G and T
[2008] FCWA 64
•30 MAY 2008
[2008] FCWA 64
| JURISDICTION | : | FAMILY COURT OF WESTERN AUSTRALIA |
| ACT | : | FAMILY LAW ACT 1975 |
| LOCATION | : | PERTH |
| CITATION | : | G and T [2008] FCWA 64 |
| CORAM | : | PENNY J |
| HEARD | : | 24 & 25 OCTOBER 2007 |
| DELIVERED | : | 30 MAY 2008 |
| FILE NO/S | : | PT 3637 of 2006 |
| BETWEEN | : | G |
| Applicant | ||
| AND | ||
| T Respondent | ||
| Catchwords: |
Property settlement - de facto relationship - "hybrid" approach to contributions
Legislation:
Family Court Act 1975 - s 205ZD(3), s 205ZG(4)
Category: Not Reportable
Representation:
Counsel:
| Applicant: | Mr R Hooper |
| Respondent: | Mr M Rynne |
[2008] FCWA 64
Solicitors:
| Applicant: | Paterson & Dowding |
| Respondent: | Anthony R Clarke & Associates |
Case(s) referred to in judgment(s):
Y and S [2006] FCWA 98
Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener)
(2003) FLC 93-143
[2008] FCWA 64
1 These parties never married, but lived in a de facto relationship for a number of
years. During the course of that relationship they were involved in the purchase of three businesses. In addition, both the applicant and respondent bought property in their own name.
2 They finally separated in early 2006 when the applicant left the home in which
he and the respondent had been living with the respondent’s children from her
marriage to [Mr L].3 At trial they could agree on very little. In particular, they could not agree on the
year in which their de facto relationship commenced, what the asset pool was, nor
could they agree on the manner in which their assets should be divided.4 It was the applicant’s case that the assets should be divided 65% to him and 35% to the respondent. The respondent sought the opposite result, that is, the assets be divided 65% to her and 35% to the applicant.
Brief background and history of the parties and the relationship
5 The applicant is aged 61, and the respondent 48. The respondent married [Mr L]
[a professional], [overseas] in 1987. There are two children of that relationship, [S], now aged 17, and [B], now aged 15. They separated in 1993 when the respondent migrated to Australia with the two children. [Mr L] spent time [overseas] and Perth for three years after the respondent moved to Perth to see if the marriage could work. They finally agreed to separate in 1996. Orders by consent in the [the Supreme Court of their country] were made in December 1996 relating to their property in that country.
6 The parties met in 1997. The respondent was living at the property in [R Street],
owned by her, with her two children and the applicant was living in a property owned
by him [nearby in C Street].7 The respondent subsequently leased [the R Street] property and rented a property
for herself and her children [nearby]. The applicant says that during 1998 he too moved into this property with the respondent and they were living together from that time. The respondent says that they did not live together until 2000.
8 The respondent and her children then resided in [three other properties in the area]. The applicant says that he was residing with the respondent over this period.
9 In 1998 the parties opened a business known as [TT] at the [shopping plaza], and
September 1999 opened the business known as [TS] in [another shopping centre].
[TT] closed down in February 2000. [TS] was sold in June 200510 In November 2003 the respondent purchased a business known as the [café].
The applicant subsequently provided funds for the business and the parties were both joint directors.
[2008] FCWA 64
11 They separated in October 2005 and remained living under the same roof until
January 2006 when the respondent obtained a violence restraining order, the effect of which was that the applicant had to leave the house.
12 After separation the respondent sold the café. The applicant is now employed as a real estate agent and the respondent as a carer.
| The law | ||||||||
| 13 | This application is brought pursuant to the provisions of s 205ZG(4) of the | |||||||
| Family Court Act 1997. The approach to be taken in relation to an application for property settlement under this Act is the same as the approach to be taken pursuant to s 79 of the Family Law Act 1975. It is a four step process. Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93- 143. Those steps are: | ||||||||
|
Assets and liabilities of the parties
14 There are a number of matters about which the parties were unable to agree relating to the assets and liabilities of the parties.
Liabilities
15 After the parties separated they lived independently of each other. The manner
in which they chose to live and the expenses they chose to incur is a matter for them. I do not intend to take into account any credit card debts of the parties, or any other debts incurred by them, post separation.
16 The respondent alleged in her affidavit for trial she owed money to her mother- in-law. In her trial affidavit sworn 13 July 2007 she stated at paragraph 16(c):
“We owe [Mrs L], [her ex-husband’s] mother, a total of $91,898. The money was borrowed to fund part of the building costs of a property situated at [R Street]. Annexed hereto and marked “RT4” is the record of the funds transferred to our joint account on 13 September 1995.”
17 [Mr L] swore an affidavit on 11 July 2007. In that affidavit he did not
mention any sums owing by the parties to his mother. He was cross-examined at trial. In evidence he stated that $100,000 owing to his mother had been repaid. He stated that the money was paid upon the sale of the [overseas] property. He said both he and the respondent agreed to this course of action.
[2008] FCWA 64
18 The respondent was cross-examined in relation to this debt. She stated that her
mother-in-law had been repaid, but then stated she had not been repaid in full and said that she still owed her money. Her evidence was confusing on this issue. I am satisfied from the evidence of [Mr L] that his mother has been repaid and there is no debt outstanding as was alleged by the respondent.
| Assets | |
| 19 | In relation to the assets of the parties, the following items are matters upon which they have been unable to agree. |
The respondent’s Citibank account
20 Upon the sale of the respondent and [Mr L]’s property [overseas], funds from
the sale were returned to the respondent’s [CP] Account [overseas]. The respondent became eligible to access this account and the funds were transferred to her Citibank Bank Account. At the time of separation the funds in this account totalled $97,777. It is the respondent’s case that these funds should not be added into the asset pool as neither she nor the applicant made any contribution to them during the relationship. The funds accumulated in her superannuation fund during the time she lived [overseas]. It appears these funds came into the possession of the respondent around the time the parties separated. In my view, given the lack of contributions made by the applicant to this asset and the fact that it was received by the respondent around the time of separation, I do not intend to take it into account for the purposes of assessing the contributions of the parties to the asset pool.
Debt repaid to the applicant by his son
21 During the course of the relationship the applicant lent to his son the sum of
$8,000. This was repaid after the parties separated. Given that the funds were paid out during the course of the relationship, in my view, the repayment of those sums should be added back to the asset pool.
The respondent’s [motor vehicle]
22 This vehicle was sold after the parties separated in November 2006. The net
proceeds to the respondent, after payment of the outstanding debt on that vehicle, were $17,000. The applicant says these funds should be added back to the asset pool. I cannot find any evidence as to when this vehicle was purchased, but it appears that it was not owned by the respondent at the time the parties commenced living together. Funds were borrowed to pay out the debt on this vehicle during the relationship. This being the case, it was an asset acquired during the course of the relationship. In my view, the net funds from the sale of this vehicle should be added back as an asset of the respondent, received post-separation.
[2008] FCWA 64
Legal fees paid
23 The legal fees of the applicant have been met by way of loan from his brother
and sister. On that basis, I do not intend to take into account either the loans or the
legal fees paid.24 The respondent’s legal fees have been mainly paid from the funds received by
her from the [overseas] Provident Fund. I have not taken this asset into account in the
asset pool, and I do not intend to add back the legal fees paid by her.25 The assets and liabilities of the parties, therefore, are as follows.
Assets
[Respondent’s property] $985,000 [Applicant’s property] 475,000 Respondent’s NAB account 592 Respondent’s NAB account 2,505 Applicant’s BankWest account 219 Applicant’s Westpac account 117 Applicant’s Westpac rental account 3,120 Applicant’s Telstra shares 10,672 Applicant’s Westpac shares 84,039 Respondent’s [motor vehicle] sold, but added back 17,000 Applicant’s [motor vehicles] 10,000 Applicant’s boat 20,500 Applicant’s household contents 1,820 Respondent’s household contents 4,115 Applicant’s loan to son, repaid 8,000 Respondent’s Singtel shares 1,080 Add back applicant’s payments to [Ms ST] 10,000 Total Assets $1,633,779 Liabilities [Respondent’s Mortgage] $328,000 [Applicant’s Mortgage] 260,535
$588,535
Net Assets $1,045,244
[2008] FCWA 64
Financial resources
Respondent’s Citibank Account (now) $42,316 Applicant’s superannuation 23,979
Credibility of the parties
26 After hearing the evidence I formed the opinion that the respondent was not a
credible witness. I have already set out her evidence in relation to the issue of debt outstanding to the respondent’s mother-in-law. The property [overseas] was sold in 2006. The funds owed to [Mrs L] were paid around that time by [Mr L]. I am satisfied the respondent was well aware of this fact and was prepared to put forward a false position in relation to this debt.
27 The respondent and [Mr L] separated [overseas] in 1993. In the respondent’s chronology she states as follows:
“The respondent and her husband, [Mr L], try to work things out and he flies back and forth between Perth and [overseas]. The final separation occurs early in 1996.”
28 [Mr L], in his affidavit, stated that he and the respondent separated in 1993. When cross-examined at trial he stated that the parties had tried to reconcile between 1993 and 1996. In 1996 he was satisfied that the parties were not able to live together. The respondent and [Mr L] filed a divorce petition in the Supreme Court in [their country]. Attached to that document was a Deed of Separation signed by both of them. In that document they agreed that the respondent would petition for divorce on the grounds that the marriage had broken down irretrievably, in that the parties had lived apart for a continuous period of at least three years. The divorce petition was presented on 13 September 1996. [Mr L] agreed that the date of separation had been “back-dated” to 1993 to “expedite things”.
29 At the beginning of her evidence the respondent had sought an adjournment of
the proceedings on the grounds that she had been in possession of a term deposit of $150,000 at the time the relationship commenced. She wanted to adjourn the trial in order to obtain proof of this fact. The proceedings commenced on 4 July 2006. The trial took place in October 2007. It was extraordinary that, at trial, the respondent should for the first time state that she had $150,000 in a term deposit at the commencement of the relationship, to which she had not referred previously. After some time the respondent decided to abandon both her submission that she had $150,000 in a term deposit at the time the parties’ relationship commenced, and her application for an adjournment.
30 Given these matters, where there is a dispute between the evidence of the
respondent and the applicant, unless there is cogent evidence to support the
respondent’s position, I intend to accept the applicant’s evidence.31 The applicant says the parties were living together from at least 1998. It was at
this time the parties commenced the business known as [TT] at the [shopping plaza]. I have no cogent evidence from the respondent that would
[2008] FCWA 64
convince me that the parties commenced living together in 2000 as alleged by
her and will accept the evidence of the applicant.
Initial contributions
32 At the commencement of the relationship the applicant owned
[the C Street property]. This was sold in 2003 and, after discharge of mortgage, the sum of $237,538 was paid to the applicant. I am prepared to accept the assessment of the respondent that the property in 1998 was worth approximately $200,000.
[C Street property] estimated value $200,000
1982 [boat] 40,000
Westpac and Telstra shares, value unknown NK
1995/96 [motor vehicle] 19,000 Cash from retrenchment from [employer] 50,000
Exceeds, but say $309,000 Liabilities
Mortgage on [C Street property] 53,000
$256,000
33 The respondent was then the owner of [R Street property] which was rented.
This property was sold in 1999, the year after the parties commenced living together and the respondent receive sale proceeds of approximately $240,000. The initial contributions of the parties were, therefore, very similar.
Contributions during the course of the relationship
34 In about June 1998 the parties commenced the business of [TT]. The parties agreed to take over an existing business in the [shopping plaza] for the cost of $10,000 for the lease, furniture and fittings, $10,970 for stock and $3,180 for a cash register and other items. The respondent says she contributed $36,500 and the applicant $18,000 to the setting up of the business. The applicant says that the initial investment of $20,000 was paid solely by him. The accounts prepared for the year ended 30 June 1998, which was only a short time after the parties purchased the business, shows that they made an equal contribution of $13,994.
35 The respondent attached to her affidavit at annexure number RT19, copies of
telegraphic transfers to suppliers of stock for the business. She says these payments
totalling $31,016 were paid from her personal account.36 In late 1999 the parties purchased an [shop] called [TS], which traded at the
[shopping centre]. This business was registered in the applicant’s name only. The applicant says that he put $25,000 into the [TS] bank account as working capital. In
[2008] FCWA 64
2004 the applicant paid an extra $10,000 from his own savings to pay for the
refurbishment of the shop.37 It is not in dispute that both the applicant and respondent worked hard in each of
these businesses, but they did so for little reward. The applicant’s schedule setting out the taxable income of himself and the respondent, exhibit “A.1”, show that the losses made in 2000 and 2002 were almost equal to the income derived by the respondent in 1999 and 2003. The applicant, on the other hand, earned $88,862 over the period of the relationship. When the [TS] property was sold the proceeds of $83,000 were distributed such that $5,500 was repaid to the applicant’s sister, being the balance of monies borrowed by the respondent from her, $32,000 was paid to outstanding creditors of [TS], and $35,500 was used by the applicant as part deposit of a property purchased by him in [ B Street].
38 On 19 November 2003 the respondent decided to purchase a [suburban] café
then known as [the café]. The purchase price was $62,000. The respondent intended to enter into this business arrangement with a friend, however, the friend decided not to go ahead with the transaction shortly before settlement. The sum of $58,248 was required to be paid to purchase the business. The respondent arranged to borrow a total of $98,000 from the National Australia Bank, but the funds were not ready for disbursement at settlement. The respondent asked the applicant if he would provide the sum of $80,000 to complete the purchase of [the café], with the funds being repaid to him after the loan was put in place. The applicant lent the funds to the respondent in order that she could purchase the café. The respondent says when the funds became available from the bank she asked the applicant if he wanted the funds returned to him and he said no. The applicant refutes this and says the funds were never repaid even though he requested a payment. After the applicant made a financial contribution to the business the name was changed to [a café and cake shop], and was owned by a company [AS] Pty Ltd. The applicant and respondent were both directors.
39 For a time both the [the café] and [TS] were both operating. The applicant was
mainly responsible for [TS], but would work at the café as well. In particular, he would open the café most mornings. The respondent says that she worked longer hours in the business than did the applicant. I am satisfied that they did their best running both the [TS] and café business until such time as the [TS] business was sold in 2005.
40 The café business was sold after separation and run by the respondent. All
expenses, including tax, have been paid from the proceeds of sale and any funds left
over after the sale of that property have been distributed equally between the parties.
Properties purchased by the parties during the relationship
41 The respondent was the owner of [the R Street] when the parties met. The
respondent subsequently leased this property to [a large firm] for $750 per week until it was sold in 1999. When it was sold in November 1999, the respondent received the amount of $241,704.
[2008] FCWA 64
42 The respondent subsequently leased a property [nearby]. Although she and the
applicant were living together, she was responsible for the rent and other expenses in relation to that unit. The respondent purchased [an investment property at E Street] in 1997 for $185,000. She borrowed $148,000 from the National Australia Bank and used her own funds for the balance. She was responsible for paying the mortgage expenses on that property until it was sold in 1998. At settlement the respondent received an amount of approximately $40,800.
43 The parties then rented [properties at two other addresses in the suburb]. At
each property the respondent was responsible for the rent payments and the payment
for utilities.44 The respondent purchased a property at [G Street] in 1999 for $277,500. The property was funded by way of the proceeds of sale of [R Street] property and $34,000 raised from an overdraft. The parties were living together in the property at this time. The respondent paid the mortgage payments. [The G Street property] was sold at the end of February 2002 and the respondent estimates she received approximately $260,000 from the sale.
45 In January 2002 the respondent purchased the property at [S Street]. She paid
the sum of $15,000 as a deposit from the [TS] bank account. At the time this property was purchased the respondent was still the owner of [G Street]. The respondent asked [Mr L] if he would take on the obligations as a joint borrower to secure a loan to purchase the property. She and [Mr L] obtained finance for a total amount of $340,000. The mortgage repayments have been made only by the respondent.
46 In October 2003 the husband sold [his C Street property] for a net return to him
of $246,000. From that amount $10,000 went towards the refurbishing for [TS], $40,000 towards the purchase of [his investment unit] and $10,000 was paid to [Ms ST]. This sum has been added back to the asset pool. The applicant says the balance of these funds were to be used for planned renovations on the [respondent’s latest acquisition]. Architects plans were drawn up for these renovations, however, they were never built. The applicant in his evidence stated that the balance of funds held by him from the sale of [his C Street] went to pay credit card payments and other living expenses.
47 The applicant confirmed that when living with the respondent he made no
contribution to either rental payments made on any premises in which they lived together, nor mortgage payments. He says their living expenses were paid for out of the businesses they were running at that time.
48 The respondent’s former husband, [Mr L], made maintenance payments to the
respondent for the children. For two years after they finally separated these payments were infrequent. In relation to the [latest acquisition] the respondent stated that [Mr L] agreed to pay the whole of the mortgage instalments, as well as extra sums to cover various expenses. The respondent and [Mr L] were cross-examined about the payments of maintenance. [Mr L] agreed he did not make maintenance payments every month and the amount of the maintenance payments for the children did not change after the mortgage was taken out. He said he paid the respondent
[2008] FCWA 64
approximately $3,000 per month and she could do what she liked with the money.
There was no necessity for her to pay the mortgage out of those sums.49 It appears from the evidence that [Mr L] paid maintenance for the children at
between $10,000 and $15,000 per year in 2000 and 2001 and, in addition to the payments which are showing in the respondent’s bank accounts, he also made cash payments by way of sending money with the children. The monthly payments on the [S Street current home] were approximately $2,000 per month. It appears on the evidence that the payments by [Mr L] were rarely in a sum sufficient to cover the mortgage, but would have met most of the children’s living expenses.
Conclusions on contributions
50 As can be seen from the manner in which I have treated the respondent’s funds
in the Citibank account, I have decided to take a “hybrid position” in relation to the issue of contributions. Y and S [2006] FCWA 98. In my opinion there are good reasons to exclude the wife’s Citibank account from the asset pool and I have set those out previously. In relation to the other assets of the parties, including the assets brought in by the applicant and respondent, in my view, in the circumstances of this matter, the most appropriate manner to deal with the assets is to assess the parties’ global contribution to them.
51 This was a relationship of only 7½ years. The parties mingled their finances to
the extent of running businesses together and both providing capital sums for these
businesses. They purchased property independently, never in joint names.52 Their initial contributions to the relationship were almost equal. I am satisfied
that during the course of the relationship they both worked hard in the various
businesses and contributed both financially and non-financially to those enterprises.53 Since the parties separated they have each contributed towards their own assets.
The respondent’s mortgage payments were greater than the applicant’s. The respondent’s [S Street property] is now the most valuable asset of the parties.
54 I am satisfied that the respondent’s contributions to the assets were greater than
the applicant’s. In particular, there is a shortfall of approximately $100,000 received by him from the sale of [C Street] property in 2003 which, while set aside for the renovations on the [S Street], was never spent on that project. There is no plausible explanation from him as to the whereabouts of these funds other than they were spent on living expenses. In the years 2003 to 2005 the applicant earned $50,559. According to him, the businesses paid their living expenses. He did not purchase the [B Street investment] property until April 2005. He did not make any mortgage or rent payments between October 2003 and April 2005. I am satisfied that the respondent contributed all her assets to the joint endeavours of the parties, in particular, their businesses and towards the various properties purchased in her name. I am not satisfied that this was the case for the applicant.
55 In my view, there should be an apportionment in favour of the respondent of
10% to take into account her greater contributions to the accumulation of the parties’
assets.
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Section 205ZD(3) adjustment
56 The respondent retains the funds from her superannuation fund now in the
Citibank account of $42,316. The applicant has superannuation entitlements of $23,979. The respondent is in receipt of funds, she says, of around $3,000 per month by way of maintenance for her children paid by [Mr L]. She is also in receipt of income from her employment as a carer. Even though she chooses to work part-time, there is no reason why she cannot work full-time as she did during the relationship. There is no evidence that her ability to work has been compromised by either the relationship with the applicant or her current situation. The respondent will retain the [S Street property] together with the other assets in her possession.
57 The applicant is 61 years of age. He is currently employed as a [salesman] and
earns approximately $45,000 per year. He obtains an income from the [investment]
property.58 In my view, there is no basis for any further adjustment pursuant to s 205ZD(3).
The assets of the parties should be divided so that the respondent receives 60% and the applicant 40%.
59 A division in these terms will mean that the applicant will retain assets valued at
$418,098, and the respondent assets valued at $627,146. The effect of such an order,
if the parties retain the assets currently in their possession, will be as follows:Applicant
[B Street investment property] $475,000
BankWest account 219 Westpac account 117
Westpac rental account 3,120
Telstra shares 10,672 Westpac shares 84,039 [Motor vehicle] 10,000 Boat 20,500
Household contents 1,820 Loan repaid by son 8,000 Payments made by [Ms ST] 10,000
$623,487
Less
[Mortgage on investment property] 260,535
$362,952
40% of asset pool 418,098
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Less retained by Applicant 362,952 Payment by respondent to applicant $55,146 60 The respondent will retain the assets in her possession and have to make a cash
payment to the applicant of $55,146. The applicant has funds in a Citibank account to meet most of this payment. In the past she has operated overdrafts to be able to purchase property or invest in the business. Given that she has an income, maintenance payments for the children and a significant equity in the [S Street] property I cannot see why she should not be able to borrow these funds. Such a result, in my opinion, is just and equitable in all the circumstances.
I certify that the preceding [60] paragraphs are a true copy of the reasons for
judgment delivered by this Honourable Court
Associate
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