Hahn & Palomo
[2021] FedCFamC2F 73
•22 September 2021
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISON 2)Hahn & Palomo [2021] FedCFamC2F 73
File number(s): MLC 437 of 2019 Judgment of: JUDGE BENDER Date of judgment: 22 September 2021 Catchwords: FAMILY LAW – property – the de facto Husband’s Application for property orders pursuant to s90SM (4) of the Family Law Act 1975 (Cth) (“the Act”) – where the Respondent de facto Wife contends the parties kept their finances entirely separate and this is a matter to which s90SM (3) of the Act applies as it is not just and equitable to make any orders adjusting the parties’ property interests and seeks the de facto Husband’s Application be dismissed.
HELD – the de facto Husband’s Application be dismissed.
Legislation: Family Law Act 1975 (Cth) (“the Act”) ss 90SM, 90SM (3), 90SM (4) Cases cited: Stanford v Stanford [2012] 247 CLR 108
Bevan v Bevan [2013] FamCAFC 116
Oamra & Williams [2021] FamCAFC 117
Bevan v Bevan(No 2) [2014] FamCAFC 19Division: Division 2 Family Law Number of paragraphs: 88 Date of last submission/s: 5 August 2021 Date of hearing: 4-5 August 2021 Place: Melbourne Counsel for the Applicant: Mr James Solicitor for the Applicant: Grice Legal Counsel for the Respondent: Mr Nehmy Solicitor for the Respondent: Kenna Teasdale Lawyers ORDERS
MLC 437 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR HAHN
Applicant
AND: MS PALOMO
Respondent
ORDER MADE BY:
JUDGE BENDER
DATE OF ORDER:
22 SEPTEMBER 2021
THE COURT ORDERS THAT:
1.The Applicant’s Amended Application filed 13 July 2021 be 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 Hahn & Palomo has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE BENDER:
INTRODUCTION
Mr Hahn (“the Applicant”) and Ms Palomo (“the Respondent”) were in a de facto relationship from October 2012 (as is the Applicant’s evidence) or February 2013 (as is the Respondent’s evidence) to 30 September 2018.
The Respondent’s evidence is there was a break in their de facto relationship between 2 May 2016 and July 2017. During this period the parties lived in separate households but continued to see each other and spend time in each other’s homes.
The Applicant’s evidence is that whilst the parties maintained separate homes during this period, from approximately October 2016 onwards they were again living in a de facto relationship as they spent all their time together, predominately living in the Respondent’s unit in Suburb C during the week and occasionally staying in his unit in Suburb D on weekends.
The Applicant is seeking property orders be made pursuant to s 90SM (4) of the Family Law Act 1975 (Cth) (“the Act”) whereby the Respondent pay him $100,000 and there be a superannuation splitting order in his favour of $100,000. He argues that in all the circumstances of the case it is just and equitable to make orders adjusting the parties’ equitable property interests.
The Respondent argues that this is a matter to which s 90SM (3) of the Act applies and that it is not just and equitable to make any orders adjusting the parties’ property interests. She therefore seeks the Applicant’s Application be dismissed.
BACKGROUND
The Applicant was born in 1968 and is aged 53 years. He is a healthcare professional who works as a contractor to a practice owner who contracts the Applicant through his company/trust structure. The Applicant has re-partnered and is now living in the home of his partner Miss G.
The Respondent was born in 1967 and is aged 53 years. She is employed as a Manager. The Respondent has not re-partnered.
The parties met and started dating in July 2012. It is the Applicant’s evidence he gradually moved his things into the Respondent’s unit over the next few months and was living full-time with the Respondent from October 2012.
The Respondent agrees that the Applicant started increasingly staying at her place in 2012. It is her evidence he did not move in with her on a full-time basis until February 2013, after they holidayed together in Island H over the Christmas/New Year break. It is the Respondent’s evidence that it was at this time that the Applicant broke his lease on his rental premises in Suburb J and put his furniture and chattels in storage.
Whilst the Applicant agrees he did not break his lease on his Suburb J property until February 2013, it is his evidence he had put his landlord on notice he intended to leave prior to this date and the February 2013 date is when his landlord found another tenant.
Whilst not a matter which will determine the outcome of these proceedings, I prefer the evidence of the Respondent to that of the Applicant as to the date when the Applicant started living permanently with the Respondent on a full-time basis. The Applicant breaking his lease on his premises in Suburb J and moving the belongings he did not take with him into storage is clear evidence of a commitment to a shared life at that time.
The assets and liabilities at the commencement of the relationship were as follows:
Item
Applicant
Respondent
Asset
Applicant’s savings
$9,000
B Street, Suburb B
$400,000*
E Street, Suburb F
$370,000*
TOTAL ASSETS
$9,000
$770,000
Liabilities
Bank B Credit Card (14/3/2013)
$27,902.15
Bank B card 2 (21/2/2013)
$16,048.76
Bank C credit card (12/05/2013)
$22,999.00
Suburb C Mortgage
$208,000
Suburb F Mortgage
$370,000
TOTAL LIABILITES
$66,949.91
$578,000
NET Total (Assets less Liabilities)
– 57,949.91
$192,000
SUPERANNUATION
$70 639.05 (as at 30/06/2013)
$102,664.94 (as at 1/7/2012)
Total assets LESS liabilities PLUS superannuation
$12,689.14
$294,664.94
*Agreed retrospective valuation as at February 2013.
The parties agreed when they commenced their relationship that they would keep their finances completely separate.
During the relationship the parties:-
• maintained separate bank accounts into which their income was placed;
• had no joint account/s;
• were each responsible for their own private health insurance;
• did not discuss their finances with the other;
• put in tax returns as single people;
• made no provision for the other in their wills;
• were solely responsible for all debts/liabilities in their name.
The Respondent paid all outgoings in relation to Suburb C and Suburb F for the entirety of the relationship. This included all mortgages, rates, insurances, repairs and maintenance. The Respondent also paid all utilities for Suburb C whilst the parties lived together.
In 2012 the Applicant bought himself a Motor Vehicle 1 on finance. He paid the finance payments for motor vehicle 1 through his company/trust structure.
Shortly after the parties commenced co-habitation, the Applicant advised the Respondent he was involved in intervention order proceedings with a former partner named Ms J.
In mid-2013 the Applicant was found guilty of assault of another former partner and sentenced to 6 months gaol. The Applicant appealed the sentence. It was only at this time the Applicant advised the Respondent of the proceeding. The appeal came before the County Court in 2013 and the sentence was reduced from a term of imprisonment to a 6 month suspended sentence.
The Applicant engaged his current lawyers Grice Legal to represent him in his IVO/criminal proceedings. He agrees between 2012 and 2017 he incurred $94,929 in legal costs of which $75,490 was paid using his credit cards.
The parties agree there was never any discussion between them as to how the Applicant funded his legal proceedings.
During their relationship the parties undertook considerable travel both in Australia and overseas. It is the Respondent’s evidence she paid for the vast majority of the parties travel expenses.
In the period between May 2016 and July 2017 when the parties had separate residences, the Applicant was fully responsible for all the rental and outgoings of the Suburb D property he was living in. The Respondent continued to be responsible for the Suburb C and Suburb F properties.
Sometime in 2017 after the parties resumed co-habitation in July 2017, the Applicant left two handwritten letters addressed to the Respondent. The first of these reads in part:-
I have no money of my own to spare or spend; the way I feel about that in our financial arrangements, in our relationship, is an impotent passenger without any ability to share my wealth (or lack of it) with you. It’s bad enough being unable to buy day to day things like groceries and stand behind you at the check-out like a little ‘kept man’.
…
I’m not judging you, I’m recollecting my past experiences of being ‘bitten’.
So I’ll outline a template of what is considered a reasonable spectrum of financial affairs as far as I know them in my experience: basically couples do everything from having totally separate finances, some even have formal written agreements, all the way through to conjoined and linked arrangements, where for example his and hers (or his) and vice versa.
I see us at the former end of the scale now…
The second of these letters reads in part:-
I will take you back to a thread that doesn’t leave my mind, a no blame accredited, the debt of tens of thousands of dollars I have from renting in Suburb D.
…
this has crippled me financially and I can’t make a meaningful contribution to our household
-it’s demoralising;
-it’s degrading;
-it’s emasculating;
-it’s a demeaning stressor!
I’m strung up for the rental and other expenses and trapped…
…
So what do you think the options are?
1.Lifeboat Ms Palomo – an island?
2.Us – taking the world together…?
I suspect I have an idea already, but I know I can be wrong. Very wrong.
Do you want to partner me in all things or just the fun things and experiences?
TRUTH be known – tables reversed (this is not to sway you, as if I could!) I wouldn’t hesitate to assist you in any practical or financial way I could. However, these are my values: I don’t fear someone taking my retirement from me like you…
…
In any case I sincerely wish you well in you endeavours; personal, professional and financial, however you want to pursue them.
It is the Respondent’s evidence she was the victim of ongoing physical, emotional and psychological abuse at the hands of the Applicant throughout their relationship.
It is the Respondent’s evidence that because of the Applicant’s violence and her increasing unhappiness in the relationship in the months leading up to the parties’ final separation, she asked the Applicant on multiple occasions to vacate the Suburb C property and he refused to do so.
It is the Respondent’s evidence she contacted family violence services to assist her to leave the Applicant safely. On 27 September 2018 the Respondent told the Applicant she was going to her gymnasium. She instead drove her car to Suburb K back street where she made a video call to her psychologist Dr. L to discuss strategies to leave the relationship. Whilst on the call the Applicant appeared at her car window and abused her calling her amongst other things a “fucking bitch” and “a cheating bitch”. After the altercation the Applicant left and the Respondent called Dr L back. Dr L advised the Respondent not to return to the Suburb C property alone.
It is the Respondent’s evidence the Applicant was stalking her and found her using the “find my phone” app on his phone. The Applicant agrees he located the Respondent using this app but that he only did so after he called the Respondent several times and she didn’t answer and he called her gymnasium and was told the Respondent wasn’t there. It is his evidence he then used the app because he didn’t know where the Respondent was and was worried she was hurt.
On the night of the altercation the Respondent returned to the Suburb C property with the Applicant’s Mother. When the Applicant refused to leave the Suburb C property, the Respondent moved into a serviced apartment for a few days.
It is the Respondent’s evidence the Applicant refused to leave until she gave him money. It is the Respondent’s evidence she immediately withdrew $2,000 cash from an ATM and gave it to the Applicant. It is her evidence she gave him a further $5,000 a few days later via his Mother so he could buy a laptop for his practice as he had been using her laptop which he returned.
The Applicant agrees the Respondent gave him money but that she did so because she had kept his laptop.
It is the Respondent’s evidence that because of the violence she suffered at the hands of the Applicant she has been diagnosed by her treating psychologist, Dr M with Post-Traumatic Stress Disorder (PTSD).
The Respondent filed an affidavit from Dr N sworn 21 July 2021 which annexed Dr N’s report dated 21 July 2021. Dr N’s report confirms the Respondent’s diagnosis of PTSD which she says arises from the extreme domestic violence and ongoing coercive control committed by the Applicant against the Respondent. Dr N’s evidence was not challenged by the Applicant.
THE EVIDENCE
The Applicant relies on his Affidavit sworn 13 July 2021. He also relies on documents that were tendered into evidence when giving his vive voce evidence which are:-
• the Applicant’s Notices of Assessment for the financial years 30/06/2012 to 30/06/2018;
• a bundle of documents termed “Financial Docs” which included the Applicant’s Superannuation statements as at 30 June 2013 and 30 June 2018 and a large number of bank and credit card statements of the Applicant relating to 2012 and the date of separation;
• a bundle of bank and credit card statements which the Applicant said were a “snap shot” of his expenditure on “joint expenses”; and
• copies of text messages exchanged between the parties between June 2016 – March 2017.
The Applicant gave vive voce evidence at the Final Hearing.
The Respondent relies on her trial affidavit sworn 21 July 2021. She also relies on the following documents that were tendered into evidence:-
• Applicant’s credit card statements at the commencement of the relationship;
• Applicant’s Civil Service Pension statement dated 16 June 2006;
• Respondent’s Aide Memoire of Applicant’s Credit Card Debt showing amounts owing at the commencement of the relationship and end of the relationship;
• Applicant’s statement of account from Grice Legal dated 22 July 2021;
• undated letter from the Applicant in 2017;
• correspondence between solicitors dated 20 July 2021 and 21 July 2021; and
• Respondent’s Superannuation statements dated 30 June 2013 and 30 June 2018.
As noted earlier in this judgment the Respondent also relies on the Affidavit of her treating psychologist Dr N sworn 21 July 2021. Dr N was not required for cross-examination.
The Respondent gave vive voce evidence at the final hearing.
THE LAW
Section 90SM of the Act defines the Court’s powers in determining Applications for property settlement following the breakdown of a de facto relationship.
Section 90SM(1) of the Act provides:-
(1)In property settlement proceedings after the breakdown of a de facto relationship, the court may make such order as it considers appropriate:
(a) in the case of proceedings with respect to the property of the parties to the de facto relationship or either of them--altering the interests of the parties to the de facto relationship in the property; or
…
including:
(c)an order for a settlement of property in substitution for any interest in the property; and
(d) an order requiring:
(i) either or both of the parties to the de facto relationship; or
…
to make, for the benefit of either or both of the parties to the de facto relationship or a child of the de facto relationship, such settlement or transfer of property as the court determines.
Section 90SM(3) of the Act provides:-
(3)The court must 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.
Section 90SM(4) of the act sets out the matters the court must take into account when considering what orders (if any) should be made for the alteration of the parties property interests. Those matters are:-
(a)the financial contribution made directly or indirectly by or on behalf of a party to the de facto relationship, or a child of the de facto relationship:
(i)to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them; or
(ii)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 de facto relationship 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 de facto relationship, or a child of the de facto relationship:
(i)to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them; or
(ii)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 de facto relationship or either of them; and
(c)the contribution made by a party to the de facto relationship to the welfare of the family constituted by the parties to the de facto relationship and any children of the de facto relationship, 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 de facto relationship; and
(e)the matters referred to in subsection 90SF(3) so far as they are relevant; and
(f)any other order made under this Act affecting a party to the de facto relationship or a child of the de facto relationship; and
(g)any child support under the Child Support (Assessment) Act 1989 that a party to the de facto relationship has provided, is to provide, or might be liable to provide in the future, for a child of the de facto relationship.
As set out in paragraph 5 of this judgment, the Respondent argues this is a matter to which s90SM(3) applies and that it is not just and equitable that any orders be made altering the parties’ property interests.
The High Court in the matter of Stanford v Stanford [2012] 247 CLR 108 considered the question of s 79 of the Act. It held at paragraphs 35 – 40:-
35It will be recalled that s 79(2) provides that “[t]he 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”. Section 79(4) prescribed matters that must be taking into account in considering what order (if any) should be made under the section. The requirements of the two sub-sections are not to be conflated. In every case in which a property settlement order under s 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order.
36The expression “just and equitable” is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition[1]. It is not possible to chart its metes and bound. And while the power given by s 79 is not “to be exercised in accordance with fixed rules”[2], nevertheless, three fundamental propositions must not be obscured.
37First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property. So much follows from the text of s 79(1)(a) itself, which refers to “altering the interests of the parties to the marriage in the property” (emphasis added). The question posed by s 79(2) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order.
38Second, although s 79 confers a broad power on a court exercising jurisdiction under the Act to make a property settlement order, it is not a power that is to be exercised according to an unguided judicial discretion. In Wirth v Wirth, Dixon CJ observed[3] that a power[4] to make such order with respect to property and costs “as [the judge] thinks fit”, in any question between husband and wife as to the title to or possession of property, is a power which “rests upon the law and not upon judicial discretion”.
39Because the power to make a property settlement order is not to be exercised in an unprincipled fashion, whether it is “just and equitable” to make the order is not to be answered by assuming that the parties’ rights to or interests in marital property are or should be different from those that then exist. All the more is that so when it is recognised that s 79 of the Act must be applied keeping in mind that “[c]ommunity of ownership arising from marriage has no place in the common law”[5]. Questions between husband and wife about the ownership of property that may be then, or may have been in the past, enjoyed in common are to be “decided according to the same scheme of legal titles and equitable principles as govern the rights of any two persons who are not spouses”[6]. The question presented by s79 is whether those rights and interests should be altered.
40Third, whether making a property settlement order is “just and equitable” is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s 79(4). The power to make a property settlement order must be exercised “in accordance with legal principles, including the principles which the Act itself lays down”[7]. To conclude that making an order is “just and equitable” only because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act.”
[1] See Mallet v Mallet (1984) 156 CLR 605 at 608 per Gibbs CJ; [1984] HCA 21.
[2] Ibid.
[3] (1956) 98 CLR 228 at 231-232; [1956 HCA 71.
[4] Given by The Married Women’s Property Acts 1890-1952 (Q), s 21, a provision which corresponded with s 17 of the Married Women’s Property Act 1882 (Imp).
[5] R v Watson; Ex parte Armstrong (1976) 136 CLR 248 at 257.
[6] Hepworth v Hepworth (1963) 110 CLR 309 at 317 per Windeyer J. See also Wirth v Wirth (1956) 98 CLR 228 at 231-232 per Dixon CJ.
[7] R v Watson; Ex parte Armstrong (1976) 136 CLR 248 at 257
When considering the decision in Stanford (supra), Bryant CJ and Thackray J in Bevan v Bevan [2013] FamCAFC 116 stated in paragraph 73 that the High Court in Stanford has laid down three “fundamental propositions” which provide guidance to trial judges being:-
73. …
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 in s 79(4), and without separate consideration of s 79(2), would erroneously conflate what are distinct statutory requirements.
In discussing the third fundamental proposition enunciated in paragraph 73 of their judgment, Bryant CJ and Thackray J held at paragraphs 84-87 and 89:-
84.Just as the expression “just and equitable” does not admit of exhaustive definition, it is not possible to catalogue the “range of potentially competing considerations” that may be taken into account in determining whether it is just and equitable to make an order altering property interests. However, in our view, it would be a fundamental misunderstanding to read Stanford as suggesting that the matters referred to in s 79(4) should be ignored in coming to that decision. Indeed, such a reading would ignore the plain words of s 79(4), which make clear that in considering “what order (if any)” to make, the court must take into account the matters referred to in that subsection (emphasis added).
85.This requirement to consider the s 79(4) matters in determining whether it is just and equitable to make any order provides fertile ground for potential conflation of the two different issues, which the High Court has warned against. However, this potential will not be realised in many cases because of what the plurality said at [42] about the “just and equitable” requirement being “readily satisfied”. But there will be a range of cases, of which arguably the present is a good example, where determining whether it is just and equitable to make any order altering property interests will not be so clear cut and will therefore require not only separate but very careful deliberation.
86.We do not consider it helpful, and indeed it is misleading, to describe this separate enquiry as a “threshold” issue. We say this for two reasons. First, as was emphasised in Stanford, the initial enquiry is to determine the existing legal and equitable interests of the parties. Secondly, although s 79(2) is cast in the negative and amounts to a prohibition against making any order unless it is just and equitable to do so, the corollary is that if the court does make an order, such order itself must be just and equitable: Woollams & Woollams (2004) FLC 93-195 per Thackray J at [53] and Teal v Teal [2010] FamCAFC 120 per Finn, Boland and Dawe JJ at [70]. The just and equitable requirement is therefore not a threshold issue, but rather one permeating the entire process.
87.It will be seen from this discussion that while the s 79(2) and s 79(4) issues must not be conflated, they are intertwined because the text of the Act links them. This was recognised in Ferguson & Ferguson where Strauss J said that s 79(2) “is directed to both the questions whether an order should be made at all, and what the order should be, if one is made” (supra at 77,615).
…
89.In our view, it will be less likely that the separate issues arising under s 79(2) and s 79(4) will be conflated if judges refrain from evaluating contributions and other relevant factors in percentage or monetary terms until they have first determined that it would be just and equitable to make an order.”
Whilst Stanford (supra) and Bevan (supra) refer to s 79 of the Act, s 90SM is in identical terms to s 79 and therefore the decisions of Stanford (supra) and Bevan (supra) are equally applicable to proceedings relating to de facto couples as they are to those relating to married couples.
IS IT JUST AND EQUITABLE TO MAKE ORDERS ADJUSTING THE PARITES PROPERTY INTERESTS
The first “fundamental proposition” required in determining this question is to identify the parties’ existing legal and equitable property interests.
In this matter the parties are agreed on what constitutes their existing property interests. The parties filed a document headed “Agreed Balance Sheet 4 August 2021” which sets out their property interests as follows:-
No
Item
Owner
Agreed value
ASSETS
1
B Street, Suburb C
Respondent
680,000
2
E Street, Suburb F
Respondent
685,000
3
Share portfolio (as at 11 April 2021)
Respondent
10,828
4
motor vehicle 3
Respondent
24,300
5
Commonwealth Bank of Australia Netbank Saver (as at July 2021) (Victims of Crime)
Respondent
6,643
6
Commonwealth Bank of Australia Netbank Saver (as at July 2021)
Respondent
15,307
7
Commonwealth Bank of Australia Netbank Saver (as at July 2021)
Respondent
3,963
8
Bank P (as at July 2021)
Respondent
2,147
9
Bank P Account …32 in the name of Mr Hahn Holdings Pty Ltd
Applicant
672
10
Bank P Account …24 in the name of Mr Hahn Holdings Pty Ltd
Applicant
4
11
Bank P Account …16 in the name of Mr Hahn
Applicant
455
12
Company Q account …53
Applicant
372
13
Company Q Account …36
Applicant
3,226
14
Company Q Account …31
Applicant
89
15
Company R Shares (as at 13 July 2021)
Applicant
654
16
motor vehicle 1
Applicant
29,000
16a
UK pension
Applicant
NK
TOTAL ASSETS
1,462,660
LIABILITIES
17
B Street, Suburb C
Respondent
171,000
18
E Street, Suburb F
Respondent
376,000
19
Line of Credit drawn down and secured over the Suburb C and Suburb F Properties
Respondent
130,000
20
Bank S Mastercard
Respondent
17,500
21
Credit card T
Respondent
30,000
22
Bank P Personal Loan
Applicant
27,500
23
Bank C Credit Card
Applicant
50,000
24
Bank P Credit Card
Applicant
35,700
25
Bank P Credit Card 2
Applicant
21,500
TOTAL LIABILTIES
859,200
NET NON-SUPER ASSETS
603,460
SUPERANNUATION
26
Australia Super
Respondent
332,621
27
Australia Super
Applicant
183,063
TOTAL SUPER
515,684
NET ASSETS & SUPER
1,119,144
The parties agree that when they commenced their relationship they agreed they would keep their finances completely separate.
It is submitted by the Respondent that in keeping with this agreement the parties kept their finances separate from each other throughout the entirety of their relationship. It is her evidence they knew very little of the other’s financial arrangements and in particular:-
•she did not know what the Applicant earned through his practice over the years of the relationship until his income tax assessments were tendered into evidence at the final hearing;
•she had no knowledge of the Applicant’s liabilities, credit card debts, applications for loans, how he funded the purchase of his motor vehicle 1, how he funded his intervention order and criminal litigations until those proceedings commenced;
•she had no knowledge of the Applicant’s business/trust structures;
•the Applicant did not know how much the Respondent earned or how she managed her finances; and
•neither party knew the other’s superannuation entitlements or their contributions to same.
As set out in paragraph 14 herein the parties did not intermingle their finances and were responsible for all liabilities in their name. The Respondent was solely responsible for the payment of all mortgages, insurances, rates, utilities and repairs relating to the Suburb C and the Suburb F properties during the relationship.
In paragraph 41 of their judgment in Stanford (supra), the High Court made the following remarks concerning the three fundamental propositions relating to s.79 of the Act:-
41. … If the parties to a marriage have expressly considered, but not put in writing in a way that complies with Pt VIIIA, how their property interests should be arranged between them during the continuance of their marriage, the application of these principles accommodates that fact. And if the parties to a marriage have not expressly considered whether or to what extent there is or should be some different arrangement of their property interests in their individual or commonly held assets while the marriage continues, the application of these principles again accommodates that fact. These principles do so by recognising the force of the stated and unstated assumptions between the parties to a marriage that the arrangement of property interests, whatever they are, is sufficient for the purposes of that husband and wife during the continuance of their marriage. The fundamental propositions that have been identified require that a court have a principled reason for interfering with the existing legal and equitable interests of the parties to the marriage and whatever may have been their stated or unstated assumptions and agreements about property interests during the continuance of the marriage.
In Oamra & Williams [2021] FamCAFC 117 the Full Court considered whether it was just and equitable to make any property settlement orders and in particular whether there needed to be a mutuality in any stated or unstated assumptions that the parties would keep their finances entirely separate and to separately retain the benefits of their efforts to the exclusion of the other.
The Appellant in Oamra & Williams (supra) (being the Wife) made particular reference to paragraphs 41 to 43 of Stanford (supra) and argued there was nothing in the High Court decision that required that there needed to be mutuality in any stated or unstated assumptions that the parties would keep their finances entirely separate and that they would separately retain the benefit of their efforts to the exclusion of the other.
Having set out paragraphs 41 to 43 in their judgement, the Full Court held at paragraph 36:
We do not accept the wife’s submission that there was no warrant in Stanford to assume the High Court had in mind the mutuality of assumptions. The words which we have emphasised in [41] and [42] above make it clear that the High Court was talking about mutual assumptions and mutual agreements. Axiomatically any agreement must be mutual. The High Court makes no reference to unilateral assumptions and the reference to “a choice made by one or both of the parties” in the first sentence of [42] is a reference to a unilateral decision to leave the marriage. The primary judge was correct to record that mutual assumptions and agreements which are informed and truly consensual will potentially inform whether it is just and equitable to make any order altering property.
Paragraph 41 of Stanford (supra) has been set out in paragraph 52 of this judgment. Paragraphs 42 and 43 of Stanford (supra) read as follows:
42In many cases where an application is made for a property settlement order, 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).
43By contrast, the bare fact of separation, when involuntary, does not show that it is just and equitable to make a property settlement order. It does not permit a court to disregard the rights and interests of the parties in their respective property and to make whatever order may seem to it to be fair and just.
When giving his vive voce evidence the Applicant agreed that prior to he and the Respondent commencing cohabitation they agreed they would keep their finances separate.
The Applicant was then asked why he was now arguing that their agreement was no longer relevant and that it was just and equitable that orders be made that would effectively require the Respondent to transfer to him property in which she holds sole interest. The Respondent’s explanation is that it was because during the relationship the parties bought things together and they shared expenses for each other’s benefit.
Paragraphs 101 – 108, 114 and 117 of the Applicant’s trial affidavit sets out what he says were his financial contributions to the relationship. They read as follows:
101That I contributed the totality of my income toward meeting our joint expenses and paying for our living expenses, our lifestyle, our overseas holidays thereby enabling Ms Palomo (sic) to contributed towards the mortgages on the two properties she owned.
102I acknowledge that Ms Palomo owned the Suburb C and Suburb F properties before the commencement of our relationship but say that my income which contributed towards our day to day living expenses enabled Ms Palomo to meet the expenses associated with the two properties and enabled her to build up a significant share portfolio and acquire a significant amount of savings.
103All the credit card debts that I currently have relate to our lifestyle expenses incurred during the relationship from which Ms Palomo received a substantial benefit.
104I contributed significantly both financially and non-financially towards our joint welfare by contributing towards the provision of accommodation, food, day to day living expenses, holidays and gifts.
105I paid for and supplied, for the benefit of the household consisting of myself and Ms Palomo, whitegoods, electronics, a custom-made king size bed, linen and quantity of household goods. I also paid for an offsite storage unit that was used by Ms Palomo and I to store our personal effects during the relationship.
106My motor vehicle 1 was the primary transport used by Ms Palomo and I as a couple during the relationship, for transport to and from work when we both worked in the Melbourne CBD in 2014.
107It was the car we generally drove for grocery shopping, airport transport and weekend travel for social events.
108From 2014 to approximately 2018, Ms Palomo drove an old motor vehicle 2, which she used largely to commute from the Suburb C property to the Suburb K Railway Station. She replaced the motor vehicle 2 in approximately 2018, when she purchased motor vehicle 3.
…
114In addition, through my company, Mr Hahn Holdings Pty Ltd, Ms Palomo received a financial benefit as the company provided her with a phone, handsets and internet services at home for most of our relationship.
…
117My financial contribution enabled Ms Palomo to accumulate assets of significant value and I assisted her in effecting repairs, renovations and improvements to her real property.
As referred to in paragraph 34 of this judgment, the Applicant tendered into evidence a bundle of his credit card statements which he asserts provide a “snapshot” of his financial contributions during the parties’ relationship. Those bank and credit card statements cover one or two months in 2014, 2015 and 2016. I have perused those statements very carefully. They disclose:
• only six purchases at a supermarket, none of which exceed $40.
• five payments at restaurants or hotels, two of which coincide with the Respondent’s birthday.
• two purchases of alcohol, one of which was a dozen bottles of champagne for the Respondent’s birthday.
• approximately $2,500 in travel expenses, which occurred while the parties were living separately from each other in 2016/2017.
The Applicant’s tendered bank statements and credit card statements do not support in any way the Applicant’s evidence he “contributed the totality of his income toward meeting joint expenses and paying for living expenses, lifestyle and overseas holidays.” His credit card payments do not relate to joint living expenses but rather to the payment of his legal expenses, business expenses, interest payments and the Applicant’s personal lifestyle costs such as petrol, parking fees, toiletries, coffee and the like.
Whilst there is one payment to retail store U in 2014, it is the Respondent’s evidence that the various items listed in paragraph 105 of the Applicant’s affidavit were purchased by the Applicant for his own personal use when he moved into the Suburb D property and that he has retained those items.
In relation to the Applicant’s claim he paid storage fees for chattels owned by both parties, it is the Respondent’s evidence that the storage facility was used by the Applicant to store his furniture from Suburb J property. Because the Respondent had a fully furnished home when the Applicant moved in, his furniture and chattels were not needed and were placed in storage.
It is also the Respondent’s evidence, which is not refuted by the Applicant, that at no time did they ever discuss or agree to change their original agreement to keep their finances separate. The manner in which they conducted themselves financially during the relationship completely accords with their agreement to keep their finances separate.
It is further contended by the Respondent that it was she who made the vast majority of financial contributions towards the parties’ living expenses and lifestyle throughout the entirety of the relationship.
As has previously been set out in this judgment, the parties lived in a property purchased by the Respondent well prior to the commencement of cohabitation. It was the Respondent who paid all mortgage payments, rates, utilities and insurances in relation to those properties.
The Applicant conceded in cross examination that despite the claim in paragraph 117 of his affidavit that he assisted the Respondent in “effecting repairs renovations and improvements to her real property”, there were no renovations and improvements effected on either Suburb C or Suburb F properties during the relationship and that the repairs, and maintenance required for those properties were all undertaken by professional trades persons and paid for solely by the Respondent.
It is the Respondent’s evidence that she paid for the majority of groceries and household expenses used by the parties. It is her further evidence that she paid for the majority of their dining and social experiences save for sports event tickets which the Applicant happily bought, sports being one of his passions. During the relationship the parties travelled extensively including up to nearly a dozen international trips. It is the Respondent’s evidence that the parties’ travel during the relationship was almost solely funded by her save for a work conference that the Applicant undertook. She agrees that on that occasions she joined the Applicant at the end of his conference and they travelled together to city W and the Applicant may have funded some of that particular trip.
The Respondent highlights the letters left for her by the Applicant that are detailed in paragraphs 23 and 24 of this judgment in which the Applicant laments his inability to contribute financially to the household as confirmation that it was she who bore the brunt of the financial responsibility for the parties during their relationship.
The Respondent further argues that the contributions made by her were made more onerous as a result of the extreme and continued family violence to which she was exposed during the course of the relationship.
The Applicant concedes the parties argued during the relationship. He denies that there was any violence committed by him towards the Respondent.
CONCLUSION
As was noted by the High Court in Stanford (supra) at paragraph 38 and the Full Court in Bevan v Bevan(No 2) 2014 FamCAFC 19 at paragraph 45 there is no one consideration or combinations of consideration that is necessarily determinative of the result when the Court is exercising its discretion in determining the question of whether it is just and equitable to make an order altering the parties property interests.
In this matter the parties clearly agreed prior to the commencement of their de facto relationship that they would keep their finances completely separate. Despite the arguments of the Applicant to the contrary, it is apparent that this is exactly how the parties conducted their financial affairs for the entirety of their relationship.
There was no intermingling of the parties’ finances whatsoever. They kept separate bank accounts, did not discuss their finances with each other, retained their own individual health insurance, lodged tax returns on the basis that they were single people, were solely responsible for all debts and liabilities in their name, made application for finance and credit card facilities without reference to or consultation with the other, made no provision for the other in their wills and were unaware of the earnings of the other and how they managed their income distribution.
Whilst the Applicant argues that the parties bought things together and shared expenses for each other’s benefit and therefore they did not keep their finances separate, the evidence before the Court supports the evidence of the Respondent that it was she who bore the brunt of the financial responsibility for the parties during their relationship. She bought most of the groceries and household items, funded nearly all of their extensive travel and was the party who usually paid when they went out to dinner.
Whilst the Applicant did from time to time purchase some groceries, buy some alcohol, pay for the occasional dinner and holiday, it is only appropriate that he should do so given the parties were living together in a de facto relationship and he was otherwise paying absolutely nothing towards the costs of his accommodation.
It is common ground that the parties lived in a property that was owned by the Respondent before the commencement of their relationship and the Applicant made no contribution whatsoever towards its purchase. During the relationship the mortgage on that property was paid solely by the Respondent as were all rates, taxes, insurances, outgoings and utilities. Not only does this support the Respondent’s contention that the parties lived separate financial lives, it also supports the Respondent’s argument that the Applicant made no contribution whatsoever to the property of which she has the acknowledged ownership.
The only major items purchased by the parties during their relationship are their respective motor vehicles. Each paid for their own vehicle and post-separation they have each retained their car.
The real estate owned by the Respondent has increased in value between the commencement of cohabitation and the hearing of this matter. This reflects market forces and does not reflect any contributions by the Applicant.
Since the commencement of the relationship the Applicant’s superannuation has doubled in value and the Respondent’s superannuation has tripled in value. This reflects the reality that during the relationship the Applicant made almost no contributions to his superannuation whilst the Respondent had consistent contributions being made to her superannuation by her employers and from time to time by herself. Again the contributions made to their superannuation by both parties is solely their own and there has been no contributions made by either party towards the superannuation of the other.
During the parties relationship the level of indebtedness of the Applicant has increased from $66,950 to $134,700, an increase of $67,750.
The Applicant argues that the increasing level of his indebtedness is as a result of his contributions to the parties’ joint living expenses.
The evidence before the Court does not however support this contention. In the period of the parties’ relationship the Applicant incurred over $90,000 in legal expenses primarily defending criminal charges and an appeal in the County Court. On his own evidence $72,000 of his legal costs were funded by way of credit card payments.
Tendered into evidence by the Applicant was what he termed a “snap shot” of his expenditure during the relationship. This included his credit card statements. The expenditure shown in his credit card statements does not support his contention that those cards were being used primarily in support of the parties’ living expenses. Rather that they were being used for the Applicant’s personal expenses including petrol, storage, interest payments, parking and business expenses.
When considering the totality of this evidence I am satisfied that these parties conducted their financial affairs during the entirety of their relationship on the basis they kept their finances separate.
The vast majority and most significant contributions made during the relationship were made by the Respondent.
For these reasons I am of the view that it is not just and equitable that there should be any orders made adjusting the parties’ property interests and the Application of the Applicant should be dismissed.
I certify that the preceding eighty-eight (88) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Bender. Dated: 22 September 2021
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