid her lawyers $40,000. According to the Husband, the Wife took all the wedding presents when she left the Property E home though he gives no detail of those items or their value.   At the date of hearing, the Wife retained the real estate she held at the commencement of the relationship, held funds at bank, a car, home contents including a wine cellar, with an increased mortgage debt as a result of her re-finance after separation, and reduced credit card debts.  She held net assets of $305,356.  

   [32] Exhibit 2

2. At the end of the relationship, the Husband owned Property S and the Property E property.  At the date of hearing the Husband had sold Property E, reduced his bank debt and bought a 50% share in a property at Property W from his superannuation fund.  He retained funds at bank, furniture and artworks, superannuation, with liabilities of a home mortgage, Mastercard, (omitted) Pty Ltd loan account, (omitted) Pty Ltd.  He held net assets of $5,705,644.

Employment

1. The Wife's taxable income was significantly less than the Husband's at the time their relationship commenced.  At the end of the relationship in March 2014, the disparity in the parties’ incomes was much the same. The Wife’s income had increased by the time of hearing.

2. In September 2010, the Wife was employed in (omitted) in her own (business omitted).  She was also operating a part time (omitted) business from her home in Property W, known as “(omitted business)”, registered with the local council. The Wife says she was still establishing the (business omitted) and had significant running costs on the large Property W property.  As already noted, she was servicing substantial credit card debt.  In cross examination, the Wife says that she had been living extravagantly and felt guilty about her financial position. The Wife maintained her businesses during the relationship, and to the time of hearing.  Her precise income at hearing was not clear. She acknowledged the income figures in her two Financial Statements had been understated.

3. The Husband has at all relevant times been employed by (omitted) Pty Ltd which carries on business as (omitted) Pty Ltd. The Husband is the sole Director of the company, and its shares are owned by a company owned by the Lewis Testamentary Trust. The Husband deposes to an income of $7,038 a week and in examination in chief acknowledges additional income of $15-$20,000 per annum by way of rent in the 2016 year.  

4. As a result of her spending less time in (omitted) and more time in Sydney during the relationship, the Wife contends that her income was reduced as a direct result of the relationship. The Wife also contends that once the Husband established an office in the Property W home, the parties agreed that the Wife would not accept (business omitted), which further reduced her income. In February 2012, the Wife sent an email to the Husband (earlier referred to) titled “I am a Pauper.”[33] It read in part:

   I have limited income which cannot cover all my expenses, especially as I am now working even less, abandoning the marketing and growth of my business and spending much of my time travelling to, and living in, Sydney.

   [33] Annexure B to Wife’s affidavit sworn on 17 August 2016

5. It is not contested that the Wife did not operate her (business omitted) five days every week in Property W after the parties’ marriage in (omitted) 2012, and that she lost productive working hours travelling 4 hours each way to Sydney even before that. (For a period of time, the Wife says that the Husband paid for her to fly from (omitted) to Sydney and return to relieve her of the long drive, but the Wife estimates that she lost more working hours when flying.) While she established a (business omitted) in (omitted) on Friday and Saturday mornings, she says it cost her approximately $5,000 in set up expenses, was not commercially viable, and closed after 12 months. She also worked at a (employer omitted) in (omitted) for two years from April 2012.  The Wife says her (business omitted) has grown since she stopped travelling to Sydney, as she is working five days a week from Property W. Although she earns minimal income from her (omitted) business, its losses continue to offset her taxation liability.    

6. In cross examination, the Wife says she agrees with paragraph 62 of the Husband’s affidavit in which he sets out her gross income for the financial years 2011-2016 as follows:

   a)2011     $122,118

   b)2012     $135,729

   c)2013     $122,419

   d)2014     $133,796

   e)2015     $147,545

   f)2016     $82,622 (half year).

   Her income in 2012 and 2013, which included rental payments from the Husband, therefore remained relatively steady. Since then, even though the rental payments from the Husband ceased, the Wife’s income has increased.  An examination of the Wife’s taxation returns[34] reveals gross fees from her (business omitted) as $109,375 in the 2012 financial year, $91,080 in the 2013 financial year, and $113,763 in the 2014 financial year.

   [34] Exhibit 1

7. As acknowledged by the Wife, her income in her two Financial Statements is not accurate.  She did not challenge the income figures set out above. 

Financial dealings during relationship

1. The parties did not pool their income. The Wife maintained her home in Property W throughout the relationship and paid the expenses related to her home, including insurances, electricity, gas and water rates, the cleaner, telephone, internet, costs of maintaining the swimming pool, and mortgage payments. The Wife describes the Property W property as large with high maintenance costs.  The Husband maintained his home (originally Property S then Property E)) with Ms C and paid all the expenses related to his homes. The parties did not share bank accounts or credit cards and did not open a joint account to share living expenses.  

2. However, while the relationship was on foot, the Husband made substantial payments to the Wife. The Wife acknowledges that the Husband was financially generous throughout the relationship. She says he was compensating her financially for the income loss she suffered as a result of travelling to Sydney, attending events or trips with him or reimbursing her for expenses she paid for his or Ms C’s benefit.  For over two years, the Husband paid rent for the use of office space in the Wife's home. The Husband met all his own expenses, both personal and business, and all those relating to Ms C, usually reimbursing the Wife if she met an expense which benefited him or Ms C.

3. The Wife deposes to assisting with living costs and to meeting the costs of repairs to her motor vehicle, including $7,000 in 2012 when the Husband had been driving. The Wife deposes to buying food, flowers and household items when at the Husband's (omitted) home, and to purchasing gifts for Ms C and the Husband.  She says she spent an estimated $2,000 a year on wine as the parties often entertained.  The Husband does not dispute that the Wife made these contributions.  

4. However, it is common ground that the Husband made the overwhelmingly greater financial contributions. He details his payments to the Wife in a Notice to Admit Facts[35] dated 2 March 2016, which total over $340,000. The Wife denies receiving approximately $10,000 of that figure, but otherwise accepts the amounts were paid to her.  And while she does not admit to the amounts the Husband claims to have paid the builder when renovations were undertaken at Property W, there is no dispute that the Husband paid for the improvements.

   [35] Exhibit 7

5. Large transfers to the Wife included $6,000 in September 2010; $50,000 in January 2011; $25,000 in July 2011; $65,000 in March 2012; $7,050 in April 2012; $14,000 in August 2012; $7,000 in November 2012; $6,000 in December 2013; $5,500 in February 2014. I set out details of a number of these transfers below.

6. On 27 January 2011, the Husband paid the Wife $50,000 as part payment of his intended purchase of a half share in her Property W home which the Wife says she used to reduce her credit card debt. In July 2011, the parties agreed the price of the 50% share would be $550,000 (including the $50,000 pre-payment). The Agreement was dated 23 July 2011.[36] On 28 July 2011, the Husband transferred another  $25,000 on account of the purchase of a half share of the property.  The Wife’s email to the Husband dated 18 July 2011 said the Husband would not lose any money he gave her[37], but the agreement was later abandoned and the funds not repaid, nor requested by the Husband to be repaid.

   [36] Annexure F to Husband’s affidavit sworn on 17 August 2016

   [37] At pages 35 to 36 of Husband’s affidavit sworn on 17 August 2016

7. Between April and September 2011, the Husband proposed, and the Wife agreed, that the Husband meet the cost of improvements to the Property W property to create a downstairs bedroom, ensuite bathroom and walk in wardrobe in place of one of the existing sitting rooms. The Husband paid $39,780.60 to the builder in addition to meeting the expense of various sundry items required for the bathroom including tiling, taps, toilet, vanity.  While the Wife does not challenge this evidence, she says she paid $786 for antique tiles, $200 for carpet and $300 for a cedar window.  I am not satisfied the evidence supports the Wife’s case that the purpose of the renovations was to establish an office for the Husband’s sole use.  Both the Husband and Ms C describe the cellar in which the Husband had his computer/printer set up as a windowless room, never used as a bedroom and unchanged by the improvements. I am not satisfied that the Wife has not benefited from the improvements to the property. The Wife continues to use the new bedroom, ensuite and walk in wardrobe, as the master bedroom. Neither party adduces evidence of the effect of the renovations on the value of the home.

8. From January 2011 to July 2013, the Husband made monthly payments of $2,700 a month to the Wife towards the monthly mortgage payments on the Property W property. In approximately February 2012, the amount was varied to approximately $2,000 per month as rental for the Husband’s use of the cellar in the Property W property for his business, in part substitution for the mortgage payments. The Husband continued to pay the additional $700 separately to the Wife each month until July 2013. The Husband claimed the rental against his business income, and the Wife included the rental as (omitted) business income.  I do not accept Mr Givney's submission that the Husband benefited financially from this arrangement. While he claimed a tax deduction for the rent, he also had to find the funds to pay the rent.

9. On 15 March 2012, after the Wife emailed him about the true extent of her debt, the Husband paid the Wife $65,000 ($30,000 + $35,000) to reduce her debt. The Wife says the funds were to help her to manage ongoing expenses “as a result of my working fewer hours.”[38]

   [38] At paragraph 27 of Wife’s affidavit sworn on 17 August 2016

10. While the Husband does not dispute that he may have enjoyed the benefit of some of these payments, it is not disputed that the Wife received the majority of these monies for her sole benefit.

11. In addition, there is no dispute that the Husband met all expenses for the parties’ trip to (country omitted) in late 2010 and (country omitted) in mid-2013 (until the separation) including fares and accommodation, or that he met expenses of $3,696.78 for the Wife’s trip to (country omitted) without him in late 2012/early 2013.  There is no dispute that the Husband covered the expenses for the parties’ domestic holidays.

12. The Husband bought jewellery for the Wife in January 2012 at a cost of $4,650 (excluding her engagement ring) which she retains. The Husband met most of the expenses for the parties’ wedding in (omitted) 2012, including the Wife’s wedding dress. The parties attended plays, operas or musicals during the relationship.  The Wife says it was usual for the Husband to meet the cost of these events (approximately 4 a year) though she recalled paying for one play.  The Husband paid when the parties went out to dinner.

1. The Husband says the parties had a farewell party for the Wife’s daughter Ms E at his Property S home, and he paid the expenses.  The Wife had a party for her cousins at the Property E home and the Husband paid all expenses.

Real estate

1. In April 2012, the Husband purchased an apartment in Property E in his sole name, with the encouragement of the Wife because it was close to her children, using his own funds of approximately $1,540,000.  The Husband then sold his property at Property S2, and used the proceeds of sale to pay for the Property E apartment and to reduce his debt to the bank. The Husband moved in to the Property E property in approximately June 2012. In September 2013, the Husband and Ms C moved out of the Property E property, and though the Husband tried to sell it then, it did not ultimately sell until July 2015 for $1,875,000.  The Husband applied the net proceeds to reduce his bank debt.  The Husband and Ms C moved to the Husband’s property at Property S1 once the tenants had vacated the property. The Husband's unchallenged evidence is that it cost him, “$60-70,000 to get things back in order.”

2. Since separation, the Husband has used superannuation funds to purchase a half share in the property at Property W. 

3. The Wife’s real estate interests have not changed since the parties met, but as already noted, in February 2016, she increased her loan on Property W by $150,000 to pay credit card debts and meet expenses. She says she has had painting done at Property W during 2016, but no structural alterations. She plans to develop the property as a (business omitted) venue with her son’s involvement, although did not use the $150,000 for that purpose, despite what she told the credit union who lent her the funds.    

Non-financial contributions

1. The Wife says she prepared all meals for the Husband and Ms C when in their Sydney home and all meals for dinner parties.  She was responsible for cooking, planning and shopping when the parties were living together. She says she often arrived on a Friday for the celebration of (religion omitted) to prepare for the family and for guests. The Wife says that while the parties also enjoyed meals out, they entertained and hosted many gatherings in Sydney and Property W: Husband’s birthdays (omitted) 2011, 2012, 2013, the parties’ wedding in 2012, family gatherings, Christmas. She deposes to shopping, cooking, cleaning and entertaining for the Husband’s friends and family, Ms C and her friends. During periods of separation and after final separation, the Wife says that Ms C continued to spend time at Property W and the Wife arranged her train transport and entertained her friends.  The Wife deposes to taking the major role in organising food and entertainment for parties, dinner parties, friends staying, entertaining the Husband’s clients, organising decorations, food, ambience.  

2. The Husband says the Wife has exaggerated her home making contributions.  He agrees the Wife cooked meals in Sydney for him and Ms C and on occasions cooked for friends.  He says that other than sharing the cleaning up after meals, the Wife was not otherwise involved in housework at his home. The Husband employed a cleaner, did his own washing, sent shirts out for ironing and looked after Ms C. Ms C says that her father enjoys cooking so also cooked for them when the Wife was in Sydney, including Friday night meals for the (religion omitted) celebration. When in Property W, the Husband agrees that the Wife largely took responsibility for cooking, though says they often shopped for food and alcohol together and he always paid.  

3. Ms C was 13 years’ of age when the parties met. The Husband acknowledges the Wife’s care for Ms C in his will[39]. Ms C spent time in Property W from time to time, sometimes with friends whom the Wife entertained. The Husband supported Ms C’s relationship with the Wife and says he encouraged Ms C’s communication with the Wife even after their separation. He acknowledges that the Wife may have shopped for clothes with Ms C, that he gave a number of lifts to (language omitted) classes, and may have gone to a beautician or a medical appointment with her.  Ms C denies the Wife’s contention that after separation, they had regular communication by phone, text and email, or that the Wife would see Ms C when she came to Sydney each week. While Ms C acknowledges getting on well with the Wife, she says the Wife has significantly exaggerated the extent of her contribution.  

   [39] Annexure Q to Wife’s affidavit sworn on 17 August 2016

4. I am satisfied that Ms C and the Wife had a good relationship, and that the Wife took an active role in her care when the parties were together. I accept that the Husband took the substantially greater responsibility for the tasks associated with Ms C, but I am satisfied that the Wife also made a meaningful contribution, was a positive presence in her life while the parties were together, and warmly welcomed Ms C and her friends into her home at Property W on many occasions, ensuring they enjoyed their time there.

5. I accept that the Wife had a role in the Husband’s office relocation when he moved to Property E, but find the Wife has exaggerated her role.  I accept the Husband’s evidence that the Wife accompanied him to purchase a table and 3 chairs for the office. 

6. The Wife deposes to preparing the Property S property for sale, removing clutter, spending “hundreds of dollars” bringing plants from Property W to landscape the front garden, preparing the house for open inspections having it clean and well presented with flowers.  I accept the Wife had a role in preparing Property S2 for open inspections, but accept the Husband’s evidence that the property was in excellent condition, beautifully furnished and there was not a great deal of preparation needed.

7. The Wife contributed to the improvements undertaken at the Property E property. The improvements included enclosing two open verandahs, adding curtains to the bedroom and adding shelving.  The Husband agrees that the Wife shopped with him for lights, selected the fabric for the curtains, and may have established a herb garden near the front door.  He agrees the Wife may have helped Ms C select and build items for her bedroom from (omitted).  However, the Husband says the Wife never made Property E her home and he met all expenses. 

8. The Wife describes herself as the homemaker, caring for the Husband and being responsible for the welcoming ambience in the home. She also believes she enhanced his relationship with his daughter Ms A and accompanied him to Melbourne when her first child was born. She says, “I contributed extensively to provide a happy and contented household for the Husband.”[40] I accept that the Wife made contributions in this way.

   [40] At paragraph 106 of Wife’s affidavit sworn on 17 August 2016

9. The Wife supported the Husband through his heart operation and later his spinal surgery. The Husband acknowledges the Wife’s important role in his recuperation after his back operation in January 2013.  He was confined to bed for a number of weeks and needed a walker.  The Wife cooked for him.  The Wife visited the hospital each day for 2 weeks.  The Husband and Ms C stayed in Property W until the end of January 2013.  When the Wife had an operation in June 2013, the Husband says their relationship was so strained that he was unable to be of much assistance despite travelling to Property W to do so.

Contributions to welfare of family

1. The word “family” consists of the words “constituted by the parties to the marriage, and any children of the marriage, including any contribution made in the capacity of homemaker or parent.”[41] The provision therefore applies to the parties but not to Ms C.

   [41] Section 90SM(4)(c)

2. Given the short period of the relationship, the nature of that relationship, and the very short time the parties spent the majority of their time in the one home, I find the Wife’s contributions are far outweighed by the Husband’s contributions.

Each party’s current circumstances

1. The Wife is now 64 years of age.  She underwent spinal surgery in July 2016 from which she was recovering at the time of preparing her trial affidavit. The Wife describes difficulty sitting and driving her car, and says she plans to purchase a new car with better suspension to accommodate her spinal issues. However, her application for a loan in February 2016 shows she has good prospects in her (business omitted) as a (occupation omitted) and her income has remained substantial in the 2016 year.  The Wife is running her (business omitted) and planning to develop her Property W property as a (business omitted) venue. I agree with Mr Millar that it is noteworthy that the Wife did not refer to these plans in her Affidavit and the proposal only came to light because they were disclosed in her application for a loan to (omitted) Bank.[42]

   [42] Exhibit 2

2. The Husband is 71 years of age, 7 years older than the Wife.  He deposes to having reasonable health for his age though has undergone heart surgery and spinal surgery in the last 4 years.  He continues to take medication as a result of surgery for a gastro intestinal tumour. He is considering retirement.

3. As already noted, there is a significant disparity in incomes between the parties, as there has always been. The Husband has the significantly greater assets now because he had the significantly greater assets when the parties met.   

Conclusion

1. The parties’ relationship was conducted at the Husband’s homes in Sydney for the most part, although the parties (and Ms C) also spent time at the Wife’s home in Property W. It was a short marriage and the parties never lived together full time. From the commencement of the relationship, the Wife frequently travelled to Sydney on weekends, often returning to Property W on the Sunday, until the parties married 18 months into the relationship.  Thereafter, for approximately 12 months the Wife spent up to 9 days a fortnight in Sydney and the remainder in Property W, before the parties separated in July 2013.  The parties then made an unsuccessful attempt to reconcile in December/January 2014, finally attending a final social event together on 26 March 2014.

2. During the marriage, the Husband gave the Wife considerable financial help, apart from meeting the majority of their joint expenses. He has transferred over $340,000 to the Wife, most of which was for her sole benefit.  The sum of $75,000 was paid on the understanding he was purchasing a half interest in her property, an agreement that was later abandoned, though the funds were not returned nor requested by the Husband.  The Wife gives her reasons for the Husband making payments to her in her Notice Disputing Facts:[43]

   After cohabiting in (omitted) 2010, I was slowly spending less time in (omitted) and more time in Sydney with (omitted) property being enjoyed by the family on weekends and school holidays. I reduced my work and secured some work in Sydney. I fully maintained the expansive (omitted) property. After paying some lump sums to reduce debt and allow me to work less…Mr Lewis began paying a monthly allowance to me for loss of income, travel costs, and other joint household expenditure and living costs.  If I incurred expenses he may “top up” this allowance as shown in items….  I bought household items, food, alcohol, petrol, clothes and gifts for my step daughter etc…

   [43] Exhibit 7

3. The Wife gives no details of her actual expenditure on the Husband which was not reimbursed.

4. Despite her claim to have lost income, the Wife’s income did not change in any significant way during the relationship. The Husband’s payments to the Wife were well in excess of any “compensation” that may have been needed to top up her income.    

5. When the Husband set up an office space at the Wife’s home, the Husband paid monthly rent to assist with the outgoings on the Property W home. In her Notice Disputing Facts dated March 2016[44] the Wife says (in relation to rental payments)

   …these amounts were paid to (omitted business) for Office rental in the Property W property at the exclusion of other guests. Claimed as income by me from the (omitted business). …

   [44] Exhibit 7

6. The Wife contends that she did not have guests during the relationship because of an agreement the parties reached. While providing no financial details of what she might have been earning from this business, she says she lost the benefit of income from one regular 3 night a week guest in particular. However, she does not adduce any evidence as to why she was unable to have guests, particularly her regular weekday guest. Ms C says the Property W property comprised four upstairs bedrooms the Wife could have used for her guests. I am not satisfied that the Husband’s use of the cellar for an office had any impact on the Wife’s (omitted) business.  I find it noteworthy that the Wife claimed losses from the (omitted) business in her taxation returns throughout the parties' relationship.

7. Mr Givney submits that[45]:

   …while the Husband was able to provide the Wife elements of a lifestyle that was not previously enjoyed by the Wife, he also had the benefit of the Wife’s company and support during times when he was [apparently] “lavishing” elements of an extravagant lifestyle…the separation brought about the inability of each of the parties to share the other’s home. The issue of the significant contributions made albeit in a short period by the Wife and the gross disparity between each of the parties’ income and means indicates that it is just and equitable for the Court to make an order.

   [45] At paragraphs 38 and 40 of Wife’s counsel’s submissions

8. Mr Millar submits[46] that the Court should have regard to the following matters when deciding whether it is just and equitable to make a property settlement order:

   a)The marriage was of short duration extending from 28 April 2012 to 2 July 2013.

   b)Perhaps by reason of the short duration of the marriage, the positions of the parties were not materially different at the end of the marriage as compared with their positions at the beginning of the marriage with respect to their financial circumstances.  When the parties met the Husband had assets and liabilities as set out at paragraphs 19, 20 of his affidavit (as set out above).  At separation, his property interests were essentially the same, though one item of property had been swapped for another: his property at Property S2 had been sold, the Property E property purchased and then sold using the proceeds to reduce mortgage debt and to buy a share of the property at Property W.  The Wife owned her home at Property W, encumbered by mortgage and her third interest in a home unit at Property W encumbered by mortgage and substantial credit card debts.  At separation, her position was the same, although at the hearing, her debt on the Property W property had increased because of a refinance done by the Wife earlier this year, and almost 3 years after separation.

   c)The Wife’s financial position was enhanced by financial contributions made by the Husband to her Property W property with respect to building works undertaken and the part-payment by him for the purchase of an interest in the property pursuant to an agreement later abandoned.  The Wife retained the funds paid to her by the Husband under that agreement.

   d)When the relationship started, and at the date of marriage, the Wife worked as a (occupation omitted) and she continued to do so at the date of separation and at the time of hearing.

   e)The parties kept their property separate from each other and each retained property registered in his or her own name.  Even when the opportunity arose to acquire a property jointly, at Property E, they did not do so.  The Wife did not contribute to the purchase price of the property nor did she have any responsibility for the mortgage. The Wife received none of the proceeds of sale.

   f)The parties did not pool their incomes or establish a joint account from which to pay joint living expenses.

   g)The parties never lived together full time.  The Wife spent up to 9 days a fortnight with the Husband for approximately 12 months only, spending the rest of her time in Property W. While the Husband paid rent to the Wife for his use of a room at her home, the Wife did not contribute rent to the Husband when staying at his home.

   [46] At page 3 of Husband’s counsel’s submissions

9. I agree with Mr Millar’s submissions.  The parties are mature intelligent adults.  They chose to conduct their relationship in a particular way, never living together full time and remaining financially independent, while retaining their individual businesses.  Each party provided their home for the parties to spend time together, though overwhelmingly the parties spent their time together in the Husband's properties.  The Wife did not pay for repairs or maintenance on the Husband's homes, although she contributed in a minor way to the purchase of items for the homes from time to time and helped in selecting home decorations. The parties did not conduct their relationship on the basis they would have an interest in the other's property.  There is no evidence to suggest that the Wife was not satisfied with the parties' financially independent arrangements, and was not adequately assisted financially by the Husband during the relationship. Neither party executed a will in favour of the other.  The Husband made the far greater contributions during the relationship.

10. In all the circumstances, I am not satisfied that it would be just and equitable to make an order for property settlement. The Wife’s application will be dismissed.

Costs

1. The orders include a timetable for written submissions on costs in the event the Husband seeks such an order. I will determine any such application in chambers unless either party seeks a hearing to make additional oral submissions.

I certify that the preceding ninety (90) paragraphs are a true copy of the reasons for judgment of Judge Sexton

Date:  1 March 2017