G and S
[2005] FMCAfam 35
•9 February 2005
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| G & S | [2005] FMCAfam 35 |
| FAMILY LAW – Property – relevance of the legal and equitable interest a party has in an asset to the division of property under section 79 of the Family Law Act. Family Law Act 1975, s.79 Burgoyne and Burgoyne (1978) FLC 90-467 |
| Applicant: | A G |
| Respondent: | E S |
| File No: | CAM1620 of 2003 |
| Delivered on: | 9 February 2005 |
| Delivered at: | Canberra |
| Hearing date: | 4 November 2004 |
| Judgment of: | Brewster FM |
REPRESENTATION
| Counsel for the Applicant: | Ms Rees |
| Solicitors for the Applicant: | Anne Marie Proctor & Associates |
| Counsel for the Respondent: | Mr Clark |
| Solicitors for the Respondent: | Jeanine Lloyd & Associates |
ORDERS
That the parties take all steps necessary to divide between them the proceeds of the sale of the property known as 1/2 Smith Street Latham as follows:
(a)To the husband the sum of $27,000 plus thirty five percent of any interest accrued on those monies.
(b)The balance to the wife.
That each party retain the chattels in that party’s possession and all choses in action in that party’s name.
That the husband indemnify the wife in relation to any liability with respect to the loan referable to the Fairmont motor vehicle in his possession.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT CANBERRA |
CAM1620 of 2003
| A G |
Applicant
And
| E S |
Respondent
REASONS FOR JUDGMENT
Introduction
This matter involves a dispute between the parties as to property division.
Background
The husband is aged 28 and the wife 32. They commenced to live together in January 2002 (according to the husband) or February 2002 (according to the wife.) They were married on 20 September 2002 and separated on 24 April 2003. The total period of cohabitation was therefore in the order of fifteen months. There are no children of the relationship.
Prior to the commencement of the relationship the wife contracted to buy a unit at 1/2 Smith Street Latham. I will call this property "the unit" in this judgment. The unit was at that stage only on the drawing board and it was purchased "off the plan." The wife paid a deposit of $1,000 on exchange of contracts.
The unit was completed in July 2002 and the parties moved into it. The completion of the contract was financed as follows:
a)the wife obtained the first home owner's grant of $14,000;
b)the husband's parents gave the parties $3,000 to pay for legal fees and other expenses concerning the acquisition of the unit;
c)the parties contributed $4,324 from joint savings; and
d)the balance was borrowed by the wife.
In the meantime in August 2002 the parties had purchased a Fairmont motor vehicle for $25,000. The whole of this amount was borrowed.
In August 2002 the parties borrowed $25,000. This was applied as follows:
a)a loan by the wife with Westpac was refinanced in the sum of $10,864;
b)the debt of the wife's Visa card was discharged of $982;
c)the husband's Visa card was discharged in the sum of $4,845;
d)the unit was carpeted at a cost of $3,249;
e)a brush fence was erected at the unit at a cost of $896;
f)$4,061 went into the parties’ savings account.
In September 2003 the wife sold the unit for $240,000. The net proceeds were $111,158. She paid off the loan referred to in paragraph 6. The amount remaining after this was $92,399.
The parties' applications
The husband seeks that he receive half the proceeds of the sale of the unit plus an amount of $6,500. It is not necessary to explain the rationale behind the $6,500 component. The wife for her part seeks an order that the husband receive $15,000 from the proceeds of the sale and that she have the balance.
The law
The first matter I propose to address concerns the fact that the wife was the sole legal and equitable owner of the unit and therefore of the proceeds of the sale[*]. The husband seeks an order altering her legal and equitable interests. Section 79 of the Family Law Act permits me to do this but subsection (2) states, in effect, that I must not do so unless it is just and equitable to do so.
[*] I point out that I do not overlook the fact that it could be argued that the husband has a minor equitable interest in the property under the principles set out in Calverley v Green 155 CLR 242, (1984) FLC 91-565. I do not accept that he has such an interest but as it would make no difference to the end result if he did I do not propose to dilate upon the reasons for this conclusion.
It was submitted on behalf of the husband that this is irrelevant. It was submitted that once the husband has satisfied the test in subsection (2) the Court should approach the division of the proceeds of sale on the basis of the various contributions of the parties and for this purpose ignore the fact that the wife is the owner of those proceeds.
I was referred to a number of authorities by counsel for the husband two of which directly address this issue.
The first of these was Burgoyne and Burgoyne (1978) FLC 90-467 where in obitur the Full Court said at page 77,393
The actual ownership of the legal title (to property) is not a significant factor in relation to the issues under sec. 79………
The second authority to which I was referred was Crawford and Crawford (1979) FLC 90-647 where the Full Court said at page 78-410
…..the legal title to a particular property may have little significance when the Court is considering what alterations of property will be necessary to carry out the intention of section 79(4).
I do not disagree with this last statement if regard is had to the use of the word “may”. If during the course of a marriage a couple bought an investment property and for tax reasons put it in the name of only one of them then little would hang on this arrangement in section 79 proceedings. With respect to those who comprised the Full Court in Burgoyne however I do not agree that in this case the fact that the wife was the sole legal and equitable owner of the unit is not a significant factor in the exercise in which I am engaged. In any event in my opinion the statement in Burgoyne to which I was referred is, in my opinion, inconsistent with statements of various justices of the High Court in Mallet v Mallet 156 CLR 605, (1984) FLC 91-507. For convenience I will use the Family Law Cases page numbers.
Mallet was an appeal from the decision of the Full Court allowing an appeal from Bell J at first instance. Bell J awarded the wife half of the property of the parties in which she had a half interest and twenty percent of the property owned by the husband. The Full Court allowed the appeal and gave the wife half of all assets. The High Court allowed the appeal and restored the judgment of Bell J.
In the High Court Mason J said at page 79,120
The Full Court attached much significance to its comment that the assets in the husband’s sole name had been acquired in exactly the same manner as the jointly owned assets, apparently from the business or businesses which was or were carried on by them jointly. It seems that the wife did not claim that the assets in question were held on trust for the parties in equal shares…….. And the Full Court overlooked the circumstance that in the case of the wife’s interest in the jointly owned assets which was to be transferred to the husband it was a question of valuing her half interest, whereas in the case of the assets held by the husband it was a question of ascertaining whether the wife should receive some pecuniary payment in respect of her contribution to those assets and if so in what amount.
Wilson J said at page 79,127
It appears that the Full Court was influenced in its view of the judgment under appeal by the distinction which Bell J drew between the property which was jointly owned by the parties and that which was owned solely by the husband. His Honour allowed the wife a sum equivalent to 50% of the former but only 20% of the latter…………. But His Honour was entitled to pay some regard to the fact that the assets in the former category constituted property in which the wife already owned a half interest………… To that extent it was not necessary to invoke sec 79 at all because the proportionate interests of the parties were not being altered at all. Having taken that step, it remained for His Honour to determine what proportion of the husband’s solely owned property justice and equity required him to award to the wife.
Dawson J said at page 79,133
Having regard to the findings made by Bell J it seems to me that it was well within the proper limits of his discretion to conclude that justice and equity did not require that the wife should have the benefit of more than 20% of the value of the assets acquired by the husband alone…………But no direct comparison can validly be made between the 50% entitlement which Bell J found in relation to (the jointly owned assets) and the 20% entitlement which he found in relation to the assets owned solely by the husband, for in the case of the jointly owned assets, the assessment of her entitlements reflects only the true position so far as its ownership is concerned and does not of itself effect an alteration of interests which would necessitate the observance of the requirements of sec 79.
This aspect of Mallet was recognised by Nygh J in Read and Read (1984) FLC 91-527 where he said at page 79,279:
Much of the water that has flowed under the bridge of the Full Court since 1976 (concerning an equal division being the starting point) has now flowed irretrievably into the desert it would seem. If there is any starting point indicated by their honours in the High Court it is that one should perhaps pay greater attention to the legal and equitable interests of the parties as the starting point and then ask oneself, in the light of the contributions, both financial and non financial, and, of course, in the light of the needs of the parties, if it is just and equitable to adjust those rights in the particular case.
In fact the significance of one party’s ownership of an asset which was emphasised in Mallet was in essence recognised by the Full Court prior to that case in Rogers and Rogers (1980) FLC 90-874. In that case the Court quoted with approval the judgment of Strauss J, in Ferguson v Ferguson (1978) FLC 90-500 where His Honour said as follows:
It seems to me, that the main purpose of s 79(2) is to ensure that the Court will not alter the property rights of a party unless it is satisfied that cogent considerations of justice require it to do so and that, if the Court decides that it is requisite to make any order the section, the Court must be satisfied that the alterations so ordered ought go no further than the justice of the matter demands.
Whilst I recognise that one should not analyse every word that falls from a justice of the High Court as if it were holy writ I do not ignore the fact that Strauss J’s use of the words “requisite” and “demands” is echoed in the words “require” and “required” found in the quotes from the judgments of Wilson and Dawson JJ set out above.
I am satisfied that, having regard to the contributions of the husband, both those referred to in paragraph four and those to which I will refer later in this judgment, there are cogent considerations of justice that require an alteration to be made under section 79. However I propose to follow the guideline laid down by Strauss J and the alteration that I propose to order will go no further than, in my opinion, the justice of the matter demands.
In undertaking this exercise the Full Court of the Family Court has set out a four step process that should be adopted. The first step is to identify the pool of property. The second step is to consider contributions of various types made by the parties either at the outset of a relationship, during the relationship or after its end. If appropriate an adjustment can be made of existing property interests on this basis. The next step, in the context of this case, involves a consideration of the matters set out in s.75(2) of the Act. Again if appropriate an adjustment can be made on this basis. The final stage involves taking an overview of the result derived from the second and third steps to determine if overall it is a just and equitable result.
The pool
The only item that I propose to include in the pool is the net proceeds of the sale of the unit in the sum of $92,399. The motor vehicle to which reference has been made is in the possession of the husband but the loan on that vehicle would come close to equalling its value. The husband in his case outline included furniture of the value of $14,000 but this has not been valued. Both parties have superannuation but have chosen not to include this in the pool. Given the fact that neither party can access his or her superannuation for many years and given the length of the relationship I consider this an appropriate approach.
Contributions
At the commencement of the relationship the husband owned a Subaru motor vehicle and had savings of approximately $3,000. He later sold the Subaru for $5,400. His savings and the proceeds of sale of the Subaru were applied to the relationship.
As I have indicated the husband's parents advanced $3,000 to assist with the acquisition and improvement of the unit. I regard this as a contribution made on his behalf.
Whilst the parties lived together they pooled their incomes to pay the mortgage and other outgoings and to support themselves. After the husband's liabilities to make HECS payments are taken into account their incomes were about the same.
A claim made by the husband on the issue of contributions was that without his income the wife would have not been able to obtain the loan to buy the unit. This was denied by the wife. I leave for another day the question of whether this could constitute a contribution. The husband's name is not on the mortgage and nor was he a guarantor of the loan. I consider it unlikely that his income played any part in the wife's being able to obtain the loan.
Various improvements were made at the unit during the relationship. The husband made a contribution in organising quotes for some of these improvements and I accept his contention that he spent "many hours of (his) own labour to improving the unit including attending to all the cabling, installing lights and power points and tiling … (and that he) helped various tradesmen including a friend of the respondent to install a roller door."
If he is credited with half the joint savings referred to in paragraph 4 the husband contributed lump sums totalling $13,562 towards the relationship. He also contributed his income to the family and worked on improvements to the unit. I consider an appropriate contribution based adjustment would be to allocate to him an amount of $27,000 from the proceeds of sale of the unit.
Section 75(2) factors
Given the shortness of the relationship in my opinion there is no basis for making an adjustment under s.75(2) in favour of either party.
Overview
It was submitted on behalf of the husband that an order which would give the wife the major share of the proceeds of sale of the unit could be categorised as unjust enrichment. I will assume for the purposes of this submission that principles of unjust enrichment go beyond those involved in the doctrine of restitution (which would give the husband in the order of the $15,000 sought by the wife) and that such principles have an application in section 79 proceedings. I do not accept that the wife has been unjustly enriched. She was the one who decided to buy the unit and who put that decision into effect. She utilised her once-only right to a first home owner’s grant. She alone took out a loan for this purpose and assumed the risks involved should interest rates rise and property values decline. Looking at the obverse I do not accept that the husband, who took none of the risks and who retains his right to a first home owner’s grant, can complain when his capital contribution to a fifteen month relationship is reflected in a one hundred percent return on that capital. I am satisfied that the order I propose is just and equitable.
Conclusion
I propose to order that the husband receive the sum of $27,000 from the monies held in trust. I assume that some interest would have accrued on those monies. In percentage terms $27,000 is about thirty five percent of those monies and I will order that he receive this proportion of any such interest.
I certify that the preceding thirty-three (33) paragraphs are a true copy of the reasons for judgment of Brewster FM
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