FORREST & JORDAN
[2018] FamCA 625
•20 August 2018
FAMILY COURT OF AUSTRALIA
| FORREST & JORDAN | [2018] FamCA 625 |
| FAMILY LAW – PROPERTY – Where the parties were in a relationship for approximately five years –Where the husband owned a property prior to the relationship – Where the wife held an interest in a property development at the commencement of cohabitation – Where both parties have made substantial financial contributions throughout the relationship – Where the husband made greater financial contributions and the wife made greater indirect financial contributions through renovations and non-financial contributions as homemaker – Where contributions are assessed at 58 per cent in favour of the wife due to her greater initial contribution. FAMILY LAW – PROPERTY – Where the wife asserts that there is a loan of $200,000 from her parents that needs to be repaid – Where the husband asserts that these funds were a gift –Where it is ordered that the wife’s parents be repaid $200,000. FAMILY LAW – PROPERTY – Where the husband seeks an order that the wife be solely liable for all future claims under the Home Building Act 1989 (NSW) – Where renovation of the property was a joint undertaking by the parties – Where the Court considers it to be a shared responsibility – Where an order is made for the parties to share the costs of any future claim. FAMILY LAW – CREDIT – Where the husband has not made full and frank disclosure of his financial circumstances in the past – Where the husband conceded in cross-examination that he deliberately allowed arrears to build up on legal advice in an endeavour to strengthen his case – Where the Court finds that this reflects poorly on the husband’s credit – Where the wife’s evidence is preferred. |
| Family Law Act 1975 (Cth) ss 75, 79 Home Building Act 1989 (NSW) |
| Bevan & Bevan (2013) FLC 93-545 | ||
| APPLICANT: | Mr Forrest | |
| RESPONDENT: | Ms Jordan |
| FILE NUMBER: | SYC | 2765 | of | 2015 |
| DATE DELIVERED: | 20 August 2018 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Johnston J |
| HEARING DATE: | 8-12 May 2017 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Batey |
| SOLICITOR FOR THE APPLICANT: | Broun Abrahams Burreket |
| COUNSEL FOR THE RESPONDENT: | Mr Kearney SC |
| SOLICITOR FOR THE RESPONDENT: | Gayle Meredith & Associates |
Orders
The husband and wife forthwith do all acts and sign all documents necessary to cause the monies held in National Australia Bank account number #...59 in the name of Gayle Meredith and Associates as trustee for Ms Jordan and Mr Forrest to be paid as follows:
(1.1)to the wife’s parents Ms B and Mr C Jordan the sum of $200,000 in repayment of the loan made by them to the wife during cohabitation;
(1.2)33.173 per cent of the balance to the husband and the balance to the wife.
In the event the purchaser or subsequent purchasers make a claim under the Home Building Act 1989 (NSW) with respect to faults relating to the property D Street, Suburb E, NSW against the wife as owner builder, that within seven days of the amount payable being determined that each of the husband and wife pay one half of the determined sum.
Within 14 days of these orders the husband and wife do all acts and execute all documents to cause the off-set account number ended #...48 and the National Australia Bank account #...21 to be closed and to cause the balance in each account to be paid 58 per cent to the wife and 42 per cent to the husband.
Otherwise the husband and the wife are declared the sole owners respectively of all other property and superannuation in their possession and/or control.
Subject to these orders that the husband indemnify and keep indemnified the wife in relation to all liabilities in his name including but not limited to his tax liabilities, his credit card liabilities, any loan obtained by him from his parents, all taxes payable by G Pty Ltd, any debt loan accounts in G Pty Ltd in the name of either of the parties and all other liability of the wife in respect of G Pty Ltd whenever and howsoever arising.
Subject to these orders that the wife indemnify and keep indemnified the husband in relation to all liabilities in her name including her tax liabilities, her credit card liabilities and any loans to her from her parents other than the loan referred to at Order 1.1 herein.
Pursuant to s 106A of the Family Law Act 1975 (Cth) in the event either party fails or neglects to do anything or sign any document to give effect to these orders within 14 days of a written request to do so, then the Registrar of the Sydney Registry of this Court shall be appointed to sign any document on behalf of the defaulting party to implement these orders upon either party filing an application and affidavit in support identifying the default.
All exhibits be released.
Both parties have leave to relist these proceedings by arrangement with the Associate to Johnston J in relation to the implementation of these orders.
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 Forrest & Jordan 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 SYDNEY |
FILE NUMBER: SYC 2765 of 2015
| Mr Forrest |
Applicant
And
| Ms Jordan |
Respondent
REASONS FOR JUDGMENT
Introduction
These are property proceedings. The parties in these proceedings are Mr Forrest and Ms Jordan. For convenience I shall refer to them as “the husband” and “the wife” respectively.
Applications
The husband seeks the following orders:
1. Pursuant to Section 79 of the Family Law Act and by way of final property alteration it is ordered:
1.1 That the husband and the wife shall do all acts and things necessary to distribute the funds held in the Controlled Monies Account in the names of the parties and numbered …59 in the following manner and priority:
1.1.1 In payment to the husband the sum of $4,000 being the wife’s 50% share of the valuation costs of [Mr H] for the valuation of the [D Street] property, and [J Valuers] in respect of the chattels and contents;
1.1.2 To the husband the sum of $939,262 and
1.1.3 To the wife the remainder.
1.2 Deleted
.
1.3 That other than provided for above:
1.3.1 the husband hereby indemnifies the wife from and in respect of all actions, claims, suits and demands as may be made against the wife in relation to all liabilities in the name of the husband;
1.3.2 the wife hereby indemnifies the husband from and in respect of all actions, claims, suits and demands as may be made against the husband in relation to all liabilities in the name of the wife; and
1.3.3 the husband and the wife shall be solely entitled to the exclusion of the other to all property and chattels of whatsoever nature and kind in the possession, ownership or control of each party as at the date of this Order including but not limited to superannuation entitlements.
1.4 Deleted.
1.5 That the wife indemnify the Husband and keep him indemnified against all actions, claims, suits and demands arising from the wife being owner-builder of the property located at [D Street, Suburb E].
1.6 That pursuant to Section 106A of the Family Law Act 1975 in the event either party fails or neglects to do anything or sign any document to give effect to these Orders within 14 days of a written request to do so, then the parties hereby authorise the Registrar of the Sydney Registry of the Family Court of Australia to do anything, (sign) any document and give any necessary authority on behalf of the defaulting party to implement these Orders or any part thereof upon either party filing an application and affidavit in support identifying the default.
2. That the wife pay the husband’s costs of and incidental to this application.
(Husband’s Outline of Case document received 4 May 2017)
On the other hand, the wife seeks the following orders:
1.The husband and wife forthwith do all acts and execute all documents necessary to cause the monies held in National Australia Bank account number #...59 in the name of Gayle Meredith and Associates as trustee for [Ms Jordan] and [Mr Forrest] to be paid as follows:
1.1to the wife’s parents [Ms B] and [Mr C Jordan] the sum of $200,000 in repayment of the loan made by them to the wife during cohabitation;
1.2$1,017,443 to the wife.
2.(deleted)
3.(deleted)
4.In the event the purchaser or subsequent purchasers makes a claim under the Home Building Act 1989 (NSW) with respect to faults relating to the property [D Street, Suburb E], NSW against the wife as owner builder, that within 7 days of the amount payable being determined that each of the husband and wife pay one half of the determined sum.
5.That within 14 days of these orders the husband and wife do all acts and execute all documents to cause the off-set account number ended #...48 and the National Australia Bank account #...21 to be closed and to cause the balance in each account to be paid as to 65% to the wife and 35% to the husband.
6.That subject to these orders that the husband be entitled to the exclusion of the wife to all property both real and personal in his ownership, possession and control including but not limited to:
6.1the property situated and known as [K Street, L Town], QLD registered in his name subject to existing encumbrances;
6.2all monies held by him in accounts with financial institutions;
6.3all furniture and household effects in his possession;
6.4the proceeds of the [motor vehicle 1] in his name;
6.5the [motor vehicle 2] in his name subject to encumbrances;
6.6the shares owned by him in [G Pty Ltd] and any debit or credit loan account in the company;
6.7his jewellery and watches;
6.8his business;
6.9his entitlement in [M Super].
7.That subject to these orders that the wife be entitled to the exclusion of the husband to all property both real and personal in her ownership, possession and control including but not limited to:
7.1all monies held in financial institutions in her name;
7.2all furniture and household effects in her possession;
7.3all jewellery in her possession;
7.4all entitlement in the [Ms Jordan] Superannuation Fund.
8.That subject to these orders that the husband indemnify and keep indemnified the wife in relation to all liabilities in his name including but not limited to his tax liabilities, his credit card liabilities, any loan obtained by him from his parents, all taxes payable by [G Pty Ltd], any debit loan accounts in [G Pty Ltd] in the name of either of the parties and all other liability of the wife in respect of [G Pty Ltd] whenever and howsoever arising.
9.That subject to these orders that the wife indemnify and keep indemnified the husband in relation to all liabilities in her name including her tax liabilities, her credit card liabilities and any loans to her from her parents other than the loan referred to at order 1.1 herein.
10.That the husband pay the wife’s costs.
(Wife’s Case Summary document filed 4 May 2017)
Background
The wife was born in 1972 and is 46 years of age. The husband was born in 1972 and is 45 years of age.
The parties commenced cohabitation in October 2009. The parties were married in 2011. They separated under one roof on 13 October 2014 and the husband vacated the former matrimonial home on 23 March 2015. The parties’ divorce became final on 15 July 2016.
On 21 November 2006 members of the wife’s family, in the name of various companies, purchased a property at N Street, Suburb O (“the Suburb O property”) for the purpose of development.
On 14 April 2008 the wife registered the company G Pty Limited (“GPL”) with herself as the sole director and shareholder.
In August 2008 development approval for the Suburb O property was obtained for a mixed use commercial and retail development. The wife reached an agreement with her family whereby upon completion of the development she would acquire a 55m2 office suite, unencumbered.
In approximately April 2009 the parties met.
On 26 June 2009 the husband purchased the apartment at P Street, Suburb E (“the P Street property”) for $590,000. He used savings of $59,000 and obtained a loan from Westpac Banking Corporation in the amount of approximately $531,000.
After he purchased the P Street property the husband engaged the services of the wife to project manage renovations to the property. The renovations commenced in late June and cost the husband approximately $90,000. The wife was not remunerated for her work in relation to the renovations but the husband gave her a gift of $2,000.
On 21 August 2009 the husband moved into the P Street property with his previous partner from whom he subsequently separated in October 2009.
There was an issue about when cohabitation commenced. I shall refer to this below. But I am satisfied that the parties commenced cohabitation at the P Street property in October 2009.
In February 2010 there were further renovations to the P Street property specifically involving the installation of a new kitchen. The wife organised and supervised this renovation. Both parties were involved in the selection of fixtures and furnishings.
In June 2010 the husband obtained a loan in the amount of $117,000 secured against the P Street property to pay taxation liabilities.
On 22 December 2010 the wife received $200,000 from her parents which she deposited into the offset account associated with the loan against the P Street property. The wife asserts that this was a loan from her parents whereas the husband disputes that the $200,000 was a loan. I shall refer to this again below.
In 2011 the parties were married.
In mid-February 2011 the wife became aware that the husband had transferred more than $60,000 from the $200,000 advanced to her by her parents to other accounts and she requested that the remaining $130,000 be transferred to her own account.
On 28 February 2011 the wife purchased the property at 1 and 2 Q Street, Suburb R (“the Q Street property”) for $366,200. This property consisted of an apartment and a car space, each on a separate title.
On 2 March 2011 the husband was appointed as a director of GPL and the wife transferred her shareholding to him. This was to enable the husband to purchase the Q Street property and negatively gear it.
A loan was obtained in the husband’s sole name with GPL as guarantor in the amount of $329,580 from the Westpac Bank, and the balance of the purchase price and purchase costs, being approximately $50,000, was paid by the wife, by way of a loan to GPL, from the money advanced to her by her parents as described above.
The Q Street property was renovated, converting it from a studio apartment to a one bedroom apartment. The wife managed the renovations, obtained quotes, supervised the work and dealt with the body corporate and the local council. The husband had input into all aspects of the renovations.
On 9 March 2011 the husband borrowed a further $54,000 against the P Street property, approximately $46,000 of which he used to pay his tax liability.
In September 2011 the Q Street property was rented out. Rental income was deposited into an account with Westpac held by GPL.
On 26 October 2011 an office within the Suburb O property development was transferred to the wife. Prior to transferring the property to the wife, her family transferred to her $365,000 for the office, $14,000 for the stamp duty and $36,500 for GST. She then paid to the transferors $365,000 as consideration for the transfer. The office was then leased.
In December 2011 the wife purchased a property at S Street, Suburb R (“the S Street property”) for $360,000. The wife used $18,000 from the advance from her parents as the deposit, and later paid $16,000 towards renovation costs also from those funds. She obtained a loan in the amount of $381,000 from Westpac Banking Corporation to assist funding the purchase, pay stamp duty and some renovation costs. The wife converted the property from a studio apartment to a one bedroom apartment and the property was then leased for $600 per week. The wife managed the renovations.
In approximately March 2012 the wife borrowed $80,000 secured against the Suburb O office. The funds were transferred to the P Street offset account and $40,000 was used to pay the husband’s taxation liability.
In April 2012 the third set of renovations commenced on the P Street property. Those renovations were modest and mainly involved removal of a small section of a wall between the kitchen and living area and changes to the floor. The wife organised and managed the renovations and contributed to the costs of some of the renovations and furniture from the loan secured on the Suburb O property.
In mid-July 2012 the wife commenced IVF treatment.
In August 2012 repairs were undertaken to the balcony of the unit block at the P Street property commissioned by the body corporate. The husband paid the special levy totalling $4,313.80. The wife assisted by providing access to the tradesmen and supervising their work, which took three weeks. The wife also arranged for new tiles to be laid on the balconies.
On 11 August 2012 the parties caused GPL to purchase at auction a property at D Street, Suburb E (“the D Street property”) for $995,000.
In September 2012 four air-conditioning units were installed at the P Street property paid for by the husband as well as a storage unit in the car space.
In September 2012 the wife sold the office in the Suburb O property development for $420,000. The proceeds were applied as follows:
a)$49,040 to the wife’s account in repayment of the overdraft used for the deposit for the D Street property;
b)$80,000 paid into a term deposit to provide security for the loan taken out for the purchase of the D Street property; and
c)approximately $289,329 deposited to the P Street offset account and then applied to the purchase of two car spaces and in respect of the purchase of the D Street property. The wife applied $100,000 in repayment of the wife’s parents’ loan. But it is not clear to me whether the $100,000 was actually paid from the proceeds of sale of the Suburb O property or from the account prior to the wife depositing such proceeds.
On 22 October 2012 the purchase of the D Street property was complete. The deposit of $49,750 was paid by the wife obtaining an unsecured overdraft from Westpac, $89,781 was paid using the proceeds of sale of the Suburb O property, and the balance was borrowed from the Westpac Bank in the parties’ joint names. Initially the property was purchased as an investment with Mr T with a view to renovate and sell it. However, shortly after its purchase the parties agreed to renovate it and retain it as their home.
Shortly after the purchase of the D Street property, the parties purchased two car spaces near the property at 3 and 4 U Street, Suburb E (“the Suburb E car spaces”) for $50,000 each.
In October 2012 the wife commenced a second round of IVF treatment.
In February 2013 the parties commenced renovations to the D Street property. The wife obtained an owner-builder permit in mid-February 2013. The parties funded the renovations by way of a joint loan from Westpac Bank for approximately $850,000.
On 15 February 2013 the wife again borrowed the $100,000 she had repaid her parents.
In April 2013 the S Street property was sold for $468,000 with net proceeds of $84,492.
In May 2013 the husband purchased a piano at a cost of approximately $100,000 without consulting the wife.
In May 2013 the wife commenced a third round of IVF treatment.
In August 2013 the wife had a skiing holiday with her family.
In September/October 2013 the husband borrowed $78,179 from the Westpac Bank to pay income tax. This was secured initially over the P Street property, and after its sale, over the D Street property.
On 28 October 2013 the P Street property was sold for $930,000. After sale costs, the proceeds were applied as follows:
a)Approximately $531,000 to the discharge of the mortgage; and
b)Approximately $393,000 to reduce the construction offset account and the construction loan accounts associated with the D Street property.
In February 2014 the wife ceased paid employment.
On 13 October 2014 the parties separated under one roof.
From December 2014, the carpark associated with the Q Street property was leased for $50 per week.
On 23 March 2015 the husband vacated the former matrimonial home.
On 1 May 2015 the husband commenced these proceedings.
On 11 June 2015 the wife and her mother, Ms B Jordan, entered into a loan agreement to the effect that the wife’s mother would lend her funds not exceeding $30,000 with interest payable at four per cent per annum, repayable subsequent to final orders being made in these proceedings.
On 29 September 2015 the wife and her mother entered into a second loan agreement whereby the wife’s mother agreed to lend her a further sum of $40,000 for the purpose of the wife paying her legal costs. The agreement stipulated that interest would be payable at four per cent per annum and that the loan be repaid on the sale of the Q Street property or final orders being made. The agreement also acknowledged that the wife’s mother had paid $30,000 to the wife pursuant to the first agreement.
On 19 October 2015 orders were made by consent whereby the parties agreed to cause GPL to sell the Q Street property and to pay the funds into a controlled monies account after paying costs of sale (including legal costs of sale), payment of outstanding utilities, discharging the mortgage, any outstanding ASIC fee in respect of the company, payment of an estimated tax amount owed. The orders also provided for the appointment of specified single expert valuers in respect of the D Street property and any furniture and personal effects in dispute.
In October 2015 the motor vehicle in the husband’s name which the wife had been using fell out of registration. The husband sold it for $1,000. The wife no longer had the use of a motor vehicle but borrowed her father’s car from time to time.
On 16 December 2015 the Q Street property was sold at auction for $570,000. The sale was completed in February 2016. The sum of $94,805.84 was paid into a controlled monies account.
On 2 February 2016 orders were made by consent to apply $40,500 of the money held in the controlled monies account from the sale of the Q Street property to arrears on loans secured by the D Street property and the Suburb E car spaces. The orders also provided that after payment of the arrears, all payments on three specified Westpac loans secured over the D Street property were to be paid by the wife and she was to indemnify the husband with respect to these payments. The orders also provided that the husband was to pay all payments on the other two specified Westpac accounts secured over the D Street property.
In May 2016 the husband purchased the property at K Street, L Town in Queensland (“the L Town property”) for $785,000.
The parties’ divorce became final in July 2016.
On 5 September 2016 orders were made by consent providing for the D Street property and the Suburb E car spaces to be sold, as well as orders for payment of the income tax liability of GPL.
On 4 October 2016 the D Street property was sold for $3,700,000. Completion occurred in November 2016 and following the discharge of the associated mortgages, the proceeds of $1,649,243 were deposited into a controlled monies account with the wife’s solicitors in accordance with the 5 September 2016 orders.
The proceedings were listed for final hearing over four days commencing on 24 October 2016. The proceedings were unable to be heard due to my ill health and were adjourned and listed over five days commencing 8 May 2017.
In December 2016 the wife had a holiday in the United States paid for by relatives of hers in the United States.
On 7 February 2017 consent orders were made providing that by way of interim property settlement, the parties each receive $142,000 from the controlled monies account, to be used for legal costs. It was agreed that the piano be sold and proceeds deposited into the controlled monies account.
On 4 April 2017 orders were made by consent to provide for the valuation of the L Town property, the potential rental income for the period May 2016 to May 2017, and its furniture and contents. The parties agreed to each pay half of the costs associated with those valuations.
In April 2017 the wife attended a Furniture Fair paid for by her cousin, Ms V for whom the wife has provided interior and furniture advice for a property she is renovating.
Credit
The Husband
The husband was a poor witness. He appeared to have difficulty with the process of cross-examination. He tended to be hesitant and was often unresponsive. This appeared to me to demonstrate a reluctance by him to make concessions. He did make concessions but on numerous occasions these appeared to be made somewhat begrudgingly. He endeavoured to debate with counsel and interjected with commentary on occasions when no question had been asked. The commentary appeared to me to be an endeavour by the husband to have admitted to the evidence material which presumably he perceived might assist his case.
In these circumstances I intervened on two occasions to endeavour to assist the husband to focus on the question and to assist the Court with a responsive answer. I considered myself to have had only limited success with this.
These difficulties left me with the impression of a witness who was far less cooperative with the process than I would have expected from a person of the husband’s intelligence, high level of education and professional experience. In all these circumstances I have little confidence with his evidence where it has not been corroborated by other witnesses or by written material in proper form.
On 15 October 2015 the husband filed an application in which he sought orders for the sale of the Q Street and D Street properties and for the wife to be responsible for payment of the D Street mortgage. The husband conceded that at the time, in his material in support, he was representing to the Court he was unable to afford his debts.
On 19 October 2015 when that application came before the Court the parties had the Court make consent orders, including orders for the sale of the Q Street property. In his affidavit in support of the application, the husband deposed that he did not have the funds to meet the arrears on the relevant facilities. He relied on a financial statement sworn in April 2015 in support of the application in which he deposed that his expenditure exceeded his income. It was clear that on 19 October 2015 when the Court made those orders the husband was contemplating purchasing a property which is inconsistent with his alleged financial difficulty.
The husband’s Application in a Case was adjourned to 2 February 2016 when it came before me. On that occasion consent orders were made including that the arrears with respect to the mortgage on the D Street property and the car spaces would be paid from the net proceeds of sale of the Q Street property. As indicated above, the orders also provided for each of the parties to pay the payments of specified facilities secured over the D Street property and the car spaces. No mention was made by the husband of the fact that he had paid a deposit of $5,000 on 20 November 2015 in respect of his purchase of the L Town property. The husband’s explanation for not informing the wife or the Court about this on 2 February 2016 was that he had not signed a contract for the purchase as at that date. The husband did not notify the wife that he had purchased the L Town property until April 2016. He said that the reason he did not notify her was because although he had signed a contract he had not received confirmation of the availability to him of finance.
In my view, in the circumstances, the husband has not made a full and frank disclosure of this significant development in his financial circumstances, either to the wife or the Court at the time the orders were made. Not only had the husband purchased the property but he had also ordered furniture for the property in November 2015 and payment was due in February 2016. The husband did not disclose this debt to the Court or to the wife at the time that the consent orders were made for payment of the arrears, namely in February 2016.
I accept as submitted by senior counsel for the wife that by failing to disclose these significant commitments and liabilities the husband was presenting to the Court and to the wife that his finances were considerably less favourable than was the reality.
During his cross-examination he said that he deliberately let the arrears build up on legal advice in an endeavour to strengthen his case for a favourable court decision permitting the sale of properties.
It is difficult to accept the husband’s assertions about his lack of capacity to pay debt at the time. This is particularly the case because between the time of swearing that affidavit, namely 19 October 2015, and April 2016, the husband managed to accumulate savings of more than $118,000 and had the confidence to commit to the purchase of the L Town property and spend monies furnishing it.
In my view, this reflects poorly on his credit.
The Wife
The wife was responsive and cooperative. On some occasions she volunteered information which must have been perceived by her to serve her own case. But this was nowhere near the extent to which the husband engaged in this. She had a good recollection for detail.
I regard her to be a witness of the truth. Where her evidence conflicts with that of the husband, generally, I would prefer her evidence over that of the husband.
Mr T
Mr T is a licensed builder who was engaged to assist with the renovation of the P Street and D Street properties. He was not a licensed builder during the renovations.
Mr T answered questions in a forthright and responsive manner. He demonstrated a good recollection about each of the renovation projects.
I regard Mr T to be a witness of the truth.
Ms B Jordan
Ms B Jordan is the wife’s mother. She appeared to have some difficulty with the cross-examination process. She was not very responsive and at times appeared not to listen to the question. Ms B Jordan tended to give very long discursive statements parts of which had some relevance to the question and a considerable amount which did not.
Having said this, when she could be confined to focussing on the question she eventually provided something of relevance. I did not think she was being untruthful.
Mr W
Mr W was not required for cross-examination. Accordingly, his evidence is unchallenged.
Issues
Owner-builder Liability
The wife seeks an order to the effect that if the purchaser of the D Street property or subsequent purchaser was to make a claim under the Home Building Act 1989 (NSW) with respect to faults in relation to the property against the wife as owner-builder, any amount for which she might become liable be paid by both parties in equal shares. The husband resists such application.
His view is that as owner-builder of the property the wife ought to have the entire responsibility for this. During his cross-examination he indicated that he expected the wife to ascertain from each of the tradespersons involved in the project whether they had appropriate insurance. He said that if the tradesperson had the appropriate insurance that person would bear the responsibility. He also said that in the event that the wife did not ensure that the tradesperson had the appropriate insurance and they weren’t covered by insurance that the wife should be solely liable for any claim made.
In my view, renovation of the D Street property was a joint undertaking by the parties. Clearly it suited the husband for the wife to undertake the primary role as owner-builder because he did not have the time available to do so himself. I am far from persuaded that now that the project has been completed and the parties have benefited financially from it, it would be reasonable to permit the husband to walk away from what I would regard as a shared responsibility as joint developers of the property.
Accordingly, in my view, the wife’s application in this regard must succeed and I propose to make an order as sought by her.
Wedding Costs
There was an issue about whether the wife’s parents contributed $47,000 towards the cost of the parties’ wedding and reception. The wife deposed in her affidavit that this was the case, such contributions having been made in December 2010 and January 2011.
The wife’s mother said in her affidavit that prior to the parties’ wedding she and her husband paid about $47,000 towards the cost of the wedding and reception. The husband put this in issue. During his cross‑examination he was shown a bank statement in his name which demonstrated a deposit of $26,000 had been made to his account on 18 October 2010. He agreed that that deposit had been made by the wife’s parents. He did not concede that the money was for the purpose of the wedding although he said that it appeared that the transaction coincided with the time when wedding and engagement rings were purchased. He did not concede that an additional payment of $21,000 was contributed by the wife’s parents for the wedding.
I prefer the evidence by the wife and her mother over that of the husband about this matter. On the balance of probabilities I find it to be more likely than not that a total of $47,000 was contributed by the wife’s parents to the costs of the parties’ wedding.
Wife’s Project Management
There was an issue about the extent to which the wife was project manager of the renovations. The wife was cross-examined vigorously about this and it was suggested that Mr T in fact managed the project. This was based on the fact that Mr T described on the tax invoices he submitted for payment the work he did on the renovations as “project management”. The wife said that the arrangement the parties had with Mr T was that they would pay him “cost plus 15 per cent” which I understood to mean his costs (presumably of engaging tradespersons and materials) to which he would add 15 per cent.
The wife described in considerable detail what she did in managing the renovations. The husband conceded that she was skilled in managing renovations. Mr T said that the wife was the project manager. I accept that the wife was the project manager of the various renovations and that Mr T provided building services.
K Street, L Town
The parties were at issue about the manner in which the Court ought to deal with the husband’s property at L Town. As indicated above, the husband purchased the L Town property for $785,000 in May 2016. This was after separation. The husband has spent considerable funds in renovating and furnishing this property. The husband spent $70,158 in stamp duty to acquire the property and an additional $69,301 in renovating and furnishing it.
It was submitted on behalf of the husband that the Court should consider this matter on the following basis:
a)include the agreed value of $825,000 in the Balance Sheet;
b)also include $3,400 being the value attributed to renovations and furniture by the single expert;
c)deduct therefrom the mortgage secured on the property of $804,878;
d)this would give equity of $23,522.
It was submitted on behalf of the wife that to adopt such an approach would be unfair to the wife. It was submitted that a fairer approach would be to not include in the Balance Sheet the agreed value of the L Town property and the mortgage thereon. Rather it would be fairer to include the monies spent which would be the $70,518 in acquisition costs to the husband and the $69,301 which he spent on renovations and furniture. This was because had the husband not spent these monies such would have been available within the pool of assets for distribution between the husband and the wife. Senior counsel for the wife submitted that in the event that the Court did not adopt his approach of including the monies spent in the Balance Sheet then the Court ought to consider that matter pursuant to s 75(2)(o) of the Family Law Act 1975 (Cth) (“the Act”).
I propose to adopt the approach suggested on behalf of the husband because this accords with the requirement for the Court to identify and value property. But I shall also take this into account pursuant to s 75(2)(o) of the Act as submitted on behalf of the wife.
The Applicable Law
Sub-section 79(1) of the Act provides to the effect that in property settlement proceedings the Court may make such order as it considers appropriate altering the interests of the parties to the marriage in the property.
Sub-section 79(2) provides that the Court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
Sub-section 79(4) sets out various matters which must be taken into account in considering what order (if any) should be made under the section. These matters include direct and indirect contributions, financial and otherwise, by or on behalf of a party or a child to the acquisition, conservation or improvement of any property of the parties, contributions by a party to the welfare of their family including as a homemaker or parent, relevant matters referred to in s 75(2) and the other matters referred to in s 79(4).
The operation of s 79 was the subject of consideration by the High Court in the case of Stanford v Stanford (2012) 247 CLR 108. In this case the majority said (at page 120) in referring to ss 79(2) and 79(4) as follows:
35.… the requirements of the two sub-sections are not to be conflated. In every case in which a property settlement order under s 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order.
36.The expression “just and equitable” is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. … while the power given by s 79 is not “to be exercised in accordance with fixed rules”, nevertheless, three fundamental propositions must not be obscured.
The High Court said that the first of these propositions is for the Court to identify, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property.
The second is that although s 79 confers a broad power on the Court, it is not a power that is to be exercised according to an unguided judicial discretion. It must be exercised in accordance with legal principles, including the principles which the Act itself lays down.
The High Court said that the third fundamental proposition is that the question of whether the order is “just and equitable” is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters set out in s 79(4). To conclude that making an order is “just and equitable” only because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2) would be to “conflate” the statutory requirements and ignore the principles laid down by the Act.
And the High Court majority went on to say (at page 122) as follows:
41.… 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 Parties’ Existing Legal and Equitable Interests in Property
The parties agreed with the value of many of the items in the Balance Sheet which at the time of final submissions was as follows:
| OWNERSHIP | DESCRIPTION | Husband’s Value | Wife’s Value | ||
| ASSETS | |||||
| 1 | Husband | Shares in G Pty Ltd | ($41,821) | ($41,821) | |
| 2 | Joint | Sale Proceeds of Piano & D Street, Suburb E | $1,432,803 | $1,432,803 | |
| 3 | Husband | The L Town property | $825,000 | $70,518 | |
| 4 | Husband | Motor vehicle 1 | $41,950 | $41,950 | |
| 5 | Husband | Furniture & Effects | $23,459 | $23,459 | |
| 6 | Wife | Furniture & Effects | $45,821 | $45,821 | |
| 7 | Husband | Sale proceeds Motor vehicle 2 | $1,000 | $1,000 | |
| 8 | Wife | Westpac Account No #08 ($1) & #27 ($1) | $2 | $2 | |
| 9 | Joint | National Australia account #21 (included in item 1) $1,634 | $0 | $0 | |
| 10 | Husband | Westpac Business Account No #60 | $624 | $624 | |
| 11 | Husband | Westpac Account No #80 | $1,149 | $1,149 | |
| 12 | Husband | ANZ Cheque Account #79 | $205 | $205 | |
| 13 | Husband | Renovations and furniture at the L Town property | $3,400 | $69,301 | |
| TOTAL ASSETS | $2,333,592 | $1,645,011 | |||
ADD BACKS
14 Wife Partial property settlement pursuant to orders made 5 September 2016 ($60,932) $0 N/A 15 Husband Partial property settlement pursuant to orders made 5 September 2016 $0 $0 16 Wife Partial property settlement pursuant to orders made 7 February 2017 ($142,000) $0 $0 17 Husband Partial property settlement pursuant to orders made 7 February 2017 $0 $0 18 Husband Legal fees paid from credit cards and part repayment to parents for legal fees (see 26-33 in Liabilities) $0 $0 19 Wife Legal fees paid $0 $0 20 Wife Amount taken by wife from offset account at separation ($70,300) $0 $0 21 Husband Amount used by husband from offset account at separation $0 $0 22 Wife Payment of mortgage required by the wife pursuant to orders 2 February 2016 and not paid. Subsequently paid from Controlled $30,951 NIL TOTAL ADDBACKS
$30,951
$0
TOTAL GROSS ASSETS
$2,364,543
$1,645,011
LIABILITIES
23 Husband Mortgage on L Town $804,878 N/A 24 Husband X Financial Services $13,050 $13,050 25 Wife Loan from parents used to purchase Q Street $0 $200,000 26 Husband Amex Account No #05 N/A N/A 27 Husband Amex Account No #01 N/A N/A 28 Husband Husband’s Amex Card Account No #06 N/A N/A 29 Husband Westpac MasterCard Account No #74 N/A N/A 30 Husband Westpac Altitude Card No #05 N/A N/A 31 Husband Go MasterCard N/A N/A 32 Husband Gem Visa Card N/A N/A 33 Husband Loan from parents for legal fees $0 $0 34 Husband GPL shareholders loan $0 $0 35 Wife Director’s Loan $0 NIL 36 Wife Loan from parents for legal fees N/A N/A 37 Wife Tax due for 2016 tax year NIL $31,272 38 Wife National Australia Bank Visa #...27 NIL NIL 39 Husband Unpaid BAS and GIC ($204,020) Excluded 40 Husband Personal Income Tax for financial year ended 30 June 2016 Excluded TOTAL LIABILITIES
$817,928
$244,322
NET ASSETS
$1,546,615
$1,400,689
SUPERANNUATION
41 Husband M Super (Accumulation) $196,339 $196,339 42 Wife Ms Jordan Super Fund $17,356 $17,356 TOTAL SUPERANNUATION
$213,695
$213,695
NET ASSETS & SUPERANNUATION
$1,760,310
$1,614,384
There were a number of issues as follows:
Item 25 – Loan from wife’s parents - $200,000
It was common ground that in December 2010 the wife’s parents advanced $200,000 to her which was deposited into the P Street offset account. The wife said she had asked her parents to lend her approximately $200,000 for the purpose of her investing in real estate which she would then develop. This was confirmed by the wife’s mother. The wife said that her mother agreed to lend her $200,000 but informed her that it was a loan and that her parents would need the money repaid as soon as the wife could do so. The wife said her mother said that they may need it sooner and might request repayment sooner but that they would not charge interest. This account was supported by the wife’s mother both in affidavit and during her cross‑examination.
It is also common ground that in October 2012 the wife repaid her parents $100,000 of the alleged $200,000 loan. The wife’s mother said that she and her husband were short of money and she asked the wife to repay $100,000. There is no question that the wife repaid $100,000 to her parents. She said this was paid after her office in her family’s Suburb O development was sold in October 2012. There was considerable attention given to the source of these funds during the course of the cross-examination. The wife said that the $100,000 was funded from the proceeds of sale of her Suburb O office. Counsel for the husband demonstrated that this appeared not to be the case. Nevertheless, I am satisfied that on a balance of probabilities it is more probable than not that the $100,000 came from the wife’s funds possibly including the said proceeds of sale.
It is also common ground that within a couple of months the wife again approached her mother and asked for a further loan of $100,000. The wife said she wanted the money to apply towards the D Street renovations. Her case, supported by her mother, was that her mother agreed to the advance which was said to be a loan, but that she and her husband would need the loan to be repaid when the wife could and if they informed her that they needed it.
It is also common ground that $200,000 has not been paid to the wife’s parents. The wife said that this is an outstanding loan which she has to repay. The husband said that he always understood that the $200,000 was advanced to the parties as a gift from her parents.
The husband said that in approximately December 2012 the parties were experiencing some difficulties with their marriage. He said that at that time the wife said to him that if they separated he would have to repay her parents the $200,000 loan. He said that he never heard the wife refer to this money as having been a loan and that her parents had never mentioned to him that it was a loan.
The wife’s mother said that late on 22 March 2015 she attended outside the D Street property at the wife’s request. She said the wife had informed her that the husband was “cleaning out the house”. She said that when she arrived she informed the husband that she and her husband required the parties to repay their $200,000 loan straight away. The wife confirmed this account. The husband denied that any mention had been made on that occasion about the $200,000 advanced by the wife’s parents.
I prefer the evidence of the wife and her mother over that of the husband in relation to this.
It was submitted on behalf of the husband that the Court would find that the $200,000 was a gift for the following reasons:
·In 2010 when the loan was advanced it seems to have been advanced for the joint benefit of the parties and for the purpose of acquisition of property.
·There was no loan agreement, no clear terms and, according to the wife and her mother, the loan was repayable on demand, although the demand was not made until such time as the parties separated.
·The goodwill inherent in the gift of $200,000 changed as the marriage soured and then it was said to be a loan.
·Support for the husband’s contention that it was never intended to be a loan lies in the fact that the wife failed to declare such a loan in subsequent loan applications she made to various financial institutions for loans.
·The return of $100,000 seems to have been made at the wife’s election not that of her mother.
·It being a gift is supported by the fact that when the $100,000 was returned it was re-advanced within approximately eight weeks and this shows that there was no demand by the wife’s mother and at all times she was happy for the parties to use the money as they saw fit.
·The terms of the loan, if any, were in dispute between the wife and her mother. The mother seems to say that she gave it to the wife then wanted it back although she did not say why or what the urgency was and the wife appeared to take a different position.
I must say I am unpersuaded by these submissions and prefer the submissions on behalf of the wife which were as follows:
·The fact that $100,000 was repaid to the parents does not fit well with a gift. I accept that this was done at the request of the wife’s mother on the basis that she and her husband needed the money. The further advance of $100,000 is a better fit with a loan.
·The husband was not a party to any of the arrangements, either initially, at the time of repayment of the $100,000 or the re-advance, and was not present at any conversation with the wife’s parents about the initial advance of funds.
·It is the case that representations were made by the wife to financial institutions in which she did not declare the alleged loan. This would not be regarded as fatal to the wife’s case and I accept that it is not uncommon for this Court to see such a practice in circumstances where an applicant is most anxious to obtain a loan. In the present case the parties were most desirous of funds in order to be able to complete the D Street renovation.
·That it was positively put to the wife during cross-examination on behalf of the husband that $200,000 had remained in the D Street offset account in case it was required to be returned to the wife’s parents and this is more consistent with it being a loan rather than a gift.
Both the wife and her mother said this was a loan. The return of part of the funds is consistent with a loan. In my view, the reasons advanced on behalf of the wife in favour of a loan are considerably more plausible than the arguments advanced for the husband’s assertion that the money was a gift. In all the circumstances, I find that the $200,000 was a loan by the wife’s parents to the wife repayable on demand. I propose to make an order that the wife’s parents be repaid $200,000 from the controlled monies.
Item 22 - Payment of mortgage required by the wife pursuant to orders 2 February 2016 and not paid
It was submitted on behalf of the husband that there should be added back to the pool of property the sum of $30,951. This sum was said to be the aggregation of mortgage payments which the wife was required to pay pursuant to Order 3 of the consent orders made on 2 February 2016.That order was as follows:
3.That pending further order the wife shall pay as and when they fall due from the date of these Orders and after the payment of the arrears provided in Order 1, all payments referrable to the following loans secured by mortgage on the D Street Property and the Suburb E car spaces:
3.1Westpac Account No #...04
3.2Westpac Account No #..26
3.3Westpac Account No #..51
and shall indemnify and keep indemnified the husband in respect to these payments.
It was submitted on behalf of the husband that the wife let the mortgage fall into arrears and at the time of settlement the sum of $30,951 was paid to discharge those arrears. It was submitted in circumstances where the consent orders were made, where the wife had the benefit of occupancy of the D Street property and she failed to meet her obligations under the orders that this amount should be added back to the property pool.
On the other hand, it was submitted on behalf of the wife that she would take issue with $30,951 being what she would have been responsible for under the orders. She conceded that this amount was approximate arrears but this included liabilities for matters outside her responsibility under the orders. It was submitted that there were five facilities secured over D Street of which only two were paid by the husband for part of the period prior to completion of the sale and that of the other three facilities the wife’s obligation extended to two but only for the period from 2 February 2016 to 5 September 2016. I agree with this submission and accept that there are difficulties with the quantification suggested as properly representing the amount that the wife would be responsible for.
But it was submitted that there was a further difficulty in relation to adding this amount back to the pool. This was that the order had been discharged on 5 September 2016 and was not brought as an enforcement application. It was submitted that even if it had been, in any event, the Court would need to have regard to the circumstances in which the order of 2 February 2016 had been made. It was submitted that at its lowest the order was made in circumstances where before the Court was misleading financial information by the husband. This is because it became clear during the hearing that five or six days later he informed a financial institution that his financial circumstances were much more favourable to him compared with what he was representing at the time of the orders in terms of his ability to be able to meet debt. I accept this and note that from the husband’s email of 25 October 2015 that the husband was embarking on a course to permit debt to increase.
It was also submitted that at the time it is clear that the wife had only a very limited capacity to service debt. From the time of separation she was not employed apart from one commission of $20,000 which she received in December 2014 and I accept that credit facilities previously extended to her by the husband were cancelled.
In my view, including for the reasons contained in the submissions on behalf of the wife, notwithstanding that she had the benefit of occupancy of the former matrimonial home and that she had entered into orders to meet mortgage repayments, in all the circumstances, it would visit an unfairness on her to add back the $30,951 particularly bearing in mind her financial circumstances at the time. I do not propose to add this back.
Item 1 – Shares in GPL Pty Limited
In relation to the shares in GPL the parties agreed that they have a value of minus $41,821. It was also agreed that the husband would keep these shares at this negative value.
Item 37 – Wife’s income tax for 2016 tax year
The wife said that she has prepared an income tax return for the financial year ending 30 June 2016. She said that she expects to receive a tax assessment requiring her to pay $31,272. It was submitted on her behalf that during the relevant period the wife had to apply income to her own support and to the maintenance of the D Street property and therefore this liability should be included in the Balance Sheet.
I do not propose to bring personal liabilities of either party (other than the $200,000 and the X Financial Services) to the Balance Sheet.
Accordingly, I find the parties’ interests in property and superannuation are as follows:
| ASSETS | $ |
| 1. Joint sale proceeds of piano and D Street, Suburb E | 1,432,803 |
| 2. Husband’s shares in GPL Pty Limited | (41,821) |
| 3. Husband’s L Town property | 825,000 |
| 4. Husband’s Motor vehicle 1 | 41,950 |
| 5. Husband’s furniture and effects | 23,459 |
| 6. Husband’s sale proceeds Motor vehicle 2 | 1,000 |
| 7. Husband’s Westpac Business Account | 624 |
| 8. Husband’s Westpac Account No #80 | 1,149 |
| 9. Husband’s ANZ Cheque Account | 205 |
| 10. Husband’s renovations and furniture at L Town | 3,400 |
| 11. Wife’s furniture and effects | 45,821 |
| 12. Wife’s Westpac Account | 2 |
| _____________ | |
| TOTAL ASSETS | $2,333,592 |
| LIABILITIES | $ |
| 1. Husband’s mortgage on L Town | 804,878 |
| 2. Husband’s X Financial Services | 13,050 |
| 3. Wife’s parents’ loan | 200,000 |
| _____________ | |
| TOTAL LIABILITIES NET | $1,017,928 $1,315,664 |
| SUPERANNUATION | $ |
| 1. Husband’s M Super | 196,339 |
| 2. Wife’s Ms Jordan Super Fund | 17,356 |
| _____________ | |
| TOTAL SUPERANNUATION | $213,695 |
| TOTAL ASSETS AND SUPERANNUATION | $1,529,359 |
Sub-Section 79(2)
Sub-section 79(2) of the Act provides:
The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
In their decision in the case of Bevan & Bevan (2013) FLC 93-545 the Full Court (Bryant CJ and Thackray J) said as follows at page 87,234:
In our view, it will be less likely that the separate issues arising under s 79(2) and s 79(4) will be conflated if judges refrain from evaluating contributions and other relevant factors in percentage or monetary terms until they have first determined that it would be just and equitable to make an order.
In the present case, the parties were married for approximately five years. Their major asset, the D Street property has been sold and the proceeds are held in a controlled monies account in the name of the wife’s solicitors. If an order was not made the money would continue to sit in the account. In addition, numerous issues between the parties would remain unresolved.
In these circumstances, in my view it would be just and equitable to make an order under s 79 of the Act.
Contributions
As indicated above, I am satisfied that the parties commenced cohabiting in October 2009 as asserted by the wife. I understand that the husband conceded this during the hearing. But in the event that my understanding is wrong, in a loan application to Westpac Banking Corporation in May 2013, the husband referred to the wife as having resided at the P Street property since 1 September 2009. This might have been a bit of poetic licence but it is difficult to find an explanation for the husband providing this date if, in fact, the wife had commenced residing at the P Street property from a later date.
Even if I am wrong about this, and the husband is correct that the parties commenced cohabitation in January 2010, little would appear to turn on this because the parties’ financial circumstances respectively were similar at either date.
At the commencement of cohabitation the husband’s financial circumstances were as follows. He owned the P Street property which he had purchased on 26 June 2009, shortly before cohabitation, for $590,000 subject to a mortgage of $531,296. He had paid the 10 per cent deposit, stamp duty and legal costs from his savings and by using the first home buyer’s grant. The husband also had modest equity in a motor vehicle which was subject to a lease, superannuation benefits with a value of approximately $57,500, savings of approximately $8,361 and some furniture and personal property. He also owned his business.
It was asserted by the wife that the husband had a tax liability of approximately $115,500. This was in issue initially. But during cross‑examination the husband accepted that he had a tax liability of approximately $111,000 and a Business Activity Statement liability of approximately $23,000. The husband was working full-time as a medical professional.
On the other hand, at the commencement of cohabitation the wife’s financial circumstances were as follows. She owned an interest in a property development which her family was undertaking at N Street, Suburb O. From her interest, she received an unencumbered commercial office which shortly after completion she rented out and received rental income over the period from January 2011 until April or May 2012. The office was sold in August 2012 and the wife received net proceeds of sale of $421,000. This money was applied for the benefit of the parties. The wife also owned a Motor vehicle 3 which she sold in 2011 for $15,200, an interest as sole shareholder in the company, GPL which had cash of $8,709, jewellery valued at $8,000, some furniture and personal property and a modest superannuation benefit. The wife had a credit card liability of approximately $15,000.
Both parties have made substantial financial contributions. The husband has worked throughout the cohabitation period full-time as a medical professional. The wife has worked as a licensed professional but she ceased paid employment in early 2014 to concentrate on the renovation of the D Street property. At this time the parties were engaged in the IVF program. In my view, it is clear that a joint decision was made for the wife to cease paid employment at this time. The wife also had the income from her Suburb O commercial office between May 2011 and August 2012 which she directed to meet various expenses including the loan repayment on the Q Street property. The wife’s parents also advanced the funds referred to above and clearly these have been of considerable benefit to the parties.
Both parties made significant contributions to the renovation of various properties referred to above. As indicated above, there was a suggestion on behalf of the husband that the wife overstated her involvement and responsibility in the renovation projects by describing herself as project manager. Having heard the evidence by both the wife and Mr T about this matter, as indicated above, I am comfortably satisfied that the wife was responsible for the project management. This is not to say that the husband did not have considerable involvement in the project. He made significant financial contributions to the renovations, and clearly there were many discussions between himself and the wife and others involved in the projects. I accept that he involved himself in decisions about various fittings and fixtures for the projects. Having said this, in terms of time spent and overall effort, in my view, it is clear that the wife involved herself much more in the renovations than did the husband who, after all, was busy fulfilling the responsibilities of his professional employment.
Both parties have made contributions to the welfare of their family unit constituted by themselves. In my view, the wife has made a greater contribution as homemaker particularly from the time that she ceased income producing work in early 2014 because from this time she had more time to do this than the husband who was very much involved working full-time.
It was submitted on behalf of the husband that the Court ought to regard the wife as not having made any contribution to the pre-cohabitation and post cohabitation components of the husband’s superannuation and that the only component to which she ought to be regarded as having made a contribution was $83,000. I do not propose to adopt such an approach. I have considered the pre-cohabitation superannuation of each party in the context of their initial contributions. I have considered the post separation contributions in the context of the parties’ overall contributions.
It was submitted on behalf of the husband that in circumstances where the husband’s net income over the period of the relationship was approximately $1.8 million net compared with that of the wife, which was $291,153, on assessing contributions the husband must end ahead of the wife at least to some extent. It was submitted that for the period from the commencement of cohabitation to separation the Court assess the husband’s contributions at 55 per cent. Counsel for the husband submitted that following separation such was the level of the contributions made by the husband that there ought to be an “uplift of 10 per cent” which would result in an assessment of the husband’s contributions overall as having been 65 per cent. Such an “uplift” in favour of the husband following separation was said to arise taking account of the fact that the husband was meeting most of the costs including for most of the period in relation to the D Street property whereas the wife had the benefit of occupying that property for most of the time without paying the loans as required under the orders of 2 February 2016 and bearing in mind that she was not in income producing work during the post separation period.
On the other hand, it was submitted on behalf of the wife that the Court would assess her contributions overall as having been 60 per cent. The 10 per cent difference from equality would recognise the substantial difference between the parties’ initial asset positions, the wife having brought in approximately $420,000 and the husband having a deficiency of assets compared with liabilities at the commencement of cohabitation. It was submitted that in relation to the parties’ other contributions the Court would recognise that each of the parties contributed to their full ability and capacity and the fact that the husband earned a much greater income over the period than did the wife would not attract recognition in a way which would cause it to be regarded somehow as being a higher value contribution than all the other contributions made by the wife, particularly her non-financial contributions to the development of the various properties through the work which she undertook project managing the renovation of the properties.
I accept that each of the parties contributed to the full extent of their respective capacities. In my view, had it not been for the wife’s much more substantial initial contribution the finding on contributions would be closer to equal. I do not accept that such were the contributions by the husband during the post separation period that there ought to be the “uplift” submitted by counsel for the husband. As submitted by senior counsel for the wife, during this period the wife was still attending to completion of work on the D Street property and preparing it for sale.
In my view, the wife’s contributions overall have been higher than those of the husband because of her initial contributions. I assess her contributions overall at 58 per cent and those of the husband at 42 per cent.
Sub-section 75(2) matters
The husband is 45 years of age. He manages a number of health issues including type 1 diabetes, hypertension, hypercholesterolemia and peripheral neuropathy. He works as a medical professional earning an average weekly income before tax of $12,370. On current indications he would appear to be able to earn income at this level for many years.
The husband’s commitments are set out in his Financial Statement. He makes voluntary payments to superannuation.
The wife is 46 years of age. She is in reasonable health. She is a licenced professional and has worked in various capacities.
The wife lives with her parents in their home and they assist in supporting her. She appears to live modestly.
The wife has found it difficult to work given the demands on her of this ongoing litigation and the fact that she does not own a car. She has borrowed a car from her parents and her brother from time to time to enable her to undertake some work. She feels that when the litigation is behind her she will be “mentally” able to resume work as a buyer’s agent and have the available time to do so.
It is clear that the wife’s income earning capacity is modest compared with that of the husband.
I also take into account the husband’s acquisition of his L Town property and the expenditure involved in doing this as well as renovating and furnishing the property.
The parties cohabited for a relatively short period namely just on five years. As indicated above, the wife ceased working in her chosen profession. She was concentrating on completing renovations and she was also focused on the parties’ endeavours to start a family. There is no evidence to the effect that this has affected the wife’s capacity to return to her profession and earn income. She has made it clear that she proposes to do so.
It was submitted on behalf of the wife that upon taking account of the relevant factors the Court would make a five per cent adjustment in order to achieve a just and equitable order. On the other hand, it was submitted on behalf of the husband that there should be no adjustment.
I accept the husband has a vastly superior income-earning capacity than the wife. And I take some account of the fact that the husband has invested considerably more money in his L Town property than is reflected in capital gain at this time. But given the relatively short period of cohabitation and in view of the finding I have made about contributions, I do not regard it necessary to make an adjustment based on s 75(2) matters to arrive at a just and equitable order.
Conclusion and fourth step
The husband is to have 42 per cent of the property and superannuation available for division. This is property and superannuation with a value of $642,331 (42 per cent of $1,529,359 = $642,331).
The husband has the following:
$
1. L Town property 825,000 2. Motor vehicle 1 41,950 3. Furniture and effects 23,459 4. Sale proceeds Motor vehicle 2 1,000 5. Westpac Business Account 624 6. Westpac Account No #...80 1,149 7. ANZ Cheque Account 205 8. Renovations and furniture at L Town property 3,400 9. Shares in GPL Pty Limited (41,821) 10. M Super 196,339 _____________
$1,051,305
But the husband has the following liabilities:
$
1. Mortgage on L Town property 804,878 2. X Financial Services 13,050 _____________
$817,928
Accordingly, the husband has net assets and superannuation with a value of $233,377 ($1,051,305 - $817,928 = $233,377).
To achieve property and superannuation with a value of $642,331 he would require additional property with a value of $408,954 ($642,331 - $233,377 = $408,954). This would come from the controlled money.
On the other hand the wife is to have 58 per cent of the property and superannuation available for division. This is property and superannuation with a value of $887,028 (58 per cent of $1,529,359 = $887,028).
The wife has the following:
$
1. Furniture and effects $45,821 2. Westpac account 2 3. Ms Jordan Super Fund 17,356 __________
$63,179
To achieve property and superannuation with a value of $887,028 the wife would require additional property with a value of $823,849 ($887,028 - $63,179 = $823,849). This would come from the controlled money.
As indicated above the controlled money account has a balance of $1,432,803. From this the $200,000 owing to the wife’s parents shall firstly be paid which would leave a balance of $1,232,803 ($1,432,802 - $200,000 = $1,232,803). From this the husband would be paid $408,954 which is 33.173 per cent thereof. The wife would be paid $823,849 which is 66.827 per cent thereof.
The husband would have the property and superannuation referred to above as well as approximately $408,954. He has some personal liabilities. Significantly, he has the capacity to earn a substantial income.
On the other hand, the wife would have her modest property and superannuation, as well as approximately $823,849.
She too has some personal liabilities. But she would still have a significant amount which she could use as a deposit on a property on the assumption that she would resume work upon completion of these proceedings.
In my view, the orders I propose will be just and equitable.
I certify that the preceding one hundred and sixty-six (166) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Johnston delivered on 20 August 2018.
Associate:
Date: 20 August 2018
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
Legal Concepts
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Remedies
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Costs
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Fiduciary Duty
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Constructive Trust
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Reliance
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Restitution
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