Gipps & Ning
[2023] FedCFamC2F 325
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Gipps & Ning [2023] FedCFamC2F 325
File number(s): CAC 2087 of 2018 Judgment of: JUDGE HUGHES Date of judgment: 23 March 2023 Catchwords: FAMILY LAW – property settlement – adjustment to husband for significant initial contribution – bigger adjustment to the wife for s.75(2) factors Legislation: Family Law Act 1975 (Cth) ss 75 and 79 Division: Division 2 Family Law Number of paragraphs: 102 Date of last submission/s: 19 July 2022 Date of hearing: 18 – 19 July 2022 Place: City G Solicitor for the Applicant: Self-represented Counsel for the Respondent: Mr Haddock Solicitor for the Respondent: Law Firm T ORDERS
CAC 2087 of 2018 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR GIPPS
Applicant
AND: MS NING
Respondent
order made by:
JUDGE HUGHES
DATE OF ORDER:
23 March 2023
THE COURT ORDERS THAT:
1.Within 6 weeks of the date of these orders (“the due date”), the husband shall pay to the wife the sum of $189,346 (“the payment”), comprising the following:
(a)$182,359 by way of property settlement;
(b)$2,987 for costs ordered on 21 May 2020; and
(c)$4,000 for costs ordered on 17 May 2022.
2.The payment shall be made into a bank account nominated by the wife in writing within 7 days.
3.In the event the payment is not made in full by the due date and unless otherwise agreed in writing:
(a)The husband shall pay interest in accordance with rule 10.17 of the Federal Circuit and Family Court of Australia Rules 2021 on any outstanding amount, such interest to be calculated from the due date until the date of full payment.
(b)Within 6 weeks of the due date, the parties shall each do all acts and things and sign all documents necessary to sell the property situated at B Street, Suburb C in the Australian Capital Territory being the land more particularly described as Section … Block … on Deposited Plan … (“the property”) and for this purpose:
(i)the husband and wife are hereby appointed joint trustees for the sale of the property;
(ii)the parties shall agree upon a selling agent (“the agent”) and a conveyancing solicitor (“the conveyancer”) but, failing agreement within 14 days of the due date, the agent and conveyancer shall be as nominated by the wife;
(iii)the property shall be listed for sale by private treaty or auction by agreement between the parties in writing and, failing agreement, as recommended by the agent;
(iv)the listing or reserve price for the property shall be as agreed between the parties and, failing agreement within 21 days of the due date, the listing or reserve price shall be as nominated by the agent;
(v)the sale price for the property shall be as agreed between the parties and, failing agreement, the parties shall accept any offer to purchase the property that is at least 90 per cent of the listing or reserve price, or as recommended by the agent;
(vi)the husband shall co-operate in every way with the wife and the agent in relation to the marketing of the property for sale, including making the keys readily available and allowing inspection of the property at all reasonable times; and
(vii)the parties shall co-operate in every way with the conveyancer and promptly execute the contract for sale and all other documents necessary to complete the sale.
4.Upon settlement of the sale of the property, the parties shall take all steps necessary to cause the proceeds of sale of the property to be distributed in the following manner and priority:
(a)to discharge the mortgage to Westpac Banking Corporation secured on the title of the property (Dealing Number: …);
(b)to pay any commission, conveyancing fees and other costs of sale;
(c)to reimburse to either party any monies paid by prior written agreement in association with the preparation of the property for sale;
(d)to pay to the wife any amount outstanding on the payment in order 1 above, plus interest in accordance with order 3(a) above; and
(e)the balance to the husband.
5.Pending the payment, the husband is hereby restrained from:
(a)further encumbering the property without the consent in writing of the wife; and
(b)selling or entering into any exclusive agency agreement in respect of the sale of the property.
6.The parties shall forthwith take all steps necessary to close the Bank D joint account number …12 with any balance to be paid to the wife.
7.Except as otherwise provided in these orders:
(a)each party is declared to be the sole legal, equitable and beneficial owner, to the exclusion of the other, to all assets, financial resources, superannuation, property and chattels in their name or possession at the date of these orders; and
(b)each party shall indemnify the other and keep the other indemnified in relation to any liabilities associated with the property taken by them.
8.If either party refuses, fails or neglects to execute any document necessary to give effect to these orders within 14 days of being requested to do so, and any such refusal, failure or neglect is proved by affidavits filed and served by or on behalf of the party alleging the default, a Registrar of the Federal Circuit and Family Court of Australia is hereby appointed pursuant to section 106A of the Family Law Act 1975 (Cth) to execute such document in the name of the defaulting party.
9.Liberty is granted to each party to relist the proceedings if required for the implementation of these orders upon providing 14 days written notice to the Registrar of the Federal Circuit and Family Court of Australia and to the other party.
10.Otherwise, all extant applications are hereby dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Gipps & Ning has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE HUGHES:
INTRODUCTION
These are property proceedings after a relationship of at least 8 years. The husband commenced the proceedings more than three years after separation in circumstances in which he had retained all of the parties’ assets, including real property. The wife took only a share portfolio she owned prior to the relationship. She then purchased a house and a car using funds borrowed from her sister. The husband sought that those assets form part of the joint property pool and that 80 per cent be allocated to him. This would have involved a transfer of some of the wife’s newly acquired assets to the husband but none of the associated liability. Unsurprisingly, the wife opposed the application. She sought to retain the property she acquired post separation and to be allocated a share of the joint matrimonial property.
BACKGROUND
The applicant husband is 57 years old. At the time of the trial he was unemployed by choice, but previously worked for many years as a professional in the technology sector. The respondent wife is 50 years old and is employed full-time as a carer. She is a dual citizen of Australia and Country E.
The parties met in Country E in 2002. The wife’s evidence is that they commenced an exclusive relationship in 2004. The husband initially argued that the relationship did not begin until the parties married in 2009. However, in light of the parties’ first child being born in 2008, he ultimately conceded in his oral evidence that the relationship had begun at least by early 2008.
The wife holds a qualifications from F School which she achieved in 1997. When the parties met, she was working full-time in the area of technology. She did not own any real property but she had a share portfolio in Country E which she estimated was worth approximately AUD $69,000. She provided no independent evidence of its value at that time.
The wife ceased work prior to the birth of the child, X, in 2008. She migrated to Australia in 2009 on a prospective spouse visa and the parties commenced cohabitation in City G. She was not engaged in any paid employment during the relationship.
The parties married in 2009 and their second child, Y, was born in 2011. The wife was granted Australian citizenship in 2015.
The parties separated in September 2015 and were divorced in July 2018.
Throughout the relationship the husband was the primary income earner for the family and assisted to some degree in the care of the children. The wife was the primary caregiver to the children and also earned a modest income from her share portfolio.
The husband owned two real properties prior to cohabitation. The first was a house in H Street, Suburb J, ACT, in which the parties lived early in their relationship. The husband deposed that the value of this property at the time of the marriage in 2009 was $400,000 but did not provide any independent evidence of this.[1] In his affidavit material, the husband described the property as unencumbered.[2] However, during cross-examination, he conceded that the property secured a loan for two other properties.[3] The H Street, Suburb J property was sold in 2014 for $436,000.[4]
[1] Affidavit of husband filed 3 February 2022 at paragraph 15
[2] Ibid at paragraph 3
[3] Transcript of proceedings dated 18 July 2022 at pages 42 and 43
[4] Affidavit of husband filed 3 February 2022 at annexure C
The husband also owned a property in Suburb K, ACT, which he had purchased in 2005. He asserted the value of this property in 2009 was $380,000. Again, he provided no independent evidence of this. He said there was an outstanding loan of $230,000 loan in relation to it but did not say at what point that amount was outstanding. Presumably this was one of the loans secured by the H Street, Suburb J property. The husband’s mother lived in the Suburb K property from the time of purchase until 2011 when she moved into an aged care facility. The husband then rented out the property for $400 per week until 2016 when he sold the property for $412,500.
In 2010 the parties purchased a Motor Vehicle 1 car for $41,700.
In 2013 the parties purchased a block of land in the husband’s sole name in L Street, Suburb J, ACT for $298,000. I assume this is the second property secured by the H Street, Suburb J St property. The parties built a house on the land at a cost of $600,000, bringing the total cost of the house and land to $898,000. This was ultimately funded by the sale of the H Street, Suburb J property in 2104 and a home loan with Bank D. The parties moved into the house in 2014. The wife says that, although she was involved in discussions about moving out of the H Street, Suburb J property, she was neither included in the financial arrangements for the L Street Suburb J property, nor put on the title of the property, as these were matters which were determined solely by the husband.[5]
[5] Affidavit of wife filed 28 June 2022 at paragraph 42
The parties separated in September 2015 at which time the wife moved into the spare room of the house at L Street Suburb J. In December 2015, the husband sent the wife an email in which he gave her an ultimatum of either vacating the house altogether or paying market rent to occupy the spare room, plus a 100% loading for “administrative expenses”.[6] The wife vacated the property in January 2016 and moved with the children to a serviced apartment she leased with the assistance of funds provided by her sister, Ms M (to which I will return shortly). In 2016 wife purchased a property in Suburb N for $588,000 using funds provided by her sister. The husband asserted these funds were gifted to the wife. The wife and her sister deposed that the funds were loaned to the wife and are required to be repaid.
[6] Exhibit W1 at page 1
The husband deposed that he sold the Motor Vehicle 1 in 2016 for $14,000 and used the proceeds to pay some of his legal expenses.[7] The wife received none of the proceeds of sale.[8] The wife’s evidence is that the husband requested that she return a different vehicle that she had been using to transport herself and the children, despite the fact the husband had his own car and that this would leave her without any vehicle.[9] The wife returned the vehicle and used some of her sister’s money to buy a new car.
[7] Affidavit of husband filed 3 February 2022 at paragraph 11
[8] Affidavit of wife filed 28 June 2022 at paragraph 64
[9] Ibid at paragraph 62
In 2016 the husband sold the Suburb K property for $412,500. He did not say how much was owing on the loan at the time. He incurred a capital gains tax debt of $39,000. He retained all of the net proceeds.
In 2017 the husband purchased a property in Suburb C, ACT for $737,000.
In 2017 the husband sold the L Street Suburb J property for $687,000. The total cost of buying land and building the house was $891,000. The sale for $687,000 resulted in a capital loss of $204,000. The wife was not consulted about the sale and nor did she receive any of the proceeds of the sale.[10]
[10] Affidavit of wife filed 28 June 2022 at paragraph 65
In 2016 the wife undertook full-time study at the O School and obtained a certificate. She then obtained casual employment as a carer. The only financial support she received from the husband while studying was child support.
The husband commenced parenting proceedings in September 2015 when the parties separated under the one roof. Those proceedings were resolved by consent orders made on 9 May 2016 which provided, in summary, for the children to live with their mother and spend time with their father on five nights a fortnight, for half of all school holidays and on special days.
In 2019, the parties’ younger child, Y, was diagnosed with a serious medical condition. He underwent surgery in 2019 and again the following month. In 2019 he commenced six weeks of medical treatment. The wife deposed that she took Y to all of his many appointments at the P Hospital apart from four occasions when the husband did so.
Y’s medical condition had stabilised following treatment but returned in 2022. At the time of the trial, Y had undergone surgery and was awaiting tests to determine what post-operative therapy was required.
FINANCIAL AND PARENTING ARRANGEMENTS DURING RELATIONSHIP
The wife deposed that when she and X arrived in Australia in 2009, the parties agreed that she would be the primary parent and homemaker and the husband would be the primary income earner for the family. The husband eventually agreed this was the case.
The parties opened a joint account at that time and the husband began transferring approximately $500 per fortnight into the joint account. Family Tax Benefit was also paid into the joint account. The wife used the funds in the joint account to pay for household expenditure including groceries, fuel, clothes, medical costs, pet costs, school fees and extracurricular activities for the children. The husband paid for other household expenditure such as utility bills.
In about July 2010 the husband increased the amount he transferred to the joint account to $750 per fortnight and, later, $800 per fortnight. However, according to the wife, at that time, the husband redirected the Family Tax Benefit into another account to which she did not have access. She deposed that, also at that time, the husband began accessing the joint account to pay for things such as utility bills, internet costs and car repairs which he had previously paid from his personal accounts. The income the husband received from his employment and from his rental property were paid into his personal accounts to which the wife had no access. The wife said that, once the husband began using the funds in the joint account, she was often short of funds to pay for basic necessities. The husband agreed in cross-examination that he sometimes took funds from the joint account but he said that was a rare occurrence.[11] He was asked why he needed to do that when he was earning more than $100,000 a year and putting only $26,000 a year into the account. He said it was necessary to cover all of the expenses. He agreed that those expenses included paying for a house in which his mother was living rent-free.
[11] Transcript of proceedings dated 18 July 2022 at page 49
The wife deposed that, in October 2011, she told the husband she was struggling to pay for necessary things on the funds in the joint account. She said that in July 2012 the husband increased the amount he paid into the joint account to $1,000 per fortnight. However he still retained the Family Tax Benefit and continued to access the funds in the joint account for expenses for which he had agreed to be separately responsible.
The wife said she managed this difficulty by paying for things on a Country E credit card she had from prior to the relationship. She would then pay off the credit card bills from income derived from her Country E share portfolio. She said she also used that income to pay for travel. Some of that travel involved her and the children going to Country E during school holidays. On some occasions the husband accompanied them. The wife deposed that she paid for all members of the family when they travelled.
This the wife deposed that she received little assistance from the husband in caring for the children. She said she carried out almost all household duties including washing, cooking, cleaning and gardening. She said that the husband was often absent from the home apart from his work hours. She said he regularly played sports on Saturdays for which he was away from home from 9am to 5pm and on Sundays he played sports for at least two or three hours. In addition, she said the husband had a number of affairs which took him away from home. The husband agreed that he played sports on most Saturdays but said it would take about three or four hours, not all day. He said he rarely played sports on the weekends, although he sometimes did on Sunday mornings. He denied ever having extra-marital affairs.[12]
[12] Affidavit of husband filed 7 July 2022 at paragraph 16
The wife deposed that, when the husband was home, he was largely disengaged from her and the children as a result of his cannabis use. She said that, in about 2010, about 18 months after she arrived in Australia with X, she became aware that the husband was using cannabis. She said this was very upsetting for her as she is strongly opposed to drugs. She said she went with X to Country E for a break and to consider whether she wanted to continue in the relationship. She returned in 2010 after the husband promised to stop using drugs when X started school. The wife said the husband did not stop using cannabis and continued to use throughout the relationship. She said the husband’s routine was that he arrived home from work each evening at about 6pm. He would have one beer and go into the shed to smoke marijuana. She said he came inside to watch his favourite television program. He then had dinner with the wife and children and either played with the boys or watched television until the children’s bath time. He then went back outside to have another smoke while the wife bathed the children and prepared them for bed. The wife said the husband sometimes settled X for bed but mostly she settled both boys. After the children were in bed, the husband returned to watching TV. The wife said he was, by then, obviously under the influence of cannabis and she simply went to bed.
The wife said the husband’s cannabis use rendered him emotionally absent from her and the children. She said he withdrew socially, physically and emotionally and sat staring at the TV or fell asleep while watching it. She said it inhibited his engagement with her and the children. She said she sometimes observed X approaching him to ask for assistance with something but the husband would tell X to go and ask his mother.
The husband took issue with much of this evidence. He described himself as “a hands-on father”. He said he interacted with the children every evening when he came home from work. He said he played with the children, read them stories and engaged with them in various activities. He said he used cannabis very rarely during the relationship. [13]
[13] Ibid at paragraphs 13 to 16
FINANCIAL ASSISTANCE PROVIDED BY THE WIFE’S SISTER
The wife has a sister, Ms M, who lives in Country E. She and the wife have a close relationship. Ms M owns a property in her own name in Suburb Q in Queensland. As a Country E citizen, she is unable to open a bank account in Australia in her sole name. In 2011 she and the wife opened a joint account to facilitate the management of the rental income from the property and expenses in relation to it. The wife said that her sister permits her to use some funds from the joint account for the benefit of the children and that she occasionally buys them small gifts or take them to McDonald’s and tells them that it is a gift from their aunty. At her sister’s request, she also withdraws cash from the account to give to the children on special occasions, such as Chinese New Year. The wife said that, to her knowledge, the only other use to which funds in the account were used was for her sister to pay some expenses for a nephew who was studying at university in Australia between 2010 and 2014. She said she assisted in making those payments to the nephew.
On 14 December 2015, shortly prior to the physical separation of the parties, Ms M sent the wife 350,000 Country E which equated roughly to AUD $107,000. When it was transferred to the wife’s account, it was described as a gift. The wife said she used the money to put a deposit on a townhouse in Suburb N in 2015, to buy a car for $39,400, to rent a serviced apartment from January 2016 to March 2016 before moving into the Suburb N townhouse, to pay legal costs of $12,828, and to pay for general living costs, as she had no income. The wife deposed that she and her sister had further discussions because it was clear the wife would need further funds. She said they agreed that her sister would provide her with further funds but that they would enter a formal loan agreement which obliged the wife to repay the funds upon request. They entered into a formal loan agreement on 8 February 2016. The total amount of funds provided by the sister, including the initial $107,000, was a little under $723,000. The total amount borrowed, according to the loan agreement is $650,000 which means the balance of $73,000 was a gift. This is less than the $107,000 originally described as a gift. The husband relied on this to argue that all of the evidence about the loan was false and that the entire amount was a gift the wife will never have to repay.
The written agreement requires the wife to repay the money within 90 days of a written request by her sister or by 31 December 2041, whichever occurs first, and unless the parties have otherwise agreed.[14] The wife is not obliged to pay interest unless she is in default of those payments. She has nevertheless made some small repayments in an effort to reduce the amount outstanding. The total amount repaid at the time of the trial was $10,215, reducing the amount outstanding to $639,785.[15] The wife deposed that she was unable to make any further repayments because the husband had stopped working, had stopped paying child support and, for a period, the wife was obliged to pay him child support. In addition, the wife had increased expenses as a result of Y’s medical issues and reduced income due to her inability to maintain consistent full time hours while caring for him. She said during cross-examination that she expects to begin to make more substantial repayments in the future when she hopes to have a more secure job and a better income earning capacity.[16] The wife said that, ultimately, if she is unable to repay the amount, she will sell her share portfolio and/or her home in order to do so.[17]
[14] Affidavit of wife filed 28 June 2022 at annexure H
[15] Affidavit of wife filed 28 June 2022 at paragraph 57
[16] Transcript of proceedings dated 18 July 2022 at page 92
[17] Ibid at page 97
The wife’s sister, Ms M, filed an affidavit in support of the wife on 27 June 2022. She also gave oral evidence and was cross-examined during the trial. Ms M’s evidence corroborated that of the wife. She said when she initially transferred funds to the wife on 14 December 2015 she described it as a gift. However, when she and the wife discussed the provision of further funds and entered into a loan agreement, they settled on a round figure of AU$650,000 which was the amount used to purchase the Suburb N property and a vehicle. Ms M deposed that she decided to regard as a gift the balance of the funds used by the wife to rent an apartment, buy household furniture, pay legal fees and pay for general living expenses. She confirmed that the total amount provided to her sister was $722,964.49, of which $650,000 is required to be repaid.
Ms M also corroborated the wife’s evidence about the circumstances in which she and the wife opened a joint bank account in Australia and about how those funds are used. She deposed that she had agreed for her sister to make withdrawals from time to time from that account for small purchases for the children and to buy gifts for the children and for the children of other friends on behalf of Ms M. Ms M said she keeps an eye on the withdrawals and her sister has only ever used the account in accordance with their agreement. She confirmed the wife’s evidence about the amount outstanding on the loan. It was squarely put to Ms M that all of the amounts she provided to her sister were gifts and do not have to be repaid. That was convincingly denied by Ms M.
Both the wife and her sister were cross-examined by the husband but there was no change in their evidence. The husband ultimately submitted that the Court should find that all of the funds provided to the wife by her sister were a gift. I reject that. I am satisfied on the evidence that the wife has a genuine liability of $650,000 (now $639,785) payable to her sister in accordance with the terms of their formal agreement.
The husband also asserted that the wife has an interest in her sister’s property on the Region R. There is no evidence in support of that proposition. The title documents make it clear that the property is owned solely by the wife’s sister. The husband conceded that there is no evidence whatsoever of the wife making any contribution to the acquisition of the property. He also conceded that the Child Support Agency previously conducted an investigation based on the same assertion by him and concluded the wife had no interest in the property.
THE CURRENT PROCEEDINGS
The husband commenced property proceedings on 15 October 2018. There were various Court events in which procedural orders were made. The matter came before me for the first time on 15 May 2019. By then, the parties had reached a consent position on numerous disclosures required to be made by each party. The parties were ordered to attend a conciliation conference. It was held on 30 March 2020 but did not resolve the property issues.
Between 3 December 2019 and 14 May 2020 there were six applications filed by the husband concerning parenting issues and miscellaneous property issues which are not relevant to the current application.
On 21 May 2020 the husband’s application for further parenting orders was dismissed in accordance with the principles in Rice & Asplund [1979] FLC90-725. The husband was ordered to pay the wife’s costs, fixed in the sum of $2,987. The property proceedings were set down for final hearing for two days on dates to be advised and filing directions were made.
On 28 September 2021 the matter was allocated final hearing dates in April 2022. Unfortunately, in early 2022 it was discovered that Y’s medical condition had returned. He was required to undergo emergency surgery in Sydney. The wife applied for an adjournment of the trial for three months. Although this was opposed by the husband, the adjournment was granted and the April 2022 trial dates were vacated. New trial dates of 18 and 19 July 2022 were allocated.
On 6 July 2022, less than two weeks prior to the trial commencing, the husband made an oral application for a further adjournment of the trial on the basis that Y required ongoing monitoring and care, having undergone further surgery. The wife opposed the adjournment. She said that Y was in a relatively quiet post-operative period during which various tests would be done to work out his future treatment. She said that, based on previous experience, once Y’s treatment began, it was likely to involve many weeks or months in Sydney for specialist appointments, hospital admissions and, in general, a great deal of disruption for the family. She urged the Court to proceed on the scheduled dates. That is what occurred.
THE TRIAL
The trial ran for two days on 18 and 19 July 2022. The husband was unrepresented. The wife was represented by solicitor and counsel. Both parties gave evidence and were cross-examined. The wife’s sister, Ms M, gave evidence and was cross-examined by the husband. Oral submissions were made and the proceedings were adjourned for judgment delivery on a date to be advised.
The orders sought by the husband at trial were those set out in his amended initiating application filed on 10 February 2022. He sought orders requiring the wife to pay him $1.7 million within seven days. In default of this payment, the husband sought that the wife pay him $1.1 million within 14 days, sell her Suburb N property and pay him a further $850,000, making a total payment to him of $1,950,000. The husband sought that there be no adjustment to the parties’ respective superannuation funds and that the parties otherwise retain all items of property in their name or possession. Finally, the husband sought orders for the parties to enter into a Binding Child Support Agreement which would provide that neither party pay the other any child support.
The wife filed her amended response to the husband’s initiating application on 27 June 2022. She sought that the husband pay her $235,000 within 28 days and, failing that, the husband’s Suburb C property be sold to facilitate the payment. Further, the wife sought a superannuation split of 100 per cent of the husband’s Super Fund 1 to her. She also sought enforcement of two unpaid costs orders against the husband totalling $6,987 plus interest.
On the first day of the trial, the wife filed a Minute of Orders seeking essentially the same orders as in her amended response except that the cash payment she sought from the husband had been reduced to $228,831.20 and she no longer sought a superannuation splitting order.
CREDIBILITY ISSUES
The wife was a credible witness. She gave her evidence in a calm, straightforward manner and conceded reasonably. For instance, she conceded that she had failed to declare her Country E bank accounts in her financial statement and that she should have done so. However, she had provided bank statements for those accounts to the husband and readily gave evidence about them during cross-examination. During cross examination by the husband, she conceded that in her 2019 financial statement she declared that she had a debt of $650,000 owing to her sister when, in fact, over the preceding three years she had made some repayments which totalled $2,000 and, accordingly only owed her sister $648,000.
The wife’s sister was also a credible witness.
The husband had significant credibility issues. He was rigid in his answers and seemed incapable of conceding anything he perceived might assist the wife’s case. Consequently, there were multiple instances in which he gave evidence that was utterly implausible. When challenged about this, he steadfastly maintained his position. Some examples follow.
(a)As mentioned earlier, the husband contended that the relationship only commenced when the parties married and then, when pressed, when the wife gave birth to their first child. When pressed further, he eventually conceded the relationship had commenced at least by the time the wife became pregnant in 2018.[18] It was put to the husband in cross-examination that he was attempting to portray the relationship as being as short as possible because that would be better for him in the property settlement. He responded “Of course”.[19]
(b)For a significant part of the trial the husband refused to acknowledge the wife’s contributions as homemaker and parent, insisting that his contributions outweighed hers because he made significant contributions in these roles outside of work hours. When asked to concede at least that the wife did more parenting than him, especially when the children were infants and he was working full-time, the husband refused to make the concession, pointing out that he took six weeks off work when the children were born and cared for the children when he came home from work each day and during weekends.[20] However, during submissions at the end of the trial he very readily conceded that the wife’s contributions as homemaker and parent during the marriage were greater than his. He said “Well, yes, of course”, as if it was an obvious proposition, despite his earlier resistance to it.[21] However, he refused to acknowledge the significance of those contributions because, when asked to concede that the wife’s parenting and homemaking were an indirect contribution to the acquisition or preservation of assets because they enabled him to go to work full-time without incurring child care costs, the husband responded “Well, the fact was, your honour, that I actually didn’t need to go to work, but I just chose to… Because I already had a passive income that could have supported the family and a huge amount of cash.” [22] The husband also initially refused to accept that the wife had borne the greater burden of the children’s care post-separation but eventually conceded that was so.[23] The husband’s resistance to these obvious propositions was reflective of his rigid adherence to his own narrative and refusal to acknowledge the wife’s contribution on any level during the marriage. It did not reflect well on him and undermined his credibility generally.
(c)The husband admitted that, in order to claim tax deductions for expenses for the Suburb K property, he had declared on his tax returns that his mother was paying rent of $400 per week when, in fact, she paid no rent to him. He appeared nonplussed about making false declarations to the Australian Tax Office. He also said during cross-examination that his mother paid rent to him when she lived in the property but, moments later, conceded that she paid no rent.[24]
(d)The husband said in cross-examination that he and his mother had entered into a formal rental agreement. He was asked to produce the agreement the next day. The following day he said he had remembered that the agreement was verbal, not written.
(e)The husband initially denied telling the wife in December 2015 that she had to vacate the former matrimonial home or pay market rent plus a 100 per cent administrative loading.[25] When pressed, he moderated his evidence to say he could not remember doing so. When the email was produced, he conceded sending it. He was asked what he intended the 100 per cent administrative fee to cover. He said it was for utilities and other expenses related to the house. His initial evidence about it was completely wrong.
(f)Most extraordinarily of all, the husband sought orders requiring the wife to pay him just under $1.7 million within seven days and, if she failed to do so, to pay him $1.9 million within 28 days (facilitated in part by immediately selling the house she had purchased after separation and giving him the entire proceeds of sale) and, otherwise, the parties each keep the items of property and superannuation in their possession or control. This would result in the wife taking nothing other than the share portfolio she had prior to the relationship and her superannuation which, as a result of her childcare responsibilities, was less than the husband’s, and two vehicles she acquired post-separation. She would also continue to be liable for the $639,785 loan to her sister which funded the purchase of the wife’s home post-separation. By contrast, the husband would take all of the real assets, his more valuable superannuation and his Super Fund 2 pension in the payment phase. It was pointed out to the husband that, from an asset pool of more than $2 million, this would mean he would take almost everything and the wife almost nothing. He conceded this was so but said it was reasonable because it would effectively put him back to his pre-relationship position. He seemed perfectly comfortable with this notion. His proposal would not, in fact, restore the pre-relationship position of the parties. It would see him significantly enriched by the fruits of both parties’ labour and by the value of the house the wife purchased after separation while leaving the actual loan repayment to the wife. During cross examination the husband said that he believed the wife could pay the sum of $1.7 million from financial resources she had in the form of cash provided by her sister. [26] He acknowledged that, if the wife was unable to find the funds, the orders sought by him would require her to sell her home in which she lived with the children in order to pay him $1.9 million. Given the value of the Suburb N property was about $900,000, this would still require the wife to take out a loan of $1 million and continue to carry responsibility for the loan from her sister. He refused to accept the proposition that the wife had no prospects of obtaining a million-dollar loan.[27]
(g)The husband declared in his financial statement filed on 6 July 2022 that his current child support assessment for both children is $840 per year or $16 a week in round terms. He agreed he was in arrears of child support and had entered into a payment plan with the Child Support Agency to pay the arrears over time. At the time the husband gave evidence he said he was paying wife $80 a month in child support. This equates to $18.50 a week which presumably incorporates a payment of approximately $2.50 a week towards the arrears. He queried whether the wife was actually spending that amount on the children. It was pointed out to him that this was a ridiculous notion when this was less than $10 per child per week and he had earlier given evidence was that he spent $400 a week on food and had the children for less time than the wife. The husband agreed that his child support was a tiny proportion of what the wife would be spending on the children but said that his statement that she may not be spending it on the children was made “in the context of the range of possibilities”.[28] This was entirely mean spirited and caused me to find that the wife could not expect to rely on the husband as a generous co-parent into the future.
(h)The husband agreed that he had previously sought an adjustment in his child support liability on the basis that the wife was entitled to receive a share of the rental income from her sister’s property in Queensland. He agreed that the Child Support Agency investigated his assertion and found that the wife had no interest in the property. Nevertheless, he repeatedly asserted in the current proceedings that the wife was entitled to that income.[29]
(i)The husband conceded that, in accordance with Court orders, he was required to undergo a drug test in 2021. He agreed that he did not undertake the test. He said he could not get the test done within the 24 hours required but he then made no attempt in any event because he could not afford the cost of the test, which was $150. That evidence was ridiculous and undermined his credibility.
[18] Transcript of proceedings dated 18 July 2022 at pages 41 to 42
[19] Ibid at page 42
[20] Transcript of proceedings dated 18 July 2022 at pages 50 to 53
[21] Transcript of proceedings dated 19 July 2022 at page 193
[22] Ibid at page 194
[23] Transcript of proceedings dated 18 July 2022 at pages 45 to 46
[24] Ibid at page 44
[25] Transcript of proceedings dated 18 July 2022 at page 69
[26] Ibid at pages 33 to 34
[27] Transcript of proceedings dated 18 July 2022 at pages 35 to 37
[28] Ibid at pages 60 to 61
[29] Ibid at pages 71 to 73
Wherever there was a direct conflict of evidence between the parties, I generally preferred that of the wife.
THE LEGAL PRINCIPLES
Section 79(1) of the Family Law Act1975 empowers the Court to make orders altering the property interests of the parties to a marriage. However, the Court must not make such an order unless it is satisfied that, in the circumstances of the case, it is just and equitable to do so.[30] The requirement is met in this case as the parties no longer enjoy the common use of their property and each asks the Court to make orders altering the current interests in the property.
[30] Family Law Act 1975 (Cth) s 79(2)
In determining what specific orders should be made, the Court must have regard to the following:
(a)First, the contributions of the parties to the acquisition, conservation or improvement of the property and to the welfare of the family as provided in subsections 79(4)(a), (b) and (c) of the Family Law Act; and
(b)Secondly, the matters set out in the remaining subsections of 79(4) which incorporate section 75(2) of the Act. Those matters broadly require a consideration of the financial position and resources of the parties; their age and state of health; their necessary commitments in supporting themselves or any other person; the duration of the marriage and the extent to which it has affected the earning capacity of either party; the effect of any proposed order on the earning capacity of either party and any other fact or circumstance which the justice of the case requires to be taken into account.
The first step in the exercise is to ascertain the parties’ legal and equitable interests in the property available for division.
THE PROPERTY POOL
The value of the real property owned by each party is agreed, as is the value of the wife’s Country E share portfolio.
The wife has two Country E credit cards and two Country E bank accounts. One of the bank accounts is a share trading account into which her share dividends are paid. At the time of the trial the balance of that account was approximately AUD $33,000. The second Country E account is a savings account which, at the time of the trial, had a balance of AUD $778. The wife said she used this account for the purpose of transferring money from the share trading account to pay off the balance of her Country E credit cards.
The wife did not declare her Country E bank accounts or credit card accounts in the financial statement she filed on 27 June 2022. It is common ground, however, that she disclosed to the husband all bank statements for these accounts.[31] The wife’s counsel formally conceded on her behalf that all of the wife’s Country E accounts should have been included in her financial statement.[32]
[31] Transcript of proceedings dated 18 July 2022 at page 103 and 19 July 2022 at page 187
[32] Transcript of proceedings dated 18 July 2022 at page 105
The wife also has a life insurance policy with some medical benefits in Country E. The husband sought to include the payout value of the life insurance, $77,113, as an asset. The wife said she has been paying for the policy for more than 20 years and, although she could cash in the policy, the surrender value was minimal and so she would not do so. I accept that. I will not include it in the value of the property available to be divided between the parties.
The wife has several Australian bank accounts which, at the time she filed her financial statement at the end of June 2022, had a total combined balance of $18,337. At the time of the trial the total balances had reduced to $17,023. She also had two “Incentive Saver” bank accounts containing money she was saving for each of the children. The two accounts had a total of $15,000 (in round terms) in them. Although the wife regards those funds as being held by her on trust for the children, they are within her control and need to be taken into account. The total funds the wife had in Australian bank accounts at the time of the trial, therefore, was $32,000 in round terms.
The wife is a joint account holder with her sister in a Bank D account used for the purpose of the Region R apartment owned by the wife’s sister. I am satisfied the wife is a joint account holder in name only to assist her sister and that she has no entitlement to the funds in the account. I will not include its balance in the calculation of the property pool available to be divided between the parties.
The value of the cars owned by the wife are agreed. There is $500 difference in the value of the husband’s car as asserted by each party. There is no evidence to assist me to determine which figure is more accurate. In the absence of any such evidence, I accept the wife’s value as it is asserted to be based on a Red Book valuation. Accordingly, I attribute to the husband’s vehicle a value of $15,000.
According to their respective balance sheets, the parties agree that the husband has household contents worth $5,000 and the wife has household contents worth $10,000.
The husband sought that the capital loss he incurred on the sale of the property at L Street Suburb be notionally added back and included in the calculation of the value of the property available to be distributed. He effectively sought compensation from the wife for that loss. He said he sold the property in order to move closer to the children’s school after the wife was permitted by the Court to change their school. However, he chose to sell the property quickly for his own convenience and did so without any consultation with the wife. He knowingly made the capital loss. The wife is compelled to share in that loss because the property pool is diminished by that sum. However, I decline to include the loss in a calculation of the property now available for distribution.
The husband sought to include as a financial resource in the balance sheet all of the sums provided to the wife by her sister. He also sought to include in the balance sheet all of the real property, vehicles and household contents purchased by the wife using those sums. Clearly that would be a double counting. I will take into account all of the property purchased with the funds and the loan repayable to the wife’s sister.
The applicant has an interest in the Super Fund 1, which is an accumulation fund. The wife has an interest in two superannuation funds, both of which are accumulation funds, the value of which is agreed.
The wife has outstanding credit card debts and the husband has a loan for legal fees. Given the parties have been separated for nearly 7 years, none of these debts could be said to be joint debts and I will not take them into account.
The property and superannuation available for distribution therefore is as follows:
Ownership Value ASSETS 1 S Street, Suburb N Wife $900,000 2 Shares in Country E Wife $373,035 3 Motor Vehicle 2 Wife $20,500 4 Motor Vehicle 1 Wife $10,000 5 Cash at Bank (Australia) Wife $32,000 6 Cash at Bank (Country E) Wife $33,778 7 House contents Wife $10,000 8 B Street, Suburb C Husband $1,070,000 9 Motor Vehicle 3 Husband $15,000 10 House contents Husband $5,000 11 Cash at Bank Husband $400 Assets subtotal $2,469,713 LIABILITIES 12 Personal loan to Ms M Wife $639,785 13 Bank D Mortgage for B Street, Suburb C Husband $387,476 Liabilities subtotal $1,027,261 TOTAL NET ASSETS $1,442,452 SUPERANNUATION Name of Fund Member Value 14 Super Fund 3 Wife $77,749 15 Super Fund 4 Wife $40,980 16 Super Fund 1 Husband $232,984 Superannuation subtotal $351,713 TOTAL NET ASSETS AND SUPERANNUATION $1,794,165 CONTRIBUTIONS
At the commencement of the parties’ relationship, the husband owned the property in H Street, Suburb J, in which the parties lived in the early years after the wife and X arrived in Australia in 2009. It was sold in 2014, a year prior to separation, for $436,000. The proceeds were contributed to the purchase price of the property in L Street in Suburb J in which the parties lived for the rest of their relationship.
The husband also owned a property at Suburb K encumbered by a loan. His mother lived in the property rent free until 2011, after which it generated an income of about $20,000 per annum. From 2011 until the separation of the parties in 2015, the income generated by the property would have been about $80,000, although there were costs associated with it. It was sold in 2016 for $412,500 by which time another year of income had been generated, although not shared with the wife.
It is not clear what the equity in the properties at that time was because, while I accept the original loan for H Street, Suburb J had been paid off, that property was then used to secure the loan over the Suburb K property of an unknown amount and, for a short time (but not significantly for the purpose of these proceedings), the L Street Suburb J property. However, I find that the ownership of the H Street, Suburb J property comprises a significant initial financial contribution by the husband. The ownership of the Suburb K property is also a contribution on his part.
At the commencement of the relationship the wife owned her share portfolio, the income from which supplemented the parties’ income throughout their relationship. The wife used that income to pay for travel and for daily expenses that were not covered by the amount given to her by the husband. The share portfolio fluctuates and is currently worth a little over $373,000.
The wife made a contribution by parenting X alone from his birth in 2008, when she gave up her full-time employment to care for him, until she and X moved to Australia in 2009. During that five month period she supported herself and the child and ensured all of the child’s needs were met. The husband asserted during submissions that he contributed to the wife’s medical costs at that time and travelled to Country E to be with the wife and child for a month after the birth. There was no opportunity for the wife to challenge those statements but, even if true, for the bulk of the time from the child’s birth to the move to Australia, she was parenting alone.
During the relationship the husband was the primary income earner and the wife was the primary parent and homemaker. I accept the evidence of the wife that, while the husband made contributions in a homemaking and parenting role outside of work hours, these were limited at times by his extra-curricular activities. The wife also contributed to the financial support of the family through the income derived from her share portfolio. I am satisfied on the evidence as a whole that, in a broad brush sense, the different contributions made by each of the parties throughout their relationship should be accorded equal weight.
The husband’s demand of the wife that she pay market rent and a 100 per cent administration fee to occupy the spare room in the former matrimonial home was bullying and exploitative, especially in circumstances in which the wife had, by agreement, given up her full-time employment to be a full-time homemaker and parent and had no income apart from her share dividends. The wife made significant post-separation contributions by continuing in her role as the primary caregiver of the children in these difficult circumstances and without any financial support from the husband until he began paying child support which appears to be in 2016. The wife dealt with these circumstances by immediately commencing study and qualifying at the end of 2016 as a public servant. This generated a modest income for her but allowed her to be available for the children outside of school hours.
The gift of $73,000 the wife received from her sister at the time of separation is a contribution on behalf of the wife. It allowed her to rent an apartment for herself and the children and facilitated the purchase of household furniture and the payment of daily living expenses, without which the currently available resources of the parties would likely have been diminished through a requirement for the husband to pay for these things, through spouse maintenance, interim property settlement or similar.
The husband had the benefit of the sole use of the former matrimonial home post-separation while the wife paid rent and then purchased a home using borrowed funds. He has made parenting contributions by spending substantial time with the children. He has also paid child support in accordance with the administrative assessment for much of the post-separation period, although his payments are in arrears.
The wife paid child support to the husband during a post separation period when she was working and the husband had voluntarily stopped working.
The value of the wife’s property at Suburb N is $900,000 and the associated debt to the wife’s sister is $639,000. The husband made no contribution at all to the resulting equity of $261,000.
The wife made no direct contribution to the husband’s purchase of the Suburb C property but she made indirect contributions to its purchase because it was partly funded by the sale of the former matrimonial home to which the wife made meaningful indirect financial contributions and direct and indirect non-financial contributions.
In summary, the weight of the significant initial contribution made by the husband is offset by the weight of the following:
(a)the wife’s initial contribution comprising her share portfolio and, to a small extent, her parenting of the child X alone for five months;
(b)the various contributions made by the wife during the eight year relationship;
(c)the post-separation acquisition of property by the wife; and
(d)the extra post-separation parenting contributions made by the wife.
I am persuaded that the net weight of the initial contribution of the husband warrants an adjustment in his favour of seven per cent of the value of the property pool.
SECTION 75(2) FACTORS
The husband is aged 57. He has university qualifications and has worked in the technology industry for many years. His tax returns show his annual income for the financial years ending June 2016 to 2019 to be the following:
2016 $109,698
2017 $192,222
2018 $121,765
2019 $144,529
In his trial affidavit filed in February 2022, the husband deposed that, in the three years prior to the trial, his income had dropped to $54,000 per annum “because of my difficult personal circumstances”.[33] He did not specify what the difficult personal circumstances were but had deposed that he was seeking an adjustment for his own future needs based on “the uncertainty surrounding the serious medical condition of [Y]” [34] He also deposed to taking unpaid leave to help care for Y. In addition, the husband deposed that he has had three surgeries in the past three years. He asserted that, given a family history of serious medical conditions, he may need to seek prompt treatment if he contracted the disease and, in turn, may be prevented from working. Given the speculative nature of this concern and the lack of any medical evidence in support of it, it is not a matter which I take into account.
[33] Affidavit of husband filed 3 February 2022 at paragraph 37
[34] Ibid at paragraph 33
During cross-examination it was put to the husband that he had voluntarily reduced his income. Initially the husband resisted that proposition then agreed with it, saying “I have chosen to do it in the interests of caring for our children”.[35] He agreed that he had the children for five nights a fortnight and half of all school holidays and the wife had the children for the balance of the time and had not reduced her work hours.
[35] Transcript of proceedings dated 18 July 2022 at page 57
When the husband gave oral evidence on 18 July 2022 he said that he expected to shortly begin working again and to remain employed for the long-term.[36]
[36] Ibid at page 30
In addition to his salary, the husband receives a superannuation pension of around $20,000 per annum, which is indexed twice a year in line with inflation. This is a valuable financial resource available to him for the rest of his life.
In 2017 the husband received $28,340 by way of inheritance from the estate of his late mother.
The wife is aged 50. At the time of the trial she was earning $64,636 per annum and about $12,500 in dividends from her share portfolio, although the amount she receives by way of share dividends varies with movements in the stock market. This was a total of a little over $77,000 per annum. The husband incorrectly put to her that her total income per week from employment was $1,632 or $84,864 per annum. Although the wife declared at item 2 of her financial statement filed on 27 June 2022 that she receive total income of $1,632 per week, this figure includes $149 in Government benefits she receives for the children and is not derived from her employment.
The wife declared total weekly expenses of $1,969, leaving a shortfall of $337 per week, taking into account her income from all sources, including Centrelink. The husband asked the wife in cross-examination how she manages the shortfall and suggested she had undeclared income or financial resources. The wife said she had declared all of her income in these proceedings and that she declares all of her earnings, including from her Country E share portfolio, to the Australian Tax Office. She said she uses credit cards to cover any shortfall in income over expenditure and makes payments on her credit cards using the income derived from her share portfolio. She also has some cash savings. This suggests that the wife has either overstated her expenditure or understated her income to some extent but this does not affect my assessment of her financial position overall.
The wife has the majority care of both children. She gave compelling evidence about unpaid leave she has had to take in the past, and expects to take in the future, to care for Y. The husband’s evidence about leave he has taken and expects to take for the same reason was less compelling.
The wife cannot rely on regular payments of child support at a reasonable level from the husband given his voluntary cessation of work for several years, his seeking (and, at one point, obtaining) child support from her, his current arrears of child support, and the ridiculously low rate of repayment of those arrears.
The husband is seven years older than the wife and is, theoretically at least, seven years closer to retirement. However, he is in a significantly superior financial position to the wife. He has a much higher income earning capacity in an industry in which he has worked for many years, apart from voluntary periods of unemployment. He has the capacity to continue to contribute to his retirement income at a higher level than the wife and to recover from the property settlement more rapidly.
In addition to the security of his pension for life, the husband has an interest in an accumulation superannuation fund worth $232,984. The wife has an interest in two accumulation superannuation funds with a combined value of $118,729.
Section 75(2)(o) of the Family Law Act 1975 requires the Court to take into account any fact or circumstance which the justice of the case requires to be taken into account. I take into account that, in his haste to move closer to where the children attended school, the husband sold the former matrimonial home at L Street, Suburb J in 2017 for a capital loss of $204,000 and that the value of the property pool was accordingly diminished by that amount.
Most significantly, the children are still young and will be dependent on their parents for many years to come. The burden of this care will fall more heavily on the wife given the children live for more time with her than the husband. It seems clear on the evidence that the wife is likely to have to take unpaid leave in order to accompany Y to Sydney for treatment. Although the husband asserted that he too is likely to lose income when he takes Y for treatment, he conceded he has the capacity to sometimes work remotely from Sydney, whereas that is simply not an option for the wife.
Taking all of these matters into account, an adjustment to the wife of 15 percent is warranted. This results in the wife taking 58 per cent of the value of the property pool and the husband taking 42 per cent.
JUSTICE AND EQUITY CONSIDERATIONS
For the husband to take 42 per cent of the value of the property pool, he will take property and superannuation to a value of $753,549. For the wife to take 58 per cent, she will take property and superannuation to a value of $1,040,616. Given the relatively modest value of the superannuation interests, I do not intend to treat them differently to the real property and other items available to be divided. Neither party sought a superannuation splitting order in any event. Accordingly, each party will retain their own interests.
The husband will take his property at B Street in Suburb C and its associated loan, his car, house contents and cash. He will retain his interest in the Super Fund 1 and his Super Fund 2 pension in the payment phase.
The wife will take her property at Suburb N and the associated loan repayable to her sister, her cars, bank accounts, house contents and her superannuation interests.
To achieve the required outcome, the husband will be required to make a payment to the wife in the sum of $182,359. The distribution can be seen in the following table:
Distribution to the husband: Value $ B Street Suburb C property 1,070,000 Motor Vehicle 3 15,000 Contents 5,000 Cash 400 Sub-total 1,090,400 Less mortgage 387,476 Net property 702,924 Superannuation 232,984 Net property and superannuation 935,908 Less cash to wife 182,359 Total 753,549 Distribution to the wife: Suburb N property 900,000 Country E shares 373,035 Motor Vehicle 2 20,500 Motor Vehicle 1 10,000 Cash (Australia) 32,000 Cash (Country E) 33,778 Contents 10,000 Sub-total 1,379,313 Less mortgage 639,785 Net property 739,528 Superannuation 118,729 Net property and superannuation 858,257 Plus cash from husband 182,359 Total 1,040,616
The wife deposed that she and the husband still have a joint account into which the baby bonus was paid. According to the wife’s financial statement, the account has less than $1 in it. In order to end the financial relationships between the parties, I will order that the wife take the balance and that the account then be closed.
The wife sought an order for enforcement of two costs orders made against the husband during the course of proceedings which he has not paid. The husband said during submissions that he was content for the costs orders to be enforced as part of the property’s proceedings. Given that agreement and in order to avoid further litigation I am content to do so. The husband was required to pay $2,987 in accordance with the orders of 21 May 2020 and $4,000 in accordance with the orders of 17 May 2022, making a total of $6,987.
The husband sought an order which required the parties to enter into a binding Child Support Agreement. The Court cannot force someone to enter into an agreement. In the absence of a child support agreement, the law provides a mechanism for the payment of child support.
I certify that the preceding one hundred and two (102) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Hughes. Associate:
Dated: 23 March 2023
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