Harry & Harry (No 4)
[2023] FedCFamC2F 1288
•13 October 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Harry & Harry (No 4) [2023] FedCFamC2F 1288
File number(s): MLC 12354 of 2021 Judgment of: JUDGE GLASS Date of judgment: 13 October 2023 Catchwords: FAMILY LAW – PROPERTY – short relationship – where husband made significant initial contributions – where husband has inherited remainder interest in farming properties – where husband is solely responsible for the care of the parties’ four year old child
FAMILY LAW – SPOUSAL MAINTENANCE – where wife has not established her need or the husband’s capacity to maintain her
Legislation: Family Law Act 1975 (Cth) ss 4(1), 90XZD, 79(2), 79(4), 81, 74, 72(1), 75(3), 75(2), 106A
Federal Circuit and Family Court of Australia Rules 2021 (Cth) r 7.06
Cases cited: Candle & Falkner (2021) FLC 94-069
Carson & Hillman [2019] FamCAFC 42
Chapman & Chapman (2014) FLC 93-592
NHC & RCH (2004) FLC 93-204
C & C (2005) FLC 93-220
C & C (2005) FLC 93-212
Kessey & Kessey (1994) FLC 92-495
Kramer & Another & Ward (2017) FLC 93-817
Mabb & Mabb & Another (2020) FLC 93-946
Malec v J C Hutton Pty Ltd (1990) 169 CLR 638
Marchant & Marchant (2012) FLC 93-520
Martell & Martell [2023] FedCFamC1A 71
Palumbo & Mandel (2019) FLC 93-929
Phe & Leng (2019) FLC 93-887
Preston & Preston (2022) FLC 94-108
Russo & Wylie (2016) FLC 93-747
Stanford v Stanford (2012) 247 CLR 108
Samper & Samper (2021) FLC 94-041
Trevi & Trevi (2018) FLC 93-858
Weir & Weir (1993) FLC 92-338
Division: Division 2 Family Law Number of paragraphs: 89 Date of last submission/s: 5 October 2023 Date of hearing: 4 – 5 October 2023 Place: Melbourne Counsel for the Applicant: Ms Smallwood SC Solicitor for the Applicant: Pearsons Lawyers Solicitor for the Respondent: Self-Represented Litigant ORDERS
MLC 12354 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR HARRY
Applicant
AND: MS HARRY
Respondent
ORDER MADE BY:
JUDGE GLASS
DATE OF ORDER:
13 OCTOBER 2023
THE COURT ORDERS THAT:
1.Within 60 days, the Wife:
(a)pay to the Husband the sum of $139,898; and
(b)discharge the mortgage secured against the property situate at L Street, City G, in the State of New South Wales, being the land more particularly described in Folio … (“L Street”).
2.In the event the Wife fails to comply with paragraph 1, the Husband and the Wife do all acts and things and sign documents as may be required to forthwith sell L Street to a non-party to the proceedings on terms agreed between them and failing agreement, as recommended by the selling agents.
3.The Husband and the Wife do all acts and things and sign documents as may be required to forthwith sell on terms agreed between them and failing agreement, as recommended by the respective selling agents, the following real properties:
(a)M Street, City G, in the State of New South Wales, being the land more particularly described in Certificate of Title Reference … ("M Street"); and
(b)N Street, Town F in the State of Victoria, being the land more particularly described in Certificate of Title Volume … Folio … ("N Street").
4.For the purposes of the sale of the real properties:
(a)in relation to the sale of L Street, O Company be engaged as the selling agents and P Company of Town Q NSW be engaged as the conveyancers;
(b)in relation to the sale of M Street, R Company be engaged as the selling agents and S Company be engaged the conveyancers;
(c)in relation to the sale of N Street, T Company be engaged as the selling agent and U Pty Ltd be engaged as the conveyancer;
(d)the parties shall promptly follow all reasonable recommendations of the selling agent;
(e)both parties shall promptly execute the required documents and authorities as and when required;
(f)the settlement terms of the sale be no longer than 60 days unless otherwise agreed between the parties in writing through their respective lawyers or as recommended by the selling agent;
(g)the Wife vacate and provide vacant possession of L Street at least two weeks prior to settlement;
(h)the parties present the properties they occupy in a clean, tidy and presentable condition for all open inspections and auction dates; and
(i)each party will have liberty to apply in relation to the terms and conditions of the sale.
5.That pending the sale of the real properties, or in the case of L Street, the Wife’s compliance with paragraph 1:
(a)the Wife occupy L Street and pay the Commonwealth Bank of Australia mortgage, rates and all outgoings and insure it against loss and damage;
(b)the Husband have right to occupy and retain rental income from N Street and M Street, and that he pay the associated mortgage repayments, rates and outgoings, and insurances of N Street and M Street.
6.The proceeds of the sales of the real properties including M Street be applied as follows:
(a)firstly, to meet sale costs and expenses, including real estate agent's fees and commissions, and conveyancing costs and disbursements, save and except that U Solicitors be reimbursed disbursements and all out of pocket costs only;
(b)secondly, to discharge the registered mortgages secured against the properties, namely:
(i)CBA mortgage dealing number … for M Street;
(ii)CBA mortgage dealing number … for N Street; and
(iii)CBA mortgage dealing number … for L Street.
(c)thirdly, the sum of $100,000 be invested by the Husband's lawyers, Pearsons Lawyers of Suburb W in a joint interest-bearing trust account, and held and applied to cover the calculation and lodgement of necessary documents in relation to CGT and the payment of CGT when due and payable; and
(d)finally, any balance remaining thereafter be disbursed as to 50 per cent to the Husband and 50 per cent to the Wife, save and except for the adjustment in paragraph 11 hereunder.
7.The Husband otherwise retain for his sole and exclusive use, enjoyment and benefit, all other items of property (both real and personal and including choses-in action and financial resources) in his name, possession and/or control including but not limited to:
(a)his bank account(s) and savings;
(b)Y Pty Ltd;
(c)his interest in U Pty Ltd;
(d)Mr Harry Family Trust;
(e)his personal belongings and effects;
(f)his remainder interest in the estate of his late grandfather; and
(g)his Super Fund 1 contributions and entitlements.
8.The Wife relinquish any right, title or interest in the property to be retained by the Husband including any loan account(s) standing to her credit in the Mr Harry Family Trust and for this purpose she shall sign all document(s) that may be required and prepared at the Husband's expense.
9.The Husband shall be solely liable for and indemnify the Wife in relation to all debts and liabilities in his name or attaching to any item of property he is retaining pursuant to these Orders.
10.The Wife retain for her sole and exclusive use, enjoyment and benefit all other items of property (both real and personal and including choses-in-action and financial resources) in her name, possession and/or control including but not limited to:
(a)the part property payment made to her pursuant to paragraph 12 of the Orders made on 22 December 2021;
(b)Motor Vehicle 1;
(c)furniture, furnishings and household contents in her possession;
(d)her personal belongings and effects;
(e)her bank account(s) and savings; and
(f)her superannuation contributions and entitlements.
11.The Wife pay to the Husband contemporaneously with receiving her payment from the sale of real estate, the sum of $23,777.80 calculated as $20,350.30 reimbursement for disbursements, and $3,427.50 as per orders made 8th September 2022 and 11th April 2023 together with any further costs as determined by this Court.
12.Unless otherwise specified in these Orders and save for the purposes of enforcing any monies due under these or any subsequent orders:
(a)each party be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the possession of such party as at the date of these Orders;
(b)any joint bank accounts held by the parties be closed and the proceeds are to be retained by the Husband and each party retain bank accounts and savings in their respective sole name;
(c)each party forego any claims they may have to any superannuation benefits belonging to or earned by the other;
(d)insurance policies remain the sole property of the owner named thereon;
(e)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders; and
(f)any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
13.In the event the Wife refuses or neglects to do all acts and things and/or execute all necessary documentation to give effect to these Orders, then the Husband's solicitor, Mr Joesph Schepis of Pearsons Lawyers Pty Ltd, be and is hereby appointed pursuant to section 106A of the Family Law Act 1975 (Cth), to do so in the name of the Wife, and he will do all acts and things necessary to give validity and operation to any deed or instrument required to give effect to the Orders.
14.All extant applications 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 has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE GLASS:
Mr and Ms Harry commenced cohabiting in approximately mid-2016, married in 2019 and separated in February 2021. Their period of cohabitation was accordingly approximately four and a half years.
Arising for determination are their respective applications for orders altering their interests in property and Ms Harry’s application for spousal maintenance. Their respective applications are articulated in Exhibits A2 and R4. Ms Harry also sought more particularised relief with respect to the sale of real estate as set out in her Application in a Proceeding filed 21 September 2023.
PROPERTY
Mr Harry proposes the sale of the parties’ properties in M Street and L Street, City G, and N Street, Town F. He proposes the proceeds be applied to discharge the parties’ home loans secured by mortgage, the parties’ prospective capital gains tax liabilities, with the balance thereafter distributed equally between the parties. From Ms Harry’s share, he seeks repayment of disbursements and costs pursuant to previous Orders of the Court. His proposal equates to Ms Harry retaining 25 per cent of the value of the parties’ assets.
Ms Harry proposes that she retain the property in L Street unencumbered. She also proposes the sale of the M Street and N Street properties, with their sale proceeds to be applied to discharge the home loans secured against all three properties, capital gains tax, and any balance then remaining being divided equally between the parties. Her proposal equates to her retaining 44% of the value of the parties’ assets.
Pursuant to section 79 of the Family Law Act 1975 (Cth), I have a discretion to make such order altering the parties’ interests in property as I consider appropriate. I am prohibited from making an order unless I am satisfied, in all the circumstances, it is just and equitable to do so.[1] If I am so satisfied, I am required to consider the matters prescribed by subsection 79(4) of the Act and by the device of paragraph 79(4)(e), relevant matters referred to in subsection 75(2) of the Act.
[1] Family Law Act 1975 (Cth) ss 79(2).
Property interests
It is necessary to begin by identifying, according to common law and equitable principles, the existing legal and equitable interests of the parties in property.[2] For reasons that follow, those interests comprise the following:
[2] Stanford v Stanford (2012) 247 CLR 108 (“Stanford”) at [37].
Asset
O'ship
Value
M Street, City G
Jt
$775,000
less Commonwealth Bank home loan #...53
Jt
($96,089)
less Commonwealth Bank home loan #...61
Jt
($261,553)
N Street, Town F
W
$740,000
less Commonwealth Bank home loan #...24
Jt
($400,752)
L Street, City G
W
$810,000
less Commonwealth Bank home loan #...20
Jt
($530,204)
Sale costs of real estate (estimate)
Jt
($75,000)
Capital Gains Tax liability (estimate)
Jt
($100,000)
6 Commonwealth Bank Accounts
Jt
$983
Mr Harry Family Trust
H
$282,557
50% equity in V Street, Town F
H
$140,800
Remainderman interest in farming properties
H
$602,734
Bank savings
H
$232
Part property settlement
W
$24,000
AA Company shares
W
$1,294
Motor Vehicle 1
W
$12,500
Furniture and household effects
W
$3,000
Total non-superannuation interests
$1,929,502
Super Fund 1
H
$106,004
Super Fund 2
W
$32,443
Super Fund 3
W
$9,213
Super Fund 4
W
$6,979
Total superannuation interests
$154,639
Total property interests
$2,084,141
The M Street property was to be sold pursuant to interim consent Orders made 22 March 2023. It has accordingly not been valued. Mr Harry estimates the sale price to be between $750,000 and $800,00 relying on a real estate agent appraisal.[3] Ms Harry asserts a value of $840,000 for the property. She deposes as follows:
The value of [M Street] needs to be over $800,000. It is around the corner from my home (that has been valued at $810,000) and [M Street] has one more bedroom than my home and is an attractive brick home. I would say between $800,000 and $860,000 would be the value for [M Street].[4]
[3] Affidavit of Mr Harry filed 3 October 2023, Annexure C.
[4] Affidavit of Ms Harry filed 26 September 2023, paragraph 18.
Neither party is qualified to give evidence of the value of the property. For present purposes, I will adopt the mid-point of the range opined by the real estate agent, noting that both parties now propose the sale of the property and the proportional distribution of its proceeds.
Each of the other real properties were valued by single experts pursuant to previous Orders of the Court. None were challenged on their evidence and I find no basis to reject it. I accept their opinions as to the value of the real properties even if Ms Harry suggests some are conservative.
Only Mr Harry asserted values for the parties’ home loans. He was not challenged about their balances in cross-examination. He gives particularised evidence of their values in his affidavit filed 6 September 2023. Nevertheless, the particular loan balances are inaccurately totalled in that document. I adopt his evidence of the particularised loan balances.
Mr Harry also gave unchallenged and uncontradicted evidence that he estimates the sale costs of the real properties to amount to $75,000. I accept that estimate, noting that the parties will bear those costs proportionately from sale proceeds.
Mr Harry adduces evidence from his accountant estimating capital gains tax liabilities resulting from the sale of the M Street and N Street properties totalling $97,005.[5] She opines that no capital gains tax would be payable in the event of the L Street property being sold. Ms Harry put to Mr Harry in cross-examination that his accountant was a family friend. He accepted that she was. I do not accept any suggestion that association impeaches her estimate of the parties’ capital gains tax liabilities. Ms Harry did not adduce any contradictory evidence as to the extent of the parties’ capital gains tax exposure.
[5] Affidavit of Mr Harry filed 6 September 2023, Annexure 3, page 33.
Both parties ultimately agreed to capital gains tax being paid from the proceeds of sale of real estate. I accept Mr Harry’s allowance of $100,000 in the balance sheet for present purposes. Again, the parties will proportionally meet the precise liability upon the distribution of the sale proceeds.
Mr Harry’s assertions as to the value of the parties’ bank accounts was unchallenged and uncontradicted. I accept them.
Mr Harry is a part owner of his business. His 50 per cent shareholding in U Pty Ltd is held by the Mr Harry Family Trust. Mr Harry is the sole director, shareholder and appointor of its trustee company. A single expert witness, Mr Z, opined the value of Mr Harry’s interest in U Pty Ltd to be worth between $266,679 and $298,434. Both parties adopted the midpoint of $282,557 as the agreed value.
The Mr Harry Family Trust also owns 50 per cent of the units in V Street Unit Trust which owns the premises from which U Pty Ltd operates. The property has been valued at $665,000. Mr Harry deposes to it being subject to a loan secured by mortgage with a balance of $383,500. The value of his 50 per cent interest in the property is accordingly $140,800. Neither the valuer nor Mr Harry’s evidence was challenged and I accept it. I reject Ms Harry’s unqualified assertion that the value of Mr Harry’s interest is $400,000.
I note that Mr Harry asserts a value of $135,750 in both the balance sheet in his Affidavit and Outline of Case, filed 6 September 2023. That figure is inconsistent with the particularised evidence to which I have referred. I decline to accept what appears to be an erroneous calculation.
Mr Harry’s maternal grandfather died in 2016. Pursuant to his will, Mr Harry’s mother acquired a life interest in three farming properties, with Mr Harry and his three brothers acquiring a remainderman interest in those properties. One quarter of the value of the real properties, with vacant possession, has been valued at approximately $1,200,000. Ms Harry asserts this to be the value of Mr Harry’s interest in the properties, although she suggests in her Outline of Case it ought be treated as a financial resource. As Mr Harry contends, his remainderman interest in the real properties is property for the purposes of the Act.[6]
[6] Family Law Act 1975 (Cth) ss 4(1).
Ms Harry’s assertion as to the value of the interests at $1,200,000 ignores the fact that Mr Harry does not have an interest in land with vacant possession. His mother has a life interest in the property and pursuant to the will, is entitled to “occupation and enjoyment thereof and to receive the rents receipts profits and income therefrom during her lifetime”.[7] I accordingly reject Ms Harry’s assertion of value.
[7] Affidavit of Mr Harry filed 3 October 2023, Annexure B, page 50.
Mr Harry asserts the value of his remainderman interest in the farming properties to be $602,734. He relies on expert actuarial evidence to that effect. Although the evidence was not adduced from a single expert, Ms Harry neither objected to its adduction, nor did she challenge it. I accept the expert opinion as to the value of the remainder interest taking into account the probability of Mr Harry outliving his mother, projected inflation and present value discount. Those hypothetical chances may permissibly inform valuation.[8]
[8] Samper & Samper (2021) FLC 94-041 at [27], citing Malec v J C Hutton Pty Ltd (1990) 169 CLR 638 at 643.
Even the attribution of that value obscures the fact that Mr Harry’s remainderman interest in his grandfather’s estate is effectively inalienable by him alone. He deposes that his mother may sell Mr Harry’s interest in the property, and his brothers may elect to sell the property after her death. Ms Harry did not challenge that evidence. As has been held, it is the “the nature and form of the property or superannuation interests comprising a party’s entitlement, and not just the dollar value of that entitlement are clearly central to achieving justice and equity as s 79 requires”.[9]
[9] Chapman & Chapman (2014) FLC 93-592 at [40] per Strickland & Murphy JJ.
Pursuant to consent Orders made 22 December 2021, Ms Harry received a part property settlement of $24,000. Given its agreed characterisation at the time of the making of that consent Order, I accept Mr Harry’s assertion that it ought now be added back to the assets available for distribution. Whilst I am not bound by that characterisation,[10] Ms Harry made no alternative submission.
[10] Marchant & Marchant (2012) FLC 93-520 at [42] and [44].
Ms Harry asserts the value of her AA Company shares to be $1,294. Mr Harry asserts them to be worth $1,262. Neither party was challenged on their assertions. I prefer Ms Harry’s assertion given they are her shares and her contention is against her interests.
Mr Harry contends that Ms Harry’s Motor Vehicle 1 is worth $12,500, relying on what he describes as a “Redbook midpoint”.[11] Ms Harry asserts its value to be $5,000. She deposes “my car is an older model and is valued at most, at $5,000.”[12] Neither party was challenged on their evidence. Neither is qualified to give an opinion as to value, although neither objected to the other’s evidence. Doing the best I can with the available evidence, I prefer Mr Harry’s evidence which has a discernible independent basis.
[11] Affidavit of Mr Harry filed 6 September 2023, paragraph 13.
[12] Affidavit of Ms Harry filed 26 September 2023, paragraph 18.
Mr Harry abandoned his assertion that the value of Ms Harry’s furniture and household effects is $30,000. He ultimately adopted Ms Harry’s assertion as to their value of $3,000, which agreed figure I accept.
Neither party was challenged on their evidence as to the value of their superannuation interests. I accept Mr Harry’s evidence as to the value of his interests and Ms Harry’s evidence as to the value of her interests.
Neither party submitted that superannuation ought be dealt with as a discrete pool of assets. That approach is open, although I must ensure relevant findings are made and the nature of the interests is taken into account in the final assessment of whether the ultimate orders are proper.[13]
[13] Palumbo & Mandel (2019) FLC 93-929 at [47], citing C & C (2005) FLC 93-220.
Justice and equity
Both parties seek an alteration of their property interests in order to finally determine the financial relationships between them.[14] It is implicit in both parties’ requests that the Court make orders, that it is accepted that the making of an order would be just and equitable.[15] The parties’ joint proprietary interest in M Street and their joint liabilities as mortgagors must be severed, so it is just and equitable to make orders altering their interests in property.[16]
[14] Family Law Act 1975 (Cth), s 81.
[15] Russo & Wylie (2016) FLC 93-747 at [54].
[16] Preston & Preston (2022) FLC 94-108 at [38].
Contributions
I am required to take into account the parties’ financial and non-financial, direct and indirect, contributions to the acquisition, conservation or improvement of property.[17] I am also required to take into account the parties’ contributions to the welfare of the family.[18]
[17] Family Law Act 1975 (Cth), ss 79(4)(a-b).
[18] Family Law Act 1975 (Cth), ss 79(4)(c).
At the commencement of the parties’ cohabitation, Mr Harry owned the M Street property. He deposes to then having equity in the property of $100,000. Ms Harry deposes to believing that Mr Harry had applied funds of $70,000 to $100,000 to the purchase which had occurred in 2015. Ms Harry does not contradict Mr Harry’s evidence as to the value of his equity in mid-2016. I accept Mr Harry’s unchallenged evidence as to the value of his equity in the M Street property at the time of the parties’ cohabitation. The property was, at that time, tenanted.
Mr Harry also deposes to then having savings of $17,550 and superannuation interests worth $25,735. His evidence was unchallenged and I accept it.
Ms Harry deposes that she had purchased a car on finance in 2015. She does not suggest there was any substantial equity in the vehicle. Mr Harry deposes that he could not recall whether the vehicle was purchased prior to the parties’ cohabitation or not. Nevertheless, he deposes that there was little equity in the vehicle. I accept Ms Harry’s unchallenged evidence as to the date of acquisition of the vehicle but find there was little equity in the vehicle at the time of cohabitation.
Also at the time of cohabitation, Mr Harry deposes that Ms Harry had a Higher Education Contribution Scheme liability of approximately $30,000. Ms Harry did not respond to that evidence and did not challenge it. In cross-examination, she gave evidence that she was “not sure” if the debt was between $25,000 and $30,000. I prefer Mr Harry’s unchallenged evidence and find Ms Harry’s liability was approximately $30,000 at the commencement of the relationship.
I accordingly find that Mr Harry contributed assets in his sole name worth $143,285 at the time of the parties’ cohabitation. Ms Harry was then liable for a debt of approximately $30,000. I find that Mr Harry’s initial contribution thereby exceeded Ms Harry’s by $173,285.
As has been observed, in 2016, prior to the parties’ relationship, Mr Harry had inherited his remainder, quarter interest, in the farming properties. His mother has retained and exercised her life interest in the properties since that time. There is no evidence that Mr Harry has derived any benefit from the properties. Ms Harry agreed in cross-examination that she made no contributions to them. Mr Harry’s interest in the properties was intended to be inherited by him alone. I accordingly treat it as a contribution made on his behalf.[19]
[19] Mabb & Mabb & Another (2020) FLC 93-946 at [119] to [120] per Kent J, quoting Kessey & Kessey (1994) FLC 92-495 at 81,150.
Ms Harry gave oral evidence that her HECS liability has reduced to approximately $5,000 by application of Mr Harry’s earnings during the parties’ marriage, although she did not depose to that liability in her Financial Statement. I find that Ms Harry’s personal liability was overwhelmingly repaid from Mr Harry’s earnings during the parties’ short relationship.
At the time of the parties’ cohabitation, both were employed on a full-time basis. Mr Harry was working as a professional and Ms Harry as a customer service officer. It is common ground that both parties were then earning approximately $60,000 per annum each. They both contributed their income to joint purposes. Ms Harry’s income was principally applied to living expenses, and Mr Harry’s income primarily applied to servicing liabilities and savings.
Mr and Ms Harry worked on Ms Harry’s mother’s farm in 2017. They both agree they generated some income doing so. They dispute its quantum and the application of the funds. Mr Harry deposes to the parties earning $10,000 to $15,000, which funds were applied to repayment of Ms Harry’s car loan. Ms Harry gave oral evidence that the parties generated $4,000 of income which was applied to the purchase of a couch for their home. She otherwise deposes to her mother repaying her car loan in the sum of $13,000. Given the relevant quantum of the dispute in terms of the value of assets currently available for distribution, I am not satisfied it is necessary to resolve the dispute.
In late 2017, the parties commenced occupation of the M Street property.
In early 2018, Mr Harry acquired his 50 per cent interest in U Pty Ltd and the V Street property for $176,375. He obtained business finance to do so.
In 2019, the parties’ child, X, was born. Ms Harry did not return to work thereafter. She was primarily responsible for X’s care. She gave oral evidence that she thereafter directed her energies to caring for X and household duties. Mr Harry continued to work full time.
In mid-2020, the parties purchased the N Street property for approximately $499,000 and the L Street property for approximately $625,000. The parties refinanced the home loan secured against the M Street property to finance the N Street and L Street purchases. As part of the re-finance, the M Street property was transferred into the parties’ joint names. The parties thereafter occupied the L Street property.
After separation in February 2021, Ms Harry continued to primarily provide for the care of X who was then months old. Mr Harry gave uncontradicted evidence that he paid Ms Harry child support at the rate of $433 per week. From January 2022, the rental income from the N Street property was unilaterally retained by Ms Harry. Mr Harry deposes that her doing so “in lieu of child support while she had the care of [X]”.[20]
[20] Affidavit of Mr Harry filed 3 October 2023, paragraph 12.
Given Ms Harry would have been entitled to a similar sum by way of child support from Mr Harry, I place minimal weight on the fact that Mr Harry paid the outgoings for the N Street property, without receiving its rental income prior to X coming into his care in March 2023.
After separation in February 2021, Mr Harry made the home loan repayments for the L Street property until September 2021. Thereafter, Ms Harry has made those repayments and met other outgoings for the property.
Mr Harry deposes that he has met the outgoings for the N Street property including mortgage instalment repayments and “all other outgoings”.[21] Ms Harry suggested to him that he had not reimbursed her for expenses she incurred in relation to the N Street property. Mr Harry gave evidence that he remembered receiving a request from Ms Harry to do so, but that he had asked for statements or invoices to be provided which were not received by him. Ms Harry suggested to him that she sent an invoice for $394 to be paid, however was unable to produce the invoice in a legible form, nor identify what the expense related to. I accept Mr Harry’s evidence that he met the outgoings for the N Street property after separation.
[21] Affidavit of Mr Harry filed 6 September 2023, paragraph 32.
Mr Harry deposes that the N Street expenses approximated $4,000 per month. He gave oral evidence that he included the repayments for one loan secured against that property and another loan secured against M Street in that amount.
Upon X coming into Mr Harry’s care in March 2023, Ms Harry continued to receive the rental income from the N Street property, which income she now deposes to amount to $474 per week. She has retained that income without meeting any of the expenses of the N Street property. She would not then have been entitled to child support from Mr Harry. Although Ms Harry has continued to meet the mortgage repayments for the L Street property, she retained the rental income from another property to do so. She paid no child support to Mr Harry during that period.
In mid-2023, the M Street property became vacant and Mr Harry has thereafter been solely responsible for the home loan repayments referrable to that property at the rate of approximately $2,200 per month. Ms Harry sought to suggest that Mr Harry had acted unilaterally in leaving the property vacant. Even accepting that were so, Orders made 22 March 2023 required both parties to forthwith sell the property, engaging R Company as agents. Despite the Order, Ms Harry did not instruct R Company in relation to the sale. She suggested that there was a conflict of interest because the selling agent was a client of Mr Harry’s practice. She was unable to articulate what the conflict of interest was, nor did she make an application to vary the Orders. I do not accept any suggestion that Mr Harry ought to have re-tenanted a property that was subject to an Order for its sale by the Court. It was Ms Harry’s non-compliance with the Court’s Orders without proper basis, that caused financial loss to Mr Harry in continuing to service liabilities relating to the M Street property.
I find that weight ought be afforded to the fact that, since March 2023, Mr Harry has been solely responsible for X’s care, and solely responsible for meeting the outgoings with respect to the M Street and N Street properties.
Ms Harry refers to the family violence she alleges Mr Harry perpetrated against her. In the assessment of contributions, I am required to take into account contributions made more difficult, onerous or arduous as a result of family violence.[22] Ms Harry’s evidence now before the Court in relation to the family violence is essentially conclusory in nature. For example, she deposes to “the history of family violence, including financial abuse and coercive control,”[23] that “the Husband’s coercive control and family violence continues,”[24] and that a government agency has “provided acknowledgement and some financial compensation for the violent crime perpetrated by the Husband.”[25] The evidence is conclusory and unsupported by facts that might enable the Court to be satisfied of the conclusions.[26] I am not satisfied that Ms Harry’s contributions were made more difficult, onerous or arduous as a result of the family violence she claims to have been subjected to.
[22] Martell & Martell [2023] FedCFamC1A 71 at [28] and the cases there cited.
[23] Affidavit of Ms Harry filed 26 September 2023, paragraph 24.
[24] Affidavit of Ms Harry filed 7 September 2023, paragraph 16.
[25] Affidavit of Ms Harry filed 7 September 2023, paragraph 18.
[26] Kramer & Another & Ward (2017) FLC 93-817 at [10].
On balance, I consider that Mr Harry’s contributions to the present value of the parties’ assets ought be assessed at 70 per cent and Ms Harry’s at 30 per cent. The 40 per cent differential in the finding in dollar terms equates to a dollar difference of $833,656.
Paragraphs 79(4)(d, e, f and g) and subsection 75(2) factors
Mr Harry is 36 years old. He works on a part-time basis as a professional. He currently earns approximately $66,000 per annum. He deposes his earnings have reduced by 40% as a result of X being in his full-time care. So much is consistent with Mr Harry’s previous salary being recorded as $110,000 in the business’ records.[27]
[27] Affidavit of Mr Z filed 4 September 2023, page 14.
Ms Harry put to Mr Harry in cross-examination that he can at any time increase his hours again. Mr Harry gave evidence that he did not know whether he could or not. Ms Harry did not further challenge that evidence. I do not accept that Mr Harry is presently able to resume full time employment given his is currently responsible for four year old X’s full time care.
Ms Harry deposes that she estimates Mr Harry’s “gross income to actually be between $300,000 - $400,000 per year.”[28] In the absence of any particularised basis for the estimate, and in the absence of any challenge to Mr Harry’s evidence of his current earnings, I do not accept Ms Harry’s evidence.
[28] Affidavit of Ms Harry filed 20 September 2023, paragraph 17.
Ms Harry effectively submits that Mr Harry has a more substantial earning capacity by reference, in particular to, his past income and distributions from the business. She put to him in cross-examination that he had received distributions totalling approximately $140,000 prior to the end of the Financial Year ending 30 June 2022. Mr Harry was unable to verify the figure without reference to taxation returns. No such documents are in evidence. Although Mr Harry gave oral evidence that the pattern of the timing of the distributions had not changed, the evidence does not establish the extent of the distributions more recently made to him, or their prospective value.
Ms Harry also relies on the business valuer’s assessment of “future maintainable normalised earnings” for the business of $141,130.[29] The difficulty with Ms Harry’s submission is that those earnings are for the business in its entirety, and not just Mr Harry’s half share. That figure appears also not to take into account Mr Harry now working reduced hours. A further difficulty with Ms Harry’s reliance on that future maintainable earnings figure, is that in order to realise his share of those earnings, Mr Harry is required to keep invested $282,557 from his share of the parties’ assets while Ms Harry has available to her assets to invest as she sees fit.[30]
[29] Affidavit of Mr Z filed 4 September 20223, page 9, paragraph 6.1.6.
[30] C & C (2005) FLC 92-212 at [25].
Ms Harry suggested to Mr Harry that when ownership of the farming properties goes to Mr Harry and his brothers unencumbered by his mother’s life estate, he could earn income from them. He gave evidence that provided he survives until then, and agreement is reached between his siblings not to sell the properties, they may generate income. There is no evidence of what level of income might be generated in that eventuality. Mr Harry’s mother is 60 years old and deposes to enjoying excellent health.
Ms Harry is 38 years old. She deposes to being unemployed and her income currently comprising rental income from the N Street property and Centrelink benefits totalling $282 per week. Nowhere in her material had she disclosed the fact that she has been working as a tradesperson or has made recent attempts to obtain employment. She sought and was granted leave to adduce the following oral evidence in chief:
Currently, I’ve been working as a [tradesperson] and I’m looking at setting up my own business. I have a [qualifications]. I’ve applied for employment I’ve previously worked at [BB Company].
Ms Harry gave further evidence in chief that her Financial Statement inaccurately recorded her employment information. She thereafter gave oral evidence that as a tradesperson she was earning between $32 and $33 per hour, and that she was working between 19 to 30 hours per week. Accordingly, Ms Harry was earning up to approximately $1,000 per week commencing in mid-2023, which income she failed to disclose to the Court prior to the commencement of the final hearing. Although she gave evidence of ceasing that employment in late August, she accepted there was no reason she could not resume work tomorrow.
Ms Harry gave oral evidence that the jobs she had applied for had salaries of approximately $70,000 per annum. She suggested in oral evidence that if she was successful in those job applications, she would also seek work as a tradesperson earning a further $50 to $150 per week.
Ms Harry’s Financial Statement also erroneously recorded the fact she is in receipt of a government benefit “Family Payment”.[31] She gave oral evidence that in fact she is in receipt of Jobseeker assistance at the rate of $225 per week.
[31] Financial Statement of Ms Harry filed 26 September 2023, question 12.
Mr Harry is solely responsible for X’s care pursuant to Orders made by the Court on 21 December 2022, due to Ms Harry’s non-compliance with paragraph 2 of those Orders. X is not currently spending time with Ms Harry due to her failure to engage with the nominated supervision agency.
Ms Harry pays no child support for X.
Ms Harry repeatedly asserted that Mr Harry had failed to make full and frank disclosure. She alleged that he had not provided any business bank accounts to her, despite an Order that he provide statements for all accounts in which he has an interest from 1 July 2018.[32] Mr Harry gave evidence that he had provided financial statements and taxation returns for the business. He conceded that he had not provided business accounts with the National Australia Bank. I accept Ms Harry’s suggestion that he was required to provide them pursuant to the Order. However, I am not satisfied that the omission was deliberate. Accordingly, I am unable to be unduly cautious about makings findings in favour of Ms Harry.[33]
[32] Interim Orders made 22 March 2023, paragraph 7.
[33] Phe & Leng (2019) FLC 93-887 at [69]; Weir & Weir (1993) FLC 92-338 at 79,593.
Ms Harry suggested to Mr Harry that he had failed to disclose other documents, such as those pertaining to the initial financing of the M Street property, funds borrowed from his mother after separation, evidence of ownership of a company motor vehicle and funds received from the parties’ work on Ms Harry’s mother’s farm in 2017. There is no evidence of Ms Harry making any specific requests for production of such documents. I decline to draw any inference adverse to Mr Harry in that circumstance.
Ms Harry’s complaints about disclosure did not lead to her suggesting to Mr Harry that he was minimising the value of any of the identified assets, nor that he owned assets that were not disclosed. The business motor vehicle she claimed to have been omitted from a Financial Statement is included in the business valuation relied on in these proceedings. In the absence of any deliberate non-disclosure or any direct challenge to Mr Harry’s evidence about his financial position, I am not satisfied that any non-disclosure ought to sound in an adjustment in favour of Ms Harry.
Both parties have borrowed funds from family members to apply towards legal fees and living expenses. Mr Harry’s funds have been borrowed from his mother. Both she and Mr Harry give evidence that the total funds now owing amount to approximately $321,165. Ms Harry deposes to having borrowed approximately $122,000 for legal and living expenses. To the extent those loans relate to the parties’ legal fees, to make allowance for them in the alteration of their property interests would be akin to making a pre-emptive decision about one party paying the other’s legal costs.[34] As Ms Harry observes, a previous application for costs by Mr Harry was unsuccessful.
[34] Trevi & Trevi (2018) FLC 93-858 at [37]; NHC & RCH (2004) FLC 93-204 at [55], [59].
On balance I am satisfied that a small adjustment ought be made in favour of Mr Harry. He presently has the sole care of four year old X and has a reduced earning capacity as a result. Ms Harry clearly has a present earning capacity, even if her present income is modest. I find that an adjustment of 5 per cent in Mr Harry’s favour is appropriate in all the circumstances. The real impact of that finding, which is ultimately the critical issue,[35] is a further differential of $208,414 between the parties’ respective positions.
[35] Candle & Falkner (2021) FLC 94-069 at [102] and the cases there cited.
Property Conclusions
I conclude that an alteration of the parties’ interests in property such that Mr Harry retain 75 per cent of their value and Ms Harry retain 25 per cent of their value is just and equitable. That 50 per cent differential in dollar terms is approximately $1,042,000. The differential is roughly equivalent to the value of Mr Harry’s interests in his business, its operating premises, and the value of his remainderman interest in the farming properties.
Ms Harry’s proposal for superannuation splitting orders are not articulated in a form that can be pronounced by the Court. More fundamentally, she has not accorded procedural fairness to the relevant superannuation trustee, such that I am prohibited from making an order binding upon a superannuation trustee.[36] I am accordingly unable to make any superannuation splitting orders. Mr Harry’s superannuation interests presently amount to 69 per cent of the value of the parties’ superannuation interests, and Ms Harry’s amount to 31 per cent of their value. I conclude that the nature of those interests suggests the ultimate orders sought by Mr Harry are proper.
[36] Family Law Act 1975 (Cth), s 90XZD.
Ms Harry deposes that she requires “one of my assets to be my home, L Street paid out and unencumbered”.[37] Pursuant to my findings, she will not retain assets of sufficient value to achieve that outcome. Despite her evidence, she sought an opportunity to retain the L Street property even if she is required to re-finance it. At the conclusion of the hearing, it was common ground that Ms Harry would be afforded 60 days to pay Mr Harry one half of the value of the equity in the property, and refinance the existing loan secured by mortgage against it. It was also agreed that would be Ms Harry’s one opportunity to retain the property. I am satisfied that outcome is just and equitable given Ms Harry had ample opportunity to make necessary arrangements to re-finance the property prior to the final hearing. That she is presently required to obtain such significant finance is also the result of her non-compliance with the previous Orders for the sale of the M Street property.
[37] Affidavit of Ms Harry filed 20 September 2023, paragraph 66.
In the event Ms Harry is unable to re-finance the L Street loan and make a payment to Mr Harry by the due date, the property is to be sold. Mr Harry proposes O Company to be engaged for the sale. Ms Harry proposes CC Company. She had made no enquiries of that agency. I prefer Mr Harry’s proposal given the property need only be sold if Ms Harry is unable to obtain finance to retain it.
It was ultimately common ground that the M Street property be sold. Mr Harry proposes that R Company be engaged as selling agents. Ms Harry opposes their engagement, although conceded in cross-examination she would immediately engage R Company for the sale of the M Street property. Given they were previously appointed pursuant to consent Orders and no conflict of interest was identified to my satisfaction, I am satisfied it is appropriate for them to be engaged. Ms Harry agreed in cross-examination to Mr Harry’s proposal that S Company be engaged. She made no alternative proposal.
It was also ultimately agreed that the N Street property would be sold. Ms Harry took no issue with the agent nominated by Mr Harry but opposed undertaking the conveyancing work. I find no basis to exclude his business from doing so.
In order for Mr Harry to retain 75 per cent of the value of the parties’ interests in property and Ms Harry to retain 25 per cent, on the values as now found, the proceeds of sale of the real properties are required to be distributed equally between the parties.
Ms Harry sought to have a Motor Vehicle 2 owned by U Pty Ltd transferred to her. She had not served a copy of the relief sought on U Pty Ltd, noting that Mr Harry only has a 50 per cent interest in the business. She did not adduce any evidence in relation to it, nor did she cross-examine Mr Harry about it. Even if Mr Harry’s business partner was willing to transfer the vehicle, I have no evidence of what, if any, taxation consequences might arise. In those circumstances, I am not satisfied that aspect of the relief sought by Ms Harry is just and equitable.
Mr Harry seeks to recover half the cost of various disbursements incurred by him for reports by Dr C, the single expert valuers and mediation. They are joint expenses incurred by the parties in the course of the litigation. Consistent with the Court’s rules,[38] I find both parties should be liable for those costs. I am not, however, satisfied that Ms Harry ought contribute towards the costs of Mr Harry’s expert actuarial witness, Mr EE. I will accordingly allow a sum $247.50 less than that sought by Mr Harry.
[38] Federal Circuit and Family Court of Australia (Family Law) Rules 2003, r 7.06.
Mr Harry seeks to retain the rental proceeds from the N Street property and be liable for its expenses pending its sale. Ms Harry opposes the relief sought. In effect, she seeks to retain the rental income while requiring Mr Harry to continue to meet the outgoings for the property. I consider that outcome to be unjust and inequitable. It will deplete Mr Harry’s property at the same time as enhancing Ms Harry’s.
Mr Harry proposes that his solicitor be appointed pursuant to section 106A of the Act to sign any documents in the name of Ms Harry in the event she neglects to comply with her obligations pursuant to the Orders. Ms Harry opposed the relief sought. She has previously failed to comply with the Court’s Orders, including Orders for the sale of the M Street property. I do not accept that Mr Harry should be required to make a further application to enforce the Orders in the event of further non-compliance by Ms Harry. I will accordingly grant the relief sought by Mr Harry.
Mr Harry sought an order in the following terms: “Such further and/or other orders and directions including consequential orders as this Honourable Court deems appropriate and necessary.”[39] No submissions were made in support of the application. There are no further orders that I consider appropriate or necessary.
[39] Exhibit A2, page 5.
Neither party made any submissions with respect to the other relief sought by either of them, including the proposed orders specifying the assets each are to retain, and providing for the parties to indemnify each other with respect to specific liabilities. I prefer the formulation proposed by Mr Harry which is more comprehensive. It is unnecessary to make orders requiring the removal of caveats which is implicit in requiring the parties do all things to facilitate the sale of the real properties.
There are nominal balances in the parties’ joint accounts. Given Mr Harry is to retain the majority of the parties’ assets, in order to achieve the necessary outcome, it is just and equitable he retain their balance upon their agreed closure.
SPOUSAL MAINTENANCE
Ms Harry seeks spousal maintenance at the rate of $26,000 per annum. The relief sought was styled as being indefinite. It was not until she was cross-examined that she clarified that she proposes it be paid for a period of six years.
Mr Harry is relevantly liable to maintain Ms Harry, to the extent that he is reasonably able to do so, if and only if, Ms Harry is unable to support herself for an adequate reason, [40] having regard to the matters referred to in subsection 75(2) of the Act.
[40] Family Law Act 1975 (Cth) ss 72(1).
Ms Harry’s Financial Statement is incoherently completed. Fancifully, she deposes that on an income of between $521 and $756 per week, she pays income tax of $403 per week. Her Part N expenses double count mortgage repayments, insurance payments and other expenses reflected elsewhere in the form.
In the event Ms Harry obtains employment at the rate of $70,000 per annum, she will be in receipt of income after tax of approximately $1,050 per week. Ignoring her asserted income tax expense of $403 per week, she will be able to meet the other expenses claimed in Part G of her Financial Statement on that income. Indeed, she is able to meet those expenses on the basis of weekly gross income of $1,000, which she has been earning as a tradesperson.
Ms Harry did not make any submissions as to the extent of the need for maintenance she seeks to establish. She failed to disclose her recent employment as a tradesperson and her recent job applications prior to the hearing. Whilst her present income is modest, and largely to be disregarded,[41] she expressed confidence in a substantial earning capacity that would enable her to refinance a significant home loan secured against the L Street property from imminent employment income. I am not satisfied she has discharged her onus of establishing an inability to support herself.[42]
[41] Family Law Act 1975 (Cth) ss 75(3).
[42] Carson & Hillman [2019] FamCAFC 42 at [57].
Even if Ms Harry had discharged her onus, she has not established Mr Harry has a capacity to pay her maintenance. He deposes to receiving weekly employment income of $1,270, and to incurring expenses of $1,597 per week. Although he also deposes to receiving work benefits totalling approximately $600, those expenses are not elsewhere claimed in his Financial Statement. I am accordingly not satisfied that Mr Harry has any reasonable capacity to maintain Ms Harry. Her application for spousal maintenance fails.
I certify that the preceding eighty-nine (89) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Glass. Associate:
Dated: 13 October 2023
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