Halliwell & Privett
[2023] FedCFamC1F 751
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Halliwell & Privett [2023] FedCFamC1F 751
File number(s): SYC 1302 of 2022 Judgment of: CHRISTIE J Date of judgment: 31 August 2023 Catchwords: FAMILY LAW – FINAL PROPERTY ORDERS – Value and ownership of assets and liabilities available for adjustment – Whether the husband owes his sibling an amount equivalent to 25 per cent of the former matrimonial home – Where evidence does not establish there was a loan between the husband and his sister nor an enforceable agreement warranting inclusion in the balance sheet as a liability – Whether the husband owes his sibling an occupation fee – Where evidence does not establish an accrued debt for occupation – Whether the husband owes his sibling funds from sale proceeds of property previously jointly owned – Where the husband has previously had funds otherwise not accounted for from the sale of the property sufficient to repay asserted debt but says he has not done so – Where it is not just and equitable for the wife to subsidise the asserted debt of the husband by including it as a liability in the asset pool – Contributions – 18 year marriage – Where the husband made greater financial contributions and greater initial financial contributions – Where the wife made greater non-financial contributions – Future needs – Where the wife has the care of the parties’ young children – Where the wife’s earning capacity is modest compared to the husband – Where each party owes legal fees – Significant superannuation disparity in favour of the husband – Superannuation splitting order – Where just and equitable order for the adjustment of property interests is 55/45 in favour of the wife. Legislation: Family Law Act 1975 (Cth) Pt VIII
Conveyancing Act 1919 (NSW) s 54
Crimes (Sentencing Procedure) Act 1999 (NSW) s 10
Limitation Act 1969 (NSW) s 14
Cases cited: Af Petersens & Af Petersens (1981) FLC 91-095
Biltoft & Biltoft (1995) FLC 92-614
Division: Division 1 First Instance Number of paragraphs: 84 Date of hearing: 24-26 July 2023 Place: Sydney Solicitor for the Applicant: Marsdens Law Group Counsel for the Respondent: Mr Hodgson Solicitor for the Respondent: Ashley, Francina, Leonard & Associates ORDERS
SYC 1302 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS HALIWELL
Applicant
AND: MR PRIVETT
Respondent
ORDER MADE BY:
CHRISTIE J
DATE OF ORDER:
31 AUGUST 2023
THE COURT ORDERS THAT:
1.Within 60 days of the date of these orders the husband pay to the wife or as she may direct the sum of $1,909,342.
The Suburb C Property
2.Simultaneously with the payment referred to in Order 1 the wife do all acts and things necessary to remove the Caveat registered on title of B Street, Suburb C (“the Suburb C property”).
3.In the event that the husband fails to make the payment referred to in Order 1 then within thirty (30) days of the failure:
(a)The wife do all acts and things necessary to remove the Caveat registered on title of the Suburb C property;
(b)The husband do all things and sign all documents necessary to cause the Suburb C property to be sold by private treaty at the earliest possible date after the conclusion of the 2023 school year, at a price to be agreed upon between the parties and failing such agreement, at a price to be determined by the President of the Real Estate Institute of New South Wales (or any successor of it) or his/her nominee and to disburse the proceeds of the said sale in the following manner and priority:
(i)Payment of agent’s commission and advertising expenses and legal expenses of the sale;
(ii)Discharge of the existing mortgage encumbering the Suburb C property;
(iii)Payment of costs incurred, if any, in relation to determination of value or selling price by the President of the Real Estate Institute of New South Wales or his/her nominee; and
(iv)The balance then remaining to be divided as follows:
A.54.55% to the applicant wife;
B.The balance then remaining to the respondent husband.
4.Pending the sale of the Suburb C property, the respondent husband shall be liable for all outgoings in relation to the said property including but not limited to the council rates, water rates, utilities, strata levies, outgoings and all other expenses as and when same fall due.
Motor Vehicle
5.Within fourteen (14) days of the Orders, the respondent husband do all acts and things necessary to transfer his right and interest in Motor Vehicle 1 to the applicant wife AND THAT the applicant wife shall thereafter indemnify and keep indemnified the respondent husband in relation to all liabilities in respect of this motor vehicle, whenever and howsoever arising.
Superannuation
Superannuation Fund 1
6.Paragraphs 6 to 10 (inclusive of these Orders) are binding on the Trustee of Superannuation Fund 1 (member number …).
7.In accordance with s 90XT(l)(b) of the Family Law Act 1975 (Cth):
(a)The applicant is entitled to be paid the specified percentage out of the respondent's interest in Superannuation Fund 1;
(b)The respondent's entitlement to payments out of his interest in Superannuation Fund 1, and the entitlement of such other person to whom a splittable payment may be payable, is correspondingly reduced by force of this order; and
(c)The percentage specified for the purposes of this Order is 50%.
8.The trustee of Superannuation Fund 1 (“the Superannuation Fund 1 Trustee”) shall do all such acts and things and sign all such documents as may be necessary to:
(a)Calculate, in accordance with the requirements of the Family Law Act 1975 (Cth) and the Family Law (Superannuation) Regulations 2001 (Cth), the entitlement created for the applicant by Order 7;
(b)Pay the entitlement whenever the Superannuation Fund 1 Trustee makes a splittable payment out of the respondent’s interest in Superannuation Fund 1.
9.These Orders have effect from the operative time and the operative time for this order is 4 business days after the date of service of these Orders upon the Superannuation Fund 1 Trustee.
Superannuation Fund 2
10.Orders 10 -14 (inclusive) are binding on the Trustee of Superannuation Fund 2 (member number …).
11.Pursuant to s 90XT(l)(b) of the Family Law Act 1975 (Cth) whenever a splittable payment becomes payable in respect of Mr Privett’s interest in Superannuation Fund 2 (member number …), the trustee shall pay to Ms Halliwell the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 (Cth), using a specified percentage of 50% and there should be a corresponding reduction in the entitlements of the person to whom a splittable payment would have been made but for these orders.
12.The trustee of the Superannuation Fund 2 Trustee shall do all such acts and things and sign all such documents as may be necessary to:
(a)Calculate, in accordance with the requirements of the Family Law Act 1975 (Cth) and the Family Law (Superannuation) Regulations 2001 (Cth), the entitlement created for the applicant by Order 11 ;
(b)Pay the entitlement whenever the Trustee of Superannuation Fund 2 makes a splittable payment out of the respondent's interest in Superannuation Fund 2.
13.Orders 10-12 (inclusive) of these orders have effect from the operative time and the operative time for this Order is 4 business days after the date of service of these Orders upon the Trustee of Superannuation Fund 2.
Superannuation Fund 3 and Superannuation Fund 4
14.Paragraphs 14-17 (inclusive) of these orders are binding on the Trustee of Superannuation Fund 3 (member number …) and Superannuation Fund 4 (member number …).
15.In accordance with s 90XT(1)(b) of the Family Law Act 1975 (Cth):
(a)The applicant is entitled to be paid the specified percentage out of the respondent’s interest in Superannuation Fund 3 and Superannuation Fund 4;
(b)The respondent’s entitlement to payments out of their interest in Superannuation Fund 3 and Superannuation Fund 4 and the entitlement of such other person to whom a splittable payment may be payable, is correspondingly reduced by force of this order; and
(i)The specified percentage allocated out of the respondent’s interest in Superannuation Fund 3 is 50%; and
(ii)The specified percentage allocated out of the respondent’s interest in Superannuation Fund 4 is 50%.
16.The trustee of Superannuation Fund 3 and Superannuation Fund 4 (“the Superannuation Fund 3 and Superannuation Fund 4 Trustee”) shall do all such acts and things and sign all such documents as may be necessary to:
(a)Calculate, in accordance with the requirements of the Family Law Act 1975 (Cth) and the Family Law (Superannuation) Regulations 2001 (Cth), the entitlement created for the applicant by Order 15;
(b)Pay the entitlement whenever the Superannuation Fund 3 and Superannuation Fund 4 Trustee makes a splitable payment out of the Respondent’s interest in Superannuation Fund 3 and Superannuation Fund 4.
17.These Orders have effect from the operative time and the operative time for this order is 4 business days after the date of service of these Orders upon the Superannuation Fund 3 and Superannuation Fund 4 Trustee.
Other
18.As between the applicant wife and respondent husband, and subject to the above Orders, the applicant wife and respondent husband shall each respectively retain all interest in and entitlement to:
(a)All personal property now in his/her respective possession or control;
(b)All shares, debentures, units in unit trusts, bank, building society or credit union accounts standing in his/her sole name respectively; and
(c)All interests in life insurance policies and superannuation funds not otherwise the subject of orders standing in his/her sole name respectively.
19.The respondent husband shall be and remain liable for any debts in his name at the date of these Orders, save as provided in preceding Orders, and in these respects shall indemnify and hold harmless the applicant wife from and against all and any liability in relation thereto.
20.The applicant wife shall be and remain liable for any debts in her name at the date of these Orders, save as provided in preceding Orders, and in these respects shall indemnify and hold harmless the respondent husband from and against all and any liability in relation thereto.
21.That both the respondent husband and the applicant wife hereby release the other from all actions, proceedings, claims, demands, costs and expenses whatsoever and howsoever arising which either of them had or may have against the other or by reason of or in respect of any act, cause, matter or thing.
22.That in the event that either party refuses or neglects to execute any deed, document or instrument necessary to give effect to these Orders, the Registrar of the Court be appointed pursuant to s 106A of the Family Law Act1975 (Cth) to execute such deed, document or instrument in the name of said party and do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of affidavit.
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 Halliwell & Privett has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CHRISTIE J:
This matter was listed for final hearing in respect of both parenting orders and property adjustment following the conclusion of the parties’ marriage.
The applicant wife filed an Initiating Application on 20 May 2022. The respondent husband relied on his Further Amended Response filed 21 July 2023.
The parties are the parents of four children: W, born 2005, X, born 2007, Y, born 2017 and Z, born 2019. The parties’ oldest child is an adult.
The parties reached an agreement about the parenting orders for the subject children, X (in respect of parental responsibility only), Y and Z during the trial and I made consent orders on the first day of the trial.
BACKGROUND
The husband was born in 1969 and the wife was born in 1979.
Prior to the parties’ relationship, the husband in 1990, purchased D Street, Suburb E (“the Suburb E property”) with his sister, Ms F. Again, prior to the parties’ relationship, the husband, in 1995, purchased B Street, Suburb C (“the Suburb C property”) with his sister, Ms G.
In 2002 the husband repaid a $20,000 loan of the wife at a time when they were involved in a relationship but had not yet commenced cohabitation. In 2002 the wife resided with the husband’s family in their home in Sydney while the husband was living in Western Australia.
In 2003 the wife commenced to reside in the Suburb C property owned by the husband with a tenant.
The parties were married in 2003 and commenced cohabitation at the Suburb C property.
The wife asserts the parties separated on 28 February 2021. The husband asserts the parties separated on 10 March 2021. Nothing turns on this difference. The parties were divorced in 2022.
A provisional Apprehended Domestic Violence Order (“ADVO”) was made for the protection of the wife from the husband in early 2021, at which time the husband moved to a self-contained unit at the Suburb C property.
In mid-2021 an additional ADVO was made with the oldest child named as the protected person. At that time the husband vacated the Suburb C property and commenced to reside at H Street, Suburb J (“the Suburb J property”).
The husband was charged in relation to a breach of ADVO. In early 2023 the charge was dismissed pursuant to s 10(1)(a) of the Crimes (Sentencing Procedure) Act 1999 (NSW) and the husband consented to a final ADVO for a period of 12 months being made for the protection of the wife and the parties’ adult child.
THE LAW
The financial matters fall to be determined, having regard to the provisions of Pt VIII of the Family Law Act 1975 (Cth) (“the Act”).
If it is just and equitable to do so, the Court may adjust the parties existing legal interests in their assets. It is generally considered to be appropriate to approach the question of what property adjustment order (if any) is required by first identifying and valuing the assets, superannuation liabilities and financial resources of the parties or either of them. Following identification of the net assets available for adjustment, it is necessary to undertake an assessment of the parties’ contributions, both financial and non-financial, direct and indirect. The next step is to consider whether or not, having regard to the parties’ present and future financial circumstances, it is necessary to make any further adjustment to their contribution based entitlements to take into account their circumstances. This exercise examines what has happened in the past but is also prospective in nature.
CONSIDERATION
There were not many matters in contention in this case. The substantial controversy concerned the value and ownership of assets and liabilities said to comprise the assets available for adjustment as between the parties.
It is useful before moving to consider the parties’ contributions to set out the balance sheet which the parties submitted as “joint”, as that document identifies the areas of dispute:
Ownership Description Applicant’s Value Respondent’s Value ASSETS 1 Husband B Street, Suburb C $3,500,000 $3,500,000 2 Husband Motor Vehicle 1 (in wife’s possession) $42,500 $42,500 3 Husband Motor Vehicle 2 $15,000 $15,000 4 Husband CBA account ending in #...69 $1,326 $1,326 5 Husband CBA account ending in #...68 $4,325 $4,325 6 Husband K Bank account ending in #...90 $4,220 $4,220 7 Husband K Bank account ending in #...53 $12,324 $12,324 8 Husband Shares $19,324 $19,324 9 Husband Interest in L Pty Ltd $10 $10 10 Wife Musical instruments $20,000 $20,000 11 Wife NAB account ending #...98 $18,483 $18,483 12 Wife NAB account ending #...13 $5,034 $5,034 13 Wife NAB account ending #...83 $207 $207 14 Wife NAB account ending #...64 $1,674 $1,674 15 Wife NAB account ending #...08 $6 $6 16 Wife Household contents $10,000 $10,000 17 Husband Household contents $12,000 $12,000 Total $3,666,433 $3,666,433 ADDBACKS 18 Wife Legal fees incurred to Marsdens Law Group $37,305 $37,305 19 Husband Legal fees incurred to AFL Solicitors $128,566 $128,566 Total $165,871 $165,871 LIABILITIES 20 Husband M Company $126,000 $126,000 21 Husband N Finance credit card (balance as at 14 July 2023) $1,658 $1,658 22 Wife Westpac credit card (balance as at 11 July 2023) $1,795 $1,795 23 Husband Debt owed to Ms F (including rental arrears) Nil $339,440 24 Husband Debt owed to Ms G Nil $875,000 25 Husband Legal fees incurred to solicitor, Mr O re ADVO/criminal matter Nil $40,000 Total $129,453 $1,383,893 SUPERANNUATION Member Name of Fund Type of Interest Applicant’s value Respondent’s value 26 Husband Superannuation Fund 2 ending in #...69 Accumulation $361,700 $361,700 27 Husband Superannuation Fund 3 Defined benefit $343,650 $343,650 28 Husband Superannuation Fund 4 Defined benefit $55,650 $55,650 29 Husband Superannuation Fund 1 ending in #...30 Accumulation $160,682 $160,68216 30 Wife Superannuation Fund 5 ending in #...78 Accumulation $27,984 $27,984 31 Wife Superannuation Fund 6 ending in #...42 Accumulation $79,007 $79,007 32 Husband Superannuation Fund 7 Accumulation $15,000 $15,000 Total $1,043,673 $1,043,673 NET TOTAL ASSETS $4,746,524 $3,492,084
From that document it is plain that the issues for determination are as follows:
(a)Does the husband owe his sister an amount equivalent to 25 per cent of the net equity in the Suburb C property?
(b)Does the husband owe his sister an occupation fee for his occupation of the Suburb J property?
(c)Does the husband owe his sister money from the sale proceeds of the property they jointly owned in Suburb E? If so, how much?
(d)Should the legal fees that the husband owes his criminal lawyers be included as a liability in the balance sheet?
Unfortunately, the husband’s evidence about financial matters was unsatisfactory in some key respects. This example will illustrate. On 7 October 2022 the husband’s solicitors wrote to the wife’s solicitors about financial matters (Exhibit 7). The letter included this sentence: “In relation to [Motor Vehicle 2], we are instructed that our client purchased the car for his mother, [Ms P]. [Ms P] is the registered owner of the vehicle. Our client instructs us that it should not be included in the asset pool.” The husband repeated this evidence in chief.
Following the evidence of the husband and his mother and cross-examination, the husband’s counsel, appropriately and on instructions, accepted that Motor Vehicle 2 would form part of the parties’ asset pool. This concession was required because: the insurance payout for the husband’s previous car was in almost precisely the same amount as the purchase price of Motor Vehicle 2, the husband’s mother does not drive, the husband’s mother did not pay for Motor Vehicle 2 and the husband drives Motor Vehicle 2. Its registration in the husband’s mother’s name and the husband’s efforts to exclude it from the pool of assets available for adjustment do him and his case no credit in circumstances where there are various other transactions between family members which are not adequately explained in the evidence.
The Suburb C property
The history of the acquisition of the Suburb C property is set out in the husband’s affidavit. In 1995 the husband and his sister Ms G purchased B Street, Suburb C. The purchase price was over $300,000. Two mortgages were obtained from the Commonwealth Bank of Australia (“CBA”) both of which were secured over the Suburb C property. Together the mortgages totalled $246,000 ($227,000 and $19,000). The husband’s father provided $68,000. It was accepted by the husband and his sister that the Suburb C property was intended to be the husband’s home (as opposed to an investment or the sister’s home).
Initially the Suburb C property was tenanted. It is not plain how the rents were applied. The husband’s affidavit material does not address how the mortgage was paid. While Ms G’s evidence contained some detail about mortgage payments in the period where she was a joint owner it similarly did not address how the rents (to which she would have been entitled at law) were applied.
In 1998 the husband discharged the mortgages with the CBA secured over the Suburb C property and the husband’s sister was released from her indebtedness to the CBA. Ten days later the husband says he borrowed $250,000 from K Bank to discharge the CBA mortgages. On the same day he says he purchased his sister’s share in the property. The transfer documents show acknowledgment of receipt of consideration of $162,500.
The husband and Ms G say that she did not in fact receive $162,500. It would be surprising if she had in the circumstances; namely the property had been purchased as the husband’s home; the husband could not acquire it without his sister as co-borrower; and the property was owned jointly for about three years. If the consideration on the transfer was supposed to be referable to half the value then the husband and his sister had adopted a figure of $325,000 – which represented an increase of value of $17,000. If Ms G had an entitlement to be paid funds at that stage then perhaps it was $8,500. If she was entitled to any of the original principal provided by her father then the figure may have been greater but it could not be $162,500.
The husband’s evidence is that he and his sister “entered into an oral agreement whereby she would be entitled to receive 25% of the proceeds of future sale of the former matrimonial home in payment for her unpaid share”.
Ms G says:
11.[Mr Privett] and I agreed verbally that if the property were to be sold, I would receive 25% of the net proceeds at the time of the sale.
12.The [Suburb C] property is estimated to be $3,500,000 and the sum I seek to receive is estimated to be $875,000 applied upon the sale.
Neither party gives evidence of an actual conversation. While I accept that significant time has passed it leaves the Court in a difficult situation because the evidence of the siblings is not unambiguous.
At the time of the transfer it appears plain that little, if any capital had been repaid, (hence the refinance for $250,000). Accordingly, including the money from the husband’s father the equity at the time of transfer was about $75,000. Half of that amount would have been $37,500. Assuming that the agreement had been for the husband’s sister to receive something akin to that to which she may have been entitled, the correct figure is more like 11.5 per cent (and that is allowing that the money from the husband’s father was intended to benefit them both and not merely to facilitate the husband buying his home). There is no explanation offered by the husband, his sister, or the evidence otherwise to explain why Ms G would receive 25 per cent of sale proceeds.
This was further problematised by the inconsistency between the evidence of the husband and that of Ms G as to whether the 25 per cent was to be gross or net. Again, the alleged agreement paid no regard to the level of encumbrance which may or may not be secured against the property at the time of sale nor did it consider any capital improvements that may have been funded entirely by the husband (or by the efforts of the husband and wife).
To the extent that Ms G’s evidence purported to suggest that the agreement between she and her brother created a “lifelong” interest in the land that is not the position at law when regard is had to the requirements of s 54A of the Conveyancing Act 1919 (NSW).
Finally, the evidence of Ms G was to the effect that she did not expect the husband to sell the property and hence in that scenario her alleged agreement had no value. At the conclusion of the evidence I am comfortably satisfied that the husband has not established that there is a loan. If I am wrong, the authorities have consistently supported a position that, where the judge finds that a loan will not, on the available evidence, be repaid then the judge will be entitled to disregard this loan as a liability for the purpose of calculating the net assets of the parties available for adjustment: Af Petersens & Af Petersens (1981) FLC 91-095; Biltoft & Biltoft (1995) FLC 92-614. That would have to be the case here.
I was taken to no representations to third parties – contemporaneous or contemporary – that would establish that the husband and/or his sister Ms G had ever represented to anyone (outside these proceedings) that the husband owed her money.
I find that even if there was an agreement between the husband and his sister its terms are not plain, would not be enforceable and ought not function to create a liability in the balance sheet such that it diminishes the assets available for division between the parties.
Occupation Fee Suburb J property
In the husband’s financial statement he listed an amount which was said to be owed to his sister, Ms F. In Part O of the husband’s Financial Statement he says that the money which he owes to Ms F relates to both the Suburb E property and an occupation fee for his residence of the Suburb J property.
It is not clear how this occupation fee is said to arise. In the husband’s financial statement at question 21 he told the Court that he was paying rent to “[Ms P]” in the sum of $450 per week. Ms P is the husband’s mother. In the husband’s affidavit he said “I am currently living with my mother, [Ms P], at her home at [H Street, Suburb J]. No one else lives at the home.” Elsewhere in that same affidavit the husband says he moved to this address about the time of an interim ADVO in mid-2021. During the hearing it became clear that the Suburb J property is legally owned by the husband’s sister Ms F, having been transferred to her in 2013 (Exhibit 25). Notwithstanding the contents of the husband’s affidavit Ms F says she does live in the Suburb J property. Notwithstanding the content of the husband’s affidavit Ms F says her brother moved into the Suburb J property in 2017 (the parties separated on 10 March 2021).
Ms F’s affidavit says:
12.Based upon his occupation at [Suburb J] I have calculated that [Mr Privett] owes me for an occupation fee and his share of utilities, storage and internet expenses. As at […] 2023 the amount owed was based on $450 per week ($450 x 92 weeks), the total being $41,400.
In her oral evidence Ms F gave inconsistent evidence suggesting that the amount to be paid was $350 per week in the first year.
There is no suggestion in her affidavit of an explicit written or oral agreement to this effect with the husband. This evidence was further complicated by the oral evidence of the husband’s mother who I accept may have been confused to the effect that the husband had paid her $1,500 in cash per week to live in the Suburb J property.
The husband had the benefit of his redundancy payment post-separation and then obtained employment from April 2022 – why he would have accrued a debt to his sister in those circumstances is not explained by the evidence.
It may be that the husband and his sister do have an agreement – the evidence fell short of satisfying me of that fact and I will not include it as a liability, particularly in circumstances where to do so would effectively require the wife to subsidise it.
Monies from the sale of the Suburb E property
In 1990 the husband and his sister Ms F bought the Suburb E property for the purchase price of under $100,000. It was intended by them to be an investment property and neither the husband nor his sister lived in the property. The husband’s evidence about the manner of acquisition is not precise but it seems apparent that there were two loans. The husband and his sister were joint tenants. In 1992 the mortgage to CBA secured against the title to the Suburb E property was discharged.
It would appear likely (in the absence of evidence to the contrary) that the rents from the property were applied to the outgoings including the mortgage. Ms F says she assisted with funding maintenance and utilities but it is not plain whether she means from the rental funds or in addition to the rental funds. Neither the husband nor his sister provided income tax returns detailing how the investment income and expenses were treated.
In 2017 Ms F transferred her interest in the Suburb E property to the husband. The transfer says that she acknowledged consideration of $430,000. She tells the Court that she did not receive any funds from the husband at that time. She explains at [8] that she did not ask him for the money and would receive it “once the respective property sales were finalised”. It is difficult to understand what the expression “respective property sales” means in this context since the affidavit to that point had only discussed acquisition of the Suburb E property. Maybe in simple terms it meant no more than she expected her brother would pay her when he sold the Suburb E property.
The Suburb E property was sold by the husband in 2019. As it transpired the husband did not pay any money to his sister from the proceeds of sale. The husband’s evidence about this was “[Ms F] and I entered into a verbal family agreement to the effect that [Ms F] would await payment of the $430,000 on the basis that I would repay her at some future time when I could”. The sale price was $900,000. The property was unencumbered.
The husband says the proceeds of the Suburb E property were applied as follows:
(a)Discharge of mortgage over the Suburb C property. The statements show the following payments to that mortgage after the sale of Suburb E totalling $146,187.29 in respect of loan ending #...41:
14 March 2019 $60,000;
26 September 2019 $40,000;
12 November 2019 $20,000;
11 December 2019 $20,000; and
12 December 2019 $6,187.29.
(b)Discharge of second loan secured over Suburb C property. The statements show the following payments to that mortgage after the sale of Suburb E totalling $274,500.00 in respect of the loan ending #...39:
8 February 2019 $200,000;
2 March 2019 $9,500;
26 September 2019 $20,000;
12 November 2019 $30,000; and
11 December 2019 $15,000.
(c)Discharge of a Commsec margin loan. The evidence does not establish the quantum of that loan but if it related to a share portfolio which was worth $116,785 in September 2022 it accordingly is unlikely to have been any greater than $115,000;
(d)Living expenses; and
(e)Capital Gains Tax (in an amount no greater than $99,757 – see Exhibit 8).
Apart from living expenses those payments total approximately $635,444 from sale proceeds of $900,000. I accept there would have been some costs of sale.
I accept that the husband had a period of unemployment but he did receive a redundancy of $212,206 in late 2019. He accepted that he was frugal in his expenditure.
The wife thinks that the husband has repaid his sister. The husband and his sister say that the only payment the sister has received is via a Deed of Family Arrangement entered into in 2016 (prior to both the transfer and sale of the Suburb E property) between the husband’s mother, and the husband and his siblings Ms G, Ms Q and Ms R. The circumstances of that Deed are that the husband was to inherit under the terms of his father’s will and, by agreement, the Deed instead provided that he receive approximately $132,174.04 plus a portion of rental monies earned on a property to be retained by Ms F. The sum in the husband’s affidavit is $131,960. Ms F and the husband say the husband did not receive those funds at that time. They are silent as to any conversation at the time of the Deed about those funds being somehow offset against her interest in the Suburb E property.
The husband and Ms F say that the husband remains indebted to Ms F in the sum of $298,040 being $430,000 less the sum of $131,960.
In the letter from the husband’s solicitor to the wife’s solicitor dated 7 October 2022 the husband represented: “Our client does not recall exactly how much he received net, after paying expenses and any outstanding mortgage, however, the entire funds were received by him, and his sister did not receive her share which was the sum of $250,000.”
Firstly it should be noted that it does not appear that the Suburb E property had a mortgage any time after 1992. Secondly, the husband does not explain why the figure of $250,000 was said to be owing.
The letter then further went on to indicate that the $132,000 – being the amount owing to him under the Deed of Family Arrangement – needed to be deducted leaving the balance outstanding to his sister at $118,000.
In a subsequent letter from the husband’s solicitors to the wife’s solicitors dated 3 November 2022 the husband provided a different account of the amount owing to Ms F in which the husband said that the amount owing to his sister was $430,000 less $131,960 being $298,040.
I was not taken in the evidence to any bank statements for any account which received the proceeds of sale of the Suburb E property nor was I taken to any settlement statement from the sale. This is most unsatisfactory since those documents must have been within the possession or control of the husband and are plainly relevant to the matters I am required to determine.
The husband has not provided anything close to a proper accounting for the proceeds of sale of the Suburb E property. Consistent with undisputed facts the most likely outcome is that the husband had funds from the sale of the Suburb E property sufficient to discharge any indebtedness to his sister Ms F. The wife is not seeking that this Court add back the funds which the husband has failed to account for but she does seek that I exclude the debt to Ms F.
While my finding that the husband has failed to account for the proceeds of the Suburb E property does not entitle me to find that he has in fact paid his sister the amount which she was owed following the sale of the Suburb E property, it does allow me to find that he has had available to him the funds to make that payment following the sale of the Suburb E property and they are not otherwise accounted for either in the balance sheet or in any evidence about expenditure after the sale. What that means is that to the extent that the husband’s sister Ms F says she is owed funds then she should look to the husband to pay her from his assets. It would not be just and equitable to include any outstanding amount in the balance sheet as between the parties given the inconsistent and unsatisfactory evidence of the husband.
If the husband was obliged to his sister from the time of transfer (in 2017) it is plain that she has taken no action to recover those funds and within a month will not be permitted to do so without leave of the Court: Limitation Act 1969 (NSW) s 14.
Liability for criminal law fees
The husband engaged a solicitor, Mr O to act for him in proceedings in the Local Court of New South Wales. In those proceedings a final ADVO was made in early 2023 for the protection of the mother. The invoice (Exhibit 14) was issued 7 May 2023 and marked “due on receipt”. The husband gave evidence that the amount outstanding to Mr O remained $40,000.
It would not be appropriate to include the debt for legal fees incurred by the husband in respect of proceedings taken by the NSW Police for protection of the wife as effectively a debt of the parties in determining the net assets available for adjustment between them. That does not mean I will ignore the fact that the husband has this liability when I consider the parties’ respective financial positions but I will not include this debt in the balance sheet for adjustment.
What that means is that the assets, liabilities, addbacks and superannuation available for adjustment between the parties is as follows:
Ownership Description Value ASSETS 1 Husband B Street, Suburb C $3,500,000 2 Husband Motor Vehicle 1 (in wife’s possession) $42,500 3 Husband Motor Vehicle 2 $15,000 4 Husband CBA account ending in #...69 $1,326 5 Husband CBA account ending in #...68 $4,325 6 Husband K Bank account ending in #...90 $4,220 7 Husband K Bank account ending in #...53 $12,324 8 Husband Shares $19,324 9 Husband Interest in L Pty Ltd $10 10 Wife Musical instruments $20,000 11 Wife NAB account ending #...98 $18,483 12 Wife NAB account ending #...13 $5,034 13 Wife NAB account ending #...83 $207 14 Wife NAB account ending #...64 $1,674 15 Wife NAB account ending #...08 $6 16 Wife Household contents $10,000 17 Husband Household contents $12,000 Total $3,666,433 ADDBACKS 18 Wife Legal fees paid to Marsdens Law Group $37,305 19 Husband Legal fees paid to AFL Solicitors $128,566 Total $165,871 LIABILITIES 20 Husband M Company $126,000 21 Husband N Finance credit card (balance as at 14 July 2023 $1,658 22 Wife Westpac credit card (balance as at 11 July 2023) $1,795 Total $129,453 SUPERANNUATION Member Name of Fund Type of Interest Value 23 Husband Superannuation Fund 2 ending in #...79 Accumulation $361,700 24 Husband Superannuation Fund 3 Defined benefit $343,650 25 Husband Superannuation Fund 4 Defined benefit $55,650 26 Husband Superannuation Fund 1 ending in #...30 Accumulation $160,682 27 Wife Superannuation Fund 5 ending in #...78 Accumulation $27,984 28 Wife Superannuation Fund 6 ending in #...42 Accumulation $79,007 29 Husband Superannuation Fund 7 Accumulation $15,000 Total $1,043,673 NET TOTAL ASSETS $4,746,524 Contributions
It follows from the above findings about the composition of the asset pool that it must first be acknowledged that the husband made a significant initial financial contribution by way of the equity which he had in the properties at Suburb E and Suburb C as well as superannuation. It is also necessary to acknowledge his receipt of an inheritance from his father in the sum of about $131,960.
Otherwise the evidence establishes that both husband and wife made contributions during the marriage. The wife’s contributions from employment were not the equivalent of the husband’s but by the same token I find that she carried the majority of the non-financial contributions for the household. Approaching the question from the perspective that the wife’s contributions facilitated the husband’s income and earning capacity and the husband’s contributions supported the family it is appropriate to conclude that the contributions during the relationship were equivalent. Post-separation this pattern was sustained with the husband’s financial contributions being greater and the wife’s non-financial contributions being greater.
It follows that I must consider the impact of the husband’s initial contributions and the inheritance on the pool of assets available for adjustment. The equity in the Suburb E property at the commencement of the parties’ relationship is unknown but it would appear as though the rental income was applied to outgoings and following discharge of mortgage would have been an additional source of income for the family.
The Suburb C property had been purchased by the husband in 1995, about seven years before the wife moved in and there had been tenants paying rent. The refinance by the husband to pay his sister in 1998 indicated a debt of $250,000. There is no evidence as to value at the commencement of cohabitation or the level of the mortgage debt.
Between the equity in these two properties, the inheritance and the husband’s superannuation entitlements, doing the best I can with the limited evidence I have, the contributions favour the husband 60 per cent to and the wife 40 per cent. As discussed above, no further adjustment as a consequence of subsequent contributions including any post-separation contributions are required as I find that the parties continued to make contributions after separation in a similar pattern to that which prevailed during the relationship.
Matters which arise under s 75(2)
The parties’ consent orders set out the parenting arrangements for their minor children, X aged 16, Y aged five and Z aged four. The children are to live with their mother who intends to relocate to Brisbane from 2024. The father’s time with the children from the beginning of 2024 will be three weekends each term and half the school holidays, with X’s time being subject to his views. There will be expenses associated with exercising time which will largely borne by the father (as while the cost of flights is shared he may have accommodation expenses in Brisbane). While the mother is likely to receive child support from the father (if she applies) she will undertake the majority of the care for the parties’ children for some considerable period of time given the youngest child is only four.
The wife gives some limited, unchallenged evidence about the costs of attending to X’s medical treatment which given her income and the need to assist to pay for travel will be an additional cost for her to bear.
The wife is likely to obtain work as an educator. Her earnings will be modest in comparison to those of the husband.
While the husband’s affidavit identifies a health issue there is no evidence of an impact on his earning capacity or of any particular costs involved in treatment. The position in respect of the wife is similar.
As I have said above I am conscious that the husband owed money to his criminal lawyer and take that debt into account. The wife owes $52,000 to her family lawyers (Exhibit 5).
Taking the relevant s 75(2) matters into account it is necessary to adjust the parties’ contribution-based entitlements by 15 per cent in favour of the wife.
DISPOSITION
The overall result is that the parties’ assets and superannuation should be adjusted such that the wife receives 55 per cent and the husband 45 per cent of the asset pool.
The parties currently have the following assets liabilities and superannuation entitlements:
The husband
ASSETS B Street, Suburb C $3,500,000 Motor Vehicle 1 (in wife’s possession) $42,500 Motor Vehicle 2 $15,000 CBA account ending in #...69 $1,326 CBA account ending in #...68 $4,325 K Bank account ending in #...90 $4,220 K Bank account ending in #...53 $12,324 Shares $19,324 Interest in L Pty Ltd $10 Household contents $12,000 Legal fees paid to AFL Solicitors $128,566 Subtotal $3,739,595 LIABILITIES M Company $126,000 N Finance credit card (balance as at 14 July 2023 $1,658 Subtotal ($127,658) SUPERANNUATION Superannuation Fund 2 ending in #...79 $361,700 Superannuation Fund 3 $343,650 Superannuation Fund 4 $55,650 Superannuation Fund 1 ending in #...30 $160,682 Superannuation Fund 7 $15,000 Subtotal $936,682
Accordingly before adjustment the husband has net assets of $3,611,937 (including paid legal fees) and superannuation of $936,682. He agrees that he will transfer Motor Vehicle 1 in the wife’s possession into her name which would reduce his net assets to $3,569,437.
In contrast the wife has the following:
The wife
ASSETS Musical instruments $20,000 NAB account ending #...98 $18,483 NAB account ending #...13 $5,034 NAB account ending #...83 $207 NAB account ending #...64 $1,674 NAB account ending #...08 $6 Household contents $10,000 Legal fees paid to Marsdens Law Group $37,305 Subtotal $92,709 LIABILITIES Westpac credit card (balance as at 11 July 2023) $1,795 Subtotal $1,795 SUPERANNUATION Superannuation Fund 5 ending in #...78 $27,984 Superannuation Fund 6 ending in #...42 $79,007 Subtotal $106,991
Accordingly the wife has net assets of $90,914 (which includes $37,305 paid to her lawyer) and $106,991 in superannuation entitlements. Taking into account the fact that I will make an order transferring Motor Vehicle 1 to her she would have $133,414 in net assets.
The pool of net assets and superannuation available for adjustment between the parties is $4,746,524. The husband currently has 96 per cent of those assets and superannuation. Having regard to my findings above the husband will need to pay the wife the sum of $2,370,183 (some of which may be by way of superannuation split). This takes into account that he will transfer Motor Vehicle 1 to her.
Superannuation split
The wife did not seek a superannuation split. The husband did seek a superannuation split.
I raised with counsel the fact that in considering the overall justice and equity of any adjustment the composition of the assets or superannuation to be retained by each party was a relevant consideration. In particular I raised the facts of this case – namely that the wife had spent a considerable amount of the parties’ marriage in part-time or casual employment and has not accrued significant superannuation when compared with that of the husband.
While the wife’s lawyer acknowledged that the Court may find that a just and equitable property settlement required a superannuation split the wife’s preference was to receive her entitlements from non-superannuation assets.
Following submissions the parties were jointly invited to communicate whether procedural fairness had been afforded to the superannuation trustees and that information was provided in respect of the following funds:
(a)Superannuation Fund 1;
(b)Superannuation Fund 3; and
(c)Superannuation Fund 2.
The husband proposes that in respect of those three funds the wife would receive a split into a superannuation fund nominated by her equivalent to half his present entitlement. Those orders, if made would increase the wife’s superannuation by $180,850 (Superannuation Fund 2), $80,341 (Superannuation Fund 1), $171,825 (Superannuation Fund 3) and $27,825 (Superannuation Fund 4) and would therefore make the amount of cash payable by the husband to the wife $1,909,342.
I am satisfied that it is appropriate to make a superannuation splitting order in the circumstances of this case.
Form of orders
The husband wanted the opportunity to retain the Suburb C property and so my orders have provided for same. If he is unable to make the payment required to the wife there will be default orders for sale and to take into account the vagaries of the market I have expressed the amount the wife would then receive as a percentage of the sale proceeds (taking into account her other assets and superannuation). This approach will allow for movements in the market in either direction.
I certify that the preceding eighty-four (84) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Christie. Associate:
Dated: 31 August 2023
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