HENNE & HENNE
[2018] FCCA 3189
•28 November 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| HENNE & HENNE | [2018] FCCA 3189 |
| Catchwords: FAMILY LAW – Property – application for property adjustment orders pursuant to s.79 of the Family Law Act 1975 (Cth) – where parties dispute the value of a number of assets –property purchased in the wife’s name with her parents post-separation – parents providing entire purchase price – resulting trust - where presumed intention of a resulting trust is displaced – where presumption of advancement rebutted – where the Court concluded that the property and related liability were to be included in asset pool – assessment of future needs – just and equitable outcome. |
| Legislation: Family Law Act 1975 (Cth), ss.75, 79, 80, 81, 117 |
| Cases cited: AJB Potter v LJ Potter [2003] NZCA 103 |
| Applicant: | MS HENNE |
| Respondent: | MR HENNE |
| File Number: | SYC 833 of 2014 |
| Judgment of: | Judge Harper |
| Hearing dates: | 3 & 4 May 2018 |
| Date of Last Submission: | 4 May 2018 |
| Delivered at: | Sydney |
| Delivered on: | 28 November 2018 |
REPRESENTATION
| Counsel for the Applicant: | Mr Livingstone |
| Solicitors for the Applicant: | MCW Lawyers |
| Counsel for the Respondent: | Mr Gardiner |
| Solicitors for the Respondent: | Foulsham & Geddes |
ORDERS
That within 7 days the parties do all acts and things and sign all documents necessary to distribute the funds held in the Bank 1 account in the name of Mr Henne and Ms Henne as follows:
(a)57% of any interest accrued on the credit balance of the account between 4 May 2018 and the date of these orders to the respondent husband;
(b)43% of any interest accrued on the credit balance of the account between 4 May 2018 and the date of these orders to the applicant wife;
(c)$226,652 to the respondent husband; and
(d)The balance to the applicant wife.
Simultaneously with compliance with Order 1, the respondent husband pay to the applicant wife the amount of $7,000 in satisfaction of outstanding costs orders against the respondent husband made in favour of the wife.
That the applicant wife be declared to be the sole legal and beneficial owner of her interest in the Business H.
That the Respondent Husband be declared to be the sole legal and beneficial owner of his shareholding in the company Business I.
That simultaneously with Order 3 the Respondent Husband shall do all acts and things and sign all documents as are necessary to release the Applicant Wife from and indemnify the Wife against any liability, present or contingent including tax and bank liabilities in respect Business I.
That the Respondent Husband be declared to be the sole legal and beneficial owner of the boat and box trailer, and the parties will do all acts, things and sign all documents necessary to transfer ownership of the boat to the Husband.
That except as otherwise provided in these Orders each party be declared the sole legal and beneficial owners of all other items of property presently in their respective possession or control but not limited to:
(a)All other real and personal property now in their possession, custody or control including but not limited to money, shares, real property, motor vehicles, furniture, furnishings and personal effects.
(b)All shares, debentures, units in unit trusts, bank, building society or credit union accounts standing in their sole names respectively.
(c)All interests in life insurance policies and superannuation funds standing in their sole names respectively.
That except as otherwise provided in these Orders each party be solely responsible for all personal liabilities including but not limited to credit card liability, personal loans, lines of credit and all other personal debts outstanding as at the date of these Orders.
That in the event that either party refuses or neglects to execute any deed, document or instrument necessary to give effect to these Orders, a Registrar or Deputy Registrar of the Federal Circuit Court be appointed pursuant to Section 106A of the Family Law Act to execute such deed, document or instrument in the name of the 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.
If any party seeks an order for costs, an appropriate application to the Court may be made within 28 days of today’s date (supported by any documentary material) to be filed and served within that time period and a copy forwarded to my Chambers. If no such application is made within the time period specified, no order will be made as to costs.
THE COURT NOTES THAT:
Any application as to costs will be dealt with by way of written submissions, unless the parties request to be heard orally.
IT IS NOTED that publication of this judgment under the pseudonym Henne & Henne is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYC 833 of 2014
| MS HENNE |
Applicant
And
| MR HENNE |
Respondent
REASONS FOR JUDGMENT
Introduction
These are property proceedings between the applicant wife, Ms Henne (“the wife”), and the respondent husband, Mr Henne (“the husband”) whereby each party is seeking orders for property distribution after the breakdown of their marriage.
In summary, in this matter, the pool of assets is modest. The most significant items are the proceeds of sale of the former matrimonial home in the sum of $281,017 which are currently held in a joint account and potentially the interest of the wife in a property at Property A, NSW. The wife claims this property is held by her on resulting trust for her parents. The husband contends that either it should be found that the wife owns the property beneficially or that in the alternative, it should be treated as a significant financial resource pursuant to section 75(2) subparagraph (b) or (o). Each party has modest superannuation.
Procedural history
The wife’s Initiating Application was initially filed with the Family Court of Australia seeking both parenting and property orders. The matter first came before Registrar Chayna on 6 May 2014 for a Case Assessment Conference and was thereafter referred for a Conciliation Conference. The matter did not resolve at Conciliation Conference.
On 28 July 2014, the matter was transferred to the Federal Circuit Court of Australia.
The matter thereafter first came before his Honour Judge Scarlett for mention on 1 December 2014.
Upon Judge Scarlett’s retirement, the matter was transferred to the docket of her Honour Judge Sexton and first came before her for mention on 11 March 2016.
On 29 March 2017, the parties entered final parenting consent orders, resolving their parenting matter on a final basis. The property proceedings continued.
The matter was later transferred to my docket and first came before me on 1 June 2017. On this occasion I referred the matter to a further Conciliation Conference on 6 July 2017. No resolution was reached at Conciliation Conference.
On 22 August 2017, a Divorce Order was granted and became final on 23 September 2017.
The matter came back before me on 7 August 2017 and Orders were made listing the matter for Final Hearing on 15 & 16 February 2018.
Unfortunately, due to judicial illness, I was unable to hear the Final Hearing on 15 & 16 February 2018 and as such, the Final Hearing was adjourned to 3 & 4 May 2018.
The matter came before me for Final Hearing with respect to the parties’ property proceedings on 3 & 4 May 2018.
Material relied upon
The wife relied upon:
a)Case Outline filed 9 February 2018;
b)Her Financial Statement sworn 8 January 2018 and filed 11 January 2018;
c)Her Affidavit sworn 8 January 2018 and filed 11 January 2018;
d)Affidavit of Mr H sworn 8 January 2018 and filed 11 January 2018; and
e)Affidavit of Mr S sworn 8 January 2018 and filed 11 January 2018.
The wife, Mr H and Mr S were cross-examined.
The husband relied upon:
a)Case Outline filed 3 May 2018;
b)Minute of Order sought by the Husband;
c)His Financial Statement sworn and filed 14 February 2018;
d)His Affidavit sworn and filed 11 January 2018; and
e)Affidavit of Dr R sworn 28 March 2018 and filed 29 March 2018.
The husband was cross-examined.
The following documents were tendered and placed into evidence:
Exhibit Label
Document
Tendered by
A
Letter dated 18 September 2018 from Kylie Holmes, MCW Lawyers, to the husband
Wife
B
Unsealed Orders of Judge Henderson dated 15 February 2018
Wife
C
[Real Estate Agent Suburb P] Residential Tenancy Application completed by husband with respect to Property B, NSW
Wife
D
Two photos of silver jewellery
Wife
E
Two photos of [Sports Team]
Wife
F
Residential Tenancy Application Form completed by the husband with respect to Property C, NSW
Wife
G
Photo of the husband
Wife
H
Photo of safe
Wife
I
Photo of husband
Wife
J
Family Report by Dr G dated 1 August 2016.
Wife
K
Tax Invoices from [Store] dated 8 August 2011and 22 August 2011
Wife
L
Sealed Orders of Judge Sexton dated 10 February 2017
Wife
M
Proposed Minute of Orders Sought by the wife
Wife
1
Business H Tax Returns for years ended 30 June 2012, 2013 & 2014
Husband
2
Wife’s Individual Tax Returns for years ended 30 June 2014 & 2015
Husband
3
Letter dated 6 February 2018 from Bank 1 to the husband
Husband
4
Minute of Orders sought by husband
Husband
5
Paragraphs 68-73 of the husband’s Affidavit affirmed 3 June 2016 and filed 6 June 2016
Joint
Court 1
Balance Sheet
Competing proposals
In closing submissions the wife tendered a minute of order sought which became Exhibit M. Her proposal is as follows:
(1) That within 7 days the parties do all acts and things and sign all documents necessary to distribute the funds held in the Bank 1 account in the name of Mr Henne and Ms Henne as follows:
(a) 60% to the Applicant Wife, of the total balance not including her costs of $7,000.00 to be paid from the Husband’s interest in the fund; and
(b) The balance to the Respondent Husband.
(2) That the Applicant Wife be declared to be the sole legal and beneficial owner of her interest in the Business H.
(3) That the Respondent Husband be declared to be the sole legal and beneficial owner of his shareholding in the company Business I.
(4) That simultaneously with Order 3 the Respondent Husband shall do all acts and things and sign all documents as are necessary to release the Applicant Wife from and indemnify the Wife against any liability, present or contingent including tax and bank liabilities in respect Business I.
(5) That within 7 days the Respondent Husband deliver the boat and box trailer to the Applicant Wife, or nominated boat broker as agreed between the parties, and the parties will do all acts, things and sign all documents necessary to sell the boat and box trailer with net proceeds to be paid in accordance in the proportions that this Honourable Court may Order.
(6) That except as otherwise provided in these Orders each party be declared the sole legal and beneficial owners of all other items of property presently in their respective possession or control but not limited to:
(a) All other real and personal property now in their possession, custody or control including but not limited to money, shares, real property, motor vehicles, furniture, furnishings and personal effects.
(b) All shares, debentures, units in unit trusts, bank, building society or credit union accounts standing in their sole names respectively.
(c) All interests in life insurance policies and superannuation funds standing in their sole names respectively.
(7) That except as otherwise provided in these Orders each party be solely responsible for all personal liabilities including but not limited to credit card liability, personal loans, lines of credit and all other personal debts outstanding as at the date of these Orders.
(8) That in the event that either party refuses or neglects to execute any deed, document or instrument necessary to give effect to these Orders, a Registrar or Deputy Registrar of the Federal Circuit Court be appointed pursuant to Section 106A of the Family Law Act to execute such deed, document or instrument in the name of the 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.
The husband’s proposed minute of order became Exhibit 4, and is in the following terms:
(1) That, pending further order, the Husband and wife do all things and sign all such documents to cause to be released from the Bank 1 account in the name of Mr Henne and Ms Henne (the account) $7,000 and such sum is to be paid to the wife or as she directs.
(2) That the balance of the funds in the account be paid to the Husband’s solicitors Foulsham and Geddes on behalf of the Husband.
(3) That the wife do all acts and things to transfer the boat in her name to the Husband.
(4) That except as otherwise provided in these orders, the husband and wife shall be declared to be the sole legal and beneficial owners of all items of property including money, insurances, equities, business interests, superannuation interests and entitlements, shares, motor vehicles, personal effects and personal debts currently in the possession or control of each of them respectfully.
It can be seen that both parties accept that the sum of $7,000 should be paid from the controlled monies account to the wife to satisfy the costs order made on 15 February 2018.
The Law
Part VIII of the Act sets out the legislative provisions relating to property orders that may be sought when parties are or were married. The central provision is s.79 of the Family Law Act 1975 (Cth) which gives the Court power to make such orders for alteration of property interests as it considers appropriate.
Section 79(2) of the Act provides that:
“The court must not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.”
Section 79(4) of the Act set outs the factors to be taken into account in considering what order, if any, should be made (these will be discussed in detail below).
The approach to be taken
Prior to the High Court of Australia’s decision of Stanford & Stanford [2012] HCA 52, parties generally relied upon the “4 step process” set forth in Hickey & Hickey & Attorney General for the Commonwealth of Australia (2003) FLC 93-143 in the determination of an application under s.79, as follows:
1. Identify and value, the parties’ property, liabilities and financial resources at the date of the hearing;
2. Identify and assess the contributions of the parties as referred to in s.79 of the Act and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties, whether examined on a global approach or an asset by asset approach;
3. Identify and assess the other factors relevant including, the matters referred to in s.75 of the Act and determine the adjustment (if any) to be made to the contribution entitlements at step two; and
4. Consider the effect of the above and resolve what order is just and equitable in all the circumstances of the case.
The High Court in Stanford (supra) at [38]-[40] highlighted that satisfaction of the just and equitable requirement specified in s.79(2) should not be conflated with an exercise of discretion under s.79(4). The Court articulated three fundamental propositions, which may be summarised as follows:
a)First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property. The question posed by s.79(2) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order.
b)Second, although s.79 confers a broad power on a court exercising jurisdiction under the Act to make a property settlement order, it is not a power that is to be exercised according to an unguided judicial discretion. A power to make such order with respect to property, is a power which "rests upon the law and not upon judicial discretion". Although the Court is given a wide discretion, it is not 'palm tree justice'. Because the power to make a property settlement order is not to be exercised in an unprincipled fashion, whether it is "just and equitable" to make the order is not to be answered by assuming that the parties' rights to or interests in marital property are or should be different from those that then exist. The question presented by s.79 is whether those rights and interests should be altered.
c)Third, whether making a property settlement order is "just and equitable" is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s.79(4). The power to make a property settlement order must be exercised "in accordance with legal principles, including the principles which the Act itself lays down"[28]. To conclude that making an order is "just and equitable" only because of and by reference to various matters in s.79(4), without a separate consideration of s.79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act.
The High Court made clear in Stanford (supra) at [39], the question whether it is just and equitable to make an order “is not to be answered by assuming that the parties’ rights or interests in marital property are or should be different from those that then exist”.
The very fact of separation and the termination of the relationship affects assumptions about property during the existence of a marriage or de facto relationship and may lead to the ready satisfaction of just and equitable requirement. In Stanford (supra) at [41]- [42], the High Court said:
[41] Adherence to these fundamental propositions in exercising the power in s 79 gives due recognition to "the need to preserve and protect the institution of marriage" identified in s 43(1)(a) as a principle to be applied by courts in exercising jurisdiction under the Act. If the parties have made a financial agreement about the property of one or both of the parties that is binding under Pt VIIIA of the Act, then, subject to that Part, a court cannot make a property settlement order under s 79. But if the parties to a marriage have expressly considered, but not put in writing in a way that complies with Pt VIIIA, how their property interests should be arranged between them during the continuance of their marriage, the application of these principles accommodates that fact. And if the parties to a marriage have not expressly considered whether or to what extent there is or should be some different arrangement of their property interests in their individual or commonly held assets while the marriage continues, the application of these principles again accommodates that fact. These principles do so by recognising the force of the stated and unstated assumptions between the parties to a marriage that the arrangement of property interests, whatever they are, is sufficient for the purposes of that husband and wife during the continuance of their marriage. The fundamental propositions that have been identified require that a court have a principled reason for interfering with the existing legal and equitable interests of the parties to the marriage and whatever may have been their stated or unstated assumptions and agreements about property interests during the continuance of the marriage.
[42] In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4).
In Chapman & Chapman (2014) FLC 93-592; 51 FamLR 176 the Full Court, when commenting on these passages in Stanford, observed at [21]-[22]:
[21] First, it is “…not possible to chart [the] metes and bounds” of the relevant discretion. Just as importantly, it was recognised specifically that the characteristics of individual marriage unions, in so far as they acquire, hold and deal with property, differ. In “many cases”, the union is underpinned by “…stated and unstated assumptions between the parties to a marriage that the arrangement of property interests, whatever they are, is sufficient for the purposes of the husband and wife during the continuance of their marriage” (Stanford, at [41]). And, in “many cases”, (but, not all) the “…just and equitable requirement is readily satisfied…” by the fact of separation: “[i]t will be just and equitable to make a property settlement order … because there is not and will not thereafter be the common use of property by the husband and wife” (Stanford at [42]).
[22] “Ready satisfaction” of the s 79(2) requirement “in many cases” by reference to separation and its consequences brings with it a necessary further consequence; in those “many cases” the parameters, breadth and depth of the s 79(2) inquiry will be curtailed accordingly. It is those who lived within the “stated and unstated assumptions” who understand them best. As a result, satisfaction of the s 79(2) requirement can be inferred, at least in part, from the issues joined and, importantly, not joined, between the parties.
The Full Court of the Family Court of Australia in Bevan & Bevan [2013] FamCAFC 116; 49 FamLR 387 at [71]-[72] has held that the decision in Stanford has not overruled the 4 step approach. Rather Stanford serves as a reminder that the 4 step process “merely illuminates the path to the ultimate result” being “no more than a shorthand distillation of the words of a statute which has but one ultimate requirement, namely not to make an order unless it is just and equitable to do so.”
However, satisfaction of the just and equitable requirement does not have to form an express part of any one step. It can be inferred, as pointed out in Chapman (supra) at [22], above. Thackray CJ, said in Fielding and Nichol [2014] FCWA 77 at [43]:
“While I accept that a finding that it is just and equitable to make an order will always be required, in most cases the court will not need to discuss the s 79(2) issue, because the cases will be conducted on the basis of acceptance by the parties that it is just and equitable to make some form of adjustment. In those cases, matters arising under s 79(4) will require discussion only when determining the way the adjustment is to be effected.”
In Hearne & Hearne [2015] FamCAFC 178; 53 FamLR 454, the Full Court made clear that a positive finding that alteration of property interests is just and equitable is not necessary as a threshold issue nor be the subject of an express finding, but can be ascertained “by necessary implication from the totality of the trial judge’s reasons for judgment” (Per Strickland J, at [71], [72], Ryan & Austin JJ agreeing).
Here the parties accept that the termination of the relationship leads to satisfaction of the just and equitable requirement. They accept some form of adjustment should be made.
I will approach the determination of this matter by first identifying the assets and liabilities of the parties, then dealing with s.79(4) factors, including s.75(2).
The parties
The wife’s evidence was at times unconvincing. For example, her assertion that she contributed $20,000 to the purchase of the parties’ first dwelling at Property D was made for the first time in her oral evidence. I discuss this further below. It gave the impression of self-serving reconstruction.
The husband also gave unconvincing evidence. His evidence about the wife’s alleged possession of silver jewellery, discussed later in these reasons, was a glaring example. His evidence about the location of the jewellery changed a number of times over the course of the proceedings, including a change from an assertion that it had been stolen to asserting three months before the hearing that it had been kept by the wife. Another example, relates to his income. Under cross-examination he conceded that he had included a grossly inflated income figure of $150,000 per annum in a Residential Tenancy Application to [Real Estate Agent Suburb P] on 9 March 2017. This document became Exhibit “C”. The income was said to be derived from the business of the Husband’s company Business I. His personal tax return for June 2017 recorded his total income of $20,343. I discuss this further below.
Overall neither party impressed me as a reliable witness. I will discuss aspects of their evidence in more detail below.
On the other hand I am satisfied that other witnesses gave evidence to the best of their recollection
Background
The husband was born [date] 1973 and is presently 45 years of age.
The wife was born [date] 1975 and is presently 42 years of age.
The parties commenced cohabitation and married on [date] 2001.
On [date] 2001, the parties’ oldest son, [X] was born. He is presently 17 years of age.
On [date] 2003, the parties’ second child, [Y] was born. He is presently 15 years of age.
On [date] 2007, the parties’ youngest son, [Z] was born. He is presently 11 years of age.
The parties separated on 11 June 2012.
The wife has repartnered with Mr S. The wife and Mr S share a child, [A] born 2017 and presently 11 months of age.
Further relevant facts
Post-separation withdrawals
On 30 March 2015, both parties each withdrew $50,000 from the proceeds of sale of the Property A property held in the joint Bank 1 account (“the joint Bank 1 account”).
On 11 November 2015, the parties each withdrew a further $100,000 from the joint Bank 1 account.
On 29 January 2016, the parties each withdrew $50,000 from the joint Bank 1 account.
On 11 August 2017, the parties each withdrew a further $40,000 from the joint Bank 1 account.
There is no dispute that both parties have received, by way of interim partial property settlement, the sum of $240,000, and that for each party these amounts should be treated as add backs.
Assets, liabilities and financial resources at the date of the hearing
On day two of the hearing, the parties tendered a joint balance sheet which became Exhibit Court 1 and is set out below:
Assets | A/J/R | Wife’s Value $ | Husband’s Value $ |
| Non-superannuation | |||
| Proceeds of sale of Property E, NSW held in Bank 1 Account | J | $281,017 | $281,017 |
| Half share in Property A, NSW | W | $437,500 | $437,500 |
| Business H | W | NIL | NIL |
| Motor vehicle 1 | OTHER | NIL | NIL |
| Jewellery | W | MIN | MIN |
| 52. Home contents | 53. W | $1,000 | $5,000 |
| Bank 1 account | W | $1 | $1 |
| 54. Bank 2 account | 55. H | $4,234 | $3,706.41 |
| Business I | H | $10,000 | NIL |
| Business J | H | NK | NIL |
| Silver jewellery | H | ||
| Boat | W | $20,000 | $7,000 |
| Home contents | H | $5,000 | $5,000 |
| Box trailer | H | $1,000 | $500 |
| Motor vehicle 2 | H | $15,000 | NIL |
| Unrecovered funds from [Council] | J | NIL | NIL |
| Total | $774,752 | $739,724.41 | |
| Addbacks | |||
| Drawings from joint Bank 1 account | H | $240,000 | $240,000 |
| Drawings from joint Bank 1 account | W | $240,000 | $240,000 |
| Total | $480,000 | $480,000 | |
| Superannuation | |||
| Super Fund R entitlement | W | $26,564 | $26,564 |
| Super Fund S entitlement | H | $53,517 | $53,517 |
| Total | $80,081 | $80,081 | |
| Total Assets | $1,334,833 | $1,299,805.41 | |
| Loan from the wife’s parents in respect of Property A, NSW | W | NIL | NIL |
| Loan from wife’s parents | W | NIL | NIL |
| Loans from husband’s mother and father | H | NIL | NIL |
| Unpaid personal income tax liability for the period up to FY12 | J | NIL | NIL |
| Unpaid personal tax liability for the period up to FY12 | J | NIL | NIL |
| Unpaid personal income tax liability for period FY13 to FY16 | J | NIL | NIL |
| Credit Card | H | NIL | NIL |
| Bank 1 credit card | H | NIL | NIL |
| Outstanding rental payments owing | H | NIL | NIL |
| Total Liabilities | $0 | $0 | |
| Total Net Property | $1,334,833 | $1,299,805.41 | |
A number of items require comment and findings.
In relation to wife’s home contents, the wife attributes a value of $1,000 while the husband attributes a value of $5,000. There is no particular basis for either figure except the parties own estimate. I will allow $2,000 for the wife’s home contents.
The husband has an Bank 2 account. The wife puts the value of this item at $4,234 while the husband puts it at $3,706.41. Again, there’s no specific evidence about this account. I will attribute the amount of $4,000 to it.
The husband has a business called Business I. The husband says this business has no value because of its significant liabilities. The wife attributes a figure of $10,000 to its value, with no evidence in support. The husband’s evidence as to significant liabilities of the business was unchallenged, although he gave no detail of the asset and liability position of Business I at the date of hearing. The husband gives evidence (paragraph 121 of his trial affidavit) that at the commencement of cohabitation his shareholding in Business I was valued at approximately $60,000. He annexes evidence that as at 21 October 2002, the company had a bank balance of $85,953.61. As already mentioned above, the husband asserted an income of $150,000 from Business I in March 2017 in applying for rental accommodation, but in his tax return for that year recorded $20,343 as total income. The evidence is unclear, but I infer that Business I has some value. In light of this unsatisfactory evidence, for which the husband is responsible, I will attribute $10,000 value to Business I.
There was a significant factual dispute about [ounces] of silver jewellery. The wife contends that in about [date] 2011, the husband purchased $30,000 in silver. This appeared to be undisputed. The wife contends that at separation, the husband removed from the former matrimonial home a safe containing the silver. The husband denies this and in cross-examination disclosed that it was his view that the wife had retained the silver after separation. This evidence is difficult to accept. Counsel for the wife cross-examined the husband on this question at some length. There is no evidence in the husband’s affidavit concerning the fate of the silver despite the fact that the wife specifically deals with the issue in her affidavit at paragraphs 34 & 48. Further, it was conceded by the husband in cross-examination that he asserted at a conciliation conference in 2017 that the silver had been stolen. However, he then contended in cross-examination that this was incorrect but he only worked out it was incorrect about three months prior to the final hearing. This was one matter upon which the husband’s evidence was very unsatisfactory. I am not satisfied there is any compelling evidence that the silver remains in the possession of the wife. The husband maintains that he does not have it. I can make no finding about the silver, except that it is not held by the wife.
The next item in dispute was a boat which the wife valued at $20,000 and the husband at $7,000. It was common ground that this boat is registered in the name of the wife but that the husband retains possession and use of it, and although it has not been used for a while, he proposes to keep using it to take the children on boat trips. There was evidence given of an insurance valuation as at 7 March 2016 which put its value in the range $9,000-$10,000. Since this is the only objective evidence of the value of the boat I accept that its value is $9,000.
The parties disputed the value of a box trailer with the wife contending it was worth $1,000 and the husband $500. I accept the husband’s value since he gave evidence that the trailer, which appears to have been used to move the boat, had substantially disintegrated.
The final item in dispute was a Motor Vehicle 2 which the wife valued at $15,000 but the husband valued at nil. There was no evidence upon which I could form a view about its value. I accept it is likely to have some value. Accepting this, and in the absence of any other assistance from the parties, I will attribute a value of $5,000.
Property A
There is a significant dispute about the ownership of Property A.
Annexure “B” to the wife’s affidavit was a copy of a title search of the Property A property which shows the wife is registered proprietor one half of the property as tenant in common with her parents who own the other half together as joint tenants. No mortgage is registered on the title.
The property was purchased on [date] 2013 at auction for $685,500. The wife’s father paid the deposit of $34,250 by cheque. The sale settled on [date] 2013 on which date the wife’s parents paid the balance of the purchase price, legal fees and stamp duty (paragraph 56 of the wife’s trial affidavit). It was common ground that the wife made no contribution to the purchase of the property. It was also common ground that the husband made no contribution to the purchase price.
The husband contends that either it should be found that the Property A property is beneficially owned by the wife or in the alternative it should be treated as a significant financial resource pursuant to section 75(2) subparagraph (b) or (o).
As noted above, the wife claims that, although she is the legal owner as to half of the Property A, she does not own her share beneficially but as trustee for her parents on the basis of a resulting trust.
The prima facie position is that the beneficial ownership of real property is commensurate with the legal title[1]. However, where “the legal title does not reflect the proportionate contributions of the parties, then (at least absent a presumption of advancement) it will be presumed that the beneficial ownership of the property is held in the proportions in which they contributed the purchase money”: Ryan v Ryan [2012] NSWSC 636 at [43] per Ward J; Anderson v McPherson [No.2] [2012] WASC 19 per Edelman J (as he then was). The property is held on trust for the parties as tenants in common in those proportions: Trustees of the Property of Cummins (a bankrupt) v Cummins [2006] HCA 6, (2006) 224 ALR 280, (2006) 80 ALJR 589 at [55]. The stamp duty fees and expenses are included in the purchase price for the purposes of considering the presumption of a resulting trust: Anderson v McPherson (supra) at [117]. Mortgage payments are not treated as contributions to the purchase price for the purpose of establishing the proportions held on resulting trust: Murtagh v Murtagh [2013] NSWSC 926 at [76] & [77].
[1] See, for example, Currie v Hamilton (1984) 1 NSWLR 687 at 690; Black Uhlans Inc v New South Wales Crime Commission & Ors [2002] NSWSC 1060 at [128].
Such a trust is an example of what has been called an “intention enforcing” type of resulting trust: Black Uhlans Inc v New South Wales Crime Commission [2002] NSWSC 1060 at [133], as opposed to a resulting trust imposed by law, which may be contrary to the parties’ intention (Anderson v McPherson (supra) at [96]-[98]). That is because such a resulting trust is based on the presumed actual intentions of the parties but is capable of being displaced where the parties had a common intention to share an equal interest in the property or that the party making the disproportionate contribution intended that the parties would have an equal interest in the property notwithstanding: Neilson v Letch (No.2) [2006] NSWCA 254 at [26].
The relevant time for a finding of intention is the time of acquisition of the property or "so immediately after it as to constitute a part of the transaction"; subsequent declarations of intention are only admissible against interest: Calverley v Green (1984) 155 CLR 242 at 262 and 269; Bryson v Bryant (1992) 29 NSWLR 188 at 215.
Where the relevant dealing takes place between parents and a child, the “presumption of advancement” needs to be considered: Napier v Public Trustee (Western Australia) (1980) 32 ALR 153 at 158. In Calverley (supra) Deane J said in a frequently cited passage at 267:
“the presumption of advancement is not, if viewed in isolation, strictly a presumption at all. It is simply that there are certain relationships in which equity infers that any benefit which was provided for one party at the cost of the other has been so provided by way of 'advancement' with the result that the prima facie position remains that the equitable interest is presumed to follow the legal estate and to be at home with the legal title or, in the words of Dixon CJ, McTiernan, Fullagar and Windeyer JJ in Martin v Martin (1959) 110 CLR 297, 303, that there is an 'absence of any reason for assuming that a [resulting] trust arose'”
In Buffrey v Buffrey & Anor [2006] NSWSC 1349; 12 BPR 23,619 at [14] Palmer J set a number of principles relevant to resulting trusts and the presumption of advancement, including the following principle concerning intention and evidence of intention:
(4) if a presumption of resulting trust or a presumption of advancement arises where one party has contributed the whole of the acquisition cost of the property but the title to the property is placed in the name of another party:
a) whether either presumption is rebutted depends upon the intention solely of the party who provided the money because the question is whether that person intended to make a gift of an interest in the property to the person who did not contribute to its acquisition;
b) evidence by the person making the payment as to his or her intentions at the time of the transaction is admissible but the Court will treat that evidence with caution as the evidence of an interested party;
c) the Court is more assisted in determining the subjective intention of the person making the payment by evidence of that person’s contemporaneous statements of intention, subsequent admissions against interest, subsequent dealings with the property, and by evidence of other relevant surrounding circumstances;
The wife gave evidence that in late February 2013 she was under financial pressure. Both she and her father, Mr H, recalled that prior to the auction they had a conversation to the following effect. “Let’s look for a house close to the school. I will buy it and you can pay me back after you’ve settled with Mr Henne”, to which the wife replied, “Yep, that is a perfect idea.” (paragraph 52 of wife’s affidavit; paragraph 8 of Mr H’s affidavit). The fact that both witnesses recalled the conversation in precisely the same terms was not the subject of cross-examination.
The wife also gave evidence that prior to settlement of the purchase her father said to her:
“I will pay for the house and put half in your mum and my names and half in your name. It looks like your property settlement will be concluded soon and you pay me then.”
The words of the conversations between the wife and her father are consistent with a conclusion that there was a mutual intention that the wife would hold a half interest beneficially, but pay her parents for her share. The latter possibility, which I adopt, accords with the ambit of the submissions of the parties. The wife contended she held only her half interest on trust for her parents. The husband did not contend that she held more than a half interest beneficially.
Thus, in my view the evidence indicates an arrangement whereby Mr H and his wife extended finance to the wife for the purchase of her half of the property. It was not suggested to Mr H in cross examination that he did not expect the wife to pay for her half or anything to the effect that it was not a real liability the wife owed to her parents.
He did concede in cross examination that he would not seek to exclude the wife from possession of the Property A property if she was unable to pay. In my view, this evidence does not negate a conclusion that the wife and her parents accept the wife has an obligation to pay for her half share of the Property A property. It establishes that the wife’s parents would allow her some latitude in the timing of repayment.
In my view the presumption of advancement was rebutted and the presumed intention of a resulting trust is also displaced, because the parties agreed that the wife’s parents would be paid for her share.
The characterisation of the transaction which accords most easily with the evidence is that the wife has become co-owner of the property as to half but is subject to a liability to her parents to pay them for that half, that is, they have lent her half of the purchase price. Calverley (supra) makes clear there is a distinction between the purchase price and the money borrowed to pay it (see 251, 257, 267-8). Borrowed money normally becomes the beneficial property of the borrower, in this case the wife: AJB Potter v LJ Potter [2003] NZCA 103. The borrowed money is treated as a contribution to the purchase price: Murtagh (supra) at [67].
Other evidence supports the conclusion that the wife owns her half beneficially. According to Mr H’s evidence, since the purchase of the Property A property, the wife has mostly paid the outgoings, including rates, utilities and insurances for the property. The wife’s evidence discloses that her current partner Mr S has also paid such expenses.
There is also undisputed evidence from Mr H that the wife has paid to him and his wife a total of $239,000 which funds have been deposited into an account in the joint names of him and his wife. As I understood the evidence this amount was derived from the interim property distributions to the wife, discussed above.
From the amount of $239,000, the wife’s parents have paid on the wife’s behalf $54,838.26 in legal fees and $21,552.61 for living expenses. There remains $162,609.13. This amount, according to Mr H, is what the wife will have remaining “before” any payments can be made towards the Property A property (paragraph 21 of his affidavit).
According to Mr H’s evidence, he has not had specific discussions with the wife about payment for her share, and he has not demanded payment because the wife is not in a position to pay.
Overall, I am satisfied that the wife and her parent’s intend that the wife will pay for her share at an indeterminate point in the future, when the wife is in a position to pay.
Exhibit Court 1, the agreed joint balance sheet, notes that the agreed value of one half of the Property A property is $437,500. However, the wife made clear that although she agreed with this value, she did not accept that she was beneficially entitled to a half interest in the property. My conclusions above mean that the half value of the Property A property should be included on the balance sheet as an asset of the wife.
The agreed balance sheet records no liabilities for either party. However, it follows from my conclusions also that there should be included in the balance sheet a liability of the wife to her parents. The value of this liability was not the subject of any submissions. Half the purchase price would be $342,750. Although stamp duty fees and expenses would be added to the purchase price for the purposes of a resulting trust, as discussed above, I am not satisfied that on the evidence the parties agreed or intended that they should be added to the purchase price in order to calculate the amount payable by the wife for her half share. Since the wife has paid no part of the purchase price yet to her parents, a liability of $342,750 should be included in the balance sheet.
I note here also that the husband has an outstanding costs order against him made on 15 February 2018, in the amount of $7,000. Since neither party sought to include this liability in the joint balance sheet, I have not included it as a liability against the matrimonial pool. However, the husband must satisfy this costs order.
Superannuation
As to superannuation, the Full Court of the Family Court of Australia’s decision in Coghlan & Coghlan (2005) FLC 93-220 requires the Court, in the majority of cases, to consider the parties superannuation interest as a separate species of property, unless the parties consent to it not being treated separately. It is open to the Court to decide whether to treat superannuation interests as a separate list of assets, or as part of one asset list. The majority of the Full Court in Coghlan (supra) said there is no binding principle as to the exercise of the Court’s discretion in deciding whether a one list or a two list approach should be adopted. No submissions were made on this issue. Neither party sought a splitting order. I will include the superannuation entitlements of both parties in the one pool of assets.
In light of the above findings, the assets and liabilities of the parties at the date of hearing are, as follows:
Assets | A/J/R | Value $ |
| Non-superannuation | ||
| Proceeds of sale of Property E, NSW held in Bank 1 account | J | $281,017 |
| Half share in Property A NSW | W | $437,500 |
| Business H | W | NIL |
| Motor vehicle 1 | OTHER | NIL |
| Jewellery | W | NIL |
| 91. Home contents | 92. W | $2,000 |
| Bank 1 account | W | $1 |
| 93. Bank 2 account | H | $4,000 |
| Business I | H | $10,000 |
| Business J | H | NIL |
| [ounces] of silver | H | NIL |
| Boat | W | $9,000 |
| Home contents | H | $5,000 |
| Box trailer | H | $500 |
| Motor vehicle 2 | H | $5,000 |
| Unrecovered funds from [Council] | J | NIL |
| Total | $754,018 | |
| Addbacks | ||
| Drawings from joint Bank 1 account | H | $240,000 |
| Drawings from joint Bank 1 account | W | $240,000 |
| Total | $480,000 | |
| Superannuation | ||
| Super Fund R entitlement | W | $26,564 |
| Super Fund S entitlement | H | $53,517 |
| Total | $80,081 | |
| Total Assets | $1,314,099 | |
| Loan from the wife’s parents in respect of Property A NSW | W | $342,750.00 |
| Loan from wife’s Parents | W | NIL |
| Loans from husband’s mother and father | H | NIL |
| Unpaid personal income tax liability for the period up to FY12 | J | NIL |
| Unpaid personal tax liability for the period up to FY12 | J | NIL |
| Unpaid personal income tax liability for period FY13 to FY16 | J | NIL |
| Credit Card | H | NIL |
| Bank 1 credit card | H | NIL |
| Outstanding rental payments owing | H | NIL |
| Total Liabilities | $342,750.00 | |
| Total Net Property | $971,349.00 | |
Percentages of net assets at hearing
Consequently, if there was no property adjustment, the wife would hold 53% (rounded up) of the parties’ net assets and the husband 47% (rounded down). Neither party contends such a result would be just and equitable. I agree, having regard to my assessment of contributions and s.75(2) factors below.
I turn now to consider the application of Part VIII of the Act and the factors set forth in ss.79 & 75(2).
Contributions under section 79
I will deal first with s.79 of the Act. Section 79(4) of the Act sets out the considerations to be taken into account by the Court in considering what order (if any) should be made under s.79 of the Act in property settlement proceedings.
Neither party submitted an asset by asset approach should be taken in assessing contributions. I take a global approach to the assessing the financial contributions of the parties: Norbis v Norbis (1986) 161 CLR 513.
In accordance with s.79(4) of the Act, the Court must consider all the contributions, both financial and non-financial to the acquisition, conservation and improvement of the parties’ assets as well as to the welfare of the family during cohabitation and after separation. The Court must consider the contributions in an overall sense: Norman & Norman [2010] FamCAFC 66; Hickey (supra); Kowalski and Kowalski (1993) FLC 92-342; G & G (supra). A broad approach is preferred, rather than reference to precise mathematical calculations: In the Marriage of Burke (1981) FLC 91-055 although an evaluation of each party’s respective contributions is necessary: JEL & DDF [2000] FamCA 1353; (2001) FLC 93,075. Assumptions about equality of contributions should not be made. Although the parties have been separated for a number of years, separate assessment of matters occurring after separation is not necessary in arriving at an assessment of contributions: Sippel & Sippel [2004] FamCA 201.
Below is a discussion of the evidence and my findings in relation to the relevant contributions under s.79(4) of the Act.
As noted above, on 29 March 2017 her Honour Judge Sexton made final parenting orders by consent. It is unnecessary to refer to those orders in detail beyond recording that they provided for equal shared parental responsibility and for the three children of the marriage to spend equal time with their parents. I will make further reference to the parenting situation later in these reasons.
s.79(4)(a)-(c) - financial, non-financial and homemaker contributions
Initial contributions
The use made of this initial contribution is relevant: Pierce v Pierce (1999) FLC 92-844 at [28].
The wife contends that at cohabitation, she had the following assets:
a)A Motor Vehicle 3;
b)Savings of approximately $20,000; and
c)A superannuation entitlement.
The husband agreed that at cohabitation the wife owned a Motor Vehicle 3, which he contends was sold for $5,500 in 2000, however contends she had less than $500 in savings.
The husband contends that at cohabitation, he had the following assets:
a)Tools, sporting equipment, furniture and general house contents valued at approximately $8,000;
b)Savings of approximately $200,000;
c)A Motor Vehicle 4 valued at $17,000;
d)Shareholding in Business I valued at approximately $60,000; and
e)Investment in [Land].
The Wife accepts the husband had savings at cohabitation, but contends they had a value of approximately $190,000.
At cohabitation, the wife contends she was employed as a [occupation omitted] earning $600 per week.
At cohabitation, and during the relationship the husband gave evidence that he ran his own business as a [occupation omitted]. There is no clear evidence of his income at cohabitation.
An initial contribution has to be weighed against all the other relevant contributions of the parties: Pierce (supra) at [28]. I turn to consider those now.
Financial contributions during the relationship
Employment
In 1999, the wife started a business. She also continued to work as a [occupation omitted].
Shortly before [X] was born in 2001, the wife ceased working as a [occupation omitted]. She continued to operate the business.
The wife continued in that employment up to about 2004 when she closed the business so she could spend more time with family.
In 2008 she started a business called Business H. This business still continues. The business consists of [business details]. The wife gave evidence that the business does not own any assets of value, and that it rents a space in Suburb Q where the classes take place.
The husband gave evidence that during the relationship he ran his own business as a [occupation omitted] earning on average $1,060 per week. He gave evidence that all of that money was applied to the usual costs of running the home and paying household expenses.
It was common ground that the husband controlled the finances during the marriage and was responsible for the financial management. The wife agreed that household bills were paid on the husband’s credit card. She was an additional card holder, and used this for all her purchases including groceries and purchases for the children.
The husband gave evidence that he did not recall any money earned by the wife through Business H being applied to the mortgage or living expenses of the family. However, there was no suggestion that the wife siphoned her earnings into an unknown account, or dissipated them in some manner which should be impugned. I accept it is likely the wife’s earnings were used for the expenses of the family.
Real Estate Dealings
In 2001, the parties purchased Property D for $299,999.
It was common ground that the husband applied his pre-cohabitation savings to the purchase price of the Property D property. I note the husband contends he contributed $195,000 whilst the wife says he contributed approximately $190,000 in savings. I will accept the figure of $195,000.
The parties took out a loan for $200,000 with [Lender]. Of this amount, $105,000 went to the balance of the purchase price for the Property D property, and the remaining amount of $95,000 was placed into an offset account which the husband used to invest in the stock market. He gave unchallenged evidence that the proceeds and dividends from all investment activity was applied to the mortgage of the Property D property.
The wife claimed that her $20,000 in savings was applied to the purchase of the Property D property. I found this evidence unconvincing. At paragraph 24 of her trial affidavit, she sets out her recollection of how the purchase of the Property D property was financed. Consistently with the husband’s evidence she states that the husband’s cash injection of $190,000 together with a mortgage from [Lender] comprised the purchase price. There is no mention by her there of her savings of $20,000 being applied to the purchase. She agreed, in cross-examination, that there was no document in existence which could corroborate her claim that she held $20,000 at the commencement of cohabitation. I accept that it is likely she had savings of $20,000 but I do not accept these savings were applied to the purchase of the Property D property.
The husband deposes that the mortgage secured against the Property D property was paid off in 2005/2006. This was not disputed by the wife.
In 2007, the parties sold the Property D property for $577,000 and purchased a property at Property E for $675,000.
Both parties gave evidence that the wife’s parents provided them with $100,000 towards the purchase of the Property E property. However, their evidence as to whether it was a gift or loan, and to whom, differs. The wife claimed at paragraph 30 of her Affidavit that the husband told her they did not have enough funds from the sale of the Property E property and that she should ask her parents for a loan. Thereafter she gave evidence of a conversation with her father as follows: “We are $100,000.00 short after the sale of Property E. Can Mr Henne and I borrow $100,000.00 from you and mum?”. The wife submits her father agreed and on [date] 2007, “my father handed me a cheque for $100,000.00”. The wife further deposes at paragraph 30 of her Affidavit as follows:
“Prior to my parents loaning us the money, I said to Mr Henne words to the effect of:
“Are you sure we can afford to pay all the money back?”
Mr Henne replied:
“Yes”
I was not working at this time and my parents were already retired. I wanted to be sure that we could repay them.”
With respect to the $100,000, the husband at paragraph 72 of his Affidavit the following:
“Around [date] 2007, close to the Applicant’s birthday, her parents gave us a card with a cheque for $100,000 saying it was a gift to help us build a new home. Mr H said, “this is to help you out with the building.” I recall the cheque being in both our names. There was never any conversation in which it was suggested this was a loan or anything other than a gift.”
Mr H gave evidence that he provided the $100,000 as a loan.
I accept that when the $100,000 was paid, it may have been intended as a loan. However, there is no evidence the money has been repaid, or that any steps have been taken by the wife’s parents to seek repayment. Any attempt now to recover the money by legal proceedings would likely be met with a successful limitation defence.
On balance the evidence does not satisfy me that the contribution of $100,000 should be treated as a present liability. Objectively, the parties and the wife’s parents treated the payment as a gift rather than a loan. I will treat it as a contribution by the wife’s parents.
Kessey & Kessey (1994) FamCA 162, FLC 92-495; 18 FamLR 149 stands for the proposition that a contribution of a parent of a party to a marriage will be taken as a contribution made by or on behalf of the party who is the child of the parent unless there is evidence which establishes it was not the intention of the parent to benefit only his or her child: see 18 FamLR 149 at 181. In my view the evidence establishes the contribution was made to both parties, not just the wife. That is the tenor of the conversation between the wife and her father on her evidence.
In 2011, the parties moved to rental accommodation in Suburb Q as they planned to knock down the Property E property and rebuild. The dwelling on the Property E property was subsequently knocked down.
In 2011, the parties sold the Property E property, which at this time was a block of land, for $817,000. This money was deposited into a joint Bank 1 account.
The parties separated on 11 June 2012.
As noted above, post-separation on 9 March 2013, the Property A property was purchased, held in the name of the wife and her parents.
Other financial contributions
In cross-examination, the wife gave evidence that she sold the Motor Vehicle 3 for $10,000 before the parties moved into the Property D property. The husband gave evidence it was sold for “around $5,500”. It is unnecessary to resolve this factual dispute. I accept that proceeds of sale of the Motor Vehicle 3 between $5,000 and $10,000 were contributed to the general household expenses of the parties.
Around 2003, the husband won $20,000 in a radio competition. The husband contends these funds were applied to the mortgage. The wife did not appear to dispute this.
The husband was cross examined at some length about this win. He eventually conceded that his win was built to a large extent upon assistance from the wife. His evidence about winning the radio competition clearly demonstrated, in my view, that the husband took credit for winning the prize alone whereas it should be treated as a collaborative or joint win because the husband relied upon the wife’s contacts with Business H.
The husband deposes that from 2000-2006, his mother gifted the parties a series of cheque contributions totalling approximately $20,000. The wife is silent on any such gifts in her Affidavit material however in cross-examination did concede that she recalled the husband’s mother providing them with some funds. However, the wife put the figure at $10,000. The wife’s evidence was vague in this regard. I accept the husband’s figure.
Contributions by way of renovations to properties
The husband deposes to having undertaken and facilitated significant renovations to the Property D property. At paragraph 128 of his Affidavit he says: “I spent hundreds of hours, over 7 years, renovating our family home at Property D which added around $100,000.00 extra value when we sold it.” Specifically, the husband submits he made the following improvements to the property:
“(a) guttering [sic] the inside of the home to make it open plan;
(b) modifying and re-sheeting the walls;
(c) placing new timber flooring throughout the home;
(d) engaging tradesman and project managing the interior and exterior painting as well as doing some of the painting myself;
(e) building the balcony on the back of the house and engaging tradesman to assist in its construction;
(f) converting the external weatherboard garage into a home office with carpet and air conditioning amongst other things;
(g) putting in all new driveways and reconcreting pathways;
(h) building retaining walls and creating landscaped gardens;
(i) building an external fence and security gates with intercom; and
(j) building a new kitchen.”
At paragraph 130 of his Affidavit, the husband also submits he “undertook and managed substantial work at the Property D property” including:
“(a) fitting out the house when we first moved in which involved cleaning walls, painting, re-sheeting walls and basic modifications to make the house liveable;
(b) assisting with the building and landscaping design plans;
(c) managing the demolition of the property in preparation for building the new home;
(d) engaging tradesmen to excavate the land to level it out for the new house;
(e) moving and reconstructing an external dwelling;
(f) building retaining walls throughout the property;
(g) engaging tradesmen to install new plumbing; and
(h) constructing a swimming pool.”
The wife concedes in her Affidavit that the husband pulled up carpet and painted the walls, also that the husband’s father helped the husband install a new kitchen. She also submits that she assisted in “taking off wall paper, cleaning paint off the floors, taking down the old blinds” but that her “assistance was limited as I was 5 months pregnant” (paragraph 25 of her Affidavit) and that her parents and brother helped with the renovations, with her father painting the majority of the interior of the property and assisting the husband with the back deck.
The wife contends the parties finished the renovations to the Property D properties in 2004 (paragraph 28 of her Affidavit). The husband submits the renovations were concluded in 2007.
Overall I accept that it is more likely than not that the husband undertook the renovation work asserted by him. I also accept the wife made a contribution of this nature, but to a lesser degree. I did not understand the wife seriously to dispute that the husband made a far greater contribution by way of renovation to properties owned by the parties. I am unable to accept the husband’s evidence that this added $100,000 in value to the Property E property at the time of sale. This is little more than conjecture. The renovation work may have increased the value of the property but it is not possible on the evidence to put a value on this.
Contributions as homemaker
A significant area of dispute between the parties was the extent to which each of them made contributions as a home-maker. In their affidavits each party detailed the range of activities they say they contributed towards the care of the children, and the maintenance and functioning of the household during the relationship. The wife contends that she was the primary home-maker. The husband contends that his contribution as home-maker was overwhelmingly greater than that of the wife. The wife was cross-examined extensively about her contributions as homemaker. She maintained her denial in cross-examination that the father took a larger role than her in caring for the children. Even though he worked from home she claimed that he spent most of his time in his office.
The husband gave evidence (paragraph 137 of his affidavit) of the duties which he says he was “primarily responsible for.” He also sets out at paragraphs 138 & 139 of his affidavit duties that he says he was typically responsible for. I note however that in an earlier Affidavit, sworn 3 June 2016, of which paragraphs 68 to 73 became Exhibit 5, he deals with the same duties. In his earlier Affidavit he gave evidence which was not consistent with his later Affidavit. For example, in paragraph 70 of Exhibit 5 he said that during the relationship he was primarily responsible for a number of home duties, including “(a) most of the cleaning, both internally and externally” whereas in paragraph 137 this became “a majority of the cleaning, both internally and externally”.
I accept the wife’s submission that the husband had a tendency to exaggerate his contributions as homemaker, and his evidence over a period of time suggests that as the proceedings have evolved he has come to overstate his contribution progressively.
Overall, I am satisfied that the contributions of the parties were equal in respect of home-making.
Financial contributions post-separation
In or about mid-2011, the wife commenced working as a casual [occupation omitted]. She submits she worked one or two shifts each week, and on weekends.
On [date] 2013, the wife’s parents purchased a Motor Vehicle 1 which the wife has the use of. The vehicle is registered in the wife’s father’s name.
The contribution of a half interest in the Property A property was for the benefit of the wife alone.
Parenting contributions post-separation
Following separation, the wife gives evidence that the children lived with her and spent time with the husband.
From 22 July 2012 until 28 August 2015, the children lived on a week-about basis with either party.
On 28 August 2015, the wife alleges the husband withheld the children, however orders were subsequently made by Judge Sexton, returning the children to a week-about care arrangement.
On 29 March 2017, final parenting orders were made which provided, inter alia, for the children to live equally with either party, however allowing flexibility for [X] given his age.
In June 2017, [X] commenced living full-time with the husband.
The husband contends that [Y] has similarly expressed a desire to live with him on a full-time basis. I return to this matter later in these reasons under s.75(2) factors.
S.79(4)(d) the effect of any proposed order upon the earning capacity of either party to the marriage
Both parties are presently self-employed but both of their respective proposals see them retain their earning capacity. As discussed below, the husband’s earning capacity is however adversely affected by an [medical] condition.
S.79(4)(f) any other order made under this Act affecting a party to the marriage or a child of the marriage
I refer to the final parenting orders made on 27 May 2017. I consider the parenting orders later in these reasons under s.75(2) factors.
Assessment of contributions
The evidence is clear that the husband made by far the greater initial financial contribution to an 11-year relationship. I am satisfied that the wife brought savings of $20,000 and a second-hand motor vehicle to the relationship. I am satisfied that her cash contribution of $20,000 was applied to the general expenses of the household.
The husband provided the contribution of $195,000 to the purchase of the Property D property. This purchase was substantially the basis for the parties increased wealth through the purchase of the Property E property. I am not satisfied the wife contributed $20,000 to the purchase of the Property D property.
I am satisfied that both parents made contributions as home-makers and in the care of the children. On the evidence in this matter, I am unable to conclude other than those contributions should be treated as equal. I reject the husband’s argument that he made an overwhelming contribution to the home-making and general care of the children. I accept the wife’s submission that the husband had a disposition to exaggerate the size and scope of his contributions. The wife did not conduct a business between 2004 and 2008. I accept she was likely to be the primary caregiver for the children during this time. On the other hand, I do not accept the wife’s attempt in her evidence to minimise the involvement of the husband as homemaker and caregiver, especially when the renovations to the Property D property were complete and he had an office at the home.
I accept the submission of the husband that there was no cross-examination about the evidence he gave of extensive renovation work as a contribution. In light of the absence of any challenge to his claim to have carried out this work, I am unable to conclude that the work was not carried out. I accept that he carried out this work. I accept that it is possible the husband exaggerated the extent of the renovation work said to have been contributed by him. However, there is no basis in the evidence upon which I can access the extent of any such exaggeration. I accept the wife made similar contributions, though not as great as those of the husband.
I have found that the $100,000 contributed by the wife’s parents was for the benefit of both parties.
Post separation I am satisfied the parties contributed equally to the care of the children.
The contribution of the half interest in the Property A property was for the wife’s benefit.
Taking account of all the above considerations, I assess both parties’ respective contribution entitlements at 52% in favour of the husband and 48% in favour of the wife.
I now turn to the s.75(2) factors.
Section 75(2)
The Act requires me to take into account the matters referred to in s.75(2) of the Act, so far as they are relevant, when considering what orders should be made in these proceedings. The relevant matters to be so taken into account on these facts are, as follows:
(a) the age and state of health of each of the parties;
The wife is in reasonable health.
The husband has been diagnosed with a condition called [medical condition]. He deposes that the condition has made it increasingly difficult for him to work in his business. The husband filed an Affidavit of Dr R, detailing his condition.
The wife submitted that the husband’s reliance upon ongoing [medical condition] is specious. I do not accept that argument. Although it is true that Dr R did not recommend any surgical treatments, and the prognosis is unknown, there remains a possibility that the husband could lose further [physical conditions]. I take account of Dr R’s evidence set out at paragraph 16 of his Affidavit sworn 28 March 2018 that it is likely the husband may have difficulty.
Apart from this, the husband gave evidence that he suffers no other health issues.
(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;
I refer to the discussion of the parties’ assets and income above.
The wife holds an [qualifications omitted]. The wife is presently not working following the birth of [A].
The husband holds trade qualifications in [qualifications omitted] which he deposes is a redundant trade in the [employment] industry. It is difficult to form a clear view about his earning capacity. He gives evidence that his [medical condition] together with a decline in demand for [employment industry] has caused a significant reduction in his earning capacity. On balance I accept this is likely.
I mentioned earlier the discrepancy between the husband’s income of $150,000 asserted in the Residential Tenancy Application, Exhibit “C”, said to be derived from the business of Business I in 2017 and his personal tax return for June 2017 which recorded his total income as $20,343. The husband gave very unsatisfactory evidence about his income, and I am satisfied he failed to disclose the reality of his income in recent years. I have formed the view that the husband’s income has been significant, likely in excess of $100,000. I apply the presumption in Black & Kellner (1992) FLC 92-287 based upon his non-disclosures. However, in the future, the capacity of husband to maintain his earnings at a similar level is likely to be compromised because of his [medical condition]. It is not possible to be more precise about the impact of this problem.
I am satisfied that both parties have a capacity for gainful employment, although the capacity of the husband is impaired by his [medical condition].
I take account of the evidence that the wife’s new partner, Mr S, has been paying expenses associated with the Property A property.
I refer to the discussion and findings concerning the Property A property above. I note that if my conclusions there are incorrect about the wife’s ownership of a half share, I am satisfied it would be appropriate to include the property here as a financial resource of the wife, subject to the obligation to pay her parents when she is able. Since I have concluded a half interest in the Property A property is an asset of the wife, I do not take it into account as a s.75(2) factor. I am satisfied that if it had been taken into account in such a way, it would lead to a result consistent with the result articulated in my proposed orders.
(c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;
As already noted, the wife has primary care of a young child [A] who is not yet one.
[X] lives primarily with the husband.
[Y] and [Z] live with both parties in an equal time arrangement pursuant to court orders.
The husband submitted that, based on comments made by the children and their behaviour, in future it is likely that all three children will choose to live primarily with him.
I give little weight to this evidence. There is no other evidence in support. There are currently court orders in place for parenting arrangements which, unless discharged or modified, will have to be complied with.
(d) commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain;
The wife does not currently work and, according to her evidence, her partner Mr S is currently meeting their household expenses (paragraph 84 of the wife’s affidavit).
The husband pays rent of $750 per week for a property at Suburb Q.
(e) the responsibilities of either party to support any other person;
This factor is not relevant on the facts of this case.
(f) subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
(i) any law of the Commonwealth, of a State or Territory or of another country; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party;
This factor is not relevant on the facts of this case.
(g) where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable;
The evidence of both parties is consistent that they enjoyed a reasonably affluent standard of living during the relationship.
The wife has repartnered and is in a stable relationship with a partner in steady employment. She is part owner of her residence.
The husband lives in rented accommodation. His reduced earning capacity, discussed above, will circumscribe the nature of the accommodation he can afford.
The outcome proposed later in these reasons will enable both parties to maintain a reasonable standard of living within the limitations of the available resources in this case.
(h) the extent to which the earning capacity of a party would increase by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income;
This factor is not relevant on the facts of this case.
(ha) the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant;
This factor is not relevant on the facts of this case.
(j) the extent to which a party has contributed to the income, earning capacity, property and financial resources of the other party;
I refer to the discussion of s.79(4) considerations above.
(k) the duration of the marriage and the extent to which it has affected the earning capacity of a party;
The parties were in a relationship for 11 years.
Both parties were able to pursue their career choices during the marriage.
I accept that overall the husband’s contribution as homemaker enabled the wife to conduct her Business H, while early in the marriage the husband could carry out his business activities because the wife’s contribution as homemaker.
(l) the need to protect a party who wishes to continue that party's role as a parent;
This factor is not relevant on the facts of this case.
(m) if either party is cohabiting with another person--the financial circumstances relating to the cohabitation;
As noted above, in addition to the children, the wife lives with Mr S, and their infant son, [A].
Mr S was born 1973 and is presently 45 years of age.
Mr S swore an Affidavit on 8 January 2018 and was cross-examined.
Mr S works full-time as a [occupation omitted] with [employer omitted] and earns approximately $112,857 per annum. Mr S gave evidence in cross-examination that he has worked with [employer omitted] for 17 years and his employment is secure, however there are no avenues for further advancement.
In his evidence, he deposed that following cohabitation with the wife in 2016, he commenced meeting a number of household expenses, including utilities, groceries and other living expenses at the request of the wife. He also deposes to meeting a number of costs for the children. Following the birth of [A], Mr S is now the sole income earner as between him and the wife.
Mr S and the wife intend to be married.
The husband gave evidence that he has not repartnered.
(na) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
The evidence about child support assessments was not clear.
However, according to the wife the husband paid $21 per week from May 2013 to May 2015. She alleges he currently owes $1,533.59. The husband did not dispute this.
The wife also gave evidence that on 9 August 2017 she received a Child Support Assessment, although the weekly amount is not specified. The husband, according to the wife’s evidence, disclosed a provisional annual income of $18,000 for the purposes of this assessment.
(o) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account
I take account of the financial support which the wife consistently received from her parents during and after the marriage.
Assessment of section 75(2) factors
The husband submitted that the Court would attribute a 10% adjustment to him for s.75(2) factors.
I am satisfied that the wife will enjoy support from her parents in the future as she has received considerable financial support from them in the past. On balance I am satisfied that this will be a financial resource available to her which is not available any longer to the husband. She presently enjoys financial support from her partner. I am satisfied the wife’s earning capacity remains intact, and she could return to running a business.
The wife has ongoing fulltime care of [A] and equal care of [Z] and [Y] with the husband.
The husband had full time care of [X].
I reject the husband’s argument that he is likely to soon be in a position where he has to care for all three of the children of the relationship. There are existing court orders in place pursuant to which the parents share the care of the children. The fact that the eldest boy, [X], has chosen to live with his father, is not a satisfactory basis to infer that either of the other boys is likely to do so in the near future. If such a course of events transpired, the wife may well be compelled to make contravention applications. In my view, on the evidence in this case, it is not appropriate to make any adjustment in favour of the husband by reason of the possible future need to care for more than one child.
The husband’s earning capacity is likely to be diminished by his [medical condition]. His failure to disclose with clarity his recent earnings, reflected in the discrepancies in his evidence about income, discussed above, make it very difficult to form a clear view about the extent of to which his earning capacity will be affected. I accept the impact will be adverse.
On weighing these factors, I am satisfied the husband should receive an adjustment of 5% in his favour. Accordingly, the assets of the parties will be divided 43% to the wife and 57% to the husband.
The net value of the property owned by the parties is $971,349, inclusive of superannuation, the distributions of $240,000 to each party and the amount of $281,017 held in Bank 1 Account. On the basis of a 43%/57% division, the wife would be entitled to receive assets with a value of $417,680 and the husband assets with a value of $553,669.
Excluding any share of the amount of $281,017, the husband presently has net assets of $318,017 inclusive of superannuation and early property distribution. He therefore needs an additional amount of $235,652 to receive his entitlement.
Excluding any share of the amount of $281,017, the wife presently has net assets of $372,315, inclusive of superannuation, early property distribution and the boat. She would therefore need an additional amount of $45,365 to receive her entitlement.
The wife argued the boat should be sold and the proceeds divided between the parties. The husband argued that the boat should be transferred to him, since he proposes to continue using it.
Accordingly, in my view the amount of $235,652 should be provided to the husband by a transfer of the boat to him, valued at $9,000 together with a payment to the husband from the monies held in Bank 1 Account, of $226,652, with the balance of $54,365 to be paid to the wife. Any interest accrued on the deposited funds since the date of hearing should be divided 57% to the husband and 43% to the wife.
The amount of $7,000 should be deducted from the husband’s share to satisfy the costs order made against him on 25 February 2018.
Are the orders just and equitable?
Section 79(2) of the Act provides that:
The court must not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
The Full Court in Manolis & Manolis(No.2) [2011] FamCAFC 105 in relation to this fourth step observed at [65] and [66]:
It can be seen that power to make orders in regard to property is not exhausted after the third step. It is not until orders are made that the power is exhausted. The exercise of power pursuant to s 79 of the Act remains subject to the overarching requirement of justice and equity imposed by s 79(2) until it is exhausted…The section does however oblige the court to “stand back” from its preliminary determination, and consider its impact. So doing may inform the terms of the orders appropriate to produce a just and equitable outcome in those terms. It may result in a re-consideration of s 79(4) and or s 75(2) factors, and a different outcome. Whatever the scope of s 79(2), the court’s determination with respect to it cannot be dependent upon findings or conclusions which are irreconcilable with those recorded in the context of a consideration of s 79(4) or s 75(2).
The High Court of Australia in Stanford (supra) commented at [36] on the meaning of “just and equitable” as follows:
The expression “just and equitable” is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its metes and bounds.[2]
[2] Stanford & Stanford [2012] HCA 52 at paragraph 36 .
I also take account of the caution expressed in Stanford (supra) at [40] that to conclude that making an order is "just and equitable" only “because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act”.
In addition to s.79(1), s.80(1) is relevant to the form of orders proposed and provides the Court with the following general powers:
The court, in exercising its powers under this Part, may do any or all of the following:
(a) order payment of a lump sum, whether in one amount or by instalments;
(b) order payment of a weekly, monthly, yearly or other periodic sum;
(ba) order that a specified transfer or settlement of property be made by way of maintenance for a party to a marriage;
(c) order that payment of any sum ordered to be paid be wholly or partly secured in such manner as the court directs;
(d) order that any necessary deed or instrument be executed and that such documents of title be produced or such other things be done as are necessary to enable an order to be carried out effectively or to provide security for the due performance of an order;
(e) appoint or remove trustees;
(f) order that payments be made direct to a party to the marriage, to a trustee to be appointed or into court or to a public authority for the benefit of a party to the marriage;
(h) make a permanent order, an order pending the disposal of proceedings or an order for a fixed term or for a life or during joint lives or until further order;
(i) impose terms and conditions;
(j) make an order by consent;
(k) make any other order (whether or not of the same nature as those mentioned in the preceding paragraphs of this section), which it thinks it is necessary to make to do justice; and
(l) subject to this Act and the applicable Rules of Court, make an order under this Part at any time before or after the making of a decree under another Part.
I also bear in mind the “exhortation” in s.81 of the Act to strive to achieve a result that satisfies the policy of making orders which finally determine the financial relationship between the parties: In the Marriage of Crapp and Crapp (No.2) (1979) 5 Fam LR 47; (1979) FLC 90-615.
Taking account of these judicial statements, and having “stood back” and considered the proposed outcome, I am satisfied it is just and equitable in the circumstances of this case.
On a 43/57 percentage division, the applicant and respondent will have the assets and liabilities, as set out in the below table.
Assets and liabilities to be retained by the applicant
Value ($)
Bank 1 Account
$54,365.00
Bank 1 Account
$1.00
Property A
$437,500.00
Household contents
$2,000.00
Interim property settlement
$240,000.00
Super Fund R
$26,564.00
Less half purchase price payable for Property A
-$342,750.00
Total:
$417,680.00
Assets and liabilities to be retained by the respondent
Value ($)
Bank 1 Account
$226,652.00
Bank 2 Account
$4,000.00
Business I
$10,000.00
Box trailer
$500.00
Motor vehicle 2
$5,000.00
Boat
$9,000.00
Household contents
$5,000.00
Interim property settlement
$240,000.00
Super Fund S
$53,517.00
Total:
$553,669.00
Costs
Section 117 of the Act sets out that each party shall bear his or her own costs, subject to the considerations in s.117(2) of the Act.
Any order for costs must also be determined in light of the substantive judgment and the relative success or failure of the parties. This is naturally something that can only be addressed after judgment has been delivered.
The Court proposes to make the orders and directions in relation to any application for costs that might be made as set forth in the orders at the commencement of these reasons.
I certify that the preceding two hundred and thirty-one (231) paragraphs are a true copy of the reasons for judgment of Judge Harper
Date: 28 November 2018
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