Fontana & Fontana
[2017] FamCA 374
•19 May 2017
FAMILY COURT OF AUSTRALIA
| FONTANA & FONTANA | [2017] FamCA 374 |
| FAMILY LAW – Property – Where both husband and wife receive lump sum trauma payments at different times – Where wife’s payment substantially contributed to real estate equity early in relationship – Where husband retained and substantially expended his trauma payout post separation – Where parties agree that three pools approach appropriate by reason of differing contributions based entitlements – Where assessment of contributions entitlement to each pool – Where wife to make payment to husband. FAMILY LAW – Practice and procedure – Where application to adduce adversarial expert as to real estate – Where consideration of applicable principles – Where appropriate to dismiss such application. |
| Family Law Act 1975 (Cth) ss 75(2), 79, 79(1), 79(2), 79(4) Family Law Rules 2004 (Cth) rr 15.42, 15.64B, 15.65, 15.66 |
| Bevan & Bevan [2014] FamCAFC 19 | ||
| APPLICANT: | Mr Fontana | |
| RESPONDENT: | Ms Fontana |
| FILE NUMBER: | PAC | 5188 | of | 2008 |
| DATE DELIVERED: | 19 May 2017 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Foster J |
| HEARING DATE: | 20, 21, 22 and 23 February 2017 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Druitt |
| SOLICITOR FOR THE APPLICANT: | Gonzalez & Co |
| COUNSEL FOR THE RESPONDENT: | Mr Hodgson & Mr Chen |
| RESPONDENT: | Self-represented litigant |
Orders
That within three months from the date of these orders the wife pay to the husband $323,033.00 in default of payment by the due date interest to accrue.
That in default of payment to the husband as provided the husband shall have liberty to apply as to enforcement.
That the wife indemnify and save harmless the husband from any liability to Mr CC and Mr SR arising from work undertaken at the property at Suburb BB.
Otherwise, all applications be removed from the pending cases list.
That any application for costs be made by way of written submission within one month from this date with any submissions in response to be within a further 14 days.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Fontana & Fontana has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT PARRAMATTA |
FILE NUMBER: PAC 5188 of 2008
| Mr Fontana |
Applicant
And
| Ms Fontana |
Respondent
REASONS FOR JUDGMENT
The present matter for determination is a long-running property application as between the applicant husband and the respondent wife.
The husband at the time of trial was aged 53 and the wife was aged 47.
The wife is a professional contracting out her services and earning about $130,000.00 per annum.
The husband is also a professional but is receiving EE Insurance trauma insurance payments of $10,500.00 per month until age 65 or his return to work.
There is one child of the parties’ relationship born in 1998 and at the time of trial being 18 years of age.
The parties commenced cohabitation at the time of marriage in 1993 although there were some joint financial dealings prior to the commencement of cohabitation.
The parties separated in late July 2008 at which time the child was 10 years of age. The child is now undertaking university studies.
A preliminary point
There was a preliminary issue as to the value of the former matrimonial home at FF Street, Suburb H.
The property had been the subject of a single expert valuation at $1.6 million. The single expert valuation had been undertaken by Mr GG of GG Property Valuers and was dated 16 November 2016: Exh “E”.
Shortly prior to the commencement of the trial on 20 February 2017, the husband filed on 3 February 2017 an Application in a Case seeking to adduce adversarial expert evidence as to the value of the Suburb H property. The husband sought orders appointing Mr HH as an adversarial expert witness and that Mr HH confer with Mr GG to prepare a joint statement of agreed and disagreed facts and statements identifying the reasons for disagreement on any issues in relation to Mr GG’s valuation of the property.
The application was dismissed with reasons to be delivered concurrently with final reasons. These are those reasons.
The husband’s application was supported by an affidavit by Mr HH sworn 2 February 2017. That affidavit attested to Mr HH’s qualifications as a property valuer and provided a valuation undertaken by Mr HH of the Suburb H property that expressed an opinion that the property as at 6 December 2016 had a value of $2.05 million. Mr HH’s valuation was based upon various asserted comparable sales.
It is to be noted that on 15 August 2016 an order was made for the appointment of a single expert valuer to undertake a valuation of the Suburb H property and on the same day directions were made to ready the matter for trial.
On 3 November 2016 the matter was listed before a Registrar and the parties were granted leave to approach the list clerk for allocation of trial dates.
The single expert valuation of Mr GG was it appears available to the parties shortly after 16 November 2016. Mr HH gives evidence that he was instructed by the husband to undertake a valuation of the Suburb H property “in late 2016”. His report is dated 6 December 2016.
No reason was given for the late application for leave to engage Mr HH in the valuation process. The husband had available to him Mr HH’s valuation for almost two months before he filed his discrete application on 3 February 2017.
The law as to adversarial expert evidence is well settled.
The respondent opposes the Orders sought by the applicant husband seeking permission to adduce evidence from another expert witness as to the same issue:
Rule 15.49 of the Family Law Rules provides:
(1) If a single expert witness has been appointed to prepare a report or give evidence in relation to an issue, a party must not tender a report or adduce evidence from another expert witness on the same issue without the court's permission.
(2) The court may allow a party to tender a report or adduce evidence from another expert witness on the same issue if it is satisfied that:
(a) there is a substantial body of opinion contrary to any opinion given by the single expert witness and that the contrary opinion is or may be necessary for determining the issue;
(b) another expert witness knows of matters, not known to the single expert witness, that may be necessary for determining the issue; or
(c) there is another special reason for adducing evidence from another expert witness.
The purposes of the Expert evidence rules are set out in Rule 15.42.
The Applicant needs to satisfy the Court:
a)there is a substantial body of opinion contrary to the opinion of Mr GG and that such contrary opinion is or may be necessary to determine the issue of valuation.
b)that another expert knows of matters not known to Mr GG that may be necessary to determine the issue of valuation; or
c)there is a special reason for adducing evidence from another expert witness.
As to the above factors, the applicant has not demonstrated by evidence the existence of a substantial body of contrary opinion.
The applicant relies upon another expert whose opinion differs from that of the court appointed single expert by reason of the consideration of, in part, some different comparable sales.
Matters of differing opinion are capable of being put to the court appointed single expert under Rule 15.65 with the single expert’s answers forming part of his report by reason of Rule 15.66. Questions are to be administered within 21 days of receiving the Single Expert Report.
The applicant before making this application has not availed himself of this procedure.
Of course, in the event of a timely application to adduce adversarial expert evidence, such application can stand over pending a response to questions administered to the Single Expert or a conference with the Expert under Rule 15.64B.
The Court is left to ponder what the single expert’s answers may have been. Indeed, such answers may well address the applicant’s concerns.
The preference for seeking a response from the expert by way of such questions before considering an order allowing further evidence to be filed was espoused in Daniels v Walker [2000] 1WLR 1382 at [29]-[32].
In this matter the applicant had the right to administer questions to the Expert as to other asserted comparable sales but chose not to or omitted to do so in a timely manner.
These are property proceedings that have been on foot since 2008. They should not be further delayed by an adjournment to facilitate the applicant complying with the Rules albeit out of time. Matters in issue can be put to the Single Expert in cross examination.
The applicant’s application was dismissed on 20 February 2017.
The evidence of the Single Expert: The expert report (Exh “E”) values the Suburb H property at $1.6 million as at 16 November 2016.
The expert was cross examined at some length by counsel for the husband on 22 February 2017. It was revealed that he had reviewed three of his comparable properties on the morning of his oral evidence.
It was put to him that the value of the subject property had gone up since the valuation done by him three months before trial. He responded that “it may well have”. He valued the property based on land value and the poor condition of the dwelling constructed thereon. He considered that the property was not capable of being renovated to an appropriate standard and in all probability any purchaser would proceed to demolition and construction of a new dwelling that most likely would provide some Sydney Harbour views.
He expressed concern as to the topography of the land that included a steep fall away after approximately the first one third of the property where the original house stood.
The expert was asked to consider in detail various comparable properties in his own report and those of the husband’s shadow expert. He provided detailed and logical responses in respect of each comparable he was asked to consider. None of which cast any doubt upon the valuation exercise undertaken by him.
He conceded that by reason of the existing Sydney market subsequent to valuation and at the time of trial that the value of the property would be up and that his original valuation could now be somewhat on the low side. He considered that the property at the time of trial would have a value between $1.7 million and $1.8 million.
Overall, in considering the evidence of the single expert for the purposes of these proceedings a valuation of $1.75 million for the Suburb H property will be adopted, such figure being the mid-range of the oral valuation opinion provided by the expert.
Context: A Short History
Prior to the parties’ cohabitation and in about September 1990 they purchased an investment property at II Street, Suburb A. The purchase price was $148,000.00 with the wife providing funds to meet the deposit of $14,800.00 and other costs of purchase and part of the balance of the purchase price being funded by way of mortgage of $118,400.00 (Exh “DD”). The balance of purchase funds including stamp duty it appears coming from the husband.
Subsequent to purchase the property was tenanted. The parties opened a joint account into which the rent was deposited and from which otherwise they met property outgoings and mortgage payments equally.
At the commencement of cohabitation the wife was in full-time employment. The husband was a partner in Company ET.
At cohabitation:
At the commencement of cohabitation the wife’s assets comprised her 50 per cent share in the Suburb A home unit and minimal savings.
At the commencement of cohabitation the husband’s assets comprised his 50 per cent share in the Suburb A home unit, minimal savings and a motor vehicle.
Shortly after marriage in late 1994 the parties acquired in the wife’s name a home unit at Suburb M. The property was purchased for $265,000.00 with the purchase price comprising some modest savings of the parties, net proceeds of sale from the Suburb A unit with the balance by way of mortgage advance from the National Australia Bank.
In August 1996 the wife received a lump sum trauma insurance payout of $200,000.00, a significant portion of which was deposited into the Suburb M mortgage account.
The Suburb H Home and thereafter:
The former matrimonial home at Suburb H was purchased in late 1997 in the name of the wife for $662,000.00. The purchase price was funded from the net proceeds of sale of the Suburb M home unit that sold for $368,000.00 (Exh “Z”) and the balance by way of National Australia Bank mortgage of about $300,000.00. A significant portion of the proceeds of the Suburb M sale comprised funds from the wife’s trauma insurance payout.
Subsequent to the purchase of the Suburb H property and using the available equity in that property, the husband borrowed by way of a business loan $125,000.00 to fund a capital investment in Company ET. This loan remained in place throughout cohabitation. Later, in early 1998, the parties borrowed from the wife’s brother $40,000.00 with those funds being paid by the husband to Company ET. The purpose of the payment is not clear but the wife’s brother was repaid in 2006 subsequent to the parties refinancing their interest in an investment property at Suburb D referred to below.
The only child of the parties was born in 1998. The wife ceased employment in late January 1998.
However, in November 1998 the husband ceased his then employment and remained out of work until July 1999. As a consequence, the wife returned to part-time employment in January 1999 contracting her services to her former employer and taking on some private work.
Subsequently, the husband and wife commenced working together from about mid-1999 until separation. They traded as H Partners, that operated through a family trust with H Partners Pty Ltd as trustee of the trust.
JJ Street, Suburb D
In late 2003 the parties acquired a 50 per cent equitable interest in a joint venture investment property at Suburb D that was acquired at auction for $627,000.00. The parties funded their share of the purchase price by way of mortgage borrowing of about $320,000.00 from the National Australia Bank.
The property was acquired in a somewhat dilapidated state and renovations were undertaken to the property over a period of time. The parties further purported to contribute to the cost of renovations by way of additional borrowings of $200,000.00 secured over the Suburb D property. In fact, a substantial part of the borrowing was used to reduce the parties’ domestic mortgage secured over the Suburb H property with the cost of renovations being funded from the parties’ joint income. A debt of $20,000.00 remains owing to the wife’s father for work done in respect to which he was assisted from time to time by the husband.
At separation the loan balance was about $528,000.00.
Renovations were completed in 2007. The property has remained tenanted since.
Separation and thereafter:
Subsequent to separation in late July 2008 the parties remained living separately and apart in the Suburb H property until the husband vacated the property on 26 October 2008. Thereafter the wife with the child has had the sole use and benefit of occupation of that former matrimonial home.
The husband has lived in various rented premises. In 2011 he realised an investment with B Group to the total value of about $23,000.00 and retained those funds. Although subsequently he has reinvested in part from later income with the value of that investment at trial being about $12,633.00 (Exh “EE”).
In August 2010 he realised a EE Investment account in the sum of $15,000.00 and retained those funds. He asserts that such funds were used to meet day to day expenses where he had substantially ceased work, his taxable income for the 2011 year being only $39,890.00. In 2012 his taxable income was nil resulting in a credit assessment of $26,727.00 that issued on 16 September 2014 and was credited against his outstanding liability (see below).
The child after separation spent substantial and significant time with each party although for the last two years of high school was a day boarder until about 8.00 pm each school day.
The parties went their separate ways in the business subsequent to physical separation in October 2008 with the wife commencing to trade on her own account as “H Services” and the husband retaining H Pty Ltd and the underlying family trust. Ongoing joint liabilities of the parties continued to be met from pre-separation accrued income for a period and from an agreed line of credit facility.
The separation of the parties’ joint business was the subject of litigation in the Supreme Court of New South Wales.
At the time of separation the wife had accrued superannuation balances totalling about $17,500.00. Subsequent thereto she has made further contributions to superannuation from her own personal earnings with her balances of superannuation as at 30 June 2016 being approximately $124,000.00.
At separation the husband had superannuation interests in three accounts. He gives no evidence as to the history of contributions. Some contributions were made during cohabitation but the wife asserts that such payments covered various insurance benefits including the husband’s trauma cover and that such payments continued by direct debit from the joint account for 18 months after separation.
The husband conceded that he made no effort to update his superannuation balances as at trial. When pressed at trial he produced statements that updated his superannuation.
At the time of separation the parties relevantly had the following liabilities:
a)home loan mortgage secured on the Suburb H property;
b)investment loan mortgage secured on the Suburb D property;
c)H Partners Pty Ltd business loan secured on the Suburb H property;
d)moneys owing to the wife’s brother, Mr SR;
e)moneys owing to the wife’s father, Mr CC.
In August 2012 the wife paid out from her post separation income the H Partners Pty Ltd loan of $124,908.00 that had gone into default.
The husband’s health, insurance payments and income post separation
The husband has some health issues, primarily kidney failure diagnosed in 2010. He requires regular dialysis and has otherwise been hospitalised on occasions with the last being in August 2016.
The husband now undertakes dialysis at his home. He is on the list for a kidney transplant. He has a defibrillator fitted to address a weak heart condition.
The husband’s Specialist Renal Physician Dr W says:
(he) has hypertension and type II diabetes. His blood pressure is under excellent control. His diabetes is also under good control on diet alone. It is expected prognosis on a dialysis is greater than 5 years….. His compliance with all aspects of his treatment has been excellent and his health has steadily improved as a result. As a consequence of his improved health and stamina (he) has been referred to the transplant unit at [P Hospital] where he is currently undergoing assessment as a potential transplant recipient.
Dr W’s oral evidence revealed that the husband is on the interim transplant list but is expected to be on the final transplant list in a “month or so” with time to transplant unpredictable but the average waiting time four to five years since he was put on the list in December 2011. Notwithstanding the husband’s need for dialysis three times per week, the husband was in his opinion “not necessarily unable to work” having a capacity as at February 2015 to work not more than 12 hours per week. Yet on dialysis the husband’s health could fluctuate. He was reluctant to express an opinion as at trial as to the husband’s capacity to work without a physical and mental examination of the husband. No such evidence was adduced by the husband resulting in the question of his present capacity being unknown. If it was contended by him that he could not work in any capacity it was a matter for him to adduce appropriate evidence.
His circumstances following separation gave rise to an income protection insurance claim. He asserted that he has been unable to work since April 2012. The claim was approved in June 2012 and he has been receiving monthly payments of $10,500.00 per month since May 2013 at which time he received a lump sum of $108,549.00 representing period payment arrears from June 2012. He agreed that such payments have outgoings. It was agreed that his ongoing payments to age 65 are subject to review as to his capacity to work (Exh “L”) and CPI indexed.
His trauma insurance claim resulted in a lump sum payment of $562,045.00 on 6 July 2012.
These funds were, the husband says, in part expended as follows;
a)Repayment of family borrowings (legal fees) $60,000.00
b)Legal fees (July 2012 Exh “C1”) $35,000.00
c)Credit card debt (post separation) $20,000.00
d)Child’s school fees $ 9,500.00
e)Furniture $12,000.00
f)Donation to S School $10,000.00
g)Share in syndicate (later mostly refunded) $15,000.00
$161,500.00
He has also paid GST and his personal tax liability as to post separation income that he otherwise had the benefit of. The husband produced no documents evidencing such liabilities or the payments in circumstances where it appears he had modest taxable income after the 2012 tax year being mainly interest on his lump sum payments received from the wife and his trauma claim as against a tax credit of $26,727.00 for the 2013 financial year.
Otherwise the husband asserted in his trial affidavit as having $250,000.00 in a term deposit. The Term deposit held a balance of $252,929.00 as at 15 January 2013 (Exh “X”). He says that the balance over and above the term deposit and the expenditure of $161,000.00 (the balance presumably being about $150,000.00) remained in his everyday account. Yet as at October 2016 the everyday account had a balance of $1,400.00.
In oral evidence the husband asserted he no longer has those funds. Some $415,000.00 thus remained unexplained before his oral evidence in cross examination.
He asserted an advance of $65,000.00 (later asserted to be $100,000.00) to his parents that has been repaid in part and from which he paid about $35,000.00 for legal fees. His parents were not called to give evidence.
The husband acknowledged a further lump sum payment to his bank account of $108,549.00 on 14 May 2013. He conceded that it was also a part of his insurance claims.
In oral evidence it became clear that the husband had also travelled overseas extensively. His oral evidence was vague, non-responsive and showed scant regard for his obligation as to full and frank disclosure. His evidence where in dispute could only be accepted where substantiated by objective documents.
He was given overnight following the first day of trial to produce further documents but only provided up to date bank balances for his accounts as at 21 February 2017 (Exh “I”) that revealed a bank balance of just $14,881.00 and a credit card debt of $18,900.00 and a bank statement for the period 31 January 2017 to 21 February 2017 (Exh “M”).
On further examination he revealed payments to his solicitors of about $35,000.00 since 18 January 2017.
He agreed that he had a tax credit of about $26,727.00 as at September 2014 for the 2013 Tax year where he had a taxable income of only $8,504.00. He could not account for those credit funds.
His taxable income post separation was for 2009: $66,754.00 and 2010: $93,252.00, substantially from distributions to him from his family trust that had total business income of $98,433.00 in 2009 and $124,870.00 in 2010. Yet no trust financial statements were provided to demonstrate the reality of the family trust’s overall trading circumstances and other benefits, if any, paid for him.
The husband asserts a tax liability of $41,323.00 as at 22 October 2016 (Exh “O”) but provided no other document evidencing how or why that asserted liability arose save for Exh “S” that comprises the husband’s tax portal statements for the period from separation to 21 February 2017. The documents only being produced at trial. It is clear that post separation the husband mostly failed to pay assessed provisional taxation liabilities from 1 July 2008 resulting in an outstanding taxation liability as at February 2011 of about $116,500.00. Various payments made left the balance owing as at 21 February 2017 of $42,837.00 that is consistent with Exh “O”.
Orders 23 July 2013
On 23 July 2013 Collier J relevantly made the following final orders as to property:
…
(16) That within three (3) months of the date of these Orders, or such other time as the parties may in writing agree, the wife shall pay to the husband the sums of $281,214 and $8,520, together totalling the sum of $289,734.
(17) That within three (3) months of the date of these Orders, or such other time as the parties may in writing agree, the wife shall pay, or cause to be paid, all monies necessary to obtain a discharge of mortgage and/or release of any encumbrance presently secured over both the former matrimonial home known as and situate at Suburb H, NSW, Certificate of Title Folio Identifier … (hereinafter referred to as “the property”) and the parties’ interest in the investment property known as and situate at Suburb D, NSW, Certificate of Title Folio Identifier … (hereinafter referred to as “the investment property”) so as to release the husband from any liability whatsoever in respect of any such mortgage or encumbrance.
(18) That upon payment of the sum of monies specified in Order 1 above within the time specified, and upon the wife having discharged the mortgage and/or encumbrance secured over and/or in respect of the property and the investment property, the husband shall thereupon transfer to the wife all his right, title and interest in the property, together with his right, title and interest in the investment property. To give effect to this order, the wife shall submit to the husband, in a timely fashion, all documents required for that purpose.
…
In September 2013 the wife borrowed $50,000.00 from her parents (Exh “BB”) to help fund the required payment to the husband. In addition she borrowed a further sum of $60,000.00 from her brother used in part to meet the payment to the husband and in part deposited to her offset bank account (Exh “CC” and “FF”).
In October 2013 the wife discharged the joint home loan secured over the Suburb H property in the sum of $106,000.00 from her funds and then borrowed by way of first mortgage secured over the Suburb H property the sum of $200,000.00 to fund the balance of the required payment to the husband pursuant to the orders. She has since reduced that debt to about $98,000.00 from her income.
There is no issue that the husband has been paid the sum of $289,000.00 by the wife on 18 October 2013. The husband’s evidence of the disposition of these funds was incomplete, vague and piecemeal.
Overall, he has had funds totalling $851,000.00 with the expenditure of about $590,000.00 since July 2012 substantially unexplained. His response in oral evidence being “I didn’t give it away”.
Orders Now Sought:
At trial the wife sought orders in summary as follows:
a)that the wife be declared solely entitled to the properties at Suburb H and Suburb D;
b)that the husband pay to the wife the sum of $100,000.00;
c)that the wife remain the beneficiary of the life insurance policy held in the name of the husband.
At trial the wife relied upon her financial statement filed 28 October 2016 and her trial affidavit filed the same day.
At trial the husband sought orders in summary as follows:
a)that the property at Suburb H be sold and that the net proceeds of sale be divided as to 50 per cent to the husband less sums already paid by the wife and as to the balance then remaining to the wife.
At trial the husband relied upon his financial statement filed 28 October 2016, his trial affidavit filed 28 October 2016 and the affidavit of Dr W filed 16 February 2017.
Approach to Property Adjustment
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.
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.
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.
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.
In many cases this requirement is readily satisfied where the parties are no longer in a marital or defacto 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. Such is the case in this matter.
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 as does the husband.
It would in some circumstances be unjust or unfair to leave property rights intact where there is common ownership and discrete assets are sought by each. Otherwise a consideration of s79(4) factors as discussed below reveals it would be unjust or unfair to leave the parties property rights as they are.
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)).
The Court can then consider the “justice and equity” of the actual orders to be made: Russell & Russell (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.
The asset pool:
The parties provided an updated draft balance sheet towards the end of the trial (Exh “C1”). Subsequently, that pool was also addressed in submissions. By reason of the discussion above there are contentions by the wife that certain funds apparently no longer in existence should be notionally included.
The assets and liabilities contended for are as follows:
Asset:
Wife Suburb H property $1,750,000.00*
Wife 50 per cent Suburb D property $762,500.00
Wife Funds at Bank $ 37,576.00*
Husband Trauma payout $ 562,000.00*
Husband Part settlement payment $ 289,400.00*
Husband EE Investment $ 14,542.00*
Husband B Group investment $ 23,885.00*
Superannuation
Wife Accumulated superannuation $ 124,353.00
Husband Accumulated Superannuation $ 56,057.00
Liabilities
Wife Suburb D mortgage $496,698.00
Wife Mortgage Suburb H Property $ 98,799.00
Wife Debt to related parties $ 110,000.00*
Joint Debt to Mr CC $ 20,000.00
Wife Debt to Mr SR $ 11,625.00
There were discrete issues identified thus * as to the above assets and liabilities considered below:
a)Suburb H value: for the reasons given above the value of $1.75 million will be adopted.
b)Wife: Offset account – funds in this account represent in part funds borrowed by the wife from her brother ($60,000.00). It was contended by the husband that if the offset account is omitted then so should the brother’s debt. Such approach was adopted by counsel for the wife. The offset account and $60,000.00 of the related party debt will be omitted.
c)Husband: Trauma payment: These are funds received and it appears expended by the husband without clear explanation. He received earned income for a period after separation and after a short period monthly insurance payments in circumstances where there was in the end not much difference in terms of available income to both parties post separation. The husband has paid legal fees of about $165,500.00 (Exh “C1”) it appears mostly from his capital otherwise he has explained some $66,500.00 of his capital expenditure. In the circumstances it is appropriate to consider that he has thus had the benefit of about $495,500.00 with that sum to be included in lieu of the husband’s current bank balance.
d)Husband: B Group investment: The sum above includes the funds withdrawn after separation and/or the husband’s subsequent reinvestment. Funds were withdrawn when the husband’s income had been significantly reduced by illness and he was in need. Otherwise, the reinvestment was from after acquired funds and should not be included. The whole sum will be omitted.
e)Husband: Part settlement payment: This sum clearly represents funds received and expended by the husband in circumstances mostly unexplained. It will be included in the pool as will the wife’s borrowings to fund the payment.
f)Husband: EE Investment realised: The husband contended that funds were withdrawn when the husband’s income had been significantly reduced by illness and he was in need. The sum will be omitted.
g)Wife: Related party debts: $50,000.00 was incurred by her in funding in part the first payment to the husband. Such borrowing thus should be included.
Counsel for the husband contended for three separate pools of assets. That contention was adopted by counsel for the wife. In circumstances where there are disparate contribution assertions as to each pool such an approach is appropriate to adopt.
After adjustments as discussed above the pools are:
Pool A to include:
Wife Suburb H property $1,750,000.00
Wife 50 per cent Suburb D
property $ 762,500.00
Husband Part settlement payment $ 289,400.00
$2,801,900.00
Liabilities
Wife Suburb D mortgage $496,698.00
Wife Mortgage Suburb H Property $98,799.00
Wife Debt to related parties $50,000.00
Joint Debt to Mr CC $20,000.00
Wife Debt to Mr SR $11,625.00
$ 677,122.00
Nett: $2,124,778.00
Pool B to include:
Husband Trauma payout $ 495,500.00
Pool C to include:
Superannuation
Wife Accumulated superannuation $ 124,353.00
Husband Accumulated Superannuation $ 56,057.00
Contributions:
In assessing contributions the Full Court said in Harris (1991) 104 FLR 458:
…the task of the court in proceedings under section 79 (and thus s90SM(4)) is not akin to an accounting exercise. To borrow a phrase used by McClelland J in Davey v Lee (1990) DFC 95-084; (1990) 13 Fam LR 688 at 689 in relation to section 20 of the De Facto Relationships Act 1984 (NSW) ''the Court is required to make a holistic value judgment in the exercise of a discretionary power of a very general kind”.
In Kessey and Kessey (1994) FLC 92-495 at 89,151 the Full Court made clear that ultimately all that is necessary is to evaluate the weight that should be given to each party’s contributions relative to the contributions of the other party:
“... In many – indeed probably in most – property settlement cases the Court has to evaluate and assess contributions to property in the absence of precise valuations of the contributions in question. Indeed, where the contributions to property are indirect or non-financial, precise valuation is impossible, and even where the contributions are direct or financial so that a valuation might be provided, other factors (not capable of precise mathematical statement) may well have eroded the initial value of such contributions. In a case such as the present, it is not necessary to arrive at precise mathematical valuations of the parties’ contributions - all that is necessary is to evaluate the weight that should be given to each party’s contributions relative to the contributions of the other party.”
Years later in Lovine & Connor and Anor (2012) FLC 93-515, the Full Court said:
42. As part of the process of ultimately determining just and equitable orders under s 79 there is included a complex of discretionary assessments and judgments of many components of contribution, only some of which are capable of measurement in money terms and then often only in historical, rather than present, money terms. Any dictate to the effect that in the course of assessment each disparate component part or kind of contribution must be assigned a discrete and identifiable value or percentage is antithetical to the nature of the discretion involved.
Contributions: Pool A
It was submitted by counsel for the husband that as at the time of cohabitation there was little to distinguish between the contributions of both parties. They had both contributed to the purchase of the then investment property at Suburb A. At separation counsel for the husband submitted that contributions should be regarded as equal save for a consideration of the wife’s trauma payment introduced into the equity of their real estate assets. It was then contended that the wife’s ongoing occupation of the matrimonial home over the significant period since separation, the parties mostly shared care of the child, and the wife’s reduction as to the parties liabilities as they existed at the time of separation would lead to a substantial equality of contributions as at the date of trial.
Counsel for the wife submitted that overall contributions should favour the wife to the date of trial. The introduction by her of almost $200,000.00 in equity in real estate in 1995 represents a most significant contribution over the ensuing years to separation and thereafter. He contended that the wife’s asserted role as primary homemaker and parent, an aspect in respect of which the husband asserted an almost equal role, would also favour her in terms of contributions. Post separation, notwithstanding her ongoing occupation of the home the child at that time was only 10 years of age and living primarily with the wife. She facilitated a significant reduction in mortgage debt from her own earned income post separation. Overall, it was contended by counsel for the wife that contributions would favour the wife as to 70 per cent in her favour with 30 per cent to the husband.
The contributions by the parties both financial and non-financial over the period of cohabitation are a clear demonstration of the myriad contributions that can be made in a reasonably long relationship. However, it is clear that the injection of a substantial portion of her trauma claim of $200,000.00 into the equity of the Suburb M property only shortly before the purchase of the current matrimonial home is a significant factor in favour of the wife.
The Suburb H property was purchased for $662,000.00. By a simple extrapolation funds from the wife’s trauma claim represented almost 30 per cent of that purchase price. As at today’s value for the purposes of property adjustment that percentage equates to about $525,000.00 of the present Suburb H value. Overall, it equates to about 25 per cent of the net value of Pool A.
The wife has had the long-term use and occupation of the matrimonial home since 2008 with the child at that time aged 10 thereafter mostly residing with her. In that regard she has had the use and benefit of the husband’s equity in that property for an extended period. Yet she has met mostly from her income ongoing mortgage payments in relation to the home and has managed to discharge the two mortgages that existed at the time of separation. On the other hand the husband has been in the rental market for some years since separation.
On balance contributions do favour the wife in this extended post separation period.
Overall, contributions to Pool A are assessed as favouring the wife as to 70 per cent and the husband 30 per cent. This sees the wife receive about $425,000.00 over and above what would have been an equal division.
Section 75(2): Pool A
The husband at the time of trial was aged 53 and the wife was aged 47. The wife contends no relevant health issue. The husband has a significant ongoing health issue as discussed above. Subject to dialysis he leads a relatively normal life.
The income, property and financial resources of the parties are considered above. While unable to work the husband will continue to receive income replacement insurance payments. The wife is able to continue her work as an employed professional.
Neither party has the responsibility to support any other person, although the adult student son of the relationship continues to live in the wife’s household.
Superannuation is considered in the context of a separate pool.
It was contended on behalf of the husband that there were no relevant factors in this regard that would require any adjustment to the contribution-based entitlement. Such contention was adopted by counsel for the wife.
By reason of a consideration of each of the factors in s 75(2) such contentions are appropriate.
In the circumstances discussed above relating to each of the parties there will be no adjustment to contribution based entitlements.
Overall: Pool A
Thus the husband’s entitlement represents 30 per cent of the net value of Pool A. In monetary terms that is $637,433.00. He has $289,400.00 thus requiring a net payment to the husband by the wife of $348,033.00.
Contributions: Pool B
Counsel for the husband contended that contributions to this pool that comprises a substantial portion of the husband’s trauma payout should be regarded as 100 per cent in favour of the husband.
Counsel for the wife contended that recognition of contributions solely favouring the husband would be inappropriate. The trauma insurance arose out of appropriate business insurances affected by the parties during cohabitation with the continued payment of premiums from joint funds until at least 2010 when they were taken over by the husband. It is to be reasonably inferred that at the inception of such insurance cover and its continuity during cohabitation was an arrangement to facilitate the financial protection of the family in the event of a significant health circumstance.
It was contended by the wife that contributions should favour the husband in the range of 90 to 95 per cent and the wife 10 to 5 per cent.
The question of trauma insurance has been the subject of previous consideration more particularly Miller (2009) FamCAFC 121 where Strickland J relevantly said at [101]:
… This payment was not a windfall. It was a payment received by the husband because he suffered a heart attack. It matters not that it was a minor attack from which he recovered. Despite the husband’s good fortune in this regard, his health into the future is “significantly compromised” as a result according to the evidence of his cardiologist. Thus, although the fact that it was a joint decision to take out the insurance and the fact that the premiums were maintained out of the parties’ joint funds can be treated as contributions by each of the parties, there still needed to be a life-threatening event before a payment could be made. It is simply not open to the wife to argue that the parties have contributed equally to this payout. It is the husband’s money to which the wife has made an indirect contribution of a relatively minor nature.
Such is mostly the circumstance in this matter. Accordingly, an assessment of contributions favouring the husband as to 95 per cent and the wife as to 5 per cent is appropriate.
Section 75(2) Pool B
It was contended by Counsel for the husband that otherwise there should be no other adjustment in relation to the contribution based findings as to this pool. It was contended by Counsel for the wife that funds that have represented a significant financial resource to the husband have substantially been dissipated by him without explanation: s75(2)(o).
The part property settlement funds paid by the wife to the husband were included in Pool A.
In this pool the husband is deemed to have most of his trauma funds for the purpose of determining the wife’s contribution based entitlement. The fact that he has dissipated same is of no concern.
It is not contended by either party otherwise that any of the factors set out in s 75(2) would thus lead to any adjustment to the contribution-based finding. Such contentions are accepted.
Overall: Pool B
Thus overall the wife is entitled to 5 per cent of this pool as found, being the sum of about $25,000.00.
Contributions Pool C:
Both parties had modest superannuation accrued at the time of separation. Thereafter the wife has continued to make contributions to superannuation without contribution direct or indirect by the husband.
The husband’s superannuation has grown marginally absent any further contributions by him, notwithstanding he has had some capacity to make contriburtions.
It is contended by counsel for the husband that thus no contribution or section 75(2) adjustment is called for in relation to the superannuation entitlements of the parties comprising this pool. That contention was adopted by counsel for the wife.
No superannuation splitting orders were sought.
Such contentions are appropriate in circumstances of this matter and the parties will retain their respective entitlements as to superannuation without adjustment.
Overall:
By reason of the findings relating to Pool A and Pool B the wife is required to pay to the husband the net sum of ($348,033.00 less $25,000.00) $323,033.00.
The wife shall be required to pay such sum to the husband within three months in default liberty to apply as to enforcement.
The wife should indemnify the husband from any liability in relation to the maternal family debts.
The wife makes no submission as to order sought by her as to the asserted insurance policy on the husband’s life. It is a matter for the husband to nominate his beneficiary (presumably his son) at his discretion. No such order will be made.
In the circumstances such orders are considered just and equitable.
Orders will be made accordingly.
I certify that the preceding one hundred and forty three (143) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 19 May 2017.
Associate:
Date: 19 May 2017
4
6
2