Hester and Hester

[2018] FCCA 1137

FEDERAL CIRCUIT COURT OF AUSTRALIA

HESTER & HESTER [2018] FCCA 1137

Catchwords:
FAMILY LAW – Property – contributions over 27 years – overall assessment of contributions and s.75(2) factors – justice and equity.

Legislation:

Family Law Act 1975, ss.75, 79

Cases cited:

Bevan & Bevan [2014] FamCAFC 19
Chapman & Chapman [2014] FamCAFC 91
Kennon & Kennon (1997) FLC 92-757
Russell & Russell (1999) FLC 92-877
Scott & Danton [2014] FamCAFC 203
Stanford & Stanford [2012] HCA 52
Teal & Teal [2010] FamCAFC 120

Applicant: MR HESTER

Respondent: MS HESTER

File Number: PAC 2671 of 2016

Judgment of: Judge Obradovic

Hearing dates: 2 March 2017, 14 August 2017

Date of Last Submission: 14 August 2017

Delivered at: Parramatta

Delivered on: 10 May 2018

REPRESENTATION

Counsel for the Applicant: Ms DeVere

Solicitors for the Applicant: Sharon Payne Family Lawyers

Counsel for the Respondent: Mr Givney

Solicitors for the Respondent: Rafton Family Lawyers

ORDERS

1. Within 14 days from the date of these orders, the parties shall do all acts and things and sign all deeds, documents, instruments and writings as may be necessary to effect a sale of the property situated at and known as Property A, New South Wales being the whole of the land described in Certificate of Title folio identifier (omitted) for the best price reasonably obtainable in the following manner:

   (a)List the former matrimonial home for sale by private treaty with such agent as the parties may agree to appoint and in default of agreement as to the agent within seven days with such agent as the President of the Real Estate Institute of New South Wales shall appoint the costs of and incidental to such appointment to be borne equally by the parties as and when they fall due;

   (b)The sale price at which the former matrimonial home be listed be mutually agreed upon by the parties or, in the absence of agreement reached within seven days of the date of these orders be the price determined by the proper officer of the Real Estate Institute of New South Wales or his nominee.

2. In the event the former matrimonial home is not sold by private treaty within three months:

   (a)The parties will list the former matrimonial home for sale by public auction with the agent appointed pursuant to order 1(b) of these orders;

   (b)The reserve price for the purpose of such auction will be such as the parties agree upon within seven days after the date upon which the former matrimonial home is first listed for auction or in the absence of agreement a price determined by the agent with carriage of the sale;

   (c)In the event the bidding at the auction does not reach the reserve price the parties may negotiate with the highest bidder or any other interested person and effect a sale of the former matrimonial home at a price agreed by the parties, but failing agreement at a price which is not more than 5% below the reserve price;

   (d)If the former matrimonial home remains unsold, the parties do all acts and things and sign all documents necessary to immediately relist the former matrimonial home for sale by public auction again, on a date nominated by the said agent in the manner listed in order 1(b) above.

3. The parties must each cooperate in every way with the agent including (without limiting the generality of the foregoing):

   (a)Making the key available to the agent;

   (b)Allowing inspection of the former matrimonial property at all reasonable times requested by the agent;

   (c)Doing or saying nothing to hinder or prevent a sale being effected;

   (d)Ensuring the former matrimonial home including the grounds are in a neat and clean condition at the time of inspection by the agent and prospective purchasers; and

   (e)Signing all documents requested by the agents in relation to listing for sale of the former matrimonial home except a contract or agreement for sale which has not been authorised by the parties’ solicitors.

4. The parties must instruct such solicitor or conveyancer as they agree upon to have the conduct of the sale on behalf of both parties or, in the absence of agreement reached within seven days of the date of these orders the husband shall propose three conveyancers or solicitors and the wife shall choose one of them to act on the sale.

5. Neither party may confer on any agent without the consent of the other party any right to any sole or exclusive agency in respect of the former matrimonial home or to any commission.

6. If the agent certifies in writing to the parties’ solicitors it is reasonably necessary for the work specified in such notice to be carried out to the former matrimonial home so as to assist in effecting a sale and provided the cost of any such work is less than $750 either party may cause such work to be carried out and the costs of the work will be recoverable by that party from the proceeds of sale.

7. Upon completion of the sale of the former matrimonial home pursuant to these orders, the proceeds of sale will be paid in the following manner and priority:

   (a)Adjustment of water rates and council rates;

   (b)In payment of agents fees and commission due on the sales;

   (c)In payment of legal costs on the sales;

   (d)In payment of the sum of $6,798 to Mr & Mrs Hester, being the full and final payment of the outstanding loan to Mr & Mrs Hester;

   (e)In payment of 43% of the balance to the husband; and

   (f)In payment of the remainder to the wife.

8. Orders (b) and (c) below have effect from the operative time:

   (a)That in accordance with paragraph 90MT(1)(a) of the Family Law Act 1975, whenever a splittable payment becomes payable in respect of the husband’s interest in Super Fund Superannuation Fund, the wife is entitled to a base amount of $94,000 and there is a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made but for these orders.

   (b)That, having been accorded procedural fairness in relation to the making of this order, this order binds the trustee of the superannuation fund.

   (c)That operative time for this order is four business days after the date of service of the orders on the trustee of the superannuation fund.

9. Apart from as provided otherwise herein the husband and wife shall have the sole right, title and interest in:

   (a)Any chattels, goods, furnishings and other property which is, at the date hereof, in their possession respectively;

   (b)Any moneys, shares, debentures, investments and superannuation entitlements which stand in their sole name or to their credit respectively at the date hereof.

10. Except as otherwise provided by these orders, each party remains solely responsible for all debts in the parties’ respective names.

11. Each party is solely liable for and indemnifies the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.

12. In the event that either party fails to execute any deed or instrument necessary to give effect to these orders within 14 days of a written request to do so, a Registrar of the Federal Circuit Court at Parramatta is hereby appointed pursuant to the provisions of section 106A of the Family Law Act1975 to execute the deed or instrument in the name of the defaulting party and do all acts and things necessary to give validity and operation to the deed or instrument.

13. Remove all outstanding issues from the list of cases awaiting finalisation.

IT IS NOTED that publication of this judgment under the pseudonym Hester & Hester is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT PARRAMATTA

PAC 2671 of 2016

MR HESTER

Applicant

And

MS HESTER

Respondent

REASONS FOR JUDGMENT

Introduction

1. These are proceedings for property adjustment orders pursuant to s.79 of the Family Law Act 1975.

2. The applicant husband and the respondent wife were married on 1990. They did not live together prior to their marriage. They separated under the one roof in November 2014 and commenced living in separate residences in February 2016.

3. There are two children of the marriage, Mr A who turned 18 in 2017 and [X] who will turn 18 in 2019, less than a year away at the time of publication of these Reasons for judgment. After the parties’ physical separation, the parties’ two children remained living with the wife.

The Relevant Legal Principles

1. The overall approach to the determination of an application for property adjustment orders pursuant to s.79 Family Law Act1975 (Cth) was set out by the High Court in Stanford v Stanford,[1]where their Honours stated:

   [1] [2012] HCA 52; (2012) 247 CLR 108

   [37] … 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.

   …

   [40]… 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”. 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.

   [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…

   [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…

2. Such approach was subsequently considered by the Full Court of the Family Court in Bevan & Bevan[2], Chapman & Chapman[3] and Scott & Danton[4].

   [2] [2014] FamCAFC 19

   [3] [2014] FamCAFC 91

   [4] [2014] FamCAFC 203

3. In many matters which come before this Court, the requirement of whether it is just and equitable to make any orders is readily satisfied by the fact of the parties’ separation; as there is not and will not thereafter be the joint use of property by the parties.

4. Once the issue of whether it is just and equitable to make any order is resolved, the Court is to then consider the contributions made by the parties as defined in s.79(4)(a) to (c), the matters set out in s.79(4)(d) to (g) and in particular the subjective considerations as to the parties by having regard to the provisions of s.75(2) in so far as they are relevant.

5. The Court is then to consider the justice and equity of the actual orders to be made, in the context of the Court’s obligations to make appropriate orders as provided for in s.79(1) of the Act.[5]

   [5] see generally Russell & Russell (1999) FLC 92-877; Teal & Teal [2010] FamCAFC 120

6. The just and equitable requirement is “one permeating the entire process”[6].

   [6] Bevan supra at [86]

Contributions

1. The wife was born on 1964 and the husband was born on 1966. The parties met at University in approximately 1985, and by 1988 they both graduated with (qualifications omitted).

2. In about 1990, the parties purchased a Ford (model omitted) together. They borrowed money jointly to fund the purchase, with either one or both of them contributing to the deposit.

3. In 1990, the parties purchased their first property at Property B for $128,000. The purchase price was funded by a deposit which the husband had saved, a home loan with the (omitted) Bank in the amount of $117,552 and an interest free loan from the husband’s parents in the amount of $4,500.

4. The wife conceded that the husband paid the deposit for that property but she maintained it was only 5%. The maths indicates that the husband must have contributed at least $5,948 towards the purchase price, which is 4.7%. The costs of the purchase are not accounted for and as such it is likely that the husband contributed more than $5,948.[7]

   [7] $128,000 - $117,552 = $10,448 with $4,500 of that from husband’s parents leaves $5,948 which must have come from the husband. There are likely to have also been legal fees associated with the purchase.

5. At the commencement of the relationship, the parties had minimal assets, except for the savings had by the husband which were utilised by the parties to purchase their first home together, personal assets and the Ford (model omitted) which was encumbered.  The husband also owned some shares.

6. The loan to the husband’s parents was repaid over nine years by monthly repayments of $40. The wife conceded that this was of great benefit to the parties.

7. In 1999, the wife received a payment for long service leave and annual leave from her then employer. This was approximately $6,000 in total, and it was deposited into the parties’ joint account.

8. In about 2002, the parties sold the Property B property for $336,000 and bought the former matrimonial home at Property A for $470,000. The purchase was funded by a loan from the (omitted) Bank and the net proceeds of sale of the Property B property.  The home loan was a split loan, and one part of the loan was paid off on 2016, while the second part remained.

9. In 2004, the husband’s parents lent the parties a further $15,000. It is not clear what these funds were used for, but it is agreed between the parties that the loan has been repaid by monthly payments of $50 which were paid from the wife’s income until 2009, after which time the husband made the repayments from his income. The parties agree that the amount of $6,798 remains owing to Mr & Mrs Hester.

10. In 2008 the wife received $1,800 from her family, which was used either for her own purposes or for the benefit of the family. Also at about this time, the wife received an inheritance of just under $4,000. Such money was paid into the home loan account.

11. In 2010 the parties purchased a motor vehicle for the wife. The price of the vehicle was approximately $16,000. This is the vehicle which the wife retained post separation.

12. During the marriage, the husband’s earnings were utilised for the mortgage repayments, and the husband made payments in addition to the minimal monthly payment toward the loan. When the parties undertook renovations to the former matrimonial home, the renovations were funded from the home loan, as was the motor vehicles which was purchased using the home loan redraw facility. The wife conceded that such re-draws were made possible because of the additional payments made by the husband towards the home loan. 

13. The wife made a number of concessions during her cross-examination as to the use of income during the relationship, such concessions going to the husband making the more significant financial contributions throughout the relationship.

14. The parties had credit cards during the relationship, which at the time of separation or close to it had a balance of zero. At the time of hearing, each of the parties had credit card liabilities in their name[8]. The wife had credit card liabilities of approximately $15,000 and the husband of approximately $5,000.

    [8] All debts at the time of hearing will be included in the balance sheet, with appropriate overall adjustments to be made.

15. In December 2015, the balance of the husband’s superannuation account stood at $240,687. At final hearing it was some $93,000 more. There was no evidence as to the amount of contributions by the husband during the post separation period or as to investment returns of the fund.

16. A minor issue in the proceedings was a debt said to be owed by the wife in relation to a monument. The corresponding asset was not included by the wife in her financial statement. It is not a matter of any significance in the overall property adjustment, nor is it an issue that the Court considers goes to credit. The wife readily conceded the matter in cross-examination. The debt will not be included in the balance sheet.

17. After the parties’ separation in November 2014 to March 2016 when the husband moved out, the wife did not make any financial contributions towards the mortgage. It was the husband who made the sole loan repayments in that period. Since March 2016 the wife has paid $41 per week as has the husband.

18. While the period post separation was difficult for the parties, it appears it was even more difficult for the parties’ two children. There was much bad blood between the husband and wife about the husband’s removal of furniture from the family home and about what the wife considered was insensitive behaviour towards her and the children, particularly after physical separation.

19. By the time of the hearing passions had settled down somewhat and the children were again able to enjoy a relationship with both of their parents. Mr A had been spending one night per week with the husband and also he had started working for him. [X] on the other hand had started spending school holidays with the husband, but her relationship with him was more strained than Mr A’s.

20. In any event, while significant hearing time was spent cross-examining particularly the husband on these issues, in the context of the parties’ relationship as a whole and the many contributions each of them made to the family, these matters are of little, if any importance.

Assessment of Contributions and s75(2) Factors

1. At the time of final hearing, the property pool consisted of the following assets:

Item	Owner	Value
Property A	Joint	$1,140,000
Various Shares	Husband	$3,315
Motor Vehicle	Husband	$13,000
Personalty and Household	Husband	$ 5,000
Superannuation	Husband	$ 333,967
Various Shares	Wife	$10,054
Motor Vehicle	Wife	$ 5,200
Personalty and Household	Wife	$8,000
Superannuation	Wife	$ 98,848
TOTAL:	$1,617,384

1. At the time of final hearing, the property pool consists of the following liabilities:

Liability	Amount
Mortgage	$ 74,182
Loan to Mr & Mrs Hester	$ 6,798
Husband’s Credit Cards	$ 5,000
Wife’s Credit Cards	$ 15,000
TOTAL Liabilities	$ 100,980

1. Therefore, the total net pool at the time of hearing is assessed at $1,516,404.

1. The parties’ relationship was overall one of co-operation and team work. They both worked hard during their relationship, whether it be in paid employment or in the household. They both contributed to their children’s upbringing. The wife worked part-time for the majority of the relationship, which meant the husband took on the greater burden of financial contributions and the wife took on the greater burden of non-financial contributions.

2. There were, as in most marriages, some hiccups and disagreements. The wife made allegations of family violence[9]. Ultimately the Court does not accept that this conduct, even at its highest[10], was such that it made the wife’s contributions during the marriage more arduous. The wife has not demonstrated that the alleged violent conduct had a significant adverse impact upon her contributions to the marriage.[11]  To be relevant, it is necessary to show that the conduct occurred not only during the marriage but that it had a “discernible impact upon the contributions of the other party.”[12] The evidence in the wife’s case simply did not meet this bar.

   [9] These are set out in detail in the wife’s affidavit filed 30 January 2017.

   [10] The court does not make findings that the conduct as alleged by the wife occurred, nor does it make findings that it did not occur.

   [11] Kennon & Kennon [1997] FamCA 27; (1997) FLC 92-757 at 84,294

   [12] Kennon at 84,295

3. The Court assesses the parties’ overall contributions as 50/50. This assessment is made on a broad brush approach, taking into consideration the assets each of the parties brought into the relationship, their contributions over many years of marriage, and their post separation contributions.

4. It is accepted that the husband brought in the initial deposit for the purchase of the parties’ first home, that his parents assisted, and that he maintained the mortgage repayments post separation until March 2016, while the parties remained living under the same roof. But this is all in the context of a long relationship, of those initial contributions being eroded over time and the post separation contributions being a continuation of the parties’ arrangement throughout their relationship.

5. While reasonable minds may differ as to the assessment of contributions, the Court is persuaded by the submissions made on behalf of the wife that it is more appropriate to consider the contributions from the day of the commencement of the relationship to the date of final submissions[13], which is a period of over 27 years, taking into consideration the welfare of the family over those years, the income of the parties and the way the parties had organised their lives throughout their relationship. 

   [13] Rather than periods of contributions

6. The husband remains employed but is in the process of furthering his private business. His (business omitted) is growing and it is his intention when business has grown sufficient enough that he will resign from his paid employment.

7. The Court does not have a crystal ball and it is impossible in circumstances where there is only opinion evidence of the parties as to their earning capacity, to find with any certainty what the future for the parties might hold. Submissions were made on behalf of the wife that because she had worked part-time throughout the parties’ relationship that her earning capacity was lower than that of the husband, who had developed his career during that same period. Certainly, at the time of final hearing the parties’ incomes were dissimilar.

8. The wife conceded in cross-examination however, that at the time of hearing, her part-time hours were a matter of choice. 

9. The parties are similar in age, and have reasonably long working lives ahead of them. They are also both in reasonable health. Neither of the parties is in a relationship. Their children are now both almost adults, albeit the wife remains primarily responsible for housing them. The husband makes child support payments although there is disagreement between the parties as to how much he should be paying.[14]

   [14] Although there is an assessment by the Child Support Agency

Conclusion as to Adjustment

1. As noted earlier, the Court assesses the parties’ relevant and respective contributions as equal. However, there will be an adjustment in the wife’s favour of 7% in light of her income, future earning capacity and commitments towards the parties’ children.

2. As such, the overall adjustment of the parties’ property interests will be 43% to the husband and 57% to the wife; that is $ 652,054 to the husband and $864,350 to the wife based on the Courts’ assessment of the net pool.

3. The parties both seek an order for the sale of the former matrimonial home. 

4. The parties are ad idem as to the amount of a superannuation split, that is, they agree that an order splitting the husband’s superannuation as to $94,000[15] to the wife is appropriate. Such an order will mean that there will be a slightly higher cash adjustment to the wife so that the overall 43/57 split is achieved in favour of the husband.

   [15] The husband contends it should be $93,642 and the wife contends it should be $94,000 – rounding it up to the nearest thousand is $94,000

5. This will mean an overall differential in terms of the cash payment to each of the parties of almost $260,000, which in all of the circumstances is just and equitable, noting that the husband will likely continue to earn a higher income and his superannuation contributions will likely also be higher over the remaining period of the parties’ working lives.

6. As such, the husband is to receive:

Item	Owner	Value
Property A – to be sold	Joint	$ 390,772
Various Shares	Husband	$3,315
Motor Vehicle	Husband	$13,000
Personalty and Household	Husband	$ 5,000
Superannuation – to be split	Husband	$ 239,967
TOTAL:	$ 652,054

1. As such, the wife is to receive:

Item	Owner	Value
Property A – to be sold	Joint	$ 648,248
Superannuation – to be split	Husband	$ 94,000
Various Shares	Wife	$10,054
Motor Vehicle	Wife	$ 5,200
Personalty and Household	Wife	$8,000
Superannuation	Wife	$ 98,848
TOTAL:	$ 864,350

Conclusion

1. In all of the circumstances and for all of the reasons set out above orders to be made as set out in the forefront of these reasons are just and equitable.

I certify that the preceding forty-nine (49) paragraphs are a true copy of the reasons for judgment of Judge Obradovic

Date: 10 May 2018