Gaur & Gaur
[2022] FedCFamC1F 719
Federal Circuit and Family Court of Australia
(DIVISION 1)
Gaur & Gaur [2022] FedCFamC1F 719
File number(s): BRC 5793 of 2019 Judgment of: BAUMANN J Date of judgment: 29 September 2022 Catchwords: FAMILY LAW – PROPERTY – Assessment of contributions – Modest pool – Orders that achieve justice and equity Legislation: Family Law Act 1975 (Cth) ss 44(6), 79(4), 90SF, 90SM, s 90SF Cases cited: Hickey & Hickey (2003) FLC 93-143
Jones & Dunkel (1959) 101 CLR 298; [1959] HCA 8
Mallett v Mallett (1984) 156 CLR 605
Stanford & Stanford [2012] HCA 52
Division: Division 1 First Instance Number of paragraphs: 83 Date of hearing: 18 January 2022 Place: Brisbane Counsel for the Applicant: Mr R Galloway by direct brief The Respondent: Litigant in person ORDERS
BRC 5793 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS GAUR
Applicant
AND: MR GAUR
Respondent
order made by:
BAUMANN J
DATE OF ORDER:
29 SEPTEMBER 2022
THE COURT ORDERS:
1.That the parties shall sign all such authorities as may be necessary to direct that the funds held in Trust be distributed as follows:
(a)$12,144 to the Applicant; and
(b)The balance to the Respondent.
2.That the Applicant shall retain without further claim by the Respondent as her sole and exclusive property:-
(a)Her Country B real estate at C Street, D Town;
(b)The two (2) motor vehicles in her possession, power, and control at the date of this Order;
(c)Her interest in the property at E Street, Suburb F; and
(d)All other personal property, superannuation (including her interest in the AA Fund), bank accounts, furniture, and chattels in her possession at the date of these Orders.
3.That the Respondent shall retain without further claim by the Applicant as his sole and exclusive property:-
(a)His interest in the property at G Street, Suburb H;
(b)His business in Country B;
(c)The two (2) motor vehicles in his possession, power, and control at the date of this Order;
(d)All other personal property, superannuation, bank accounts, furniture, and chattels in his possession at the date of these Orders.
4.That each party shall be solely responsible for any loans, debts, credit card obligations or other liabilities which they are, at the date of these Orders, required to meet and shall indemnify the other party from any liability arising therefrom.
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 Gaur & Gaur has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BAUMANN J:
introduction
The parties in this matter, being the Applicant, Ms Gaur, now aged 64 years, and the Respondent, Mr Gaur, now aged 65 years, were in a somewhat complex and fluid relationship from the time of their cohabitation and marriage in 1977. As the history that follows reveals, there have been many events that could occupy significant forensic and Court time in unravelling. When the matter was heard on 18 January 2022, the Applicant (who, for the purpose of these Reasons, I shall refer to as “the wife”, although she is not now legally married to the Respondent) was represented by Mr Galloway of Counsel, and the Respondent (who, for the purpose of these Reasons, I shall refer to as “the husband”) represented himself.
The husband revealed a capacity to run his case, both in his material and cross-examination, reflective of the fact that he is a professional in Country B, and who had, as my Reasons will reveal, previously worked in Queensland. The parties have provided written submissions in this matter, which have been considered, filed in accordance broadly with my directions made on 18 January 2022. The fact that every submission made is not dealt with in these Reasons is not to suggest they have not been considered. For, in many ways, a number of the matters which the parties regarded as very important to their perceptions and history of this matter, were not likely to be significantly relevant and had not become relevant to the determination of what orders should be made that do justice and equity to the parties in altering their property interests.
As the Reasons make clear, the pool of available interests is very modest. The matter was transferred to this Court (formerly the Family Court of Australia) by the Federal Circuit Court of Australia (as it was then known) at a time where it was regarded as having some complexities, and involved a third party, being the wife of the husband who he subsequently married in 2012. I am not satisfied that the matters were ultimately as complex as were maybe originally anticipated.
Applicable Principles
Although the parties were married in 1977, I am satisfied on the evidence that they were divorced in Country J in mid-1994. They thereafter recommenced cohabitation and/or a genuine domestic relationship at least by early 1996. They continued to care, to the extent that their roles had so allowed, for their children, Mr K (born in 1980) and Mr L (born in 1986). Accordingly, the principles that are to be applied in determining what orders are just and equitable are those relating to the existence of a genuine domestic/de facto relationship within the meaning of the Family Law Act 1975 (Cth) (“the Act”). Although Counsel for the wife contended for the application of s 79(4) of the Act, as Judge Tonkin gave leave pursuant to s 44(6) of the Act, I am satisfied the de facto relationship provisions apply. As Hickey & Hickey (2003) FLC 93-143 makes clear, there is a four step process to be involved in the assessment of competing applications for alteration of property interests by de facto partners, once jurisdiction has been established.
In that regard, the four steps are
(a)to determine the pool of assets, liabilities and interests of the parties;
(b)to consider the respective financial and non-financial contributions made to the acquisition, maintenance and improvement of the property during the course of the relationship (s 90SM(4));
(c)to consider the relevant s 90SF(3) factors; and
(d)to consider the orders that are proposed to be made to ensure that they achieve justice and equity for both parties.
As the High Court made clear in Stanford & Stanford [2012] HCA 52, before undertaking such a process, the Court needs to be satisfied that it is just and equitable to make an order at all. The parties’ cases were such, and the nature of their termination of the relationship in or about 2014 is such, that I am satisfied it is just and equitable to make an order (s 90SM(3)).
History
Statements of fact hereafter should be construed as findings of fact.
Although both parties make allegations about the lack of credit of the other party, and there is some evidence that both parties have not been totally honest with the Court, I make no defining credit finding against either the husband or the wife in this case. As the history which follows reveals, there is much about their relationship which is very fluid and where there are quite different perceptions. Having seen both parties in the witness box, I am satisfied that the wife was almost entirely compliant with the requirements and requests of the husband during the course of the relationship and post-cohabitation/marriage. The husband was both educated and articulate, and had, it seems to me, the capacity to persuade the wife to undertake various transactions during the course of the relationship – including to sign documents.
In so saying, I am not indicating that I have formed a conclusive view that the husband was controlling or sought to unduly influence the wife – rather, in the dynamics of their relationship, and perhaps there is a cultural context in this matter, the wife very much followed the guidance, advice and demands of the husband during the relationship. To a large degree, this was reflected in her failure to take any actions in the matter for many years after the relationship ended in 2014. It is not possible, despite the evidence before the Court – including evidence of the husband’s movements between Country B and other countries – to be entirely satisfied as to when the parties were living under the one roof and when they were not.
I form the view that, generally speaking, between 1977 and what I regard as final separation (accepting the wife’s evidence) in 2014, they were in a continual relationship, save for the following events:
(a)After the parties divorced in mid-1994, when they were living in Country J, with an immigration status which was unclear, the wife married a Mr M. The husband says that upon marrying Mr M, the wife applied for permanent residency in Country J. The wife is an Australian citizen. The wife says the marriage was a “marriage of convenience”, which I take it was a suggestion that it was a marriage that was designed to support her application for permanent residency in Country J;
(b)The husband says that the wife’s actions were unilateral and without his involvement. I am not at all satisfied that is the case. However, in the absence of more evidence, including evidence from Mr M, it is not possible to make any particular finding as to whether the relationship between the wife and Mr M was bona fide. That relationship was in any event short-lived; and
(c)The wife returned to Country B from Country J in early 1996. The husband joined her in Country B some months later when cohabitation was resumed, the children then being in the care of the wife.
Whether or not there was an immigration investigation as the husband asserts, or whether there were charges against the wife that were then dismissed (as the wife asserts), I find the evidence is unclear and I am unable to confidently make a finding on the evidence offered. In any event, in my view, a finding of what occurred is not necessary.
I am satisfied that the husband maintained a business in Country B from late 1996 and thereafter, and during much of that period, the wife worked in the office. The husband said the office had three employees and the wife should be construed as a senior clerk, although she had no formal training.
In early 2002, the wife and the youngest child, Mr L, returned to Australia. Shortly thereafter, a property at E Street, Suburb F (“the Suburb F property”) was purchased in the husband’s name. I should indicate that apart from the property in Country B, all properties during the course of the relationship appeared to have initially been purchased in the husband’s name solely. It is apparent, of course, that he was the only one with an income that might have supported an application for a loan. When the husband came to Australia and joined the wife, he worked as a professional.
However, as the documents set out in Exhibit 3 reveal, the husband was the subject of a decision by the Queensland Civil and Administrative Tribunal (“QCAT”) made early 2013 which, in effect, removed his name from the list of Practitioners in Queensland. The reasons for the decision were simply that the husband had not revealed to the regulatory authorities in Queensland that he had been convicted of a charge in Country B (when acting as a professional in Country B).
When that matter came to the attention of the Queensland authorities, the application to QCAT was made by the Commissioner. Whilst still in Australia, the husband did continue to press for a review of the QCAT decision to the Queensland Court of Appeal. Ultimately, as Exhibit 3 indicates, when he sought to run a business in Country B, a judgment by the Chief Justice of the High Court of Country B contained within Exhibit 3 permitted him to do so from mid-2016. By this time, it seems that the wife, often with the children, continued to occupy the Suburb F property. There were mortgage payments payable in respect of that property met by the husband.
I am satisfied on the evidence that after the husband had ceased working as a professional in Queensland, whilst regulatory authorities were undertaking investigations of his continuing right to work, he acquired a franchise takeaway food business. The franchise, he says and I accept, was in his name, but the business was operated by a company, in which he held, by way of shareholding, 55 per cent; the wife held 25 per cent and their adult son held 20 per cent. I am satisfied that during the course of the operation of the business, the wife and husband both worked within the business. In circumstances where the husband had returned to Country B again, the wife then maintained operation of the business; used income available to pay for the mortgage on the Suburb F property; and otherwise allowed income to be generated, some of which was paid by the husband (when he received approximately $1,300 a month) to the eldest son, Mr K, who was then living in Country J.
At this point, I should acknowledge that both these parents have revealed by their conduct that they are very generous towards their children and support them even into their adulthood.
A strange feature of this case is that the husband says separation occurred in 2008, at or about the time the takeaway food franchise was purchased. The husband says, and I accept, that the franchise was purchased with a loan of $80,000 (which I accept was secured over the Suburb F property) and $80,000 from savings in Country B generated through the parties’ activities in that country.
There is a dispute as to when the parties separated on the evidence. However, a financial agreement entered into between the husband and his current wife makes it clear that the husband accepted that the de facto relationship with the wife in these proceedings continued until 2014. That is why the wife says, consistent with the nature of their relationship, that the de facto relationship did end at that time. I accept that evidence.
A curious factor in this matter is that in late 2012, the husband married a much younger woman. Whether or not, as the wife alleges in this case, the new wife was an arranged marriage for their son and the father decided to remarry rather than to allow the son to do so, I am not absolutely certain. What I do know is that that lady is the mother of a child of that relationship; continues to reside in Australia in a property that was purchased post-2014 by the husband with his new wife, in proportions of 70 per cent to the husband and 30 per cent to his current wife.
With this interesting factual history, there is little doubt that tensions between the parties in this litigation arose, such that in early 2019, the husband commenced proceedings in the District Court of Queensland seeking that the Suburb F property be sold via the appointment of statutory trustees for sale. The wife’s legal interest in that property had been secured well after sole acquisition by the husband as a result of an agreement between the parties that she would secure a 30 per cent interest, but would pay the mortgage and maintain the takeaway food franchise business (see Exhibits 7 and 8).
The wife did not seem to understand the full content of the agreements which had been prepared by her at the direction of the husband in late 2016. Nonetheless, that litigation in the District Court was the subject of an Order made in the absence of the wife (see Exhibit 9) in early 2019. Almost oblivious to those proceedings (and the wife says she was unaware of them), the wife commenced proceedings in the Federal Circuit Court of Australia in May 2019 for property adjustment, but was required to seek leave to bring proceedings out of time.
On 4 December 2019, a Federal Circuit Court Judge made an Order granting leave (pursuant to s 44(6) of the Act). I have not seen any Reasons for that Order, and can only assume that her Honour also took into account in the granting of leave, the delay between when the wife said the relationship ended in 2014, and the filing of her Application. Nonetheless, because of the then involvement of the new wife in the property that she had purchased with the husband, and the asserted complexities, the matters were transferred to the Family Court of Australia.
The Hearing
The hearing was complicated by, frankly, very poor material and lack of proper compliance with trial directions made. However, as the record and transcript would reveal, the Court regarded it as important to try and get some finality for these parties. The husband had returned to Australia for the sole purpose of this litigation (and I infer to spend some time with his current wife and child) and was due to return to Country B after this trial to deal with business interests and other health issues of his extended family.
This may have contributed to the failure of both parties to comply with a direction made by the Court when the matter was listed for trial. In particular, when the matter was listed for trial, the Court was aware of a dispute relating to a property that had been purchased (in the name of the wife) as vacant land upon which a building had been constructed comprising three flats in rural Country B. Alert to the failure of the parties to agree on a value for the said property (then, frankly, the only substantial property remaining) the Court, on 24 November 2021, ordered:
3.That the parties use their best endeavours to arrange the two [Country B] real estate valuers to confer thereafter as to whether they can agree on the current market value of the property.
The two valuers did not confer. Rather, it seems that the wife relied upon a valuation by Mr N of the property as at mid-2021 at $170,000 Country B currency (see Exhibit 1) and the husband relied on a subsequent valuation by a different valuer made in late 2021 at $380,000 Country B currency. What appears clear, as was identified when Mr N was cross-examined by telephone, was that the husband sent to Mr N a copy of the valuation he was relying upon during the cross-examination by Mr N, and he then gave evidence as to what he now regarded the value of the property to be. I deal with this conflict below.
The other conflict was that the husband, who ought to have known his obligation to make full and complete disclosure, did not produce any valuation evidence of his interest in the property at G Street, Suburb H (“G Street property”), in which he has a 70 per cent interest. His explanation for that was a mixture of difficulties with Covid-19; him being resident in Country B, and I suspect most importantly to him, the fact that as the property interest was acquired after the separation of the parties, in his view, it was simply not relevant to the determination of justice and equity between the parties.
I sought to explain to the husband that the Court was required to take into account all legal and equitable interests each of the parties had in property as at the date of the trial, and as a result, his interest in that property was relevant. In an attempt to “fill that gap” the wife had arranged for a Mr O, a real estate agent in the Suburb H area, to provide a curb side appraisal of value of the unit, which was marked as Exhibit 10. Mr O was the subject of cross-examination, and I deal with his evidence later in these Reasons.
With all of these unsatisfactory complications in this very modest property dispute, there was one further issue that the wife had not revealed to the Court, and which only came to light during the course of her giving oral evidence. Noting that the Suburb F property had been sold by the Trustees with a net balance of approximately $88,000 available (see Exhibit 14), the wife had indicated in her affidavit material filed 17 November 2021 that she was homeless. In fact, it seems that she was not. She had reached an agreement with a neighbour, a Mr P, that she would become a joint tenant to property owned by him at E Street, Suburb F (E Street”). The wife says – and I had no evidence from Mr P who was available, apparently, but was not called – that he is a man of 82 years of age, and in poor health. The husband acknowledges that he owed money to Mr P in another unrelated transaction.
Seemingly by way of some support of the wife, Mr P, before he was to undertake major surgery, arranged to transfer an interest in the property at E Street to the wife for no consideration. It seems that Mr P survived his surgery, and accordingly in the circumstances, the wife hopes to be able to retain an interest in the property by paying to Mr P a sum of money equal to a half interest in the property. The wife argued, very late in the proceedings and with little evidence, that she holds her interest in E Street (in which she resides) as a Trustee under a resulting trust from Mr P, and has no equitable interest in the property, although she does, clearly, have a legal interest.
The wife’s failure to make full and complete disclosure of this transaction and, even worse, to misinform the Court on oath of the extent of the relationship with Mr P and his generosity, was one of the areas of credit to which the husband referred. Not surprisingly, Counsel for the wife referred to the history of the husband’s conviction for perverting the course of justice and other activities when saying that I should not regard the husband as a witness of truth.
Competing proposals
By final written submissions filed 28 January 2022, the wife contends that orders which adjust property interests in the proportion of 85 per cent to the wife and 15 per cent to the husband will achieve justice and equity. The parameters of the order sought by the wife are set out in the written submissions at paragraph 25, and were expressed in the following terms:
25.The Court will consider that it is just and equitable that there be a property adjustment order and, taking into account those matters referred to in these submissions, it ought to be in terms that incorporate the following provisions:
(1)that, within seven days of the date of this order, the parties do all things necessary to be done to authorise the payment to the wife of the sum of $48,460 with accretions, in any, from the trust account of the conveyancing solicitors;
(2)that, within a further three months, there be paid to the wife by the husband the sum of $102,101;
(3)that, in default of the payment described and the order immediately foregoing, the husband’s interest in property at [G Street, Suburb H] [sic] in the State of Queensland be realised and, of the net proceeds of sale, after the payment of debts secured on the property, there be paid to the wife from the husband’s share the sum of $102,101 or as much of that sum as may be had by the husband from his 70 per cent interest in those proceeds;
(4)that the balance of moneys owing to the wife, if any, be payable by the wife together with interest calculated at the rates applicable in the Family Court from time to time on any outstanding balance;
(5)that the husband indemnify the wife and keep her indemnified in respect of all costs and fees incurred by [Q Accountants] in respect of the appointment of partners of that firm as statutory trustees for sale, pursuant to the order of a Judge of the District Court of Queensland, made in early2019;
(6) that, until payment of moneys owed to the wife by the husband as provided for in these orders, the husband be restrained and an injunction issued restraining him from further encumbering the property at [G Street, Suburb H]; and
(7) that the wife, by this order, be empowered to draw and lodge a caveat to protect her interest under these orders until such time as the husband’s obligations hereunder are performed.
The wife’s written submissions in reply filed 7 March 2022 do not seek to alter the basic terms of the orders sought.
In the husband’s final submissions in response filed on 28 February 2022, his conclusion as to the orders that achieve justice and equity are set out in paragraph 59 as follows:
59.The party’s casual relation from 2012 ended in 2014. We say casual on the basis that the Respondent was married to his current wife in late 2012. The Respondent has a small child, and he has a legal duty to him. Taking into the consideration that there was no direct contribution, it is submitted that:
(a)The parties be given 50% each from the proceed of [E Street] after taking out $28000.00 trustees’ cost as ordered by the District Court Judge.
(b)The parties to be paid 50% each from the value of [Country B] Property that was valued and given as evidence from the valuer of the Applicant as $320,000.00 after taking out the liabilities of the Respondent.
(c)In regard to [G Street], the Respondent to pay $17500.00 that he owe to the Applicant as her share from the sum of $40,000.00.
It is trite to observe, of course, that a determination by the Court as to what constitutes the balance sheet of interests shapes what orders are likely to achieve justice and equity. I will deal with this conflict of views that exist now.
Pool of Assets
Fundamental to establishing the pool of interests in this case is determining the value to be attributed to the Country B property described as C Street, D Town (“the Country B property”), the 70 per cent interest in the G Street property held by the husband, and the extent to which any interest and/or the legal interest the wife, at the time of trial, had in E Street. Furthermore, it was an issue for the Court’s determination as to the extent to which all these interests should be included in the one pool or in separate pools (bearing in mind the nature of their acquisition, and the extent of any contribution to that acquisition), so as to do justice and equity to both parties.
It is also acknowledged that the parties each had the benefit, by Court Order made by consent on 24 November 2020 (Order 4), of the release of the sum of $20,000 from the moneys held in trust from the sale of the Suburb F property (which was net of the mortgage and Trustee’s expenses of approximately $27,000) leaving a balance agreed in trust from the sale of that property of approximately $48,460.45.
I make the following findings in respect to valuations and the pool of interests and their exclusion or otherwise.
Funds in trust
The balance of funds from the sale of the Suburb F property are agreed to now be $48,460. It is common ground that on 24 November 2022, an Order was made for each party to receive $20,000. In my view, the partial property payments received should be “added back” to the pool so as not to create an injustice that could arise from the Orders for adjustment this Court makes.
The husband says the wife should be responsible for the funds paid to the Trustees on the sale of the Suburb F property, totalling $28,000, in accordance with the Orders of the District Court of Queensland made in early 2019 (Exhibit 4). It was but one of the curiosities in this case that the Applicant in the District Court proceedings (the husband) chose to pursue civil remedies and obtain an Order, it appears, by default. Then, the Trustees basically did nothing to perfect in a timely way the sale of the property (which eventually the parties arranged to sell and settle for the Trustees in late 2021). The other curiosity is that the wife’s Initiating Application was not filed until 22 May 2019 – after the Order was made in the District Court. The husband says I cannot “go behind” the District Court Order and that the Court is required to ensure the wife solely pays the Trustee’s fees. The fees were deducted, not surprisingly, before the funds were placed in Trust for the use of the owners. Mr Galloway of Counsel for the wife submits that, as the costs have now been paid, the wife has no further obligations to the Trustee under the Order. I agree.
However, as between the husband and the wife, the actions of the husband (as a co-owner) were supported by the Orders of the District Court in appointing Trustees with the power of sale and the amount available from the sale was reduced by the costs of the Trustees. In the exercise of my discretion, I find that this set of facts is a matter better taken into account under s 90SF(3)(r) rather than some “notional add back”.
Value of the COUNTRY B HOME
The parties do not dispute this property was purchased in 2009 by the wife and, during the relationship, was improved by constructing on the land buildings which now comprise three flats. A valuation by a registered valuer Mr N was produced, dated mid-2021 (Exhibit 1), opining the market value at $170,000 Country B currency.
During the case management of this case, on 24 November 2021, the husband was given leave to effectively adduce adversarial evidence – but on various conditions, particularly that the two valuers confer. It is to be remembered at all times that the husband was residing predominately in Country B – where he was still practising as a professional.
The husband did procure a valuation from R Consultants, dated late 2021 (Exhibit 2) opining the market value to be:
Freehold Land Value $135,000 Country B currency Improvements $245,000 Country B currency $380,000 Country B currency with a further opinion expressed that a “forced to sale value” of $285,000 Country B currency applied.
At the trial, the husband was unable to produce his valuer for cross-examination. The wife’s expert, Mr N, was produced and cross-examined by telephone. The summary of his additional evidence was:
(a)the property is in a rural area and it could take six to twelve months to sell the property;
(b)the valuation was conducted in the “Covid” period when Country B borders were closed down and there was little real property activity; and
(c)he had been requested by the husband in early 2022 to comment on the valuation obtained by the husband and after consideration of that opinion, and despite there being no “comparable sales”, he now opines the valuation on the current market to be $320,000 Country B currency – an increase in less than six months of close to 90%.
In final submissions, Mr Galloway says I should give no weight to Exhibit 2, as it has not been tested. I agree. However, when he further submits that the only valuation obtained in accordance with the directions is that of Mr N, with respect, that is not correct. The husband was given leave to adduce evidence but could not produce his witness.
Although Mr Galloway says that the Court should find Mr N had not remained “truly independent” after having being retained by the wife, I am not prepared to attack the valuer’s integrity in such a way. I regard Mr N’s evidence of the conditions applying when he did his initial valuation in mid-2021 compared to early 2022 as plausible. The lack of comparable sales to support his opinion now is concerning, however he did not adopt the valuation obtained by the husband.
Mr Galloway says a discount for a forced sale would apply if the wife had to sell the Country B property to make, as the husband seeks, a payment to him. I agree, but the difficulty with the discount factor offered by Mr N, was it was in a range of 20 to 25 per cent.
Doing the best I can on this somewhat unsatisfactory evidence, I will adopt a valuation for the wife’s Country B property of $320,000 Country B currency , less $64,000 Country B currency (20 per cent) equals $256,000 Country B currency which at the conversion rate adopted at the trial creates a value for the wife’s interest of AUD$176,550. I do so because I regard it as likely the wife will need to sell the Country B property if she wishes to retain the interest in E Street.
HUSBAND'S INTEREST IN G STREET PROPERTY
At an earlier stage of these proceedings, the husband’s current wife was a party to these proceedings. However, by Order made on 19 August 2021, the Intervenor was removed as a party. Although, on the evidence, it is difficult to be satisfied to what extent the husband’s current wife, Ms T, may have contributed to the purchase and continued retention of the G Street property, the wife in these proceedings does not contend for the husband having a greater interest than the 70 per cent interest reflected by the title.
It is also not in dispute that the husband drew down $40,000 on the line of credit secured over the Suburb F property, which on or about late 2014, through a series of transactions, found their way as a deposit on the purchase of the G Street property for $242,000. In circumstances where the line of credit continued to exist until the Suburb F property was sold by the Trustees, there was a direct financial contribution by the wife to the G Street property. Although the acquisition occurred some months after the husband and wife finally separated, I am satisfied that the husband’s 70 per cent legal interest in the G Street property should be included in the joint balance sheet.
The issue that then arises is what is the appropriate value of the husband’s interest in the G Street property at the time of the hearing? In that regard, the husband offered no evidence of the current market value of the G Street property seemingly because, for a time, the husband took the view that as the interest was acquired post-separation, it should not be included in the pool. The husband no longer adopts that position, sensibly, considering how his initial contribution to the purchase of the G Street property was funded with joint funds.
The wife produced at trial an unsworn appraisal of value of the G Street property by a local experienced real estate agent Mr O (see Exhibit 10). Mr O, after a “market analysis” but without the opportunity of inspecting the interior of the property, expressed a “price guide of $290,000 to $320,000”. Mr O was tested by cross-examination when he confirmed the market was “very high” at the moment and that an adjoining unit (unit 4) was on the market for $275,000. Because he could not inspect the interior of the husband’s unit, he was not able to express an opinion as to the comparison of unit 4 and the subject adjoining unit which both have a similar floor plan.
In submissions, Mr Galloway for the wife contends a “median value” from the evidence of Mr O of $305,000 should be adopted and after allowance for an ANZ mortgage, outstanding rates, and body corporate charges as asserted by the husband totalling $129,670, the husband’s 70 per cent of the net equity of $175,330 amounts to $122,731.
The husband, in reply, contends that his 70 per cent interest in the property should be based on a current market value of $275,000, based on a likely sale of unit 4. There is no probative evidence before the Court that unit 4 was sold for $275,000 – Mr O’s evidence being that is the price for which it is listed. The husband in submissions submits the ANZ mortgage is $177,723 with outstanding charges swelling the debt to $185,249.
In my assessment, as unsatisfactory as the evidence is in many respects, I accept the evidence of Mr O, however the figure I adopt is $290,000. After allowance for the debt of $185,249 this leaves an equity of $104,751 with the husband’s 70 per cent interest calculated at $73,325. That is the net figure I propose to adopt.
Wife’s legal interest in E STREET SUBURB F
The wife’s legal interest in E Street, and the interaction by both parties with their former neighbour Mr P, is mired in uncertainty. Mr P is, the husband asserts, a creditor of the husband who lent him $25,000 for legal expenses the husband incurred in respect of the QCAT proceedings. The QCAT decision forms part of Exhibit 3, which reveals that after a hearing before the Tribunal in late 2012, in early 2013 the Tribunal “in light of the seriousness of the original offending, was driven to conclude that Mr Gaur’s name must be removed from the local roll” . An Appeal against the decision to the Queensland Court of Appeal was dismissed with costs. The Reasons for Judgment of the Queensland Court of Appeal reveal that the husband in that matter was represented by Senior Counsel Mr S and instructing solicitors.
I give this history to provide some background as to the basis upon which the husband has incurred a liability to Mr P (and, as I discuss below, also to the Commission). There is no evidence that Mr P intends to enforce any debt, if it exists, and considering it was likely incurred some eight years ago, the debt could be statute barred.
That Mr P assisted the husband with an unsecured loan gives some background to the alleged transaction between the wife and Mr P. The husband says, and I accept his complaint, that the wife’s disclosure of her “legal” interest in E Street was for the first time, on the eve of the trial. For reasons given orally, I allowed the wife to give evidence about what she claims are the circumstances of the transaction between her and 82 year old Mr P. The wife’s oral evidence on this issue, inter alia, is that:
(a)in early 2021, she made an arrangement with Mr P, who was to undergo major surgery, that she would acquire a half interest in his property for $170,000;
(b)as she subsists on Centrelink benefits, she was not in a position to pay Mr P any money at all at the time for a conveyance of a half interest;
(c)Exhibit 5, a copy of the Title Deed for E Street, reveals the wife and Mr P are registered as joint tenants, with a “dealing” (which I infer was a form of transfer) being registered mid-2021. Again, the wife deserves criticism for not disclosing this transaction earlier than early 2022; and
(d)there is no written contract in existence, however, the wife deposed in her evidence that if she is unable to pay Mr P the sum of $170,000 (presumably from the proceeds of these proceedings), she will have to “reconvey” to Mr P her interest.
In the absence of any evidence from Mr P on this transaction – it being apparent he did survive the major surgery – the husband says an inference under the principles of Jones & Dunkel (1959) 101 CLR 298 is available.
It is sadly an indication of the sort of “smoke and mirrors” I have been required to endure in this case, that neither party called (by subpoena or otherwise) Mr P. In the circumstances, I find that the evidence Mr P may have given about his loans to the husband would not have assisted the husband and further that the evidence Mr P may have given about the transaction with the wife in respect of E Street would not have assisted the wife.
The husband submits (at paragraphs 30 to 35 of his submissions filed 28 February 2022), that as the wife is registered and has “indefeasibility” of title and has failed to provide evidence from Mr P or even the transfer that was produced to the Land Titles Registry, the wife should be regarded as having a 50 per cent interest in the E Street property. Mr Galloway mounts an argument that the wife’s evidence should be accepted and that she “holds all her right title and interest in and to E Street upon a resulting trust for Mr P to the extent of one half of the property” and that as it seems likely, the wife is unable to pay Mr P, then her equity obliges her to hold her title on trust and execute that trust by conveyance.
I have no evidence of value of the property at E Street, but even if the wife’s evidence that a half interest was to incur a payment by her to Mr P of $170,000 is accepted as “evidence” of value, the wife’s evidence is she has to pay that sum – so her current “legal” interest has potentially no value at all.
I accept the evidence of the wife that the transaction was agreed to in the shadow of Mr P’s impending major surgery. I infer, from the fact that the co-owners hold the legal title as “joint tenants”, that the intention was if Mr P died in surgery, that the wife would take the property by survivorship. The wife says she has acted for some time as Mr P’s carer. At the time of trial she was living in the property.
I propose to regard the wife’s interest in the property to be in the nature of a “financial resource” – and a valuable one at that, but impossible on the evidence before me to accurately quantify.
Husband’s debts
The husband and wife, it must be recalled, separated in 2014. The “joint venture” in which the parties and their son operated, the franchised takeaway food business described as “V Franchise”, ceased trading in early 2017. Although the husband had a controlling shareholding of 55 per cent, the business seems to have been operated by the wife and a son. In this respect, the rather strange “agreement” dated September 2016 has no legal effect, although alterations to the title to the Suburb F property, reflecting the wife receiving 30 per cent of the property, did occur. At best, the Agreement appears to relate to the operation of the business, and does not in any way make provision for how profits should be shared, and further, for example, the penalty clause seems unenforceable and unconscionable. What possible purpose the husband saw for creating the document (other than perhaps to allow him to reside in the wife’s property in Country B (clause 2(b)) is unclear.
The husband seeks to bring into the balance sheet a number of liabilities he says are relevant in addition to the alleged loan from Mr P, which I have dealt with earlier and will not include in the pool. The other “debts” are:
(a)At paragraph 21 of the husband’s submissions, he seeks to include liabilities described as:
W Bank loan $29,502 W Bank credit card $7,400 U Bank $12,000 ANZ/ Westpac credit card $13,300 Total $63,202
The husband says the wife failed to sign the “handing over” documents to the Franchise and the “deal fell off”. There is a total absence of any financial statements arising from the business or how these debts, all in the husband’s name, apparently are attached to the business. I do not accept that shareholders are personally liable for company debts – other than where they have signed some personal guarantee or, on liquidation, where directors (not shareholders) are shown to have allowed a corporation to operate when insolvent. Although the wife may have worked in the business and obtained wages for doing so, the husband, on the evidence, controlled the business. The husband says the business ceased when the franchise agreement expired. The evidence does not satisfy me to the requisite standard that the debts are all “business debts” or that the wife has any liability for them.
(b)The findings of QCAT (accepted by the Queensland Court of Appeal) reveal behaviour by the husband for which he was personally responsible. Ultimately in mid-206, the husband was successful in the High Court of Country B in an application to be re-registered in Country B, had the consequence of him being able to resume his business in Country B, which he has done.
I find in the circumstances as outlined, that it would not be just and equitable to expect the wife to share in or contribute to the remaining legal costs of the husband owed to the Commissioner (which he says he is paying by modest instalments).
Furthermore, considering the parties have been separated for over seven years by the time of trial, that the husband has obligations to his new wife (and their chid), and that it is unclear what income he actually generates (a matter discussed later in these Reasons), I cannot be satisfied that some of his current liabilities are not associated with his new wife and family obligations. This is another basis for not including the debts in the pool.
Based on these findings above, I record the pool of interests to be as follows:
Owner
Asset
Amount
Joint
Proceeds of the Suburb F property
$48,400
Husband
Partial property distribution
$20,000
Wife
Partial property distribution
$20,000
Wife
Country B property
$176,550
Husband
70% net interest in the G Street property
$73,325
Husband
Two vehicles
$11,000
Wife
Two vehicles
$16,000
Husband
Superannuation
$200
Wife
AA Fund
$5,000
$370, 475
Contributions
Although the parties were divorced in 1994, they recommenced cohabitation and a continuing relationship within months thereafter. No real explanation as to why they sought a divorce is offered to the Court. At the time of the divorce, their sons were aged 14 years (Mr K) and eight years (Mr L) respectively. The couple were living in Country J at the time.
Having commenced cohabitation when they married in 1977, I see no unfairness to either party in approaching this matter on the basis that the relationship spanned from 1977 to final separation in February 2014 – a total period of 37 years.
Relying as I do on earlier findings, I record that the relationship between the parties involved some periods of separation, however, as is clear from the purchase and use of the Suburb F property and then the business “V Franchise”, the ongoing personal relationship also included some business relationship.
The remarriage of the husband in late 2012 did not immediately manifest in a perceptible change in the relationship between the parties in this case. I infer that was because the husband still was spending time in Country B which continuously increased to primarily living in Country B again after the decision of the Country B High Court in 2016, permitting him to return to his professional business.
Considering the myriad of contributions during this long relationship, I find that essentially throughout the period to final separation in 2014, the husband was the “breadwinner” and his direct financial contributions were superior to those of the wife. However, the wife did make a contribution financially – at least for some years in the husband’s professional business.
Generally, however, the wife’s role was as the primary carer of the two children and as the homemaker. As the High Court in Mallett v Mallett (1984) 156 CLR 605 made clear, the non-financial contributions of this nature must be given proper weight. I accept the husband did make a non-financial contribution as the father of the children, but less than the wife did on the evidence.
The post separation period is confusing – not the least because the husband’s remarriage; purchase of the interest in the G Street property and no doubt his contributions to the mortgage on that property; and the birth of his son meant, I find, his relationship with the wife became more “businesslike”. The attempts to create legal obligations through “agreements” prepared reflect the change in nature of the relationship.
Taking all contributions into effect, I find the contribution based entitlements of the parties to the date of the trial slightly favour the wife – and would assess them as 52 per cent to the wife and 48 per cent to the husband.
Section 90SF factors
When I consider, as I will now analyse through findings, the comparative weight of these factors, I have come to the conclusion that a further adjustment to the wife of 10 per cent is appropriate. A 10 per cent adjustment in the pool of $370,475 equates to the husband paying, from his contribution based entitlements, to the wife a sum of approximately $37,000. The findings I make are as follows:
(a)The husband is slightly older than the wife, and there is no significant health issues affecting either party identified in the evidence;
(b)I find the husband has a superior income and earning capacity compared to the wife. The wife has been reliant on Centrelink benefits for many years, although I accept she worked in the V Franchise business for a time and received some income. The husband has many years of practice as a professional both in Country B and Australia. I accept he is not presently entitled to work as a professional in Queensland, however, he is not restricted from working in a related office as he has done previously. Although the husband says his business in Country B will come to an end in about two years when his visa in Country B will expire – there is no evidence as to his capacity to extend his visa. Further, I am not satisfied full and complete disclosure of his income has been made to the wife, who was not always represented by a solicitor in these proceedings. I am not therefore able to quantify his current income or the benefits of his professional business. I am however satisfied the husband does have a superior income and earning capacity to that of the wife;
(c)As required by s 90SF(3)(b), I do take into account the wife’s use (at least) of the E Street property as a financial resource available to the wife. For reasons already set out, I am not satisfied the wife has a valuable legal interest in the property. The terms of the property adjustment orders I will make will not provide the wife will the funds to pay Mr P the sum of $170,000 – unless she chooses to sell the Country B property;
(d)I accept the husband’s submissions that he has a duty and commitment to support the infant child conceived through his current marital relationship. As there is a dearth of evidence as to the financial circumstances relating to the cohabitation with his current wife (s 90SF(3)(m)), it is not possible to know what her income is and how that household operates. It is however a factor which favours an adjustment to the husband;
(e)In such a modest pool of interests, the ultimate outcome from the alteration of interest is not a significant factor. On the evidence, the wife, now aged 64 years, may have little income; an uncertain right to continue to reside in E Street property, and a home in Country B, which has the capacity to generate income. The husband has a unit to live in with his wife and their child, a continued capacity to earn an income and his share of the pool is also modest; and
(f)Apart from the fact the husband will need to manage some personal liabilities he has created, there are no other significant factors under s 90SF(3) which need to be taken into account.
What orders achieve justice and equity?
Of course, it is not the “percentage split” which of itself reflects that orders achieve justice and equity. The Court is required to look at the effect of the orders to be made to be satisfied that justice and equity to both parties is achieved.
If the wife is to receive 62 per cent of the pool of interests of $370,475, (being a sum of $229,694) this would manifest in the following property being retained:
Partial proceeds received $20,000 Country B property $176,550 Two vehicles $16,000 AA Fund interest $5,000 $217,550 Plus share of monies in Trust $12,144 Total share of pool $229,694
If the husband is to receive 38 per cent of the pool of interests as found of $370,475 (being a sum of $140,780), this would manifest in the following property being retained:
70 per cent of net interest in the G Street property $73,324 Partial distribution $20,000 Two vehicles $11,000 Superannuation $200 $104,524 Plus share of monies in Trust $36,256 Total share of pool $140,780
The Orders which appear at the commencement of these Reasons, reflective of these findings, are just and equitable to both parties.
I certify that the preceding eighty-three (83) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Baumann. Associate:
Dated: 29 September 2022
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