Franklyn & Franklyn
[2023] FedCFamC2F 353
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Franklyn & Franklyn [2023] FedCFamC2F 353
File number(s): DUC 63 of 2018 Judgment of: JUDGE OBRADOVIC Date of judgment: 30 March 2023 Catchwords: FAMILY LAW – Final Property – matter remitted for hearing – short relationship – significant intermingling of funds – add-backs– waste – assessment of contributions – whether adjustment just and equitable Legislation: Family Law Act 1975 (Cth) ss. 75(2), 79 Cases cited: Bevan & Bevan [2013] FamCAFC 116
Chapman & Chapman [2014] FamCAFC 91
Franklyn & Franklyn [2021] FCCA 588
Franklyn & Franklyn (No. 1) [2021] FamCAFC 112
Inthe Marriage of Briese (1985) 10 Fam LR 642 ; [1986] FLC 91-713
In the Marriage of Weir (1992) 16 FamLR 154
Kennon & Kennon (1997) FLC 92-757
Livesey v Jenkins [1985] 1 All ER 106
Oriolo v Oriolo (1985) 10 Fam LR 665 ; [1985] FLC 91-653
Robb & Robb (1995) FLC 92-555
Russell & Russell [1999] FamCA 1875
Scott & Danton [2014] FamCAFC 203
Stanford v Stanford [2012] HCA 52
Teal & Teal [2010] FamCAFC 120
Trevi & Trevi [2018] FamCAFC 173
Division: Division 2 Family Law Number of paragraphs: 157 Date of last submission/s: 21 September 2022 Date of hearing: 25 and 27 July 2022; 12 August 2022; and 21 September 2022 Place: Parramatta Counsel for the Applicant: Mr Othen Solicitor for the Applicant: Matthews Folbigg Pty Ltd The Respondent: In person ORDERS
DUC 63 of 2018 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR FRANKLYN
Applicant
AND: MS FRANKLYN
Respondent
order made by:
JUDGE OBRADOVIC
DATE OF ORDER:
30 MARCH 2023
THE COURT ORDERS THAT:
1.The interim orders made on 10 May 2018 are discharged.
2.Forthwith, the respondent (“wife”) is to do all acts and things necessary so as to cause the removal of the caveat lodged in her name in respect of any interest claimed over the property ‘C Property’, J Street, Suburb K NSW being the whole of land contained in Folio Identifier Lot … DP… (“C Property”).
3.Within 90 days of the date of these orders:
(a)The applicant (“husband”) is to make a cash payment to the respondent wife, in the sum of $801,657;
(b)The husband is to do all acts and things necessary to pay out any and all mortgages and any and all loans in the parties’ joint names held with the L Bank; and
(c)Upon the husband complying with order (b) above, the parties are to do all acts and things necessary to cause the discharge of any and all mortgages and/or securities held in the parties’ joint names with the L Bank.
4.Simultaneously with compliance with order 3, the wife shall transfer to the husband:
(a)The whole of her right, title and interest in C Property; and
(b)Any interest that she has which may remain in the Franklyn Partnership (“partnership”).
5.In the event that the husband fails to comply with order 3(a), then within 7 days of default, the husband shall:
(a)Transfer to the wife the whole of his right, title and interest in C Property; and
(b)Pay to the wife the sum of $101,657.
6.In the event the husband fails to comply with order 3(b), then within 28 days of default, the husband shall list for sale and sell ‘B Property’, 1 M Street, Suburb K NSW, being the whole of land contained in Folio Identifier Lot … DP… and Lot … DP … (“B Property”) with an agent and using a solicitor at a price agreed between the parties and failing agreement:
(a)At a price nominated by N Valuers;
(b)With an Agent nominated by the President of the Real Estate Institute of NSW; and
(c)A solicitor/conveyancer nominated by the President of the NSW Law Society.
7.Where the husband has failed to comply with order 3(b) upon sale of B Property the proceeds shall be distributed:
(a)To pay the costs of sale, including real estate fees;
(b)To pay outstanding rates;
(c)To pay the L Bank overdraft, in the parties’ joint names, bearing account number …03;
(d)To pay the L Bank commercial loan, in the parties’ joint names, bearing account number …94;
(e)To pay all other debts held in the parties’ joint names; and.
(f)Any balance to the husband.
8.In the event the husband fails to comply with order 5(b), then within 28 days of default, the husband shall list for sale and sell ‘O Property ’, 2 M Street, Suburb K NSW being the whole of land contained in Folio Identifier Lot … DP … (“O Property ”) with an agent and using a solicitor and at a price agreed between the parties and failing agreement:
(a)At a price nominated by N Valuers;
(b)With an Agent nominated by the President of the Real Estate Institute of NSW; and
(c)A solicitor/conveyancer nominated by the President of the NSW Law Society.
9.Where the husband has failed to comply with order 5(b) upon the sale of O Property the proceeds shall be distributed:
(a)To pay the costs of sale, including real estate fees;
(b)To pay outstanding rates;
(c)To pay $101,657 to the wife; and
(d)Any balance to the husband.
10.In the event the husband fails to comply with both order 3(b) and 5(b), then within 28 days of default, the husband shall list for sale and sell ‘B Property’, 1 M Street NSW, being the whole of land contained in Folio Identifier Lot … DP… and Lot … DP … (“B Property”) with an agent and using a solicitor and at a price agreed between the parties and failing agreement:
(a)At a price nominated by N Valuers;
(b)With an Agent nominated by the President of the Real Estate Institute of NSW; and
(c)A solicitor/conveyancer nominated by the President of the NSW Law Society.
11.Where the husband has failed to comply with both orders 3(b) and 5(b) upon the sale of B Property the proceeds shall be distributed:
(a)To pay the costs of the sale, including real estate fees;
(b)To pay outstanding rates;
(c)To pay the L Bank overdraft, in the parties’ joint names, bearing account number …03;
(d)To pay the L Bank commercial loan, in the parties’ joint names, bearing account number …94;
(e)To pay all other debts held in the parties’ joint names;
(f)To pay $101,657 to the wife; and
(g)Any balance to the husband.
12.Unless otherwise provided herein, the applicant husband is declared the sole owner at law and in equity of:
(a)The property known as ‘B Property’, 1 M Street, Suburb K NSW, being the whole of land contained in Folio Identifier Lot … DP … and Lot … DP … (“B Property”);
(b)The property known as ‘O Property ’, 2 M Street, Suburb K NSW being the whole of land contained in Folio Identifier Lot … DP … (“O Property ”);
(c)All plant and equipment located on O Property and B Property and if there has been compliance with order 3(a) then all plant and equipment located on C Property;
(d)All assets held by the partnership;
(e)All assets standing in his sole name; and
(f)Any superannuation entitlement held by him.
13.The husband shall indemnify and keep indemnified the wife and be solely liable for any and all liability relating to:
(a)C Property;
(b)B Property;
(c)O Property ;
(d)The L Bank overdraft, in the parties’ joint names, bearing account number …03;
(e)The L Bank commercial loan, in the parties’ joint names, bearing account number …94;
(f)The remaining debt to the P Bank for the finance which was secured on Motor Vehicle 1 motor vehicle;
(g)Any liability attached to the partnership;
(h)Any assets standing in his sole name; and
(i)Any liability standing in his sole name.
14.Pending compliance with orders 3 and 4, or alternatively orders 5 to 10 as relevant, the husband shall meet all payments associated with the L Bank overdraft, the L Bank joint loan, all rate payments, insurance payments and outgoings related to C Property.
15.Unless otherwise provided herein, the wife is the sole owner at law and in equity of:
(a)Any business interest owned by her including her business ‘Q Company’ and all furniture fittings from same;
(b)All sale proceeds of the property at E Street, F Town;
(c)Any superannuation entitlement held by her;
(d)Any asset standing in her sole name; and
(e)Any funds retained by her from the R Insurance claim in 2017.
16.The wife shall indemnify and keep indemnified the husband and be solely liable for any and all liability relating to:
(a)Any business owned by her;
(b)Any asset standing in her sole name; and
(c)Any liability standing in her sole name.
17.Each party do all acts and things and sign all such documents necessary to give effect to these orders.
18.In the event that either party refuses or neglects to execute any deed, document or instrument necessary to give effect to these orders, the Registrar of the Court be appointed pursuant to s.106A of the Family Law Act 1975 (Cth) to execute such deed, document or instrument in the name of the said party and do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of Affidavit.
19.The husband is to file and serve any evidence and written submissions in respect of costs by 4pm on 28 April 2023, such submissions to include a schedule of any outstanding costs applications and/or reserved costs.
20.The wife is to file and serve any evidence and written submissions in respect of costs by 4pm on 26 May 2023, such submissions to include a schedule of any outstanding costs applications and/or reserved costs.
21.The husband is to file and serve any submissions in reply in respect of costs by 4pm on 9 June 2023.
22.Unless the parties object, the Court is to deal with the issue of costs on the papers and judgment will be reserved to be delivered on a date to be advised.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Franklyn & Franklyn has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE OBRADOVIC:
INTRODUCTION
These are reasons for judgment in respect of competing property adjustment orders as between the applicant husband, Mr Franklyn born in 1967 (“husband”), and the respondent wife, Ms Franklyn born in 1971 (“wife”).
The wife and husband (collectively the “parties”) have been involved in a protracted dispute which commenced in 2018 and has been before a number of judges of this Court, including before another Judge for final hearing. The proceedings have also been before the appellate jurisdiction of the then named Family Court of Australia twice: in 2019 in respect of an interim judgement and again in 2021 in respect of the final judgment.
The Court’s decision in relation to final parenting orders was upheld on appeal, whereas the property aspect was remitted back for re-hearing as a result of a partially successful appeal.[1]
[1] Franklyn & Franklyn (No. 1) [2021] FamCAFC 112
The findings of fact made in relation to the parenting proceedings are undisturbed.[2] This Court, for the purpose of this judgment, adopts those findings of fact.[3]
[2] Franklyn & Franklyn [2021] FCCA 588
[3] Franklyn & Franklyn [2021] FCCA 588
It is of note that the parties cohabited for a relatively short period of time, from about early 2014 to about late 2017, a period of less than 4 years. The parties at the time of the final hearing had been separated for approximately 5 years.
RELEVANT LEGAL PRINCIPLES
The overall approach to the determination of an application for property adjustment orders pursuant to s.79 of the Act was set out by the High Court in Stanford v Stanford.[4] Such approach was subsequently considered by the Full Court of the Family Court in Bevan & Bevan,[5] Chapman & Chapman[6] and Scott & Danton.[7]
[4] Stanford v Stanford [2012] HCA 52
[5] Bevan & Bevan [2013] FamCAFC 116 (“Bevan”)
[6] Chapman & Chapman [2014] FamCAFC 91
[7] Scott & Danton [2014] FamCAFC 203
In many matters which come before this Court, the requirement of whether it is just and equitable to make any orders is readily satisfied by the fact of the parties’ separation; as there is not and will not thereafter be the common use of property by the parties. For reasons explained herein, it is so in this instance.
Once the issue of whether it is just and equitable to make any order is resolved, the Court is to then consider the contributions made by the parties as defined in s.79(4)(a) to (c), the matters set out in s.79(4)(d) to (g) and 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.
The Court is then to consider the justice and equity of the actual orders to be made, in the context of the Court’s obligations to make appropriate orders as provided for in s.79(1) of the Act.[8]
[8] See generally Russell & Russell [1999] FamCA 1875; Teal & Teal [2010] FamCAFC 120.
The just and equitable requirement is “one permeating the entire process”.[9]
[9] Bevan at [86].
Non-disclosure
The wife has been very concerned, throughout the time these proceedings have been on foot, to point to the husband’s alleged lack of full and frank disclosure, his non-compliance with orders in respect of disclosure, both alleged and conceded, and generally the alleged lack of frankness in his evidence.
In financial proceedings between spouses each party must make a full and frank disclosure of all material facts.[10] The mere compliance with rules of the court or practice directions does not alter the basic principle of the need for full and frank disclosure. The purpose of full and frank disclosure must be “the need for each party to understand the financial position of the other party, which is at the very heart of cases concerning property”.[11]
[10] See for example: Livesey v Jenkins [1985] 1 All ER 106; Inthe Marriage of Briese (1985) 10 Fam LR 642; [1986] FLC 91-713; and Oriolo v Oriolo (1985) 10 Fam LR 665 ; [1985] FLC 91-653.
[11] See In the Marriage of Briese (1985) 10 Fam LR 642 ; (1986) FLC 91-713, approved by the Full Court in the case of Oriolo v Oriolo (1985) 10 Fam LR 665; [1985] FLC 91-653.
Where there is clear evidence of non-disclosure, the Court should not be unduly cautious about making findings in favour of the innocent party.[12]
[12] In the Marriage of Weir (1992) 16 FamLR 154.
Notional Add-Backs
In Trevi & Trevi[13] the Full Court of the then Family Court of Australia held as follows:
[27]The Full Court held in [AJO & GRO] that addbacks fall into “three clear categories”: where the parties have expended money on legal fees; where there has been a premature distribution of matrimonial assets; and “waste” or wanton, negligent, or reckless dissipation of assets.
[28]However, the Full Court also made it clear that an addback does not necessarily occur whenever “a party has expended money realised from the disposition of assets that existed as at the date of separation”, the Full Court describing such a proposition as “unduly simplistic”. An earlier Full Court made the same point, saying that adding back is “the exception rather than the rule”.
[29]The fundamental precept that addbacks are exceptional, reflected in the decisions just referred to, also mirrors what has been said in earlier decisions of the Full Court that, for example, “the Family Court must take the property of a party to the marriage as it finds it” at trial. An important parallel proposition is that the parties do not “go into a state of suspended economic animation” after separation. Thus, reasonably incurred expenditure does not usually come within accepted categories of addback.
[30]Two fundamental premises emerge from [AJO & GRO] and the authorities preceding it. First, “adding back” is a discretionary exercise. When the discretion is exercised in favour of adding back, it reflects a decision that, exceptionally, in the particular circumstances of a case, justice and equity requires it. The second premise is its corollary: in cases that are not “exceptional” justice and equity can be achieved, not by adding back, but by the exercise of a different discretion – usually by taking up the same as a relevant s 75(2) factor. Indeed, it has been said that the latter is “a course which is, perhaps, technically more correct” than adding back to the list of existing interests in property.
(citations omitted)
[13] Trevi & Trevi [2018] FamCAFC 173, [27]-[30].
DOCUMENTS RELIED UPON AT FINAL HEARING
This matter was originally listed for a three day final hearing commencing on 25 July 2022. On the first day of the hearing the wife made an adjournment application which was dismissed. However, the matter was stood down to allow the wife some time to inspect subpoenaed material. The wife ultimately took two days to inspect the material, and the hearing re‑commenced at 10am on 27 July 2022. The proceedings were then adjourned part-heard for two additional days of hearing, being 12 August 2022 and 21 September 2022. At that time, an order was made restricting the duration of the wife’s cross-examination, to be completed by 4pm on 12 August 2022.
On 12 August 2022, the wife made an additional adjournment application, as well as an application to conduct the hearing via telephone. The Court dismissed the wife’s adjournment application but granted her leave to appear and conduct the final hearing via telephone, noting that she was in Queensland.
Further, on 12 August 2022 orders were made to allow the wife to obtain an updated expert valuation of the properties the subject of these proceedings. The wife was ordered to meet the costs of the preparation of the report and any costs associated with the witness’ attendance at the hearing. This necessitated a further day of hearing, with the proceedings going over part-heard to 21 September 2022.
The hearing concluded on 21 September 2022, with lengthy oral submissions from both the wife and counsel for the husband.
At final hearing, the husband relied on the following documents:[14]
[14] Case Outline of Applicant Husband filed 18 July 2022
(a)Case outline Document filed 18 July 2022;
(b)Minute of Order handed up on 27 July 2022;
(c)Amended Application for Final Orders filed 15 December 2020;
(d)Financial Statement filed 22 November 2021;
(e)Affidavit of Mr Franklyn (paragraphs 1-14, 18-26, 31-46, 94-148) filed 15 January 2021;
(f)Updating Affidavit of Mr Franklyn filed 22 November 2021;
(g)Affidavit of Ms T filed 22 November 2021;
(h)Affidavit of Mr S filed 22 November 2021;
(i)Affidavit of Mr U (plant and equipment) filed 27 November 2021;
(j)Affidavit of Mr V (real property) filed 29 January 2021; and
(k)Affidavit of Mr W (property inspection) 25 November 2021.
At final hearing, the Wife relied on the following documents: [15]
[15] Exhibit 15 plus additional three documents not listed on Exhibit 15
(a)Affidavit of Ms Franklyn (paragraphs 27-29, 110-120, 123-147) filed 21 March 2018;
(b)Affidavit of Ms Franklyn (paragraphs 10-31) filed 2 July 2018;
(c)Financials of Mr Franklyn filed 25 July 2018;
(d)Summary of Argument (paragraphs 2-7) filed 19 September 2018;
(e)Affidavit of Ms Franklyn (paragraphs 11-U) filed 16 October 2018;
(f)Affidavit of Ms Franklyn (paragraphs 61-62) 14 February 2020;
(g)Affidavit of Ms Franklyn (paragraphs 1-10, 107-109, 166-251) filed 15 January 2021;
(h)Affidavit of Ms Franklyn (paragraphs 1-7, 20-55) filed 27 November 2021;
(i)Affidavit of Ms Franklyn filed 15 September 2022;
(j)Affidavit of Mr Z filed 15 September 2022; and
(k)Balance Sheet filed 21 September 2022.
In addition, there were 20 Exhibits tendered as part of the evidence before the Court.
During the oral evidence, a number of propositions were put to the wife with a view to getting her concession about those matters. While the Court is aware that the wife did at times concede the propositions which were put to her, not all of the propositions accord with the parties’ evidence. Where there is a difference in the Court’s determination, the Court has attempted to explain why its findings are different to the propositions put by the husband and agreed to by the wife.
The parties’ evidence was at times “loose” and did not necessarily accord with the documents which were said to be in support of the various propositions, and/or concessions were made during the hearing that some of the parties’ assertions were slightly inaccurate.
While all of the evidence has been considered, not all of the evidence is discussed in these Reasons for Judgment. Only findings of fact which are relevant to the issues the Court needed to determine are made.
FINDINGS OF FACT
The husband was born in 1967. He is presently 56 years old.
The wife was born in 1971. She is presently 52 years old.
Between 1992 and 2003, the wife purchased and sold a number of properties. In September 2003, the wife purchased a property at BB Street, Suburb CC (“Suburb CC property”) for $440,000, encumbered by a mortgage of $352,000.
The wife has a child from a previous relationship, X, who was born in 2008. X’s father passed away in 2009. During the parties’ relationship, X lived with the parties. X presently lives with the wife.
The husband was born and grew up on a family property near Town DD, NSW. In 2011, the husband purchased the property “B Property” at 1 M Street, Suburb K, NSW for $600,000[16] (“B Property”). B Property consists of two lots. It is located on the eastern and western sides of M Street. It comprises a rural holding of over 500 hectares which includes the main dwelling, outbuildings and mixed use land.
[16] See Affidavit of Mr Z filed 19 September 2022 at page 44
At or around the same time the husband’s mother loaned him some equipment for his use on the farm in order to assist him in starting his own business.
In late 2011, the husband purchased the property “O Property” at 2 M Street, Suburb K, NSW for around $180,000 (“O Property”).[17] O Property consists of one lot. It is land adjacent to B Property on the western side of M Street, and is a rural land holding of 150 hectares, including mixed use land.
[17] See Affidavit of Mr Z filed 19 September 2022 at page 44
The husband’s evidence is that the source of funds for the purchase of B Property and O Property was his share of the family property near DD Town, which his brother took over. There is no evidence that the husband had to borrow any funds to purchase either B Property or O Property.
Around the same time in or about 2012, the husband commenced operating an overdraft account with the L Bank for the purposes of running his farming enterprise. The husband operated as a sole trader, and undertook largely mixed farming.
In early 2013, the husband purchased a property “EE Property”, FF Street, G Town. The source of funds for purchase of EE Property has not been set out in the evidence.
In early 2013, the husband placed EE Property on the market. It sold in late 2013 for $275,000, and the sale settled in early 2014.
In 2013, the wife’s father passed away. She did not receive any inheritance from her late father’s estate until 2015.
In mid-2013 the parties met and were living together at B Property by at least early 2014,[18] but no earlier than late 2013. X also commenced living with the parties from this time.
[18] Franklyn & Franklyn (No. 1) [2021] FamCAFC 112 at [7]
As at early 2014, the wife still owned the Suburb CC property subject to a mortgage, which had a balance of $407,223 at the time.
At or around the time of the commencement of the parties’ cohabitation, the wife also had $53,000 in superannuation, a motor vehicle which was unencumbered and which she estimates was worth about $25,000, savings of $10,000 and personal effects.
As at early 2014, the husband owned B Property, O Property and EE Property. He had an overdraft balance of $302,118. He had farming plant and equipment, livestock and grain. He also had a small amount in superannuation.
From the beginning of the parties’ relationship, the wife was very involved in the business, taking on all of the bookwork, paying all bills, all accounting entries, attending to stock count and associated administrative tasks, talking to creditors, and picking things up in town. The husband says he trusted the wife “completely”.
The husband continued to do most of the outside farming work, planting, animal husbandry, harvesting, and repairing fences and machinery. The wife also assisted the husband with works around the properties and cooking for the contractors.
The home at B Property was in relatively poor condition, and the parties undertook renovations to the property after the wife (and X) moved in from about mid-2014. The cost of the renovation was funded by the wife, withdrawing funds from the loan secured over the Suburb CC property. The wife’s brothers provided assistance with the renovation.
The husband sold the EE Property in late 2013, and subsequently in early 2014 received net proceeds of $245,577 which were deposited into the L Bank overdraft, bringing the balance down to $105,591.[19]
[19] Husband’s Affidavit filed 15 January 2021 at [103]
During 2014, the husband purchased Motor Vehicle 2, using the L Bank overdraft to fund the purchase in two tranches, $55,000 being paid in mid-2014 and $60,000 being paid in late 2014. Motor Vehicle 2 remains on the farm.
In 2014 the parties were married.
In early 2015 the parties established a business partnership called HH Partnership, by registering an Australian Business Number in early 2015. The partnership was never the subject of a written agreement.
In 2015, the parties’ child Y was born. Y presently lives with the husband.
In early 2015, the wife received an inheritance from her father’s estate of $260,000. From those monies she:
(a)Applied $211,000 to reduce her two mortgage loan accounts over Suburb CC unit; and
(b)Used the balance to repay a debt to her mother and other pre-relationship debt.
In 2015 the parties jointly purchased an adjoining property to B Property being the property known as “C Property”, J Street, Suburb K NSW. The purchase price of C Property was $350,000.
In mid-2015, the husband used his L Bank overdraft to pay the deposit on C Property, in the amount of $35,000.
In mid-2015, the wife deposited $100,000 into the husband's L Bank Overdraft by way of redraw from her Suburb CC property mortgage.
The parties agree that in late 2015, the purchase of C Property settled by 100% borrowing as part of a refinance of existing L Bank facilities.
At about the same time, the husband refinanced the L Bank overdraft and the parties thereafter became joint borrowers as follows:
(a)A loan with an approved limit of $450,000;[20] and
(b)An approved overdraft facility with a limit of $150,000.[21]
[20] BSB … Account Number …94
[21] BSB … Account Number …03
The income from all business income was deposited into the overdraft facility, which was also used to fund the expenses relating to the business, including the maintenance and running of all vehicles.
The husband concedes that between March 2016 and September 2017, the wife deposited $53,500 into the overdraft facility and that such income was not derived from the enterprise.
The wife asserts that she contributed $145,000[22] between July 2015 and May 2016 from her Suburb CC mortgage by way of re-draw to the overdraft account.[23] Given the husband’s concession and her agreement that she deposited $100,000 on or about August 2015, and that she deposited a further $53,500 between March 2016 and September 2017, the total amount conceded by the husband ($153,500) to have been deposited by the wife, is greater than the total asserted by the wife ($145,000).
[22] This includes 4 payments totalling $100,000 in late July and early August 2015
[23] Affidavit of wife filed 15 January 2021 at [221]
In mid-2016, the wife sold the Suburb CC property and received net proceeds of sale of $408,000. From those proceeds of sale she transferred $376,000 to the joint loan account with L Bank. The wife presumably retained the balance.
In or around mid-2016, the parties purchased two motor vehicles being, Motor Vehicle 1 for $52,446, borrowing $28,969 to fund the purchase, and Motor Vehicle 3 for $73,000, borrowing $73,000 to fund the purchase.[24] The two loans taken out to purchase the motor vehicles appear to be stand-alone loans and not part of the existing funding in the parties’ joint names. It is not clear on the evidence where the balance of the purchase price for Motor Vehicle 1 was sourced from.
[24] Husband’s Affidavit filed 15 January 2021 at [115]
In or around late 2016, a claim was made on the parties’ insurance policy following a major weather event.
In about early 2017, a further equipment loan was taken out to purchase farm equipment (Equipment Item 1 and Equipment Item 2) for $60,000. Equipment Item 1 was returned in mid‑2017, thus reducing the loan balance to approximately $7,000. Equipment Item 2 remains on the farm.
In mid-2017, the wife purchased a commercial property E Street, F Town (“F Town property”) for $240,000 in addition to the associated costs of the purchase. The deposit for the F Town property of $24,000 was paid from the wife’s own funds,[25] with the balance of $215,280, plus stamp duty of $6,910, being paid from the parties’ rural bank loan account.
[25] This is the evidence of both parties
The wife conceded in cross-examination that the source of the funds for the F Town property was the $376,000 which had been transferred into the joint loan account with L Bank. This cannot be correct as on both parties’ evidence the deposit did not come from the joint loan/overdraft account, but rather from the wife’s account.
It is arguable that the source of the funds for the purchase of F Town was the net proceeds of sale of the Suburb CC property (which included the $376,000), however, there is nothing to distinguish the particular source of funds; the monies came from the joint loan account more than a year after the wife deposited the Suburb CC property sale proceeds. It would be artificial to quarantine the Suburb CC property net proceeds in that way, as different money went in and out of the account over that period of time; it was an account utilised by the parties in the running of the farming business.
At or around the same time, the wife transferred $59,560 from the joint loan account into her business account. She agreed in cross-examination with the proposition that these funds came from the $376,000 she contributed, although such a concession can really only be an accounting exercise for the same reasons as explained above. There is no evidence that after the wife paid $376,000 into the joint loan, that those funds were quarantined. If anything, the evidence is that the injection of that capital allowed the parties to more freely run the business, and that it ameliorated any cash flow issues.
The F Town property was purchased for the wife to run as a business, but she did not use the F Town property as a location for herself. The wife did not lease the F Town property to any other business and left it vacant from the time she acquired it until the time it was sold. The F Town property was in derelict condition at the time of purchase, and the wife commenced renovations and a fit-out, but never completed the works.
In mid-2017, the parties received an insurance payout for damage to the farm. The whole amount of $165,116 was paid into the wife’s Commonwealth Bank of Australia account. The wife has agreed that she took the benefit of $122,000 of the insurance claim money, by using $32,000 to purchase equipment for the business and transferring $90,000 into her business account.
The parties separated on 30 October 2017.
At separation, the wife left B Property with both X and Y. The husband spent limited time with Y thereafter, and the wife was his primary carer. The husband paid child support to the wife post-separation, in a limited amount for a limited time.
It is the wife’s case that at the time of separation there were more than 500 bales of hay in sheds and more bales on the farm, more than 150 tonnes of crops in silos at C Property, and more than 100 tonnes at B Property. She also claims that the properties had more than 3,000 livestock.[26] The Court accepts the wife’s evidence about these matters, noting that she was the person responsible for all of the bookkeeping, accounting and associated administrative work for the farm. The husband says in any event, that upon separation the wife removed the business’ financial documents. It was not put to the wife in cross-examination that her evidence about what was on the farm at separation was in any way inaccurate.
[26] Wife’s Affidavit filed 15 January 2021 at [189]-[196], [227]-[230]
There has not been an adequate explanation in the husband’s case as to where all such hay, grain and stock has gone to. The wife alleges that the husband has sold livestock, crops, grain, wool, plant and equipment without disclosing such information to the wife.
In late 2017, the husband provided an undertaking that he would not acquire or dispose of assets relevant to the matrimonial pool, or utilise funds from the farm save in the normal operating parameters of the farm business.
A short time later, the husband opened up a bank account in his sole name with a view to conducting the farming business through that account.
The husband concedes that in late 2017, he sold some livestock and received $36,801 from the sale. These livestock were on the property prior to separation.
In 2018 the husband harvested a crop for which he received $68,897. It is inferred that the crop was planted prior to separation. There was no crop in 2019, and some crop in 2020.
The husband has also leased part of the property to his brother, for which he received an income of at least $89,390 per annum. That income has been retained by the husband post separation and utilised by him.
In early 2018, the wife received an inheritance of $116,196 and put it into her son X's account. The wife has since withdrawn about $105,000 of her inheritance in 3 tranches which she used for her expenses, including about $55,000 for personal expenses and the balance for legal fees.[27]
[27] T: 245.35
In May 2018, the Court made a number of orders in respect of disclosure, grounded an application by the wife in July 2018, alleging contempt of Court by the husband. While ultimately the Court did not find the husband in contempt, the Court did find that the husband had not complied with some of the orders, that the information he provided was in parts inaccurate and deficient, and that monies he received from the sale of grain was not placed into the ‘partnership account’ contrary to the orders (albeit the money had already been spent by the time the order was made and he may have known he could not comply with the order at the time it was made). [28] It is clear from the Court’s reasons in the contempt proceedings that the husband had behaved in a manner which was not contemptuous, but certainly disrespectful of the Court orders, and certainly not in accordance with the spirit of the obligation of full and frank disclosure.
[28] See Franklyn & Franklyn [2019] FCCA 431
In about late 2018, the husband formed a new relationship with his current partner, Ms T. The husband and Ms T have never lived together, although she does own livestock which graze on the husband’s properties.
In about early 2019, the wife moved to Queensland with X and Y. What followed was an interim parenting order requiring her to return with the children, which was successfully appealed. At the time of final hearing in February 2021, and again at this final hearing, the wife has remained living in Queensland.
On 13 August 2019, orders were made for the wife to return Motor Vehicle 3 to the husband. In November 2019, the husband sold Motor Vehicle 3 for $40,000 and applied the proceeds toward the loan, leaving a balance of $9,978.65[29] owing. The balance of the loan has not been paid off to date.
[29] Exhibit 18
In late 2020, the wife sold the F Town property for $155,000. Of those monies:
(a)$20,000 paid to herself for legal fees;
(b)$55,922 received as a partial property settlement (and paid towards legal fees); and
(c)$61,600 for her own legal fees.
In 2020, the husband entered into a share farming agreement with his brother, for B Property and C Property. Such agreement provided for crop sale proceeds to be distributed as to 80% to the husband’s brother, and 20% as to the husband. The husband says that he had no funds for seeds and chemicals, and that all outgoings were paid by his brother. The husband was not cross-examined about this evidence. In late 2020, the husband sold crop and received $26,387 in late 2020 and $11,099 in early 2021, said to be his portion. Further crop was sold in early and mid-2021.
In about July 2021, the husband and his brother entered into another agreement for the husband to lease property to his brother.
From the commencement of the relationship and for its duration, the wife attended to most of the homemaker and parenting duties, including cooking, cleaning, laundry, grocery shopping, attending to the children’s needs, pick up and drop off from school and extra-curricular activities. The husband was also involved with providing some care for the children, although the bulk of the work fell upon the wife.
Since separation and until 25 September 2021, when he commenced living with the husband, the wife has been the primary care giver for the parties’ child Y. This is a significant contribution on her behalf for some 4 years post separation. The husband’s primary care of Y is a significant contribution from 25 September 2021.
Since separation the husband has made all payments in regard to the L Bank loan account, the overdraft account, and the various vehicle loans. He has made all relevant insurance payments and maintained the running of the farming business. The husband has incurred additional debts. However, he has also received all of the income from the farming activities and income generated by leasing the properties.
Allegations of Violence and Kennon
The wife has made serious allegations of family violence. At final hearing in February 2021, the same allegations of family violence were ventilated. The following findings were made following the final hearing in February 2021, which were not disturbed on appeal:
Issues of Credibility
[100] The Court has carefully considered all of the evidence provided by the applicant father both orally and in documents tendered in evidence. The Court found the applicant father to be considered in his answers. The applicant father made appropriate concessions against his interest when required and, in particular, in relation to issues with firearms. The Court was of the view that the applicant father’s evidence was both credible and truthful.
[101]The Court also carefully considered the evidence of the respondent mother both orally and in documents tendered in evidence. The Court has concerns as to the respondent mother’s statements that the applicant father was informed of her intention to relocate to [City JJ]. A number of property issues relating to the ownership of [livestock] by [Ms T], and the loan of machinery by the paternal grandmother to the applicant father as discussed below, which were put to the relevant witnesses could not be sustained. Documents were produced supporting the ownership of the [livestock] by [Ms T].
[102]The Court has considerable concerns as to the denials by the respondent mother that she has sought to alienate the children from the applicant father. The Court prefers the opinions of the writer of the CIC memorandum and the writer of the Family Report. The Court does not accept there has been a change of heart in this regard by the respondent mother.
[103]The above concerns, as well as the issue of family violence discussed below, have caused the Court to carefully scrutinise the respondent mother’s evidence, overall, and exercise some caution as to the overall credibility of her evidence and the weight that should be given to her evidence.
Issues of Family Violence
[104]The respondent mother raised issues of family violence during the course of the marriage, including coercive and controlling behaviour by the applicant father towards the respondent mother and physical violence in respect of her and the children. There are also allegations of alcohol abuse in relation to the applicant father.
[105]In relation to alcohol abuse, the respondent mother painted a picture of excessive alcohol usage on a nightly basis. The applicant father undertook a CDT test which provided a negative result. In the absence of any other evidence, the Court is not prepared to accept the respondent mother’s allegations of alcohol abuse by the applicant father. Contained within the applicant father’s tender bundle is a copy of the transcript of the defended hearing in relation to the respondent mother’s application for an ADVO. This hearing took place [in mid] 2018, a relatively short period after the party separated.
[106]The Local Court Magistrate noted that, under the relevant domestic violence legislation in New South Wales, the Court may, on application, make an Apprehended Violence Order if it is satisfied on the balance of probabilities that the complainant has reasonable grounds to fear on behalf of herself and the children, as well as reasonable grounds to fear and in fact fears, noting however that in relation to the children it is not necessary for the Court to be satisfied that the person for whose protection the order would be made, in fact, fears.
[107]At point 40 on page 55 of the transcript, the learned Magistrate states as follows “I must say that I found the statement of [Ms Franklyn] (the respondent mother) to be very general, lacking much substance”. At point 45 on page 57 of the transcript the, Magistrate states as follows:
I am troubled by the evidence given by the complainant in these proceedings. I find there is a degree of exaggeration. I am not satisfied on the balance of probabilities that there are reasonable grounds to fear, though I do accept that the complainant actually fears whether or not there is some sort of or sense of paranoia or not, which may lead her belief that the defendant hired a […] man with a backpack and a suit to walk around and follow her at various locations in [F Town] or not. I don’t know but even if I was satisfied there are reasonable grounds to fear it is not a matter in my view that it is appropriate to make an apprehended violence order for the protection of the persons named in the complaint.
[108]While this Court must form its own view on the issue of family violence, this Court is entitled to take into account the findings of the local Court Magistrate as set out above. The Court notes that, as a result of the Interim ADVO being issued, the applicant father’s firearms were seized from him. The applicant father no longer has access to any firearms and is unlikely to be able to obtain a firearms licence in the future. This mitigates against any fears the respondent mother may have in relation to the usage of firearms by the applicant father in an inappropriate manner.
[109]The Court notes that there is some evidence of complaints of family violence being made by the respondent mother in 2015 prior to the parties separating. This report was apparently made by a psychologist who saw the respondent mother about relationship issues during her pregnancy with [Y].
[110]Based on the totality of the evidence, including the independent evidence of the Family Consultant and the writer of the CIC memorandum, together with the material set out above, the Court is not satisfied that the applicant father poses a risk to either of the children and that there is a need to protect the children from being subjected to, or exposed to abuse, neglect or family violence at the hands of the applicant father.
…
s.60CC(3)(j) & (k): any family violence…
[142]As discussed above, the Court is not able to be satisfied, on the whole of the material, that there has been acts of family violence involving the children or the respondent mother, such that this consideration would need to be considered further than it has been discussed above
It appears however, that the allegations of family violence were only considered in so far as they related to the parenting applications, that it, it does not appear that His Honour had turned his mind to any possible Kennon[30] argument or aspect of the wife’s property case dealing with the issues of family violence. Notwithstanding, the Court earlier was not satisfied that there was family violence during the relationship.
[30] Kennon & Kennon (1997) FLC 92-757.
As noted, those finding have not been disturbed on appeal.
The wife did not make any submissions in respect of how the Court was to treat the findings made nor was there any cross-examination of the husband in respect of any aspect of a possible Kennon claim, that is, nothing was put to the husband that his treatment of the wife (in the manner alleged by the wife or otherwise) resulted in her contributions being more arduous.
DETERMINATION
Assessment of Contributions
Contributions at commencement of the relationship
Both the husband and the wife had substantial assets before they entered into the relationship as discussed earlier in these Reasons for Judgment. There are no historical valuations in respect of any of the real properties held by the parties at the time of the commencement of cohabitation, or in respect of the plant and equipment held by the husband at the farm. The Court accepts the parties’ evidence as to the value of their respective superannuation at the time. The valuation evidence contains information relating to the purchase price of B Property and O Property .
Doing the best that it can, the Court finds that the parties had the following assets and liabilities at the commencement of the relationship in late 2013/early 2014:
(a)As to the husband:
Ownership Description Value Husband B Property, 1 M Street, Suburb K $600,000 - At time of purchase in early 2011 Husband O Property , 2 M Street, Suburb K $177,230 – At time of purchase in late 2011 Husband EE Property, FF Street, G Town $275,000 – contract price as at late 2013 Husband Farming plant and equipment Unknown Husband Livestock and grain Unknown Husband Superannuation E$3,000 Husband Overdraft with L Bank ($302,118) (b)As to the wife:
Ownership Description Value Wife Suburb CC property $440,000 – at time of purchase in 2003
$850,000 – at time of sale in mid-2016Wife Motor Vehicle Unencumbered E$25,000 Wife Savings $10,000 Wife Superannuation $53,000 Wife Suburb CC mortgage ($407,223)
The husband had the greater initial contributions. Without historical valuations it is not possible to determine the exact amount of the initial contributions. However, for the purposes of assessing the contributions the following approximations are applied:
(a)The value of the husband’s assets at the time of the commencement of the relationship was in the vicinity of some $753,000 plus the plant and equipment and livestock and grain (utilising the purchase value of B Property and O Property, noting they were purchased no more than 2 years prior to commencement of the relationship and the sale value of EE Property); and
(b)The value of the wife’s assets at the time of the commencement of the relationship was in the vicinity of some $506,000 plus the motor vehicle and personal effects (utilising the 2016 value of the Suburb CC property as it is closer in time than the value as at the date of purchase).
As such, the initial financial contributions of the husband are assessed as being about 55-60% and those of the wife about 40-45%.
Contributions during the Relationship
The wife’s financial contributions over the time of the parties’ relationship are significant. She made the following capital contributions:
(a)In August 2015, the wife deposited $100,000 into the overdraft facility;
(b)Between March 2016 and September 2017, the wife deposited $53,500 into the overdraft facility;
(c)In about mid-2016, the wife transferred $376,000 of Suburb CC proceeds of sale into the joint loan account with L Bank; and
(d)In mid-2017, the wife paid $24,000 as deposit for the F Town property.
The capital contributions by the wife were $553,500 in total. However, it is important not to double count the parties’ contributions. The Suburb CC property was part of the wife’s initial financial contribution, and as such the net financial contribution during the relationship was $177,500. The additional funds of $100,000 and $53,500 came via the Suburb CC property mortgage, with a re-draw on the mortgage, noting that the wife received a significant inheritance in early 2015 which was used to reduce the Suburb CC mortgage at the time. The $24,000 used as a deposit for the F Town came from the wife’s account, and the source is likely the net proceeds of the sale of the Suburb CC property (noting the wife only paid $376,000 of $408,000 into the joint loan account) and as the insurance payment had not yet been deposited into the wife’s account by that stage.
The net effect being, that the wife made $153,500 capital contribution during the relationship via her inheritance.
However, the use to which the cash funds were put from mid-July 2016 was not available to the parties from the time they started to live together. That is, while she had the property at the start of the relationship the cash injection from the sale was a different contribution, although the net financial contribution as between the two is not possible to determine.
Not only was there the impact of the substantial financial injection in terms of cash flow, but such cash injection is likely to have had the effect of being a springboard for the day to day running costs of the farm, and to make the operations of the farm much less susceptible to the stresses of delayed income and receipt of monies from sales.
The use to which the financial contributions by the wife were put was significant. Without the wife’s contributions, it is unlikely that the parties would have been able to purchase C Property, which has significantly grown in value over the years. There is no evidence that suggests that anything but market forces have been responsible for the increase in price of that property.
Both parties worked equally hard on the farm, the husband doing the bulk of the physical and outside work, while the wife did the bulk of the administrative work, albeit she also did some physical and outside work. The wife was the primary homemaker and parent, although the husband did make some contributions of the Robb & Robb[31] kind.
[31] Robb & Robb (1995) FLC 92-555.
It is entirely unclear on the evidence, what livestock, grain, plant and machinery was acquired by the partnership as opposed to previously being owned by the husband, or being acquired after the parties commenced living together, but before the partnership was set up. There is no evidence as to the parties’ intentions in respect of the existing farm assets at the time of the commencement of the partnership, nor is there any evidence of any agreement between the husband and the partnership as to those assets. This is all understandable, noting that the farm was a family farm and run by spouses, but it makes the factual determinations difficult, if not impossible, in respect of some matters. In any event, there is some evidence about the acquisition of plant and equipment.
When the wife left the relationship she left everything behind (except Motor Vehicle 3, the wife’s personal items and perhaps some household effects), and all of the farming plant and equipment, all of the livestock and grain and similar assets belonging to the farming business, acquired during the relationship (and prior to it) remained with the husband.
At Separation
At separation, the parties had the following assets:
Ownership Description Value Joint 'C Property', J Street, Suburb K NSW Unknown Husband/ Partnership Livestock and grain Unknown Husband/ Partnership Plant and Equipment, including Motor Vehicle 3 and Motor Vehicle 1 Unknown Husband B Property, 1 M Street, Suburb K Unknown Husband O Property , 2 M Street, Suburb K Unknown Husband Superannuation E$20,000 Wife E Street, F Town $240,000 – at time of purchase in May 2017 Wife Business Bank Account $113,190 Wife Superannuation $49,700 Joint L Bank Loan ($452,136) Joint L Bank Overdraft ($149,778) Joint Motor Vehicle 3 Loan ($73,000) Joint Motor Vehicle 1 Loan ($28,000) Joint Equipment Loan ($9,900) Husband/Joint Business Debts (including MM Pty Ltd $79,274, Mr NN $15,000) (>$94,274) Contributions Post Separation
Post separation, the wife retained the F Town property and it was sold in 2020 for $155,000,[32] $85,000 less than the purchase price. There was also the additional overcapitalisations of the property in terms of the renovations which were started, but never completed. Those overall losses have not been quantified.
[32] It is not entirely clear on the evidence whether this was the sale price or the net proceeds of sale. In any event, the wife has received the benefit of the entire $155,000.
The purchase of the F Town property, even though in the wife’s name, was a joint endeavour by the parties. The parties had agreed that the wife would purchase the property, that it would be renovated and thereafter used by the wife to run a business.
There is no evidence that the reason why the renovations were not completed, or why there was an overall capital loss, is because of a deliberate choice by the wife to cause any loss. There is no evidence of unjustifiable waste by the wife, or that the loss was deliberately or recklessly incurred by her. As such, there is no basis for the Court’s discretion to be exercised in a manner which would see the losses suffered to be notionally added-back into the pool.
The sale proceeds of the F Town property have been utilised by the wife in their entirety for the payment of legal fees, which is a well-recognised category of notional add-backs. As such, the whole amount of $155,000 will be notionally added-back into the pool.
The husband has had the benefit and use of all of the farming assets, as well as all of the real property held by the parties (sans the F Town property), following the parties’ separation. He has retained all of the income, and as noted earlier, has been loose in complying with his obligations for full and frank disclosure. The husband has also remained working on the farm, and he has also leased parts of the farm to earn an income. There is no evidence that the husband has been reckless or wanton in the way that he has run the farm, or that he has deliberately or recklessly caused the farm to operate as a less lucrative venture than had been the case while the parties were together.
The fact that the parties each had the benefit particular assets post separation, to the exclusion of the other, as well as the money which was in their respective business and/or personal bank account, are relevant matters to be taken into consideration under s.75(2).
In respect of the monies retained by the wife in her business account, the wife did purchase some equipment for the business. That equipment has not been valued, and anything that remains has been retained by the wife. In respect of the balance, which is the bulk of the money retained by her, it appears that to date that most if not all such monies have been used by the wife (except in so far as findings have been made with respect to the payment of legal fees) for her reasonable living expenses.
The wife did, after all, vacate the former matrimonial home with two minors upon separation, and had to support herself and the two children. Upon leaving, she had to find appropriate accommodation for her and the two children, set up her home again, and in general re-start her life away from the husband.
The husband had the benefit of remaining in the parties’ home, and all of the associated benefits of not having to move and re-establish himself somewhere else. He kept working on the farm, and as such, access to his income stream was not affected by the separation as it was for the wife.
The husband has bought and sold some more motor vehicles. His evidence satisfactorily explains what was traded in, paid out and purchased. Overall, he retains these vehicles together with the finance attached.
At final hearing, none of the joint debts have been substantially reduced, and it appears that there is outstanding debt in respect of council rates. It is not understood by the evidence why the husband has not paid council rates noting he has remained living on the properties.
Overall, and using a broad brush approach, the contributions are assessed as being slightly in favour of the husband. Notwithstanding the relatively short relationship of some three and a half years and noting the higher initial contributions by the husband, the Court makes this assessment for reasons which have been explained in detail, but which include the following:
(a)There was significant intermingling of resources;
(b)The wife sold her investment property in lieu of investing in joint property with the husband and running a farming business together;
(c)There were joint endeavours by the parties in running the farm and equal contributions, with the wife doing all of the administrative work and some of the physical work, and the husband doing the bulk of the physical work;
(d)The assistance the wife’s family provided to the renovations of B Property;
(e)The impact of the initial contributions on the current pool; and
(f)The wife had the greater home-maker and parent contributions overall.
The contributions are assessed at 58% to the husband and 42% to the wife.
Future Needs
The parties are relatively young. The husband is 56 years of age and the wife is 51 years of age.
There is no evidence that the husband suffers from any medical conditions, and his health appears to be in good order.
The wife submitted a number of times to the Court during the final hearing that she has been diagnosed with a medical condition in mid-2020. It is also a matter mentioned in her case outline document. The wife has told the Court that she suffers from migraines, and that her eyesight is affected.
The wife has asserted that she has been diagnosed with back issues in late 2021, and that this has greatly affected her health, exasperated by not having a motor vehicle and thus having to carry heavy items.
The wife also deposes that:
(a)She has been diagnosed with a form of arthritis, which causes her significant pain particularly when walking, and requires pain medication for relief;
(b)Her general practitioner has confirmed that she has stress induced high blood pressure and that she has been diagnosed with a medical condition, for which she requires medication and infusions; and
(c)Due to a previous diagnoses of cancer, she requires ongoing medication and blood tests.
There is no expert evidence as to any of these matters, only reports tendered as business records. However, the Court accepts that the wife suffers from a number of health conditions which appear to be managed by medication or otherwise.
There is no evidence, either lay or expert, as to any negative impact the various health conditions the wife says she suffers from have had on the wife’s earning capacity.
Noting the findings in respect of disclosure, the Court is not being overly cautious about making findings overall, in particular in respect of the debts which have been incurred post separation and in respect of the income which the husband has received post separation, coming from assets held by the parties pre-separation.
The husband will continue to live and work on the farm. He will continue to earn an income from the established farming business. He may also continue to earn an income from leasing the properties as he has in the past. The husband has the support of his brother, who has financially assisted him and who has assisted him in the running of the farm.
The wife has, since separation, had the benefit of an inheritance, albeit the funds she had received have all now been exhausted. She has also had the benefit of the balance of the funds received from the insurance payout and the equipment purchased.
The wife has a more limited capacity to earn an income than the husband. While she appears to be skilled in administrative and book-keeping tasks, since the parties’ relationship, her employment has been disrupted. She worked on the farm with the husband, she attempted to set up her own business unsuccessfully, and she has since separation been able to find employment in another industry. She is trained in this industry.
Each of the parties has the care and control of a minor, with the husband having the care and control of the parties’ child Y. The wife pays child support for the parties’ child in the assessed amount.
In all of the circumstances, there will be a modest adjustment in favour of the wife of 3% for s.75(2) factors.
Expert Valuations
Expert Valuation Report of Mr V – dated January 2021
An expert valuation report was prepared by Mr V in relation to the value of the O Property, C Property, and B Property properties. Mr V confirms that he used the “summation” method as his primary method of valuation and cross checked the valuations using a direct comparison. Mr V was not cross-examined by the wife.
The husband provided the Court with an Aide-Memoire containing updated values for the property, which shows that Arable land is now valued at $2,162 per hectare, light timbered grazing land is valued at $1,100 per hectare, and green timbered grazing land is valued at $618 per hectare. It is noted that the updated values had all buildings as valued the same as the original valuation from early 2021. The updated values took into consideration the report of Mr Z and his oral evidence.
Expert Valuation Report of Mr Z – dated September 2022
Mr Z states that he used the direct comparison approach to determine the value of the three properties in question, being O Property, C Property, and B Property. Mr Z was cross examined by the legal representatives for the husband.
Mr Z’s figures are as follows:
(a)C Property, is valued at $700,000;
(b)O Property , is valued at $380,000; and
(c)B Property, is valued at $1,450,000.
Mr Z maintained after questioning during cross-examination that his valuations were correct and that he had not over-valued the land. He said that any difference between him and Mr V would be a matter of opinion and would not be considered significant.
Having heard from Mr Z the Court is satisfied as to the basis of his opinion. The Court accepts Mr Z’s opinions as to the values of the properties.
The Pool
In Stanford, the High Court emphasised as fundamental that a consideration of whether it is just and equitable to make a property settlement order begins by “identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property”.[33]
[33] Trevi at [46]
There is no admissible evidence as to household effects and personalty each party holds, nor indeed as to the value of such goods. The evidence suggests that the husband has retained most of the parties’ joint household effects post separation. These were not matters pursued at final hearing.
There is no evidence as to the number of stock on the various properties held by the husband, nor is there any evidence as to current grain levels or likely impending yields.
The Court accepts the husband’s evidence as to current business debts.
At final hearing, the pool is assessed as follows:
Ownership Description Value Joint 'C Property', J Street, Suburb K NSW $700,000 Husband B Property, 1 M Street, Suburb K $1,450,000 Husband O Property , 2 M Street, Suburb K $380,000 Husband Various bank account $3,765 Husband Superannuation (Superannuation Fund 2) $26,504 Husband Plant and Equipment as valued by Mr QQ:
Motor Vehicle 1: $35,000
Equipment Item 3: $60,000
Equipment Item 4: $60,000
Equipment Item 2: TR 70 $7,000
Motor Vehicle 4: $5,000
Equipment Item 5: $9,000
Motor Vehicle 5: $4,000
Equipment Item 6: $6,500
Motor Vehicle 6: $800
Motor Vehicle 2: $90,000
Motor Vehicle 7: $4,000
Equipment Item 7: $6,000
Equipment Item 8: $800
Equipment Item 9: $4,000
Equipment Item 10: $800
Motor Vehicle 8: $450
Equipment Item 11: $700$294,050 Husband Grain and Livestock Unknown Husband Household and Personal Effects Unknown Wife Proceeds of sale of F Town Property as a notional add-back $155,000 Wife Various bank accounts $11,847 Wife Superannuation (Superannuation Fund 1)) $49,800 Wife Household and Personal Effects, including items purchased for the business Unknown Joint L Bank Loan ($447,000) Joint L Bank Overdraft ($149,406) Joint Motor Vehicle 3 Loan ($9,978) Joint Outstanding Council Rates ($14,268) Joint P Bank ($33,534) Husband Business Debts (including LL Company $91,908, MM Pty Ltd $38,154, Mr NN $15,000, Mr OO $2,000 and PP Financial Services $6,820) ($153,882) TOTAL: $2,262,898
The wife currently holds $216,647 and the husband the balance. The Court has already discussed the wife’s post separation retention of the insurance payout and receipt of inheritance.
CONCLUSION AS TO OVERALL ADJUSTMENT
Based on the findings made as to contributions and future needs, the Court has assessed that there should be a 55% adjustment in favour of the husband and a 45% adjustment in favour of the wife. If such orders were made, the husband would receive assets to the value of $1,244,594 and the wife $1,018,304. Such adjustment is just and equitable.
No superannuation splitting orders will be made, noting the current balances.
As such, the husband will receive:
Ownership Description Value Joint 'C Property', J Street, Suburb K NSW $700,000 Husband B Property, 1 M Street, Suburb K $1,450,000 Husband O Property , 2 M Street, Suburb K $380,000 Husband Various bank account $3,765 Husband Superannuation (Superannuation Fund 2) $26,504 Husband Plant and Equipment as valued by Mr QQ:
Motor Vehicle 1: $35,000
Equipment Item 3: $60,000
Equipment Item 4: $60,000
Equipment Item 2: TR 70 $7,000
Motor Vehicle 4: $5,000
Equipment Item 5: $9,000
Motor Vehicle 5: $4,000
Equipment Item 6: $6,500
Motor Vehicle 6: $800
Motor Vehicle 2: $90,000
Motor Vehicle 7: $4,000
Equipment Item 7: $6,000
Equipment Item 8: $800
Equipment Item 9: $4,000
Equipment Item 10: $800
Motor Vehicle 8: $450
Equipment Item 11: $700$294,050 Husband Grain and Livestock Unknown Husband Household and Personal Effects Unknown Joint L Bank Loan ($447,000) Joint L Bank Overdraft ($149,406) Joint Motor Vehicle 3 Loan ($9,978) Joint Outstanding Council Rates ($14,268) Joint P Bank ($33,534) Husband Business Debts (including LL Company $91,908, MM Pty Ltd $38,154, Mr NN $15,000, Mr OO $2,000 and PP Financial Services $6,820) ($153,882) Payment to the Wife ($801,657) TOTAL: $1,244,594 As such, the wife will receive:
Wife Proceeds of sale of F Town Property as a notional add-back $155,000 Wife Various bank accounts $11,847 Wife Superannuation (Superannuation Fund 1) $49,800 Wife Household and Personal Effects Unknown Payment from the Husband $801,657 TOTAL: $1,018,304
Each of the parties will retain superannuation and given their ages and earning capacities, such superannuation will likely continue to accrue until the parties reach retirement.
The husband wants to retain all three farming properties and he will at first instance be given the opportunity to do so. This will be dependent upon him obtaining requisite finance approval to refinance the secured loans and additional funds to pay the wife the amount under these orders.
The payment by the husband to the wife of some $800,000 will be a significant capital injection for her. She currently lives in Queensland and wants to remain living there. This will allow her the opportunity of investing in a property.
The wife will need to remove the caveats so that the refinance can go ahead.
The wife however, wants to retain C Property as part of the property settlement.
If the husband is able to pay the wife out entirely within 90 days, there will then be a simultaneous transfer of C Property to the husband. If he is not able to do, C Property will be transferred to the wife and the husband will make an additional cash payment of $101,657.
Such alternative orders will allow each of the parties to retain some real property and to benefit from the income earning potential of such properties. Each of the parties will have a property with a homestead. If the wife decides to move back to New South Wales, she will have the ability to live close to Y.
If the husband fails to comply with the various orders, there are then cascading machinery provisions for the sale of B Property and O Property.
In all of the circumstances, the result is just and equitable.
COSTS
There appear to be outstanding costs applications in these proceedings, although none were pressed at final hearing. If either party chooses to press any reserved costs or costs applications which have been made but not formally determined, then that party shall notify the Court in accordance with the orders made. If any application for costs is pressed, unless the parties object, the costs applications will be dealt with on the papers.
For all of those reasons, orders as set out at the forefront of these Reasons for Judgment will be made.
I certify that the preceding one hundred and fifty-seven (157) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Obradovic. Associate:
Dated: 30 March 2023
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