Hobbs & Valonz
[2013] FCCA 1999
•27 November 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| HOBBS & VALONZ | [2013] FCCA 1999 |
| Catchwords: FAMILY LAW – Property – whether it is just and equitable to make an order – contributions – s.75(2) factors. |
| Legislation: Family Law Act 1975, ss.75, 78, 79, 106A, pt. VIII |
| Bevan v Bevan [2013] FamCAFC 116 Stanford and Stanford Lots of Questions – Very Few Answers, Martin Barfeld QC of the Victorian Bar. |
| Applicant: | MR HOBBS |
| Respondent: | MS VALONZ |
| File Number: | BRC 6269 of 2012 |
| Judgment of: | Judge Cassidy |
| Hearing date: | 10 October 2013 |
| Date of Last Submission: | 15 November 2013 |
| Delivered at: | Brisbane |
| Delivered on: | 27 November 2013 |
REPRESENTATION
| Counsel for the Applicant: | Mr Linklater-Steele |
| Solicitors for the Applicant: | Barry Nilsson Lawyers |
| Counsel for the Respondent: | Ms Carew QC |
| Solicitors for the Respondent: | Small Myers Hughes |
ORDERS
That the husband receive an amount equal to 37% of the net assets, as set out in Annexure A, and retain and be entitled to be the sole legal and beneficial owner of the following:
(a)His property at Property B in the State of Queensland;
(b)His (vehicle omitted) – (model omitted) motor vehicle;
(c)His Ford (model omitted) motor vehicle;
(d)His (omitted) Bank account;
(e)His (omitted) Bank account;
(f)All shares currently held in his name;
(g)US dollars in his possession;
(h)Furniture, furnishings and effects in his possession;
(i)Personal effects and jewellery; and
(j)His superannuation entitlements in the Hobbs Private Superannuation Fund.
In addition to the assets referred to in Order 1 hereof, the wife pay to the husband $151,000.00 within twenty-eight (28) days of the date of these Orders.
That if the said sum is not paid within the period specified, the wife to pay to the husband interest thereon at the rate prescribed by the Family Law Act 1975 and calculated on a daily basis until such payment is received by the husband.
That the wife retain and be entitled to be the sole legal and beneficial owner of the following:
(a)Her property at Property O in the State of Queensland;
(b)Her property at Property A in the State of Queensland;
(c)Her property at Property S in the State of Queensland;
(d)Her Toyota (model omitted) motor vehicle;
(e)The Caravan;
(f)All (omitted) Bank accounts in her name;
(g)All shares currently held in her name;
(h)Her superannuation entitlements with (omitted) Super and the Valonz Superannuation Fund;
(i)Her interest in Valonz (omitted) Pty Ltd;
(j)Furniture, furnishings and effects in her possession;
(k)Personal effects and jewellery.
That each party shall indemnify the other with respect to any expenses, outgoings and liabilities related to those items of property which they retain or receive pursuant to these Orders.
That both parties do all acts and things and execute all such documents as are necessary to transfer the Caravan to the wife.
That in the event that either party refuses or neglects to sign any documents or do any act necessary to give effect to the terms of these Orders (within seven (7) days of a written request to do so), the Registrar of the Federal Circuit Court of Australia at Brisbane, is hereby appointed pursuant to s.106A of the Family Law Act 1975, to execute all such documents on behalf of the defaulting party and to do all such acts and things as are necessary to give validity and operation to the said Orders.
That the party in default is ordered to pay all reasonable costs incurred by the solicitors of the non-defaulting party.
Annexure A – Net Assets
ASSETS
AGREED VALUE
Assets in Wife’s Name
Property O
$610,000.00
Property A
$400,000.00
Property S
$330,000.00
Toyota (model omitted)
$55,000.00
Superannuation
$1,587,436.00
(omitted) Portfolio
$392,800.00
(omitted) Investment Loan
$8,240.00
Bank Accounts
$164,066.00
Total Gross Assets
$3,547,542.00
Liabilities in Wife’s Name
(omitted) Bank
-$285,499.00
(omitted) Bank
-$328,000.00
Total Liabilities
-$613,499.00
NET ASSETS IN WIFE’S NAME
$2,934,043.00
Assets in Husband’s Name
Property B
$639,000.00
(vehicle omitted)
$65,000.00
Bank Accounts
$110,000.00
Ford
$14,000.00
US Dollars
$12,047.00
(omitted) Portfolio
$79,357.00
Superannuation
$589,364.00
TOTAL ASSETS IN HUSBAND’S NAME
$1,508,768.00
Asset in Joint Names
Caravan
$41,500.00
TOTAL ALL ASSETS
$4,484,311.00
IT IS NOTED that publication of this judgment under the pseudonym Hobbs & Valonz is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRC 6269 of 2012
| MR HOBBS |
Applicant
And
| MS VALONZ |
Respondent
REASONS FOR JUDGMENT
Property Settlement
The parties in this matter have competing applications for an alteration of property interests pursuant to Part VIII of the Family Law Act 1975 (as amended) (hereinafter referred to as “the Act”). The husband seeks orders under s.79 of the Act. The wife seeks to have the husband’s application dismissed on the basis that it is not just and equitable to make an order under s.79 of the Act.
The Competing Applications
The husband’s application seeks an order that has the effect of dividing the property of the parties equally. He seeks to retain certain real property and bank accounts and personal effects and superannuation entitlements and then seeks a payment of cash from the wife that will enable him to receive an adjustment equal to 50% of the total property these parties owned together or separately.
The husband is also seeking a declaration, if it becomes necessary in the alternative, that pursuant to s.78 of the Act, the wife owes the husband the sum of $100,000.00, together with interest and a declaration that the wife holds her interest in the Caravan on constructive trust for the husband.
The reason that the husband is seeking those declarations is because, relatively late in the proceedings, the wife amended her response and set out in her outline of case that was filed on 9 October 2013, the following orders that she sought being:
“[2] … that the Husband’s Application for an Order pursuant to section 79 of the Family Law Act be dismissed.”
The wife argues on the basis of Stanford v Stanford (2012) 47 Fam LR 481 that there should be no order made with respect to the division of property in this matter. The wife argues in the alternative, that if I am persuaded that it is just and equitable to make an order, that the order should not be very different from the distribution of property she contends for, if I make no order with respect to property. In other words, her submissions are that the contributions and the s.75(2) factors, when assessed, would produce the same outcome as not making an order under s.79 of the Act.
The wife is seeking a result (by dismissing the husband’s application) of 65.42% of the assets remaining with her and the husband keeping the assets he has. She seeks the jointly owned caravan be transferred to her which would effect a 67% split.
The Material
The material that I have considered in this matter, in the husband’s case was:
a)The initiating application filed 25 October 2012;
b)The affidavit of the husband filed 25 October 2012;
c)The affidavit of the husband filed 13 September 2013;
d)The husband’s case summary document filed 1 October 2013;
e)The amended initiating application filed 10 October 2013; and
f)The husband’s supplementary summary of argument filed 15 November 2013.
The material that I have considered in the wife’s case was:
a)The affidavit of the wife filed 10 September 2013;
b)The affidavit of Mr B filed 13 September 2013;
c)The affidavit of Ms D filed 13 September 2013;
d)The financial statement of the wife filed 13 September 2013;
e)The affidavit of the wife filed 3 October 2013;
f)The wife’s amended outline of case filed 9 October 2013;
g)The affidavit of Ms P filed 9 October 2013;
h)The wife’s updated list of documents filed 10 October 2013;
i)The wife’s outline of argument filed 10 October 2013; and
j)The wife’s supplementary outline of argument filed 7 November 2013.
I have also considered the following material:
a)The transcript of the Court proceedings on 10 October 2013; and
b)The exhibits tendered on 10 October 2013, being:
i)Exhibit 1 – a bundle of the husband’s (omitted) Bank bank statements;
ii)Exhibit 2 – a single page document from (omitted) Bank, printed 20/12/2012 detailing the product list / balance for the husband;
iii)Exhibit 3 – the property pool; and
iv)Exhibit 4 – the (omitted) Bank and (omitted) Bank account summaries.
The Law
In the recent decision of the Full Court in Bevan v Bevan [2013] FamCAFC 116, the Full Court (Bryant CJ and Thackray J) set out, at paragraphs 57-89, a useful analysis of the approach to be adopted in property cases, following from the decision of the High Court in Stanford v Stanford (supra).
At paragraph 59 and following, Bryant CJ and Thackray J held:
“[59] Prior to Stanford, property applications were commonly dealt with by reference to what the trial Judge called “a four stage process”. This process was described at [31] and [32] of his Honour’s reasons. The jurisprudential basis for the process was well established — see the line of cases cited in Hickey & Hickey (2003) FLC 93-143 at [39].
[60] The four stage (or step) process involves:
• identification and valuation of the property of the parties;
• identification and evaluation of contributions to the property (including property no longer owned by the parties);
• identification and assessment of the various matters in s 79(4)(d) to (g) including, to the extent they are relevant, the matters in s 75(2);
• consideration of matters of justice and equity.
[61] Although the four step process has been regularly applied, the Full court has stressed it is no more than a means to an end, since the statutory obligation is to alter existing interests only if it is just and equitable to do so. Thus, in Norman & Norman [2010] FamCAFC 66 at [60], the Full Court (Finn, May and Murphy JJ) said:
It is the mandatory legislative imperative (to reach a conclusion that is just and equitable) that drives the ultimate result. For all its usefulness and merit as a “disciplined approach” or a “structured process of reasoning” (per Fogarty, Lindenmayer, McCall JJ, N and N, unreported, 10 June 1992), the “three-step” or “four-step” approach merely illuminates the path to the ultimate result.
[62] To like effect, in discussing the four step approach in our joint judgment in Martin & Newton (2011) FLC 93-490, we said (original emphasis):
305. … that approach is not legislatively mandated, and as the Full Court [in Hickey] said, is simply the preferred approach. This is because it will be sufficient, in most cases, to have regard to the overall justice and equity of the orders after determination of the asset pool, consideration of contributions and assessment of the relevant s 75(2) matters.
306. But in our view, there is no requirement that the justice and equity of the order, as prescribed by s 79(2), must only be considered at the fourth (and last) stage. In our view, the requirement to make an order that is just and equitable permeates the entire decision making process, and it is not impermissible to consider it at an earlier point if the particular case requires it. We consider this is such a case.”
At paragraph 64 onwards, their Honours continued:
“[64] The Magistrate who gave the primary judgment in Stanford clearly set out and applied the “four step process”: Re S by her Case Guardian R and S by his Case Guardian S [2010] FCWAM 26 at [45]. The Full Court also accepted there was a “settled approach” in property matters: Stanford & Stanford (2012) FLC 93-495 at [51]. The High Court had before it both judgments, but made no comment about the “four step process” or the “settled approach”.
[65] Although the High Court did not disapprove the four step process, we accept it was not approved either. Given the way the matter was resolved, there was no requirement for a pronouncement either way. However, the High Court’s decision serves to refocus attention on the obligation not to make an order adjusting property interests unless it is just and equitable to do so.
[66] This obligation was previously described in the High Court as the “overriding requirement”: Mallet v Mallet (1984) 156 CLR 605 at 647 per Dawson J. In the same case at 608, Gibbs CJ aptly described s 79 as conferring on a court “a very wide discretion to make such order as it thinks fit when it is satisfied that it is just and equitable that an order should be made …” (emphasis added).
[67] This understanding of the role of s 79(2) resonates with authority developed in the early years of operation of the Act. Thus, in Rogers & Rogers (1980) FLC 90-874 at 75,539 the Full court cited with approval this view expressed by Strauss J in Ferguson & Ferguson (1978) FLC 90-500 at 77,615:
It seems to me, that the main purpose of s 79(2) is to ensure that the court will not alter the property rights of the parties, unless it is satisfied that cogent considerations of justice require it to do so, and that if the court decides that it is requisite to make any order under the section, the court must be satisfied that the alterations so ordered, will go no further than the justice of the matter demands.
[68] Notwithstanding this clear exposition of the law, again approved in Beneke and Beneke (above), perusal of the law reports reveals that it has only rarely been argued that a court is precluded by considerations of justice from exercising the discretion conferred by s 79(1). It appears to have been routinely assumed by litigants, certainly in more recent times, that justice requires the court to assess their claims by reference to s 79(4), even if one contends that the outcome of that assessment will be an order leaving existing property interests intact.
[69] The reason for this is likely to be found in this passage from Stanford (original emphasis):
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 …
[70] In our experience, the circumstances described in the paragraph above encapsulate the vast majority of cases. Hence, the reminder in Stanford of the pivotal role of s 79(2) is unlikely to have any impact in most cases, although it will serve as a reminder to trial judges that the precondition to making any order is a finding that it is just and equitable to do so.
[71] Stanford will also serve as a reminder that the four step process “merely illuminates the path to the ultimate result”. Any future restatement of that process should incorporate acceptance of the fact that the power to make any order adjusting property interests is conditioned upon the court finding that it is just and equitable to make an order.
[72] It follows that judges would be well advised to avoid what we consider to be arid discussion of the “stage in the process” at which “adjustments” are permissible. Such discussion tends to elevate the four step process to the status of a statutory edict, when in fact it is 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.”
At paragraph 73 onwards, the Judges set out , in summary form, the three “fundamental propositions” articulated by the High Court in Stanford v Stanford (supra):
“[73] The High Court in Stanford has laid down three “fundamental propositions” which will provide useful guidance to trial judges in approaching the task under s 79. These were recited above, and could be summarised thus:
1. Determination of a just and equitable outcome of an application for property settlement begins with the identification of existing property interests (as determined by common law and equity);
2. The discretion conferred by the statute must be exercised in accordance with legal principles and must not proceed on an assumption that the parties’ interests in the property are or should be different from those determined by common law and equity;
3. A determination that a party has a right to a division of property fixed by reference only to the matters in s 79(4), and without separate consideration of s 79(2), would erroneously conflate what are distinct statutory requirements.”
At paragraphs 74 to 83, the Court said:
“[74] The first “fundamental proposition”, which requires identification of existing legal and equitable interests in property, is nothing new, since “property” has always been understood as incorporating equitable, as well as legal, interests.
…
[77] Once it is recognised a court has power to alter both legal and equitable interests, it follows that it is necessary first to identify all property in which the parties have either a legal or equitable interest. Since the issue does not arise here, we will not express a concluded view about the post-Stanford controversy concerning the extent to which it is necessary to decide whether — as between the parties — the legal title accurately reflects their respective interests. However, where it is accepted that justice and equity require the making of an order, it would seem unnecessary to complicate proceedings by deciding whether one party has an equitable interest in property held by the other, since the ultimate outcome will not be determined by application of equitable principles but rather by reference to ss 79(4) and 75(2).
[78] Nevertheless, there will be cases, of which Stanford may have been one, where the assertion (or lack thereof) of an existing equitable interest in property held by the other party may be of critical importance in deciding whether it would be just and equitable to interfere with the existing legal ownership. And of course it will always be important to determine whether one party has an equitable interest in property owned by a third party.
[79] We observe that “notional property”, which is sometimes “added back” to a list of assets to account for the unilateral disposal of assets, is unlikely to constitute “property of the parties to the marriage or either of them”, and thus is not amenable to alteration under s 79. It is important to deal with such disposals carefully, recognising the assets no longer exist, but that the disposal of them forms part of the history of the marriage — and potentially an important part. As the question does not arise here, we need say nothing more on this topic, save to note that s 79(4) and in particular s 75(2)(O) gives ample scope to ensure a just and equitable outcome when dealing with the unilateral disposal of property.
[80] The second “fundamental proposition” laid down in Stanford is also not novel since, as the plurality noted, it is well accepted that “title to property and proprietary rights in the case of married persons … rests upon the law … ”: Wirth v Wirth (1956) 98 CLR 228 at 232. Thus, spouses do not have rights to property by operation of s 79 unless and until an order is made altering the rights they have, as determined by principles of common law and equity: Fisher v Fisher (1986) 161 CLR 438 per Mason and Deane JJ at 452 to 454.
[81] The third “fundamental proposition” demands separate consideration of the preliminary question of whether it is just and equitable to make any order altering property interests before the need arises to consider the extent to which existing interests are to be altered and the manner in which that is to be done.
[82] As we have noted, in many cases the preliminary question is effectively answered in the affirmative by the way the parties present their cases. Nevertheless, it is still necessary for it to be shown that the trial judge has expressly, or by clear implication, answered that question in the affirmative before making an order altering existing interests in property.
[83] Answering this preliminary question clearly involves the exercise of judicial discretion since, as was said in Stanford at [36]:
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.”
Continuing at paragraphs 84 onwards, Bryant CJ and Thackray J set out their further analysis of the approach to s.79 property cases, including the approach that should be taken to ensure that s.79(2) and s.79(4) issues must not be “conflated” (as required by the High Court), but which nevertheless remain “intertwined”:
“[84] Just as the expression “just and equitable” does not admit of exhaustive definition, it is not possible to catalogue the “range of potentially competing considerations” that may be taken into account in determining whether it is just and equitable to make an order altering property interests. However, in our view, it would be a fundamental misunderstanding to read Stanford as suggesting that the matters referred to in s 79(4) should be ignored in coming to that decision. Indeed, such a reading would ignore the plain words of s 79(4), which make clear that in considering “what O (if any)” to make, the court must take into account the matters referred to in that subs (emphasis added).
[85] This requirement to consider the s 79(4) matters in determining whether it is just and equitable to make any order provides fertile ground for potential conflation of the two different issues, which the High Court has warned against. However, this potential will not be realised in many cases because of what the plurality said at [42] about the “just and equitable” requirement being “readily satisfied”. But there will be a range of cases, of which arguably the present is a good example, where determining whether it is just and equitable to make any order altering property interests will not be so clear cut and will therefore require not only separate but very careful deliberation.
[86] We do not consider it helpful, and indeed it is misleading, to describe this separate enquiry as a “threshold” issue. We say this for two reasons. First, as was emphasised in Stanford, the initial enquiry is to determine the existing legal and equitable interests of the parties. Secondly, although s 79(2) is cast in the negative and amounts to a prohibition against making any order unless it is just and equitable to do so, the corollary is that if the court does make an order, such order itself must be just and equitable: Woollams & Woollams (2004) FLC 93-195 per Thackray J at [53] and Teal v Teal [2010] FamCAFC 120 per Finn, Boland and Dawe JJ at [70]. The just and equitable requirement is therefore not a threshold issue, but rather one permeating the entire process.
[87] It will be seen from this discussion that while the s 79(2) and s 79(4) issues must not be conflated, they are intertwined because the text of the Act links them. This was recognised in Ferguson & Ferguson where Strauss J said that s 79(2) “is directed to both the questions whether an order should be made at all, and what the order should be, if one is made” (supra at 77,615).
…
[89] In our view, it will be less likely that the separate issues arising under s 79(2) and s 79(4) will be conflated if judges refrain from evaluating contributions and other relevant factors in percentage or monetary terms until they have first determined that it would be just and equitable to make an order. Ultimately, however, appellate error will not be demonstrated if it is possible to ascertain, either by reference to an express finding or by necessary inference, that the trial judge has given separate consideration to the two issues.”
It is clear from the decisions of Bevan v Bevan (supra) and Stanford v Stanford (supra) that the overriding principle in applications seeking orders adjusting property interests is that such orders should not be made unless it is just and equitable to do so. This “permeates” all parts of the determination of such applications.
While a step or staged approach to determining property settlement remains valid (the Full Court in Bevan v Bevan (supra) noting that a four step or stage approach was neither approved nor disapproved by the High Court), such an approach should not be adopted “unthinkingly”.
Ms Carew QC, as she is now, helpfully referred me to a paper “Stanford and Stanford Lots of Questions – Very Few Answers” by Mr Martin Barfeld QC of the Victorian Bar. The paper suggests the following approach and I consider this is an appropriate way to deal with this application:
“It can be now said after Bateman v Bowe that the approach is still one involving steps, albeit not to be followed ‘unthinkingly’. These appear to be:
a. Declare and value the interest (both legal and equitable) of each party in property;
b. Determine whether circumstances exist to make an order adjusting those interests and explain that circumstance. If the answer is yes (as it usually will be);
c. Evaluate and fix contribution;
d. Apply the s.75(2) factors;
e. Formulate an order justified to give effect to the production of the evaluation.”
Background Facts
I have accepted and taken into account the following facts.
The wife is a (occupation omitted). She was born on (omitted) 1948 and she is presently 65 years old. The husband is retired. He was born on (omitted) 1945 and he is 68 years old. The husband retired from a career with (omitted) in 2000. He then engaged in some contract work.
The parties commenced cohabitation in (omitted) 2002 and married on (omitted) 2005. They separated on 23 June 2011 and divorced on 3 November 2012. There were no children of the marriage, although both parties have adult children from previous marriages.
It is not disputed that, at the commencement of the relationship, the wife had net assets, including superannuation, of about $859,687.00. The husband’s assets at the commencement of cohabitation were $1,094,499.00. The wife worked as a (occupation omitted) for the entirety of the marriage and her taxable income totalled approximately $941,360.00. The wife received a redundancy on 5 June 2013 in the sum of $65,791.65. She also received the sum of $100,000.00 ($50,000.00 net) to assist her to retrain. The wife’s superannuation was paid to her in June of 2013, being $196,490.00 from her defined benefit scheme and $9,636.00 from the accumulation fund, both with (omitted) Super Fund. The husband retired in 2000 from (omitted) and his taxable income throughout the period of cohabitation was $201,005.00. The husband continued to work as a (omitted) for (omitted). He retired completely in 2005.
The wife made significant contributions to her superannuation fund over the period of the relationship of about $619,012.00, in addition to the $941,360.00 she earned as taxable income. The husband made no withdrawals from his superannuation fund during their relationship other than $100,000.00 which he lent to the wife. The parties entered into an agreement that the husband would lend the wife $100,000.00 and the wife would borrow the sum to purchase shares. The agreement had the wife paying the husband interest at 8.5%. This was higher than he would have been able to obtain had he simply invested that in a bank deposit. No doubt that was the rate the wife was able to obtain for a loan were she to have borrowed from a bank. The upshot of the arrangement was that the wife paid the husband some interest for the first twelve months that that loan was in existence. The loan has not been repaid, nor has interest been paid since the first twelve months when interest was paid.
The parties lived in the husband’s property, which was a property at Property F, during the relationship. The wife’s property at Property O, where she formerly lived, was rented out for the duration of the relationship, after a short period of time where her daughter occupied it. The wife received the rents from that transaction. The wife’s daughter X lived with the parties from June 2003 until December 2003.
The husband owned a property at Property H. This property sold for $210,000.00. Some part of this money was contributed to the renovations of the Property F property. The husband sold the Property F property for $750,000.00 and purchased a unit at Property B in August of 2013. He paid $639,000.00 for the unit.
The assets currently in the name of the wife, including her superannuation, equal $2,934,043.00. The husband currently has assets of $1,508,364.00. There is a joint asset, which is the Caravan, which has been valued at $41,500.00. Further there is this agreed “loan” as between the husband and the wife of $100,000.00.
The caravan was purchased from money the husband had. I note the wife made some lesser financial contributions to the caravan.
The Asset Pool
The only asset that the parties were not able to agree upon was the sum to be attributed to the wife’s bank account. There was evidence adduced with respect to that issue. I accept the wife’s evidence that the sum totaled $164,066.00 because the husband did not provide evidence of a contrary position. Therefore the assets of the parties are as follows:
ASSETS
AGREED VALUE
Assets in Wife’s Name
Property O
$610,000.00
Property A
$400,000.00
Property S
$330,000.00
Toyota (model omitted)
$55,000.00
Superannuation
$1,587,436.00
(omitted) Portfolio
$392,800.00
(omitted) Investment Loan
$8,240.00
Bank Accounts
$164,066.00
Total Gross Assets
$3,547,542.00
Liabilities in Wife’s Name
(omitted) Bank
-$285,499.00
(omitted) Bank
-$328,000.00
Total Liabilities
-$613,499.00
NET ASSETS IN WIFE’S NAME
$2,934,043.00
Assets in Husband’s Name
Property B
$639,000.00
(vehicle omitted)
$65,000.00
Bank Accounts
$110,000.00
Ford
$14,000.00
US Dollars
$12,047.00
(omitted) Portfolio
$79,357.00
Superannuation
$589,364.00
TOTAL ASSETS IN HUSBAND’S NAME
$1,508,768.00
Asset in Joint Names
Caravan
$41,500.00
TOTAL ALL ASSETS
$4,484,311.00
Liability Asset
It was conceded that the husband lent the wife $100,000.00 in 2009 and this has not been repaid.
The Just & Equitable Assessment Under s.79(2)
The wife’s submission is that the husband fails to satisfy the preliminary question which is “is it just and equitable to make an order under s.79 of the Act?”. Her submission is that there is no need to adjust the parties’ interests in their property. She argues that there is nothing that has arisen out of the marriage relationship or its breakdown that would cause an injustice to leave things as they are.
The wife submitted that the parties to their marriage kept their assets separate. They continued to operate their own bank accounts, they continued the ownership of real property in their own names and they had no joint bank accounts, credit cards, investments or other property, other than a caravan that was purchased in 2008 to which they each made contributions.
The wife submits that any benefit received by the husband during the relationship by virtue of her significantly greater financial contributions, as compared with any non-financial contributions the husband made, and their effectively equal homemaker contributions, exceeded the benefit to the wife of the loan of $100,000.00 made to her by the husband. The argument that the wife raises therefore is that there are no factors that would justify an order being made in the circumstances.
The High Court in Stanford v Stanford (supra) said:
“[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 the present case I am satisfied that it is just and equitable to make a property settlement order because arrangements were made by both the husband and the wife in the present case that impact on the fact that they are no longer living in a marital relationship. It is appropriate to make a property settlement order because there is no longer the common use of the property by the husband and the wife that had been enjoyed by both of them during the marriage.
In particular the loan arrangement as between the husband and wife of the $100,000.00 is no longer able to be determined consensually. Furthermore, the cohabitation in the home at Property F that was owned by the husband has stopped. I note that the cohabitation had allowed the wife’s property at Property O to be used for rental purposes. Whatever assumptions may have underpinned the existing property arrangements, they have been brought to an end in the present case by the voluntary severance of the mutuality of the marital relationship. The joint use of the husband’s Property F property and the $100,000.00 arrangement between the parties, together with the joint ownership of the caravan, requires an adjustment of the property of the parties. But for those matters, I may have been persuaded it was not necessary to make an order but it seems to me that there was a sufficient blending of property and common use of property to make it just and equitable to make an order in relation to the property of the parties.
Initial Contributions
At the commencement of their relationship, both the husband and the wife were employed. The husband was employed by (omitted) as a (omitted) and the wife was employed by (omitted) as a (omitted).
The wife, at the commencement of the relationship, had the following:
Property O
$320,000.00
Property A
$250,000.00
Property R
$140,000.00
Property L
$106,000.00
Property E
$123,000.00
Bank Accounts
$1,364.00
Superannuation
$363,891.00
(omitted) Investment
$72,560.00
Shares
$26,757.00
Ford (model omitted)
$21,926.00
Furniture
$17,990.00
Gross Assets
$1,443,488.00
Liabilities
(omitted) Bank Loan
$188,997.00
(omitted) Bank Loan
$369,655.00
Capital Gains Tax
$25,149.00
Total Liabilities
$583,801.00
Net Assets Including Superannuation
$859,687.00
So the wife’s initial contributions where about $854,687.00.
The husband’s initial contributions were $1,094,499.00.
Property F
$325,000.00
Property H
$200,000.00
Bank Accounts
$37,000.00
Subaru Motor Vehicle
$35,000.00
(vehicle omitted)
$80,000.00
Superannuation
$358,189.00
Shares
$77,000.00
Furniture
$5,610.00
Gross Assets
$1,117,799.00
Liabilities
Capital Gains Tax
$23,300.00
Net Assets Including Superannuation
$1,094,499.00
There is no real dispute about these contributions.
The husband needs to have that contribution recognised.
The total assets held by the parties presently is $4,484,311.00. The relationship lasted approximately eight and a half years, so the initial contributions should favour the husband by 2%. This is the sum of approximately $90,000.00 in relation to the current property the parties hold.
Contributions during the Relationship
Financial Contributions
There is no dispute that the wife worked during the relationship and during the relationship she had a taxable income, from between 2003 and 2011, of $941,360.00. She also contributed to her own superannuation, above and beyond that income, a sum of $619,012.00. So the total funds that were generated by her during the relationship were $1,560,372.00.
During the same period, the husband had a total taxable income of $201,005.00. This discrepancy in the financial contributions by way of money that the parties earned during the relationship amounted to the wife earning about 89% of the money and the husband earning about 11% of the money. So there is no doubt that the wife’s contributions far exceed the husband’s with respect to financial contributions during the period of cohabitation.
The wife has received a lump sum payment, net of tax in 2010, of $50,000.00 for retraining purposes. There is no evidence she will have to refund this because she has not completed the retraining. The wife was made redundant in the meantime. The redundancy payment the wife received was $65,000.00 net. These two sums were in addition to her very significant financial contributions from her salary.
The husband argued that, he reimbursed the wife the costs of living payment that she made. I do not accept that as the husband was not able to adduce any real evidence. He was given an opportunity in cross-examination to demonstrate these reimbursements from his bank accounts to the wife’s accounts. He could not produce this evidence. The amount of money that the parties earned respectively seems to me to support the wife’s contention that she was the main provider financially and that she paid for the majority of the expenses that the parties incurred during the relationship for day-to-day living and otherwise.
Non-financial Contributions
The husband submits he made non-financial contributions to the property of the parties by:
a)Carrying out inspections of the wife’s Property O property while it was rented;
b)Performing minor maintenance on the Property O property;
c)Performing minor maintenance on the Property A property;
d)Assisting the wife to manage her private superannuation investments;
e)Purchasing shares for the wife with the wife’s funds.
I consider these do not go anywhere near offsetting the wife’s very significant financial contributions. The husband did not establish that he contributed significantly to the acquisition, conservation, or improvement of the assets held in the wife’s name.
The homemaker contributions were approximately equal over the relationship in that each party conceded the other did various tasks in relation to the domestic chores.
The overall contribution, taking into account the husband’s initial contributions of 2% in his favour, is 65% to the wife, 35% to the husband.
Section 75(2) Factors
The husband is older than the wife by only three years. They are both retired.
The wife holds significantly more property than the husband so I consider there should be a small adjustment in favour of the husband of 2% resulting in a 63% adjustment to the wife and a 37% adjustment in favour of the husband.
The Outcome
The husband seeks that the wife retain the caravan and this in an order the wife seeks.
The adjustment necessary to provide a 63%/37% is that the wife must pay the husband $151,000.00 and I am satisfied that is just and equitable given the husband and wife wish her to have the caravan. Also the outcome has the husband paying the wife a little over $100,000.00. This is similar to the sum the husband lent the wife to purchase shares.
I certify that the preceding fifty-four (54) paragraphs are a true copy of the reasons for judgment of Judge Cassidy
Date: 26 November 2013.
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