Giles & Giles & Anor
[2018] FCCA 194
•21 September 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| GILES & GILES & ANOR | [2018] FCCA 194 |
| Catchwords: FAMILY LAW – Property – final hearing – long marriage – characterisation of debt owing to the husband’s father – contributions – future needs. |
| Legislation: Family Law Act 1975, ss.75, 79, 80, 81 Conveyancing Act 1919 (NSW) s.23C |
| Cases cited: Bevan & Bevan (No.2) [2014] FamCAFC 19; (2014) FLC 93-572 |
| Applicant: | MS GILES |
| First Respondent: | MR GILES |
| Second Respondent: | MR [A] GILES |
| File Number: | SYC 6853 of 2014 |
| Judgment of: | Judge Monahan |
| Hearing dates: | 14, 15, 16 and 22 August 2017 and 18 October 2017 |
| Date of Last Submission: | 4 May 2018 |
| Delivered at: | Sydney |
| Delivered on: | 21 September 2018 |
REPRESENTATION
| Counsel for the Applicant: | Mr Hodgson |
| Solicitors for the Applicant: | Heslop Lawyers |
| Counsel for the First Respondent: | Mr Stapleton |
| Solicitors for the First Respondent: | Robertson Saxton Primrose Dunn |
| Counsel for the Second Respondent: | Mr Stewart |
| Solicitors for the Second Respondent: | Rebekah Dorter Family Lawyer |
ORDERS
THE COURT ORDERS ON A FINAL BASIS THAT:
Within 7 days of these Orders the parties cause the net proceeds of sale from the Property A property be divided as follows:
(a)$1,063,199.40 to the Second Respondent;
(b)$62,463.24 to the Applicant wife; and
(c)$99,964.88 to the Respondent husband; and
(d)the balance (including any accrued interest) to the parties as follows:
(i)50% to the Second Respondent;
(ii)30% to the Applicant wife; and
(iii)20% to the Respondent husband.
Subject to paragraph 1 herein, the Applicant wife and the Respondent Husband each keep all assets in their respective names including any superannuation entitlements, and otherwise indemnify each other against any liabilities in their name.
In the event that any party seeks to press their application for costs in these proceedings, they are to make, file and serve an Application in a Case within 28 days.
Subject to paragraph 4 herein, all extant applications be otherwise dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Giles & Giles & Anor is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYC 6853 of 2014
| MS GILES |
Applicant
And
| MR GILES |
First Respondent
| MR [A] GILES |
Second Respondent
REASONS FOR JUDGMENT
Introduction
This decision arises from a final hearing of a property application filed by MS GILES (“the wife”) against MR GILES (“the husband”) and MR [A] GILES, the husband’s father (“the second respondent”).
The parties are in significant disagreement about whether the recently sold property situated at Property A (“the Property A property”), which was registered in the husband’s sole name, is held on trust (as to a one half unencumbered share) for the second respondent.
The parties also disagree about the following:
·whether the wife and the husband have a $78,000.00 debt owing to the second respondent;
·the relative strength of the wife and husband’s respective contributions to the pool of matrimonial property, and to their family, made prior to and during their relationship and following their separation; and
·whether there should be a further adjustment to reflect the wife and/or the husband’s future needs.
The details of the orders sought by each party are extracted below.
At the final hearing all parties were represented by counsel; the wife by Mr Hodgson, the husband by Mr Stapleton and the second respondent by Mr Stewart.
Unless otherwise stated, any statutory references in these reasons will be to the Family Law Act 1975 (“the Act”).
Background
Relationship history
The wife was born on 1963 and is currently 54 years of age. The husband was born on 1968 and is currently 50 years of age.
As stated, the second respondent is the husband’s father, and he was born on 1944 and is aged 73 years.
The wife and the husband met in 1990 and then married on 1992. The cohabitation and marriage is of 21 years duration.
The wife and the husband separated in late 2013 and divorced on 3 June 2017.
The wife and the husband have three children of their relationship; MR B born 1997 who lived with the husband from separation until February 2017 and now lives independently; MS H born 2000 who lived with the wife from separation and since April 2016 has lived with the husband; and [X] born 2004 who lives with the wife and her current partner. There is no parenting dispute in this matter.
Both the wife and the husband have now re-partnered.
Procedural history
The wife commenced these proceedings by way of her Initiating Application filed on 31 October 2014 which came before me in the duty list on 29 January 2015. On that occasion the parties were able to agree to interim property orders. The parties at that time (being just the wife and the husband), were ordered to attend a Conciliation Conference and the matter was adjourned to 11 May 2015.
As stated, on 23 April 2015 the wife and husband attended a Conciliation Conference with a Registrar at the Sydney Registry. Unfortunately, the wife and the husband could not come to an agreement about the pool of assets.
The matter came before me again on 11 May 2015, and I made orders for valuations in relation to the relevant companies in the relationship and the real estate. The matter was thereafter listed for a callover which occurred on 17 February 2016. At the callover the matter was listed for final hearing for no more than three days in August 2017 and further adjourned to a date in April 2017 for a compliance check for the final hearing.
The parties, with leave to approach, provided Chambers with interim consent orders, which were respectively made in Chambers on 6 July 2016 and 19 July 2016.
The second respondent filed an Application in a Case on 1 August 2016 seeking to intervene in the proceedings. This application came before Judge Harper on 22 February 2017 and his Honour adjourned that application to a listing before me on 6 April 2017.
On 6 April 2017, I made trial directions and listed the matter for final hearing for no more than three days to commence on 14 August 2017.
As stated, the final hearing began on 14 August 2017 but did not conclude on 16 August 2017. The matter was adjourned part-heard to 22 August 2017.
As the hearing did not complete on 22 August 2017, the matter was further adjourned to 18 October 2017 and orders were made for the preparation of written submissions to be served prior to the adjourned date.
On 18 October 2017, the counsel for the parties made their final oral submissions in addition to the written submissions provided. The parties also ultimately agreed to sell the Property A property and leave was granted to the parties to approach Chambers with a minute to this effect. Judgment was thereafter reserved.
On 10 November 2017, the parties provided Chambers with joint correspondence enclosing a copy of the signed minute of consent orders for the sale of the Property A property. These orders were made in Chambers on 14 November 2017.
On 5 April 2018, my Chambers sought information from the parties by way of email as to the sale price of the Property A property, and whether the settlement has been finalised. On that same date, the legal representatives for the husband responded to that email, advising that the sale price was $2,200,000, with settlement to occur on 18 April 2018.
On 27 April 2018, my Chambers sought further information from the parties by way of email as to whether the settlement of the sale of the Property A property had been finalised, and if so, a request to the parties to provide a jointly submitted Statement of Agreed Facts. On 4 May 2018, the parties provided Chambers with joint correspondence enclosing a copy of the following Statement of Agreed Facts:
STATEMENT OF AGREED FACTS
The Applicant Wife, Respondent Husband and Second Respondent agree that:
1. On 5 March 2018, contracts for the sale of the property situated at Property A (Folio Identifier) (the Property A property) were exchanged with Mr L (Purchaser) for the agreed purchase price of $2,200,000.00.
2. On 7 March 2018, the Purchaser paid $220,000.00 to (omitted) Real Estate (Vendor's Agent) by way of Deposit for the purchase of the Property A property.
3. The sum of $117.56 was earned as interest on the deposit between exchange and settlement.
4. Settlement of the sale of the Property A property from the Respondent Husband to the Purchaser occurred on 18 April 2018, being the 42nd day after contracts were exchanged.
5. The collective balance of the Mortgages secured over the Property A property was $900,771.27 and was paid from the sale proceeds of the Property A property upon settlement.
6. The real estate commission and advertising expenses paid to the Vendor's Agent upon settlement of the sale of the Property A property was $52,866.
7. The legal fees and disbursements paid to Robertson Saxton Osborne Lawyers (Vendor's Solicitor) upon settlement of the sale of the Property A property was $3,873.61.
8. The payments made on settlement for rates and bank fees were $955.54.
9. The allowances made on settlement for water rates, consumption and discharge of mortgage fee resulted in a net surplus to the vendor (Respondent Husband) of $164.05.
10. The Land Tax payment for the Property A property for the 2017 year in the sum of $8,399.67 was paid on settlement. This payment is in addition to the land tax payment made by the Second Respondent in the sum of $7,788.00 on 28 August 2017.
11. The sale proceeds available for distribution between the parties upon settlement of the sale of the Property A property is $1,225,627.52, which includes the deposit paid by the Purchaser and interest earned on the deposit.
12. The sum of $7,788 has been paid to the Second Respondent by way of reimbursement from the proceeds of sale of the Property A property as per the Orders of 14 November 2017.
13. It is agreed that the net proceeds of sale of the Property A property remaining after the payments referred to herein shall be held upon trust by the Respondent Husband’s solicitors pending further order of the Court.
Legislative requirements
Property proceedings between parties to a marriage are governed by the provisions of Part VIII of the Act, and more specifically, s.79.
Section 79
Section 79(1) of the Act states that the Court may make such orders as it considers appropriate altering the interests of the parties in the property.
Section 79(2) of the Act provides that:
“The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.”
If the Court is satisfied that it is just and equitable to make an order altering the interests of the parties in the property, s.79(4) of the Act sets out those matters which the Court must take into account when considering what orders should be made. Section 79(4) provides:
In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
(a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d)the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e)the matters referred to in subsection 75(2) so far as they are relevant; and
(f)any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
Section 79(4)(e) requires the Court to have regard to the matters set out in s.75(2) of the Act being the matters relevant to spousal maintenance. Section 75(2) of the Act states the matters to be taken into account are:
(a)the age and state of health of each of the parties; and
(b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c)whether either party has the care or control of a child of the marriage who has not attained the age of 18 years; and
(d)commitments of each of the parties that are necessary to enable the party to support:
(i)himself or herself; and
(ii)a child or another person that the party has a duty to maintain; and
(e)the responsibilities of either party to support any other person; and
(f)subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
(i)any law of the Commonwealth, of a State or Territory or of another country; or
(ii)any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party; and
(g)where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable; and
(h)the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
(ha)the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant; and
(j)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k)the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l)the need to protect a party who wishes to continue that party's role as a parent; and
(m)if either party is cohabiting with another person--the financial circumstances relating to the cohabitation; and
(n)the terms of any order made or proposed to be made under section 79 in relation to:
(i)the property of the parties; or
(ii)vested bankruptcy property in relation to a bankrupt party; and
(naa)the terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to:
(i)a party to the marriage; or
(ii)a person who is a party to a de facto relationship with a party to the marriage; or
(iii)the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv)vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(na)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
(o)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(p)the terms of any financial agreement that is binding on the parties to the marriage; and
(q)the terms of any Part VIIIAB financial agreement that is binding on a party to the marriage.
Approach to exercise of discretion
The approach to the exercise of the Court’s discretion has been outlined in numerous judicial decisions. The High Court in the decision of Stanford v Stanford [2012] HCA 52 (“Stanford”) held that before making any orders adjusting the parties’ interests in the property pursuant to s.79 of the Act, the Court must, as required by s.79(2) of the Act, determine that it is “just and equitable” for the Court to do so. At [42] the High Court stated that in most cases:
“The just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4).”
Prior to the decision in Stanford, the preferred approach in determining property matters was that set out by the of the Full Court of the Family Court of Australia (“Full Court”) in the matter of Hickey v Hickey [2003] FamCA 395; (2003) 30 Fam LR 355; (2003) FLC 93-143. At [39] Nicholson CJ, Ellis and O’Ryan JJ stated:
“The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s 79. That approach involves four inter-related steps. Firstly, the court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the court should identify and assess the contributions of the parties within the meaning of ss 79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the court should identify and assess the relevant matters referred to in s 79(4)(d), (e), (f) and (g), (“the other factors”) including, because of s 79(4)(e), the matters referred to in s 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case…”
This approach was reconsidered by the Full Court in Bevan v Bevan [2013] FamCAFC 116; (2013) FLC 93-545 (“Bevan”) in light of the High Court’s comments in Stanford. At [71], Bryant CJ and Thackray J stated:
“Stanford will also serve as a reminder that the four step process “merely illuminates the path to the ultimate result”. Any future restatement of that process should incorporate acceptance of the fact that the power to make any order adjusting property interests is conditioned upon the court finding that it is just and equitable to make an order.”
In Bevan & Bevan (No.2) [2014] FamCAFC 19; (2014) FLC 93-572 the Full Court, having upheld the appeal against the decision at first instance, proceeded to re-determine the property application before the Court. At [18] to [19], Bryant CJ and Thackray J stated:
“18. Senior counsel for the husband structured his submissions by reference to the “four-step” approach to property settlement applications discussed in our earlier reasons. By way of explanation for doing so, senior counsel said:
16. The adoption of the above [four-step] approach is not intended to presuppose a positive answer to the question posed [by] section 79(2), nor to suggest that it is an approach appropriate in all proceedings. Rather, and provided that the fundamental propositions outlined by the High Court in Stanford (2012) … are not obscured, such approach is intended to and does no more than provide a principled, disciplined and structured means by which all of the matters arising for consideration pursuant to section 79 can be conveniently and properly identified and assessed.
17. Further, and whilst not said critically nor in a matter which seeks to cavil with the decision in this appeal, no other approach to the determination emerges readily from either Stanford nor the decision in this appeal. It is respectfully submitted that provided that the ‘fundamental propositions’ articulated in Stanford are not obscured, and whilst not universally so as has always been recognised, the approach set out above continues to provide a proper, transparent, certain and structured approach to the presentation and determination of applications pursuant to section 79.
19. We have no issue with what senior counsel has said about the utility of the four-step process, which we accept provides a convenient way to structure both submissions and judgments, provided the caveat mentioned is not overlooked.”
The ‘caveat’ referred to by the Full Court is the requirement that the Court must first be satisfied that it is just and equitable to make an order adjusting property between the parties.
In the subsequent decision in Rockman & Rockman [2014] FCCA 1966 (“Rockman”), Judge Bender noted at [83] that the “High Court in Stanford “neither disapproved or approved the four steps process”. I agree with her Honour’s observation. That said, the High Court did lay down what they described as three “fundamental propositions” which would provide useful guidance to trial judges when undertaking the task under s.79 of the Act. I note that in Bevan,[1] Bryant CJ and Thackray J summarised those fundamental principles at [73] as follows:
“… 1.Determination of a just and equitable outcome of an application for property settlement begins with the identification of existing property interests (as determined by common law and equity);
2.The discretion conferred by the statute must be exercised in accordance with legal principles and must not proceed on an assumption that the parties’ interests in the property are or should be different from those determined by common law and equity;
3.A determination that a party has a right to a division of property fixed by reference only to the matters of s 79(4), and without separate consideration of s 79(2), would erroneously conflate what are distinct statutory requirements.”
[1] Bevan v Bevan [2013] FamCAFC 116; (2013) FLC 93-545.
I also agree with the view expressed in Rockman that subsequent Full Court and single judge considerations of Stanford suggest that the path that may best “illuminate the path to the ultimate result” could now best be described as the following ‘five step process’:
“(a)firstly, what is the parties’ legal and equitable interests in property;
(b)secondly, is it just and equitable to make an order adjusting the parties legal and equitable interests in that property;
If the answer to (b) is in the affirmative:
(c)thirdly, identify and assess the contributions of the parties within the meaning of ss.79(4)(a), (b) and (c) of the Act and determine the contribution-based entitlements of each party as a percentage of the net value of the property of the parties;
(d)fourthly, identify and assess the relevant matters referred to in ss.79(4)(d), (e), (f) and (g) and s.75(2) of the Act and determine the adjustment, if any, that should be made to the contribution-based entitlements of each party as a percentage of the property of the parties; and
(e)fifthly, given s.79(1) empowers the court to make such orders affecting the parties’ interest in the property as are appropriate, determine what order, if any, altering the parties’ interests are “appropriate” to enable the parties’ entitlements as determined pursuant to steps (c) and (d) to be achieved.”[2]
[2] Rockman & Rockman [2014] FCCA 1966 at paragraph 84.
The Court will adopt this process for this decision.
Section 80
In addition to the specific powers provided by section 79(1) to adjust property interests, section 80(1) provides the Court with the following general powers:
The court, in exercising its powers under this Part, may do any or all of the following:
(a) order payment of a lump sum, whether in one amount or by instalments;
(b) order payment of a weekly, monthly, yearly or other periodic sum;
(ba) order that a specified transfer or settlement of property be made by way of maintenance for a party to a marriage;
(c) order that payment of any sum ordered to be paid be wholly or partly secured in such manner as the court directs;
(d) order that any necessary deed or instrument be executed and that such documents of title be produced or such other things be done as are necessary to enable an order to be carried out effectively or to provide security for the due performance of an order;
(e) appoint or remove trustees;
(f) order that payments be made direct to a party to the marriage, to a trustee to be appointed or into court or to a public authority for the benefit of a party to the marriage;
(h) make a permanent order, an order pending the disposal of proceedings or an order for a fixed term or for a life or during joint lives or until further order;
(i) impose terms and conditions;
(j) make an order by consent;
(k) make any other order (whether or not of the same nature as those mentioned in the preceding paragraphs of this section), which it thinks it is necessary to make to do justice; and
(l) subject to this Act and the applicable Rules of Court, make an order under this Part at any time before or after the making of a decree under another Part.
Section 81
For completeness, I note that the Court must also consider section 81 of the Act which states:
“In proceedings under this part [i.e. Pt VIII], other than proceedings under section 78 or proceedings with respect to maintenance payable during the subsistence of a marriage the court shall, as far as practicable, make such orders as will finally determine the financial relationships between the parties to the marriage and avoid further proceedings between them.”
While section 81 of the Act is clearly relevant to the making of a property order, it is neither a ‘head of power’ nor an absolute requirement. This was the view of the Full Court in In the Marriage of Crapp and Crapp (No 2) (1979) 5 Fam LR 47; (1979) FLC 90-615:
“Firstly sec 81 is in the nature of an exhortation by the legislature to the courts and is not a separate source of power and secondly the section itself states that the policy of making orders which finally determine the financial relationship between the parties and avoid further proceedings is only to be taken ‘as far as (is) practicable’. Nevertheless it is true to say that it is unsatisfactory in the general context of the philosophy of the Family Law Act for a really significant issue between parties who are divorced and have gone their separate ways to remain in suspended animation for a number of years.”[3]
[3] In the Marriage of Crapp and Crapp (No 2) (1979) 5 Fam LR 47 at 61 (per Fogarty J; Pawley and Dovey JJ agreeing).
The practical effect of section 81 of the Act is that the Court must endeavour to make an order that finalises the financial relationship between the relevant spouses, but it does not require the Court to make an order that achieves finality. That said, for the comments previously made, and as far as it can be achieved, I see clear benefit in orders being made that will finalise the financial relationship between the parties.
Proposals
Wife
The wife provided the Court with a case outline document and proposed to file, in Court, a minute of order. However, this did not occur. On 18 October 2017, the wife was granted leave to approach Chambers with her minute of order but did not do so.
At this stage, I note that in the wife’s Initiating Application filed on 31 October 2014 she sought the following final orders:
1. That within forty-eight (48) hours of the date of these Orders that the sum of one hundred and fifteen thousand three hundred and forty dollars and sixty-six cents ($115,340.66) held in trust with T.H. Walker Solicitors & Conveyancers of Forestville, being the balance of the proceeds of sale of the former matrimonial home situate at Property B, be transferred to the trust account of Oliver Campbell Heslop Solicitors, solicitors for the Wife, for her sole benefit.
2. That within twenty-eight (28) days of the date of these Orders the Wife shall do all acts and things and sign all necessary documents and attend all such meetings and vote as may be directed by the Husband so as to transfer to the Husband or his nominee, her entire shareholding and interest in Company A.
3. That within twenty-eight (28) days of the date of these Orders, the Husband pay to the Wife the sum of six hundred thousand dollars ($600,000).
4. That contemporaneously with Order (3) hereof, the Wife provide to the Husband a properly executed Withdrawal of Caveat for Caveat registered number over the property situated at Property A in the State of New South Wales, being the whole of the land more particularly described in Certificate of Title Folio Identifier ("the Property"), and the Husband be declared the sole beneficial owner thereof and indemnify the Wife against all payments and liability pursuant to the mortgage and all apportionable rates, taxes, and outgoings of or with respect to the Property of whatsoever nature and kind.
5. That if the Husband is unable or unwilling to comply with Order (3) hereof then within fourteen (14) days of his failure to comply that the Husband do all acts and things and sign all documents necessary so as to effect a sale of the Property for the best price reasonably obtainable in the following manner:
5.1 By public auction of the Property upon the following terms.
5.2 The auctioneer shall be as agreed between the parties and failing agreement as shall be nominated by the registered real estate agents nominated by the Chief Executive Officer of the Real Estate Institute of New South Wales.
5.3 The Husband will pay to the auctioneer any sums requested for advertising expenses in relation to the auction.
5.4 The date for the auction will be such date as recommended by the auctioneer.
5.5 The Husband will execute all documents requested by the auctioneer for the sale of home by auction.
5.6 The parties will request the auctioneer to recommend a reserve price to be placed on the home for the purpose of the auction sale and the Husband will accept such recommended reserved price.
5.7 The Husband will give such instructions as are necessary to a solicitor for the preparation of a contract for sale and for the contract of sale to be made available to the auctioneer prior to the auction.
5.8 The Husband will attend at the auction sale of the home and negotiate with the highest bidder in the event that the reserved price is not reached , and will accept the advice of the auctioneer as to the acceptance of a price less than the reserved price.
5.9 The Husband will execute the contract of sale.
5.10. The Husband will co-operate in any way with the auctioneer in relation to the auction of the home including making a key available, allow an inspection of the home at all times requested by the auctioneer and ensuring that the home is in a neat and clean condition at the time of inspection by prospective purchasers.
5.11 The Husband will execute all other documents necessary to complete the sale.
6. That in the event that the Property is not sold at an auction pursuant to paragraph 4 hereof, or within seven (7) days of the date of such auction by negotiation with the highest bidder at such auction, the parties shall cause a further auction of the home to be held three (3) months after the date of the first auction and the provisions of paragraph 4 shall apply Mutatis Mutandis in relation to such further action.
7. That from the date of these Orders until the date of settlement of the sale of the property , the Husband will be solely responsible for the payment of the mortgage and all Council and water rates and insurance payments with respect to the Property.
8. That the Wife will provide at settlement of the sale of the Property a properly executed Withdrawal of Caveat for Caveat registered number.
9. That upon settlement of the sale of the Property the proceeds of the sale be applied as follows:-
9.1 Payment of agent's and auctioneer's fees and commission associated with the sale of the Property
9.2 Payment of legal fees associated with the sale of the Property
9.3 Payment of the mortgage secured over the property with Bank 1
9.4 Payment of any outstanding council and water rates
9.5 Payment to the Wife of the sum of six hundred thousand dollars ($600,000).
9.6 Payment to the Husband of the balance thereafter remaining.
10. That unless otherwise specified in these Orders and save for the purposes of enforcing any monies due under these or any subsequent orders:
10.1 each party be solely entitled to the exclusion of the other to all other property and chattels of whatsoever nature and kind in the possession of such party at the time of making these orders and that for this purpose bank accounts are deemed to be in the possession of the person whose nan1e appears on the bank 's record thereof, superannuation and insurance policies are deemed to be in the possession of the owner thereof,
10.2 each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.
11. That the Husband and the Wife do all acts and things and give all consent and execute all documents and writings necessary to give effect to the Orders made herein.
12. That in the event that either party refuses or neglects to execute any deed or instrument the Registrar of the Court is appointed pursuant to Section 106A to execute such deed or instrument in the name of such party and to do all such acts and things necessary to give validity to the operation of the deed or instrument.
13. That the Husband pay the Wife's costs of and incidental to these proceedings.
The wife did not file any Amended Initiating Application following the Second Respondent joining these proceedings. In light of this and the parties’ ultimate agreement to sell the Property A property, these Orders would not reflect the final proposals sought by the wife.
That said, in her case outline document, the wife argues that, based on her view as to what comprises matrimonial property, she should receive 60% of the net assets. The wife states at paragraph H therein:
In percentage terms, the Wife contends that a just and equitable result would be for the net assets of the parties to be divided in proportions as to 60% to the Wife and as to 40% to the Husband. The wife proposes that she receives her entitlement from the proceeds of sale of the Property A property.
The wife also argues that the second respondent transferred all his interest in the Property A property to the husband during the marriage.
The Court, of course, does not have the benefit of specific orders sought by the wife that would achieve this outcome.
Husband
The husband also provided the Court with a case outline document, minute of proposed orders and written submissions.
The husband argues that, based on his view as to what comprises matrimonial property, he should be entitled to “60 to 65%” of the net assets. The husband argues that he holds a one half share interest in the Property A property on behalf of the second respondent and consequently supports the orders sought by the second respondent (and discussed below). If the Court rules against the establishment of a trust, then the husband further argues that he should be entitled to a much greater share of the matrimonial property. The husband also argues that he and his ex-wife owe the second respondent the sum of $78,000.00 being monies that they borrowed by them to assist with their business.
As stated above, the parties ultimately agreed to sell the Property A property.
As a consequence, the husband handed up to the Court an amended proposed minute of orders as follows:
1. Order pursuant to s.79 of the Act that the net proceeds of sale from Property A, in the event that the Second Respondent’s case is successful, be divided:
a) 50% to the Second Respondent before accounting for the mortgage ie $1.25m of a net sale of $2.5m; then
(b) 65% of the balance after the payment of the mortgage to the husband; and
(c) 35% to the wife.
2. Alternatively, if the Second Respondent is unsuccessful, order pursuant to s. 79 of the Act that the net proceeds of the sale after payment of the mortgage, be divided:
(c) 75% to the Respondent; and
(b) 25% to the Applicant.
3. Order requiring procedural fairness be given to the Wife’s Superannuation Trustee for the purpose of a Super Splitting Order to give effect, if necessary to the outcome of (a) or (b) above.
4. Subject to order 3, the parties each keep all assets in their respective names and indemnify each other against any liabilities in their name.
5. No order as to costs.
The Second Respondent
The second respondent also provided the Court with a case outline document, proposed minute of orders and written submissions.
The second respondent argues that the husband holds a one half unencumbered interest in the Property A property on trust for him and, as a consequence, he seeks orders for the sale of that property and, in general terms, the receipt of 50% of the net proceeds of sale (excluding the discharge of the relevant mortgage). He also argues that the wife and husband owe him the amount of $78,000.00 being monies that he loaned to them to assist in their business.
The orders sought by the second respondent are as follows:
1. THE COURT DECLARES that the First Respondent, Mr Giles, holds the real property situate at Property A (Folio Identifier) (the Property A property), on trust for the Second Respondent, Mr [A] Giles, as to a one half share and free from any and all encumbrances.
2. THE COURT ORDERS that the Property A property held by the First Respondent, Mr Giles, be sold for the best price reasonably obtainable in such manner and with such agent as the Applicant, the First Respondent and the Second Respondent shall agree, and in default of agreement within 14 days:
a. sell the Property A property by public auction within 42 days of the date of the making of this Order;
b. the agent shall be nominated by the President of the Real Estate Institute of NSW;
c. the reserve price shall be nominated by a person nominated by the President of the Real Estate Institute of NSW;
d. the solicitor shall be nominated by the President of the Law Society of New South Wales;
e. the costs of the appointments referred to in this order shall be paid by the parties equally; and
f. the parties shall co-operate fully with the agent and shall not say or do anything which interferes with the sale of the Property A property.
3. THE COURT ORDERS that on the settlement of the sale of the Property A property, the proceeds of sale shall be paid to meet the costs of sale and all usual conveyancing deductions, and the balance divided between the Second Respondent as to one half of the net proceeds and thereafter as between the Applicant and the First Respondent in such share as the Court determines.
4. THE COURT ORDERS that the Applicant and the First Respondent pay to the Second Respondent the sum of $78,000.00 jointly and severally.
5. THE COURT ORDERS that the Applicant and the First Respondent pay the Second Respondent's costs jointly and severally.
Issues
The following specific issues were raised during the course of the final hearing and require determination by the Court:
·Whether the husband holds (or held, given the property’s sale) a one half unencumbered share of the Property A property in trust for the second respondent or not;
·Whether the parties owe the second respondent the sum of $78,000.00 or not;
·What contributions the wife and the husband each made to the acquisition, conservation or improvement of the matrimonial property pool, and to their family, and the strength of those contributions;
·Whether there should be a further adjustment in the wife and/or the husband’s favour for ‘s.75(2) and related factors’; and
·Whether any costs order should be made.
Evidence of the parties
Both parties provided the Court with affidavit and oral evidence and were cross-examined. No other person, apart from Mr Bruce Robertson, was required for cross-examination. Mr Bruce Robertson was a solicitor for both the husband and the second respondent in relation to the acquisition and subsequent transfer of the Property A property.
A number of documents were tendered by each party in support of their case which have been considered as part of this decision, details of which are provided below.
In addition, there was one Court Exhibit – a Report and Valuation by Mr M of (omitted) Valuers, dated 5 August 2017 (Exhibit “A”).
Wife
The following documents were relied upon by the wife:
·Amended Initiating Application filed on 31 October 2014;
·Financial Statement filed on 9 June 2017; and
·Her affidavit affirmed and filed on 8 June 2017.
The wife also tendered the following documents:
·Email from Mr Giles in relation to Hardship Application dated 22 November 2013 (Exhibit “AW1”);
·Notice of Decision of the Child Support Agency dated 17 October 2014 (Exhibit “AW2”);
·Letter to Centrelink from Robertson Saxton Osborne Lawyers dated 28 April 2017 (Exhibit “AW3”);
·Document titled Mr Giles Owner Income and Expenditure July 2014 to June 2015 (Exhibit “AW4”);
·Document titled Mr Giles Owner Income and Expenditure July 2015 to June 2016 (Exhibit “AW5”);
·Bank 2 Statement for the period of 11 January 2016 to 6 June 2016 (Exhibit “AW6”);
·Bank 2 Statement for the period of 6 March 2017 to 6 June 2017 (Exhibit “AW7”);
·Child Support Payee Transaction Statement dated 26 February 2014 to 14 August 2017 (Exhibit “AW8”);
·Documents in relation to New Loan Application for Mr Giles dated 31 August 2006 (Exhibit “AW9”);
·Statement of Financial Position to Bank 1 from Mr Giles dated 20 November 2012 (Exhibit “AW10”);
·Document titled Indicative Approval Advice from Bank 1 dated 13 September 2006 (Exhibit “AW11”);
·Email from Mr Giles to Ms P dated 7 September 2015 (Exhibit “AW12”);
·General Ledger for (omitted) dated 1 July 2015 to 16 August 2017 (Exhibit “AW13”);
·Document titled Mr & Ms Giles Assets (Exhibit “AW14”); and
·Bank 3 Statement of Mr Giles from 18 April 2017 to 16 August 2017(Exhibit “AW15”).
The wife was a well-spoken and articulate witness. She presented to the Court as candid and generally believable. The wife asserted that her career was interrupted by child care obligations and she rejected the husband’s assertions that he was the primary carer of the children. The wife stated on several occasions during cross-examination that she was aware that she and the husband effectively purchased 50% of the Property A property and she specifically acknowledged in answer to questions from Mr Stewart that the second respondent had an interest in the Property A property. [4] The wife’s evidence was that she had little if anything to do with the relevant transaction. The wife also came across as somewhat oblivious to the alleged loan by the second respondent of $78,000.00 for the relevant business and the amount of approximately $180,000.00 that was borrowed from a financial institution (and secured by way or mortgage against the Property A property) in order to allow the husband and wife to purchase the Property C property (a property which was later sold).
[4] Transcript, 15 August 2017, pages 34, 42, 76, and 79.
Husband
The husband relied upon the following documents at the final hearing:
·Amended Response to Initiating Application filed 19 July 2017;
·Financial Statement filed on 19 July 2017;
·His affidavit sworn and filed on 19 July 2017; and
·Affidavit of Bruce Robertson (solicitor) sworn and filed on 8 August 2017.
The husband tendered the following documents:
·Tax documents for Company A for period 2000 to 2017 (Exhibit “RH1”);
·Profit and Loss Statement for Company B dated July 2014 to June 2015 (Exhibit “RH2”);
·Letters to Mr Giles from Super Fund M dated 8 March 2016 and 16 May 2017 relation to Superannuation Withdrawals (Exhibit “RH3”);
·Tax Return Documents of Mr Giles from 2014 to 2016 (Exhibit “RH4”);
·Itemised Account Statement from Australian Tax Office for Mr Giles for period 2000 to 2017 (“Exhibit RH5”);
·Land Tax Assessment Notice dated 20 January 2017 (“Exhibit RH6”);
·Owner Income and Expenditure for July 2012 to June 2013 for the Property A property (“Exhibit RH7”);
·Receipts in relation to repairs and maintenance for period June 2017 to July 2017 (“Exhibit RH8”); and
·Handwritten note from Mr Giles to Bruce Robertson (“Exhibit RH9”).
Generally speaking, while the husband was well spoken, he did not present well as a witness. He was very difficult in directly answering the questions that were put to him and he was reluctant to agree to reasonable propositions. The husband did admit to “dishonesty” in lying in the relevant loan applications and he also admitted that there were significant omissions in his initial Financial Statement (and to a lesser extent his subsequently filed Financial Statement).
The Second Respondent
The second respondent relied upon the following documents at the final hearing:
·His affidavit sworn 23 January 2015 and filed 28 January 2015;
·His affidavit sworn 28 July 2016 and filed 1 August 2016;
·Exhibit ‘EX-G1’ to his affidavit sworn 28 July 2016; and
·His affidavit sworn and filed 7 August 2017.
The second respondent tendered the following document:
·Caveat on Property A property dated 30 September 2016 (Exhibit “TP1”).
Generally speaking, the second respondent was softly spoken and presented well as a witness. He was measured in his control of providing answers to questions and he was able to make concessions to reasonable propositions put to him under cross-examination. The second respondent’s evidence, and explanation, for the events surrounding the creation of the alleged trust appeared genuine; that is, that he left it up to, and “trusted”, the husband and their solicitor to prepare the necessary paperwork. In particular, the second respondent agreed to the proposition that the husband had “misled” him about the dealings in relation to the Property A property and that the husband’s actions were “dishonest”. The Court appreciates that such concessions by the second respondent would have been very difficult for him. That said, the second respondent’s evidence in relation to the loan of $78,000.00 was less clear as to whether he appreciated the loan was to the parties or to the relevant company.
Discussion and Findings
The Court will now consider the parties’ proposals and submissions in light of the legislative requirements and the available evidence.
Identifying and valuing the parties’ property and interests
As stated, the Court must first ascertain what is considered to be the parties’ property. This requires identification and valuation of the parties’ property, liabilities and financial resources. Generally speaking, identification and valuation is at the date of the final hearing.[5] This will enable the Court to ascertain the net property pool. As part of this process the Court will need to make a finding as to whether or not the husband holds a one half unencumbered share of the Property A property in trust for the second respondent.
[5] Warne & Warne (1982) 8 Fam LR 388 at 389 (per Simpson J; Strauss and Hase JJ agreeing); also see Omancini & Omancini (2005) 33 Fam LR 134 at 142 (per Holden, Warnick and Le Poer Trench JJ).
Joint balance sheet
The parties filed a joint balance sheet on 10 August 2017, prior to the commencement of the final hearing. By the conclusion of the hearing the following assets and liabilities were identified and, unless stated, were the subject of agreement as to values:[6]
[6] In the table, ‘W’ refers to property registered in the wife’s name or otherwise legally owned by her or in her possession and ‘H’ refers to property registered in the husband’s name or otherwise legally owned by him or in his possession. Some items were ultimately ‘omitted’ from the balance sheet with the consent of the parties: see Notation C to the Orders made 18 October 2017.
No.
Assets
Valuation
1
(Omitted)
2
Property at Property A (H)[7]
$2,500,000.00 (W)
$1,250,000.00 (H)3
Interest in Company A (H)
Not Known (W)
Nominal (H)4
Interest in Company B (H)
Not Known (W)
Nominal (H)5
Furniture and contents (H)
$10,000.00
6
Furniture and contents (W)
$5,000.00
7
Funds in Bank 3 Account (W)
$220.00
8
Funds in Bank 4 Account (H)
$300.00
9
Funds in Bank 2 Account (H)
$4,065.00
10
Funds in Bank 5 Account (Rent Account) (W)
$1,200.00
11
Motor vehicle 1 (H)
$6,000.00
12
Motor vehicle 2 (W)
$8,000.00
Sub-total
$2,534,785.00 (W)
$1,284,785.00 (H)[8]‘Addbacks/Partial Property Settlement’
13 Funds released to Husband by agreement between the parties by Oliver Campbell Heslop Solicitors from funds held in trust being the net sale proceeds of Property C property ($10,000 in April 2014, $10,000 in June 2014, and $20,000 in February 2015) (H) $40,000.00 14 Funds released to Wife by agreement between the parties by TH Walker & Co from funds held in trust being the net sale proceeds of Property C property ($10,000 in April 2014, $10,000 in June 2014, and $20,000 in February 2015) (W). $40,000.00 15 Funds released to Wife by agreement between the parties by Oliver Campbell Heslop Solicitors from funds held in trust being the net sale proceeds of Property C property in September 2016 (W) $28,486.00
16 Funds released to Husband by agreement between the parties by Oliver Campbell Heslop Solicitors from funds held in trust being the net sale proceeds of Property C property in Sept 2016 – funds paid directly to Child Support Registrar to a Section 72A Notice $28,486.00 (W)
NIL (H)Sub-total
$136,972.00 (W)
$108,486.00 (H)Liabilities
17
Bank 1 Mortgage (H)
$305,863.55
18
Bank 1 Mortgage (H)
$326,920.09
19
Bank 1 Mortgage (H)
$258,842.45
20
(Omitted)
21
(Omitted)
22
(Omitted)
23
(Omitted)
24
Loan from Mr [A] Giles 2011/2012 (J)
Not Admitted (W)
$78,000 (H)25
(Omitted)
26
(Omitted)
27
(Omitted)[9]
Sub-total $891,626.09 (W)
$969,626.09 (H)Superannuation
28
Super Fund M (H)
$17,998.95
29
Super Fund N (W)
$164,853.00
Sub-total
$182,851.95
Total net assets[10]
$1,962,982.86 (W)
$606,496.86 (H)[7] Following the close of the final hearing, the parties reached agreement that the Property A property be sold: see Orders made by consent on 14 November 2017. As stated, the property was subsequently sold for the gross sum of $2,200,000.00.
[8] These figures exclude the ‘Not Known’ values attributed by the wife to items 3 and 4.
[9] The parties subsequently agreed that the second respondent is to be reimbursed this amount from the net proceeds of the sale of the Property A property. See Order (2)(c) of the orders made on 14 November 17 and Notation (b)(iv) of the orders made on 18 October 2017.
[10] Including Addbacks/ Partial Property Settlement and Superannuation.
I will note again at this point of my reasons that following the close of evidence, the parties reached agreement for the Property A property to be sold and orders to that effect were made in Chambers on 14 November 2017 with the consent of the parties. As stated earlier, the property was subsequently sold for $2,200,000.00 and the net sum of $1,225,627.52 was ultimately received in April 2018 and is held in trust pending further order of the Court (“the net sale proceeds of the Property A property”).[11] The net costs of sale were $73,601.21 made up as follows:[12]
[11] See the Statement of Agreed Facts provided to the Court on 4 May 2018.
[12] Ibid.
No.
Expenses
Amount
1
Vendor’s Agent commission
$52, 866
2
Vendor’s Solicitor’s[13] legal fees
$3,873.61
3
Payments made on settlement for rates and bank fees
$955.54
4
Land Tax payment for 2017
$8,399.67
5
Land Tax reimbursement to Second Respondent paid on 28 August 2017 for 2016
$7,788.00
Subtotal $73,882.82
6
(less) Allowances for water rates etc.
$164.05
7
(less) Interest earnt on deposit
$117.56
Subtotal $281.61 Total net expenses $73,601.21 [13] The Vendor’s Solicitors were also the solicitors for the husband in the family law proceedings.
The amount required to discharge the mortgage secured over the Property A property was $900,771.27.
On 18 October 2017 before oral submissions were made, the Court noted the following agreed changes to the balance sheet:
·Item 1 was omitted as it had already been taken into account in item 15;
·Items 20, 21, 22, 23, 25, and 26 were omitted but the Court is to consider whether those alleged liabilities are relevant to the parties’ financial resources;
·The second respondent asserts that he has paid the outstanding land tax in Item 27 and informed the Court that this will be adjusted in the forthcoming minute of interim consent orders. That minute was subsequently provided to Chambers on 14 November 2017 evidencing that the parties now agree that the second respondent is to be reimbursed this amount from the net proceeds of the sale of the Property A property.
Areas in dispute in the balance sheet
To determine the net available property pool, two significant questions require determination:
·Firstly, whether or not the husband holds a one half unencumbered share of the Property A property for the second respondent (which, if upheld, would require the sum of $1,063,199.40 to be deducted from the net sale proceeds of the Property A property) ; and
·Secondly, whether or not the parties owe the second respondent the sum of $78,000.00.
In addition, the Court is also required to determine:
·whether the husband’s interests in the companies, Company A and Company B (Items 3 and 4) have any value, nominal or otherwise;
·Whether the funds released to the husband and paid to the Child Support Registrar (Item 16) should be included in the balance sheet as an “Addback/Partial Property Settlement.”
Each of those questions will now be considered.
Does the husband hold one half unencumbered interest of the Property A property in trust for the second respondent?
The husband and the second respondent submit that the husband holds (or held) a 50% share of the Property A property on trust for the second respondent and further submits that this 50% share is unencumbered.
It is not disputed that the Property A property was purchased by Company C in 2002. Company C had been established by the second respondent and his wife to purchase property in Australia, as they were citizens of the (country omitted).
In February 2007, the Property A property was transferred to the husband’s sole name. It is submitted by the second respondent, and accepted by the husband (contrarily to his interests) that from this time the second respondent held a one half unencumbered share of the Property A property by way of trust. This is disputed by the wife.
Discussion – Express Trust
The onus falls upon the second respondent to satisfy the Court that a trust exists. The second respondent submits that there is an express trust whereupon the respondent husband holds a 50% unencumbered share of the property at Property A for the benefit of the second respondent or, in the alternative, that a resulting or constructive trust exists.
The decision of the Full Court in Cierpiatka (1999) FLC 92-864; [1999] FamCA 1286 (“Cierpiatka”), summarised the essential requirements for the creation of an express trust as follows:
·There must be a manifest intention to create a trust; in particular, the Full Court observed “is there language or conduct showing a clear intention forthwith to create a trust”; and
·There must be certainty as to subject matter; as was explained, if there is not property which can be identified, there can be no trust; and
·The purpose of the trust and the extent of the benefit must be known.
The second respondent submits that the respondent husband, being the creator of the trust in this case, has used language that expresses an intention to create a trust and that intention is recorded in contemporaneous documents:
First, in the email from the respondent husband to his accountant, Mr A, copied to second respondent dated 18 July 2006 […] he stated inter alia: “in fact my Dad (Mr [A] Giles) will be the sole owner of the other 50%. My Mum is no longer anything to do with it. Dad has confirmed he is happy for it to be 100% in my name as the Australian and have legal documentation in place stating that I am holding 50% for Dad in trust that will be split at a time of sale.”
Second, on or around 25 January 2007, the respondent husband phoned Mr Bruce Robertson, solicitor, at which time Mr Robertson made a hand written file note of the conversation that records inter alia: “½ share will be held in trust” […]
Third, on the fax cover sheet of 29 January 2007 from the respondent husband to the solicitor, Mr Robertson […] he specifically recorded: “email regarding 50% held in trust to follow.”[14]
[14] Second Respondent’s written submissions dated 23 August 2017, page 2.
The second respondent also submits that the express trust does not fail for want of certainty as to subject matter,[15] being the Property A property. The second respondent makes the following argument in relation to the interest being unencumbered:
It was the very money that was contributed so that the 50% was to be held on trust and because it was real money not debt financing, is the very reasons that this proportion could not be encumbered by the respondent husband i.e. if you have already paid for something, it follows that some other person cannot take out a mortgage against what you own. Accordingly, the Court should reject any suggestion made by the applicant wife that the second respondent should share the burden of the Bank 1 mortgage debt, with her or the respondent husband. Of course, it bears repeating that she never believed she and/or her ex-husband owned any more than 50% of the Property A property. It is therefore difficult to conceive as to how she could believe they could mortgage more than 50% of the value of the property.[16]
[15] Second Respondent’s Case Outline Document filed 8 August 2017, paragraph 5.22.
[16] Second Respondent’s written submissions dated 23 August 2017, paragraph 2.38.
The wife, through her Counsel, provided lengthy written submissions. In summary, the wife disputes the existence of an express trust submitting that there is at least a lack of certainty as to the intention to create a trust and a lack of certainty as to the interest in the property particularly being an unencumbered interest.
The wife further submits that there cannot be an express trust particularly where there is a lack of trust deed or document containing the terms of any trust created either at the time of or subsequent to the acquisition of the Property A property. This submission is made in relation to section 23C of the Conveyancing Act 1919 (NSW).
Section 23C of the Conveyancing Act 1919 (NSW) states as follows:
(1) Subject to the provisions of this Act with respect to the creation of interests in land by parol:
(a) no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by the person's agent thereunto lawfully authorised in writing, or by will, or by operation of law,
(b) a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by the person's will,
(c) a disposition of an equitable interest or trust subsisting at the time of the disposition, must be in writing signed by the person disposing of the same or by the person's will, or by the person's agent thereunto lawfully authorised in writing.
(2) This section does not affect the creation or operation of resulting, implied, or constructive trusts.
The second respondent makes the argument that the fact that the trust was never reduced to writing in the form of a trust deed is not fatal to an express trust being found in this case as this was not anticipated by the parties, and if the trust were to fail, it would provide for the husband to take beneficially something which the creator of the trust never intended the trustee to enjoy.
Finding
Having considered the available evidence, the Court is not persuaded that there is sufficient evidence to find that an express trust exists. The Court finds accordingly.
Firstly, I am not persuaded that there was an intention sufficiently clear enough to establish an express trust. I note Mr Robertson stated in his file note dated 29 January 2007 that there was to be an email to follow in relation to the 50% interest. Mr Robertson confirmed during cross-examination that no email was sent.
Secondly, the subject of the trust in this case goes beyond just merely there being “a property” situated at “Property A.” Given the absence of there being evidence that the “50% share of the property” is unencumbered or not, the Court is unable to find that there is “certainty as to the subject matter.” This is of course, the live issue of the dispute.
Thirdly, I am not satisfied that there is sufficient evidence as to the purpose of the trust.
Given this finding, the Court is not required to make a finding in relation to section 23C of the Conveyancing Act 1919 (NSW). Although section 23C(1)(b) does not require the trust to be created in writing, it would be unenforceable until the trust is evidenced in writing by some or a combination of documents containing the terms of the trust. I note there is a lack of signed documentation of the husband and the second respondent.
I will now go on to consider the alternative arguments.
Discussion – Resulting Trust
The alternative argument presented by the second respondent is that the evidence supports the creation of a resulting trust. This alternate argument is supported by the husband who submits that, at a minimum, a resulting trust exists.
In his case outline document, the second respondent correctly submits that “a resulting (or implied) trust is so called because the trust property reverts or ‘results’ to the settlor by reason of an intention presumed by law in the absence of a contrary intention by the settlor.”
One set of circumstances in which a resulting trust might occur is where ‘A’ pays for the purchase of property which is vested in another; it is presumed that the property is held on trust for ‘A’, although that presumption may be rebutted by the counter-presumption of advancement or by direct evidence that ‘A’ intended beneficial ownership to pass.
The learned authors of Jacob’s Law of Trusts in Australia (8th edition, LexisNexis, 2014) at paragraph 1213 state:
The presumption in favour of a resulting trust in the case of a voluntary transfer of realty or a transfer to a person other than the purchaser may be rebutted. So may the presumption against a resulting trust in the case of a transfer to the wife or child of, or person in loco filii to, the purchaser. That is, where the presumption of a resulting trust arises, evidence is admissible to prove that no trust was intended, and where there is a presumption against a resulting trust, as in the case of a transfer to the wife or child of the purchaser, evidence will be admitted to show that the wife or child was intended to be merely the nominee of the purchaser … the law endeavours always to give effect to the intentions of the parties, but in the absence of any evidence of such intention except the bare fact of the transfer to someone other than the purchaser, it presumes, until the contrary is proved, in the first case, in favour of the person providing the purchase money and, in the other, in favour of the wife or child or person in loco filii.
In order to ascertain the true intention of the person who has paid the purchase money, the court apart from receiving testimony from that person as to that person’s intention, will admit evidence (written or parol), of the circumstances surrounding the transfer: for example, the relationship of the parties, and statements made by the parties. Evidence of acts and declarations of the parties before or at the time of the purchase or so immediately after it as to constitute a part of the transaction will be admissible either for or against the actor or declarant. But for subsequent acts and declarations this is not so. In regard to the latter, the non-statutory rules of evidence relating to declarations against interest will apply in jurisdictions not affected by the ‘uniform’ Evidence Acts to permit only admissions to be received. The ‘uniform’ Evidence Acts do not appear to lead to any different conclusion. In rebutting either the presumption of a resulting trust or the presumption of advancement, subsequent acts are inadmissible in favour of the person doing those acts but are admissible against that person.
The learned authors then go on to state:
It should be emphasised that the task is to ascertain property rights at the time of acquisition or purchase of the property concerned and that the right so ascertained cannot be altered by subsequent events without an enforceable agreement or a conveyance. Hence the relevant intention is the intention at the time of the acquisition or purchase. The time of creation of a resulting trust is important, since once it is established, from the date of its establishment the beneficiary has, in equity, a proprietary interest in the trust property, enforceable against any later claimant except a bona fide purchaser for value of a legal estate without notice.
In Calverly v Green (1984) 155 CLR 242 (“Calverly v Green”) Gibbs J said at 246:
“Where a person purchases property in the name of another, or in the name of himself and another jointly, the question whether the other person, who provided none of the purchase money, acquires a beneficial interest in the property depends on the intention of the purchaser. However, in such a case, unless there is a such a relationship between the purchaser and the other person as gives rise to a presumption of advancement, i.e., a presumption that a purchaser intended to give the other a beneficial interest, it is presumed that the purchaser did not intend the other person to take beneficially. In the absence of evidence to rebut that presumption, there arises a resulting trust in favour of the purchaser.”
The second respondent submits that this is such a situation as described in cases such as Bloch v Bloch (1981) 180 CLR 390 (“Bloch”) and Kawada & Kawada [2012] FamCA 273 (“Kawada”) that would support the existence of a ‘classic’ resulting trust.
In the case of Bloch, the High Court held the following at 397:
…The circumstances surrounding the acquisition of the flats do not yield with sufficient certainty the expression of an intention to create a trust. On the other hand, the facts present a classic illustration of the creation of a resulting trust. The property was conveyed into the name of the son, with the father having contributed part of the purchase price in circumstances which rebutted the presumption that the contribution was intended to advance or benefit the son. The contribution was not a gift. It was not a loan. The inference then arises that the father intended the son to hold the property in trust for him in a proportion corresponding to the proportion of the purchase price which was contributed by him: Underhill, supra, p 267; Allen v Snyder [1977] 2 NSWLR 685, per Samuels JA at 698.
In Kawada, O’Reilly J provided a detailed analysis of the case law pertaining to resulting trusts. Of particular assistance were the following statements at paragraph 40:
40. In relation to the present case, I would extract the following principles as particularly relevant:
1. All evidentiary presumptions give way to facts showing the contrary: Buffrey, [14(1)].[17]
2. The presumption of advancement is a rebuttable presumption: Shephard v Cartwright, [445-6].[18]
3. Although a purchase in the name of a child, if altogether unexplained, will be deemed to be a gift, evidence as to the surrounding circumstances of the purchase might lead to the conclusion it was a trust, not a gift: Russell v Scott, [453].[19]
4. Where evidence has been given as to the intentions with which the parties effected a transaction, it is unlikely that the question whether or not there is a presumption of advancement will be important, or at least decisive, for if there is a presumption, it is only prima facie, and evidence may be given to rebut it: Napier, at 154-5.[20]
5. Whether either presumption is rebutted depends upon the intentions solely of the party who provided the money: Buffrey, [14(4)(a)][21]
6. Subsequent acts and declarations are admissible as evidence only against the party who did or made them, and not in his favour: Shephard v Cartwright, 445-6; subsequent acts and declarations of the parent are not evidence to support the trust, although subsequent acts and declarations of the child may be so; but, generally speaking, it is necessary to look at what was said and done at the time: Charles Marshall, 363-4.[22]
7. This however does not exclude testimonial evidence of intention, so that a person whose intention at an earlier time is in issue may give evidence of it, even though the weight of the evidence, coming as it does from an interested witness, must be scrutinised with care: Damberg, [45].[23]
8. Whilst the Briginshaw principles do not apply, proof nonetheless is required of a “definite intention” to retain beneficial title, not a “nebulous intention to rely upon the ... relationship as a source of control over the property”: Damberg, [44].[24]
9. The rules for admissibility of evidence are those of the general law “that any modifications effected by the Evidence Act 1995 (Cth) are applicable”: Damberg, [45].
[17] Buffrey v Buffrey [2006] NSWSC 1349.
[18] Shephard v Cartwright [1954] UKHL 2; (1955) AC 431.
[19] Russell v Scott [1936] HCA 34; (1936) 55 CLR 440.
[20] Napier v Public Trustee (Western Australia) (1980) 32 ALR 153.
[21] Buffrey v Buffrey [2006] NSWSC 1349.
[22] Charles Marshall Pty Ltd v Grimsley [1956] HCA 28; (1956) 95 CLR 353.
[23] Damberg v Damberg [2001] NSWCA 87; (2001) 52 NSWLR 492.
[24] Ibid.
The second respondent argues that this is applicable in this case and submits as follows:
Accordingly, in the unlikely event that the second respondent does not make out an express trust, then he will succeed in making out a resulting (or implied) trust where he (and Ms P) paid for the purchase of the property which was then vested in the respondent husband and it is presumed that the property is held on trust for Mr [A] Giles (and Ms P).
In the present case although the applicant wife may wish to assert that the respondent husband has in his favour the presumption of advancement (i.e. father to adult son), that presumption is rebutted by clear words that disclose the manifest intention that the 50% share was not to pass to the respondent husband upon the transfer from Company C: see Reydon & Leeming at [1212], [1213] and [1215]; JG 19/7/2017 [35]-[46]; EG 8/6/2017 aff. [44].
For completeness, the reference to Mr [A] Giles’ death (G 28/7/2016 aff. [77], EX-G 1 p. 139), is not evidence of an advancement inter vivos; and, in any event could only amount to a record of testamentary intention that may or not reflect the testator's intention as at the date of death (such being invariably governed by a valid will).
Put simply, a resulting trust arises by presumption of law in favour of Mr [A] Giles in the present case because Mr [A] Giles did not wholly dispose of the beneficial interest in the Property A property, and where he contributed approximately 50% of the proceeds to the purchase of the property: Reydon & Leeming at [1201]. Mr [A] Giles disposed of the legal title but only half the beneficial interest in the property. What is important is the actual intention of the purchaser at the time of purchase: Calverley v Green (1984) 155 CLR 242 at 251; Muschinski v Dodds (1985) 160 CLR 583 at 598-9; Baumgartner v Baumgartner (1987) 164 CLR 137 at 145-5.[25]
[25] Second Respondent’s Case Outline Document filed 8 August 2017, paragraphs 5.33 to 5.36.
The second respondent further argues that there is no evidence to suggest that the transfer of the Property A property to the husband’s name was either a gift or a loan and that the inference therefore is that the second respondent intended the husband to hold his 50% share of the property on trust for him, in circumstances where the second respondent contributed approximately 50% of the proceeds to the purchase of the property.
The second respondent makes the following summation of the purchase price of the Property A property at the time of acquisition being February 2007:
The agreed value for the Property A property is $1,020,000.00, and is funded by:
a) the mortgage over the Property A Property with the Bank 6 in the sum of $619,227.52, being paid out from the mortgage obtained by the respondent husband with Bank 1; the second respondent leaves in the original sum of $450,534.00 paid by him and his wife for the property in 2002;
b) the second respondent contributes a further $109,228.00 in cash;
c) the respondent husband (from the Bank 1 mortgage) and the second respondent (cash) each pay $20,246.00 for half the stamp duty; and
d) the respondent husband (from Bank 1 mortgage) and the second respondent (cash) each paying $2,432.45 for the transaction costs.
The renovation costs were then also split equally between the respondent husband and the second respondent.
So:(100 x $582,440.45) divided by $1,065,356.91 = 54.7%. [26]
[26] Second Respondent’s written submissions in reply filed 17 October 2018, paragraph 59.
As stated, the husband also supports the existence of a trust, noting that this is contrary to his interests. It is the husband’s position that it is a matter for the Court as to which ‘type’ of trust is in existence, but at a minimum, the husband submits that a resulting trust exists.
I note the following arguments submitted by the husband:
15. The relevant extracts of the documents support the contention that:
a. It was expressly agreed between the first and second respondent that upon the first respondent becoming registered proprietor of the property, he would hold 50% of its unencumbered value on trust for the second respondent until sale of it; and / or
b. It was the first and second respondent’s intention to give effect to that arrangement. Neither of them would have sold or bought their respective interests on any other basis. The first respondent could not afford to buy 100% of the property. The second respondent would not dispose of 100% of the property and in return only be relieved of his debt plus pay 50% of the stamp duty and 50% of the renovation costs. An implied resulting trust must be presumed to exist as a matter of fact and law.[27]
[27] Husband’s written submissions filed 28 August 2017, paragraph 15.
The wife disputes the existence of a trust and argues that the presumption of advancement applies. The basis of this appears to be founded on the husband’s dishonesty both with third parties and the Court in disclosing his financial situation. The wife argues that there is a lack of certainty as to the actual intention of the husband and the second respondent. It is also submitted that the second respondent did not seek to take any steps to protect his interests by way of a trust deed. The wife submits in relation to the presumption of advancement as follows:
The initial presumption is that the legal and equitable title passed on purchase to the Husband. The Husband has asserted that the monies provided to him to effect the purchase were by way of gift or by way of loan. It is submitted that the presumption of advancement applies and the evidence of the Second Respondent should be treated with caution as “the evidence of an interested party”. The Husband was permitted to encumber the property at the outset and subsequently without the slightest restraint or objection from the Second Respondent. The Husband treated the Property A property as his own and without any regard to any interest which he now contends the Second Respondent has in the property. [28]
[28] Wife’s written submissions filed 10 October 2017, page 21 paragraph 4.
While the wife raises the presumption of advancement in the husband’s favour, this assertion is somewhat inconsistent with the wife’s own evidence when she acknowledged, on more than one occasion, that the second respondent held a 50% interest in the Property A property. It is also noteworthy that the second respondent has two other children.
The wife also presents two alternative arguments. Firstly, if the Court finds a resulting trust exists, the wife submits the interest of which the husband holds on trust is not a 50% unencumbered interest, but an interest proportionate to the monies contributed on behalf of the second respondent at the time the husband acquired the property. The wife submits as follows:
It is submitted that if it is determined that a resulting trust exists, it should not be as to an unencumbered one half interest in the Second Respondent’s favour. It is submitted that the quantum of the proportion held upon trust for the Second Respondent, should be calculated in proportions as to 401/1,020 of the present net value of the Property A property, namely $1,608,374. This would equate to an amount of $632,090.98. This calculation is made upon the basis of the monies contributed on behalf of the Second Respondent at the time of the acquisition by the Husband of the Property A property, namely $401,000. [29]
[29] Ibid, page 19 paragraph 4.
Secondly, the wife argues that if the Court finds the second respondent has a half interest in the Property A property, that interest is not unencumbered. The wife submits as follows:
If it is determined that the contribution on behalf of the Second Respondent was in fact one half of the acquisition costs, it is submitted that the quantum of the proportion held upon trust for the Second Respondent should be one half of the net value of the Property A property, which would be an amount of $804,187. [30]
[30] Ibid, pages 19 to 20.
Relating to these arguments, the wife takes into account the husband having borrowed an amount of $700,000 secured on the Property A property by way of mortgage from Bank 1. The wife argues that the second respondent would have been aware that as a result, the husband would have only $320,000 equity in the property at the time of acquisition. The wife argues that considering the husband has further increased the loan secured on the Property A property on multiple occasions which diminished the equity in the Property A property, it cannot be the case that the second respondent holds one half unencumbered share of the Property A property. The wife submits as follows:
It is submitted the Husband’s conduct was such that it was apparent he did not consider that he was holding a one half unencumbered share of the value of the Property A property in trust for the Second Respondent. His actions were those of the sole owner of this property and he had no regard whatsoever to any interest of the Second Respondent in the Property A property. [31]
[31] Ibid, pages 3 to 4.
In response, the second respondent submits as follows:
26. Of course, the equity, in the lay sense, in Property A Property was significantly diminished by these further borrowings by the Respondent Husband, for which the Applicant Wife received a benefit. However, it has to be accepted that the Second Respondent did not give authority for these further borrowings and did not consent and did not know about any such borrowings in the same way he did not know, consent to, or give authority for the Respondent Husband to initially mortgage against the property the sum of $700,000 with the Bank 1 at the time of transfer. Each of these submissions is entirely consistent with the Second Respondent's evidence as well as the Respondent Husband's concessions against his own interests in cross-examination.
27. Due to the borrowings by the Respondent Husband of which the Applicant Wife also benefitted, the "equity" i.e. the ratio between debt and equity in the Property A Property, was diminished. However, that is entirely different and it does not in any way equate to the Second Respondent holding a "smaller'' equitable interest in the property.
28. At paragraph 4, second substantive paragraph, a submission is made by the Applicant Wife that the Respondent Husband's conduct was such that apparently he did not consider he was holding a one-half unencumbered share in the value of the property in trust for the Second Respondent and his actions were those of the sole owner of this property; and, because the Respondent Husband had no regard whatsoever to any interest of the Second Respondent in the Property A Property, then there was no trust.
29. First, the Respondent Husband's evidence was that he held a one-half unencumbered share in the Property A Property on trust for the Second Respondent. He never wavered from this evidence. Second, the conduct is not consistent with him being the sole owner. The conduct is entirely consistent with there being a breach of the trust upon which he held the Property A Property as to one-half unencumbered share on trust for the Second Respondent. With respect, it is wrong to submit that a breach of trust is evidence of there being no trust in this case: see also paras. [2.35], p.3 l ]-[3.32] of the Second Respondent's Closing Submission dated 23 August 2017. [32]
[32] Second Respondent’s written submissions in reply filed 17 October 2018, paragraphs 26 to 29.
Finding
Overall, the Court agrees that the evidence supports the submissions of the second respondent (as supported by the husband). The facts in this case, as supported by the evidence, illustrate the creation of a resulting trust. The Court is therefore satisfied and finds in favour of the second respondent’s submissions in relation to the presumption of advancement being rebutted and a resulting trust existing for a 50% unencumbered share of the Property A property. In summary, the Court is persuaded by the following reasons:
·Firstly, at the time the husband acquired the property the agreed value was $1,020,000 and the mortgage over the Property A property was $619,227.52. The second respondent leaves the original sum paid by him and his wife being $450,534.00 and contributes a further $109,228.00 in cash. This further contribution effectively adjusts the husband and second respondent’s respective interests to equate to 50% of the agreed value. The purchase price also would consist of costs incidental to the purchase including legal expenses, stamp duty and registration fees[33] of which the second respondent and the husband contributed equally.
·Secondly, the second respondent’s contribution to the ‘purchase price’ is pertinent to the finding of a resulting trust. The fact that the husband was able to finance more than 50% of the property with a mortgage of $700,000 (albeit, by being “dishonest”) does not negate the second respondent’s contribution to the ‘purchase price.’ The resulting trust is to be in the proportion corresponding to the proportion of the purchase price which was contributed by the settlor, that being the second respondent.
·Thirdly, the fact that the husband had sole responsibility for the mortgage over the Property A property following the transfer is consistent with the second respondent’s intention for the husband to hold the 50% equity contributed by the second respondent on trust.
·Fourthly, contemporaneous evidence supports the argument of the second respondent’s true intention for there to be a trust and that the presumption of advancement should be rebutted. This includes the email dated 18 July 2006 that stated “in fact my Dad (Mr [A] Giles) will be the sole owner of the other 50%. My Mum is no longer anything to do with it. Dad has confirmed he is happy for it to be 100% in my name as the Australian and have legal documentation in place stating that I am holding 50% for Dad in trust that will be split at a time of sale.”
[33] Ryan v Dries [2002] NSWCA 3, paragraphs 52 to 53.
As the Court has found in favour of the existence of a resulting trust in this case, it is not necessary to consider the constructive trust argument put forward by the second respondent.
Given the Court’s finding, there will be orders to direct the parties to cause the second respondent to receive the sum of $1,063,199.40 from the net sale proceeds of the Property A property. As a consequence, noting the collective balance of the Bank 1 Mortgages secured over the Property A property was $900,771.27 at the time of sale, the Court finds that the value of the husband’s interest in the remaining net sale proceeds of the Property A property is $162,428.12. That sum will be added to the balance sheet.
Do the parties owe the second respondent the sum of $78,000.00?
Discussion
The wife submits that the husband did not disclose the alleged liability in his initial financial statement filed on 27 January 2015 (although this was later included in his financial statement filed 19 July 2017). The husband also made reference in his affidavit filed in 2015 to the second respondent “injecting our business with a $78,000 loan in 2012” but also the second respondent lending “78,000 to Ms Giles and I as an investment in Company A” (which the husband later claimed was actually referring to Company A). In his affidavit filed 19 July 2017 the husband refers to the second respondent “lending our business $78,000 by way of a loan in 2012.”
At the final hearing the husband gave evidence in relation to the alleged debt. Although his evidence about the alleged $78,000 loan initially appeared to suggest that his father made a ‘loan’ or advance to the company Company A, the husband later corrected his evidence.
The second respondent also gave evidence about the alleged loan. Acknowledging that this would be a difficult thing for the witness to say, his evidence about the loan was less clear as to whether he appreciated the loan was to the parties or to the company. It appears that no document to this effect was signed, whereas the initial purchase was well documented. The evidence was that the second transition was poorly documented and the second respondent gave consistent evidence that he had ‘trusted’ his son.
Finding
The Court finds that the alleged debt of $78,000 is a debt owed to Company A, a company which has since been de registered. There is no evidence that the husband and/or the wife provided any guarantee to pay the alleged debt should the relevant company default in repaying it.
Consequently, the alleged debt will not be included as a matrimonial liability.
Do the companies Company A and Company B have any value, and if so, what are the husband’s interests valued at?
The companies Company A and Company B were included on the joint balance sheet provided to the Court. The wife assigns an ‘unknown’ and the husband a ‘nominal’ value to these companies.
Discussion
The husband tendered in evidence the tax returns for the company Company A for the years ending in 2014, 2015 and 2016 (Exhibit “RH1”) and profit and loss statements for the company Company B, for the tax years ending 2015 and 2016 (Exhibit “RH2”).
It would appear from those documents that in relation to Company A, from the most recent tax return of 30 June 2016, Company A had a taxable loss of $12,000. It is the husband’s contention that this company has nominal value however no valuation was ever provided to the Court.
The husband also has an interest in Company B, and owns a 51% share in circumstances whether another director, Mr C, owns a 49% share. It is the husband’s evidence that both directors are given nominal wages from the profits of the business after tax and expenses. Although the husband tendered the relevant Profit and Loss Statements for the last two financial years leading up to the final hearing, again no valuation of that business was ever provided to the Court.
Finding
Given the above evidence and the lack of valuation, the Court is unable to determine this issue. As a consequence, the Court is unable to make a finding as to whether the relevant companies have value.
Whether the funds released to the husband and paid to the Child Support Registrar should be included as an ‘addback’?
Discussion
In September 2016, it was agreed between the parties that each should receive the sum of $28,486.00 from funds held in trust being the net sale proceeds of the Property C property by way of interim property distribution. The wife duly received that sum, however pursuant to a ‘Section 72A Notice’, the husband’s share of those funds were paid directly to the Child Support Registrar on account of Child Support arrears (then received by the wife).
The wife argues that this sum should be considered as an interim property distribution to the husband and should be included in the balance sheet under “Addbacks/Partial Property Settlement.” In the joint balance sheet provided to the Court, the husband initially disputed that this value should be included.
Finding
Although the husband initially disputed an ‘addback’/partial property settlement of $28,486.00 as he did not receive these funds, this issue was ultimately conceded in part and was otherwise not pressed at the final hearing.[34] It was the husband’s contention that the sum taken from his interest and paid to the wife was based on an overpayment based on an assessment error by the Child Support Agency. In the event that the husband seeks to dispute this issue then that issue will need to be raised with the Child Support Agency in the appropriate forum and by the appropriate process.
[34] See Transcript, 18 October 2017, page 427.
Balance sheet findings
Given the above determinations, the Court finds that the net available property pool is $517,037.07, being net non-superannuation assets totalling $334,185.12 (including ‘addbacks’) and superannuation entitlements totalling $182,851.95. This sum is made up as follows:
A.
Assets
Valuation
2
Net sale proceeds of the Property A property less payment to second respondent
$162,428.12
3
Interest in Company A (H)
Unable to determine
4
Interest in Company B (H)
Unable to determine
5
Furniture and contents (H)
$10,000.00
6
Furniture and contents (W)
$5,000.00
7
Funds in Bank 3 Account (W)
$220.00
8
Funds in Bank 4 Account (H)
$300.00
9
Funds in Bank 2 Account (H)
$4,065.00
10
Funds in Bank 5 Account (Rent Account) (W)
$1,200.00
11
Motor vehicle 1 (H)
$6,000.00
12
Motor vehicle 2 (W)
$8,000.00
Sub-total
$197,213.12
B.
‘Addbacks’/Partial Property Settlement
13 Funds released to Husband by agreement between the parties by Oliver Campbell Heslop Solicitors from funds held in trust being the net sale proceeds of Property C property ($10,000 in April 2014, $10,000 in June 2014, and $20,000 in February 2015) (H) $40,000.00 14 Funds released to Wife by agreement between the parties by TH Walker & Co from funds held in trust being the net sale proceeds of Property C property ($10,000 in April 2014, $10,000 in June 2014, and $20,000 in February 2015) (W). $40,000.00 15 Funds released to Wife by agreement between the parties by TH Walker & Co from funds held in trust being the net sale proceeds of Property C property in September 2016 (W) $28,486.00
16 Funds released to Husband by agreement between the parties by Oliver Campbell Heslop Solicitors from funds held in trust being the net sale proceeds of Property C property in Sept 2016 – funds paid directly to Child Support Registrar to a Section 72A Notice (H) $28,486.00 Sub-total $136,972.00 C.
Liabilities
17
Bank 1 Mortgages (total debt $900,771.27[35]) discharged at settlement of sale of Property A property
Nil
Sub-total $Nil D.
Superannuation
28
Super Fund M (H)
$17,998.95
29
Super Fund N (W)
$164,853.00
Sub-total $182,851.95
NET PROPERTY POOL A. Assets $197,213.12 B. ‘Addbacks’/Partial Property Settlement $136,972.00 C. (Liabilities) (Nil) D. Superannuation $182,851.95 Total $517,037.07
[35] See the Statement of Agreed Facts provided to the Court on 4 May 2018.
Is it just and equitable to make any order?
Both the husband and the wife are before the Court seeking orders altering their property interests. The second respondent has intervened seeking orders and the Court has determined that he has a significant interest in certain matrimonial property.
The Court is satisfied that this is a matter where it is just and equitable that orders be made adjusting property between the parties.
Contributions
As stated, the Court is required to consider the wife and the husbands’ contributions made on and from the commencement of their relationship,[36] during their relationship and following separation.[37]
[36] In the Marriage of Olliver (1978) 4 Fam LR 360; (1978) FLC 90-499.
[37] In the Marriage of Ferraro (1992)16 Fam LR 1; (1993) FLC 92-335.
Global or asset-by-asset assessment of contributions
Before going any further, I note that I raised with the parties during final submissions whether the circumstances of this case may make it more appropriate or not for the Court to consider the contributions of the parties on an ‘asset-by-asset approach’ rather than in a ‘global’ sense. In the High Court decision of Norbis & Norbis (1986) 161 CLR 513; (1986) 10 Fam LR 819; [1986] FLC 91-712, Mason, Deane, Dawson, Brennan and Dawson JJ, held that the adoption of the asset by asset approach by a judge was a discretionary matter and that both the global approach and the asset by asset approaches were legitimate and that the circumstances of the approach dictate which is more convenient. The importance is that justice and equity are served by either approach.
In this case the respective counsel for the wife and the husband submitted to the Court that it would be appropriate for the Court to adopt a ‘global’ approach.[38] Given the agreement of the parties the Court will apply that approach.
[38] Transcript, 18 October 2017, pages 399 and 401.
The wife argues that the parties’ respective contributions should be assessed to favour the wife as to 52.5% to 55% in her favour. The husband contends that he should receive an adjustment of up to 65% in his favour for contributions.
Financial and non-financial contributions
Both the wife and husband assert to making significant financial and non-financial contributions to the property of the relationship.
The wife argues that she was in employment for various periods throughout cohabitation and she contributed the income which she earned for the benefit of the household in payment of outgoings and household expenses. The wife argues that at times, she earned a comparable income to that of the Husband.
The wife also submits that she made a contribution to the operation of the Company A business, known as Company A. The wife additionally submits that the parties rented a unit in Suburb R owned by the wife’s brother at a reduced rent, thereby enabling the parties to save money for a deposit to purchase a home. The wife argues that from the time the Property A property was rented until the date of separation, the shortfall between the rental income and the mortgage repayments and other expenses was met from the joint income of the parties.
Although the husband argues the parties’ respective contributions to the matrimonial property during the marriage were equal, he submits his initial contribution was greater by bringing the Property A property into the relationship, and in addition, his contributions to that property post separation were significant.
It is not disputed that the husband made substantial contributions to the improvement of the Property A property. The wife also concedes the husband has been meeting mortgage repayments in respect of the property for a period of some five to six years prior to separation from the Property A rental income and joint income and that since separation, the husband’s superannuation entitlement, which had accumulated during cohabitation, has been significantly reduced as a consequence of him accessing it in order to meet mortgage arrears. The husband submits that his financial sacrifices during cohabitation and following separation have ensured that both can benefit from the increased value of the Property A property.
Family contributions (as homemaker and parent)
Both parties assert that they made the superior contributions to the family.
The wife argues that she was primarily responsible for the care and supervision of the children and in performing household tasks and domestic duties throughout cohabitation. Since separation the wife has been primarily responsible for caring for [X] and was initially responsible for the care of Ms H.
The husband argues that he made the greater homemaker and parenting contributions, which would include shopping (because he had control of the money), cooking (as he did not like the wife’s cooking), and taking the children out when the wife was unwell during some day time periods. In addition, the husband has been responsible for caring for Ms H over the last two years.
Contributions analysis
Despite some issue about the extent of her ‘depression’ and its impact upon her parenting and management of the household, the evidence would support that the wife was the primary carer of the three children of the marriage.
At the hearing the husband gave evidence about the reasons why the superannuation hardship application was made, however his explanations for this did not appear genuine. Additionally, the husband’s failure to produce the bank statements for the 2015 year as well as the unexplained withdrawals are troubling and may suggest he is hiding something.
Nevertheless, there is merit in the husband’s submissions that his contributions, in particular his post separation contributions, enabled the parties to benefit from the retention of the Property A property.
Given the available evidence, the Court is satisfied that the contributions of the parties should be assessed equally. In other words I find that that the parties’ respective contributions, in percentage terms, should be assessed 50% to the wife and 50% to the husband.
Section 75(2) (and related) factors
As stated, the Court must have also regard to the relevant factors under s.79(4)(d) to (g) of the Act in light of the evidence. These factors are considered further below.
At this point of my reasons I note that the wife argues that there should be a further adjustment in her favour of up to 10% for s.75(2) (and related) factors.[39] While the husband agrees that there is merit in a modest adjustment in the wife’s favour for s.75(2) (and related) factors, he ultimately submitted that the evidence would support no more than a 2.5% adjustment.[40]
Section 79(4)(d): effect of any proposed order upon the earning capacity of either party to the marriage
[39] Ibid, page 399.
[40] Ibid, page 400.
I am satisfied that none of the proposed orders the Court will make will affect either party’s earning capacity.
Section 79(4)(e): matters referred to in sub-section 75(2) so far as they are relevant
(a) The age and state of health of each of the husband and the wife
The wife is aged 54 years and the husband is aged 47 years. There was no evidence that either party suffered from ill health (although the mother gave evidence that she suffered from depression during the relationship.
(b) The income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment
During the course of submissions, the parties acknowledged the obvious – that should the trust argument be upheld, the pool of matrimonial property available for division will be significantly reduced. This has been a difficult decision for the Court to make and it understands that the trust determination has significantly reduced the pool available for distribution between the husband and the wife. However, that determination was required.
The wife argues that she has “limited capacity for gainful employment, as a consequence of her obligation to care for the child, [X]”.[41] This is disputed by the father who asks the Court to note that the child, who is now 13 years old, is an “independent boy with new friends at his new school” which is located directly adjacent to the wife’s residence.[42] The husband also argued:
104. This has permitted the applicant to return to work full time. She has recently obtained a new job that involves her working from about 8.30am to 5pm, five days per week. That job gives her flexibility to work during school holidays if she chooses too, which she accepted was entirely her own choice.
105. The applicant said her new work was the base level she could achieve having recently entered the work force full time again. She admitted that she ought to be able to achieve a higher income with training to bring her (qualifications omitted) and opportunities up to date. It must be assumed the applicant will have the ability to increase her income.
[41] Wife’s written submissions, 10 October 2017, page 30.
[42] Husband’s written submissions, 28 August 2017, paragraph 103.
The wife further argues that the husband has the “superior income earning capacity”[44] and additionally that it would be difficult for her to move into a new career. In response the father argued as follows:
106. The applicant now lives with her new partner with whom she shares her rental expenses and living costs. Her income as declared on her Financial Statement has increased to $1000 per week before tax and before $107 per week of Family Tax Benefit ($71) and child support ($36).
107. The first respondent’s income will reduce to $1391 per week after the sale of Property A and he will continue to be liable to the applicant for child support of $36 per week.
[44] Wife’s written submissions, 10 October 2017, page 30.
At the final hearing the wife conceded that debts owing to family members should be removed from the balance sheet and they are only relevant to her financial resources.[46] The parties also both sought for their outstanding legal fees to be considered as relevant to their financial resources. In summary, the parties sought for the following loans to be considered under this section in lieu of inclusion in the balance sheet:
·Loan from Mr & Ms N (W) (Item 20; a value of $39,709 attributed by the wife with the husband asserting an unknown value);
·Loan from Mr D (W) (Item 21; a value of $8,500 attributed by the wife with the husband asserting an unknown value);
·Finance MasterCard (W) (Item 22; $1,200);
·Bank 3 MasterCard (W) (Item 23; $3,750);
·Outstanding legal fees to Robertson Saxton Osborne (H) (Item 25; $30,000); and
·Outstanding legal fees to Oliver Campbell Heslop (W) (Item 26; $33,546).
[46] See Notation C(ii) to orders made 18 October 2017.
The Court has therefore considered that the wife may have additional liabilities owing of up to $86,705 and the husband may have additional liabilities of up to $30,000.
(c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years; and
As stated, the wife has the primary care of the parties’ son, [X], now aged 13 years. The parties’ daughter, Ms H, who is aged 17 years, lives with the father.
(d) Commitments of each of the parties that are necessary to enable the parties to support:
(i) himself or herself;
(ii) a child or another person that the party has a duty to maintain
Both the wife and the husband have re-partnered. This is considered further below. Otherwise I refer to previous comments.
(e) The responsibilities of either party to support any other person
Apart from the children referred to, and the evidence that both parties gave re-partnered, the Court is not aware that either party has any responsibility to support any other person.
(f) The eligibility of either party for a pension, allowance or benefits…
The wife has superannuation in the amount of approximately $165,000.00. In contrast, the husband’s superannuation has significantly reduced to only $18,000.00 because he was able to get early releases of funds for various purposes, including the meeting of the mortgage liability for the Property A property.
The wife is in receipt of Family Tax Benefit A and B and gives evidence that she currently receives a combined benefit of $71.00 per week.[47] The husband’s Financial Statement filed 19 July 2017 does not disclose the receipt of any Commonwealth benefits.
(g) Where the parties have separated or the marriage has been dissolved, a standard of living that in all the circumstances is reasonable
[47] Wife’s Financial Statement filed 9 June 2017, paragraph 12.
While these are property proceedings and not spousal maintenance proceedings. I am satisfied that the Orders to be made in this matter will provide a reasonable standard of living for the parties having regard to their assets and liabilities and the circumstances existing at the present time.
(h) Extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income
This subsection is not relevant to these proceedings as neither party is seeking maintenance.
(ha) The effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant
I am satisfied that on the evidence presented, there are sufficient assets to satisfy the claims of all known creditors.
(j) Extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party
This subsection is not relevant to these proceedings as neither party is seeking maintenance.
(k) Duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration
The wife and the husband married at the end of 1992. They separated under the one roof by the end of 2012 and they physically separated by the end of 2013. Consequently they cohabited for approximately 21 years. That said, this subsection is not, strictly speaking, relevant to these proceedings as neither party is seeking maintenance.
(l) Need to protect a party who wishes to continue that party's role as a parent
As stated, the wife has the primary care of the parties’ son, [X], now aged 13 years. The parties’ daughter, Ms H, who is aged 17 years, lives with the father.
(m) If either party is cohabiting with another person – the financial circumstances relating to the cohabitation
As stated, both the wife and the husband now cohabitate with new partners.
In her Financial Statement filed 9 June 2017, the wife states that her new partner earns $1,360.00 per week.[48]
[48] Wife’s Financial Statement filed 9 June 2017, paragraph 17.
In his Financial Statement filed 19 July 2017, the husband states that his new partner earns $1,500.00 per week.[49]
[49] Husband’s Financial Statement filed 19 July 2017, paragraph 17.
(n) Terms of any order made or proposed to be made under section 79
These proceedings involve competing applications for property adjustment and not spousal maintenance.
(naa) Terms of any order or declaration made, or proposed to be made, under Part VIIIAB
This consideration is not relevant to the present dispute.
(na) Any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage
There is a child support assessment that requires the husband to pay child support to the wife. The husband asserts that this liability is currently $36.00 per week.[50] While I note that neither the wife nor the husband included any details about child support, received or paid, in their respective Financial Statements filed this year, during the course of the hearing the wife tendered a document entitled ‘Child Support Payee Transaction Statement for the period 26/2/2014 to 14/08/2017’ (Exhibit “AW8”).
(o) Any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account
[50] Husband’s written submissions, 28 August 2017, paragraph 107.
There are two additional issues that are relevant under this consideration.
Firstly, the husband’s overall dishonesty and his failure to provide relevant documents, for example, his 2015 bank statements, are of concern.
Secondly, the husband’s dealings with his superannuation; reducing it allegedly to pay the mortgage should be taken into consideration while the evidence suggests that he may have applied some of these monies to the mortgage, by the conclusion of the final hearing it became clear that his superannuation payments were not just used for this purpose. As a consequence, that asset has been ‘wasted’ and leaves both parties more vulnerable in their retirement years. Clearly another consequence of this is that the husband himself now has little superannuation, and has now sought a superannuation splitting order in his favour of the wife’s superannuation.
(p) The terms of any financial agreement that is binding on the parties to the marriage
This consideration is not relevant to the present dispute.
(q) The terms of any Part VIIIAB financial agreement that is binding on a party to the marriage
This consideration is not relevant to the present dispute.
Further adjustment analysis
In this case, the husband concedes that the wife should receive a further adjustment for section 75(2) (and related) factors, albeit a modest one.
Having considered the available evidence in light of the relevant statutory criteria I am persuaded that an adjustment of 10% in the wife’s favour is appropriate.
Conclusion
In this case the Court has determined that the husband holds a one half unencumbered share of the Property A property in trust for the second respondent. Given that the property has now been sold, orders to enable the second respondent to receive the sum of $1,063,199.40 from the net sale proceeds of the Property A property will be made.
In addition, given the statutory criteria and the above determinations, there will be a final settlement of matrimonial property that will divide the net property pool (being $517,037.07) 60% to the wife and 40% to the husband. In monetary terms this represents a division of assets totalling $310,222.24 to the wife and $206,814.83 to the husband.
There will be orders made enabling the wife to receive 60% of the available assets and the husband to receive 40%. This will result in a distribution of the assets as follows:
Wife’s Net Asset Distribution Furniture & Contents $5,000 Funds in Bank 3 Account $220 Funds in Bank 5 Account (Rent Account) $1,200 Motor vehicle 1 $8,000 Funds released to Wife by agreement between the parties by TH Walker & Co from funds held in trust being the net sale proceeds of Property C property ($10,000 in April 2014, $10,000 in June 2014, and $20,000 in February 2015 $40,000.00 Funds released to Wife by agreement between the parties by TH Walker & Co from funds held in trust being the net sale proceeds of Property C property in September 2016 (W) $28,486.00 Super Fund N $164,853.00 Subtotal $211,759 Plus Remaining net proceeds of sale of Property A property $62,463.24 Total (60%) $310,222.24
Husband’s Net Asset Distribution Furniture & Contents $10,000 Funds in Bank 4 Account $300 Funds in Bank 2 Account $4,065 Motor vehicle 1 $6,000 Funds released to Husband by agreement between the parties by TH Walker & Co from funds held in trust being the net sale proceeds of Property C property ($10,000 in April 2014, $10,000 in June 2014, and $20,000 in February 2015) $40,000.00 Funds released to Husband by agreement between the parties by Oliver Campbell Heslop Solicitors from funds held in trust being the net sale proceeds of Property C property in Sept 2016 – funds paid directly to Child Support Registrar to a Section 72A Notice $28,486.00 Super Fund M $17,998.95 Subtotal $106,850 Plus Remaining net proceeds of sale of Property A property $99,964.88 Total (40%) $206,814.83
Given the relatively modest property pool available for distribution, and the circumstances that lead the husband to withdraw sums from his superannuation, I am not persuaded to make a superannuation splitting order as sought by the husband.
Orders will be made directing the parties to cause the net proceeds of sale of Property A property (being $1,225,627.52) to be distributed as follows:
·$1,063,199.40 to the second respondent;
·$62,463.24 to the wife; and
·$99,964.88 to the husband.
In the event that the net proceeds of sale were invested pending distribution, then any interest that accrued can be divided 50% to the second respondent, 30% to the wife and 20% to the husband.
There will be a further order that the parties will retain all property including personal property, superannuation, savings in bank accounts and such held in their sole names or in their respective possessions.
I note that the wife and the second respondent sought their costs of these proceedings. In the event that any party still presses their application for costs, they will be required to file an Application in a Case within 28 days.
For all these reasons the Orders of the Court will be as set out at the commencement of these reasons for judgment. Given the factors to which I have referred, I state again that I am satisfied that the Orders are just and equitable.
I certify that the preceding one hundred and eighty eight (188) paragraphs are a true copy of the reasons for judgment of Judge Monahan
Date: 21 September 2018
[43] Ibid, paragraphs 104 and 105.
[45] Husband’s written submissions, 28 August 2017, paragraphs 106 and 107.
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